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Ann McKechin (Glasgow North) (Lab)
1. What steps she is taking to address the rising cost of living in Northern Ireland.
John Robertson (Glasgow North West) (Lab)
4. What steps she is taking to address the rising cost of living in Northern Ireland.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
The actions the Government are taking to help with the cost of living include freezing fuel duty, cutting income tax bills, delivering the biggest ever single cash increase in the state pension and helping to keep interest rates low by dealing with the deficit.
Ann McKechin
The Secretary of State may be aware that last year the Northern Ireland Council for Voluntary Action confirmed that Belfast, with an expected loss of £840 per adult of working age, will be hit harder than any other major city in Britain. Will she advise the House on what specific steps she is taking to address the cost of living, given the depth and scale of the problem in Northern Ireland?
Mrs Villiers
As I have said, the Government take this issue very seriously. That is why fuel duty today is 20 pence per litre lower than it would have been if we had stuck with the previous Government’s plans; that is why we have cut income tax for about 618,000 people in Northern Ireland and taken 75,000 out of income tax altogether; and that is why people on the minimum wage will see their income tax bills halved by April.
John Robertson
I wonder whether the Secretary of State can tell us what her assessment is of the Advice NI social policy report, which confirms that over 11 food banks have opened in Northern Ireland since 2012. Is she happy with that? If not, what does she plan to do about it?
Mrs Villiers
Of course it is a matter of regret that anyone feels the need to go to a food bank, but the Government are doing everything they can to support people on low incomes with the cost of living. I hope the Opposition will welcome the fact that inflation fell to 2% yesterday. We will continue to give people support, in particular with our triple lock on pensions that delivered the biggest ever single cash increase in the state pension, and we will continue to deal with the deficit. The real threat to the cost of living would be a Labour Government, who would put up taxes and see interest rates increased.
Neil Carmichael (Stroud) (Con)
12. Does the Secretary of State agree that the real way to deal with cost of living issues is to pursue economic growth with a long-term strategy to rebalance the economy, and that that applies to Northern Ireland, particularly in engineering and manufacturing?
Mrs Villiers
My hon. Friend is absolutely right. The only way to achieve a sustainable increase in living standards is to run the economy efficiently and effectively, and to have a credible plan to deal with the deficit. That is the way we can keep interest rates low and deal with inflation, and that is the way we can make this country a wealthier place.
Mr Philip Hollobone (Kettering) (Con)
Some disreputable people try to reduce the cost of living by smuggling fuel across the border with the Republic of Ireland. What steps are being taken to combat this menace?
Mrs Villiers
There is very effective cross-border working. There is also very effective working between the Northern Ireland Executive and Her Majesty’s Revenue and Customs. We take this matter very seriously. My hon. Friend the Exchequer Secretary has been looking with care at the different proposals for new marker technology. I expect progress on that to be announced very soon.
Jim Shannon (Strangford) (DUP)
One in three people, in response to Shelter Northern Ireland questionnaires, stated that this year they will struggle to pay their rent or mortgage payments and that child care costs take up a large part of their budget. What discussions has the Secretary of State had with the Department for Work and Pensions to raise the child care element for full-time working families?
Mrs Villiers
The introduction of universal credit in Northern Ireland will make about 102,000 people better off, according to Social Development Minister Nelson McCausland, who also commented that that would lift 10,000 children out of poverty. Our welfare reforms are designed to incentivise work. Getting people into work is the best way to deal with poverty and we will continue to push forward with welfare reform.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
2. What recent assessment she has made of the security situation in Northern Ireland; and if she will make a statement.
Pamela Nash (Airdrie and Shotts) (Lab)
6. What recent discussions she has had on security in Northern Ireland.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
The threat level in Northern Ireland remains severe, with persistent planning and targeting by terrorists, as illustrated by the attacks that took place before Christmas. However, action by the Police Service of Northern Ireland and its partners continues to keep those groups under pressure.
Oliver Colvile
Before Christmas, the Select Committee on Northern Ireland Affairs went to Belfast and met the Parades Commission. We learnt about the budgetary challenges facing the PSNI. Will my right hon. Friend review giving the Northern Ireland Executive the same powers as all other parts of the UK to levy a policing precept?
Mrs Villiers
The future resourcing of the PSNI is certainly a matter of concern to many in this House. It is within the powers of the Department of Justice to introduce precepting, if it chose to do so. That does not require legislation or further devolution from this House; it is a matter for the Department to decide. Very constructive discussions are under way between the Department of Finance and Personnel, the Department of Justice and the PSNI, with a view to resolving the resourcing question, in particular with regard to the comprehensive spending review year 2015-16.
Pamela Nash
With the public rightly concerned after the stalemate reached in the Haass talks and the severe security threats faced by Christmas shoppers in Belfast, to which the Secretary of State referred, as well as the huge costs of £55,000 a day of policing contentious parades in Northern Ireland, will she tell us whether 2014 is really the right time to be cutting the funds to the PSNI, or are the Government going to reconsider that decision?
Mrs Villiers
The PSNI is actually receiving additional funds from the Government—£200 million over the current spending review period and about £30 million in 2015-16—and as I have said, discussions continue between the PSNI and the Northern Ireland Executive over whether further funding can be added from the Executive in 2015-16.
Mr Laurence Robertson (Tewkesbury) (Con)
Patten recommended that in a peaceful situation, the PSNI should have a minimum of 7,500 officers. Given that Northern Ireland is not exactly in that peaceful situation, owing to paramilitary activity, is the Secretary of State concerned about the PSNI’s ability to recruit sufficient officers?
Mrs Villiers
I am grateful to the Chairman of the Northern Ireland Select Committee for his question and his important work on this issue. The current number of officers in the PSNI is 6,795. The Chief Constable recently told the Policing Board that the minimum number he needed to perform effectively was 6,963. It is important that consideration be given to how the shortfall can be dealt with, and as I have said, I remain optimistic about the ongoing discussions between the Department of Finance and Personnel and the Department of Justice about resolving that budgetary shortfall.
Mr Peter Hain (Neath) (Lab)
If I may, Mr Speaker, I would like to pay tribute to Paul Goggins, not only a good friend of mine but a brilliant security Minister who served under me in Northern Ireland. His funeral is tomorrow.
How can the Secretary of State justify her answer to my hon. Friend the Member for Airdrie and Shotts (Pamela Nash), given that the additional security budget, which the PSNI is entitled to apply for, has been halved this year compared with the past three years—and this at a time of rising dissident threats, as we saw in Belfast city centre before Christmas?
Mrs Villiers
It is just not true that it has been halved. The Government take very seriously their security responsibilities in Northern Ireland, which is why we have provided additional funds for the PSNI to deal with the deteriorating security situation we inherited from the previous Government. We will continue to be vigilant. In particular, we will continue to work closely with Irish counterparts on deepening and strengthening the cross-border co-operation that is crucial to keeping Northern Ireland safe and secure.
Mr Nigel Dodds (Belfast North) (DUP)
On policing and security and in the context of the recent Haass talks on the past, especially past terrorist crimes, will the Secretary of State take it from me that Martin McGuinness’s comments last night about extremism are seen by many on both sides of the community as not only untrue but a transparent attempt to distract from Sinn Fein’s abject lack of leadership in addressing its continued glorification of past terrorist crimes, as witnessed in Castlederg this summer, which is causing huge damage to community relations? Will she urge Sinn Fein to stop wallowing in the filth of murder?
Mrs Villiers
I encourage all party leaders to continue working on the Haass issues. Perhaps the more important thing to draw from last night’s meeting of party leaders was the welcome news that they would reassemble next week and that these discussions would continue. There is an important opportunity here still to be seized by the political parties to make real progress on these divisive issues by resolving their differences and reaching agreement.
Mr Dodds
I, too, want to see those talks take place, and we hope that all parties, including Sinn Fein, will come to the table and negotiate in good faith, but will the Secretary of State recognise that severe damage has been done to policing, and to the capacity of the policing and justice system to tackle the security situation, by decisions such as the one recently to issue one of those most involved in glorifying past terrorist crimes—Gerry Kelly—with an informed warning, rather than to prosecute him, even though the threshold for prosecution was reached, for obstructing the police during a very tense parades situation? Does she not see the damage that this sort of situation is creating?
Mrs Villiers
I understand the right hon. Gentleman’s point. I would urge all elected representatives to do all they can to support police officers in the execution of their duties which, in Northern Ireland, can sometimes be extremely difficult and highly sensitive.
Mr Ivan Lewis (Bury South) (Lab)
As other hon. Members have said, Northern Ireland faces a number of security challenges at the start of this new year: the terrorist threat from dissident republicans and the potential threat to law and order posed by the downgrading of the Parades Commission. In the light of those risks, will the Secretary of State assure us—and give a specific answer—that the PSNI has an adequate number of front-line police officers to cope with these challenges, and, specifically in respect of the terrorist threat, that she is liaising with Home Office colleagues to ensure proper police co-ordination across the United Kingdom?
Mrs Villiers
On the last point, I had the opportunity to discuss Northern Ireland matters with the Home Secretary yesterday, and my officials stay in regular touch with Home Office colleagues. The hon. Gentleman probably did not hear my earlier answer. There are currently 6,795 officers in the PSNI, while the Chief Constable believes that he needs 6,963, so there is a shortfall and the Chief Constable wishes to start recruiting once again. The UK Government are anxious to ensure that that is possible. That is one of the reasons why we have allocated additional national security funding. We are also working with the DOJ to ensure that discussions with the DFP reach a satisfactory conclusion on the Northern Ireland Executive’s contribution.
Mr Lewis
That shortfall is a serious concern, and it is important that the Secretary of State does something about it.
Turning to another issue, I had the privilege yesterday of meeting representatives of the Disabled Police Officers Association of Northern Ireland. I heard first hand the moving and disturbing testimonies of retired police officers who suffered lasting physical and mental scars through their work on the front line during the troubles. Does the Secretary of State accept that we owe a great debt of gratitude to these retired officers, and will she make representations to Ministers in the Northern Ireland Executive about the erosion of their injury pension rights?
Mrs Villiers
The Minister of State, Northern Ireland Office, my right hon. Friend the Member for South Leicestershire (Mr Robathan) met the Disabled Police Officers Association of Northern Ireland, and I would like to associate myself with the shadow Secretary of State’s comments to the effect that we owe them a huge debt of gratitude. The representations made at that meeting will, of course, be taken up with the Northern Ireland Executive. My understanding is that decisions on these matters lie primarily within the devolved field.
Ian Paisley (North Antrim) (DUP)
3. What assessment she has made of the potential effect in Northern Ireland of the Government’s proposed further reductions in welfare expenditure.
Julie Hilling (Bolton West) (Lab)
7. What recent assessment she has made of the effect of the Government's welfare reform policies on Northern Ireland.
The Minister of State, Northern Ireland Office (Mr Andrew Robathan)
We have worked hard with the Executive to adapt our reforms flexibly to the circumstances of Northern Ireland. These reforms will ensure that work always pays and will help to lift people out of poverty by moving them into work. When fully implemented, universal credit will make around 3 million low-to-middle-income households across the UK better off.
Ian Paisley
The number of people living in poverty in Northern Ireland has increased from 18% in 2002 to 22% in 2013. In reality, that means that one in four people in Ulster earns and lives on a salary that falls below the basic standard of living. Will the Minister take the opportunity to give us an assurance that the cuts—the deeper and further cuts—talked about by the Chancellor of the Exchequer will not force more people into poverty in Northern Ireland?
Mr Robathan
I am not in a position to know what further cuts to the welfare budget the Chancellor may be planning. Northern Ireland receives more than a quarter more in Government spending per head in comparison with constituencies such as mine in England and, indeed, all English constituencies. It is a fact that Nelson McCausland specifically said that more people will be lifted out of poverty by universal credit, including some 10,000 children. I am sure the hon. Gentleman would welcome that. We are not immune to understanding people’s concerns, but we believe that it is work, not welfare, that will bring prosperity to Northern Ireland.
Julie Hilling
But does the right hon. Gentleman agree with the Minister of State, Department for Work and Pensions, the hon. Member for Hemel Hempstead (Mike Penning) that Northern Ireland is “getting the best deal” on welfare when changes could potentially take £450 million per annum out of vulnerable people’s pockets?
Mr Robathan
I do not recognise the figures that the hon. Lady has quoted. What we wish to see is people in work. Unfortunately, the last Government left this country with the most appalling financial and economic catastrophe. All that the hon. Lady, her Front-Bench team and the Leader of the Opposition can suggest is more spending, more borrowing, more taxes and more debt, which will plunge us back into the disaster they left behind.
Mark Durkan (Foyle) (SDLP)
The Chancellor has indicated that he is considering a new regime for annually managed expenditure, with an overall cap on welfare spending. Does the Minister believe that that will entail a cap within a cap for Northern Ireland’s welfare spending, and what discussions is the Northern Ireland Office having with the Treasury and the devolved Administration about the serious implications of such a development?
Mr Robathan
Officials are always discussing things with the Treasury, Indeed, an excellent young man who works for us has just come from the Treasury to increase liaison.
Northern Ireland cannot be exempt from that which is affecting the rest of the United Kingdom. The Belfast Telegraph has said that the Northern Irish cannot pretend that they can
“have it both ways; that we can continue to benefit from the Treasury—we get back more than we raise in taxes—while people in other parts of the UK suffer from the reforms… we cannot expect that situation to continue indefinitely.”
I think that the hon. Gentleman, who is a serious and grown-up politician, will realise that as well.
Stephen Pound (Ealing North) (Lab)
I am relieved, as the whole House will be, that a “young man” is currently striving to bring light to this area. We wish him well.
In May 2010 the Conservative party in Northern Ireland, then sailing under the flag of the Ulster Conservatives and Unionists—New Force, or UCUNF, was comprehensively rejected by the voters. In the light of that, how can the Minister justify the continuing distress caused by the rolling threat of the imposition of a £5 million fine on the Northern Ireland Executive, and will he tell us when, this month, the sanction will commence?
Mr Robathan
If the hon. Gentleman wants to go back to May 2010, I think he might note that the good people of England comprehensively rejected the Labour party and all its works at that time, which I think was pretty sensible of them.
As the hon. Gentleman knows, we are looking after the interests of everyone in the United Kingdom. For instance, 1.6 million private sector jobs have been created since 2010, including jobs in Northern Ireland. [Interruption.] As has been explained to the Northern Ireland Executive, the sanction on welfare has not yet been imposed because the Treasury cannot impose it unilaterally. But might I say that the First Minister—
Sammy Wilson (East Antrim) (DUP)
5. What recent discussions she has had with the Chief Constable of Northern Ireland on public order in Northern Ireland.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
Public order issues are primarily a matter for the Justice Minister and the Chief Constable, in line with the devolution settlement. However, I meet them both regularly to discuss a range of issues, which often include public order matters.
Sammy Wilson
Does the Secretary of State share the concern felt by many people in Northern Ireland about the apparently partisan way in which the PSNI has dealt with public order offences? On the one hand, members of the loyalist community who have been involved in street protests have been arrested, had their homes raided, been refused bail, and gone to jail; on the other hand, a prominent Sinn Fein Member of the Legislative Assembly who obstructed the police and encouraged others to attack them was merely given a warning. Does the Secretary of State not agree that public order offences must be dealt with firmly but also evenly, because otherwise confidence in the police will be lost?
Mrs Villiers
I agree that it is always important for the police to be fair and even-handed, and I believe that they have shown those qualities in dealing with all the public order incidents that have occurred in recent years. I know that they take their duties of fairness, even-handedness and respect for human rights very seriously. I urge those who might become involved in violent protests not to do so, because such action is disastrous for them and negative for the community, and, of course, I urge all elected representatives to support the police in every possible way, given the difficult duties that they must fulfil.
Lady Hermon (North Down) (Ind)
Obviously, the need to deal with public order issues and to try to contain the threat from dissident republicans requires an increasing number of police officers. It is therefore extremely worrying that a steady flow of experienced police officers is haemorrhaging away from the Police Service of Northern Ireland every single month. What assurances has the Secretary of State managed to extract from the Treasury that there will be funds to guarantee recruitment to the PSNI?
Mrs Villiers
A guaranteed total of £200 million in the current spending review and £30 million in the next will be provided to assist the PSNI in its national security work, which will of course enable it to be more effective across the board. As I said in response to earlier questions, the Executive and the PSNI are currently discussing the additional funding that will be needed in 2015-16 to enable the PSNI to commence the recruitment that the Chief Constable believes is necessary.
Naomi Long (Belfast East) (Alliance)
Given the impact that public order has on policing and budgets in Northern Ireland, does the Secretary of State agree that the recommendations in the Haass report, which stated that there should be a legally enforceable code of conduct for all parades and protests, would go a long way to changing behaviour on the ground?
Mrs Villiers
There is much to be said for the proposals on parading in draft seven of Richard Haass’s work. It is disappointing that the parties have not felt able to agree with those proposals as yet. Further work is clearly needed before we can get an agreement among the five parties. I urge them to see whether they can find a way to resolve their differences, including on the issue of a code of conduct and what sanctions should accompany it.
Ms Margaret Ritchie (South Down) (SDLP)
8. If she will hold discussions with the responsible Minister in the Northern Ireland Executive on the number of middle-grade accident and emergency doctors in Northern Ireland; and if she will make a statement.
The Minister of State, Northern Ireland Office (Mr Andrew Robathan)
First, may I say how much I appreciated the hon. Lady’s contribution to the meeting we had yesterday with the disabled police officers in Northern Ireland, to whom we owe a great deal?
I understand the hon. Lady’s concerns about the issues she raises but these are entirely devolved. [Interruption.] The commissioning and provision of medical services in Northern Ireland are matters for the Minister of Health, Social Services and Public Safety in Northern Ireland and the Health and Social Care Board. [Interruption.]
Mr Speaker
Order. There is far too much discordant noise in the Chamber. The question must be heard and the Minister’s answers must be heard.
Ms Ritchie
I thank the Minister for his answer, but he and the Secretary of State need to be more proactive on this matter because the policy that dictated the lack of A and E doctors emerges from Whitehall and London. Will he and the Secretary of State co-host with the responsible Minister in Northern Ireland a summit to address the shortage in A and E doctors?
Mr Robathan
Well, we will certainly ensure that we have discussions with the responsible Minister in Northern Ireland. We have had to take some very difficult decisions since 2010, but there are now more than 20% more A and E consultants in England than there were in 2010. We need to go further, but it does take six years to train a doctor and I think all Members, even those on the other side, will have spotted that we were not in power six years ago.
David Simpson (Upper Bann) (DUP)
The Minister will be aware that Northern Ireland hospitals have been well served over the years by doctors and nurses from India, Pakistan and Malaysia, but visa restrictions have made it very difficult to get doctors in. Will he speak to his Government colleagues to see whether these restrictions can be removed?
Mr Robathan
I am very happy to take that up on behalf of the people of Northern Ireland. I was not aware of that particular problem because it has not been raised with me, but I congratulate the staff in Northern Ireland hospitals, who have had such a great reputation, particularly those at the Royal Victoria hospital which I remember well from when I used to visit it.
Mr Gregory Campbell (East Londonderry) (DUP)
9. What public funding will be made available to help implement an agreement on flags, parades and protests, and dealing with the past.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
I would urge the parties to continue their efforts to reach agreement on these matters. Since these areas fall mainly within the devolved field, funding for them is also devolved to Northern Ireland as part of the block grant.
Mr Campbell
There will be a waiting public wanting to see whether agreement can be reached on these very comprehensive matters. Will the Secretary of State ensure that whatever funding is needed in addition to the block grant to deliver this can be delivered to ensure a much more peaceful and prosperous future in Northern Ireland?
Mrs Villiers
I agree that these issues are very important. They are difficult to resolve, and finding an agreed way forward would be very positive for Northern Ireland. However, it is primarily for the Northern Ireland Executive to find the money for these proposals within the block grant they are already allocated, which, as my right hon. Friend the Minister of State has pointed out, is considerably higher per head than elsewhere in the UK. We will of course consider proposals for additional funding, but the deficit means I can make no promises as to whether it will be granted.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
10. What assessment she has made of progress in the Haass talks.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
All parties have acknowledged that there are elements of the Haass proposals that they can support. It is important that they continue their negotiations to try to resolve their differences, and the UK Government will continue to support their efforts to do that.
Tom Greatrex
I thank the Secretary of State for her reply; I am sure that she was expecting that question. Will she tell us what discussions on these issues she has had with the Government of the Republic of Ireland, ahead of any possible recommencement of the talks?
Mrs Villiers
I have had regular discussions with Eamon Gilmore on this matter, including a number of meetings in Northern Ireland and in Dublin. We are keen to work together to encourage the finding of a way forward, and to encourage the political parties in Northern Ireland to reconcile their differences and get an agreement over the line.
Dr Alasdair McDonnell (Belfast South) (SDLP)
11. I welcome the Secretary of State’s positive comments on the Haass process. Does she agree that much has been achieved and that we should now implement as much of that as possible by creating the necessary legislation and resolving the remaining differences?
Mrs Villiers
I agree that considerable progress has been achieved. These issues are incredibly divisive, and the fact that all five political parties have found a degree of common ground is very welcome. I also agree that we should keep up the momentum and seize this opportunity to get an agreement over the line and to reconcile the differences that still exist among the five parties.
Keith Vaz (Leicester East) (Lab)
Q1. If he will list his official engagements for Wednesday 15 January.
The Prime Minister (Mr David Cameron)
This morning I had meetings with ministerial colleagues and others, and in addition to my duties in the House, I shall have further such meetings later today.
Keith Vaz
Launched last week, Action on Sugar aims to reduce the sugar content of food and drinks by up to 30% because of the twin epidemics of obesity and type 2 diabetes. Voluntary arrangements with manufacturers, though well intentioned, have not worked. Will the Prime Minister meet a delegation of health experts to discuss this issue, and may we enlist his support in the war on sugar by asking him to give up sugar and sugary drinks for one day this week?
The Prime Minister
I am sure that the right hon. Gentleman’s last proposal will have the strong support of Mrs Cameron, so I will take it up if I possibly can. I commend him for raising this matter and for speaking out on the issues of diabetes and obesity with such consistency, because they are major health concerns for our country. We are taking them very seriously, and we are rolling out the NHS health check programme to identify all those aged between 40 and 74 who are at risk of diabetes. Childhood obesity rates are falling, but more needs to be done. I am happy to facilitate discussions between the right hon. Gentleman and my right hon. Friend the Secretary of State for Health. We take this issue very seriously, and we think that the responsibility deal has achieved great things, but there is more to be done.
Henry Smith (Crawley) (Con)
Q2. Last week I had the honour of opening the new Network Rail regional operating centre at Three Bridges in my constituency. Will my right hon. Friend tell us what investment the Government are putting into the existing rail work to help commuters and travellers as part of the long-term economic plan?
The Prime Minister
My hon. Friend is absolutely right: investing in infrastructure is a key part of our long-term economic plan to ensure that Britain’s economy can be a success now and in the future. We have seen major investment in the south-east, with Thameslink, Crossrail and East West Rail all delivering new services for London and the south-east. I can also tell my hon. Friend that, between 2015 and 2020, we are planning to invest more than £56 billion in roads, rail and local transport. It is important to make the point that that is more than three times as much as the planned investment in HS2, so I say to those who fear that HS2 will take all the investment that it will not. Three times as much will be spent elsewhere.
Edward Miliband (Doncaster North) (Lab)
RBS is expected to ask the Government to approve bonuses of more than 100% on multi-million pound salaries. Does the Prime Minister think that that is acceptable?
The Prime Minister
What I can tell the right hon. Gentleman is that we will continue with our plans for RBS that have seen bonuses come down by 85% and a bonus pool at one third the level it was under Labour. I can confirm today that, just as we have had limits on cash bonuses of £2,000 at RBS this year and last year, we will do the same next year as well.
Edward Miliband
We can all agree with the general sentiments that the right hon. Gentleman expresses about bonuses, but today I am asking him a very specific question. RBS is talking to parts of the Government about the proposal to pay over 100% bonuses. He is the Prime Minister, the taxpayer will foot the bill, so will he put a stop to it right now by telling RBS to drop this idea?
The Prime Minister
I will tell the right hon. Gentleman exactly what we are saying to RBS: if there are any proposals to increase the overall pay—that is, the pay and bonus bill—at RBS, at the investment bank, we will veto them. What a pity that the previous Government never took an approach like that. [Interruption.]
Mr Speaker
Order. However long it takes, the questions will be heard and the answers will be heard.
Edward Miliband
I am not asking about increases in pay and bonuses; I am asking a very simple question about the proposal that is expected to come forward from RBS to pay more than 100% bonuses on pay. We know that when RBS is making a loss, when it itself says that it has been failing small businesses and when these kinds of bonuses lead to risky one-way bets, it should not be allowed to happen. When ordinary families are facing a cost of living crisis, surely the right hon. Gentleman can say that for people earning £1 million a bonus of £1 million should be quite enough.
The Prime Minister
If the right hon. Gentleman is not asking me about the overall pay and bonuses at RBS, why on earth isn’t he? That is what he should be asking about. I have said very clearly that the remuneration—the total pay bill—at that investment bank must come down. I am getting a lecture from him, yet from his Government we had the biggest bust anywhere in the world with RBS, 125% mortgages at Northern Rock and all the embarrassment about Fred Goodwin. He comes here every week to complain about a problem created by the Labour party—last week it was betting, this week it is banking. He rises up with all the moral authority of Rev. Flowers, but where is the apology for the mess they made of RBS in the first place?
Paul Burstow (Sutton and Cheam) (LD)
Q3. In the past two years, my local council’s Opportunity Sutton growth plan has created £317 million of inward investment, halved youth unemployment and seen record numbers of new businesses starting up. Sutton is also home to the Institute of Cancer Research and the Royal Marsden hospital. Given that life sciences are an engine of innovation and growth, what support will the Government give to realise Sutton’s plan for a life sciences cluster based around those world-renowned centres of excellence?
The Prime Minister
My right hon. Friend makes a very good point about the strength that Sutton has. Obviously, we have the patent box to attract life science businesses to Britain; we also have the investment in apprenticeships, which is very important; and, of course, as he knows, the Office for Life Sciences brings together the Department for Business, Innovation and Skills and the Department of Health to help bring life sciences jobs here. Working with local enterprise partnerships, there is a great opportunity for more investment in these very important businesses.
Mr David Lammy (Tottenham) (Lab)
The Mark Duggan inquest concluded last week with a verdict of lawful killing. It also found errors in the police investigation. Last week also saw PC Wallis admitting that he lied about the right hon. Member for Sutton Coldfield (Mr Mitchell). Does the Prime Minister accept it is now urgent that we reform the Independent Police Complaints Commission?
The Prime Minister
First, I commend what the right hon. Gentleman said about the importance of people respecting the outcome of the inquest. We have proper legal processes in this country and we should respect their outcomes. He also knows that there is an ongoing IPCC investigation into that case, and we should let it do its work. I am always prepared to look at reforms of organisations such as this. There was a big reform some years ago to make the IPCC much more independent.
The Prime Minister
The right hon. Gentleman is shaking his head and saying it is not working. I am very happy to look at the arguments.
On the issue of PC Wallis, it was deeply shocking to see an e-mail that purported to be from someone who had witnessed an event, whom we are told is a member of the public but turns out to be a serving police officer. That was deeply troubling and deeply disturbing, so I am not saying that all is well. The vast majority of the British police service do a magnificent job. They put their lives on the line for us day after day and we should always recall that, but I am happy to look at proposals for how we can strengthen these arrangements.
Andrew Bingham (High Peak) (Con)
Q4. Will the Prime Minister join me in congratulating the Street Crane Company in my constituency? May I invite him or the Chancellor to see how, with D2N2 local enterprise partnership money from the regional growth fund, it is embarking on the first phase of a £1.1 billion expansion programme, which will total £2.7 million and increase jobs by 20%? Its exports across the world demonstrate the power of British business and the fact that it, like this Government, has a long-term economic plan.
The Prime Minister
I am grateful to my hon. Friend for what he says. We have seen the regional growth fund produce some real economic success stories, and that is being combined with our long-time economic plan to encourage businesses to take on employees, to put in place the infrastructure and, as he says, to back exports in terms of Britain’s performance and get out there and sell to the world.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Q5. Given that we have recently heard reports that half a dozen terror suspects could soon be released on to our streets, can the Prime Minister give us an assurance that public safety will not be compromised or put at risk once the Government’s latest experiment with terrorism controls expires?
The Prime Minister
I can assure the hon. Lady and the House that we will always take every step necessary to keep the British public safe. I think the terrorism prevention and investigation measures are working well. It is a complete myth to pretend that control orders could be kept in place for ever. Many people were taken off control orders during the existence of TPIMs. I always listen very carefully to the head of the Metropolitan Police Service and to the heads of the Security Service who are involved in drawing up those measures and who advise us on how best to keep our country safe.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Q6. In the first six months of last year, Shrewsbury benefited from the highest number of business start-ups in our town’s history. Now the unemployed claimant count is down to 2.5% in Shrewsbury. Will the Prime Minister join me in praising Shrewsbury’s entrepreneurial spirit, and also redouble Government efforts, through UK Trade & Investment in the west midlands, to help more Shrewsbury firms to export?
The Prime Minister
My hon. Friend is absolutely right. We are seeing an enterprise revolution in our country again. There are 400,000 more businesses in existence today compared with 2010. The point he makes about small businesses and exports is particularly important. Currently, one in five of them exports. If we could turn that into one in four, we would wipe out our trade deficit. I absolutely support the excellent work that he does to call UKTI to account and to encourage it to do everything it can to back Britain’s entrepreneurs.
Edward Miliband
There are sites all over the country with planning permission that have the capacity for a quarter of a million—sorry, 250,000—houses where nothing is happening, some of which are being hoarded by developers. I am in favour of giving powers to say to developers who hold land without building on it, “Use it or lose it.” The Prime Minister said the policy was nuts. Does he still believe that?
The Prime Minister
We have just had a demonstration of the grasp of maths that was involved at the Treasury. It is no wonder that we had banks collapsing and all the rest of it.
House building is picking up: we are seeing a big increase in housing starts and housing completions. Why I think the right hon. Gentleman’s policy is, as he kindly puts it, “nuts” is that if we say to developers and companies that we will confiscate land unless they build, they will not go ahead with the building in the first place. His approach is to put a freeze on the whole of development, rather than to get Britain building, which is what we need to happen.
Edward Miliband
I have to say that the Prime Minister is incredibly complacent. House completions are at their lowest level since 1924. I am interested in what he says about the policy, because his own Housing Minister has said that the policy might make a contribution, and the Mayor of London says:
“We should be able to have a use it or lose it clause…Developers should be under no illusions that they can just sit on their land and wait for prices to go up.”
So is the policy nuts or is it the right thing to do?
The Prime Minister
What we need to keep going with are the policies of this Government, which are seeing house building increase. I know that the right hon. Gentleman does not like the facts, but nearly 400,000 new homes have been delivered since 2010, housing starts in the last quarter were at their highest level for five years—89% higher than the trough in 2009 when he was sitting in the Cabinet—and there has been a 16% increase in housing starts over the past 12 months compared with the year before. His shadow Ministers go around opposing our planning reforms, even though they are important to get Britain building, and time and again they criticise proposals such as Help to Buy that are helping our fellow countrymen and women to realise the dream of home ownership, so here is a question that he needs to answer: if he cares about house building and home ownership, why not make Labour councils get on with selling council houses to hard-working people?
Edward Miliband
In Labour councils, they are building far more houses than in Tory councils. Frankly, I am still no clearer at the end of this exchange what the Prime Minister thinks about the “Use it or lose it” policy. His Housing Minister says that he supports it, the Mayor of London says he supports it, but the Prime Minister does not know what he thinks. Here is the reality: he is not doing enough to close the gap between supply and demand. The truth is that the number of social housing starts is down, he has shelved his plans for new towns and rents are rising. Does he accept that Britain is building 100,000 fewer homes than we need to meet demand?
The Prime Minister
Of course we need to build new homes. That is why we have reformed the planning system, which the Opposition opposed; it is why we have Help to Buy, which they oppose; and it is why we are helping in all the ways we are to get Britain building. We are seeing the right hon. Gentleman having to jump around all over the place: when it started off, deficit reduction was not going to work, but now he cannot make that argument; then we needed plan B, but now he cannot make that argument; next it was about the cost of living, but yesterday we saw inflation fall to 2%. What we see is a Government who have a long-term economic plan and an Opposition who do not have a clue.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Q7. May I welcome the Government’s renewed commitment to ensuring that my local communities benefit from the potential of shale gas? May I urge the Prime Minister to do more to encourage the companies and the scientific community to do more to resolve the understandable and legitimate concerns that residents have about the technology and about the potential environmental impact?
The Prime Minister
My hon. Friend is absolutely right to raise that issue and make the remarks that he does. I think that shale has huge potential for our country. If we recovered just 7% of the Bowland shale reserves, that would provide us with gas in this country for 30 years. We must clearly do a far better job, however, of explaining the benefits to communities, of working with them on that and of talking frankly about the process. A huge number of myths are being put around to frighten people about shale gas extraction whereas, as we can see in the United States, it can be extracted safely and cleanly, providing effective low-cost and green energy for our homes and businesses and making our country more competitive at the same time.
Ian Lavery (Wansbeck) (Lab)
As we sit in this Chamber, six British nationals, including Nick Dunn, a former paratrooper, are languishing in prison in Chennai after being taken prisoner from a ship off Tamil Nadu. Will the Prime Minister agree to meet me and other representatives from this House to discuss the issue and see whether we can get those former paratroopers released from prison?
The Prime Minister
I know how important this issue is and I raised it personally with Indian Government Ministers when I was in India recently. I have discussed it with the Foreign Secretary and I shall go on making sure that we do everything we can. If a meeting needs to be arranged between Members of the House of Commons representing their constituents—I believe that one is a constituent of the Foreign Secretary himself—I am happy to arrange that.
Iain Stewart (Milton Keynes South) (Con)
Q8. Investing in research and innovation is essential for our economic future. Does the Prime Minister agree that the Open university’s smart city research project to improve infrastructure is just one example of how Milton Keynes is leading the way in securing our long-term economic plans?
The Prime Minister
I have visited the Open university at Milton Keynes. It is an extremely impressive organisation that is also leading a very important export drive for our universities. I congratulate Milton Keynes on its representation on the smart cities forum and on what the Open university is doing. There are many opportunities for Milton Keynes, not least those provided by HS2, and I look forward to discussing them with my hon. Friend in future.
Chris Evans (Islwyn) (Lab/Co-op)
Q9. Constituents tell me all the time that they cannot afford food, cannot afford to keep warm in winter and cannot afford to put petrol in their cars to go to work, all because their wages are not going far enough. Does the Prime Minister finally accept that the cost of living is stretching families in Islwyn and constituencies such as mine to breaking point?
The Prime Minister
I totally accept that we are still recovering from the great recession that took £3,000 out of the typical family’s income, but what we are seeing now is more people in work, including in Wales. We are seeing real wages starting to rise, and I think that we can be confident. Yes, it is difficult; yes, it is still hard work; but our economy is growing, and we want that to be a recovery for everyone in our country.
Jesse Norman (Hereford and South Herefordshire) (Con)
Q10. The number of people in Hereford and South Herefordshire in receipt of jobseeker’s allowance fell by 31% between November 2012 and November 2013. Youth unemployment fell by an even more impressive 40%. Does the Prime Minister share my view that the Government’s long-term plan is already giving employers the confidence to get hiring again?
The Prime Minister
I am grateful for what my hon. Friend says, because an absolutely key part of our long-term economic plan is to see a growing number of people in work in our country. We see 1.2 million more people in work. In the west midlands, employment has risen by 60,000 since the election. Private sector employment is up 64,000. There is still further to go, particularly in the west midlands, where we need to get young people in particular back to work, but the figures in his constituency are very encouraging.
Mr Tom Watson (West Bromwich East) (Lab)
On his Amritsar inquiry, instead of ordering the civil servant to investigate, why does the Prime Minister not just ask Lords Geoffrey Howe and Leon Brittan what they agreed with Margaret Thatcher and whether it had anything to do with the Westland helicopter deal at the time?
The Prime Minister
I fear that the hon. Gentleman might have gone a conspiracy theory too fast on this one. Look, it is very important that we get to the bottom of what happened, and that is why I have asked the Cabinet Secretary to lead this review. He will establish this urgently and establish the facts. The process is under way. I want it to be fast; I want it to find out the truth; and the findings will be made public.
I remember and will never forget my visit to the Golden Temple in Amritsar. It is one of the most beautiful and serene places anywhere on this planet, and what happened at Amritsar 30 years ago led to a tragic loss of life. It remains a source of deep pain to Sikhs everywhere. Prime Minister Singh, in my view, was absolutely right to apologise for what has happened, and I completely understand the concerns that these papers raise, so let us wait for the outcome of the review by Sir Jeremy Heywood.
I do not want to prejudge the outcome, but I would note that, so far, it has not found any evidence to contradict the insistence by senior Indian army commanders responsible at the time that, on the responsibility for this, it was planned and carried out solely by the Indian army. It is important to put that, but we do need an inquiry, so that we can get to the bottom of this.
John Stevenson (Carlisle) (Con)
Q11. On 30 January, I will be hosting Carlisle skills fair for 70 businesses and training organisations, targeting 14 to 25-year-olds with training and job opportunities. If Carlisle is to prosper, it needs a skilled work force and successful businesses. Will the Prime Minister give his support to this event, and will he confirm that he and his Government will remain committed to training and upskilling the young, so that they benefit personally and local and national businesses succeed?
The Prime Minister
I commend my hon. Friend for what he is carrying out in Carlisle. Jobs and skills fairs, encouraging young people to think about apprenticeships and encouraging businesses to train people in apprenticeships, are some of the most important things that we can do. We have got 1.5 million apprenticeships started since the election. Over 250,000 apprenticeships have started in the north-west under this Government, including in his constituency, and we must keep up this good work.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Q12. The Prime Minister will be aware of the grave concern among British Sikhs about the reports in recent days of UK involvement in Operation Blue Star to storm the Golden Temple. He will also be aware that the broader events of 1984 in India resulted in the deaths of thousands of innocent Sikhs and that this has left lasting grief and pain in the Sikh community here in the UK and around the world. This is an open wound, which will not heal until the full truth is told. So, on the process that the Prime Minister has set up, will he ensure that there is full disclosure of all Government papers and information from that time and that there is also, following that, a proper statement in the House, where Ministers can be questioned about this?
The Prime Minister
I agree with the right hon. Gentleman about the deep scars that this event left and the incredibly strong feelings that exist to this day. As I say, anyone who visits the Golden Temple at Amritsar and sees what an extraordinary place of peace and tranquillity it is and what an important site it is for the Sikh religion knows how powerful this point is. We will make sure that the inquiry is held properly and its findings will be made public, which is vitally important. In the end no one should take away the responsibility for these events from the people who are properly responsible for them, and I am sure that the inquiry will find that. In terms of making a statement and revealing this information and the findings to the House, I will listen carefully to what he says, but a statement might well be the right approach.
Tessa Munt (Wells) (LD)
Will the Prime Minister speak to his colleagues across Government about the funding resulting from incentives for fracking being passed directly to parishes, so that those communities that feel the impact of fracking are those that choose how that money is spent, rather than having to compete with district and county councils’ other priorities?
The Prime Minister
My hon. Friend makes an important point. What we have set out is the overall level of financial support: £100,000 when a well is dug; up to £10 million, theoretically, because of the 1% of revenue that will be paid; and then this absolutely vital point about 100% retention of business rates, which could have a very significant effect for local government finance. The point that she makes is how that is divided up between parishes, districts and counties, and whether one looks at individual payments to individual households who might be inconvenienced. I think that we should look at very local options, making sure that parishes and individuals will benefit. That is something that colleagues will want to discuss and think about, so that we can get this right and help this industry to take off.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Q13. I am not sure whether Members are aware that anyone joining the police force will now have to pay £1,000 for a certificate before they even fill in the application form. A £1,000 bobby tax will make it harder for the police to look like the community that it serves and that I represent. It will put off young people from poorer backgrounds and ethnic minorities from joining the police. We all know that the Prime Minister admires characters such as Harry Flashman, but charging for Army commissions was abolished in 1871. Why is it being introduced for the police in the 21st century?
The Prime Minister
I listened very carefully to what the hon. Lady said. What we are trying to do through the College of Policing is even further to professionalise this vital profession, but I will make sure that the Home Secretary contacts her about this particular issue.
Angie Bray (Ealing Central and Acton) (Con)
What is the point of anyone clinging on to a plan B when plan A is so obviously working?
The Prime Minister
It is not just plan B that we are not hearing about any more. The Opposition seem to have stopped talking about the cost of living. They have stopped talking about how the deficit would not come down. Remember when they told us that growth would never come. They told us that we would lose a million jobs rather than gain a million jobs. But the biggest transformation of all is the silence of the shadow Chancellor. There is a big debate today on banking, but he was not allowed on the radio and he will not be speaking in the House of Commons. They have a novel idea: to hide their shadow Chancellor by leaving him on the Front Bench.
Naomi Long (Belfast East) (Alliance)
Q14. The Prime Minister has previously shown considerable leadership in apologising to victims of state violence in Northern Ireland. Unfortunately, those victims of paramilitary violence who made up the majority of victims of the troubles have not had access to such apologies. Does he agree that the Haass proposals for dealing with the past offer the best opportunity for victims and survivors to receive truth and justice? Will he commit as Prime Minister to backing those proposals, helping by co-operating and also by funding those proposals?
The Prime Minister
There is a lot of merit in the Haass proposals—he did some excellent work. I noted that Peter Robinson, the First Minister of Northern Ireland, described them as providing the architecture for future agreement and discussion. I hope that we can take forward the Haass work, including the very difficult work done on the past, with all sides trying to agree.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Q15. I am not sure whether the Prime Minister is a follower of “Benefits Street” on Channel 4, but if he is, he will know that, sadly, there is a street like that in every constituency in the land. Does he agree that, as part of our long-term economic plans, we make sure that the benefit system is there for people who need it, it is not a lifestyle choice, and people do not get trapped in it?
The Prime Minister
I have managed to catch only a small amount of that programme, but I think that it brings home two vital points: first, we need a welfare system that is tailored to ensure that work always pays; and secondly, many people in our country have multiple disadvantages and problems and so need help to get out of poverty and benefit dependency. So it is not just about tailoring a benefit system to make work pay; it is about making sure that we intervene in people’s lives and try to correct the things that are keeping them out of work and out of earning a decent living.
Mr Jack Straw (Blackburn) (Lab)
May I say to the Prime Minister, as someone who strongly supports shale gas extraction by fracking, that his current package, however well intentioned, will not assuage local communities, which on a cross-party basis in Lancashire have treated his latest offers as near derisory? Why can he and the Chancellor not sit down with the cross-party Local Government Association and negotiate on its proposal for 10% of revenues to be shared with local communities, as happens in other countries?
The Prime Minister
I thought that the proposal from some Members was that it should be 10% of profits. My point is that 1% of revenues, which obviously start running the moment shale gas starts coming out of the ground, could well be a better offer. I am very happy to sit down with anybody to discuss the issue, because I think that shale is so important for the future of our country. The point I would make, having been on Monday to see the oil platforms that are already on the Nottinghamshire-Lincolnshire border, is that those went ahead without any of the sorts of community benefits that we are promising with shale: £100,000 when a well is dug, before any gas has reached the surface; 1% of revenues, which could be between £7 million and £10 million for a typical fracking well; and 100% retention of business rates, which for a set of wells could be £1.7 million, or even £2 million, for a local authority. Hon. Members should think about how much council tax a small district or metropolitan authority raises and consider the difference that £1.7 million or £2 million in revenue could make. By all means let us talk about the facts and figures and what we can do, but we also need to persuade people that this can go ahead without the environmental damage or the problems that people are worried about. Those are the concerns more than anything.
Andrew Bridgen (North West Leicestershire) (Con)
The Leader of the Opposition has said, “What Hollande is doing in France I want to do in Britain.” Given recent events across the channel, does my right hon. Friend agree that that is completely at odds with our long-term economic plan?
The Prime Minister
I did not catch all of President Hollande’s press conference yesterday, because I was appearing in front of the Liaison Committee, but one thing that I did notice is that the French proposals now are to cut spending in order to cut taxes in order to make the economy more competitive. Perhaps the shadow Chancellor, in his new silent form, will want to consider some of those ideas and recognise that this revolution of making business more competitive and trying to win in the global race is a proper plan for the economy.
Point of Order
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Alex Cunningham (Stockton North) (Lab)
On a point of order, Mr Speaker. I would very much welcome your guidance. I wrote to the Home Secretary on 9 October last year—14 weeks ago today—about an issue raised by my constituent, Kerry Bouskill, on child protection and the Childhood Lost campaign. She was concerned about young people reporting abuse often not being believed and how that can be a deterrent. The question on behalf of my constituent was simple enough: will the Home Secretary outline the steps taken by the Government to strengthen child protection? On 18 November my office contacted the Home Secretary’s office, but nobody called back. On 19 November I was told that I would have an answer within a week. On 2 December I was advised that changes were needed to the letter before sign-off. On 11 December I was advised that the letter was awaiting a signature. On 20 December the matter had been passed to the office of the Minister for Crime Prevention and I was told that I would receive a letter over the Christmas recess. On 8 and 9 January my office contacted his office, but again we received no call back. On 10 January I was again advised that the letter was awaiting a signature, but I have still received nothing. I would appreciate your advice.
Mr Speaker
In all courtesy to the hon. Gentleman, no one in the House or outside it could accuse him of excluding from his point of order any matter that he considered in any way to be material to the thrust of his complaint. As a consequence, I feel sure that all right hon. and hon. Members will now be fully familiar with the chronology of events that so dissatisfies him. Suffice it to say that he has certainly waited an inordinately long time for a response to his inquiries. His point of order will have been heard very clearly by those on the Treasury Bench; the Leader of the House is sitting there. I hope that hearing it will cause the Government to react in a timely way so that the hon. Gentleman’s questions are answered. I should also say to him that the Procedure Committee monitors the performance of Departments in answering parliamentary questions, and he may wish to draw the facts of this case to the attention of the Clerk of that Committee and possibly its illustrious Chairman, the hon. Member for Broxbourne (Mr Walker).
United Kingdom Register of Places
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Andrew Rosindell (Romford) (Con)
I beg to move,
That leave be given to bring in a Bill to establish a Commission to establish and maintain a national register of places within the United Kingdom, including but not limited to countries, counties, cities, towns, villages and hamlets, with a permanent identity defined by historical, social and geographical boundaries, separate from existing administrative and electoral boundaries; to grant each such place the right to its own coat of arms, flag and other symbols of local identity; and for connected purposes.
The United Kingdom today is a vibrant tapestry of distinct places comprising four countries—England, Scotland, Wales and Northern Ireland—and a patchwork of counties from Caithness to Cornwall, Kent to Pembrokeshire, Norfolk to Antrim, Flintshire to Fermanagh, and Dunbartonshire to Dorset. Our historic counties, as distinct from administrative county areas, are real places that people take enormous pride in, but today they have no official status. My Bill would change that. Then there are our great cities, from Edinburgh to Exeter, London to Londonderry, Cardiff to Colchester, and Belfast to Birmingham, and our historic regions, such as the peak district, the black country, Snowdonia, East Anglia, the Cotswolds and the highlands. Islands too are places with their own distinct identity, from Shetland, Orkney and Lewis to Anglesey, the Isles of Scilly and the Isle of Wight, and they also form part of our nation’s great heritage; and in each of our constituencies there are historic towns, neighbourhoods, villages and hamlets, all with their own unique identity. But over the years the identity of very many of these places has been eroded by changes to local government boundaries, parliamentary boundary revisions and the redrawing of council wards, where all too often artificial names are used and where parts of one area are sliced off to make up the electoral numbers in another. Over the years, one change has been compounded by another to create very many anomalies and muddled identities. All that now needs to be put right, with these real places, their boundaries and genuine identities given permanent protection from the hands of the bureaucrats.
Take, for example, my own constituency and the community of Rush Green, where I was born. Rush Green is divided between two London boroughs, two constituencies, two electoral wards and two London Assembly constituencies, even though the whole of Rush Green is historically and geographically a part of Romford. Local government boundaries have not been drawn up with the actual communities in mind.
Another example, in London, is the twin villages of Hampstead and Highgate, divided between four London boroughs, no less, all competing to promote their own identities over that of the historic villages themselves. My Bill will stop the Camdenisation of places such as Hampstead and ensure that local authorities have a duty to preserve and uphold identities of genuine towns and villages that have been around far longer than these local government constructs, which love to promote their own corporate identity over and above that of real places. My Bill will provide for the permanent registration of the actual places that exist in our nation, with their boundaries and identities completely separated and distinct from administrative and electoral boundaries.
The Post Office, too, will be duty bound to ensure that postal addresses truly reflect real place names. Indeed, the United Kingdom register of places would be the point of reference for all public bodies, Government Departments, organisations and institutions to refer to in future.
Our counties and regions, great cities and towns, neighbourhoods, villages, hamlets and islands are places with an identity that is cherished by the people who live there. In essence, such places exist due to a prevailing sense of community spirit and the pride people have in the place they come from, and yet there is no official system in Britain where all are listed and given the recognition they deserve.
As many hon. Members will know, I am particularly proud to come from the town of Romford, which I represent in this House. It lies in the traditional county of Essex, which in turn forms a part of my country of England. I also identify strongly with my local neighbourhood of Marshalls Park, where I grew up and went to school and where my family home remains to this day. Marshalls Park does not, however, exist as a defined place.
My Bill will define, for the first time, all such places in a national register of names, location and precise boundaries as entities entirely separate from existing local authority, administrative and electoral boundaries: in other words, real places not made up by boundary commissions, local authorities or Whitehall bureaucrats.
There will be significant benefits in doing this. In particular, there will be much greater scope for the collection of data, as they would be permanently based on actual towns, villages and neighbourhoods, thereby creating a consistent area to measure changes and collate statistics, rather than changeable local authority or ward boundaries. It would also have a positive impact on community cohesion, helping to encourage a greater sense of local identity across our nation. As all Members will be aware, the drawing of administrative and electoral boundaries has systematically failed to take into account the importance of community identity and of the historical and geographical factors that have led to community development.
By creating a UK register of places, there will be, for the first time, definite and clear boundaries for all counties, regions, towns, cities, neighbourhoods, villages and hamlets, which would be taken into consideration when redrawing administrative and electoral boundaries. Indeed, this Bill will ensure that the national register of places is taken into account during any future boundary revisions, and that defined places will no longer be divided and carved up in an arbitrary way.
Polling districts should be created within the defined places. They, rather than the much larger electoral wards, could then form the building blocks of any future parliamentary boundary review. As polling districts are smaller units, their use to attain the correct number of electors would avoid the huge upheavals and divisions of towns and communities of previous boundary reviews.
My Bill aims to strengthen local communities, uphold local identities and encourage people to foster a sense of pride and local patriotism in the place where they live. It will give all places the opportunity to adopt their own symbols of local identity, such as a coat of arms or a flag, that could be included on village and town signs and municipal buildings or used for a wide variety of purposes. It will redraw the map back to what it should cover—the genuine boundaries of our towns, villages, counties, cities and hamlets across these islands of ours. It will restore local identity, local patriotism and pride in the places where we live, and I commend it to the House.
Question put and agreed to.
Ordered,
That Andrew Rosindell, Mr Angus Brendan MacNeil, Albert Owen, Ian Paisley, Priti Patel, Greg Mulholland, Sheryll Murray, Mr James Gray, Adam Afriyie, Mr Henry Bellingham, Sir Tony Cunningham and Jim Dobbin present the Bill.
Andrew Rosindell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 28 February, and to be printed (Bill 154).
Opposition Day
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Banking
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
16:01 - The House divided: - Ayes: 242 / Noes: 304 - Question accordingly negatived.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House believes that Government reforms have failed to deliver a competitive banking system which serves the interests of consumers or the needs of businesses and the British economy; is concerned that customers have limited choice and low levels of trust and confidence in the banking market; is disappointed that recent legislation has fallen short of the recommendations of the Independent Commission on Banking which called for action to diversify the sector and ensure that major new banking service providers are created; believes that banker remuneration remains unacceptably high; regrets the fact that it has taken the EU to act to rein in excessive bonuses in Britain in the absence of domestic action, but believes that the Government as a majority shareholder in RBS should not approve any request to increase the cap; and calls on the Government to prevent a return to business-as-usual in the banking sector, which continues to require real reform and competition so that the UK can earn its way out of the cost of living crisis.
Mr Deputy Speaker—[Interruption.] My apologies, Mr Speaker; I correct my first sentence. I want to explain to the House that for many of our constituents—[Interruption]—including those of the hon. Member for New Forest East (Dr Lewis), January can often be a difficult month financially, with families facing higher fuel bills and receiving credit card statements for the often very expensive Christmas period. Not everyone has such reactions to the new year, however, because for many of the luckiest bankers working in the City, January and February is party time—bonus season—when their high salaries are often dwarfed by even higher windfalls, which are enough to make a lottery winner look on in envy.
Last week, the City recruitment company Astbury Marsden reported that bonuses for the most senior staff in banking and financial services may increase by as much as 44% in this bonus season, despite all Ministers’ talk about how such payouts have been scaled back. In 2012, the financial sector paid out an eye-watering £14 billion in bonuses to top staff. At least £1.7 billion of bonuses were held back until just after that fateful day last April when the Chancellor of the Exchequer cut the top rate of tax for the richest 1%, who are those with earnings of more than £150,000 per year. Incidentally, the postponed payouts cost the public purse at least £85 million in lost taxes.
What about the rainmakers, as they are sometimes called—the most senior traders or masters of the universe? The number of UK bankers who earn more than £800,000 rose by 11% to 2,714 last year, which is more than in the rest of Europe combined. For that set of senior bankers, the compensation—a word that the banking sector sometimes uses instead of the word pay that the rest of us use—rose from £1.1 million to more than £1.6 million in 2012. That does not look like an industry that is licking its wounds; it looks like business as usual.
Mr Tobias Ellwood (Bournemouth East) (Con)
The shadow Chief Secretary to the Treasury seems to have glossed over the fact that City bonuses tripled in the last five years of the Labour Government. I want to ask him a more general question. Given the catastrophic role that the banking industry played in the economic downturn, why are we having only a half day’s debate on this important subject and squeezing it together with another important debate on the national minimum wage? The Treasury Committee is also meeting this afternoon to talk about these issues with the Governor and one of the deputy governors of the Bank of England. The Committee’s members will therefore not be able to participate in this debate. I wonder whether that is a reflection of the fact that Labour is not taking this matter as seriously as it should.
Chris Leslie
I am not sure that the hon. Gentleman has alighted on the best criticism of the fact that we are having an Opposition debate today on the failures in the banking sector. He is a bit off message because he at least admits that it was the banks that got us into the economic catastrophe in the first place. That is slightly off the script that Ministers usually use.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does my hon. Friend agree not only that this is a good day to have this debate, but that most of the people in Huddersfield, whom I represent, and in this country cannot understand the culture of bonuses for bankers? These people have failed us and have failed small businesses and start-ups, and yet they have a bonus culture that is unlike anything else in the country.
Chris Leslie
My hon. Friend is right to speak of the anger that his constituents feel. While many of his constituents and mine are struggling with the cost of living crisis, what has been the Chancellor’s response to the concerns about, and the evidence of, excessive pay? Does the Chancellor regret the millionaires’ tax cut or missing another year of the bankers’ bonus tax? Does he reflect on the outrage among the public, which my hon. Friend has expressed, who want leadership in tackling such brazen rewards? No; the response of the Chancellor of the Exchequer is to oppose even the most basic transparency, which would let shareholders know about bankers who are paid more than £1 million, and to oppose any action in the UK to tackle the excessive bonus culture.
The Chancellor’s response to public concern was to travel to Brussels in September last year to oppose Europe-wide moves to limit bonus payouts to no more than 100% of salary levels for those who are on £400,000 or more, unless there is approval from shareholders. The Chancellor continues to spend hundreds of thousands of pounds in legal fees to fight that new EU rule tooth and nail, even though it has only just come into force.
Stephen Mosley (City of Chester) (Con)
Does the hon. Gentleman accept that under this Government, bonuses have more than halved?
Chris Leslie
I do not know where the hon. Gentleman was at the beginning of my speech, but City analysts are predicting that the bonus round for 2013 will see an increase of 44%. I do not know whether he thinks that that is acceptable or whether many of his constituents are receiving increases in their pay of 44%, but I would bet that they are not.
Sammy Wilson (East Antrim) (DUP)
Does the hon. Gentleman recognise that although bonuses may have been halved, in banks such as RBS, which is still making losses and denying the finance that is needed to businesses across the United Kingdom, bankers bonuses are still sometimes in excess of twice their salaries?
Chris Leslie
That is exactly the issue that we are debating.
For all the sophistry and smoke-and-mirrors attempts by Ministers, including the Prime Minister earlier today, to give the impression that they are taking action on bonuses, we know that they confront a key decision because of the new Europe-wide decision to limit bonuses. However they try to spin their way out of it, they will have to confront that decision. It is a matter of national embarrassment that UK policy on bankers bonuses was not led by the UK Treasury. Now that we have a bonus ratio in statute, albeit from the European Union, surely the Minister will not cast his shareholder vote, on behalf of the taxpayer, to allow state-owned banks to shell out bonuses that are above the level of their salaries.
Jesse Norman (Hereford and South Herefordshire) (Con)
It is deplorable that this debate has been scheduled during a Treasury Committee hearing. As a member of that Committee, I have seen over the past few months and years the attempts to clear up the appalling wreckage that was left in 2010. Is it not true that under the last Government, this country ran a budget deficit of 3% at the top of the economic cycle and that we had the highest levels in recorded history of personal and household debt?
Chris Leslie
There they go again, denying that the banks had any responsibility whatever for the global financial crisis. Obviously, it was Labour’s investment in schools and hospitals that caused the devastation in dozens of countries worldwide and recession across—[Interruption.]
Mr Speaker
Order. The hon. Member for Hereford and South Herefordshire (Jesse Norman) is usually the epitome of the cerebral philosopher; an air of calm usually exudes from his every orifice. He has become uncharacteristically over-excited. He must calm himself, consider the merits of yoga and listen to what the shadow Chief Secretary has to say.
Chris Leslie
I now have an image in my mind, Mr Speaker, but we will move on.
I want to pin down the position that the Prime Minister was trying to spin in Prime Minister’s questions. The market expectations are that the loss-making RBS will pay about £500 million in bonuses in 2013, despite the string of allegations about LIBOR fixing and the accusations that it forced viable businesses into default in a bid to seize their assets on the cheap. When life is getting harder for so many households and bank lending to businesses is falling, it cannot be right for the Chancellor to approve a doubling of the bank bonus cap when the taxpayer has a stake.
Chris Leslie
I will give way to my hon. Friend in a moment, but I want to finish this point.
The Prime Minister gave the clear impression at Prime Minister’s Question Time that he would veto higher pay and bonuses. Perhaps he was unintentionally misleading in the way that he made that point. He might want to come back to correct the record. Some of us think that he was conveniently looking at the total remuneration at RBS as a device to slip out of the question about how he will exercise the shareholder vote.
The House needs to know that RBS has reduced the number of bankers on its roll by about 2,000 in the past year. One would therefore expect its pay bill to fall, and so it should, but that does not get it out of answering the question about the individual senior bankers who are earning £400,000 or more. Will the shareholder, in this case the Chancellor of the Exchequer, give them permission not just to have bonuses of 100% of their salaries, but to bust through that and go to 200% of their salaries? That is a crucial test for the Chancellor. Whatever the sophistry and warm words we might get from the Prime Minister, they cannot wriggle out of confronting that decision.
Huw Irranca-Davies (Ogmore) (Lab)
Does my hon. Friend agree that this is a question of leadership? If leadership is not shown by the banking sector itself, it is for this House and this Government to show leadership. My constituents cannot understand why these people live in a stratosphere in which they are under no moral or financial obligation to behave properly. Let us show some leadership on this matter in today’s vote.
Chris Leslie
My hon. Friend is right. The motion states explicitly that the Chancellor should exercise his role as the majority shareholder to prevent an extreme approach to bonuses.
Andrew Gwynne
My hon. Friend will know that on 1 January the EU bankers bonus cap came in and it restricts the payment of bonuses to not more than the amount of a salary on a 1:1 ratio. Does it not tell the House all we need to know about this Government’s attitude towards bankers bonuses that their first action is to submit a legal challenge to the European Court of Justice against the EU cap?
Chris Leslie
One of the questions I have for the Minister is precisely about how much it is costing the taxpayer, in all those legal fees to hire barristers, to try to overturn the bankers bonus cap. I will be happy to give way to the Minister if he has an update for the House on whether the figure is £100,000, £200,000 or £300,000. How much is being spent on legal fees? The Minister’s eyes are not gazing across the Chamber at this point, so perhaps he will come back to that in his speech.
I wanted to quote for my hon. Friends something that the Chancellor said in August 2009, when he was in Opposition:
“It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees. It must stop.”
That is the position the public were led to believe the Chancellor would take when in office. Strangely, that does not seem to be the position he takes now.
Ian Lucas (Wrexham) (Lab)
Does my hon. Friend agree that it is very important indeed to establish the amount of money that is being paid to individuals, such as the £5.8 million in the year ending 2010 to the chief executive of RBS and the £5.8 million paid out by Lloyds? Will our constituents not recognise that the Conservative party is saying absolutely nothing about the level of those payments to individuals, and that it is defending them?
Chris Leslie
Government Members will have to confront this issue, because it is a decision they will to have to take. Those traders and executives were former colleagues of the Financial Secretary to the Treasury, who was one of the senior bankers at Deutsche bank. Perhaps he can tell us whether, when he was a banker before the election, his bonus was more or less than 100% of his salary. Perhaps he can fill us in with that bit of history.
In our motion, we have made the point about instructing United Kingdom Financial Investments Ltd and making sure that it acts accordingly and turns down this proposal if bonuses come to more than 100% of salaries. That is not fair. Most of the people watching this debate will think, “Well, it would be nice to get any bonus at all. The same amount as my pay? Crikey, that would be phenomenal, but twice the amount of pay is totally unacceptable.” The Chancellor and the Minister will have to confront the anger of the public on this issue if they fail this test.
Guy Opperman (Hexham) (Con)
The motion mentions the requirement for greater competition. The hon. Gentleman will be aware that the dozens of challenger banks that have sprung up under this Government since 2010—
Guy Opperman
I can definitely assure the hon. Gentleman that that is absolutely correct and that many are coming forward. Does the hon. Member for Nottingham East (Chris Leslie) regret voting in April 2012 against greater competition in the banking sector?
Chris Leslie
I am not quite sure what planet the hon. Gentleman is living on, but we have been consistently tabling amendments to financial services legislation to encourage more competition and to have an inquiry into retail banking competition. At every stage, the Government have refused to go down that route.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman is probably aware that the respected Nobel prize winner Professor Joseph Stiglitz said in his book, “The Price of Inequality” that one of the ways forward is to
“curb the bonuses that encourage excessive risk-taking and short-sighted behaviour.”
