House of Commons

Tuesday 17th December 2013 Commons Chamber

Tuesday 17 December 2013

The House met at half-past Eleven o’clock

Prayers

Tuesday 17th December 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 17th December 2013 Commons Chamber

The Secretary of State was asked—

[Mr Henry Bellingham (North West Norfolk) (Con)]

1. What recent representations he has received about UK withdrawal from the European Court of Human Rights; and if he will make a statement.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The coalition agreement commits the Government to the European convention on human rights and the Strasbourg Court. However, the differences between the two parties’ views on this subject are well known, so there will be no major changes before the next election, although, of course, it is my party’s intention that there should be afterwards.

[Mr Bellingham]

Does the Lord Chancellor agree with me that it is quite outrageous that the European Court of Human Rights has deemed whole-life sentences to be in breach of human rights laws? Is he aware that I used to be a strong supporter of the Court, but that I now feel strongly that the time has come when it is in our national interest to come out of it?

[Chris Grayling]

My hon. Friend echoes the view of many people in this country that the whole-life tariff ruling is entirely inappropriate. The Government are considering how best to respond to the ruling, but it is an example of why, in my view, the Court’s reputation in this country has fallen dramatically in recent times, and of why change is now so urgently necessary.

[Jeremy Corbyn (Islington North) (Lab)]

Will the Secretary of State think more carefully about this issue? Were Britain to withdraw from the European convention on human rights, and consequently, from the European Court, where would our moral stature be in condemning human rights abuses in any other European country, and what would be the future for human rights in this country? Does he not think that, instead, he should be more positive and proactive about the necessity of human rights legislation to protect us all?

[Chris Grayling]

Let us be absolutely clear: human rights are important and remain a central part of what this Government, and any Government in this country, do to promote good practice around the world. That does not necessarily mean, however, that we all have to endorse the working of a Court that, in my view, has lost its way.

[Mr Christopher Chope (Christchurch) (Con)]

It is five months since the decision of the European Court of Human Rights in the whole-life tariff case, so why are the Government still vacillating over what to do about it? Does my right hon. Friend agree that the problem is that the European Court of Human Rights is seeking to legislate rather than to interpret the law, because the whole-life tariff was a substitute for capital punishment?

[Chris Grayling]

My view is that it is not appropriate for the Court to seek to make law for this country in such an area, which should be a matter for Parliament. My hon. Friend will understand, particularly given the realities of coalition politics, the care we are taking with our response, but he should be in no doubt that both I and the Prime Minister believe that the ruling takes us into a place where we should not be.

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

Notwithstanding the difference between the two coalition parties in government, does the Secretary of State not believe that there are no examples of the Strasbourg Court defending our rights where domestic courts have failed?

[Chris Grayling]

That is an interesting point. Although we understand and respect the differences between the coalition parties on this matter, the Labour party is dancing on a pin. One week, it says that it opposes votes for prisoners; the next week, it supports the rulings of the European Court. As our party sets out its proposals over the next 18 months, it will be fascinating to see exactly where Labour stands.

[Dr Julian Huppert (Cambridge) (LD)]

Can the Secretary of State list the European countries that are not part of the European convention on human rights? Does he really think that Britain’s international standing would be enhanced by joining the club with Belarus?

[Chris Grayling]

It is important to say that my concern has always been about the Court, not the convention. As I have said to my hon. Friend in the past, anyone who reads the terms of the convention would find it to be a document that we would all agree with. The problem is the way in which it is being interpreted, which, in my view, has moved a long way away from the intentions of the people who drafted it in the first place.

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

This Government’s position on, and attitude to, Strasbourg was recently cited in Ukraine as a reason in defence of opposing one of the recommendations of the Court. Does the Secretary of State recognise that withdrawal from the Court would have implications for millions of people beyond our boundaries and beyond our nation?

[Chris Grayling]

The key point that the hon. Gentleman must understand is that we can be, and will continue to be, a beacon of propriety as regards human rights in the world, but that that does not mean that we have to continue to accept a jurisprudence that is treading on territory that rightly belongs to this Parliament. In my view, this Parliament needs to address that issue.

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

Does my right hon. Friend agree that there is no point in this country withdrawing from the European Court of Human Rights if we remain bound by the European Union and its charter of fundamental rights, because we will finish up being told what to do by the European Court of Justice?

[Chris Grayling]

As we renegotiate our membership of the European Union—as I hope and believe we will when we win the next election—it is important that we also address the legal position of the charter, which is not only an issue for this country, but conflicts directly, in a number of key areas, with the wording of the convention.

[Nic Dakin (Scunthorpe) (Lab)]

2. What reports he has received on the progress of investigations of the alleged misuse of public money by private providers that hold contracts with his Department.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The Serious Fraud Office has launched a criminal investigation of issues that have been uncovered in relation to the electronic monitoring contracts that my Department holds with G4S and Serco. As that criminal investigation is taking place, I cannot comment further at this stage, but I will make a statement as soon as it is appropriate for me to do so.

[Nic Dakin]

Today we learnt that Professor Harrington had warned the Secretary of State against rolling out fitness-for-work tests as long ago as 2010. Also today, many experts, including the chief inspectors of prisons and probation, have advised against the privatisation of the probation service. Why is the Secretary of State a serial offender when it comes to ignoring expert advice?

[Chris Grayling]

Let us be clear about the matter that has been raised today. Civil service records show no such warning having been made, and no such warning was included in the reports that were produced at the time.

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

Can my right hon. Friend assure us that there will be a full review, across Government, of all contracts held by G4S and Serco, so that Ministers will be able to manage such contracts better in future?

[Chris Grayling]

I can certainly give my hon. Friend that assurance. We are looking carefully at our own contract management approach and at the contracts that we hold. It is worth reminding the House, however, that the issues that are being referred to, and the contracts that we are looking at, date back to the time of the last Government.

[Sheila Gilmore (Edinburgh East) (Lab)]

We have several years of experience of multi-purpose companies that appear to bid for anything and everything, regardless of whether they have any particular expertise, and that is happening again with the roll-out of the personal independence payment. Promises that were made about the service that would be delivered are simply not being fulfilled. Is it not time for a complete review of contracting of this kind?

[Chris Grayling]

I am very much in favour of a broader supplier base and the arrival of new organisations to work with the Government. I think it important for us to work with third parties, as, indeed, the last Government did. I believe that when, in the near future, we publish the list of organisations that have passed the pre-qualification questionnaire stage in respect of the reforms of the probation service, every Member in the House will be encouraged by the mix of organisations that have put their names forward.

[Jenny Chapman (Darlington) (Lab)]

I have never before raised an individual case with the Secretary of State, but every now and again something happens that I think is worthy of being raised in the House.

The Secretary of State will be aware that last week, in court, it was reported that a woman had miscarried in her cell during her first night in a prison run by Sodexo, She informed health care workers, but was made to clean up on her own, and received no assistance for three days and no pain relief. Sodexo’s own inquiry into the matter is not sufficient. The Secretary of State should commit himself to some kind of inquiry, investigation or review to ensure that no other woman in a private or a public sector prison has to experience that level of neglect.

[Chris Grayling]

Let me make it absolutely clear that if what has been described is true, it is wholly unacceptable. My team will of course follow it up with Sodexo, and Sodexo itself will want to address it, because no one would seek to defend it. Things go wrong in public prisons and in private prisons, and whenever they do go wrong and what happens is unacceptable, it should be addressed.

[Jessica Morden (Newport East) (Lab)]

3. What assessment he has made of the effects of reductions in funding for civil legal aid.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

The Ministry of Justice and the Legal Aid Agency keep the legal aid scheme under constant review, in terms of both expenditure and the impact of reforms. The Government will undertake a post-implementation review of the legal aid provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 within the next three to five years.

[Jessica Morden]

Since the Government’s legal aid cuts, more of my constituents have had to represent themselves in family courts against former partners who can afford a solicitor, and local cases are being deferred by judges because they do not feel that the litigant in person is sufficiently prepared. Does the Minister agree that it is time to be transparent and produce figures showing the number of litigants who have appeared in person and the number of deferred cases that have taken place since the changes, so that we can judge the impact on our courts for ourselves?

[Mr Vara]

The reforms did not come into effect until earlier this year, and we need to give them a bit more time. As I have said, we will be reviewing the position, but it is currently too early to form a proper assessment.

[Valerie Vaz (Walsall South) (Lab)]

4. What recent assessment he has made of family mediation services.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The Ministry of Justice does not regulate family mediation services, but it does award contracts for the provision of family mediation funded through legal aid to standards set by the Legal Aid Agency. We are aware that there has been a drop in referrals to mediation following changes to legal aid in April 2013, although there has been no drop in the number of mediations taking place. My Department is undertaking a range of activities to address this important issue.

[Valerie Vaz]

The Minister indicates that there has been a drop of 47%, causing some mediation services to close. That was a foreseeable consequence of cuts in legal aid to family lawyers, so will he please change the policy now?

[Chris Grayling]

We are working extremely hard to address the issue. One change that will come through when the Children and Families Bill becomes law relates to making it a requirement in a family process that the mediation referral takes place. However, as I say, the actual issue is about referrals, rather than about the number of mediations, which has not changed. We are working very hard with those in the mediation world to address that and ensure that the right referrals are made.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I would say the opposite to what the hon. Member for Walsall South (Valerie Vaz) said: I am surprised that the number has fallen, because when the change to the regulations was made the Department gave full funding for all mediation to those in receipt of legal aid. Has the Minister thought, therefore, of encouraging more mediation by approaching lawyers and other venues to increase it?

[Chris Grayling]

We are following a number of different paths, including an increased promotion of mediation services and making some mediation compulsory as a result of the provisions in the Children and Families Bill. We are also looking for other measures to help ensure that mediation takes place. It is much better if these issues can be dealt with through a mediation service, rather than through the cost and difficulty of a full legal process.

[Ian Lucas (Wrexham) (Lab)]

But is the Secretary of State not aware that in the delicate environment of the beginning of a divorce case, specialist advice from legal practitioners leading to mediation is essential? That is why this Government’s policy has such a negative impact. Will he please look at it again?

[Chris Grayling]

I am not sure whether that is an attempted spending commitment from the hon. Gentleman. The reality is that we have had to take difficult decisions about the availability of legal aid in order to deal with the financial challenge we inherited. The issue is about trying to ensure that we make the best use of the network of mediators we have in this country. As I say, the number of actual mediations has not fallen, but we are not getting enough people into mediation in the first place. That is why we are changing the law, we are introducing better targeting of the routes into mediation and we are working with mediation organisations to help them get more people referred to them.

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

Does my right hon. Friend agree that there seems to be a lack of clarity in this area? For example, it would not be appropriate to refer to family mediation a case in which a woman on low income, who could not pay for legal advice, wants to protect her child from going into custody. Such a case should still be legally aided, rather than being addressed through mediation.

[Chris Grayling]

Cases involving children being taken into care would, of course, remain funded through legal aid, and they continue to be carried out through the courts in the way they always have been—that remains important.

[John Healey (Wentworth and Dearne) (Lab)]

5. What his policy is on probation trusts tendering for probation services.

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

The “Transforming Rehabilitation” competition process has been designed to allow, as far as possible, a range of different entities to bid to deliver services. But such entities need to be capable of bearing financial risk, because under our reforms we will pay providers in full only if they are successful in reducing reoffending.

[John Healey]

The Justice Secretary is almost entirely without allies and without evidence for these privatisation plans. The Minister has confirmed that he is denying the experts in some truly excellent probation trusts, such as South Yorkshire’s, the chance to tender for these contracts. If South Yorkshire’s four local authorities combine to back the trust and take out the financial risks he talks about, will he think again?

[Jeremy Wright]

I would say two things to the right hon. Gentleman. First, he understands, I think, that one advantage of what we are proposing is that we move risk away from the taxpayer, so that those prepared to take on these contracts on a payment-by-results basis put their own money at risk, not the taxpayer’s. In the scenario he is outlining, it is difficult to see how we avoid the taxpayer continuing to take that risk. Secondly, as he may also know, many of the talented individuals who work for probation trusts at the moment are exploring the possibility of setting themselves up as mutuals so that they can continue to do this work, and there is considerable support for that from our colleagues at the Cabinet Office—they are providing money and support to enable them to do that.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

What makes the Minister confident that the structure he has described can overcome the dysfunctionality in offender management described by the chief inspectors of probation and prisons in a report today?

[Jeremy Wright]

My right hon. Friend refers to the report that has been produced today. As he knows, a significant point in it is that there is not currently sufficiently good connection between offender management that takes place inside custody and that that takes place outside. As he will also recognise, our transforming rehabilitation proposals intend to close that gap, so that offender management involves the same provider from the closing months of someone’s custodial sentence, through the gate and out into the community. Transforming rehabilitation will start to address exactly the points that this report raises.

[Natascha Engel (North East Derbyshire) (Lab)]

Thirteen police and crime commissioners, including Alan Charles in Derbyshire, have expressed grave concerns at the plans for the probation service because they could put public safety at risk. What has the Minister said to them to address their fears?

[Jeremy Wright]

The first thing the House should know is that all 13 are Labour police and crime commissioners. Whatever party they come from, it is very important that we work with police and crime commissioners and that all providers who will be doing this work do so too. For that reason, we will ensure that police and crime plans from every area of the country will be clearly available to providers, and we will expect them to co-operate not just with police and crime commissioners but with a whole range of other local partners too.

[Gareth Johnson (Dartford) (Con)]

Does the Minister agree that the supervision of short-term prisoners by the probation service within existing budgets is simply unaffordable and that the tendering process is needed to provide extra supervision for short-term prisoners?

[Jeremy Wright]

I agree with my hon. Friend. He does not need to take my word for it as the previous Government tried to do that as part and parcel of the public sector budgets and failed to do so because they determined that it was unaffordable.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

A few days ago, the Minister and the Secretary of State appeared before the Justice Committee, during which the Secretary of State said that his door is always open to meet the leaders of the National Association of Probation Officers. When will that meeting take place?

[Jeremy Wright]

I cannot give a date to the right hon. Gentleman. Both my right hon. Friend and I have met NAPO leaders before and are happy to do so again. What we will not do is pause the process in which we are engaged because the members of those trade unions would like some certainty over their own futures, and we think that is important, which is why we must get on with this process.

[Robert Flello (Stoke-on-Trent South) (Lab)]

6. What steps he plans to take to enforce the code of practice for victims of crime.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

We are working with all service providers who have duties under the victims code to ensure that their operational systems, guidance and training are updated to deliver their new responsibilities to victims of crime. We will continue to work with our criminal justice partners to ensure there is appropriate oversight of the new code at a local and national level.

[Robert Flello]

I am immensely grateful for that.

“There is more to be done to ensure agencies are made accountable under the code…this needs to be backed up by statutory powers.”

Those are not my words but the words of the Victims’ Commissioner herself. At every turn, the Government have paid lip service to victims and then acted against them. They have made the Victims’ Commissioner job part-time and then savaged the criminal injuries scheme. Will the Minister now give the victims code some real teeth, and not just warm words?

[Damian Green]

I am afraid the hon. Gentleman is massively out of touch with the sector that deals with victims if he expresses those views. When we launched the victims code, it was welcomed by a wide range of our partners in the voluntary sectors, including Victim Support and the National Society for the Prevention of Cruelty to Children. The victims code is a significant step forward from the old impenetrable code that the previous Government put forward, and it has been welcomed by those who know most about the sector.

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

The one thing victims want most is to know that the perpetrators of the crime are brought to justice. Can the Minister assure us that we are doing enough to ensure that associates of the offender, or people who saw something, have the ability to report what they saw without fear of recrimination? If necessary, they can do it confidentially to start with.

[Damian Green]

That would be good police practice. One thing we are doing with the code is ensuring that the guidance that goes out to the police from the College of Policing will be improved to fit with the victims code. In other parts of the criminal justice system, both with the Crown Prosecution Service and the courts themselves, the code will make a difference in all instances and will enable victims to feel more confident.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Secretary of State is planning to cut funding for Victim Support in London at a greater rate than anywhere else in the country. Will the Minister listen to his friend the Mayor of London and ensure that victims in London get the support they deserve?

[Damian Green]

I am happy to assure the hon. Lady and everyone else in London that the amount of money going to Victim Support in London is going up, not down, as it is in every other region of the country. More money will go to victims’ services under this Government than under the previous arrangements.

[Sadiq Khan (Tooting) (Lab)]

The right hon. Gentleman is usually a thoughtful and intelligent Minister and he will be aware that we already have a variety of codes of practice and charters for victims scattered across different Government agencies. Like him, I meet victims of crime all the time and they complain that the codes are toothless and offer no means of redress if their entitlements are breached. How will the new code differ and how will he measure success?

[Damian Green]

It will differ in a number of ways. First, the new code is written so that victims will be able to understand it—I am sure that the right hon. Gentleman will agree that the previous code was not written in that way, as it was written by and for professionals. Secondly, there are specific rights in the code that were not in the previous code, such as the very important right for a victim to be able to make their personal statement in court after the sentence. Many victims have said that that is a significant step forward in enabling them to feel that they are being taken more seriously than they have been before.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

7. What plans he has to review sentencing for causing death by dangerous driving.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

Causing death by dangerous driving is punishable by up to 14 years’ imprisonment. I have asked the Sentencing Council to look at its guidelines on causing death by driving to ensure that the sentences imposed reflect the seriousness of the offending. We are also considering whether further changes might be necessary to strengthen the law.

[Annette Brooke]

I thank the Secretary of State for his answer. Constituents who have lost a close relative in a driving incident, perhaps a young son or daughter, face the stress of a court case along with a feeling that the sentences for serious driving offences are inadequate. Does he agree that the outcome of the review and the various issues he is considering must make a difference to irresponsible driving and the subsequent loss of lives?

[Chris Grayling]

I very much agree with my hon. Friend. I feel strongly that we must take a tough approach to someone’s causing death and serious injury while disqualified from driving. Too often, it turns out that the people who commit such an offence have been disqualified again and again and do not have a licence when it happens. That is an area that I am keen to address.

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

The Secretary of State’s colleague at the Home Office, the hon. Member for Lewes (Norman Baker), announced in Cambridge on 28 August that he had asked the Sentencing Council to review this very offence. Is this another request today? When exactly will the Sentencing Council review the offence and make a decision?

[Chris Grayling]

I put in the original request to the Sentencing Council some months ago. It intends to put this into its work stream for next year and will make recommendations. Separately, I am also looking at the current law. I feel that there is still scope for tightening and I will bring forward my thoughts in due course.

[Mr Philip Hollobone (Kettering) (Con)]

My constituents Mark and Sue Donnelly lost their 26-year-old son Stephen in a road incident on the A14 to a driver who was twice over the limit. He was sentenced to eight years in prison, which they do not think is long enough, and nor do I, but he was also given a 10-year concurrent driving ban, which they felt was particularly insulting since for most of that time he would be in prison and unable to drive. Will the Secretary of State consider concurrent driving bans to see whether they are appropriate?

[Chris Grayling]

I am rather sympathetic to what my hon. Friend says and I suggest that he and I have a longer conversation about it.

[Mr David Hanson (Delyn) (Lab)]

8. What his strategy is for supporting victims of crime.

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

16. What recent steps he has taken to support victims of crime.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

This Government are committed to putting victims first and we will give victims a voice at every stage of the criminal justice system. It is crucial that victims receive the support and help they need to cope and, where possible, to recover. We are aiming to make up to £100 million available to support victims to recover, testing pre-trial cross-examination, considering how we might reduce the distress caused to victims by cross-examination in court and implementing the new victims code.

[Mr Hanson]

Most people I speak to think that the Victims’ Commissioner should be a full-time post. Why is it not?

[Damian Green]

The Victims’ Commissioner is doing admirable work. She is supporting the Government and she is capable of doing the work very well. I am already enjoying working with her to ensure that she continues to represent the interests of victims very well.

[Mr Burrowes]

Can the Minister give me an update on the progress in providing funds for victims from prisoner earnings, which not only fulfilled an important manifesto commitment, but upheld the principle that criminals should pay victims for their crimes, not least when as prisoners they are earning?

[Damian Green]

My hon. Friend raises an important point. Part of the extra money that is going to support victims in London and elsewhere comes from the proceeds of the Prisoners’ Earnings Act 1996. I am happy to tell him that whereas in 2011-12 some £332,000 went to Victim Support from this source, in 2013-14 the sum will be £825,000—more than two and a half times as much.

[Dan Jarvis (Barnsley Central) (Lab)]

Victims of domestic abuse are placed at risk when forced to give their safe address in open court in unrelated proceedings. That not only places the individual at risk from the abuser, but deters the thousands of victims who suffer from domestic violence from reporting this horrendous crime. Does the Minister support Eve’s law, which seeks to address that anomaly, and will he work with the campaign to ensure its implementation in law?

[Damian Green]

I will happily consider that. The hon. Gentleman makes a reasonable point. It is for the judge to decide in each individual case, and it is not for Ministers at the Dispatch Box to decide what judges do in each individual case. We are already taking a range of steps to protect people who may be victims of domestic violence, and I am always happy to look at others.

[Andrew George (St Ives) (LD)]

On a similar point, the families of victims of capital crimes, as well as coping with bereavement, will usually be unaware of their rights and the responsibilities of authorities to assist them in protecting the memory, reputation, estate and so on of the deceased. What assessment has my right hon. Friend made of the support available to victims’ families in such circumstances?

[Damian Green]

I think I know the case to which my hon. Friend is referring, as he and I have discussed it in Westminster Hall. He will be aware that I wrote to him on 4 December on the detailed issue. Victims of all kinds require support and are getting better support. As he knows, the specific issues related to cases such as he describes are being considered at present.

[David Mowat (Warrington South) (Con)]

9. What assessment he has made of the potential for further savings to the public purse from the justice system.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

Across the spending review period starting in 2010 and running up to March 2015 the Ministry of Justice will have delivered annual savings of well over £2.5 billion. Building on successful delivery of these savings, the Ministry is developing reform plans to transform the way we deal with offenders and make courts, prisons and probation more efficient.

[David Mowat]

A unique feature of the legal aid system in the UK is that we pay a subset of practitioners several multiples of what we pay our Prime Minister. Can the Secretary of State give us some assurance that his changes and amendments to the legal aid system will bear down on those very high salaries, while protecting the majority of barristers who do such good work?

[Chris Grayling]

We have tried very hard in difficult decisions to make sure that we focus as much as possible of the impact of necessary changes to legal aid on the higher end of the income scale. Our changes to very high cost case fees and the approach that we are taking to Crown court fees are designed to ensure that, so far as possible, the impact of our changes is much less on those people at the bottom end of the income scale than it is at the top.

[Mr Frank Field (Birkenhead) (Lab)]

10. How many young people currently in young offenders institutions and specialist children’s homes are being held on human trafficking offences.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

From 2008 to 2012, no children and young people were sentenced to custody for human trafficking as the principal offence. This Government are committed to combating human trafficking. On Monday we published the draft Modern Slavery Bill to strengthen our response and to underpin the work of law enforcement agencies.

[Mr Field]

As the Lord Chief Justice has ruled that victims of slavery should not be prosecuted for crimes they undertake under the direction of their slave owners, will the Minister undertake an audit of young people in offender institutions to establish how many are there, even if they have been charged under a lesser crime, in order to see whether their cases should be reviewed?

[Damian Green]

Yes, as part of the extra work we are doing under the aegis of the draft Modern Slavery Bill, to which the right hon. Gentleman has contributed significantly, we are obviously looking at the individual effects on those who might have been victims of trafficking and enslavement. He makes a perfectly valid point.

[Fiona Bruce (Congleton) (Con)]

11. How his Department’s funding for restorative justice is being disbursed.

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

We recently announced funding of £29 million over three years for restorative justice, at least £22 million of which is going to police and crime commissioners for victim-initiated and pre-sentence restorative justice services. The remainder is being used to boost capacity so that good-quality restorative justice is available at all stages in the criminal justice system.

[Fiona Bruce]

I thank the Minister for that reply. Will he join me in affirming the excellent work of the Prison Fellowship’s restorative justice programme, known as the Sycamore Tree project, and will he be good enough to meet me and Prison Fellowship representatives to discuss how the project can be extended beyond the third of prisons in which it currently works to prisons across the country?

[Jeremy Wright]

As my hon. Friend says, the Sycamore Tree project is already available in some 75 prisons. I certainly support what my hon. Friend says about the good work it does, as was showcased at the excellent event she hosted last week, which I had the pleasure of attending. I will certainly meet her to discuss it further.

[Henry Smith (Crawley) (Con)]

12. What professional development support his Department plans to put in place for those supervising offenders in the community.

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

The national probation service will continue to use the probation qualifications framework to ensure the competence of its staff. For the new community rehabilitation companies there will be a contractual requirement to have and to maintain a work force who have appropriate levels of training and competence. On 3 December we announced that we will be setting up a new probation institute that will promote the sharing of good practice to those working across the probation profession.

[Henry Smith]

I am grateful to my hon. Friend for that answer. How much investment are the Government making in the new national probation institute?

[Jeremy Wright]

We are contributing some £90,000 towards the cost of setting up the probation institute. The remainder will come from the Probation Association and the Probation Chiefs Association. I am grateful to them and to the probation trade unions for working together so successfully to bring forward the proposal, which we entirely support and which will help to underline the professionalism and continuing professional development of those who work in rehabilitation.

[Mr Gerry Sutcliffe (Bradford South) (Lab)]

13. What steps he plans to take to ensure access to justice regardless of ability to pay.

[Paul Blomfield (Sheffield Central) (Lab)]

14. What steps he plans to take to ensure access to justice regardless of ability to pay.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

The fee remissions scheme was updated on 7 October this year. It provides for court and tribunal fees to be waived in whole or in part based on an assessment of the user’s disposable capital and gross monthly income. The scheme ensures that access to justice is protected for those who cannot afford to pay court or tribunal fees. Legal aid also remains available in many cases, and those granted legal aid will have their court fees paid.

[Mr Sutcliffe]

I am interested in that answer. Why is it, then, that the legal profession in Bradford is telling me that, as a result of the Government’s introduction of charges for industrial tribunals—£1,500 before taking a case—and reduced support for legal advice workers, people will be denied reasonable access to justice?

[Chris Grayling]

The system is very clear. When someone needs to go to court but does not have the income to pay any court fees incurred, there is a system of fee remissions that ensures that they do not have to contribute.

[Paul Blomfield]

The Secretary of State’s justification for the legal aid residence test is contribution, particularly through tax. Can he therefore explain his decision to exempt only certain categories of children from the test? If he fails to broaden the exemption, is he not in danger of falling into the trap that the Joint Committee on Human Rights described last week as

“knowing the price of everything but the value of nothing”?

[Chris Grayling]

I might be a bit old-fashioned, but I do not think that we should give civil legal aid to people who have just arrived in the country. However, I recognise some of the issues raised in the consultation and I have listened. The change with regard to very young children under 12 months old was specifically requested by people in the judiciary. I listened and I introduced it.

[Mr Andy Slaughter (Hammersmith) (Lab)]

One group particularly badly hit by the Government’s restrictions on access to justice are mesothelioma sufferers. The Secretary of State has not carried out the review that he promised in order to get the Legal Aid, Sentencing and Punishment of Offenders Act 2012 through. He continues to confuse funding for mesothelioma with the Mesothelioma Bill, even though there is no connection. He has not even answered the question that my hon. Friend the Member for Stretford and Urmston (Kate Green) asked at the previous Justice questions, which he promised to do. Why is he making people who suffer from that terrible disease pay 25% of their compensation in lawyers’ fees and then telling them to shop around? When will he give justice to mesothelioma sufferers?

[Chris Grayling]

Of course this is not a new problem, and in many areas we are picking up on things that were not done by the previous Government. We will bring forward a further consultation on these issues shortly.

[Graeme Morrice (Livingston) (Lab)]

15. What steps he is taking to support victims of domestic violence.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

Domestic violence is a dreadful form of abuse and is not acceptable within our society. The Government are committed to providing greater protection to victims of all forms of violence, and their approach to domestic violence and abuse is set out in the violence against women and girls action plan, updated in 2013.

[Graeme Morrice]

Last week’s report by the Joint Committee on Human Rights on the Government’s legal aid cuts said:

“We are particularly worried about the impact of the residence test on vulnerable groups such as children or victims of domestic violence.”

Will the Minister tell the House exactly how much will be saved by taking away legal aid from sufferers of domestic violence affected by the residence test, and explain what victims are expected to do if these plans strip them of the option of legal aid?

[Damian Green]

The Government have left in place all the exemptions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 to ensure that the most vulnerable continue to receive legal aid. Beyond that, we have ring-fenced nearly £40 million for specialist local domestic and sexual violence support services. That, together with specialist domestic violence courts, provides a better specialist way of dealing with this terrible abuse.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

17. What steps he is taking to tackle rogue payment protection insurance claim companies and nuisance calling by those companies.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

Our priority is to protect the public by rooting out and punishing bad practices by claims companies. The claims management regulator is expanding its resources and consulting on a new set of toughened rules to crackdown on abuses, and later next year claims companies will face fines for rule breaches.

[Andrew Jones]

I thank the Minister for that reply. Given that so many rogue companies have been plaguing constituents, what effect have the Government’s actions had on the number of claims firms?

[Mr Vara]

I am happy to say that there has been a positive impact on the numbers. Between January and November 2013, the total number of authorised claims management companies decreased by 718; the total number of personal injury claims management companies fell by 917; and the total number of PPI claims management companies fell by 85. That is clear evidence that the Government’s tough measures are having an impact.

[Jason McCartney (Colne Valley) (Con)]

23. I serve on the Transport Committee, and we have just completed an inquiry into the effect of fraudulent whiplash claims on the cost of motor insurance. Will the Minister update the House on what steps the Government are taking to stop bogus claims by rogue firms driving up the cost of insurance premiums for drivers?

[Mr Vara]

The Government have introduced various measures, one of which, on whiplash, is to have an accredited panel of medical experts. We want to make sure that there are proper experts who deal with this issue. The AA has reported that, as of October this year, the average comprehensive insurance for motor vehicles has gone down by £80.

[Sir Tony Baldry (Banbury) (Con)]

18. What steps he is taking to reduce the use of cautions for repeat offences.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

Cautioning for repeat offenders is unacceptable and does not deliver justice for victims. That is why we have acted to ensure that criminals should no longer receive a second caution for the same, or a similar, offence committed in a two-year period.

[Sir Tony Baldry]

I thank my right hon. Friend for that answer. In addition to stopping the use of repeat cautions, does he agree that there are some offences for which, in any event, the use of a caution is simply not appropriate?

[Damian Green]

I do agree; my right hon. Friend makes an extremely important and valid point. That is why we concluded after the simple cautions review that cautions should not be used for any offence that can be tried only in the Crown court. Indeed, going further than that, certain offences that can be tried either in the Crown court or in a magistrates court are also not suitable for cautions, including, in particular, possession of a knife.

[Andrew Selous (South West Bedfordshire) (Con)]

19. What steps he is taking to ensure that no prisoner leaves prison unable to read.

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

When a literacy need is identified on arrival in prison, prisoners are offered teaching and support as a matter of priority. In 2014 we are introducing increased assessment for prisoners, including reading skills, to ensure that we maximise the benefits of the literacy support that is available.

[Andrew Selous]

The Secretary of State has spoken of his vision of custody as “education with detention”. If serious efforts are made in prison to deal with illiteracy, will probation officers absolutely ensure that that continues on release?

[Jeremy Wright]

I think my hon. Friend refers to a quote that is specifically about the youth estate, but he is absolutely right that education is just as important in the adult estate. Too many prisoners cannot read and write properly, which means that their chances of securing employment on release are much reduced. Under our reforms of rehabilitation, we will expect providers to ensure that someone is supported not only through the gate, but in the community for at least 12 months. One of the best ways of supporting them to stay free of crime is to make sure that they get employment, so I would absolutely expect them to be interested in literacy as well as many other things.

[Mr Speaker]

The right hon. Member for Hazel Grove (Sir Andrew Stunell) was already looking excited, but I imagine his excitement will now be boundless.

[Sir Andrew Stunell (Hazel Grove) (LD)]

20. What steps he plans to take to ensure that the voluntary sector is able to compete for rehabilitation contracts.

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

I am not sure I can live up to the expectations, Mr Speaker.

We have run a registration process for smaller providers to maximise the opportunities for them to be involved in the competition, and we awarded £150,000 to the Association of Chief Executives of Voluntary Organisations to help the voluntary sector and mutuals to compete for contracts. We will embed good market stewardship principles in the system so that there is fair, reasonable and transparent treatment of all those involved in the direct and indirect provision of services.

[Sir Andrew Stunell]

I thank the Minister for that reply, but does he agree that in many previous exercises by other Government Departments, inappropriate scale of projects and burdensome bureaucratic detail have meant that small, voluntary local organisations have been ruled out? Will he undertake to ensure that high-quality, small-scale providers will be able to access these contracts?

[Jeremy Wright]

I understand the point my right hon. Friend makes: it is very important that we reduce bureaucracy wherever we can. I know he has experience of this from his time in government. It is also important that we support those small, voluntary organisations when they show an interest and then support them through the contract-bidding process and contract management. My right hon. Friend will be reassured to learn that there is already considerable interest in the voluntary sector: some 550 voluntary organisations have already expressed their interest in participating.

[Jeremy Lefroy (Stafford) (Con)]

21. What plans he has for Stafford prison.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

My hon. Friend and I had the honour and pleasure of visiting Stafford prison last week. I pay tribute to the skills of the team working there. It has a strong and valuable future in our prison system.

[Jeremy Lefroy]

I am very grateful to my right hon. Friend for visiting last week. He will have seen the emphasis that Governor Oakes-Richards places on prisoners being in work, education and other purposeful activity. Will my right hon. Friend indicate what support the Ministry of Justice is giving to Stafford and other prisons to help them prepare prisoners for the world of work?

[Chris Grayling]

If you were to visit Stafford prison, Mr Speaker, you could not help being impressed by the work being done by the team on the ground, bringing valuable contracts and work experience into the prison. Of course, our central team that looks for opportunities to bring work into prisons will work with Stafford and other prisons to ensure that we do as much as we can to keep prisoners active.

[Mr Speaker]

I must tell the Secretary of State that I have visited the prison myself, but sadly it was 13 years ago. I am sure it is even better now than it was then. [Interruption.] No, I did so in my capacity as a shadow Minister. [Laughter.]

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

The whole House is relieved to hear that, Mr Speaker!

[John Pugh (Southport) (LD)]

22. What assessment he has made of trends in the number of cracked trials.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

The number and proportion of trials which crack and the reasons for this is reported by the Ministry of Justice in quarterly court statistics. As part of the Government’s criminal justice strategy and action plan, Her Majesty’s Courts and Tribunals Service is working with the Crown Prosecution Service and the judiciary to improve performance in the summary justice system, including reducing the volume of cracked trials.

[John Pugh]

Has the number of cracked trials been in any way influenced by the reduction in the number of courts and court access?

[Damian Green]

No. The cracked trial rate in magistrates courts has remained fairly stable—between 43% and 45%—since 2006. I am happy to report that the rate in the Crown court has been falling steadily—from 43% in the third quarter of 2010 to 36% in the second quarter of 2013—so progress is being made.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

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

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

Given the interest in victims’ matters today, I will briefly update the House on the new victims code, which came into effect last week. It is the culmination of a year’s work to make sure that victims are given back their voice, and it has been widely welcomed by victims’ groups. Crucially, it includes a new entitlement for victims to read out their personal statement in court, which means that offenders and the court will be left in no doubt about the full impact of the crime. Children and young people will get the enhanced levels of support that they deserve all the way through the criminal justice process. The new impact statement for business will make sure that when hard-working people and their businesses suffer from the effects of crime, the court can hear directly about its impact on their livelihood and on jobs. I want to make sure that all victims’ voices are heard, and this Government are working to ensure that they are.

[Tom Blenkinsop]

Since May 2010, 47 courts closed by this Government have remained unsold. The cost to maintain those buildings is £2.2 million. Is that a good use of taxpayers’ money?

[Chris Grayling]

Clearly, we want to sell an unused property as soon as we can, and we are working to do so, but we of course need to have a buyer before we can sell it, and we are constantly looking for buyers.

[Priti Patel (Witham) (Con)]

T3. Will the Secretary of State provide the House with an update on when he intends to stop child sex offenders and terrorists being automatically released from prison early?

[Chris Grayling]

This is an extremely important area. A change is long overdue, and we will proceed with it in the next few weeks.

[Sadiq Khan (Tooting) (Lab)]

You will be aware, Mr Speaker, that the Justice Secretary is unwilling to publish the MOJ’s assessment of the risks attached to his plans to privatise probation. Will the Secretary of State tell the House whether his plans will see the risk to public safety higher, lower or the same as it is now?

[Chris Grayling]

I owe the right hon. Gentleman an apology from last time, when I implied that his campaign to be Mayor of London had him trailing in third place. I have now discovered that that is not the case, and I wish him well. I have watched his progress carefully.

On the risk registers, I would say to the right hon. Gentleman that he never published them because they are a working tool for the civil service. This Government will not do anything that leads to a greater risk to public safety. Bringing supervision to under-12-month groups will make the public safer, rather than more at risk, through a system that he and his Government admitted was wrong but never did anything about.

[Sadiq Khan]

The Secretary of State’s response is even more surprising, bearing in mind the very damning joint report from the chief inspectors of prisons and of probation, which is published today. They believe that the scale of the problems they have identified means that

“the entire thrust of the Government’s rehabilitation plans”

is undermined. We know that he ignored their last report in 2012, but bearing in mind the seriousness of the issue, will he meet the inspectors as a matter of urgency to hear their concerns that his plans could in fact make matters worse rather than better?

[Chris Grayling]

I hate to disappoint the right hon. Gentleman, but I last met the probation inspector about three days ago. I meet both inspectors regularly, and I take their views immensely seriously. That is one reason why we have put in place radical changes that will create a through the gate rehabilitation service to deal with many of the issues that they have highlighted. Unfortunately for the right hon. Gentleman, their report is not about our plans, but about the system we are trying to change, and that is why we are trying to change it.

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

T4. The Secretary of State will be aware that, following a spate of knife attacks in Enfield, my hon. Friend the Member for Enfield North (Nick de Bois) and I led a successful campaign to toughen up the knife laws. After the killing in my constituency of Joshua Folkes just two weeks ago from a knife attack, will the Secretary of State ensure that the law shows greater intolerance of those carrying a knife?

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

The whole House will share my hon. Friend’s horror at the death of his constituent in a knife crime, and I pay tribute to my hon. Friend for his dedication to tackling that particular social scourge. He will know that the Government have recently created a mandatory prison sentence for threatening someone with a knife, and as I have just said to my right hon. Friend the Member for Banbury (Sir Tony Baldry), we are ending the use of cautioning for possession of a knife. Knife crime is falling, but we will of course consider any further changes that will continue that welcome fall.

[Kerry McCarthy (Bristol East) (Lab)]

T2. Bristol city council and Barnardo’s have just launched a charter for the children of prisoners, which is intended to prevent young people in such a situation from enduring their own hidden sentence and to reduce the impact of a parent’s imprisonment on their educational attainment, emotional development and behaviour. What support is the Justice Secretary giving to such initiatives, and will he review how his Department can help the 1,300 children in Bristol and the close to 200,000 children in England and Wales in such a situation?

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

What the hon. Lady says is very interesting and we will look at the details. She is of course right that it has a huge impact on young people when one of their parents serves time in custody. There is a knock-on effect on the likelihood of those young people going on to commit crimes themselves. Shockingly, something like 60% of young men who have had a parent in custody go on to commit crimes themselves. She is right to make that link and we will look at what she has said.

[Andrew George (St Ives) (LD)]

T5. The forfeiture rule precludes a person who has been convicted of unlawfully killing another person from acquiring benefit in consequence of the killing. However, if the deceased person is a close family friend, a spouse or a close family member, their killer can use and abuse the estate until they are convicted. Will the Government consider addressing that issue? Will the Minister meet me to explore whether the rule can be improved in that respect?

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

My hon. Friend raises an interesting point. I would be more than happy to meet him to discuss the matter further.

[Jeremy Corbyn (Islington North) (Lab)]

T7. Will the Secretary of State confirm that neither G4S nor Serco will be considered for any further contracts with the Ministry of Justice while the fraud inquiries are continuing?

[Chris Grayling]

Mr Speaker, you will understand that, for legal reasons, I cannot discuss the outcome of a tendering process before the appropriate time. I will make the appropriate statements when the right moment arises.

[Sir Edward Leigh (Gainsborough) (Con)]

T6. Further to the Secretary of State’s earlier reply, will he confirm that this country is a proud signatory of the original European convention on human rights and a founder member of the Council of Europe? Indeed, for its first five decades, the convention was hardly a controversial issue. The problem is that the Human Rights Act 1998 has been used by the European Court of Human Rights in a proactive way to deal not with gross abuses of human rights like those that we saw in fascist Europe, but with the decisions of a democratically elected Parliament. Why do we not simply remain a member of the Council of Europe, keep the convention, repeal the 1998 Act and create our own Bill of Rights?

[Chris Grayling]

My hon. Friend makes a valid point. A leading official from the Court came to this House a few weeks ago and described this country as “best in class”. If a country that is best in class on human rights has reached a point where it has lost confidence in the Court, it is clear that something needs to be done. Under a Conservative Government, something will be done.

[Natascha Engel (North East Derbyshire) (Lab)]

T9. As well as the 13 wise Labour police and crime commissioners who have raised concerns about the Justice Secretary’s plans for probation, probation staff themselves have raised concerns and the internal risk assessment raises serious concerns about the dangerous and reckless plans. Given that, why is he signing contracts with private companies for up to 10 years, which will bind future Parliaments to pursue this privatisation whether it is successful or goes very badly wrong?

[Chris Grayling]

Let me remind the House what the Labour party opposes. It opposes extending supervision to under 12-month prisoners. It opposes a through the gate service. It opposes a system that will provide mentoring and support to people for 12 months after they leave prison. That is what the Opposition keep criticising. They could not do it because they could not find a way. We have found a way and we are going to do it.

[Mr David Ward (Bradford East) (LD)]

T8. I listened with interest to the question that the hon. Member for Colne Valley (Jason McCartney) asked about PPI claims. It is excellent news that the Competition Commission is taking action to address market failure in the car insurance industry. The Department for Business, Innovation and Skills, the Department for Transport and the Home Office are all making a contribution. Is there anything more that the Ministry of Justice can do?

[Mr Vara]

I thank my hon. Friend for that question. Given that the Competition Commission is undertaking that inquiry, it is probably best to listen to what it has to say, take note and see whether we can improve on its suggestions.

[Andy McDonald (Middlesbrough) (Lab)]

T10. Given that new entrants will potentially be coming into an immature private probation market, will the Secretary of State guarantee that low and medium- risk prisoners will be managed correctly when their risk level increases so that public safety is not compromised?

[Chris Grayling]

A crucial part of the reform plan and the contracts that we are putting together will be to require an element of co-location between the members of the national probation service who carry out risk assessments and the teams in the new providers to ensure that there is a simple process that happens in the same office so that risky offenders can be transferred to multi-agency supervision as quickly as necessary when the circumstance arises.

[Philip Davies (Shipley) (Con)]

According to Ministry of Justice figures, for every single category of offence, men are more likely than women to be sent to prison. Does the Secretary of State accept his own Department’s figures, or does he think they are wrong?

[Jeremy Wright]

I always try to accept my own Department’s figures, but I think my hon. Friend will accept that it is always in the minds of sentencers to try to avoid sentencing female offenders, in particular, to custody. As he will agree, however, that is sometimes unavoidable, which is why we need to provide the necessary places in the female custodial estate.

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

A few weeks ago I attended a public forum on domestic violence, where I was told that specialist domestic violence courts were being closed and that support for domestic violence victims to bring their case to court was being restricted. Why do the Government find it acceptable to deny the most vulnerable access to justice?

[Damian Green]

This Government have done more than any previous Government to give victims of domestic violence access to justice, and we are continuing to improve how such people, normally women, are treated in the operations of both the courts system and the police. As I said earlier, we have backed up that commitment with £40 million of ring-fenced money.

[Jackie Doyle-Price (Thurrock) (Con)]

Theft and vandalism against small businesses costs jobs. Will my right hon. Friend confirm that his changes to the victims code will mean that courts can take into account the economic consequence of crime from now on?

[Chris Grayling]

I can confirm exactly that, and I pay tribute to my hon. Friend and her constituents. Her work in this area is clear evidence that a Back Bencher bringing a genuine constituency case to the Government can make a real difference. She did that, she has made a difference and the world has now changed for such businesses, so the impact will be known.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

The Secretary of State indicated earlier that he was planning a consultation on mesothelioma victims. Does he accept that the review that his Department recently carried out simply did not fulfil the requirements of section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012?

[Mr Vara]

We had a consultation, and we have come up with the preliminary report. As was said earlier, we will come up with a fuller report in due course.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Will the Minister confirm that if an alternative location can be found for the Felmores approved premises in Basildon, his Department is still willing to relocate it?

[Jeremy Wright]

We will certainly look at that. May I say that it has been particularly helpful to receive submissions on the matter from my hon. Friend, who has been closely engaged in arguing on behalf of his constituents? Of course, if a suitable alternative venue can be found, we will co-operate with that.

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

Will the Secretary of State confirm that last Friday the prison capacity was running at 99.2%? Will he further confirm that over Christmas and into the new year, no police cells or custodial cells in courts will be used to supply the overfill?

[Chris Grayling]

The Opposition are desperate to find a crisis in our prisons. I can absolutely confirm that we are nowhere near the situation that they were in when they were in office, when they had to use police cells. We have plenty of capacity in our prison system and plenty of reserves that we can draw upon, and last week the prison population came down.

[Dr Matthew Offord (Hendon) (Con)]

Does the Secretary of State share my concern about the case of Beth Schlesinger and the unusual decision by an Austrian court to deprive her of custody of her two young children? Will he undertake to make representations to the Austrian Government on what many people consider a serious miscarriage of justice?

[Chris Grayling]

I am happy to discuss the case with my hon. Friend. I suspect that he, as constituency MP, may be better placed to make representations, but I am happy to discuss it with him.

[Robert Flello (Stoke-on-Trent South) (Lab)]

May I take the Secretary of State’s mind back to the war memorial at the former Fenton magistrates court? There seems to be a bit of confusion among some of my constituents who are fighting for it about the difference between a covenant and a clause in a sale contract. Will he put on record whether there will be a permanent covenant or a temporary contract clause?

[Mr Vara]

I have corresponded with the hon. Gentleman on the subject, and I can assure him that there will be a covenant to ensure that the monument is preserved, and not temporarily.

[Mr Philip Hollobone (Kettering) (Con)]

How many foreign national offenders are there in our prisons, and what steps are being taken to send them back to secure detention in their own countries?

[Jeremy Wright]

Well, this question is familiar to me. The answer is 10,789—I think that figure is heading in the right direction although there is a lot more to do. My hon. Friend is right to say that the Government’s clear intention is to return all the foreign national offenders we can back to custody in their own countries. That requires compulsory prisoner transfer agreements of the kind that we are negotiating and that Labour failed to negotiate.

[Dr Julian Huppert (Cambridge) (LD)]

rose—

[Mr Speaker]

I would not want the hon. Member for Cambridge (Dr Huppert) to feel either forgotten or ignored. We must hear the hon. Gentleman, with brevity.

[Dr Huppert]

For many years there has been an increase in private companies doing public sector work. Does the Secretary of State agree that that must be done in a transparent and accountable way, and will he extend the Freedom of Information Act to cover it?

[Chris Grayling]

I am very much of the view that the Freedom of Information Act should be extended to cover some of those provisions, and I am also in favour of an open-book arrangement with our contractors. I hope that when the hon. Gentleman looks at the list of organisations that have put their name forward for probation, which will be published shortly, he will see some powerful partnerships between the private and voluntary sector of the kind we all hope to see.

Petition

Tuesday 17th December 2013 Commons Chamber

Nic Dakin (Scunthorpe) (Lab)

- Hansard - - Excerpts

I would like to pay tribute to the hard work that Councillors Sandra Bainbridge and Tony Ellerby have done in leading this petition to defend an asset in their ward.

The petition states:

The Petition of residents of Scunthorpe,

Declares that the Petitioners are very disappointed by the ruling of the Conservative group of North Lincolnshire Council that they intend to close The Lilacs care home despite it being a manifesto promise of theirs to not do so.

The Petitioners therefore request that the House of Commons requests the Government to urge North Lincolnshire Council to rethink their decision and consider the impact that this closure will have on local residents.

And the Petitioners remain, etc.

[P001314]

Transport Infrastructure

Tuesday 17th December 2013 Commons Chamber

12:35

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

With permission, Mr Speaker, I would like to make a statement about the work of the Airports Commission. I will also give brief details of my written ministerial statement from this morning on Network Rail’s reclassification.

In September last year, Sir Howard Davies agreed to chair an independent Airports Commission. That commission was asked to examine how the UK’s status as a leading global aviation hub can be maintained, and this morning it published its interim report. I have deposited copies of that report in the Library, and it is available on the Airports Commission’s website. I know this issue is central not only to our nation’s economic future but to those who use or work in airports, or who are affected by the impact of airports on their lives.

The UK is a leader in aviation, with the third largest aviation network in the world. The sector contributes £18 billion per year to our economy, and employs around 220,000 workers directly and many more indirectly. We need airports that put our country at the front of global competition and allow people to get to where they want to go. We also want airports that are quieter and meet our carbon commitments. Today’s report is an important step towards both goals.

Many Members of the House and their constituents hold strong views about the right outcome, and it is right that we respect that. I will be writing to invite Members to a briefing session early in the new year, when Sir Howard will explain the contents of the commission’s report in more detail. I take this opportunity to thank Sir Howard and his fellow commissioners—Sir John Armitt, Professor Ricky Burdett, Vivienne Cox and Dame Julia King, and Geoff Muirhead who stood down in September—for the care they have taken. Their interim report is a detailed and professional piece of work based on careful research, and it merits the fullest consideration.

It may be helpful if I provide a brief overview of the key issues that have been addressed. First, the interim report provides the commission’s advice on the level of future airport capacity this country will require, which is based on new evidence about a rapidly changing industry. The commission has also consulted a wide range of people and organisations, and as a result it offers a clear recommendation that there is need for new runway capacity in the medium term to support continued competitiveness and prosperity. We will, of course, be looking carefully at that recommendation and at how best we can take decisions that are in the long-term economic interest of the country, while respecting the environment and quality of life. Sir Howard is also clear in his report that there is no crisis of capacity now. He does, however, conclude that we will need one additional runway in the south-east by 2030, and in all likelihood a second by 2050. The commission is clear that those recommendations can be consistent with the UK’s climate change obligations.

Secondly, the commission has announced which long-term options it intends to take forward in the second phase of its work. The first option is Gatwick Airport. The commission will consider a new runway spaced sufficiently south of the existing runway to permit fully independent operation. The second and third options are for Heathrow Airport. The Commission will consider, first, a new full-length runway to the north west of the existing airport, as proposed by Heathrow Airport Ltd, spaced sufficiently to permit fully independent operation; and secondly, an extension of the existing northern runway to the west, as proposed by Heathrow Hub Ltd, which would allow it to be operated as two separate runways, one for departures and one for arrivals.

Options for the construction of a new airport in the Thames estuary have not been shortlisted by the commission at this stage. However, the commission intends to carry out further analysis of the feasibility and impacts of a new airport on the Isle of Grain and aims to reach a decision in the second half of 2014 on whether this constitutes a credible option for further development and detailed study. If this option is then added to the shortlist, it will be subject to a process of appraisal and consultation similar to that proposed for other shortlisted options. In phase two of its work, the commission will undertake detailed analysis and consultation on each of these locations, in partnership with promoters. It will also, of course, work with local communities and listen to their views.

On the third key issue, the commission also recommends action to make better use of our existing aviation infrastructure, particularly over the next five years. I welcome this fresh thinking, much of which is aimed at industry as much as the Government, about how we can make improvements to our already strong aviation sector. The commission has produced some interesting ideas including: the better use of airspace to improve resilience at London airports; trials at Heathrow airport to smooth the early-morning arrival schedule to minimise stacking and delays and to provide more predictable respite for local communities; and an independent aviation noise authority to improve decision making on noise issues. These are important recommendations that merit a response in advance of decisions on longer-term capacity. The Government will consider the short-term recommendations in detail and respond to them by the spring of next year. Finally, the commission proposes improvements to surface access to airports. The Government set out their initial response to these recommendations in their national infrastructure plan, published earlier this month.

I would also like to set out how we intend to address the concerns of people who live around sites subject to further consideration by the commission. Now that the commission’s report has been published, we will be working closely with promoters to consider the form and scale of any appropriate relief that might be put in place, and we will set out our thinking on this important issue in our response to the interim report.

I know that colleagues on both sides of the House will have their views on the content of the commission’s interim report, and in particular on the choices made in shortlisting those options. My principal concern as Secretary of State for Transport is to protect the integrity and independence of the commission process through to the final report, which we expect to be delivered by summer 2015. The Government will not therefore be commenting, either today or in responding to the interim report, on the respective merits of the options that have and have not been shortlisted. Given the vital importance of aviation to our nation, I urge colleagues to engage positively with the work of the commission as it moves into the next, equally important phase of its work. The variety of views in the House and beyond about the right way forward is proof that an independent commission, rather than ill thought out actions that might suggest other alternatives, is the right way forward. The commission process offers us the best chance we have to get this decision right.

I turn briefly to a second issue. Hon. Members will also be aware that today the Office for National Statistics announced that from 1 September 2014 Network Rail will be reclassified and appear on the Government’s balance sheet. As the Treasury and the Office for Budget Responsibility noted when my right hon. Friend the Chancellor made his autumn statement, this includes the company’s net debt of some £30 billion. I laid a written ministerial statement this morning, and I published a memorandum of understanding with Network Rail on my Department’s website and placed copies in the Libraries of both Houses. The MOU shows how my Department will work with Network Rail until its reclassification in September 2014. This independent, statistical decision will not affect Network Rail’s investment programmes, plans for High Speed 2 or the franchising programme.

The Government will continue to deliver vital improvements to all modes of transport so that transport can remain the engine for economic growth that it is. I commend this statement to the House.

12:45

[Mary Creagh (Wakefield) (Lab)]

I thank the Secretary of State for giving me notice and advance sight of his statement. I welcome the interim report from Sir Howard Davies. This is important work, and we will scrutinise it closely. It is vital that we take decisions about our airport capacity, including in the south-east, as it is important for Britain’s jobs, growth and competitiveness. Britain’s status as a global centre of aviation should be maintained.

It is good to see that the original Heathrow proposal for a third runway to the north of the current airport, which we were sceptical about, has been taken off the table. We also welcome the fact that this work takes into account our climate change obligations. As the commission now looks at specific proposals in more detail, we urge it to take into account the need to minimise the impact of increased capacity on local people and the environment. We are glad that the Government accepted our proposal to establish the commission, and we will look carefully at the report. The commission must be allowed to get on and complete its work on the long-term future of UK aviation.

Will the Secretary of State explain the exact status of the plans for an airport in the Thames estuary? I also want to ask him about the commission’s short-term recommendations. Will he introduce legislation in the Queen’s Speech in May to set up an independent aviation noise authority? If so, which Bill will contain the proposals? Can he say more about the optimisation strategy to improve the efficiency of UK airports in the short term? Communities that are currently affected by aviation noise want to know the Secretary of State’s position on additional night flights and on compensation for communities. Will he draw up plans to ensure that EU limits on air pollutants from existing aviation are met, as recommended by the Transport Select Committee?

On the reclassification of Network Rail, given that the Government already guarantee Network Rail’s debt, will its cost of borrowing now fall as a result of today’s announcement? Will the Government’s fiscal rules be changed to take account of the changes to debt and borrowing? Will today’s change affect the deficit? Will the Government and the Office for Budget Responsibility continue to publish borrowing and debt figures excluding these changes, as they have done with the transfer of the Royal Mail pension scheme, so that the underlying changes in borrowing and debt are transparent? Will the Government be taking any additional powers to direct Network Rail’s borrowing now that it will be on the Government’s books, or will the reclassification mean that Network Rail’s borrowing and debt have to be offset by further cuts and tax rises elsewhere? Could the change mean less money being available to invest in the railways? Can the Secretary of State guarantee that passengers will not face higher fares to pay for the debt reclassification? Does he anticipate any structural changes to Network Rail that would take the debt off balance sheet in the future?

The Secretary of State’s memorandum of understanding announced the appointment of an accounting officer to satisfy Parliament’s accounting and budgeting process. When will that person be in post? What will the audit arrangements be? When can we expect decisions from the Secretary of State on whether to appoint a special director to Network Rail, and on whether he will change the framework for Network Rail executives’ pay and bonuses? How many of them are currently paid more than the Prime Minister? Will he now personally sign off on their pay and bonuses? Can we expect greater transparency in the way in which Network rail operates? Who will be accountable for Network Rail’s performance? Will he tell us who is now responsible for safety on the railways? Is it Network Rail executives, Network Rail members, the permanent secretary or the Secretary of State himself?

[Mr McLoughlin]

I thank the hon. Lady for her—I am not quite sure how many—questions. A number were on Network Rail, on which I may respond a little later. It is always amazing to hear the way in which the hon. Lady tries to rewrite history. I notice today that she has said in a press release that it is good to see that the original Heathrow proposals for a third runway

“of which we were sceptical”

have been taken off the table. I cannot help but go back to the manifesto on which the hon. Lady fought the last general election; a manifesto written, I think, by the current Leader of the Opposition. The manifesto says:

“We support a third runway at Heathrow, subject to strict conditions on environmental impact and flight numbers”.

Something about which they are now sceptical was actually a core part of their transport manifesto at the last general election. I know that there is a rewriting of history going on but when something appears in the manifesto, it is usual to try to stick to it.

On the welcome for the setting up of Sir Howard Davies’ commission, I do not remember the calls for it initially; I think that the idea was put in place by my predecessor and was announced by me when I became Secretary of State for Transport. I am glad that the hon. Lady welcomes the report because this is a big infrastructure issue that takes time to develop. It takes time to work through all the proposals and it is right that we try, if possible, to get as much consensus as we can across parties. One of the commissioners did a report for Labour on infrastructure spending that was published not so long ago. I welcome the hon. Lady’s points on that.

On the Thames estuary proposals—the Isle of Grain— Sir Howard has said this morning in interviews and in the report that he would hope to have a view on that by the middle of next year and we will then know on which route we are going.

With the Leader of the House and the Chief Whip here, I am not at this stage able to announce what may or may not be in a future Queen’s speech. I did say that I will respond by the spring to some of the points that Sir Howard has made in the report and I shall stick by that commitment.

The hon. Lady asked me a number of questions about Network Rail. There will be more time for us to debate this issue as the change comes into operation from September 2014. But as I am here today making the statement, and as I have made a statement on the Office for National Statistics recommendations, which came through only this morning, I will be happy to deal in more detail with specific points that she raised on a number of issues.

One of the things that the Government and I are keen on is that over the next four years in the CP5 phase of Network Rail’s expenditure, it will invest £38 billion in the railways, far more than it has been investing for some years. That certainly is under no threat whatsoever. We will still see record levels of investment taking place. Some of the other questions the hon. Lady asked are on issues that the hon. Lady I am considering.

[Mr Simon Burns (Chelmsford) (Con)]

Will my right hon. Friend accept that too many Governments of all political parties have fiddled around on the question of airport capacity for too long, which is why the commission is to be welcomed so much? But does he agree that when the final recommendation is made, we need to seek political consensus across the chamber to be able to move forward as quickly as possible? How does he think that consensus can be achieved?

[Mr McLoughlin]

There may be a consensus, but there will always be a certain number of people who are against a consensus. I am not necessarily sure that one gets total consensus on any infrastructure project. It often depends on how it impacts on individual constituents, which is something we have to take into account. We should not run away from that. I hope that, as a result of the detailed work that is being done by the commission and the fact that it is being as open as possible in its dealings with everybody, it will be seen that it is doing a proper and constructive job and will enjoy widespread confidence. Today has been a good example of that, in the way that the shadow Secretary of State has welcomed the initial findings of the report.

[John McDonnell (Hayes and Harlington) (Lab)]

At a minimum, according to the report, 2,000 of my constituents will lose their homes, which will be demolished. That could rise to perhaps 10,000 because of homes being rendered unliveable by noise and air pollution. Two primary schools will be demolished, with perhaps two more being rendered unfit to teach in. The threat returns that we may have to dig up our relatives buried in the local cemetery. Where will my constituents find a home? Where will my constituents send their children to school? Where will we bury our dead? Does he appreciate the sense of betrayal that is felt in my community?

[Mr McLoughlin]

I know that the hon. Gentleman has spoken very sincerely about this on behalf of his constituents. However, he is prejudging the outcome of the report. The report has not said which option it has gone for. It has come forward with three shortlisted options and another option that will be looked at in the longer term. This is not a fait accompli. The commission’s work will continue over the next 18 months.

[Sir Alan Haselhurst (Saffron Walden) (Con)]

Bearing in mind that the recommendations of the Roskill commission on airport capacity were rejected by successive Governments, does my right hon. Friend accept that until the first concrete, and lots of it, is poured, uncertainty will not be removed from many of the locations that are mentioned by Sir Howard Davies today? To echo the sentiment of my right hon. Friend the Member for Chelmsford (Mr Burns), will my right hon. Friend work extremely hard to get bipartisan acceptance of the final recommendations?

[Mr McLoughlin]

Not only will I try to get bipartisan agreement, I will try to get tripartisan agreement. I shall not just look at any two parties. I hope that that is the way in which we can move forward. My right hon. Friend has huge experience of this issue and has often made the case for protecting Stansted airport.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

The Davies commission report includes a shortlist that has on it the recommendation of the Transport Committee for expanding Heathrow, and confirms the importance of connecting the economy of this country with the emerging economies in India, Brazil and China. Does the Secretary of State agree that taking no action means that this country continues to lose out? When does he think the decision should be made?

[Mr McLoughlin]

I am sorry; I missed the last bit of the hon. Lady’s question. [Hon. Members: “When do you think the decision should be made?”] I know that the Transport Committee will be seeing Sir Howard at one of its meetings in the early part of January. I agree with the hon. Lady; we will be responding early next year to the recommendations on which Sir Howard has asked us to come to a view.

[Dr Julian Huppert (Cambridge) (LD)]

The Government was absolutely right to scrap Labour’s plans for a third runway at Heathrow. I very much welcomed the Prime Minister’s statement:

“No ifs. No buts. No third runway”.

I assume the Prime Minister meant it. What assurance can the Secretary of State provide that nothing will be done to breach the Committee on Climate Change recommendations?

[Mr McLoughlin]

It is important that everything that Sir Howard is looking at is contained within our climate change obligations. Aircraft are changing; their emissions are changing. What is very unenvironmentally friendly is stacking aircraft above London that are pumping out emissions into the atmosphere.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

The Commission appears to be recommending another runway at Heathrow, which is exactly where we were 10 years ago. The proposal on Gatwick appears to be “in addition to” rather than “instead of” the proposal at Heathrow. I notice that the Secretary of State studiously avoided expressing an opinion and I understand that he wants to await the outcome of the commission. However, could he tell us whether or not the Government think that the commission is on the right track? Clearly if it is not, it would be better to tell it now, rather than wait until 2015. I join everyone in this House who believes that, 50 years after the Government first looked at what should happen to London airport, we need to make a decision, and we should do so as soon as possible. If we do not, we will fall behind the rest of the world.

[Mr McLoughlin]

I am always slightly cautious in the answers I give to the right hon. Gentleman, who has the distinguished record of being one of the longest-serving Transport Secretaries of recent times. I would point out, however, that when he was Secretary of State and the 2003 White Paper was published, there was only one mention of Dubai. Things have changed hugely in aviation over the last few years, which is why it was right to set up this commission. The right hon. Gentleman was wrong on his original assumption: Gatwick is an alternative—it is not necessarily a case of Heathrow and nothing else—as is the Thames estuary.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

The commission report places great importance on the success of all the options it is still looking at through effective and integrated surface transport links. So much so that the commission, which I understand is carrying out, in the Secretary of State’s own words, work that merits the fullest consideration, now intends to examine the HS2 line and the possible HS2 spur to Heathrow. Surely the Government should now wait until this work is completed and the final decision on airport capacity is made before pressing ahead with a high-risk £50 billion project that might end up being built in quite the wrong place.

[Mr McLoughlin]

I refer my right hon. Friend to page 202 of the report. I thought that she would raise this issue, so I refer her to paragraph 6.94:

“A high speed rail spur from the main HS2 line to the airport is not included in the cost estimate, but the Commission will consider the case for this as part of its review of surface access options. It will not, however, consider the case for any re-routing of the main HS2 line.”

I believe that it is a vital part of the national infrastructure of the United Kingdom.

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

Is the Secretary of State aware that some of the UK’s leading companies have cut their flights by an average of 38% over the past three years, and does he not recognise that his reckless enthusiasm for new runways will not only cause huge harm for the local communities involved, but shows this Government lagging far behind progressive companies that understand the urgency of climate change and are reducing their number of flights on economic as well as environmental grounds?

[Mr McLoughlin]

The hon. Lady needs to look at the passenger numbers through the terminals. At Heathrow in 1992, for example, there were 45 million in comparison with 70 million in 2012. At Gatwick in 1992, passenger numbers were 19.9 million, but 34.2 million in 2012. People still want to travel. I am sure that the hon. Lady has holidays only in the United Kingdom and never travels abroad, but a lot of people like the option to go abroad.

[Sir Roger Gale (North Thanet) (Con)]

Sir Howard reminds us that Heathrow is 100% full and Gatwick is 85% full. A new build of any kind anywhere is going to take an absolute minimum of 10 years and probably longer. We are losing business to Schiphol, Charles de Gaulle and Dubai now. We have to get to chapter five, paragraph 5.91 on page 163 before we find a paragraph that mentions other airports, and it is dismissive. Manston airport in Kent has the capacity—now, as we speak—to take business from Gatwick and Heathrow to release the capacity we need and to build in the time we need for the right decisions to be taken in the longer term. Will my right hon. Friend please look at it seriously?

[Mr McLoughlin]

The commission has looked at a number of options. I draw my hon. Friend’s attention to the conclusions on page 102, where it is made clear that the UK does not face an immediate capacity crisis. Sir Howard and the whole commission are clear that we need to take this decision so that we have the option of a new runway by 2030. That is exactly what we will be doing.

[Mr Andy Slaughter (Hammersmith) (Lab)]

For my constituents, today’s report is proof that the Heathrow lobby’s hold over the Conservative party never went away. The hands of the Prime Minister and the Chancellor are all over this report. One third of those seriously affected by airport noise in Europe live around Heathrow. What is the Secretary of State offering to the 2 million people in west London other than a continued deterioration in their quality of life by the expansion of Heathrow.

[Mr McLoughlin]

I remind the hon. Gentleman that he fought the election on the basis of a manifesto saying that there would be a third runway at Heathrow airport. Before he gets on his high horse about what I am doing, perhaps he should consider what that manifesto said. As I have said, the simple fact is that we need to do everything we can to alleviate noise problems; we need to look carefully at the eventual recommendations of the final report. We do not yet have the final recommendations; the time to conduct this type of debate is when we get them.

[Angie Bray (Ealing Central and Acton) (Con)]

My first impression is “so far, so depressing”. I know that this is only an interim report, but my constituents will note that Heathrow is yet again emerging as the favoured option. I should also say that the two options for Heathrow that are flagged up in the report will both be particularly bad news for my constituents in Ealing, Chiswick and Acton. Let me ask my right hon. Friend: what on earth more do my constituents have to do to get their message across that any expansion of the noise, pollution and congestion that goes with Heathrow and blights the whole of west London would simply be intolerable?

[Mr McLoughlin]

I am grateful to my hon. Friend, and I understand the passion that she and other Members feel about this issue. It is right for us to try to look at and address these issues. We have to see what is happening with aviation noise and how it should be judged. That is why I am very interested in some of the commission’s interim proposals. It will take longer to take a view on that, but I hope to be able to come back in the spring to announce the way forward. This is a very difficult job because these issues have been around for some time. It is right to conduct a proper investigation and, I hope, come up with the right alternative at the end of the day.

[Graham Stringer (Blackley and Broughton) (Lab)]

As Government after Government have ducked this issue, our main European competitors have built many runways, while our new competitors in the middle east have built even more of them. Does the Secretary of State agree that the only way to break this logjam is for both the major political parties represented in this Chamber to give a commitment to accept the conclusions of the Davies report?

[Mr McLoughlin]

I agree with the hon. Gentleman, who served for a long time on the Transport Select Committee. I certainly agree with him that it would be good if we could reach a consensus on this matter. Whatever option we come up with will impact on people’s lives and communities. We need to try to do everything we can to address and relieve it, but we also need to look at the options for the longer-term future offered by quieter aeroplanes, for example. An overall consensus would indeed be the best way to move forward on big infrastructure projects.

[Mr Crispin Blunt (Reigate) (Con)]

My right hon. Friend has repeatedly used the phrase “longer term” both in his statement and in replying to questions. The exam question to the commission was how the UK’s status as a leading global aviation hub could be maintained. By any standards on a long-term basis, the commission has failed. Its principal options simply cannot sustain the UK’s position as a long-term hub. The only hope remains the Isle of Grain option. When it comes to consideration of Gatwick, for example, someone will need to explain that doing up Gatwick station will not deal with the capacity issue on the Brighton main line or with the road issues. Someone will also have to explain where a town the size of Crawley is going to be placed.

[Mr McLoughlin]

My hon. Friend has just dismissed two options, but no doubt other hon. Members who may be called to speak a little later will dismiss the third option, which my hon. Friend refers to as the “only” option available. That is why we set up a commission—so that we could base our final decisions on proper researched evidence.

[Jack Dromey (Birmingham, Erdington) (Lab)]

The chief executive of Birmingham airport, Paul Kehoe, has described the Davies report today as focusing disproportionately on the south-east and entrenching the dominance of the south-east economy to the detriment of growth in the rest of the UK. The Birmingham chamber of commerce has said the same thing. Does the Secretary of State recognise that, in circumstances where Birmingham wants the expansion of its airport, which will be key to economic growth in the midlands, Britain simply cannot succeed through London and the south-east alone?

[Mr McLoughlin]

I am a passionate believer in the role of airports outside London. The first time I appeared before the Select Committee, I said that we should stop describing airports such as Birmingham and Manchester as regional airports, because they are major international airports in their own right. I want to see those airports—along with East Midlands airport—serving their local communities. On page 195 of its report, the commission says that it does not see

“a strong case for expansion at Birmingham”

at the moment, but that may well change by 2050. Moreover, being served directly by HS2 will give the airport a great opportunity for the future.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Will there be an independent assessment of the impact of any proposals on the carbon emission targets of the Committee on Climate Change?

[Mr McLoughlin]

The commission is taking all our carbon reduction obligations into account, as I would expect.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

At the last general election, both coalition parties opposed an increase in runway capacity in the south-east. I think it is clear that the Conservatives have now realised that that was the wrong decision and have changed their minds, but the Liberal Democrats are still in denial. Most of us want the Davies commission to report earlier than the summer of 2015. Who set the deadline—the Secretary of State, Sir Howard, or the Liberal Democrats?

[Mr McLoughlin]

I note that the hon. Gentleman is now speaking from the Back Benches about a subject on which he used to speak from the Front Bench. When he was on the Front Bench, I challenged him to tell us, if his was such an easy solution, what proposals he would support. He was unable to answer that question from the Front Bench, but perhaps he will be able to do so from his more privileged position on the Back Benches.

[Zac Goldsmith (Richmond Park) (Con)]

I note the answer that the Secretary of State has just given, but does he not accept that no serious political party can go into the next general election without a clear opinion on an issue that matters to so many people and so many businesses in this country? That is simply not a credible position for any party to have.

[Mr McLoughlin]

I know my hon. Friend’s views on this matter, and I know that he fights passionately on behalf of his constituents. However, I think it right for us to try to obtain an answer that is, as far as possible, based on good evidence and good research. That is what the commission is doing, and it will report by the summer of 2015.

[Phil Wilson (Sedgefield) (Lab)]

According to the Davies report, London continues to accommodate the largest overseas destination market in the world. What more can be done to enable regional airports such as Durham Tees Valley airport, which is in my constituency, to have access to that market by ensuring that it is given Heathrow slots sooner rather than later? May I also ask the Secretary of State to discuss with his colleagues in the Treasury the possibility of varying the levels of air passenger duty around the country, which would help all United Kingdom airports?

[Mr McLoughlin]

I think that the biggest increases in APD occurred under the last Government rather than this one. At a time when we are trying to reduce the deficit, it is always easy to find ways of making cuts, but we must then find a replacement for that certain income. As for the hon. Gentleman’s question about regional airports, I remind him of what I said a few moments ago about their importance to local communities.

[Jason McCartney (Colne Valley) (Con)]

Does my right hon. Friend agree that the provision of more long-haul services from, for instance, Manchester airport, and Leeds Bradford International airport—which my constituents use—to China, India and the other emerging markets would help to ease all the congestion at London’s airports? Could that not be part of the solution?

[Mr McLoughlin]

It might play a role in easing some of the congestion, but the overall evidence shows that there is continuing growth in aviation traffic, and the commission is giving that careful consideration.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

Will the Secretary of State consider seriously the issue of connectivity throughout the United Kingdom, particularly in relation to Scotland? Connections to the south-east are extremely important, and if we do not get a move on, we shall be in danger of strangling growth throughout the UK.

[Mr McLoughlin]

I understand exactly where the hon. Lady is coming from. Concern has been expressed in a number of regions about the accessibility of London. However, people could consider using other airports, such as Luton and Stansted.

[Sir Edward Leigh (Gainsborough) (Con)]

Do the Government accept the commission’s contention that a new runway needs to be built in the south-east before, or by, 2030?

[Mr McLoughlin]

I believe that what the commission has said is important, but we must await its final proposals and establish whether we can work to that deadline.

[Jim Shannon (Strangford) (DUP)]

Let me first thank the Secretary of State for his statement. He described the United Kingdom as an international aviation hub. What discussions has he had with representatives of Belfast City, Belfast International and City of Derry airports in Northern Ireland to ensure that the viable transport links to which he referred can be solidified and all regions can benefit from them?

[Mr McLoughlin]

Having responded to questions from the Northern Ireland Affairs Committee, I am well aware of the importance to Northern Ireland of its connections with London. I have had no direct conversations with the Northern Ireland Assembly, but I have of course listened to what colleagues in the House of Commons have had to say.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I commend the Howard Davies commission for recognising that the Isle of Grain cannot be lightly dismissed and merits further consideration. However, he said this morning, when comparing it with the other proposals, that the Thames estuary proposal was

“a much more extensive proposition for shifting the economic geography of the south-east of England by creating a new pole of economic development.”

Is that within the remit of the commission?

[Mr McLoughlin]

I should make it clear that by “he said”, my hon. Friend meant what Sir Howard Davies had said, rather than any words that I might have said.

The commission must look at the whole proposal, and it has said that it will do so, because it is completely different from the proposals that certain airports have been making themselves. The matter will be addressed in the report which Sir Howard has said he hopes to produce by next summer.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I am not sure that I derive much comfort from the information that the expansion of Birmingham airport may be decided in 2050, by which time I shall be 95 years old. May I suggest something that the Secretary of State could do now? He could compel Network Rail to come up with a strategy to improve surface access to airports, so that those such as Birmingham which have spare capacity can be properly connected?

[Mr McLoughlin]

I am not sure that I wish to comment on the first part of the hon. Lady’s question—it might not be the thing to do from the Dispatch Box—but I will say that I know Birmingham airport very well, having used it on a number of occasions. It is not badly connected at present, but there is room for improvements, and I naturally want to think about ways of making those improvements. I believe that the direct connection between HS2 and Birmingham airport will give it the potential to develop in that way.

[Mr Speaker]

Order. The Chair must be very careful when it comes to these matters, but I must say that I found the age-related facet of the hon. Lady’s question utterly implausible.

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

A suppressed Cabinet Office report on HS2 raises major concerns about its risky construction timetable, its poor management and the insufficient work done on costs, and also questions the capability of those involved in the delivery of the project. Will my right hon. Friend tell us whether the Government are prepared to publish the report by the Major Projects Authority?

[Mr McLoughlin]

I do not think that there is any shortage of reports on HS2, be they from the National Audit Office, from the Transport Committee, or in the form of evidence given to the Treasury Committee. There is a huge number of such reports that people can consult rather than consulting a report that is more than two years old.

[Ian Austin (Dudley North) (Lab)]

Birmingham airport is right in the middle of the country and right next to the major motorways of the United Kingdom, and, with HS2, it will be within easy reach of the vast majority of the people who live in Britain. People living in the west midlands will be utterly staggered to learn that they must wait until 2050 for any consideration to be given to its expansion.

[Mr McLoughlin]

It is not a case of waiting until 2050 for any consideration of that airport’s expansion; what I said, and what the report said, is that there will be a need for a new runway in the south-east by 2030 and then probably for another runway in 2050, and at that stage that airport could be one of the considerations. But a huge amount is still going on at Birmingham airport. I am not going to talk that airport down now, and I do not want anyone else to do so. It has extended its runway and has a lot more availability, and I want it to be able to prosper, along the lines that other airports, such as Manchester, have done.

[Michael Fabricant (Lichfield) (Con)]

I very much agree with the comments made by the Chairman of the Transport Committee that the current situation is an option that cannot go on for much longer, but I also agree with comments made by Opposition Members about the connectivity with Birmingham. Given that senior engineers in HS2 doubt the efficiency, cost and environmental suitability of the route, would it not make sense to link HS2 directly not only from Birmingham to central London, but to whichever airport is chosen to have that third runway?

[Mr McLoughlin]

I am not sure which people in HS2 my hon. Friend is referring to when he says that they are opposed to the current route. We are committed to that route and have deposited the Bill before the House.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

There is a widespread feeling that the airports issue is symptomatic of this country’s poor approach to long-term infrastructure planning. Clearly there will be winners and losers whichever decision is made, but the truth is that a decision will still need to be made. If we need two runways by 2050, will the Government make a provisional decision on both, thus finally bringing some long-term certainty to this issue?

[Mr McLoughlin]

I am not sure that we will make a decision on both of them in one go. As I say, the report is very clear: we will need an additional runway by 2030 and, in all likelihood, another by 2050. A number of things will have changed by then, so it would be wrong at this stage to start saying exactly what the runway beyond the next runway will be, because the infrastructure I have talked about, such as HS2, will be in place and other airports will come much more into play.

[Karen Lumley (Redditch) (Con)]

The Government are determined to build HS2, rebalance our economy and make Birmingham airport 38 minutes from London Euston. Does the Secretary of State share my concern and disappointment today that Birmingham airport was not included in the initial recommendations?

[Mr McLoughlin]

What I am seeing, and what I see nearly everywhere I go, is a strong lobbying exercise, or representation exercise, on behalf of Birmingham airport, and rightly so because it is a very good airport—I like it and use it regularly. What Birmingham has already done, through its expansion and extending the runway, means that it will be able to offer lots more services to the people of the west midlands, and I very much hope to take advantage of that.

[Chris Bryant (Rhondda) (Lab)]

Will most ordinary people listening to this debate not conclude that a politician who cannot make a decision is no more use than a chocolate teapot? If we are going to keep on procrastinating and if the Government cannot even decide that Boris island is not going to float, they have run out of steam.

[Mr McLoughlin]

Coming from somebody who was 13 years in a Government who refused to make—[Interruption.] The hon. Gentleman was 13 years in Parliament supporting a Government—avidly, on every occasion—who continually failed to take any decisions about major infrastructure projects, yet he now complains that this Government, who have made more progress on the railways and on aviation, are somehow slacking in making their decision.

[Mr Rob Wilson (Reading East) (Con)]

Heathrow is crucial to the continued economic vibrancy of towns such as Reading and to foreign inward investment into the Thames Valley region. Airport capacity does need to expand, but so, too, does surface access to Heathrow. Will my right hon. Friend ensure that the Heathrow rail link to Reading and from the west is immediately brought forward from the 2021 timeline currently in progress?

[Mr McLoughlin]

My hon. Friend is a very big advocate of more infrastructure investment in Reading, where we are currently spending some £880 million on a major refurbishment of Reading station, which will greatly enhance the capabilities for surface access to Reading. However, I note his early applications for even more investment in his area.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

One issue that merits greater consideration than the half page given by the commission is the proposal for a temporary exemption from air passenger duty for new long-haul routes from airports outside London. Such an exemption would help airports such as Manchester to develop new routes to China. Will the Secretary of State make sure that this idea stays on the table?

[Mr McLoughlin]

The right hon. Gentleman, by his mentioning the proposal, has just done exactly that.

[Mrs Caroline Spelman (Meriden) (Con)]

The Davies report states that expansion at Birmingham airport would have a “relatively high” noise impact compared with the alternatives, but ironically a second runway would have taken the noise further way from areas of habitation. Will the Secretary of State look also at the road surface access to the existing extended runway, as that can currently be a source of gridlock at a very important transport node?

[Mr McLoughlin]

I will of course look at that important issue, as my right hon. Friend asks. Her constituency is very much affected by the entire road network around that area, and by the rail and airport expansion, so I will look seriously at the point she raises.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

On the Network Rail statement, given the way in which responsibilities for rail services in Scotland are divided between the Scottish and UK Governments, how will responsibility for the net debt of £30 billion or its servicing be divided between those Governments?

[Mr McLoughlin]

I will write to the hon. Gentleman about that.

[Sir John Randall (Uxbridge and South Ruislip) (Con)]

I congratulate my right hon. Friend on coming to the House to make a statement on an interim report. I am delighted to hear him confirm that the Government have no set position on this matter, but I am sure he will be reassured to know that people in Hillingdon, including my honourable comrade, the hon. Member for Hayes and Harlington (John McDonnell), will be dusting off the campaign material and once again proving that any expansion at Heathrow is politically and environmentally undeliverable.

[Mr McLoughlin]

My right hon. Friend and the hon. Gentleman will be a formidable team in their campaigning approach to this matter. I know they will do so, but I also urge them to submit their views to the commission as it moves to its next phase in preparing its final report.

[Ian Lucas (Wrexham) (Lab)]

The Aerospace Growth Partnership, with strong environmental safeguards, is supported by all three main parties—even the Liberal Democrats have signed up. My hon. Friend the Member for Blackley and Broughton (Graham Stringer) made the good suggestion that all three parties should commit to the outcome reached by the Davies inquiry. Will the Secretary of State explore that with all main parties?

[Mr McLoughlin]

Yes.

[Lorely Burt (Solihull) (LD)]

I thought that Sir Howard’s remit was to examine the need for aviation provision for the whole UK economy, so does my right hon. Friend share my disappointment that he seems focused on the self-fulfilling prophecy that growth feeds further demand in the south-east? Does my right hon. Friend share my wish for further consideration to be given to growth in resurgent economies, and, thus, to Birmingham international airport, for the midlands, and to other regional airports and economies?

[Mr McLoughlin]

The commission has had to work on the basis of what is actually happening in aviation: Heathrow has 99% usage and Gatwick is also filling up, but other airports in London are not as busy at the moment. So it is right that the commission has done the overall work and the proper work, and has made an interim suggestion. The Davies commission does also talk about the importance of regional airports, and nobody is denying that; I would much prefer more services to be available for people so that they would not necessarily have to travel into London to use an airport of demand. However, the availability of services does attract a lot of passengers to airports in the south-east.

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

New airport capacity must go hand in hand with our efforts to reduce CO₂ omissions from aviation, as the Secretary of State mentioned in his statement. Given that his Government abandoned the UK’s target to be at or below 2005 levels by 2050, what guarantees can he give to the House to ensure that those considerations are included in the final plans?

[Mr McLoughlin]

If the hon. Gentleman takes time to reflect and to look at the various appointments to the commission, he will see that we have taken incredibly seriously the environment and our environmental commitments.

[Martin Vickers (Cleethorpes) (Con)]

I invite my right hon. Friend to expand a little on the role of regional airports. Will he give an assurance that the Government will recognise the important role that smaller regional airports can play, not just in easing the burden on traffic to the south-east but in providing economic growth to areas such as the Humber region?

[Mr McLoughlin]

I cannot add very much to what I have said already. I agree with my hon. Friend, but it is difficult for some regional airports to attract new services. That is one of the big changes that we have seen as far as the aviation industry is concerned, and I am keen to do anything I can to encourage those regional airports to be able to provide more services.

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

In that regard, Birmingham could cater for two thirds of the projected passenger increase from building a new runway at Heathrow at less than 2% of the £6 billion cost, without the need to demolish schools, villages or homes. Why are those considerations not worthy to be looked at now?

[Mr McLoughlin]

Those considerations were looked at by the commission, and there is someone on the commission who works in Birmingham.

[Several hon. Members]

rose—

[Mr Speaker]

The time has come to call a patient dame. Dame Angela Watkinson.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

Does my right hon. Friend agree that increased airport capacity and quieter aircraft will not just benefit the UK economy but improve the quality of life of my constituents in Hornchurch and Upminster and those in the rest of Greater London by reducing stacking of aircraft, which currently have nowhere to land?

[Mr McLoughlin]

My hon. Friend is absolutely right. One thing that causes too much pollution is stacking aircraft. Through better traffic management and longer traffic management of aircraft, a lot has been done to improve the flows into airports so that there is orderly access and entry into Heathrow, but more work can be done on that. That is one of the interim recommendations of the commission.

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

In his statement, the Secretary of State rightly described the increase in airport capacity in the south-east as the “engine for growth”. The same applies in south Wales. Will he directly engage with the Welsh Government on how Cardiff airport can develop its services so that it can play its part in both UK and regional growth?

[Mr McLoughlin]

That matter is now in the domain of the Welsh Assembly. I am due to meet its Transport Minister, who will no doubt want to discuss the issue, some time in the new year.

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

Can the Mayor of London expect any Government money to promote his imaginative proposal, and if so, could we also have some in Medway? Given that the page numbers in the Secretary of State’s report are different from those I got from the commission, can he shed any light on the late change in the report to include a Grain option and tell us whether meetings with the Prime Minister and the Chancellor last week played any part in that?

[Mr McLoughlin]

It is true that my report did not come off a PDF document, but I am not sure whether the page numbers differ from those in the report received by my hon. Friend. How the Mayor of London spends the considerable amounts of money that he has at his disposal is a matter for him.

[Jessica Lee (Erewash) (Con)]

Does my right hon. Friend agree that within these important considerations about aviation expansion fits the complementary issue of supporting nationwide infrastructure? With that in mind, will he assure the House that Ilkeston train station is on target for opening at the end of 2014? Such news will perhaps bring a bit of extra festive cheer to the good people of Erewash.

[Mr McLoughlin]

I assure my hon. Friend that everything I have said about Network Rail and its reclassification will have no impact on the courageous campaign that she has mounted to get a railway station open in Ilkeston by next December. When I was in Ilkeston recently, it was suggested to me that it should be called not Ilkeston station but Jessica’s junction.

[James Morris (Halesowen and Rowley Regis) (Con)]

I welcome the recommendation in the Davies commission on the use of existing airport capacity, particularly the reiteration of the support for Birmingham gateway. Does the Secretary of State share my disappointment that the commission has not been bolder in looking at Birmingham airport as a long-term solution? If we are considering options in London and the south-east, would it not have made more sense to have a credible option outside the area, because it could have a transformative effect on the west midlands economy?

[Mr McLoughlin]

I am pleased to see the Birmingham lobbying exercise spread across the whole of the west midlands. There is clearly a united front on the matter. I know that Sir Howard will look at the exchanges today, but there is nothing to stop Birmingham airport expanding; indeed, I encourage that. At the moment, the airport is not utilised to its full capabilities. Many more services can be provided from Birmingham now that the extension of the airport has been completed.

[Stuart Andrew (Pudsey) (Con)]

The aviation White Paper in 2003 stated that expansion of Leeds Bradford airport would need surface access improvements, yet we have seen very few. In this report, chapter 5 makes specific reference to surface access to other airports and recommends that the Government work with local authorities to ensure that such improvements take place. Will the Secretary of State make sure that Leeds Bradford airport will be looked at, because my constituents have to suffer many people going past their homes on very overcrowded roads?

[Mr McLoughlin]

Following my hon. Friend’s representations, I am delighted to give him the assurances that he requires. I will also come to his constituency and look at the situation there.

[Jackie Doyle-Price (Thurrock) (Con)]

The Mayor of London claims that Heathrow is a planning error. It is not; it is our hub airport. As my right hon. Friend is well aware, the Thames estuary is home to some significant ports infrastructure. Is it not to be hoped that the Davies commission rules out, once and for all, a Thames estuary airport, particularly as we already have an excellent airport at Southend?

[Mr McLoughlin]

As I have said to various colleagues, everyone will have an opinion if they have something in their own localities. I will await the outcome of the commission’s report, but I take what my hon. Friend has said seriously.

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

Let us forget Birmingham and Leeds Bradford and get back to Manchester. Given that Heathrow is already operating at full capacity and it is likely to be years before any option being considered by the Davies commission is built, may I ask my right hon. Friend what steps he is taking to encourage greater use of these regional airports—or major international airports as he calls them? May I suggest that a useful and popular first step would be to reduce airport passenger duty for new long-haul flights from regional airports, which would not cost the Treasury anything because they do not exist at the moment?

[Mr McLoughlin]

I am always keen to hear about schemes that cost no money whatever. Colleagues often convince me of a scheme but, unfortunately, when I go to the Treasury the idea is usually dismissed in fairly short terms. None the less, I understand my hon. Friend’s point. The truth is that Manchester has expanded and is, without any doubt, now a major international airport. I am just sorry that no one has mentioned East Midlands airport, which is also owned by Manchester airport.

[Neil Carmichael (Stroud) (Con)]

Forty years ago, a Labour Government cancelled the Maplin airport project, thus creating the situation we now have with under-capacity. Now that we have a second chance to get this right, does the Secretary of State agree that any report from Sir Howard’s commission should include a proper analysis of the advantages of a new airport east of London?

[Mr McLoughlin]

As I have said and as Sir Howard has been at pains to say in his statements today, if this was an easy decision it would have been taken some time ago. It is not an easy decision to take. It is right that we should consider all the facts and our environmental commitments, too, and that is the work that the commission has embarked on.

[Robert Halfon (Harlow) (Con)]

Will my right hon. Friend commend the Manchester Airports Group for its new stewardship of Stansted airport? Although I note that the report suggests that an extra runway is environmentally unsustainable and economically unviable, it also considers the expansion of the existing runway. If that happens, will my right hon. Friend ensure that the Government invest in the infrastructure on the M11 and the railways and ensure that local people are employed to help with the extra expansion?

[Mr McLoughlin]

I certainly commend Manchester Airports Group for how they have taken over Stansted and I hope that they will continue the public engagement with people from around the area. At the moment, it is estimated that there is room for growth at Stansted without any extra runway capacity. My hon. Friend makes the point about how important airports are for jobs and for giving people opportunities.

[Mr Philip Hollobone (Kettering) (Con)]

Given the crucial role that Network Rail plays in the provision of Britain’s transport infrastructure, not least at the moment through the necessary but highly disruptive work in Kettering in preparation for the welcome electrification of the midland main line, does my right hon. Friend think that it is as efficient as it might be in providing Britain’s railway infrastructure and does he regard its extraordinary and expensive corporate structure as fit for purpose?

[Mr McLoughlin]

As I announced in my statement, Network Rail has been reclassified and is charged with some important projects. My hon. Friend refers to the electrification of the line that serves both his constituency and mine, but I would also point out the big infrastructure jobs that Network Rail has undertaken, such as the closure for six weeks in the summer of Nottingham station and the complete resignalling in that area. That project came in under budget. The projects are very big and, obviously, certain consequences will flow from the changes. It is vital that there is no question but that the huge investment we have committed to Network Rail will be delivered over the next five years.

[Rehman Chishti (Gillingham and Rainham) (Con)]

The Secretary of State will be aware of the comments made by Sir Howard Davies, who said that the estuary airport would cost about £80 billion to £110 billion and would cause massive disruption. Do the Government have that amount of money to spend when there are other, better, environmentally friendly options? Those views are shared by my constituents in Gillingham and Rainham and the local authority, Medway council. They are bitterly opposed to that bizarre idea on those grounds and many others.

[Mr McLoughlin]

One thing that will have to be considered if such proposals are made is how they will be paid for. I am, however, aware that figures for transport infrastructure projects sometimes get greatly inflated. This one started off at about £75 billion, it has grown to £100 billion, my hon. Friend says that it is £110 billion and I have no doubt that by next week it will be around the £150 billion mark.

[Mark Garnier (Wyre Forest) (Con)]

In his statement, my right hon. Friend said that he is seeking political consensus on both sides of the House. By now, he will no doubt have gathered that there is practically political unanimity behind Birmingham airport. Is not the important point that rebalancing the economy of the UK is about not just regions but sectors? Significant expansion at Birmingham would rebalance the economy not just out of the south-east but away from the service sector, supporting our industrial heartlands in the midlands.

[Mr McLoughlin]

My hon. Friend makes yet another representation from the Birmingham grouping—[Interruption.] The Birmingham mafia, as Members say. As he knows, there is nothing to stop Birmingham airport expanding significantly. There is spare capacity there at the moment and it has to attract carriers in to the airport. I am keen to see it do that and for that to become available to the whole of the west midlands.

[Mr Marcus Jones (Nuneaton) (Con)]

The west midlands is one of the only regions to have a positive balance of trade. The Government want to build on that rebalancing by investing in HS2. To properly integrate our transport infrastructure, does my right hon. Friend not agree that the future development of Birmingham international airport should feature far more heavily in the final Davies report than it does in the interim one?

[Mr McLoughlin]

I do not know whether I have been kiboshed as far as Birmingham is concerned, but my hon. Friends on both sides of the House have made clear to me how important they consider the airport to be. There is nothing to stop the expansion of Birmingham airport. It has done a lot to increase capacity and I hope that more services can be attracted to Birmingham.

Points of Order

Tuesday 17th December 2013 Commons Chamber

13:45

[Michael Fabricant (Lichfield) (Con)]

On a point of order, Mr Speaker. I cannot think of anyone less like a chocolate teapot than my right hon. Friend the Secretary of State for Transport. May I invite you to prepare a booklet of various examples of intemperate language, such as “chocolate teapot”, that you think might be inappropriate in this House?

[Mr Speaker]

The truth of the matter is that it is all about the context in which remarks are made. The hon. Gentleman, who is a keen student of parliamentary history—although I do not think he has written a book on the subject, so in that sense he would not compete with the hon. Member for Rhondda (Chris Bryant)—will be aware that there was at one time a list of proscribed words, but the list was discontinued, partly, I think, on the grounds that it was so extensive as to become unmanageable. It was judged instead that it was for the Chair to make a judgment about the manner in which something is said and the context in which words are used. I hope that the insatiable curiosity of the hon. Member for Lichfield (Michael Fabricant) has now been satisfied, for today at any rate.

[Chris Bryant (Rhondda) (Lab)]

Further to that point of order, Mr Speaker. I think that I am right to say that on one occasion the hon. Member for Lichfield (Michael Fabricant) accused me of being a teapot. He seems to think that what is right for a teapot is not right for a chocolate teapot.

[Mr Speaker]

I fear that this exchange will descend. Colleagues will be aware that the hon. Member for Lichfield previously served in the Whips Office with considerable dedication and loyalty under the leadership of the man who now serves as the Secretary of State for Transport. Whether that explains the differential treatment, I do not know, but I hope that we will leave the matter of teapots and other items there for today.

Mental Health Outcomes (Measurement)

Tuesday 17th December 2013 Commons Chamber

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

13:48

[Mr Robert Buckland (South Swindon) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to record certain statistics relating to people receiving treatments for mental health conditions; and for connected purposes.

The Bill is not about a headlong drive towards box-ticking and bureaucracy in our NHS, but about finding the most effective way of achieving true parity of esteem between physical and mental health. Parity of esteem, or equal priority for mental health and physical health, has been enshrined in statute by the Health and Social Care Act 2012—a very welcome measure.

A year ago, the Department of Health published the NHS mandate, in which it identified a number of areas in which it expects particular progress to be made. One of those priorities is to deliver

“a service that values mental and physical health equally.”

Amen to that. How will that be achieved? The Government state in the mandate that they expect NHS England to be able comprehensively to identify levels of access to, and waiting times for, mental health services in the community. Again, that is welcome, but let us take a moment to look at the current ways in which performance in mental health services is measured. The NHS outcomes framework is the mechanism, and it is working well to cover physical health outcomes. When it comes to mental outcomes, however, the picture remains incomplete.

What I am seeking is an improvement in the range and depth of information. I am after quality, not quantity. Why? It is because I want to see developing in our local communities mental health services that genuinely reflect local need. I welcome the publication this month by the Minister, who is in his place, of the mental health dashboard, which brings together existing information about mental health provision. I note that in that document there is an acceptance that the range and type of information available will have to develop, but there is a concern that consistency and stability in what the dashboard measures are maintained. My proposals today will, I believe, deepen the quality evidence while maintaining that stability.

I further welcome the creation of the mental health intelligence network by NHS England and Public Health England. It sounds a bit James Bond, but it is a practical means which will be launched next year to devise more effective ways in which quality information can be gathered. However, unless more work is done to fill in the gaps in relation to mental health outcomes, I fear that important opportunities will be missed.

What measurements do we have so far? We have mortality rates of adults under 75 with severe mental health conditions. That information is being collected and it is relevant to the first part of the NHS outcomes framework. Those statistics reveal that life expectancy is 15 to 20 years shorter than the average in England; they also reveal the extent of co-morbid physical conditions. Already, we can see how such information is crucial to making the right interventions and tackling those appalling statistics. There are also measurements related to improving access to psychological services, which have helped to drive the commissioning of more and more services at a local level. I warmly welcome that. However, like the proverbial Swiss cheese, gaps both in the range and quality of measurement remain. I believe that mortality data should be broken down further to clinical commissioning group level, which would help to identify particular local needs—not just mental health needs, but physical needs.

Part 3 of the NHS outcomes framework aims to measure how well NHS services help people to recover from illness or injury. A useful measurement of recovery is the number of people who have or have had mental health conditions who are able to gain employment. There are national measurements, but they are not reflected in local indicators. If we are to drive more locally based employment support services, that needs to change. The outcomes framework is very much focused on acute services, so measurement of their use by mental health patients, broken down locally, would be very useful in helping to determine the extent of our community services or where, to put it bluntly, firefighting is taking place, as opposed to interventions in the community.

Part 4 of the outcomes framework deals with how well health services provide a positive experience of care, so measures of psychiatric in-patient or secure services have to be made. In-patients at acute hospitals undergoing treatment for physical conditions are rightly asked for a lot of information, all designed to make services more attuned to aspects such as age and gender, for example. We owe this to mental health patients using acute services too. They are among the most vulnerable people in our society and a service that is better attuned to their individual needs will yield better results. At present there is no collection of information about the duration of untreated psychosis—in other words, the length of time it takes between someone presenting with a psychosis and their treatment. How will we comprehensively identify problems with delays in referral and treatment if this is not done?

In relation to people detained under the Mental Health Act, let us not forget that we still have far too many people, including children, being detained in police cells, rather than in an appropriate place of safety. The number of incidences is recorded, but not the outcome. That is another example of how a lack of quality information prevents this issue from being properly prioritised and prevents local analysis of need.

One in four of us will experience some form of mental health condition in the year ahead, and 10% of children in the United Kingdom have a mental health condition. Many children and adults will have co-morbid physical and mental health problems. The division between physical and mental health is an artificial one which must be removed. They need—we need—commissioned services that are truly responsive to our demands. Parity of esteem must become a reality. I commend my Bill as a means of achieving that.

Question put and agreed to.

Ordered,

That Mr Robert Buckland, supported by Caroline Nokes, Annette Brooke, Mike Freer, Yasmin Qureshi, Mrs Madeleine Moon, James Morris, Mike Thornton, Caroline Lucas, Grahame M. Morris, Oliver Colvile and John Hemming present the Bill.

Mr Robert Buckland accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 28 February 2014, and to be printed (Bill 147).

Local Audit and Accountability Bill [Lords]

Tuesday 17th December 2013 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1

Integrated audit

‘(1) Before section 1 of this Act is brought into force, the Secretary of State shall, by regulations, put into effect arrangements for integrated audit which enables auditors to work across authorities and with the National Audit Office, where national and local funding is being used jointly.’.—(Andy Sawford.)

Brought up, and read the First time.

13:56

[Andy Sawford (Corby) (Lab/Co-op)]

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

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 2—Transparency of audit—

‘(1) A local auditor has a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year.

(2) Local auditors only have a right of access to audit documents from private companies, under subsection (1), that relate to the service provided to the local authority by that company.

(3) A local auditor must make available on request any audit documents, obtained under subsection (1), subject to the provisions of the Freedom of Information Act 2000.

(4) In this section “private company” shall be interpreted to mean any legal entity, including joint ventures, not-for-profit organisations, mutually-held organisations and charities.

(5) Five years after the coming into force of this section, the Secretary of State must commission and publish a review of the effectiveness of subsections (1) to (3) and of the costs to local auditors, private companies and local authorities arising from it.

(6) The meaning of “significant” and “terms of qualification” shall be set out by regulations.’.

New clause 4—Scrutiny—

‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report on the effectiveness, efficiency and economy of the structures and procedures put in place by relevant local authorities, under section 21 of the Local Government Act 2000 (Overview and scrutiny committees), to review the decisions made, or other action taken, by the executives of such local authorities.’.

New clause 5—Fraud investigation—

‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report on the adequacy of the resources, staffing, structures and procedures put in place by authorities to detect and investigate fraud within the authority effectively.’.

New clause 6—Compromise agreements—

‘Before section 1 of this Act is brought into force, the Secretary of State shall prepare and lay before each House of Parliament a report into the extent and appropriateness of the use of compromise agreements, incorporating confidentiality clauses, as provided for by section 203 of the Employment Rights Act 1996, to effect the exit of members of staff from employment by local authorities.’.

Government amendment 1.

Amendment 13, in clause 20, page 15, line 24, at end insert—

‘(7) A person providing commercial or consultancy services to an authority may not audit those services.

(8) The audit of any commercial or consultancy services provided by a person appointed as a local auditor must be subcontracted to a different local auditor.’.

Government amendments 2 and 3.

Amendment 12, in schedule 2, page 43, line 8, at end insert—

30 A Local Enterprise Partnership.’.

Government amendments 4 and 5.

[Andy Sawford]

I shall speak to new clauses 1 and 2.

This is a better Bill for the scrutiny that it has received as a result of the work of the draft Bill Committee, the Communities and Local Government Committee and the House of Lords, and in Committee in this House, where I was pleased to receive substantial reassurances from the Minister, clarifications and explanations on many points. Some welcome concessions have been made, both during the Committee stage and in some of the amendments before us today.

Three years ago in a press release the Government announced the abolition of the Audit Commission, without thinking it through. There has been considerable criticism of the fact that there was no real consultation with local government, and when the announcement was made prematurely, the audit world was not consulted on how the new arrangements might evolve. That has led to a range of problems in the Bill. It is very much a backward-looking piece of legislation that seeks to post-rationalise a premature announcement that took most people by surprise.

The Audit Commission was abolished without proper consideration of how to maintain some of its more valuable functions, such as enabling local authorities to make comparisons and to use benchmarking tools to see whether they are spending the public pound as well as possible, and acting as an independent auditor, to bring transparency and public confidence to public audit. The Government had not thought through crucial issues such as how to maintain independence of audit, which we will come to later, without amendments to increase transparency, particularly new clause 2.

The Government had overestimated and double-counted the savings that may accrue. They had failed properly to address concerns that the audit market for local government is too limited. However, there is a bright spot. The Government’s reluctant U-turn on joint procurement is very much to be welcomed. It follows submissions from my noble Friends in the House of Lords and from the Local Government Association, the National Association of Local Councils and many other bodies. We tabled amendments in Committee to allow local authorities to form a joint procurement body, and we were pleased when, towards the end of the Committee stage, the Government introduced, albeit through gritted teeth, a new clause to do just that. The Government have not been clear about who will lead the development of that joint procurement body, but I urge them to work closely with the Local Government Association, the principal representative body for local government.

New clause 1 seeks to enable auditors to follow the public pound through the system. It would require the Secretary of State to make arrangements for integrated audit so that auditors can work across local authorities, and other relevant authorities at a local level, and with the National Audit Office where national and local funding is being used jointly. The problem that the new clause aims to solve is that the audit arrangements set out in the Bill are too narrowly focused on the relevant authority as a self-contained unit.

The Government have therefore failed to provide for the changing world of public services. Shared services, community budgets, which both they and the Opposition strongly support and which local authorities across the country—notably, many Labour councils—are taking forward, and combined authorities are all part of a shift towards much stronger partnership working by local authorities. There is also a specific point about local enterprise partnerships that I will come to later.

The previous Labour Government introduced the Total Place initiative in their last years in office. By enabling authorities to join together for some parts of their audit, we hope that we can see the value for money of the Total Place approach and that that will be a spur to further joining up. By bringing the National Audit Office into that approach to integrated joint audit, we can follow the public pound up and down the system for local and national spend.

The new clause is about future-proofing the Bill. In Committee the Government resisted all attempts to reference integrated audit or community budgeting approaches. In that sense, I think that the Bill will lead to an atomised approach to auditing, rather than a connected view. It has completely failed to make provision for the new world of public service delivery being built before our eyes, and not just the changes in local authorities that I have identified, but wider changes such as the troubled families programme and welfare changes, particularly the introduction of universal credit. They are all looking at connecting spending across the country. It is astonishing that the world of audit envisaged by the Bill takes no account of that at all.

We now have city deals, which should be properly audited. Indeed, we explored in Committee how they and other bodies, particularly those focused on enterprise partnerships and working with business, might be audited when it is not possible to bring together different auditors. As community budgets develop, different auditors will examine the use of the local government pound while the National Audit Office examines the use of the Whitehall pound, although they are actually being spent together. If a service is shared and common, surely it makes sense that the audit should be, too.

Another example is health and social care—the subject of the legislation we debated only yesterday. We need to see the future of the health service as one in which we meet the challenges of a rising elderly population, with people living longer and more independently. Local authorities, through their social care role, and health bodies will work jointly. Indeed, there are significant moves in that direction through local health and wellbeing boards. It would make sense for audit to be able to follow that pattern of more joint services.

Parliament has a strong interest in seeing that public money is spent well, whether nationally or locally. That was the drive behind Lord Heseltine’s introduction of the Audit Commission all those years ago. Parliament previously drew some assurance from the Audit Commission’s national work on value for money, but that work is winding down and the value for money assurances offered in the Bill are very limited. Indeed, we sought clarification on those points in Committee, and we had some reassurances from the Minister, but they were not sufficient for us to believe that that work will be carried out in the way it ought to be.

That point becomes increasingly relevant as Government policy cuts across departmental silos as fresh patterns of local delivery develop and local authorities commission services from, and develop partnerships with, an ever wider range of providers. The ad hoc Bill Committee that scrutinised the draft Local Audit Bill was absolutely right to state that the Bill should provide an unambiguous basis for insight into spend across central and local government, but as it stands it does not. Would it not be sensible—I ask this again in the hope that the Minister will change his mind at the eleventh hour—in the management of audit contracts if two authorities working together substantially and significantly could appoint a lead audit for a particular set of services, rather than having two separate auditors crawling over the same books and duplicating how they look at the same services, perhaps even reaching different conclusions?

We would rather have auditors work together to reach a shared view on whether services represent value for money and whether public money is being spent effectively, so an audit presented to a relevant authority might contain sections that had been prepared jointly and appropriately with other auditors of local spend, perhaps those from other relevant authorities or the National Audit Office. That audit would then be much more valuable, and not only to the council, but to the public and Parliament, in showing whether money was being spent well. For example, in my area there is an arrangement for shared services between Northamptonshire and Cambridgeshire county councils. There are questions about whether that genuinely delivers value for money. I am concerned that an audit in which they are each treated entirely separately and reported on separately will not give us a real sense of whether the partnership is delivering the value for money that I and my constituents want to see.

I therefore appeal to the Minister to have a change of heart. He is a former council leader. He might well return to local government after the next election or at some future time, when I am sure he would be very grateful that the Government had created audit arrangements fit for the new world of local government, not the old one.

This might be the most appropriate time to refer to amendment 12, which seeks to add local enterprise partnerships to the list of relevant authorities set out in schedule 2. LEPs have a growing role in the local public sector and partnership landscape. They are charged with driving local economic growth. From next year their role will increase, as they will be tasked with developing investment strategies for European structural funds; looking after skills for employment; leading on community-led local development; taking on board economic and social inclusion; looking at environment and climate change issues in local communities; taking forward social innovation, ICT and digital inclusion; and tackling youth unemployment. Indeed, the Government seem to view LEPs as a panacea for how many areas of local public service reform, enterprise and regeneration will be taken forward.

However, since the establishment of LEPs three years ago, and particularly following the publication of Lord Heseltine’s report “No Stone Unturned”, while their remit has expanded dramatically and the roles and responsibilities of their boards have changed, there has not been a commensurate consideration by the Government of how to address the governance, capacity, audit and probity of LEPs.

From next year, LEPs will receive central Government money, including a share of the £6 billion from the European regional development fund, a share of the £24 million growth money from the Department for Business, Innovation and Skills, a share of the £2 billion from the 2015 Treasury allocation for which LEPs can bid, and a share of the £400 million top-slicing of the new homes bonus, which is very controversial with local authorities, which are concerned about the implications of that top-slicing. As LEPs take responsibility for funding streams from several Departments and agencies, it is clear that there will be no effective audit trail to account for how the money will be spent. The truth is that LEPs are not really accountable to anyone.

In Committee my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) asked the Minister to set out how he envisages LEPs being audited in future. Given that they are responsible for such significant amounts of public money, and given the pace of change in LEPs across the country, the Minister’s response was simply inadequate. He could make a simple amendment to schedule 2 that would allow us to treat LEPs as a relevant local authority so that not only can we look at the local spend, but we can consider how the national spend will be accounted for as it goes into those LEPs in a way that does not mean having to look at the separate audits of a whole range of different Departments and agencies. If the Minister is not minded to accept our amendment to schedule 2, that could be addressed by simply accepting new clause 1, which would allow integrated audit, because LEPs are precisely the kind of area where integrated audit is much needed. Whether he chooses to accept new clause 1 or the amendment to allow a change to schedule 2—we hope he will accept one of them—we hope that we see a significant change in the confidence that we and the public have in how LEPs work.

LEPs are a mixture of the public and private sectors, so they are a different kind of organisation. Many public sector bodies are involved in them. For example, there are two LEPs operating across the area I represent, with different types of authorities in a two-tier area, so they are quite complex. Just saying, as the Minister did in Committee, that auditing the money for which LEPs are responsible will be done by that disparate set of audits by component bodies is just not good enough. I strongly urge him to rethink that.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I appreciate the general points that the hon. Gentleman is making, but does he agree that the democratic accountability of LEPs needs to be considered at some stage, because in many cases we have one-party representation on the political side?

[Andy Sawford]

The hon. Lady makes an interesting and important point. I should perhaps declare an interest as an officer of the all-party group on local growth, local enterprise partnerships and enterprise zones. I think the Minister can also claim to have held that auspicious role in the past. The group has been concerned about how we can make sure that LEPs are as effective as possible, principally in regenerating areas and communities and ensuring local growth, but also as regards democracy. LEPs must be accountable to communities, particularly given that they have mixed boards taken from the public and private sectors. In my area—I am not sure about the hon. Lady’s—there are two different types of authorities, and district councils around the country, in particular, have been very concerned about whether they have a powerful enough voice in the governance of LEPs.

The hon. Lady mentioned political representation on LEPs and their political leanings. A modest change to this Bill would address some of the issues about how LEPs are growing and developing to suggest that they should be audited in an integrated and proper way. That could enable elected local councillors to ask questions of and examine the performance of their LEP so as to enhance the local accountability and democracy that she and I want to see around the country in relation to the growing role of LEPs.

New clause 2 is about transparency. The independence and transparency of audit is not sufficiently safeguarded by the Bill. We recognise that the Bill has been improved during its passage through Parliament, and that the Government have sought to put in place ways to ensure an element of independence—for example, of local auditors. We had substantial discussion about how we would ensure the independence of members of the audit panels that recommend the appointment of auditors. However, there are significant issues in relation to how local authorities are finding new ways of working, particularly with private sector companies and other suppliers. We want to bring greater transparency to the relationship between local authorities and the private contractors to whom, increasingly, large amounts of public services are being contracted out.