The hon. Gentleman will see that we are back on that trajectory. We are heading for another crash and another period of excess in banking, as the monopolists’ rent-seeking behaviour continues in the City.
Chris Leslie
The hon. Gentleman makes a fair point. This morning the Chancellor gave his rationale for disagreeing with the European banker bonus cap. It is a shame that he did not take a lead in trying to construct something of his own to rein in this culture. After all, we would have had a repeat of the banker bonus tax. The Chancellor’s argument is, “Oh well, this is just going to move it all on to pay and on to ordinary salaries.” Surely one of the lessons of the banking crisis is that the excessive, short-termist risk and reward bonus culture was driving dysfunctional behaviour that got us into the mess in the first place. Frankly, I am sure those bankers will try to find all sorts of little dodges and weaves to get around the rules, but we have to make the system more transparent and we need to move towards a remuneration arrangement that is much more about sustainability, stability, professionalism and serving the customers. It would be foolish for the Government to try to sue Brussels on this point and hold out against public opinion, which has had enough of this excessive behaviour.
Emily Thornberry (Islington South and Finsbury) (Lab)
I wonder whether my hon. Friend can help the House. Have the Government ever given any indication on what they believe the upper limit should be on bankers’ pay?
Chris Leslie
I do not think they have, although I think before the general election the Prime Minister indicated that he did not want any taxpayer-owned banks to pay out bonuses of more than £2,000. We know what happened to that proposal.
The issue goes beyond anger about bank bonus season. Serious reforms to the banking culture and the role of banking in the economy are still required. Ministers still have not grasped the role that banks ought to be playing to repair our economy. They are still out of touch on the causes of three years of economic stagnation and the reforms to the banking sector that are still needed. How much more evidence do they need? Despite the billions of pounds needed to ensure that the cash machines kept working; despite the mis-selling and ripping off consumers; despite the money laundering and sanctions busting; despite banks peddling interest rate swaps to struggling small firms; despite multi-billion losses in the disastrous London Whale scandal—London Whale was the name given to a trader—and fines of more than £1 billion for Deutsche bank in the United States for mis-selling mortgage-backed securities; and despite the rigging of LIBOR and other benchmark indices, including investigations into attempts by up to 15 banks to manipulate a £5 trillion dollar a day foreign exchange market; despite all that the Government still do not have the stomach to do what it takes to clamp down on misconduct and to finish the job.
Mr Russell Brown (Dumfries and Galloway) (Lab)
My hon. Friend mentions the LIBOR scandal and the mis-selling of products. May I put on record my thanks to the hon. Member for Aberconwy (Guto Bebb) for his work as chair of the all-party group on interest rate swap mis-selling?
On bonuses and reward, does my hon. Friend believe that perhaps what we should say to high earners is that there will be no more bonuses until they have sorted out the mess the Financial Conduct Authority is currently investigating, and until all the individuals and companies have had their cases considered fully and have been compensated for the mess the bankers made?
Chris Leslie
My hon. Friend puts his finger on the point, which is that most of our constituents would say that bonuses are supposed to be for good or excellent performance and not just part of the run-of-the-mill, ordinary pay they receive regardless of whether they do well, make losses or get involved in all sorts of problems and difficulties. That is part of the problem with the culture in the banking sector, with which, frankly, the legislation introduced by the Government has so far just not dealt with.
Jesse Norman
Perhaps the hon. Gentleman could update the House later on what cap on bonuses was set by the previous Prime Minister, or the one before that. Does he not accept that the past few years, as he has just demonstrated with his recitation of scandals, was a period of the most lax supervision? It was under the previous Government that the Bank of England allowed these dreadful evils to take place. That is why it has made such a difference introducing the new senior persons regime, the new authorised persons regime and all the other changes, as well as the new definition of competition in legislation.
Chris Leslie
The hon. Gentleman and I differ in our analysis of what happened—I will explain why in a moment—and that says a lot about where we need to take policy. I do not believe that we have finished the job of banking reform, which seems to be the impression we are getting from the Government Front Bench. He and I might agree that more is needed—I will talk a bit about that in a moment—but stopping short of those reforms will not prevent another bank failure or protect the interests of normal customers and society so that they, not the high remuneration of those senior bankers, come first.
Sheila Gilmore (Edinburgh East) (Lab)
Does my hon. Friend share my incredulity that the Conservative party, which in opposition accused the then Government of over-regulation, should now suggest it was previously in favour of more regulation?
Chris Leslie
There is a touch of revisionism from Government Members, but perhaps that is a bit generous; their attempt to rewrite history is breathtaking. I have no doubt that when the Minister speaks my hon. Friends will hear a complacent desire just to move on from banking reform and a desperation to make party political points about the history of the banking crisis. They will try, with all their might, to pretend that it was Labour’s spending on schools and hospitals that caused a global recession in dozens of countries worldwide, but my hon. Friends will not hear from him about how the banks must still be made to pay for their egregious and scandalous abuses and over-leveraged trades in sub-prime mortgage securities.
All sense that the banks must be held accountable for the state we are in has been airbrushed from the Government’s narrative, because they want to blame their political opponents rather than upset their corporate friends. Perhaps the Minister likes to turn a blind eye, in the knowledge that it really was the banks that were responsible for the global financial crisis, or perhaps he has now genuinely convinced himself that it was primarily the fault of Governments and that the banks were only a little bit to blame. Either way, they have the wrong analysis, which explains why they have the wrong policies. By failing to tackle the root causes of recent economic devastation and the deficit that built up as a result, they are maintaining the risk that banks could once again turn to the taxpayer to bail them out, should they fail again. Never again must the taxpayer pick up the losses for the reckless behaviour of banks, and never again must our economy and public services be thrown into such turmoil because of the negligence and monumental greed of banking executives and traders.
Mr Jim Cunningham (Coventry South) (Lab)
I apologise for arriving late, Mr Speaker. I am sure my hon. Friend would agree that in the last Parliament the Conservative party, in opposition, only ever complained about red tape. Did he notice that for the first time today the Prime Minister talked about the recession not being the fault of the Labour party?
Chris Leslie
This is why this Government’s narrative is beginning to crumble around the edges. Most people realise that the banking sector was totally dysfunctional and causing great difficulties. Of course we need better policing throughout the international community and by the regulators, but if we are to rehabilitate the banking sector, we cannot shy away from the tough decisions needed to change its structures and behaviour. There are still too many areas in which the Government have left banking reform unfinished.
Chris Williamson (Derby North) (Lab)
Returning to the point about complacency, did my hon. Friend see the briefing note from the British Bankers Association prior to this debate? It says that
“no other industry is subject to such influential pay supervision”.
I have never heard anything so ridiculous in my life. Does he agree that this “influential pay supervision” is patently failing in its job?
Chris Leslie
We have to feel sorry for senior bankers facing a bonus of merely the same amount as their basic take-home pay, as 200% bonuses are obviously vital for their survival—for the record, this is sarcasm. It is complete nonsense, of course.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I have been listening intently to my hon. Friend’s delineation of the big ticket items where the banks have failed and where the Government appear not to criticise them, but on a more localised issue, Scottish constituents of mine have consistently been rack-rented and ruined by RBS, as the Tomlinson report said, yet these bankers complain in the local press in Scotland that their £4 million-worth of bonuses is less than the £6 million that HSBC bankers get—and these are people who consistently destroyed companies in Scotland. I hope the Minister will address the question of their faults and how they have acted since the crash.
Chris Leslie
Of course, we want to see rewards, bonuses and pay that reflect performance. That is my hon. Friend’s basic point. It is not asking for too much.
In too many areas, reform has been left unfinished. Four times the Government have rejected our proposals for bankers to face an independent licensing regime with an annual validation process for competence; they have delayed a decision on leveraging that could prevent excessive risk taking; and they have continued to resist a sector-wide back-stop power for the full separation of retail and investment banking, should the ring-fencing not work. Moreover, there is insufficient scope for proper scrutiny before the further sale of Treasury assets, and we know that the Government sold both Northern Rock and the first tranche of Lloyds shares at a loss. Despite month after month of persistently falling lending to small and medium-sized enterprises—a fall of £12 billion in the past year alone—the Government have had to throw out Project Merlin, ditch credit easing and reboot their funding for lending programme, but still to little effect. It is obvious that we need a serious British investment bank, supported by a network of regional banks and capitalised with revenues from the market value of 3G spectrum licences, yet here we are, in the fourth year of this Government, and their half-hearted attempt at a business bank is still not fully up and running.
Kwasi Kwarteng (Spelthorne) (Con)
Members are listening to the hon. Gentleman with astonishment. What exactly did the previous Labour Administration do in 13 years to regulate the sector that he is talking about?
Chris Leslie
The previous Government introduced a bankers bonus tax, which raised billions of pounds that helped improve our public services. Government Members need to wake up and realise that they need to repeat that strategy.
While we are on the subject of bank taxation and the levy, let us look at what the Government have done, because it has been such a colossal disappointment so far. The Prime Minister promised that his bank levy would raise £2.5 billion each year, but they have never been bothered about making the banks pay their fair share, because their hearts are not in it, so the bank levy has fallen short of that target year after year. It raised only £1.6 billion in 2011, and despite their subsequent promises, it then again raised only £1.6 billion in 2012, and they are expecting a further shortfall this and next financial year—the Minister could confirm this. In the past three years, the bank levy has raised £2.1 billion less than they promised. With £2 billion, we could kick-start the construction of 80,000 houses or employ more than 20,000 nurses—the same number the NHS is short of. It represents a serious and scandalous shortfall in tax collection.
Chris Leslie
I would like to make some progress.
Perhaps the most serious area of reform left untouched by the Government is the continued dominance of the big five banks, which gives customers limited choice and helps feed disillusionment and low trust. The Government have an action plan to deliver competition in the banking sector, but we cannot see it. We need more competition and banks that are hungry to serve the interests of consumers, businesses and the British economy, and a wholehearted shift in the number of market participants serving households and businesses, not a half-hearted tinkering around the edges.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It has been widely trailed today that a future Labour Government, if elected, would try to force banks to sell off branches. That will cause great concern, particularly in rural areas, because it is their branches that would be most likely to be disposed of. How would his proposals help create competition for our high street businesses?
Chris Leslie
This is not about shutting branches; it is about making a more competitive sector. Time after time, we have tabled amendments to financial services Bills calling for more competition in the banking sector. The Independent Commission on Banking, chaired by Sir John Vickers, called for action to diversify the banking sector, but the Treasury’s approach to divestments of branches from NatWest and Lloyds was not exactly a raging success. It would have been better if the Government had taken our advice and gone for a competition review of the retail sector and not just the business banking sector. They often say “We are looking at competition”, but it is usually only in business banking. They need a more comprehensive approach; the customer needs better service and competition to bring down fees and charges.
There is still no obligation on banks to provide a basic bank account for all customers, even though we know it helps people on low incomes to save money and plan their budgets. The jury is out on whether the seven-day current account switching service will be enough or whether steps should be taken towards full portability of bank accounts for customers. The Government could introduce a fiduciary duty of care, explicitly putting the best interests of customers first and foremost in the financial services sector.
Today, banks are an essential utility; they are supposed to be there to help customers, not to hinder the economy or act like untouchable vested interests. We need to clean up the behaviour of the banks and end the culture of excessive risk and reward. Those are the traits of the old economy; the new economy that we need demands a more modern banking sector—more competitive and diverse, accountable to its customers, supporting long-term investment at home and delivering the sustained growth that we need. That will be the task of the next Labour Government.
The Financial Secretary to the Treasury (Sajid Javid)
I thought that Labour Members had turned over a new leaf this year: they admitted that they got it wrong on immigration and they admitted that they got it wrong on education, so I hoped that the hon. Member for Nottingham East (Chris Leslie) would follow suit and admit that they also got it wrong on banking. I hoped he would admit that it was Labour’s changes to banking regulation that led to the world’s largest banking bail-out—changes that meant that when the alarm bells were ringing, no one was listening. The Bank of England was completely powerless to act. I hoped that the hon. Gentleman would also admit that City bonuses rocketed under Labour’s 13 years in office, while Labour Cabinet Ministers were telling the world that they were
“intensely relaxed about people getting filthy rich”
and they were handing out gongs to the likes of Fred Goodwin. City bonuses were surging to all-time highs, rising year after year, more than tripling over five years and peaking in 2008 at over £12 billion. Instead, this is a new year and the same old Labour.
Sajid Javid
I will give way to the hon. Gentleman; I might be about to hear an apology, so I will listen carefully.
Michael Connarty
I think anyone who reads the transcript deserves an apology from the Minister, who forgot to mention that the relaxation of banking controls started with Mrs Thatcher and the Conservative Government. He forgot to tell people on the record that when people like me on the Opposition Benches were urging constraint—I am an economist—the Minister’s right hon. and hon. Friends were calling for fewer controls and a lighter touch with the banks, as was the SNP in Scotland.
Sajid Javid
I think the hon. Gentleman has a challenged memory of events. I am sad to see that he had an opportunity to apologise, but did not take it.
Let us look at the facts. At the time of the changes Labour was making to the financial sector, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) warned the then Government in November 1997:
“The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 732.]
Let me share another quote, in this case from the current shadow Chancellor from a speech he made as City Minister in 2006:
“Nothing should be done to put at risk a light-touch, risk-based regulatory regime.”
What we are hearing from Labour is the same old headline-chasing nonsense that we have come to expect and no answers at all to the problems they created.
I agree with the hon. Member for Nottingham East on one thing: public confidence in the banking system and in bankers is still low, just as—let us be honest—public confidence in the political system and the people in this Chamber is still low. That is precisely because, five years ago, partly as a result of the irresponsible decision of some bankers, but largely as a result of the policies of the then Labour Government, our country found itself in a huge mess. When trust is lost on that scale, it is not won back overnight.
Steve Brine (Winchester) (Con)
Perhaps the Minister can answer this question because the shadow Minister did not give way to me. The shadow Minister said that restricting the number of branches that banks can hold will not close branches, but of course it will. What does he think closing branches will do to people’s faith and belief in the banking sector. I have three branches of Barclays in my constituency—in Chandlers Ford, Alresford and Winchester—so if, God forbid, a Labour Government were ever elected, which one would they propose to close?
Sajid Javid
My hon. Friend highlights the fact that the Labour party has no ideas about how to increase competition in the banking sector, and any kind of approach that includes arbitrary quotas will clearly lead to the sort of problems that my hon. Friend outlines.
Harriett Baldwin (West Worcestershire) (Con)
It is reported today that the Opposition are proposing specific market shares on specific banks. Has that ever been tried in any other country?
Sajid Javid
My hon. Friend is right. It is reported that, this Friday, the Leader of the Opposition will make a speech on the economy and attempt to set out an economic policy. I am afraid that his last such speech did not go very well. From what we know about this proposal—very little at this stage—I am not aware of any country in the developed world that has a similar approach, with the possible exception of the former Soviet Union, which adopted a similar approach to its banking sector.
Lyn Brown (West Ham) (Lab)
I am glad we are discussing history, because I am aware of the hon. Gentleman’s own history as a banker. I wonder what his remuneration and bonuses were back in those days. Given his history and the fact that he should be saying sorry—I presume—will he tell us whether he believes that bankers deserve a bonus in excess of 100% of their salary. Does he think so and does the Chancellor think so?
Sajid Javid
The hon. Lady seems to suggest that it is best to have Ministers who have no experience or knowledge in the areas for which they are responsible. We saw that under the previous Government, and look what happened. To win back the confidence of the British people, we need a long-term economic plan for recovery.
Chris Leslie
I would not want the Minister unintentionally to miss answering the important question that my hon. Friend the Member for West Ham (Lyn Brown) asked. For the record, do the Government believe that the senior bankers at the Royal Bank of Scotland should or should not be allowed to pay bonuses of over 100% of pay?
Sajid Javid
I will come to that later in my speech when I will deal with some of the issues that the hon. Gentleman raised.
Bringing back confidence to the economy will of course mean dealing with the banking sector to make it more stable, more resilient and more efficient. That is exactly what this Government have been doing for the last three years.
Mr MacNeil
Does the Minister agree that, as with the debate on the bedroom tax before Christmas, this debate is really one about the symptoms of inequality in our society. Since the 1970s, we have seen 80% of the gains in productivity going to the top 1%—an inequality level roughly equivalent to that of the 1920s. Governments all over Europe and in the United States are not getting to grips with inequality and the hampering of life chances that it is causing. What does the Minister think should happen? The bankers should not receive the bonuses they are getting and people should not have their life chances halted by the bedroom tax. Are this Government going to do anything serious on this issue?
Mr Speaker
I assume that the hon. Gentleman will not seek to make a speech in the debate, on the grounds that he has already done so.
Sajid Javid
The hon. Gentleman will know that inequality surged under the previous Government and has come down under this Government. In fact, the rich pay a higher proportion of tax than they have ever paid, with the top 1% of earners paying almost 30% of income tax for the first time and the top 5% paying almost half of the total income tax take. The Government are proud of making sure that the rich make a fair contribution to public finances.
Jesse Norman
My hon. Friend is making an extremely powerful case, but may I remind him of the central fact of the past 15 years? The banks had the same level of leverage for 40 years, until 2007, after which it went up by two and a half times. It was that explosion of leverage, under Labour, that destroyed the banking system both in this country and internationally.
Sajid Javid
As always, my hon. Friend is spot on. Because of the changes that Labour made in the regulatory system, no one knew what was going on, and if they did, they were absolutely powerless to act, especially those in the Bank of England. That is the legacy of the last Government.
Let me now say something that the Labour party seems to be scared of saying. We need well-run successful banks in this country. We need the services that they provide. We need the loans that they give to small businesses, and the mortgages that they offer to home owners. We need the jobs that they produce—more than 450,000 throughout this country, and more than two thirds of those are outside London. We, as a Government, also need the huge taxes that the financial sector and its employees pay—some £60 billion last year—so that we can run our schools and hospitals.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Small businesses have been among the biggest victims of the financial crisis, because banks have stopped lending to them. I share some of the Minister’s scepticism about the advantages of shutting bank branches, which may indeed only harm banking and access to financial services in rural areas, but I nevertheless think that the Government could be doing a great deal more to ensure that the banks lend more to small businesses on fairer terms. What will the Minister do about that?
Sajid Javid
I agree with the hon. Lady that businesses rely on the banks for the lending that they need. The action that we have already taken through, for example, the funding for lending scheme has ensured that the banking sector has had more money at lower rates to on-lend to small businesses and, indeed, households. We also recently announced a consultation on collecting small and medium-sized enterprises credit lending data, which will help to spur further competition in that sector.
Ian Lucas
The Minister is endorsing a noble cause in recommending support for small business and for manufacturing in particular, but given that manufacturing accounts for 10% of the economy, why does only 2.6% of bank debt stock result from lending to it? Why does the Minister not do something about that?
Sajid Javid
Part of the answer might be that manufacturing was decimated under the last Government. Its share of the economy fell from about 17% to the 10% to which the hon. Gentleman referred, and, of course, lending fell with it. If the hon. Gentleman were honest and recognised the damage that his party did to the manufacturing sector, perhaps what he says would be taken more seriously.
We need a more stable, resilient, efficient banking sector, and it is on that requirement that we have focused our reforms. As Members will know, back in June 2010 my right hon. Friend the Chancellor announced the establishment of an Independent Commission on Banking, chaired by Sir John Vickers, to explore how the sector should be reformed in the wake of the financial crisis. Last year the House passed the Financial Services (Banking Reform) Act 2013, which has enabled us to implement the commission’s recommendations. The changes will mean that banks must ring-fence the deposits of individuals and small businesses, so that everyday banking can be separated from volatile investment banking.
As all Members, and, indeed. all members of the public will know, the financial crisis saw taxpayers bailing out the banks that got into trouble, but we have taken steps to ensure that that will not be repeated. Our banking reform Act introduces a bail-in tool, as a result of which shareholders and creditors, not taxpayers, will be first in line to bear the costs of future bank failures.
Chris Williamson
I think that the Minister should admit that the Government have watered down the Vickers commission. Will he now come clean with the House, and tell us that that is what they have done?
Sajid Javid
That is exactly what we have not done. We have accepted the central recommendations of the Vickers commission.
We have not just been working to prevent a repeat of the crisis. Many Members on both sides of the House have been rightly appalled by the revelations of poor behaviour on the part of some in the industry, such as payment protection insurance, interest rate swap mis-selling, and LIBOR manipulation. Those practices were going on right under the noses of Labour Treasury Ministers, including the current shadow Chancellor, who did nothing at all to stop it.
Guy Opperman
My hon. Friend attended the local banking conference that I organised shortly before Christmas. Does he agree that “challenger banks” such as Aldermore, Virgin, Metro, and even the Bank of Salford—which is run by Labour and Unite, and is excellent—are a key element in the greater competition that we need in order to reinvent the banking market in this country?
Sajid Javid
My hon. Friend’s intervention gives me an opportunity to commend him for his initiative to promote regional banks. He is absolutely right in his assessment.
We also set up the Parliamentary Commission on Banking Standards, chaired by my hon. Friend the Member for Chichester (Mr Tyrie). As a result of the commission’s work, we amended the banking reform Act in order to implement its recommendations on holding bankers to account more effectively for poor behaviour. If a bank were in future to enter resolution because of reckless mismanagement, senior bankers could face a prison term of up to seven years.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Minister has spoken in strong terms about the experience of the financial services. Does he accept that the unique way in which bonuses drive short-term risk taking led to the scandals that we witnessed, and, indeed, to the financial crisis? Does he really believe that the reward for short-term risk taking behaviour to meet bonus targets should be more than 100% of the reward that someone receives for doing his or her own job?
Sajid Javid
What I do accept is that badly structured and badly designed bonuses will lead to bad behaviour. I am sure that the hon. Lady herself accepts that if an arbitrary cap is imposed on bonuses and it leads to an increase in fixed pay but no overall fall in overall pay, the bad behaviour will actually worsen.
We are putting our house in order. We are learning from the huge mistakes of the last Government, and are ensuring that we create a country in which the public can trust that their money is secure and our banking sector can flourish.
Dr Coffey
My hon. Friend is making great progress in the debate. Will he also mention the fact that taxpayers are now benefiting from the fines that have been levied on the industry, and that the Chancellor has extended the arrangement to ensure that military charities and others benefit?
Sajid Javid
I am glad that my hon. Friend has referred to that. It was the right thing to do, and it demonstrates that we can take some of the money that is coming from the banking sector and use it for good causes.
Sir Andrew Stunell (Hazel Grove) (LD)
My hon. Friend mentioned the shadow Chancellor’s failure to tackle the abuses that were taking place in the banking system. Will he confirm that the shadow Chancellor encouraged the development of a less regulated environment, and that that contributed to the problems that we now face?
Sajid Javid
My right hon. Friend has made an important point. I have already quoted what the shadow Chancellor said in 2006, when he was the City Minister, but those were not just his views; they were also the views of his boss, the then Prime Minister, the man who did more damage to our financial sector than any other. This is what the last Labour Prime Minister said in his 2007 Mansion House speech:
“I congratulate you Lord Mayor and the City of London on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London.”
Shortly afterwards, he carried out the world’s largest banking bail-out.
Kwasi Kwarteng
Will the Minister share with the House his thoughts about which member of the last Government recommended that Fred Goodwin should receive a knighthood as an honour from the Government?
Sajid Javid
I have to tell my hon. Friend that I am not sure who it was, but I know that the knighthood was widely supported by members of the then Government, which shows what their priorities were.
Jesse Norman
Was it not the previous Prime Minister who said, “We will do for Great Britain what we have done for the City of London”, and is it not a disaster that he said and did that?
Huw Irranca-Davies
The Minister is understandably making a case for the financial sector, as he also should for manufacturing and all other sectors. What my constituents fail to understand is why, when public and private sector employees over the last few years and now have accepted pay restraint and real-terms squeezes on their earnings, and we in this House, including Ministers, are facing public demands to accept pay restraint on our pay and conditions as well, top bankers are immune from those constraints.
Sajid Javid
I will come on to that topic shortly and share with the hon. Gentleman some numbers that show what has happened to the pay of top bankers.
Sajid Javid
I will come on to it. The hon. Gentleman raised the two issues of banking competition and remuneration and I want to cover them.
I was very pleased that the hon. Gentleman talked passionately about the importance of competition. It is a shame that the previous Government did absolutely nothing to encourage it for 13 years. It is worth reminding the Chamber that when the last Government took office there were at least 10 major UK banks, but over their 13 years of incompetence they continued to permit and manage banking takeovers which shrank the number of market players and left the big banks to dominate.
Greater competition in banking is good for people and businesses and the economy. That is why we are implementing the recommendations of the Independent Commission on Banking for improving competition; indeed, we are going further. We are addressing the issue of too big to fail through ring-fencing, meaning that big banks will no longer get a competitive advantage from this implicit guarantee. We have put competition at the heart of financial services regulation by giving the Financial Conduct Authority a formal competition objective as well as making provision for a secondary competition objective for the Prudential Regulation Authority. We are also making sure that the FCA has the right tools to get the job done on competition by giving it concurrent competition powers.
While competition dropped under Labour’s stewardship, it is increasing under ours. As we have heard, since the crisis Metro Bank, Virgin Money and the new TSB brand have entered the market. Indeed, RBS also announced recently that it has teamed up with investors, including the Church Commissioners, to launch a 300-branch challenger bank, Williams & Glyn’s, focused on small businesses.
In fact our financial regulators are currently in talks with 22 potential new bank applicants because of the steps we have taken to promote banking competition. On top of that we are creating a new payment systems regulator so that smaller banks and others can access the payment systems fairly and more transparently, and we have secured a seven-day current account switching service to make sure that people have the confidence to change accounts. There are further innovations coming on cheque imaging and mobile payments. This is a Government who are bringing competition back to banking.
On bankers’ pay, we understand the depth of public anger but we will not take any lectures from the Labour party. While bonuses continued to increase year after year on its watch, even after 2007, they are now down 85% from their peak in 2008. Since 2010 we have been leading the way on tackling unacceptable pay practices. First, we have introduced rules that require significant parts of bonuses to be deferred and paid in shares, which means there is now a much better alignment of pay with risk and performance. While we make sure that only good performance can be rewarded, we are also making sure that poor performance can be punished by introducing measures that mean firms have clawback policies to reduce or revoke pay retrospectively.
Those steps are having an impact. The 2012 bonus pools at almost all major banks have declined massively since this Government came to office. The truth is that while Labour talks about clamping down, this Government get on with the job.
Emily Thornberry
If the public are watching this debate, they may well want to ask the question I shall ask now, and I hope we get an answer. Do the Government have a view on the maximum amount a banker should be given by way of either a salary or a bonus, and does the Minister agree with the bonuses currently being given out by Chase Manhattan bank?
Sajid Javid
First, I am not sure even whether the Opposition have a view on what the right level of bonuses is. Also, I am not sure about Chase Manhattan bank because it does not exist any more as far as I know.
Kwasi Kwarteng
Will my hon. Friend explain to the House what the last Government said about bonus levels, if they said anything about them, and the gratitude with which they spent bankers’ tax receipts?
Sajid Javid
My hon. Friend again rightly points out that the previous Government did nothing when bonuses were reaching a record high. Even after they had carried out the world’s largest bank bail-out, pumping in over £40 billion of taxpayers’ money, they still allowed bonuses the next year to reach an all-time peak of almost £12 billion. That is their legacy.
Chris Leslie
We now come to the point that the Minister has twice said he would address later on, so will he address it now? Will the Chancellor of the Exchequer be using his power as a shareholder in the Royal Bank of Scotland to allow its senior bankers to exceed the level of bonus beyond 100% of pay: yes or no?
Sajid Javid
That is exactly what I was coming on to next. It is important for taxpayers that any proposals by RBS are considered fully and properly. The Government have not yet received a proposal from RBS on bonuses; once we do, we shall be in a position to judge whether it represents value for taxpayers.
The Government do not support the EU cap on bonuses. The Government have fought against it and we are currently challenging it in court. The bonus cap creates perverse incentives by removing the link to performance. It is damaging to financial stability; it is opposed by the PRA and the Bank of England; and, indeed, the cross-party Parliamentary Commission on Banking Standards rejected crude bonus caps as unworkable.
Let me turn finally to the bank levy.
Sajid Javid
No, I have given way enough and others want to speak.
If we need an example of how little the Opposition understand the banking sector, we only have to look at their policies on the bank levy, a levy they turn to every time they want to fund a policy announcement. They seem to believe that the bank levy could raise enough money to pay for capital spending, a youth jobs guarantee, regional growth funding, housing, child care and community services. On top of that, they think they can cut the deficit with it, reverse VAT increases, reverse child benefit savings and reverse tax credit savings—in total over £30 billion of commitments. Only the economically illiterate would think that with £1 raised in tax, we could have £10 of spending power.
It is no wonder that Labour gave us the deepest recession in 100 years, the largest post-war budget deficit and the world’s largest banking bail-out. In short, whereas their old banking policy was to stick their heads in the sand, their new banking policy is to stick their heads in the clouds, so frankly I do not think they are in a position to tell this Government what to do. Instead we shall work to continue to make this sector more stable, more resilient and more efficient, and we shall continue to help our banks to help our country get back to our best. I urge the House to reject this motion.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before I call the next speaker, I should say that obviously a great many Members wish to contribute and there is limited time available. I am therefore imposing a limit of eight minutes on Back-Bench speeches. If a Member takes an intervention, the eight minutes is increased by one minute, of course, and I urge Members to take that into consideration when deciding how long to speak for; otherwise, I shall have to decide for them. I call Michael Connarty.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
If I refuse to take interventions, it will not be because I do not think Members have a good contribution to make, but because I would like to limit the length of my speech. I recall often ending up with only four minutes to speak when the debate started off with an eight-minute limit.
The Minister did not focus on the motion, but I always look at the motion on the Order Paper rather than bring my prejudices with me and try to fit them around the debate. The motion says that, so far, Government reforms
“have failed to deliver a competitive banking system”.
I want to focus on what has happened since the crash, and on the behaviour of the banks that my constituency businesses have had to deal with, and ask why that should influence our decisions on bonus levels.
I welcome the EU regulation. I heard the right hon. Member for Wokingham (Mr Redwood) on the radio this morning saying that the European Scrutiny Committee, on which I am the longest-serving Labour member, unanimously supported the position on an individual veto for the UK on a number of items. In fact, he misquoted us. If he had looked at the policies in the document on the scrutiny of EU business in this House, he would have seen that paragraph 2.80 states that we supported the idea of a red card for items in the EU. That would mean that a majority of the EU countries would have to agree to send back a policy, such as the 100% bonus limit, to the EU in order to reject it. That is not the same as the UK having the right to mount an individual challenge to such a policy.
In the public’s mind, this debate focuses on whether the banks have changed their behaviour, whether they are better organised and are working better for our constituents, and whether the people who run them deserve to get larger amounts of money as a reward for what they have done in the interim. The reality is that RBS, the bank that took a £44.7 billion bail-out from the last Government, has again and again been awarded substantial bonuses for failing. It has not been performing well.
The Tomlinson report found that RBS had been involved in what can best be seen as malpractice in its relationship with the business community. Small businesses have account managers at the bank who suggest that they should take money from the bank. They are told that they will be looked after by their account manager. They are not told that, in the background, a group of people known as debt recovery executives are looking at those same deals and asking themselves how they can make that company go bust and get its assets. They are also thinking about how they can revalue those assets downwards so that the company will be found not to be solvent enough to pay its debts.
I have watched that happen to businesses in my constituency again and again. They were told that they were getting a good package and a good deal, only for someone to appear from another part of the bank to tell them that their assets had been revalued. Incidentally, the same valuers were used again and again by the bank to downgrade those companies’ asset values. The companies were then told that they were in trouble because they could not pay their debts, but that the bank would give them another loan, charged at an additional 10% interest over and above what had originally been agreed. I have watched company after company go to the wall on that basis.
RBS is in print as saying that its bankers deserve a £6 million bonus, rather than the £4 million that they would be limited to under the EU rules. Those bankers say that they could get £6 million if they went to work for HSBC—well, good riddance to them, if that is how they are going to run the banking system. We are failing the same people that we failed under the last Government. I make no apologies for the last Government. They took certain choices, and I criticised them for it. When I was at university, the banking system was a solid, solvent organisation. I had a very right-wing professor, Andrew Bain, who said that banks should have a low leverage point of about 12.5 times the level of its reserves. That all went to pot under the last Government, and I do not see why anyone who criticised the Government for that should apologise.
The pattern at RBS is being repeated at the Clydesdale bank. I have been with that bank since I was a student. Ballantine’s iron foundry had an order for £1 million of wrought iron work in this building. It had a full order book. Following an offer from an account manager, it transferred to the Clydesdale bank. The bank looked at the company’s £2 million of property assets and also judged its assets held in patents and rare mouldings to be worth £1 million. Further down the line, however, other people from the bank emerged to tell the company that its property had been revalued and was now worth only £500,000 and that its patents were worth nothing. The company had been in existence for 180 years, and its owner put £70,000 of his own personal cash into the company’s bank account to keep it moving and to prove to the bank that his business was viable in the long term. It was put into administration anyway, and it has now closed, with the loss of 70 jobs. I blame the Clydesdale bank for that.
This is the problem that I have: the Tomlinson report talked about RBS, but the problem is constantly occurring. Banks have the ability to write down their own debt by making good businesses go to the wall and selling off their assets to bring in money. They write off a debt and bring in assets at the same time. That has been going on since this Government came to power. It happened under the last Government as well, but we are talking about what this Government are doing.
Part of the motion that could hold out some hope for people is the proposal to
“ensure that major new banking service providers are created”.
The only way to achieve that is by splitting the big five banks. Their domestic banking businesses would need to form a whole new banking system, with the risk-takers and speculators going off into other banks. The idea of setting up little banks here and there will not work, although I must admit that I have taken advantage of the facility of moving all my accounts—including my MP’s office account—to the Trustee Savings bank, which has now been split off from Lloyds. The Airdrie Savings bank has also opened a new branch in the adjacent constituency of Falkirk, and a number of people are going to it because they want to be treated as customers. When they talk to their account manager, they do not want to feel that there is someone in the back room wondering, “How can I get money off this individual?” or “How can I trap this small business?”
It is important for people to have new banks. We are not talking about bank closures, despite the myths about that. We need to create a major new banking system by splitting the banks, and we need to encourage people to diversify and to leave a bank if it is not treating them well. We also need to ensure that people who get bonuses receive only the maximum allowed by the EU, and I hope that the Government fail in their challenge to that proposal in the European Court of Justice.
Harriett Baldwin (West Worcestershire) (Con)
It is a pleasure to follow the hon. Member for Linlithgow and East Falkirk (Michael Connarty). I, too, encourage many of my small businesses to look around and to act as customers. They do not have to stay with the bank they have been with since they were students.
I could not believe the bare-faced cheek of the Opposition motion on the Order Paper when I read it this morning. I am sure you felt the same, too, Madam Deputy Speaker, because you will recall—in your very impartial way—the state of the banking sector when this Government came to power. It is worth recalling the mess that we had to deal with when we took over. We had had the first run on a bank in this country for well over 100 years; we had had the biggest banking failure in the world; and we had had a decision, taken under conditions of panic by the former Chancellor and Prime Minister, effectively to nationalise large parts of the banking system. The Opposition motion should acknowledge that that was a deliberate decision. The natural course of events under capitalism would have been for those banks to fail, for all their employees to lose their jobs and for the branches in all our constituencies to close, followed by a restructuring process taking place outside state ownership. Instead, we have effectively perverted the course of capitalism, and that was a deliberate choice.
Mark Garnier (Wyre Forest) (Con)
Will my hon. Friend remind the House who the architect of the Financial Services and Markets Act 2000 was? That Act set up the Financial Services Authority, the regulator that manifestly failed to regulate the banks properly, which allowed the collapse to happen. Will she also remind us who the City Minister was at the time of the banking collapse?
Harriett Baldwin
I think I am right in saying that the then City Minister is now the shadow Chancellor. My hon. Friend rightly reminds us that the regulatory architecture that allowed this disaster to occur was also set up by the previous Government. Having been regulated by that regulator for many years, I know how important it is that the regulation of banks has been returned to the Bank of England. That is important because the Bank of England sees the canary in the coal mine when banks have problems with day-to-day liquidity. The Bank of England was able to see such problems in the run-up to the crash, whereas the Financial Services Authority, in its lofty headquarters in Canary Wharf, was at one remove from that, and there was no ability to join up the reaction. My hon. Friend makes an incredibly important point.
At the start of this Parliament, our Government inherited, in effect, a state-owned oligopoly in the banking system, and that is not a good place to be if we want to achieve a competitive and healthy banking system. The Government have embarked on a long-term economic plan to reform the banking system and make it more responsive to the needs of businesses and consumers up and down the land. That cannot be done overnight—it takes time. Step No. 1 was to reform the system of financial regulation. That was an extremely thorough and elaborate process, involving many people from within this House and the other place, and as of last year we had the final enactment and implementation. So we have taken some difficult and long-term decisions to reform the regulatory architecture in a way that will make it impossible for this sort of crisis to occur in the future.
Secondly, we have established a long-term economic plan for people and for businesses in this country. We have reformed the way in which the economy is working: we have lowered the cost of mortgages for home owners; we have lowered the cost of government for council tax payers; and we have lowered the cost of fuel over and above what the Opposition planned, so that people who drive to work do not have to pay that extra £11 in tax that had been planned for them.
Thirdly, I come to the final piece of this journey in passing on to future generations a banking sector that is, once again, fit for purpose: addressing this problem of the state-owned oligopoly. We cannot restructure the failed banks effectively within the Government’s ownership, and the best way to say that we have closed this terrible chapter that we inherited in the banking system will be by privatising the banks that are publicly owned and returning them to the private sector. We have started on that with the sale of the first tranche of Lloyds shares. I sincerely hope that the Minister will be able to reassure us that it is the Government’s plan to return Lloyds shares to the private sector.
I also argue that it is in the best interests of the economy and the country that we move now to return RBS, whose share price is still well below that paid by the former Prime Minister for its shares, to the private sector, even if that means recognising and crystallising a loss which is the price we pay for Labour’s banking failure. At the moment we are in the worst of all possible worlds: we have a system where we need to allow new entrants to come into the space, but a large semi-state-owned dinosaur is taking up a lot of market share. It would be better for that to be restructured effectively within the private sector.
My argument today is that the Government need to get out of the banking business as quickly as possible. It is not the role of government to be setting the compensation of every banker in this country. The Government must set the framework and the regulation, but this level of micromanagement is a function—a symptom—of the terrible inheritance that we received. By getting out, we must recognise that we will reform the banking sector for our children and our grandchildren. It will mean that those banks will then restructure within the private sector, and the socialists will never be able to get their hands back on running a large sector of our economy.
Andrew Gwynne (Denton and Reddish) (Lab)
I am grateful to be called in this debate, Madam Deputy Speaker, and to follow the hon. Member for West Worcestershire (Harriett Baldwin). I do not necessarily share her views or her assessment, but she made an illuminating contribution. Given today’s news about RBS, this is a pertinent and timely debate for the Opposition Front-Bench team to have called, and we must take the opportunity to debunk some myths that have been allowed to penetrate into the debate so far.
First, we must point out the fact that the banking crisis was global. The Minister gave a history lecture, but perhaps conveniently the chapter he missed was the one on Lehman Brothers’ collapse in New York in September 2008, which triggered a tidal wave of chaos across most major western economies. I would argue that the action taken by the previous Labour Government was necessary; we all remember the queues outside Northern Rock and the chaos that was created, and default would have been a disaster, for not only the British economy, but for the wider global economy. Confidence would have completely collapsed in the banking sector and we would have seen a run on all major high street banks. The alternatives to Labour’s action would have been disastrous and it is not worth contemplating them. The action was costly to the public purse, but nobody—none of my constituents or those of the hon. Member for West Worcestershire—lost their savings. That is an important fact to remember, as it shows precisely why the banks that think it is back to business as usual just do not get it.
It was not only this bonuses-as-usual mentality from the banks but some of the other structural weaknesses that remain within our banking system that allowed the LIBOR and Euribor rigging attempts for which RBS, Lloyds, Barclays and Deutsche bank were fined by the regulators, to take place. It is also the mis-selling of interest rate swaps and of payment protection insurance—
Andrew Gwynne
I will not give way because many hon. Members wish to contribute. Clearly, those structural weaknesses remain in the banking sector and the Government should be doing more to address them, both in the UK and globally. I would like the British Government to take a lead on addressing banking reform, not just in this country, but across Europe and across the globe.
The banks also have a social obligation to taxpayers. I said that the Labour Government’s action was costly to the public purse and important to secure people’s savings, but I do not believe, unlike the hon. Lady, that we perverted the course of capitalism, because the alternatives would have been disastrous. However, banks should be doing more to help the Government meet their social needs and the wider social needs of society—those for whom it does not feel as if the recession is yet over. That is why the proposal from my hon. Friend the Member for Nottingham East (Chris Leslie) to have the bankers bonus tax to fund a compulsory jobs guarantee is absolutely right and why I think he gets it. It is also right that the bank levy should also be increased, specifically to fund the expansion of free child care for three-year-olds and four-year-olds from 15 hours a week to 25. The Government try to make out that this is the same pot of money. We are talking about two very different socially responsible measures that will ensure that the banks start to repay what they owe to society
Finally, bank lending and access to bank services are important if the banks are to take on socially responsible roles in securing the recovery and helping local communities. Let me turn first to lending to small and medium-sized enterprises. I despair when companies come to see me as their Member of Parliament and set out perfectly viable business propositions to which, before the banking crisis, banks would have fallen over themselves to lend money, and yet they cannot even get a foot through the door. We must ensure that the Government’s attempts to get banks lending start to work, because it is just not happening at the moment. Indeed, the most recent data show a huge drop-off in bank lending to small businesses, which should cause some concern to the Treasury.
There are still too many communities without good access to banking services, and branches continue to close. That is a huge problem not just in rural communities, but in some of the most deprived urban communities. It is very much a social justice issue. People should have good access to banking services within their community. Perhaps there is a greater role in that regard for the Post Office. One scheme under the previous Labour Government was to increase the number of free cashpoints in our most deprived communities. It was outrageous that people in some of the poorest areas were charged to get cash out of machines. The previous Government were absolutely right to install 600 free cashpoints in such communities. However, some of those measures have stalled under this Government, and there is a lot more that we should be doing to ensure that the most deprived communities have proper access not just to free cashpoints but to a full range of banking services.
In conclusion, we need a vibrant and socially responsible banking sector, and to ensure that bad practices are ended. The Government must recognise that banks have an important role in our communities, offering services and lending to businesses, and they must face greater competition. The Government and the banks must recognise that it is far from business as usual. It is time for proper banking reform.
Mr Tobias Ellwood (Bournemouth East) (Con)
It is a pleasure to follow the hon. Member for Denton and Reddish (Andrew Gwynne). I agree that this is a timely debate, but I repeat the concern that I expressed at the start of the debate that it clashes with a Treasury Committee hearing and that it is a shame that its members cannot be present. I plead with the Opposition Front-Bench team not to squeeze in important debates such as this with other subjects. I could not get in to speak in the food banks debate, because there were too many of us. None the less, I am pleased that I am on my feet today, debating this important matter.
Bournemouth East is renowned for being a wonderful seaside tourist resort. What is less well known is that it is also a thriving business community. Many financial services organisations choose to use this corner of Dorset to base not only significant operations, but their headquarters. They include the Nationwide building society, the Liverpool Victoria, Unisys UK, RIAS Insurance, Barclays and that giant US bank, JP Morgan. Whether such financial institutions are based in Bournemouth or London, they are a reminder of our success in attracting international firms to this country. Those firms could go anywhere in the world to do their business, but when they are based here they bring jobs, investment and prosperity.
It is no fluke that so much of the financial services industry chooses to locate in the UK, making us the world’s leading centre of finance. The firms that invariably choose Britain in which to do their transactions cover a range of services, including insurance, accountancy, shipping, legal services, hedge funds, private equity, asset management or investment banking. Two hundred and fifty-one foreign banks are based in London. We are the leading global financial services centre, and the single most internationally focused financial marketplace in the world.
I am saddened to hear some of the comments from Opposition Members, from which I hope the Front-Bench team will distance themselves. They did a disservice to the banking industry when they mocked those MPs who had been bankers.
We have an unrivalled concentration of capital and capabilities as well as a regulatory system that is now effective, fair and indeed principled, which means that more overseas financial institutions and investors choose to do business in and with the UK than any other country. For example, there is a $1.9 trillion exchange turnover every single day in London. That is 37% of the global share. Around 600 foreign companies are listed on the London stock exchange, which is 18% of the global total. That shows why Britain is so important.
We may think that these big organisations are separate from us, but let us pause to think of some of the financial moments that we might experience in our lives. I am talking about buying a home with a mortgage, seeking a loan to start our own business, or starting our retirement and drawing our pension. On each of those occasions, we look to a financial system that we can trust. I urge Members to be careful when they call for increased levies against banks or random caps on bonuses from the banking sector. We should also be careful about making fun of those who served in that sector, and who now serve in this place.
Let me make it clear. People who work in all those banks and institutions in Bournemouth are not rolling in money; they are not millionaires. They are hard-working individuals who will not get the huge bonuses that have been spoken about in this place. In today’s global, technological, 24/7 economy, it is simple for a firm to relocate to another part of the world. That would mean losing UK jobs, taxes and, most importantly, influence over the regulations. It is important that we exert a modicum of control when we have this debate. We do not want the hysteria that we saw in the interventions at the beginning of this debate.
None the less, I do not dismiss the seismic failure and irresponsible behaviour of part of the banking industry. Indeed, it is the failure of our banking system that has caused the biggest economic downturn in this country. We saw banks lend funds that they did not have to people who could not afford them and in ways that they did not understand. The banking system failed because it was not properly regulated. First, the Bank of England was stripped of its responsibility for keeping the banking system safe. Secondly, the Financial Services Authority was focused only on compliance and individual rules and so missed the bigger picture. Finally, there was failure at the Treasury, where the banking division was run down. As a result, the total debt reached five times the size of the entire economy; 10% of the entire wealth of this country was lost and hundreds of thousands of people lost their jobs and livelihoods.
Labour tries to portray this situation as a global phenomenon—we have just heard that from the hon. Member for Denton and Reddish—and there is no doubt that there is a global context in which to place it, but it is no good blaming the US subprime market or Lehman Brothers. I note that in 2008, when Lehman Brothers collapsed and all these events were happening, banking bonuses were £11.5 billion. To place that in context, the figure now is £1.5 billion. The alarm bells were ringing at the time, but nothing was done.
Closer to home, away from Fannie Mae and Freddie Mac, Northern Rock was handing out 120% mortgages. That was a British issue. The Royal Bank of Scotland and its reckless purchase of ABN Amro after the credit markets had already seized up was also a British issue. We cannot blame any other part of the world for that. It has taken a new Government to reform the regulatory system from top to bottom and restore Britain’s reputation as a competent, global financial centre.
I know that other Members want to speak, so let me say in conclusion that the Government have acted to transform the banking industry through four key areas of reform. The first area is supervision. The Bank of England is back at the centre of the supervisory regime, with new powers to identify and address risks to ensure that banks do not threaten our economy in the future. The second area is structure, with new laws to separate the branch on the high street from the trading floor and therefore protect customers. The third area of reform deals with the cultural perspective by imposing higher standards of conduct on the banking industry and recognising the reckless misconduct that leads to bank failure. The final area is competition, which empowers customers and gives them the greatest choice. That should incentivise innovation and competition in the banking sector.
Our country paid a high price for what went wrong with the banking system. It has taken a new Government to restore order, confidence and control in a sector that is so vital for the rest of the economy.
Ian Lucas (Wrexham) (Lab)
It is a pleasure to follow the hon. Member for Bournemouth East (Mr Ellwood), although I am afraid that I shall disagree with a number of the things he said.
The public want a banking system in the UK that works for them. At the moment, they do not have that. As I mentioned earlier, figures from the Investors Chronicle suggest that even now bank lending is massively biased towards the financial sector and against the manufacturing industry. About 20% of the economy in my constituency is based on manufacturing, as is about 10% of our national economy, but only 2.6% of the stock of bank debt is spent on manufacturing. It is absolutely clear that the banking system in this country does not address the need for the creation of a competitive dynamic economy, not just in the south-east and in the square mile that is the City of London, for which Ministers often seem to speak, but in the rest of the country.
We need a banking sector that supports business and manufacturing across Britain. We have a Government who are committed to supporting a banking sector that represents only one part of the economy, the financial sector, and only one area of the country, the south-east of England. That goes back far beyond 2006—it goes back to the 1980s, when we had an economic sector that relied not just on banks but on organisations called building societies. Building societies were extremely dynamic funders of economic activity across the country and they were regional institutions.
When I became a solicitor in 1986, the main lender of mortgages was the Halifax building society. It is gone; it has disappeared. The Leeds Permanent building society was a major source of lending that contributed to the construction sector. I come from the north-east of England, and the hon. Member for Bournemouth East mentioned Northern Rock. When I was born, the Northern Rock building society was where my relatives put money into an account. It was a building society to support people in the north-east in building homes for their children, and it was destroyed by the demutualisation of the 1980s and 1990s.
The centralisation of the banking and building society economy happened as a consequence of the demutualisation and privatisations of the late 1980s. More and more financial power was concentrated in the City of London, away from local communities. Banking and building societies became completely divorced from the communities that they represented. As a consequence, we have the obscenity of bankers’ salaries being paid by such organisations. The chief executives of RBS, which has taken over the Halifax building society, and of the Lloyds Banking Group are paid £5.8 million a year with all the bonuses they receive. Those figures are from the end of 2010. Such salaries are out of step not only with the experience of the poorer people in our communities but with that of the middle classes. They are out of step with the people who become police officers or teachers for £20,000 a year, and with the local businesses that need investment.
The little businesses that need investment cannot access finance because the people who run the financial system in this country know that they can get faster, quicker and easier returns in the short term from the financial sector. As long as that remains the case and we have a centralised banking system, that will lead to a non-competitive economic system. We must remember that our Chancellor told us in 2010 that that economic system would clear the deficit by 2015. He has changed his mind since then; he has failed according to his own terms. He has redefined the rules of the game.
We need a complete change. We do not want to go back to 2006 or 2007; we need to go back to an economic system with devolved power and finance. We need a regional banking system based not on North Korea, but on Germany, where the Sparkassen system—[Interruption.] The hon. Member for Spelthorne (Kwasi Kwarteng), who is a banker, probably does not know anything about the Sparkassen system, because it supports manufacturing industry. If he learns anything from this debate, it should be that the important point is that banks under that system are geographically restricted, which means that they must invest in their local community. Germans choose to invest in Sparkassen—20% of people in each region invest in their Sparkassen, which then invests in its local economy to provide jobs for young people. It is not divorced from business and it creates work for young people.
We must shift power away from those people in the City who pay themselves £5.8 million a year and back to local communities, which will then invest local money in local institutions. That was what the Northern Rock building society was like before Mrs Thatcher got her hands on it. Such organisations would invest in local communities, providing jobs in construction and houses for local people. It is as simple as that.
Part of the problem with the banking industry is that far too many people in it are too clever by half. They think that because they understand what a derivative is, they can tell the whole of the rest of the world how to run the economy. We must go back to the principle that was successful during the industrial revolution, when local banks supported local investment. We must go back to building societies, which even the Business Secretary has said were an important driver of the economy in the 1930s. Unfortunately, we have a Government who are not creating extra competition in the banking sector. They are going back to where we were before the crash happened and, because of that, they are going to fail.
Mr Brian Binley (Northampton South) (Con)
I congratulate the hon. Member for Wrexham (Ian Lucas) on a thoughtful speech. At least it ranged wider than the speech of the shadow Chief Secretary, for whom I have great respect but who surprised me by concentrating quite so much on bonuses, when this whole matter is of much wider import, quite frankly. Indeed, bonuses are an infinitesimal part of our banks’ throughput and lending power, which is what I want to concentrate on. I welcome this debate and the thought that a successful banking sector is critical to our future policy.
We can argue about the reasons for the financial crash—I am sure we shall do so for the next 10 years—but there is no doubt that it undermined the fundamentals of our economy. I praise the Government and welcome their attempt to rebalance our economy by strengthening the contribution of other sectors and of regions beyond the City of London. I believe that the Government are trying to do that, and the hon. Member for Wrexham spoke about it.
It is easy to resort to banker bashing—I have done my fair share of it in the Chamber over the past three years—but we must not forget that banks play a fundamental role in our economy. We need to avoid the traps created by simple solutions and, indeed, sometimes by European interference. I am fearful of the transactions tax, which will harm the City enormously, and I hope that hon. Members on both sides of the House will fight hard to ensure that it does not hit us in the way that a number of people in Europe hope that it will.
Banks are needed first and foremost to maintain the supply of credit to enable the economy to flourish. The financial crash restricted the supply of credit to the economy, in terms of mortgage approvals and business lending. I recognise the fact that, following the excessive use of collateralised debt obligations, banks needed to improve their balance sheets to lessen the risk of a further crash, but the consequence of the response to the crash has had an impact on the wider economy and our path to recovery.
There are welcome signs that the general economy is recovering and that our macro-economic situation is improving. Business and consumer confidence is returning, which is critical. Growth is gaining momentum, and the labour market is improving. Mortgage lending has increased by more than a third during the past year. We have witnessed the fastest growth in demand for mortgages for more than six years, but bank lending to businesses is not so promising.
Despite the general surge in lending, the finance available to businesses from banks has been disappointing. The funding for lending scheme has made only a marginal difference to lending to businesses. In November last year, we saw the biggest drop in business lending for more than two years—more than five times the average monthly drop. I accept that the fall is effected disproportionately by a fall in lending to large businesses, but it reveals a worrying approach to business lending, despite the general optimism in other parts of the economy.
I therefore want to focus on one area for the remainder of my remarks. I recognise the importance of small businesses to the growth of jobs and to the well-being of our nation. Small businesses are crucial to our future prosperity, and the financing of those enterprises is a major issue that we need to get right. They employ more than 14 million people and generate more than £1,500 billion for our economy. Problems with access to finance are indicative of broader difficulties in the economy and have serious consequences, as I know from the businesses in my constituency.
Some people argue that there is no problem with bank lending to small businesses and that the present issue is one of a lack of demand. Perhaps some small businesses are not seeking credit to invest and have constraints on their ambitions to grow. Perhaps a number of small businesses have generated cash surpluses that are available for investment, as confidence continues to grow stronger. The Treasury estimates that amount of money at more than £500 billion.
The funding for lending scheme has, however, failed to meet the aspirations that we were promised it would instigate. I welcome the decision of the Governor of the Bank of England to make business lending the sole beneficiary of the scheme, rather than using it for all loans. Plainly, he feels that more needs to be done in this area, but the position seems fairly clear: funding for lending has made a difference for individuals, but not for small businesses. The Federation of Small Business has argued that many small businesses have been affected by a lack of access to financial support during the recovery and have relied on non-bank lenders to keep them afloat, and that simply is not good enough.
I agree with the Government that business investment needs to increase. The Treasury estimates that a 10% increase in business investment in 2012 would have stimulated gross domestic product by a further £12 billion —almost one percentage point in 2012, when I was calling for more lending. Cash balances in the non-financial sector have grown by £104 billion above the pre-crisis level. Work is needed to translate improved business confidence into investment. Indeed, business investment is more than 25% below its pre-crisis peak. That is not a salutary figure, when we rely on small and medium-sized business to provide the growth and to generate the wealth that we need.
Much needs to be done, especially when we recognise our poor productivity figures. One of the great issues over the next five years will be to increase productivity in our businesses. There is an environment of relatively stable prices and improving confidence, but we need to encourage business to invest for growth. Investment for growth means more jobs, high productivity and improved living standards, so small businesses must have priority. The banks have failed to give them that priority, and I call on the Government to do more to ensure that they get it.
Sammy Wilson (East Antrim) (DUP)
It is a joy to follow the hon. Member for Northampton South (Mr Binley), who has hit on a very important element of the debate: the role of banks in oiling the wheels of the economy to ensure that it is healthy and grows. Today’s debate is important, because despite the changes that the Government have made, the banks in the whole United Kingdom are clearly not fulfilling that function. Indeed, if anything, initiatives like funding for lending and the disappointment there, the return to the bonus culture and the inability of the banks to lend to small businesses all show that there is still a problem with the banking system.
I want to deal with two aspects. First, the hon. Member for Northampton South said that he was disappointed with some of the comments about bonuses, and the Minister has tried to dismiss them by saying that they are only headline chasing nonsense. In an age of austerity, and given the political context in which we are debating the issue, this is not headline chasing nonsense and should not be lightly dismissed as such.
The vast majority of people cannot understand why a Government who are pursuing rigorously—and, I believe, with some justification—a pay policy that restricts public sector pay are at the same time giving priority to challenging an EU ruling on bankers’ pay. I do not mind EU rulings being challenged; I can think of many other EU rulings that I would like the Government to challenge. But let us face it: we are talking about a public sector organisation, so the Government are in effect challenging their own pay policy for some of the most well-off people in society through the courts. This is not headline-chasing nonsense, and it is difficult for the public to understand.
Mr Ellwood
I will keep my intervention short; I am conscious of Madam Deputy Speaker’s guidance. The concern is that if we introduce the EU rules, many organisations will choose to leave the EU and base themselves in Singapore, Hong Kong and other parts of the world. Although the spirit of the proposal makes sense, the real consequences are that it could damage financial investment in the EU.
Sammy Wilson
I could believe the hon. Gentleman if there was some evidence of that. Ministers have boasted today that they have cut bonuses by 60%, or whatever it is, over the last few years, but we have not seen a flight of capital from the UK or a flight of banking business to Singapore or elsewhere. They cannot argue that they are restricting the ability of banks to pay bonuses while claiming that if we do that the banks will leave the country. There has been no evidence that banks cannot recruit or retain people or get the best people, despite the fact that the Government have said that they have restricted bonuses. The question is often asked: what is an appropriate level of bonus? We have not had an answer.
We are talking about a state-run bank and we are not even considering senior executive posts. Cases cited today concern an individual with an increase on his basic salary of £1.7 million to £4.8 million, an increase of 133%. Is that enough? Another individual has a basic salary of £700,000, which after bonuses is £2.1 million, a 300% increase. Is that enough? Another individual has an increase from £775,000 to £3.3 million, an increase of 450%. Is that enough? The increases go right up to 600%. When do we stop? Surely the Government must have some view on this, but we have not heard it. That is why this debate on bonuses is important. We cannot have a state-run bank where bonuses of up to 600% are being given but the Government seem to have no view on it, whereas they do hold the view that public sector workers on £14,000 a year should not get a 1% increase. That is why it is important. It is not headline-chasing nonsense.
The second issue that I want to deal with is competition, which is particularly pertinent to Northern Ireland. As we are sitting here today, the Northern Ireland Affairs Committee is considering the banking structure in Northern Ireland where we have a particular problem because 67% of the market is served by banks such as Ulster bank, which is part of RBS, the Bank of Ireland and the First Trust bank, both of which had to be bailed out by the Irish Government. All those banks find that their lending ability is hugely impaired by the bad loans and the bad decisions that were made during the property boom in Northern Ireland, and now they are trying to consolidate their balance sheets. Lack of competition is one reason why from 2010 until now lending to businesses in Northern Ireland has fallen by 12.5%. During the last year, it fell by 5%, even at a time of growth when one would expect businesses to need to obtain further finance.
The Tomlinson report did not really cover Northern Ireland, but the excesses that it identified are to be found to an even greater degree there. Constituents regularly come to me about property loans and the first question I ask is whether they stopped paying the loans, but they were servicing their loans and paying the interest, and in some instances they were even paying down the capital, but their bank deliberately changed the rules and withdrew the facility, sometimes on a technicality, and sometimes on a technicality contrived by the banks. The loans were called in, and when the properties could not be sold, Ulster bank rode to the rescue and offered to put them on the West Register and buy them at a deflated price, even though there was an income stream and, had it waited long enough, the property market would have picked up some of the difference. The result is that many viable businesses have been sent to the wall by the actions of the banks seeking to repair their balance sheet at the expense of the real economy. The businesses then had to put people out of work because they were declared bankrupt. That is why there is a need to restructure the banking system.
If there is a need to restructure the banking system in Great Britain, there is an even greater need for competition in Northern Ireland. I look forward to hearing what the Minister and the Opposition spokesman have to say about what can be done in such cases, whether it is the kind of localism referred to by the hon. Member for Wrexham (Ian Lucas) or the introduction of a big new player that is not contaminated by the property loans of the past, splitting up some of the existing banks to ensure that that will happen. If we continue with the present banking structure, we will not find a way out of the current recession. That is why the need for increased competition referred to in the motion is as important as the need to restrict bonuses.
Ian Swales (Redcar) (LD)
I naturally share many of the concerns expressed today, but a common theme seems to be emerging from these Opposition day debates about business and financial issues, whether they be on energy, gambling or banking. The Labour party makes a mess of things in government, realises there is a problem when it is in opposition and then proposes the wrong solutions, although they help it with its headline writing.
Let us look at some of the issues, the first of which is competition. I checked this morning and right now 55 different companies are offering current accounts; there are even 11 different types of account. It is now so competitive that many banks are paying people to have current accounts. Therefore there is a real question as to how restricted the competition is. A quarter of people already do not bank with the big four, and TSB has just been demerged to form a new high street bank. But high street banks are only part of the story. It is not in the motion, but we see from the press that the Labour party will try to force banks to demerge their branches. In fact, a lot of banking is not done that way at all. I have not had a bricks and mortar branch, for business or personal reasons, since 1989, when I took out the First Direct telephone banking service. How would that proposal work anyway? A banking analyst speaking to the BBC today asked:
“What makes anybody believe that there’s a queue of people willing to buy these branches? New and smaller banks—they don’t want more branches, they want more apps.”
There is an important point that we need to recognise about technology, which leads to the concerns expressed by some Members about what will happen to rural banking systems. Clearly, not everybody has access to apps and the internet. I assure the hon. Member for Denton and Reddish (Andrew Gwynne) that the scheme for cash machines in deprived areas is still in operation, as I know from my constituency.
We know that everything in the banking sector is far from rosy. Many hon. Members have spoken about business lending, and I am particularly concerned about the manufacturing industry, which is important in my area. The banks are lurching from one scandal to the next: payment protection insurance, LIBOR, foreign exchange fixing and interest rate swaps. A business in my constituency, Python Properties, specialises in refurbishing iconic commercial buildings, which it has done in South Bank, also in my constituency. It now has tenants waiting for the next floor of a building that it has been refurbishing, but it does not have the cash to do the work, because HSBC is still holding out on paying it compensation for an interest rate swap. I hope Ministers will urge the banks to get on and pay out money for those swap arrangements.
The Government have done good work in tightening up on tax avoidance—it is still far too high, but was rife before this Government took office—to the point where HSBC and Barclays have now effectively disbanded their tax avoidance advice teams. We are seeing some progress, but there is a lot more to do. The culture of the banking industry is still not what it ought to be.
The Government have been taking action, of course, partly through frustration, by setting up new banks. The Business Secretary says that he is the first person to set up new state banks since Victorian times, as the green investment bank and the business bank are now operational, but let us not forget the Financial Services (Banking Reform) Act 2013, the Financial Services Act 2012 and, as I have mentioned, the agreement on tax avoidance. There is also now a permanent bank levy, as well as inquiries into LIBOR and the banking inquiry itself.
Bonuses are now more directly linked to performance in what are, after all, commercial businesses. I know that the Business Secretary is taking steps on executive pay, for example by giving shareholders binding votes on a company’s pay policy. The Government cannot run away from their responsibilities for RBS or Lloyds, as many Members have said, because they are a major shareholder in those organisations. They have a role in the decision-making process under the new rules. As the Minister said, the Business Secretary is taking steps on executive pay, unlike his predecessor, the one who said that he was
“intensely relaxed about people getting filthy rich”.
Under the previous Government, capital gains were taxed at 18%, but this Government have increased the rate to 28%. People were allowed to put up to £250,000 a year into pension schemes and still get full tax relief on it, but that figure has now been reduced to £40,000. The higher income tax rate was 40% for the whole period that the previous Government were in office except the last month, and it is 5% lower now. As Members have said, we should take no lessons from the previous Government on that.
However, setting up a bank is still not as easy as it could be. It is a shame that the hon. Member for Wrexham (Ian Lucas) is no longer in his place, because I was very taken with his speech. As a north-east MP, I vividly remember what happened with Northern Rock, and not just the things he spoke about, but the loss of the Northern Rock Foundation, which put a lot of profit back into the local community. We need a greater emphasis on regional banking. It is not as easy as it should be to set up a regional bank. I hope that Ministers will talk to Dave, who runs Burnley Savings and Loans—known as the “Bank of Dave”—who I think would like to do more but feels constrained.
Lorely Burt (Solihull) (LD)
I am following closely what my hon. Friend is saying about regional banks. In America there are thousands upon thousands of community banks. Would he like to see a development towards community banks, which are even more local than regional banks?
Ian Swales
My hon. Friend makes an important point. Not only should we see that trend here, but the Government should encourage it. To that end, I hope that Ministers will meet a consortium of people from the north-east who are busy trying to set up a north-east bank.
Setting up banks needs to be made easier. The uncertainty that some of the Opposition’s proposals create for what are, after all, commercial organisations is extremely unhelpful. They are now talking about imposing market shares on commercial operations in the banking sector, making them get rid of parts of their operation and dictating how much they can pay their staff. That is a dangerous precedent, because ultimately we have to ensure that competition deals with those things. That is why I welcome the steps that the Government are taking.
The Government have a permanent bank levy. I am surprised that the Opposition want to reduce bank bonuses further, because taxing bank bonuses seems to be the main source of finance for most of what they want to do. It reminds me of a story I used to read to my children, “The Magic Porridge Pot”—it never stops producing porridge.
Today the shadow Chief Minister could not bring himself to apologise for what happened under the previous Government. We have had apologies from the Leader of the Opposition, the shadow Chancellor and the former Prime Minister. History has taught us that we should never allow the Labour party to be in charge of the economy again and that we should continue with the further steps that are needed to improve our banking sector.
Bill Esterson (Sefton Central) (Lab)
Like other hon. Members, I want to speak about some of my constituents’ experiences with the banks, particularly in relation to small business lending. The banks’ behaviour changed overnight when the global financial crisis hit, as a number of businesses in my constituency have made clear to me. They had been repaying loans for years and had never missed a payment, but suddenly the banks called in the loans—the hon. Member for East Antrim (Sammy Wilson) made this same point—and many good businesses went to the wall as a result. That is something I experienced, although our business did not fail, but only because we were able to bail ourselves out by using personal savings.
The problem today is that the banks are still not lending to small businesses. Most of the 4.7 million small business—those with fewer than 10 members of staff—that I meet are unable to borrow money from the banks. They will not lend to them, whether they are the high-tech growth businesses trying to develop the products we need to develop our export industry or the mainstays of our communities—the service firms that support local communities up and down the country. The banks are not lending, whether the companies have a good track record or a good business plan. It seems that the only firms that the banks are lending to—and even here we are seeing some problems—are the larger ones, the medium-sized companies that have significant assets against which they can borrow. I am afraid that the cost of living crisis, which is hitting many ordinary people in this country, is also hitting those who own or run small firms. It is just as bad for small businesses as it is for everybody else. The banks have a crucial role in turning that cost of living crisis around.
My hon. Friend the Member for Wrexham (Ian Lucas) mentioned the German system and how he would like to introduce something similar here, and I agree. Having met representatives of the Sparkassen, I must say that they have a lot to teach us. They know their customers, are based in the regions where they lend, understand the local economy and can lend only in that area. We could also learn something about bonus culture from the German system, because its regional banks’ remuneration is linked to the financial success of the economic area in which they lend. It is not something that we could introduce here directly, but we could certainly learn something about having a bonus culture that is manageable, proportionate, fair and based on success, and the right kind of success, rather than how much the banks lend. The banks in Germany are set up to produce jobs and growth and the banking system is designed to support small businesses.
One of the interesting things I learnt from the Sparkassen is that rather than us having to become better Germans, we should look at who created the German regional banking system—it was this country, after the second world war. We based it on the old stable and steady lending criteria that we used to have in the old regional banks. We developed the system in Germany using this country’s experience and expertise. It is something that I am afraid we moved away from after the big bang of the late ’80s.
We can learn from Germany, but there are good examples in this country too, such as the Merseyside Special Investment Fund. It provides equity and loan finance to small businesses in Merseyside, and it has been one of the few sources of such support to businesses since the financial crisis. Some of its customers switched to it having been turned down for loans by their banks. People who were unable to borrow from the banks have succeeded with MSIF. Indeed, local bank staff across Merseyside sometimes refer customers to MSIF because their own computer says no, so even they understand the problem. It is important to distinguish between banking executives and those who get large bonuses and the ordinary bank staff who do a great job up and down the country, day in, day out, in serving their customers in the retail sector—personal and business customers.
We can learn a lot from MSIF about how to lend. It does not just lend money but gives advice and management support. It understands the local economy and aims to support jobs and growth. It is not a bank, but it performs many of the functions of banks and is filling the gaps left by the banks. It shows what can be done in this country in just the way that the Sparkassen do in Germany. Those are two examples that we can learn from in supporting small businesses. Our proposal for regional banks has much in common with the German model and with what is going on in Merseyside.
I completely agree with my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) about social responsibility. Within a few yards of my constituency office, we face the closure of one branch of a bank. He mentioned the role of post offices. I agree, too, that we should see post offices as another valuable element in our banking system, but unfortunately we also face a post office closure not far from my office. Perhaps Ministers in different Departments—those responsible for post offices and those responsible for banking matters—need to talk to each other, and of course to the banks as well.
Labour Members have the right ideas about regional banks and about how we could ensure that there is the lending to small businesses that is needed. There must be a change in the banks’ approach if we are to see the recovery and the investment in business that will lead to the exports that this country desperately needs to move forward in the short term and the long term. The banking system is crucial in this. Our proposed measures show the way forward. I hope the Government will pay attention to them and take the action that is needed, and not just carry on as they have during the past three years.
Kwasi Kwarteng (Spelthorne) (Con)
I am pleased to follow the hon. Member for Sefton Central (Bill Esterson), who gave a very measured account of some of the challenges facing the banking sector.
It is absolutely right that we in this House should be talking about small businesses and the challenges they face in trying to get credit and loans. I represent a borough that is almost exclusively dependent on small businesses from an economic point of view. Obviously we have Heathrow airport, but small businesses are the predominant employers. Banks today are perhaps more reluctant to lend to small businesses than they were 10 years ago. Small businesses that need to have loans approved are much more likely to feel confident in a less centralised structure. They are happier dealing with loan officers they have known for a long time and if they have good local relationships. That gives them a lot more confidence than some of the computerised and centralised forms of banking that we have seen. In Spelthorne, lots of small businesses use export finance. Because of the proximity of the airport, they are reliant on foreign trade to do their business. Credit lines are very important for those sorts of businesses.
I suggest—perhaps this will find less agreement around the House—that the bankers’ job is very difficult, because policy makers are saying, “We want your bank to lend more money”, at a time when capital requirements are higher. It does not take a very sophisticated appreciation of finance—I was about to say that it does not take the brains of an archbishop, which is very relevant in a debate on finance—to realise that it is very difficult for a bank to extend its balance sheet while increasing its capital. If we look at it as a pantomime horse, the two ends of the horse are pulling in different directions in being asked to raise capital and to lend money at the same time. That is a difficult balancing act.
I want to talk about the general condition of the sector as it has developed over the past 10 or 15 years. As my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) said, banks’ leverage ratios were remarkably stable from the end of the second world war and going into the 1950s, right up until 2000. It was only after the turn of the century that we saw the almost frenzied credit expansion that made us so vulnerable in the final denouement when Lehman Brothers collapsed and the crash happened. Labour Members have suggested that many causes of the financial crisis extend back to the 1980s, with big bang and all the rest of it. In terms of leverage ratios, though, the serious risk in the system developed relatively recently, for lots of different reasons. Labour Members would suggest that a culture of deregulation brought in by Margaret Thatcher was responsible for some of the recklessness in the system, whereas Government Members would suggest that it was due to some of the reforms in 1997, particularly with regard to the Bank of England’s supervisory role.
At that time there was a great deal of complacency, on both sides of the House, about the sustainability of this model. As has been repeated many times, we were in an era when Cabinet Ministers were
“intensely relaxed about people getting filthy rich”.
That sentiment was not exclusive to Labour Front Benchers. The political establishment were quite content to see vast bonuses and big salaries extended across the City of London, for the simple reason that the tax revenues coming into the Government from the City were extremely useful at that time. Even though we were running deficits when the country was growing, we were using a lot of those tax revenues for Government spending. There was a symbiosis in which we were all somehow complicit. I find it interesting that Labour Members suggest we cap bonuses, because they will remember that, during the times of plenty, it was taxes on bonuses that gave such vast sums to the Exchequer, which it used—more than used, because it had to borrow—to spend on public administration.
It does not make any sense for people in the House of Commons to engage in banker-bashing when a lot of the prosperity in the constituencies we represent has been fuelled by this country’s success in financial services. If we look across the range of financial services in banking, insurance, actuaries and accounting, we will see that all those professional bodies were largely encouraged and developed on these islands. Britain has always been—certainly for 300 or 400 years—at the centre of innovation in the financial industry. We cannot simply turn our back on that or suggest that we should penalise and punish. That is not how we have developed or how we will get future prosperity.
Although I absolutely share some of the concerns expressed by Opposition Members during this very reasonable debate—it has been much less political than one might have anticipated—I must say, once again, that finance is something in which we are world beaters and we should not be ashamed of it. We should not be embarrassed about it; we should encourage it. Yes, we should have more regulation and a stable regulatory environment—which, I hasten to add, was not implemented over the past 15 years—but at the same time we must not forget that a lot of the prosperity and tax revenues that accrue to the Government derive from the continuing success of the City of London, as has been the case for many centuries.
Mr Michael Meacher (Oldham West and Royton) (Lab)
This has been a timely debate and I say that advisedly, having listened to the complacent, provocative and characteristically tribalistic knockabout from the Financial Secretary, which seemed to me to be almost totally devoid of any new, serious content.
The record of the banks over the past five years has been so riddled with abuse of power, criminal malfeasance, reckless speculation, pervasive mis-selling of financial products, facilitation of contrived tax avoidance on an industrial scale, the rigging of the LIBOR and Euribor interest rate benchmarks, a growing and dangerous development of a shadow banking system, and continued dalliance with the exotic financial derivatives which precipitated the worldwide crash of 2008-9 in the first place that, when combined with the fact that there has been very little fundamental reform so far, there must be a serious risk of another financial cataclysm in the foreseeable future.
The central fact about banking power in Britain today is that 85% of the public’s money in the retail market is controlled by just five big banks, which can—and do—use that money without any accountability to the public interest. The total gross spending of the banking sector reached £7 trillion—five times GDP—in mid-2011. Although it has somewhat reduced today, it still exceeds total Government spending by a factor of almost 10:1. That means that this tiny banking clique commands more spending power to control the UK economy than the entire machinery of Government.
How does it use that power? The most striking fact about the British economy over the past five years—we all know this—is that the banks’ lending to industry has largely been negative for most of that time, while at the same time the banks have continued with their indulgence in property, overseas speculation, tax avoidance and risky derivatives. In the light of that, it surely is the case that the power of this dominant clique of the top UK banks, which has been so badly misused against the public interest, has to be broken up.
Mr Meacher
I have no time to give way.
By being too big to fail, the banks exacerbate moral hazard, because the knowledge of the explicit taxpayer guarantee encourages excessive risk taking and recklessness. They have failed in their pre-eminent duty to keep adequate funding flowing to UK business, and through their size and weight they choke off competition and new entrants to the market. Initially, that should be brought about by a clean break between retail and investment banking. The Vickers alternative of Chinese walls—separating the two functions within a single, still-integrated structure—is flawed owing to the fact that the City will in no time circumvent it through regulatory arbitrage.
Beyond that initial break, I believe there are strong grounds for further disbandment, which several of my hon. Friends have mentioned, in order to pave the way for what Britain really needs at this time, which is regional banks such as the Sparkassen banks in the German Mittelstand and specialist banks concentrating on infrastructure development, the knowledge and information industries, investment for a low-carbon economy, small businesses and so on.
The fact is that the finance sector is always the most dangerous component in a capitalist economy, particularly in the deregulated version imposed in the 1980s, and it is surely clear that nothing like enough has yet been done to give assurances to the economy and to taxpayers that we are now protected against the depredations of the finance sector.
The truth is that the big banks knowingly gamed the system for so long in order to expand their balance sheets ever faster and with ever lower capital ratios, based on the bogus claim that their lending was then less risky. They even deliberately invented the colossal credit default swaps market as an asset class in order to enable the hedge funds to speculate against collateralised debt obligations, and they gained regulators and investors alike, using their vast lobbying power to create the relaxed regulatory environment which, of course, is at the root of all of this.
That lobbying power—probably the most formidable in Britain—is still being used ferociously to chip away at any, or every, new proposed regulation at both domestic and EU levels. As a result, capital ratios are still too low; the proposal to raise them is wrongly being delayed until 2018-19 to fit in with Basel III; the use of offshoring and tax havens has hardly been reduced at all; lending to UK industry remains deplorably low; the shadow banking system has not been effectively tackled; and managerial oversight will not be enforced until the Tyrie commission proposal, which is a good one, to hold individual directors and executives to account by disqualification or a custodial sentence is implemented.
My last point concerns the control of the money supply. The banks have, in effect, seized control of the money supply. They have become major generators of unsustainable asset bubbles, which is a source of great instability to the economy and of enormous cost to the taxpayer. They control 97% of domestic credit creation and have used their virtual monopoly over it to feed successive property booms and speculative foreign ventures while allocating—this is the key point—just 8% of the nation’s resources to UK productive investment in the form of manufacturing, communications and distribution.
The case for bringing back control of the money supply to public hands—as was always the case in this country until the 1980s—is crucial, partly to prevent the skewed allocation of national funding excessively towards mortgaged property; partly to rebalance the economy from finance to manufacturing when our balance of payments on traded goods is currently running at a deficit of more than £100 billion every year, which is frankly unsustainable; and partly to channel a huge amount more of our resources into real, productive investment, without which Britain will never recover its global competitive position.
The banks have massively let down this country and they continue to do so. The extensive restructuring of the financial sector is critical for the future of this country, and that requires far deeper reform than the present Government are trying to get away with.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It will be obvious to the House that every speaker has taken their full eight minutes or more. I therefore have to reduce the time limit for Back-Bench speeches to seven minutes.
Guy Opperman (Hexham) (Con)
Greater competition, the desire for local banks and the Labour policy to close regional voluntaries are the issues of this debate. I have held two local banking conferences over the past six months—one in Gateshead on 6 June and the other in London in December—and they were attended by in excess of 350 people from various organisations, banks, accountancy firms and start-ups. It was very striking that, contrary to what the right hon. Member for Oldham West and Royton (Mr Meacher) has recounted, there was a tremendous desire for a large number of new banks, and that is in fact the reality.
I have met the likes of Metro, Aldermore, Handelsbanken, obviously Virgin, Cambridge and Counties—it was set up out of a local authority pension fund—and the Hampshire bank. A fantastic bank has been put forward by the Unite union, on behalf of Labour, in Salford, and it is doing wonderful work. I have met Alex, who is the linchpin of that. He is a fantastic lad, who is doing great stuff to try to transform how that local community bank provides services to the local community of Salford.
I therefore disagree with the doom and gloom approach about there being no competition or new entrants. Certainly, when I meet those from the Financial Services Authority and the Prudential Regulation Authority, including Sam Woods and all the individuals involved with the regulators, they tell me that they have had in excess of 25 separate pre-applications that they are now considering.
On 23 April 2012, when we debated local banks and the need for greater competition—this is my seventh speech on local banking in the House in the past three and a half years—the Labour party chose to vote to delete clause 5 of the Financial Services Bill, which was designed to create greater ease for new entrants to enter the market and related to how far competition can encourage innovation. I welcome the fact that the Opposition seem to have changed their policy and would now like more competition, but the proof of the pudding is always in the eating, is it not?
An announcement has been briefed to Nick Robinson of the BBC that the Labour party, if it gets into government, will ultimately close regional and local branches. As my hon. Friend the Member for Winchester (Steve Brine) made clear when he questioned the shadow chief Secretary, the hon. Member for Nottingham East (Chris Leslie), that would have a massive impact on our local communities.
I am certainly trying to have more bank branches opened in my area. I am negotiating with my credit union to see how far it can do that. Similarly, I am trying to create new banks in the north-east. As my hon. Friend the Member for Redcar (Ian Swales) has made clear, there is great scope for new entrants to do so. The very fact that the big five are so complacent and have had so many problems, gives new entrants an opportunity, which is certainly being exploited by all those we have spoken about today.
In that context, I want briefly to touch on two matters—credit unions and the Church, neither of which have been discussed. It would be a failure of this debate if it did not deal with both of them. All of us should support our credit unions. I am certainly wholeheartedly behind the Northumberland credit union. We must acknowledge that even though this Government have done more to give credit unions greater clout, power and ability to lend, credit unions are still incapable of filling the banking void and overcoming the current difficulties.
The only way forward is the creation of local community banks built on a credit union. I can give the House at least three examples. I have already mentioned the bank in Salford, which is the former Salford credit union. The Glasgow credit union is probably the biggest and most successful in the country: it is effectively a bank in all but name. Finally, I have the Prince Bishops community bank in Durham, which is the former Stanley credit union. All are very successful and have great potential. We need to follow such examples.
To touch briefly on the Church, I welcome the fact that Justin Welby is the new Archbishop of Canterbury. It is savage irony that 500 years have had to pass for us to have the new type of God’s banker, who is encouraging the Church to become involved in banking. It can only be good if the clergy move from being reactive to poverty and social deprivation—to their great credit, they are amazingly good at reacting in that way—to being proactive.
I suggest that the Church has a role, acting with their credit unions and local community banks, effectively to become the offshoots and outlets of those community banks. After all, all the vicars that we, as constituency MPs, know and deal with know which people are in great social deprivation, going to the food bank or having problems with high-cost credit and need debt advice. There is massive scope for the Church to take a greater role by dovetailing churches with credit unions and community banks. I welcome the fact that the Church has chosen to buy branches of Williams and Glyn’s bank, and is setting something up so that we can go forward. If we can do that and become more proactive in our local communities, a huge amount can be done.
In seven days’ time, I will meet my Northumberland credit union in Hexham to discuss how we can promote the idea of taking the credit union, building it up and creating a larger bank to make the situation so much better. If we do that, we will have in our regions and communities a bank that we can trust, with a proper brand name and identity, and one that is part of the community, rather than something based in London or Frankfurt and completely divorced from that community. That is the problem that we all face and have identified and, to their great credit, that is the problem that the Government have made great efforts to address.
In the interests of brevity, I will draw to a close, but I very much urge all parties to make sure that they get behind local community banks. We have not always done so, but we should do so in the future.
Alison McGovern (Wirral South) (Lab)
I am sorry that the hon. Member for Spelthorne (Kwasi Kwarteng) appears to be leaving his place, as I want briefly to say that I am worried about what he said. He seems not to have heard the message from the public that they are still dissatisfied with our banking industry. I do not think that our financial services industry should be about wealth accumulation; it is there as a supporting act to this country’s industry for wealth creation. I hope that he might consider his remarks in that light. I thank him for pausing to hear what I have said.
I want to speak about two matters—first, about co-operation versus competition in regulation, and secondly, about rebalancing our economy. I thought that those would be cross-party matters, but having heard what some Government Members have said so far, I am no longer sure.
On global co-operation in the regulation of financial services, we in this House must recognise that we are part of an international global marketplace. That has been pointed out by British citizens since Adam Smith sat on the promenade at Kirkcaldy and watched ships going in and out of the port. As a Merseyside Member of Parliament who sees very large ships coming in and out along our River Mersey, I am also acutely aware of that point.
Fundamentally, in the face of a global international marketplace—financial services are undoubtedly such a marketplace—we have two choices. We can either work with our partners to regulate the industry, given the risk that it might pose to all our economies, or we can take part in a global race to the bottom and allow global corporations to play one Government off against another. The bank bonus cap introduced by the EU is a classic example of that dilemma.
I argue that there are strong moral reasons to be internationalist, but there are clearly economic reasons too. This is a classic economic prisoner’s dilemma: we either work together and everybody benefits, or we work against others and in the end we work against our own interest. The G20 resolved in 2009 to introduce new global rules on supervision. Since then, the UK has acted unilaterally and has blocked global co-operation. If we do not co-operate, we are doomed to compete against our own interests in the long term.
I do not think that the British people are supportive of a Chancellor who has rushed to defend bankers bonuses that can be several times the size of an annual salary. The high level of variability in remuneration is leading us into the kind of cycle that we were in before. I am worried that we are dooming ourselves to make the mistakes of the past. I therefore ask the Minister to say what intention the UK has to work with its partners across the world to realise the promises that were made in 2009.
David Mowat (Warrington South) (Con)
I agree completely on the need for global co-operation, as do the Government. That is why the Basel agreements are being implemented in the UK, with everything that that involves. However, there is a distinction between global co-operation and European co-operation. Why does the hon. Lady think that we should not follow global rules on bankers bonuses, which the Government would be much happier to do if they existed, rather than European rules?
Alison McGovern
We seem to be hearing that argument more and more from the Tory party. I am sorry to hear it from the hon. Gentleman, who has previously spoken sensibly about working with our European partners. It is as if Europe is the great problem and that Britain can be part of a world that does not involve Europe. However, Europe is one of the world’s biggest trading blocs, along with the United States, so if we are not influencing Europe, where should we be influencing?
The second question that Ministers need to answer is where is their plan for rebalancing the economy. Given the way in which they have acted in relation to the City, coupled with the way in which they have acted in relation to the housing market, I suspect that we are getting the same old story from the Tory party. I would happily have debated the points that were made by the hon. Member for Spelthorne about 1986 and the influence that that moment had on our economy. However, I ask the Minister what the Government’s plan is for the City. Do they just want to reflate it all over again? Are we back to Tory economics as usual—the so-called FIRE economy of finance, insurance and real estate—leaving us open to the same worries that we faced in the past? Let the City of London rip and never mind the risk to the rest of the country!
The way to deal with the risks that we face is to consider proposals for proper regulation, such as establishing a full reserve power to split banks into retail and investment arms if necessary. We need to keep our eye on the ring fence, as was suggested by the Independent Commission on Banking. There should be a review of the ring fence to check that it is working and, if it is not, we should use the full reserve power for splitting the banks.
We must also not take our eye off the issue of remuneration. The regulator needs more powers to reform the rules if it is necessary. The British public are not comfortable with bank bonuses running away at two times people’s annual salaries. I would invite any Member of the House to talk to my constituents about how they feel about the incomes that are earned by people in the City of London. They do not feel that it is in the best interests of this country to have such a concentration of high earners. That creates risks for which they pay the price. The cuts that we have seen to local authorities have hurt communities up and down this country, but they were brought about by the actions of a very few people in the City of London.
If Ministers do not take rebalancing seriously, people in this country, and certainly those in Wirral and Merseyside, will not forgive them. If they are serious about rebalancing, I simply ask them to say what steps they will take to regulate the City properly. Will they explain to this House—I am not sure that they will, but I would like them to do so—how they think an ever-expanding City of London that imports ever more risk into this country is helpful to the ordinary businesses and companies that I represent in the Wirral?
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Member for Redcar (Ian Swales) suggested that there was a pattern to these debates. The pattern I am increasingly seeing is rather like the schoolchild saying to the teacher, “I didn’t do my homework today because he didn’t do his homework yesterday.” The answer to virtually everything in the Financial Secretary’s opening speech seemed to be, “If Labour didn’t do it in 13 years, that lets us off the hook.” Regardless of whether his accusations about what the Labour Government did or did not do are accurate, for the Government to say, “Well, we don’t have to bother” is not the answer. There were other aspects of the Minister’s opening speech that I really have to pick up on for the record.
The Minister gave the impression that under the previous Labour Government income inequality mushroomed as never before. By saying something confidently enough, he hopes that nobody will ever question it, but what actually did happen? Using the Gini coefficient, the recognised measure, there was indeed an increase in inequality from 37 to 40 from 1997 to 2009. I am not happy about that—I would have preferred the Labour Government to have done more to close the inequality gap—but the real mushrooming of income inequality was from 1979 to 1997, when it sprang up from 26—a low number, which means there was less inequality—to 37. The Labour Government did not turn it around, despite several measures to help those at the lower income level—for example, addressing pensioner poverty, which most people recognise was done—but it is simply not correct to convey the impression that our record on inequality was particularly bad.
I represent a constituency in a city where the financial services industry is particularly important. In the last census, the industry accounted for 11% of all employment in the city. Many of my constituents work at some level in the financial services industry. I was talking to a constituent recently about the bonus culture. In his field of work, bonuses historically formed a substantial part of earnings. They were expected and taken for granted. However, they were deemed to be increasingly unfair to groups of employees who did not have the opportunity to earn them. After much negotiation, the solution was to modernise pay by ending the award of bonuses. My constituent lost £7,000 a year in that process, which was nearly a quarter of his previous annual earnings.
I am sure that everyone will have grasped that my constituent does not work in the financial services industry. He is not a banker; he is a joiner who works for the council’s building services department. A bonus that is paid every week or every year, with little or no reference to performance, was, it was argued in the negotiation process, a distortion of earnings. Why is that argument not applicable to the banking sector? My constituent claims that morale has been affected by the changes—turnover and sick leave have increased—but that made no difference to the view that was taken on the bonus culture.
Does it matter to a country if there are vast differences in income and inequality? I think it does matter. This is not simply the politics of envy. We risk increasing social disconnect in our society. People feel that nothing changes. As politicians, we spend a lot of time being angsting about why people engage less with politics and why, when we go to their doors, they say to us, “You’re all the same. Nothing ever changes. My life never changes. It’s not worth my while voting. Everything will just be the same. The rich will still be rich and I’ll still be the same as I am.” We worry about how we can do something about that.
I submit that one reason for that is that people see great unfairness and great inequality, and they would like something done about it. If we do not make some changes, we risk seeing the gap between average voters—or non-voters, as they are more likely to be—and the elite running the country get even bigger. Average voters feel that the elite have nothing to do with them.
There are other issues relating to banking. I am glad that the hon. Member for Hexham (Guy Opperman) spoke about banking for the less well-off. Increasingly, and for all sorts of reasons, we would like those who are less well-off to be banked. For example, those paying for energy bills through PayPoint usually end up paying an extra charge on top of their bill, so that the poorest people without bank accounts pay the most. We want people to be banked so that they can get employment—it is often a prerequisite because money needs to be paid into a bank account—and so that they can receive their benefits payments.
The previous Government took up the question of the unbanked, through the introduction of basic bank accounts and putting pressure on banks to do something about it. It was their intention to make it compulsory for banks to offer basic bank accounts, but the incoming coalition Government chose specifically not to go ahead with them, and now only one of the major banks offers basic banks accounts; all the others have stopped. This is important if people are to have the widest possible choice, and much as I support the credit unions in my area and much as I think they have a valuable role to play, they are in their present incarnation—and will remain so without a lot more investment—very far from being able to substitute for proper basic bank accounts and provide for the least well-off. Banks need to do something about that. It is another important aspect of what they should be doing for the country.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
As many hon. Members have said, this has been an interesting debate. Surprisingly, some Members thought there had been a conspiracy to have this debate clash with the Treasury Select Committee, but that was perhaps a conspiracy theory too far, to coin a phrase.
It being the new year and the Financial Services (Banking Reform) Act having been passed, I had hoped we might be able to move on. I thought we might have been in a position to debate where to go next, but unfortunately, despite it being the new year, we did not hear anything new from the Minister, just the same tired old Tory lines, which was disappointing. The Minister boasts of his experience in the banking sector, so I had hoped he might have been able to throw some light on the debate, rather than simply trying to bolster his reputation as the Tories’ attack dog, which seems to be his role at the moment. Also, he seems to have a new middle name, because his response to every second question was, “I will come to that shortly”, but I am not sure he ever did. However, I am sure that we will hear more answers from him in due course.
We have heard some excellent contributions this afternoon from my hon. Friends the Members for Denton and Reddish (Andrew Gwynne), for Linlithgow and East Falkirk (Michael Connarty), for Wrexham (Ian Lucas) and for Sefton Central (Bill Esterson), my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) and my hon. Friends the Members for Wirral South (Alison McGovern) and for Edinburgh East (Sheila Gilmore). We also heard interesting contributions from the hon. Member for East Antrim (Sammy Wilson), who highlighted several issues about bonuses, and from the hon. Member for Northampton South (Mr Binley), who did not quite stick to the Government line all the way through when he raised issues to do with funding for lending.
We had hoped to raise the tone and tenor of the debate and move on from the banking reform Bill. I think we would all agree that we need our banks to work for the whole economy—for individuals, small businesses and the large business sector—if we are to earn our way out of the cost of living crisis. As I highlighted when we were debating the banking reform Bill, the danger is assuming that the job is done and that no further reform is necessary. Now that that Bill has been passed, our concern, which was reflected by many of my hon. Friends, is that the banks will simply slide back into previous practices or wish to go back to business as usual. [Interruption.] I see some Government Members agreeing with this. That is why we have concerns about bonuses.
As many hon. Members have said today, there is a question mark over how it can be justifiable, in a time of austerity, when everyone else is being asked to do their bit, for bankers to seek excessive bonuses of over 100% of their annual salaries. I know the Minister said that nothing has been put forward by RBS yet and that he would consider it when the time came—I suppose that will be “shortly”. Members of the public watching the debate and the media, hearing the news and looking at the newspapers want to see a signal that the Government believe, as the Opposition believe, that taking forward these excessive bonuses is not the correct approach.
Mr MacNeil
What does the hon. Lady think could be done with the money currently put in the bonus pot? What else could the banks do with that money if their bonuses were curbed? How else could they spend it; what could they do with it?
Cathy Jamieson
The hon. Gentleman will know that Labour’s policy, which I am sure he will support, is to use the bankers bonus tax to fund a youth jobs guarantee. That would benefit Scotland, too, which I am sure he would approve of.
Our motion highlights the fact that we have not yet done enough to boost competition in the banking industry—by encouraging the challenger banks, for example. We have not looked at expanding the mutual sector either. Some hon. Members provided examples of new banks coming forward, but we should acknowledge that that has not yet challenged the main banking sector in the way that we would like.
We should recognise that public trust in the sector is still at a low level. I remain concerned that, during the course of the banking Bill, the Government rejected both the fully independent licensing system for bankers and the idea, raised again in today’s debate, of imposing a duty of care to customers and all those working in the banking sector—a fiduciary duty. Opposition Members have consistently argued that those two policies would help to reform banking to make it work in the interests of customers and the economy rather than of the bankers themselves. Despite the changes in the banking Bill, the original Vickers recommendations have been rather watered down, particularly in respect of competition.
A number of hon. Members discussed and provided examples of lower bank lending to business, with it falling far short of what we need to boost jobs and growth so that our economy can recover. It was mentioned that the Bank of England has reported a record £4.7 billion contraction in lending to business—the biggest drop in more than two years and nearly five times the recent average monthly decline of £1 billion. That follows the decreases in lending in the UK by 3% each year since the start of the financial crisis amidst the failure of the other schemes that the Government introduced such as Project Merlin and its business bank, which has not had the intended impact.
Little wonder, then, that the Government belatedly heeded Labour’s call to refocus on the funding for lending scheme—a point made by the hon. Member for Northampton South—and introduced change in an attempt to improve the supply of credit both to big business and to SMEs. Time after time, however, we have heard that small businesses in every constituency have been unable to access credit because of the lack of availability of loans and that the terms on which credit was offered often made it more difficult for them to take it. Many report that they simply do not ask for credit, believing either that they will not get it or that the terms will be prohibitive.
It was interesting to see a recent research report from the peer-to-business lending platform, rebuildingsociety.com, showing that SMEs have stated that more than 21% of SMEs continue to suffer those restrictions. That is why 1 million SMEs have seen the lending terms from their bank worsen over the past five years. It is all very well to say that the money is there, but the businesses are not applying for it and are not going to the banks to ask for it. The reality is that nearly half of those who responded in that particular survey have had their interest rate and their overdraft increase, while a third have had their lending facilities cut. More than one in 10 SMEs did not even approach their banks for a loan, because they believed that they would be unsuccessful.
We fear that things are sliding back to “business as usual”. We are concerned about the whole question of bankers’ bonuses and bankers’ pay. I know that during Prime Minister’s Question Time today the Prime Minister suggested that he did not want the overall cost to increase, but that failed to take account of the public’s concern about the fact that individuals in the banking sector who are already highly paid are able to receive bonuses amounting to twice their annual salaries.
Figures from the European Banking Authority, published at the end of 2013, reveal that the financial rewards handed to the City’s highest-paid bankers rose by a third last year, and that more than 2,000 bankers in the United Kingdom earned more than £1 million. That means that the UK contains 12 times as many high earners as any other country. Top bankers picked up bonuses averaging 3.7 times their basic salaries, a figure that has risen since 2011. The public want to know who is on their side rather than on the side of the bankers, so that they can be sure that that does not continue, which is why we initiated today’s debate.
My hon. Friend the Member for Nottingham East (Chris Leslie) pointed out that Labour had led calls for the Competition and Markets Authority to be forced to begin, immediately, a full market study of competition in the retail and SME banking sectors, and I hope that the Government will take that on board.
The public want to see a signal that the days of excessive bonuses are over, and they want to see it now. We do not believe that the present position is acceptable, but nothing that the Government have said today has sent that signal to the public. Perhaps the Exchequer Secretary is about to send it now.
The Exchequer Secretary to the Treasury (Mr David Gauke)
This has been a thoughtful and interesting debate. I particularly thank my hon. Friends the Members for West Worcestershire (Harriett Baldwin), for Bournemouth East (Mr Ellwood), for Northampton South (Mr Binley), for Redcar (Ian Swales), for Spelthorne (Kwasi Kwarteng) and for Hexham (Guy Opperman), all of whom made excellent and intelligent speeches. I am not sure that I would use quite the same words to describe the speech made by the shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), but I hope that he will not take that personally. I have a lot of sympathy for him—after all, he spent a number of years making speeches in debates like this one, saying that we were going too far, too fast, and that a plan B was needed. We do not hear quite so much about that now.
We have heard a fair amount about the cost of living in recent months, but Labour party spin doctors have been briefing the press that they are about to bring that campaign to an end, so where does Labour go now? How does it fill the vacuum that exists where an economic policy should be? The answer is, “With a bit of banker-bashing.” I could say, “Same old Labour”, but in reality the rhetoric that we have heard today and during the current Parliament is not consistent with what the last Labour Government did.
When it comes to dealing with the risks and excesses of our financial system, Labour is in no position to criticise us. It is extraordinary that the people who crashed the car now wish to give us a lecture on road safety. They left us with a regulatory system that had failed catastrophically—a system that had failed to identify risks, or, when they were identified, failed to do anything about them—and, when the crisis came, it was not clear who was in charge. But who was the special adviser in the Treasury who was running the show when the tripartite regime was established? The shadow Chancellor. And who was the City Minister in the run-up to the crisis? Again, the shadow Chancellor.
It was this Government who produced the Financial Services (Banking Reform) Act 2013 and implemented the Vickers report, and this Government who established the Financial Policy Committee, involving the Bank of England once again and providing clear lines of responsibility. It is this Government who have ensured that we ring-fence deposits, separating them from volatile investment banking, and it is this Government who have introduced a bail-in power that protects taxpayers, to ensure that shareholders and creditors, not taxpayers, are first in line to pay for a bank failure. It was the last Government who presided over a system whereby individual bankers could not be held properly to account. Under our laws—laws passed by this Government—reckless management of a bank could result in seven years in prison. Under the last Government, it could result in a knighthood.
Bill Esterson
Don’t worry, I’m not after a knighthood. The Minister’s party colleague, the hon. Member for Northampton South (Mr Binley), made it clear that the funding for lending scheme has failed and that lending to small businesses has fallen. The Minister’s comments have been notable in their failure to mention what he is going to do about funding for small businesses. Will he tell us now?
Mr Gauke
Gross lending is up, but one thing that will not help small businesses is if our interest rates rise prematurely because we do not have credibility. We have given this country economic credibility and that has helped to keep interest rates lower for longer.
Our system ensures rigorous scrutiny before someone can have a serious position in a bank. Labour’s system could allow someone like Paul Flowers to become chairman of a bank. While fines went back into the banking system in the past, now they go to support military charities and others.
Mr Binley
May I make the point that I did argue that business lending from the funding for lending scheme was very low indeed, and that is why Mark Carney took the action he did and why I want to see the Government make more sense of lending to small businesses, because that is where growth and well-being are going to come from?
Mr Gauke
No, I shall make some progress.
We did not hear anything about the bankers’ bonus tax from Labour today—at least we do not see much about it in its motion—although it is customary on these occasions for Labour to identify yet another spending programme to be funded by it. [Interruption.] I wonder whether there was no mention of it today because the Opposition are embarrassed by previous occasions when they have claimed that more would be paid—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. This has been a quiet and dignified debate. Members who were not present during it have now come into the Chamber. I ask them to have the courtesy to listen to the Minister.
Mr Gauke
Thank you, Madam Deputy Speaker. I do not know whether the Opposition are embarrassed by previous occasions when they claimed more would be paid from a bankers’ bonus tax than was actually paid in bankers’ bonuses. Perhaps they have noticed that if they cap bonuses they will get less tax from them. They may want to revise their numbers on that.
It has to be pointed out that it has been estimated that City bonuses in 2012-13 were more than 85% lower than at their peak in 2007-08. I know there is genuine concern about bank bonuses encouraging short-term high-risk behaviour, but it is not just the amount that matters; it is also the structure of the bonuses. There is a difference between cash bonuses and bonuses paid in shares with the opportunity for clawback if there is bad behaviour or a need to rebuild regulatory capital. Under the PRA remuneration code, large parts of bonuses must be deferred and paid in shares, aligning the interests of the employee with the long-term interests of the bank. The implication of many of today’s comments is that there is a concern about total remuneration, yet the motion and everything we have heard from the Labour Front Bench is about only one part of remuneration: bonuses. The reality is that the European directive and the policy pursued by Labour will drive up salaries. It is not clear why the Opposition are interested in only one aspect of remuneration, and we have certainly not had an explanation of that. It is also worth pointing out that the Governor of the Bank of England was critical of a cap in his evidence to the Treasury Committee this afternoon.
I am pleased that Labour appears to support the virtues of competition, but that was not its record in government. There were 10 banks in 1997, but that figure reduced over the following 13 years. The Cruickshank report, produced in 2000, was supposed to encourage more competition, but it was blocked by the Treasury and nothing was done. Our record has involved a much greater focus on competition, and it is a primary objective of the Financial Conduct Authority and a secondary objective of the Prudential Regulation Authority. We have a payment systems regulator, which makes things easier for small businesses, and we have changed the application process to make it much more proportionate for new businesses. Furthermore, the regulators indicate that 22 new banks are interested in acquiring authorisation in the UK.
On empowering consumers, our new switching policy saw a 54% increase in switching in December, compared with the year before. We have heard Labour’s proposals for a quota system. We do not have the details, of course, but simply reducing the number of branches of one bank will not create huge new levels of competition. There are concerns about branches being lost under Labour’s proposals. Most significantly of all, the Governor of the Bank of England told the Treasury Select Committee this afternoon that that would not help with competition. One other person has been critical of that policy in the past. In April 2011, the shadow Chancellor said that
“there is no need to break up institutions”.
The last Labour Government’s record on the banking sector was lamentable. Their regulatory system failed, and their attempts to ensure that individuals were held to account also failed. They tried to ensure that bonuses did not create perverse incentives, but that failed. They tried to encourage more competition; that failed. They tried to protect taxpayers’ money, but that failed too. Their record is one of failure, and until they acknowledge that, there is no reason why the British people should take anything they say on this matter seriously again.
Question put.
National Minimum Wage
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:58 - The House divided: - Ayes: 235 / Noes: 299 - Question accordingly negatived.
19:11 - The House divided: - Ayes: 297 / Noes: 227 - Question accordingly agreed to.
Madam Deputy Speaker (Mrs Eleanor Laing)
I must advise the House that Mr Speaker has selected the amendment in the name of the Prime Minister.
Rachel Reeves (Leeds West) (Lab)
I beg to move,
That this House celebrates the 15th anniversary of the introduction of the National Minimum Wage, which falls this year, and the contribution it has made to making work pay, boosting living standards and tackling in-work poverty; notes that, before the National Minimum Wage was established, poverty pay was widespread and that the Conservative Party and many Liberal Democrat hon. Members opposed its introduction; further notes that families are on average £1,600 worse off a year and that the National Minimum Wage is now worth less in real terms than in May 2010; further notes that the Government has not backed up its promise to name and shame firms not paying the minimum wage; calls on the Government to strengthen enforcement of the National Minimum Wage, including by increasing fines for non-payment of the National Minimum Wage and giving local authorities enforcement powers; and further calls on the Government to encourage employers to pay a living wage and take action to restore the value of the National Minimum Wage so that the UK can earn its way out of the cost of living crisis and to help control the cost of social security.
For me, the proudest achievement of the previous Labour Government was the introduction of the national minimum wage. It was important because, as we know, the best way out of poverty is work and because taxpayers should not have to pick up the bill of subsidising bad employers. Making work pay is also vital to getting the social security budget under control and we will not allow the Government to let the national minimum wage wither on the vine.
Fifteen years ago, on 1 April 1999, the national minimum wage took effect. We should and do celebrate the difference it has made to millions of people. We have also called this debate today, at a time of difficulty for so many low-paid workers and with low pay a growing problem across our country, to call on the Government to take action to strengthen the minimum wage, crack down on rogue employers and restore the value that the minimum wage has lost over the past three years. We call on them to do more to build a stronger economy that enables people to earn their way out of the cost of living crisis.
Ms Karen Buck (Westminster North) (Lab)
Social care workers do one of the most important jobs in our society. Does my hon. Friend share my concern that in my borough, Westminster, and, I am sure, in others, social care workers are not even guaranteed the minimum wage as the travelling time between appointments is not counted for the purpose of payment?
Rachel Reeves
An investigation by the Low Pay Unit looked at pay rates before the national minimum wage was introduced and back then one worker in a residential care home was paid just £1.66 an hour. I agree that today, too, people working in that sector are too often exploited and that their employers get round the legislation.
The Low Pay Unit considered pay before 1997 in a range of industries. I mentioned residential care but it also came up with other examples, such as a factory worker who was earning just £1.22 an hour in 1997 and a person working in a chip shop in Birmingham who was earning just 80p an hour. That is sheer exploitation. It is poverty pay and it was taxpayers who picked up the bill.
Let us also remember what Government Members said back then. The right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), now Secretary of State for Work and Pensions, said in 1997 that a minimum wage would
“negatively affect, not hundreds of thousands but millions of people.”—[Official Report, 4 July 1997; Vol. 297, c. 526.]
The right hon. Member for Richmond (Yorks) (Mr Hague), now Foreign Secretary, said back then that a minimum wage would have to be
“so low as to be utterly irrelevant”
otherwise
“it would price people out of work.”—[Official Report, 17 March 1997; Vol. 292, c. 617.]
The right hon. Member for Sevenoaks (Michael Fallon), now the Minister of State responsible for business and enterprise, said that a minimum wage
“will add costs to British business”.—[Official Report, 11 July 1997; Vol. 297, c. 1240.]
And the right hon. Member for Witney (Mr Cameron), now Prime Minister and then a parliamentary candidate in Stafford, darkly predicted in 1997 that a minimum wage would lead to a rise in unemployment.
Mark Tami (Alyn and Deeside) (Lab)
Conservative Members are very keen on calling for us to apologise for things. Does my hon. Friend think that it is time for them to apologise for such comments?
Rachel Reeves
It is not just the Tories who should apologise; the Government’s junior coalition partners should apologise, too, because they were worried back then as well about the impact of the minimum wage. In 1994, their then leader attacked Labour’s
“umbilical attachment to a national, high-rate minimum wage”
and said that
“a national minimum would…force many on to the dole”.
The Liberal Democrats went into the 1997 general election with a manifesto commitment not to a national minimum wage but to a
“regionally variable, minimum hourly rate.”
Let us be grateful that they did not get their way. Despite the then Opposition fighting the legislation tooth and nail, line by line, clause by clause, using every trick in the book to slow, frustrate and obstruct its progress, the national minimum wage became law.
Caroline Dinenage (Gosport) (Con)
I am grateful to the hon. Lady for her fascinating history lesson. I wonder whether her bit of paper also says that 500,000 people lost their jobs under the previous Labour Government and whether she agrees that the announcement made this morning demonstrates the Government’s absolute commitment to ensuring that no employer will be able to exploit their employees by paying unfair wages.
Rachel Reeves
Two million jobs were created under the last Labour Government and employment reached a record high, so I am not sure where the hon. Lady gets her statistics from.
I have quoted the former leader of the Liberal Democrats but, back then, where was the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable)? He was nowhere to be seen in the debates. He was nowhere to be seen on the voting record. On Second Reading and Third Reading, he failed to vote. Apparently, he abstained because he had reservations about a minimum wage. Perhaps he will stand up today to profess his concern for the plight of the low-paid. I am happy to take an intervention from the right hon. Gentleman if he wants to make one.
Ian Mearns (Gateshead) (Lab)
Although the Secretary of State for Business, Innovation and Skills had reservations about the minimum wage, many of my neighbours who worked in the security industry on 90p or £1 an hour back then are eternally grateful for the Labour Government’s action in introducing the minimum wage. It made a massive difference to their lifestyle.
Rachel Reeves
I thank my hon. Friend for that intervention, which reminds me of a story that my predecessor as MP for Leeds West told me. He saw a job advert in our constituency for a security guard back in the mid-1990s that said, “Pay, 90p an hour. Uniform provided. Bring your own dog.” Those were the sort of jobs that existed back then, but members of this Government opposed the national minimum wage legislation. I look forward to hearing what the Secretary of State for Business, Innovation and Skills has to say later, but people will be entitled to ask him where he was when we abolished the scandal of jobs paying less than £1 an hour and when British workers won the right to be paid a decent minimum wage.
Grahame M. Morris (Easington) (Lab)
Notwithstanding the Secretary of State’s reservations about the minimum wage, what does my hon. Friend think about the reservations of ordinary working people about the Government’s plan to give 100% bonuses to bankers at the Royal Bank of Scotland? Will that be well received?
Rachel Reeves
Many people earning £6.31 an hour will be shocked and outraged to find out that bankers this year will get bonuses worth more than they earn, but they will be even more shocked to find out that they are the ones who are paying for those bonuses.
Alex Cunningham (Stockton North) (Lab)
I am suspicious about a tomato company that is expanding in my constituency. It appears to be replacing Stockton workers with people from overseas and paying them the minimum wage. I am told that those foreign workers are charged accommodation costs, so reducing the value of that wage. The company will not answer my letters. Does my hon. Friend understand my suspicions?
Rachel Reeves
I will come to that point shortly because the number of firms that are getting out of paying the minimum wage is incredibly worrying. We suggest increasing the fine to £50,000 for not paying the minimum wage, but there is no point in having such a fine if the legislation is not enforced.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Today’s Glasgow Herald reports that the fine will go up to £20,000 from where it is today. Surely, that is not nearly enough, given that hundreds of thousands of people are not even paid the very minimum wage of £6.31 an hour.
Rachel Reeves
At the Labour party conference, my right hon. Friend the Leader of the Opposition called for the fine to be increased to £50,000, and I support that. It is also important that companies that get out of paying the minimum wage are prosecuted, and we are not seeing that under this Government.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
With regard to the advert about the security guard and the dog, I remind my hon. Friend that the RSPCA refused to allow the dog to work, yet the security guard had to do so.
My hon. Friend is running through a list of the abstentions in the vote on the minimum wage. Please do not leave out the separatists in Scotland, who I think were washing their hair that night.
Rachel Reeves
I thank my hon. Friend for drawing the attention of the House to the voting record of other Members of Parliament on that night.
Thanks to Labour Members of Parliament and a Labour Government, for the first time in history, in England, Scotland, Wales and Northern Ireland, British workers had a legal floor below which their hourly pay could not fall. Slowly but surely during the following years the rate rose. It was attacked every step of the way by many Government Members and, in 2003, when the Labour Government announced a 16% increase in the minimum wage over two years, the right hon. Member for Twickenham attacked the policy directly, saying that it would set a dangerous precedent.
The result of the minimum wage was to boost the wages of nearly 2 million low- paid workers, two thirds of whom were women. It helped to lift 1 million children out of poverty and every authoritative economic study concluded that it brought no negative employment effects, despite the warnings of Government Members. No wonder that a survey of academic policy experts conducted by the Institute for Government judged the national minimum wage to be the greatest policy success of the past 30 years. It is now a policy supported by the CBI and the TUC, whose nominees work together on the Low Pay Commission. It is seen by the British people as a vital British institution, underpinning basic rights and decency in the way our economy works.
Rachel Reeves
I give way to my hon. Friend the Member for Clwyd South (Susan Elan Jones).
Susan Elan Jones
When Members are a little shy, they should have a little encouragement from the rest of us. I worry that some Government Members are a little shy. They are not usually frightened of defending their party in government. Would they like to do so now, and will my hon. Friend allow them to do so?
Rachel Reeves
I have already made the offer to the Secretary of State, but we have not yet heard from him. All Members are welcome to make interventions, but in the meantime I will take an intervention from my right hon. Friend the Member for Delyn (Mr Hanson).
Mr Hanson
I confess that I was here when we voted for the minimum wage. I did vote for it, having stayed up most of the night, because I was kept up by the Conservative and Liberal Democrat Members who ensured that we did have to support that with our votes.
Does my hon. Friend accept that the additional spending power given to many millions of people, including in my constituency, which was spent locally, helped to boost jobs in retail, on the high street and in locally produced goods?
Rachel Reeves
I congratulate my right hon. Friend on his work in helping to put the national minimum wage on to the statute book. He is absolutely right to suggest that one of the contributions to the cost of living crisis that we see today is that the national minimum wage has not kept pace with the increase in prices during the last few years. The introduction of the minimum wage did indeed help to boost the spending power of workers.
Rachel Reeves
I am so shocked. We have two interventions from Government Members. I will happily give way to not one, but two Government Members.
Julian Smith
As a fellow Yorkshire Member, I thank the hon. Lady for allowing me to intervene. Will she welcome this week’s announcement on inflation at 2%, and will she accept that this, as well as the Government’s phenomenal job creation results, are a key part of the package of getting people better paid in this country?
Rachel Reeves
For 41 of the 42 months that the Prime Minister has been in office, prices have risen at a faster rate than wages, and that continues to be the case. The only month that it was not the case was in April last year, when bank bonuses were deferred from March to April to take advantage of the cuts in the top rate of tax from 50p to 45p. [Interruption.] That is the only month in which prices grew at a slower rate than wages, not for ordinary workers, but the privileged few who the hon. Gentleman’s party always supports.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The Chair has noted that the hon. Member for Skipton and Ripon (Julian Smith) has departed immediately and too soon.
Mr Newmark
I fear that the hon. Lady’s answer might have frightened my colleague away. I promise that I will not run away after she answers me. Will she at least acknowledge that this Government, by raising to £10,000 the level at which tax hits, thereby taking 2.7 million people out of taxation altogether, have indeed helped the low-paid?
Rachel Reeves
Work by the Institute for Fiscal Studies has shown that, taking account of all the changes to taxes, tax credits and benefits since the Government came into office, the average worker is now £850 worse off. The hon. Gentleman points to one thing, but the VAT increase means that people are worse off, as do the tax credit changes. Overall, when all those things are added up, people are worse off, not better off. I hope that he will stay a little longer than his colleague to hear a bit more of the debate.
We know that we need to build on the success of the national minimum wage, because today we face a new challenge: getting our economy working for working people and tackling the worst excesses of insecurity and exploitation in our labour market.
Mel Stride (Central Devon) (Con)
Further to the point made by my hon. Friend the Member for Braintree (Mr Newmark), does the hon. Lady not accept that the pressure on living standards is a function not just of wages, but of the costs that average families face? Will she thank the Government, as I do, for having frozen council tax during the period we have been in office, unlike her party, which doubled it during its period in office?
Rachel Reeves
If the hon. Gentleman looks at what has happened to living standards, he will see that the average worker is £1,600 worse off than they were in 2010. I am surprised that he applauds what the Government are doing—I certainly do not—because workers in his constituency are worse off, not better off, after three and a half years of Conservative government.
John Robertson (Glasgow North West) (Lab)
Does my hon. Friend agree that Government Members, after giving up attacking us on the minimum wage, have now moved on to more sinister things, such as workers’ right, zero-hours contracts and a vast increase in the number of people in part-time employment, to mask the fact that people are so much worse off than they ever have been? The outlook for those people now is something we never saw until the Government came to power.
Rachel Reeves
I thank my hon. Friend for that intervention. The reality is that under this Government we have seen record numbers of workers on zero-hours contracts, record numbers of people who want to work full time having to work part time, and wages failing to keep up with prices. The average worker is now £1,600 a year worse off and the number of people being paid less than the living wage is up from 3.6 million in 2010 to more than 5 million today. The value of the minimum wage has fallen by 5% over the past three and a half years. For a full-time worker that means a real-terms pay cut of £13 a week.
Mr David Hamilton (Midlothian) (Lab)
Is my hon. Friend as surprised as I am that Government Members are not supporting good employers? There are good employers in my constituency who are arguing very clearly that undercutting the minimum wage is affecting their business. They want good employers, not bad ones.
Rachel Reeves
I thank my hon. Friend for that intervention. We saw similar things when Labour introduced the national minimum wage in the first place, because in many cases those who benefitted were the good employers who wanted to pay their workers a decent wage and who were being undercut by the cowboys.
Jim Shannon (Strangford) (DUP)
I congratulate the Opposition on bringing this matter before the House for consideration—we all have an interest in it. Does the hon. Lady share my concern about those in long-term apprenticeships who are not receiving the minimum wage? That has been brought to my attention on a number of occasions. They are glad to have the experience and a vocation at the end of it, but in my opinion they also deserve the minimum wage, which many of them do not receive.
Rachel Reeves
There is an apprentice rate for the minimum wage, which is important, but we need to ensure that more people are doing good-quality apprenticeships so that at the end of them they can get jobs not only at the minimum wage, but above it. My worry is that too many of the current apprenticeships do not offer the decent training that will enable people to get a good-quality job.
Steve Rotheram (Liverpool, Walton) (Lab)
My hon. Friend is making an excellent speech. Does she agree that while it was a brave Labour Government who brought in the national minimum wage, they were working in conjunction with the unions, which were pivotal to bringing in the policy? It will be the unions, working together with the Labour Government in 2015, that will introduce a living wage.
Rachel Reeves
I thank my hon. Friend for that intervention. Trade unions, including the Union of Construction, Allied Trades and Technicians, of which he is a member, did a huge amount of campaigning for the introduction of the minimum wage and campaign today to ensure that more people are paid a living wage. I will say a little more about what we are willing do in government to ensure that more people are paid a living wage above the national minimum.
Mr Jim Cunningham (Coventry South) (Lab)
The freeze in council tax, which was mentioned earlier, looks good on the surface, but councils are not being compensated for it, and they are stacking up a problem for two or three years down the road, when there will be massive cuts to services.
Rachel Reeves
My hon. Friend is absolutely right. Many councils, including mine in Leeds and his in Coventry, have been hard hit by the cuts to the local authority grant, which are affecting some of the services that the most vulnerable people rely on.
Guy Opperman (Hexham) (Con)
Can we get to the nuts and bolts of policy? Will the hon. Lady give the House an assurance that policies such as the petrol duty freeze and the council tax freeze—[Interruption] I am sorry, but the hon. Member for Rhondda (Chris Bryant) is chuntering so much that it is hard to hear him—would be continued under a Labour Government were they to be elected?
Rachel Reeves
I suggest that Government Members look at what we are debating: the national minimum wage. I know they do not want to talk about it, because they did not support it in the first place, but it would be nice if they could talk about its impact on their constituencies. However, I think we may have to wait for another occasion.
We have a Government who opposed the national minimum wage when it was introduced and who are not enforcing the legislation properly today. Thanks to an investigation by the independent Centre for London, we know that as many as 300,000 workers are being paid less than the minimum wage. We have reports of workers having the costs of uniforms, accommodation, transport or training illegally deducted from their pay packets. We have shocking accounts of working conditions for some people in sectors such as elderly care which hurt not only employees but vulnerable people who need a reliable and good-quality service from people who are paid a decent wage. There are stories of legal loopholes being used to bring in migrant workers who are, as my hon. Friend the Member for Stockton North (Alex Cunningham) said, forced to work at exploitative rates of pay that also undercut and undermine the pay and conditions of all workers.
Despite that, the number of enforcement cases opened or registered has fallen in every year of this Tory-led Government, and it is now at less than half the level it was in the last year of the Labour Government. Since this Government came into office, just two prosecutions have been brought for non-payment of the minimum wage. They have repeatedly said that they will name and shame firms that are flouting the legislation, but they have not named a single one.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
My hon. Friend is making a very powerful speech. Does she agree that perhaps one of the reasons the national minimum wage has not been enforced is that Government Members are not 100% committed to it? For example, the hon. Member for South Northamptonshire (Andrea Leadsom) has called for businesses with three employees or fewer to be exempt from the national minimum wage, as well as from regulations on maternity and paternity rights.
Rachel Reeves
Not only are Government Members not 100% behind the national minimum wage; they cannot even bring themselves to say “national minimum wage”.
Charlie Elphicke (Dover) (Con)
The Government are asking the Low Pay Commission to review the minimum wage with a view to increasing it. Does the hon. Lady welcome that—yes or no?
Rachel Reeves
The hon. Gentleman is a little behind the curve. That is what the Low Pay Commission does: that is what we set it up to do.
The failure to enforce the legislation properly has contributed to a worrying rise in in-work poverty. It used to be thought that if someone got a job, put in the hours and put in the effort, they would be paid enough to keep them and their family out of poverty and have a decent standard of living—that was the deal. But today, for the first time since records began, the majority of people in poverty are in work and the majority of children in poverty are brought up in working households. It is just not good enough that in today’s Britain an honest day’s work does not bring in a decent day’s pay.
Dame Anne Begg (Aberdeen South) (Lab)
Does my hon. Friend agree that perhaps the best way to make savings in the welfare bill would be to make sure that people are not just in work, but in well-paid work, so that they would not have to depend on welfare?
Rachel Reeves
I could not agree more with my hon. Friend. If more people were paid a living wage, if the minimum wage were enforced and if more people who want to work full time were doing so rather than working part time, all those things would help bring down the rising costs of social security.
A Britain where people who are putting in the effort and the hours still cannot make ends meet cannot be right and it is not fair. A Britain where parents who want to spend more time with their family and children but can hardly see them because they have to take on a second job is not right and it is not fair. A Britain where a young worker who wants to go to evening classes to improve their prospects but cannot because they have to take on an extra shift in the evening just to make ends meet is not right and it is not fair. A Britain where a woman cleaning the offices of well-paid executives before they arrive in the morning and who is still at work in the evening serving on the supermarket tills is not right and it is not fair.
This is not just an injustice to those families. It is, as my hon. Friend has said, imposing cost on the rest of us as well, because lower pay means more money spent on tax credits and housing benefit. The bills of in-work poverty are rising faster than this Government can cut people’s entitlements. It also means less tax and national insurance going into the Government’s coffers. If we want to get the costs of social security under control and if we want to put our public finances on a sustainable footing, we need to get our economy working for working people, so that we can all earn our way out of the cost of living crisis that this Government have created.
What solutions do Government Members have to offer? As my hon. Friend the Member for Feltham and Heston (Seema Malhotra) has indicated, the hon. Members for Christchurch (Mr Chope), for Wellingborough (Mr Bone), for Cities of London and Westminster (Mark Field), for Windsor (Adam Afriyie), for Clacton (Mr Carswell) and for Bury North (Mr Nuttall) sponsored a Bill that would have enabled employees to agree with their employers that they should not be paid the minimum wage. The hon. Member for South Northamptonshire (Andrea Leadsom) has said that people working for businesses with three employees or fewer should not have to be paid the minimum wage. The hon. Member for Esher and Walton (Mr Raab) has said that 16 to 21-year-olds should not have to be paid a minimum wage. The hon. Member for Shipley (Philip Davies) has said that disabled workers should not have to be paid the minimum wage. Shame on them and shame on the Conservative party. It is the same old story from the same old nasty Tories. Their only answer to our economic problems is to cut taxes for the richest and cut pay for the poorest.
Andy Sawford (Corby) (Lab/Co-op)
The push to stop a minimum wage for 16 to 21-year-olds is appalling at a time when the Government have made life so difficult for that group of people in our society through their changes to the education maintenance allowance and the increase in tuition fees, which the Liberal Democrats, of course, promised would not happen. It is absolutely wrong and we must fight it.
Rachel Reeves
I could not agree more with my hon. Friend. With almost 1 million young people out of work—250,000 of them for more than a year—hitting them further by saying that they should not be entitled to a minimum wage is doubly unfair, cruel and callous.
Gavin Shuker (Luton South) (Lab/Co-op)
Is not a further point that there are many threats to wages in rural communities in particular—where the cost of living is higher—not least as a result of this Government’s shameful decision to abolish the Agricultural Wages Board, which protected the pay of many low-paid people?