The new clause is partly inspired by the strong points made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) on Second Reading, when he encouraged us to look at the work of Transparency International. I assure him that I read its report on corruption, as did my hon. Friend the Member for Derby North (Chris Williamson), and used it to raise some important questions in Committee. Indeed, the Minister met representatives of Transparency International, so interested had he become in the strength of its recommendations and the issues that it was throwing up. Transparency International says:

“Private companies, when operating services in the public interest, should be required to comply with the Freedom of Information Act with regard to those services. Specifically, audit reports from local authorities should be covered under the Freedom of Information Act or published directly as public documents.”

I agree.

Our new clause draws on amendments that have been tabled at every stage in the Lords and in Committee. I pay tribute to the work of Lord Wills in this regard. At each stage, the Government have warmed a little more to the arguments that have been made. The Liberal Democrats have been encouraging, too. Lord Tope and Lord Wallace of Saltaire spoke in the Lords in favour of greater transparency. Lord Tope said:

“My Lords, Liberal Democrats campaigned hard for freedom of information long before the Act was passed and have since been consistent and enthusiastic supporters of its provisions. It follows therefore that we start with considerable sympathy for the issue that the noble Lord, Lord Wills, is pursuing…I am grateful to him for pursuing the issue at all stages of the Bill.”

I hope that he noticed that we took these matters forward in Committee. Lord Wallace of Saltaire said:

“I encourage the noble Lord to pursue this issue further. I will repeat what I said on Report: both Parliament and the Government need to look at this issue in general.”—[Official Report, House of Lords, 24 July 2013; Vol. 747, c. 1319-24.]

They are both right.

The Government’s main counter is that transparency increases costs and is not necessary because councils can already be subject to the Freedom of Information Act 2000. However, that is not sufficient given the travel towards ever greater outsourcing of services. Local government controls about a quarter of all public spending and contracts out an increasing amount of services to private providers. It is responsible for making decisions about a number of matters where the interests of private companies are often in tension with the wishes of the electorate. For all those reasons, local government is inherently exposed to corruption risks. On the whole, it navigates and mitigates those risks admirably, and we should recognise that and keep in proportion the level of concern. However, the public will want to know that we in this place have done our very best to ensure that there is transparency in how local authorities mitigate the risks and manage contracts.

14:15

Two recent reports by the National Audit Office are very worrying. They warn of a crisis of confidence and highlight the fact that much of the work of central Government is being contracted out to firms such as Serco, with a contract of £1.8 billion; Capita, with a contract of over £1 billion; and companies such as G4S and Atos. We all know from our constituencies some of the problems with Atos, which has contracts approaching £1 billion but is singularly failing to deliver for our constituents. The reports highlight the issues and problems that have emerged in the management of these contracts. In its memorandum, the NAO says:

“Transparency is needed to ensure that no one within the contractor can hide problems and that it is in the contractor’s commercial interest to focus on their client’s (the government’s) needs”—

or, indeed, the needs of local government. The Institute for Government says:

“The current pace and scale of outsourcing outstrips the ability of Whitehall officials to design and manage complex contracts effectively.”

We know the scale of the contracts that local authorities are negotiating around the country. Some are working successfully but in others there are problems, and the public want to know that there is a measure of real accountability and transparency. Hon. Members will recognise that this is a challenge for local authorities as well as for central Government.

The new clause aims to bring some transparency to the billions of pounds of public money that are at stake with regard to tackling fraud, corruption, incompetence and inefficiency in terms of citizens’ rights to know about the services provided to them and taxpayers’ rights to know about the services that they pay for. We have all agreed at various stages of our debate that local government and the relevant authorities that are subject to the Bill in schedule 2 are generally bodies that conduct themselves—in their financial probity and their conduct and standards in public office, including that of elected members and boards and their officers—in a manner that we would all want to see. However, we also know about occasions—we have to be honest about them—when those organisations fall short, sometimes wilfully and sometimes because of maladministration or error. We discussed some examples of that and what we can learn from them in Committee.

The fact that local authorities are covered by the Freedom of Information Act does not always provide the necessary transparency for private sector bodies carrying out public sector work, nor does the right of electors to inspect the accounts and audit documents, important though that is; indeed, it is provided for in a welcome way in the Bill. The Government have argued that the transparency that is intended in these provisions would increase costs, but we would argue that transparency can save money. Some of the work of the Audit Commission has saved billions of pounds of public money. There is evidence from local authorities around the country of how transparency can at times shine a light on areas of public spending that leads to savings to the public purse. I think the Minister would support that general point; indeed, he and his colleagues have talked about armchair auditors.

We deliberately included the word “significant” in the new clause to make it clear that it is not intended to cover the provision of services by small businesses, nor the work of town and parish councils, as in those cases it might be unnecessarily onerous in terms of cost. That acknowledges the Government’s concern in that respect. It would allow a local auditor

“a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year...A local auditor must make available on request any audit documents, obtained under subsection (1), subject to the provisions of the Freedom of Information Act 2000.”

That would clearly make these documents available to the public. We seek to define “private company” in the context of how freedom of information may apply in relation to the process of audit, so that it would mean

“any legal entity, including joint ventures, not-for-profit organisations, mutually-held organisations and charities.”

Of course, many more of those bodies are now involved in providing public services.

To ensure that the Minister understands that we intend to be very reasonable and measured in making this proposal, we have included a sunset clause. I hope that the Government recognise that that means that if the new clause proves to be particularly onerous, or unnecessary, they could at a future time consider whether it is any longer needed.

Our final amendment in this group, amendment 13, centres on the independence of audit. It is straightforward and I do not intend to detain the House on it for long. It is an important principle that independent audit means that companies should not be auditing themselves. As I have said, councils are increasingly outsourcing contracts to the private sector. When a company, be it PricewaterhouseCoopers, Deloitte and Touche, KPMG, Ernst and Young or some other provider—perhaps a smaller firm or even a new entrant to the audit market, as the Government hope will happen—provides services other than audit to a council, it should not then audit those same services. That is a simple but very important principle, because there is clearly a conflict of interest when a firm is auditing itself.

In Committee we heard assurances that in such circumstances an audit firm would, by virtue of the expectations in the contract with the council and, to some extent, with regard to the codes of professional standards and probity that govern and guide how auditors operate, make sure that a different person or even a different team within the company would carry out the audit so as to bring a measure of independence when looking at areas of spend and operation for which that self-same company is responsible. We listened to those arguments, which were made by a number of hon. Members. We know that auditors already seek to uphold professional standards of conduct and that in the private sector they sometimes need to have different teams when they work with a major company as both an auditor and a supplier.

We would argue, however, that it is a matter for the shareholders of those private companies to resolve any conflicts of interest. Our focus in this Bill is on arrangements for local and other relevant authorities that are spending billions of pounds of taxpayers’ money and where it is our responsibility to make sure that conflicts or interest are resolved.

Our amendment does not seek to prevent a company from undertaking audit work when it has other interests in the relevant authority. We recognise that that would go too far and that there are significant issues with regard to what is, in effect, an oligopoly in this market. We do not wish to narrow further the number of firms that could bid to undertake the audit work. Our amendment does say, however, that the audit firm would have to subcontract to another firm any part of its work that relates to the auditing of services that it already provides. Given that the Government envisage some arrangements whereby more than one auditor may be appointed to carry out work, we do not see what the problem is with the amendment. It seems perfectly sensible and I hope they will consider it.

The Minister has assured us that in many local authorities it will be commonplace for a company to be able to subcontract parts of its audits to different audit firms or to be able to make arrangements in relation to combined authorities where different auditors work together. He has assured us that that is a feasible and, indeed, desirable part of the arrangements as currently envisaged, and we see the amendment as a logical extension of that.

I welcome the new clauses tabled by my hon. Friend the Member for Hayes and Harlington, who has a strong interest in maximising transparency, which is the focus of his new clause 3. On new clause 4, independent studies have been done on the effect of changes in local authority structure since the Local Government Act 2000. I gently say to my hon. Friend that I would rather leave it to local authorities, local residents and interested parties to review their arrangements than ask for central Government’s verdict on what is the most effective structure for local democracy in any given local authority area.

New clause 5 addresses how local authority capacity has been diminished. I would be very interested to hear the Minister’s response to that, because it is an important point that was raised in Committee. On new clause 6, compromise agreements are a matter of increasing public concern. We sought to raise the issue in Committee, where we tabled amendments that would have meant that compromise agreements could not effectively gag employees. I am sorry that the Government did not accept them.

On Government amendment 2, I thank the Minister for his letter explaining this minor technical amendment. Government amendment 3 makes sense to us on the cross-border point, notwithstanding the wider policy point about the treatment of internal drainage boards, which we will come to later. Government amendment 4 is a tidying-up amendment.

Finally, on Government amendment 5, I am very pleased that the Government have responded to the points we made in Committee about recognising the qualifications of auditors. The amendment does not go far enough to address the important issue of auditors needing to understand the scope of public audit, a point that was powerfully made by the Chartered Institute of Public Finance and Accountancy in its representations to us and, indeed, by the draft Bill Committee; nevertheless, I welcome the amendment.

[John McDonnell (Hayes and Harlington) (Lab)]

I wish to speak to new clauses 4 to 6, which stand in my name, and, without wanting to stray from the procedural rules of the House, I may refer to new clause 3, which has not been selected, but I assure you, Mr Deputy Speaker, that it will be a fleeting reference.

As has been said, on Second Reading I referred to the Transparency International report on the potential for corruption in local government. I circulated the report to all Members in advance of this debate and I am grateful that the Minister took up my suggestion to meet Transparency International and that the report became a subject of debate in Committee.

I tabled these new clauses to draw attention to some of the issues raised by the Transparency International report and to seek at least an element of forward momentum with regard to addressing these issues in future. It is critical that we maintain the confidence of the general public in the administration of local government. I think that Transparency International has helped us greatly, although its report says that it is very difficult to identify evidence other than anecdotal evidence about the level of corruption that may exist in UK local government. I believe we all share the view that the vast majority of councillors and council officials do an excellent job to a very high standard of probity and efficiency. Nevertheless, we are plagued with anecdotal information about elements of local government and with doubts about corruption.

Given the lack of data on corruption in local government collected at national level or any other level, Transparency International looks at the systems implemented to make sure that corruption does not take place. Its report says:

“Here, a disturbing picture emerges, and one on which experts and interviewees”

in the study

“were agreed. On the one hand, the conditions are present in which corruption is likely to thrive—low levels of transparency, poor external scrutiny, networks of cronyism, reluctance or lack of resource to investigate, outsourcing of public services, significant sums of money at play and perhaps a denial that corruption is an issue at all.”

My new clauses address those key elements. First, lack of transparency relates to new clause 3, which has not been selected, so I will not dwell on it. On Second Reading, I gave the example of my own local authority—this may happen elsewhere, so I would welcome the views of other Members—regularly putting items in part 2 of its agenda on the basis of spurious commercial confidentiality. When the find of prehistoric flints on one of my sites was reported in part 2 of the agenda, I joked in a previous debate that commercial confidentiality might have been important 3,000 years ago, but it is not now. It is, however, becoming a regular way of stifling debate and of preventing issues from being reported in the local media.

I believe—this is why I tabled new clause 3—that we need to address that. Central Government need to be clear about how often it is happening in local government and about the scale of its use and whether it is being used appropriately. They also need to address whether they have a role to play in providing further and better guidelines on how part 2 items should be addressed and on how items should be deemed to be commercially confidential or otherwise for the purposes of part 2 of the cabinet system.

That relates to the overall system. Under the previous Government’s local government reforms, which I opposed, we now have quite a centralised local council system whereby the leader is elected and then appoints the cabinet. They are all on a relatively high income these days. I do not begrudge anyone being paid the rate for the job, but the leader of the council in my area is on £65,000 a year and is appointing other members of the cabinet on salaries of between £45,000 and £55,000 a year. That gives the leader extremely wide-ranging powers of patronage and it is the leader who decides which items go into the confidential part of the cabinet agenda. They do so after being given some advice, about which I also have concerns, which I will come to.

That centralisation of decision making is dangerous and has the potential to result in not just poor decision making and lack of transparency, but corrupt decision making. That level of centralised control is part of the problem we now have. One of the issues thrown up by Transparency International’s report is that, structurally, we have opened ourselves up to decisions being made by a very limited number of councillors, with limited scrutiny by others. Whatever people thought of the old committee system—to be frank, it might well have been relatively slow at times—it was more open, democratic and transparent.

14:39

That brings me to the second element of my new clauses, which is covered in new clause 4. I am anxious that scrutiny in local government should depend on the system of scrutiny committees established by the previous Government, but those committees work only if they are properly resourced and can scrutinise decisions with an element of detailed research and knowledge. In my area, I am fearful that lip service is simply paid to scrutiny. There is not sufficient investment in officers to support such committees, and patronage in relation to them exerts a role in preventing its members from having independence of mind.

I tabled new clause 4 to suggest that there should be a review by the Secretary of State and a report to this House on how scrutiny is working in local government. My hon. Friend the Member for Corby (Andy Sawford) suggests that that should be left to local government, but that is the problem. In areas such as mine, which is increasingly becoming a one-party state, there is no way to enable a proper independent examination of scrutiny practices or to know whether scrutiny structures are operational. If the Audit Commission is no longer to exist, there does not seem to be any other body, other than the Secretary of State, with the power to instigate an investigation into whether scrutiny is working. I am sure that it works extremely effectively in some areas, but in others it is poor to the point of virtual non-existence. [Interruption.] My hon. Friend the Member for Sheffield South East (Mr Betts) is obviously tagged—another form of scrutiny. [Laughter.]

The new clauses are about transparency and scrutiny, but my new clause 5 relates to Transparency International’s concern about the lack of resource to investigate corruption in individual councils. I am concerned because it is very difficult to find information anywhere about the scale of local authority investment to ensure full probity. For example, with the latest round of cuts in local government, I am anxious about cuts to areas involving the management of accounts and their internal audit in finance departments. Because cuts in staffing have been so large, there is vulnerability in local government in that staff are not available for councillors to be able to ensure proper investigation or to bring to book corrupt elements. The new clause therefore suggests that the Secretary of State should prepare and lay before the House a report on the adequacy of resources and staffing levels, but also on the structures and procedures that individual authorities have put in place to detect and investigate fraud. At the moment, there is fragility in local government in relation to the investigation and detection of fraud.

My new clause 6 is about compromise agreements. I have asked questions over the past year about the use of such agreements within local government, and the response has been that it is not monitored by the Department for Communities and Local Government and that, therefore, no information is available. We have to go back to anecdote, which is the problem in this debate. As Transparency International has highlighted in its report, the vast majority of council officials leaving in my area do so on the basis of compromise agreements. I do not understand why such agreements are used to ensure that there is a gagging clause to prevent an official from commenting on their local authority’s activities, efficiency and other matters.

I can understand to a certain extent the use of compromise agreements in the private sector, but their use in the public sector seems to undermine the structures and procedures we put in place for whistleblowing. To cite my own area again, officers seem to disappear time and again, particularly after criticising the local authority or individual councillors—their desk is suddenly vacated and they have gone—and we then discover that they have left under a compromise agreement. They do not gain their full benefits until that has been negotiated—often, I have to say, at the door of the tribunal—but a compromise agreement is signed, so they get their pay-off, but they are not allowed to comment on the issues that may well have been what resulted in their leaving the authority. I doubt that that is peculiar to my own local authority, but I think that it flies in the face of openness, transparency and accountability.

I am simply suggesting that the Secretary of State should investigate what is happening in relation to such matters. It would be helpful to know how frequently compromise agreements are used across local authorities. It would also be useful to know how often confidentiality clauses are incorporated into such agreements and, frankly, why there is any need for them. I can understand their use to a certain extent if there are strict matters of commercial confidentiality involving a contract between a local authority and an individual company, but their use seems to range much further and even to cover any element of criticism of a local authority and its actions.

My new clauses are an attempt to address the issues raised by Transparency International. I am not making party political points. As I have said, I am criticising structures and systems put in place by the previous Government, but also trends that have accelerated under this Government in recent years. They have increased not localism but centralism within individual local authorities, and they have produced cuts that have cut the very officers needed to maintain levels of probity and undermined the ability of councillors who are not in the ruling regime or on its back benches to undertake appropriate and effective scrutiny.

I do not expect the Government to accept my new clauses, but I flag them up as issues that we need to bear in mind. We must send a message to local government that this House has concerns about these matters and that we take Transparency International’s report seriously. I suggest that the Government need—the Minister should take this upon his shoulders—to have a close watching brief on these issues and to engage in a dialogue with local government associations to see whether they have concerns. Local government might be able to make proposals for future reforms to ensure that we address the concerns expressed in Transparency International’s report and the issues that I have raised today.

If the Government do not do so, perhaps such issues should be referred to the Communities and Local Government Committee for a further report or, failing that, we should do what we have done in other instances and bring together a group of Back Benchers who have had a particular interest in or experience of local government over the years to look at such matters independently and report back to the House. These issues will not go away, but will cause more concern in the public mind, particularly as local decisions are made on controversial cuts that people fail either to support or fully understand. That is why full openness and transparency are needed in local councils about decisions that they make.

I commend my new clauses to the House, but I will not press any of them to a Division. I hope that this debate will set an agenda—not only for the Minister to examine, but one that the House can look at at a future date—in relation to whether local government operates effectively and efficiently, but also transparently and openly. It will also demonstrate our concern about corruption, which local government should be willing to address where necessary.

[Alex Cunningham (Stockton North) (Lab)]

I am pleased to have the opportunity to speak in support of new clause 2, which would add a considerable dose of fairness to the Bill. I will concentrate on the need to extend the use of the Freedom of Information Act.

As we all know, private companies that deliver public services are exempt from the requirements of the Freedom of Information Act. The Information Commissioner has no power to investigate private contractors. He cannot serve information notices to require a contractor to supply information for an investigation, nor can he take enforcement action if a contractor fails to comply with his contractual obligations. Put bluntly, that renders it nigh on impossible for us to get our hands on the details of much of what private companies get up to with public money.

New clause 2 seeks to correct that oversight, at least in relation to services that are provided to local authorities and health bodies. I hope that, in time, such provisions will be extended to all significant public sector contracts that are placed with organisations outside the public sector, whether they are charities, not-for-profit companies, mutuals or those that make vast profits for their shareholders at the expense of the taxpayer.

I have been hugely concerned for many years—not just under this Government, but under the previous Government and others before them—that there is a tremendous lack of transparency in the use of public money when it is handed to private companies and other organisations for the delivery of goods and services. Further billions of pounds of public money have been distributed from the public sector into the private sector in every year since the coalition Government came to power, so my anxieties have increased considerably.

There are good grounds for that anxiety, because many of the vital services on which we daily rely have been contracted out to private sector and other providers. The list seems endless, but until now we appear to have been largely content to see taxpayers’ money handed over to private companies for the delivery of services ranging from waste management and highway repair to schools, hospitals, the justice system, early years care and, as we were reminded yesterday, the care of elderly people.

No public service appears to be safe from the zeal for outsourcing that has been demonstrated by this Government, regardless of whether evidence exists to support such a model of provision. Should Ministers be allowed to further their ambitions to privatise even more services, without the providers being subject to proper scrutiny? I do not think so. If taxpayers’ money is involved, any citizen or Member of Parliament should be able to see the detail of where and how it is being spent. Applying the provisions of the Freedom of Information Act to such circumstances would enable that to happen.

We must make the best use of taxpayers’ money. I often hear Members from all parts of the House talk about the need to innovate in delivering services and to share best practice so that people across the country can reap the benefits. Without the transparency that would be provided by new clause 2, through the Freedom of Information Act, we are destined to see service providers keep their cards close to their chests, protecting their information at the expense of better services across the country. That transparency would also provide us with data on organisations that are prepared to run services at a loss for a period to drive competitors out of the market and then make a killing in the long term when there is no one for them to compete against.

Although I am the first to acknowledge that the requirements of the Freedom of Information Act can, at times, be cumbersome, I am in no doubt about the greater good that they serve. It is those requirements that allow those who are on the outside looking in—who, let us not forget, consist largely of the taxpayers who fund service provision—to delve into the details and scrutinise the outputs to ensure that they are getting value for money through providers that are fit for purpose. It is also those requirements that allow politicians, the media and other organisations to scrutinise what companies are up to.

I spoke recently on the Offender Rehabilitation Public Bill Committee about the need for the extension of the Freedom of Information Act to services that are provided to the Ministry of Justice, including the probation services that are on the verge of being privatised. I said that I was offering Government Members an opportunity for the future. Just as they had the right to scrutinise the public sector by pressing for information under the Act after Labour brought it in, they could have any number of fruitful days examining the contracts that are let by the future Labour Government if the provisions are extended to the private sector, as outlined in new clause 2.

Perhaps I will not convince the Conservatives, who will doubtless plead that commercial confidentiality must be retained in contracts, but the Lib Dems would surely love to have the chance to exploit this new transparency. They will know that, with £100 billion of taxpayers’ money being spent each year on the provision of public services by private and voluntary sector companies, it is essential that such expenditure is evaluated properly and that service providers are held fully to account for their actions. It is a core tenet of our democracy that taxpayers are able to access the information that is necessary to do that thoroughly and vigorously.

14:45

Under this Government, the number of services that are run by the private sector is growing. There is a parallel growth in the size of the democratic deficit. Not only is more taxpayers’ money being entrusted to companies that have limited or no experience of such service provision, as will happen with the probation service, but there is an increase in the number of activities that are undertaken by Departments that are not subject to the Freedom of Information Act. As a result, the number of contracted services that are unaccountable and lacking full scrutiny is increasing. As things stand, private sector companies that are responsible for delivering public services are able to hide behind a cloak of commercial confidentiality.

Billions of pounds of taxpayers’ money is being awarded to companies under contracts that are barely transparent. We cannot say that often enough. Billions of pounds of taxpayers’ money is being awarded to companies under contracts that are barely transparent. Those same companies are free to exploit the benefits of gaining detailed knowledge of successful public sector bodies through the submission of freedom of information requests. That information can be deployed to undercut, imitate or outbid the very same public sector bodies when contracts are tendered or renewed. That situation leaves private companies in the strongest possible position to exploit such knowledge. More importantly, it enables them to hide what they are doing with large sums of public money.

Departments are under considerable strain in monitoring their contracts because staff numbers have collapsed under the Government’s cuts. The public therefore deserve the right to do some monitoring of their own. There would be real accountability if the private firms and other organisations that spend those billions of pounds of taxpayers’ money were compelled to answer directly to the public by providing responses to questions about what they are doing.

[James Morris (Halesowen and Rowley Regis) (Con)]

The hon. Gentleman seems to be talking about large private companies. Subsection (4) of new clause 2, to which he is speaking, includes in the definition of a private company

“joint ventures, not-for-profit organisations, mutually-held organisations and charities.”

Is he not concerned that the new clause would place large costs on smaller organisations that might not be able to handle the kind of requests he is talking about?

[Alex Cunningham]

No, I am not. As my hon. Friend the Member for Corby (Andy Sawford) said in opening the debate, this proposal relates to substantial contracts. It does not include the smallest organisations and we must ensure that they are protected. However, I would say that such organisations have a responsibility to be accountable for anything that they do when spending public money.

In the new world, public and private providers will ultimately be responsible for delivering equivalent services, but they will be governed by different rules. If a public partnership wins a contract to deliver refuse services, it will be subject to the freedom of information provisions, but its private sector rivals for future contracts would not be. Why should that be so? Private contractors that provide services should undoubtedly be held to the same standards of responsibility as state providers. I do not believe that anyone can argue to the contrary. It is therefore logical that the right to information about their regimes and establishments should also be equivalent.

So that there is no mistake, I remind Members that in announcing measures in 2011 to allow the publication of further spending and performance data on public services, the Prime Minister spoke of the “power of transparency”. Indeed, he went on to assert that, “Information is power.” He even suggested that

“we need more of it.”

I know that this is unusual, but I agree with the Prime Minister that we need more of it.

To put it simply, many non-public sector providers shelter themselves from open scrutiny and operate behind a screen of secrecy that simply is not compatible with the principles of public service provision. Such stealth and secrecy cannot be allowed to continue. It is only right that as more and more public services that were once the sole preserve of local and national Government are contracted out beyond the public sector, steps are taken to ensure that the same access arrangements are required of private and voluntary sector providers. To do otherwise is unfairly to insulate the Government, the Department and favoured contractors from adequate scrutiny and accountability.

One of the major risk factors that flow from a position of secrecy is the potential for fraud and corruption. Other Members have addressed that point in more detail. In public service provision, that is a crime against each and every taxpayer, and the public should be granted protection against such transgressions by all providers of public services being made subject to the requirements of the Freedom of Information Act. We have already seen the failures of some companies that were happy to take the taxpayers’ billions, and some people may face legal action as a result. For such reasons, we cannot afford to overlook the importance of new clause 2. Its additional safeguards are particularly important given the Government’s recent poor track record on commissioning services.

I know that the Government will bang on about commercial sensitivity, but that is nonsense. This is about fairness, open government and, above all, trust. For those reasons, I fully support new clause 2.

[Chris Williamson (Derby North) (Lab)]

I rise to support the shadow Minister, my hon. Friend the Member for Corby (Andy Sawford), on new clauses 1 and 2. To some extent, we rehearsed the arguments in Committee, when the matter was considered in some detail. The Minister and his colleagues were singularly unconvincing in their opposition to our proposals, but I hope that, having had time to reflect on those discussions and the contributions of my hon. Friends today, the Minister will accept our reasonable new clauses.

On new clause 1, considerable amounts of local and national funding are now used jointly. It therefore seems appropriate that they are subject to proper scrutiny and auditing arrangements. To argue against that is unacceptable. It is incumbent on the Government to ensure that funding is subject to proper scrutiny after deployment, particularly at a time when significant austerity and swingeing funding cuts have been imposed on public services, especially local government. They must ensure that we get the maximum benefit for the public pound in communities up and down the country. I hope the Minister will concede that the arguments that have been made are persuasive, and I hope that the Government will respond accordingly.

On new clause 2, it seems appropriate that proper measures are put in place to ensure that we do not end up with a cosy relationship between auditors and local authorities. There is a real danger of that, particularly as the Audit Commission is to be abolished. There could be significantly increased opportunities for corruption and the misuse of public funds. We could find situations such as the infamous “homes for votes” scandal involving Westminster council and Shirley Porter—or maybe we would not find out about them. Without new clause 2, they would be more difficult to uncover, so there might be more such examples around the country, which would be extremely regrettable.

In the case of that Conservative-controlled council in Westminster, we saw more than just the “homes for votes” scandal. We know from the records of officers who were employed there at the time that the council leader, Shirley Porter, bullied officers, and that anybody who had the temerity to question her direction of travel was slapped down in no uncertain terms. They were told, “You’re not one of us”, or “You are a negative officer and you need to decide which side you are on.” That was totally unacceptable behaviour by the leader of a council, and I fear that such behaviour is likely to increase if new clause 2 is not accepted.

As I said, it was not just the “homes for votes” scandal. Shirley Porter rose to notoriety when she sold three cemeteries in London for redevelopment for 5p each—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. As interesting as this may be, we are discussing audit. I know that the subject of Dame Shirley Porter may create some interest, but we have to try to stick to the new clauses and amendments. We are drifting a little wide of them. I am sure the hon. Gentleman is desperate to get back on track.

[Chris Williamson]

Indeed I am, Mr Deputy Speaker, and I am grateful for your guidance. I was just about to conclude my remarks about Shirley Porter by saying that she privatised at will, as well.

In Committee, we heard a lot from the Minister about his commitment to transparency. His Back-Bench colleagues reinforced that point. However, the Bill will make transparency considerably more difficult, because arrangements within local authorities will be considerably more opaque. Transparency International, which my hon. Friend the Member for Hayes and Harlington (John McDonnell) quoted, was scathing about the Bill, stating:

“The range of measures outlined in this Bill, combined with recent legislative reforms under the Localism Act 2011, remove key institutional defences against corruption, replacing them with arrangements that are likely to be inadequate to protect the public interest and the public purse.”

We hear a lot from the Government about their concerns for the public purse and the need to ensure that the taxpayer gets value for money, yet it seems that, unless they accept our new clauses, they are being cavalier with the public purse in this case.

I hope that the Minister will reflect on what has been said today. Unless the new auditing arrangements are subject to freedom of information provisions, their opacity will grow. I do not want to strain your patience too much, Mr Deputy Speaker, but circumstances such as the Shirley Porter case will not be uncovered. It is essential that new clause 2, tabled by my hon. Friends the Members for Corby and for Stockton North (Alex Cunningham), is accepted; otherwise private sector audit companies will not be subject to the scrutiny that was previously available under the Audit Commission arrangements. Even when there were external auditors, the information that they held was deemed to be held by the Audit Commission and was therefore subject to scrutiny by the general public. My hon. Friends and I say that it is important that proper scrutiny is still available under the new arrangements. As we heard from my hon. Friend the Member for Corby, local enterprise partnerships are now also spending considerable sums of money.

[James Morris]

Will the hon. Gentleman clarify the meaning of proposed subsection (1) of new clause 2? It states:

“A local auditor has a right of access at all reasonable times to audit documents from private companies to whom the local authority has contracted significant services during the last financial year.”

Does that mean that a local auditor should have the right to access any and all documents within such companies irrespective of whether they are relevant to the relationship with the local authority? That would give the local auditor carte blanche to access any document at all in those organisations.

[Chris Williamson]

It means documents relating to the contracts under which companies are working for the local authority. Clearly, it would be overly burdensome and inappropriate for all their documentation to be subject to the Freedom of Information Act, but it is perfectly reasonable in respect of work they are doing on behalf of a local authority, as is made clear later in the new clause. The hon. Gentleman’s concerns are misplaced, and the new clause is entirely reasonable.

15:00

[Andy Sawford]

My hon. Friend is right in his interpretation of the new clause. Clause 26 on the inspection of documents sets out the documents that would reasonably be made available for inspection in public bodies. We would extend that to private sector contractors.

[Chris Williamson]

I am grateful to my hon. Friend for that clarification. I hope that provides the reassurance Government Members were seeking.

In conclusion, we are moving to a new era in which the Audit Commission will be abolished and more private sector auditors will get involved in the market. It is important that those are subject to appropriate scrutiny, and we must therefore ensure that instruments are available to enable such scrutiny to take place. According to the Chief Secretary to the Treasury, up to £20 billion will be spent by local enterprise partnerships, and proper scrutiny and auditing arrangements must be in place to ensure that that money is expended properly. The public demand nothing less, and if the Government do not support this measure, it is incumbent on them to explain how that scrutiny will take place. If scandals are uncovered in the future because of a lackadaisical approach adopted by the Government, they will not be able to say they were not warned. I hope the Minister will sleep easy in his bed if he rejects these reasonable measures, because I believe that would put taxpayers’ money at risk of being misused. He needs to reassure the House and—more importantly—the wider public.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

I will respond first to the new clauses tabled by the hon. Member for Corby (Andy Sawford) before addressing those tabled by the hon. Member for Hayes and Harlington (John McDonnell). I will then consider the Government amendments in this group.

New clauses 1 and 2 and amendments 13 and 12 cover familiar ground which, as the hon. Member for Corby noted, we debated at some length in Committee. New clause 1 returns to the issue of integrated audit and seeks to enable auditors to work across local authorities with the National Audit Office. I support the principle of audits being undertaken efficiently and effectively, but I do not consider that the new clauses are the right approach, or that they are necessary to support bodies in working jointly or sharing services or budgets.

The public audit framework is designed to provide assurance about how each public body has used its resources. Individual public bodies are separately accountable, and because each is accountable for its decisions and expenditure, every one is required to produce a set of accounts and have an independent audit. I do not believe that the current accountability structure prevents local auditors from auditing relevant authorities cost effectively, or that it prevents authorities from working together to share services or budgets. The requirement to have a separate audit has not been highlighted as a problem in the four areas with which the Government have been working to explore service transformation and joint working via a community budget. Neither did the Public Accounts Committee raise external audit as a barrier in its report on integrated working by Government Departments and via community budgets.

Auditors are already required by the code of audit practice to have regard to partnership working that local government and health service bodies operate, to share information and co-operate with other auditors, and to minimise the burden of regulation on audited bodies. The Financial Reporting Council’s auditing standards also state that auditors should rely on the work of other auditors where appropriate, and guidance is available to support auditors making that judgment.

The National Audit Office supports Parliament to hold Government Departments to account. It does not have a role in auditing expenditure by local public bodies, and it does not wish to have one. The NAO already carries out a number of national value-for-money examinations under existing legislation, and the Bill broadens its powers to enable it to examine all or groups of relevant authorities. That will enable a more end-to-end view on the use of public money. It will not enable the NAO to undertake examinations of individual authorities, but it will be able to look at any thematic or systemic issues across a number of relevant authorities. For those reasons, we consider that the new clause is not needed.

There has been a lot of discussion about provisions in new clause 2, both in the other place and in Committee. As I said in Committee, we believe the new clause is not necessary to enable auditors to access all the information they need because the Bill already does that. Clause 22 mirrors the provision in the Audit Commission Act 1998, and enables auditors to access every document they need in order to undertake their statutory functions. That includes all documents held by local authority contractors which the auditor considers necessary to undertake an audit.

The Government also believe that it is not necessary to apply the Freedom of Information Act to documents an auditor has obtained from a contractor. Rather than extending that Act to documents an auditor has obtained from a contractor, the Government’s preferred approach is through the transparency agenda, existing rights of local people, and our planned revision to the freedom of information code of guidance. Local people can already access information about contracts. The Bill maintains local people’s current extensive rights to inspect detailed accounts, accounting records and audit information, and to ask the auditor questions and raise objections. Those rights enable local people to access more information than the proposed new clause would.

[Chris Williamson]

Does the Minister agree that perception is important, and that by not subjecting private sector auditors to the Freedom of Information Act, the wider general public could feel that they will not be able to access information that was previously available under the Audit Commission? Does the Minister believe he has an obligation to be seen to be doing the right thing, as well as giving those assurances at the Dispatch Box?

[Brandon Lewis]

What is important—I think this is what the hon. Gentleman was trying to say in a roundabout way—is to do the right thing, not what might look like the right thing but may not be. Local authorities are subject to the Freedom of Information Act, but I will continue my remarks so that he fully understands the point about how people can get to information.

It is absolutely right that the Government are driving forward the transparency agenda so that auditors have access to the information they want. That is why it is important that if people ask questions, the auditor may gather even more documentation to investigate the issues. That goes further than the Freedom of Information Act, which would require the auditor to provide information it holds but not lead it to seek additional material.

Last week, the Government published their response to the consultation on the transparency code. It set out their intention to make regulations requiring local authorities to publish specified pieces of information, including contract details exceeding £5,000. Local authorities also monitor the delivery of their contracts and are subject to the Freedom of Information Act 2000. The Government consider that a better approach would be for contracts to include provisions that require contractors to assist local authorities in meeting their Freedom of Information Act obligations—thereby satisfying the point raised by the hon. Gentleman. That decision was taken following the Justice Committee’s post-legislative scrutiny of the Freedom of Information Act, which recommended that greater transparency through contracts would provide a more practical approach than extending that Act to companies directly.

[Mr Clive Betts (Sheffield South East) (Lab)]

I have heard what the Minister has said about transparency of contracts, but is he saying that if a local authority goes about formulating a contract in the right way, the public—it is they who are important—could be entitled to as much information about the spending of their money through a contracting process as they would be if the service was delivered by a local authority directly?

[Brandon Lewis]

It is not for me to prejudge a contract that a local authority might agree to, but it is true that people can access the Freedom of Information Act through the local authority, and the auditor can go further in its inquiries to ensure it has all the documents it needs.

[Mr Betts]

That has not answered my question—I was not asking what local authorities should do. If a local authority went about this correctly and formulated a contract correctly, could the public have as much information on the spending of their money through a contracting process as they could if the service were delivered directly by the local authority?

[Brandon Lewis]

In principle, yes, but it is not for me to prejudge how a local authority would contract. If it chose to contract in that way, of course that would be a matter for it. It would be entirely possible.

[Chris Williamson]

That response is instructive. I think the Minister is saying that in certain circumstances that information will not be available in the way it is currently available. It seems it will be down to the local authority. He said he met with Transparency International. I wonder if he would comment on its key recommendation:

“Amendment should be made to the Bill to ensure that the work conducted by auditors will be subject to the Freedom of Information Act, and that auditors will be allowed to access documents from significant private contractors that a local authority has used.”

[Hon. Members]

Will the hon. Gentleman give way?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Interventions need to be shorter, but I certainly do not need instruction from Back Benchers.

[Brandon Lewis]

As I said, the Freedom of Information Act applies to local authorities, but we are not extending it to cover private companies. I am happy categorically to make the point, as I did in Committee, as the hon. Gentleman will see if he looks in Hansard, that we are not going to extend the provision to private companies; it is the local authority that will be accountable. He will have to take that as outlined.

We will issue a revised code of practice encouraging public authorities to include and enforce provisions in contracts to ensure that openness and accountability are maintained by encouraging the release of a wider range of information about contract delivery. This approach will be monitored by the Government and the Information Commissioner. If contractors or public authorities do not comply with this guidance, the Government will consider what other mechanisms might be necessary, including the possible extension of the Freedom of Information Act to service providers.

[Mr Betts]

On a point of clarification, will the guidance apply to subcontractors as well as contractors? In practice, many contracts are effectively delivered by the subcontractors as well as the main contractors.

[Brandon Lewis]

I will not prejudge the guidance before we publish it, but I am sure that the hon. Gentleman, if he is not happy with what we do, will want to raise it with me at Question Time or through the Select Committee.

Following our debate on amendment 13 in Committee, I wrote to the hon. Member for Corby providing further details. I can assure the House that this amendment is not necessary, as sufficient safeguards are already, and will continue to be, in place to ensure the independence of the auditor. First, the Financial Reporting Council’s ethical standards require audit firms to establish policies and procedures to ensure that auditors act with integrity, objectivity and independence. There are specific limitations on audit firms providing non-audit services.

The ethical standards require the lead auditor to assess any threats to the auditor’s objectivity. Before accepting an engagement to provide non-audit services, it must consider whether doing so could threaten the firm’s actual or perceived objectivity or independence. The ethical standards do not prohibit audit firms from undertaking non-audit work, but they do require them to introduce safeguards that would eliminate these threats or reduce them to an acceptable level. This is where a reasonable and informed third party would probably not conclude that an auditor’s objectivity was or could be impaired. If the firm cannot introduce sufficient safeguards to reduce the threats to an acceptable level, it must not accept the non-audit engagement or it must withdraw from the audit.

Secondly, auditors must comply with international standards setting out the ethical requirements for financial statements audits and requiring lead auditors to report on compliance with independence requirements and audit firms to ensure that their quality control systems comply with professional standards and regulatory and ethical requirements. The international standards also require firms to put in place procedures for the acceptance and continuance of specific engagements, including whether compliance with ethical requirements can be achieved.

Thirdly, recognised supervisory bodies will have rules to ensure that local auditors conduct work properly and with integrity and that they do not accept appointments where a conflict of interest would prevent that. They must record threats to independence and the steps taken to safeguard independence and ensure that remuneration is not influenced by the local auditor providing other services. That is consistent with the established framework in the companies sector. In addition, we expect the independent auditor panels to advise the authority on the adoption and content of a policy on awarding non-audit work to the auditor. A note to the annual accounts is required if the audit firm undertakes non-audit work.

Those safeguards will protect the actual and perceived independence and integrity of the auditor. If objectivity is prejudiced, the firm must withdraw from either the audit or the non-audit work. We consider this approach preferable to the amendment tabled, which would not remove the potential conflict of interest. If the audit firm were required to subcontract to another firm, it would still be accountable for the audit opinion and any other work undertaken by the subcontractors.

15:15

Amendment 12 would add local enterprise partnerships to schedule 2 and make them subject to the local audit provisions. I will begin by repeating the assurance, which I gave in Committee, that any public funds channelled through LEPs will be subject to appropriate scrutiny. LEPs are voluntary strategic partnerships, not statutory public bodies. Each has a lead local authority that acts as the accountable body for public funding, and it is this local authority that provides the appropriate financial accountability, including through an annual external audit.

Making LEPs subject to public audit themselves would simply duplicate existing audit arrangements through which lead local authorities act as accountable bodies. The recent report from the all-party group on local growth, local enterprise partnerships and enterprise zones, of which, as the hon. Member for Corby said, I was the first chair, stated that

“many participants recognised the role of the accountable body arrangement in providing the necessary financial accountability for public money outside the LEP organisation, freeing the LEP up to focus on strategy and delivery”.

The amendment would simply add unnecessary burdens to LEPs, while doing little to improve accountability. With these explanations and assurances, I hope that the hon. Gentleman will feel able not to press new clauses 1 and 2 and amendments 12 and 13 to a vote.

On the amendments tabled by the hon. Member for Hayes and Harlington, new clause 4 would require the Secretary of State to provide each House of Parliament with a report on the effectiveness, efficiency and economy of structures and procedures that local authorities put in place for reviewing decisions or actions taken by their executive cabinets under section 21 of the Local Government Act 2000. Section 21 requires local authorities operating executive arrangements to appoint at least one overview and scrutiny committee. The role of such a committee is to review and scrutinise decisions and actions of the executive or the council and make reports or recommendations to the council or executive.

Such committees may also undertake reviews and make recommendations to the council on any matter affecting the local authority area or its inhabitants. Overview and scrutiny is thus important in holding the executive to account for its decisions and actions and plays a vital role in the development of policy, but councils are accountable to their local electorates. It is their responsibility to ensure that their scrutiny arrangements are effective, and they must account for this to their local people, ultimately—like us all—through the ballot box. The provisions in the Bill that enable regulations to make it clear that people can film meetings and blog or tweet about what their elected representatives are saying in meetings are all part of reinforcing local accountability and making it more effective.

The Government believe in localism—that power should be passed down to local people to hold their councils to account. Local authorities should not have to spend their time reporting to central Government, only for the latter to lay some report before Parliament. That is turning accountability completely on its head. The Bill’s provisions are all about strengthening local accountability, making it more effective and bringing it into the 21st century. These amendments would take us in a different direction and are wrong in principle as they would create a wholly unnecessary and inappropriate arrangement.

For example, new clause 5 would require the Secretary of State to prepare and lay before Parliament a report on the adequacy of the resources, staffing, structures and procedures put in place by authorities to detect and investigate fraud within the authority, before the Audit Commission is abolished. We agree that tackling fraud should be a priority, not only for central Government, but for local authorities and all public bodies. We are clear that local government needs to deal with the £2.1 billion a year of fraud that occurs largely through housing tenancy, payroll, procurement and council tax discounts fraud. “Fighting Fraud Locally: the Local Government Fraud Strategy” was published in 2011. Developed by local government for local government, it provides a blueprint to reduce the risk of fraud, realise cash savings and work together to prevent future fraud losses. To support local authorities in taking this work to the next level, we have just announced £16.6 million of new investment over the next two years. We have also committed to working urgently with local government to ensure that it has the right powers, incentives, data and capacity to tackle fraud effectively.

The Audit Commission’s work has clearly been an instrumental part of the counter-fraud landscape. Of primary importance is the national fraud initiative which, since it began in 1996, has helped to identify over £1 billion potentially lost to fraud, error and overpayment in the UK. During the earlier stages of the Bill, we announced that the initiative and associated data-matching powers would transfer to the Cabinet Office, and my officials are working with the Cabinet Office to ensure a smooth transition of that important function.

In addition, the Audit Commission has developed a set of counter-fraud tools, including “Protecting the Public Purse”, the annual fraud survey and the changing organisational cultures toolkit. We are working with the commission and others to determine the future of the tools that matter to local government, so please let me reassure hon. Members that we are progressing this issue with rigour and pace. I would be happy to keep hon. Members informed of progress in this area.

[John McDonnell]

I am grateful to the Minister for that information and for his offer of co-operation. Does he have figures for the number of staff employed to investigate fraud in local government in, say, 2007-08 compared with the number employed in that area during the past year?

[Brandon Lewis]

I cannot give the hon. Gentleman those figures off the top of my head, but I will come back to him on that if he will bear with me.

New clause 6 would require the Secretary of State to report to Parliament on the use by local authorities of compromise agreements that involve confidentiality clauses in relation to staff exiting their organisation. I know that the hon. Gentleman feels strongly about this issue and that he raised it on Second Reading. During that debate, he expressed concern that, if used inappropriately, confidentiality clauses could unreasonably restrict officers’ ability to provide full and frank advice to local members and to protect the public interest. Officers, including those exiting an organisation, must have proper opportunities to provide such advice and to raise concerns. The Secretary of State has made clear his view that so-called gagging clauses should not be used to undermine that principle, and I am happy to reiterate that view today.

The use of compromise agreements in the public sector was recently the subject of a report by the National Audit Office and was also scrutinised by the Public Accounts Committee. Further to this, the Government agreed that there should be greater transparency and accountability on the use of compromise agreements across the whole of the public sector, including local authorities. Importantly, the law is quite clear that compromise agreements—in which an agreement is reached to contract out of statutory employment rights—can be made only when the employee has had access to independent advice on the terms and effect of the proposed agreement.

Furthermore, confidentiality clauses cannot be used to prevent a protected disclosure under the Public Interest Disclosure Act 1998. The Government have recently undertaken a call for evidence to look at whistleblowing, and specifically at whether there is enough support for people who wish to report wrongdoing. The Government will respond to the call for evidence early in the new year. I hope that I have been able to reassure the House that the Government take this matter seriously and are taking action on it.

[John McDonnell]

I am grateful for that information, but may I suggest that that review of whistleblowing should pay specific attention to the use of compromise agreements, particularly within local government? I do not think that that has been explored or taken into account sufficiently so far.

[Brandon Lewis]

The hon. Gentleman makes a fair point, and he will appreciate that it is now noted and on record. I hope that I have been able to provide sufficient assurances to persuade him not to press his new clauses and amendments to a vote.

I shall not detain the House for long on Government amendments 1 to 5. Amendment 1 would require an authority to include the period of the auditor’s appointment in the public notice confirming the appointment of the auditor. Clause 8 requires authorities to publish such a notice within 28 days of making the appointment. The hon. Member for Corby will recall that he tabled a similar amendment in Committee and suggested that it would be helpful for the public to know the term of the auditor’s appointment. It was also suggested that knowing when the existing contract would end would be useful to potential bidders for any new appointment.

There was a similar discussion in the other place, where Lord McKenzie tabled an amendment to require that information on the term of appointment should be included in the published notice. At the time, the Government expressed sympathy with the intentions of the amendment, but questioned whether such a requirement needed to be set out in legislation, because it could simply be a matter of good practice and guidance. However, having considered the case further, and in the light of the points made by the hon. Member for Corby in Committee, the Government accept that it might be useful to put the matter beyond doubt through this amendment.

Amendment 2 is a minor and technical amendment to ensure that references throughout the Bill cover subordinate legislation made under part 42 of the Companies Act 2006, as applied by schedule 5 to the Bill. It will make it clear that provisions on eligibility and regulation apply to the whole local audit regime.

Amendment 3 removes from schedule 2 internal drainage boards that are partly in England and partly in Wales. There are two such boards: Powysland and Lower Wye. Both are mainly in Wales but currently fall under the Audit Commission regime. The local audit provisions in the Bill will therefore not apply to those cross-border internal drainage boards after the Audit Commission is abolished. The Welsh Government intend to transfer the functions of the two cross-border IDBs, along with the functions of one IDB that is wholly in Wales, to a single body, Natural Resources Wales, and to bring them under the Welsh audit system. They intend to do this by the time the Audit Commission is abolished—by April 2015. Both bodies will continue to fall under the Audit Commission regime until then.

The Welsh Government supported a legislative consent motion to make audit arrangements for the two bodies under the Bill as a stopgap measure until the new governance arrangements are in place. However, the legislative consent motion was not passed by the National Assembly for Wales. As a result, in line with the devolution settlement, the amendment removes these two bodies from schedule 2. Welsh Ministers have agreed that we should retain the power in clause 2 as a backstop power to add cross-border bodies back into schedule 2 by regulations at a later date, should the transfer of functions take longer than expected. Regulations made under this power will be subject to consultation and the affirmative procedure, and would require consent from the National Assembly for Wales.

Amendment 4 is a minor amendment to clarify that paragraph 6(1) of schedule 4 does not apply in the case of health bodies. The paragraph currently provides that, when an authority uses an existing committee as its auditor panel, wider enactments that usually apply to committees of a local authority do not apply. A corresponding power in paragraph 5 then allows such enactments to be positively applied to the panel, to ensure that arrangements remain proportionate, given the panel’s limited role.

In the case of health bodies, however, their audit committees are covered by a specific existing framework, which is different from that applied to local authority committees. That framework reflects the different governance framework for health bodies such as clinical commissioning groups, and will need to continue to apply in full, even when the committee is acting as the panel. As drafted, paragraph 6 of schedule 4 could have the unintended consequence of disapplying that existing framework for audit committees within health bodies when they are acting as the auditor panel. The amendment therefore excludes health bodies from this provision.

Amendment 5 further modifies schedule 10 to the Companies Act 2006, as applied by schedule 5, in respect of auditors qualified in other European economic area countries. It has two main effects in respect of those individuals. First, it will enable the recognised supervisory bodies for local audit to recognise the qualifications of those auditors who hold the equivalent of a UK local audit qualification obtained elsewhere in the EEA. This is necessary to comply with the requirements of the recognition of professional qualifications directive, 2005/36/EC.

Secondly, the amendment specifies that recognised supervisory bodies can require an EEA statutory auditor to pass an aptitude test only if the auditor is seeking to become established as a local auditor in the UK on a permanent basis. The audit directive, which makes provision for an aptitude test, applies only to statutory audit. Unlike the audit directive, however, the recognition of professional qualifications directive does not permit the imposition of an aptitude test if an individual is seeking to provide services on a temporary and occasional basis. The amendment therefore seeks to align the regulatory frameworks for statutory and local auditors, as far as is permitted.

The amendment will also ensure that any indirect discrimination against EEA auditors is avoided and that the requirements for EEA local auditors and EEA statutory auditors are as consistent as possible. It will also ensure that a firm is qualified if it is eligible for appointment as a local or statutory auditor or is eligible for a corresponding appointment. I urge the House to support the Government’s amendments.

[Andy Sawford]

Thank you, Madam Deputy Speaker, for allowing me a moment to reply.

The amendments, particularly new clause 2, have had strong support from my hon. Friends and I am grateful to them for putting their views on record. I welcome the Minister’s statement that the Government will publish guidance to private sector contractors. He went further, saying that if that is not effective, the Government will consider extending freedom of information contracts to private suppliers. I consider that to be a significant move forward, certainly from where we were in Committee. It is a win for my hon. Friend the Member for Derby North (Chris Williamson) and others who have championed this. We very much look forward to seeing that guidance, but we also commit to taking the issue forward ourselves.

15:30

In relation to integrated audit, I believe that the Minister—whether intentionally or not—has sought to misrepresent what our amendment would do in practice. We have not said that the National Audit Office should audit local government, for example. We have simply said that we should work together in audit. We have also not said that the absence of integrated audit is in itself a barrier to taking forward community budgets, but rather that it will be an enabler and a complementary approach as we take forward community budgets around the country.

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Clause 8

Procedure for appointment

Amendment made: 1, page 6, line 43, at end insert—

‘(ba) specifies the period for which the local auditor has been appointed,’.—(Brandon Lewis.)

Clause 39

Code of practice on local authority publicity

[Andy Sawford]

I beg to move amendment 14, page 26, line 11, leave out

‘one or more specified local authorities’

and insert ‘a local authority’.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Amendment 15, page 26, line 25, leave out subsection (4) and insert—

‘(4) A direction can only be made by the Secretary of State if—

(a) evidence of a breach of a code has been published by the Secretary of State to the local authority;

(b) a local authority, on receipt of a letter from the Secretary of State notifying them of evidence which purports to demonstrate a breach of the code has made a response to the Secretary of State within 28 days; and

(c) upon receiving any response the Secretary of State has published a report detailing his conclusions.’.

Amendment 16, page 27, leave out lines 1 to 29.

[Andy Sawford]

Clause 39, to which the three amendments relate, includes provisions on local authority publicity that the Opposition strongly believe, and have consistently argued, are unnecessary, undemocratic and wholly disproportionate. The amendment, and the clause itself, covers all council publicity from newspapers to posters and even social media. We are gravely concerned that the Secretary of State is, in effect, through clause 39 making himself the censor-in-chief of local government communications.

Much attention has been paid to the Government’s gagging law, which attempts to silence civil society. It is less widely known that, through clause 39, the Government are trying to silence elected local councils. These new powers make the Secretary of State censor-in-chief of local government at the same time as evidence is emerging that his Department is encouraging councils to print pro-Government propaganda through the circulation of the very loaded pro-Government suggestive press releases that we have seen appear around the country.

Clause 39 will give the Secretary of State the power to dictate when and how councils can publish communications to local citizens. Of even more concern to us is the fact that the Secretary of State is taking a power of censorship to direct what issues and information councils can talk about and even what language and phraseology they can use. Ministers have made it clear that their intention is to prevent councils from sharing information or commenting on the impact of Government policy if they disapprove of the message.

In Committee, the examples given by the Minister and his Back Benchers included not allowing elected leaders of a local authority to publish a comment on the effect of central Government funding changes—so furious are the Government that councils are letting their residents know the scale of the cuts they are facing. Under these new powers, the Secretary of State could force councils to use pro-government terminology such as the benign-sounding “spare room subsidy” rather than the “bedroom tax”, which betrays how unpopular and unfair the policy is to many of the poorest and most vulnerable people—including many disabled people—in our communities. Legal advice to the Local Government Association says that these censorship laws would prevent councils from publishing information on issues such as HS2 or health service reconfigurations.

The Government argue that the power is needed because local authorities are breaching the current voluntary code on local authority publicity. Yet they have managed to find only one example of a breach; Tower Hamlets’ publication “East End Life”, which seems to the Opposition clearly to flout the code. It is absolutely shocking that the Government have failed to take any action, using the powers they already have, in more than three years since they became aware of the level of concern, including that reported by Labour councillors in Tower Hamlets. We agree with the Secretary of State that that publication is a problem, but we ask again why the Government have taken no action—no action at all. In fact, the Minister attempted to explain to me in an answer to a parliamentary question that it is because the Secretary of State has not done anything that he now believes that he needs to give himself these dictatorial powers. It is so extraordinary that one might assume that if councils knew the full extent of these plans, they would resist them.

Through several freedom of information requests, I discovered that the Department has not communicated with local authorities about the plans since May 2010. No councils have answered letters or e-mails in respect of their local publications on this subject. This is all being done behind local authorities’ backs.

At the same time as the Secretary of State is censoring councils and preventing them from saying things he does not like, he is seeking to use them as a propaganda arm of the central state. I have discovered that, through these press releases, the Government are seeking to trumpet their policies when it suits them to use councils in that way at the same time as they seek to silence them when council communications are inconvenient. The Secretary of State preaches localism rhetoric, but the truth is—we know this, and local government knows it, too—that he does not really like local democracy. Starved of funds and subject to diktats even on issues like when to collect the bins, local authorities are now subject to censorship. It is clear that the Secretary of State’s warnings of cigar-chomping commies looking to take over government were remarkably prescient.

The hon. Member for Mid Dorset and North Poole (Annette Brooke), who I see in her place, described these censorship laws as

“a sledgehammer to crack a nut”.—[Official Report, 28 October 2013; Vol. 569, c. 704.]

Liberal Democrat-run Cambridge city council says that the clause is “disproportionate and unnecessary”. It says it is

“quite at odds with the principles of localism”.

I asked the Secretary of State in a parliamentary question of 16 December to publish or place in the Library all the responses his Department received to the consultation it ran on local media. The Minister replied:

“I have placed in the Library of the House, a copy of the Government’s response to the consultation on ‘Protecting the Independent Press…’ which outlines the divergent views of councils and representatives of independent newspapers.”—[Official Report, 16 December 2013; Vol. 572, c. 444W.]

Because the Minister would not provide the information, I took the trouble of making a freedom of information request to local authorities themselves about their responses to the consultation on the publicity code. I then discovered that it was not only Cambridge city council that said it disagreed with the clause. Watford borough council, led by the widely respected elected local mayor, Dorothy Thornhill—she is not of my party, but she is someone I have worked with who has a good reputation around local government—says:

“These changes are a threat to local democracy. They could inhibit local elected members from representing their residents. Placing the ultimate decision-making powers in the hands of a Secretary of State is contrary to the localist agenda of the Government, and it is heavy-handed.”