Rachel Reeves
I thank my hon. Friend for that intervention and for his work on these issues as a shadow Environment, Food and Rural Affairs Minister.
Labour Members know that a strengthened minimum wage and practical policies to promote the living wage are essential to building a recovery that works for working people and to securing rising standards of living for the future. That means stronger penalties and effective enforcement against rogue employers who flout the minimum wage. It means plans to restore the value of the minimum wage, which has been lost over the past three and a half years. It means the Government doing their bit to support the campaign for a living wage by setting an example with their own employees and contracts, as Labour councils are doing up and down this country, and it means the Government sharing the savings to the Treasury with employers who commit to paying the living wage, as we will do with our Make Work Pay contracts.
The national minimum wage is one of Labour’s proudest achievements. It was opposed by the Tories every step of the way, while their coalition partners tried to water it down and frustrate its purpose, and the current Business Secretary sat on his hands. That is why we cannot trust the Tories or their Liberal Democrat supporters to protect the minimum wage, why we cannot trust the Tories to enforce or strengthen it, and why we cannot trust them to deal with the cost of living crisis.
It therefore again falls to Labour to protect and strengthen the national minimum wage by increasing fines for those who exploit workers; investigating rogue employers and enforcing the law properly; restoring the value of the national minimum wage and catching up the lost ground of the past three years; and encouraging employers who can do so to go further and to pay the living wage.
I suspect that when the Secretary of State gets to his feet, he will tell us how he now supports the minimum wage and wants it to be increased and to be enforced better. If that is his way of apologising for his past sins, so be it, but I must warn him and his Government that we will be watching. Working people who are struggling to earn a living and to survive the cost of living crisis need more than warm words and liberal promises; they need action, and only a Labour Government will deliver that.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes that since 2010, the Government has increased the National Minimum Wage each year, despite the worst recession in living memory, to protect the income of the low paid and increase their wages relative to average earnings, and is cutting taxes for the low paid to boost take home pay by £705 a year, taking 2.7 million out of income tax altogether; welcomes increased employment under this Government, which is at its highest ever level; notes that the Secretary of State for Business, Innovation and Skills has asked the Low Pay Commission for an assessment of how it might achieve a higher National Minimum Wage in the future without damaging employment; further notes that the Government has maintained a central enforcement body that covers all areas of the UK and ensures a consistent approach and high quality service; and further notes that the Government is quadrupling fines for employers in breach of paying the National Minimum Wage and has already made it easier to name and shame employers who flout the rules.”.
I am delighted to have the opportunity to move the Government amendment. Before I get down to the detailed substance of the motion, I want to say that this debate gives us the opportunity to discuss in more detail the regulations that, following my announcement before Christmas, I have laid today to increase penalties for non-compliance with the minimum wage by a factor of four. I also want to reinforce my earlier commitment that we will not merely do that but will proceed to introduce primary legislation to enable fines to be applied per worker, rather than per company, which will make them a great deal more forceful.
Vince Cable
I will take an intervention later.
The shadow Secretary of State, the hon. Member for Leeds West (Rachel Reeves), misadvised one of her Back Benchers, the hon. Member for Westminster North (Ms Buck), who quite rightly intervened, in relation to care workers, about there being no payment between jobs for social workers carrying out domiciliary care. That is actually an abuse of the minimum wage legislation. It has now been recognised as an abuse, and colleagues in the Department of Health, as well as my Department and Her Majesty’s Revenue and Customs, are making efforts to ensure that the regulations are properly enforced.
Vince Cable
Let me carry on for a few minutes. The hon. Gentleman knows that I always take interventions. Let me just build an argument and then I will allow him to respond.
Let me start with the very basics. It is a little difficult to do so in the face of the relentless tribalism that we have just heard, but I would say at the outset that the introduction of the national minimum wage was a real achievement of the previous Government. There were not many achievements, but two will stand the test of time: the establishment of the independent Bank of England and the establishment of the national minimum wage. [Interruption.] Indeed, there were others, but those were the two main ones in the economic field.
Having said that, I attempted to be constructive about the motion, but one blindingly obvious point is that the centrepiece of the national minimum wage legislation—the establishment of a non-partisan, non-political Low Pay Commission—did not even merit a mention. The shadow Secretary of State referred to it only in response to an intervention. That is rather important, because it suggests one of two things. The first possibility is that Labour Members do not understand how their own system works. Indeed, I heard a Labour Member cry out earlier, “Why don’t you make it increase the minimum wage?”, so there are clearly people who do not understand the mechanism. The second possibility is that Labour Members do not respect the basis of the system, which is independent advice from a non-partisan body. That advice has been followed consistently by successive Secretaries of State, including my Labour predecessors. That is the strength of the system and that is why there is political consensus behind it.
Vince Cable
I will just deal with the politics of this matter before I take interventions.
The hon. Member for Leeds West made a great deal of the fact that, as she put it, the Conservatives opposed the national minimum wage and many Liberal Democrats opposed it. She speaks with all the self-confidence of somebody who was not here at the time.
Vince Cable
I did not particularly wish to raise this, but I am being asked personally to explain why I did not vote. It had a lot to do with the fact that my late wife was terminally ill at the time and I was in the Royal Marsden hospital. That is why my voting record at the time was poor on that and other issues.
As it happens, my party supported the national minimum wage; nobody opposed it. I became the party’s spokesman shortly after the vote and I made it absolutely clear throughout that Parliament that we supported the principle of the national minimum wage. There was never any question about that.
Perfectly legitimate issues were raised about why there was no regional variation. There is a proper debate to be had about whether there should be a regional or a national minimum wage. As it happens, I endorsed the principle of the national minimum wage. However, there is a perfectly respectable argument for regional variation. As I understand it, the Labour party now promotes the living wage, at the heart of which is the idea that there should be regional differentials, with people in London being paid more and people in the west country or the north of England being paid relatively less. There is an argument for that. Why criticise people who have put forward that idea in good faith?
As for the Conservatives, although I do not always speak in their defence, I think that they should get credit for accepting that there is a good system that works and for deciding to support it. That is creditable. Although I and my party have supported the national minimum wage, there is a perfectly respectable intellectual and moral argument for not having a minimum wage. Countries that do not have a minimum wage include Sweden, Finland, Norway, Denmark and Austria. Those countries are all in the social democratic tradition, but have felt that it is too problematic. Germany, which has had either social democratic or national unity Governments for most of the post-war period, has adopted a national minimum wage only in the last few weeks. In those countries, where there are civilised values and a sense of solidarity, the costs and benefits of the minimum wage have been debated properly. Why should we criticise people in this country who wanted to have such a debate, but who have now come to a consensus that it is a good system and that we should make it work?
Seema Malhotra
Is the Secretary of State saying that Government Members and Conservative Members in particular support the national minimum wage for all businesses in all circumstances?
Vince Cable
Yes, it is now the law. Of course we support enforcement of the law. I do not understand the question.
Mr Donohoe
Will the Secretary of State tell us why he came to the conclusion that the fine should go from £5,000 to £20,000, rather than the £50,000 that would deter all those gangsters out there who are not paying the minimum wage?
Vince Cable
The rise to £20,000 is a fourfold increase. However, the big difference is in applying that fine per worker rather than per company. That is a considerable escalation of the penalties. I hope that we will have the support of Opposition Members in voting that through.
John McDonnell (Hayes and Harlington) (Lab)
Is not the difference between this country and the countries cited by the right hon. Gentleman that they still have vibrant trade union rights and are not condemned annually by the International Labour Organisation, as this country is, for undermining trade union rights?
Vince Cable
Those countries have had a variety of Governments, both left-wing and right-wing. I was simply making the point that it is possible to have a perfectly viable system without a national minimum wage. I agree with the hon. Gentleman that in practice what is needed is either a strong system of trade union rights or a national minimum wage. We have now all accepted that the national minimum wage is the best system. I think all the minority parties accept that, too.
Mr Hanson
I am grateful to the Secretary of State for giving way. Does he accept that enforcement, as well as the fine, is important? Currently, the national minimum wage is enforced only by Her Majesty’s Revenue and Customs. Will he give serious consideration to supporting giving local councils the power, as they now have on trading standards, to enforce the minimum wage locally?
Vince Cable
As the right hon. Gentleman says, the primary authority is HMRC, but it works with other agencies to enforce the national minimum wage. There are some important cases where HMRC has worked with local authorities—I think with Blackpool council and others—to enforce it in areas where we have sensed there is a systematic weakness.
Jim Sheridan
I thank the Secretary of State for giving way. The national minimum wage is exactly what it says on the tin: a minimum wage. Does he accept the overwhelming evidence that union-organised work forces are paid more and have better conditions than non-union-organised workplaces?
Vince Cable
In general, that is the case. However, my experience, from talking regularly to trade unions and employers, is that most of our trade unions, certainly in the private sector, are extremely pragmatic and flexible on wages—indeed, that is one of the reasons why we have had relatively low unemployment. They deserve some credit for that.
Mr David Anderson (Blaydon) (Lab)
I thank the right hon. Gentleman for giving way; he is being very generous. At whatever level the fines are set, will he look at the possibility of reinvesting the money they raise directly into enforcement, so that the enforcement keeps on going to the point where, hopefully, we do not have to fine anybody, because nobody is breaching the rules?
Vince Cable
In line with the commitment to enforcement, I think we have produced more resources for that. My hon. Friend the Economic Secretary to the Treasury, who will be summating, may want to say a little more about that, but we recognise that the enforcement authorities need resources to do their job.
Charlie Elphicke
I thank my right hon. Friend for giving way. As a Conservative Member of Parliament representing a constituency with a lot of social deprivation, I support the national minimum wage and the work of the Low Pay Commission, which is really important. In response to my intervention, the shadow Secretary of State dismissed the Low Pay Commission and talked about restoring the value of the minimum wage. Does my right hon. Friend know what exactly restoring the value of the minimum wage means and how much that would cost?
Vince Cable
I welcome the hon. Gentleman’s support and I know that it is shared among his colleagues. This is a historical issue: it has now been laid to rest. I will talk a little more about the mandate of the Low Pay Commission and the fact that successive Secretaries of State, including me, have respected its judgment, which is non-political, non-partisan and represents both the union and employer standpoint.
Let me talk about the wider economic consequences. The shadow Secretary of State talked with a real sense of righteous indignation about things that are, frankly, blindingly obvious. We have had a massive financial crisis, the biggest in our history—certainly in modern times. As a result, the country is poorer. That is a matter of fact. It is not a polemical point: the country is poorer, and that has been translated into lower earnings. That is simple economic reality and nobody is disputing that.
In the wake of the economic crisis in 2008-09, we now know that British GDP fell by 7.5%. That was more than after the great crash in 1929 and worse than in any other western country. I am not going into the business of who did what when; I am just recording a matter of fact. Recession inevitably followed the financial disaster and real earnings have been affected. The shadow Secretary of State is right on simple matters of fact: real earnings fell by 7% and the minimum wage fell by 5%. That is a matter of fact. What I find so very difficult to understand is that the Opposition Front Benchers—it is not just her; her colleagues are the same—have seen the greatest economic disaster in modern economic history and apparently not noticed it, and they have not taken any account of the inevitable economic consequences. What matters is that the Government of the day seek to mitigate those effects.
Mr William Bain (Glasgow North East) (Lab)
Does the Secretary of State accept that while he has been in office, the real-terms value of the adult national minimum wage has declined by 50p an hour since May 2010? It is his responsibility to review the remit of the Low Pay Commission. Why is he acting so slowly on this, given that 28% of part-time workers in his constituency are earning less than the living wage? Does that not show the failure he is presiding over on poverty pay across the whole country?
Vince Cable
I do not know about the numbers, but certainly the minimum wage, in real terms, has declined by 5%, as a result of my predecessor on two occasions and me on three occasions following the advice of the Low Pay Commission.
Alex Cunningham
The RBS bankers and others in the City who led us into this terrible economic situation do a lot better than the national minimum wage, so does the Secretary of State think they should get bonuses of more than 100% of their salaries?
Vince Cable
I think hon. Members have had a chance to debate that already. I am a great advocate of the new model developed by Handelsbanken of relationship banking and no bonuses—that is what we ought to have—but I suspect that even their branch managers are paid above the minimum wage.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Does my right hon. Friend share the incredulity of Government Members that for all the talk of bankers not having been affected, not one person has condemned the fact that trade union leaders have been getting double-digit pay rises in the same period?
Vince Cable
I suspect that that is also true, but I am trying to get away from the tribal debate that the shadow Secretary of State was so keen to launch.
To return to the thread of the argument, we have had a major shock, and it has reduced real earnings and the real minimum wage. I fully acknowledge that; it is a matter of fact. The question is: what is being done to mitigate the effects? Two major changes have taken place. First, the Government have recognised that earnings are not the same as take-home pay and disposable income, and we have therefore concentrated our tax policy on lifting low earners out of tax. As a result, 2.7 million low earners now pay no income tax. Those working 28 hours a week on the minimum wage pay no income tax, while those on 35 hours pay only one third of the income tax they paid at the beginning of this Government. We have therefore considerably reduced the impact of the squeeze on real incomes by using tax policy.
The second highly relevant issue is the level of unemployment. After the great crash in 1929, unemployment rose to 20%. In the recent financial crisis, countries less affected than the UK have had considerably higher unemployment—I am talking about France and Sweden, among others. We reached a peak of 8.5%; it has now gone down to 7% and is falling. We have record numbers of people in work, while the number of jobs has increased by 1.3 million, in the wake of this enormous economic crisis. Now, why has that happened? It has happened because millions of individual workers, realising that there is a choice to be made between jobs and pay, have wisely decided that it is much more important to keep the employment.
The Low Pay Commission, speaking for the country as a whole, rather than for individuals, has reinforced that assessment. In its 2012 report, it explained its analysis in the following terms—let us remember this is not the Government, but an independent commission representing unions, employers and independent assessors. It said its aim was a minimum wage that helped
“as many low-paid workers as possible without any significant adverse impact on employment or the economy.”
That became the mandate—the remit—that I have used, and it is virtually identical to the remit used by my Labour predecessor. I simply ask Labour Members what they object to in that remit. Do they seriously think that the Low Pay Commission and the Secretary of State should ignore the state of the economy or the level of employment? What do they think is fundamentally wrong with the remit?
Gavin Shuker
From the tone of the Secretary of State’s remarks, it is clear that, following the banking crisis of 2008, this is a deep issue that confronts us as a nation. He is right in his analysis, and many workers have chosen not to push for pay rises in the light of that situation. The challenge facing us, however, is surely one that requires a political response. I disagree slightly with his characterisation of this Government’s policy. What it has resulted in has been clearly demonstrated in 41 of the last 42 months, with people being able to buy less with what they are being paid. If he is saying there will be no change, then Opposition Members will continue to call out for that change.
Vince Cable
I keep hearing the call from Opposition Members for a political intervention. Are the hon. Gentleman and his colleagues saying that this system—a very good system that his Government established, based on the Low Pay Commission analysis—should be torn up and a political settlement imposed? Is he suggesting that the remit, which takes account of the impact of the minimum wage on employment, should be disregarded? Is that the argument?
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Let me give the Secretary of State an example. The Low Pay Commission recommended against amending section 31(1)(b) of the minimum wage regulations, which allowed employers to pay hospitality workers out of their tips. The last Government took the courageous step of changing that provision and preventing that from happening. That is a good example of where politics looks to the good of the individual and does not play to what I believe are the prejudices and fears of people in the Low Pay Commission. Is it not also true that if the minimum wage were raised—I have seen many cases of this—the bill for tax credits would go down and the Government would probably be better off in terms of public sector expenditure?
Vince Cable
On the last point, the hon. Gentleman may well be right, although I have seen an analysis suggesting that, because of the effect on corporate taxation, which offsets those gains, he is not. However, on the more substantive point about politicians intervening to override the Low Pay Commission, I believe that we should not be dogmatic about it. In the overriding majority of cases, it behoves the Secretary of State to listen carefully to the Low Pay Commission and it would be unusual to override it. He cites one case, and I have actually overridden the Low Pay Commission—on the apprenticeship wage, which I thought was excessively low, giving the wrong signal to young people and others who wanted to do apprenticeships. I made a decision on that specific issue to intervene and disregard the advice of the Low Pay Commission. If that became a habit, however, and if its advice were overridden on a major issue of pay policy, the minimum wage structure would crumble from being politicised in that way.
Mr Donohoe
To ask a simple question, what is the minimum wage for apprenticeships?
Vince Cable
I think it is £2.68, and it was going to be frozen at £2.65. [Interruption.] It is a very small increase, but there was an issue of principle involved, which is why I intervened to change it.
Let me proceed on the issue of the mandate. The Low Pay Commission has consistently regarded jobs as an important objective of policy—rightly, and we must respect that judgment because it is based on serious analysis. Let me quote a good study carried out by the Resolution Foundation, and I believe the National Institute of Economic and Social Research was involved, too. It analysed the effects of a general increase to the living wage level, which Labour Members would like to see happen.
The analysis suggests that if other things were equal and if all low pay were increased to the level of the living wage, there would be a net loss of 160,000 jobs. Worse than that, there would be a loss of 300,000 jobs among the unskilled and among young workers, because massive substitution would take place. That does not mean that the living wage is a bad idea as a voluntary principle, but it does spell out very brutally what would happen if Governments ignored the Low Pay Commission and took a cavalier view of the impact of the minimum wage on jobs.
Chris Williamson (Derby North) (Lab)
Is that not precisely the argument that was used by those who opposed the introduction of the national minimum wage in the first place? Is this not just a repetition of that flawed argument?
Vince Cable
I must tell the hon. Gentleman that it is an argument to which the trade unions on the Low Pay Commission fully subscribe. This is the first time that I have heard Members seriously question the competence of the Low Pay Commission and challenge the whole principle of its remit. I am appalled and alarmed that they should want to tear up and politicise a basically good system which has worked well under the last Government and under this one, in different circumstances. That really is very dangerous.
Alec Shelbrooke
What I find strange—I am sure that my right hon. Friend agrees with me—is that the subject of the living wage keeps popping up on the Opposition Benches. Today’s debate is about the minimum wage, and the Labour motion does not call for the Low Pay Commission even to consider the issue of the living wage.
Vince Cable
Indeed. Admittedly the issue of the living wage is now part of the public debate, and of course I believe that if employers are profitable they should adopt it—particularly if they are taking advantage of their work forces—but we must be clear about the fact that making the living wage mandatory, either directly or indirectly, would have enormous implications for jobs.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Will the Secretary of State give way?
Mark Lazarowicz
The fact is that millions of workers are now enjoying the living wage because of the actions of local authorities—the vast majority of them Labour-controlled—and progressive employers. Rather than just saying that the living wage is a good idea, should not the Government encourage employers to adopt the living wage through specific measures, such as those suggested by Labour in the motion and in our policies generally?
Vince Cable
I have noticed the word “encourage” before. Ministers are being told that they should encourage employers to pay the living wage. I have thought about that: what does it actually mean? It is motherhood and apple pie on one level, but if we take it seriously, what does it mean?
If I encounter a company that is perfectly profitable, particularly if it seems to be taking advantage of its work force, of course I will urge it to pay the living wage, but many companies are on the brink of bankruptcy. Would Members urge them to increase their pay levels substantially in those circumstances? That would be extremely irresponsible. These bland phrases, although they may be superficially attractive, are potentially very dangerous.
Vince Cable
I have given way a number of times, and I should now like to finish what I have to say.
Along with the element of its remit that relates to the impact on employment, one of the key concepts in the work of the Low Pay Commission is what it calls the “bite”. That terrible bit of jargon refers to the relationship between the minimum wage and the median. It may be technical, but it is very important, because the closer the minimum wage gets to the median, the more likely it is that a big increase will displace employment. When the minimum wage was first introduced in 1999, it was about 46% of the median; now it is 53%, and there have been successive increases.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The median wage is falling.
Vince Cable
It did fall slightly last year—just slightly. However, the minimum wage is now significantly above that level.
That is a major issue for young workers and for apprenticeships. For young workers, particularly those aged 16 and 17, the so-called bite is close to 80%, which means that any significant increase in the minimum wage would have the unfortunate effect of displacing most of them from the labour force. That is a factor that has weighed very heavily with the Low Pay Commission when it has made its recommendations.
Grahame M. Morris
Will the Secretary of State give way? I will be very brief.
Grahame M. Morris
I am grateful to the Secretary of State. He is being very generous, and I appreciate the way in which he has engaged with interventions. May I just put one thought in his mind? A number of very profitable companies are offering their workers—many of them young workers—zero-hours or four-hours contracts, which have a terrible effect on a person’s ability not just to live but to exist.
Vince Cable
I have already said in the House on several occasions that the Government are now engaged in a public conversation about how we deal with zero-hours contract abuses. I think the hon. Gentleman has to be careful as the research that has been carried out suggests that very large numbers of people on zero-hours contracts like that model, but we must deal with the abuses, of course.
Vince Cable
It would be remiss of me not to take at least one intervention from the Scottish nationalists, so I will do so.
Mr MacNeil
May I put in the right hon. Gentleman’s mind the words of Paul Krugman earlier this week? He spoke about unemployment insurance and how when money is in the hands of the poorest in society, that creates demand, which in turn creates jobs. The corollary of that is that the higher the minimum wage, the more money is put in people’s pockets and the more it circulates, and we return to a system, as in the 1950s, when inequality is reduced, rather than the situation now, when inequality is equivalent to what it was in the 1920s.
Vince Cable
Of course an increase in wages among other things increases demand, and that is one factor that has to be taken into account. That leads me on to the next point I want to make, which is how this year I have approached the issue of the mandate of the Low Pay Commission. Opposition Members have been questioning that and saying, “Why don’t you change the way we look at it?” I have done that, while respecting its independence. I have said the Government want a faster increase in the minimum wage, reflecting the fact we now have a real recovery, and in order to achieve that the LPC should look at a wider range of factors governing low pay. They include the fact that at the national economy level, the Governor of the Bank of England has now said that if unemployment falls to 7%, he would want there to be some tightening of monetary policy, as the environment will have changed. We would want to see what impact that will have on the cost of employment, which has been cushioned by the Chancellor’s decision to bring in the employment allowance—£2,000 for the first employee—as it significantly changes the cost of employment. We also need to look at the impact it would have on the Government, because there is an interaction with tax credits, tax yields and corporate taxation. There is the impact on take-home pay, too, and therefore we have to factor in our tax policy.
I have therefore asked the LPC to look at this problem in a much more holistic way. I do not know what it will conclude, and I will be respectful of its independent advice, but that is the way we are approaching this and we do now recognise that in a recovering economy low-paid workers should derive benefits, and that is how we are approaching this matter.
Katy Clark (North Ayrshire and Arran) (Lab)
Will the right hon. Gentleman give way?
Vince Cable
I have taken several interventions already.
Finally, let me say a few more words about enforcement. Clearly the minimum wage is only effective if it is properly enforced and has the force of law. It is important not just for its own sake but to give workers confidence that if they complain, those complaints will be followed through. There are several levels as enforcement is a complicated process. First, it is a problem of securing arrears and then imposing fines. We then have a name and shame system, and ultimately there is prosecution in court, but that has hardly been used either under the last Government or this one because it requires a demonstration of proof of intent, which is very difficult to demonstrate.
Let me explain how these various levels are now operating. In the last year, arrears of about £4 million were paid, compared with an average of about £3 million over recent years. About 26,000 workers benefited from that. Fines are crucial, because under the last Government and this one, that is where the main enforcement action has been taken. Last year 700 enforcement cases were taken to the level of fines. The amount paid was seven times as much as was paid under the last year of the Labour Government. One can argue about this from one year to another, and these things fluctuate, but any suggestion that the regime has become easier is simply not true.
Vince Cable
I am going to proceed to the end of my speech.
We are now in the process of considerably increasing the penalties, both in terms of raising the fine from £5,000 to £20,000, subject to the House approving the legislation, and applying it per worker rather than per firm, which is, of course, much more draconian.
The new guidelines for the naming and shaming process were issued to HMRC in October. There is also the question of due process. Companies that are about to be named and shamed can appeal, and it is estimated that that process takes roughly 150 days. I imagine that a significant number of cases would begin to emerge by the end of February; we can test that when the issue arises.
To summarise, we have a good system, but we want to strengthen it, and to strengthen enforcement. We also want to respect the principles of the Low Pay Commission. We want to see improvements to the minimum wage, but that needs to be done properly, through the independent Low Pay Commission. I therefore urge my colleagues to oppose the motion, and to support the Government’s amendment.
Madam Deputy Speaker (Dawn Primarolo)
Order. There will be a five-minute time limit on all Back-Bench contributions in this debate. That might need to be reviewed, but I hope not.
Dame Tessa Jowell (Dulwich and West Norwood) (Lab)
Having listened closely, as I always do, to the Secretary of State for Business, Innovation and Skills, I am hard pressed to see how he can recommend voting against our motion, which focuses on the enforcement of the national minimum wage.
The existence of a national minimum wage is a major statement about the kind of country that we are. Beyond the clichés about hard-working families, what does hard work actually involve? Are we prepared to be citizens and representatives in a country where too many mothers ship their children from one childminder to another, often late at night and very early in the morning, because they work for employers who do not honour their statutory obligation to pay the national minimum wage? This is about decency, and if the Government are serious about the enforcement and enforceability of the national minimum wage, they must surely acknowledge that the proposals in the motion are unexceptional.
I am proud to have been part of the Government who introduced the national minimum wage, and I hope that that progressive change has now become irreversible. Over its lifetime, one of its most powerful effects has been to start to close the gender pay gap. It stood at more than 16% when the national minimum wage was introduced in 1999; its present level of 9.2% is still unacceptable. The greatest burden resulting from the lack of growth in the economy and from the Government’s tax and benefit changes has been borne by women. Women’s employment is also concentrated in poorly paid occupational groups that include care, cleaning and catering. Whatever low pay threshold is used, the proportion of working women who are low-paid is about twice that of working men on low pay.
The need for enforcement of the national minimum wage goes without saying, and the failure to enforce it is a stain on the stated ambition of the Government. I commend the next stage of the ambition, which is to move towards a living wage. I pay tribute to Citizens UK and, in particular, to London Citizens, which have been at the forefront of introducing the living wage since 2005—so much so that 214 London employers and 12 London councils have now signed up to pay it.
Many opportunities are open to the Government to urge more employers to pay the living wage: the leverage of procurement; the increased tax receipts for Her Majesty’s Revenue and Customs resulting from more people being in better-paid jobs; and the practical benefits that businesses that pay the living wage report, such as more corporate resilience and social purpose, reduced absentee rates, greater loyalty and enhancement of the quality of work. Good businesses know that the living wage is good for their business; this is about the interconnection between corporate success, commercial success and social purpose.
When we talk about changes to the benefits system, we must remember that the living wage is one way in which we move families off and out of tax credits, and shift the responsibility for decent levels of pay from the state—the social security system—to employers. Having rather curtailed my remarks, I wish to finish by saying that we can follow the example of the best of business, but we should also remember what the difference means to families. The mother whose child—
Robert Halfon (Harlow) (Con)
The hon. Member for Leeds West (Rachel Reeves), who opened this debate, is right about one thing: it was a mistake for my party to have opposed the minimum wage. I am glad that we support it now. If we are honest about our mistakes, the Opposition need to be honest about what went on: that it was a mistake to abolish the 10p income tax rate; that median real wages stopped rising from 2003; and that the value of the minimum wage did not decrease from 2010 but from 2008. All of us have made mistakes in these areas, and the Opposition should have welcomed the fact that we have taken 2 million lower earners out of tax altogether.
Alec Shelbrooke
Does my hon. Friend agree that it was also a mistake to put in petrol price rises year after year—Labour would have added the equivalent of 64p a gallon by this time—which dig directly into hard-working people’s pockets?
Robert Halfon
My hon. Friend is right; our party has a relentless focus on helping the lower paid. We should support the minimum wage because we are the party of aspiration and working people, and increasing the minimum wage eliminates the poverty trap, cuts the benefits bill and encourages more people to get back into work. If we do just one thing, it should be to increase the minimum wage at least to reflect the increase in inflation over the past few years.
I also urge the Government to institute a regional minimum wage—in addition to the national minimum wage, not as a substitute for it—because of the different costs of living in different parts of the country. I am talking about the differing costs not just from north to south, but within regions. That has been done in other countries, such as Canada and the United States, where individual states can set minimum wage rates above the federal minimum. We need to consider such an approach seriously.
Jackie Doyle-Price (Thurrock) (Con)
My hon. Friend and I represent constituencies in Essex, where the cost of living is higher than it is in other parts of the country. Does he agree that we often see people trapped in a life on benefits because it does not pay to work as a result of the loss in housing benefit owing to higher property prices?
Robert Halfon
My hon. Friend makes an important point, and the Conservative party is the workers’ party. We are here to get people out of dependency and back into work, and the Labour party is the party of benefits.
Although it is important to support a fair wage, we must not hurt small businesses—the Secretary of State was exactly right on that. We should move towards a living wage, but there are ways of doing it. The important thing is to put the burden on government to achieve the living wage, not on businesses. I support the minimum wage and the living wage, but we have to make sure that they are not raised to unsustainable levels. Labour’s solution of offering companies tax breaks if they pay employees the living wage for a year is said with the best of intentions, but it has flaws because it does not fully offset the cost. Many companies would still be unable to meet the additional cost of paying their workers an extra £2 an hour. It would also only last a year, so many people would not benefit in the long term.
We should remember that 5 million low earners in Britain are earning less than £10,000 a year. To achieve the living wage, we need to look at two ends of the equation. First, we could reintroduce the 10p income tax band. That would halve the income tax bill for those on the minimum wage and significantly reduce the cash gap between the minimum wage and the living wage. It would also cost less than raising the personal allowance, and ensure that people continue to pay into the system while letting them keep more of their own money. Alternatively, we could continue raising the threshold of income tax. Those are the ways to get people up to a living wage, and I am happy with either solution.
National insurance is the one tax that is still taken directly out of lower earners’ pay packets. A worker who earns around £7,500, which is around half of what the Government say they need to live on, still pays national insurance. We should take a small step to help the lower paid by increasing the national insurance threshold, so that it is in line with income tax for employees. The 2020 Tax Commission found that nearly three-quarters of company bosses said that national insurance contributions curbed the rates they paid their staff.
A bigger step would be to remove altogether national insurance and income tax from the national minimum wage, which would mean that someone working 40 hours a week would be earning just £10 a week less than someone who is currently earning the living wage. If we did that, national insurance and income tax could be merged into just one tax.
Although some argue that we need to maintain national insurance because of the contributory principle, it effectively acts as a double income tax, and a contributory system could be transferred into any consolidated form. Such a system could have enormous benefits, such as a simplification of the tax system, greater transparency, fewer administration costs and it would leave workers with more money in their pockets. It would be costly, but there would be benefits, such as people spending more and being less reliant on the state for welfare and encouraging people back into work. It would benefit all low-paid workers, especially those who work just part time. It should be the long-stated aim of my party to try to introduce this over a number of years.
As Conservatives, we are on the side of hard-working people, which is why we capped taxes for 20 million-plus lower earners. It is right that the Government increased the personal allowance, but if the slogan “For hard-working people” is to mean something, we have not only to become the workers’ party but to shout from the roof tops our support for the minimum wage. A real-terms rise in the national minimum age, a regional top-up and raising the national insurance threshold would give us legitimacy as the party standing up for millions of workers.
Chris Ruane (Vale of Clwyd) (Lab)
I was elected in 1997 in a Labour landslide on a manifesto with a commitment to introduce the national minimum wage. It was Keir Hardie who, in 1906, put forward the idea of a national minimum wage and it took almost 100 years to deliver it. Incidentally, he also proposed devolution for Wales, Ireland and Scotland and reform of the House of Lords. Both of those were introduced after Labour’s historic win in 1997.
When I was a parliamentary candidate in 1996, I organised a low-pay survey in my constituency. The person who came out top—or should I say bottom—was a taxi driver who was on £1 an hour. There were other incidences of women in the care sector who were working 12-hour night shifts for £2.50 an hour.
Seaside towns such as Rhyl probably benefited more than anywhere else from the introduction of a national minimum wage. A table produced by the House of Commons Research Department shows that 29% of those who worked in hotels and restaurants and in the entertainment industry were affected by the national minimum wage. In seaside towns, we have a huge number of care homes and the second biggest sector to benefit, at 15.1%, was the one that undertakes community and social services activities. Seaside towns have done really well under the national minimum wage.
Could any of us in the Chamber today work for £1 an hour or its equivalent today? Could we have brought up our families on £2.50 an hour, working throughout the night? I have a great deal of respect for the hon. Member for Harlow (Robert Halfon) on these issues, as he is what I would consider to be a compassionate Conservative, but he said that he was concerned about unsustainable levels when this is about trying to increase pay for people on the lowest rung by 50p or £1 an hour. We never hear about the unsustainable levels of high pay. For example, two captains of industry in the energy companies were given £14 million and £15 million golden handshakes without a peep from the Conservative party. It is one law for the rich and one for the poor.
Mr Anderson
My hon. Friend spoke about care workers’ pay before the 1997 election. I was then a negotiator for care workers in the public sector, who were getting at least £5 an hour—twice as much. We introduced this legislation because people were being exploited by private companies. Is that not the same worry that we see today?
Chris Ruane
I concur entirely.
When we want to improve the efficiency of businesses, we say that we must pay those at the top as much as we can to reward their energy and enterprise and that we must reduce the pay of those at the bottom because it is in their own best interest. There is one rule for the rich and one for the poor.
Katy Clark
Of course, we did not hear from the Secretary of State this afternoon about the fact that although most people in this country face a cost of living crisis and although wages are going down for the vast majority, those at the top are doing very well, thank you very much. The salaries of chief executives and those at the top are soaring. At the time of the 1997 election, we heard time and again that we could not afford the national minimum wage. Does my hon. Friend agree that the arguments we are hearing now should be treated in the same way as those arguments were then?
Chris Ruane
Absolutely. The Conservatives were whingeing when I raised these points, but it is obscene that the Chancellor of the Exchequer scurries off to Brussels to protect the multimillion pound bonuses of British bankers at the same time as he is reducing workers’ rates by £1,600 a year.
Stephen Barclay (North East Cambridgeshire) (Con)
Will the hon. Gentleman give way?
Chris Ruane
No, I will not.
More than 7,000 people have visited me in Parliament since I was elected in 1997. Many have been schoolchildren and sixth formers. I always allocate a good period of time for questions and one of the most common questions is, “What are you most proud of from your 16 years as an MP?” I am most proud of this piece of legislation, which Labour introduced in 1998. It is totemic. It was an indicator at that historical time of what Labour was about and what the Tories were about. We were for the many and they were for the few. I welcome the massive U-turn that the Conservatives have made on that, but it is too little too late.
Chris Ruane
I am afraid that I must make progress, as I am now using up my own time. I thank my hon. Friends the Members for Blaydon (Mr Anderson) and for North Ayrshire and Arran (Katy Clark) for their interventions as they gave me an extra two minutes, which I am eating into now.
The policy was resisted tooth and nail by the Tories. The House sat for two days in the Chamber and there were 70 hours of debate in Committee between 22 January and 17 February 1998. The Tories made the direst predictions about the introduction of the national minimum wage, predicting that 2 million jobs would be lost and every single person who received an increase would be sacked. That was absolute nonsense; an extra 2 million jobs were created.
The then Secretary of State for Wales, the right hon. Member for Richmond (Yorks) (Mr Hague), said:
“He is right: the adoption of a minimum wage and the social chapter would gravely inhibit employment opportunities in Wales. There is no question about that.”—[Official Report, 27 February 1997; Vol. 291, c. 461.]
What about when the Conservatives were closing down the steel mills and the coal mines in south Wales? Did that gravely inhibit employment opportunities in Wales? He said:
“Adoption of the social chapter and a minimum wage would price tens of thousands out of their jobs along with hundreds of thousands throughout the rest of the United Kingdom.”—[Official Report, 17 March 1997; Vol. 292, c. 609.]
He was on the mild side in referring to hundreds of thousands; the Conservative party nationally was predicting 2 million job losses. The Conservatives fought tooth and nail against the legislation, but it was passed. That is the proudest moment of my time here in the House.
In my constituency, we saw no job losses. We saw the number of people in employment go from 23,000 to 30,000. The St Asaph business park, which was built by the Conservatives in my constituency at the cost of £11 million, was empty for seven years. When Labour came to power, it was filled, and there are now more than 2,000 jobs on the park.
The national minimum wage legislation is fantastic, but we should not rest on our laurels. We need to move upwards and onwards to the next frontier, which, as has been mentioned by hon. Members, including shadow Ministers, is zero-hours contracts and a living wage. We need to push for better conditions and better payments for workers. That is in the best interests of those workers, their families and the economy.
Gordon Birtwistle (Burnley) (LD)
The Opposition motion mentions that the Liberal Democrats were all against the minimum wage. I do not think that many current Liberal Democrat Members were here 14, 15 or 16 years ago. As a Liberal Democrat, I was always in favour of the minimum wage, and the engineering company that I owned always paid well over the minimum wage. If companies want really skilled people to work for them, they find that the minimum wage is far below what skilled workers are paid today.
I was a little bit offended by the attack on my right hon. Friend the Secretary of State for Business, Innovation and Skills by the hon. Member for Leeds West (Rachel Reeves). She should apologise for the fact that she did not understand the reasons why he was not in the House at the time. I accept that she is new and probably inexperienced, but hon. Members need to know the reasons why someone did something before attacking them in the House.
As has been said many times by the Secretary of State, we went through an appalling crash. There is no getting away from the fact that the Labour party and the bankers drove the country virtually into bankruptcy, and we have had to do something about it. We have managed to maintain employment. As has been said, 1.5 million people are now working who were not expected to work. The Opposition’s hope for a triple-dip recession has not happened. We have managed to drag the economy round and things are moving on, but these things need to be explained.
What can the Government do about the minimum wage? I agree that the Low Pay Commission should look at the minimum wage. I believe that it should be given the right and the power to decide what the minimum wage is, and it is quite right, as the Secretary of State said, that we should not have political interference in things of that nature.
What have the Government done to try to mitigate what we have got? By the fact that the Government have been doing what they have with the economy, we have managed to keep interest rates really low. Let us imagine what would have happened if we had gone along with the Labour party’s proposals on the economy. What would interest rates be now? We have mitigated the effects of a lot of the low salaries by keeping interest rates and mortgage rates down to a very low level. If we look across the rest of Europe, we see interest rates in Greece and similar places that have climbed to as much as 20%. Let us imagine what would have happened in this country if we had allowed that to happen. We have mitigated those effects.
All right, the country has not been able to increase the national minimum wage, and I for one would like that to happen. As the Government’s apprenticeship ambassador, I would certainly like the minimum wage for apprentices to increase, because we should be investing in young people and delivering jobs of the future, and we are now doing so. If I had the authority to speak to the Low Pay Commission, I would ask it to look at that issue.
Katy Clark
The hon. Gentleman’s colleagues who sit alongside him like to say that we are all in this together, but he will know that those with the highest earnings, such as the chief executives, are doing very well and their wealth is increasing, and the profits of many companies have risen considerably. Should not those factors be taken into account along with the cost of living crisis when looking at the level of the national minimum wage?
Gordon Birtwistle
The very profitable companies, such as the big engineering companies and the major multinationals, invariably pay well over the minimum wage. Many minimum wage payments occur, for example, in the care industry and those industries where low pay is accepted. I agree that if a company is profitable and doing well, it should recognise that its employees are creating not only wealth for the chief executive but wealth and security for themselves and for the country. I agree that companies should recognise what employees do, and the vast majority that do so pay a lot more than the national minimum wage.
Mr MacNeil
The hon. Gentleman is actually referring to the productivity gains that have been made. Studies in the United States of America show that the productivity gains have gone to the top 1%. The federal wage in the United States is about $7.25. Had that kept pace with the minimum wage in the 1960s and had the productivity gains been distributed at that level, the federal wage would have been treble the present rate. It is a fair bet that the same would be happening in other western countries, this one included.
Gordon Birtwistle
I am not conversant with what the hon. Gentleman says. I do not study the wage rates of the federal states of America. I have enough to do looking at rates in the UK. But we have kept inflation low and we have mitigated the effect of that on the minimum wage, and we have also managed to create extra jobs and wealth. It is interesting that the motion says that the Opposition agree with making work pay. That is the first time since I became a Member in this House that the Opposition have agreed with making work pay. Hallelujah! They have always had a go at Government Members for promoting work to create wealth for families instead of paying out in benefits. I am over the moon about those three words. If they were in the motion, I would vote for it; unfortunately, they are not.
The Opposition do not have the confidence to include in the motion what they believe the minimum wage should be. I understand that what they suggest runs for only 12 months. What will happen after 12 months? Will everyone go back to what they had before, or will people lose their jobs? It is a half-baked motion. [Interruption.] It is part of the non-economic plan. There is no long-term plan—or a short-term plan. There is no plan at all. The majority of the statements in the motion have been covered in the amendment, which is a far more sensible approach. I urge hon. Members to support the amendment.
Mr William Bain (Glasgow North East) (Lab)
Nothing speaks more to how the economy simply does not work at the moment for ordinary people in this country than this Government’s record of dither and inaction on low pay. It should be genuinely shaming for every Member of this House that the United Kingdom had the fifth worst levels of poverty pay in the OECD in 2013. We should also remember today the tireless work of living wage campaigners, trade unions and those enlightened employers across the United Kingdom who accept that our country has no future as a low-skill, poverty-wage economy and who have achieved fairer deals for workers from the financial services sector through to local government.
Now the Government must meet their share of the responsibilities by using the procurement system more effectively to secure the living wage for workers through Government contracts wherever that is possible, because although the burden of poverty pay falls most heavily on the working poor, who are now using food banks in record numbers, it is paid for by every single taxpayer in this country. They are subsidising, through the tax and benefit systems, unacceptable levels of low wages paid by bad employers. That also damages the interests of good employers.
Over the past three decades, the share of growth finding its way into the pay packets of ordinary workers on the lower half of the income scale has slumped to just 12p in every £1 of GDP growth generated. Having denied for months that there is a cost of living crisis in our country, the Business Secretary and the Government now ring their hands, for ever pledging change in the future but failing to take the action needed now to enforce the minimum wage properly, to reverse its real-terms fall in value under this Government, or to produce any long-term plan to restore the broken link between growth, productivity and wage growth, which is vital to generating a lasting uplift in living standards for millions of people across our country.
The Chancellor has been sending out mixed messages over the past few weeks ahead of his Budget. He has briefed some newspapers that a significant uplift in the minimum wage is on the way, but other newspapers have received a different story. Whatever he announces on 19 March will be weighed against the fact that under his stewardship since May 2010 the real-terms value of the adult minimum wage has fallen by 50p an hour. He is also launching a £600 million stealth raid on work incentives for the low-paid through the freeze in the work allowance of universal credit for the next three years. A single parent with children will be up to £230 a year worse off as a result of that sneaky change buried deep in the documents that accompanied the autumn statement.
Business investment is flatlining, exports are poor, productivity is weak, the squeeze on wages is extending into 2015, and people are working longer hours than they did in 2008 but have a lot less to show for it. This is not a Government who can say that they have a credible long-term plan to boost the living standards of ordinary working people in Britain.
The Government should be enforcing the minimum wage better. The hon. Member for East Dunbartonshire (Jo Swinson) said that bad employers would be named and shamed, but we have seen nothing of that so far. The Office for National Statistics told me at the end of last month that nearly 300,000 people across our country are being paid less than the minimum wage, including 17,000 in Scotland, yet we have seen only two prosecutions over the past four years, and the average fine for each breach was only £1,500.
Mel Stride
Does the hon. Gentleman not welcome, as I do, the fact that we are moving from a fine of up to £5,000 per company to a fine of up to £20,000 per employee who does not receive the minimum wage? If 50 employees in a company were affected, presumably the fine could be as much as £1 million.
Mr Bain
I am grateful to the hon. Gentleman for his intervention, but that would simply mean that the maximum fine was only 40% of the maximum fine for fly-tipping in this country. Is he genuinely saying that there should not be an equivalence between the maximum fine for fly-tipping and the maximum fine for failing to pay the national minimum wage? I urge him to think again.
Mr MacNeil
Does the hon. Gentleman agree that minimum wages must have some link with productivity? Productivity is like a cake, with workers and CEOs each getting a slice, and that is what is making the difference to equality in this country.
Mr Bain
Unusually, I find myself in agreement with the hon. Gentleman; I will try not to make this a bad habit. He is right that industrial policy has a big part to play.
We need to be creating better-skilled jobs to replace those lost over the course of 30 years. We also need a transformation in skills in the workplace, because evidence from this country and from the OECD shows that an uplift in skills gives people the ability to progress in a job, to get new jobs, and to see a lasting increase in their wage levels across their career. That is what we need to be doing across our country in our industrial policy.
The scale of the crisis is being felt in every part of the United Kingdom. A written answer that I received from the Cabinet Office last Thursday, at column 250W of Hansard, shows that according to the most recent survey of wages and hours worked, conducted last April, over 16% of my constituents were paid less than the hourly rate for the living wage. Startlingly, in Chingford and Woodford Green, the constituency of the Work and Pensions Secretary, work is not paying under this Government, because 43% of workers are earning less than the living wage, including two in every three male part-time workers. That shows the scale of what is happening even in the constituencies of members of the Cabinet such as the Work and Pensions Secretary.
The case is clear: there has to be an increase in the minimum wage. We can work towards the living wage through Make Work Pay contracts, but the Government should be fulfilling their responsibilities in saying to the Low Pay Commission that low-wage Britain needs a pay rise, and needs it now.
Alec Shelbrooke (Elmet and Rothwell) (Con)
As I recently outlined, I am not in favour of a statutory living wage, but I am in favour of raising the minimum wage.
A rise in the minimum wage, as national wage growth returns, fundamentally leads to a smaller state, as has been outlined by Labour Members. Now that the Government have reduced business taxes—national insurance, corporation taxes and small business taxes—and brought in last year’s rebate, the time is right to look at how we can create a sustainable growth in the wages of the lowest-paid by giving the taxation that the Government were taking back to the people who are creating the wealth in companies. That means that the potentially inflationary pressures will not occur because the Government are not taking tax from a company just to give it back to a worker.
Robert Halfon
My hon. Friend talks about the Government cutting business taxes. Does he agree that they have also raised taxes for the rich by increasing capital gains tax from 18% to 28% and increasing to 45p the 40p rate that existed in the 13 years under Labour?
Alec Shelbrooke
My hon. Friend puts it most eloquently, as always.
This is an uncomfortable truth for Labour Members. [Interruption.] They have been yelling and shouting this afternoon, and they are at it again now as soon as they do not want to hear an inconvenient truth. The hon. Member for Vale of Clwyd (Chris Ruane) put forward the false premise that Government Members are saying we should increase wages for the people at the top and cut them for those at the bottom—no Government Member has ever made such a comment; it was a disgraceful thing to say—but failed to mention that under his party’s Government, the noble Lord Mandelson said that he was perfectly comfortable with people getting “filthy rich”.
Mr MacNeil
Is not this debate about the division of the spoils of productivity? We are looking for a division that is more like that of the 1950s, when those at the bottom were given a larger percentage than they get at the moment and those at the top got a smaller percentage. We now have a share-out of the spoils that is creating a level of inequality between sectors of society that we have not seen since the 1920s.
Alec Shelbrooke
I am grateful to the hon. Gentleman for giving me that extra minute. I will come to my own history lesson in a moment. He will of course welcome the fact that under this Government the gap between the poorest and the richest in society is the smallest it has been for 30 years, having grown under the previous Labour Government.
Let us talk about the problems of falsely increasing wages and go back to the 1970s. In 1975, my parents, who were young teachers, were given a 25% pay rise under Harold Wilson and were delighted with it. Twelve months later they suffered a 3% pay cut, because inflation had gone up to 28%. We also remember the then Labour Chancellor, Denis Healey, demanding wage restraint at the Labour party conference, only to be booed by the floor. Having listened to this afternoon’s speeches, I am sure that some Members present would boo him now, too.
Wage inflation creates a real problem for people on fixed incomes who have worked hard their entire lives and paid into private pension funds, only to then see them eroded by inflation running out of control. For example, in 1965 my great uncle retired at the age of 65 on what was then a very reasonable pension of £15 a week. By the mid-1970s it was absolutely worthless.
If we go ahead with wage inflation in the way suggested by the Labour party without linking it to cutting taxes for business and making sure that it is sustainable, we will end up, as Neil Kinnock said, with a Labour council running around the city in taxis, giving out redundancy notices.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The problem for people on the minimum wage, though, is that it simply has not kept pace with inflation. Those people would each have been £675 better off had the minimum wage kept pace with inflation, even over the past five years.
Alec Shelbrooke
I entirely agree with everything the hon. Lady has just said. She is absolutely right. The minimum wage has not kept pace with inflation, but neither has anybody else’s wage, because of the devastation that the Labour party caused to the economy. It is going to take decades to get this country back on track, but what we are seeing now is a long-term, credible economic plan that is leading to real growth in business and GDP.
It is fundamentally evil to introduce policies that create inflation which people who are on fixed incomes and who have worked hard all their lives are unable to keep up with. Such policies must sound very good to the Islington elite as they sit around their dinner tables and say, “Let’s talk about a living wage. We must have a living wage.” It is notable, however, that Labour’s motion does not encourage the Low Pay Commission to look at a living wage.
Alec Shelbrooke
I have already given way quite a lot, so I am afraid that I will not use up any more time. Having listened to the contributions of Labour Members, it seems to me that every single one of them has a different idea of what to do with a living wage.
Conservative Members accept the lessons of the past. Our party accepts that it was wrong to oppose the minimum wage. The Chancellor, the Prime Minister and many Conservative Members have made that clear. Indeed, we are a party of young people from normal backgrounds these days. As the previous Member for South Shields said, the trouble is that the Conservative party is the party with working-class people in it and the Labour party is full of failed polytechnic lecturers. The fact is that their philosophising and great ideas that sound good around the table have a real impact on the lives of people at the bottom of society.
Those who cannot afford to keep up with inflation because their income may not rise with it need proper, sustainable policies. One such policy is the opportunity we have taken in this economic climate to cut taxes on business and cut the national insurance contributions of business leaders and employers, followed by making sure that those tax cuts go back to the people who create the wealth in the first place. That is a sustainable and sensible policy and a long-term economic plan. For all those reasons, I urge the House to support the amendment in the name of my right hon. Friend the Prime Minister.
Chris Williamson (Derby North) (Lab)
Last Wednesday was fat cat Wednesday—the day by which top executives in FTSE 100 companies had, two days after returning to work from the Christmas holidays, earned more money than the average worker, let alone someone on the minimum wage, will earn in the entire year.
Like my hon. Friend the Member for Vale of Clwyd (Chris Ruane), I undertook a job centre survey in 1996—in Derby—and I was absolutely shocked by the number of jobs on offer at £1 an hour or less. It had a hugely civilising effect on our country when the Labour Government, who were elected in 1997, introduced the national minimum wage and took millions of people up the income scale as a consequence.
We know that the national minimum wage was opposed by the Conservatives in this place and elsewhere in the country, and that the Liberal Democrats could not really make up their mind: some were in favour and some against. True to form, since returning to power, they have frozen the amount of resources available for its enforcement. That is utterly disgraceful, because the consequence of the freeze is to make it that much more difficult to bring to book exploitative employers who pay below the minimum wage.
I have to say that the Secretary of State for Business, Innovation and Skills was all over the place when he addressed the House. He said that the political process should not interfere with the Low Pay Commission, but he went on to say that he had interfered on some occasions, and let us remember that it was a political decision to bring in the national minimum wage in the first place. Given the Government’s parsimony in relation to ensuring that the necessary resources are available to the enforcement body, I want the Secretary of State to make a political intervention by conferring a formal third-party role on the trade union movement. Trade unions could help to monitor and enforce the minimum wage by ensuring, when they complain about non-compliance, that such complaints are investigated by HMRC as a matter of course, which would make a big impact.
Chris Williamson
I will not take any interventions, if the hon. Gentleman does not mind, because I know that some of my hon. Friends want to speak and they may run out of time.
We certainly need better enforcement. It annoys me that the Conservative party is quite happy to use taxpayers’ money to subsidise the well-heeled in our society. Not enforcing the minimum wage and, indeed, not supporting the living wage is a case in point, because taxpayers’ money goes to subsidise low pay in our country. We therefore need not just support for the living wage, but greater penalties to ensure that the national minimum wage is enforced. It is welcome that penalties are being increased, but that is still not enough; more needs to be done.
Let us be clear that, as my hon. Friends have already said, when people on low incomes have more money in their pockets, they spend that money, which creates economic activity and growth, and helps to sustain and create jobs in other industries and businesses. In my view, that is really important.
Having listened to the Conservatives today and knowing their record from history, it seems to me that one thing is pretty clear: we cannot trust them—or, indeed, the Liberal Democrats—with the national minimum wage. It will take a Labour Government coming to power in 2015 to ensure that the national minimum wage is enforced, that appropriate penalties are imposed on recalcitrant employers and that we can move rapidly towards a living wage to bring all citizens up to a decent standard of living. We owe that to the people of this country, but it will take a Labour Government to achieve it.
Mr Brooks Newmark (Braintree) (Con)
I am delighted to follow the robust speech by the hon. Member for Derby North (Chris Williamson). I am probably the first Conservative in the Chamber to begin mine by supporting the first part of the Opposition motion, which states:
“That this House celebrates the 15th anniversary of the introduction of the National Minimum Wage”.
I support the minimum wage, as I believe all Government Members do, because it is important to make work pay, to boost living standards and to tackle in-work poverty. I cannot, however, support the rest of the motion.
The Secretary of State for Business, Innovation and Skills recently said:
“Anyone entitled to the national minimum wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear—if you break the law, you will face action. As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due.”
Mel Stride
Does my hon. Friend agree that it is a significant step forward that the fines will now relate to the individuals who have not received the minimum wage, rather than to the companies?
Mr Newmark
I thank my hon. Friend for that intervention. I will go into that matter in a little more detail in a minute.
The Government are taking strong action to deal with the last Labour Government’s failure to have a robust system of enforcement for the national minimum wage. I welcome this week’s announcement that tougher financial penalties will be brought in to crack down on those who do not play by the rules.
Justin Tomlinson (North Swindon) (Con)
I support everything that my hon. Friend has said. When I was an employer, I always recognised that I would get what I paid for. When a business is successful, that success should be shared with its employees. I welcome the fact that the Government are increasing the fines and are naming and shaming businesses, but I want to see the naming and shaming of the decision makers who disgracefully choose to exploit their staff.
Mr Newmark
My hon. Friend is right that there should be more publicity about those who abuse the system. Naming and shaming is a good idea.
To put some numbers on what has been said about penalties, in 2012-13 HMRC identified 736 employers who had failed to pay the national minimum wage, which led to the recovery of £3.9 million in unpaid wages for more than 26,000 workers. This week’s announcement will see the penalty for rogue employers raised to up to £20,000. The Government are taking punitive, robust action.
We should not forget that the last Labour Government left us with the biggest recession in recent history. This Government are helping some of the lowest-paid people in our society by raising the tax threshold and taking more than 2.7 million people out of tax altogether.
Mr Newmark
No, I cannot take any more interventions.
Furthermore, under this Government we have seen a net increase of almost 1 million jobs. That means that a record 30 million people are in work. In other words, more men and more women are in work than ever before. Youth unemployment is falling. In the past three months, it has fallen by 19,000. I warmly welcome the abolition of employer’s national insurance contributions for the under-21s, which is something that I have campaigned for hard over the past year with the Million Jobs campaign. I encourage businesses to take on young people and to give our young men and women their first step on the job ladder.
The cost of living is an issue for the low-paid. Given that the recovery is well under way, I ask the Government at least to consider increasing the minimum wage further. I believe that would be a win-win. It would be a win for the low-paid because it would help with the cost of living issues that have been raised by Opposition and Government Members. It would also be a win for the Exchequer because it would reduce the amount that is paid in tax credits. Notwithstanding that, I support the Chancellor’s position that we should leave the final judgment to the Low Pay Commission, which takes into consideration the impact on overall employment and on businesses.
Although I join Opposition Members in celebrating the 15th anniversary of the introduction of the minimum wage, I believe that the Government are tackling the issues that they have raised. I therefore cannot support the overall motion, but will support the Government amendment.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I was one of those in 1998 who spent the night here as Conservative Members did everything in their power to try to stop the national minimum wage legislation. Today, they are still warning about employment risk. Only last week the Chancellor talked about his fear that a rise in the minimum wage would jeopardise jobs and risk the recovery. I am afraid that is all too familiar.
We are supposed to believe that there is a new-found enthusiasm for the minimum wage on the Conservative Benches. They are leaking stories to the press that suggest there is a Conservative-Liberal Democrat battle over who will promise a hike in the minimum wage in their 2015 manifestos. Well, they are the coalition. If we are all in it together, give us something on account: give us some of it now.
Mr David Burrowes (Enfield, Southgate) (Con)
On support for the living wage, does the hon. Gentleman agree that leading by example is important in the private and public sector, including in Government Departments? Does he recognise that Conservatives have been on the case for a number of years? Boris Johnson, the Mayor of London, has introduced the London living wage in city hall.
Steve McCabe
I am a fan of the living wage and I will mention it before I finish.
Forgive me, Mr Deputy Speaker, if I am a little cynical, but there is a consistent thread to Tory opposition. In 1983, they abolished the fair wage resolution. In 1993, they abolished wages councils. It took them until 2005 to give a manifesto commitment to retain the minimum wage. Of course, nobody told the hon. Member for Christchurch (Mr Chope), who has made successive efforts to sabotage it. All of that is probably why only 14% of people think the Tory party best represents low-paid, private sector workers. The sad truth is that the minimum wage has not kept pace with inflation and the early gains have been wiped out. In October, those on the minimum wage got a 12p rise while the Government were busy giving millionaire bankers a tax cut worth £100 million. It is funny how that poses so little threat to the economy. In fact, it apparently poses no threat at all, because they are about to give them another one.
Mr MacNeil
Given that the stories of doom about the minimum wage did not amount to anything, does the hon. Gentleman look back with hindsight, as openly and as honestly as he can, and think that the minimum wage could have started on a higher rate without any ill effects?
Steve McCabe
What is absolutely the case is that we should not be listening to people who want to do anything to squeeze it down now.
The real tragedy has been the appalling lack of enforcement. Last year, my hon. Friend the Member for Rhondda (Chris Bryant) pointed out that there had not been a single prosecution for failure to pay the minimum wage between March 2011 and 2013. I am extremely indebted to the Tory party researcher who contacted me to suggest that the figures my hon. Friend used, which were obtained, as I understand it, from a parliamentary question, were not true. There had indeed been a single prosecution: a Mr Kenneth Ikerrunaan was apparently fined £1,000 on 26 February for non-payment of the minimum wage, as part of a multiple charge sheet that included extensive VAT fraud. Lest Government Members think I am being unfair, I will acknowledge the only other prosecution that has come to light, that of a butcher in Sheffield who was fined £700. Some, of course, argue that the fines are not that important because the Inland Revenue can negotiate penalties, but of the 937 cases subject to penalties so far, the average penalty has been less than £600. That is for people who are defrauding their workers of wages running into hundreds of thousands of pounds.
I acknowledge plans to increase the maximum fine because, as we heard earlier, it is absurd that people can be fined more for fly-tipping than failure to pay the minimum wage. It will only make a difference if it is used to deter those who treat this law with contempt, and it will only make a difference when we see those employers named and shamed as the fraudsters they are.
I am pleased that there is some talk about supporting better wages, and I welcome the comments of the director of the CBI, but as well as employers evading their legal responsibilities regarding the minimum wage, it is estimated that nearly 5 million workers in this country do not earn a living wage. I was shocked to discover only last week that the university of Birmingham was refusing to pay 250 of its lowest-paid staff a living wage, but could afford to pay its vice-chancellor a salary increase of £28,000. We need a living wage from those who can afford it, we need an enforcement policy so that the minimum wage can be made a reality, and we need rogue employers who recruit foreign workers to undercut the minimum wage told bluntly that we do not want that kind of business here.
Andy Sawford (Corby) (Lab/Co-op)
It is a pleasure to speak in an incredibly important debate that has huge implications for people in my constituency. In 1905, boot and shoe workers from the second-largest town in my area, Raunds, marched near Parliament to demand fair pay from the War Office, and they won their campaign. There is a long tradition in my constituency of fighting for a living wage, and we all owe a debt of thanks to those hon. Members who passed the minimum wage in 1997. It was, indeed, a great achievement for the Labour party—not just that Labour Government, but the Labour movement—in more than a century of fighting for a better standard of living for working people in this country.
Today, though, my constituency is plagued by problems, particularly in connection with employment agencies that treat many workers unfairly and make unfair deductions from pay—for example, transport costs, unlawfully charging for personal protective equipment and making workers pay a payroll company just to get their own very low pay—and those deductions take people below the minimum wage. The latest scandal involves local agencies charging workers £2.50 a week for personal accident insurance, which they buy for pennies and then sell on at a profit to the worker, when of course the worker is already protected by the employer’s liability insurance. It is another way of bringing down the employer’s premium and scamming the workers.
I am grateful to the hon. Member for East Dunbartonshire (Jo Swinson), who I wish well—she recently gave birth to a son—for supporting me in getting Her Majesty’s Revenue and Customs and the Employment Agencies Standards Inspectorate to come to Corby to investigate the 32 agencies operating in my area. They found that 12 agencies were breaching the minimum wage law and that £120,000 was payable to more than 3,000 local workers. Two of the investigations have been completed, and penalty charges totalling £1,532 and wages totalling £3,154 have been paid back to workers, but that is just the tip of the iceberg. These are very small figures. The remaining 10 agencies have an average of £12,000 to pay back to local workers, but for some of the largest agencies—they are also national agencies—operating in my area that figure will be up to £40,000 or £50,000.
On the two agencies that have had to pay penalty charges, I must say to the Government that it really is not much money. Having to pay back £1,532, having scammed local workers out of £3,154, is hardly a deterrent to them and other local employers. I appreciate the support from the Government so far, but will the Minister consider whether, in those cases, fines should have been imposed? We know that they have breached the law. If in the other 10 cases we find even more substantial breaches, as we surely will given the figures HMRC is looking at, I hope we will impose fines. I welcome the move to increase the fines announced today. I would like it to go further, but let us acknowledge that the Government are moving in the right direction. Enforcement is critical, however. The increase in the fines is meaningless unless we take enforcement action to deter people from breaching the law. It is a huge rip-off.
We have taken other initiatives. I am delighted that Channel 4’s “Dispatches” worked with me to investigate the issues in my constituency and did some undercover reporting that was shown on Channel 4. A director of Staffline, one of the biggest agencies in my area with known issues of exploiting workers, was filmed saying that he could ensure, through a legal loophole, that Corby workers would be paid less than workers for a particular company on another site in this country. That is absolutely wrong. These agencies find ways to exploit workers and help companies to do it.