It is not just Liberal Democrat councils either, because Conservative councils, too, are opposed. North Yorkshire county council says in its response:

“The proposed legislation is disproportionate”.

Tory-run North Somerset says:

“With regard to the proposed restrictions on the publication of council newspapers, we object strongly.”

Baroness Eaton said in the other place:

“This clause is unnecessary as there is no evidence that council publications are competing unfairly with local newspapers…the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at local level”.

Lord Tope, commenting on the lack of evidence to support the proposals on local authority publicity, said:

“All we have had from the Government is rather silly and misleading statements from the Secretary of State about ‘town hall Pravdas’”.—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898-902.]

The Local Government Association, a cross-party but Conservative-led body, says:

“The powers are too wide ranging and do not allow councils any local discretion about how to engage with their residents. This is unnecessary and could allow the Secretary of State to interfere with the work of an elected council.”

The National Association of Local Councils, which has no political axe to grind, says these powers are “anti-localist”, fly in the face of localism and are

“a threat to local democratic accountability”.

Finally, let me cite the very considered words of the right hon. Member for Hazel Grove (Sir Andrew Stunell), the former Local Government Minister in the coalition Government. In Committee he said:

“Every Bill has high spots and not-so-high spots, and Clause 39 is one of those not-so-high spots.”––[Official Report, Local Audit and Accountability Public Bill Committee, 19 November 2013; c. 301.]

I have had the pleasure of working with the right hon. Gentleman in a previous role so I know that that is a typically understated remark from him. He then went on to challenge the Minister for assurances about the proportionality of any intervention, and the ability of councils to make representations with regard to how they are exercising discretion. However, far from giving reassurances, the Minister—and many of his hon. Friends, some of whom I see in the Chamber today—made us more rather than less concerned. Their political motivation was absolutely clear: they were frankly shameless about revealing that clause 39 was about silencing councils if they communicated with citizens about anything that the Government did not like.

The Secretary of State claims that the clause is needed to protect the press from unfair competition from advertising, but the recommended code of practice for local authority publicity contains no provisions relating to advertising. It is clear that the Secretary of State’s argument is a diversion from the real aim of censoring councils and their locally elected councillors. The National Union of Journalists disagrees with the Government’s contention that local authority publications are damaging to the press. Its general secretary has said that there is “no case at all” for the current Secretary of State

“and future Secretaries of State to be given extra statutory powers to decide when”

and how local authorities can communicate, adding:

“We do not believe that this element of guidance reflects the needs of many communities”.

The Minister will no doubt tell us that the Government ran a consultation in April 2013. That consultation was a classic example of things that cause the public at times to be very sceptical abut public sector consultations. It was, in fact, very much a “nonsultation”. Its outcome was so evidently predetermined, even by the loaded title “Protecting the independent press from unfair competition” and by the way in which it was launched. The Government, as if to confirm that impression—as if they had no regard to whether the public, or indeed local authorities, would consider that they had given any proper thought to the consultation—published their response within two days of the end of the consultation.

We have challenged the Government to give practical examples. As I have said, we acknowledged the issue about Tower Hamlets, on which they should have acted. Baroness Hannam said in the House of Lords that she had evidence involving other local authorities, yet she said—extraordinarily—that it would not be “helpful” to identity them. Asked to give examples, she said:

“I shall not say which local authorities…are breaching the code. I have them. I could do it, but I think it is…not helpful.”—[Official Report, House of Lords, 15 July 2013; Vol. 747, c. 604.]

In Committee, the Minister said:

“the fact is that there are examples out there.”––[Official Report, Local Audit and Accountability Public Bill Committee, 19 November 2013; c. 304.]

He then vaguely referred to four councils—Plymouth, Lambeth, High Peak and Nottingham, all of them Labour-run—which had had the temerity to inform the public of the unfair scale of the cuts imposed on them by central Government. Can Ministers not see that the kind of censorship that they are seeking to impose through clause 39 is not democratic, not British, and not worthy of the values that our Parliament should uphold? The motivation is petty, but the consequences will be very serious indeed.

Let me tell the House about the effect in my area. The Minister has suggested that a council publication in my constituency, the Nene Valley News, is competing unfairly with local papers. His ill-informed statements show why we should not trust the Government with these powers. The truth is that there is no newspaper for the Nene Valley News to compete with across much of east Northamptonshire—and now the only communications lifeline on which many people in the small towns and villages of my constituency can rely is being cut off. Those are people in areas with poor broadband access, and the demographic is such that, proportionally, there are fewer people in those areas than in some of the larger towns in the county who use social media widely, or even have access to the internet.

[Mr Betts]

Three years ago, the Select Committee conducted an inquiry into the whole issue of local authority publications, and found absolutely no evidence of any impact on commercial newspapers. Indeed, one of our findings was that many local authority publications were published on the presses of commercial papers, thus providing them with important additional income.

[Andy Sawford]

My hon. Friend, who chairs the Select Committee, is right. I think that there is often a complementarity between the newspapers, news sheets and magazines published by councils and other local papers. There is often a considerable spin-off in the form of the relationship between the communications that councils promote through their papers about local events and community organisations, and how vibrant local newspapers are able to become in terms of, for example, the advertising revenue that they can create in relation to such community events and activities.

The Minister has claimed that the advertising in the Nene Valley News is the problem. First, it is not included in the code; secondly, I would gladly facilitate a meeting between the Minister and the local small businesses and traders who use the low-cost space in the Nene Valley News, and who are now extremely worried about how they will get business. I quoted one individual at length in Committee, but for brevity I shall merely say now that he concluded his remarks to me on this matter by saying, “Aren’t the Tories supposed to be a party that likes business?” He is very sceptical about the motivation for, and is concerned about the effect of, this crass, uninformed and undemocratic clause.

15:45

The clause will damage local democracy, because it will mean that local councils are not as able to inform and engage the public in their work. It will also damage community groups, scout organisations, local charitable organisations, small businesses and the food banks which, sadly, are needed in our communities, as they will not be able to publicise their activities through the local free sheet—through the local council. Many of my constituents have contacted me to tell me that they object to what the Government are doing. I hope that all hon. Members will want to support our sensible amendments, which are supported by the Local Government Association, and I urge the Minister to accept them. We have not sought to strike out clause 39 completely, although we question why it is necessary and argue that the Government should have taken action previously in relation to the code.

Amendment 14 seeks to make things more proportionate. Either the Secretary of State wants all councils to abide by the code or he wants to be selective. I am told that he wants to be selective, which makes me even more concerned. Amendment 15 seeks to delete the astonishing new subsection that sees the Secretary of State attempt to take editorial powers over all local government publications. The words in the Bill leap off the page, because it says he will take this power

“whether or not the Secretary of State thinks that the authority is complying with the code”.

The amendment would require the Secretary of State to publish evidence of a breach of the code.

[Andrew Griffiths (Burton) (Con)]

I listened to much of what the hon. Gentleman said in Committee and followed his train of argument. Will he clarify whether he opposes the code itself or just its enforcement?

[Andy Sawford]

I am surprised that the hon. Gentleman did not pick this up during our three Committee sittings on this clause, as we made it clear that we support the voluntary code. We have been able to agree on one example where there is clearly a question as to whether the code is being flouted, and it is a great shame that the Government have not seen fit to take any action in three years to enforce the code.

[Andrew Griffiths]

Will the hon. Gentleman give way?

[Andy Sawford]

I am going to make some progress, because the hon. Gentleman spoke extensively on these provisions in Committee and made us more, not less, concerned.

Amendment 15 seeks to delete the astonishing new subsection I mentioned, to extend the time that the authority has to respond to evidence of a breach of the code to 28 days from 14, and, crucially, to require the Secretary of State to publish a report detailing his conclusions, having considered the response from the authority. That seems to us to be a very reasonable amendment that enshrines an evidential basis for taking any action in relation to the code. Amendment 16 seeks to delete the whole of proposed new section 4B, as we feel it is overly proactive meddling from the Secretary of State. We will seek to press amendment 15 to a vote. I hope that hon. Members on both sides of the House will consider it reasonable that if the Government must press ahead with these powers, there is at least a requirement for the process to be evidence-led, for councils to have the right to make representations and for the Secretary of State to publish his findings before any action is taken.

I end by asking the Minister, one more time, to try to persuade us that this approach is necessary by saying how he thinks that the Opposition, the cross-party, Conservative-led Local Government Association, Liberal Democrat-run and Tory-run councils all around the country, the National Association of Local Councils, the National Union of Journalists and my constituents in east Northamptonshire, who are so upset about the end of the Nene Valley News, are all wrong and he is right. Even if he still thinks he is right, can he explain, as someone who purports to be a localist, why it is right to impose central Government’s will? This clause is worthy of a crackpot dictatorship.

[John McDonnell]

This is barmy. It is absolutely crackers that we are spending parliamentary time on this matter. I receive Hillingdon People from my Conservative-controlled local authority. On virtually every page, there is a picture of a smiling Conservative councillor pointing at something, standing on something or expressing some view. Interspersed with the smiling photographs is genuine information about what is happening in the local community. People tell me that the newspaper is an ideal size for lining a hamster cage, so it serves some useful purpose in the local area.

Today, the Government have announced the commission report on the expansion of aviation, which includes the threat to my constituency from the third runway. I have been assured that there will be cross-party opposition on my council to the Government’s proposals. We will use Hillingdon People to explain the proposals that have been introduced. We have used it in the past to explain the proposals of all political parties. Undoubtedly, views will be expressed by councillors on a cross-party basis condemning the commission’s proposals and, almost certainly, the Government’s approach. Does that mean that we will then be hauled before the Secretary of State to be advised on the words that we can use about this matter and on the way in which Hillingdon People will be used?

The one good thing about local newspapers is that they reflect local opinion. There might be an overbalance of photographs of a certain party, but for all that they are a useful tool in mobilising local opinion around a local issue, and they are campaigning tools for a local authority in genuinely reflecting the views of the local populace who elected them.

My local council has certainly consulted local people and supported local meetings to ensure that people can express their views on the extension of Heathrow. It has then reflected those views in Hillingdon People, and launched campaigns on the basis of what local people have said. At my last public meeting on this matter, a campaign called “Back Heathrow” was spuriously launched by the aviation industry to support Heathrow airport expansion. It was completely funded by Heathrow airport and run by its public relations agency. People then said to me that Hillingdon People should be used to put out accurate information, rather than the spurious propaganda that the airport was putting out. I am anxious that my local authority, which will go on the stump on this issue, may be debarred from using Hillingdon People to explain what its views are and to campaign against the expansion of Heathrow airport.

I would be grateful to the Minister if we heard his views. By the looks of it, he will now be the editor-in-chief of Hillingdon People, so I would welcome his views now before we put a foot wrong. Is it in order, under this Bill, for Hillingdon council to use Hillingdon People to campaign against Heathrow expansion and to disseminate information that will be opposed to the commission’s views and what seems to be the emerging view about a third runway at Heathrow?

[Chris Williamson]

I rise to speak against this Orwellian clause and in favour of the amendment tabled by my hon. Friend the Member for Corby (Andy Sawford). He is absolutely right to say that the Government are seeking to put the Secretary of State in the position of censor-in-chief. We live in the United Kingdom. I thought that the Government believed in freedom of speech and the free press, but it turns out that that is not the case when it comes to publications produced by local authorities. It is clear that the Secretary of State is setting himself up as some sort of Orwellian big brother figure. If the clause goes through, the Department for Communities and Local Government should be renamed the ministry of truth. It is all right for the DCLG to issue draft press releases praising the Government. As my hon. Friend the Member for Corby said, as long as local government is praising the policies of central Government that is okay, but if it has the temerity to point out that in some way what the Government are doing might have a negative impact on the communities that they represent, then woe betide them; that is not acceptable. When the Secretary of State seeks to take that kind of power to himself, we have to ask what kind of country we want to live in. This is completely wrong. Just look at the document—it could be a Tory hand-out. It has even suggested the headline that the local authorities might like to put on their press releases. It reads, “Pickles praises troubled families programme”—so, big up the Secretary of State, but, whatever you do, do not say anything that could be interpreted as negative.

My hon. Friend the Member for Corby pointed out that there is absolutely no evidence suggesting widespread abuse of the voluntary code. Indeed, we would be hard-pressed to find any example, let alone widespread examples, so this provision is completely over the top. We have talked about using a sledgehammer to crack a nut, but it is more like using a pile-driver to crack a minuscule nut. There is no example of any abuse. It is clear, therefore, that the Secretary of State is seeking to set himself up as the censor-in-chief.

In Committee, I challenged Government Members to come up with some examples of the abuses that merit this heavy-handed legislative response. The first out of the traps was the hon. Member for High Peak (Andrew Bingham), who came up with the ludicrous assertion that legislation is merited to stop a photograph of the Labour leader of his local borough council appearing in the council newspaper with a Labour party pen. A pen with the Labour logo on it was an abuse that merited legislation—talk about crackers, as my hon. Friend the Member for Hayes and Harlington (John McDonnell) said. It is unbelievable. We are talking about legislation to stop local authorities publishing their council newspapers, giving information to the local community about matters affecting them, and it is suggested that the Secretary of State should be put in charge because a Labour leader appeared in a council newspaper holding a pen with a Labour logo on it.

The hon. Member for High Peak must have scrutinised that photograph with a magnifying glass to be able to see the logo, let alone to suggest that it would influence people. He dug himself an even bigger hole by comparing it with product placement, which is banned on the television. He said that we do not see packets of cornflakes on the table in “EastEnders”. Crackers really does not cover it.

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

The hon. Gentleman is making some cogent points. If that photograph had appeared on a Member of Parliament’s website paid for by IPSA, IPSA would have banned it. I am not sure whether that helps or hinders his argument, but someone else would want to ban that logo placement.

[Chris Williamson]

With the greatest of respect, I think the hon. Gentleman is talking through his hat. I am not sure that IPSA would ban it. Is he telling me in all seriousness that that would happen if a Labour politician appeared on their website and happened to be holding a pen with a Labour logo on it? People would not be able to see it; it is ridiculous. In the Committee sitting, I had a pen with “League Against Cruel Sports” emblazoned on it. I held it up and challenged the hon. Member for High Peak to read what it said on the pen, because the scale would have been about the same as in the photograph in the borough newspaper. He could not see it; of course he could not. The hon. Member for Daventry (Chris Heaton-Harris) mentions IPSA, but that compounds the ludicrousness of the Government’s case. When the hon. Member for High Peak made the point, he was unable to read the logo on my “League Against Cruel Sports” pen and, in the same way, without a magnifying glass he would not have been able to see that the Labour leader had the temerity to hold a pen with the Labour logo on it.

The next out of the traps was the Minister, who referred to a poster. A poster in Lambeth was a bit critical of the Government—we can’t be having posters. The poster was, I think, on a bus stop—so far, therefore, a pen and a bus stop merit legislation.

The final Government Member out of the traps, as I recall, was the hon. Member for Burton (Andrew Griffiths), who quoted Councillor Western, the Labour leader of Derbyshire county council. She had the temerity to point out that the cuts being imposed by central Government would have “a devastating impact” on our communities. Well, that is a statement of fact. It seems that Members on the Government Benches do not want statements of fact if they are in any way, shape or form marginally critical of what the Government are doing, even though they are accurate. This really is Orwellian and merits references to the ministry of truth. I sincerely hope that any Government Member who believes in fairness, free speech and the freedom of the press will support my hon. Friend’s amendment.

16:00

I conclude by reinforcing the point made by my hon. Friends the Members for Hayes and Harlington and for Sheffield South East (Mr Betts), to which my hon. Friend the Member for Corby may have alluded as well—the fact that local council newspapers are in no way a threat to the local newspaper industry. I know from personal experience at a local level that Derby city council uses a local newspaper to print and publish its council news-sheet, so far from damaging the local newspaper industry it is having a beneficial impact.

[John McDonnell]

I am the secretary of the National Union of Journalists group in Parliament. There needs to be a discussion between Departments. We are working with the Department for Culture, Media and Sport and will hold a seminar in the new year to discuss how we ensure that all Government Departments can assist in the development and support of the local press. A Member on the Government Benches suggested publishing local material in the local media or on a wrap-around basis, which would support the print industry and the local press.

[Chris Williamson]

Indeed. There is a happy partnership between many local authorities and the newspaper in their local area. It is a significant overstatement of the truth to suggest that local authorities producing their newspaper are in any way responsible for the decline in the local newspaper industry. Many other factors, not least access to online information, are responsible for the decline. What the Government seek to do will not arrest that decline and might make matters worse. The truth is that, where there is a partnership with the local newspaper serving the local authority area, limiting the number of times the council can produce information through its newsletters will diminish the local newspaper’s income stream. Far from assisting local newspapers, the Government will add to their decline. I hope the Minister will reflect on that.

My hon. Friend the Member for Hayes and Harlington referred to his connection with the NUJ. Let me quote the National Union of Journalists’ response to what the Government propose. As my hon. Friend the Member for Corby said, in many areas where there is no local newspaper, local people rely on the council publication for useful information and would regret the Government decision to limit the council’s ability to produce that for them. The NUJ says:

“In areas where there are no, or limited local newspapers, then sharing planning details, service changes and details of consultations on a quarterly basis is insufficient”.

It is clear that there is no evidence to support what the Government want to do. The amendment—this is pretty unprecedented, in my experience—is supported by the Local Government Association, a Conservative-led body. It is very rare for the LGA to come out and support an Opposition amendment. It is also supported by the National Association of Local Councils, the National Union of Journalists and members of the general public. It is hard to find anybody who has a good word to say about this Orwellian clause, save for a handful of hard-line Conservatives on the Government Benches.

I implore the Minister, if he has any semblance of concern for the feelings of the public or the wishes of the Tory-led Local Government Association, and if indeed he genuinely believes in a free press and freedom of speech, to support amendment 14, because that would be in the interests of freedom of speech and of the general public, ensuring that they have the information they need about services and other activities in their local area provided by the council. I hope that he will reflect on that and support the amendment.

[Alex Cunningham]

I rise to support amendments 14 to 16. Nothing is more likely to get the blood rising in the body of a journalist, even one who has not worked in mainstream journalism for half a lifetime, than the idea that someone wants to interfere in the message they are trying to deliver to their readers. That was my reaction when I first heard about the Secretary of State’s ambition to become editor-in-chief of all council publications, from city authority newspapers to parish council newsletters.

I spent many a happy year working as a journalist in the local and regional media and then in the communications industry for a blue-chip company. I never experienced any real interference, and certainly nothing like the level that the Secretary of State wants. Likewise, in my 20 years as a councillor, first for Cleveland county council and then for Stockton-on-Tees borough council, I never saw the abuse of power through publications of which the Secretary of State appears to be so terrified. It will therefore come as no surprise that, as a former journalist and councillor, I have particular concerns about clause 39, which gives the Secretary of State the power to direct local authorities to comply with a specific code of conduct relating to their publicity materials.

If the Bill passes in its current form, as other Members have said, the Secretary of State will be appointing himself editor-in-chief of Local Government Inc. and assigning himself carte blanche to intervene, irrespective of whether he believes a local authority is complying with the code of practice. So that we are clear about the extent and reach of the proposed powers, I will explain that clause 39 would apply to all local authority publicity material, including newspapers, such as the quarterly Stockton News in my constituency which is delivered to so many residents across the borough to keep them informed about services and what is going on in the local authority area. It would apply to posters advertising the many events, schemes and projects that local authorities promote for the benefit of their citizens. It would also apply to the social media updates that local authorities provide to ensure that residents have up-to-date information.

As an aside, I would be fascinated to know how the Secretary of State plans to monitor the thousands of communications emanating from councils across the country every day. Does he have plans for an army of Twitter monitors, Facebook spies and online assessors to ensure that there can be no challenge to his authority? Of course not, so perhaps the Minister can explain just how that brave new world will be policed.

The powers proposed in clause 39 are entirely disproportionate and represent a stubbornly heavy-handed response, as the Government have identified only one example of a local authority apparently abusing its position. Even in that instance, as other Members have said, the local authority involved has denied the accusation of contravening the Government’s current code of recommended practice. I agree that any political bias would be unacceptable in local authority publicity, and the code of conduct requires objectivity, even-handedness and appropriateness. That much is beyond contention. It was with that in mind that we encouraged the Government to take action in cases where possible breaches are identified in order to ensure neutrality and fairness. However, as my hon. Friend the Member for Corby (Andy Sawford) has said, the Government have not even written to the local authority in question about the publication. I must therefore question whether the Secretary of State truly believes that a breach has been committed.

It is also worth repeating that, as my hon. Friend the Member for Corby said, through a series of freedom of information requests it has been established that, since coming to power in May 2010, the Government have not contacted a single local authority to express concern about potential breaches of the code. Perhaps they can tell us how many they expect to contact in the future under the new proposals. Assuming that the Government are implementing the current code of practice in full, we must take it from that that few councils, if any, are breaking existing recommendations. All of that prompts the following question: why fix something that is not broken?

When we bear these factors in mind, the context of the Secretary of State’s attempted power-grab politics becomes abundantly clear. With the lobbying Bill currently seeking to limit the campaigning that third sector and voluntary organisations are able to undertake, it appears that the unpopularity of the Government’s policies has begun to sink in. Is the Secretary of State really heading up a damage-limitation mission to control how local authorities communicate the politically toxic effects of the Government’s policies to their local communities merely by explaining the changes and cuts that they need to make?

We know from copies of the template press releases that the Department has issued to local authorities’ press teams that they encourage bias as they frame Government policy in what could only be described as positive terms. Does this mean that the Secretary of State will have to punish one of his own Conservative-led councils for being politically biased for printing material from his own Department? This illustrates the absurdity of his proposals and reveals an outrageous double standard, if ever there was one.

Clause 39 not only grants to the Secretary of State the ability to determine when and how local authorities can publish communications to local residents but assigns to him the ability to dictate the issues and information that they can communicate as well—perhaps an ideal set of circumstances that would put him on a par with the Rupert Murdochs of this world. Why does he not just ban all the newspapers, ban all the publicity and ban all the posters? It would have the same effect. If that were not extreme enough, he is similarly assigned the ability to control the language and phraseology that local authorities will be permitted to use. Perhaps the Government will manage to rid the public of the bedroom tax after all, but changing the words will not change the devastating effects that his policies are having on some of our most needy people.

I am sure that the significance of this move, coming as it does so soon after the intense debates that have been had on the topic of press regulation and the need to remove the risk of political interference and maintain the sanctity of free speech, will not be wasted on Members on both sides of the House. I am minded to ask the Secretary of State whether, were he to assume these new powers, his reformulated role would be compliant with the spirit of the royal charter in providing the public with better protection from press abuses while upholding the freedom of expression that is so central to our democracy. Surely those provisions should apply to him as well. A new term has been coined for him this afternoon—the censor-in-chief—which is certainly what he will be with these powers.

In short, such wide-ranging powers will disfranchise local authorities, removing any semblance of their discretion over communications with residents. Let us not forget that local authorities have a responsibility to represent those residents and to provide services for them, and that transparency and accountability are fundamental cornerstones of that duty. Were an authority unable to protect the interests of its residents, it would unquestionably be failing in its duties.

Given the Government’s agenda for the national planning policy framework, the plans before us appear to undermine their express goal of empowerment for local residents and fly in the face of their professed localism agenda. Members need not just take my word for it. Baroness Eaton, the former Conservative leader of Bradford council, has described as “regrettable” the proposal in the Bill that will

“centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 902.]

Ministers have already made clear their intention to prevent local authorities from sharing information or commenting on the impact of Government policy if they disapprove of the message. That would inevitably have the effect of gagging local authorities in contentious policy areas. To give an illustrative example, a piece in Stockton News entitled “Challenging Times”, published earlier this year to inform residents of upcoming service changes, would be unlikely to make it past the Secretary of State’s red pen unscathed, referring as it does to

“a time of unprecedented reductions in Government funding to the Borough as a result of the Government’s austerity measures.”

The Secretary of State might not like the fact that Stockton borough council’s funding will have fallen by 40% between 2010 and 2016, but that is precisely what it is—a fact. We are talking about facts—political, maybe, but not politicised. That is crucial to the argument for upholding the freedom of speech. I should also make the point that, as far as Stockton News is concerned, no politicians, with the exception of the civic mayor, ever write or comment in it. The publication does not even quote them or publish pictures of them.

Local authorities often work with residents, community groups and MPs to promote the best interests of residents in matters such as the siting of local health provisions and national infrastructure developments. If the Government’s proposals pass, the Secretary of State could use clause 39 to block such collaboration, ultimately to the detriment of residents.

16:15

Let us not forget that local authorities are already required by statute, in the shape of the Local Government Act 2000, to have regard to the contents of the publicity code, and should the Secretary of State have reason to believe that a local authority has failed to comply with a statutory obligation, he is able to intervene by seeking judicial review. The Secretary of State has failed to detail why he deems current provision to be inadequate or to explain why he has yet to apply any of the current powers. Instead he has argued that clause 39 is needed to protect the local press from unfair competition for advertising, but he has not told us how the situation is unfair.

Time and again, the Secretary of State overlooks some essential points, not least that the recommended code of practice has no provisions relating specifically to advertising, other than to specify lawfulness. This suggests to me that this particular argument is but a distraction from the underlying aim to censor local authorities and their elected councillors.

The nonsense of the suggestion is best borne out by the Communities and Local Government Committee report, which declared—others have already alluded to this—that there is no evidence that council publications are competing unfairly with local newspapers. Indeed, far from unfair competition, the obligation on local authorities to publish statutory notices actually results in local authorities paying the commercial newspaper industry some £26 million a year. Taking into account total spend, including general advertising, local authorities spend nearly £44 million a year with the commercial newspaper industry, which blows the Secretary of State’s argument out of the water.

As I have made clear, I can see no reason to move away from the current code of recommended practice to an unnecessarily heavy-handed, regulated system entrenched in legislation. We simply cannot hand full editorial control—because that is what this will mean—to one person for his own political motives. For that reason, I support amendments 14 to 16.

[Brandon Lewis]

First, let me be clear that good communication between a local authority and the public is important. Let me also be clear that what clause 39 delivers is a manifesto pledge by both coalition parties. Local authority publicity can be expensive and it can be controversial, so it is important that local authorities get it right.

In Committee I outlined our intentions and explained exactly what the clause seeks to achieve. We should be conscious of the fact that localism is about empowering local people to be able to challenge and see, transparently, what their local authority is doing. This is about true localism and making sure that we are also able to do our bit to defend the independent local press.

The code of recommended practice on local authority publicity ensures that publicity is, among other things, cost-effective, objective, even-handed and appropriate, and Labour Members have agreed in principle with the voluntary code. It ensures that taxpayers’ money is not wasted on issuing inappropriate publicity or publicity that political parties themselves should be issuing, rather than a local council using taxpayers’ money to do it. The code has been in place since 2011. It was debated and approved by both Houses of Parliament.

[Andy Sawford]

The Minister is right to say that the code seeks to prevent money being used on things that are politicised, but does he not see that his argument is not consistent with a Department that is sending out puff pieces about its Secretary of State for local authorities to issue?

[Brandon Lewis]

I suspect that deep down inside, the hon. Gentleman—we almost became hon. Friends in Committee—probably realises that there is a world of difference between a template press release sent to independent local journalists and a municipal taxpayer-funded newspaper that takes away the competition of a local independent press. None of the provisions in the Bill makes any changes to the publicity code.

Let me give a very clear example of how the process might work for a local authority publishing a weekly newspaper—such as Nene Valley News, which was mentioned by the hon. Gentleman—in direct competition to the local independent press that is so important in holding councils to account. Under the provisions, the Secretary of State, after advising the local authority that he intends to do so and giving it time to make any representations it wishes—such as that there is no other local paper—may, if he thinks fit, issue a direction requiring that the local authority comply with some or all of the code, but particularly, let us say, the part advising local authorities that council newsletters should be issued no more than quarterly. If the Secretary of State considers that a group of local authorities, or even all local authorities in England, should be required to follow the guidance in the code, he must of course make an order, which would need to be debated and agreed by both Houses of Parliament.

[Alex Cunningham]

Will the Minister tell us the name of one newspaper group that has approached the Department to claim that local authority publications are undermining and threatening its business?

[Brandon Lewis]

I suggest that the hon. Gentleman looks at Hansard for the reports of our proceedings in Committee, where we outlined the evidence—including from the Newspaper Society, which complained about exactly that issue—particularly, as was noted, in relation to Tower Hamlets.

Amendment 14 confuses the very clear and necessary provision that the Secretary of State may direct a local authority to comply with some or all of the publicity code. The amendment would achieve little in practice, as the Secretary of State may of course issue more than one individual direction. Amendment 15 would also be far from beneficial. It would add layers of complexity and bureaucracy to what should be a straightforward procedure to allow the Secretary of State rapidly to address incidences of the guidance in the code not being observed.

[Andy Sawford]

Will the Minister give way?

[Brandon Lewis]

No, I shall make a little progress. The hon. Gentleman was keen to make progress during his speech.

Any local authority that already—rightly—complies with the guidance in the code would be wholly unaffected by a direction. Amendment 15 would remove sensible, proportionate measures and put in place a gold-plated bureaucratic process that requires the publication of not one, but two reports by the Secretary of State, all while taxpayers’ money might continue to be wasted.

Amendment 16 seeks to remove the provisions to ensure that a group of local authorities, or all local authorities in England, comply with the guidance in the code. We have sensibly decided to make provision for the Secretary of State to require compliance with the code not only by an individual local authority, but by a number of them or even, if necessary, by all local authorities in England.

The Secretary of State can issue an individual direction to an authority, but to require a group of local authorities or even all local authorities in England to comply with the code, the Secretary of State must make an order subject to the agreement of both Houses of Parliament. That was a recommendation of the Delegated Powers and Regulatory Reform Committee, and we were happy to amend the Bill to give effect to it. Amendment 16 would quite wrongly undo the power and the recommendation, leaving a ridiculous situation in which if the Secretary of State wanted to act to address widespread non-compliance by a group of councils, he might have to issue hundreds of individual directions. The amendment would also remove parliamentary scrutiny of the process.

We are obliged to make the provisions because although the vast majority of local authorities comply with the code, a very few do not; we accept that there are very few. It is to address that abuse of council resource and waste of taxpayers’ money that we have rightly decided to act. The provisions are important, proportionate and necessary.

[Alex Cunningham]

The Minister is making some sweeping comments. I would be interested to know whether he can tell us of one local authority that the Secretary of State has found it necessary to take action against under the existing code, which is adequate for the purpose that he is outlining? I think we already know the answer.

[Brandon Lewis]

I am sure that the hon. Gentleman will have done his homework and will realise that for the Government to take action under the voluntary code, there would have to be a long and expensive judicial review.

The provisions are the right way in which to move forward so that we can enforce the code effectively, efficiently and swiftly. It is slightly baffling that the Opposition claim that they have no problem with the voluntary code agreed by Parliament and support it, but do not want it to be enforced. That just does not make sense, has no credibility and does not add up. The provisions ensure that we can protect the good, local independent press, and that taxpayers’ money is used efficiently and effectively, and not wasted on town hall Pravdas. I encourage hon. Members to resist the amendments.

[Andy Sawford]

What a shocking response. We will not press amendments 14 and 16, but we will press amendment 15 to the vote.

Amendment 15 would place a very simple expectation on the Secretary of State: that he would act on the receipt of evidence, that he would share that evidence with the local authority and that he would ask it to comment. As the Minister says, these matters should be subject to local discretion as well as to national direction. The Secretary of State would simply have to say, in taking enforcement action against a local authority, that he had found a breach of the code. It would be incredibly simple, straightforward and right to make that amendment if the Secretary of State feels that it is necessary to take these extraordinary powers, even though we do not.

The Minister’s response, as at each stage of the passage of the Bill, has made us far more concerned, not less, about the intention behind this very worrying and deeply anti-democratic clause.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 15, page 26, line 25, leave out subsection (4) and insert—

‘(4) A direction can only be made by the Secretary of State if—

(a) evidence of a breach of a code has been published by the Secretary of State to the local authority;

(b) a local authority, on receipt of a letter from the Secretary of State notifying them of evidence which purports to demonstrate a breach of the code has made a response to the Secretary of State within 28 days; and

(c) upon receiving any response the Secretary of State has published a report detailing his conclusions.’.—(Andy Sawford.)

Question put, That the amendment be made.

16:25

Division 161

Ayes: 226

---

Labour: 221
Social Democratic & Labour Party: 2
Independent: 2
Plaid Cymru: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 287

---

Conservative: 241
Liberal Democrat: 44
Independent: 1

[Madam Deputy Speaker (Dawn Primarolo)]

We now come to the next group of amendments. The hon. Member for North East Cambridgeshire (Stephen Barclay) is not here to move lead amendment 17. I call the Minister to move amendment 6.

Clause 41

Council tax referendums

[Brandon Lewis]

I beg to move amendment 6, page 30, line 32, at end insert—

‘(13A) Subsections (14) to (16) apply (and subsections (18) to (20) do not apply) if, in accordance with section 49(2A), this section comes into force on the day on which this Act is passed.’.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Government amendments 7 and 8.

Amendment 18, page 31, line 2, at end insert—

‘(17) The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.’.

Government amendments 9 to 11.

[Brandon Lewis]

Our amendments are precautionary measures to remove the risk of local authority budgeting being adversely impacted in the event of a delay to the Bill taking effect. Clause 41 currently provides that the council tax referendum calculations will take account of levies from 1 April 2014. The referendum principles, which we intend to publish in draft very shortly, will be put to this House for approval in February as normal. Those principles will take account of levies, but will be subject to the will of Parliament and the Bill, which will have come into force by then.

The amendments have a relatively simple effect. Together, amendments 6, 9, 10 and 11 provide that if the Bill is passed by 5 February—the likely date by which the referendum principles must be laid before Parliament—the provisions in clause 41 will take effect immediately and the changes to the referendum provisions will take effect for the 2014-15 financial year. Otherwise, the changes will take effect by order from 2015-16. There is no reason to believe that the provisions will not be in force before the referendum principles are approved, but we are tabling this group of amendments to give local authorities advance certainty over timings so that they can be confident that any delay in Parliament would not impact on their budget-setting timetable.

Amendment 7 is a minor amendment clarifying that the clause does not alter the existing discretion of the Secretary of State when determining categories of authority for 2014-15. Amendment 8 addresses the ability of the Secretary of State to determine categories of local authorities on the basis of whether their 2013-14 council tax increase would have been excessive had levies been taken into account. The clause puts this existing ability beyond question and does not extend it further. Similarly, the amendment does not extend that existing ability, but updates the references to increases in 2013-14 to include references to increases in 2014-15, should the provisions take effect from 2015-16. The current transitional provisions in subsections (14) to (16) ensure that council tax comparisons between 2013-14 and 2014-15 are made on a like-for-like basis. An amendment must be made to ensure that this protection for authorities still exists if levies are to be included from 2015-16. Subsections (18) to (20) in amendment 8 provide that protection.

In summary, these amendments are precautionary measures only and, apart from clarifications and restatements of existing legislation, have one purpose: to ensure that in the event of any unpredicted delay, local authorities will continue to be treated consistently and to benefit from the transitional protections already in the clause.

[Andy Sawford]

Our amendment 18 would give the Secretary of State some discretion to prevent any unintended consequences arising out of the levy changes from affecting city deals. The amendment states:

“The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.”

We are concerned that the provisions to include levying bodies could affect those city deals that have been agreed around the country.

16:44

The provisions would, for example, affect the deal in which the Leeds city region has been promised a large investment fund that is to be part-funded by the increased levy from the integrated transport authority. The deal was done in the expectation that the current rules would apply—that is, that the integrated transport authority levy would not be included in the calculation. Will the Minister clarify that, at the time the city deal was signed, there had been no discussion about changing the rules on levying authorities? The answer to that must surely be no. Had the Government known that they intended to make these retrospective changes, it would only have been right to inform the authorities that that city deal could be undermined by the changes on levying made at a later date. All local authorities are important, of course, but those that are leading our major cities and trying to work in partnership with the Government could understandably think that there had been a breach of faith in this regard.

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

It strikes me that the same argument could apply, in principle and in practice, to the internal drainage boards, which work in partnership with the Environment Agency. They are worried that being included in the referendum provision could lead to their being unable to do the essential drain clearing that helps with flood alleviation. My hon. Friend is making his point well. Does he agree that this could also apply to the internal drainage boards?

[Andy Sawford]

My hon. Friend is absolutely right. This group of amendments on levies would have significant implications for internal drainage boards. There was a specific amendment on them, but it has now been withdrawn. However, the other amendments will affect the boards just as they will affect other bodies that apply levies. I know that my hon. Friend considers this to be an important matter; he is an expert on matters affecting our rural communities and, in particular, on flooding. If a local authority felt the need to take urgent action—or, indeed, long-term action—on flood defences, I think we would all be concerned if that ability were to be undermined by the provisions in the Bill. I will return to that issue in more detail later.

Leeds city region has written a letter to the Deputy Prime Minister to raise concerns about the clause, and it gives us a new insight that we did not have in Committee. The city region is concerned that including levies within the ambit of a calculation to hold a referendum on annual increases in council tax could result in it having to hold

“up to 60 referendums, with the Combined Authority not being in a position to know whether its investment programme was affordable until all referendums had been passed.”

Is the Minister aware of that concern, and does he recognise those possible implications? A critical element of the Leeds city deal is the local contribution fund. The Leeds city region believes that the Bill, as it stands, will make the fund “impossible to deliver”, because it could trigger up to 60 referendums a year and the authority might have to conduct such referendums over a period of five years.

In Committee, the Minister said that the figures provided thus far did not make a compelling argument for treating city deals differently. Does he agree, however, that these new figures from Leeds city region should make us think again and support a clause that does not require the Secretary of State to make exemptions but, rather, merely permits him to do so?

The Minister might well be proved right; this might not become an issue. Leeds city region clearly believes that it will, however. If that were to happen, would it not be in everyone’s interests if the Secretary of State could make a judgment to exempt the levies? It would be in the Government’s interest, in terms of their good faith in negotiating the city deal. It would also be in the interests of the city regions around the country, particularly Leeds city region, which has expressed so much concern.

If a council tax referendum were lost and the levying body refused to reduce its levy, what would the Minister expect a local authority to do? Under the Bill as it stands, a levying body would not have to abide by the result of a referendum, should one be triggered and subsequently lost. In effect, therefore, the financial risk would be on the local authority regardless of whether the increase in council tax was a direct result of its financial decisions. That cannot be fair.

The provisions are retrospective. The Minister told us on Second Reading and in Committee—his noble friend Baroness Hanham told their lordships—that the provisions are not retrospective. They clearly are. The Local Government Association is absolutely clear in its analysis of the effect, as are Labour Members. Clause 41(15) allows the Secretary of State to apply changes retrospectively. He will be able to impose a different referendum limit on authorities where their council tax increase for 2014-15 would have been excessive under the new definition, but not under the current definition. This is not fair on those authorities that have taken decisions in good faith based on the legislation in place at the time. There is no difference in principle between Labour Members and the Government on the intention to protect citizens and residents of our local councils from excessive council tax increases. Indeed, councils such as Hackney have been freezing their council tax for many years and setting an example, as other Labour councils have done, but we would not want to see an unfair retrospective provision that undermines the plans that local authorities have put in place.

There is clearly a risk of perverse outcomes that will put growth-generating investment at risk. Levying bodies are, by statute or local agreement, able to recover some or all of their costs by charging local authorities a fee for infrastructure or services. Local government in England is subject to a variety of different levying arrangements covering significant and regionally important issues such as transport, drainage—the point my hon. Friend the Member for Ogmore (Huw Irranca-Davies) made—and a wide range of other local issues. There is enormous scope for perverse outcomes in our communities from these provisions.

There are a number of examples where the extension of council tax referendums will cause instability and uncertainty—not just the Leeds example, but many other areas around the country where plans have been made on a different basis from the legislation that is now being proposed. On integrated transport, the implications in west Yorkshire, for example, are that if the referendums were lost, it would put at risk £750 million of investment and 20,000 new jobs; these are very significant consequences.

Under the Bill’s provisions, an internal drainage board that needed to take emergency action to manage flood risk may be denied the capacity to do so by the outcome of a referendum. These boards may also be unable to support wider central Government objectives because the changes might limit their ability to levy funding to invest in flood defences. Participants in the work that Sir Michael Pitt did a few years ago in response to some of the most severe flooding we have seen in this country were left scratching their heads as to how, at a time of public sector financial constraint, we would meet the challenge of ensuring that there are effective flood defences. We know that some of the poorest and most vulnerable people are the most exposed to flood risk around the country. There are issues with insurance, for example. One of the sensible ways in which we were able to take this forward was through the drainage boards and the work they were able to do. That could now be undermined.

[Huw Irranca-Davies]

My hon. Friend illustrates the point very well. It is only a couple of years ago that we had extensive flooding in the south-west of England. One of the consequences of that was the need to do emergency work very rapidly on the drainage channels there. The levies paid through IDBs are very well supported by those communities that need them for flood alleviation.

[Andy Sawford]

My hon. Friend has considerable expertise in this and he is right. If a drainage board needed to take emergency action, clearly it would not be in the interests of communities—the very people who, during a cost of living crisis caused by the Government, we agree we want to protect from excessive council taxes—to leave them exposed to flood risk if we know that we can take emergency action to address that.

There are issues with pension authorities, particularly in some metropolitan counties and in London, which operates the legacy pension schemes of the Greater London Council. As with the rest of the local government pension scheme, there is little control over the costs of these, which are increasing with each successive valuation. Indeed, more levying bodies may be created in the future as a consequence of the pension governance reforms that the Department is considering.

In short, these proposals have not been thought through. We do not disagree with the fundamental intention behind them—to keep council tax down—but we do disagree about how they are being introduced, without further thought or consultation, and particularly about some of the issues that arise from retrospection as it affects drainage boards and city deals. We would urge the Government to go back to the drawing board. With the leave of the House, we will seek to press amendment 18 to a vote.

[Brandon Lewis]

Before dealing with amendment 18, let me touch on the issue of internal drainage boards, which some hon. Members have raised. IDB levels are not being singled out. This Bill will ensure consistent and fair treatment between all local authorities.

I shall now turn directly to amendment 18, which relates to local authorities that have collectively entered into “city deals”—agreements with the Government on additional freedoms and financial certainties in order to promote local growth and skills—before the Bill’s commencement. This area was touched upon on Second Reading and debated in more depth in Committee, where the hon. Member for Corby (Andy Sawford)was content to take away and consider the clarifications and assurances I gave in response to a similar amendment.

Since this amendment has been tabled, I am happy to repeat some of the points discussed in Committee and to provide hon. Members more widely with any further expansion I can give. Although the amendment would have a wider effect, I understand that its intent is to address a single specific case—that of the Leeds city region deal— where there are plans to create a transport investment fund that would allow about £1 billion to be raised from grants, contributions from stakeholders and borrowing. Repayment of that borrowing will be met by the constituent authorities via modest increases in the transport levy over the next decade. This arrangement is novel. It will provide much-needed investment in the region and remains an arrangement that the Government are committed to and happy to support. However, the figures generated by Leeds and the other authorities taking part show that if those levy increases were passed straight on to local taxpayers in the form of higher bills, it would be affordable without the need for a referendum. It would amount to an increase of between 0.2% to 0.9% per year.

[Andy Sawford]

I understand the Minister’s point, which he made in Committee. It is a fair point, but does he accept that the consequence would be to restrict the ability of local authorities across that area, in a way that they never imagined, to raise council tax in a way that local authorities outside the city deal could? The amount that would trigger the referendum would mean that they were limited?

[Brandon Lewis]

I will come on to that very point in a few seconds.

I have to say that there is no basis for suggesting that these levies would result in authorities being forced to hold referendums. Given the relatively small increases involved, I would urge those authorities to freeze their council tax instead and take advantage of the grants we are making available to support them in doing so, thus holding down council tax for hard-working people.

Let me gently suggest to Labour Members that this is an area where the facts do not support the claims being made. It is right for the Opposition to test and challenge the statements of the Government of the day, but where there is shown to be no basis for criticism, we should move on and focus our attention elsewhere. In this case, we are proceeding over ground already debated several times here and in the other place, and the figures involved are not disputed by the Opposition or the authorities themselves. However, in the same manner as for any other authority, if Leeds, Bradford or any other council wishes to make representations about how the proposed referendum principles will apply to their particular circumstances, the Secretary of State would take them into account when asking the House to approve the final principles in 2014.

[Huw Irranca-Davies]

I am listening carefully to the Minister and I am genuinely probing because this is a matter of concern. Can he give a categorical assurance that where emergency funding is needed for an area, as advised by an IDB, it would trigger the referendum and would not delay the essential work being done? Can he give that categorical assurance and, if so, how?

[Brandon Lewis]

The hon. Gentleman makes a cogent point. My constituency of Great Yarmouth has been heavily affected by the east coast weather, with 9,000 evacuations and some homes lost in Hemsby, where the community is working phenomenally well together. What happens in the event of floods or other major disruptive events is that the Government look to support authorities facing major unexpected problems in the usual ways—through the building scheme, for example, or other appropriate bespoke approaches. Inclusion of levies in council tax legislation will have no effect on those procedures.

[Huw Irranca-Davies]

rose—

[Brandon Lewis]

I want to make some progress, but I am happy to talk to the hon. Gentleman further about Bellwin.

The other claim made in Committee and on Second Reading was that the Government were reneging on their agreements with authorities and that they gave their approval for large council tax increases as part of the Leeds city deal. That is not correct. The Leeds city deal was not agreed on the basis that it meant large council tax increases for local people or on the basis of denying them their say if Leeds or other authorities wished further to increase council tax—for instance, to increase investment and go beyond what is set out in the deal itself. That could happen only so long as local taxpayers, who will have to bear the burden, are willing to accept it. It is a matter for them. With those reassurances, I hope that the hon. Member for Corby will not press his amendment to the vote. If he does, I encourage Members to resist it.

Amendment 6 agreed to.

Amendments made: 7, page 30, line 37, after ‘may’, insert ‘, in particular,’.

Amendment 8, page 31, line 2, at end insert—

‘(17) Subsections (18) to (20) apply (and subsections (14) to (16) do not apply) if this section comes into force on a day appointed by the Secretary of State by order under section 49(2A).

(18) Section 52ZC of the Local Government Finance Act 1992 applies with the following modifications to the determination of a set of principles for the financial year beginning with 1 April 2015.

(19) The Secretary of State may, in particular, determine categories of authority for that financial year—

(a) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2013 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under section 52ZX of the Local Government Finance Act 1992 as amended by this section,

(b) on the basis of whether an authority’s relevant basic amount of council tax for the financial year beginning with 1 April 2014 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under that section as so amended, or

(c) on the basis set out in paragraph (a) and on the basis set out in paragraph (b).

(20) In subsection (3)(b) of section 52ZC the reference to an authority’s relevant basic amount of council tax for the financial year immediately preceding the year under consideration is to the amount that would have been calculated by the authority for that year under section 52ZX of the Local Government Finance Act 1992 if the amendments made to it by this section had been in force for that year.’.—(Brandon Lewis.)

Amendment proposed: 18, page 31, line 2, at end insert—

‘(17) The Secretary of State may, by Order, exempt from the calculation of an authority’s basic amount of council tax any levies agreed as part of a City Deal signed prior to this Act receiving Royal Assent.’.—(Andy Sawford.)

Question put, That the amendment be made.

17:00

Division 162

Ayes: 222

---

Labour: 219
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 284

---

Conservative: 236
Liberal Democrat: 46
Independent: 1

Clause 44

Interpretation of Act

Amendment made: 2, page 34, line 19, at end insert—

‘(2A) References in this Act to provision made under it include provision made under Part 42 of the Companies Act 2006 as it has effect by virtue of Schedule 5.’.—(Brandon Lewis.)

Clause 49

Commencement

Amendments made: 9, page 36, line 3, leave out ‘and’ and insert ‘to’.

Amendment 10, page 36, line 5, at end insert—

‘(2A) If this Act is passed before 5 February 2014, section 41 comes into force on the day on which this Act is passed; otherwise that section comes into force on such day as the Secretary of State may by order appoint.’.

Amendment 11, page 36, line 8, leave out paragraph (a).—(Brandon Lewis.)

Schedule 2

Relevant Authorities

Amendment made: 3, page 42, line 36, leave out paragraphs (a) and (b) and insert

‘that is wholly in England’. —(Brandon Lewis.)

Schedule 4

Further provisions about Auditor Panels

Amendment made: 4, page 47, line 5, after ‘authority’, insert

‘other than a health service body’.—(Brandon Lewis.)

Schedule 5

Eligibility and Regulation of Local Auditors

Amendment made: 5, page 58, line 3, leave out sub-paragraph (3) and insert—

‘(3) For paragraph 6 (holding of appropriate qualification) substitute—

“Holding of appropriate qualification

6 (1) The body must have rules to the effect that an individual is not eligible for appointment as a local auditor unless the individual—

(a) holds an appropriate qualification,

(b) is an EEA auditor who has passed an aptitude test in accordance with sub-paragraph (3), unless an aptitude test is not required (see sub-paragraphs (4) and (5)), or

(c) has been authorised to act as a local auditor by the body pursuant to the European Communities (Recognition of Professional Qualifications) Regulations 2007 (SI 2007/2781), and complies with the requirements of those Regulations that apply to a person acting as a local auditor.

(2) The body must have rules to the effect that a firm is not eligible for appointment as a local auditor unless—

(a) each individual responsible for local audit work on behalf of the firm is eligible for appointment as a local auditor, and

(b) the firm is controlled by qualified persons (see paragraph 7 below).

(3) The aptitude test—

(a) must test the individual’s knowledge of subjects—

(i) that are covered by a recognised professional qualification,

(ii) that are not covered by the professional qualification already held by that individual, and

(iii) the knowledge of which is essential for the pursuit of the profession of local auditor;

(b) may test the individual’s knowledge of rules of professional conduct;

(c) must not test the individual’s knowledge of any other matters.

(4) No aptitude test is required if—

(a) the individual is to provide services consisting of local audit work on a temporary and occasional basis, or

(b) the subjects that are covered by a recognised professional qualification and the knowledge of which is essential for the pursuit of the profession of local auditor are covered by the professional qualification already held by the individual.

(5) Whether the provision of services is on a temporary and occasional basis is to be assessed on a case by case basis and in particular by reference to its duration, its frequency, its regularity and its continuity.

(6) A firm which has ceased to comply with the conditions mentioned in sub-paragraph (2) may be permitted to remain eligible for appointment as a local auditor for a period of not more than three months.”

(3A) In paragraph 7 (meaning of control by qualified persons)—

(a) in sub-paragraph (1) (introductory), for “paragraph 6(1)(b)” substitute “paragraph 6(2)(b)”, and

(b) in sub-paragraph (2)(b)(i), (requirement for firm to be eligible for appointment as statutory auditor), for “statutory auditor” substitute “local auditor, or as a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2013.”’.—(Brandon Lewis.)

Third Reading

17:14

[Brandon Lewis]

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

Let me begin by thanking the members of the Public Bill Committee, who did such an excellent job in ensuring that the Bill was subjected to thorough scrutiny. We benefited from the wide range of experience that a number of colleagues from all parties had of working in and being part of local government and I thank them for committing their expertise to the Bill.

In particular, I should like to thank the hon. Member for Corby (Andy Sawford), who fulfilled his commitment to give the Bill robust but fair scrutiny. In the other place, Lord McKenzie commented that audit is sometimes considered “boring but important”. I would say that the often passionate critique put forward by the Opposition in the course of this Bill’s passage certainly proves the latter while arguably testing the former assertion. I am particularly grateful to the hon. Gentleman and his Opposition colleagues for their support in helping us to introduce new measures into the Bill in Committee.

The new provisions to modernise parish polls respond to amendments from the Earl of Lytton, who, in his role as president of the National Association of Local Councils, highlighted the urgent need to reform that outdated legislation. The measures to open up local council meetings will break down the doors of town halls and increase the transparency of local decision making. I am pleased that we have achieved consensus on that as it shows that in this digital age, as the way the public consumes information changes, it is no longer right that decisions should be made out of the sight of local taxpayers. We will, of course, work closely with interested parties to ensure that, as we agreed in Committee, we strike the right balance in the regulations between allowing members of the public to film council meetings and minimising disruption.

The Bill is the culmination of a great deal of work with a number of third parties, particularly the Audit Commission, which I would also like to thank for its support and healthy challenge throughout this process. During the Bill’s passage through the House, we have made, as has been noted, a number of amendments to strengthen it. In addition to the two new measures we have added, we have also made amendments to enable the sector to set up collective procurement arrangements, through which relevant authorities can choose to have an auditor appointed on their behalf. That has been welcomed by the Local Government Association and we will continue to work with it in developing the regulations that will set out the approach in more detail.

Also prompted by debates in the other place, we have amended the Bill to extend the purposes for which data-matching exercises may be used. That will enable the future owner of the national fraud initiative to continue to undertake data-matching exercises on the detection of errors and inaccuracies, as the Audit Commission can under its existing powers.

In addition, we have made a number of other technical and clarifying amendments to several of the local audit provisions, which will ensure the smooth and effective operation of the new audit regime after the Audit Commission’s demise. In addition to the amendment we have made today to support the transparency of the auditor appointment process, we have also clarified how the provisions apply to parish meetings, the qualifications and eligibility criteria for local auditors and how local auditors will recover costs for undertaking all their statutory functions.

We have had a lengthy debate about the local government publicity code. I think it is safe to say that we are all agreed on the content of the code, but that there is a difference of opinion about how that code should be enforced. I say again that it is right that action should be taken when authorities are failing to comply with the code. By ensuring compliance, the Bill will support local accountability by protecting the local free press from unfair competition and preventing taxpayers’ hard-earned money from being squandered on propaganda and competing with the local independent press.

The Bill further protects the taxpayers’ pound by ensuring that levies will be included within the council tax referendum principles. No longer will a local authority be able to raise council tax through back door levy increases, making taxpayers pay more for services that councils down the road do in-house and within the referendum principles. That levels the playing field for local authorities and the amendment we have made today will provide certainty for those authorities.

In conclusion, the Bill is another important step in delivering the Government’s localist agenda. It deals with some of the fundamental principles of good governance and good government, it promotes responsible and robust public accounting, it drives decision making down to the local level and it protects local taxpayers and defends local democracy. To return to my opening remarks, it is an important—and I would say interesting—Bill and I commend it to the House.

17:19

[Hilary Benn (Leeds Central) (Lab)]

The Bill certainly has generated a great deal of debate—more, I suspect, than either the Minister or others who thought it was just about audit might have anticipated. That is in no small measure, as the Minister has just acknowledged, due to the skill and forensic arguments put forward by my hon. Friend the Member for Corby (Andy Sawford), who did sterling work in Committee, as he has done today, ably assisted by my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) and also my hon. Friend the Member for Derby North (Chris Williamson), from whom we heard today.

I join the Minister in expressing thanks to all Members who served on the Bill Committee, all those who gave evidence to the ad hoc Joint Committee, and my colleagues the noble Lords McKenzie and Beecham for the work they did in scrutinising the Bill in another place.

As we know, this is a Bill that arises from a very early decision that the Secretary of State took, which was to abolish the Audit Commission. When we heard from him on Second Reading, he was convinced that it was the right thing to do. We all recognise that the commission is going, but only time will tell whether it was right for the Secretary of State not to take the advice of the noble Lord Heseltine, who originally introduced the Audit Commission because he thought it was wrong for local government to appoint the people who audit it.

What is striking about the Bill, however, is that the quality of some of the content we have debated at length has not benefited from the length of time it has taken the Government to bring it forward, in part because of the complexity of what has been removed and therefore the need to construct arrangements to replace it. I acknowledge that the Government moved on the issue of joint procurement, and I am grateful to the Minister for listening to the arguments made by local government and by my hon. Friend the Member for Corby, but I am genuinely sorry that the Minister either has not wanted to get the arguments that we made or has not properly understood the consequences of the Bill failing to anticipate the new world in which local authorities have to work. That is particularly surprising, given that Ministers often lecture local government about the need to make changes.

On access to information, the amendments that we argued for were all about the public’s right to know. As we are aware, the Audit Commission is covered by the Freedom of Information Act; private auditors in general are not. As councils change the way in which they work, it is very important that the public have the right to understand what is happening and have access to information. Listening to the Minister this afternoon, the more he protested that our amendment was not necessary, the more puzzled I became. Then there was a moment of what I hope was conversion. I am delighted by what he had to say when pressed by my hon. Friends. We will hold him to what he said about ensuring that the public has exactly the same right as it currently has using the Freedom of Information Act to get access to information that auditors and private companies have about contracts that they are undertaking on behalf of local authorities.

I am very sorry that the Government have not made provision for auditing that will be fit for purpose for the years ahead. The Minister did not do justice to the argument that we advanced. We did not suggest that the Bill prevents local authorities from working together with each other or with central Government—for example, through the troubled families initiative. That is not our argument. Our argument is that when the Whitehall and the local pound are brought together to provide services at a local level, there will continue to be different audit arrangements.

I say to the Minister, and I hope he will reflect on it even when the Bill has become an Act, that that does not make sense. An audit, especially when the Bill gives us a chance to set it on a new footing, must take account of the changing way in which public money is spent, particularly as community budgets develop. It does not make sense if there is a community budget for different bodies, with the NAO trying to chase the Whitehall pound down the road and the local authority auditor looking at the local pound.

One clause that was dissected and then comprehensively savaged by my hon. Friend the Member for Corby, both in Committee and earlier today, is clause 39, which deals with the code of practice for local authority publicity. I was interested to hear that the Liberal Democrats apparently could not bring themselves to vote for it in Committee, because they were absent when it was discussed. I do not blame them, because they are right to be embarrassed by what is a most illiberal piece of legislation.

The hon. Member for Mid Dorset and North Poole (Annette Brooke) described that provision as a sledgehammer. If I may coin a new phrase, I think that it is a sledgehammer of a blunderbuss, and it has been constructed on the back of a lot of ministerial complaining about Pravda-like publications. I have not read quite so many local authority publications since Second Reading, but I have still found no figures on tractor production, which I continue to be disappointed about.

Basically, no evidence has been advanced on local authority publications. It is no good the Minister in the other place saying, “I could give you the names of 12 authorities, but I don’t think that would be helpful.” We have heard the Minister give one example, that of “East End Life”. The really damning revelation is that for all the complaints, concerns and denunciations of breaches of the code, he tries to suggest that what the Bill offers is true localism, and in three years the Government have not even contacted a single local authority, which is astounding. They could not be bothered to write a letter to a single authority, but they could be bothered to draft a shoddy clause that will give the Secretary of State the right to control every single local council publication, every website, leaflet and bit of content—the lot.

The Secretary of State, if he takes offence, will be able to tell councils, “You’re not allowed to refer to the bedroom tax as the bedroom tax. You have to call it something else.” If he feels like it, he will be able to stop councils commenting on spending cuts and the way they affect the local authority area. He could stop them commenting on airports, HS2 or NHS changes. He can even tell local parish councils that they cannot produce 12 double-sided A4 sheets a year. He will be able to do anything he wants. Censors the world over might think that is a jolly good clause, but the House was unconvinced.

[Brandon Lewis]

I appreciate the right hon. Gentleman giving way at this stage, when I would not normally seek to intervene, but I just want to point out gently that parish councils can still produce 12 such publications a year—one a month.

[Hilary Benn]

Absolutely, but the problem with the clause is that they cannot publish any more than that. If they want to bring out a special edition on their Christmas celebrations, for example, having had their 12, that would not be allowed, because the Secretary of State is taking the power to prevent that.

The clause states that the Secretary of State can exercise all those powers regardless of whether he thinks that the local authority is complying with the code of conduct, which is extraordinary. I read with great care the arguments that the Minister tried to advance in Committee, but I am afraid that I found none that justified that. The truth is that Ministers ought to be really careful with the great big blue pencil they are about to get hold of.

On referendums and levying bodies, I must say that I was unconvinced by the Minister’s arguments in relation to the Leeds city region deal, described by his ministerial colleagues as a watershed moment, which was signed before the new policy was announced. The Minister has still not answered the question I asked the Secretary of State on Second Reading, and which was asked again today by my hon. Friend the Member for Corby, so I will put it slightly differently.

The city deal was signed towards the end of the year and the announcement of the new policy on referendums and levying bodies was announced at the beginning of the new year. Knowing how long it takes to decide on these things in government, I think that it is inconceivable that Ministers were not privately discussing changing the rules at the very moment when they were discussing the Leeds city region deal. If that is the case—I will give way to the Minister on this point—why did he not tell the people they were negotiating with? He does not want to intervene, so for the third time we have had no answer to the question, and some people will draw the conclusion that they do not want to answer it.

The Minister will have seen the letter mentioned by my hon. Friend the Member for Corby that the Leeds city region sent to the Deputy Prime Minister on 6 December asking the Government to solve the problem they created by changing the rules after the agreement was signed. The Minister knows very well how important the transport infrastructure fund is to the Leeds city region deal; indeed, it is the main thing that the city region got out of city deals, which, as he knows, I support. The letter is signed not only by the chair of the combined city region which is to become an authority—the leader of Leeds city council—but by the chair of the local LEP. They are not persuaded by the Minister’s arguments, because they say:

“As it stands, the Local Audit and Accountability Bill makes the Fund impossible to deliver.”

I listened carefully to what the Minister said, and I do not know whether there is a chink of light there, but he has a responsibility to sort this out.

Apart from doing justice to the Leeds city region, there is another argument for why the Minister has a responsibility to deal with this. If the Government go back on a done deal, which is what has happened in this case, they undermine confidence in the city deal process, undermine the certainty on which financial planning has to be based, and undermine the confidence of those who will negotiate with them in future, who will ask themselves, “Hey, look what happened to the Leeds city region—how do we know they aren’t going to change the rules for us after we’ve signed our names in ink on a piece of paper?” It needs to be sorted out.

As the Minister knows, we support the other changes that were made in this House on parish polls and councils allowing recording and videoing of council and committee meetings. In this day and age, with the very big changes in technology that enable every citizen to become a reporter, all of us in this House, whichever side we sit on, want more people to take an interest in what our local authorities are doing, by going to meetings and reporting them to spread the news and make sure that more people can see what is going on.

We will not oppose the Bill given that provision has to be made for a replacement for the Audit Commission, which is on its way out, but in some respects it is a lost opportunity. For all the words that the Secretary of State, in particular, is fond of saying about localism, once again this Bill proves that the longer he is in office the more he cannot resist using legislation to tell local councils what to do.

17:32

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I thank my right hon. Friend the Member for Hazel Grove (Sir Andrew Stunell) and my hon. Friend the Member for Chippenham (Duncan Hames) for serving on the Committee. The thoroughness of the scrutiny by the hon. Member for Corby (Andy Sawford) has been very apparent. It would be remiss of me if I did not mention my noble Friend Lord Tope, as have many others, and thank him and Lord Shipley for their contributions in the other place. I also thank the Minister for his great courtesy throughout.

This Bill has pluses. It was right to abolish the Audit Commission. Having gone through the whole passage of the Bill, we have got to a pretty good place as regards auditing. I feel reassured by the Minister on the remaining issues. I am particularly pleased that he will continue to work on regulations with the Local Government Association. I applaud the modernisation of parish polls, which I am sure will be a great relief to parishes in my constituency. I welcome more openness in the recording and publication of council meetings, as that can only be a plus for local government.

We have discussed the publicity code at much length today. Clearly, there is agreement on the code itself across the House, but following its implementation and impact will possibly be an interesting experience. I can see the point of including levies in the referendum principles, thereby preventing unaccountable levying authorities from exerting pressure on council tax, but there is more talking to do about the potential unintended consequences. The Minister indicated that he would continue to listen to people’s concerns.

Finally, the Bill does not repeal the duty on local authorities to publish statutory notices in their local newspapers. I accept that the Government feel that this is not the right time to do that, but I urge them to keep looking at the issue. It is a burden on local government, given the tightness of its finances, and it is also the most ineffective way to communicate very important information to local residents.

17:35

[Neil Carmichael (Stroud) (Con)]

I served on the Bill Committee and thoroughly enjoyed it. I thank everyone else who served on the Committee for making it such an enjoyable process. As has been recognised, we scrutinised the Bill extraordinarily well.

I want to talk briefly about internal drainage boards, which are important. In my constituency, the IDB is essential in maintaining flood defences and as part of the process of ensuring that houses are protected. The accountability of our IDBs is relevant to the Bill, so I want to underline their importance to local communities. I also note that councillors are, of course, on the boards and should be applying influence as appropriate. The precept issue should not disguise the fact that IDBs play an important part in land drainage, certainly in areas of my constituency.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.

Business without Debate

Tuesday 17th December 2013 Commons Chamber

Delegated Legislation

Tuesday 17th December 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Pensions

That the draft Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013, which was laid before this House on 19 November, be approved.—(Mr Gyimah.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Capital Gains Tax

That the draft Taxation of Regulatory Capital Securities Regulations 2013, which were laid before this House on 22 November, be approved.—(Mr Gyimah.)

Question agreed to.

[Mr Speaker]

With the leave of the House, we shall take motions 5 to 7 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Representation of the People

That the draft Electoral Registration and Administration Act 2013 (Transitional Provisions) Order 2013, which was laid before this House on 17 July, be approved.

That the draft Representation of the People (England and Wales) (Description of Electoral Registers and Amendment) Regulations 2013, which were laid before this House on 23 October, be approved.

That the draft Representation of the People (Provision of Information Regarding Proxies) Regulations 2013, which were laid before this House on 23 October, be approved.—(Mr Gyimah.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Representation of the People, Scotland

That the draft Representation of the People (Scotland) (Description of Electoral Registers and Amendment) Regulations 2013, which were laid before this House on 30 October, be approved.—(Mr Gyimah.)

Question agreed to.

European Union Documents

Tuesday 17th December 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 119(11),

Regulation of Tobacco and Related Products

That this House takes note of European Union Document No. 18068/12 and Addenda 1 to 7, a draft Directive of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products; welcomes the success of the Government so far in securing agreement for top priority issues such as the prohibition of characterising flavours, including menthol, in tobacco products; supports the Government’s continued pursuit of its key negotiating objectives during Trilogue negotiations, primarily a text which provides adequate flexibility for Member States to go further in certain key areas of public health policy, including packaging, where the evidence supports this and it is justified by the Treaty; further notes that the Government recognises the importance of further strengthening the internal market, taking into account a high level of health protection; and supports the Government’s view that the proposed Directive is good for public health and will be a positive measure in the Government’s efforts to reduce the number of children and young people who take up smoking in the UK.—(Mr Gyimah.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Economic and Monetary Union

That this House takes note of European Union Document No. 14102/13, a Commission Communication: Strengthening the social dimension of the Economic and Monetary Union; and supports the Government’s position that any measures to increase social and employment co-ordination should be voluntary for Member States outside the Eurozone.—(Mr Gyimah.)

Question agreed to.

The Lilacs Care Home, North Lincolnshire

Tuesday 17th December 2013 Commons Chamber

17:37

[Nic Dakin (Scunthorpe) (Lab)]

I would like to pay tribute to the hard work that Councillors Sandra Bainbridge and Tony Ellerby have done in leading this petition to defend an asset in their ward.

The petition states:

The Petition of residents of Scunthorpe,

Declares that the Petitioners are very disappointed by the ruling of the Conservative group of North Lincolnshire Council that they intend to close The Lilacs care home despite it being a manifesto promise of theirs to not do so.

The Petitioners therefore request that the House of Commons requests the Government to urge North Lincolnshire Council to rethink their decision and consider the impact that this closure will have on local residents.

And the Petitioners remain, etc.

[P001314]

Dalgety Bay

Tuesday 17th December 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

17:39

[Mr Gordon Brown (Kirkcaldy and Cowdenbeath) (Lab)]

I am grateful to you, Mr Speaker, for agreeing to this debate, but I regret having to come back to the House and subject it to a fourth debate in less than three years about a single issue in one constituency—radiation contamination in the Dalgety Bay area of Fife.

It is now more than half a century since contaminated materials containing radium-226 were dumped on the Dalgety Bay foreshore by people on behalf of the Ministry of Defence. It is now just under a quarter of a century since the Ministry accepted that the contamination existed and posed a potential safety risk. It is now three years since the discovery of large amounts of contaminated particles that, as a result of coastal erosion, had risen to the surface, with some particles having a level of radiation that is judged to be a risk to health and thus completely unacceptable. It is now nearly two years since the Ministry of Defence committed itself to a plan that required the polluter to clean up the area. It is now six months since the Committee on Medical Aspects of Radiation in the Environment and Public Health England, the relevant health body advising the Ministry, called for the clean-up to be agreed and to happen as soon as possible.

Despite more than 50 years of contamination, nearly 25 years of the Ministry of Defence knowing about the risks, two years of knowing the seriousness of the risk and the likely escalation of such risks, and two years in February since a plan was agreed with the Scottish Environment Protection Agency, there has been no clean-up, no agreement to fund a clean-up, no agreement on a plan for a clean-up, no agreement even on the options for such a plan and, as yet, no presentation of the options for a clean-up plan or the promised consultation on those options. Indeed, the Ministry of Defence has yet to agree to what it promised in February 2012 to do by May this year—publication of the options for remedial action, acceptance of responsibility by the polluter for the pollution and a plan to fund the clean-up.

It is sad to report that despite all the evidence proving the Ministry of Defence’s responsibility and all the evidence of its admission of responsibility as long ago as 1990, the Ministry is even now—months after a report this spring named it as the polluter—refusing to accept that it has responsibility in this area. That is despite the clear promise made in a letter from Mark Hill of the Defence Infrastructure Organisation, dated 21 December 2012, which stated:

“In the event that MOD is found to be an Appropriate Person in accordance with the statutory regime for contaminated land”—

the MOD was of course named as the appropriate person a few months ago—

“the Department will fulfil its legal obligation to meet its portion of the liability and carry out voluntary action including remediation where appropriate.”

All this is yet to happen.

There has therefore been a failure to make progress on three important issues—publication of the options for the clean-up, agreement on the funding of the clean-up, and acceptance of responsibility as the polluter. Those issues of deep concern locally have brought me back to the House today to ask the Minister—I know that he has visited the area and, as he will reply to me for a second time in the House, he is fully aware of the issues or, at least, he should be—to use his influence to end the delays, to end the failure of the Ministry of Defence to accept responsibility and to end what I am afraid to say is a lack of consideration for the people of Dalgety Bay that is now strongly felt in the local community.

The issue of the contamination and its significance cannot be wished away. Dalgety Bay is already the first and only area of the United Kingdom where a radiation risk assessment has had to be done to measure the extent of the contamination. It is also the first and only area of the country to be the subject of what is called an appropriate person report—a report under the legislation dealing with radiation contamination—which has been produced through very detailed research by the Scottish Environment Protection Agency. It has concluded that, without any doubt in the matter, the polluter of the area is indeed the Ministry of Defence.

Dalgety Bay is therefore not only the first area subject to such a risk assessment and to the naming of a polluter, but it is still at risk of being named by the Scottish Environment Protection Agency as the only radiation contaminated area in the United Kingdom, which has never happened to areas where there are nuclear weapons, nuclear power stations or nuclear waste storage. If it had to be imposed on the area, which is a scenic part of the Fife coastal walk, such a decision would blight the foreshore, harm the environment and cause difficulties for the town that would last well into the future or, at least, for as long as we can see ahead.

We therefore cannot gloss over this matter. For 13 years, starting in 1946, decommissioned military aircraft were scrapped and then incinerated. The resulting ash, which included radiated particles, was dumped in the area of Dalgety Bay.

To give an understanding of the scale of the pollution, I want to draw the House’s attention to a memo of 14 December 1990, which was sent by Her Majesty’s inspectorate of pollution to the then Minister at the Scotland Office. The official’s report stated:

“I attended a meeting with the MOD to discuss the possible origins of the contaminated material and to consider how best to proceed. MOD confirmed that some 800 aircraft were scrapped during 1946 at the nearby…HMS Merlin and that the aircraft would have contained instruments and equipment luminised with radium.

There is evidence that the debris from demolition work at the…station was used for infilling purposes between 1946 and 1959.

This information, together with the nature of the contained debris which has been found leaves little doubt as to the origins of the contaminated debris which has been found…and is likely that there is more material buried in the area inland from the beach.”

He said:

“I am glad to report that”

the MOD

“seem willing to help both with further monitoring and with any remedial action which might be necessary.”

In the last debate on this matter, the Minister told me:

“We have found no evidence to corroborate claims that 800 aircraft were destroyed in 1946 through burning, and the resultant waste material—including ash—deposited on the beach or within the headland prior to 1959.”—[Official Report, 9 July 2013; Vol. 566, c. 335.]

I take that one contestation of the report to mean that everything else was correct: that the dumping did take place, that it was authorised by the Ministry of Defence, that the waste is a potential risk, and that the Ministry of Defence does and should take responsibility. It is only the precise number of aircraft that he cannot confirm, but he cannot deny the figure either.

In 1992, there was a report in which the Ministry of Defence accepted that Dalgety Bay was a polluted area. Again, after 2000, Mr Fred Dawson, the head radiation protection officer dealing with the safety officer at the MOD, advised that the Ministry of Defence would be found liable and that there was significant reputational damage involved in denying liability in this area. More recently, the community council, under the chairmanship of Colin McPhail MBE, whom I congratulate on the work he has done to expose this matter, solicited statements by former and present residents about the scale of what happened in the ’40s and ’50s. I understand that the leader of Fife council, Alex Rowley, has assembled a mass of evidence that is available to the Ministry.

It is hardly surprising that the Scottish Environment Protection Agency states:

“The total number of radioactive…particles…that have now been recovered since the beginning of our investigation in September 2011 is over 1,000. Of these sources, five had a radioactivity content of greater than”

the accepted level of radium-226. After that report, we cannot doubt that the dumping of materials was done by the Ministry, that those materials have radioactive content or that, because of coastal erosion, the particles are being brought up to the surface in greater numbers. Action must now be taken. The discovery of radiation particles on the surface is not an historical problem that is diminishing the further we move from the time of the dumping and that is likely to disappear over time; contaminated particles are being discovered all the time. That is aggravated by winter storms and rising coastal erosion. Such particles are being washed up or found on the foreshore at the rate of 100 a month.

Let us be clear what the Ministry of Defence promised us would have happened by now. In February 2012, the Ministry agreed to an “Investigation Plan”, which listed the stages of work that would be undertaken. The Ministry promised that in the second part of stage 3, which was due to happen between February and May this year, it would outline management options for the clean-up of the site:

“MOD will set out within the investigation report outline management options which may include remediation.”

That was supposed to have happened seven months ago. The report also stated:

“The options should be distinct and range from the ‘do minimum’ to the ‘maximum possible’.”

It recommended an holistic approach and said that the listing of the options was to have happened seven months ago. It then said:

“It may be appropriate to sift the outline options…to whittle the number down to a manageable size”.

That has not been done either.

It said that stages 4 and 5 were then to be progressed by the appropriate persons. Stage 4 should

“comprise the long-term management/remediation solutions”,

with consideration of

“source removal, pathway disruption and receptor protection…to reduce the level of uncertainty.”

Stage 5 should then be delivered by the appropriate person, meaning the polluter, the Ministry of Defence.

Not one of those promised actions has yet happened. Seven months on from the deadline agreed by the Ministry, there has been no option study published and no narrowing of the options. Although the Ministry has been named as the polluter, none of the options has been costed and none of the clean-up has yet been agreed. None of the work has been planned or gone out to contract, far less any clean-up done. Work that was supposed to have been completed on a timetable from February to May this year has not been done, and we are still waiting for the options paper to be published and the consultation entered into.

The community council chairman was promised in a letter from Mr David Olney of the Defence Infrastructure Organisation, dated 26 March 2012:

“MOD experts are already in regular contact…in order to ensure the successful completion of the investigation by May 2013.”

That has not happened. The effect is that work that should have been commissioned in the autumn and completed by the winter has now been delayed. The likelihood is that we will face another winter of coastal erosion, with more particles being brought to the surface, and that a summer and autumn of delays will be followed by a winter of further delays, about which I want to ask for answers today.

The consultation that was promised has ground to a standstill. The last meeting of the Dalgety Bay particles advisory group was held on 22 May and the last forum meeting on 30 May. A meeting of stakeholders was promised before the end of the year, but none will take place until the beginning of next year, which means that work is unlikely to start before next summer, if then.

The Minister must also consider the fact that the delays are all the more regrettable because nearby, in Almondbank in Perth, at another ex-Ministry of Defence site where contamination was discovered, the clean-up was agreed and carried out within six weeks. It appears that that was because the remedial work was a condition of sale, with penalty clauses included. It looks like the Ministry is willing to act with speed only when there is a legal obligation to do so.

Machrihanish, where there are far lower levels of radiation, was also cleaned up without anyone having to come to Parliament to beg for it to be done. Again, that was because of a condition of sale in a commercial contract. Must we really accept that the Ministry of Defence will move only when there are commercial obligations and stall when it feels it has only a moral obligation to act? Have we to wait for the Scottish Environment Protection Agency to impose statutory obligations on the Ministry of Defence, which it is entitled to do?

The delay is galling because, as I understand it, the Ministry of Defence will announce in the next few days that it will break up submarines at Rosyth, next door to Dalgety Bay. For months it has been consulting on a plan, one of the options in which is to store not only low-level but intermediate radioactive material there. In that case, it would be nuclear waste.

The Minister has accepted responsibility not only for the DIO but for Scotland as part of his work in the MOD. As any visit he makes to Scotland will prove, the Ministry cannot command any public confidence when it seeks to guarantee safe long-term storage of either low-level or intermediate radioactive nuclear waste in Rosyth if it cannot even reassure the people of the nextdoor town that it will take responsibility for the safe disposal of the long-standing radiation waste at Dalgety Bay. Would the Minister be happy to accept the storage of even more radioactive waste in his constituency if he had no assurances about the safe storage of the existing waste?

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I am grateful to my right hon. Friend for securing this important debate. Does he agree that there is no way in which my constituents in Rosyth or his in Dalgety Bay will accept for a second that waste being stored at the site or in the wider West Fife area?

[Mr Brown]

My hon. Friend is absolutely right. It seems that one part of the Ministry of Defence has no clue what another part is doing. It wants to store waste at one place in that part of Fife but refuses to clean up the mess left by previous waste in another part. It is shocking that there is no co-ordination within the Ministry, and I believe that people who work on the nuclear programmes in the MOD are unhappy with the state of affairs that the Minister and his colleagues have left us with.

I come now to the delays. When replying to the previous debate, the Minister said we should take into account the views of Public Health England, which he said had not exactly given a “ringing endorsement” of the report produced that showed the risk and named the polluter. The letter sent to SEPA from Public Health England stated on 28 June:

“I am writing to provide comments on the…risk assessment …Regarding your contaminated land assessment, we agree that radium-226 contaminated objects recovered from Dalgety bay include objects that could give rise to radiation doses that exceed the relevant criteria for the Radioactive Contaminated Land (Scotland) Regulations 2007; specifically the effective dose criterion of 100 MSV.”

Whether or not that is possible, it is important that such objects are removed from the beach and disposed of appropriately.

On 10 July Public Health England wrote:

“It is clear that there is a level of radioactive contamination that requires further investigation and appropriate action.”

The response stated:

“You also asked about the extent that risk mitigation is required. It is clear that doing nothing is not an option and as noted above, it is important that agreement is reached by all of the interested parties on the best way forward.”

Public Health England then wrote formally to all parties on 21 August saying that it has

“consistently called for a management strategy to be developed and implemented at Dalgety bay.”

It concluded:

“We agree that the…criterion on effective dose could be exceeded for ingestion.”

There is no doubt about where the health authorities stand on the issue.

I understand that the MOD is worried about creating precedents, and that 15 sites with similar waste have been revealed by the MOD, including Dalgety Bay. I know that a radioactive waste inventory of 2010 suggests there are many more sites that are not under the control of the MOD but may have radioactive waste. However, I have always argued that because of coastal erosion on a site beside the sea, there is a special case for action in Dalgety Bay that the Ministry of Defence should now accept. Nothing excuses it for refusing to act on the incontrovertible evidence now available.

In the past few months, all the facts have been produced, researched, documented and published in forensic detail. We know that without doubt the MOD was responsible for dumping the waste, and that it knew for nearly 25 years without telling us that there were safety issues and risks that should have been dealt with. We also know that if it does nothing to fund the clean-up, it will have legal obligations that it will eventually have to meet. It is surely time to bring this sad saga to a conclusion in the only way possible, and I hope I will not have to ask you, Mr Speaker, for a fifth debate before the responsible course of action is pursued. That responsible course is for the MOD to own up to the damage, to pick up the bill to get rid of the waste and clean up the area, and to do so as soon as possible. The patient and long-suffering residents of Dalgety Bay deserve nothing less.

17:57

[The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)]

I congratulate the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) on securing this debate—his fourth on the subject since November 2011. Believe me, Mr Speaker, I sincerely hope that he will not have cause to call a further debate, and that some of the things I say today will reassure him about what is happening and what is to be done in the near future, and that that will be helpful for him and his constituents.

As he said, I visited Dalgety Bay in July to see the situation for myself, and I have read the case file in depth. I assure the right hon. Gentleman that I have taken a close personal interest in this matter. We now have the draft outline management options appraisal report dated 30 September. That has been shared with SEPA and will be published early in the new year. I would be surprised if he has not had sight of it already, but if he has not, I will ensure he gets a copy.

Following a meeting between SEPA, the MOD and Public Health England on 28 November, the preliminary findings of the detailed risk assessment, heralded in July, will be available early in the new year. I think SEPA has now agreed that both are needed to determine a credible and coherent way forward.

Contrary to the impression that the right hon. Gentleman and others continue to give, the MOD has never sought to abdicate its legal responsibilities, much less “pass the buck” or delay progress in reaching a resolution. We have been upfront about the Department’s historical activities and the part they might have played in introducing radium into what was the royal naval air station Donibristle and HMS Merlin. Moreover, he will recall that we previously intervened to remove contaminated material from gardens within the housing estate that now occupies the former defence sites, while taking care to avoid blighting his constituents’ properties. Furthermore, removal of contaminated material is one of the options contained in the September options appraisal.

To date, our support to SEPA alone has cost in excess of £1 million. Work undertaken by the Department has included: a site investigation; an ongoing monitoring and recovery programme; continual work to reduce the hazard by removing any radioactive contaminants found; and most recently work to develop the more detailed risk assessment necessary to inform the discussion and development of an effective long-term management strategy. This work has the support of both SEPA and Public Health England, which, despite its name, is also responsible to the Scottish Government.

As the right hon. Gentleman would expect, the MOD sought legal advice, and this has been shared with SEPA. Senior counsel’s advice deals with judicial review of SEPA’s risk assessment, SEPA’s appropriate person report, to which he referred, and the statutory guidance on which it apparently relies, and the advice is that this matter could be subject to a judicial review favourable to the MOD. That opinion was informed by acknowledged experts in radiological assessment, as he would expect. Rather than seeking to settle the matter by potentially expensive, protracted and divisive legal means, however, my Department favours dialogue and the development of a robust evidence-based understanding of the risk that accords with established best practice and is scientifically rigorous.

I understand the frustration caused and the impatience of the right hon. Gentleman and his constituents with the clean-up, and I can assure him that we are genuinely working as fast as we can, with the parties concerned, to bring the matter to a satisfactory conclusion. He will understand better than most, however, the complexity and the scientific and technical difficulties posed by the site. I am reliably informed that the site is unusual and that that has resulted in some of the delays to which he referred. I hope he agrees that, without the understandings I have mentioned, it is not possible to engage all interested parties in developing and delivering a viable long-term solution that is proportionate to the risk. It remains open to SEPA, if it is confident of its reports, to designate the MOD as an appropriate person, triggering either acquiescence by MOD or a legal challenge, but to date there has been no such designation.

The right hon. Gentleman has not specified precisely what remedial action he seeks. If I can be candid with him—he has referred to this too—I fear large opportunity costs translating to waste where there is negligible risk to public health. He will know that if the MOD concedes this case without identifying where any significant health risk might emanate on the site, the precedent could cost hundreds of millions of pounds in extensive and unnecessary remedial work across the country. Statute calls for a risk-based approach, but it remains doubtful whether there is a significant risk of harm. It is also unclear whether the activities undertaken on the land after my Department vacated the site changed the risk by potentially exposing the public to contamination.

Ultimately, the presence of radium at Dalgety Bay must be viewed and addressed in the light of the statutory regime for contaminated land, rather than the correspondence from the 1990s to which the right hon. Gentleman referred, or concepts such as ALARA —as low as reasonably achievable—designed primarily for other purposes.

The draft report from the Committee on Medical Aspects of Radiation in the Environment states that

“there does not appear to be a current risk from external radiation”.

I take that to mean gamma and beta radiation. The right hon. Gentleman will recall that the Centre for Radiation, Chemical and Environmental Hazards has previously concluded that the likelihood of a member of the public inadvertently ingesting an object contaminated with radium that could cause them significant harm is less than one in 10 million. I remind him that, in 1998, he was aware of the view that the annual risk of contracting a fatal cancer through inadvertent inhalation or ingestion was found to be less than one in 1 million—something that he regarded then as a “negligible risk”. Indeed, he pointed out at the time that it is more negligible than the risks run by people living among the granite of Aberdeen.

After the right hon. Gentleman made his remarks, a scoping risk assessment was undertaken by the Centre for Radiation, Chemical and Environmental Hazards in 2012. It took account of the two high-activity objects found in late 2011 and two subsequent objects found in April 2012, and, together with the current management measures, concluded that the risk of attributable cancer from Dalgety Bay was actually less than one in 10 million. That is less than the risk that informed the right hon. Gentleman’s 1998 reassurance by an order of magnitude. In addition, the most recent cancer report collated by COMARE found no evidence of the occurrence of cancers in the local population that would ordinarily be attributed to the presence of radium-226.

The right hon. Gentleman—who was of course Chancellor, then Prime Minister, between 1997 and 2010 —did nothing on this subject during that time other than to announce that his constituents faced a negligible risk of harm in 1998. I have to say to him that he needs to be very careful indeed about raising fears in his local population. He knows full well that the Government will comply with statute, but I have told him that we will go beyond that. We will voluntarily play our full and proper part in protecting public health, but that has to be evidence based and underpinned by a proper risk assessment.

[Mr Gordon Brown]

I think the Minister knows—and no one should be under any other impression—that it was only in 2010 and 2011 that the scale of the particles appearing on the surface became so great that we had to have the extra investigations, to find out what needed to be done. The main point, which should not be evaded when we are talking about all the other issues in this debate, is that this clean-up will have to happen. The engineering options will have to be set out, and the Ministry of Defence will have to accept responsibility. When the Minister presents the options paper in January, will he narrow down the options to those that are realistic, and then have an immediate public consultation on them? Will he then agree to set a timetable under which he will agree to fund the chosen option? We have agreed that he wants to dispense with lawyers whenever possible. Let us now have a sensible timetable so that we can get this done. We must not go through another winter with this contamination rising to the surface.

[Dr Murrison]

I have given the right hon. Gentleman an assurance that I want to see this sorted out quickly. There are two bits of material that are necessary in order to do it properly. One is the options appraisal study to which I have referred. It is currently in draft form and will be published very soon. The other is the risk assessment. The two need to tie in together because we cannot otherwise make a determination on which option to choose, or on whether to choose a mixture of some of the options, in order to obviate the various risks that might be posed by contaminants across this complicated site. I think it is true to say that SEPA now agrees that both those elements will be necessary in order to plan credibly and comprehensively for the future at Dalgety Bay. I hope that the right hon. Gentleman is getting a sense that those two things are now coming together very quickly, and that we will be in a position to make a determination on this matter, which I hope he will find satisfactory, very soon.

[Mr Brown]

rose—

[Dr Murrison]

Before the right hon. Gentleman intervenes again, may I just comment on the objects that were found and the influence they had on the assessment of risk? As I said, the risk was determined at one in a million. That went down to one in 10 million. It was the same organisation that did the assessments. What had changed were the mitigation measures taken, notwithstanding the finding of the four high-intensity objects.

[Mr Brown]

I accept what the Minister says, but the health protection organisation that advises him has said that this work has to be done. I repeat: the clean-up will have to happen. It is right that the engineering options are investigated in detail so we can target where the remedial work must be done, but I put this again to the Minister, as I think he misunderstood me: when he publishes his options paper in January, having a range of all possible options will simply mean another few months of delay. Can he not narrow down the options by January, so that we can then set a realistic timetable to get the work done, and proper funding for it, as well as the public consultation exercise? There is one kind of options paper that looks at everything. There is a specific type of options paper, which was promised and which should be done by January, that looks at the main and realistic options for cleaning up as soon as possible.

[Dr Murrison]

Yes, of course, but it is not a decision to be taken unilaterally by the MOD; SEPA will wish to take a view and it has a copy of the draft paper already. It will want to make a determination, it has said, once it is in possession of the risk assessment to which it has contributed and, indeed, which it has formed in a way, because it has insisted on particular data sets making up that exercise.

[Lindsay Roy (Glenrothes) (Lab)]

Does the Minister accept that the MOD cannot abdicate its responsibility in this area?

[Dr Murrison]

The MOD has consistently made it clear that as the default position it will accept its legal responsibilities, but that it wants to go beyond that and make sure—without the intervention of expensive lawyers who will wrap us up for years—that we take action by negotiation with all interested parties so we can get a plan that will satisfy the right hon. Gentleman and his constituents. Our position in respect of liability has not changed at all.

In its draft report, COMARE says that

“we recommend that, in conjunction with all stakeholders, an evaluation of the means of remediation should be instituted immediately considering efficacy, practicability and cost.”

I wish to conclude this evening by saying that we could not agree more. To go back to my opening remarks, I sincerely hope very much that while the right hon. Member for Kirkcaldy and Cowdenbeath has been assiduous in bringing this matter to the House—I commend him for that—he will not have to be here for a fifth time in another six months.

[Thomas Docherty]

Further to the point that my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and I have made to the Minister about submarines, will he take the opportunity to give real cast-iron guarantees to my constituents and those of my right hon. Friend that there will be no attempt to move on these submarines until this is all joined up going forward?

[Dr Murrison]

The hon. Gentleman is talking about the submarine dismantling project and will be aware that there are seven hulls currently at Rosyth awaiting dismantling. Their cores have been removed; he knows that. The pressurised vessels that contain those cores remain, and because of the exposure to radiation over the years they have become intermediate level waste and need to be disposed off responsibly. The hon. Gentleman will probably be aware—because Babcock has briefed MPs and the councils—that Babcock is not interested in storing the intermediate level waste. It is difficult to see how this becomes a relevant factor in the context of Rosyth.

I am very grateful for the opportunity to come here to talk about Dalgety Bay again. I hope that I have made it clear that I take a personal interest in this; I hope the right hon. Gentleman is reassured by that. I will do my utmost to make sure that this process is moved on as swiftly as possible

Question put and agreed to.

18:14

House adjourned.

Westminster Hall

Tuesday 17th December 2013 Westminster Hall

Tuesday 17 December 2013

[Sir Roger Gale in the Chair]

Tomlinson Report

Tuesday 17th December 2013 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Karen Bradley.)

09:30

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to serve under your chairmanship this morning, Sir Roger.

I am pleased to have secured this debate on the Tomlinson report prior to the Christmas recess, because it is important and touches on a lot of my work on interest rate swap mis-selling. The report’s scope is wider than just the interest rate swap mis-selling scandal, and it looks at how a certain part of the Royal Bank of Scotland, namely the global restructuring group, has been operating in relation to small businesses. It is important to place on the record that Lawrence Tomlinson’s findings reflect what I have seen both as a constituency MP and in my work on interest rate swap mis-selling.

Prior to the report’s publication, Lawrence Tomlinson spoke to the all-party parliamentary group on interest rate swap mis-selling, and it is fair to say that many Members in that meeting were shocked by what they heard about banks’ behaviour. What should concern us more than the fact that Members were shocked by Mr Tomlinson’s comments is that many of them were not surprised. When some of the report’s findings were highlighted, it was concerning to see that such activity was recognised by Members from their constituency casework. If MPs are not surprised by allegations of behaviour that verges on the criminal, there is cause for significant concern about banks’ behaviour.

Since the publication of the report and its findings, there has been a certain degree of blow-back. Elements of the press have suggested that Mr Tomlinson might have a personal agenda or vendetta against RBS. I therefore want to place on the record that I have never banked or had any banking facilities with RBS, and have no vendetta whatever against it. My concern lies with the numerous constituents who have been treated in a manner that I find unacceptable. It is important to highlight what the report found and how it resonates with those of us who have dealt with businesses that have been badly treated by their banks.

The report was met with a significant degree of sympathy when originally published, but concerns have been highlighted since then. I want to examine three key issues of concern today; other Members may have different issues to discuss. First, I want to concentrate on the report’s findings in relation to whether the bank deliberately attempted to engineer situations in which businesses defaulted or breached their banking covenants. One of the report’s key claims is that businesses often found themselves in difficulties due to the bank’s deliberate efforts to ensure that that happened, including through revaluations. Once banking covenants were breached, businesses were placed in the so-called supporting hands of the global restructuring group.

The second question that deserves consideration is about the nature of the support that businesses receive once subjected to the support structure of the GRG. Is it really trying to get businesses back on track, or—as in many cases that I have seen, and in many cases highlighted by Lawrence Tomlinson—are businesses subject to unfair and penal rates of interest and charges, and often asked to pay for reports and valuations that are almost never in the businesses’ interests?

The third question is about the impartiality of the whole insolvency process. The report asks significant questions about whether the process and all the professionals involved actually operate in an independent manner. I have seen a number of cases of valuations changing dramatically because valuers have been instructed to undertake a second valuation by the bank. That raises significant concerns about the independence of those valuations. Consultants, solicitors and accountants have been asked to undertake work, paid for by the business, on the instruction of the banks. Time and again, that work has been less than helpful to the survival of the business.

When I conclude my remarks, I will touch on the selection of Clifford Chance to conduct an internal review of RBS. I have no doubt that Clifford Chance is a reputable firm of solicitors, but I have concerns about whether it will pass the smell test of being impartial enough to undertake such a review, given its links to RBS.

Have RBS and the global restructuring group been guilty of engineering a default or a breach of covenant? There are examples. A constituent of mine had a quarry with landfill rights that was valued at £9.5 million. The bank decided to enforce a revaluation of the asset, which came back at £2.5 million. As one can imagine, the impact of a £7 million reduction in value was an immediate breach of the banking covenant. After long and hard-fought efforts by the company, there was a final agreed valuation of £4.5 million. The company agreed to that simply because it was desperate and wanted to try to keep trading. How can a £7 million reduction in value occur when the company undertaking the revaluation was the same one that made the original valuation only a few months previously? That question needs to be answered. Also, why did the company have to pay £14,000 for a valuation that it successfully disputed?

I was contacted by a business yesterday with a large portfolio of flats, one of which was valued by the GRG at £100,000. A sale price of £145,000 was achieved yesterday, but the bank is still unwilling to make any compromise on the valuation of the entire portfolio. When one flat is sold for £45,000 in excess of the bank’s valuation, one must question why the whole portfolio is not re-examined from a banking perspective. The business is paying penal rates of interests on the basis that it breached its loan-to-value covenant, yet the one sale that has been achieved shows that the asset’s value was much higher than the value that the bank placed on it.

Another example, of a hotel in north Yorkshire, landed on my desk because the business has also been affected by interest rate swaps. The hotel was independently valued by Matthews & Goodman at £3.4 million, but the bank was clearly unhappy with that valuation, which gave the business a healthy loan-to-value position, so it instructed the business to get a second valuation within two months. The business was charged £3,500 for the privilege, and the second valuation came back at £1.65 million. The result was that the business was in breach of its banking covenants. It is unsurprising that the business feels hard done by: an independent valuation suggested a value of £3.4 million, but less than three months later, another valuation, done on the instructions of the bank but paid for by the business, was less than half that.

[Glyn Davies (Montgomeryshire) (Con)]

I thank my hon. Friend for allowing me to intervene. There is a similar example from my constituency. Does he agree that it is often the time scale in which the bank demands a response that kills a business completely? A business in my constituency was given 24 hours to resolve a position that was not a difficulty. The business was bankrupted and its principal has gone to work in the far east, where they have created many jobs and much good business. That has been taken away from mid-Wales.

[Guto Bebb]

That is a fair point about timing. Another of my constituents was told that his bank charges would be increased to a weekly fee of £4,000. The letter informing him of that arrived on 21 December, just before his business closed for Christmas, which I am sure was enjoyable because of that letter. There was nothing to be done until the new year, because the business was closed. There is an issue there. To go back to the hotel I was talking about, as a result of the lower valuation, the business can show on paper that its bank charges over the following six months were £250,000 higher than they had been in the previous six months.

[Tessa Munt (Wells) (LD)]

I applaud the hon. Gentleman’s work in this area, and it is a joy to work with him. I want to mention a similar case involving a constituent who had a long-term arrangement with a bank. His business, which owns housing, has been told by the bank that it wants to finish his loan on 31 March, so he is required to sell the housing on 1 April. How can that be fair?

[Guto Bebb]

That is an issue on which the bank would have to respond, because my view is that clearly it is not fair.

I have a fourth and final example of businesses finding themselves in difficulty due to decisions taken by the bank. A company that contacted me recently had net profit of £272,000 on turnover of £3.5 million in 2008, net profit of £281,000 on turnover of £4.4 million in 2009, and net profit of £268,000 on turnover of £3.9 million in 2010. Those are all healthy figures. The company employed about 40 members of staff. In late 2010, however, an agreed overdraft facility with the bank was withdrawn, because a loan agreement under the EFG—enterprise finance guarantee—system was declined. The company was therefore put into GRG support, and the group proceeded to disallow a payment of £14,000 in corporation tax, on which basis the company found itself in difficulties and ended up going into administration. The final set of management accounts for the nine months before the company went into administration showed a net profit of £190,000. The company would argue that its difficulties were caused by the bank refusing the corporation tax payment, even though the final accounts showed a profit.

Such businesses feel extremely hard done by as a result of the way that the GRG and RBS have behaved towards them. My evidence could be described as anecdotal—I am more than happy to accept that—but it is important to emphasise that the cases highlighted in the Tomlinson report are the tip of the iceberg; they are not representative of an issue created by Lawrence Tomlinson himself. I have seen these issues in my constituency, and other Members have seen them in theirs.

Once businesses are in the GRG, the concern is that its attitude and behaviour is less than helpful. RBS argues that the whole purpose of the group is to put businesses back into health, but it is difficult to see how a business allegedly subject to cash-flow problems is helped by having an additional £250,000 in fees in a six-month period. Time and again, I have seen the fees charged by the bank go up when businesses go into the GRG, and they apparently bear no relation to the amount of work done in support of the business.

So-called independent reviews are forced on businesses by the bank, whether through a valuation, accountancy work or solicitors. Professional fees are charged to the business, but the instructions come from the bank and, often, the reports go to the bank first. We have to be concerned about that. Furthermore, the businesses often have no say whatever in who the reviewers will be. There is a question about the conflict of interest faced by those professionals: if they are being paid by a business, but instructed by the bank, surely they are conflicted in their work.

The other thing that I have seen time and again is payments by suppliers not being prioritised. There is almost never a case in which a payment to suppliers would be allowed if that took the business beyond the terms of its overdraft or facilities, and yet I have never seen a case in which charges due to the GRG have not been taken because they will take the business over its overdraft limit. That is a fair point to make, because if a business can go over its agreed limit in order to pay the bank charges, why on earth will the bank not allow a payment to a supplier if that supplier is crucial to the continuation of the business in question?

I have already mentioned a constituent of mine struck with a £4,000 weekly fee for the continuation of his banking facilities. To return to him, after three months of negotiation, the GRG agreed that it would accept £2,000 per week. There was no explanation as to why the fee was initially £4,000, or why £2,000 was now acceptable. I get the impression that the reason why it was £4,000 to start was that the bank thought that it could get away with it; the fee was subsequently £2,000, because the business put up a fight—its accountants and solicitors argued the case, as did the MP.

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

Given all that, does the hon. Gentleman agree that removing the cash flow that assists in running the business when it is under pressure simply creates additional problems?

[Guto Bebb]

Absolutely. When a business is taken into the GRG in order to help with cash flow, it is difficult to envisage why there is therefore justification in imposing a £4,000 or even £2,000 per week charge for support. There is no indication of what that support entails, but it certainly does not support the cash flow—let us put it that way.

The company I mentioned was also expected to produce new accounts. It had monthly management accounts produced by its accountants, but that was not good enough for the bank, which had to have KPMG to do the work. Again, it was not good enough for the bank for the company to use its solicitors to value assets that were subsequently sold; it had to use solicitors chosen by the bank. That is oppressive behaviour by the GRG towards businesses that it is allegedly meant to be supporting.

It is important to bear in mind that when we highlight such cases, the concern is that we have examples from throughout the country, which makes the case that there is an issue here that needs to be looked at. I am pleased that the regulatory authorities are taking a look at the Tomlinson report, but I hope that they also take on board the comments made today by me and other Members on our experiences of businesses not included in the Tomlinson report. This is happening throughout the country and it needs to be highlighted.

I also want to highlight an interview with Derek Sach, the founder of the GRG, by Debtwire in October 2012, which is rather chilling to someone who is of the view that the bank ought to be there to support small businesses. He describes the steady flow of “new distressed businesses” into the GRG as an opportunity. That is a key point. If the head of the GRG considers that distressed businesses coming into his organisation are “opportunities”, his view is that the group is there not to support businesses, but to gain commercial advantage on the back of those businesses. Furthermore, if any Members present represent a shipping business, they should be concerned, because Mr Sach also emphasised that he sees significant “opportunities” in that sector, because shipping is going through a difficult period—in other words, the GRG vultures are hovering, waiting for a further supply of distressed businesses of which to take advantage.

Throughout the process, I have also seen numerous examples of instructions by the GRG not to prioritise the Crown on VAT, corporation tax or pay-as-you-earn payments. That is concerning from any high street bank, but to see such an instruction to businesses coming from a bank that was supported and saved by the taxpayer should cause serious concern to Government. I hope that the Minister will respond to that specific point.

I have a final point to make before my brief comment on Clifford Chance. The whole insolvency process is a concern. When an insolvency practitioner or administrators go into a business, the poor old creditors will often receive little in return, because the fees will take the vast majority of what is available. Hon. Members need not take my word for that, because in a recent article, James Nicholls of Nicholls & Co, an insolvency lawyer based in Birmingham, highlighted the fact that the insolvency business is complicit in what is, in my view, an abuse of small businesses. He made the point that

“we in the insolvency industry have been complicit, collaborative and have completely failed in what our true roles should be. Almost everyone in our industry has effectively been ‘bought off’ by the Banks—accountants, IPs”—

that is, insolvency practitioners—“lawyers, surveyors—everyone.” That is not my comment but a comment from somebody involved in the insolvency industry. His argument is that the industry has turned a blind eye to the behaviour of the GRG and other turnaround companies: it has been bought off by the fees and affected by the culture that has existed in the past decade.

If we are serious about supporting small businesses and supporting the growth of our economy through their development, we have to ask ourselves whether that sort of attitude towards them—seeing them as opportunities to make money rather than as businesses to be supported—is the right way forward.

[Jason McCartney (Colne Valley) (Con)]

Everything my hon. Friend is saying is familiar to me. I have been supporting a decent-sized manufacturing business in my constituency. The bank concerned is not RBS but another major bank; I want the Minister to be aware of that fact, and I might speak with him afterwards. When a business needs support and is feeling a bit vulnerable, perhaps because it has just lost a contract or is restructuring, instead of getting support from its bank it gets a hike in interest rates and has extra costs imposed on it—for example, an extra £10,000 a month in accountancy costs—and there is no pathway for returning to regular lending.

The circumstances my hon. Friend has described are ones I am seeing with a business in my constituency; instead of getting the support it needs, the bank’s behaviour is creating worry and concern. I am supporting that business as best as I can. This debate is a timely one.

[Guto Bebb]

I appreciate my hon. Friend’s intervention, as it highlights the fact that this is not only an issue for those businesses highlighted in the Tomlinson report but something that we are seeing in our own constituencies.

James Nicholls concludes the article I mentioned by saying that the insolvency industry—by that he means accountants, solicitors, insolvency practitioners and so forth—needs

“to stop defending practices that on close and moral scrutiny just do not stand up to the ‘smell test’.”

I say, “Hear, hear,” to that.

I will conclude my comments by discussing Clifford Chance. I have no doubt, as I said in my opening remarks, that it is a reputable firm of solicitors, and make no comment about its behaviour, which I am sure is of the highest standard. However, by choosing Clifford Chance to undertake an internal review of the allegations made against the GRG, RBS is doing itself a disservice and is not creating any confidence in that review process.

Let us think of the relationship between Clifford Chance and RBS over the past couple of years. Clifford Chance worked on the sale of £80 billion of toxic UK commercial real estate by RBS, which was called Project Isobel internally; it acted on behalf of RBS on the sale of RBS Aviation Capital; it was instructed by RBS to deal with the recent IT outage suffered by RBS and NatWest; and it advised RBS on the LIBOR scandal.

I have no doubt that Clifford Chance feels that it could act impartially on the review, but businesses up and down the country genuinely feel that they have been treated badly by the GRG and RBS and they need to feel confident that the bank is taking their concerns seriously. I would argue that the impression given of a conflict of interests between Clifford Chance and RBS is enough of a reason for RBS to think again and appoint another firm to undertake the review. I welcome the fact that RBS is willing to undertake an internal review, and it has argued that it is creating an independent internal review; but that independence must be beyond reproach. Given the commercial relationship that I have highlighted between Clifford Chance and RBS, it is difficult to make the case that the review will be truly independent and will be able to gain the confidence of the business community. I ask the Minister to convey my concerns on that matter to RBS.

Thank you, Sir Roger, for allowing me to speak for so long on this issue, as I am aware that other Members wish to contribute. My concerns are simple. I believe that the issues highlighted in the Tomlinson report are worthy of consideration, and that it is good that the regulatory authorities are investigating on the basis of the report. But it is also important that Members of this House from all parts of the country highlight their experiences with the global restructuring group. RBS is not, in my view, the only bank to have behaved badly, but RBS and the GRG are the focus of the current report.

[Toby Perkins (Chesterfield) (Lab)]

I am grateful to the hon. Gentleman for giving way just as he is concluding his remarks, which have been very thoughtful. He is right to say that the GRG might not be the only perpetrator of this kind of behaviour, but it is the focus of the report. Does he think that the evidence that he has heard from colleagues and has read in the report is enough to say not just that there might have been bad practice but that, as Tomlinson appears to allege, systematic fraud is being perpetrated by RBS—is that the case that he is making?

[Guto Bebb]

I would be extremely wary of using the word fraud. In my view, there has undoubtedly been systematic bad behaviour and I could speak at some length about West Register, which is part of RBS, and the way in which assets have been taken from businesses by the GRG and West Register—there is a conflict there. However, even with the privilege afforded by being in the House, I would be careful about using the word fraud.

[Tessa Munt]

Does the hon. Gentleman agree that we could summarise the matter in this way? Customers have trusted their banks over so many years and that trust has been built up through generations. People still think that they should trust their banks, but there is now a complete imbalance in that relationship, as a practice has grown up in which highly commercially minded organisations are managing personal money and business money. People are now not qualified to understand what they are being offered by their so-called friends, the business or relationship manager and their bank.

[Guto Bebb]

Undoubtedly. That imbalance is something I have highlighted time and again in relation to the issue of interest rate swaps. I do not think it is reasonable to assume that we are talking about two equal parties when one is a banking organisation that has the ability to pull someone’s livelihood away from them at the stroke of a pen.

To conclude, the attention focused today on the GRG and RBS reflects the fact that RBS was bailed out by the taxpayer to such a great extent. With that taxpayer support comes added scrutiny. We should not take our eye off the behaviour of other banks and there are issues within those banks, but the key point is that the bank that we are talking about today is supported by the taxpayer and so has an obligation to justify its behaviour, over and above what is expected of other banks.

09:57

[Natascha Engel (North East Derbyshire) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I am delighted that the hon. Member for Aberconwy (Guto Bebb) has secured this important debate on what is an absolute shocker of a report. He has led a campaign to expose the bullying tactics that were often used by banks on interest rate swaps. We have all been quite shocked to discover that interest rate swaps were just the tip of what is a very large iceberg.

The Tomlinson report gives us an insight into behaviour that, if it is not systematic fraud, certainly reflects a culture and set of practices in the banking sector that are shocking in the eyes of most right-minded people. Small and medium-sized businesses are already struggling in a difficult business climate; to find that the very institutions that are supposed to help them through that difficult time are using practices that make their situation even more difficult—and often force them into insolvency —is truly shocking.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

On interest rate swaps, is my hon. Friend aware that tailored business loans sourced from the Clydesdale bank, for example, have been excluded from regulations and from the review? Businesses taking out those loans are just as badly affected as everyone else, so does she agree that such loans should be included in a review?

[Natascha Engel]

Absolutely, and I will conclude later by saying that that means we really have to look at the whole banking sector. The Banking Commission has done a good job of starting to expose some of these malpractices, but they are very worrying. The issue does not affect just RBS, and it needs to be looked at more widely.

What is really worrying is that RBS would, arguably, not exist if not for the fact that it was bailed out, and is 80% owned, by the taxpayer. However, some of the practices exposed by Tomlinson represent a double whammy for the taxpayer. I can cite examples of RBS using the GRG to take money out of bank accounts that businesses had set up expressly to pay Her Majesty’s Revenue and Customs. The bank was, therefore, not just taking taxpayers’ money so that it could continue to exist, but taking money from accounts specifically set up to pay HMRC.

I started to get involved in this issue as a result of constituents coming to see me about interest rate swaps. One particularly big example involves a man who owns care homes, which are disproportionately affected by interest rate swaps. He was a solvent customer running a successful business, but RBS bullied him into taking on loans that included interest rate swaps. He wanted to refuse, but RBS bounced his cheques until he took the loans on. He is now involved with the GRG, even though it was expressly set up for severely distressed customers. He is not in severe distress now, but he soon will be, because the money he has to use to pay back the interest rate swaps RBS forced him to take on should be going into investing in his care home business. In addition, when RBS first forced him to take on the loan, the exit fee was £10,000. Only a few months later, it was £150,000. Given the amounts involved, we really need to start taking a serious look at what RBS is doing.

The hon. Member for Aberconwy was reluctant to use the word “fraud”, and I understand why, because it is a serious accusation. However, what I would like to hear about from the Minister is the reverse: what makes him confident that systematic fraudulent activity is not happening in RBS? I am focusing on RBS because that is what the Tomlinson report focused on, but also because RBS is more than 80% state owned. What makes him confident that the bank is not forcing people into the arms of the GRG, with the result that perfectly solvent businesses are not solvent any more, and asset stripping them at the same time? What makes him confident the bank is not taking huge fees from companies that bank with them, asset stripping them and making sure they can no longer exist properly?

[Tessa Munt]

On that point, the bank sold the business of one of my constituents, which was bought by another of the bank’s customers, who then found themselves in exactly the same situation as their predecessor. The bank therefore profited from not only the distressed sale, but what happened afterwards. Worse still, the sale happened as a result of interest rate swap mis-selling, but there is another interest rate swap agreement with the new company, so something that happened in 2005 happened again in 2007. Very often, these things are happening to the people who provide large numbers of jobs in our constituencies—the businesses that will provide the jobs and the growth.

[Natascha Engel]

Indeed. Those responsible are laughing all the way to the bank—ha, ha! The engineering of loan defaults allows a company to be put into the GRG. What we find, and what we see in the Tomlinson report, is that the lending is refinanced—companies are forced to refinance—and the bank gets far higher margins on the new loans. The bank also prioritises taking disproportionately high penalty fees from companies.

All of that is chipping away at small and medium-sized companies, which just want to get on with their business; they do not want to have to worry about what these massive organisations are doing. The banking sector is supposed to help people. Before the crash, banks were over-generous in flinging money at people; after the crash, they have become highly reluctant to lend even to perfectly good businesses. Where they do make business loans to companies, they are behaving, if not fraudulently, then at least appallingly badly, as I think we can all agree.

The all-party group’s investigation into interest rate swap mis-selling revealed not just the banks’ bullying tactics, but many cases that highlighted the imbalance between the size of the banks and the size of small and medium-sized enterprises, which the hon. Member for Wells (Tessa Munt) mentioned. We recently had a meeting with the Minister about that very issue. Can we really say that individuals have access to justice, when RBS—I repeat that it is mainly state owned—can call on some of the best legal minds in the country to support it against tiny businesses? I would say that those businesses do not have access to justice, and I would like the Minister to look at that.