The companies are responsible for their own actions. I say to them all that they should sign up to the employment agency charter that we have launched in Corby. Some of the best agencies have worked with us because they are proud of their practice. There is a role for temporary employment and there can be a role for agencies in certain circumstances. Some of our local employers have signed up, too, but I want them all to sign up. I want them to know that if they do not, we will be on their backs; and that if they break minimum wage law, the Government will fine and fine them properly so that they do not do it again.
I had hoped to cover other issues on the living wage and, in particular, on zero-hours contracts. I hope all hon. Members will support my private Member’s Bill on zero-hours contracts, which I shall introduce next Friday.
Mrs Mary Glindon (North Tyneside) (Lab)
In 1999, the national minimum wage lifted 1.5 million people out of poverty pay. As has been said, it was one of the greatest achievements of Labour in power. I am proud to say that my predecessor, Stephen Byers, then Secretary of State for Trade and Industry, was instrumental in introducing this policy, which has made a difference to the lives of so many low-paid workers in the last 15 years. More than 5% of workers earn the minimum wage, and I am pleased to see that, for some, thanks to the work of unions such as GMB and Unison, this has been upgraded to a living wage. If we are serious that work should pay for everyone, including young people, this must surely be achieved for all workers in future, which is Labour’s ambition.
This debate acknowledges the introduction of the minimum wage and its benefits, but it remains shocking to see that figures from the Office for National Statistics show that last year, 279,000 people received less than the minimum wage. I was disappointed to find that 15,000 of those workers were in the north-east. Those figures show why it is so important to make sure that employers—even in these hard times—comply with the law.
The general-secretary of the TUC has today welcomed the increases in penalties for employers who fail to pay the minimum wage. She cautioned, however, that Her Majesty’s Revenue and Customs must have the appropriate resources to enforce those penalties. In fact, the Public and Commercial Services Union has pointed out that there are only 90 full-time staff employed as compliance officers. Although the union welcomes the increase in penalties, it believes that the emphasis needs to be on the worker. The priority should be making sure that employees get the pay they are owed, rather than concentrating only on fining the employer.
Last year, HMRC managed to get £4 million for workers, but that sum would have been more if HMRC had not had a budget underspend. Since 2010, HMRC has underspent on the national minimum wage enforcement budget, year on year. I agree with PCS that HMRC should have more money for enforcement, but that the Department must not be allowed to underspend in order to meet Government savings targets, which negate those enforcement efforts. I hope that the Government will heed the union and the TUC on this matter.
Finally, let me raise an issue on behalf of Longbenton air cadets—the top air cadets in the country. Before Christmas, I attended an evening with the cadets about the working of Parliament, in which a role-play Commons debate was acted out. Young people’s pay was debated, and they asked me to raise the issue of apprentices’ wages, which are only £2.68 an hour. Those who have apprenticeships are grateful, but they would like to be paid a more realistic wage. After all, who of us in this House could live on £2.68 an hour if we were young today?
John McDonnell (Hayes and Harlington) (Lab)
Let me use the last few minutes of the debate to identify some cases, as my comrades have done. We have been asked to name and shame, so let us do that. We have been campaigning in the maritime sector for a national minimum wage for a long time. To be frank, people were disappointed at developments under the last Government, but we did secure a working party between the National Union of Rail, Maritime and Transport Workers, Nautilus and the Department, which produced a redefinition of the national minimum wage qualifications for seafarers. It was done on the basis of the individual’s connection with the country and so forth, and we felt that it was a breakthrough, but it is not being enforced.
Let me provide an example. The most notable exception that we found involved the lifeline passenger freight ferry routes from Portsmouth, Poole and Weymouth to the Channel Islands. They are operated by Condor Ferries, which employs seafarers from outside the European economic area who are paid £2.35 an hour. Despite frequent protests against the pay discrimination by the RMT, the HMRC enforcement team has taken no action, and is not enforcing the Government’s own policy. I agree with the Public and Commercial Services Union that that is because there are so few staff and they are not given enough powers or resources. That firm is a disgrace. We have raised the issue time and again, but we have been completely ignored, and enforcement action is now necessary.
In 2012, we pointed out that Streamline Shipping was operating a freight service from Aberdeen to the Shetland Islands and exploiting the Government’s lax national minimum wage and Equality Act 2010 regulations to employ Filipino workers and pay them half the minimum wage. We want all workers, whatever their nationality, to be paid a decent wage.
Another scam has been referred to by my hon. Friends. The cost of accommodation is now being deducted from seafarers’ wages. The sum deducted is currently £4.91 per day, or £34.73 per week. On most ships that sail from our ports, seamen work two weeks on, two weeks off, so that amounts to a deduction of some £70. That is extraordinary. Do the seamen clock off and go home on their own boats? Are dinghies attached to the boats? It is ridiculous, and it is yet another way of undermining pay in the sector.
Finally, let me take up what was said by my hon. Friend the Member for North Tyneside (Mrs Glindon) about apprentices’ pay. Along with the UK Chamber of Shipping, the employers and the unions—the RMT and Nautilus—we have embarked on a drive to get young people back on to British ships as ratings. They can train with a grant, and subsequently rise to officer level. We are trying to encourage people to learn the skills of British seafaring so that we can maintain the industry itself. Our efforts are not helped by some recruitment practices, but at least we have a campaign going. Paying people £2.68 an hour, even when they are apprentices, is not acceptable. In the last few years, the apprenticeship rate has gone up by 18p. That is a derisory amount, and I do not think that it can serve as an incentive for our young people.
We want the national minimum wage regulations to be reviewed again. Following a campaign by us, they were reviewed, and we were told that the minimum wage would apply in British waters, but the Government then redefined the concept of British waters, which became a narrow channel consisting basically of the Norfolk Broads. That was about it. As a result, employers were able to pay below the minimum wage, and also to avoid some elements of the Equality Act. That is unacceptable in this day and age. I urge the Government at least to consider enforcement against that company, so that we can use it as an example to make clear to other shipowners that we will not tolerate any more poverty pay on British ships.
Mr David Anderson (Blaydon) (Lab)
The hon. Member for Vale of Clwyd (Chris Ruane) reminded us that in 1906 the Labour party was in favour of a national minimum wage. During the 92 years before we got one, the people who kept the light shining for the campaign were members of the trade union movement, although I should add that some union members were not in favour.
Throughout the dark days of the 1980s and 1990s, the person who led the campaign more than anyone else was Rodney Bickerstaffe, the leader of the National Union of Public Employees and Unison. In 1997, I was proud to sit with Rodney at the first Low Pay Commission hearings, where we gave evidence about what should be done about the national minimum wage. The union argued at the time that the level should be set at £4.15 an hour, but unfortunately the Government of the day, although they were doing the right thing in general, decided to press for a level of £3.60.
If the Government had listened to the unions, we would not be having a debate about the living wage, because if the minimum wage had been set at £4.15 then, it would be a living wage now. That would not only have been the right thing to do for people in work, but it would have saved the billions of pounds in benefit that we have been spending over the past 15 years to supplement the wages paid by exploitative employers. We could do a lot worse than listen to what the unions are saying now. Unison’s submission to the Low Pay Commission for this year includes a number of recommendations which I hope will be supported by both Front Benches.
First and foremost, the union makes the point that it is clear that the national minimum wage has slipped behind, and we should move progressively in stages towards having a living wage for all workers. In particular we should make up the ground that has been lost, as the Secretary of State acknowledged, of its being at least 5% behind the retail prices index this year. The Government as well as the trade unions should have that objective going forward.
The subject of breaches of the legislation has been talked about on both sides of the House. The unions are putting forward the case that there should be a new formal complaints mechanism, meaning that if a trade union, law centre or citizens advice bureau puts forward a formal complaint on behalf of workers, that should be treated by HMRC as a formal complaint and must be investigated. That should be supported, because those are the people on the ground with direct contact with workers.
On enforcement, the unions make the case clearly that instead of freezing funding for enforcement, which is what has happened over the last period, it should be dramatically increased for the people on the ground. If that were the case, we would not be seeing the exploitation that was mentioned by my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Corby (Andy Sawford).
On penalties, we welcome the increase and the fact that the penalties will be for each worker not just per company, but I asked the Secretary of State whether he will reinvest the money raised through fines in funding for enforcement. That is where it should go. It should not be a windfall to the Treasury so that the vicious circle is continued.
The right treatment for 18 to 20-year-old apprentices has always been clearly argued for by the trade union movement. The differentiation based on a person’s age is immoral. If somebody is good enough to do the job, they are old enough to do the job and that principle should be enshrined in law. If they are not doing the full job, then differentiation is fair enough, but if they are doing the full job they should be paid the full rate. The Secretary of State mentioned that apprentices were getting a derisory 3p pay increase to £2.68. We cannot buy a pint of beer in this place for £2.68—and before somebody from the TaxPayers Alliance has a go at me about that I will add that we all know that the beer here is subsidised. Apprentice pay should be at least the development or the youth rate. There must also be a discussion about zero-hours contracts and the national minimum wage and exploitation.
The argument put forward about travel time is an absolute disgrace. The care workers who do such important work for people in our communities are not being paid for travelling from house to house. The Secretary of State says that is illegal, so let us make sure everybody in this country gets behind that. It is also clear that we must give the people running care in this country—the councils and private organisations—the necessary funds.
It is also a disgrace that people are being made to lose money because of having to live where they work, as has been mentioned. After all, £4.91 might not be very much to us, but it is a big chunk out of some people’s pay.
Finally, there is another scam: people being made to pay for uniforms and work equipment. That is wrong, it is immoral and it should not happen.
Ian Murray (Edinburgh South) (Lab)
The small number of Members on the Government Benches at the tail-end of this debate highlights their commitment to the national minimum wage, and I have to say I was slightly disappointed by the Business Secretary’s response to this debate. He said he did not want a tribal debate, and then went on to give a very tribal response to the shadow Secretary of State. He also said he was delighted to have laid regulations today to increase the amount in fines that would be payable by employers if they did not abide by the national minimum wage legislation. I do wonder with my cynical nature why those regulations were laid only today yet the Prime Minister announced this policy back in November. Perhaps the Opposition’s calling for this debate has oiled the wheels.
It was unkind of the Business Secretary to say that the previous Labour Government had only one or two successes, the national minimum wage being one. Several others were shouted at him across the Dispatch Box and he responded by saying perhaps there were those things as well. However, the one thing that the Business Secretary has managed to do—his one great success and what his legacy will be—is to destroy completely the Liberal Democrats party.
I would like to acknowledge and put on record that we were perhaps slightly unkind to the Business Secretary, not realising the circumstances behind his not voting in favour of the national minimum wage, and we apologise if we got that wrong. However, that does not take away from the fact that the Liberal Democrats were against the national minimum wage when they were campaigning in the run-up to the 1997 election. They supported it in the Chamber on Second and Third Reading of the Bill, but that simply shows that they flip-flopped between what they stated in their manifesto and what they did in the House. I am sure that we have seen that before. Also, in the House of Lords they strengthened the regulations on the requirements for the Government to take enforcement action. I was disappointed by the Secretary of State’s response to this debate.
When moving the Second Reading of the National Minimum Wage Bill in December 1997, the then President of the Board of Trade, my right hon. Friend the Member for Derby South (Margaret Beckett), said that the national minimum wage was
“a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few.”—[Official Report, 16 December 1997; Vol. 303, c. 173.]
How relevant that statement is today.
Fifteen years have passed, and the national minimum wage is now an economic and political fact of life for us all. It is undoubtedly one of Labour’s proudest achievements, and I wonder whether the present Prime Minister now regrets campaigning against it in the mid-1990s. The then Opposition castigated the policy as a burden on business, arguing that increasing wages at the bottom would cost more than 1 million jobs. It did nothing of the sort. We should celebrate the fact that it contributed to the ending of poverty pay and boosted living standards in this country. That was confirmed by the Low Pay Commission in 2013, when it stated that
“the research had…found few adverse effects on aggregate employment;…individual employment or unemployment probabilities; or regional employment or unemployment differences.”
The days when an employer could legally pay someone as little as £1 were brought to an end despite the vehement opposition of the Conservatives.
It was not only the Conservatives who were against the introduction of the national minimum wage. I should like to draw the attention of the House to the record of the First Minister for Scotland. When he was in this House, he abstained on Second Reading of the National Minimum Wage Bill, and the Scottish National party as a whole did not vote on Third Reading.
Ian Murray
I am afraid I do not have time to give way, although I see that when the nationalists are provoked, they tend to respond.
I want to comment on some of the contributions from both sides of the House to today’s debate. My right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) was right to say that the existence of the national minimum wage is a statement about the kind of country we are. She was also 100% right to highlight the real-life impact of low pay on individuals and families, and particularly on women with child care responsibilities, who are disproportionately affected by employers who do not abide by national minimum wage legislation.
I was quite taken by the remarks of the hon. Member for Harlow (Robert Halfon). He was right to be contrite, and to apologise for his party’s previous stance on the national minimum wage. Unfortunately, however, as recently as yesterday, the hon. Member for Esher and Walton (Mr Raab) wrote in the Evening Standard that any increase in the national minimum wage would be a
“massive jobs tax on business”.
He also described it as “oversold”, and said that this
“policy cross-dressing is more likely to confuse than impress voters”.
Perhaps the hon. Member for Harlow is a lone voice on the Conservative Benches when it comes to defending the national minimum wage in the trenches. That would be a shame.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) said that the very low-paid could not even comprehend the pay packets of the most wealthy in this country. He summed up the debate well when he said that the minimum wage was for the many and not for the few. He also reminded us that the National Minimum Wage Bill Committee sat for an unprecedented 70 hours. Anyone here who has served on Bill Committees over the past four years will realise that to do so for 70 hours involves quite an undertaking. That just shows the then Government’s commitment to getting the legislation through.
I am always delighted to hear the hon. Member for Burnley (Gordon Birtwistle) speak in the Chamber, although I never agree with a word that he says. Given that he is a Liberal Democrat, I thought he might have been a little more contrite on this subject. Let us give credit where it is due, however. He did say that he had always supported the national minimum wage and always paid it. If any of the hon. Gentleman’s employees or former employees want to get in touch to dispel that rumour, we would be willing to hear from them.
My hon. Friend the Member for Glasgow North East (Mr Bain) reminded the House of the statistic that the UK has the fifth worst levels of poverty pay in the OECD. We should be doing something about that. He also mentioned the impact of low pay on the welfare budget, and the fact that since 2010 the national minimum wage has fallen behind to the tune of 50p an hour.
The hon. Member for Elmet and Rothwell (Alec Shelbrooke), always an entertaining speaker in this House, talked about how increasing wages for the lowest paid was false and fake. I do not think the pay of the poorest in this society is false and fake, but I did enjoy his restatement of the Tories’ trickle-down policy of economics in this country. My hon. Friend the Member for Derby North (Chris Williamson) talked passionately about the need for effective enforcement and rightly said that it would take political direction to bring in the living wage. The Business Secretary did say that the Low Pay Commission should be free of political interference, but bringing in the national minimum wage and, indeed, the living wage is a political direction, and we should all be striving for that.
My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) was one of the hon. Members who stayed in this House all night trying to get the national minimum wage legislation through. Let us not underestimate the former right hon. and hon. Members, and those who still sit in this House, who made such effort to get this legislation through, despite the vehement opposition of many on the Opposition Benches.
My hon. Friend the Member for Corby (Andy Sawford) has done some wonderful work in his constituency since he was elected in that wonderful by-election victory, and he gave numerous examples of where workers are paid less than the national minimum wage because of unlawful deductions. He mentioned the increasing problem of the personal accident insurance that is being taken off employees; it is costing employers pennies but they are taking pounds from employees. We have to make sure that there is enforcement on such issues.
My hon. Friend the Member for North Tyneside (Mrs Glindon) is a passionate advocate for the living wage and rightly gave credit to the councils that are paying it. My local council in Edinburgh is paying above the living wage and has done since 2011, and we should encourage more councils and employers to do more. When I am at this Dispatch Box I always find that my hon. Friend the Member for Hayes and Harlington (John McDonnell) speaks last, or second last, and is curtailed in his contributions. I would like to hear an awful lot more of him speaking in this Chamber, because he deserves significant congratulations on the campaign he has run against national minimum wage exploitation; we heard some of the issues relating to the shipping industry from him.
Last, but certainly not least, my hon. Friend the Member for Blaydon (Mr Anderson) talked about why enforcement fines should go back into the enforcement industry, to make sure that we can enforce the system better and that exploitation is rooted out.
We have had a robust debate on the national minimum wage, in which I have been struck by the Government’s restatement of their policies. Indeed, they have re-announced their policy on naming and shaming more times than they have actually used it, which is surprising. We need more action from the Government on these issues, rather than the restating of policies. When the Prime Minister, no less, announced the increase in fines back in November, I am sure that the Government had no intention of rushing them through—until the Opposition called this debate. But that is not new in this House, and this Opposition will continue to press the Government to get results.
Labour will also bring in Make Work Pay contracts to encourage people to pay the living wage, and we have instigated a review led by Alan Buckle, the former deputy chairman of KPMG. He will look in detail at how to restore the value of the minimum wage; how to ensure that sectors that can afford to pay more do so; and how we can promote better the living wage. In November, the Leader of the Opposition also outlined how a future Labour Government will provide tax incentives for employers that sign up to pay the living wage—employers, employees, trade unions, the Government and the Treasury all working together to share the benefits of lifting pay for the lowest paid in this country. Those benefits can be shared for all; I think that that is the right way to go.
Labour created the national minimum wage, despite strong opposition, and it is Labour that will strengthen it for all the low-paid people around our country, moving together towards the shared goal of making work pay for all. It is Labour that will take proper sanctions against those who do not pay it. That is only fair to those who work hard, do the right thing and deserve to be paid properly. That is what we are trying to do today, and I hope that the Government will support our motion.
The Economic Secretary to the Treasury (Nicky Morgan)
This afternoon’s debate has been a good one, and we have heard interesting contributions from all parts of the House. I counted 13 Back-Bench Members of Parliament who have been able to contribute in the couple of hours available to us. I will try, shortly, to address as many of the points raised as possible in the time allowed to me.
The shadow Secretary of State and many Opposition Members have taken great pride in pointing out that 17 years ago some members of my party had reservations about the impact that a minimum wage might have on UK businesses. The Opposition are right to point out that some of those fears—[Interruption.] I think they might want to listen to this. They are right to point out that some of those fears have been unfounded and that the minimum wage has been important for our lower-paid workers. I hope Opposition Members will realise that acknowledging mistakes is not terribly hard. The shadow Chancellor might want to think about that when he realises who crashed our economy.
What we have to remember is that this is all about finding the right balance. Yes, we would like to see a faster increase in the national minimum wage and everyone sharing in the recovery, but if an increase were to cost people their jobs or to slow down the recovery, then it would, as my right hon. Friend the Chancellor said last week, be completely self-defeating. That is why my right hon. Friend the Business Secretary has asked the Low Pay Commission, whose judgment and expertise we value greatly, to consider the conditions that we would need for a faster increase.
Chris Williamson
Does the hon. Lady deprecate those employment agencies that seek to use the Swedish derogation model to get around the implementation of the minimum wage? Is that not a gross abuse of that derogation, and does she deprecate it?
Nicky Morgan
I will come on to that point, as the hon. Member for Blaydon (Mr Anderson) mentioned it in his speech. If Members will forgive me, I will accept only a few interventions because I want to reflect on the points that have been raised this afternoon.
As all Members are aware, the Low Pay Commission will report to us next month on the recommended wage for 2014, and the Government will respond shortly after. As we have heard this afternoon, we must ensure that the existing wage rates are properly enforced, which is why this Government’s steps to hit those firms found guilty of failing to pay the wages with penalties and publicity will be so important.
Let me turn to the points that have been made by Members across the House this afternoon. We started with a typically thoughtful contribution from my hon. Friend the Member for Harlow (Robert Halfon), who has looked a great deal at this area. He mentioned the reintroduction of the 10p tax band, which is an interesting suggestion. [Interruption.] Yes, who did abolish the 10p tax rate? I think it was the Labour party! My hon. Friend also talked about making some changes to national insurance contributions, but the most important thing he said was that we want to leave workers with more money in their pockets, and that is what this Government are all about.
The hon. Member for Burnley (Gordon Birtwistle) reminded us all that the Low Pay Commission is independent, which is critical. It was set up by the previous Government and we need to wait to hear what it recommends before we make any further decisions.
My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) was absolutely right about the importance of low inflation. I am sure that he, like all Members, will welcome the recent fall in inflation and the impact that that will have on people’s wages and the amount of money that households have to spend.
My hon. Friend the Member for Braintree (Mr Newmark), who is not in his place at the moment, talked about the policy to abolish national insurance contributions for those under the age of 21, which was announced by my right hon. Friend the Chancellor in the autumn statement. He was absolutely right to say that we must encourage businesses to take on as many young employees as they possibly can.
Let me move on to the contributions from Opposition Members. The right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) and the hon. Members for Glasgow North East (Mr Bain), for Derby North (Chris Williamson), for Corby (Andy Sawford), for North Tyneside (Mrs Glindon) and for Hayes and Harlington (John McDonnell) all talked about enforcement. I am sure that others did as well. In 2012-13, Her Majesty’s Revenue and Customs collected £3.9 million in arrears for workers; 26,500 workers benefited. That was a 33% increase in the number of workers benefiting and a 26% increase in the number of arrears identified. Seven hundred employers were penalised last year for failing to comply with the national minimum wage rates, and the value of fines, as my right hon. Friend the Secretary of State said earlier, was seven times higher last year than it was in 2009-10.
In 2009-10, 381 penalties were charged, and last year it was 696, although it had risen to more than 900 in the previous two years. Opposition Members talked about the amount of money that was given to the enforcement agencies. However, it is not necessarily about how much money is given but how effective those enforcement agencies are with the money that is given to them—a principle that Government Members take very seriously.
I must comment on the point made by the hon. Member for Vale of Clwyd (Chris Ruane) about the fact that although it had taken the Labour party nearly 100 years to deliver the national minimum wage, it got there in the end. It looks like it is going to take the shadow Chancellor 100 years before the Labour party comes up with a long-term economic plan. He has plenty of time and we look forward to hearing it.
Opposition Members, particularly the hon. Member for Glasgow North East, did not tackle the fact that the rise in the income tax threshold introduced by the Government has left more money in workers’ pockets. The hon. Gentleman talked about comparisons with the minimum wage and what it was when Labour was in government, but the fact is that constituents come to MPs from both sides of the House and say that they have more money in their pockets as a result of the fact that the personal allowance has gone up.
The hon. Member for Birmingham, Selly Oak (Steve McCabe) talked about UK employees being undercut. We have asked the Equality and Human Rights Commission to explain what enforcement action it is taking against employment agencies that discriminate against our nationals, for example by advertising UK jobs exclusively overseas. That is an issue we are aware of and we have asked the EHRC to address it.
I thought that the hon. Member for Corby (Andy Sawford) was very fair in his remarks about enforcement in his constituency. There is clearly more to come and I heard what he said about the new penalty figures and the penalties that have been levied. I am sure that my colleagues in BIS will take note of what he said.
The hon. Member for Blaydon talked about care workers. As my right hon. Friend the Secretary of State said, the guidance on travelling time has been updated. It is right that we should do more to get that guidance out. I have been approached about it in my constituency office as the Member of Parliament for Loughborough and we certainly need to disseminate it better.
We had some interesting contributions from Members this afternoon and I thank all Members for their contributions. I am aware that I have not necessarily been able to respond to all the points that have been raised this afternoon. I shall certainly take away what has been said and I will read the debate to see whether we need to tackle any other issues.
It is fair to say that almost everyone who has spoken in the Chamber today wants to achieve the same goals. We want to see those who receive the minimum wage paid fairly and we want to see those who do not pay the minimum wage treated harshly. I am sure all Members welcome today’s announcement, mentioned by Government Members, that the fines have been quadrupled from £5,000 to £20,000. As my right hon. Friend the Secretary of State said, we would also like to increase those fines to £20,000 per worker, which will send a clear message to employers who think that they can flout the minimum wage regulations that that is not an option and that they need to pay a fair wage for a fair day’s work.
We want wages to continue to rise, unemployment to continue to fall and our economy to continue to recover, and we want everyone in this country to share in that. I ask the House to wait for the Low Pay Commission’s report, to reject the motion and to support the Government amendment.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
Business without Debate
(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Delegated Legislation
(10 years, 3 months ago)
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Acute Hospital Wards (Staffing)
(10 years, 3 months ago)
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Andrew George (St Ives) (LD)
I am delighted to have secured this important debate on the staffing of acute hospital wards, on which I know the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter)—I am pleased to see him in his place—is aware I have been campaigning for a number of years.
The pressures on acute hospitals have, without question, intensified over the past couple of decades. There are now a third fewer general and acute hospital beds than there were 25 years ago. The past decade alone has seen a 37% increase in emergency admissions. An increasing number of older patients are being admitted to hospital: 65% of admissions are of people over the age of the 65. These patients are more likely to present more complex and multiple comorbidities, and the increased demand on acute care and the increased complexity of patients’ needs will have a knock-on effect, including placing greater demand on hospital resources and increasing pressure on registered nurses, doctors and other health care professionals. It will also, of course, have an effect on patient care itself.
I intend to concentrate on the staffing levels of registered nurses. Although much of the health debate has become obsessed with changing and tweaking management tools for commissioners—for example, by incentivising health systems with payment by results and more sophisticated tariffs, creating new pathways of care and, as far as the previous Government were concerned, wasting billions on fancy information technology systems—front-line nurses are often run ragged and overstretched on hospital wards.
The background or history to this debate goes back to the case of Graham Pink, who was sacked by Stepping Hill hospital in Stockport in 1990 for speaking out about poor staffing. I raised the matter as long ago as 2001 with John Hutton, now Lord Hutton, who wrote in response to a question from me:
“The work force commitments to recruit additional nurses, doctors and therapists in the NHS Plan take account of the need to increase the number of staff necessary to deliver diagnosis and treatment within the agreed clinical standards set out in the National Service”.—[Official Report, 17 July 2001; Vol. 372, c. 114W.]
There was therefore recognition in 2001 about the need to increase the complement of staff within NHS hospitals.
Since that time, there has been an acceleration of activity. To a certain extent, that activity was stimulated by the publication on 6 February 2013 of the Francis report on Mid Staffordshire NHS Foundation Trust, which has been debated a great deal in the House and elsewhere. As a member, as the Minister once was, of the Select Committee on Health, I know that it has exercised our consideration on many occasions.
To respond to the concerns about the arguably inadequate registered nurse staffing levels in many acute hospitals, the Safe Staffing Alliance has been formed with members from the Royal College of Nursing, the Patients Association, the Florence Nightingale Foundation and many other bodies. In an important launch on 12 May, it released a statement on the risk of excess deaths, indicating that the risk was significantly increased by lower registered nurse to patient ratios. I met the Minister on 14 May, after which I submitted a substantial file of evidence to back up the argument in favour of improving those ratios.
On 16 July, Professor Bruce Keogh published his study on 14 hospitals. Certainly one of its key themes was the inadequate registered nurse to patient ratios on wards, which caused concern within those hospitals, and that has been debated on many occasions. On 16 August, Professor Don Berwick published a very significant report on patient safety, from which the same theme arose that we cannot achieve safe patient outcomes if we do not have adequate safe staffing levels.
On 9 October, the Safe Staffing Alliance held a reception, which I was pleased to host, and I tabled early-day motion 643 on safe staffing on 29 October. The Government have since responded, with the National Quality Board—headed by the chief nursing officer, Jane Cummings—publishing a “How to” guide on using the right tools to establish safe staffing levels on hospital wards. On 19 November, the Government responded to the Francis report, as did the Health Committee on the same date, and announced further initiatives to address the issues, which I will come on to in a moment.
The question is how bad the problem is now, when there is so much attention on it. Interestingly, a report in the Nursing Times this week stated:
“Serious concerns over staffing levels and patient safety were raised last week at four hospitals in different parts of the country”
as a result of Care Quality Commission reports. A number of CQC reports in recent years have highlighted inadequate staffing levels.
Dr Phillip Lee (Bracknell) (Con)
One of those CQC reports was on Wexham Park hospital, which serves part of my constituency. There have been reports of pretty woeful nursing standards, particularly on acute medical wards. Does the hon. Gentleman agree that part of the challenge is that we have too many acute hospitals in the 21st century to deliver the appropriate care that we would all want our constituents to receive? A reconfiguration of hospital services, with fewer acute sites, would allow proper staffing of acute medical wards.
Andrew George
The hon. Gentleman speaks with great knowledge on this subject. Of course, we have fewer acute hospitals than we used to have, but we still have serious staffing problems. On its own, that idea is not the answer, but it does need to be considered if we are to address the issue of patient safety.
As the hon. Gentleman rightly says, the report on Wexham Park hospital stated that CQC inspectors found evidence of regular short staffing on “almost all wards” and a culture in which
“staff did not always feel they could raise concerns”.
The inspectors concluded that the trust was more focused on “responding to…targets” than on
“ensuring that overall patient experiences were positive”.
The article in the Nursing Times states:
“Despite a previous CQC warning in May, almost all the wards inspected were found to be regularly short staffed. Staff did not always feel they could raise concerns, with a number expressing concerns about bullying and harassment, the CQC said.”
The article states that there were similar problems at Bradford Teaching Hospitals NHS Foundation Trust and that, last Wednesday,
“Belfast Health and Social Care Trust declared a ‘major incident’ at its Royal Victoria Hospital due to a backlog of A & E patients. At one stage, 42 people were waiting on trolleys.”
A hospital porter, Pat Neeson, is quoted by the BBC as saying that he was
“fed up watching our nurses cry”
as a result of long-standing A and E pressures. There are significant pressures in many hospitals. Although those examples have been in the press this week, we all know that the problem is not exclusive to those hospitals.
This is also a political issue. The question is whether the reports implicate uncaring nurses or whether the problem is that there are not enough nurses on hospital wards. The Prime Minister has become involved in this issue through his presentation of the Francis report to the House last year and what he has said elsewhere. On 6 January 2012, he said:
“If we want dignity and respect, we need to focus on nurses and the care they deliver. Somewhere in the last decade the health system has conspired to undermine one of this country’s greatest professions.”
Last year, in the light of the Francis report, the Government proposed that all trainee nurses should have one year’s experience as a health care assistant before they become fully qualified. The Prime Minister said:
“We have said in the light of that report that nurses should spend some time when they are training as healthcare assistants in the hospital really making sure that they are focused on the caring and the quality and some of the quite mundane tasks that are absolutely vital to get right in hospital”.
The question is whether the problem is the attitude of nurses or nursing numbers.
The Safe Staffing Alliance suggests that there are excess deaths as a result of there being insufficient nurses. Some people ask how many excess deaths there are. Given the statistics and methodologies that are available, academic statisticians would blanch at suggesting what the figure might be. I have been cautioned by House of Commons statisticians and the academics who back up the Safe Staffing Alliance about ever doing so. It is suggested that there were at least 20 excess deaths per annum in hospitals with unsafe average staffing. The RN4CAST survey of 32 English hospitals, including more than 400 wards, showed that 43% had registered a nurse staffing ratio of more than 1:8.
There are about 240 acute hospitals. I have been heavily cautioned by the House of Commons Library and other statisticians not to extrapolate a figure, and I appreciate that I am doing what academic statisticians would never do, but I am going to step off the tightrope of academic equivocation and be a brazen politician and suggest only an indicative figure. While surrounded by so much caution and so many caveats—I do not have time to list them all—the number of excess deaths will be higher than zero and much lower than the approximately 248,000 patients who die each year in acute and community hospitals. Taking those statistics together, the indicative figure would be 4,000 excess deaths in acute hospitals in England. Clearly, this issue needs to be seriously addressed.
All the review reports last year showed that nurse staffing was a critical issue to prevent poor care, and they absolutely corroborate the research findings of the link between registered nurse staffing and quality of patient outcomes. The National Institute for Health and Clinical Excellence has been commissioned to give guidance on acute ward nurse staffing by July and it will look at validating methodologies. I have spoken to Professor Gill Leng of NICE and it is clear that it will be conducted on a robust evidential basis.
The Berwick report, the Nursing and Care Quality Forum and the Council of Deans have all publicly endorsed never having more than eight patients per registered nurse on acute wards, based on current known evidence. A number of trusts are now displaying nurse staffing on boards at ward level, with some trying to ensure that they take account of the “never more than eight” standard. A lot of action is being taken to address this issue.
As well as avoiding excess deaths, the issue needs to be addressed by health care economists, too. Recent evaluations in Perth, Australia, which has mandated levels of safe staffing, show that investment has more than paid for itself in reductions in patient harm, fewer bedsores, less complications and infections, and fewer falls. California, which has the same arrangement, has shown a 25% reduction in readmissions. These are important benefits, which health economists need to look at when they address this issue.
Jane Cummings, the chief nursing officer, has looked at the issue and I will read a key quote from her in the National Quality Board report:
“There has been much debate as to whether there should be defined staffing ratios in the NHS. My view is that this misses the point—we want the right staff, with the right skills, in the right place at the right time. There is no single ratio or formula that can calculate the answers to such complex questions. The right answer will differ across and within organisations, and reaching it requires the use of evidence, evidence based tools, the exercise of professional judgement and a truly multi-professional approach. Above all, it requires openness and transparency, within organisations and with patients and the public.”
My concern about this kind of management babble, and those who possess the presentational skills to get away with it, is that it throws a warm comfort blanket around the issue and creates a cloud of obfuscation. We need some of the hard lines proposed by the Safe Staffing Alliance, and we need fundamental standards below which no service should fall.
I have given the Minister advance notice of my questions. Does he accept that there are still a significant number of hospital settings where the number of registered nurses on duty is insufficient to ensure patient safety, professional standards and morale among many in the nursing profession? Does he agree that the Safe Staffing Alliance proposal for a fundamental standard of never less than one registered nurse to eight patients would be a useful tool for inspections and act as a benchmark for management to use, alongside other safe staffing tools? Does he agree that the CQC should in future concentrate more on using safe staffing tools and clear measurements of how many registered nurses are on a ward? Does he agree that as part of future work force planning, hospital managers should not conflate or blur the distinction between registered nurses and advanced care practitioners? Finally, without pre-empting NICE’s conclusions this summer, what can Ministers do to guarantee that hospital boards follow, or at least apply, its proposed guidance? I look forward to his response.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
I pay tribute to the dedication and commitment to safe staffing and minimum staffing levels that my hon. Friend the Member for St Ives (Andrew George) has shown over the last year. I have much enjoyed our many conversations about the matter, and although he understands that we have different views about the right thing to do, both he and we are coming from the right position, which is about ensuring that we properly respond to the scandals exposed as a result of the Francis inquiry into Mid Staffs and ensuring we support all staff and hospitals to look after patients.
Jeremy Lefroy (Stafford) (Con)
Given that one of the problems at Stafford hospital in the mid-2000s was a sharp reduction in the number of nurses in order to cut costs, will my hon. Friend and the Department of Health be looking at cases where trusts substantially reduce the number of nurses at one point to see whether that constitutes a risk to safety?
Dr Poulter
As I will come on to say, if my hon. Friend will bear with me, it is now a matter for the CQC to inspect trusts on issues such as quality of patient care and safety. I will outline those measures later in response to my hon. Friend the Member for St Ives.
It is important that we support staff as much as possible when they raise concerns, whether about minimum staffing levels or other quality-of-care issues—this was the point just raised by my hon. Friend the Member for Stafford (Jeremy Lefroy)—and to do that we are facilitating and enhancing a duty of candour on trusts to ensure a more candid and open approach and to ensure that staff who have concerns are better supported and are better able to raise them.
Turning specifically to the matters at hand, superficially the principle of minimum staffing ratios sounds seductive, but when it comes down to it, we will see that they do not guarantee safe staffing or care. For those reasons, the Government do not support them. The principle of good care is about having the right staff in the right place at the right time. As we will all be aware, the needs of patients can change not just daily, but hourly—a patient can rapidly deteriorate—and just having ticked a minimum-staffing box does not mean that the right care is necessarily being applied. The lesson to learn from Mid Staffs is that we followed the bureaucratic tick-box approach and that led to failings in care, and that just ticking boxes saying we have done something, however seductive or good it might sound, does not necessarily mean that patients are being treated right. That is a matter of clinical circumstances and the clinical judgment of staff.
Andrew George
I am well aware of the Minister’s line, but if we followed its logic to its conclusion, we would withdraw minimum staffing levels from paediatric wards, intensive care and, in other sectors, child care, which is a topic that has been hotly debated politically as well.
Dr Poulter
As my hon. Friend will be aware, the CQC inspection regime inspects all parts of hospitals. Good care in a cardiac or intensive care unit is not necessarily about having one-on-one nursing; it is also about ensuring that all the other additional supports and other parts of the multidisciplinary team are in place to deliver high-quality care. That is at the heart of what the Government are trying to do. I believe that the CQC, looking not just at staffing levels but at wider determinants—for example, using the NHS safety thermometer, which looks at the issues my hon. Friend raised about bedsores—and putting together a whole picture of what the care at a trust is like, is well placed to make judgments. Part of the CQC’s inspection regime entails full clinical involvement, so it has become more of a peer-review process about what “good” looks like from one hospital to another—an important improvement in the quality of the inspection regime, which enables it to weigh up staffing issues.
My hon. Friend will be aware that we are going to support the CQC and provide greater transparency throughout the health system—in regard to staffing levels, by ensuring that they are published in future. Trust boards will have a requirement specifically to look at their staffing levels and to address problems. We shall not simply wait for the CQC to react to staffing issues as part of its wider inspection regime; there will be a requirement on trust boards to look at them. On Christmas day, I visited my local trust and found that staffing levels were discussed on a daily basis, in direct response to improvements following the Francis inquiry. I believe the same thing is taking place in a number of hospital trusts throughout the country.
Let me deal with my hon. Friend’s specific questions. He asked whether there were a significant number of hospital settings in which the number of registered nurses on duty was insufficient to ensure patient safety, professional standards and morale among many in the nursing profession. Our patients, their families and the public need to be assured that, wherever they are cared for and treated, there is a strong and positive patient safety culture, led from the top and embedded in every organisation.
There can be cases where hospitals are under-staffed and there is an impact on the quality of care provided, but these cases need to be addressed from a whole-care perspective, in which staffing numbers form just one element of a broader safety assessment. It is right that clinicians and trust boards have the freedom to agree their own staff profiles, which should not be dictated from Whitehall or by some blanket tick-box approach saying “You have met the minimum staffing number; you are therefore delivering good care”. We know from what happened at Mid Staffs that that is not the case. We must do everything we can to support good decisions made in the best interest of patients on the ground. This approach will give trusts the flexibility to respond swiftly to changes in patient demand or to meet the urgent needs of patients who have deteriorated, ensuring that safety and quality care is available.
We need to make sure that patient safety is a constant concern to each and every NHS trust and NHS employee, ensuring that risks to patient safety are always acted on as soon as they are identified, whether it relates to a “never event” or to the number of staff on a ward at any time of the day or night. We expect trust boards to sign off and publish information on staffing levels at least every six months to demonstrate that they are using evidence-based tools to calculate their staffing levels and provide assurance on the impact on quality of care and patient experience.
My hon. Friend asked whether the Safe Staffing Alliance proposal for a fundamental standard of no less than one registered nurse to eight patients would be a useful tool for inspection, surveillance and as a benchmark for management to use alongside other safe staffing tools. I hope he will understand that no single dimension and no single tool can ensure patient safety and that setting minimum staffing levels does not necessarily ensure that patients get the best possible care. Patient safety is not just about safe staffing; it is about listening to patients, assessing their needs and staff taking action where there are concerns. The number of staff—not just nurses, but doctors, physiotherapists, health care assistants and all other important members of a multidisciplinary team—needed to look after patients in a cardiac intensive care unit will differ from the numbers and skill mix required in a rehabilitation setting or another care setting—and it will differ from day to day, ward by ward and sometimes even from hour to hour, depending on the care needs of patients.
Ticking boxes on minimum staffing levels does not equate to good care. As the Berwick review made clear, ticking boxes in relation to minimum staffing levels does not equate to good care. Patients must be assessed individually, and the level of care required to ensure their safety must be determined by front-line staff locally, supported in their decision making by a range of factors that determine safe care. That should include staffing levels, but they are not the only issue: the Berwick review made that clear as well.
The Care Quality Commission also considers staffing levels in its inspections of registered providers, including acute hospitals. All providers registered with the CQC must ensure that at all times there are sufficient numbers of suitably qualified, skilled and experienced staff. In time, the guidance that we are developing on safe staffing will help providers to understand how to calculate reference staffing levels. It will also be used by the CQC when it assesses whether the right number of staff are employed to provide safe patient care.
My hon. Friend asked whether I agreed that in future the CQC should concentrate more on using safe staffing tools and clear measurements, and on how many registered nurses were on a ward. I do not want to dictate from Whitehall—indeed, I am sure that none of us do—the details of what the CQC will look for; it is important for the CQC to take a flexible approach to its inspections, and to be prepared to pursue different avenues depending on what it finds. What we can all agree on is that the provision of enough trained and skilled staff is vital to the delivery of acceptable care, and that CQC inspections should continue to consider staffing levels.
I must end my speech shortly, so I will write to my hon. Friend about the other points that he raised. I know that we are approaching this issue from the same position, and that all of us care about supporting staff and delivering high-quality care. However, I hope my hon. Friend will agree that safe staffing levels could have perverse consequences, that they are only a part of the picture when it comes to delivering good care, and that it is for the CQC to ensure that it takes an accurate and holistic view when carrying out its inspections to ensure that high-quality patient care is provided in the future.
Question put and agreed to.
Ministerial Correction
(10 years, 3 months ago)
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European Council
(10 years, 3 months ago)
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Mr Bernard Jenkin (Harwich and North Essex) (Con)
If EU defence is really just harmless intergovernmentalism, why do we have directives that have the force of law in the field of defence? Why do these conclusions include invitation after invitation for the Commission, which is not an intergovernmental institution, to lead on initiatives? Why are we still in the European Defence Agency, which contains expensive provision for qualified majority voting on defence? Is not my right hon. Friend becoming somewhat blind to the fact that we are moving towards a federal defence policy and a European army? He is in denial.
Mr Lidington
My hon. Friend is mistaken in his analysis of the EDA. The Under-Secretary of State for Defence, my hon. Friend the Member for Ludlow (Mr Dunne), who has responsibility for defence procurement, took a very hard line and successfully won a flat-cash settlement for the EDA this year. We held out and it required unanimity for that budget to be agreed. It is simply not the case that we can be overridden by a QMV vote.
[Official Report, 7 January 2014, Vol. 573, c. 182.]
Letter of correction from David Lidington:
An error has been identified in the response given on 7 January 2013.
The correct response should have been:
Mr Lidington
My hon. Friend is mistaken in his analysis of the EDA. The Parliamentary Under-Secretary of State and Minister for International Security Strategy, my hon. Friend the Member for South West Wiltshire (Dr Murrison), who has responsibility for defence procurement, took a very hard line and successfully won a flat-cash settlement for the EDA this year. We held out and it required unanimity for that budget to be agreed. It is simply not the case that we can be overridden by a QMV vote.
Westminster Hall
(10 years, 3 months ago)
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Bilateral Relations: Kurdistan Region of Iraq
(10 years, 3 months ago)
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Jason McCartney (Colne Valley) (Con)
It is a pleasure to serve under your chairmanship this morning, Mrs Osborne.
Twenty years ago, I was an officer in the Royal Air Force, and I helped to police the no-fly zone over the Kurdistan region of Iraq. Operation Warden operated from Incirlik airbase in Turkey. Aircraft from the United Kingdom, the United States, France and Turkey prevented Saddam Hussein from waging his war against Iraq’s 5 million Kurds. During my tour, I joined coalition officers from the military co-ordination centre in Zakho, northern Iraq. We toured Kurdish villages in that spectacularly beautiful part of the world. We met village elders, and spread the word that the aircraft flying above them were friends, not foes. Of course, we were given a very warm welcome.
The no-fly zone saved lives and has meant that Iraq’s 5 million Kurds have experienced relative stability and peace since the end of the 1991 Gulf war, but the Kurds had suffered abysmally at the hands of Saddam Hussein, who carried out genocide against them, most notoriously at Halabja in 1988. That slaughter of 5,000 men, women and children remains the worst single incident of the use of chemical weapons against civilians. Saddam Hussein destroyed the Kurds’ agricultural base, razed thousands of villages and rounded up the Kurds into concentration camps; it is estimated that about 200,000 people were killed.
When Saddam Hussein’s forces were defeated in Kuwait in 1991, the Kurds rose up, but they were set to be annihilated. One million people fled to the mountains—at that point, they called the mountains their only friends—and the sight of people freezing to death during the winter months prompted the then Prime Minister of the United Kingdom, John Major, to work incredibly hard to initiate a no-fly zone with other allied forces. It saved the Kurds, and enabled them to rebuild their economy and society into what it is today: a dynamic, prosperous, pluralistic, tolerant and democratic part of a federal Iraq.
Britain has a mixed historical record in Kurdistan, but when I returned there recently I was left in no doubt about the deep affection and respect felt there for the British and for the United Kingdom. I was back in the region last summer as a guest of the Kurdistan Regional Government, via the all-party group on the Kurdistan region in Iraq—it is good to see colleagues from that group here this morning. I saw at first hand the peaceful and increasingly prosperous city of Erbil and its surrounding areas, a fairly secular region in which Christians, Jews and Muslims live side by side—we even met a local bishop. Over 2 million tourists visited the region last year. The Erbil citadel, 6,000 years old, is a fantastic building. The world’s oldest continuously inhabited settlement, it is set to be a huge tourist attraction. Again, the welcome was warm and friendly.
I also saw first hand that the Kurds are looking west. English is their second language, and they speak it very well indeed. Two universities operate in English and most of the Kurds who go overseas for their studies and postgraduate courses choose to come to the United Kingdom.
The Kurdistan of two decades ago lived a hand-to-mouth existence. Today’s Kurdistan is becoming a wealthy and cosmopolitan society, with an active civil society; but it is still in a transition phase from genocide, dictatorship and its own civil war. It has many bright community leaders and public servants—we met many of them, and they were impressive people—but the practice of politics, administration and civil society is still fairly new to the region, and the Kurds are having to learn new skills. They seek to soak up as much experience, advice and expertise as they can from various bodies, including the Westminster Foundation for Democracy.
There is a deepening détente with Turkey. We have to admit that that is based on hard-headed self-interest: the export of Kurdistan’s newly explored and vast reserves of oil and gas has overcome decades of hostility and conflict. That trade is set to be a major gain for Turkey, with a potentially positive impact on resolving the conflict with Turkish Kurds—something that is important for the region—and could also have great positives for European and British energy security, which we have been discussing so much in the House in recent months.
The Kurds want British trade and investment because they value our skills and the quality of our goods and services, but until now we have been too slow to respond. Many Members here today have seen the Kurdish success story for themselves at first hand, and we talk about it regularly. Small and large companies, universities and health bodies should go over to the region and get stuck in.
We have a number of asks of the Minister based on increasing such close co-operation. There should be direct flights from the United Kingdom to the Kurdistan region. When we went there last year, we had to fly with Austrian Airlines via Vienna, which ended up taking seven or eight hours. Direct flights would help massively. We also need a British trade envoy to the region. It would be great if our leaders visited Kurdistan, and even better if we could invite their leaders to come here. It is important that we are bolder and more positive in recognising who our friends are, and we have a great opportunity to make new friends in the Kurdistan region.
Having been helped themselves, the Iraqi Kurds are now helping others. On my trip there in the summer, we spent an emotional day at the Domiz refugee camp near the Iraq-Syria border. At that stage—I have no doubt that the figure has since grown—some 130,000 Syrian Kurds had fled the fighting in Syria. I spoke with many refugees, including many children who are continuing their education in specially constructed schools. The Kurdistan Regional Government deserve praise for funding and arranging that, after the crisis the Kurds went through two decades ago.
That ability to help others now is a far cry from the poverty and despair I saw on the border with Turkey 20 years ago. It has been a remarkable journey from genocide to prosperity. I urge the Minister to help efforts to achieve greatly increased co-operation with the Kurds, not just for our sake but for theirs, and I have five specific requests to put to him.
First, I suggest that the UK Government invite the President and Prime Minister of the Kurdistan region on an official visit to London to meet the Prime Minister and the Foreign Secretary. Secondly, I suggest that the British Government consider the possibility of a visit by the Foreign Secretary to the Kurdistan region. I have no doubt that he would receive a very warm welcome.
Thirdly, at a time when the Government are stressing the importance of overseas exports and finding new markets, I urge them to appoint a UK trade envoy to the Kurdistan region. I saw an area that is becoming increasingly prosperous, and met the Erbil chamber of commerce where many deals were being done. There are great opportunities for British companies and business people, and having a UK trade envoy would be helpful.
Fourthly, we would like a meeting with the Home Office to discuss the visa regime and how to remove the obstacles to increased cultural and commercial activities with Kurdistan. I referred to students who are choosing the United Kingdom for their university and postgraduate studies, and we should ensure that they are encouraged to come to our wonderful universities, including my local Huddersfield university, which has students from 130 nations. Fifthly, with Holocaust memorial day coming up, I urge the Government to recognise formally the genocide against the Kurds and to take a full part in marking the annual Anfal day on 14 April.
I will conclude my comments because other hon. Members who have experienced the Kurdistan region first hand have some positive and well-informed input to make to the debate. The Iraqi Kurds are back from the brink and making real and positive progress. They are helping their neighbours, and it is important that the United Kingdom does not neglect that renaissance in the Kurdistan region.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
I refer to my entries in the Register of Members’ Financial Interests. I congratulate the hon. Member for Colne Valley (Jason McCartney), who in this debate is my hon. Friend, as well as being my colleague on the all-party group on the Kurdistan region in Iraq, which I have the honour to co-chair with the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who is also my hon. Friend in this debate. I congratulate my hon. Friend the Member for Colne Valley on securing the debate. It is good that we have been able to secure a second debate on the Kurdistan region in less than a year, and a sign of the area’s growing potential.
In November, together with some hon. Members here, I visited the Kurdistan region as part of a delegation from the all-party group, and we saw some of the issues affecting the area. The contrast between that visit, which was my sixth, and my first visit four years ago was astonishing and heartening. During my first few visits, it was easy to feel like a pioneer, as there were few western faces about, but today there is a modern airport terminal and several new hotels, each with lobbies full of local and western business people discussing deals and developments. It is truly a transformation.
During the visit in November 2013, we went to the Domiz refugee camp near Dohuk, as did my hon. Friend the Member for Colne Valley in the summer. The impact on hon. Members who were visiting for the first time, and on me, was such that I want to spend a little longer talking about the situation there. It is the new home, working place and school for 75,000 refugees from the Syrian conflict, of which 13,000 are children. It is just one of 13 refugee camps in the Kurdistan region and the largest of the four in the Dohuk province. In a prominent location near the camp entrance is the child protection unit, which is funded by the UK Government and run by UNICEF. With my previous working experience of child protection, I was pleased that we spent considerable time addressing the issue of children and their welfare.
The Kurdistan region has been at pains to welcome Syrian refugees, and Dohuk’s governor told me that another 75,000 refugees are living in the province among the host community. Two months ago, there were 150,000 refugees, up from the number that my hon. Friend the Member for Colne Valley mentioned. Many of the refugees living in the region have family connections in the area, and highly-qualified refugees have found jobs and been able to move their families into permanent accommodation within the community. The United Nations High Commissioner for Refugees has described that hospitality and support as extraordinary. The Kurdistan region has supplied much of the finance itself, which is a huge burden for a region that is still developing its services. For example, many of the local Kurdish schools have double shifts to accommodate all the children who want to attend. The region is not in a good place in terms of being able to welcome refugees, but it is opening its arms to those in desperate need.
I want to emphasise the importance of the Government remembering that the Kurdistan region of Iraq is hosting refugees. In his statement to the House on Monday, the Foreign Secretary referred to refugees in Jordan, Turkey and Lebanon, but did not mention Iraq; refugees are also flooding over that border and being welcomed there. The Government should recognise that.
I pay tribute to the Government, who have committed £500 million of their aid budget to Syrian refugees. The Foreign Secretary made it clear that further funds will be made available, and I fear that that will be necessary well before the end of the conflict. As the fighting in Syria continues, we must ensure that the people in the refugee camps are not forgotten.
During our visit, I met representatives of Syrian Kurdish groups who are members of the Syrian Opposition coalition. The majority of Kurdish groups oppose the Assad regime, and the representatives we met were clear that they wanted the British people and Government to have a better understanding of the situation in relation to the Syrian Kurdish Opposition. They stressed that the organised Opposition in Syria is different from the al-Qaeda groups that grab the headlines. Those groups were asking for greater representation in the Geneva II talks, and I urge the Foreign Secretary to help to accommodate that.
Turning to economic development and relationships with the UK, I had the opportunity to visit the Taq Taq oilfield, run by the Taq Taq Operating Company and the Turkish-British oil company Genel Energy. The oilfield is a large local employer, employing 400 people from local villages. I understand that the first oil exported to Turkey will be sold by the end of this month, although all of us in contact with the region know that there is some controversy about that. I will not go into that today, but the Kurdistan region has a target of producing 2 million barrels of oil per day by the end of 2019.
Unlike in many post-conflict situations, this region of Iraq is not having to rely on international aid to rebuild its economy. Instead, it is developing the oilfields to ensure a strong source of revenue for decades and generations to come. That foresight and enterprise should be applauded. It was good to meet British citizens working in the oil industry and clearly enjoying working in Kurdistan with local people.
The region is growing quickly, and the regional Government have been strengthening their relationship with Turkey. Not long ago, 200,000 troops were on the border of Turkey, but 200,000 people from Turkey now work in the region. That stability provides a great opportunity to strengthen the commercial and cultural links between the UK and the Kurdistan region.
As my hon. Friend the Member for Colne Valley said, the all-party parliamentary group has long supported improved trade links between the UK and Kurdistan. Since we began lobbying on the issue of visas, the capacity to receive applications for visas and to take biometrics in Erbil has dramatically increased, which we are pleased to see. However, we know, having spoken earlier this month to the consul general from Erbil, that more could be done, if the capacity were there. I urge the Government to look again at the issue and consider providing even more capability. As has been said, our all-party group would like to have a further meeting with the Home Office to explore what more can be done.
We have long campaigned, as has also been mentioned, on the importance of direct flights from Kurdistan to the UK. It is good to note that progress is being made with the recent visit by officials to Erbil. However, it would be remiss of me not to press the Minister further on maintaining the pressure for a positive outcome as soon as possible. The UK is the country of choice for trade for many in Kurdistan, and we should do all we can to facilitate those contacts. Compared with other European countries, there is a lack of ministerial support from the UK to British companies in Kurdistan. Trade and Industry Ministers in Italy, Germany and other countries tend to visit Kurdistan, often with big trade missions, and they are all well received by the Kurdistan Regional Government. Although it was a great pleasure, along with my hon. Friend the Member for Stratford-on-Avon, to lead a trade delegation as a Back-Bench Member of the UK Parliament in 2010, so much more could be done if Ministers were to go out with trade delegations and the companies that really want to do trade in Kurdistan, to make those contacts. It is clear that the countries that are giving that priority are benefiting, through positive contacts with their companies, and through gaining contracts.
Similarly, it is good to see that the UK remains the country of choice for the majority of students who are funded by the Kurdistan Regional Government on placements overseas as part of their human capacity development programme. Many universities across the UK are welcoming students, including Sheffield Hallam university. That is a real benefit for all concerned and is likely to have long-term benefits. The university of Huddersfield, which has already had a mention this morning, has even formed an alumni association in Kurdistan, with more than 70 former students and their families attending the recent launch. We know that many students who have spent time in the UK carry positive attitudes for the rest of their lives, which can lead to ongoing relationships in a wide range of walks of life, including business, academia, and even politics.
The willingness of the people of the region to help and support people from other areas of Iraq who have faced persecution, particularly the Christian community, has been impressive. They have again shown their good will in providing help to the refugees from Syria. They are a beacon in the middle east of a stable, democratic and welcoming people and Administration. It is time for more MPs and Ministers to take seriously our relationships with the Kurdistan region, and it would be good to see the Select Committee on Foreign Affairs, for example, doing an investigation into the prospects for the Kurdistan region of Iraq and the issues facing the Kurds across Syria, Turkey and Iran; that is just a suggestion. I am sure that other hon. Members will cover security, but we stress the importance of the Government providing non-lethal security equipment to help the KRG. The UK must do all that it can to support the ongoing work of the KRG to develop the resources in the area and the skills and enterprise of the people.
Robert Halfon (Harlow) (Con)
It is an honour to serve under your chairmanship, Mrs Osborne. I congratulate my hon. Friend the Member for Colne Valley (Jason McCartney) on initiating the debate. He displayed extraordinary knowledge, and we respect his service in the armed forces. I am pleased to follow the hon. Member for Sheffield, Heeley (Meg Munn), whom I call my hon. Friend; I hope she will not mind me saying that she represents the liberal interventionist wing in her party—something I strongly support.
My interests are on the Register of Members’ Financial Interests: I am vice-chairman of the all-party parliamentary group on the Kurdistan region in Iraq and chairman of the Kurdish genocide task force. I am privileged to have been to Kurdistan a significant number of times over the past few years, and every time I have been, I have seen the region go from strength to strength. Until the 1990s, Kurdistan faced constant threats to its very existence through war, internal unrest and genocide, and yet incredibly, it is now a progressive, democratic Muslim nation, where the rule of law is well established. For Kurdistan, freedom is not only about elections, but about being a place where women have equality, all religions are respected, property rights are manifest, and where a free press is unshackled. It is early days, and of course there are problems, but the direction is positive.
Across the Kurdistan region, business is flourishing, as has been described, and people are keen on British and foreign investment. Privatisation continues apace and huge property complexes are being built. There are significant oil and gas reserves, which, unusually in these parts, are used for the benefit of the country, not salted away in corruption. As I pointed out in an early-day motion, which I tabled just before my visit to the region in November with my hon. Friend the hon. Member for Stratford-on-Avon (Nadhim Zahawi) and the hon. Member for Sheffield, Heeley, the KRG can become an important ally in guaranteeing the UK’s future energy security, but we must be aware of the legacy of the Ba’athist regime. I know from questions tabled by the hon. Member for Blaydon (Mr Anderson) that there are questions and reservations about the closeness of Crescent Petroleum to Saddam Hussein’s genocidal regime, and therefore its current status as operator in the Kurdistan region. That needs to be examined.
Three significant challenges face the KRG, some of which threaten its survival as an autonomous region in Iraq, as well as all its social and economic achievements since 1992. I shall describe each in turn. They are terrorism, the situation in Syria, and as has been mentioned, the recognition of the genocide.
Since its founding, the KRG has faced significant terrorism threats, mainly from Iran and al-Qaeda, but there have been very few attacks, thanks to tight security. Similar to what people see when visiting the state of Israel, outside every major building, there are guards checking for suicide bombers and armed checkpoints are on all the major roads. Sadly last September, one day after the results of the fourth democratic elections in the region, there were two linked suicide bomb attacks in Erbil, one on the Interior Ministry and the other on the next-door security directorate. I visited the site with my hon. Friends. Seven security guards died, with more injured. The atrocity was linked to al-Qaeda, which is thought to control vast swathes of Mosul, an Iraqi province next to Kurdistan where a strong Salafist movement has been established. On visiting the site of the attack, one Minister warned that if action was not taken, Mosul could become a second Afghanistan in one year, with significant implications not only for Kurdistan, but for the whole of Iraq. The British Government should take that seriously.
Secondly, there is Syria. The unstable situation in Syria is a threat to the KRG’s security and stability. It is thought that the terrorism I have described is being aided and abetted by terrorists passing through Syria, trained by al-Qaeda and funded in part from Saudi Arabia, Somalia and Sudan. In addition to the exploitation of the Syrian crisis by extreme Islamists, large numbers of refugees are seeking safety in Kurdistan. Many of the refugees accepted by Kurdistan are Syrian Kurds, who represent 9%—1.9 million—of the Syrian population.
During my recent trip to the KRG, I, like the hon. Member for Sheffield, Heeley, visited the Domiz camp, just 40 miles from the Syrian border, where there were 75,000 refugees, including 15,000 children. The Kurds, having experienced centuries of persecution, have welcomed the refugees and assisted them by providing residence permits and work opportunities. Nevertheless, the number of refugees, already at 250,000, is due to increase and that will inevitably put the KRG’s society under strain. In addition to the pragmatic challenges of hosting such large numbers, the geopolitical consequences are also of extreme importance. What happens if Syria breaks up post-Assad? Does the Kurdistan region extend into Syria, with the risk of a domino effect on the millions of Kurds who live in Iran and Turkey?
The third challenge is the genocide. Inexplicably, the genocide against the Kurds, described earlier, has not been recognised internationally, causing a deep sense of grievance among the Kurds. I have said in previous debates in the House on Kurdistan that I have seen there some of the worst places that I have ever seen in my life. When we go to the prisons and to Halabja, we see how the Kurds suffered. Major perpetrators of the chemical gas attacks have not been brought to justice, and some are thought to live freely in Europe. Many of the companies, also from the west, that sold Saddam the materials used to make chemical weapons have not yet faced the criminal courts. In Iraq, the Ba’athist Arab hatred of the Kurds remains strong in some areas, even though in 2008 the Iraqi Parliament recognised the genocide.
In 2013, the Netherlands courts and the House of Commons recognised the genocide. Despite that, it remains incumbent on western Governments to push through a relevant resolution in the United Nations. Recognition would mean that those responsible for war crimes could appear before the international court and compensation and reparation would be given to the KRG. The Kurds are a nation that does not live in the past, but learns from the past. Recognition would help to heal the wounds from many years.
Following last year’s debate, the former Minister for the middle east, my right hon. Friend the Member for North East Bedfordshire (Alistair Burt), said:
“I am greatly sympathetic to the motion. The Government do not in any way oppose it and I have no doubt that Parliament will respond to the views expressed in the motion by my hon. Friend”—
that was our hon. Friend the Member for Stratford-on-Avon—
“I have listened carefully, with whatever compassion I may possess, to the case that has been made. I do not doubt that the Foreign Secretary will read the debate with exactly the same sense. I am sure the Government will find the vote of Parliament helpful when further representations are made, as they will be.”—[Official Report, 28 February 2013; Vol. 559, c. 562-63.]
I believe that our country has made a significant step towards recognition of the genocide of the Kurds and I urge the new Minister in that post to carry that forward.
I said at the beginning that western intervention in Iraq saved a nation from being exterminated, but that is not enough. The free world has a real chance of a new, prosperous, democratic and forward-looking Muslim nation forging ahead. The UK can and must assist the Kurdistan Regional Government in reinforcing their democratic institutions and fulfilling their potential. In the short to medium term, we should enter negotiations with the KRG about the supply of non-lethal security equipment to be used in the fight against terrorism. Kurdistan and the geopolitical challenges that it faces because of the instability in Syria should be considered in any solution that the Government put on the table at the Geneva talks.