To return to interest rate swap loans, which is where all this started, another problem is the foot dragging by the banks, which are looking into this, and which would say they are dotting the i’s and crossing the t’s; by the Financial Conduct Authority, which is also making sure it gets everything absolutely right; and by the Treasury, which is not putting enough pressure on the banks and the FCA to make sure this issue is dealt with swiftly. As we have seen, exit fees can go from £10,000 to £150,000 in only a few months, and interest rate swap mis-selling is costing businesses vast amounts, so every day matters, because all this money is going to the bank, not the businesses.

We cannot be confident—the Tomlinson report highlights this—that systematic fraud is not going on, perhaps in the wider banking sector, but certainly in RBS. I would really like the Minister, when he responds, to say what he is doing to make sure we can be confident that systematic fraud is not going on at RBS and more widely in the banking sector. I will conclude there, because I would like to give him as much time as possible to respond.

09:59

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

I congratulate the hon. Member for Aberconwy (Guto Bebb). I must be honest: I had not intended to speak, but given that there are so few contributors, I want to say a little about my experiences and, more importantly, those of some of my constituents. I also congratulate the hon. Gentleman on the work he has done over a sustained period with the all-party group on interest rate swap mis-selling, which is what initially drove me towards the all-party group.

I want to tell Members about the sad experience of one of my constituents four or five years ago, although I suspect that one or two people in the room will be sick of hearing about it. The story initially confused me, and that is part of the problem: this is a complex issue, which makes it all the more difficult for a layperson to understand. As anyone who has had a constituent come to them to explain their difficulties will know, it takes considerable time to plough through what the constituent is saying, and to begin to understand the complexities of the banking system that has been operated for businesses for a considerable time. The lack of understanding that MPs will have initially, coupled with the fact that perhaps some sectors of the media do not understand the problem, means that light has not been shone on the issue in the way that it deserves to be. Stuck in the middle are businesses, which are going to the wall. As a result, people are losing their jobs. That is having an impact on family life across the length and breadth of the country.

A gentleman who was banking with Barclays bank got in touch with me about a family-run business that had been around for more than 20 years. It operated caravan parks in four parts of the UK: one was in my constituency, a couple were in the south Lake district, and one was in the Yorkshire dales. The company was encouraged, by almost a separate arm of Barclays bank, to look at investment in the business; the offer came in that guise. It was told, “We have set up a special arm of the bank to assist you; we can do some good business here and develop your business further.” The end result was the bank shifting products; it asked its client to sell one product back to it and to take out another. It ended up with three of the parks having to be sold so that the company could retain one, which continued to operate in Dumfries and Galloway for a period.

The businessman was reluctant for me to create any kind of a storm, because he could see that the first thing the bank would do was immediately move to close the business down. However, time passed and eventually administrators moved in. It all happened at and around the time of the LIBOR scandal and the involvement of The Daily Telegraph and Guardian Care Homes. That very much drew the issue into the spotlight, and as a result, I had a closer look at the case that my constituent had brought to me. I went to the administrators and said, “Quite clearly, this is a case of mis-selling. If this is mis-selling by the bank, and you are conducting business on behalf of this bank, you are doing nothing more than driving this business to the wall.” The administrators could not work quickly enough; basically, they drove the business into the ground.

That comes back to the point that the hon. Member for Aberconwy hinted at. The administrators were fine; their cheque was signed off. However, anyone else who was owed money was left waiting in the wings. The administrators and anyone dealing with the insolvency are absolutely guaranteed their money, despite the plight that many businesses are in. The shocking thing about the business that went down was that it did so owing £1.2 million, of which £900,000 was bank charges. That was punishing—crippling—and it destroyed that business. Goodness only knows how many other businesses the length and breadth of the country have experienced the same thing.

The Tomlinson report’s title is “Banks’ Lending Practices: Treatment of Businesses in distress”. Businesses in distress is one thing, but businesses being driven into distress is completely different. We heard this morning from the hon. Gentleman, and from my hon. Friend the Member for North East Derbyshire (Natascha Engel), about some experiences; I have three cases before me. One involves a gentleman whose small business—the family have a number of businesses—is some 200 yards along the street from my office in my constituency town of Dumfries. He discovered that the bank was dipping into other bank accounts—not only those that were relevant and related to his business, but those of family members. It had taken total control of all his finances. That poses a serious question mark about how banks are carrying out their business and what they are doing to people.

When my constituent contacted me, I said, “Come back to me in a couple of days”—because he was scheduled to meet the bank—“and let me know what action I need to take.” He came back saying, “It look as if they are prepared to move and assist.” The fact was that those were mere platitudes. The bank did not help him one iota, and that business, which is down the street from my constituency office, is closing down.

Another businessman who is, again, involved in caravan and camping sites has been mis-sold products. He does not have a kind word to say about the global restructuring group. His view is that the bank will quickly move to settle with him on the products that he was mis-sold. There has been an admission, but he also knows what is waiting in the wings. If he takes that early settlement, it will move in on other aspects of his business and close him down. That is no way to treat people who have probably been loyal customers of these banks for many years.

The most shocking case I have concerns a gentleman who is involved in property and is a private landlord. In the mid-1990s, his business had a value of about £300,000 to £400,000; gradually, over the years, he built that up into a business that provides jobs, of course, as well as a roof over the heads of individuals and families, and it was worth several million pounds. He then fell foul of the bank. He made me aware—he is an astute businessman—that he was always wary of the bank’s promises that what it was selling him was good for his business. The value of that business has fallen dramatically, and it may be worth somewhere in the region of £1.5 million to £2 million. However, stuck in the middle of all that are people living in homes that he is providing as a private landlord.

[Sandra Osborne]

Does my hon. Friend agree that private landlords seem to be targeted by the banks? I had a constituent in that business who was taken to a hotel in Glasgow and treated to a big presentation about how the loans could help with the business. They were not told all the facts and then ended up getting into difficulty. Does he agree that this has been a conscious effort to dupe people?

[Mr Brown]

I can only agree with my hon. Friend. I do not think there is any doubt that certain sectors have been targeted. I mentioned at the start of my contribution the caravan camping leisure sector, which Barclays had created a separate arm for, so there is no doubt there. Let us be honest: the types of businesses that can grow, even under difficult financial circumstances, appear to be targeted. There is an indication in the Tomlinson report that there have been elements, if I can put it this way, of predatory practice.

Again, I want to emphasise the point made by the hon. Member for Aberconwy: this is about businesses being told what is good for them. It is about businesses, once they get into financial difficulties, being told, “We need a report. We need someone to come in and do some work on how you’re running your business. We need valuations—and, by the way, you’ll pay for them at our behest.” The cost is not a few hundred pounds, or a couple of thousand pounds. These are significant sums of money. In any other world, we would call what the banks are doing an absolute rip-off. They actually gerrymander the valuation of businesses. That is simply not acceptable.

On the last couple of occasions on which I have attended meetings of the all-party interest rate swap mis-selling group, chaired by the hon. Member for Aberconwy, I have made this plea. The Royal Bank of Scotland—I should have declared at the beginning of my speech that I have banked with the Royal Bank of Scotland for more than 40 years; I try my best to keep on the right side of it—is 80% state controlled. We cannot release it back to where it was before the banking crisis. I have been pleading with the chair of the all-party group, and there is a Minister here this morning, so I plead with him: do not release the Royal Bank of Scotland and send it back whence it came, because we need some kind of control over this bank until some of the problems that it has caused are sorted out.

I know that the hon. Member for Aberconwy was anxious about the language that we should use in this place, despite the cover that we have, but I think that there is a culture of predatory business that is destroying businesses and, more importantly, destroying people’s lives. I apologise if I have missed a piece of work that the Select Committee on the Treasury has carried out, but I think that we need some of these people back in front of the Treasury Committee, explaining some of the charges that they are imposing on business. They are crippling business, not helping it. These big banks are organisations that we all looked at years ago, before the crash, and thought, “These are decent people that we can all do business with.” Frankly, they have been wolves in sheep’s clothing. They do this nation and the economy of this country no good whatever when they take businesses down.

10:22

[Toby Perkins (Chesterfield) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger, as we discuss a subject that is vitally important for small business owners across the country. As someone who was a small business owner before coming into this place, I like nothing more than the opportunity to reflect on what is happening with small businesses and, of course, the vital relationship between small businesses and their banks.

I congratulate the hon. Member for Aberconwy (Guto Bebb) on securing the debate. Everyone in the House will know how much of his parliamentary energy he has dedicated to the cause of small business redress, most notably through his campaigning on the interest rate swaps issue—an issue about which he and the Opposition share many concerns.

This debate and this report go to the heart of several big questions that Government and society need to address. What are banks for? Whom should they serve? What is the role for Government in that relationship? Where does the balance lie for banks in protecting their own interests and those of their customers when a conflict is seen to exist? A key question is not whether there has been any wrongdoing, but whether, as has been alleged in the Tomlinson report, there has been systematic fraud by Britain’s largest bank. We need to be clear that that is what Tomlinson is suggesting in his report. It is an incredibly powerful and potentially huge allegation from someone who sits at the heart of Government as an entrepreneur in residence at the Department for Business, Innovation and Skills.

The report also poses questions about how a responsible Government should balance the need to expose wrongdoing and scrutinise questionable practices, which has come across loud and clear in this debate, with the need for a measured and considered approach to evidence gathering, particularly when the allegations are as serious as those made in the Tomlinson report. The report is clear in its call for a change in the culture of British banking. Indeed, Tomlinson echoes concerns and remedies that the Opposition have already called for.

Mr Tomlinson is a much respected entrepreneur who has won admiration from across the business sector for his own business success as a British manufacturing success story, but he is involved in a long-running and bitter dispute with RBS. Given the way in which his report changed between the original draft that was sent to RBS and its subsequent publication, many people feel disquiet about the independence of the report and the strength of the evidence base that led to a report as hard-hitting and potentially damaging to UK plc as this one.

As my hon. Friend the Member for Streatham (Mr Umunna) has said and few will disagree, there were many things wrong with banking practices and many causes for concern about the way in which the relationship between businesses and the banks has been conducted in recent years and continues to be conducted today. That was why my hon. Friend publicly called for those guilty of LIBOR rigging to face jail, and why Labour has led the way in calling for decisive action on the mis-selling of interest rate swaps. We have been very much with the hon. Member for Aberconwy on that. We have been resolute in calling for speedier action to bring about closure and settlement for companies that were mis-sold products, and concerned at the way in which the Financial Conduct Authority has failed to ensure that the banks complied with timetables that they had promised to adhere to. At this stage, I would like to place on the record my admiration for the work done by Bully-Banks to highlight some of these issues and to ensure that the matter is kept under the glare of public scrutiny. Indeed, as we meet today, banks have paid out less than 3% of the amount that they have set aside for compensating the victims of that scandal.

Those concerns were also why Labour tabled an amendment to what was then the Financial Services Bill that would require Ministers to bring forward proposals to help firms to pursue collective redress against the mis-selling of swaps, which the Government combined on to vote down.

[Sandra Osborne]

Does my hon. Friend agree that tailored business loans, which are currently not included in the review, should be considered as well?

[Toby Perkins]

I think that many important points have been raised during the debate and that is certainly one of them.

We share the disappointment at the continued excesses in bank bonuses and the failure of the Government’s bank bonus levy to yield the returns that it promised. After all, we are having this debate just a day after publication of a survey showing that managing directors at banks in London are expecting a 44% rise in bonuses for 2013.

I turn now to some of the contributions made by hon. Members to the debate. Unsurprisingly, the hon. Member for Aberconwy made a series of significant contributions to the debate that he initiated. It was interesting that he reflected on the fact that Tomlinson had spoken to the all-party group on interest rate swaps. I was surprised to discover that during this process, Tomlinson never spoke to RBS and never gave it an opportunity to put the allegations that he was making in an alternative light.

The hon. Gentleman refused to take the bait that I generously offered him to say that the behaviour highlighted in the Tomlinson report would have verged on the illegal. I think that he understates the case. Tomlinson is fairly unequivocal. He is clearly alleging systematic fraud on the part of Britain’s largest bank—in effect, it is feathering its own nest by bringing down businesses that without the intervention of the bank would have survived and thrived.

[Guto Bebb]

It is fair to say that the allegations in the report are extremely serious. That is why, in my initial remarks, I welcomed the fact that the Government have referred the report to the relevant regulatory authorities—because I think that it is important that those allegations are looked at very carefully. However, the purpose of this debate was to highlight the significant effort in the media to portray Mr Tomlinson as a gentleman with a vendetta against RBS. The opportunity today was to highlight the fact that constituency MPs have seen behaviour by RBS and the GRG that is identical to that highlighted in the report.

[Toby Perkins]

There is no question about it: we have heard a lot of evidence of that sort. I agree, of course. I welcome the fact that the Government have referred the report on, but it is hard to see how they could have done anything else, on the basis of the strength of the report. The way in which the situation has been handled poses questions about judgment in terms of the seriousness of the allegations being made.

The matter will now be looked at by the Financial Conduct Authority. We are talking not about an external report to which the Government have to respond, but about a report written by someone at the heart of Government, which is apparently based on anecdotal evidence and which does not give RBS much of a right of reply. That is why I have questions.

The hon. Member for Aberconwy raised a legitimate question about the impact of the charges levied by banks on businesses that are already struggling with cash flow, and the powerlessness that businesses feel when they enter the restructuring process. In some cases, a business enters the process knowing that it is in trouble and feels as though the process is making the situation worse. I also recognise that Tomlinson highlights, as my hon. Friend the Member for Dumfries and Galloway (Mr Brown) has said, the fact that some businesses did not consider themselves to be in crisis until the moment they entered the process. The report raises many questions and we need to hear the Government’s response. It is important that we continue to put pressure on the banks, and indeed it is hard to see how that pressure will be alleviated.

My hon. Friend the Member for North East Derbyshire (Natascha Engel) highlighted suspect practices by RBS that were experienced by a business in her constituency. She repeated Tomlinson’s claim that systematic fraud was taking place. Interestingly, she asked the Minister to explain why he was certain that such practices were not occurring. Given that the report has come from the heart of Government, I imagine that he must be pretty clear that such fraud existed. I do not want to prejudge his comments, but I would be interested to hear what he has to say on that. My hon. Friend also made a significant point about the imbalance and unfairness of the relationship between banks and firms that are battling to stay afloat and do not have the resources to take on a major bank.

My hon. Friend the Member for Dumfries and Galloway raised an example from Barclays that it made it clear that such practices are not confined to RBS, although the Tomlinson report was entirely about RBS. My hon. Friend focused on businesses being driven into distress. He said that RBS was 80% state controlled. Although RBS is state owned, it has become clear under successive Governments that the bank is not state controlled; it is run in its own way. Perhaps we need to consider the fact that an organisation owned by Government is not always working in the best interest of British businesses and UK plc.

As I have said, we share many of Mr Tomlinson’s concerns and conclusions, and I now turn to the areas on which we agree. The Tomlinson report recognises the fundamental faults of the lack of competition in the British banking system, on which the Opposition wholeheartedly agree. Some 89% of small businesses are locked into the big five banks. The report also speaks of the need to change banking culture so that banks see small businesses as partners rather than merely cash cows, and so that the two can grow locally together. Such a model would not only be good for small businesses but lead to a stronger and more durable overall economy. That is why Labour proposes a new generation of local banks based on the Sparkassen model to add genuine competition on the high street. That would create a major new player that would not operate according to the same lending models as all the other banks, and would boost local decision making.

Although net lending has fallen every year during the crisis, our biggest European competitor, Germany, has seen an increase in lending over the same time. After the crash in 2008, a crisis occurred in bank lending, and far from being improved in the years since, it has continued to constrict. Tomlinson is right to say that we need greater competition. Alongside the new local entrants to the banking market, we are calling for greater bank account portability to ease the path into the market. Even a huge bank such as Santander found it exceptionally difficult and expensive to gain a foothold in the UK market.

We also agree that the culture of selling additional products and services alarmingly supersedes that of best serving customers’ needs, as was demonstrated by the interest rate swap scandal. Britain is currently facing a mutual crisis of confidence in small business lending, and in the relationship between banks and businesses more widely. A survey of members of the Federation of Small Businesses found that more than half of small businesses believe that banks do not care about small businesses, and, similarly, banks fear lending money to businesses. Such mutual distrust is one of the reasons why we have had the slowest recovery for 100 years. The Tomlinson report will, indisputably, further damage the confidence between banks and businesses. The Government have a grave responsibility to ensure that, when such damaging criticisms are made, every possible step has been taken to verify and scrutinise those criticisms before the Government endorse them.

In that context, we have significant reservations about a report that contains such serious allegations of systematic and widespread corporate fraud. There are concerns that, at best, the Tomlinson report will not be seen as being truly impartial. We have reservations about the Government’s endorsement of the report when its evidence base has not been subject to any public or, as far as we are aware, departmental scrutiny. The Secretary of State for Business, Innovation and Skills told the House during recent Business, Innovation and Skills questions that Tomlinson’s

“accusations are echoed in the report published by Sir Andrew Large, who was appointed by RBS.”—[Official Report, 5 December 2013; Vol. 571, c. 1080.]

However, the Tomlinson report states that businesses rarely survive the global restructuring group process, and that they never come out again. Tomlinson highlights the fact that

“a whistleblowing ex-RBS banker confirmed that they could not think of any occasion in which a business entered RBS’ Global Restructuring Group and came back into local management.”

The report by Sir Andrew Large showed that 50% of businesses traded out of the GRG, and that only about 10% became insolvent, so it is difficult to see how the Secretary of State could use the Large report as a justification for the publication of the Tomlinson report.

The Parliamentary Private Secretary to the Secretary of State for Business, Innovation and Skills appeared to be supportive of what the hon. Member for Aberconwy said, so I do not know whether his contribution has the Secretary of State’s implicit support. The hon. Members for Aberconwy and for Wells (Tessa Munt) certainly appeared to be working collaboratively. The allegations in the Tomlinson report are incredibly serious, and they clearly carry the stamp of Government.

If Labour had been in office when the issue came to prominence, we would not have been as quick as the Secretary of State has been to rush out this departmental report, about which there are many questions to answer. I am told that if Tomlinson had chosen to speak to RBS, he could have been referred to companies such as Samsonite, Fairline, Independent Slitters Ltd and many others, which would have told him that the GRG process was positive for them. He chose not to do so, and as a result the report represents serious concerns but does not reflect all points of view in a balanced way.

Had Labour been in office, we would have ensured that the FCA, which is the appropriate body to investigate such grave allegations, was immediately commissioned to conduct a full and proper inquiry before the trust between banks and businesses could be damaged by a sensational report such as the Tomlinson report. I do not suggest that bad practices do not exist or that we have not been pushing the banks to identify where they have failed their business customers, but we consider that the anecdotes in the report provide a pretty tenuous basis for such serious allegations to be made with the stamp of Government approval.

With that in mind, I ask the Minister to address the following questions. Was the Secretary of State aware of Mr Tomlinson’s ongoing dispute with RBS when he was commissioned to produce the report? If so, what assessment did the Secretary of State make of any potential conflict of interest before giving it the departmental stamp of approval? Why did the Secretary of State trumpet the report as independent when it was produced in his Department by someone with a close interest in both the party and the issues under discussion? Why were earlier references to malpractice at Lloyds removed from the final version of the report so that it focused purely on RBS, the bank with which Mr Tomlinson is in dispute, and why was RBS not shown the final report, nor given a chance to submit evidence to it?

The report is sadly lacking in detailed referencing and evidence. Given that the basis of the report seems to be that many of the businesses will have collapsed—presumably, that is on the public record—will the Department be publishing detailed citations for where the allegations have come from? Is the Minister personally satisfied that due diligence was carried out by his Department before it promoted the report? Does he agree that if the report’s claim that RBS was systematically involved in deliberately distressing businesses that would, without its intervention, have thrived, that would be a matter of corporate fraud on a huge scale, and such an allegation should be thoroughly investigated before being produced in a Government-backed report? Does he think that the appropriate level of scrutiny was given to the report prior to publication?

Finally, as we head towards a general election, I suspect we will hear from Ministers why they think the way in which the Secretary of State operated was not the way things would have been done under a Conservative Government. If we had a purely Conservative Government, would they have handled the report in the same way? If not, in what way would it have been different?

10:41

[The Financial Secretary to the Treasury (Sajid Javid)]

I will start by welcoming you to the Chair, Sir Roger, and congratulating my hon. Friend the Member for Aberconwy (Guto Bebb) on securing this important debate. I will try to address the concerns raised, and I thank all hon. Members for their contributions in this debate.

SMEs are a vital part of the UK economy; they contribute significantly to economic growth. Access to finance is important for funding investment, ensuring businesses reach their full potential, and for facilitating new business start-ups. As hon. Members who have contributed to today’s debate have made clear, it is essential that our banking system works in the interests of SMEs and treats them fairly.

I will turn specifically to the report. Lawrence Tomlinson is one of BIS’s two entrepreneurs in residence. His appointment was made by BIS officials, not by Ministers, following an open competition for which there were more than 200 applicants. Mr Tomlinson is independent of BIS, but, as an entrepreneur in residence, he has the scope to explore and raise matters that he regards as important to SMEs. His report was prepared in that context, so it was not commissioned by the Department or by Ministers. It was a personal report by Mr Tomlinson; it is not a Government report.

I will deal with the questions asked by the hon. Member for Chesterfield (Toby Perkins), which were all in the same vein. He referred to the report coming from the heart of Government, so it is worth restating that this is a personal report by Mr Tomlinson. It is not a Government report, so Mr Tomlinson was free to publish whatever he saw fit. No Ministers or officials were involved. What was eventually published by Mr Tomlinson was entirely his own choice. It was also his own choice whether to involve the banks that he refers to in the report and what resources he wanted to use.

[Toby Perkins]

The hon. Member for Aberconwy referred a few moments ago to the smell test. I do not know whether the Minister is attempting to distance himself from the report, but anyone applying the smell test would say that an entrepreneur in residence at the heart of BIS was the person selected by BIS officials to do a report that was promoted and welcomed by the Secretary of State for Business, Innovation and Skills. It does not feel independent.

[Sajid Javid]

I disagree with the hon. Gentleman. The value of the report is that it is entirely independent. It was done by Mr Tomlinson in a personal capacity. He was free to look at any of the issues that he saw as important to the SME sector. I will look at the important issues he has raised, but at this stage I want to make it clear that it was a personal report by Mr Tomlinson and not a Government report. Once that is taken into account, the answers to the questions that the hon. Gentleman asked become clear.

The allegations made in Mr Tomlinson’s report are deeply concerning, and they have raised questions as to whether banks—particularly RBS—are treating their customers appropriately. We expect all banks to act with integrity across all the business activities that they engage in. Separately, as we have heard, the new management of RBS also commissioned Sir Andrew Large to conduct an independent review to examine RBS’s support to SMEs and the decisions that they make on SME lending. Following that review, a report was published on 25 November, and RBS has committed to implement its recommendations in full.

The reports, which were not Government reports, contained some very serious allegations, as we have heard from various hon. Members, particularly from my hon. Friend the Member for Aberconwy. It is now the responsibility of the Financial Conduct Authority to undertake investigations into allegations surrounding RBS’s lending practices and treatment of small businesses.

The FCA has now considered both reports. It has notified RBS that an independent skilled person will be appointed in accordance with the FCA power under section 166 of the Financial Services and Markets Act 2000 to review the allegations made against RBS.

[Natascha Engel]

Is there a time limit on the investigations being launched by the FCA? Foot dragging is a really serious issue, and every single day means more money lost to small businesses, so is there a specific time frame to which that person is working?

[Sajid Javid]

First, the FCA has yet to appoint the skilled person. I am not aware of a specific time limit, but it is fair to say that the FCA understands the urgency of the situation and the need to look into the allegations as quickly as possible. However, the hon. Lady will agree that it should take whatever time is necessary to get to the bottom of such serious allegations. The FCA will need to be satisfied that the skilled person appointed to review the allegations is sufficiently independent to carry out the work.

[Natascha Engel]

Will the Minister give way?

[Sajid Javid]

I will in a second. If the findings of the review reveal issues that come within the FCA’s remit, it can consider further regulatory action.

[Natascha Engel]

I am sorry to press this, but one of the very serious issues is the foot dragging, and the more time that is taken, even if it is under the guise of making sure that every i is dotted and every t is crossed, means more small and medium-sized businesses are unnecessarily going under, so the time pressure is really serious. I want to re-emphasise that the FCA must be put under pressure by the Treasury to ensure that the review is done as quickly as possible.

[Sajid Javid]

I agree with the gist of the hon. Lady’s comments, but I am not sure what she means by foot dragging. The report was published on 22 October. On 23 October, it was given to the FCA, and, within days, the FCA announced that it would investigate, so it would be wrong to accuse the FCA or anyone else of foot dragging, but she is right to suggest that we must stay on top of this and make sure it is handled in a timely way.[Official Report, 19 December 2013, Vol. 572, c. 7MC.]

The hon. Lady and other hon. Members mentioned the allegations of fraud in the report. They will understand it is not for Ministers to determine whether criminal activity by any institution or individual has or has not taken place. That is something that the courts and authorities must look into. If she or other hon. Members have been contacted by businesses with concerns, it is timely to remind her that micro-enterprises can go to the Financial Ombudsman Service with any such concerns. Businesses can also raise concerns directly with the FCA, which will investigate if it is appropriate, and of course any organisation is free to go to the police with any concerns about criminal activity. The police may involve other authorities such as the Serious Fraud Office.

[Mark Durkan (Foyle) (SDLP)]

In respect of some of the issues that hon. Members may be hearing about, as the Minister is aware, the arm of RBS operating in Northern Ireland is Ulster bank. Customers of that bank talked to Tomlinson, and other issues have arisen since the report. Will the skilled person appointed by the FCA look specifically at questions about the practices that seem to have been instilled into Ulster bank as well?

[Sajid Javid]

My understanding is that the FCA’s investigation through the skilled person will examine all allegations in the report and some similar allegations in Sir Andrew Large’s report.

I also mention, as my hon. Friend did, the Clifford Chance report commissioned by RBS and described by RBS as independent. I note my hon. Friend’s concerns about Clifford Chance; I listened carefully to what he said. Although it is for RBS to decide whom to appoint, I will ensure that his concerns are conveyed to RBS.

The hon. Member for Dumfries and Galloway (Mr Brown) discussed the future direction of RBS. He and others will be aware that on 1 November this year, the new management of RBS set out a new direction for the bank, which will lead RBS to boost the British economy rather than burden it. It will also enable RBS to focus on its core British business of supporting British families and companies. Ross McEwan, RBS’s new chief executive, has committed to improving RBS’s lending performance across the UK and announced the ambitious goal of becoming the No. 1 bank for small businesses and enterprises throughout the UK, as measured by a newly created independent survey to be run by the Federation of Small Businesses and the British Chambers of Commerce.

The Tomlinson report also recommended that state-owned banks be split into small banks focusing solely on retail and commercial lending as a means of improving competition in the banking sector. The Government are already committed to greater competition and diversity in the UK banking sector both locally and nationally, which is why we asked the Independent Commission on Banking to investigate competition issues in the UK banking sector as part of its work.

The ICB uncovered a number of issues, and we are taking forward its recommendations in the Banking Reform Bill and through other legislation. We are removing the competitive advantage that big banks get from the “too big to fail” system by introducing ring-fencing in the Bill. We have also secured a new seven-day switching service delivered by industry that will allow both consumers and SMEs to switch businesses accounts far more easily, and we have introduced a strong competition objective for the regulator, the FCA, to help it promote competition much more effectively.

The new regulators have already introduced big changes on the regulatory side to make it easier for new banks to enter the market, grow and compete with the large incumbent banks. We are also taking further action in the Banking Reform Bill by creating a new payments regulator to ensure that new and smaller banks have fair and transparent access to the payment system, and giving the Prudential Regulation Authority a secondary competition objective to strengthen its role in ensuring competitive banking markets. The Bill will also give the FCA further competition powers.

Hon. Members mentioned the future of Lloyds and RBS. At the national level, both RBS and Lloyds are in the process of divesting part of their UK banking businesses, creating new challenger banks. The Government have taken the first steps to return Lloyds to the private sector and are actively considering options for further share sales. The reintroduction of the TSB brand on the high street is great news for competition. That action is further evidence of the Government’s stated aim not to be a permanent investor in the UK banking sector.

The Government do not believe that there is a strong case for breaking up the core operations of any bank in which we have a stake. The cost of reorganisation would be attributable to the banks, and consequently to the taxpayer. The time required to execute such a reorganisation would also be lengthy, further delaying the Government’s ability to return the banks to private ownership.

Before I conclude, I turn to a couple of the other issues raised by hon. Members. My hon. Friend had concerns about insolvency, relating not just to the Tomlinson report but to the process more generally. His comments show how much he has researched the subject, so I take what he said seriously. He will know that the Department for Business, Innovation and Skills is the lead on insolvency issues, but I will ensure that my colleagues in BIS are aware of his concerns. Perhaps, if he finds it useful, I could arrange a meeting for him with the relevant Minister to discuss this important issue.

My hon. Friend will know, however, that insolvency procedures can be commenced only by a court order, and that the whole process is subject to supervision by courts. It is deliberately designed to ensure transparency, make the process legitimate and provide a forum for any disputes, as they often occur throughout such a fought process. I will take the issue forward for him and see whether more can be done to listen to his concerns.

[Toby Perkins]

I suspect that the extent to which the Minister has attempted to distance himself and the Government from the report speaks volumes. Does he believe that how BIS and the Business Secretary have handled the Tomlinson report and its impact on RBS’s performance is ultimately helpful to this Government’s future success, or does he think that it should have been handled differently?

[Sajid Javid]

I say again for the record—I hope that I have made it clear to the hon. Gentleman—that this is a personal report by the entrepreneur in residence at BIS. That has always been the Government’s position, and neither BIS Ministers, Treasury Ministers or any other Ministers have ever said anything different. Nevertheless, it is an important report. He will know that the entrepreneurs in residence initiative was started by this coalition Government in order to allow further analysis of what can be done to help the SME sector.

In that vein, we welcome the Tomlinson report, which is why we take its allegations seriously and why we are pleased that the FCA has acted quickly so far to consider them. This debate has shown how much parliamentary interest there is in the issue on behalf of our constituents, due to the number of small businesses in our constituencies that have come to us with similar concerns.

[Guto Bebb]

The hon. Member for Chesterfield (Toby Perkins) highlighted concerns about the fact that there was no advance consultation with RBS, but in his comments, Sir Andrew Large said that managers at RBS had very little understanding or scrutiny of the global restructuring group. In view of the fact that the report highlights concerns about the GRG, is it really a huge loss that consultation did not take place with a group of managers who did not know what was going on within the GRG, according to Sir Andrew Large?

[Sajid Javid]

My hon. Friend raises an important point. I hope that all that will be considered in the independent inquiries taking place.

I congratulate my hon. Friend once again on securing this important debate on issues about which he and many other Members feel strongly. Those issues will be seriously considered by the FCA, and further as required. It is important at this stage, though, to allow the FCA, as the conduct authority, to investigate the claims made in the Tomlinson report.

Hypothyroidism

Tuesday 17th December 2013 Westminster Hall

10:59

[Mrs Caroline Spelman (Meriden) (Con)]

I am very grateful to have the opportunity to raise this subject in Parliament. It was first brought to my attention by a constituent; I will obviously keep her name confidential, but she is content for me to discuss her experiences, which are not unusual. Hypothyroidism is not a small or niche illness; it is estimated that up to 3.5 million people in the UK may have a thyroid problem. It disproportionately affects women compared with men, by a power of 10, and the effects of the disease can be really debilitating, with the many symptoms including tiredness, aches, weight change, coldness, memory loss and depression. Even more seriously, the disease can impact on the functioning of the heart. The problem is that many of these symptoms are not unique indicators, and therefore they may be hard to pinpoint or describe.

When someone is suspected of having an underactive thyroid, or hypothyroidism as it is known, their GP will usually do a blood test to check the levels of the thyroid-stimulating hormone, or TSH. This test is called the TSH or FT4 test. In the UK, an abnormal test result will only come back for someone who is above the “over” levels of the TSH bell curve for the population. That means that some people may have sub-clinical levels of hypothyroidism but they are not flagged up for treatment. Once again, there is a disparity between the number of men and women with sub-clinical levels of hypothyroidism; three times as many women as men suffer from those sub-clinical levels. The opposite can also be true. Doctors have to consider how to treat patients with abnormal results who otherwise show no clinical signs of hypothyroidism. Therefore, it is accepted that GPs might face many different problems when trying to treat a patient with hypothyroidism.

However, my constituents know exactly how difficult and frustrating it can be to live without effective treatment of their condition. I expect that all of us know someone who has suffered from hypothyroidism, and I think that we are all aware of the impact it can have on someone’s quality of life.

[Jim Shannon (Strangford) (DUP)]

In her introduction, the right hon. Lady mentioned that about one in 50 women and about one in 1,000 men develop the disease in their lifetime. Does she agree that if someone has a family history of the disease, perhaps at a certain stage of life there should be a check carried out on them to see if they have it?

[Mrs Spelman]

I thank the hon. Gentleman for his intervention, because that is an excellent suggestion; it is what I would describe as a no-brainer. If someone has a family history of the disease, surely that should be a very strong indication for the GP to be proactive in monitoring the possibility of it appearing in subsequent generations within the family. The Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), is responding to the debate and perhaps she could respond to that point.

The constituent who first brought this issue to my attention a couple of years ago is, in fact, director of the charity Thyroid UK, which has been contacted by 19,000 thyroid sufferers. There was recently a petition with more than 5,000 signatures from sufferers who wish to see this matter debated and this disease being better dealt with. Therefore, I want to take this opportunity to raise awareness of this serious disease, the methods of diagnosing it and the ways of treating it. I also want to question the broad range of GP responses to diagnosis. More training is required to ensure that GPs respond consistently and are ready to test a patient fully for thyroid problems, so that a quick and full diagnosis can be made. That should include checking someone who has a family history of the disease, which was the excellent point made earlier.

If hypothyroidism is left undiagnosed, it can affect heart health, as I said before. It can also be a risk in pregnancy for a younger woman. If they are undiagnosed, sufferers have to live with unabated symptoms. Wrongly diagnosed patients spend time and money on visiting different specialists, as they try to find an answer to the symptoms they know they have. That is obviously a waste of both the patient’s time and the doctor’s time, as well as a waste of precious resources within the NHS. Effective and quick diagnosis is needed. There are many stories of misdiagnosis, for example where depression or fibromyalgia is diagnosed, and therefore the patient is given the wrong prescription, which can include anti-depressants and other hormone-altering drugs.

There is also an argument that in the long term correct diagnosis and treatment will cost the NHS less. In addition, a healthy, active working patient will cost the state less in benefits. My constituent had to give up work during a period of five years, and she very much regrets that her symptoms necessitated her having to do that. The disease obviously has a huge impact on someone’s life and on their overall earning capacity within their working lifetime.

It is imperative that all GPs are trained in identifying this condition, and that they are reminded to consider that certain symptoms might indicate hypothyroidism even if someone’s TSH test comes back as normal. For example, could it be that the patient is still affected by sub-clinical hypothyroidism? Should the range for those considered “normal” be reduced to bring in these borderline and sub-clinical patients? In the UK, the test considers anything above 10 ml of TSH in serum in the blood as abnormal. However, given that 10 ml is an average figure, there will be individuals who may be hypothyroid with TSH levels below the 10 ml figure. So there may be an argument for reviewing the 10 ml level. At the very least, there should be assurances that the tests are standardised, with reproducible performance in different laboratories. I have discovered that in Germany the threshold is, in fact, 3 ml, but I have to say that it is measured in a slightly different way from the way that we measure it here. However, one question that I put to the Minister is this: why does there seem to be a more sensitive threshold in another well-developed country such as Germany, which might allow a doctor to be alerted sooner than might be the case here?

When a normal result is shown but symptoms are present, why is it not regular practice to carry out a T3 test, in case the problem is caused by a malfunction of the pituitary gland rather than a malfunction of the thyroid gland, or a lack of conversion from T4 to T3? A consistent and sympathetic approach to hypothyroid diagnosis by GPs and specialists is necessary, putting the needs, experience and concerns of patients first.

There is also an inconsistency in the prescription medicines that are offered. Guidelines from the National Institute for Health and Care Excellence clearly state that levothyroxine should be prescribed in the case of overt hypothyroidism, and that might be why the 10 ml level is required by the test. NICE also states that T3 should not be used in conjunction with levothyroxine.

First, it should be made clear that the test to see if the disease is present should not be set at a level solely for identifying the level needed for prescription and a curative drug. The threshold perhaps needs to be different to ensure that there is early and correct diagnosis. People need to know with certainty what illness they might have, in order to give them at least the ease of mind that they have the answers to their health questions.

Recently, the Medicines and Healthcare products Regulatory Agency called into question levothyroxine tablets made by a company called Teva. The agency recognised that levothyroxine is now far more controlled in its production and sale here in the UK. Levothyroxine is licensed in the UK, and I am not suggesting that those problems have not been dealt with; they have been. However, in the minds of patients, doubts were of course raised at the time.

Levothyroxine is not a drug as such, but is a naturally occurring thyroid hormone made to replace the missing hormone in someone who suffers from hypothyroidism. NHS Choices is clear that the drug does not usually have any side effects, unless too much of it is taken. Levothyroxine sodium can also be used.

A naturally desiccated thyroid treatment, or NDT, is a medication made from dried porcine thyroid glands. Before artificial thyroxine existed, this product tended to be used. I do not know at what date it ceased to be licensed, but presumably it was licensed in the 1960s, when it was the only product available. It is not now licensed in the UK, as the hormone levels in the naturally desiccated thyroid treatment can be inconsistent and both T4 and T3 hormones are present. However, my constituent is anxious that sufferers such as herself, who do not respond well to the artificial thyroxine product, should be able to be prescribed NDT treatment as an alternative.

The Royal College of Physicians advises against the use of the hormones T3 and T4 together, as that is inconsistent with normal physiology and high risks of long-term harm may outweigh the considered short-term benefits to the patient. However, NDT is prescribable by GPs, on their own direct responsibility, in respect of their patient’s health. Therefore they are rightly under no obligation to prescribe it. The Minister might like to reflect on the fact that, within the NHS, such variation can be a cause of concern among patients, some of whom do not have access to a GP who will prescribe it for them.

This inconsistent approach by doctors has caused distress among patients, some of whom have received the drug from GPs although others have not. Patients do, of course, compare notes. This inconsistency needs to be addressed. Combination and NDT drugs probably do not yet meet the clinical requirements to be licensed in the UK. However, it is surely time that a T3 replacement medicine or a combination medicine that meets the requirements is researched and produced. There is official recognition of some patients’ preference for such medicines, although it was understood, when studying patients who were unaware that they were taking a combination drug, that there is no clinical benefit. There is guidance to GPs on explaining the possible benefits and dangers in full to their patients.

There may be sufficient justification for a reappraisal of the treatment of hypothyroidism in the UK by such bodies as NICE and the Society for Endocrinology. Such a professional reappraisal would also benefit from the involvement of patients. The results of any reappraisal should be communicated clearly to patients, health care professionals and prescribers, and we parliamentarians, who take up individual cases.

I pay tribute to the work of the charity, Thyroid UK, which provides important support to the large number of sufferers, and families, affected by this disease.

11:09

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my right hon. Friend the Member for Meriden (Mrs Spelman) on securing a debate on this issue. This is, as she says, an opportunity to highlight something that we do not discuss often in Parliament. I hope that the debate will prove informative for those who wish to learn more about the condition, and will be useful to those who are affected in the way that she so ably described. I will mention the help and support that is available and will try to respond to the points that she made. If I am not able to respond to each point, I will write to her.

As my right hon. Friend said, hypothyroidism describes the general effects of a severely underactive thyroid gland, where not enough hormones are produced to keep the body functioning properly. The condition can be congenital, but most commonly occurs as a result of an autoimmune disease that attacks the thyroid gland and impairs its function. The condition is not uncommon, as she said. In the UK, the annual incidence of primary hypothyroidism is 3.5 cases per 1,000 women, and 0.6 per 1,000 men, so there is, as she said, a disparity between men and women.

The effects of hypothyroidism can be pronounced and debilitating, as my right hon. Friend said. Often, the condition goes untreated, because symptoms are frequently subtle and non-specific—she highlighted some—and may be wrongly attributed to other illnesses. Fatigue, weight gain, dry skin, lethargy, memory impairment and tiredness are all likely to be present. In elderly populations, symptoms such as memory disturbance, impaired mental state and depression may also be seen. However, the good news is that, for the vast majority of patients, once the right dose of hormone replacement treatment is given, they will return to a healthy state. Continuous medication is usually required to maintain that correct balance, and patients needing it are entitled to receive their prescriptions free of charge.

However, to get the right treatment and to restore the balance of health and well-being, a prompt diagnosis is, of course, crucial. My right hon. Friend focused on that. A range of guidance is available to improve awareness of the condition among both members of the public and health professionals. NHS Choices provides comprehensive advice on the causes, symptoms and treatment of the disease, and more detailed clinical guidance is available on the NHS clinical evidence website.

Best practice on the identification and management of hypothyroidism has been set out by the Royal College of Physicians in its guidance, “The Diagnosis and Management of Primary Hypothyroidism”, which was developed on behalf of key organisations, including the British Thyroid Association, the British Thyroid Foundation and the Society for Endocrinology. The guidance is endorsed by the Royal College of General Practitioners.

Clinical symptoms and signs alone are insufficient to make a diagnosis of hypothyroidism, so the RCP guidance makes it clear that the only validated method of testing thyroid function is blood testing, which must include measurement of the thyroid-stimulating hormone—TSH—and free thyroxine, or FT4, in serum. There is no evidence to support either the use of body fluids or the measurement of basal body temperature as a means of testing thyroid function. However, the guidance recognises that different methods of testing blood can give differing results, as my right hon. Friend mentioned. Highlighting in Parliament the RCP’s support for a helpful international initiative for greater harmonisation of reference ranges, and of the units used in expressing results of thyroid function tests, reinforces its thinking in that regard. My right hon. Friend is right to highlight that.

Once patients have been diagnosed with hypothyroidism, the vast majority can achieve successful management of their condition with a synthetic hormone replacement treatment. My right hon. Friend focused on the fact that some people do not get on with that treatment. The RCP guidance sets out that overwhelming evidence supports the use of thyroxine T4 hormone replacement—usually prescribed as levothyroxine tablets—alone in the treatment of hypothyroidism. The guidance does not recommend prescribing additional T3 hormone in any presently available form, including natural desiccated thyroid treatments, such as Armour Thyroid. This is because it has not been definitively proven to be of any benefit to patients and may be harmful. However, that does not prevent clinicians from considering other forms of thyroid hormone replacement, if appropriate.

For some patients, as my right hon. Friend highlighted, the wider availability of NDTs is a concern. It is worth making it clear that although this treatment remains unlicensed in this country, because the evidence base for its efficacy is unclear, GPs may prescribe it on a named-patient basis. I appreciate the push-back on inconsistency, but that is probably because it is unlicensed, so people have to find a GP willing to prescribe it on that basis.

To ensure that patients with the most severe and complex endocrine problems receive appropriate care and support, NHS England has published a service specification for complex endocrinology, setting out clearly what NHS England expects to be in place in order for providers to offer evidence-based, safe and effective care. That has been developed by clinicians and commissioners, with expert patient input. Certain patient groups have been calling for specialised training for endocrinologists and general practitioners in diagnosis and treatment. My right hon. Friend rightly focused many of her remarks on that.

Health Education England has responsibility for promoting high-quality education and training that is responsive to the changing needs of patients and local communities, and works with key stakeholders to influence training curriculums as appropriate. The curriculums of the Joint Royal Colleges of Physicians’ Training Board, which is responsible for the specialty of endocrinology, and the Royal College of General Practitioners, are both subject to regular review. As such, there are regular opportunities for stakeholders and interested parties, including parliamentarians, to express their views and influence the training of these clinicians. In light of the issues raised today by my right hon. Friend, I will write to the Royal College of General Practitioners, asking for its opinion on the guidance available to support its members in the diagnosis and treatment of hypothyroidism.

[Mrs Spelman]

My hon. Friend the Minister is coming towards the end of her remarks. Perhaps when she writes to the Royal College of General Practitioners, she will mention the excellent point raised by the hon. Member for Strangford (Jim Shannon). Where there is a family history of hypothyroidism, we should be thinking a bit more about prevention. When a patient presents with an ill-defined collection of symptoms, such a family history might set off an alarm bell in a GP’s head and precipitate a test, so that the hypothyroidism does not go undetected for so long.

[Jane Ellison]

That is a good point. There is some information on the NHS website, but I will certainly include that point in my letter, and hopefully I will get a response from the royal college, which I will pass on. The hon. Member for Strangford (Jim Shannon) takes a fantastic interest in health issues and, as ever, is here in his place.

I hope that the Chamber is pleased to hear that the National Institute for Health Research is funding a £164,000 study on whether people aged 80 or older with hypothyroidism would benefit from lower doses of hormone treatment. Older people often have the condition in a mild form, and may not have symptoms with adverse outcomes, so the current treatment might not be beneficial.

I always make the point in these health debates that the NIHR welcomes high-quality funding applications for research on any aspect of human health. My right hon. Friend the Member for Meriden highlighted some areas that she feels would benefit from further research, and I can only say that the NIHR’s door is open to high-quality bids in any of those areas. That might be worth passing back to the charities and experts working in this field.

As I come to my conclusion, I reassure the Chamber more generally about the Government’s commitment to improving outcomes for the 15 million-plus people living in England with long-term conditions, including hypothyroidism. Through the NHS mandate, we have asked NHS England to make measurable progress towards making the NHS among the best in Europe at supporting people with ongoing health problems. We want such people to be able to live healthily and independently, with much better control over the care they receive. Of course, that feeds into many other priorities, such as ensuring that people do not present at accident and emergency because the management of a long-term condition has gone wrong. We want to ensure that such people can be healthy, well and looking after themselves without getting to that stage.

The various improvement areas mirrored in the NHS outcomes framework—this is relevant to the point on local doctors—are also in the clinical commissioning group outcomes indicator set, so CCGs are also held to account for, and are asked to provide information to the public on, the quality of the services and health outcomes that they achieve through commissioning for people with long-term conditions.

At a service level, the new NHS improvement body, NHS Improving Quality, has made the development of evidence-based tools for the management of long-term conditions the subject of a key improvement programme for 2013-14. The interventions under consideration include care plans, care co-ordination, the use of technology, self-care and the role of carers. That work will be evaluated, with best practice identified, to help us drive improvement across a range of long-term conditions. I am sure that some of the conclusions reached and evidence gathered by NHS Improving Quality will be relevant to hypothyroidism.

In conclusion, I thank my right hon. Friend once more for securing today’s debate. I hope this discussion has been helpful in providing some reassurance on our commitment to improving the quality of life for all those with long-term conditions such as hypothyroidism. I will, of course, write to her to follow up on this debate, which I hope will both help her to reassure her constituent and add to the wider debate.

11:24

Sitting suspended.

Rare Diseases

Tuesday 17th December 2013 Westminster Hall

[Hugh Bayley in the Chair]

14:30

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to be called to speak in this debate, Mr Bayley, which I have sought for some time. It all goes back to a meeting that I had with a number of people from Northern Ireland back in June. They outlined their concerns about the funding and resources for rare diseases, and about strategy.

In this debate, we have an opportunity to look back. Governments in Westminster and the regions, and particularly in Northern Ireland, which I represent, are responding to a UK strategy. The timing of this debate is more appropriate than it would have been had we had it in September, or July last year, because we now have the chance to discuss where we go with the strategy, and how we tie it in throughout the United Kingdom. I appreciate the attendance of Members to discuss rare diseases. It is a pleasure to have so many in the Chamber—to make a contribution, I hope.

Some of the stories that I have heard about rare diseases would break your heart, Mr Bayley. That is where I am coming from, because my cases are those of constituents who came to me with their problems and asked me to portray or reflect on them in the House of Commons and, we hope, find a way forward. It is abundantly clear to me and to everyone in the Chamber that we need to be proactive, making changes that will give the people affected in our nation a better quality of life.

Let me set the scene with a few facts. One in 17 people in the United Kingdom will be affected by a rare disease at some point in their life, which equates to 3.5 million people; 75% of rare diseases affect children; and 30% of patients with rare diseases will die before their fifth birthday. The Teenage Cancer Trust has given me some facts. There are more than 6,000 recognised rare conditions, 80% of which have a genetic cause.

In June 2009, the UK adopted the Council of the European Union’s “Recommendation on an action in the field of rare diseases”. It recommends that member states

“Establish and implement plans or strategies for rare diseases”,

which should be adopted

“as soon as possible, preferably by the end of 2013 at the latest”.

We will not make that deadline, but I hope that we will make the deadline of February 2014, when all the regions will come together under the captaincy of the NHS and the Minister in attendance, who will push things forward.

In November 2013, a UK strategy for rare diseases was issued by Ministers from the four UK Health Departments, including our Northern Ireland Minister, Edwin Poots. The recommendation contains 51 commitments, which all four countries of the UK are committed to delivering by 2020. The commitments are UK-wide and will be implemented in country-specific plans for England, Scotland, Wales and Northern Ireland. Time prevents me from going into all 51 commitments, but I have been contacted by many groups, and I wish to raise at least some of the issues that they highlighted for me.

[Graham Stringer (Blackley and Broughton) (Lab)]

Before the hon. Gentleman gets into a long list, does he agree that the changes in the structure of the NHS have made achieving a strategy more difficult, because it is often not clear where the responsibility for dealing with rare diseases lies between the commissioning groups and NHS England?

[Jim Shannon]

The hon. Gentleman has outlined an issue that is of concern to us, and I hope that the Minister will respond to it in this debate. With great respect to the Minister, he always tries hard to respond to the issues that we ask him about; I do not mean to put up too high a pedestal, but we have high expectations of his response.

The Teenage Cancer Trust contacted me, and its correspondence included some of the figures I gave earlier, which indicate how important the subject is. The trust told me that seven young people per day between the ages of 13 and 24 are diagnosed with cancer. The trust has 27 cancer units operating throughout the United Kingdom and Ireland. There are around 1,200 new cases of cancer among teenagers and young adults in the UK every year, which is a significant number for a rare disease, as defined by the specialised services. Cancer, however, remains the most common cause of non-accidental death in young people, and the five-year survival rates are lower among teenagers for some cancer types than among children. I repeat that, according to the trust, 30% of rare-disease patients will die before their fifth birthday. It is a cruel fact that some children will not enjoy life beyond the age of five.

The trust has proposed recommendations. It believes that it is critical that the service model continues to be secure in the NHS, as part of a standard cancer care; in other words, diagnosis and care must be delivered at an early stage. It welcomed the setting up of the teenage and young adult clinical reference group in NHS England, and called on NHS England to continue to work with the group to focus development on the services.

I refer to NHS England, even though I am an MP for Northern Ireland and health is a devolved matter, because there has to be a driver on rare diseases, and NHS England is the driver to take all the regions forward together. When I refer to NHS England, I am referring to something to which we can all contribute, including those in our part of Northern Ireland.

The Teenage Cancer Trust also referred to the fact that there are different cancer biologies, treatment protocols and responses to treatment. All the issues need to be brought together, which underlines what the hon. Member for Blackley and Broughton (Graham Stringer) said. There has to be better co-ordination. The trust also recommended more trials relating to teenagers and young adults with cancer, and challenging the arbitrary age criteria that are often set for trials. It also recommended ensuring a mechanism for action on new drugs, so that they can be tested by different groups. In other words, it wants early diagnosis, a focus on the issue and, by releasing financial and regulatory burdens safely, to encourage more research development for teenagers and young adults.

Another trust recommendation was for a system that alerted GPs when they had seen a patient three times with unresolved cancer symptoms. That would help them to identify and manage those cases. That is to say, with cancer, when someone has had three strikes, it is time for the case to be looked at intensely, so that we can ascertain exactly what is wrong. The trust has put forward those ideas, which are important to what we are trying to do.

There are more than 60 different types of muscular dystrophy and related neuromuscular conditions. Approximately 1,000 children and adults for every 1 million of the UK population are affected by muscle-wasting neuromuscular diseases. It is therefore estimated that some 70,000 people are affected by a neuromuscular condition in the UK. A constituent I met in June, Dr Amy Jayne McKnight, chair of the Muscular Dystrophy Campaign in Northern Ireland, is a director of the Northern Ireland Rare Disease Partnership; she sent me the following quotation through the Muscular Dystrophy Campaign, with which I have contact:

“There is an urgent need to establish multidisciplinary support for people with neuromuscular conditions in Northern Ireland. The lack of a register of affected individuals makes clinical care particularly challenging due to a lack of planned services. My father, who has spinal muscular atrophy, experienced very sporadic clinical support and was only offered respiratory care after he ended up in intensive care—putting his health at risk. Individuals in Northern Ireland deserve the same care and support as those living in England; international standards of care guidelines exist for several neuromuscular disorders including NICE accredited guidelines for Duchenne and the forthcoming NICE guidelines for uncommon neuromuscular disorders. We need to build on existing expertise in Belfast, alongside support from Centres of Excellence in the rest of the UK, to enable an effective network of specialist services to be developed in Northern Ireland.”

That is a lengthy comment, but it puts in perspective what the partnership is seeking, and what the House should be doing in the strategy that we develop.

I have raised this issue with the Minister who has responsibility for health in Northern Ireland, Edwin Poots, but if all four UK countries are to fulfil their part of the deal, the United Kingdom Government must soon provide additional, ring-fenced funding to each region. Only then will people receive the care that they need. It is all very well to have a strategy, but we must have resources and finance in place to make it happen. The four regions need to work together to make it happen; that is what we should be trying to do.

[Graham Stringer]

The hon. Gentleman has raised some profound points about networks and information. I am not so familiar with the situation in Northern Ireland, but clinical reference groups are vital. He has talked about Duchenne muscular dystrophy. In England, patients suffering from neuromuscular diseases are often directed to a clinical reference group for generic neurological diseases, which is obviously inappropriate. Is that his experience in Northern Ireland, and does he believe that we should do something about the situation in England?

[Jim Shannon]

I cannot speak about other places, but I do not believe that that has been the case in Northern Ireland—I am not aware of it. In my area, there are young people with Duchenne muscular dystrophy, and I met some young people with Duchenne at an event held every year in the Methodist centre across the way. I have been to the past couple of events, and there has been only one person from Northern Ireland there. With my background information, I would say that what the hon. Gentleman describes does not happen in Northern Ireland, but he says that it does in England, and that needs to be addressed. I hope that the Minister will take that point on board when responding.

The United Kingdom Primary Immunodeficiency Network, or UKPIN, is a professional organisation for all doctors, nurses and scientists working in this field, and it covers six rare diseases. UKPIN—I need to be careful how I say that, because UKIP has no role in this matter whatever—has stated that its aims are the registration and accreditation of specialist immunology centres for primary immunodeficiency, or PID; the development of a national patient registry, to which the Government have given a commitment in the rare diseases strategy; and the development and dissemination of guidelines and standards for best clinical practice. The UK PID registry has been supported by the Healthcare Quality Improvement Partnership, and has engaged the participation of 95% of UK centres since its establishment in 2008. To date, nearly 3,000 patients have been registered, making it the second largest patient registry in Europe, after the long-established French registry.

The figures for Northern Ireland suggest that PID is as common as cystic fibrosis. A first report on the matter is at the presses, and we will soon have the opportunity to read it. Perhaps the most pressing point that has been raised is that there is a need for meaningful national and international collaboration on both research and development of clinical practice to ensure maximum benefit for patients. Let us not disregard international collaboration: if something good is being done in France or Germany, it would be good to exchange expertise, so that we can all improve and move forward. Groups such as UKPIN can take the lead in some of these matters. The UK has already led in the development of novel treatments—for example, with gene therapy—and in implementing novel technologies such as next-generation sequencing. It is crucial that there is ongoing investment to maintain that research.

Rare Disease UK has welcomed the promise of greater co-ordination of care for people with rare diseases. As we hear all too often, patients and families have nobody to co-ordinate the multiple elements of care and treatment that their condition necessitates. How often have we heard that, when it comes to health care? It is not just about care for rare diseases. Members here today all regularly contribute to our discussions on health issues in the House, and all too often we hear of people who do not know where to go or who to speak to, and are not quite sure who they need to be in touch with to help them. That is a key issue; if we could address that, it would be helpful.

[Mr Nigel Dodds (Belfast North) (DUP)]

I am grateful to my hon. Friend for raising this important issue. He touched on support and services for families, particularly at the early stages of diagnosis of rare diseases. That is especially important when the case involves a child, as many do; we heard that earlier. Does he agree that that is one of the most critical matters that needs to be addressed in any UK strategy, and that it is particularly important in Northern Ireland? He and I have shared some experiences of the deficiencies in that regard.