In the long term, our efforts should focus on strengthening civil society and the people’s participation in political life. There are already two organisations that run projects in Kurdistan—the Westminster Foundation for Democracy and the National School of Government—but much more can be done. As has been suggested, Members of Parliament can lead on that by visiting the region, meeting our Kurdish colleagues and sharing best practice. If the Government invited the President and Prime Minister of the Kurdistan region on an official visit, that would send a strong signal to the Kurds.
Kurdistan has the potential to act as a beacon for the rest of Iraq, to be a force for good in the middle east and to spread these values across the region. Muscular enlightenment means more than deposing dictatorships and stopping mass murder. It means helping to embed the conditions necessary for those evils never to return.
Nadhim Zahawi (Stratford-on-Avon) (Con)
It is a pleasure to serve under your chairmanship, Mrs Osborne. I congratulate my hon. Friend the Member for Colne Valley (Jason McCartney) on securing this very important debate. I place on the record my appreciation of all the work that my co-chairman of the all-party group, the hon. Member for Sheffield, Heeley (Meg Munn), did before my time in this place. The moment I arrived here in 2010, she made a beeline for me to ask me to join the group and, soon after, very generously asked me to co-chair it with her.
It will come as no surprise that I declare a significant interest in the relations between the UK and the Kurdistan region of Iraq. I draw attention to my entry in the Register of Members’ Financial Interests. I am immensely proud to be the first British MP of Kurdish descent. The UK provided a safe haven to my family when Iraq was a dangerous place to be a Kurd.
In the relationships between countries, the past will always have an influence on the present, and although memories of British policies may cause suspicions to linger in some parts of the middle east, in the Kurdistan region of Iraq the UK has generated a huge amount of good will over the past 20 years. From implementing a no-fly zone in 1991 to recognising the Kurdish genocide in this place just last year, the UK has been a long-term friend of the Kurdish people, but we cannot be complacent. As a region with a burgeoning economy and even more potential, it is important that we continue to foster this friendship and the great benefits that it can bring to us both.
Politically, the region is not an easy one to operate in, but Kurdistan has made great strides in cementing democracy and is gradually finding its way in the post-Saddam era, as so eloquently described by my hon. Friend the Member for Harlow (Robert Halfon). The success of recent elections serves as a model for the rest of Iraq in the run-up to the national polls in April.
One of the most prominent, if slightly controversial, diplomatic developments for the Kurdish region in recent years has been its improved relationship with Turkey. As Turkey is one of the UK’s most important trading partners, the benefits of increased understanding between the two should not be underestimated. Not only has the new-found friendship between Turkey and Kurdistan brought increased stability to the region, but the recently completed oil pipeline will, in time, also help to strengthen the security and diversity of European energy supplies. Although the pipeline has been the cause of some tension with Baghdad, its success should not be viewed on a zero-sum basis. KRG Ministers have assured me that they are proactively engaging with Baghdad to establish a new, reliable and robust revenue-sharing agreement through which the whole country can benefit from the Kurdish success.
Equally, although I recognise that the Iraqi Prime Minister, Nouri al-Maliki, is beginning to take a more proactive approach towards the KRG, he could go further. I hope that the national elections this year will incorporate all groups in governance and further cement federalism. Such progress in resolving these kinds of disputes will not only enhance stability in Iraq, but enable the region to expand as a gateway to the whole country for trade and investment.
Natural resources are not the whole story of Kurdistan. The pipeline is just one area of progress in a region with a fantastic appetite to work with the United Kingdom. As the economy grows, KRG Ministers are actively encouraging British investment and expertise, creating widespread opportunities for British businesses throughout Kurdistan. On my most recent visit to the region, with a number of colleagues who are here, I met the Prime Minister of the region, Nechirvan Barzani. He reiterated his desire to engage with the UK at governmental and corporate levels to help him deliver the next steps in capacity building and infrastructure development.
Education, health and tourism are all sectors in which British expertise is flourishing and can go further. Our British universities, as we have heard today, are already having major success. We are fortunate enough to host a disproportionate number of the KRG’s international scholarship students, who come to the UK to take advantage of our world-class universities. I urge the Minister to look into what more can be done to help British universities attract such students, and to consider what the Government can do to help establish campuses in the Kurdistan region.
Bringing in companies is only one side of a successful commercial relationship. The KRG must play its part in strengthening efficiency, transparency and dispute resolution.
Mr Nigel Dodds (Belfast North) (DUP)
I join in congratulating the hon. Member for Colne Valley (Jason McCartney) on securing this important debate. Does the hon. Member for Stratford-on-Avon (Nadhim Zahawi) agree that engagement in developing relations with Kurdistan is important not only at national level but among the regions of the UK? Does he agree that the recent visit of KRG representatives to Northern Ireland, where they met the Minister of Enterprise, Trade and Investment and Invest Northern Ireland, following on from the signing of a memorandum of understanding between Northern Ireland and the KRG, is significant? Local relationships and opportunities for trade and investment co-operation are extremely important and should be encouraged throughout the UK.
Nadhim Zahawi
The right hon. Gentleman makes an important point. The feedback I have had since those significant visits and meetings is that the level of knowledge sharing, especially with Invest Northern Ireland, and the best practices that the Kurdish delegations observed have been incredibly important in helping them to design their investment packages as part of their investment body, which will visit the UK in the coming weeks. The relationship with the regions of the United Kingdom is also flourishing.
In consolidating our position as the partner of choice to this emerging region, the enhancement of our representation in Irbil was vital. I was pleased to hear last week from our consul general in Irbil that real progress is being made in securing our new consulate. We currently operate out of a hotel in Kurdistan, but the new consulate will be built on land provided by the KRG. I would like to take this opportunity to commend my right hon. Friend the Member for North East Bedfordshire (Alistair Burt) on all the progress he made in advancing British relations with the Kurdistan region. I am delighted that he has become the vice-chair of the all-party group on Kurdistan. The Foreign Office’s loss is most certainly our gain.
The UK should be rightly proud of the close friendship that it has forged with the Kurdistan region, but as we have heard, we must not get left behind. From France and Germany to Russia and the United Arab Emirates, other countries are realising the opportunities that exist in the region and participating in state visits at the highest level. I add my voice to those of my colleagues who urge the Minister and the Foreign Secretary to visit this wonderful part of Iraq and see the mutual opportunities for themselves. The Kurdistan region is not resting on its laurels, and nor should we.
Martin Horwood (Cheltenham) (LD)
It is a pleasure to serve under your chairmanship, Mrs Osborne. It is a pleasure to follow the hon. Member for Stratford-on-Avon (Nadhim Zahawi), and I commend not only the hon. Member for Colne Valley (Jason McCartney) on securing this timely and appropriate debate, but all the members of the all-party group who have spoken. It is clearly an active and effective group.
The division of Kurdistan, fixed almost by historical accident after the first world war, has posed enormous challenges for the Kurdish people. However, the defeat of Saddam Hussein in the first Gulf war in 1991, which paved the way for the no-fly zone and the autonomy and self-government of the region of Iraqi Kurdistan, delivered to the Kurdish people an enormous opportunity that they have made good use of. They have built a democratic, peaceful and stable society—a nation, really—in Iraqi Kurdistan, which is an example to many other parts of the middle east.
The situation might not have been that way. In the 1990s, the PUK and the KDP were virtually fighting a civil war between different armed peshmerga groups. If we, as Conservatives and Liberal Democrats, think that our coalition is a little bumpy and was difficult to put together, imagine if one of us had been drawing support from Saddam Hussein and the other had been drawing support from Iran, and we had been at war only a few years before. Even so, the PUK and the KDP, for many years, put together a successful coalition. They put aside their differences. They built strong institutions in Iraqi Kurdistan, with help and input from the Foreign and Commonwealth Office, which assists with institution-building in Kurdistan. The two parties encouraged significant investment in the region, even from investors such as Turkey that might once have been its enemies—as hon. Members have said, Turkey has now become very engaged. The governing coalition also invested significantly in infrastructure. In many ways, the approach was a model one. The two parties managed to achieve all that while respecting the rights of minorities, both religious and ethnic.
When the PUK suffered a setback in recent parliamentary elections in Kurdistan, its supporters did not take to the streets or challenge the results. They did the traditional democratic thing of having a go at their own leaders and looking to their own resources to do better next time. That is a real example to other areas of the middle east. An independence referendum was even held in Kurdistan that garnered virtually 99% support for independence, but Kurdish politicians saw the bigger picture and stepped back from the brink of pressing that case, which is perhaps an example to another political party not a million miles from here.
We should not look at the region through rose-tinted spectacles, however, because there are problems. It might be better for Kurdistan’s image if the Prime Minister were not the nephew of the President. The dominance of the Barzani family is something of a cause for concern, although I stress that both the President and the Prime Minister are respected figures who have attracted a great deal of praise for the way in which they have behaved in office. There are concerns about the human rights situation, particularly the treatment of journalists. I heard what the hon. Member for Harlow (Robert Halfon) said about the movement towards freedom of expression going in the right direction, but there are some real causes for concern, which have been highlighted by Reporters without Borders. In December, for example, Kawa Germyani, editor of Rayal magazine, was murdered. I hope that the Minister will confirm that the British Government will take that matter up with the Kurdistan Regional Government. Female genital mutilation is prevalent, and I know that tackling it is a big priority for the Department for International Development. The Kurdistan National Assembly has made great efforts to tackle violence against women in all its forms.
Another problem, to which hon. Members have referred, is the refugee situation. I believe that DFID has committed some £18 million from its large budget to help refugees and host communities in the region, and it is doing fantastic work with organisations such as UNICEF and Save the Children, but the situation is complicated. Most refugees from Syria who enter Iraq are going into the Kurdistan region. There are even refugees from Iraq in Syria who are trying to return to their homes in Iraq; they have become secondarily displaced because they have not been able to return to their home regions. In camps, settlements and urban areas across Iraq, but mainly in the Kurdistan region, there are still Palestinian refugees who were granted asylum by the previous regime. We can do only so much through aid budgets and assistance. In a sense, the ultimate solution to all these problems is to press the peace processes for Syria, for Israel and Palestine, and across the region.
It is right that we should accentuate the positive in a debate such as this, and I would entirely endorse the requests made by the hon. Member for Colne Valley for greater diplomatic links, reciprocal visits, better trade links, and visa relaxation, particularly in respect of student visas. Of course, I must add to the chorus by recommending the university of Gloucestershire as a potential destination. I am sure that the hon. Member for Gloucester (Richard Graham), who is in the Chamber, would endorse that.
The security situation must be addressed, as the hon. Member for Harlow mentioned. The Foreign and Commonwealth Office is already helping the Kurdistan Regional Government to address that, but more can be done. We should do as much as we can to help with the refugee situation on the ground, but there are many things happening in Kurdistan to praise and applaud. It is now an example of what many nations and communities in the middle east could achieve, given peace, democracy, and self-determination.
Ian Lucas (Wrexham) (Lab)
It has been a pleasure to listen to this extremely well-informed debate on the Kurdistan region. It is testament to the work of the all-party group on the Kurdistan region in Iraq that so many Members who have taken part in the debate have actually visited the region, learned so much about it and can speak with such breadth of knowledge. It is also interesting that Members have forged relationships with the region through the universities that they represent. We do not always sufficiently appreciate the importance of MPs building relationships with different parts of the world through local contacts and visits.
Before he had to leave, the right hon. Member for Belfast North (Mr Dodds) made an important point about the regions of the UK. We have here Members from right across the UK. We must deal with Kurdish matters not just at the UK Government level in Whitehall; we MPs must make efforts in our communities and build personal connections. There are Kurds right across the UK, often studying. As we know from the hon. Member for Stratford-on-Avon (Nadhim Zahawi), in the long term, building strong links over a sustained period will help to create prosperity in Kurdish communities.
I must pay tribute to the hon. Member for Colne Valley (Jason McCartney) for securing this debate. It is important that we recognise his service in the Royal Air Force in the 1990s. We must also pay tribute to the people of Kurdistan, who are so grateful for the commitment of the United Kingdom over the past 25 years. When I visited the region last June—I refer to my record in the Register of Members’ Financial Interests—I found that people were particularly grateful to former Prime Ministers John Major and Tony Blair. The latter has not been mentioned today, but he is extremely highly regarded in the region because of the part he played in safeguarding the role of Kurds in Iraq throughout an extremely difficult period.
We have heard about the progress made in the region. It must have been an extraordinary experience for the hon. Member for Colne Valley to visit a peaceful Kurdistan, after previously making a flying visit, if I may use that phrase. He will have seen the extraordinary progress in the country that I saw, and the appetite there for all things British. I must say to the Minister that the impression that I got—I am sure the Government will agree—is that the door is open and needs only a gentle push as far as UK universities, trade and cultural links are concerned. There can be a strong, vibrant relationship to the benefit of Kurdistan and the UK, if only we give that door a gentle push.
Last week, I had the pleasure of meeting the consul general to talk about the progress made even since I visited last June. It was good to hear that we are building better links. We must be conscious of issues such as immigration caps when we are talking about student visas. We can talk consensually about the importance of bringing Kurdish students to the UK, but we must recognise that if we are to impose rough caps, that might affect the ability of our universities to build close contacts with regions such as Kurdistan.
The co-chair of the all-party group, my hon. Friend the Member for Sheffield, Heeley (Meg Munn), has contributed an enormous amount to the strong relationship between Parliament and the Kurdistan region, and we heard her depth of knowledge on the issue. I would like to pick up on what she said about the Domiz refugee camp, which I visited, as did a number of other Members, and where 75,000 people are living. When I visited, the environment was extraordinarily calm. I had a haircut there, which was very high quality indeed. A meticulous gentleman applied to my hair a strange substance that is not normally applied to it. The community there is working extremely hard in very difficult circumstances, and the UK Government are giving it a great deal of financial support, for which I pay tribute to them. Our consul general is playing an important role in assisting with that support, alongside the United Nations High Commissioner for Refugees. The Kurdistan Regional Government are also working hard to provide a strong base to support the huge number of refugees that are going into not just the camp but the rest of Iraqi Kurdistan.
Meg Munn
My hon. Friend is making an important point about the refugee camp. I am greatly concerned about the 13,000 children there, and the fact that there are only four schools. There are efforts to increase the number of schools so that these children, who have already suffered displaced lives and a great deal of trauma, can continue their education. Does he support my call for the Government to look specifically at supporting the provision of schools for those children?
Ian Lucas
Absolutely; I would certainly support that call. I visited a school in the camp and spoke to the head teacher. It was quite extraordinary to see the enthusiasm and interest that the children attending the school showed to visitors to the site. We are doing a good job on site, but because of the continuing pressure from the appalling events in Syria, I am afraid that the pressures on Iraqi Kurds in the camps also continue.
I echo my hon. Friend’s point about the fact that Iraq is housing huge numbers of refugees. For reasons I do not really understand, Iraq is not generally referred to as providing support for refugees from Syria, but there is huge pressure on Iraqi Kurdistan from Syrian refugees, and we are doing a lot there. We must recognise that whenever a statement is made.
I ask the Government, as the Labour party has done previously, to consider whether, in a very limited number of cases, they should offer refuge to individuals who have fled Syria and are now in places such as Iraq. There are people who have serious medical difficulties or particularly close family contacts here, and they could be offered direct refuge in the UK. We have pressed the Government previously on this issue. In a limited number of cases that option should be considered, because at present we are not offering any places to those individuals. We should consider doing so, and I ask the Minister to reflect on that.
We heard from the hon. Member for Harlow (Robert Halfon) about the Anfal, which I heard about on my visit to Iraqi Kurdistan, when I met relatives of individuals who had disappeared in 1988. As I have said before in the House, I remember seeing a TV programme—I think it was “Newsnight”—on the Halabja attacks in the late 1980s, which has stayed with me for ever; it was very powerful indeed. I think we made a lot of progress in our discussions on this subject in the debates that we have had during the last year. I pay tribute to the right hon. Member for North East Bedfordshire (Alistair Burt) for the work that he did. I can report to Members here that after a debate that took place last year, I had some private discussions with him about trying to take this issue forward on a consensual basis—it is clearly not a partisan matter—and we would like to try to continue that process with the new Minister, who is here today.
I know that, as far as the Kurdistan Regional Government are concerned, the recognition of the genocide is a major issue and that there is a strong feeling in the country that there is not the level of international recognition that there should be, so the steps taken by the UK Parliament last year were welcome. They helped to inform the debate, which we need to take further at Governmental level. I am happy to continue the discussions in which the right hon. Member for North East Bedfordshire played such a positive role.
Of course, the co-chair of the all-party group on the Kurdistan region in Iraq, the hon. Member for Stratford-on-Avon, does not need any lectures from me about Kurdistan. I simply say to him that as a visitor to Kurdistan—I visited it for a limited period—I was fascinated by the region. It is such an important region, because it has played such an important role in the past 25 years in UK politics. In the context of current events in the middle east, it would be very valuable for all Members to visit Iraqi Kurdistan, whatever their position on it has been in votes in the past 10 years; I know that we have a number of different positions represented in Westminster Hall today. Visiting Iraqi Kurdistan makes a valuable contribution to one’s knowledge of the region, and visiting it would help to inform Members who have not been there about the progress of democracy in the middle east, because it is an important example of a place where progress has been made.
After all, when I was in Erbil, I had the longest political interview that I have ever had on the Rudaw television channel. It was a wide-ranging interrogation on policy across the middle east. I would love to have that on the BBC, but unfortunately the interview went on for longer than “Newsnight”; I think my interview lasted 50 minutes, whereas “Newsnight” has a 45-minute running time. As I say, there is progress in the region on democratic debate.
The citadel referred to by the hon. Member for Colne Valley is an extraordinary historic site. When one says to one’s constituents, “You should go to Iraq for a holiday”, there might be a certain amount of scepticism initially, but that citadel is the longest-occupied site on earth and it is an extraordinary place to visit. I am quite sure that in the future people will go to Erbil, and there is a strong view—is there not?—that we need to work towards introducing direct flights from the UK to the region, so as to facilitate that type of visit for our constituents. I am sure that that would be widely appreciated across the House, both for tourism and for business.
I am afraid that I will have to refer to my university in Wrexham, Glyndwr university, which as we speak is holding discussions with the university in Erbil about possible relationships between them. Again, that shows the appetite in the UK for building relationships with the Iraqi region of Kurdistan. There will be more contact between Iraqi Kurdistan and the rest of the world in the future. The region wants contact with the UK and its different regions. We really need to seize that opportunity and do the best that we can to ensure that we are right at the forefront in pushing at that open door that I referred to earlier.
The Iraqi region of Kurdistan is a very tough neighbourhood indeed. We must remember that it is bordered by Iran on one side and Syria on another, and that Turkey is to the north. Notwithstanding that difficult environment—it is such a difficult political environment, with so much violence, including the violence in the rest of Iraq—there has been real progress in the region, and that is quite extraordinary.
We need to help the Kurdistan Regional Government to build better relations with the Government in Iraq; relations between the two have been the source of some tension. It is also important that we recognise that those tensions continue, particularly over the pipelines that deliver oil from northern Iraq to Turkey. There is a continuing debate over that issue, and I hope that the UK Government will play a positive role in trying to build relations, especially in the context of the election later this year.
We have heard a great deal about the positive nature of the relationship between the region and the UK. I would like to flag up the issue of female genital mutilation, which is still an issue in Kurdistan. We can play a positive role in engaging on that issue with the Kurdistan Regional Government. I think that they would accept that it is an issue on which progress needs to be made. This is a country that is developing a democratic tradition. That has happened there very recently, and it is very important that difficult issues such as this one are addressed in their cultural context.
One of the important players in that process will be the Kurdistan diaspora community in the UK. That community is very important indeed, and they are very active and willing to engage with UK political representatives. I hope that they will engage with more and more MPs to try to get them to recognise the importance of the Iraqi Kurdistan region, and to get more of them involved in the all-party group on the Kurdistan region in Iraq. That group has achieved a great deal. We have heard about the work being done with universities and businesses locally as a result of the group’s work, and that can only be further developed by having more MPs involved with the group. I am not sure how many of my colleagues in the House will welcome this, but I encourage members of the Kurdish diaspora here to contact their local MP to try to get them involved in the group, because they will then learn about the progress made in the northern region of Iraq, and will also build better links between the UK and the region.
The positive picture that Members and I have painted this morning is testament to our good relations with the region, both under the previous Government and this Government. That picture is one of extraordinary progress. There are still opportunities there, and we need to build on them further. I think that this is an issue that there is not a big political divide over, and the positive picture of the UK in the Kurdistan region provides a massive opportunity for the UK. It is an opportunity that we need to seize.
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
I congratulate my hon. Friend the Member for Colne Valley (Jason McCartney) on securing this debate. The Minister of State, Foreign and Commonwealth Office, my right hon. Friend the Member for Faversham and Mid Kent (Hugh Robertson), would have been delighted to respond, but he is travelling on ministerial duties. My hon. Friend the Member for Harlow (Robert Halfon) referred to me as the new Minister and this was compounded by the hon. Member for Wrexham (Ian Lucas) doing so. I have been Minister of State in the Foreign Office since September 2012, but this part of the world is not my responsibility particularly, which is why there may have been some confusion. It is none the less my pleasure to respond on the Government’s behalf.
The knowledge and insight with which hon. Members have spoken today says much about the strength of our relations with Iraqi Kurdistan, the reasons for which and the significant advantages it brings I will come on to discuss. I pay tribute to hon. and right hon. Members from all parties—and in both Houses—for their work over many years to build relations with the Kurdistan region, not least to the great efforts made by the all-party group.
The hon. Member for Wrexham said that it was up to hon. Members to familiarise themselves with the region. I have not had the advantage of travelling to the region, but having done extensive research for today’s debate, including reading the previous, extraordinarily distinguished debate in the House, I should love to go there and see it for myself—and perhaps even have a similar haircut to the hon. Member for Wrexham, not that the creator of his hairstyle will receive an MBE any time soon. You never know.
APG members have observed great changes—because there have been great changes—in Iraqi Kurdistan, including in its relationship with the UK, and they have made a significant contribution to realising them, which I acknowledge and for which I thank them. It does our Parliament great credit and their efforts do not go unrecognised. We welcome the group’s latest report, which is launched today.
The links between Britain and Iraqi Kurdistan are historic and deep, as we have heard. The recent strength of those links is founded in no small measure on our country’s role in establishing the no-fly zone in 1991, which helped to protect the population from Saddam’s murderous threat. The region is now a stable and prosperous area within a volatile region. I will return to that point, but first I shall say a little more about opportunities to strengthen our relations further, echoing many comments made hon. and right hon. Members.
The people of Iraqi Kurdistan and its Regional Government are ambitious, and opportunities in the region are, as we have heard, striking. Its economy continues to grow impressively. More companies from Britain than from any other EU country are registered in the region and we hope more will follow. British companies are helping to realise its potential in the energy sector. In recent months, two major trade missions have visited the region, led by my noble Friend Lord Marland and by Baroness Nicholson of Winterbourne respectively.
We recently welcomed the first inward investment mission from the region to London and another will follow this month. As ever, these links benefit from the contribution of the Kurdish community resident in the UK, which now numbers many thousands, and the Kurdistan Regional Government representation here in London.
We have only just begun to realise the commercial potential for the UK and the Kurdistan region, and we cannot take success for granted. That is why we have increased staffing at our consulate general in Erbil and will move to a new permanent building, which, I am glad to report to my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), we plan to open in the second half of 2015.
We continue to look for new opportunities in the region. UK Trade and Investment worked with the London office of the Kurdistan Regional Government to host a conference in July 2013 dedicated to tourism in the region. We continue to build strong links in higher education. On her recent trip, Baroness Nicholson took representatives from a range of UK universities to that part of the world.
Some 1,600 postgraduate students came to the UK last year, supported by the Kurdistan Regional Government. As Minister responsible for the Chevening scholarship programme, I am delighted that one of its scholars, Minister Falah Mustafa, is now the head of the Kurdistan Regional Government’s Department of Foreign Relations and recently met my right hon. Friend the Member for Faversham and Mid Kent.
Recognising the relative safety and security of this region, our travel advice makes a distinction from the rest of Iraq. We are one of the few countries that do not advise against travel to the Kurdistan region. We have also taken steps to make it easier to obtain a UK visa. During his visit in September last year, my noble Friend Lord Marland opened a visa application centre in Erbil, so that applicants no longer have to travel to Baghdad or outside Iraq to submit their applications, although I accept that it is still relatively expensive to submit applications.
Hon. Members spoke about direct flights. I have ever more calls for direct flights around the world, particularly with my responsibilities in Latin and central America; everybody wants direct flights to the UK, and the Kurdistan region is no exception. We share the ambition to see direct flights between London and Erbil and other destinations in Iraq. That requires work to satisfy our security assessments, but I am pleased to say that officials from the Department for Transport visited Erbil in November and we are making good progress with the authorities. It is our hope that Erbil airport, designed by a British architect, will welcome British carriers in the near future.
As I have noted, the security situation in Iraqi Kurdistan compares favourably with much of Iraq and the wider region, but it is not immune from threats. We recognise the ongoing bravery of the security forces who counter the threats of terrorism, and pay tribute to those who lost their life in September in that deplorable act of terrorism in Erbil—thankfully, the first such atrocity for several years. The hon. Member for Cheltenham (Martin Horwood) rightly spoke about the complex situation in the region regarding refugees.
Mr Swire
If the hon. Lady will allow me, I am about to address the points that she made.
The hon. Lady asked what the British Government were doing for the refugees. My hon. Friend the Member for Harlow also commented on that. As a result of the horrors in Syria, Syrian refugees continue to flee across the border. I pay tribute to the Kurdish and federal Iraqi authorities, and to the people of the region, for their support to the many people whose lives have been threatened and who have been left displaced and dispossessed. The Department for International Development has given £14.2 million to international efforts supporting Syrian refugees in the Kurdistan region. The UK will make a major contribution to the new UN appeal for Syria at the pledging conference being held today in Kuwait, and we urge other countries to be equally generous. We also welcome the efforts of the leadership of the Kurdistan Regional Government to encourage Syrian Kurdish groups to agree on participation in Geneva II.
The hon. Member for Wrexham asked specifically about allowing in refugees from that part of the world. He will know that there has been a lively debate about asylum for Syrian refugees, and I will not change the established Government position. I remind him of our major commitment to alleviating suffering in that part of the world. The UK is right at the forefront of this. Following the pledging conference in Kuwait, I am sure that we will maintain that position.
Meg Munn
I want to ask about security, because the Minister moved on a little bit too quickly, hence my agitation at that point. When we visited in November, the Interior Minister responsible for security spoke to us about his difficulty in getting support for help and advice about non-lethal security measures. I should like to press the Minister, if not now then perhaps later, to say what more we could do to help with a difficult security situation and to help a Government who are working hard to keep the region safe and who are successful for most of the time.
Mr Swire
I hear what the hon. Lady says, and she and other hon. Members will be aware that sales of non-lethal equipment may be subject to the UK’s export licensing controls. Applications for export licences are considered on a case-by-case basis against the criteria, taking into account the circumstances at the time.
Following on from what the hon. Lady says, Iraqi Kurds have a vital role in the stability of Iraq, where terrorist violence claimed nearly 9,000 lives in 2013. We are extremely concerned about the current violence in Anbar province in western Iraq. This Government will stand alongside the Iraqi Government in combating that threat and other terrorist threats across the region. We have made it clear that addressing the threat of terrorism requires support from the local community and an inclusive political process for all Iraqis. We urge Iraqi Kurds to play a full part in Iraq’s democratic future, ensuring that federal elections take place in April on time, fairly and freely. We also hope that overdue provincial elections for the Kurdish region will be held at that time.
We welcome the efforts in 2013 to improve relations between Erbil and Baghdad, including reciprocal visits, which were asked for by a number of hon. Members, by President Barzani and Prime Minister Maliki. We urge both sides to find agreement on how to administer the country’s energy resources and on how to share oil export revenues, and to finalise the 2014 federal budget. Resolving those issues is vital to unlocking much needed investment throughout Iraq. We also hope that a new Kurdistan Regional Government will continue to make progress on human rights in the region. The recent murder of a journalist was a brutal reminder that journalists continue to be targeted, and we call on authorities to bring those responsible to justice.
The hon. Member for Cheltenham raised the murder of Kawa Germyani, about which we have expressed serious concern. He was the editor-in-chief of Rayal magazine and a correspondent for the Sulaymaniyah-based Awena newspaper. He was assassinated outside his home in Kalar on 5 December, which is a brutal reminder that journalists in the region continue to be targeted for reasons related to their work. It is important that the KRG honour their commitment to investigate the attack and to bring those responsible to justice.
The people of the region know only too well the horror of violence and abuse, having suffered at the hands of Saddam Hussein. Members have spoken eloquently today and in the past about the Anfal campaign against Iraq’s Kurds. I am pleased to hear that my right hon. Friend the Member for North East Bedfordshire (Alistair Burt) has accepted the vice-chairmanship of the all-party group, and our debate on the subject in February 2013 is an example of the House at its best. As he noted on that occasion, the Government have a long-standing position of following a legal process to ascertain whether such atrocities should be designated as an act of genocide, but I reiterate our sympathy for the victims of the Anfal and confirm that we will work with the Kurdistan Regional Government and representatives here on how we can mark Anfal day on 14 April in an appropriate way.
Robert Halfon
Will my right hon. Friend do what he can to ensure that the British Government do everything that they can to bring to justice the perpetrators of the genocide if they are living in Europe? Will he do the same for the companies that supplied the chemical weapons to Saddam Hussein? Fortunately, the companies are not British; they are from other parts of Europe.
Mr Swire
Indeed, we should and will do everything we can to bring to justice perpetrators of any atrocities anywhere in the world, and the companies that have been supplying them illegally. That is what we do as a Government, and we will certainly continue to do so. Reflecting on those past tragedies only emphasises the progress made by Iraqi Kurdistan. We urge Iraqi Kurds to use the example of their history and progress to become a voice of moderation in Iraq and to show what they have done to address discrimination, to protect minorities and to rejuvenate their economy.
In the closing moments I will address the other questions that have been raised. My hon. Friend the Member for Stratford-on-Avon is a fantastic example of someone from that part of the world. He said that he is the first British Member of Parliament of Kurd ancestry, which is a remarkable achievement. There is a lot more he can do, and I would not be surprised if there were some wonderful opportunities for Erbil in Stratford-on-Avon. If we can export “War Horse,” the Michael Morpurgo play, to China, I am sure he can probably export “Wolf Hall” to Erbil. “Wolf Hall” is a play that runs for eight hours and is on in Stratford-on-Avon as we speak, and I know that my hon. Friend is experiencing considerable difficulty in obtaining tickets.
The hon. Members for Cheltenham and for Wrexham talked about women’s rights, particularly in relation to FGM. Since I have been in the House we have not done enough about FGM, which is one of the most abhorrent, despicable things to happen to women, and the thought that it still continues in the UK is absolutely unacceptable.
Mr Gregory Campbell (East Londonderry) (DUP)
The Minister is addressing an important topic. Does he agree that we need to send out a clear message not just in the region but across the developing world that the practice of female genital mutilation is totally and utterly unacceptable to try to move those societies away from such a barbaric practice?
Mr Swire
Yes, I absolutely do. The hon. Gentleman will be aware of the Foreign Secretary’s wider initiative to prevent sexual violence in conflict, particularly against women. FGM is different, and there is a big initiative in the House, not before time. We have continued to fund various projects run by the Westminster Foundation for Democracy to increase participation by female parliamentarians in the Kurdistan Parliament. We continue to support efforts to improve the position of women in Iraqi society, and we are working closely with the UN, the EU and other international partners, but he is right. I find the practice of FGM absolutely abhorrent wherever it is perpetrated. It seems to me to be an ultimate act of violence against very young women and girls who have no choice, and we should continue to be strong wherever in the world we find the practice.
I do not run the Foreign Secretary’s diary, but I am certain that he will have noted the point on high-level visits. The then Minister with responsibility for the middle east, my right hon. Friend the Member for North East Bedfordshire, visited Erbil in February 2013, and Lord Marland has also visited. Various hon. Members called for more ministerial visits and trade missions—yes, absolutely. I would point out that Ministers under this Government are travelling much more than ever before, and that part of the world should certainly be on their agenda. I welcome the idea that we should invite President Barzani to the UK, and we will factor that in. We heard from the right hon. Member for Belfast North (Mr Dodds) about President Barzani’s visit to Northern Ireland at the invitation of the First Minister and Deputy First Minister in February 2013 and the signing of the memorandum of understanding, which was a very successful trip.
My hon. Friend the Member for Colne Valley asked about a UK trade envoy for Iraqi Kurdistan, which is probably under consideration. Such appointments are made by No. 10, which is aware of the opportunities in Iraqi Kurdistan. We have spoken about visas, Anfal and flights. This is one of those remarkable occasions on which I have addressed every single question raised by hon. Members. This debate has been entirely consensual. There is no party political divide, and we agree that the work of the all-party group has been superb and continues to be so. We agree that we need to do much more in the area on education, cultural links and business opportunities. We need to do a lot to remind the world of the horrendous suffering of the Iraqi Kurds, and we need to do more to raise awareness and to alleviate the suffering of many refugees from Syria. The extraordinarily complicated mix in the area is the fallout from what is going on in Syria. On human rights, we need to ensure the safety and freedom of journalists. We want free and fair elections. We want good relations with all the disparate parts of Iraq, and we want to end barbaric practices such as female genital mutilation. We are in a good place and we are doing a lot, but we can always do a lot more. With such an active all-party group, we are in a pretty good place.
Farmland Bird Populations
(10 years, 3 months ago)
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Sir John Randall (Uxbridge and South Ruislip) (Con)
It is a pleasure to serve under your chairmanship, Mrs Osborne. I thank Mr Speaker for giving me the opportunity to raise this subject here today.
It may seem slightly strange to the casual observer that a Member whose seat is based firmly in the suburbs should raise the subject of farmland birds, but as some colleagues will know—if the Minister did not know before, he will become aware of it not just today, but over the coming months and years—nature and birds have been a passion of mine for a long time. Of course, all these issues are relevant to us all, wherever we live.
I can remember waking up at home in Uxbridge to the sound of skylarks singing. Today I live in the house next door, but I am afraid that the sound of skylarks singing has been replaced by the rather alien shrieks of the ring-necked parakeet. However, I am pleased to say that one does not need to go too far away in the London borough of Hillingdon to go down to Minet park, where one can still hear and see skylarks.
At this time of year, our fields should be golden and alive, but not with the rapeseed and wheat that were everywhere a few months ago; they should be golden with yellowhammers and alive with flocks of other farmland birds and wildlife, waking up for spring. Yellowhammers are normally pretty solitary, but this time of year, as birders will know, they flock together, and when they lift from the stubble in the sun, it is a remarkable sight. I have secured this debate because yellowhammers, skylarks and many other farmland birds are in trouble.
Jim Shannon (Strangford) (DUP)
I thank the right hon. Gentleman for securing this debate. In my constituency, there have been three initiatives to increase the numbers of yellowhammers: at Calvert’s on Ballybryan road; Lord Dunleath’s estate in Ballywalter; and Martin Hamilton’s in Newtownards. All three projects to increase the number of yellowhammers have happened not only because of the commitment of farmers but because of the shooting organisations, such as the Countryside Alliance and the British Association for Shooting and Conservation. Does the right hon. Gentleman believe that a partnership needs to be achieved between landowners and shooting organisations for such initiatives to succeed?
Sir John Randall
Those organisations have a strong record on farmland birds. I am sometimes a little bit concerned about some of them regarding birds of prey on uplands, but that subject is for another day.
The farmland bird indicator, which is a scientific record of populations, shows that more than half of the UK’s skylarks, yellowhammers, linnets and lapwings have disappeared since the ’70s. Those birds are not the worst affected, because they can survive in other habitats, but species that live mainly on farmland, such as the grey partridge, turtledove, tree sparrow and corn bunting have declined by 85%.
To any hon. Member who wants to follow the changes in population and range of all those different species, I thoroughly recommend the British Trust for Ornithology’s new “Bird Atlas”, which maps out 40 years of data. It is a fantastic piece of science and a wonderful resource. Unfortunately, it paints a gloomy picture regarding farmland birds.
Richard Benyon (Newbury) (Con)
I congratulate my right hon. Friend on securing this debate. I have a particular fondness, as we all do for particular birds, for lapwings. Is he aware of the extraordinary work being done by people such as Philip Merricks? He has proved that, in order to get more than 0.7 chicks per pair fledged, one has to do a lot of intervention and work hard. He has managed to double the rate through good management of the Elmley reserve on the Isle of Sheppey. There are many lessons that we can learn from people like him. I agree with the gloomy reports of the current status of farmland birds that my right hon. Friend talks about, but we can turn that around over the next few years.
Sir John Randall
I was not aware of that piece of research, but I am aware of its general nature. I pay tribute to my hon. Friend for much of the work he did when he was the Minister responsible for biodiversity. It is not always easy, because one cannot always do the things one really wants to do. I know what he does privately as well for farmland birds and for wildlife in general.
We have an opportunity to turn things around in the coming months. We know what the problem is: the main reason for the decline—there are others—is the intensification of farming methods. Changes in cropping patterns have led to a loss of winter stubbles, so the main feeding habitats for many birds, such as finches and buntings, have disappeared or have been greatly reduced. Greater use of pesticides and herbicides has removed critical food resources, and the loss of hedges and other semi-natural habitats, of which we are all aware, has combined with intensive grassland management to take away vital habitats.
Glyn Davies (Montgomeryshire) (Con)
I thank my right hon. Friend for raising this subject, which has been of huge interest to me all my life. Does he accept that one of the great dangers is the monocultures that are creeping into parts of our country, particularly maize? Huge areas are used to grow maize every year to feed energy plants, and that is probably causing more damage to birds and wildlife in those areas than anything else one could imagine.
Sir John Randall
I am delighted to hear of my hon. Friend’s great interest in the subject over many years. As a farmer himself, what he says exemplifies the fact that many farmers are keen conservationists and can do an awful lot for us; I will go on to that in a little while.
Many of the changes that I have been talking about have been driven by farm incentives under the common agricultural policy, which paid farmers to produce more, and these days, there is also pressure from competition to produce food ever more cheaply, but we know what some of the answers could be. As several of my hon. Friends present have proved, a farmer’s knowledge of his land is second to none. Many farmers leap at the chance to work their land in a way that provides a good habitat for plants and animals. I pay tribute to the many farmers who work tirelessly to conserve and improve habitats. Working with conservation groups, wildlife-friendly farmers have come up with the big three essential elements for farmland birds to thrive: safe nesting sites; invertebrate food for chicks in the spring and summer; and seed food over the winter.
I noticed with interest that in a recent edition of Country Life, the Game and Wildlife Conservation Trust has urged both farmers and gamekeepers to sign up to its action plan for grey partridges—this goes to the point made by the hon. Member for Strangford (Jim Shannon)—which will help not only that species but other farmland species, and indeed mammals such as the iconic brown hare, which will be the subject of another debate from me.
The answers can be provided by simple solutions. A skylark plot is a tiny patch mown into the centre of a field. It allows birds to enter the thick crops and nest safely away from predators. Skylark plots have raised breeding success by 50%, but they are small enough to have no significant impact on crop yields. Other actions require a bit more effort, but we know that they work.
At the moment, the main tool for improving biodiversity is agri-environment schemes, under which farmers receive money for environmental stewardship. Let me give a couple of examples of the difference they can make. Under such schemes, cirl bunting numbers in south Devon have increased sevenfold, from 118 pairs in 1989 to 862 pairs in 2009. I am certainly showing my age when I say that I can remember going to watch cirl buntings in Buckinghamshire. Now they are completely confined, in England, down in the south-west. That is another example of how species have just disappeared. In Wiltshire and Norfolk, stone curlew numbers have recovered from just 160 pairs in the 1980s to 400 pairs in 2012, thanks to farmers working through agri-environment schemes. When we get the system right, farmers are expert in looking after our natural world.
Other parts of the system have not been quite as effective. The entry level stewardship part of agri-environment has been untargeted—frankly, some farmers have received money for old rope, as far as I, a non-farmer, can see; that is what it looks like to me. There are 65 activities to choose from under the scheme. Many farmers involved in the entry level stewardship have opted for the simplest measures that have the fewest benefits. One example is the low-input grassland option, which entails only modest restrictions on the use of fertiliser and provides few if any benefits to wildlife. The other big problem with environmental stewardship is that it has not been targeted properly. At the top end of the scheme, higher level stewardship has been targeted in 110 areas across England under a set of priority themes, but the entry level has been completely untargeted. That means that farmers can receive money for actions that make no ecological sense for the areas they are farming.
Our money from the common agricultural policy is divided into two parts: pillar one is a direct payment based on land-holding, and pillar two is for rural development, including the agri-environment money. In December, the Department for Environment, Food and Rural Affairs announced that it would transfer 12% of CAP funds from direct payments to rural development. The maximum of 15% would have been better, but 12% still provides a hefty £3.5 billion to spend between 2015 and 2020. I would welcome the Minister’s confirmation that the Department seriously intends to increase the transfer to 15% from 2018. Slightly less than £3.1 billion of that money will be spent through the next round of agri-environment spending, known as the new environmental land management scheme. It is a real chance to make good on the two big issues.
The new scheme must be targeted and, when we are talking about farmland birds, farmers need to deliver the big three conservation solutions if they are to receive the money. The Minister will be aware that DEFRA will make its decisions about the design of NELMS over the next few months. It is a great opportunity to design a scheme that will deliver for the environment by supporting farmers in taking the ecological steps that will enhance the value of their land for wildlife and the public at large. I hope that the Minister can assure me that biodiversity will be the top priority of the NELMS scheme. More specifically, I hope he agrees that to deliver the maximum value for money, we need a system that will dish out money only when farmers deliver the core conservation actions along with a system that targets the menu of conservation options to the area involved.
Jim Shannon
One issue that has not been touched on yet—the right hon. Gentleman might intend to come on to it—is the control of vermin to enhance these projects and help them work. Does he feel that the control of grey-backed crows, magpies and foxes, for example, is an integral part of any programme to help these bird populations grow?
Sir John Randall
The hon. Gentleman is leading me towards something in which I am not an expert. Obviously there is always a question about vermin, but it is a little more contentious, and I want to keep my comments very much on farmland birds. Like all these actions, vermin control can be a good thing, but it can also be rather contentious and it depends on where one is.
We have to ensure that Natural England has the resources it needs to provide specialist advice to farmers and land managers. Natural England is taking a 26% cut in its overall budget and a 38% cut in the portion of the budget that it manages directly. How will that affect the specialist advice needed to ensure that NELMS is working for our environment?
Finally, I want to touch on the direct payments, as there is an opportunity there as well. The rules for greening direct payments were watered down during the EU negotiations, but the UK can still make a couple of decisions to ensure that the subsidy delivers value for money. Again, we need to see a list of actions for the ecological focus areas that will make a real difference to biodiversity. DEFRA is about to review the cross-compliance rules, which are designed to ensure that farmers abide by the rules before they can make a claim. That includes rules like the retention of hedgerows and protection for sites of special scientific interest. The CAP costs the UK £10.3 billion a year, which is £398 a household. It is only right that we ensure that the money goes to farmers who are sticking by the rules and delivering maximum public benefit. I hope the Minister agrees that the rules need to be strengthened.
If they did not know it before, Members here, and those hopefully reading the debate later, will recognise that I am a committed birder. I have to speak out about biodiversity because it is my passion, but this is about more than a bearded man and his binoculars. Just last week, researchers at the university of Exeter found that moving to a green space had a sustained positive effect on people’s well-being, unlike pay rises or promotions, which only give a short-term boost, however welcome. Connection to nature is vital. Farmers are the stewards of three quarters of our land, so we must ensure that the system helps them deliver a healthy countryside. There are economic implications, too. We know that our farmers need to be competitive to provide affordable food, but we also know that they need help to deliver the wider benefits from their land. We have all heard about the plight of the bumblebee: of the 97 food plants that bumblebees prefer, 76% are in decline. It is not just bees that are vital pollinators. We need to look after the whole of our farmland diversity to help underpin the future of the sector.
This debate is about seizing the opportunities in front of us. Many of the decisions about farm funding have been made—many of them at European level—but the Minister has a chance over the next couple of months to help to create a farming sector that will thrive and fields that are alive with wildlife again. I hope he takes the opportunity to design a system that puts nature at its heart and delivers targeted and efficient support for our nature-friendly farmers. The magical sound of the song flight of the skylark is the quintessential sound of the British countryside, and I sincerely and earnestly want future generations to share in the joy that I and so many others have had in the natural world over the years. It is down to us to ensure that we do everything we can to ensure that that happens.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I congratulate my right hon. Friend the Member for Uxbridge and South Ruislip (Sir John Randall) on securing this debate. He is passionate about bird life and has been a member of the Royal Society for the Protection of Birds for some 50 years, which shows real dedication. I grew up around wildlife on a farm. In Cornwall, we used to get a lot of lapwings, because they often overwintered there. Like him, I have a passion for birds and wildlife, and I want to see the common agricultural policy promoting them.
My right hon. Friend highlighted that the trend in recent decades has been bleak. The Department for Environment, Food and Rural Affairs measures how birds fare through the farmland bird index, which is published every year as part of its biodiversity indicator suite. The index looks at 19 widespread species that feed in open farmland during the breeding season, and includes species such as lapwing, grey partridge, greenfinch, wood pigeon, skylark, corn bunting and yellowhammers. The evidence shows that the main decline in the index was from the late 1970s to the early 1990s. While the decline has continued, it has slowed since then.
It should be noted that not all farmland bird species have followed the overall trend. While grey partridge, turtle dove, tree sparrow and corn bunting are among those declining, wood pigeon, jackdaw, goldfinch and stock dove have all shown substantial increases. The wood pigeon, for example, has benefited from the increased availability of food as a result of cropping patterns switching to more oilseed rape, as many farmers could tell us.
The causes for the overall decline are complex and varied, but it is clear that the sharpest rate in decline coincided with major changes in agricultural land management and intensification. First, the switch from spring to autumn sowing of many cereal crops led to a loss of overwinter stubble fields, which has had a major impact on food sources. Secondly, the increased use of agri-chemicals, particularly during the 1970s, played an important part as well. Thirdly, the loss of field margins and hedgerows meant that farmland birds lost not only valuable sources of seed and insect food, particularly over the winter, but suitable nesting habitat. Recently, other natural factors have had an impact, particularly the weather. Many species have been vulnerable to the recent wet summers and cold winters. There is also disease; we know, for example, that trichomonosis has affected the greenfinch.
For some ground-nesting species such as lapwing, and game birds such as grey partridge, we have to acknowledge that predation by foxes and other predators has been a factor. The impact of predation varies between species. For farmland songbirds, for instance, there is little evidence of an effect, perhaps because they often have more than one brood and will re-nest after predation, and are therefore better able to withstand its effects. There is some evidence that predation is likely to have a greater impact on bird populations where habitat is in poor condition, perhaps because it has been degraded through overgrazing; nests may be more exposed and suffer higher loss rates to predators.
Having outlined the causes of the decline and the nature of the problem, I want to say something about what we hope to do, and the possible solutions. Our agri-environment schemes are the principal means of improving habitat for farmland birds in England; they provide funds for farmers to manage the cropped environment and provide additional habitat and food on their farms for farmland birds and other wildlife. Agri-environment measures that benefit birds include providing overwintered stubble, so that there is seed in winter, and wild bird seed mixtures in spring and summer, and the sympathetic management of hedgerows. Today there are about 50,000 farmers in England in agri-environment schemes, representing about 70% of available farmland. As part of the rural development programme for England, we spend about £400 million a year on those schemes.
As I said earlier, although we have stemmed the rate of decline and have turned a corner with respect to some species, we need overall to ask why, having spent a great deal of money in recent years on such countryside stewardship schemes, we have not yet reversed the decline, as my hon. Friend the Member for Newbury (Richard Benyon), other hon. Members present, and I would want.
The first thing to consider is management options under the stewardship schemes. We would certainly have liked better uptake of management options beneficial to farmland birds. My right hon. Friend the Member for Uxbridge and South Ruislip highlighted the weaknesses of the entry-level stewardship scheme in particular. We have looked at ways of encouraging greater uptake of those management options to benefit farmland birds.
In 2013, as a result of the review, we introduced into the schemes specific measures that enable farmers to provide supplementary feeding for birds in winter, to begin to address what is known as the hungry gap between midwinter and early spring, when seed food is depleted and before other food sources become available. That simple measure involves providing seeds on the ground or in hoppers to supplement the seed in stubble and wild bird seed crops. Another new measure that we introduced in 2013 involved leaving the last cut ryegrass silage unharvested, to allow grass to set seed and provide a seed source over winter.
A study by Baker and others published in 2012 for the British Trust for Ornithology showed that there is strong evidence that the provision of winter food resources produces positive effects in relation to the population growth of a number of species. The study results underline the importance of getting farmers to choose those targeted measures that we have already introduced, to deliver the outcomes we need.
Natural England, which administers environmental stewardship, has worked with many conservation bodies to develop farmland bird packages, setting out minimum requirements for the options by which farmers can provide nesting habitat, invertebrate chick food and adult seed food. They have been targeted at areas in England known to hold important populations of farmland birds and have been promoted by Natural England and the RSPB.
Julian Sturdy (York Outer) (Con)
The Minister makes a strong argument for the way modern farming can live in harmony with wildlife, and for how environmental schemes can improve bird numbers. All those present for the debate will agree about that. However, he has not touched on habitat destruction through uncontrolled planning and flooding. Is he in conversations with any of his ministerial colleagues at the Department for Communities and Local Government about whether that aspect of the matter can be tightened up?
George Eustice
It is probably a topic for a separate debate, but my hon. Friend will know that we are considering approaches such as biodiversity offsetting; when planning permission is granted and a habitat is damaged, there would be a process enabling local authorities to put things right somewhere else. There is potential to get that moving and to try to help habitats damaged by development.
Natural England has worked with the RSPB and the Game and Wildlife Conservation Trust to try to improve the working of the ELS scheme. The Campaign for the Farmed Environment has also done a lot to promote good practice. It is a voluntary industry-led initiative, where key industry partners work with environmental groups to encourage farmers to undertake voluntary environmental management. It is funded jointly by the industry and DEFRA, which has committed about £700,000 for this year and next to support its activities. Currently the campaign is promoting skylark and lapwing plots, wild bird seed mix strips, unsprayed overwinter stubbles and winter feeding.
My right hon. Friend the Member for Uxbridge and South Ruislip mentioned the common agricultural policy. As he said, we have gone to a 12% modulation rate. We have also taken the decision to increase the percentage of the pillar two budget spent on agri-environment schemes from 83% to 87%, so increasing the total amount being spent. Between now and 2020 we shall spend well over £3 billion on agri-environment schemes, and I confirm that we intend to review the position in 2016, with a view to moving to a full 15% modulation, subject to sufficient demand for the schemes and to concluding an analysis of the competitiveness of British agriculture.
My right hon. Friend highlighted some of the shortcomings of the ELS, and as he said, we plan for a new environmental land management scheme to replace it. The new scheme will build on the acknowledged successes of the environmental stewardship scheme in a positive way: it will be more targeted and focused. The new proposed mid-tier will identify areas of particular priorities for given objectives and incentivise the right options; we call that the directed option choice.
Biodiversity is among the things that I want to promote as we design NELMS. I want to make sure we have those directed options, so that there must be certain options, from a particular list, that will prioritise the recovery of farmland birds. I want us to look at that closely as we develop the approach. The directed option choice will enable us to encourage farmers to maximise the environmental outcomes on their land, in response to the agreed environmental priorities in their area, rather than simply seeking the lowest-cost or most convenient options. In addition, we shall adopt a landscape-scale approach to establishing NELMS. I hope that that will result in some critical mass and wildlife corridors, and a concentrated improvement in habitats to sustain the recovery of certain bird species.
Like my hon. Friend the Member for Newbury and my right hon. Friend the Member for Uxbridge and South Ruislip, I want to reverse the decline in bird populations, and I do not believe that that is incompatible with continued farming. Many of the measures that can help farmland birds are entirely compatible with modern farming practices. I recently had a meeting with the RSPB, and we discussed some of the good work that they are doing at Hope farm in Cambridgeshire. I hope to visit in the spring; this very morning, my office has been trying to find a date for that.
The number of farmland birds at Hope farm has doubled since 2000, mainly because of land management undertaken through environmental stewardship. A particular success has been the fourfold increase in skylark numbers, which has been achieved simply through skylark plots. The RSPB representatives described to me how during the drilling of a cereal crop the drill is shut off periodically to produce the skylark plots. That is a simple management measure, which does not really affect the profitability of the farm, but has a huge effect on the skylark population. I look forward to my meeting with the RSPB and learning more about that.
I congratulate my right hon. Friend again on obtaining the debate, and reassure him that we shall prioritise biodiversity as we design the new environmental land management scheme.
TfL (Funding and Station Staffing)
(10 years, 3 months ago)
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John McDonnell (Hayes and Harlington) (Lab)
The subject of this debate is future Government funding for Transport for London and station staffing levels. They are matters of considerable concern to many London MPs, but they do extend beyond the capital. Let me first outline the reasons why we sought this debate.
As a result of the Government’s austerity drive, Transport for London’s general grant will, according to its December 2013 business plan, be cut from £1 billion in 2013-14 to £835 million in 2014-15, reaching a low of £629 million in 2015-16 before recovering slightly to £684 million by 2020-21. On 21 November 2013, London Underground, backed by its owner, TfL, and the Mayor of London, Boris Johnson, announced a policy called “Fit For The Future—Stations”, which includes closing every ticket office at all 240 stations, cutting 950 of the 5,750 station staff positions, which equates to a 17% cut, and removing supervisors and senior staff from many stations. At the same time as revealing station staffing cuts and ticket office closures, London Underground announced with a big fanfare a separate policy of 24-hour operation at weekends on some tube lines. The timing of that announcement was greeted by the staff of London Underground and others as quite a cynical move designed to distract attention from the plans to close ticket offices and slash station staff numbers.
Mr David Lammy (Tottenham) (Lab)
Does my hon. Friend also recognise in that business plan Transport for London’s intention to seek year-on-year fare rises for the next decade?
John McDonnell
The reactions of my constituents have been remarkable, and other Members may have seen the same. People cannot understand why they are paying more in fares while station staff and ticket offices are being cut. I can understand their being perplexed.
On 18 December, the Labour transport spokesman on the Greater London authority, Valerie Shawcross, asked the following question of the Mayor:
“Will you guarantee that all LUL stations will be staffed at all times?”
The Mayor responded by saying that officers were drafting a response that would be available shortly. We still have not had that response. The fact that the Mayor has still not been able to provide an unequivocal answer suggests that that guarantee cannot be given. Following the King’s Cross fire, a legal requirement was introduced that there be a minimum of two staff at every station, but that applies to sub-surface stations only, so the others are extremely vulnerable.
The business plan also sets out that London Underground will cut the frequency of essential maintenance checks, still plans to introduce driverless trains at some unidentified point in future, is not filling posts, despite large numbers of Londoners looking for jobs, and seems to be plugging the gaps in staffing with casual workers more frequently. My constituency has a railway estate and I represent a number of London Underground workers. To be told a month before Christmas that they would not have a job not only shocked them, but caused real consternation and, understandably, considerable anger. The two rail unions that represent staff at London Underground—the National Union of Rail, Maritime and Transport Workers and the Transport Salaried Staffs Association—rightly consulted their members in the light of representations that they received. On Friday 10 January, the RMT issued the following statement:
“RMT members have voted by 77% for strike action and by an even bigger majority for action short of a strike. The results will now be considered by a meeting of the union’s executive.”
Dates will be set and there will be strike action unless meaningful negotiations with the Mayor take place. RMT general secretary, Bob Crow, said:
“RMT members on London Underground have voted by a massive majority for both strike action and action short of a strike in a dispute which is wholly about cash-led cuts”
and
“plans that would see the axing of nearly a thousand safety critical jobs and the closure of ticket offices at a time when the tube network is under growing pressure from customer demand and needs more staff and not less to ensure safe and efficient operation.”
Mr Virendra Sharma (Ealing, Southall) (Lab)
I congratulate my hon. Friend on securing this debate. I must register an interest as a former employee of London Transport, where I worked as a booking clerk. I can certainly confirm that security and safety are most important for station staff when looking after passengers. The cuts will create fear in passengers’ minds and they will be reluctant to use the underground, so that they do not have to face criminals. A few weeks ago at Northfields station in my constituency, a staff member was attacked and it was only because other staff were there to assist that he was saved and a disaster was averted.
John McDonnell
My hon. Friend is experienced and knows what it is like to deal with customers face to face on the underground. He knows the insecurities of travellers and staff and outlines a recent, concrete example of what can happen.
Let me finish what Bob Crow said:
“Not only are a thousand posts on the line but staff remaining are going to be forced through the humiliating and degrading experience of re-applying for their own jobs—the same staff who have been hailed as heroes when the tube has faced emergency situations”,
which echoes my hon. Friend’s point. Bob Crow continued:
“That is a kick in the teeth for the loyal and experienced tube workforce who have kept services running safely and efficiently under constant pressure from weight of demand and a creaking and under-resourced infrastructure.”
He also said—I add this as it may prevent some carping or questions later—that before anyone starts
“shouting the odds they should take note of the fact that the turn out in this ballot was higher than the last mayoral and GLA elections and the vote in favour massively outstrips anything that those same politicians can even dream of in terms of a popular mandate.”
Those are the views of rank and file tube workers.
On 9 January, the TSSA issued the following press release:
“A strike ballot of front line station staff was called today by the TSSA rail union in protest at plans to close 260 Tube ticket offices and axe nearly 1,000 jobs.
It gave London Underground seven days notice of a ballot which will start next Friday, January 17 and end on January 27. Any subsequent industrial action could start from February 3 in the event of a yes vote.
Manuel Cortes, general secretary, blamed the ballot on the ‘reckless’ behaviour of London Mayor Boris Johnson who he said was refusing to meet the unions over their genuine fears for safety and security with the wholesale closure of every ticket office.
‘It was the Mayor who came into office in 2008 with a firm pledge to keep open every ticket office on the grounds of keeping passengers safe and secure at all times.
‘Now he wants to scrap the lot, claiming there will be no problems because he will keep staff on station platforms, those that keep their jobs, that is.
‘He wants to scrap permanent station supervisors who are in charge of evacuations and replace them with mobile supervisors who will travel from station to station.
‘But he will not answer the question; “How mobile can you be if all lines are in lockdown because of an emergency and nothing is moving whatsoever?”’.
He called on the Mayor to end his six year ban on meeting the rail unions”—
he has refused to meet them for six years!—
“and to sit down with them instead to work out a solution which would guarantee ‘the safety and protection of all passengers at all times’.”
I repeat what the Mayor said in 2008, which was very specific. He said that there was no
“financial, strategic or common sense”
in the closures that were threatened at the time, and promised:
“We will halt all such ticket office closures immediately”—
That is a broken promise. It is a broken promise not only to the staff, but to the travelling passengers.
Passengers and the general public are anxious. A large poll—a face-to-face survey by Survation of 1,027 London underground users in 23 tube stations—showed widespread concern about the threat of ticket office closures: 71% of London Underground passengers interviewed said that they were “quite concerned” or “very concerned” about their station no longer having staffed ticket offices. Concerns were particularly strong among tourists travelling on the underground, with 81% saying that they would be “quite” or “very concerned” in the event of ticket office closures—no doubt because of their reliance on the offices for general information.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
My hon. Friend has called a very important debate today on something that is affecting all our constituents who use the underground. Does he share my particular concern for women who are travelling, perhaps to and from work late at night or with their children? They will not have a sense of safety and security in underground stations and on platforms. They need to have that reassurance that it is safe to travel and that they will have support when they need it, should anything happen.
John McDonnell
Safety and security is a critical issue. Later, I will come on to some of the statistics that we have looked at, including research specific to women.
Perhaps the Minister will pass back to the Mayor of London that the same Survation survey found that 49% of underground passengers who were resident in Greater London would be “much less likely” or “somewhat less likely” to vote for a candidate for Mayor of London who went back on a promise to keep ticket offices open. That is what Boris Johnson pledged in his 2008 manifesto. That figure increased to 56% among those who voted for Boris Johnson in the previous election. People feel strongly, and they will be willing to express their concerns at the ballot box in due course. There is also a petition; 20,000 people have signed a 38 Degrees e-petition calling on the Mayor to keep his manifesto promise.
Political opposition to the cuts includes Labour and the Greens, and there has been cross-party support, including from some Liberal Democrat MPs, for early-day motion 787 proposed by my hon. Friend the Member for Islington North (Jeremy Corbyn). That sets out the detail of the cuts in an objective fashion, but its conclusion is to call on the Mayor of London to reconsider his proposals and to keep the ticket offices open. One Liberal withdrew his name in due course, but that was a tube line to Damascus conversion as a result of promotion to ministerial office. [Interruption.] I cannot believe that others would do that.
For opposition from the wider community, let me run through some of the broad range of groups that have expressed concerns. The cuts have been opposed by the TUC and by disability organisations, in particular Transport for All, which is the voice for disabled people in London on transport issues, and Disabled People Against Cuts. The National Pensioners Convention has now expressed its concern about the implications of the cuts.
Threats to passenger services are real. Let me run through what the cuts mean in concrete terms. Now, every passenger may depend on staffed ticket offices when the machines are out of order or their Oyster card has stopped working. Under the Mayor’s plans, passengers will have nowhere to turn during such everyday situations. They will have to rely on their Oyster card or contactless payment cards to travel, or they will have to pay higher prices for paper tickets. Passengers will have to buy tickets online, if they can, or at shops, and they will have to find the correct ticket on the self-service machines. Experienced tube workers have said clearly that there are real fears that errors or problems with tickets will no longer be resolved at stations, because there will be no ticket office and of course the shops that sell tickets cannot help with such problems—nor is that their role.
Mr Virendra Sharma
The role of the staff at the station is not only to sell the tickets or clean the station, but to assist the passengers, whether children, women, the disabled or visitors who come to the city and do not understand the workings of the underground system, such as moving through the stations from one platform to another. Staff are guiding passengers. Once they are taken away, individuals and groups will be suffering. I hope that my hon. Friend agrees that once the cut has been made, visitors and passengers will feel that they are not getting such services.
John McDonnell
My hon. Friend is right that certain categories of passengers will be affected the most. To finish on the subject of tickets, however, the Survation survey found that there was little confidence about relying solely on the automatic ticket-vending machines: 52% said that they had been unable to buy tickets in the past, due to the machine being broken. Obtaining information on the correct price and travel advice are also important, as my hon. Friend says.
New forms of ticket retail have become increasingly available, but surveys have shown that passengers value the face-to-face contact with staff, even for simply navigating around the complex ticket pricing system. The Department for Transport’s own review of ticketing acknowledges Passenger Focus research that found that
“passengers are more confident with ticket offices than any other sales channel of obtaining the best value ticket for their journey”.
In response to announcements in recent years about main line railway ticket office closures and reduced opening hours, Passenger Focus stated that
“passengers really value the presence of staff at stations. Any reduction in ticket-office opening hours and the subsequent withdrawal of booking staff often reduces the overall facilities available at stations… We fear that this could lead to passengers feeling less safe at stations and paying more for their tickets than they should.”
Stephen Pound (Ealing North) (Lab)
I am extremely grateful to my hon. Friend for giving way, and I echo the comments of my hon. Friend the Member for Feltham and Heston (Seema Malhotra) in praising him for bringing the subject before the House. I also associate myself with my former colleague in London Transport, my hon. Friend the Member for Ealing, Southall (Mr Sharma)—he and I were bus conductors together. I speak from a position of some knowledge in this matter.
None of the tube stations in my constituency are fully accessible. It may not be the duty of station staff to assist people up and down stairs, but it is something that they do, and they do it willingly. How in heaven’s name are people struggling with buggies, on walking sticks or with walking aids going to manage without that good will if the people, however willing, simply are not there?
John McDonnell
That is the running theme through all the comments we have had.
The Campaign for Better Transport stated:
“Plans to close ticket offices and cut staff in stations will mean passengers are left to fend for themselves when buying a ticket and will result in people paying over the odds for their journey.”
If there are 17% fewer staff to help passengers, then what? As my hon. Friends have said, staff help with incidents, accidents, advice on what route to take, directions to local venues or addresses, disability access needs, lost property and yes, lost children and everything else, as well as service updates and many more issues that passengers cannot deal with on their own or via a machine. The remaining station staff, to be frank, will be less available to help with travel and other inquiries, because they will be busy helping people to use the ticket machines who would have previously have sought help at the ticket office.
Passengers also need some types of help that a station supervisor has to deal with, in particular the more complex issues for a more senior level of staff. Now there is a station supervisor in every station, but under London Underground’s plans, they will be removed from many stations and responsible for a number of stations instead, so that they might have to travel from another station to help passengers. Staff will be expected to work on several stations over a wider area, so they will be less familiar with the area the station is in and they will often be working in isolation.
There will be an impact on efficiency—all the expert evidence that we have collected says exactly that. Station staff play an important role in keeping the trains moving, such as helping the trains to depart promptly, reporting faults and providing information and advice during service disruption. Station staff work with other London Underground staff, such as drivers and service controllers, to keep the tube running. If there are fewer staff in stations, the train service will suffer. The London Underground plans to remove station supervisors from many stations will slow down service recovery during and after disruption.
Station supervisors also play a critical safety role. London Underground plans that such essential staff will be in charge of several stations at the same time, so they will be unable to deal in person with the many safety incidents and issues. It intends to plug some of the gaps in staff coverage with a casualised work force of agency staff, as well as having office staff who occasionally work on stations, away from their normal duties and with minimal training. In many people’s view, that will compromise safety. I agree.
Chris Williamson (Derby North) (Lab)
My hon. Friend has obviously focused on the implications for London. I represent a constituency in the midlands, and my real fear is that if Boris Johnson and London Underground get away with these reckless cuts to staffing on stations on the London Underground network today, it will be the midland main line and other surface railway networks around the country tomorrow. Does my hon. Friend share that fear?
John McDonnell
My hon. Friend has made a valuable point. What happens in London is usually the example that is then rolled out to the rest of the country. This issue is critical not just for London but nationally. Ministers have a role in this matter, which should not just be left to the Mayor of London.
There are already issues with station staffing as there have been cuts in the past. In outer London, many stations are already neglected and are not well staffed. Transport for London responded to questions from members of the Greater London assembly on this matter by saying that on average stations have to be closed on 120 occasions a year due to staff shortages.
Jeremy Corbyn (Islington North) (Lab)
I apologise for arriving only recently and missing the first part of my hon. Friend’s contribution. Is he aware of the situation facing Finsbury Park station? It is almost unique on the network in having no barriers because of its size, and it is grossly overcrowded, with no step-free access. Without staff, the station would turn from being dangerous into being positively lethal because of the number of people crowding on to the platforms every morning trying to get on to very overcrowded trains. The policy is disastrous.
John McDonnell
I know the station concerned. My hon. Friend has campaigned on the matter on a number of occasions, and he has liaised with the staff there. Trade unions have raised the issue as well. It is lunacy to start removing staff from stations such as that one.
We have been here before. Some hon. Members might remember previous debates on the issue, because London Underground management in particular do not have a good track record in anticipating passenger need. Members might remember that after axing 800 staff the previous year, in 2010, London Underground was forced to recruit an additional 300 staff as a result of passenger complaints about safety and security and the campaign that a number of Members who are here today waged alongside the trade unions.
My worry is about safety in all its aspects. I am worried about both preventing and tackling terrorist attacks. Adequate staff numbers are absolutely essential both in preventing terror attacks and dealing with the aftermath when they happen.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I apologise for not being present for the opening of the debate. Is the problem of safety not even further exacerbated by the proposal to close so many London fire stations?
John McDonnell
We all feel under assault as Londoners at the moment because of what is happening to our emergency services. Through the combination of losing staff from stations and the cuts to the fire service and to policing, we feel as if our emergency services are being stretched to breaking point. If we asked the front-line staff, who are the real experts, they would tell us that as well.
Staff on stations play a role in the prevention of terrorist attacks as well as dealing with the aftermath. It is absolutely ironic that the tube staff who were applauded for their heroism during the London bombings are the ones whose jobs are being cut by the Mayor and who are being treated shabbily in the way in which the announcements are being made. I remember the statement from the Transport for London board in July 2005. I will quote from it now:
“The Board would like to express its heartfelt thanks to all TfL staff who worked so professionally and tirelessly in extremely challenging conditions immediately following the attacks. Their selfless actions to help those who had been injured is a testament to the quality and calibre of public transport workers in London.”
It is those staff whose jobs are now at risk or are to be cut. Their bravery was also praised in the official inquiry into the bombings. I will quote an extract from The Independent in 2010:
“London Underground staff ignored concerns for their own safety and rushed to help victims of the 7/7 bombings, the inquest into the deaths of the 52 people killed heard”.
I will quote a citation for one member of staff, Mr Falayi, who was at Aldgate station, and was told at the inquest:
“You were very brave and I’m sure the efforts you made, despite the risk to yourself, to save and help people there at that dreadful scene will provide some comfort to those who have either lost people or who themselves were dreadfully injured.”
It is those workers who are now going to lose their jobs, and when those jobs go, it will undermine the safety of the travelling public.
It is not just a question of terrorist attacks; there are also operational accidents. One example is people who go on to the line: in September 2012, a member of station staff jumped on to the line to save a child. During the Notting Hill carnival there was an incident in which the car barriers had broken, but as a result of cuts there were no staff to try to ensure that passengers did not go on to a live line. That demonstrates to management that there are heightened risks of that type of accident once staff are removed from stations.
Turning to the issue of security raised by my hon. Friend the Member for Feltham and Heston (Seema Malhotra), in 2012-13, there were 1,897 incidents of violence on the tube. That number is rising. People have commented on the problems caused by cuts to mainline stations. For example, Anthony Smith, the chief executive of Passenger Focus, has said that
“all our research indicates passengers really like the reassurance only the presence of staff can bring. Taking staff away from stations would represent a very short-term, short-sighted saving.”
The Independent Social Research report of 2009, “Passengers’ Perceptions of Personal Security on Public Transport”, said:
“The presence of uniformed staff provided a sense of order and authority, and gave passengers confidence that anti-social behaviour would be challenged. Women and older people in particular were reassured by staffing initiatives, and often commented that seeing staff on trains, stations and at bus stations made them feel safer.”
I will quote another source, the work done by Kerry Hamilton of the university of East London on women and transport in 2005. Many of us have complimented her on that work, and she said that
“women feel more vulnerable to attack and harassment than men and their greater concern with personal security...This deep concern about personal security has important implications for the design of transport interchanges and waiting areas and for staffing levels...Therefore the quality and level of staffing on vehicles and at bus and rail stations is of vital importance.”
A former colleague, Vera Baird QC, was commissioned by the Labour party to write a report called “Everywoman Safe Everywhere”. That report states:
“A significant number of respondents to the consultation raised concerns about cuts to travel budgets and services and the corresponding impact on that could have on women’s perceptions of safety.”
Removal of station and train staff and the closure of ticket offices were chief among those concerns. A 2012 survey showed that 28% of women and 15% of men do not feel safe using London public transport at all times of the day and night. We have to get that message across somehow to Government Ministers and to the Mayor.
There is also an issue with access. I am worried about the increased problems with accessibility that have been mentioned. Ultimately, a station that is accessible for someone with a disability means a station with staff. There is no cheap and staff-free alternative that protects accessibility. Stations must keep their ticket offices open to facilitate information provision and assistance. That was confirmed by a report into the usability of ticket vending machines by Passenger Focus in 2010, which stated:
“Unsurprisingly, passengers with disabilities can find TVMs difficult and frustrating to use and reported various barriers during the interviews”.
A whole series of people came forward to express their concerns. For example, on people with vision impairments, the report said:
“Using TVMs can present a significant challenge for vision-impaired passengers as the nature of their disability can vary significantly…Vision impairments are all different; some people can see better in less light, some can see better in more light, so it’s difficult.”
People need assistance.
Wheelchair users are extremely worried now about what is going to happen. The overriding issue for them is the lack of accessibility of ticket vending machines. The Passenger Focus report on ticket vending machines stated that even machines that are compliant with the Disability Discrimination Act 1995
“can be difficult for some wheelchair users, particularly those who are elderly or lack the upper body strength or mobility to reach the touch screen. Neither of the wheelchair users was able to position themselves close enough to the TVM to use the touch screen in the same way as other respondents. One attempted a side-on approach which got her closer, but she found the twisting motion required to touch the screen awkward and uncomfortable and she still experienced problems with the reach distance.”
There is a threat to the safety of disabled and older people. I bitterly regret to say that many disabled people have experienced hate crimes at stations, and staff are the key to deterring that abuse.
A Survation survey of 1,031 disabled and older people in April 2013 showed that enhancing personal security and safety was ranked consistently as the most important benefit that staff provide to disabled passengers. The response on CCTV is interesting:
“CCTV cameras can never replace the staff in making passengers feel safe.”
I fully agree. In that survey, 27% of respondents claim to have suffered hate crimes or abuse at railway stations, and 25% said they sometimes or often feel unsafe; nine out of 10 passengers thought station staff were generally polite and helpful. Enhancing personal security and safety was consistently ranked top of the range of benefits that station and train staff provide, and 81% of disabled passengers said that reduced staff numbers would make train travel more difficult for them.
I will not labour the point much longer because other hon. Members want to speak, but let me list some organisations that represent disabled people and to which we should listen. The London Visual Impairment Forum said that staff on London
“underground trains are…excellent…If there are cuts to underground station and ticket office staff this could reduce the assistance offered to blind and partially sighted and other disabled passengers.”
Transport For All expressed its opposition, and cited example after example of different forms of disability requiring a personal touch and understanding by another human being, rather than a machine.
Glenda Jackson
The issue is not only about people with disabilities. People with chronic illnesses could previously have got a black cab or even an ambulance to take them to regular appointments, but that has virtually gone. A constituent who had just come out of hospital collapsed on the platform at Swiss Cottage station, and if there had been no staff there, he would have been left entirely without assistance.
John McDonnell
Example after example has been given. Thoughtistic, which represents people on the autistic spectrum, says that some people on that spectrum are not capable of using, or willing to use, automated systems, and respond better to personal intervention.
Example after example has been given and submitted to the Mayor for consideration, but he has ploughed ahead. The argument that has come back is that gateway stations—King’s Cross, St Pancras and Victoria—will have one third more staff, but that means that staff will be cut at another 125 smaller tube stations, with just one member of staff at certain stations at certain times of day.
At the moment, London Underground offers disabled and older passengers a turn-up-and-go assistance service, in which it provides help with buying tickets, planning routes and getting to the right platform, without passengers having to book in advance. That assistance gives thousands of disabled Londoners the confidence to travel. Many believe that that will be lost.
The recent introduction of manual boarding ramps at 35 stations opened up many more routes to wheelchair users, but those ramps depend on a member of staff operating them. If the staff cuts go ahead, fewer staff will be able to operate the ramps on top of other tasks. The cuts will be a nightmare for many people who suddenly saw their world opening up as a result of increased accessibility following investment over the past 15 or 16 years. Now, we are denying them that.
There is a fear that without the fixed point of a staffed ticket office, visually impaired people will find it harder to locate staff to assist them. Passengers at stations other than mainline stations will have to find a member of staff somewhere on the platform, if they can find one at all.
There have been contradictory answers to questions tabled in the London assembly and in Parliament. On 18 December 2013, Labour members of the London assembly tabled written questions asking the Mayor what assessment he had made of the impact of the cuts on women, disabled people and older passengers. The answer on 7 January was that officers are drafting a response that will be sent shortly. That was despite the fact that parliamentary questions had been answered by Ministers; they said that London Underground had carried out a quality impact assessment to identify the impact of the Mayor’s proposals, and that it showed that the changes will be positive or neutral for all equality target groups. Either Ministers have got it right, or the Mayor has. Someone should tell us the truth of what has happened with the Mayor’s overall assessment.
There will be dangers to staff and we should not underestimate that. The cuts pose a significant threat to staff safety and morale. The official documentation presented to the unions on the day when the cuts were announced was pretty damning. It said that not only would 1,000 posts be on the line, but the remaining staff would be forced to reapply for their jobs, and in addition would have to work in conditions that even on London Underground’s own assessment will carry a medium risk to their safety. It also said that employees will be
“confused, demoralized or distracted due to uncertainty…during”
the HR process. It continued:
“Although there are lone supervisors today this proposal would mean employees at a lower grade would be working alone and may increase employee perception of vulnerability, especially for minority groups at particular risk of abuse.”
That is where we are at. The level of cuts will put passengers at risk, demoralise staff and undermine the overall service.
Mr Lammy
Does my hon. Friend agree that, in the conversation about cuts, it has been hugely disappointing that the Mayor has had nothing to say about how alternative revenue might be found? He could lift the borrowing requirements for TfL. He could allow local authorities and the Greater London authority to keep 100% of London property taxes; that might be a way of supporting Transport for London. There are alternatives, and we have not heard enough about them. Does he agree?
John McDonnell
Not completely. The alternative, as my right hon. Friend said, is investment, growth, and tax collection. Interestingly, today we received a brief from the London assembly arguing for that specifically. My right hon. Friend’s proposal is supported by the London assembly, and the Mayor should listen, as should the Government.
There is an alternative if we invest, but the growth in the number of passengers must be recognised. London Underground faces cuts not because of falling demand, but the opposite. Since 1996, there has been a 60% increase in passenger numbers. Transport for London’s business plan predicts that passenger journeys will rise by 13.7% from 1.273 billion in 2013-14 to 1.448 billion in 2020-21. The same plan predicts that the population growth in London will be to 10 million in 2030. The alternative to cuts is to accept reality, and that sheer passenger demand will require London Underground to take on more staff, not fewer.
In recent decades, various London Underground contracts were taken over by private companies. That has caused public money to leave the system while bureaucracy and inefficiency has increased. Some of those contracts have since returned to the public sector, as hon. Members know, including those relating to Metronet, Jubilee line train maintenance and London Underground’s power supply. TfL saved £56 million by bringing power supply back into London Underground at a lower than expected cost. It expects that to bring significant savings in future years that will more than offset the initial cost.
Re-integrating Metronet has provided London Underground with an ongoing year-on-year saving; it was £53 million in 2012-13. If TfL re-integrated other elements of London Underground that were previously privatised, it would save significant sums of money. That could include tube lines that are in public ownership but not integrated with the rest of the tube. I am talking about cleaning, catering, ticket machine maintenance, engineering contracts, Northern line train maintenance and recruitment.
Let me finally counter some of the arguments that TfL put forward, some of which are bizarre. TfL has said that only 3% of journeys involve a visit to a ticket office, but that is 100,000 people a day. Even if the majority do not visit ticket offices, it is essential that there is a service for those passengers who do. TfL has said that London Underground’s plan will make its staff more visible around the stations. I find that difficult to believe when 950 staff—17% of existing staff—will be removed. Staff will be scattered around the station, rather than at one location.
Jim Dowd (Lewisham West and Penge) (Lab)
On redeploying staff from ticket offices, the crux of the matter is that increasing visibility is incompatible with losing the best part of 1,000 front-line jobs that deal with the London travelling public. It is not just those with special needs and disabilities who will be affected by this proposal; every person travelling on the London underground will suffer a degraded level of service as a result of these proposals.
Andrew Rosindell (in the Chair)
Order. I remind the hon. Gentleman that others wish to speak in this debate. The Front-Bench spokesmen will begin speaking at 3.40 pm. That leaves us with only half an hour for other Members to participate, so will he please draw his comments to a close?
John McDonnell
I will conclude by quickly refuting some more of TfL’s arguments. TfL said that other countries’ underground systems manage without staff or ticket offices. The London underground has won international recognition and awards largely due to having station staff and a good service; many other metros do not. If we level the service down, it will undermine the whole level of service. In Washington, which removed all staff and moved to a fully automated system, the press, after another accident, called the lack of safety the “price of parsimony”. TfL said that new technology means that the London underground needs fewer staff. New technology can improve the London underground, but only if it is used alongside, not instead of, staffing. Too often, TfL uses increased mechanisation as an excuse for getting rid of jobs.
Frankly, we need some clarity on all this. The Minister has a role to play in what goes on in London. This debate is an opportunity for us to ask him to intervene. Will he clarify exactly what the discussions were between the Government and the Mayor that led to the decision to make these cuts in this way? Ministers have a role to play and one thing the Minister could do is impress on the Mayor that there has been no public consultation to date on these cuts. It would be helpful if he joined us and urged the Mayor to consult Londoners. We are making a simple request: listen to Londoners. The Minister might be able to help us get some clarity on the contradictory statements by Ministers and the Mayor on the equality impact assessment.
I am really worried about safety. The Minister has a role to play in meeting the Mayor to look at what assessment has been made of safety in light of the threats of terrorist attacks and the potential for accidents. The Mayor has not met the unions for six years. Will the Minister join us in urging the Mayor to meet the unions? Secretaries of State and Ministers of this Government meet trade unions almost daily, including the TUC, the general secretaries, and others from other unions. The Mayor should at least do that, too. He owes that debt to the unions that represent these staff. The Minister could play a valuable role here. If he does not, London MPs will have to play it. We will join in with those campaigns, with passengers and with trade unions, to try to ensure that the staff are protected and our ticket offices stay open.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
I had not planned to speak in this debate, but the picture painted by the hon. Member for Hayes and Harlington (John McDonnell) differs in almost every respect from the briefing I have had from London Underground. I hope that the Minister will be able to extract the facts when he responds to the debate.
I am an enormous fan of the London underground. I use the tube all the time and it is by far the easiest way of getting round London. It is quicker than buses and is certainly quicker than a car or taxi. I am someone who gets lost very readily at ground level, but I know exactly where I am on the tube. I have four stations in my constituency. Although they are not underground, they are the last four stations on the District line.
Some 1.2 billion journeys were made on the London underground last year. It is an enormous task to get that many people from A to B efficiently, effectively and safely. There are some 3.5 million journeys every day. I pay tribute to the exceptional standards of customer service provided by London Underground during the London Olympics last year. That was a great success and a feather in its cap. It is planning to introduce a new 24-hour service from 2015, and I know from travelling late at night on the underground that the trains are always full. If someone was not wearing a watch, they would not know that it was late at night; it could be any time of day. There is a demand for the service.
The proposals will see more staff in public areas, which is where the tube customers need them. Several scenarios have been described in which passengers will need personal intervention, help or advice from personnel on the stations—passengers such as women travelling alone at night, of whom I am one. I do not happen to feel unsafe, but some people might. Other scenarios include terrorist attacks, people falling on to the line—it is rare, but unfortunately it does happen from time to time—wheelchair users needing help or advice, someone collapsing or falling ill on a station, and someone who is autistic needing things explained to them if they do not understand. In all those scenarios, what is needed is advice, which is more readily available under these proposals. Staff will be in the ticket hall or on the platforms—in the public areas of the stations—rather than behind glass at the ticket office. In those scenarios, the proposals will be an improvement on the current situation.
As we have heard, there are many ways to buy tickets and only 3% of journeys involve a visit to the ticket office. If there were more staff in the ticket hall who were more accessible and could be spoken to, person to person, passengers’ problems might be resolved without the need to go to the ticket office. London Underground said:
“Our core commitment is that all stations will be staffed and controlled at all times when trains are running and that there will be more staff visible and available to help customers.”
That sounds like the sort of thing that is needed and is an improvement on current circumstances. I am not clear why it is being opposed. The briefing continued:
“The current ‘turn up and go’ assistance service for disabled and visually impaired passengers and the disability training given to staff, will continue.”
One thing puzzles me. I have heard a lot from Opposition Members about staff cuts, but London Underground’s briefing states:
“We have made a firm commitment to the staff affected by these changes that no compulsory redundancies will be made and it is our intention that there will be a job for everyone who wants to stay working with LU and who is willing to embrace change.”
I assume that “embrace change” means transferring from back-office jobs and ticket offices, and being available for passengers in public areas, and that sounds like an improvement to the service. From what I have read, the changes will be an improvement, rather than detrimental. The real point of difference is on whether there will be staff cuts, and the briefing from London Underground says that there will be no compulsory redundancies.
To conclude, I quote the London chamber of commerce and industry, which said:
“London businesses want the Tube to provide the best customer service possible.”
We all want that; everyone would agree on that. It continued:
“In an era where less than three percent of Tube journeys involve a visit to a ticket office, it makes sense that this service is provided by staff at ticket machines and on the gateline, not stuck behind a glass panel. LCCI understands London Underground’s practical reforms will increase the number of staff interacting with the public, no station will be left unstaffed.”
I hope that the Minister will extract the facts from the very different account we have heard, so that we understand exactly what is proposed.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
As we have heard, 3.5 million journeys are made on the tube every day. Millions of Londoners use the tube every day, and, next to housing, public transport is one of the most important issues for ordinary Londoners’ health and well-being. Londoners have been fortunate: under the visionary stewardship of Ken Livingstone, first as leader of the Greater London Council and then as Mayor of London, millions were invested in London Underground, to do up stations and for new services—notably the Overground line, of which I am a happy user every day. I pay my respects to the people who staff Haggerston station. I congratulate Sir Peter Hendy, whose stewardship of London Underground in good times and bad has been exemplary. The way he delivered and kept London moving during the Olympics has been noted on all sides. Perhaps one day a statue will be raised to him—by public subscription, of course, not paid for by taxpayers.
Until now, I should have said that Transport for London has been able to withstand the worst that Boris Johnson could try to do to it; but now it is proposed, in one fell swoop and without consultation, to close every single ticket office. I listened to the explanations read from the Transport for London briefing of why that is a good idea; but they sounded like the views of people who do not use the underground. People who use it will have seen the queues outside ticket offices every day, particularly on a Monday morning. What are the people who queue up going to do? People who use the underground will know how often the machines do not work or gobble up money; they will understand that even in a relatively small tube station such as Westminster, there are hundreds of tourists whose first language is not English, who need someone to talk to.
It is all well and good to come to the Chamber and read out the Transport for London briefing; we are talking about the realities of London Underground, and the reality for the people who must use it, whether they are regular commuters, people from out of town or the thousands of tourists who throng through tube stations in zones 1 and 2 every day. As the House has already heard, the millions of London commuters whose fares are being ratcheted up do not understand why they are paying more to travel when the level of service may well come down. It is not enough to say, as Transport for London does, that it is because so many people now use Oyster cards. We need to think about out-of-town business, the elderly and disabled, and tourists, and weigh up the promises that there will be more staff on the stations to help commuters.
The first thing to consider is how commuters see the proposal and how much hostility there is to the closing down of every ticket office on the network. Many members of my family have worked in transport, and I would always argue that London Underground is only as good as its staff. Those staff have in good and bad times shown London Underground exemplary loyalty and a deal of flexibility. On 7/7, they showed how brave and committed they were. What are they being given for all those years of commitment—for building the underground service that still serves Londoners so well? The answer is up to 1,000 job losses and on top of that, and in my view worse, a drive to employ more agency and casualised staff. We are moving away from secure, stable jobs that offer a lifetime career to casualised employment. As a general point, I deplore the hollowing out of London’s economy through the replacement of stable—and, yes, unionised—jobs with casualised agency workers. That cannot be in the interests of a stable society and stable employment in London.
I am a regular user of London Transport services and I bow to no one in my respect for what it has achieved, particularly under a Labour leader and then a Labour Mayor—and I am an admirer of Sir Peter Hendy and all his work. However, passengers and staff oppose the cutting of every ticket office without consultation. All the polling shows that the majority of passengers are unhappy. Boris has yet to explain, certainly to London MPs, how the proposal can possibly improve the service. We know that more and more people are using Oyster cards and that Ken Livingstone introduced a smaller programme of closures when he was the Mayor, but now we face the elimination of every ticket office on the network. That cannot be right. I shall fight the closures on behalf of ordinary Londoners, staff and a London that works—a stable community that offers jobs and life chances to its citizens. That is the only kind of London that has a future in the 21st century.
Andrew Rosindell (in the Chair)
I ask hon. Members to keep their contributions to three minutes from now on, so that everyone gets a chance to speak.
Jeremy Corbyn (Islington North) (Lab)
I repeat my apology for missing the beginning of the speech by my hon. Friend the Member for Hayes and Harlington (John McDonnell). I have a brief time to speak, and want to express my admiration for the people who work for London Underground. It carried 4 million passengers in a day during the Olympics, and despite the best advice of the Evening Standard in the run-up to the games the staff performed brilliantly. The service was delivered throughout the Olympic games, as it is every day, by willing staff at all the stations. We should think about that—as should the Mayor.
It is extraordinary for someone to have been the Mayor of a great city such as London for six years but still never to have met the representatives of the people who provide the services for which he is responsible. He has time to meet every banker in the City and to travel to every city in the world, but does not, apparently, have time to invite the union representatives of the people providing TfL services to his office to tell him their views about it. He needs to get a grip on what democratic accountability is about.
I drew attention to Finsbury Park station in an intervention on my hon. Friend the Member for Hayes and Harlington because it is the one I use the most. Indeed, some of my colleagues in the Chamber today use it too. It is old, busy and getting much busier, and is an interchange between Network Rail and the Piccadilly and Victoria lines. It is not well laid out and was never well designed, and it has no ticket barriers; there is nowhere to put them. There are plans to change the station, but the changes are some years away. That means the station becomes very overcrowded, and frequently in the morning rush hour staff must stand in the street and ask the public not to come in until the numbers on the platform can be reduced. There is no physical way to stop them because of the lack of barriers.
There is a First Capital Connect ticket office and another for London Underground. For reasons that are beyond me, each seems to deal only with its own business. It should be possible for them to deal with each other’s business. The ticket office is very busy, with people making inquiries about Oyster cards, lost Oyster cards, or student travel; there are people using the freedom pass, who may have mislaid it or have a problem using it, and people simply trying to buy tickets or find where to go. They get a good response and good help from the very hard-working staff in that station. If the ticket office is closed, what are they supposed to do? The hon. Member for Hornchurch and Upminster (Dame Angela Watkinson) gaily told us that only a small percentage of the total number of travellers will be affected, but as my hon. Friend the hon. Member for Hayes and Harlington said, that is 100,000 people a year, or the equivalent of a bit more than a full Wembley stadium. Would we really have Wembley stadium operating with only ticket machines and no staff? Think about the numbers and the potential for problems by not having fully staffed ticket offices.
When we make this plea, we do so to retain jobs, obviously, and to ensure that the public are properly represented and dealt with in ticket offices. We also do it from the point of view of station safety, because, in the days when not enough staff were at the stations and there were only, quite often, inoperative CCTV cameras inadequately guaranteeing the safety of passengers, the number of assaults went up and the number of passengers at night went down, and the number of people trying to drive in and out of London went up while the number of public transport users went down. As my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) pointed out, if we run a good public transport system that is well staffed and well run, more people use it, our city is less congested, and it has a much better sense of community.
Through the medium of this debate, I make an appeal to the Mayor: think again. Meet the staff representatives, understand what the ticket offices are there for and what they do, and reverse this crazy policy and retain staffed ticket offices on every station, as we have now.
Katy Clark (North Ayrshire and Arran) (Lab)
I will be brief, because I appreciate that others want to speak. I make reference not only to my entries in the Register of Members’ Financial Interests, but to my membership of the RMT, TSSA, and ASLEF parliamentary groups— I thank them for the briefings that they have provided for the debate, which are quite different from the briefings from Transport for London, which have been referred to.
I am speaking in this debate because I believe that if the proposals for job cuts and ticket office closures in London go ahead, they will come to areas such as the one I represent next. If those closures are possible in London, where there is massive public opposition and a strong, well organised, trade unionised work force, which, frankly, has a tradition of taking industrial action, that will make it very difficult to fight similar threats in other parts of the country. However, I assure anybody who is listening that we will fight any attempt to reduce staff in other parts of the country, and in Ayrshire in particular.
The reality is that it is in none of our interests to have a transport system that does not have staff and people on it to look after passengers, but that is our current direction of travel, to use a pun. We are talking about approximately 1,000 job losses as a result of the 240 ticket office closures in London, affecting not only ticket office staff but supervisory staff, managerial positions and staff in control rooms. It is happening as part of Government proposals to take staff away from our whole public transport system, and in particular the railways and the tube lines. That is why this debate and this dispute are relevant to every part of the country.
It is common sense that we need people to help us when we use our trains, and we need people on stations to assist us. Whether that involves buying a ticket, finding the appropriate platform, finding a trolley to put a bag on, helping people on to the train or helping them once they are on the train, it is something we all need and something for which I believe there is cross-party support.
I say to everyone in the House that this dispute is not only about London Underground, but about the service that all our constituents receive. We should be sending a very clear message not only to Transport for London and to the Mayor but to Government in this place and throughout these islands that we want a public transport system with people to help us on the platforms, in ticket offices and on trains.
Stephen Pound
I am sure that my hon. Friend agrees that the Minister is a decent man. He regularly uses the District line and is frequently seen on the Wimbledon run, but I fear that he may be seduced by the arguments that we have heard today, which are the same as those used when my hon. Friend the Member for Ealing, Southall (Mr Sharma) and I were bus conductors. We were told that without conductors, the buses would be safe, but in fact, crime has rocketed on the buses. Does my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) agree that there is real fear, not only about public insecurity and a lack of public safety, but about an increase in crime in unmanned, empty, echoing halls?
Katy Clark
I agree with my hon. Friend; I do not think we want to have to deal with machines all the time. We want to have staff to help us in stations and on every part of our transport system. That is why I have spoken today, and I hope that the voice will come very clearly from this place that these proposals are not in anybody’s interests.
Ian Lavery (Wansbeck) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on an excellent, powerful and factual contribution, and I shall bear in mind the fact that I have about three minutes.
London underground is not only a London issue—I am a north-east MP and I have great interest in what happens to the underground. This is the nation’s capital. It is where we held the Olympics, and where we have fantastic cultural events, arts and leisure, and international football and rugby games. We have all seen the chaos that often occurs on the underground.
I place on record my thanks to the fantastic work force who work tirelessly 365 days a year to provide the London Underground’s services. They are fantastic. Look at the tourists from across the globe; we want as many people coming to London as possible. We do not want to keep them away for fear of having a dreadful service in London. Look at the people who work on the underground and the valuable contribution that they make to the economy, and yet we think nothing of slashing jobs and stations at the cross of a pen. Millions of ordinary people use the underground as a means of getting across London to work. We have to consider all that.
In the minute or so I have left, I mention that this is not a failing organisation. As my hon. Friend the Member for Hayes and Harlington said, passenger journeys on London underground will rise by 13.75%, from 1,273 million to 1,448 million by 2021. London Underground is a flourishing organisation, which needs more staff, better health and safety and a whole new structure to cater for the people who will use the service. I cannot understand how the hon. Member for Hornchurch and Upminster (Dame Angela Watkinson) can suggest, even with the best brief in the world, that closing the 240 ticket offices and cutting 950 jobs will be an improvement to the service. Perhaps somebody can explain to me how it will improve it. We need to make sure that the service is top class and stop cutting the jobs, and we need to make sure that the service is there, embracing people from across the globe, and to get to grips with reality.
Chris Williamson (Derby North) (Lab)
I have only a minute left to speak, but there are plenty of things that I want to say. I rise to contribute to the debate as a part-time Londoner, even though I represent a constituency 120 miles from the capital. I emphasise that to me this is part of a wider ideological assault on the public sector and on public services. We have heard eloquent testimony today from hon. Members about the contribution that London Underground staff make to ensuring that we have a quality service. We should be proud of and cherish the personal attention that they give members of the public. The Minister should use his good offices to ensure that the Mayor recognises the important role that those staff play and that the Mayor meets their trade union representatives, so that he can hear directly from them and, we hope, they can change his mind.
Lilian Greenwood (Nottingham South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this important debate. He is a tenacious advocate for better public transport and was right to say that London Underground’s quality of service is now under threat.
There are two closely related issues in the debate, and I would like to begin with the question of station staffing levels, because the staffing reductions on the underground weigh heavily on the minds of many Londoners who rely on current levels of customer service to undertake their daily journeys. Of course, that is to say nothing of those Londoners whose jobs are at risk.
Every passenger may experience inconvenience if staffing levels are reduced. How many of us have come across faulty barriers or ticket machines, but have known exactly where to find help? How many of us knew where to go for advice when a service was cancelled, especially late at night? Clearly, it was the ticket office. Just yesterday, I arrived on the platform down at Westminster to find services disrupted, so I could not travel by tube and needed a refund on my Oyster card. I knew that that service would be provided quickly and courteously by staff in the ticket office, and of course it was.
Such experiences are common to us all, but as my hon. Friend the Member for Hayes and Harlington set out very clearly, we know that Boris Johnson’s plans to close all ticket offices and cut 17% of station staff will hit disabled passengers particularly hard. These are passengers who Transport for All has warned could face new barriers in trying to travel to work, to see friends and family and to get out and about in the capital. According to Transport for London’s own equality impact assessment, customers with dyslexia will be particularly affected, as that is
“a disability that remains hidden when”
people are
“using a ticket office, but would potentially become known when”
they are
“requesting assistance at the ticket machine.”
If stations are left unstaffed, perceptions of safety will be damaged, discouraging some groups of passengers in particular from travelling. TfL’s own equality impact assessment states:
“Concerns about crime and antisocial behaviour tend to affect the travel patterns of women, BAME”—
black, Asian and minority ethnic—
“Londoners, younger people and…those on lower incomes more…than other groups”.
A number of my hon. Friends have described some of the circumstances that demonstrate exactly how important tube workers are in keeping stations safe and feeling safe.
Let us be clear. This is not a carefully managed, gradual transition to new working practices. All the ticket offices are due to close next year. That suggests that it is driven by a political timetable. These proposals are about McNulty-style cuts to the underground instead of putting passengers first. I well understand why my hon. Friends the Members for Derby North (Chris Williamson), for North Ayrshire and Arran (Katy Clark) and for Wansbeck (Ian Lavery) are worried about the implications for their local rail services. When almost 1,000 station staff are losing their jobs, it is simply not credible for the Mayor to say that that will not lead to any reduction in passenger service and safety standards.
Chris Williamson
Does my hon. Friend agree that this is also a matter of trust? I say that because the Mayor is on record as saying in March 2010:
“This Mayor takes his promises to Londoners extremely seriously. Every station that has a ticket office will continue to have one.”
He made that solemn pledge; he could not have been clearer. This is a matter of trust, is it not?
Lilian Greenwood
My hon. Friend is exactly right. I would say that the Mayor has now lost any credibility that he might once have had on this issue. Not only did he make those comments in 2010 but in his 2008 manifesto he was unequivocal:
“We will halt all such ticket office closures immediately.”
I know that the Mayor has had a high-profile falling-out with the Deputy Prime Minister, but perhaps he should have some sympathy with him, because he was photographed signing a petition that called for an end to
“the closure of station ticket offices”
and the reopening of
“those which have already been closed.”
In a particularly florid turn of phrase, the Mayor said at the time:
“Consider the threat has been lifted, annihilated, vaporised, liquidated, exterminated, removed and obliterated as of now”.
He later said to Assembly Members:
“The first and most important point to make is no ticket offices will be closed...They are not going to be closed...The answer to the number of ticket office closures is nil”.
On the very same day, a leaked TfL report revealed that closures were indeed being planned, and in November we had confirmation that all ticket offices were to be shut, so Boris Johnson began as the Mayor who said that he would save every ticket office and he will finish as the Mayor who closes every one of them.
There are other long-term considerations that have to be addressed, including the future of London Overground which, as my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) rightly said, is an excellent service. Services and stations on the West Anglia lines are due to be transferred from Greater Anglia to London Overground next year, and commuters on those lines will be hoping that the promises made on investment and improvements in service quality will be upheld. As the Campaign for Better Transport has powerfully argued, the highly visible improvements that London Overground made in 2007, which included putting more staff on stations, have improved passenger satisfaction, driven up revenue and transformed the image of many local services.
As Ministers help to oversee the transition of the lines, will they satisfy themselves that this round of job losses is not the first step towards returning to the poorly staffed, poorly maintained and threatening stations that characterised the old Silverlink franchise? If this Minister can give that commitment today, this question must surely apply: why take that approach to the overground but not the underground?
Unfortunately, recent relations between the Government and the Mayor’s office do not give us cause to hold out much hope for the future. Several of my hon. Friends have raised concerns about TfL’s funding. The current dispute between the Treasury and the Mayor reflects poorly on both parties, but as Labour Members understand, ordinary Londoners are the ones set to pay the price.
I will give some background. David Goldstone, TfL’s chief finance officer, told London assembly members that
“the Mayor made the decision about the average”
increase
“across all TfL services being at RPI…at that time we understood the travel cards would have the national RPI-plus-1 formula applied. The Chancellor then announced that national rail would be at RPI.”
This has left TfL with a budget shortfall of £13 million to £14 million a year, and the late application of fare rises this year—a result of the confusion between Whitehall and the Mayor’s office—means that the bill could rise to £20 million in 2014. There is an apparent refusal by Treasury Ministers to fund that hole in the Mayor’s budget, and that has naturally led to suspicions that personality politics may be at work.
Can the Minister provide clarification and say whether the Chancellor of the Exchequer informed the Mayor of London that he intended to restrict fare rises to RPI before the announcement was made? Will the Treasury fund the shortfall, and if not, what estimate has he made of the impact on TfL’s services that cuts of this value could have? Is he in contact with the Mayor and the Treasury on this matter, and what representations has he made to them? I hope that the Minister will address those questions and the questions raised by other hon. Members, but the truth is that there are enough questions on this issue and these plans to fill a much longer debate.
With fewer staff available to manage congestion during peak periods, it seems likely that overcrowding will start to have a greater impact on operational performance. Violent crime is unfortunately on the rise on the underground network, and visibility will be reduced, as up to 17% of station staff are set to lose their jobs. Staff will be carrying more expensive equipment as they replace ticket-office functions, which could make them targets for abuse and theft. Of course, the staffing reductions will be much higher at some stations, raising the prospect that individual members of staff could be left in unsafe situations, with little flexibility for back-up, particularly when there are problems on the lines.
However, it does not seem that the Mayor or TfL have planned for these problems, nor does there seem to be an awareness of the practical challenges that unattended ticket machines and barriers pose. We all know that that is not infallible technology and that without constant supervision, disruption can soon mount up for passengers. I am concerned that passengers will not necessarily be able immediately to find staff to help them if they are not in the location where they should be able to find them.
Although most of the matters we have discussed today are the responsibility of the Greater London authority, there is an important role for Ministers in assessing the impact of the planned cuts, clarifying the position on the £20 million black hole in TfL’s budget and ensuring that this chaotic situation never arises again, because Londoners deserve better than this.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
It is a great pleasure to serve under your chairmanship, Mr Rosindell. Like other hon. Members, I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing this debate on Government funding for TfL and station staffing levels. Let me begin on a consensual note, because that may not carry on through my speech. As the hon. Member for Ealing North (Stephen Pound) said, I often use the underground, and I did so this morning. I recognised, as I always do, the valuable role that the workers on the London underground play.
My hon. Friend the Member for Hornchurch and Upminster (Dame Angela Watkinson) asked whether I would tackle some of the myths and misinformation that are circulating. I hope that I will be able to reassure her—I am not sure that I will ever be able to reassure all Opposition Members—that the changes will make London underground staff more visible. They will be there to help with ticket barriers, ticket machines and platform safety in a way that has not been seen before.
John McDonnell
The Minister, and possibly the Mayor, might be able to convince people, but in order to convince people it is necessary to meet them. The Minister and his colleagues meet the RMT and other unions regularly. Why cannot the Mayor do so?
Stephen Hammond
I understand the fixation on the Mayor, because he is the leader of London. However, Mr Brown, who runs London Underground, meets the unions, and I understand that Sir Peter Hendy has done the same.
I was asked several questions, and I will try to answer some of them in the short time that I have. The hon. Member for Hayes and Harlington asked me about the response to a parliamentary question about the planned changes. The response stated that according to the equality impact assessment, the changes would be
“positive or neutral for all equality target groups”.—[Official Report, 6 January 2014; Vol. 573, c. 121W.]
That information was provided to us by TfL, which has also guaranteed that it will run an engagement exercise throughout this year with disabled and older people to ensure that they understand exactly how services will continue to be accessible.
The hon. Member for Hackney North and Stoke Newington (Ms Abbott) spoke about the great achievements of the previous Mayor, but it is important to recognise that under the current Mayor, platform staffing levels have risen by 12% and demand by 23%. The Government recognise that transport is the key to unlocking growth and jobs, and they provide the financial settlement that allows the Mayor to fulfil his responsibilities for transport and operational matters. The Government are providing more than £10 billion to TfL over the current Parliament, which includes more than £4.5 billion to support the tube upgrade. The Jubilee line upgrade has been completed. The Victoria line upgrade features new trains, tracks and signalling and a 21% increase in capacity. The Metropolitan line has a new fleet of air-conditioned trains. The Government have provided the Mayor with a guarantee that enables him to move ahead with the proposed Northern line extension to Battersea. The upgrade of the sub-surface lines, in which my hon. Friend the Member for Hornchurch and Upminster and I take a particular interest, will increase overall capacity by 33%. The spending round announcement last summer included a huge commitment of £5.8 billion in capital grant and a further £3.8 billion of borrowing power for TfL to 2021, which will be absolutely crucial to the delivery of Crossrail and the Thameslink project.
The hon. Member for Nottingham South (Lilian Greenwood) challenged the Mayor on trust. Memories are short on so many things; I remember the previous Mayor telling us in 2004 that there would be no increase in fare levels if he were re-elected, but the following January fares went up by a minimum of 4%. One must be careful when talking about trust, because that contention applies as much to Mayor Livingstone as to Mayor Johnson. The hon. Lady questioned me about fares, and the Mayor has said clearly that the extra accommodation that is needed can be found from TfL’s budget by a combination of efficiencies and increased commercial revenue. In the huge budget provided by the Government, there is scope for TfL to find the relatively small amount that the hon. Lady mentioned. The Mayor has decided, quite rightly in my opinion, to hold London fares down to RPI plus zero. I think it will be possible to find the amount required to do that, and it will be sustainable if he continues to deliver efficiencies and value for money and ensures that the money that the Government give to TfL is best spent.
Everybody has pointed out that London continues to grow. We are set to see a further 1.8 million people by the 2030s, which is enough to fill an extra tube train per week. It is quite right therefore that TfL set out its vision for the future of the tube on 21 November. The core commitment at the front of that vision is that all stations will be staffed and controlled when trains are running and there will be more staff visible on platforms and in ticket halls to help customers.
However we look at it, the way in which passengers choose to pay for their travel is changing. That is an incontrovertible fact, even though we may not like the 3% figure. Over the past five years, demand for travel has risen by 23%, but ticket office sales have fallen by 43%. At the same time, to meet customers’ expectations, station staffing needs to increase. The ticket office is not the heart of the station; it is simply a room. The staff are at the heart of a station’s operation. TfL’s vision for London will allow them to be better equipped with technology and information in the ticket halls and at the barriers, so that they can step out of the ticket office and improve customers’ journey experience.
Jeremy Corbyn
Will the Minister assure me that the closure of ticket offices will not be accompanied by yet more retail opportunities at tube stations?
Stephen Hammond
That is an operational matter for TfL. The hon. Gentleman should recognise the key points in TfL’s vision. A 24-hour tube service will run at weekends; the reliability and capacity of the tube will be further improved with new, more frequent trains; there will be enhanced signalling at stations; all tube stations will be controlled and staffed while services are operating; and staff will be more visible. TfL aims to deliver improvements and secure the best value for money.
In addition, the vision contains a commitment to the staff. My hon. Friend the Member for Hornchurch and Upminster was absolutely right; although some 950 staff work in lightly used ticket offices, the overall decrease in station staff will be less than that, because TfL proposes to create 200 new jobs in ticket halls and on stations. Furthermore, as my hon. Friend has pointed out, TfL has made a commitment to provide a job at London Underground for anyone who wants to continue working there, and the changes will be made with no compulsory redundancies.
Despite the comments about the Mayor, London Underground continues to speak to staff and involve them at various stages of the change. The transformation will create 200 new jobs on top of the significant increase in numbers of staff available in ticket halls, at barriers and on platforms to provide reassurance about safety and to give advice. Those are not the figures portrayed by the hon. Member for Hayes and Harlington. The numbers are available, and I am sure that he will want to look at them.
I am aware that RMT has announced two 48-hour strikes, and I urge the RMT and TSSA leadership to work with TfL to shape the plans. Customers want hassle-free journeys, and they expect customer service that is fit for the 21st century and beyond. With Government investment, the vision for London ensures that the tube will continue to be fit for purpose, safe, affordable and reliable, and that it will meet the expectations of passengers throughout the 21st century.
Manorial Rights (England and Wales)
(10 years, 3 months ago)
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Albert Owen (Ynys Môn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I welcome the opportunity to debate manorial rights, which are an important issue across the country. In recent years, concerns have been expressed about chancel repairs and manorial rights in Wales and England. As the Minister will know, such rights are ancient. In the case of chancel rights, they include the repair of parish churches, particularly Anglican ones. In the past, manorial rights have covered a number of activities on ancient manorial lands, including shooting, hunting, fishing and mineral extraction.
The matter has been brought to my attention recently when residents of my constituency became aware of overriding rights, often by accident or when ownership of titles changed and, once aware, the new owners attempted to exercise their rights. The problem goes back over decades. Chancel repairs and manorial rights are very much relics of the past. Many such rights go back to the Domesday Book, and others have evolved over many centuries. Often, they have lain dormant while properties have been built, boundaries extended and land use changed. People have bought their properties in good faith. They have paid for legal fees for searches and conveyancing and have not been aware that any overriding rights exist. Many constituents of mine, and people from across the country who have been in touch with me on this issue—
Albert Owen
Before the Division, I was outlining, by way of introduction, the origins of chancel repairs and manorial rights in Wales and England, and how many people who have become aware of them have done so by accident.
Over many years, Parliament has tried to resolve the issue of land registration. The Land Transfer Act 1875 and the Land Registration Act 1925 sought to update the law on registration. The Land Registration Act 2002 was introduced following a Law Commission and Land Registry report entitled, “Land Registration for the 21st Century”, and many of us thought that that was a great step forward. The 2002 Act sought to simplify and modernise the law on registration. The aim was to provide an accurate picture of title of land, showing more full rights and subsidiary interests affecting the land; it was also designed to provide protection against predatory rights and fake claims.
I understand—the Minister may be able to confirm this—that some 20% of land remains unregistered. The need in the early 2000s was to try to verify ownership.
Glyn Davies (Montgomeryshire) (Con)
I thank the hon. Gentleman for securing a debate on an issue that is causing massive concern in my constituency. I look forward to the Minister’s response, hopefully clarifying some of those issues.
Landowners such as the Williams-Wynn estate in north Wales send letters to people and cause them massive concern and great expense as they consult solicitors because of their worry and because they have no idea what the letters mean. Does the hon. Gentleman agree that that is irresponsible behaviour and that there should be a proper explanation of what it all means?
Albert Owen
I agree with the hon. Gentleman. A lot of distress and anxiety is caused when people receive letters not just from individual landowners, but from the Land Registry on behalf of title holders.
Albert Owen
Before I do, I just want to outline the foundations of the 2002 Act. It has many positive aspects, such as greater transparency and a clear, up-to-date register, but in recent months it has caused great concern, as the hon. Member for Montgomeryshire (Glyn Davies) described just now, and as my right hon. Friend the Member for Delyn (Mr Hanson), who cannot be with us today, has indicated is happening in his area, not least when residents receive letters from the Land Registry. In many cases, that was the first time people knew of any such title or overriding rights.
Hywel Williams
I congratulate the hon. Gentleman and my near neighbour on securing this important debate. I agree with him that this situation is an unjust and clear anachronism that needs to be tackled. He will be glad, of course, that our colleague, Rhun ap Iorwerth AM, is meeting the Land Registry to discuss this matter next week. Does he agree that the so-called “Lord Treffos” should be thoroughly ashamed of himself for causing such worry to local people in his constituency and, I am sure, elsewhere, with these entirely unjustified claims, as well as causing them expense and possibly threatening their mortgages and remortgages too? It is a disgrace.
Albert Owen
The hon. Gentleman pre-empts what I was going to say about Anglesey and Lord Treffos. I acknowledge that many people have raised this issue with the county council, local councillors and their local Assembly Member, and they have taken it forward. I have raised it a number of times in this House and the most appropriate place to raise it is in this House of Parliament, which confers rights on individuals, including manorial rights, and which should be protecting the rights of individuals.
I will talk about Lord Treffos in a second but, as has been indicated, this issue has caused concern in my own constituency because of Lord Treffos’s claims. However, I have also been contacted over the weekend by people across Wales and England, including the county of Wiltshire, where a community council is concerned about the rights being established—or, rather, it has become aware for the first time of rights being established —over a playing field for young children. There are implications across Wales and England.
That is why I am pleased that the Minister is here in Westminster Hall today to respond to the debate, because this is not just a parochial matter. I will make no apologies for the fact that the purpose of this debate is to gain assurances from the Government that they will alleviate people’s concerns. It is one of the unintended consequences of the Land Registration Act 2002 that people are being distressed because they were unaware of this situation.
An important question is why these manorial rights were not included in original deeds, because many people paid for conveyancing and searches, believed that they had full freehold and were unaware of these overriding rights. In the 21st century, those people need the right protection. I want to examine the role of the Land Registry and how it deals with issuing notices, as well as the legal tone of those notices. Indeed, in my part of the world it is important to note that Welsh language provision was not available when these notices were first sent out, when by statute it should have been available.
I also want to look at the role of the legal authorities, which could perhaps lead in providing collective responses in the future, so that the burden does not fall on individuals. They could also perhaps look to rebalance these rights in favour of the freeholder today, to ensure that—as the hon. Member for Arfon (Hywel Williams) said—mortgage lenders are aware of the benign nature of these manorial rights, so that they do not consider them to be a restriction on the remortgaging or indeed the sale of properties. I ask the Minister to look very carefully at that issue.
As I say, I make no apologies for briefly highlighting the situation in Anglesey, where there is the ancient title of the Lord Trefoss, which originates from the Bishop of Bangor’s diocese. The title is today held by Stephen Paul Hayes, who I understand purchased it, perfectly legitimately, at an auction in the early 1990s. I now understand that the title, including the manorial rights of hunting, fishing and mineral rights, is up for sale on a website for $45,000. I have also been made aware that a document exists from the district valuer, dating back to 1950, showing that in 1940 the Bishop of Bangor gave the then title to University College of North Wales, now Bangor university, and that the claims of interest in the manor are limited to commons and waste lands within the provision of the law, including the Property Act 1922. I am not a property lawyer, but I make the point clearly that it should be possible for individuals to find out the exact titles, and that information should be included in their deeds. Surely the role of the Land Registry should be to assist individual freeholders and not to put out a generic letter that causes so much concern. In layperson’s terms, any such letter should have explained the reasons for what the Land Registry is doing, as well as the manorial rights and titles.
I will now move on. I realise that we will now finish at about 4.45 pm, so I will try to be brief for the rest of my remarks, so that the Minister can give a full reply to the debate. I want to look at the role of the local authority in Anglesey, because it too has been issued with some of these notices as its land falls within the manorial rights. The first point in the notice that was being distributed by the Land Registry was that the manorial rights being claimed by Lord Trefoss are actually contained within the local authority itself. As Members will know, over the years a lot of responsibilities have been passed from landowners to local authorities, as County Council Acts in the 1800s and various other measures have meant that authorities have taken over services. Today, highways, street lighting and all those main services are provided by the local authority. The local authority could be—in fact, it needs to be—a single body that could object to manorial rights on behalf of a number of households within its jurisdiction. That would be a way forward.
For the benefit of the Minister, I will also examine briefly the role of the Land Registry in the distribution of these notices. The explanatory notes to the notices attempt to clarify the reasons for the notices being issued. However, many people have been so concerned that, as the hon. Member for Montgomeryshire said, they have gone—at great cost to themselves—to a solicitor for clarification, because they found the notice to be a little threatening and they were certainly unable to understand it. Also, as I have already said, there has been an issue with the lack of Welsh language provision, which is not acceptable under current statute.
Jessica Lee (Erewash) (Con)
I am grateful to the hon. Gentleman for giving way and for securing this debate this afternoon. Moving away from his constituency to Derbyshire and my constituency of Erewash, an issue has been raised about land owned by the Duke of Rutland. Regarding the issue of language, however, our local newspaper has come into its own, airing the grievances and concerns of local residents but also allowing the landowner the right of reply, so that he can explain his position. I am sure that my hon. Friend has raised the issue in his area on behalf of his constituents, as he represents them; I continue to do the same for my constituents in Erewash.
Albert Owen
I thank the hon. Lady for that intervention. Indeed, I am in a similar position, but it should have been the duty of the Land Registry to provide clear and concise notices in the first instance. It is an unintended consequence of previous Acts that this method of informing people has come into being, and in the future I want to see a clearer way by which manorial rights can either be extinguished or at least explained to individuals. We are singing from the same hymn sheet in that regard.
I do not expect the Minister to give full answers today to the questions that I put to him directly, but we have already exchanged letters and he has very courteously given me a lot of the details about this situation. I have also raised this matter with the Leader of the House. The purpose of this debate is to ask the Minister to consider the points that I have raised, and will continue to raise, on behalf of constituents in 4,000 premises in my constituency and, as I have said, many other people throughout Wales and England.
As I have already indicated, the Land Registration Acts of Parliament, including the Land Registration Act 2002, are supposed to provide transparency and clarity on these ancient and in many cases outdated manorial rights. Instead they have caused people confusion, anxiety and distress. That burden could be lifted en bloc if there were the political will to do so. Also, as I have said, the local authority can help.
In future, I want the owners of properties to be comfortable that when they do searches on their properties, these types of rights are identified, and I do not want anybody to be penalised for having a right added to their property deeds. That is because for ordinary people a home is probably the biggest purchase that they will make in their entire life, and they want security for themselves and their family. I feel for them in that regard. I am sure that the Minister will understand the fears and concerns about manorial rights that I have highlighted. He will also understand that those fears have been heightened at a time when we are talking about shale gas exploration in this country. Many people link the two things.
As I have said, I raised the issue of manorial rights with the Leader of the House on 5 December. I welcomed his saying quite clearly that there is no link between the notice of manorial rights and shale gas or oil. He added that
“The Petroleum Act 1988 vests all rights to the nation’s petroleum resources in the Crown.”—[Official Report, 5 December 2013; Vol. 571, c. 1100.]
However, there needs to be further clarification of this issue by the Minister, because many people are uncertain what minerals can be extracted if a mineral right is part of manorial rights. I am sure that the Minister will mention that.
Nia Griffith (Llanelli) (Lab)
My hon. Friend will be aware of the considerable concern of many constituents throughout the country about chancel repair liability. He will also know that the General Synod of the Church of England recommended phasing that out in 1982, a call that was repeated by the Law Commission in 1985. Would he suggest that, as the October 2013 deadline has passed, the Government should at least set up a parliamentary committee of inquiry to try to sort out all these issues?
Albert Owen
I am grateful to my hon. Friend, who has been campaigning on behalf of her constituents on this matter as well. I am sure that the Minister heard what she said. That is one way forward that the Government could take, working with the Church Commissioners. Perhaps there will also be an opportunity for a question to the Church Commissioners in the House.
In relation to the Council of Mortgage Lenders, I should like the Minister to reassure people in my area and others that the current status of manorial rights is not regarded as a blight that warrants restriction on lending in future. Does he agree to senior officers of the Land Registry meeting myself and other concerned Members of Parliament to discuss the issues and how they can best be handled and improvements made? Serious errors in my area, with people receiving not just one notice but two, have heightened the anxiety and distress.
Will the Minister consider seriously whether local authorities could make a collective response to the Land Registry on behalf of residents? I know the law is complex, but in the 21st century we should be looking to give greater benefits, to simplify the process, to rebalance property rights away from the unique protection of ancient rights that are often absurd, and to protect today’s property owners for the future. I make that statement today—other hon. Members have spoken in the same vein—to get a positive outcome, not to just raise the issue and let it be.
Many people who have contacted me are receiving notices saying that owners of titles are contesting this matter. It will go on and cause greater anxiety unless the Minister responds in a more positive way and considers changing the laws. The Minister is a reasonable, progressive man and he will understand the genuine concerns raised today about my constituency and on behalf of the people of Wales and England who want to look forward with comfort, having bought their properties and done the right thing, encouraged by this Government and others before them, rather than find themselves with an additional burden regarding rights on their properties. I hope that we can all work together to alleviate those concerns and anxieties and have property laws fit for the 21st century.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I welcome you to the Chair, Mr Rosindell. I congratulate the hon. Member for Ynys Môn (Albert Owen) on securing this important debate. He raises concerns about manorial rights and the implications for affected property owners of recent changes to the law.
The Land Registry is a non-ministerial Department on behalf of which I am responding today. I undertake to write to the hon. Gentleman on any points that I am not able to cover. Perhaps some points are not directly relevant—for example, chancel repair liabilities, which are important and worrying—but I may be able to get a better reply in writing on that to the hon. Member for Llanelli (Nia Griffith), and to the hon. Gentleman on his point about local authorities.
Manorial rights are certain rights over land that were specifically preserved when most remnants of the manorial system were abolished in 1926. These rights may take several forms, but include sporting rights and rights to timber, mines and minerals. Until recently, those rights bound the owners and buyers of land, whether they knew about them or not. However, since 13 October 2013, the rights will have bound buyers of registered land only if those rights are noted on the register before the purchase is registered.
One of the aims of the Land Registration Act 2002, which I understand passed through this House without a Division, was to bring more information on to the register of title, so that it formed a more complete record of legal ownership. Manorial rights are a good example of a hidden burden that the policy was designed to expose. The 2002 Act gave the owners of these rights 10 years to bring them on to the register to ensure their continued existence. Naturally, the approach of the 10-year deadline brought forward a number of registrations and, unsurprisingly, issues around these manorial rights have arisen as the owners of the rights have had to consider what to do, and some property owners have been reminded—or perhaps have learned for the first time—that someone is claiming that their property is subject to these rights.
In some cases, landowners have always known that their properties are subject to these rights, either because the rights are referred to in the old title deeds or because they were discovered by their conveyancer when they bought. However, in other cases, these rights were not apparent at the time of purchase, and owners are finding out about them for the first time when they are contacted by the Land Registry. The Land Registry has received more than 73,000 applications to enter a notice claiming manorial rights on properties across England and Wales.
Although I appreciate that letters from the Land Registry have arrived without warning, there is little that it could do about this. It can only notify property owners that an application has been received, resulting in a notice of a claimed right being entered on to the register in respect of their land. The statute requires the notice to be entered. The Land Registry appreciates that it can cause concern and upset when people receive a letter from it saying that a third party has protected a claimed interest. However, that letter gives the property owner an opportunity to consider the issue. The letters give full details of the third party making the application, as well as Land Registry details, so residents can ask for further information if they require it. The Land Registry has worked with applicants to try to ensure that those affected by notices are able to access more information via the applicant.
The letter deals with the main questions that recipients have tended to ask. Recently, it has been updated to take account of feedback from recipients, including those from the hon. Gentleman’s constituency, to try and simplify the information as much as possible without making it misleading.
The Land Registry has also produced a guide for property owners that sets out in simple terms what these rights may consist of, and what steps an owner can take if they dispute that the claimed rights affect their land. That guide is available in English and Welsh, both on the Land Registry’s website and from any Land Registry office. However, following discussions with the Land Registry, I confirm that it will now send this guidance out with its initial letter, as a matter of course.
Where an owner disputes that their property is subject to the rights claimed, the Land Registry does what it can to help the parties in the dispute. For example, it encourages the party claiming the rights to produce its evidence at the earliest possible stage, and in many cases that brings the matter to a conclusion. The Land Registry always gives the parties the opportunity to try to resolve their dispute, and the time to do so. In addition, where it can, the Land Registry will try to assist, if asked, by expressing its view, based on the available evidence. However, hon. Members will understand that the registry must, throughout this process, remain strictly impartial.
Where, after negotiation, the notice holder decides to withdraw their notice, the Land Registry arranges for them to lodge a withdrawal. So far, approximately 6,000 properties have been voluntarily released from notices. If it is clear that the parties cannot settle their dispute, the Land Registry is required to send the case to the land registration division of the property chamber first-tier tribunal for a judicial decision. In such cases, the registry has to await, and then act on, the tribunal’s decision.
The registry appreciates that a property dispute can be difficult for both property owners and those claiming legal rights over properties. It has therefore produced a guide about the dispute process and the various stages. That is routinely sent to the parties to disputes who are not legally represented. It is also available on the website and from Land Registry offices.
On the Welsh language, Land Registry policy is to send communications in the recipient’s language of preference, if that is clear from the register. If the language preference appears to be English because there is no contrary indication on the register, communications will be sent in English. If it is apparent from the register or from any subsequent contact that the recipient prefers Welsh, however, the Land Registry will communicate in Welsh. The Land Registry’s website has extensive information in Welsh. It would prefer to continue to try to meet the personal preferences of recipients, rather than send large amounts of material that might not assist its customers.
The hon. Gentleman mentioned that there has been quite a lot of publicity suggesting that the existence of manorial rights has caused difficulty in getting property loans. The Land Registry has been monitoring the situation and, where it has been able to contact individuals who may have been affected, those individuals usually, but not always, turn out not to have been affected. We know that in some cases there has been a short delay in granting a loan because of an earlier application by the property owner to remove the notice. The lender would have wished to ensure that any dispute had been resolved before proceeding. In one case, the property owner changed lawyers because of concerns about the advice given, and the change in lawyers enabled the loan to be granted. The Land Registry stands ready to assist anyone else facing similar problems.