[Jim Shannon]

I agree entirely with my right hon. Friend. We have experience of those deficiencies in the health service—we are not immune from them in Northern Ireland. In this House, I always try to extol the health service in Northern Ireland and the good things that we are doing, but there are times when we fall down, and times when we have to improve. My right hon. Friend is absolutely right that there are things that we would like to see done better, and we endeavour to make sure that happens. We have a devolved Administration and a Health Minister in Northern Ireland, so we have an opportunity to make that happen. We have seen lots of changes for the better in the health service in Northern Ireland.

Patients’ uncertainty about who to contact can mean that they do not receive the information and support that they need or that they have to tell their story over and over. I have often told the story of the gentleman I mentioned, and other people’s stories as well, but I still have not got the answers that are needed. My goodness, but it is frustrating for the people concerned, and it is also frustrating for me, as an elected representative. People can feel lost in the health care system.

It has been outlined to me that any strategy must include the development of a generic care pathway to facilitate the delivery of best practice to all rare disease patients, not just those who have a specific service specification; an appropriate care plan for all patients with a rare disease; clearly stated principles about the standards of care that patients with a rare disease can expect, including patients with no diagnosis; and the development of seamless pathways for transition, from childhood to adolescence and on to adulthood and older age. How does the Minister feel we can put such a strategy into place?

We must ensure that there is evidence-based diagnosis and treatment of rare diseases, as without accurate diagnosis, appropriate screening programmes and targeting of diagnostic tests, patients and families cannot access effective treatment or therapy, or manage their condition appropriately. All those things are important to the person who is living with such a disease every day of their life. A delay in diagnosis, or a misdiagnosis, could also involve multiple avoidable appointments with doctors and consultants, incorrect treatments and diagnostic tests, and significant distress. I hate to talk about money but it is an important factor in how the health service works, so we have to consider it. If we can do things more efficiently and effectively, let us do so, and deliver a better service, without some of the current bureaucracy and paperwork.

The UK rare diseases strategy represents the first time the four nations of the UK have come together to recognise and respond to the needs of rare disease patients systematically and structurally. It follows the founding principle of the NHS that treatment should be a response to need. The NHS is an organisation that we love and have great pride in—a pride that was mentioned in the House yesterday—and we want it to deliver across the whole spectrum for everyone. The rare disease strategy essentially gathers a set of 51 commitments that all four nations in the UK could agree to implement. When the Minister responds will he tell us how the 51 commitments will be achieved—will there be follow-up regulation and monitoring to make sure that they all take place?

Regrettably, few of the commitments require the four nations to work together on rare diseases. I find that a wee bit hard to understand. We should be exchanging expertise. If in Northern Ireland we are more expert on one aspect of treating rare diseases, let us do that part; if someone in Wales, Scotland or England is more expert on another aspect, let them do that part. Let us exchange our knowledge with each other to take the strategy forward. For high-quality care to be available to all patients with rare diseases across the UK, such collaboration needs to improve and increase.

[Mark Durkan (Foyle) (SDLP)]

I commend the hon. Gentleman on leading the debate. On the issue of co-operation and co-ordination across the UK, does he agree that the issue of rare diseases could be taken up for focus work by the British-Irish Council? As that body represents all eight Administrations within these islands, not just the devolved regions of the UK and Whitehall, its involvement could help to foster a sense that across these islands there is an open faculty of all those who are trying to specialise in improving the treatment and care of people with rare diseases.

[Jim Shannon]

I agree with the hon. Gentleman. The Teenage Cancer Trust already has 27 units working across the whole of the United Kingdom and Ireland. Bodies are already working across the borders, so to speak. As I said earlier, if someone in the Republic of Ireland or someone somewhere else in Europe has knowledge and expertise, let us galvanise our approach and work together.

It is in the area of rare diseases where the value of resource and service sharing can most easily be seen. The population size and distribution in each of our four nations vary tremendously, as do the health care needs, and there are significant efficiencies to be gained from sharing the burden between the four health services.

The Brittle Bone Society has highlighted that there needs to be a clear commitment to develop a fully functioning and properly staffed transitional service offering all the multidisciplinary services needed for all-round care at this life stage.

There should also be consideration for other departments, such as mature or older well women and well men clinics. Charitable patient organisations may be resource-poor, and it takes time, care, consideration, planning logistical preparation, communication, and an effort to inform and advise members to recruit them to take part in vital surveys, research trials and other invaluable projects.

Research into and development of new treatments and medicines for rare and very rare diseases, known as orphan and ultra-orphan medicines, is an important feature in medical research and the life sciences sector. A large number of products have been developed or are in development to treat rare and very rare diseases. Such research can provide valuable insight into the treatment of conditions that affect large numbers of people. Research and development must be enhanced to provide hope and an answer for those who are suffering from such diseases. The fact that the number of people who suffer from a disease is small must not detract from the fact that a child or adult in the UK is suffering, and we must do all that we can to alleviate that.

The Specialised Healthcare Alliance has sent me some helpful information. It refers to highly specialised services for the rarest conditions, some of which we may never have heard of—apart, perhaps, from a mention on TV, which will probably have been the first we have heard of it—but unfortunately they are occurring more often. There are some 500 patients in England and some 600 patients across the whole UK. Such illnesses and diseases are complex and need the highest level of expertise and knowledge to address. The alliance states:

“Many patients in Northern Ireland, Wales and Scotland depend upon the quality of English highly specialised services for their patients, given the very small number of centres that can sensibly provide these services.”

That goes back to a point that I made in the beginning: we are dependent on England being the driver for the issue, and on NHS England as the organisation that we follow in Northern Ireland, Scotland and Wales. The alliance also refers to “properly funded administrative support”. These are issues that it would like to see taken forward. It also says that the problem of capacity in the system has to be addressed to ensure that resources are there and that opportunities for specialised services are and can be delivered.

An example of the need to work together in the regions can be found in the fact that there is a regional variation in post-bone marrow transplant care. Patients who have received a transplant will face a range of severe and debilitating late effects, as well as life-threatening infection, due to the nature of their therapy. Those complex needs have to be managed by a transplant clinician in a late effects clinic, in which the co-morbidities can be considered with a full range of treatments by a specialist team. Without security of funding, a transplant centre cannot provide that service, so variation will creep in where follow-up care is commissioned by clinical commissioning groups.

Only small numbers of people receive transplants—1,440 in 2011. A nephew of mine has received a transplant, which transformed his life greatly. We are thankful to the donor for making that happen. It was not always plain sailing; sometimes there were backward steps. Has the organ been accepted by the body? Was there medication to ensure that that happened? At the end of the day, he is a bright young man today, and doing very well due to his kidney transplant. Many years ago, it would not have seemed possible, but we now have the opportunity to see a young man who has done extremely well through a transplant. There is a clear argument for NHS England to foot the bill to ensure the security of the service. Furthermore, it should ensure that the right type of care is available by drawing up national guidelines on what constitutes a late effects clinic to eliminate variation.

Time has beaten me, and I want to give others the opportunity to speak. I am not going to go into any further detail on the issue. Although the key commitments are welcome, there are fears of how they will work in reality. The Department must work with other Departments regionally to ensure that not only are those commitments realised, but that there is no longer a regional disparity in service provision. I commented on regional disparity yesterday in relation to the debate in the Chamber, and there is also a clear regional disparity on this topic. How can we achieve this funding and heart? The rare disease groups have shown that there is heart in abundance. Those organisations have spoken to hon. Members present and other hon. Members, who are unable to attend. However, we also need Government commitment to funding. Perhaps today we will get the assurance that that is forthcoming.

14:54

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bayley. May I begin by congratulating the hon. Member for Strangford (Jim Shannon) on securing this debate? He mentioned that one in 17 of the population can expect to be affected by a rare disease. I want to speak briefly on two issues: trigeminal neuralgia and headache disorders.

Trigeminal neuralgia is a relatively rare condition, thought to affect less than 0.1% of the population, and that has included me. I secured an Adjournment debate on TN in 2010, seeking, among other things, to raise awareness of the condition.

It is important that the rarity of that or any condition does not exclude it from research, funding and the search for treatments or even a cure, as the hon. Gentleman referred to in his excellent opening remarks. One vital corollary of such research is in getting to grips with misdiagnosis, which is a particular problem when dealing with rare diseases. We need to break the chain of rarity leading to lack of research and knowledge leading to misdiagnosis. Such a chain can mean ongoing misery for the sufferer, when it might otherwise be possible to make breakthroughs that could bring hope and relief to the afflicted.

Of particular importance in the case of rare diseases is the existence of support groups and networks. They are important for all sufferers, as one often finds that the very rarity of a condition serves only to exacerbate the sense of isolation felt by the sufferer. If people do not know what they are talking about, and do not know anyone among their family or friends who suffers from a condition as rare as, for example, TN, it is crucial that one can link up with fellow sufferers, not only to overcome the sense of isolation, but, in practical terms, to share experiences, advice and the latest developments in that field of medicine, surgery and so on.

The Trigeminal Neuralgia Association UK brings together consultants, sufferers, doctors and researchers—indeed anyone with a connection to the disease. It also raises awareness among the public and medical professionals. I know that similar groups exist for other diseases, and all those groups are of immense importance and value to all of us.

I am the chair of the all-party group on headache disorders. We have initiated an inquiry into headache services in England. We have had a number of written submissions and one oral evidence session already, with another to follow in January. Evidence submitted to the inquiry so far indicates that there is significant misdiagnosis and subsequent mismanagement of primary headache disorders throughout England. Sufferers of rare headache disorders, such as cluster headaches, are further disadvantaged by the lack of medical awareness and access to specialists in the UK. The inquiry is looking into the current provision of care for headache sufferers in England and what opportunities exist in the new NHS system to improve care.

The all-party group has heard that misdiagnosis and incorrect treatment for headache disorders place a huge burden on the NHS, for example, inappropriate referrals to secondary care, costly medical procedures, and a high number of unnecessary A and E admissions. That can continue for years and comes at huge personal, financial and economic cost. The patient group OUCH reports high suicide levels among cluster headache sufferers.

Without funding for research into primary headache disorders, little will be done to improve the lives of sufferers or reduce the burden on the NHS and the UK economy. Increased education of health professionals—currently medical students receive only an average of four hours’ training on headaches—and clear treatment pathways are also required to tackle rare headache disorders.

Will the Minister meet officers of the all-party group once a report is published, which will certainly be before the summer recess, so that we can discuss its findings with him and his officials? Obviously we would like to extend that invitation to the shadow Minister. If the Minister is prepared to do that, that would be a welcome response to this excellent debate.

14:59

[Charles Hendry (Wealden) (Con)]

I am delighted to have the chance to speak in this debate, Mr Bayley, and I congratulate the hon. Member for Strangford (Jim Shannon) on securing it. I have been in the House for more than 20 years in total, and I cannot remember having a debate on rare diseases in that time. This is an important subject that we need to address in a constructive way, as the hon. Gentleman has done.

Looking at figures before coming into the Chamber, I saw that there were about 6,000 rare diseases, which is a shockingly high figure. I do not think that many people realise just how many different types of diseases there are. As a parent, one has only to watch a programme such as “Children in Need” to see how many diseases are out there, to see illnesses that we have never even heard of, but that are having such a devastating effect on families and lives, and to see how much work still needs to be done in the area. If the debate helps to take that forward, that is all to the good.

I want to focus on two aspects: first, the families and voluntary groups that work in this space and secondly, some of the academic research that is being done into rare diseases. So much of the work in this area is done by families who have been affected by a child or a family member who has been unwell. The work that they then do to raise funds, either to support other families or to carry out research, is an incredibly important part of the equation.

I want to refer to two examples. The first, Charlie’s Challenge, was named after Charlie Boutwood, a constituent of mine, who was 20 months old when he was found to have a brain tumour. He survived thanks to incredible medical attention, but his parents set up the Charlie’s Challenge charity to put money into brain tumour research, particularly relating to children. Although brain tumours are the biggest single killer of all the cancers of children and young people under 40, less than 1% of the research into cancers is into brain tumours and particularly the effect on young people. The work of Charlie’s Challenge is to see how it can provide additional support and research funding into such an important area. The second is Tildy’s Trust, which was named after Matilda Curran, a young teenager—the daughter of a very close friend—who was found to have leukaemia and who died of it two years after it was discovered. Her parents set up Tildy’s Trust in order to provide support, research and funding for families who are going through similar circumstances.

Those are just two examples of a large number of such organisations, which are driven by incredible commitment and passion by families who have been affected, and to whom we should pay tribute, because of the immense contribution that they make. Sometimes I feel that more could be done by Government to help to join up the work of those many different organisations to try to provide a greater central force to take forward that work and to help to co-ordinate the valuable work that they do.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

The hon. Gentleman is making an important and quite sensitive point, because a number of these trusts are set up on the back of and because of people’s individual experiences and losses. It is difficult sometimes to get them to talk to each other, because they are so very personal to people.

[Charles Hendry]

I think that is absolutely true and there is a role that the Department can perhaps play in bringing people together, when they have similar goals, and if they can combine their force and strength, the overall gain may be bigger than the sum of the parts. Perhaps that is something to which the Minister could respond when he replies to the debate.

My second point relates to the university work that is being done in this area. When I left the Government in September last year, one thing that gave me the most joy was to be invited by the university of Edinburgh to become a visiting professor. I have been incredibly impressed by the work that is being done in this area—not in the part in which I am involved, which is the business school—particularly by the medical faculty. Work is being done to look comprehensively at the patient experience and at how to bring together all the issues that affect patients who often are being affected by rare diseases and how they can combine the necessary research into that as well.

The issue is not only about the role of world-class research, which I think Edinburgh has in abundance, but about how that is tied in with the role of benefactors, because the work of the university of Edinburgh has been made possible by a small number of extraordinarily important contributions. The Euan MacDonald centre for motor neurone disease research is funded by an immense donation by the family of Euan MacDonald, but that in turn led to an even bigger donation by J. K. Rowling for the Anne Rowling regenerative neurology clinic. It is through the work of the university—of examining how it can bring together its extraordinary genius in looking at the challenges that have been presented by these rare diseases—and tying that in to extraordinarily generous benefactors that offers us a really great way to address some of the issues. The work being done in Edinburgh is of course being done in many other universities in this country as well, but if we can help, through the Government, to try and co-ordinate that better, we will see real progress.

I remember hearing former President Jimmy Carter talking about what it meant to him, in his lifetime, to have played a leading role in the eradication of a single disease—river blindness. What an extraordinary, unbelievable ambition, and it is a magnificent thing to have been achieved, just as Bill Gates is achieving similar things in different sectors. The more that we can co-ordinate that work, expertise and genius in our universities with the good will of so many people outside it, the more, as a succession of Governments, we will be able to say that what we have done has led to the eradication of some of these diseases.

[Graham Stringer]

The hon. Gentleman is making very serious points about the excellent research that happens in the university of Edinburgh and in many of our other medical schools up and down the country, but he has not referred to a problem, which is that an excellent drug, or one that is likely to be excellent, can be developed, but because of the nature of rare diseases—that very few people suffer from them—it is very difficult to get it through the trials process, because that is designed to see whether the drug works on large numbers of people, quite sensibly. Does he agree with me that NICE should have different rules for drugs related to rare diseases?

[Charles Hendry]

I agree with the hon. Gentleman. A constituent has written to me just this week about meningitis and a drug that has gone through the trials process. It has been approved, essentially, but is only being made available to people who can pay for it at the moment. It seems to me that when treatments could be made available, expediting the process of approval and then ensuring that they are generally available as soon as possible, to as many people as possible, should be an objective of its own. I absolutely agree with what he said in that respect.

[Jim Shannon]

As I said in my introduction, the Teenage Cancer Trust indicated that that was one of its recommendations and it would like to see that happening. Perhaps the Minister can respond to that recommendation from the Teenage Cancer Trust. When it comes to the trial, effectiveness and availability of the drugs, we have to look outside the box. That is what we are trying to do, and I think that the hon. Gentleman is also saying that.

[Charles Hendry]

That is exactly what I am saying. The other thing that we owe tremendous credit to the Teenager Cancer Trust for is highlighting the way in which teenagers are dealt with in hospitals. The issue is that sometimes they are put in children’s wards, which is clearly not suitable for somebody who is in their late teens, and at other times, they are put in wards with people who were in their 80s and 90s, who are dying or are ill with other conditions. Someone who is a teenager is at a particularly vulnerable time of transition in their life, and it is incredibly important that their needs are dealt with in a specialist way and that they are surrounded by as many people of their own age group as possible. I think that is an important part of the treatment and recovery process.

I encourage the Government to continue what they are doing to try and address the issues. The strategy that is being put in place is of great importance, but more could be done to achieve a bigger overall gain from so many different fragmented, but immensely worthwhile contributions.

15:08

[Alison Seabeck (Plymouth, Moor View) (Lab)]

It is a pleasure to follow the hon. Member for Wealden (Charles Hendry), who gave a thoughtful and extremely constructive speech, which I hope that the Minister will respond to, on an area that so far, nobody else has covered. I thank the hon. Gentleman. I also congratulate the hon. Member for Strangford (Jim Shannon) on securing this important debate, and I pick up on the point made by the hon. Member for Wealden that we have had a dearth of interest in rare diseases on the Floor of the House. However, we have some extremely active all-party groups, which I shall come back to later.

Rare diseases are perhaps not quite so rare. There are an extraordinary number of them, and many more are being discovered, with five new diseases being described in medical journals each and every week. The number of people affected can vary from a handful to a few thousand, which often means there are issues about how they are supported and how care is given. Of course, these diseases are often hard to diagnose and complicated to treat, but one in 17 people will potentially be affected by a rare disease of one sort or another.

Despite the vast number of rare diseases, I would like to focus primarily on one that will be familiar to a number of Members present: muscular dystrophy. It and related neuromuscular conditions affect about 70,000 people in the UK. Each affects different muscles, and their severity and the way in which they affect individuals vary greatly. Most are progressive, causing muscles gradually to weaken over time. These conditions can be inherited or can occur out of the blue, even when there is no family history.

The Muscular Dystrophy Campaign has welcomed the strategy. I was pleased the campaign was highlighted in one of the strategy’s examples of good practice, which noted that people with a muscle-wasting condition and their families can

“be seen in one place at one time by the local paediatrician, the regional neurologist, therapists from both local and regional services and a representative of the Muscular Dystrophy Campaign.”

That sounds wonderful, and Plymouth and the south-west are, in many ways, exemplars when it comes to treating and supporting people with muscular dystrophy. Unfortunately, the same is not true everywhere; there really is a postcode lottery, and we have heard examples today. It is difficult, certainly in a region as large as the south-west, for people with serious mobility issues to travel excessively long distances, so we have not quite achieved that level of provision.

Let me cite the case of a constituent, Sharon Kitcher. Her son James is 22, and I have known them for many years. He suffers from Duchenne muscular dystrophy. The family have been real champions for James and his care over many years, and they have certainly beaten a path to my door on many occasions. They are very tenacious, and rightly so. However, it has been difficult for them to ensure he gets the treatment he needs, even though they are strong and vocal in supporting him. It has been difficult to get the wheelchairs he has needed as he has grown, because such things take time. It has also been difficult to get the support the family as a whole needs so that the household can operate properly.

Since transitioning to adult services, James has really struggled to access specialist neuromuscular physiotherapy, which is an extremely important part of managing Duchenne. Currently, there is no cure for the disease. James’s mum told me:

“Access to specialist care is extremely important for my son. There has been a huge difference in the level of support he receives since he has entered adult services and accessing specialist neuromuscular physiotherapy has been a particular challenge”.

That, of course, is happening in a region that is leading the way, so I really have concerns about other parts of the UK.

Will the Minister therefore explain what steps his Department is taking to harmonise the levels of support patients with rare diseases receive when transferring from child to adult services? How does the recently published strategy seek to address the issues my constituent is experiencing? Does the Minister accept that the confusion in the commissioning process in the current health market is not helping families and practitioners to find the right course for some patients? The pathway has not been seamless, and I agree with the hon. Member for Strangford that our aim must be a seamless pathway for young people as they move into adulthood. This is a difficult period at the best of times. A member of my family was in a similar position; she made the transition as a young woman with Down’s syndrome, and the problems were exactly the same, so we do not seem to have made much progress.

My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) spoke passionately about his and OUCH’s experience, and I hope the Minister heard that. He also spoke about the importance of all-party groups, and most of us here belong to one or other of those linked to rare diseases. Our meetings are extremely well attended, and sufferers and their families—this is particularly true of the all-party group on muscular dystrophy—regularly come to Westminster. We hold regular inquiries into different areas of concern for sufferers, and the Minister has responded to issues that have been raised, as have other Ministers in the past. Those responses have been well thought through and considered.

I recently attended a briefing on alpha-1 antitrypsin deficiency. Alpha-1 is not rare, with one in 3,000 to 5,000 people affected, so I was concerned to hear about the frequency of misdiagnosis. Indeed, the introduction to the strategy states:

“Around 4 in every 10 patients say they found it difficult to get a correct diagnosis”—

for rare diseases. When the Minister winds up, perhaps he could outline how the strategy seeks to address that in the case of muscular dystrophy and across the board.

The Muscular Dystrophy Campaign is launching a landmark new project in July, and it is funded by the Department of Health, which is good. The aim is to secure neuromuscular service developments in the newly reformed NHS, and we shall see how that works, because, as I say, the jury is out on how the reforms have been put together. However, the principle behind what the campaign is trying to do is the right one. The project is bringing together specialist commissioners, clinical commissioning groups, clinicians and people living with muscle-wasting conditions so that they can work together to improve the patient experience. However, the project is about muscular dystrophy, and I come back to the point I made to the hon. Member for Wealden: myriad organisations, individuals and trusts out there are all trying to achieve the same ends, and we really have to find a mechanism to bring them together. I hope the work the Muscular Dystrophy Campaign is doing will help to show the Government how they can do that.

In closing, I want to touch on the question raised about the trials process for drugs and treatments. I met a mesothelioma sufferer—a very brave young woman who had picked the disease up through contact with her father’s clothes. She had to travel to Germany for treatment. She lived many years longer than she was told she would, and that was, without any doubt, because of the treatment. She had a good quality of life, but we had to battle hard to get any support for the cost of the treatment. NICE was particularly difficult, even though this tried-and-tested technique was being used in Germany. The problem was that there were not enough people in the pool here to justify NICE giving the treatment the all-clear so that this young woman could use it, and we really need to look at that. When medicines and treatments are available in America or Europe, where there are high standards of testing, there should be more flexibility than currently exists.

15:18

[Mark Durkan (Foyle) (SDLP)]

I commend the hon. Member for Strangford (Jim Shannon) on introducing the debate, which is taking place just a few months after the all-party group on muscular dystrophy concluded its inquiry; I took part in some of the evidence sessions. The group expressed the concern, which has been voiced in the debate, that some of the changes that are afoot could imperil some of the good, concentrated work that has been done on rare diseases. There is a fear that the confused migration of various functions and tasks means that some of the specialist focus over the past few years has been lost.

The Government have argued that there will be new approaches, and they have said that the UK strategy would help to take care of some issues, creating a new focus on rare diseases. However, they also said that the £50 million specialised services commissioning innovation fund would be used to support work on rare diseases. Only a month after the all-party group reported with its concerns, that fund was essentially withdrawn because of other funding pressures. The statements and assurances that we get do not add up. The fears and apprehensions of many of the rare disease campaign groups and others, including Members and all-party groups, are reinforced by the apparent confusion.

The Government need to do more to give the rare disease strategy credibility and traction. In an intervention on the hon. Member for Strangford, I talked about what was needed, in addition to work at the UK level, to get better co-ordination between NHS England and the various devolved health services. Besides each responsible health service area doing its bit, there is a need for real collaboration that transcends those areas. Indeed, I see that happening beyond the UK; I see it spanning the whole of the British-Irish Council, which includes the Republic of Ireland, the Isle of Man and the Channel Islands. There are people with rare conditions in isolated parts of these islands, and the idea of combining our efforts on rare diseases and trying to achieve an economy of effort that would not be possible within one jurisdiction or health authority is important. The British-Irish Council is ready made to bring added emphasis and commitment to such areas.

It is important to do more than just pledge greater co-ordination and prioritisation for rare diseases; another issue to be dealt with is resources. As individual health authorities find it harder to guarantee a competent concentration of commitment to rare diseases, we must find critical mass at a higher level that transcends the health authorities and the devolved health service areas. That is why the UK strategy is an important concept. The 51 commitments are strong and sound, but there are questions about whether they will, in practice, add up to a full strategy, if they are left to the interpretation of each area individually. At times, there seems to be confusion about when NHS England is driving for the UK as a whole, and when it is in the lead simply as a matter of quantum—because it is the biggest. I am not sure whether there is a full strategy and co-ordination plan, and we need to continue working on that.

Some hon. Members have mentioned excellent work done in various locations, some of which depends on the skilled and dedicated leadership of clinicians, who may move to other posts. We should not take it for granted that the excellence achieved in some places will be sustained and maintained. That is a challenge, not least in the area of rare diseases. People progress professionally and move on, and sometimes the services that they leave are not sustained and maintained with the same quality. That is why—to return to the idea of co-ordination and co-operation across the UK, and more widely across the British-Irish Council—I argue for a central, open faculty. Then the clinicians who provide treatment for, or do research on, rare diseases may not feel that they are working on in isolation, feeling nearly as lonely as some sufferers; instead, they may feel part of a working, open faculty, in which they can connect with other professionals and patients.

I commend the Government and devolved Administrations on formulating the strategy so far, but funding is a fundamental question. We need significant challenge funds to be available, so that specialists who respond to particular patients, identifying needs better and coming up with innovative treatments, are not left trying to busk around within their local health service, trying to get a bit of funding here or there. The fact that the £50 million innovations commissioning fund was an early casualty in the reorganised NHS does not give great encouragement. More needs to be done.

The Minister with responsibility for care is responding to the debate, and as the hon. Member for Plymouth, Moor View (Alison Seabeck) said, few of the rare diseases we have been considering have outright cures or treatments; for many with such diseases, the approach is supportive therapies and coping support. My remarks have concentrated perhaps more on clinical leadership, but care and support are also hugely important. I know that the Minister will be conscious of that. Aspects of what I mean include setting good models and examples of practice and experience; helping individuals—particularly the young people who are sufferers of so many of the rare diseases—and their families; and thinking about improving care networks and the meshing of services, so that people who provide services, whether in education or family support, understand better what rare diseases may entail, and their possible life-cycle variation during the life of a child. People who provide social and education services cannot readily make themselves experts in the conditions in question, and often they confuse conditions whose names sound the same, although they are very different in character, and give rise to different demands and behavioural consequences. Wider support is needed.

Finally, the Government need to take account of the context of welfare reform and changes to several benefits, and the fact that every so often, people must reapply and prove their case for benefits again. That is particularly hard when people have rare diseases. Those people and their families should not have to spell out their condition again, in all the medical jargon, and explain it. They should not be made to jump through those hoops. We should find a better way in the social security system of showing understanding about rare diseases.

[Jim Shannon]

The time it takes to process an application is frustrating for the person concerned—and it frustrates me and other hon. Members, too. In special cases such as those involving rare diseases, I have had to go to someone at the top of the tree in Northern Ireland, to expedite the process. Does the hon. Gentleman think that people with rare diseases should be put in a fast queue, to be processed more quickly?

[Mark Durkan]

I think they should be put in a “not to be neglected” queue, rather than a “too difficult for us to sort out now” queue. The problem at the moment is that if an applicant’s condition is deemed very rare or complex, instead of their case being given added attention and urgency, it is allowed to silt up. That can happen with medical treatment and the opportunity for further diagnosis, which often requires travel outside the jurisdiction, and with the social security issues that I have mentioned, and on which I want to finish.

The Welfare Reform Act 2012 contained provisions that seemed to assume that many people with lifelong conditions would suddenly improve and not want to let on about being cured. It is a bit much when families who have their hands full supporting someone with a rare condition—particularly a child or young person—as well as supporting other family members, must constantly jump through hoops for a system that is supposed to support them and understand their needs.

[Alison Seabeck]

Will the hon. Gentleman accept that there are also issues about the way in which general health funding is distributed? In Plymouth, we have a very high prevalence of rare diseases, perhaps linked to the heavy industry that we have had, yet we get half the funding per person that is seen in Windsor and Maidenhead, for example. Will he accept that that also needs to be revisited?

[Mark Durkan]

I absolutely accept that point. It also came through in the earlier inquiry work on some of the concerns voiced by the all-party muscular dystrophy group. That goes back to the point that I made about funding.

The real test of whether a strategy is coherent and effective is what happens when it comes to funding. We can have many good statements of intent. There are 51 commitments, which are very strong and sound. It all sounds great, but does it translate into money being available for support and treatment or, as happens with approving new drugs, does the finance test get in the way of support and treatment reaching people? The cost-effectiveness criteria used either by the National Institute for Health and Care Excellence or by the Joint Committee on Vaccination and Immunisation raise questions. Particularly in relation to rare diseases, if the test is almost that a possible new treatment has to throw two sixes to start, in circumstances in which people do not even have any dice, it is a serious problem. Although the rare disease strategy is a good start, it is only that—a good start. It will need more work and more resources, and will need to be informed by further research.

[Hugh Bayley (in the Chair)]

We now come to the winding-up speeches. I remind both Front Benchers that we have just under half an hour left.

15:31

[Mr Jamie Reed (Copeland) (Lab)]

Thank you, Mr Bayley; it is a great pleasure to speak under your chairmanship again. It is a huge privilege to follow the hon. Member for Foyle (Mark Durkan), who made an incredibly telling contribution to the debate as usual. He is one of the few hon. Members—I hope that he does not mind my saying this—that it is worth staying in a debate to listen to, and he always has been. There were also tremendous contributions from my hon. Friends the Members for Poplar and Limehouse (Jim Fitzpatrick), for Plymouth, Moor View (Alison Seabeck) and for Blackley and Broughton (Graham Stringer) and an incredibly insightful and welcome contribution from the hon. Member for Wealden (Charles Hendry), who reminded us yet again of what a genuine loss he is to the Treasury Bench.

I thank the hon. Member for Strangford (Jim Shannon), who spoke in a health debate in this Chamber only a fortnight ago. I commented then that his record in contributing to health debates in this Chamber is, in my experience, unrivalled—at least, he is always here when I am here. For those past contributions, for his speech today and for securing this very important debate, I cannot commend him enough.

Figures provided by Rare Disease UK show that one in 17 people will be affected by a rare disease at some point in their life. That equates to about 3.5 million people. As we have heard, three quarters of those affected by rare diseases are children and, tragically, almost one third of those children will die before their fifth birthday. As a father of four children, I can add no words to underline the stark brutality of that statistic. My heart goes out to all the families who have faced such a shocking loss.

The term “rare diseases” refers to more than 6,000 different conditions that can affect the young or old and have an impact on physical or mental health. These can be life-threatening, debilitating diseases, but the term can also refer to manageable conditions.

The very definition of rare diseases, and how these are manifested in the statistics that I have given and that we have heard from other hon. Members, illustrate the fundamental issues that arise when we try to establish a coherent, comprehensive and useful long-term strategy through which to deal with the problems that they present. Some rare diseases will be very similar and advancements in medical sciences and research in one area can greatly benefit another, but some classes of diseases can be extremely different from others and the treatments for those can be wildly different, not sharing any empirical research base. As we have heard, economies of scale are often hard, if not impossible, to find.

That huge difference in dealing with each disease highlights a problem in trying to gear the system with the tools and resources necessary to make advances. With limited resources, any improvement in one area of research can sometimes be at the expense of another. These are difficult calculations and choices. Research and development must be rewarded. Certainty and predictability of funding for this work are essential. Some research—potentially a good deal—will yield no tangible or quick benefit at all. Supply chains, researchers and research and development environments must be identified, supported, grown and nurtured. The loudest voices will not always be the most deserving.

These are invidious choices. Can the Minister explain the Government’s priorities in this regard? How will Government ensure that the right balance is struck between all these competing pressures, and can the Minister tell us what criteria are used by Government to decide how and which areas of research are prioritised?

In 2009, before the last general election, the Labour Government set in motion a UK strategy following the adoption of a recommendation from the European Union in which member states were required to commit to better research and more resources for tackling rare disease. I think that all hon. Members on both sides of the Chamber agree that that was an important step.

It is now just a few weeks since the current Government published the UK plan for rare diseases. We welcome that plan, but I am struck by some of the apparent contradictions between what the Government say they want to do and what they are actually doing. The Minister knows full well that I respect him significantly. We will be spending a lot of time together in Committee on the Care Bill next year, and I hope that we can perhaps establish a precedent and resolve those contradictions today.

In October this year, the specialised services commissioning innovation fund was scrapped. That fund was set up, amid great fanfare, just two months earlier, with the promise that it would save lives and help patients. The fund was intended to provide finances and resources needed to expedite the synthesis of hundreds of potential new treatments for rare diseases. The Prime Minister said that it was

“becoming ever more essential to get your products tested and adopted in the NHS much more quickly”

before warning that

“the newest innovations are often the lowest hanging fruit”

when savings need to be made.

As we have heard, the commissioning innovation fund represented a £50 million investment. The BBC reported that the fund was scrapped due to “financial pressures”. John Murray, the director of the Specialised Healthcare Alliance, called the decision

“bad news for people with rare and complex conditions”.

Will the Minister tell us what those financial pressures are? I could hazard a guess, but I think that we deserve to know.

Of course, this will not be the last time that the Prime Minister says one thing and does another, but can the Minister tell us how this decision affected the interests that I mentioned earlier? Has the Department assessed how this cancellation affected the research and development supply chain, its planning, its recruitment and its work streams? If such an assessment has not been undertaken, will he commit today to doing that? More importantly, has the Department undertaken any analysis of how this chaotic mess has affected the state of the art? Have any potential treatments failed to appear as a result of the funding cut? Have any treatment delivery work programmes been interrupted as a result? It is impossible to believe that the decision has had no effect. More importantly than anything else—I know that the Minister will want to answer this question—have the funding cut and its effects had any negative effect on patients living with rare diseases?

Just one month before the cut was announced, the all-party muscular dystrophy group warned that resources earmarked for rare disease medication had been absorbed by the overall NHS budget. Will the Minister explain how the removal of significant resources that were specifically earmarked for the research and development of new treatments for rare diseases fits with the Government’s stated aims?

Let me move on to the strategy. No one would disagree that there is a need for a co-ordinated effort from all the countries in the UK when tackling the issues before us. I would be grateful if the Minister could explain, when he responds, how the new fragmented system of commissioning of services in England will be able easily to co-ordinate the commissioning of research and the commissioning of what are often expensive treatments for rare diseases and, as we have heard, orphan and ultra-orphan conditions with the NHS in Scotland, Wales and Northern Ireland. Where is the guiding mind with which to achieve economies of scale and critical mass in research, which we know is necessary for these conditions?

It is clear that NHS England has a leading role to play in ensuring that the new strategy is implemented and implemented well. The benefits of a national body taking a lead on that are plentiful, but how does that fit with the idea of creating local areas of expertise, such as the centre at Newcastle university and the centres elsewhere in the country, to steer innovation? Is the driving force behind innovation and new treatments coming from NHS England or from experts on the ground, and how will that work in practice? Of course we need to allow innovators to flourish, but we also need to co-ordinate. Where does the responsibility for that co-ordination rest?

That brings me to my final point. As in any debate on matters relating to health issues, we must always focus on the patient. If patients are not seeing improvements in their care, or they do not experience any easing of the symptoms associated with their disease, the Government —any Government—will have failed. Innovations are meaningless if the patients who rely on them see no benefits. Without the resources to back them up, strategies are little more than meaningless words. For any of us to claim success, patient access to treatments must improve. Many groups, as we have heard, are calling for a form of adaptive licensing to be implemented with regard to treatments for rare diseases. Have the Minister or any of his officials had any contact with, made representations to or received representations from the Medicines and Healthcare products Regulatory Agency with regard to adaptive drug licensing for treatments of rare diseases?

Access to treatments raises several issues from the perspectives of the patient and the manufacturer. First, bringing drugs to market is difficult and expensive. Encouraging drug companies to manufacture drugs and treatments that will benefit a relatively small number of patients is an important and challenging task. In the case of motor neurone disease, for example, no new drugs for the treatment of the disease have been approved since riluzole more than 20 years ago.

We must always ensure that drugs brought to the market are safe and effective. That means that even if the new UK strategy is effective in encouraging greater innovation in the field for developing treatments for rare diseases, those treatments will not be available to help patients for several years. That is not a problem that has arisen solely under the current Government—nothing could be further from the truth—but it is a difficult, sensitive issue. To that end, what are the Government doing to ensure that new treatments are available to improve the quality of life for patients with rare diseases as soon as possible?

From the patient’s perspective, the issue is often cost. Prescriptions for those with rare diseases can amount to a significant financial burden. The previous Government put in place a framework that would have resulted in those with long-term conditions becoming exempt from prescription charges. Can the Minister explain why the coalition Government chose to scrap that? Enabling greater access to treatment is essential, and I hope that the Minister can explain why that has not been given more prominence in the strategy.

As I have said, rare diseases affect millions of people. The impact on sufferers and their families is immense, so the cost of getting the strategy wrong is high. More importantly, no matter how difficult it is and whatever our political allegiances, we are morally obliged to get this right. When the Minister gets to his feet, I hope he can give those people some confidence and help to resolve the contradictions I have outlined. Finally, if the Government can produce a coherent, integrated and effective approach to resolve the problems that they seem to have caused, and to progress those issues in a meaningful and timely manner, they will have my support and that of my colleagues.

15:42

[The Minister of State, Department of Health (Norman Lamb)]

It is a pleasure to serve under your chairmanship, Mr Bayley. I thank the shadow Minister, the hon. Member for Copeland (Mr Reed) for his generous offer of support, and I am sure that we will be able to deliver his preconditions for that support. I congratulate the hon. Member for Strangford (Jim Shannon) on securing the debate. He is, as the shadow Minister has said, one of the most assiduous attendees at health debates and a consistent contributor on a whole range of different issues. We all welcome his contributions. He always makes the case for better co-ordination and collaboration between the different nations of the United Kingdom, and I completely share that aspiration. There is great value in a bit of diversity in the development of our health systems, because we can often learn things from the innovation and experimentation taking place in other parts of the United Kingdom. In opposition, I visited Northern Ireland because I was fascinated by the way in which Northern Ireland commissions and provides health and social care together. I wanted to learn more about the experiences in Northern Ireland, good and bad. Such diversity is to be valued and we should not have a one-size-fits-all approach, but I agree with the hon. Gentleman about the importance of collaboration. The Government’s strategy is an example of where that can be really strong and effective.

[Ms Margaret Ritchie (South Down) (SDLP)]

On the Minister’s point about collaboration, is he aware that a drug to deal with atypical haemolytic uraemic syndrome has been approved in England but the same approval has not been given in the devolved institutions, particularly in Northern Ireland?

[Norman Lamb]

I was not aware of that, but I am interested to hear it, and the hon. Lady makes her case powerfully. Before I respond fully to the points made by the hon. Member for Strangford, I want to deal with some of the other issues that have arisen during the debate. Several hon. Members, including the shadow Minister, asked whether the new architecture of the NHS had damaged the co-ordination of work on rare diseases. In many respects, I can reassure hon. Members. There is a danger that if one was coming into this place from afar and hearing the debate, one might think that we were moving from an idealised, perfect scenario into something more troubling. We all know, however, that that is absolutely not the case. The treatment of rare diseases historically has been far from optimal, and the greater involvement of clinicians in the commissioning of care can have real benefits for patients. Until 31 March 2013, far from being a simple matter, specialised commissioning was fragmented across a range of NHS organisations including regional specialised commissioning groups, a national specialised commissioning team and local primary care trusts, which remained ultimately responsible for the specialised health care of their populations. From 1 April 2013, under the terms of the Health and Social Care Act 2012, NHS England became the sole direct commissioner of specialised services, which provides a greater simplicity in the commissioning of services.

[Alison Seabeck]

Will the Minister give way?

[Norman Lamb]

I will continue, because I am conscious of the time. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) made a valuable contribution. I learned something about trigeminal neuralgia, from which I think I understood him to say that he suffers. He asked whether it would be possible to meet once the report that he referred to is complete, and I would be happy to agree to that, diary permitting. I am sure it will be possible to do so at some point. He made some important points about misdiagnosis, and about the importance of support groups and networks. The internet now provides incredible assistance to people with rare diseases, because they can link up not only with those in their neighbourhood but with people and clinicians globally who can guide them in the treatment of their condition. He also spoke about unnecessary referrals to hospitals and the mental health implications of some rare diseases, and I completely agree with him.

My hon. Friend the Member for Wealden (Charles Hendry) made powerful points about the extraordinary work of so many families, and he mentioned in particular the work of Charlie’s Challenge and Tildy’s Trust. Such families do the most remarkable work, and they are often hellbent on producing a really valuable legacy from their experiences. His point about the Department helping to co-ordinate the work of so many such groups was well made. He also referred to the fantastic work that is going on in Edinburgh university, and I applaud all those involved.

The hon. Member for Plymouth, Moor View (Alison Seabeck) made the point that there is extraordinary variability of service around the country. That is something that the strategy can absolutely address, and I believe we will get powerful results. She referred to her constituent, young James, who suffers from Duchenne muscular dystrophy, and she talked about the importance of transition to adulthood. I focus a lot on mental health, and that transition is often a complete disaster. We need to do far more to improve it.

The hon. Member for Foyle (Mark Durkan) made some important points about collaboration. He referred to the British-Irish Council, and although I have no idea whether his suggestion is possible, I am happy to look into it. He talked about the funding challenge. We are in very tough financial circumstances and often—the contributions of many hon. Members this afternoon have emphasised this—the question is how the money is used, because it is frequently not used effectively. A misdiagnosis usually results in an inappropriate referral to hospital, and a patient goes down completely the wrong track. An enormous amount of money is wasted, and the patient receives very poor care. It is essential to improve the way in which the system works to extract better value. We recently announced integration pioneers in 14 areas of the country. None has had extra money, but they demonstrate that, by co-ordinating their efforts more effectively, they are producing much better results for patients. The shadow Minister was absolutely right that the one thing we should all focus on is the patient—the individual citizen—and their experience of the system.

It is fitting that this debate should happen so soon after the launch of the UK strategy for rare diseases. This strategy is an overarching UK-wide framework, setting out a shared UK strategic vision for improving the lives of all those with rare diseases. It is owned by each country in the UK and commits them to more than 50 actions—I think it was identified as 51—that will deliver better outcomes for those with a rare disease. It means that for the first time we are in a position to make a tangible, co-ordinated difference to those suffering with a rare disease. That is something we can all be really positive about.

As we have heard, one in 17 people will experience a rare disease at some point in their life, with the majority of diagnoses made in childhood. That amounts to some 3 million people in the UK. A disease itself may be rare, but having a rare disease is, alas, not unusual, because there are so many of them—a point made by the hon. Member for Plymouth, Moor View. They are a major cause of illness and make considerable demands on the resources of the NHS and other care services. The strategy for rare diseases is based around the more effective and efficient use of services—a point I made earlier—with better links to research and innovation. As the NHS constitution states, no-one should be left behind because of their condition, be it rare, very rare or yet to be diagnosed. To achieve this, England, Scotland, Wales and Northern Ireland have agreed to deliver the 51 commitments that focus on five areas.

The first is empowering patients—perhaps the most significant of all—making sure that they are listened to, informed and consulted every step of the way. No one knows the condition better than the person suffering from it; too often, they are ignored in a rather paternalistic system. We will continue to work closely with patient groups and others to improve services for rare disease sufferers. We will improve access to knowledge and support networks at UK, European and international level, and we will help patients to participate in rare disease registries. We will look at how those might be developed in England to better capture the patient experience.

Secondly, we want to develop more effective methods for identifying and preventing rare diseases. Carrier testing, preconception and antenatal care, along with newborn screening, all play a part. Rare diseases are often genetic in nature, and so can affect more than one member of the family. This makes it important that testing of other family members, where appropriate, becomes more routine.

The third area is better diagnosis, which has been raised during the debate, and earlier intervention. Too many people still wait far too long to get an informed, correct diagnosis. There are several things we need to address. We need to ensure there is better awareness of rare diseases. That is important across all aspects of health care. Not everyone can be an expert, but ensuring that the possibility of a rare disease is considered when a diagnosis is proving difficult can help. We need to ensure that all doctors are alert to the possibility of a rare disease when they see patients, even if they are not able to diagnose specific diseases. This means including better training on rare diseases in university courses and in professional development at work.

The training and education of clinicians is critically important. Health professionals do not need detailed knowledge of every rare condition, but all medical specialties and multi-professional care teams should have a general awareness of rare diseases so that they can make rapid referrals to specialists in the appropriate field. Making genetic testing more mainstream, harnessing the potential of genomic technologies and focusing on what our DNA can tell us will also help us to reduce the time to diagnosis.

Perhaps the most important commitment is to develop clearly defined care pathways between primary and secondary care and regional and specialist centres. Health care professionals, especially GPs who are likely to be the first point of contact, need to know how to access the pathways for those at risk of rare disease.

Fourthly, we want to see better co-ordination of care. Building on the fantastic NHS genetic services that already exist—this country is well recognised internationally for that—we want to see the development of centres of excellence in rare diseases, providing one-stop-shop services to patients through co-ordinated consultation and treatment schedules. The centres should also be knowledge and skills hubs—concentrating the skills together—that support local delivery of services and facilitate clinical trials and other research projects.

The last area of the strategy, but by no means the least, is recognising the absolute importance of research, which several hon. Members have touched on today. The Government are committed to supporting research into rare diseases. Such research holds the key to improved personalised and targeted approaches to health care. These have the potential to improve the effectiveness and safety of treatments, the speed of diagnosis and patients’ quality of life.

In the UK, we are lucky to have some of the best academic and clinical research in the world. It was no coincidence that Earl Howe launched the strategy at Great Ormond Street hospital last month. The hospital itself hosts a National Institute for Health Research biomedical research centre that continues to lead on experimental medicine, including the discovery of diagnostics and new treatments for childhood diseases. The shadow Minister—if I can briefly divert him from his iPad; I am sure he is catching up on important stuff—made the point about how we ensure that we make the right decisions on research priorities. Ultimately, it comes down to the quality of the proposition that is put forward, but I will write to him and other hon. Members on the issues raised that I have not touched on.

We also want to see more collaboration between patients, health care professionals and researchers, and for that to become normal custom and practice. At that same event, Earl Howe also announced that the National Institute for Health Research is establishing a rare diseases translational research collaboration to translate research into actual practice. As part of the NIHR rare diseases translational research collaboration, researchers will share their considerable resources and world-leading expertise to increase research collaboration and improve treatment and care.

Some £20 million over four years is being invested by the NIHR to fund the NHS research infrastructure focused on deep phenotyping—the gathering of information on the physical characteristics of people with rare diseases. The TRC will build on our British heritage as a world leader in genomics. It will provide national co-ordination to bring those with significant relevant NIHR-funded infrastructure in the NHS together. That will speed up the development of new diagnostics and treatments. That is also why rare diseases is one of the three priority areas for the Government’s initiative to sequence 100,000 whole genomes over the next three to five years. We want to see innovative research and cutting-edge technology translated into real patient benefit.

The strategy for rare diseases will increase access and lead to a more patient-centred, co-ordinated approach to care and treatment, clearly focused on the needs of patients and families. Each country in the UK will develop its own implementation plans over the next few months. We will ask a reconstituted UK rare diseases stakeholder forum to maintain an overview of the implementation of the strategy. The original forum was established earlier this year and comprises policy officials from the four UK countries, service users, industry, regulators and service providers. The forum played an invaluable role in the development of the UK strategy and will now have an ongoing role in monitoring the strategy’s implementation and reporting back on progress.

In England, our key delivery partner is NHS England. The recommendations of the UK strategy for rare diseases that relate to NHS England’s responsibilities for specialised commissioning will form part of the scope of NHS England’s five-year strategy for specialised services—an £11.8 billion plan to co-ordinate specialist services.

I want to thank all hon. Members for their contributions to a very useful debate. On all the other points that I have not been able to deal with, I will write to hon. Members.

[Hugh Bayley (in the Chair)]

I very much look forward to seeing some of the Front Benchers when we scrutinise the Care Bill in the weeks to come.

Sixth-Form Colleges (VAT)

Tuesday 17th December 2013 Westminster Hall

16:00

[Lisa Nandy (Wigan) (Lab)]

My constituency is home to two excellent sixth-form colleges, St John Rigby college and Winstanley college. Like so many of the 94 sixth-form colleges in the country, they do an excellent job, not only for their students but for the wider community. It is deeply unfair that they must pay VAT while school and academy sixth forms do not. In other types of free 16 to 19 education provision, funding is diverted to the front line. Why not for students in sixth forms?

Following recent changes to the funding formula, the anomaly has become unjustifiable. That view is shared by at least 74 other Members of Parliament, including the Chairman of the Select Committee on Education and my hon. Friend the Member for Barrow and Furness (John Woodcock), who wanted to highlight the case of Barrow-in-Furness sixth-form college but unfortunately cannot be here due to illness.

This unfair situation is exacerbated by the cuts made to sixth-form colleges in recent years. In 2010, enrichment funding was reduced from 114 to just 30 hours a year. Subsequently, the new 16 to 19 funding formula cut their budgets further—the average was 6%, which masks much more serious cuts for some. Last week, out of the blue, sixth-form colleges were told that 18-year-olds would no longer attract the same level of funding. Ministers argued that it was because those students have already received two years of funding, which completely misses the point that they are often the young people who most need and benefit from the additional help that we can provide.

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

The hon. Lady is making a strong case. On behalf of the three sixth-form colleges in my constituency, I absolutely agree. Will she comment on the fact that the sixth-form colleges in Brighton disagree with the Government’s position that VAT costs are taken into account in the up-front funding allocation made to colleges? If she agrees, will she join me in saying to the Minister that surely that means schools and academies are effectively being double-funded, because they are getting that as well as the VAT rebate?

[Lisa Nandy]

Absolutely. Issues of a level playing field are at the heart of this debate and I hope that the Minister will respond to that in his closing remarks.

Taken together, in the worst cases, the funding cuts have left some sixth-form colleges reeling from a staggering 30% overall budget cut. We should consider the issue against that backdrop.

Civil servants originally estimated that creating a level playing field for sixth-form colleges in relation to VAT would cost £20 million. They have since revised that upwards on several occasions, arriving most recently at a figure of £150 million, which includes other institutions. I say to the Minister that it seems completely the wrong approach, given that the Government have accepted in principle that treating sixth-form colleges differently is wrong, to refuse to right that wrong for them because they do not want to do so for others.

The problems for sixth-form colleges are exacerbated by the fact that, unlike school sixth forms, they cannot cross-subsidise their 16 to 19 work with funding from pre-16 provision, which is more generous. Principals and teachers across the sector are taking agonising decisions about dropping courses, cutting staff or reducing activities. A survey last year found nearly half of colleges had had to drop courses, eight out of 10 had had to cut staff and an astonishing 71% had removed or reduced enrichment activities such as sport, music, drama and dance. That is a loss for all young people, but it is devastating for young people who have never had such opportunities open to them.

[Mr Mark Spencer (Sherwood) (Con)]

I congratulate the hon. Lady on securing this debate, but will she acknowledge that sixth-form colleges are often able to offer courses that school sixth forms cannot, because they have the ability to draw in expertise? Ultimately, we need a level playing field, so that all those offering sixth-form education are playing by the same rules.

[Lisa Nandy]

Absolutely. The issue of the level playing field has come up time and time again. The hon. Gentleman is absolutely right about courses and the staff that sixth-form colleges can use. I am concerned that that loss of staff has also meant a loss of expertise. If the sector is hit by anything else, we will struggle to get it back.

[Kerry McCarthy (Bristol East) (Lab)]

This issue has certainly been raised with me by St Brendan’s sixth-form college in my constituency. Another issue is the fact that the VAT situation does not allow adults to use the building for more than a short amount of time. Otherwise, that incurs VAT as well. The academy schools in my constituency lobbied me about that in the past, but thankfully we managed to overturn the situation for them. In terms of community engagement, does she agree that not being able to use the buildings in the evenings is a wasted opportunity?

[Lisa Nandy]

Absolutely. I am grateful to my hon. Friend for raising that point. There is also a wider point: sixth-form colleges benefit not only their students but the wider community. I know from my constituency that they are institutions rooted in the wider community, and they play a much more beneficial role across our town than it would appear from looking only at their core activities.

It is galling for my sixth-form colleges that while they are struggling with the impacts of the cumulative funding cuts, the Government are creating new free schools and academy sixth forms, with which they are required to compete but which are VAT exempt. Many people contacted me before the debate to point out, rightly, that a market does not function if competition is not fair. Many new free school sixth forms are struggling to fill their places, yet those places are funded too. Ministers are paying for places in new institutions to lie empty while successful and established sixth-form colleges are struggling to afford the students that they have.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing this debate and putting the case so strongly. She puts her finger on it: new institutions are being funded for phantom students who are not there, while existing institutions are not only not being funded for this year’s students but taking a 17.5% cut in funding for next year’s students, based on an existing 20% difference in funding. VAT is yet another anomaly. Does she not agree?

[Lisa Nandy]

Absolutely. I pay tribute to the work done by my hon. Friend and many of the other Members present. The fact that there are so many Members here for such a short debate should tell the Minister that there is huge strength of feeling throughout the House on this issue.

All of this would make more sense if the sector were failing, but taken as a whole, sixth-form colleges are not only lean and efficient institutions, according to the National Audit Office; they are also among the best existing provision for 16 to 19-year-olds. Some 80% of them are rated as good or better, and they consistently rate higher than other types of provision in terms of added value. I know that St John Rigby college in my constituency does tremendous work with young people from deprived backgrounds and outdoes almost every other type of provision in getting those young people to university.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I congratulate the hon. Lady on securing this important debate. Does she agree that 16 to 19 provision in further education colleges—outside a school setting—can sometimes provide the impetus that 16-year-olds who might not have done well at school need to enable them to achieve their GCSEs and then go on to A-levels?

[Lisa Nandy]

The hon. Lady is absolutely right. I am grateful to her for raising that issue. The culture in sixth-form colleges is enormously beneficial to such young people, and the staff are obviously passionate and determined to ensure that those young people reach their potential.

In conclusion, Ministers have accepted that this situation is unfair, so will the Minister who is here in Westminster Hall today take steps to create a level playing field for sixth-form colleges?

[Kelvin Hopkins (Luton North) (Lab)]

My hon. Friend may be interested to know that my very first debate in Parliament, 16 years ago, was about sixth-form colleges and took place in this room, but that is beside the point. At that time, I described sixth-form colleges as the geese that lay golden eggs; I think she has made that point today. Of course, one other thing that sixth-form colleges do is to bring together young people from different schools and different communities. They are often situated in areas of diversity and they are a tremendous force for social cohesion. Does she accept that point?

[Lisa Nandy]

My hon. Friend is absolutely right, and his expertise on sixth-form colleges is well known; not only does he sit on the governing body of a local sixth-form college but he is chair of the all-party group on sixth-form colleges, which has done so much good work on this issue. I have to say to him that when he was first raising issues about sixth-form colleges in this place, I was actually at a sixth-form college in the constituency of the hon. Member for Bury North (Mr Nuttall). That shows that nothing changes.

As I was saying, Ministers have accepted that this situation is unfair, so will the Minister take steps to create a level playing field for sixth-form colleges? Will he make this important sector a promise that there are no more of these cuts to come? And will he join me in paying tribute to the extraordinary contribution that sixth-form colleges, such as my local one, make to young people and communities across the country?

[Mr Graham Stuart (Beverley and Holderness) (Con)]

rose—

[Hugh Bayley (in the Chair)]

I have not had a note—

[Mr Stuart]

Yes, in both cases.

[Hugh Bayley]

If it is yes and yes, I am glad to give the floor to the Chair of the Select Committee on Education.

16:11

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Thank you very much, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship, and to confirm that both the Minister and the hon. Member for Wigan (Lisa Nandy), who secured the debate, had agreed to my speaking in it. I am sorry if I should also have informed you, Mr Bayley, but I think my bureaucratic resources ran out after contacting the Minister and the hon. Member.

Given the short time available, I will try to keep my comments brief. In October, I wrote a letter to the Secretary of State for Education. It is a shame, notwithstanding the great respect that I have for my hon. Friend the Exchequer Secretary to the Treasury, who is a deeply distinguished member of the Government, that we do not have a Minister from the Department for Education here to answer questions about what is essentially an education matter. That letter was co-signed by 73 MPs from across the House, and it made the point that the unfair treatment of sixth-form colleges as far as VAT goes made no sense and was, in fact, untenable. The good news is that the Government agreed, fundamentally, that they could not defend that treatment. The bad news is that they do not plan to do anything about it. That is a shame, because Government policy is to create a level playing field for 16 to 19 provision, and they are right to do so. If anyone wants to play party politics, I will point out that the Opposition were wrong to leave the position uneven when they were in power. However, the Government have set out their aim, but now they are not fulfilling it. They have moved in that direction, but there is a real opportunity to take action on this issue. In the overall scheme of things, it would not be that expensive to do so; for sixth-form colleges, it is estimated that it would cost no more than £30 million.

There are reasons why sixth-form colleges could be treated differently from further education colleges, if one wanted a stepped programme. To say, “This is wrong, but we can only afford to rectify some of it, so we will rectify none of it” is illogical. It would be better to do the right thing by sixth-form colleges, not least because, as has been said, they are the most successful 16 to 19 providers that we have. If the Government’s education policy is about anything, it is about raising standards across the board and, of course, closing the gap between rich and poor. Well, guess which the most successful institutions are in the 16 to 19 sector at doing both those things? You’ve got it—sixth-form colleges.

I have no sixth-form colleges in my constituency; I am not banging a constituency drum here. The sixth forms in my local schools will probably be cross with me for speaking up for sixth-form colleges so often. However, the whole point of the Education Committee is that we look at the evidence and try to work out what is the best thing to do. Well, guess what? Sixth-form colleges are peculiarly successful in addressing the Government’s two key aims on education, so it makes no sense to penalise them in the way that is happening now.

The VAT penalty that sixth-form colleges face is worth an average of £250,000 per college, and as has been said, the problem is worsened because, unlike other institutions, they cannot cross-subsidise. If that money were to be provided to sixth-form colleges, it would help them to save courses that are being lost, including less popular courses such as further maths. Ministers are quite right to identify the need to encourage science, technology, engineering and maths subjects. Sixth-form colleges can play a positive part in doing that, if they are provided with the wherewithal to do so.

[Mr Robin Walker (Worcester) (Con)]

I am grateful to the Chairman of the Education Committee for giving way; he is making a very strong speech. He talked about investment in STEM subjects. Worcester sixth-form college has received money from the Government to invest in a new science centre. However, does he agree that that money would go further if we were able to take action on VAT for colleges?

[Mr Stuart]

I absolutely agree with my hon. Friend, and I think there are feelings across the House on this subject. I said that I would keep my remarks brief, so perhaps I will bring them to a close. The big point is that sixth-form colleges have for years consistently been the most successful providers at delivering the Government’s key educational aims for 16 to 19-year-olds, but time and again, they appear to be on the front line of cuts in funding. That cannot make sense, in terms of having a rational, coherent approach to this issue.

[Jason McCartney (Colne Valley) (Con)]

I congratulate my hon. Friend on the great work that he is doing. He said that he has no sixth-form colleges in his constituency; I have no schools that provide sixth-form education in my constituency. However, there are three colleges there that provide sixth-form education: Huddersfield New college, Greenhead college, and Kirklees college. I also congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and I will continue to support this campaign.

[Mr Stuart]

I am grateful to my hon. Friend for saying so.

There is another aspect that it is worth pointing out briefly. At the moment, because of the freedoms for schools that I think are broadly supported across the House—there is certainly support for them on the Government Benches—there is a danger that we are sleepwalking into the creation of more small sixth forms, which we know, from sustained evidence gathered over time, perform poorly. At the same time, we are undermining institutions that have a long track record of success in raising standards for all, and in closing the gap between rich and poor. We cannot allow that to happen, so we need the Government to wake up and recognise the jewels that they have in the form of sixth-form colleges.

Far from seeing sixth-form colleges cut back, sliced and reduced in capacity and capability, I would have thought that, having found a delivery system that works better than others, we should desperately look at expanding and supporting it in a way that is fair to other providers. I do not want in any way to be prejudiced against sixth forms, but I would like a level playing field, because we have the exact opposite: we are seemingly strengthening those with the weakest record, and weakening those with the strongest record.

[Kelvin Hopkins]

rose—

[Mike Thornton (Eastleigh) (LD)]

rose—

[Mr Graham Stuart]

I had better give way to the hon. Member for Luton North (Kelvin Hopkins) first, and then I will sit down.

[Kelvin Hopkins]

I congratulate the hon. Gentleman on his speech; I agree with every word of it. However, does he agree that the Government ought to be looking to create many more sixth-form colleges across the country?

[Mr Stuart]

I agree. If a system is most successful and cost-effective, establishes high standards, particularly for the poorest, and closes the wealth gap, I would think people would be delighted to see it expand. I will give way to my hon. Friend the Member for Eastleigh (Mike Thornton), and then I will draw to a close.

[Mike Thornton]

I thank the hon. Gentleman for giving way; I very much appreciate it. With the reduction in spending caused by VAT and the need to provide for those over 18, does he agree that it is very strange to cut money for colleges that aim specifically to get people good A-level results and other results at that level, when they are trying to educate people, including those who perhaps missed out earlier, but who are now able to catch up on their education between the ages of 18 and 19?

[Mr Stuart]

My hon. Friend is right. Perhaps that is the danger of making political promises that are nice and neat. His party might want to look carefully at the way that the protection of schools has left very few areas where we can cut in order to deliver reductions in spending. It could be that a series of measures that were positively meant have eventually led to this cut.

Those who are 18 at the start of an academic year and who are still at a sixth-form college are likely to be those clinging on to education, having struggled in post-16 education, and they may be at risk of becoming NEET—that is, not in education, employment or training. Again, it does not make sense for a Government who are rightly using the pupil premium and other measures to try to close the gap to finish up looking to make reductions at the end of the period—at the time when pupils need help to get over the line, and to get themselves on the first rung of the employment ladder—rather than looking to put in place additional support. The sixth-form college sector is not looking for special treatment; it is simply looking to be treated fairly, compared with other providers.

16:19

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Thank you, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship. I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and on making her case so strongly. Indeed, it is noteworthy that this is a well-attended debate, as she has mentioned.

In the light of the remarks made by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), I should mention that I am here as a Treasury Minister, as the debate relates to the VAT system. In respect of House of Commons workings, this is a Treasury matter, and this week the Treasury, rather than the Department for Education, was up for debates, although the hon. Member for Wigan has been most ingenious in getting a debate on sixth forms in a week in which Department for Education Westminster Hall debates were not occurring.

The hon. Lady has highlighted how sixth-form colleges interact with the VAT system. Let me say a little bit about that. VAT can be a rather complex matter. It might help if I provided some background, before turning to the specific issue of sixth-form colleges. One basic feature of VAT is that businesses are able to reclaim the VAT that they pay on their inputs. However, this does not apply to purchases, acquisitions or imports made in relation to non-business activities, such as the provision of free education. This means that bodies such as schools can end up with VAT costs on the goods and services that they buy in.

Clearly, it is always an option to meet these costs by increasing the funding made available to schools, for example. However, there is a risk of the burden of that funding falling on local taxation, as the state education system in England and Wales has historically been delivered by local authorities. To deal with that, in 1973 the Government introduced a scheme, now under section 33 of the Value Added Tax Act 1994, allowing local authorities to recover the VAT incurred on goods and services purchased relating to non-business activities. Local authority maintained schools are able to recover VAT under the umbrella of the local authority.

Since then, there have been extensions to that scheme, in particular to cover the position of academy schools. The Finance Act 2011 introduced a new VAT refund scheme, under section 33B of the 1994 Act, to ensure that funding for academy schools’ non-business VAT costs was consistent with that for local authority maintained schools. The specific purpose of the scheme is to ensure continuity in the funding of institutions that are leaving local authority control to become academies, so that they are not put at a financial disadvantage.

I hope that this slight historical excursion has made it clear that there is clear logic to the VAT treatment of local authority schools and academy schools making the move out of local authority control. That logic is rooted in the nature of the service being provided and the relationship to public sector local authorities.

Let me turn to the campaign by sixth-form colleges, of which hon. Members in the Chamber are well aware. The campaign has gained the support of 74 Members representing constituencies that contain, or are serviced by, sixth-form colleges, and the likes of my hon. Friend the Member for Beverley and Holderness. They wrote to the Secretary of State for Education, expressing their concerns.

Hon. Members have welcomed the introduction of the new 16 to 19 funding formula, which will mean that all 16 to 19 education providers are funded in the same way, and which is reducing the historical disparity between school sixth forms and colleges. However, the 74 hon. Members feel that the way that sixth-form colleges interact with the VAT system leaves them at a disadvantage, compared with local authority or academy schools. In particular, as we heard today, they have asked for their differential VAT treatment to be recognised in the way that they are funded.

[Kelvin Hopkins]

My memory goes back to when sixth-form colleges were grouped—by mistake, I think—with further education colleges and put into the FE sector. That is why the VAT mistake was made. Had sixth-form colleges been kept in the schools sector, this would not have occurred. Does the Minister agree?

[Mr Gauke]

I think that is probably a fair description, historically. Schools have been treated one way, in part, because of the relationship with local authorities and funding at local authority level, whereas other elements of the public sector do not get funding for VAT in the way that local authorities do. Sixth-form colleges and further education colleges are examples of that.

[Nic Dakin]

rose—

[Mr Gauke]

I give way to someone who knows a lot about this subject.

[Nic Dakin]

The Minister and I have exchanged words on this matter many times. The historical record is quite interesting. When colleges were incorporated, they had the same VAT rights as schools, because they came from the same part of the womb, as it were, but that was changed at the point of incorporation. Given the way that the landscape of education has changed, it is odd that new provisions, such as university technical colleges or 16 to 19 free schools, are entitled to the VAT, whereas sixth-form colleges are not. That anomaly was created on this Government’s watch. It would be better if it were not so.

[Mr Gauke]

It should be acknowledged—and it was, in earlier interventions—that notwithstanding the points that the hon. Gentleman makes, this is a long-standing issue.

Let me turn to the Government’s position. The academies VAT refund scheme is set up for a specific policy purpose, which is to remove a financial disincentive for maintained schools to convert to academies. As the purpose is specific, the Treasury has no plans to extend the scheme to colleges. Many other providers of public services are expected to cover their VAT costs from their funding allocations. This funding model is applied to bodies delivering—

16:26

Sitting suspended for a Division in the House.

16:30

On resuming—

[Mr Gauke]

I am grateful for the opportunity to complete my remarks. The academies VAT refund scheme is very specific. The Treasury has no plans to extend that scheme to colleges, and many other providers of public services are expected to cover their VAT costs from their funding allocations. That funding model is applied to many bodies delivering public services, and to some spending by Departments and non-departmental public bodies.

The Department for Education, however, has considered whether adjustments could be made to funding for 16 to 19 education to recognise the differential VAT treatment of different types of providers. In particular, the Department for Education has considered whether it could additionally fund sixth-form colleges by an amount equivalent to their typical VAT costs. The Department for Education has concluded that that is not affordable in the current fiscal climate. The £20 million estimate applies only to sixth-form colleges; extending extra funding to further education colleges, which have a similar case to sixth-form colleges, would cost some £150 million.

[Kelvin Hopkins]

I echo the Chair of the Select Committee on Education, the hon. Member for Beverley and Holderness (Mr Stuart), by saying that the amounts are small in the scheme of things. They are piffling amounts compared with the volume of the Government’s public spending. One penny on the standard rate produces £4 billion, and we are talking about £30 million for sixth-form colleges. It is a tiny amount of money.

[Mr Gauke]

I am not entirely surprised by the hon. Gentleman’s comments. I have no doubt that he would not hesitate to put up income tax by 1p. In the context of the current fiscal situation, we have to be very careful with public expenditure. The Department for Education will, of course, keep the sector’s funding under review.

Although I recognise that colleges have concerns, the reform of 16 to 19 education is one of the Government’s priorities. The Government remain committed to moving towards fairer funding of 16 to 19 education by levelling the rate of funding for schools and colleges by 2015.

[Sir Peter Bottomley (Worthing West) (Con)]

I am sorry that I missed the earlier remarks about 18-year-olds and the £700 cut in funding, which will mostly affect people in poorer postcodes. Does my hon. Friend the Minister accept that if the schools budget was increased by 0.8% rather than 1%, there would have been no need for a 17.5% cut in 18-plus funding to Worthing college and other sixth-form colleges?

[Hugh Bayley (in the Chair)]

Order. Minister, you have two minutes.

[Mr Gauke]

Department for Education Ministers have decided to make savings in the academic year 2014-15 by reducing the participation requirements for 18-year-olds in full-time education. It is worth pointing out that most 18-year-olds will have already benefited from two years of post-16 education. We are of course in a situation where difficult choices must be made about public finances; my hon. Friend the Member for Worthing West (Sir Peter Bottomley) is well aware of that.

The Department for Education is introducing a series of reforms in partnership with the sector to help drive up standards and improve the quality of provision by implementing Alison Wolf’s proposals for 16 to 19 education, by introducing new traineeships for school leavers, and by reforming the apprenticeships programme to route funding directly to employers.

To conclude, while the Government recognise the concerns raised by sixth-form colleges, this position is not unique to such colleges. The Government have no plans to make any change in this area in the near future, given the fiscal climate.

[Sir Peter Bottomley]

rose—

[Hugh Bayley (in the Chair)]

Order. The Minister having sat down, I am bringing this debate to an end.

I want to put on record—an unadvisable thing to do to any statement from the Chair—that more than 20 Members were present for a half-hour debate, which is extremely unusual and indicates the importance that many hon. Members attach to the subject. I apologise to the Minister and the hon. Member for Wigan (Lisa Nandy) for the manner in which the debate was interrupted by a Division in the House.

Housing and Related Jobs (Greater London)

Tuesday 17th December 2013 Westminster Hall

16:41

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

I thank Mr Speaker for choosing this subject for debate today. I welcome the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins) to the first debate that I have had with him on such issues and to his new responsibilities.

For the 30-plus years that I have had the privilege of being a Member of Parliament in Bermondsey and Southwark, housing has been at the top of the political agenda for my constituents. It is what they come and see me most about—they need more and better housing. We need more affordable housing of higher quality to meet the demands in a community such as ours. It is not that the local authority has not played a fundamentally important part; we have the largest local authority housing stock in London and one of the largest in the country. There is also significant housing association housing, and we have one of the highest proportions of shared ownership in the country. We have also seen considerable growth in owner-occupation over the years. It was only 2% when I was first elected and is now well into double figures.

As the Minister and everybody in London knows perfectly well, however, the legacy that this Government inherited has meant that we have seen relatively less housing being provided to meet the need in London. I am happy to give credit where it is due. More local authority housing was built under the Governments of Mrs Thatcher and John Major than thereafter, but we then had a period when, although money was spent by Government on bringing homes up to a decent standard, we did not build new local authority housing. We therefore have an accumulative deficit in housing need.

The other self-evident factor is that London has the greatest gap in the country between average family income and the average cost of a home. Both rental costs and purchase costs are far greater relative to income in London than anywhere else. We have a real crisis that the Government, to their credit, have sought to address. I am here to urge the Government to do more and to come up with specific proposals. In particular, I am here to place on the record in Parliament some of the recommendations of a report, which the Minister has now seen, commissioned and worked on by my colleagues in the Greater London assembly, who put forward proposals for how we can increase not only the number of properties built, but also the number of jobs created as a result. There is no better way to increase jobs and apprenticeships than through the construction industry. My constituency, like all others, will benefit from that upturn in jobs, and there are many who would want to work in the construction industry.

At our party conference in September 2012, my colleagues made housing a priority and specifically asked for various things. People can look up the full motion that was passed, but we wanted the Government, the Mayor of London and local government to

“stimulate a major programme of house building, increasing the rate of construction until we reach at least 300,000 houses a year”—

across the country—

“using untapped sources of finance and giving more freedom to social landlords, local authorities and local communities”,

and radical steps to be taken

“to improve land supply, through releasing public land with ‘build now, pay later’ deals.”

I persistently return to this issue.

I initiated an Adjournment debate in the summer on foreign purchases of properties in London. We have seen growth in the number of people purchasing from abroad and in the number of properties built and offered for sale abroad before they are offered for sale at home. That has caused particular anger and frustration. It has driven up prices, because if properties are opened up to the global market—Malaysia, Singapore and other places—and advertised to people who see London as a good place to invest in housing, the general price goes up because sellers can get higher prices for sales abroad. If local people cannot even get access to bid for properties until after they have been sold—on-plan or off-plan—to someone far away, that is a double frustration. That has been a real cause of grief and frustration to my constituents, in particular around the Elephant and Castle, where a huge development is ongoing, and elsewhere.

I am pleased that the message has got through and that local developers are now making commitments to offer property for sale locally. I am still frustrated that my local council, which Labour still runs, does not insist that the planning conditions that are meant to be applied, specifically that all developments should contain 35% affordable housing, are adhered to. That condition is regularly opposed or not fulfilled when planning permission is granted. I was particularly pleased, however, that the Chancellor responded specifically to the issue in the autumn statement as a result of, I hope, my debate, but also the propositions of others, and announced that, in the following financial year, any non-UK purchaser of residential property who sells a property will pay capital gains tax on that sale, as everybody else does. That has corrected a real injustice where residents in the UK felt that they were being penalised when those who came in from outside were not.

In October, against this background, my colleagues at the London assembly, Stephen Knight and Caroline Pidgeon, produced a report entitled “Affordable Homes & Jobs for London: A Seven Point Plan”. I thank them for their work and the Secretary of State for Business, Innovation and Skills for launching the report in Southwark. I will not repeat the history of difficulties, but I want to highlight one or two things before I concentrate on the proposals for how we get out of the difficulties and increase the Government’s current plans. We have a

“historically low cost of public borrowing”,

which is a plus, a

“high economic multiplier for investment in construction”,

which a plus, and a

“high level of spare capacity in the construction sector”,

which is again a plus. At the moment, we are placing

“13,000 homeless households into temporary accommodation”

in London every year, for which the best estimate of cost

“is £408 million every year”.

The best estimate for the cost to the taxpayer of poor housing is

“£17.5 billion a year in crime prevention, health costs and the loss of children’s future productivity”.

There are still lots of people in emergency temporary accommodation and in overcrowded homes, huge numbers on waiting lists and, as I indicated before, a multiple of 12.5 times the median income for London property prices. Furthermore, private rent levels have risen by more than 11% since June 2012.

The Mayor has his policy, and a draft housing strategy is out for consultation, so I encourage people in London to respond—the deadline is in February. I hope that people who read and hear our debate will look at the consultation and respond. Slightly, if not very frustratingly, when the report was compiled only 737 homes had been started by the Mayor in London this year, and only 5,225 homes had been built on GLA land, although the commitment was to build nearly 40,000. He therefore has a long way to go.

The Government have introduced policies that have certainly initiated significant new development of affordable housing. I hope that we are on target to deliver by the end of the Parliament much more affordable housing England-wide than in the previous Parliament—although the definition was changed—but we are still falling badly behind comparable countries. The report gives a table of the increase in housing completions since 2010 in the UK, Belgium, Finland, France, Switzerland, Poland, the Netherlands, Denmark, Sweden, Germany and Norway: all the others have achieved many more housing completions than we have. We have to be more ambitious. I remember, though I was not politically alert at the time, one of the great legacies of Harold Macmillan was building “homes fit for heroes”. We had a huge housing building programme after the war, as we did after the recession in the ’30s. I am clear that we need that sort of action now.

There are proposals for the Greater London authority to increase investment in and use much more GLA land for affordable homes, but I will speak about matters that the Minister and his colleagues in the Department for Communities and Local Government can deal with specifically. One thing is already on their agenda, which I welcome. This very week, the Minister sent me and colleagues a letter announcing the allocation for the new homes bonus; my local authority has received £10,845,251, according to the letter—I do not doubt the figure. This is a good initiative of the Government, and we welcome it. I am conscious that the GLA has experienced some top-slicing, which is controversial; none the less, the new homes bonus is allowing us to build many more homes and I am positive about it.

I want to propose, however, that the Government could usefully look again, and more boldly, at the housing revenue account and the way in which local authorities can deal with it. I ask the Government not only to take the welcome steps in the autumn statement—allowing shared spend of money up to the housing revenue cap—but to scrap the housing revenue account borrowing cap, allowing London boroughs to invest in affordable housing under prudential borrowing rules.

I want, too, the Government to increase their investment in affordable homes, shifting the balance of spending from housing benefit to bricks and mortar. We are in a nonsense position in this respect at the moment: for the four financial years of the current affordable housing programme, £4.5 billion is being invested by the Government to support the creation of affordable homes; over the same period, however, the Government are also spending an estimated £95 billion on housing benefit. In London, in 2011-12, £5.9 billion was spent on housing benefit alone; about half of that, or £2.6 billion, would provide 111,000 extra affordable homes.

I appreciate that we have to have the homes first, before we can move people from privately rented accommodation, where the rents are high, into much cheaper accommodation, which is their own. Of course there is a cycle, but it cannot be beyond the wit of Government to think of ways in which to forward finance that, so that we can build more quickly, move many more people into affordable housing and reduce the housing benefit bill, which I am sure that colleagues in the Department for Work and Pensions would wish. Only 11% of the annual housing benefit spend in London for four years would seem to be enough to fund 111,000 extra affordable homes.

On the benefit for jobs in London, the reality is not only that all the house building would produce extra jobs in the construction sector, which has the capacity—housing associations, too, have capacity, because I have spoken to them and they have confirmed it—but that there is opportunity for full-time employment and for apprentices. Eighteen per cent. of all small and medium-sized enterprises in London are in the construction sector. In the first quarter of 2013, however, the balance of construction employment in SMEs fell faster in London than anywhere else in the UK. Less than 20 years ago, more than two thirds of homes were built by companies employing fewer than 500 people; by 2012, only 27 companies were responsible for 70% of the housing starts in London. SMEs in construction have been squeezed, therefore, and some have left the market altogether.

The last benefit of such a programme is the apprenticeships. The Government have done a huge amount on apprenticeships, which I welcome, as the Minister would expect, but he knows about the capacity to recruit and retain other people as apprentices, who would then go on to the construction industry as a whole. In Southwark, we are bidding to have a university technical college in Bermondsey to specialise in construction skills, as well as in health service-related skills, because we believe that the market is there.

I will end with one encouragement to the Minister. I understand that the Treasury rules always make such issues difficult, because the Treasury counts local authority borrowing as public sector borrowing. I have, however, talked to the housing associations in London, which have been extremely helpful—there are 16 big ones and more than 300 smaller ones—and they are beginning to find ways of expanding the amount of social building. By and large, they are not simply building conventional, rented affordable homes; they are building homes that they sell at market rates and that they rent at market rates, allowing them to use private finance in their associations and so to cross-subsidise the affordable rented accommodation—so much so that associations such as London & Quadrant are now beginning to be able to relet and let their new affordable housing not only at the Government’s affordable rent—up to 80% of market rent, or even 60%—but even at target or social rents, which really meets the need.

As my last Christmas proposal to the Minister, I ask him to take back to Government the request that they should look at liberating local councils to do the same sort of thing, so that they can access not only the Treasury and public money, but the private sector, and lead in the regeneration of London’s housing. If we could get house building going in London, the land accumulation is waiting and ready. If we could add more incentives to the tax system so that people do not sit on land, but develop it, there would be huge benefit socially, to family life, relationships and mental and physical health, and economically. I hope that the Minister can be encouraged, but also encouraging, and go back to his Department to say, “We must do more, and we will find ways of doing so.”

16:58

[The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)]

It is a privilege to serve under your chairmanship, Mr Bayley. I thank my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) for his generous comments, which are much appreciated.

I came into the Chamber towards the end of the previous debate, and saw many Members enthusiastically contributing to a half-hour discussion on VAT and sixth-form colleges. My right hon. Friend and I see housing as an important issue, so it is somewhat sad that only he and I are here now to contemplate the matter. I am sure we will not agree on all the issues that he raised, but I acknowledge the spirit in which he has approached the debate.

I also want to acknowledge the comments my right hon. Friend made about Margaret Thatcher and John Major, which are appreciated, as well as his recognition of the interventions that the Chancellor has already made to address concerns about foreign investors. I intend there to be a strong relationship between housing associations and the Department, so if my right hon. Friend has ideas for specific interventions in that sector that he would like to see developed further I encourage him to write to me with them.

I appreciate the opportunity the debate gives me to consider the document that my right hon. Friend mentioned, “Affordable Jobs & Homes for London: A Seven Point Plan”, and I am pleased to respond to the debate on behalf of the Government. In doing so, I must stress that the Government are fully committed to seeing the supply of all types of housing increase, not just affordable housing. Through a balanced package of measures targeting both supply and demand, we want everyone to be able to access the home that best meets their needs.

London is experiencing rapid growth. Although that is good for its economy, it puts massive pressure on its housing. However, we are responding to that pressure. Over the Mayor’s two terms, more than 100,000 low-cost homes to rent or buy will be built, providing quality homes for around 250,000 Londoners. That represents the highest number of low-cost homes delivered in the GLA’s history. Around 67,000 have already been delivered.

My right hon. Friend suggested that the Mayor should borrow against the GLA’s annual revenue stream to increase investment in affordable housing in the capital.

17:01

Sitting suspended for a Division in the House.

17:11

On resuming—

[Kris Hopkins]

Increased borrowing would only be a short-term approach and would not be sustainable year on year. The GLA already receives substantial capital grants to invest in affordable homes. The Government have provided £1.1 billion to the GLA from 2012-13 to 2014-15 to deliver affordable housing in London.

However, the Mayor recognises that more needs to be done. In his draft housing strategy, the Mayor has set out ambitious plans to double output, including an annual target to deliver at least 42,000 market sale, private rented and affordable homes, which is more than at any point since the 1930s; new funding of £1.25 billion to support the delivery of 45,000 low-cost homes from 2015 to 2018; and £160 million for a London housing bank to speed up building on large sites.

My right hon. Friend mentioned the use of GLA land. In 2012, the GLA inherited 625 hectares of land from the Homes and Communities Agency, and it is vital that a significant part of that is used for new house building. The GLA is already utilising land and property assets to drive economic growth and housing supply of all tenures. Much of that land has already been developed. Around 130 hectares have been released so far, with a gross development value of £3.6 billion. For instance, in recent months, contracts have been exchanged in the Silvertown quays and Royal Albert dock area, with a capacity for 1,500 homes and 29,000 jobs.

The GLA is also driving regeneration schemes through grant funding and infrastructure investment at Greenwich peninsula, Barking riverside, Kidbrooke in Greenwich and Woodberry Down in Hackney. Those four developments will provide in excess of 30,000 homes of all tenures. The GLA is using, and will continue to use, its public land holdings to deliver new homes in London.

My right hon. Friend suggests that the Government should scrap the housing revenue account borrowing cap, enabling London boroughs to invest further in affordable housing through prudential borrowing rules. I must stress that the Government’s first priority is to reduce the national deficit. Allowing councils unlimited borrowing would increase that. With the introduction of self-financing in April 2012, London boroughs collectively had about £1.4 billion extra headroom to invest in housing if they chose to do so. We recognise that some councils may need additional borrowing, which is why we announced in the autumn statement an additional £300 million of borrowing capability, which individual authorities may use on housing if they so choose. We expect that to support around 10,000 affordable homes over 2015-16 and 2016-17. The provision will be allocated through a competitive bid process.

I reiterate that the Government are committed to building more affordable housing. More than 170,000 new affordable homes have been delivered in England over the past three and a half years. In comparison, between 1997 and 2010, under the previous Administration, the number of affordable rented homes fell by 420,000, as my right hon. Friend pointed out. Our affordable homes programme is making almost £20 billion of public and private investment available to deliver 170,000 new affordable homes between 2011 and 2015. Some 98,700 affordable homes have been delivered through the affordable homes programme since it started in 2011, which is more than half way towards delivering the 170,000 new affordable homes we expect by 2015.

Up to an additional 30,000 homes will be delivered by March 2017, supported by a share of the £10 billion housing guarantees scheme and grants of £450 million. Around £23 billion of additional public and private funding will deliver another 165,000 new homes over three years from 2015. That will be the fastest annual rate of building of affordable homes for nearly 20 years.

We are also committed to boosting the supply of all tenures of housing and are investing in expanding the wider supply of housing. Housing supply is now at its highest since the end of the unsustainable housing boom in 2008, with 400,000 new homes built over the last three years.

I agree with my right hon. Friend that it is vital that Londoners—and everyone else around the country—are equipped to respond to the housing demand and to take advantage of the new jobs created by an increase in house building. That is why the Government have a range of measures and schemes in place to ensure that that happens.

My right hon. Friend talked about small and medium-sized enterprises. We have a shared desire to increase the number of homes built. Part of that will be to get all builders—not just the big six but small and medium-sized enterprises—developing new homes. The Government are playing their part in improving demand through schemes such as Help to Buy equity loans. Some 87% of builders out of the 939 registered with the scheme are small builders building 40 units or fewer. We are working with the Department for Business, Innovation and Skills to ensure that small builders are aware of the business bank, which includes schemes to provide lower levels of development finance guarantees.

We have introduced a range of measures to support apprenticeships. The Government introduced the apprenticeship grant for employers in February 2012, which pays £1,500 per apprentice to support employers of up to 1,000 employees taking on a new young apprentice aged 16 to 24. The Government fully fund the training costs for 16 to 18-year-olds to provide an incentive to employers to take on a younger person. For apprentices aged 19 and over, the Government will pay 50% of the assessed cost of the framework.

In conclusion, I acknowledge the scale of the challenge in London, which we and the Mayor are dedicated to tackling. Our housing strategy adds to a balanced package of support for both supply and demand.

Question put and agreed to.

17:19

Sitting adjourned.

Written Statements

Tuesday 17th December 2013 Written Statements

Tuesday 17 December 2013

Government Deregulation

Tuesday 17th December 2013 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The Government are today publishing the seventh statement of new regulation. This statement reports on regulations within the scope of the one in, two out rule which are expected to come into force between 1 January and 30 June 2014, and gives an account of Government regulation and deregulation to date. The statement shows that the sum total of Government deregulation between January 2011 and December 2013 will be to reduce the net annual cost to business by around £1.2 billion.

The statement also reports on the red tape challenge measures expected to come into force and progress on the targets; and EU measures which are implemented by UK regulations.

In parallel, Departments are each publishing a summary of the regulations they intend to introduce.

I am placing copies of the statement in the Libraries of both Houses.

Terrorist Asset-Freezing etc. Act 2010

Tuesday 17th December 2013 Written Statements

[The Financial Secretary to the Treasury (Sajid Javid)]

My noble friend the Commercial Secretary to the Treasury, Lord Deighton, has today made the following written ministerial statement:

Mr David Anderson QC has completed his third annual report as independent reviewer of terrorist asset-freezing legislation. The report covers a 12-month period of the operation of the Terrorist Asset-Freezing etc. Act 2010 and will be laid before Parliament today.

The Government are grateful to Mr Anderson for his thorough report and will consider carefully the recommendations he has made. The Government’s response to this report will be placed in the Libraries of both Houses on or before 11 February 2014.

Sustainable and Secure Buildings Act 2004

Tuesday 17th December 2013 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)]

I am pleased to announce that I am today laying before Parliament the fourth report required under the provisions of the Sustainable and Secure Buildings Act 2004.

The report considers the progress towards the sustainability of the building stock in England over the preceding two years and Wales up until the end of 2011 when the setting of building regulations was devolved to the Welsh Assembly. The Welsh Government will be publishing their own report for 2012.

The report covers changes made to building regulations over the period and their expected impact, plans for future legislation, and proposals for the setting of targets in relation to sustainable buildings. The report also covers changes in the energy and carbon efficiency of the building stock, the extent to which buildings have their own facilities for generating energy, and the recycling and reuse of construction materials over the period.

This Government have, during the period of the report, continued to work to improve the energy efficiency of the housing stock, with the introduction of the green deal and changes to building regulations, most recently the strengthening of the requirements for new buildings in part L (conservation of fuel and power) of the building regulations.

The average energy efficiency rating for homes in England has continued to improve steadily during the period of the report and carbon dioxide emissions from the domestic sector are estimated to be 6 million tonnes lower in 2011 than 2009.

Telecommunications Council

Tuesday 17th December 2013 Written Statements

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

The Telecommunications Council took place in Brussels on 5 December 2013; the Deputy Permanent Representative to the EU, Shan Morgan, represented the UK.

The first two items were progress reports from the presidency on the proposal for a directive of the European Parliament and of the Council concerning measures to ensure a high-level of network and information security across the Union. (First Reading - EM6342/13), followed by the proposal for a regulation of the European Parliament and of the Council on measures to reduce the costs of deploying high-speed electronic communications networks. (First Reading - EM7999/13). There were no major interventions on either of these items.

This was followed by the only substantive item, which was an “orientation debate” guided by a paper and two questions from the presidency. The first question related to the proposal for a regulation of the European Parliament and of the Council laying down measures concerning the European single market for electronic communications and to achieve a connected continent. (First Reading - EM13562/13 and 13555/13 + ADDs 1-2). It asked member states to indicate which of the actions contained in the proposal they regard as priorities; and whether it was appropriate to carry out such actions at EU or member state level. Commissioner Kroes opened the debate by noting the difference in pace between the Council and Parliament in discussing this file and expressed concern that there had been little progress in Council since the October European Council, compared to that of the European Parliament.

There then followed an extensive debate in which all member states intervened. All began their interventions by welcoming the overall objectives of the package in terms of completing the telecoms single market and the associated growth opportunities. However, France, Portugal, Czech Republic, Denmark and Sweden, called for the prioritisation of other, more advanced, legislative proposals over the connected continent package, in particular the proposals on electronic identification, broadband cost-reduction and network and information security. France, along with others, also forcefully questioned the speed with which this proposal was drawn together and called for the Commission to re-examine the rationale and evidence behind several parts of the package.

There were mixed responses to the individual components of the package. Many member states, including the UK, France, Germany, Poland and Italy, did not want to see Commission gaining any further competency over spectrum management, especially national auctions, although there was recognition, that there were some gains to be made from closer co-ordination between member states. On the roaming proposal, many member states supported the reduction of EU roaming charges, but noted that the current proposal was too complex, unlikely to achieve its desired effect and may have a negative impact on competition. Opinion was mixed regarding the net neutrality proposal. Spain and Hungary supported the draft proposal, while UK and Latvia did not. Similarly, member states views on the consumer protection elements of the package were also mixed. They were supported by Spain, Portugal, Hungary, Luxembourg and UK, while Germany Austria and Ireland were concerned that the current draft would erode their currently high-level of domestic consumer protection. France added that the proposals did not add any value to their domestic regime and were opposed on this basis, while Malta and Luxembourg were concerned about the effects of them on smaller electronic communications operators.

The second question considered the conclusions of the October European Council that covered several aspects of the digital economy—for example, cloud computing, big data and digital platforms—that are currently either unregulated or rely on “soft” regulation. The presidency asked if any regulatory framework was required and whether regulation should be at member state or EU-level. The major focus of this discussion was on big data and cloud computing. All member states began by recognising the importance of these two areas and the need to make progress. However, responses about how to achieve this were mixed, with some calling for further regulation and others pressing for a light-touch approach. Germany, Italy, Slovenia and Slovakia supported further work in this area, including the development of specific European frameworks. However, Sweden and the UK called for a light-touch approach and did not support further regulation on cloud and big data. However, it was recognised that the use of standards could help form any common framework.

During summing-up, Commissioner Kroes stated she saw the debate as a turning point. She suggested that Council supported an extensive examination of the connected continent proposal under the Greek presidency, and that there was high-level consensus on the need for action on spectrum, net neutrality and consumer protection, while acknowledging that roaming may be more difficult to reach agreement on. However, she also called for further progress under the current Lithuanian presidency.

The presidency largely agreed with the Commission’s assessment, although felt that the views of member states on parts of the package were more strongly held and differed from those that the Commission suggested. They would therefore hand this file over to the Greeks to begin detailed work on the file. However, in a procedurally unusual move, Commissioner Kroes challenged the presidency’s conclusions, as she believed that member states’ were calling for work to begin under the Lithuanian presidency. The presidency disagreed with this view, which was supported by an intervention from France.

There then followed two items under AOB. There were no major interventions on either of these items. The first was an update from the presidency on the proposal for a regulation of the European Parliament and of the Council on guidelines for trans-European telecommunications networks and repealing decision No 1336/97/EC. (First Reading - EM16006/11). The second item was an update from the presidency on the proposal for a regulation from the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market. (First Reading - EM10977/12).

Finally, the Greek delegation informed the Council of their priorities for their forthcoming presidency before Council adjourned until the next meeting in June 2014.

Oil and Gas Exploration

Tuesday 17th December 2013 Written Statements

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

I have today published a regulatory road map for onshore oil and gas exploration and a strategic environmental assessment, which represent important steps for onshore oil and gas exploration, including shale gas.

The Government are keen to explore the potential for shale gas in the UK, which could bring major benefit in terms of growth, jobs and energy security. However we must develop shale responsibly, both for local communities and for the environment. These documents will help ensure this and enable a sustainable and successful industry for the long term.

First, the regulatory road map sets out the process operators should follow when seeking to drill for onshore oil and gas in the UK. The content is primarily for unconventional oil and gas operations—specifically shale gas and coal-bed methane developments—but many of the processes described will apply equally to conventional operations.

The road map is intended as a first point of reference, so that operators, planners and the public can see the overall regulatory process. This will help operators in particular by making it clear what they need to do and when, while providing useful links to more detailed guidance.

The road map does not contain any new policy but sets out the current process in one place. It also reflects the regulatory differences between England, Scotland, Wales and Northern Ireland. It focuses on the exploration and appraisal phases, rather than production and decommissioning.

The road map can be viewed on the gov.uk website and will be kept up to date to reflect changes in regulation.

I have also today published for consultation an environmental report on our proposals for further onshore oil and gas licensing in areas of Great Britain.

The report identifies, describes and evaluates the likely significant effects on the environment of DECC’s proposals to invite applications for new licences, and of reasonable alternatives to that plan; and how these effects can be reduced or offset.

This report is a necessary part of the process of strategic environmental assessment (SEA), required by EU law.

The consultation will be open until 28 March 2014. Once the consultation responses have been taken into account I will issue a “post-adoption statement” which will summarise how the Government intend to proceed in relation to the 14th onshore oil and gas licensing round.

The environmental report can be viewed on the gov.uk website.

Healthy Living and Social Care

Tuesday 17th December 2013 Written Statements

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

In November 2012, the Department launched the healthy living and social care theme of the red tape challenge. The Department sought comments on regulations affecting business and civil society through the red tape challenge website and responses from a range of different groups were received on a number of areas.

The Department looked at 555 regulations covering four areas: public health; quality of care and mental health; NHS; and professional standards. This builds on earlier work done to look at 255 regulations under the red tape challenge medicines theme.

We carefully considered the comments received through the red tape challenge website, alongside an internal audit of departmental regulations, the results of which have already been published. Using this information and running a rigorous challenge process we identified the healthy living and social care regulations that could be abolished or improved. I am proud to announce the results of this process here. Of the 555 regulations considered, the Department is proposing to abolish 128 regulations and improve 252 others. This means that 68% of the regulations under the healthy living and social care theme will either be abolished or improved.

The Department is responsible for key areas of public protection, and many of its regulations are therefore essential to protect patients and the public by ensuring essential standards are maintained. Nevertheless, we have actively embraced the regulatory reform agenda. There are a number of proposals the Department is looking to take forward, including:

simplifying a large number of professional standards regulations following the Law Commission’s recommendation;

working with the Department for Communities and Local Government to address the problem of duplication of inspections between the Care Quality Commission and local authorities through the focus on enforcement review of adult care homes;

updating the nursery milk regulations to make them fit for purpose to help effectively deliver a scheme that is efficient, sustainable, and gives better value for money;

improving the operation of the healthy start scheme, that provides vouchers for fruit and vegetables, milk and formula milk to low-income pregnant women and children under four. The Department will work with retailers to explore and implement practical ways to make the paper vouchers easier to handle by the end of 2015-16;

implementing the recommendations to review the human tissue legislation, which will potentially bring benefits to the regulated sectors through improving the efficiency and effectiveness of the regulators; and streamlining regulation; and

revoking the regulations which ban the sale of HIV home testing kits, and this is expected to benefit business significantly and have positive wider benefits for the public. The Department is taking forward work to implement this and other changes identified through the red tape challenge process by the end of this Parliament.

However, we do not want to stop there. Some of the comments the Department received through the red tape challenge related to non-regulatory issues. For example, comments received about the deprivation of liberty safeguards suggested that while the measures were important, the number and complexity of some of the forms made it difficult and time consuming for people to use them. In response the Department plans to tackle this in 2014 by both reducing the existing number of forms and redesigning them so that they are easier to use. Another non-regulatory improvement will be a reduction in the amount of unnecessary guidance issued by the Care Quality Commission when they introduce new fundamental standards of care, saving people time in familiarising themselves with it.



I am pleased with the outcomes of the healthy living and social care theme and the work that went into identifying regulations the Department can abolish or improve. The Department is committed to continue to look at how it can minimise burdens on both business and health care professionals. The Department is currently looking at opportunities to reduce burdens for those on the front line of healthcare and is engaging with relevant organisations and health professionals to progress this.

Details on the regulations the Department proposes abolishing or improving have been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed paper Office. The details can also be seen at: www.redtapechallenge. cabinetoffice.gov.uk/home/index/.

NHS Commissioning

Tuesday 17th December 2013 Written Statements

[The Secretary of State for Health (Mr Jeremy Hunt)]

NHS England’s board has today agreed its clinical commissioning group planning guidance and allocations. Final documents will be published on the NHS England website by Friday 20 December and copies will be placed in the Library.

As we set out in the mandate to NHS England, the NHS needs to change to meet the needs of an ageing population. This guidance will help commissioners develop plans for services that more closely address the needs of local populations and deliver better integration of health and social care services.

The planning guidance sets out the priorities for commissioners. Commissioners are asked to plan for the next two years, with a specific emphasis on improving health, reducing health inequalities and moving towards a parity of esteem for mental and physical health.

In order that such an important decision is considered objectively, free from party political considerations, the Health and Social Care Act 2012 made how health funding is allocated between different areas of the country a responsibility of NHS England.

The NHS England board has today made decisions on how to distribute its budget so patients benefit. This includes allocating funding for individual clinical commissioning groups.

The Government have protected the overall health budget and NHS England has today decided that every CCG in England will continue to benefit from at least stable real-terms funding for the next two years. Those areas with fastest growing populations will benefit from more rapid growth in funding.

By reflecting changes in population around the country and better targeting where the pockets of deprivation are located, the NHS can offer the best services where patients need them most.

Palace of Westminster (Restoration and Renewal)

Tuesday 17th December 2013 Written Statements

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

Following their consideration of the pre-feasibility study on the restoration and renewal of the Palace of Westminster in October 2012, the House of Commons Commission and the House of Lords House Committee agreed that the next more detailed study should be carried out by an independent third party and that it should focus on the costs and technical issues associated with the remaining options.

The contract for an independent options appraisal (IOA) has now been awarded to a consortium led by Deloitte Real Estate and including AECOM and HOK. This follows a rigorous evaluation and selection process. Work on the study is expected to begin early in 2014.

The palace will require very significant renovation in the years to come. The Commission and the House Committee recognised in 2012 that doing nothing is not an option. They accept their responsibilities as custodians of a great iconic building and the need to ensure its future. Selection of a preferred way forward is expected to occur during the course of the next Parliament, not this one.

The contract for the IOA will set a maximum price of £2,019,295 and a fixed price (which may be lower but not higher) will be agreed two months into the contract once the consultants have become familiar with the extensive survey work already done on the palace.

Independent Commission for Aid Impact (Triennial Review)

Tuesday 17th December 2013 Written Statements

[The Secretary of State for International Development (Justine Greening)]

On 21 March 2013, I announced the commencement of the triennial review of the Independent Commission for Aid Impact (ICAI). I am grateful to ICAI for its continuing valuable work and I am now pleased to announce the completion of that review.

ICAI’s role is to provide independent scrutiny of UK aid spending in order to deliver value for money for British taxpayers and maximise the impact of aid. Its specific functions are to:

i) produce a wide range of independent, high quality and accessible reports setting out evidence of the impact and value for money of UK development efforts;

ii) work with and for Parliament to help hold the UK Government to account for their development programme, and make information on this programme available to the public; and

iii) produce appropriately targeted recommendations to be implemented and followed up by the UK Government.

The triennial review of ICAI concludes that the functions performed by ICAI are still required, subject to some refinements to promote clarity and maximise value for money. In particular, the review recommends that ICAI should also focus on in-depth thematic reviews addressing wider development issues, alongside retaining the ability to produce shorter reports on topics of particular interest to stakeholders, which may include the country level. The review further concludes that an advisory non-departmental public body (NDPB) continues to be the most effective way of delivering these services.

The review also looked at the governance arrangements for ICAI in line with guidance on good corporate governance set out by the Cabinet Office, and found that ICAI’s arrangements largely comply with this guidance. In the few areas where there is not full compliance, it makes some recommendations in this respect, which will be implemented in full prior to the next ICAI contract period beginning May 2015. The review also makes suggestions regarding the role of the International Development Select Committee in ICAFs work, given the unique position of ICAI as an advisory NDPB that reports directly to Parliament.

The final report of the triennial review of ICAI will be made available on the gov.uk website and copies will be placed in the Libraries of both Houses of Parliament.

HM Courts and Tribunals Service Trust Statement

Tuesday 17th December 2013 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

Her Majesty’s Courts and Tribunals Service (HMCTS) has prepared a trust statement providing an account of the collection of revenues which are due to be paid to HM Treasury. The statement includes the value of fines and confiscation orders imposed by the judiciary; fixed penalties imposed by the police; the value of collections; the balances paid over to third parties including victims of crime, the Home Office and HM Treasury; and the balance of outstanding impositions.

We welcome the Comptroller and Auditor General’s (C&AG) report on the trust statement which recognises the improvements in financial reporting made by HMCTS. The C&AG has, for the first time and subject to two specific exceptions, given an opinion that the trust statement presents a true and fair view of the transactions and balances reported.

The statement shows that we have continued the year-on-year improvement in the levels of collection. During 2012-13 more than £495 million has been collected from offenders, an increase of £11 million compared to 2011-12. Almost £59 million in compensation was paid to victims of crime—of which £25 million was funded by criminals’ cash and assets recovered through confiscation orders. In addition, following a change to the victim surcharge HMCTS is able to report increased receipts for victim support with £11 million being collected and paid in the year to support this work.

Confiscation orders are one of the key mechanisms available to the Government to deprive criminals of the proceeds of their crimes. The value of the order imposed, which is often very high, is based on the criminal benefit attributed to the crime and may, therefore, exceed the value of realisable assets that are known to the court at the time of imposition. Crucially, an outstanding order stops the criminal benefiting from the proceeds of crime and ensures that, if the assets are discovered in the future, they can be seized.

Confiscation orders comprise 70% (£1.4 billion including interest) of total outstanding impositions. All available actions and sanctions are taken to recover this debt and bring it to account as expeditiously as possible. However, around one half of this amount—excluding interest—cannot be collected as it includes £109 million (8%) relating to individuals who are deceased, deported or who cannot be located, £84 million (6%) relating to orders which are being appealed and cannot be enforced while under appeal; and £136 million (10%) relating to orders where all the assets have been assessed as hidden following the conclusion of financial forensic investigations. In addition there is a further £339 million (24%) of interest accrued on confiscation orders which are outside agreed payment terms.

Cracking down on those who do not pay is an absolute priority. The agencies involved in the enforcement of confiscation orders, including the Ministry of Justice, the Home Office, the Serious Fraud Office and the Crown Prosecution Service take every step to tackle outstanding debt including the addition of interest and imprisonment for those who do not pay. In relation to the outstanding fine debt the sanctions include taking deductions from offenders’ benefits or their earnings and seizing and selling their property and goods. Those who do not pay can also be imprisoned.

Criminals go to extraordinary lengths to hide the proceeds of their crimes by transferring funds abroad and concealing them with friends and family, but we are succeeding in recovering more money every year. The agencies responsible for enforcement are building better relationships with overseas authorities and engage specialist forensic teams to track down hidden assets. The 2012-13 trust statement analyses the confiscation order debt value by lead agency to assist the users’ comprehension of the contribution made by agencies involved in the enforcement of confiscation orders.

HMCTS recognises the importance of the recommendations made by the National Audit Office value-for-money study on confiscation orders and will work with our partner enforcement agencies to address those recommendations and ensure that criminals continue to be deprived of the proceeds of crime.

Legislation to allow HMCTS to obtain data from HMRC and DWP to be used for the purposes of setting fines and enforcing outstanding payment amounts came into force on 11 December 2013 and will allow HMCTS to increase the use of the attachment of earnings sanction. HMCTS has also rolled out a programme to implement the use of direct debit payments which can be used where outstanding fines are paid in instalments. The direct debit payment process will be easier for enforcement staff to administer than standing orders and should help to improve collection rates.

HMCTS has recently published an OJEU notice seeking a commercial partner to help increase collections, reduce enforcement costs and, importantly, ensure more criminals pay. A new national system has been implemented to manage the collection of fixed penalty notices, with all of the police forces having transferred to the new platform by June 2013.The continuing improvement the agencies are making combined with our future plans will ensure that more criminals pay and that taxpayers get better value for money.

Presumption of Death Act 2013

Tuesday 17th December 2013 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

On 20 June 2013 the then Under-Secretary of State for the Ministry of Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) announced she would make a further statement regarding the timing of commencement of the Presumption of Death Act 2013 (“the Act”) before the end of 2013—[Official Report, 20 June 2013; Vol. 564, c. 39WS].

When my hon. Friend made her statement in June regarding the Act it was expected that the work on the rules of court, regulations and associated procedures necessary to bring the Act fully into force would be completed in time for commencement to take place in April 2014. However, as my hon. Friend stated, this was not certain. In the event, the necessary work has not yet been completed. The proposed commencement of the Act will therefore be delayed until the next available common commencement date, 1 October 2014. I will make a further announcement to confirm the actual commencement date of the Act in due course and in any event before the summer recess.

On the same date, my hon. Friend also announced that the Ministry of Justice intended to publish a consultation paper on the possible creation of a status of guardian of the property and affairs of missing persons in 2013—[Official Report, 20 June 2013; Vol. 564, c. 39WS]. Work on this paper is progressing and publication will take place as soon as possible in 2014. I will make a further announcement in relation to the publication of the paper in due course and in any event before the Easter recess.

Huawei Cyber Security Evaluation Centre

Tuesday 17th December 2013 Written Statements

[The Prime Minister (Mr David Cameron)]

The Intelligence and Security Committee (ISC) reported in June 2013 on foreign investment in critical national infrastructure. The ISC raised concerns about the Huawei Cyber Security Evaluation Centre (HCSEC) and recommended that the National Security Adviser undertake

“a substantive review of the effectiveness of HCSEC as a matter of urgency”.

The Government responded in July to the ISC report, agreeing that a review would be carried out. This has now been completed and shared with the Chair of the ISC. An executive summary of the review has been published. Copies of this have been placed in the Libraries of both Houses. The Government’s main conclusion, which reflects discussion with the Chairman of the ISC, is that oversight of HCSEC should be enhanced, and that GCHQ should take a leading and directing role in its future senior appointments.

Network Rail

Tuesday 17th December 2013 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

Today the Office for National Statistics announced that, following a review, Network Rail will be classified as a central Government body in the public sector. This is an independent statistical decision taken by the Office for National Statistics in light of the European system of national accounts 2010 (ESA10) manual from Eurostat which comes into force across the EU from 1 September 2014.

The Government welcome the ONS review and have always been committed to the transparent reporting of public liabilities. The change in Network Rail’s classification will mean that the company’s net debt, currently some £30 billion, will appear on the Government’s balance sheet. The Office for Budget Responsibility noted in its “Economic and fiscal outlook” published on 5 December, that this will likely increase public sector net debt by about 2% of GDP and public sector net borrowing by 0.2% of GDP on average. The Government remain committed to their plans to reduce the deficit and will continue to do so by taking difficult decisions to cut public spending and prioritise investment in infrastructure to deliver a stronger economy and fairer society. The new classification will be implemented from 1 September 2014 and will apply from April 2004. Until then Network Rail remains in the private sector.

I am committed to ensuring that Network Rail maintains the operational flexibility to continue to deliver a safe, punctual rail network and increased capacity for our busy railways and that it is able to attract a high calibre of staff, while still providing value for money and being accountable to Parliament.

My Department will agree appropriate accounting and governance adjustments for Network Rail to ensure it can continue to deliver world-class railway infrastructure when the company is reclassified for statistical purposes on 1 September 2014. I have accordingly agreed a memorandum of understanding with Network Rail that sets out how we will work together to develop and agree that framework. This memorandum has today been published on my Department’s website and copies have been placed in the Libraries of both Houses.

This Government remain committed to the railway. The ONS decision on the classification of Network Rail does not affect the planned improvement and investment in the railways, including Network Rail’s £38 billion settlement for the planned running of and investment in the railway in the five years from 2014. This Government’s plans for HS2 and the rail franchising programme set out in March this year are unchanged. The Office of Rail Regulation will remain the economic and safety regulator for the railway and the ONS decision will have no effect on rail fares, performance, punctuality, timetables, or safety. My Department will continue to consider how to best secure the benefits of private investment in rail infrastructure and work with Network Rail to deliver the best possible railway for the benefit of the whole industry, its passengers, and the taxpayer.

Automatic Enrolment Annual Thresholds

Tuesday 17th December 2013 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am today announcing the proposed automatic enrolment thresholds for next year.

It is intended to lay an order before Parliament in the new year which will include the following:

£10,000 for the automatic enrolment earnings trigger;

£5,772 for the lower limit of the qualifying earnings band;

£41,865 for the upper limit of the qualifying earnings band.

I am also placing a copy of the analysis supporting the proposed revised thresholds in the House Library.

These papers will also be available later today on the www.gov.uk website.

Disability and Health Employment Strategy

Tuesday 17th December 2013 Written Statements

[The Minister of State, Department for Work and Pensions (Esther McVey)]

Later today we will publish the Command Paper Cm 8763 “The disability and health employment strategy: the discussion so far”.

There are 11.5 million working-age people in Great Britain with a long-term health condition. More than half—6.5 million—are classified as disabled under the Equality Act 2010, because they have a physical or mental impairment that has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities.

At any one time, some of these people will be unable to work, and we will continue to provide them with financial support. However, many disabled people and people with health conditions can and do work, and the employment aspirations of too many people remain unfulfilled. A number of factors contribute to this loss of potential, for example: entrenched beliefs about what individuals are capable of; an employment support that does not always meet people’s individual needs; and an inflexible benefits system.

This Government are already doing much to tackle these issues, including:

the implementation of many of the recommendations in “Getting In, Staying In, Getting On” has focused resources on tailored, personalised support for individuals, rather than on “one-size-fits-all” institutions and programmes;

our work to enable disabled people to fulfil their potential and have opportunities to play a full role in society through the fulfilling potential strategy series;

the introduction of universal credit, which aims to ensure work always pays;

the introduction of personal independence payment, a new disability benefit designed to better reflect today’s understanding of disability and deliver a benefit that is fairer, more transparent and sustainable;

the first national disability employment conference in July 2013, at which the Prime Minister launched our two-year disability confident campaign, working with employers to increase the employment of disabled people, and now including a series of regional events;

the development of a new mental health and employment resource pack to improve the employment support that Jobcentre Plus provides for individuals with mental health issues; and

the development of the Health and Work Service, as recommended by the sickness absence review. The service is due to start in 2014 and will support individuals with health conditions or impairments to stay in work.

However, we are determined to do more to enable disabled people and people with health conditions to get into, stay in and progress in work. This paper is the next important step in developing our approach and widening our focus. To do this, we need to concentrate on the skills, capabilities and aspirations of all individuals, offering the right support, early on, to those who need it. We need to focus on employers, so they are confident and able to employ and retain disabled people and people with health conditions. We need to ensure that all disabled people and people with health conditions can make a smooth transition from education to work.

In this paper, we set out a range of proposals to further improve our employment support, both for disabled people and for people with health conditions who do not consider themselves to be disabled. This will be followed next year by a further paper setting out our delivery plan.