The fact that a notice has been entered in the register does not necessarily mean that the right claimed actually exists. Whether the right exists will depend on the facts of the case. Home owners and other landowners remain as free as they were before the legislation to contest a claim. The requirement to enter a notice to protect manorial rights removes uncertainty and unpredictability by making it apparent that such rights are claimed. It is a positive development for property owners in general that such rights have to be recorded on the register and may be lost if they are not recorded. Registration of manorial rights is, of course, distinct from exercising those rights. In the case of mineral rights, to which the hon. Gentleman referred at the end of his remarks, planning consent is required in the normal way.
I am happy to write to hon. Members who have spoken and interjected on the points raised. The registration requirement will ultimately achieve a better balance between the interests of the owners of manorial rights, the interests of those who are subject to the rights, and the interests of those who may at some time in the future purchase a property affected by such rights. I am grateful to the hon. Gentleman and others who have helped to bring the matter before the House today.
Police and Crime Commissioners and ACPO
(10 years, 3 months ago)
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Mark Reckless (Rochester and Strood) (Con)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I am grateful to have secured this debate, which is timely, as the police and crime commissioners’ decision on the funding of the Association of Chief Police Officers is pending.
ACPO still receives £4 million of public funding. Some £1.2 million of that is provided directly by PCCs to ACPO centrally, with the remainder almost all going to national policing units still overseen by ACPO—something that I and other members of the Select Committee on Home Affairs have repeatedly said is wrong. The Home Office has already ended funding to ACPO, so I hope the Minister will find General Sir Nick Parker’s independent review of ACPO helpful.
The PCCs to whom I have spoken do not in any way interpret recommendation 4, on having a change management programme, as a criticism of the Home Office; rather, they see it as an offer to work with the Home Office to ensure that the transition from ACPO happens, and to provide a final year of funding to do so. The Parker report’s other three recommendations also strongly support the changes to the policing landscape driven by the Home Office, and they will be welcomed by members of the Select Committee, and by many chief constables who are perhaps not part of the ACPO in-group, if I may describe it in that way.
The Parker report’s first three recommendations are central to today’s debate, and I will address them in reverse order. Recommendation 3 states:
“PCCs should seek greater visibility of National Business Area governance and output. Even though the overall responsibility for management is transferring from ACPO to the College of Policing the level of resources that Business Areas consume at local level mean that PCCs remain a major stakeholder.”
The Select Committee would probably also add that Alex Marshall and the College of Policing are in charge. The College of Policing is a new body that will take time to get into its stride, which I believe it is now doing. It is important that chief constables look to Alex Marshall, who is operationally in charge of the college, to provide that leadership, because it now happens through the College of Policing, rather than through ACPO.
Recommendation 3 runs counter to the rearguard action being fought by a number of chief constables; that point is addressed on page 10 of the report, where General Parker refers to the “concerns” from some that
“the wide representation of stakeholders within the College, and the processes necessary to ensure appropriate consideration, may delay the implementation of tactical procedures. Chief Constables should retain an important stake in the speed of decision-making and the priorities set to address issues. This will allow Business Area Heads to ensure timely, credible implementation and, if the situation demands it, provide an effective counter to obfuscation by other stakeholders within the College who may not have responsibility for operational effect.”
That betrays some chief constables’ lack of understanding of how the new policing landscape should operate, and particularly of the role of the College of Policing in running those business areas, and the key role of the police and crime commissioners on the college’s board. As the general says,
“it would be wrong to assume that there is a clear dividing line between policy and practice”.
That is why it is necessary for PCCs to have oversight. The business areas should not just be pushed off on to a professional committee within the College of Policing; the PCCs should be central either in directly managing the business areas or delegating them to ensure appropriate supervision. That is essential, as General Parker emphasises in his report.
The second recommendation is on national units, of which there is a great range. Some are small in what they do, although they are often important, and some are smaller or larger in terms of funding. The general says that we need
“alternative models to governance, funding and support currently provided by ACPO, such as the lead force…to streamline governance and financial accountability by reinvigorating the bilateral contact between forces and each national unit. This will ensure that individual force requirements are met in the most cost effective manner.”
The report continues:
“ACPO does provide important administrative services, particularly in support of national units. It governs some commercial interests and acts as the home for CPOSA. There are alternative solutions, including more widespread use of the lead force model in the case of national units.”
There is a clear model for the direction that that should go in, so the question is how we arrange the transfer over the next year, if the PCCs are kind enough to provide funding and support for the Home Office to oversee it.
Finally—this is key—nobody has any objection to chief constables getting together to discuss matters of mutual interest. That is something that they have done, as the so-called chief constables’ council, within ACPO, using ACPO as the agency to the extent that that was required, but the consensus, certainly in the report, is that the status quo is no longer feasible. General Parker says that we need change that
“shifts responsibilities…to the College of Policing and other appropriate bodies, one of which must represent senior…operational leadership at the national level”.
ACPO will therefore have no further role in that. I emphasise that responsibility is shifting to other appropriate bodies, one of which will provide a central focus at the national level and can act as a forum for the senior leadership of the police service.
Jack Dromey (Birmingham, Erdington) (Lab)
I am grateful to the hon. Gentleman for giving way. He rightly quotes at length the Parker review, which praises the historic work of ACPO, recommends a collective national policing function to conduct operational and managerial co-ordination, and argues for reform. It has been embraced by ACPO and supported by the Association of Police and Crime Commissioners, which are now collaborating in a transitional board. Does he accept the importance of a focus akin to that which ACPO has provided historically? Whatever the future reforms, there should be that focus on the effective co-ordination of operational and managerial delivery. Is that not key to the safety and security of the communities that we represent?
Mark Reckless
What is key for our communities is democratic oversight. As I said in my maiden speech, if Labour is now not the party of democratic oversight, which the right hon. Member for Blackburn (Mr Straw) has an honourable record in pushing, but of ACPO, then it can stand on that basis, but that is a sad change. I am not sure whether, in the shadow Minister’s remarks, there was a degree of confusion between ACPO and the National Police Coordination Centre, in terms of that national co-ordinating role during times of crisis—the most obvious recent example is the riots. Everyone agrees that that role is required, but we need appropriate oversight of that, and there is appropriate oversight in that centre. The president of ACPO does not have direction and control; he is one of a number of people serving on the new body, which includes representation from the Cabinet Office and the Home Office. That is the right model.
It is perfectly fine to discuss and develop the idea of whether chief constables need a collective view, and whether or not the body should be called the chief constables’ council. The traditional tripartite model involves the chief constable and the police authority locally, and the Home Office setting the national framework. Unfortunately, over several decades, ACPO began undemocratically to set that national framework centrally, when it is much more appropriate for such things to be delivered locally and with democratic oversight. If there is to be a chief constables’ council, which is perfectly sensible, it should be run by a part-time chair elected by the members—even ACPO was run in that way before 2003. There is no need for some great legal entity and superstructure that has human resources, finance and legal functions; it can operate like the other business areas. The elected chair could use his staff officer and a number of officers within the local force as appropriate, with the costs falling as they lie with the business area. That is the appropriate model, which would allow chief constables to work together, with the chair speaking on their behalf when appropriate. That is all that is required, and we must be sure that the transition does not allow a revamped ACPO to return from the dead.
Keith Vaz (Leicester East) (Lab)
I will be brief, as the Minister has to speak, and I know that other colleagues also want to contribute. It is a pleasure to serve under your chairmanship, Mr Rosindell, and to congratulate the hon. Member for Rochester and Strood (Mark Reckless) on initiating the debate. He is a true original thinker on the Select Committee on Home Affairs as far as policing is concerned. Throughout the incredible change that has been organised by the Government and the new landscape of policing, he has pushed the Select Committee in the right direction when we have probed the changes. I am happy to remind the House that the Select Committee is investigating how police and crime commissioners and chief constables work together. As part of that, we will have our say on what is left of ACPO in the new landscape.
I agree with the hon. Gentleman that chief constables have a different role from the one that has developed over the past few years. They are not supposed to be involved in making policy, although the Home Affairs Committee has on many occasions called on ACPO to give us views on policy. That changes in this new landscape, which I am on the record as saying I am excited about, but it has not yet settled. The hon. Gentleman is saying that when it has settled, chief constables will have a role to play, but it will not be the traditional role that developed under ACPO. It should be a new role. I am sure that the Select Committee will consider those points when we come to make recommendations.
Dr Julian Huppert (Cambridge) (LD)
It is a pleasure to serve under your chairmanship, Mr Rosindell, and to follow the right hon. Member for Leicester East (Keith Vaz), who is the Chair of the Select Committee on Home Affairs, and my hon. Friend the Member for Rochester and Strood (Mark Reckless), who gave an excellent summary. He and I have often taken up this issue on the Select Committee, because it does matter.
When I talk to experts in policing structures from around the world and they look at how ACPO works, they are often shocked at the amount of power that has accumulated without oversight and without deliberate intention. Nobody would deny that there is a role for operational discussion between chief constables, but far more than that has been accumulated and gone into the new structure, as I have seen in many cases. Several years ago, the Cambridgeshire police authority was told that it had to agree a particular policy on Tasers, because it had been mandated by ACPO. The police authority should have known better than to accept the policy, but that is what it was told, in writing, from the chief constable at the time. That is simply inappropriate. It is not up to ACPO to set that sort of policy.
The Parker review is deeply critical on several points, as was summarised by my hon. Friend. Some things have been annoying many of us for a long time, such as the fact that it is a private limited company and exempt from freedom of information requests. In fairness, the president, who is on the parliamentary estate today, has highlighted those as things that he would like to change, but I have not seen them change yet. We have the opportunity to change things now as a result of the Parker review, the new College of Policing, the bringing of a good evidence-based environment to policing, and the changes around police and crime commissioners.
PCCs now have the right to choose what model they would like. It is obviously their choice to make, but I hope that they consider the sort of model outlined by my hon. Friend. I say yes to a chief constables’ council, yes to a place for chief constables to talk, engage and interact, and yes to it having a part-time chair, who should have support and be able to be involved with operational policing. ACPO should be trimmed down, with far more responsibilities lying with accountable bodies, and far less of the power that it has accumulated. Many people at ACPO have worked hard and with the best of intentions, but it has not been accountable, and it has led to a few people collecting a huge amount of power.
Julian Smith (Skipton and Ripon) (Con)
I rise to support my hon. Friend the Member for Rochester and Strood (Mark Reckless). ACPO was let off lightly in General Parker’s review. It is a failed institution that is bordering on corrupt. It has myriad conflicts of interest and lacks transparency. General Parker’s review is excellent, but it failed to identify and to nail the heart of the problems at ACPO, which come from a group of men, largely, protecting their jobs over decades.
Jack Dromey
A very serious allegation has just been made about the most senior police officers in our country. It has been alleged that they are corrupt. Will the hon. Gentleman either justify that statement or withdraw it?
Julian Smith
I will not withdraw it. An organisation that offers jobs to ex-officers without following the procurement processes that it created displays a form of corruption. It is a club working in its own interests. The report does not identify that, just as it does not identify the organisation’s moral vacuum. There have been many challenges to our police service, but has this organisation reviewed the issue of better leadership, or what should be done? Has it looked at how many women are in the senior leadership of our police forces? Has it looked at ethnic minorities? Has it challenged itself? Has it looked at new entrants into the forces? Has it looked at why white males largely dominate the senior positions within our police? It has not. For those reasons, we should draw a line under ACPO. The PCCs should not give this organisation a penny piece beyond some transitional funding. The Home Office should be much more focused on ensuring that any money that it pays for ongoing projects does not seep over into the overall running of this organisation. ACPO is finished and should be wound up; the sort of organisation outlined by my hon. Friend the Member for Rochester and Strood sounds like just the ticket for a new, more transparent period of policing.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
It is always a pleasure to serve under your chairmanship, Mr Rosindell. It was also a particular pleasure to hear some thoughtful and trenchant views in the course of this short debate. Those who spoke, most of whom are members of the Home Affairs Committee, have thought about the subject deeply and long. Furthermore, the right hon. Member for Leicester East (Keith Vaz), the Chair of the Select Committee, said that a report is gestating; as ever, we look forward to its birth. I was especially grateful to the right hon. Gentleman for saying that he was “excited” about the new policing landscape. There were many reasons why we conducted such a widespread and radical reform of the police. It was extremely necessary to improve policing in this country. It is an uncovenanted and added bonus that it excites the Chair of the Select Committee.
The time is right, amid all this change, to look again at the role of ACPO to ensure that it has adapted to the massive change and reform programme introduced by the Government, because the whole of the policing landscape has been reformed. As was said by my hon. Friend the Member for Rochester and Strood (Mark Reckless), who introduced the debate so thoughtfully, police and crime commissioners have given communities a greater say in policing and introduced new lines of accountability for chief constables. Also, the Independent Police Complaints Commission has been strengthened to ensure the highest standards of police integrity, which is clearly an ever more important reform; the National Crime Agency has been created to lead the fight against serious and organised crime; the inspectorate of constabulary has been made more independent; and the College of Policing has been established to provide professional standards for policing. It is therefore essential that ACPO’s functions are now delivered within the ethos of the new policing landscape.
In the short time—a little more than a year—that PCCs have been in office, they have innovated by developing strategies to tackle drug and alcohol misuse and the problem of people with mental health problems being held in custody cells; they have worked with young people to improve engagement; and they have driven innovation in technology to improve policing. They have done all that while holding their forces to account and scrutinising police performance. Many PCCs have wasted no time in introducing new processes to hold chief constables to account for the delivery of the PCC-prepared police and crime plans and in driving value for money. All that has fundamentally changed the accountability process in and governance of policing for the better. I am grateful for the endorsement of that change in the tone of the debate so far.
PCCs have reviewed the role and remit of ACPO within that new context—this is essential, and I very much welcome it. Various hon. Members have talked about the Parker review, which demonstrates that PCCs are providing an impetus to reform at the national as well as the local level. They are of course innovating and delivering policing more efficiently in each of their individual areas, and not only have they brought real local accountability to how chief constables and their forces perform, but they are working hard to ensure that their local communities have a stronger voice in policing.
Everything is happening against the economic and fiscal background with which we are familiar. In the current climate, it is essential to drive innovation and transformation that deliver value for money, so that savings can be made and priority given to front-line policing. PCCs are doing this at the same time as they are delivering against their national responsibilities, which I hope is putting an end to the view of some people that that is a weakness of PCCs. I think that it is a strength.
I now turn in some detail to the Parker review. As Sir Nick Parker said in a review undertaken on behalf of PCCs, not of the Home Office, there are frustrations with the lack of transparency in ACPO funding and with the inadequacy of audit and performance monitoring. Sir Nick said that
“these arise out of ACPO’s undoubtedly complex and unorthodox structure.”
There is a variety of governance mechanisms across the full range of ACPO’s functions, and its status is unusual, in that it is a company limited by guarantee rather than a public body. We have heard some of those frustrations aired in the Chamber today.
Keith Vaz
To be fair to the president of ACPO, Sir Hugh Orde—I am a great fan of his and the way in which he conducts his policing—he said that he was very uncomfortable with being in a company limited by guarantee. He had torn what little hair he had left off his head in order to find alternatives.
Damian Green
Absolutely. The right hon. Gentleman is entirely right to make that point. I am conscious that Sir Hugh Orde has thought as much about these matters as anyone else and has, as one would expect, come to thoughtful conclusions.
I support the broad direction of travel of the Parker review, and I was pleased that PCCs had taken collective action to review the role and functions of ACPO. I was also pleased the review recognised the need for efficiencies and for deriving maximum value for money from services that are currently provided under ACPO.
The PCCs have a vital role in ensuring that there is a national forum in which chief constables may come together to co-ordinate what they see as their needs at the national level. We all agree that that is an essential function. As the review recognises, crucially, the majority of ACPO functions have now transferred to the College of Policing. We are using the Anti-social Behaviour, Crime and Policing Bill to give the college the power to set standards. It will be for the college to provide leadership for the whole of policing in future.
Dr Huppert
The Minister is absolutely right to highlight the role of the College of Policing in providing standards and leadership. It is also important to evidence-informed policing and to developing new approaches that were not seen in the previous policing landscape. Will he talk about that role as well?
Damian Green
Indeed. My hon. Friend makes a good point. I am about to come on to the college and its vital, central role in future, but first I will point out the one part of the Parker review with which I disagree: the need for a centralised change management programme for police reform, potentially run from the Home Office. That is exactly what we do not need and is very much against the ethos of the more accountable, locally driven and bottom-up police service that we are introducing. That is one of the reasons why I am so glad that the PCCs have grasped the nettle of reform themselves, because it shows that we do not need a small group in the Home Office driving all change.
Mark Reckless
The PCCs I have spoken to do not interpret the report in that way. I can see how the Minister might, reading it broadly, but that has not been their interpretation, to the extent that change management is needed and the Home Office’s co-operation with that is desired. I believe that is an issue for the transitional final year funding that PCCs are prepared to offer to help the Home Office to ensure that ACPO’s functions are wound down and that the appropriate transition is made.
Damian Green
Absolutely. I thought that that was what I had said. I am conscious that PCCs want to do that. I am not saying that there is no role for the Home Office—there is of course a role for it, and we have a very senior official sitting on the transition committee precisely so that the legitimate interest that the Home Office has in the process can be represented at this vital time of change.
I have been invited to talk about the College of Policing, however, so I will. We saw before Christmas with the code of ethics that the media and the public are increasingly—and rightly—looking to the college to speak boldly on how it believes the police should response to press and public concerns, in the way that, in the past, they would have looked to ACPO. The college has taken on much that we used to look to ACPO to provide—setting out the case for change, providing leadership and enabling police forces to provide a more effective service to their communities.
In future, we will be looking to the college as the body responsible for developing a better police force, for identifying the challenges that policing faces and for setting out how those challenges should be met. In future the college will come up with the big ideas for reforms to improve the way policing is delivered. I expect to see the college providing dynamic leadership in the face of a wide range of challenges, including reducing bureaucracy, increasing officer discretion and driving the modernisation of the police.
To achieve all that, the college will need to be visible not just to the few at the top of the police or to the many thousands working in policing but—perhaps most important of all—to the general public, without whom the police could not be effective. We have always had a model of policing by consent. The famous dictum of Robert Peel, that the
“police are the public and the public are the police”
needs constant reinvention in every age. It will be to the college that Governments, the police and the public will look to interpret how we achieve that hugely desirable end, which has always been at the heart of British policing, in the 21st century.
We have talked about accountability today, and I agree that it is important. The college is accountable through its board, with a far greater range of people from right across policing responsible for taking decisions about the way the college works. It will also be accountable to Parliament for the standards it sets.
Mark Reckless
The key is that the range of people on that board include a serious number of PCCs, who are elected. That is the difference, surely.
Damian Green
It is one difference, but the most important difference, and the next thing I was going to say, is how inclusive the college is. It is for the whole of policing: officers, staff, special constables and volunteers. There is a wide range of people on the college board as well as on its professional committee. As my hon. Friend says, that rightly includes PCCs, who are themselves directly elected.
The college is new and new organisations need time to get their strategy and structures in place, and to make sure that they have the right people in post to deliver their aims, but there has already been huge progress. In September, the college published its strategic intent, inviting views on its strategy, including on whether police officers and staff should pay a fee to join. In October, it consulted on the code of ethics for police officers and members of police staff. While we are debating the changes to ACPO here today, the college is working through its longer term structures and developing its commercial strategy. All that is being progressed alongside the work the college is doing on direct entry, on the threshold tests linking pay to skills, on police digitisation and on freeing up police time. It is essential that everyone not only gives the college time to develop but supports it in that development. It will be a vital institution for the future success of policing in this country.
We should all recognise that it will not be some diktat from the Home Office or lever pulled by the Policing Minister that will bring about reform. We need to work in partnership with police and crime commissioners and chief constables to ensure that the model for the future is the right one. We continue to take a strong interest and financially to support those critical national functions that chief constables undertake and must continue to deliver, namely those where operational co-ordination is needed on national issues. Critical national functions including the national police co-ordination centre and the ACPO criminal records office must continue so that we safeguard work on, for example, the sharing of international criminal information across the EU and the rest of the world—clearly an area of increasing importance to the police.
Sir Nick Parker’s review was comprehensive and looked at the future of ACPO in the round. It concluded that reform was needed to ensure that chief constables have a forum with functions and structures that fit the new police reform landscape. I support that objective. The changes to the policing landscape that followed the publication of the review of ACPO will take time to unfold. Once those changes take place, it will be essential that they work. We have already seen the changes the Government have made to this part of the policing landscape through the creation of the college. Those changes have worked because they have been supported by all parts of policing—by chief constables, PCCs, the Police Superintendents Association, the Police Federation and those trade unions that have members who are police staff. The changes to ACPO need to be worked through in exactly the same way.
I am grateful to ACPO and its members. Chief constables have shown the ability to adapt and evolve to meet new challenges. That pragmatic, reforming approach will need to continue as police reform and, in particular, a sharper focus on public accountability and transparency continue to drive change across the policing landscape.
Question put and agreed to.
Written Statement
(10 years, 3 months ago)
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Environment Council
(10 years, 3 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)
I represented the UK at the European Environment Council meeting in Brussels on 13 December. Paul Wheelhouse, Minister for Environment and Climate Change in the Scottish Government, and Alun Davies, Minister for Natural Resources and Food in the Welsh Government, also attended.
After adopting the list of legislative and non-legislative “A” items, Environment Ministers held an exchange of views on a proposal for a regulation on monitoring, reporting and verification of C02 emissions from ships. I set out the UK’s objective of securing a global agreement under the International Maritime Organisation but confirmed the UK’s view that the scope of the Commission’s proposal is broadly appropriate. The majority of other member states who spoke agreed with the UK that a global measure is the main objective and that the scope of covering ships over 5,000 gross tonnage, but not gases other than C02, is appropriate. Views diverged with regard to transparency of information. Denmark emphasised the importance of exposing data to public scrutiny, while Cyprus and Malta highlighted the commercial risk of disclosing data for individual vessels.
The Commission introduced its proposal on tackling invasive alien species (IAS), underlining its intention to focus only on species non-native to the EU. During the orientation debate, there was universal support for an EU system to tackle IAS. It became apparent, however, that there is a need to revise the principles used to devise the list of species and acknowledge the importance of regional co-operation, which was strongly supported by most member states. The majority of member states, including the UK, indicated their opposition to capping the total number of IAS on the proposed list of Union concern. There was a large group of member states, including the UK, also in favour of extending measures to IAS native to the EU. The Commission recognised that a cap is problematic. It also noted the support for including non-EU IAS and agreed to consider if and how this could be achieved through existing provisions.
In other business, the presidency provided an update on the failure to reach agreement in the Energy Council of 12 December on the proposed directive to address the indirect land use change impacts of biofuels. The presidency then introduced the outcome of the 19th session of the conference of the parties to the UN framework convention on climate change (C0P19). Looking ahead at the timeline for developing the EU’s contribution, Germany, France, Denmark, Belgium, Sweden and the UK all emphasised the importance of the March Council and of the June ministerial meeting.
The presidency gave an update on the state of play and way forward on EU ETS/aviation. France, Germany, Finland and the UK all argued that the Commission’s proposal does not reflect the political nature of the issue and underlined the importance of making progress in the International Civil Aviation Organisation on a global solution. Also under other business, the Commission introduced its new proposal on plastic bags, which has been adopted in response to calls from the Council and the huge reaction to the Commission’s public consultation. I welcomed the flexibility included in the Commission’s proposal and highlighted the progress made nationally in reducing carrier bag usage. I also stressed the UK’s willingness to work together with other member states and the Commission to develop a truly biodegradable plastic bag.
Greece presented the work programme for its presidency. They hope to seek agreement on EU ETS/aviation, the shipment of waste, the protection of species of wild fauna and flora by regulating trade and fluorinated gases. Ministers then broke for a working lunch, during which we discussed the post-2015 development framework.
Grand Committee
(10 years, 3 months ago)
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Pensions Bill
(10 years, 3 months ago)
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The Deputy Chairman of Committees (Lord Skelmersdale)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 27: State pension credit: phasing out assessed income periods
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the purpose of this clause is to provide for the abolition of the assessed income period in pension credit cases from April 2016. I will just add that I was most welcoming of the reinforcements I had temporarily.
The assessed income period removes the requirement for certain people to notify the department of changes to their retirement provision for a defined period. The assumption when the assessed income periods were introduced in 2003 was that pensioners were more likely to have relatively stable incomes and capital, so a lighter touch to reviews was therefore considered appropriate as a way to minimise intrusion and ease the administrative process.
The logic behind the policy is clear, but operating the system over the past 10 years has shown the reality to be somewhat different. The operation of assessed income periods has proved to be more complex and intrusive for both staff and the individual than anticipated. For example, people can report a change during an AIP and, as a result, their award can be increased. However, because we have to look again at all of their retirement provision, not just the reported change itself, it does not always lead to a change in the award. This is nugatory work for the Pension Service and is confusing for recipients.
More importantly, our assumptions about the stability of pensioners’ incomes and capital have not stood the test of time. Our analysis shows that circumstances change and fixing retirement provision for such a long period leads to inaccuracies in benefit awards, which then remain in the system for some time. Based on a sample of around 100,000 cases that have been reviewed, the pension credit award required updating in 54% of them, and in 36% of cases the award was reduced.
In the current economic climate, we believe it is right that benefit awards reflect the individual’s current financial circumstances. We therefore propose to abolish assessed income periods by removing them for new claimants and phasing out existing fixed-term ones from April 2016. It is estimated that this measure will result in steady-state savings in AME of around £80 million per year in the long term. We recognise that removing assessed income periods will require pension credit recipients to report relevant changes when they occur—however, this will not necessarily result in increased levels of contact for all recipients.
We will be working with stakeholders and partners on communications products to ensure that people are clear about what this change means and what they will need to report and when. For example, there will be no need to report changes in capital provided it remains below £10,000. Currently, only 12% of recipients—around 290,000—have capital above that level. Above £10,000, changes are only relevant where they cross £500 bands. Annual increases in pensions will be taken into account automatically, as now, so only new income streams will need to be reported. It is also worth remembering that the impact of reporting changes will depend on individual circumstances and that not all will lose out. Some may see an increase in their award, while some may not experience any change at all.
Pension credit is a safety-net benefit designed to help the poorest pensioners, and as such it is right that it takes account of the income and capital people have access to. Through the abolition of the assessed income period, we will ensure that pension credit awards are accurate and that, in future, our limited resources are spent on those who require the most support. I beg to move that Clause 27 stand part of the Bill.
Baroness Hollis of Heigham (Lab)
My Lords, I thank the Minister for his explanation of this clause. I would like to explain why I and my noble friend Lord McKenzie have raised this on the stand part debate so we can discuss the issues. As the Minister said, this clause proposes to abolish the current assessed income periods for pensioners claiming pension credit. At the moment, pensioners are means-tested for pension credit at their retirement at 65; then at 70; then again at 75 and not thereafter. I am genuinely surprised and, actually, disappointed that the Government want to make a quick saving of £82 million gross—as the Minister said—or some £60 million-odd or £65 million or so net by introducing annual means testing, although excepting current pensioners over 75 who may be in receipt. It will affect 1 million pensioners a year up to 2020.
Why do we have the current rules? My noble friend Lord McKenzie was instrumental in further enlarging and developing them in 2008. Very wise he was, and very good they were—of course. I hope Hansard records the “Hear, hears” to that. In particular, he introduced the indefinite assessed income period for no means-testing for those reaching 75. In my mind, that was a most important consideration, the one I am most concerned about. Essentially, we know that pensioners loathe means-testing so much that—either through ignorance or stigma—a third do not now claim that to which they are entitled. Those eligible non-recipients are missing out on something like a mean average of £34 a week. That is an average loss of £34 a week, an income that would transform their circumstances.
More means-testing, which is what the Government are proposing, will not, given this strategy, bring more pensioners in, but will deter even more pensioners from claiming what they should. That is why I am so pleased that we are extracting means-testing out of the new state pension, as the former Pensions Commission recommended when considering the old pension. I was pleased that we were removing it from the new state pension, only to find that the Government are foolishly importing it back in again and extending it through annual means tests, rather than five-yearly ones, in pension credit to make a quick buck. Therefore, those who get the more generous pension in future will escape the means test; the older, poorer pensioners—mainly women—will be subject to even more of it. I think that is wrong.
Why was means-testing for pensioners under my noble friend Lord McKenzie carried out with a light touch? It was essentially because pensioners’ income is pretty well stable in their retirement years. The three major events which are likely to affect their entitlement are, first, the death of their spouse. When he dies—and it is, alas, usually “him” ahead of “her”—his modest pension, if it is a single-life pension which two-thirds of them are, dies with him. That is why it is elderly widows who most need pension credit. The second major event is that they may, rarely, get a small legacy—say, from the death of an unmarried sibling. The third is that they may have to move into residential care.
Such big events should be reported, and I have no objection to reinforcing that and making it clear that capital from, say, a generous legacy of more than £10,000 or £15,000, acquired before 75, should be reported. I do not have a problem with that. Apart from that, a five-year check will discover not just whether pensioners are getting too much, which is rare, but sometimes whether they are getting too little. I do not think we have recently had much in the way of a take-up campaign—funny, that.
Now the Government are going to produce annual means tests, and the Bill team—I thank it for this—very helpfully sent me the best statistics we currently have, which show that twice as many people will lose under annual means-testing as will gain. The Government will not make their savings primarily because people are receiving too much, although some money may come from that and will be clawed back, and so on. No, if the Minister will actually make a saving, it will come from pensioners who should get it not claiming, and certainly not annually. The department has a lot of literature, which is entirely decent, about the problems of the means-testing, which informed the new state pension. It was absolutely right to do so, and yet it seems to be ignoring it in its efforts to make a quick £65 million or so saving from the poorest pensioners.
The Minister and his team will so increase the stigma of means-tested pension credit—with people annually reminded that they are suspected of error, if not downright fraud—that more of the poorest pensioners will slip down the snake of further poverty. Pensioners do not cheat on pension credit, but this proposal suggests that they do. Let us not have any spin about increased take-up as a result. This is about savings and nothing more, and I do not think it is decent.
The Government boast of their reduction in means-testing for the new state pension, while quietly importing a massive extension of means-testing for those not joining the sunny uplands of the full new state pension. They are deliberately widening the gap between those who will get the new pension, and those who cannot on grounds of age. Poorer pensioners will be worse off simply because they are a day older or a year older than other pensioners who are eligible for the new state pension.
Single people who are on pension credit because they are on the wrong side of that cliff edge will have £30 of pension credit added to their BSP of £111, giving them a total income of some £140. However, if they acquire any capital savings over £10,000, they will find them means-tested. In some cases they will then lose every penny of pension credit. Meanwhile, other pensioners, who are a day or a year younger, will get their more generous pension of £144, and will also keep every penny of savings they may have or acquire because we rightly float them off pension credit, and all credit to the Government for that.
The older and poorer start to lose if they have any savings over £10,000, so there is not an incentive to save. Yet pensioners a day younger not only have a higher pension, but their savings are not taken into account at all. This problem will of course be made worse by the loss of savings credit. Is this fair? Far from increasing means-testing for the poorest group, in my view the Government should do exactly the opposite. They should reduce means-testing to achieve greater fairness for pensioners who are being penalised for nothing but their age. That would give less of a cliff edge, and more equity between the two groups of pensioners who are divided by one day. It really is shameful to import an unnecessary cliff edge for trivial government savings, and it is also perverse.
Since my noble friend Lord McKenzie wisely reviewed AIPs, there have been huge cuts in domiciliary support for the elderly from social services. Mr Pickles has cut local government budgets by 35%, and inevitably this is passed on in depleted services. Nearly half a million people, mostly pensioners, have lost homecare since 2008—half a million. Only those with substantial or even critical care needs can now expect to have carers who are funded by the local authority.
Pensioners with only “functional” disability may have quite significant mobility or sight problems, and five years ago they could have received perhaps three or five hours per week of help from social services. They now get nothing, and their family may live 100 miles away. If someone’s needs are more substantial and they are frail, and they need help getting up in the morning and at night, the two hours a day which was offered may now come down to two slots of 15 minutes. On top of this has come Dilnot.
The Government’s response has been to emphasise co-payment. I do not disagree with that, but where is the money for that co-payment to come from? If you are a pensioner on pension credit, you have minimal or low savings and your only asset is your home. Outside London this may be worth perhaps £100,000 or double that. Some 80% of pensioners below 60% of median income are owner-occupiers. Half of those on pension credit are owner-occupiers. Equally, three-quarters of those who should claim pension credit—but do not and so lose out on £34 per week—are owner-occupiers.
Pensioners may have to contribute to the cost of their social care, or decide—rightly, in my view—that they wish to live independently outside of residential care, with more domiciliary support than social services can now provide. However, those on pension credit, having been means-tested at 65 and again at 70 and now coming up to 75, have only one way to do that, which is to release some of the equity in their home.
Lord McKenzie of Luton (Lab)
My Lords, I join my noble friend Lady Hollis in reviewing why this clause should stand part of the Bill. This debate gives us an opportunity to review its rationale, as my noble friend has done, and particularly to scrutinise what alternative support mechanisms are to be put in place for those newly required to notify the DWP of changes to retirement provision. As we know, the assessed income period removes the requirement to notify changes to capital and retirement pension for the purposes of pension credit. It will run for five years but is set indefinitely for somebody who has reached the age of 75.
As the Minister himself has said, the concept was based on the assumption that the capital and retirement income of pensioners would not vary significantly, that administratively it was appropriate to have a light touch for claims maintenance, and that it was also less intrusive for a claimant whose reporting of changes of circumstances obligations was significantly reduced. It is now asserted that the administrative burdens will not be forthcoming, in part because a huge volume of cases come up for review at the same time, and there is not the stability in levels of capital and retirement income originally envisaged. So far as the administration issues are concerned, it would presumably be possible to spread the load by modest extensions of the end dates of existing AIPs to even out their reconsideration. Perhaps the Minister can tell us why such an option was not considered.
We learn from the impact assessment that just under 2 million of 2.5 million people on pension credit have an AIP split roughly half and half between those with a specified end date and those of an indefinite period. Given that those with an indefinite period AIP are not to be preserved, it looks as though these provisions will potentially affect some 1 million pensioners. Do we have figures for those within this cohort who are in receipt of savings credit only, guarantee credit only or both? Obviously, savings credit would have no application for those who reach state pension age after 5 April 2016, and to a certain extent these provisions wither on the vine because those who reach state pension age post-April 2016 will get STP generally which will be above the guarantee credit level, so they get floated off and savings credit does not apply to them in any event.
As for changes to income and capital, as my noble friend has made clear, the numbers have been predicated on scaling up and are now, I think, upwards of 99,400 cases. We know that of those cases, 36,000 will see a reduction in their award—13,000 will lose all pension credit—18,000 will see an increase and nearly half will see no change. However, over a five-year period, the impact assessment suggests that 540,000 people will be affected by the change in policy, with one-third gaining and two-thirds losing. It would seem that the reasons for a reduction in award are attributable to increases in non-pension income as well as increases in capital—the former cases, I think, being more numerous.
We know that in a steady state the Government will benefit to the tune of £82 million a year and will gain further savings from housing benefit and rent support. I do not know whether we have an updated assessment for that figure. Incidentally, will the Minister remind us what is happening because we went through a period when an application for pension credit, council tax benefit or housing benefit was going to involve one process of application, and that was then going to be shared? I do not know what has happened to that process. Clearly, the council tax part of it has had to go because of the localisation of that but it would be helpful to have an update on that process.
Ensuring that pension credit assessments of means-tested benefit are accurate is not an unreasonable ambition, but an equally important ambition should be to improve the take-up of pension credit, as my noble friend made clear. We know that about one in three of those eligible for pension credit are currently not claiming it, although take-up of the guaranteed credit is higher. The greater the required engagement with the system, the greater the risk will be that pensioners will fall out of the system or not engage with it in the first place.
As my noble friend asked, what are the Government’s plans to improve take-up of pension credit? This issue must not be underestimated, especially in an environment in which people are living longer, and living at least semi-independently, with support from formal and informal carers. I have seen this in my family: whereas bank statements and pension slips were once neatly filed in date order, they are now tucked away down the side of a chair, scattered randomly in a drawer or thrown out with the rubbish. When you cannot always remember whether you have had breakfast, it is not always easy to remember to pass on a piece of correspondence to a family carer. These are real issues, particularly as people get older.
Of course, there are penalties for failure to report changes of circumstances, and we know that this Government are hot on sanctions. So can the Minister please say, given the changes to the AIP policy, what additional cost is to be incurred in supporting pensioners, both at the point of the change and routinely thereafter? What special protections will be in the system if someone is at risk of being sanctioned?
Finally, on the matter raised by my noble friend Lady Hollis concerning the effect of this change on equity release and capital more widely, it is with a degree of trepidation that I am bound to say that I cannot fully support the position of my noble friend. I know that that is dangerous territory. I agree that AIPs facilitate the accumulation of substantial sums from equity release without impact on pension credit, but that, of itself, is not a reason why it should be retained. It is common ground that AIPs were designed as an administrative easement, not as a route to allow certain types of capital to be outside the pension credit rules. I see great merit in equity release but I am not sure why capital raised just in that way should have more favourable treatment under the benefit system than capital raised in any other way. There is already a series of provisions under which capital is disregarded for the purposes of pension credit and, indeed, other benefits. They include amounts held to buy a home or to carry out essential repairs. There may well be an argument—and my noble friend has advanced these—to extend these capital disregards in effect to cover costs of caring. However, this should be done explicitly, not under the guise of hanging on to something via an administrative easement.
The Government are going down a dangerous path. Thousands of pensioners could be disadvantaged by this provision administratively, and we certainly want to know, if the Government are going to press ahead with it, what support is going to be given. I do not see anything in the figures about extra costs and more frequent reviews. What is in the analysis that states that the Government are going to support pensioners, particularly older pensioners, effectively to make sure that they take up pension credit when they are entitled to it, and that that they are able to comply with the new, more onerous reporting rules that flow from these provisions?
Baroness Meacher (CB)
My Lords, I support my noble friends. I have just worked out that it was about 40 years ago when I undertook and produced the first research report of the Child Poverty Action Group. The subject of that study was the non-take-up of means-tested benefits. At that time, when I was a young person, I assumed that the important issue was stigma. Of course stigma is a major feature, but what took me by complete surprise was the level of ignorance and complete unawareness on the part of, most particularly, the poorest potential claimants—ignorance that they might even conceivably be entitled to any benefit at all. It just had not crossed their mind. If you do not ask any questions, you do not get the answers to those questions. If he really wants to extend means-tested benefits, I urge the Minister to undertake some research into the levels of knowledge and understanding of potential pension credit recipients, because if the level of ignorance remains today as it was then, the social consequences of these reforms will be very alarming indeed.
Baroness Sherlock (Lab)
My Lords, all noble Lords who have spoken have laid down a significant challenge to the Minister on this part of the Bill. I do not propose to add a great deal, but there are a few questions that I would like to clarify. First, in his opening remarks, I think the Minister said that one of the problems being addressed was that there were significant levels of incorrect awards of pension credit because various assets and income were not being taken into account if they happened after an AIP was set. Does he mean incorrect? Presumably, he does not mean incorrect if they were in line with the rules. If someone is not required to declare it then they do not affect the award, but maybe I misunderstood that point.
Secondly, there is a question about the additional changes of circumstances. I am struggling a little to understand what the department does and does not know about this. The impact assessment states:
“We have limited evidence for the additional number of changes of circumstance that are likely to be reported each year as a result of the change in policy”,
but the impact assessment provides an estimate of £17 million a year as the cost of processing additional changes of circumstances and reviews. What assumptions is that figure based on in terms of the number of changes of circumstances?
Picking up a point made by my noble friend Lord McKenzie, what estimate has the department made of the likely increase in fraud and error as a result of the abolition of AIPs? Will the Minister remind the Committee what sanctions will be imposed on pensioners who fail to report a change in retirement income or capital that is relevant to their award? I would also be interested to hear what kind of support will be given. Will he also take the opportunity to remind the Committee how pensioners will be informed of this, how they will be reminded and what discretion can be exercised in choosing whether to sanction them, and of course what appeal mechanisms are there. That would be very helpful.
There is then the crucial question of the likely effect on the level of pension credit awards to those who have, or would have had, an AIP. The impact assessment was encouraging at first because it states:
“Analysis suggests that many customers are not currently reporting changes which would lead to an increase in their entitlement so they may actually benefit from the simplification of the policy”.
Can the Minister explain the use of the word “simplification”? At the moment, if I have an AIP and an income only from pension and capital, I do not have to tell the DWP about any changes in income, but in future I will. How is that simpler?
On the question of level, the briefing said that despite the fact that many customers may be better off, most people will not be better off as the Minister and my noble friend Lord McKenzie have pointed out. It is obvious that they could not be if £80 million a year is to be saved. Also, my understanding is that not only will there be twice as many losers as gainers, if I have read this correctly the average gainer will gain £6.70 a week but the average loser will lose £13.10 a week, which is twice as much. Will the Minister clarify whether that is right and if so what average means in this context? Is it a mean or median figure?
On the impact by age band of abolishing AIPs, the briefing from the department says that it is not possible to break down savings by age band, but that the younger cohort of recipients who are more likely to be affected by the change in policy are less likely to have capital above £10,000 or other pension income. Will the Minister help me understand that distinction? Assuming that they are spared, these younger pensioners will go on to be over-75s, who would have been entitled to an indefinite AIP. Is the assumption that that cohort, when they reach 75, will still be less likely to have savings over £10,000 or other pension income and thus less likely to face a change in pension credit entitlement? In other words, is the distinction one of age or cohort?
Just out of interest, did the department make any assessment of the effect and cost of, for example, maintaining indefinite AIPs for pensioners above 80 or 85 or any other age level? There is then the question raised by my noble friend Lady Hollis on equity release. I have no intention of standing between my two noble friends on the question of how they should be treated, being a woman with an ambition to live to at least 75 myself. But this is a serious question, to which the Minister responded at Second Reading simply by saying that,
“equity release may not necessarily result in a reduction in eligibility for means-tested benefits and will depend on overall income and capital”.—[Official Report, 3/12/13; col. 193.]
Of course, that is obviously true; for some people it may, and for some it may not. The briefing on the subject that came from the department had a note attached to it that may have come from the Department of Health, entitled, Reforms to Care and Support: Financial Product Review. That said, on equity release:
“Some people do use this to fund the cost of domiciliary or home care. No data is collected on the number of people who take out equity release to pay for care but it is currently very limited”.
At the risk of being a pedant, if no data are collected, how do the Government know that the number is very limited? I wonder if they are perhaps relying on the Age Concern survey referenced in the DWP briefing note, Abolition of Assessed Income Periods—Equity Release? I think probably not, however, because it suggests that the sample size was too small to be used for extrapolation. So I am sure that is not the source of it. But they must be able to make an estimate to be able to declare that the number is very limited, so can the Minister tell the Committee how many people the department estimates take out equity release to pay for care?
The importance of this question is to understand its implications. Even if the Minister takes the view that he does not regard this as being anything other than administrative easement, as explained by my noble friend Lord McKenzie, the Committee needs to understand whether there will be consequences for the treatment of income that may be needed to pay for care and, if so, how those costs will otherwise be addressed. I look forward to the Minister’s reply.
Lord Freud
My Lords, I shall deal with the equity release issue first. Assessed income periods were never intended to enable people to shield their income and capital from interaction with the means-tested system. Pension credit is a safety net benefit providing support for daily living needs for the poorest and, as such, should be a last resort.
Baroness Hollis of Heigham
I am sorry to interrupt, but I am not sure that that is the case. Certainly equity release providers had discussions with the department, to my certain knowledge, and were told that somebody could acquire capital through equity release between, say, 65 and 70, and that if it was then spent down—that is, it was used for reroofing, or a new boiler, or insulation, or whatever—the department was entirely content with that.
Lord Freud
Yes, I shall come to that. In practice, that is absolutely the case. Money taken for essential repairs is disregarded. I can confirm what the noble Baroness is saying.
To go back to the argument, people should draw on the income and capital available to them before seeking help from the state. If people liquidise assets to release money or generate an income, that should be taken into account, no matter what the source—if they sell some shares, release equity or downsize. It has been suggested that abolishing the assessed income period will deter people from using equity release to pay for care under the new care funding regime proposed by the Government. The planned care charging reforms will provide greater clarity about what people will be expected to contribute. There will be financial advice to help people better meet these costs, and the Department of Health has been working with the financial services industry to help create the right conditions for a new market of financial products to develop that will be suited to this purpose. Equity release may be a product some may consider, but at this stage it is difficult to say how future care charging reforms will influence behaviour in this area.
The Government do not want people to be penalised for making proper provision to fund their care. That is why the Department of Health will consider how the charging system can recognise the provision people have made and why we are working with them to understand the impacts and the potential interactions with means-tested benefits. However, we cannot retain a complex feature of pension credit as a way of protecting the position for what may be a minority of pension credit customers in specific circumstances. This would not be a targeted response; indeed, it could be argued that it moves away from and undermines the rationale of a safety net benefit.
There may be alternative solutions that both departments will need to consider in due course to avoid penalising those who have made provision to pay for care, but keeping the assessed income period is not the answer. I can confirm what the noble Baroness, Lady Hollis, said—that officials have spoken with the Equity Release Council and have agreed to meet with them in due course to talk through the implications of this measure. The council, in terms of the information base, has been careful about providing advice to those on pension credit about the potential impact on their benefit and designed products so that they do not breach the £10,000 disregard.
Baroness Hollis of Heigham
Except, my Lords, in referring to the brief to this extent, that usually the minimum sum from any equity release providers, from looking at the Aviva statistics and retirement statistics, is usually £10,000, at which point any moneys above that are netted off pension credit.
Lord Freud
Once these things are put in place with the social care provisions, there may be ways of dealing with that, but it is premature to address it until we have the shape of those social care provisions. As I said, the way to do that is not necessarily through a wholesale change to our AIP strategy.
Lord McKenzie of Luton
Does the Minister accept that the easiest way to change it would be simply to amend the disregards for capital in pension credits? It would be easy to do that.
Lord Freud
I am grateful for all suggestions. The noble Lord has made the point that I was trying to make: there are probably quite a few ways to skin this particular cat and one would want to look at it in that context. I have confirmed for the noble Baroness that sums of money taken out for essential repairs and so on are disregarded, so there are areas of flexibility as we work through the full implications of this policy.
Lord McKenzie of Luton
Is it possible that this cat might be skinned by the time we reach Report?
Lord Freud
My Lords, my experience of cat skinning is that it takes quite a long time, so I am not sure that I can promise the aforesaid cat in its dematerialised form in the right time.
Baroness Sherlock
Is the Minister able to help us find out how big the cat is?
Baroness Sherlock
I am sorry, but I am pressing the Minister on the comment about the assessment of how many people use AIPs for equity release. The phrase I think he used at the beginning of his remarks was that this may be a minority of claimants, which is about as vague as it is possible to get in terms of a formulation. Can he shed any light on this?
Lord Freud
No, my Lords. We do not have any precision on this, and that is one of the reasons that we want to look at it in the context of social care. Clearly, one will need to build a better evidence base rather than me extrapolating from a very thin one. The cat is small; it is possibly a kitten.
On the question from the noble Baroness, Lady Hollis, about potentially retaining AIPs until the age of 75, while the noble Lord, Lord McKenzie, talked about the age of 80, we do not have a breakdown of age from the sample of AIP reviews that we have taken, but we have no evidence to suggest that older pensioners have more stable incomes than younger ones. Retaining AIPs for older pensioners would prevent us driving many of the inaccuracies out of the system and would lead to a two-tier system, whereas we want to see a single, understandable regime for everyone. Older pensioners are more likely to have indefinite AIPs already in place in April 2016 because they are being retained, so they should not experience any significant changes to their reporting requirements.
On the more detailed question about numbers raised by the noble Lord, Lord McKenzie, on the breakdown between guarantee credit and savings credit, I do not have it to hand behind me right now, but I am happy to offer a letter providing that. I can confirm to him that someone who applies for pension credit can make a claim for housing benefit, but people will be encouraged to seek council tax support. As the noble Lord is fully aware, that scheme was localised in April of the current financial year.
Baroness Hollis of Heigham
As this is not an amendment, I do not have a formal right of reply to withdraw an amendment. Before the Minister sits down, therefore, could I press him on this? Why did he—rightly in my view—support his right honourable friend’s position in the other place, which was based on the recommendations of the Pensions Commission, to get rid of pension credit in the new single pension and therefore to reduce means-testing very significantly? Pension credit served its purpose in taking existing pensioners out of poverty. It possibly deterred other, future pensioners from saving, but it did tackle the problem of poverty. Quite rightly, in my view, the current Government have proceeded to take that chunk—a huge chunk of means-testing—out of the system. Why, then, does the Minister think it right to reintroduce it for some people who are simply a day too old?
Lord Freud
My Lords, I think there is a distinction to be made here, which the Government are making. You can reduce the level of means-testing by providing a higher single-tier pension, while still making sure that where you are providing people with a means-tested benefit, it is accurate, in order that the Government do not spend more money than they need to at a very tight time.
Baroness Hollis of Heigham
But the Government are giving the equivalent of a whole pension credit to everyone who draws their pension after 5 April 2016, so the Minister is not worried about a safety net then, or spending money that is not necessary—he is just doing it. Everybody will get the equivalent of a full pension credit if they fall the right side of the line. If they fall the wrong side of that line, it will be means-tested annually. What is the decency behind that?
Lord Freud
As the noble Baroness is fully aware, the dividing line is actually much more spread given the complicated transitional arrangements between one system and another. There is not the sharpness of a dividing line—I know the noble Baroness is fully aware of that because we have debated it in great detail. I am conscious that we are pressed for time.
Baroness Sherlock
There are three questions that the Minister did not answer. I am happy for him to write to me: I wanted to get them on the record so that they could be picked up before Report. I asked about the estimate of £17 million in the impact assessment for the cost of processing additional changes of circumstance. What assumptions was that figure based on in terms of the numbers of additional reviews or changes of circumstance?
I asked what estimate, if any, the department had made of the likely increase in fraud and error as a result of AIPs going. Also, the departmental briefing says that the younger cohort of recipients who are more likely to be affected by the change in policy are less likely to have capital above £10,000 or other pension income. Is it that cohort or because they are young and therefore when they become old that will no longer apply?
Lord Freud
My Lords, I will arrange to write to the noble Baroness. I think I can deal with the second point straightaway. We simply do not know whether it is an age or a cohort effect, so I cannot be clearer about that.
Lord McKenzie of Luton
Could the Minister put something on the record? I am very concerned about issues around sanctions, particularly for older members of the pensioner cohort. They struggle, some of them, in later life to deal with paperwork. When we discussed sanctions in the Welfare Reform Bill around people with mental health challenges, the department undertook never to sanction someone without a face-to-face interview or at least a letter—whether that has been complied with is another matter. There should be some sort of process so that elderly people who fall foul of the system are protected before sanctions are levied.
Lord Freud
The noble Lord makes a very fair point. I know that I smiled about that, but it is a real point about older people handling bills. It is best if I come back to the noble Lord and write specifically on that matter.
I can update the noble Baroness, Lady Sherlock, a little more. We are assuming 1 million extra changes of circumstance. That is what the £17 million comes from, and we are assuming a 10% reduction in savings to account for this on the increase in fraud and error. Those are the figures. I will check that I have not missed any other points. I owe the noble Lord, Lord McKenzie, something on sanctions for sure, and probably one or two other things. On that basis, I hope that the Committee will agree that the clause stand part of the Bill.
“which for a widowed parent shall not be less than three years, or until the youngest child of that person at the time of the death had reached the age of 7 years, whichever is the longer period”
Baroness Hollis of Heigham
My Lords, we move on to a different section of the Bill on bereavement benefits. In moving Amendment 59, I wish to speak also to Amendments 60, 61 and, very briefly, to Amendment 66.
I am unhappy about some aspects of these proposals. I know that they have been out to consultation, as, obviously, I have read the consultation documents, but I wonder whether it was wise to go for a one-size-fits-all approach in the name of alleged simplicity. The background notes go back to our policies in 1925, presumably in the belief that this shows we need to overhaul the system, but, actually, we did review and restructure it in 2000. Why did we structure it in the way we did? I hope that noble Lords will forgive me if I talk about widows rather than deceased spouses or partners.
Currently, widows receive a £2,000 lump sum. We recognised, as have the current Government, that you need money immediately to pay for funeral costs and to tide you over the couple of months while the deceased spouse’s income or, alternatively, childcare are not available and before alternative benefit income, if appropriate, is established. As UC, for example, can be paid in monthly arrears, it could be two months before any money is flowing to the bereaved spouse or partner, so we produced a lump sum. We then sought to support widowed parents with children while the youngest was on child benefit: that is, normally up to age 16. At the time that was consistent with the income support rule for single parents with a taxable benefit. The widowed parent’s allowance is now worth £108 a week—a little less than BSP but more than income support, as it is NI-based. It is not means-tested and no work conditionality is attached. The number of new widowed parents claiming the allowance varies between 50,000 and 100,000 a year. As far as I can see, there is no particular pattern to it. Currently, widowed parents claim their allowance on average for five to six years. Not surprisingly, those with younger children claim it for longer—around nine to 10 years. Only 3.6%—less than 4%—claim it for a year or less.
The Government, to my dismay, while increasing the lump sum to £5,000, are proposing that widowed parents should receive this financial support not until the youngest child is 16 or even 12, but for one year only irrespective of the age of the child, at £400 a month. I believe that this is quite unacceptable. For most, the financial loss will be substantial. Some 88% of widows in work with children will be worse off; 50% of those not in work will be worse off. To put it another way, any widow with children who would have claimed for two years or more, usually because of the age of their children, will in future be worse off. That loss could be £50,000 if eligibility were retained while the child carried child benefit. Instead, within a year, she will probably have to work longer hours if she is in work just to make good her financial loss at the selfsame time that her children need her. Children do not adjust in a year. In my experience they are stressed and distressed for many years longer and need more, not less, care from the surviving parent. My children were grown up when bereavement hit and even then it was very hard, but friends who lost a spouse when the children were young found that their children had nightmares and returned to bedwetting. Those parents experienced broken nights and witnessed their children’s clinging fear of losing their other parent, school phobia, challenging behaviour, miscellaneous, unexplained small illnesses and symptoms of depression. They found that their children needed much extra support, stability and attention as well as affection. The widowed parent—a sole carer and earner—may have to extend her working hours to make good the loss of income at just the time when she needs to be more available to them, perhaps to change childcare, move house and, consequently, change their school.
The more generous working parent’s allowance not only helped to replace his income but could also allow a working mother the financial flexibility to adjust her hours to care for her children to enable them to settle into the new patterns of life that they now experience. Given that few widows claim the full credit that they could, they are making a wise decision for themselves and are in no sense seeking to milk the system. Are we really so desperate for money that we need to take it away from grieving widows with deeply distressed children?
As for work conditionality, if widowed parents are on UC, it is proposed that they are brought within work conditionality after six months. Again, that is quite unacceptable. I am baffled by this lack of empathy or understanding. Of course, if she wants to go back to work—as many of us do, and did—that is fine and we should support her but to impose work conditionality whether she feels ready for work or not seems unbelievably harsh. We talk about advice and guidance and a friendly interview with Jobcentre Plus staff, but the power lies with the staff. The Minister is giving huge discretion to a young single member of staff, however well intentioned—I am sure that they are—but with probably no personal experience of bereavement.
I would not want that. The more, I am afraid, we hear of the culture of targets at Jobcentre Plus, the retraining or demotion of staff who do not meet their targets, and the resulting heavy pressure on claimants who are still numb and barely functioning to go back to work, the more we should all worry. I appreciate and welcome the fact that the Minister has recently offered further consultation to discuss work conditionality and the training of staff with the voluntary groups who support widowed mothers, and I hope that work conditionality pressures, at least, will be properly relaxed.
Baroness Meacher
My Lords, I will speak to Amendment 62ZA, but before doing so I must apologise to your Lordships—I have already apologised to the Minister—because I am running against a very tight deadline. I tabled this amendment assuming it would come up on Monday. Before addressing the amendment, I give my very strong support to Amendment 59, moved brilliantly by the noble Baroness, Lady Hollis. I have no doubt at all that the replacement of the widowed parent’s allowance by the bereavement support payment has positive features, but the limitation of that benefit to one year is absolutely cruel. The noble Baroness, Lady Hollis, really got across the point that bereavement is not just a short-term problem. It brings several years of very considerable distress and discomfort for the children, as well as for the parent left behind.
The aim of Amendment 62ZA is to remove the widowed parent’s allowance and its predecessor, WMA, from the list of benefits treated as income other than earnings for the purposes of universal credit entitlement. I realise that that would be a very big step for the Government, but the result would be that claimants with no other income or earnings would keep the value of the WPA in full. Those with earnings in excess of the personal allowance would of course pay tax on it, but they would at least receive the majority of the benefit.
This is a probing amendment. The Children’s Society has calculated that, without the amendment, those entitled to widowed parent’s allowance could find themselves worse off by about £400 per year compared to those with no entitlement and no national insurance contributions. An important point is that WPA is a contributory benefit. It is only payable when the deceased parent has paid sufficient national insurance contributions. The clear assumption behind the benefit is that a surviving parent with all those contributions should surely benefit over and above surviving parents with no contributions. We regard it as an anomaly that under the universal credit rules this advantage from having national insurance contributions would be stripped away. Do the Government really intend that outcome? I do not think so. The proposed bereavement support payment, which will of course replace a number of benefits including the WPA, clearly identifies bereaved parents with national insurance contributions as being entitled to benefits which are not available to others. There is therefore a real discrepancy between the two basic assumptions behind the two benefits.
Although the bereavement support payment will be limited in time—hopefully it will be provided for at least three years, which seems to be an absolutely basic requirement—nevertheless it will be of greater value to most of those entitled to it than the widowed parent’s benefit. The contributory principle is well and truly recognised by this new benefit. At the same time, as I understand it, those receiving the widowed parent’s allowance will continue to do so when bereavement support payment takes over for new claimants. The WPA will continue to be treated as income other than earnings, which again is a different principle. This means that the benefit will continue to be deducted pound for pound from the claimant’s universal credit entitlement. The result is that a widowed parent with no other income will experience zero benefit from his or her national insurance contributions, thereby entitling them to the WPA.
The situation is, of course, even worse for widowed parents who continue to work. The gross sum of the widowed parent’s benefit will be subject to income tax. I find that absolutely extraordinary. Working claimants may have their WPA deducted in full from their universal credit entitlement, but will also pay tax on the gross income that they have not received. Those are the parents who could end up £400 per year worse off. I would be grateful if the Minister could confirm that that is a correct reading of the situation.
Can the Minister confirm whether the Government really intend that those bereaved parents with a national insurance contribution record should be no better off than those with no such record and that those in work should really find themselves even worse off? Will the Minister confirm that many current recipients of the widowed parent’s allowance will continue to be disadvantaged in this way even after the introduction of the bereavement support payment? Finally, does the Minister accept that only relatively well-off bereaved parents, whose earnings take them above the ceiling for universal credit, will actually benefit from having a national insurance contribution record? Can that be right?
Baroness Finlay of Llandaff (CB)
My Lords, I support these amendments very strongly. The points about bereavement have been made most eloquently. However, I would like to add the scenario where one parent dies suddenly rather than as a result of a protracted illness, where the shock of the death may be absolutely overwhelming. That could be suicide, murder or a sudden death. There is another scenario, too, which is where the surviving parent was involved in a road accident and does not even start to grieve until much later. The children who are bereaved know that one parent is already dead and, for many months, they may not know whether the other parent will survive or not. The shortening of time is quite cruel, and I use that word advisedly. A year is a very short time in the life of anyone bereaved, and the anniversary of the death often marks a major step change in the way that they live their lives. That applies to children as well as the bereaved parent.
The government proposal to increase the lump sum is most welcome because the current lump sum gets nowhere near the immediate expenses incurred. However, it is essential that the Government consider this proposed three-year period, or until the child is seven, if that would be longer than three years, because pre-school children certainly need that security and will become very clingy when they realise that one parent has gone. A scenario might arise with an accident where not only has the parent died but another sibling. It is not uncommon, sadly, for a family of five or six to be suddenly left as a family of two—multiple losses all in one go in a horrendous road accident.
We know that the outcomes for children who are not well supported in bereavement are much worse. When we think about the cost of bereavement support, it must be put in context of the cost to society of young people who have been bereaved who have not had adequate support and have experienced excessive strain and mental health problems. That increases their risk of suffering from depression, attempting suicide and experiencing drug addiction, alcoholism, underage sex, unplanned pregnancies and so on. That cost must be offset against what appears, at face value, to be a demand for an increase in the amount that the Government will put there for bereaved parents. The long-term continuity becomes really important.
The only other point I will make, which was made to me by a young lady doing work experience with me, is that these days not that many parents are married. The issues highlighted in Amendment 62ZB are therefore really pertinent to the way that youngsters live today. I can see that administratively, if the parents are not married, it can become more complicated for government, but I do not believe that that is beyond the scope of being worked out. It is important to realise that the person who the child has lost and needs support to grieve over may not be their biological parent.
Lord German (LD)
My Lords, I raised this issue at Second Reading and have no hesitation in raising it again. I rise to address the issues that have been spoken of already, particularly those in Amendment 66, which the noble Baroness, Lady Hollis, has tabled this afternoon.
I hope and I am sure that noble Lords will judge the issue of changes to bereavement benefits as changes which would improve rather than worsen the current set of arrangements. We are told that these measures are based on what people were told the Government would provide them with, and that they would provide them with the best support. The Government in turn have told us that they are not about reducing entitlement or making savings. Therefore, the test surely must be whether the changes provide a genuine improvement and are not a worsening of the provision. That is why I have this concern about the one implication of the changes, that bereaved parents will be required to go back to work six months after the death of the mother or father. I am afraid I am unable to see the logic or the compassion that I would expect in this change. In fact, I used the word “cruel” at Second Reading.
For the benefit of the bereaved child or children, I would wish for those bereaved parents with children to have full conditionality relaxed for the whole year. This does not rule out preparation for return to work; in fact, there could still be some limited conditionality after six months—for example, attending work-focused interviews only. It is worth making the comparison with kinship carers. I regard this as an anomaly in the proposed regulations. If a child after bereavement goes to live with an uncle, aunt or cousin, that uncle, aunt or cousin, who may have to forgo work to look after the bereaved child, is exempt from full conditionality for 12 months. Yet the bereaved parent, the mother or father, is given only a six-month relaxation. As we know, a 12-month relaxation will not be necessary for everyone. The noble Baroness, Lady Hollis, said this. Some bereaved parents may determine that their circumstances are different and may want to return to work earlier. One would hope that that is always in the best interests of them and their bereaved children, but that is their choice and not a requirement of the state. There is compelling evidence to suggest that we need to alter the proposed provision.
There are six facts from studies, which I want to draw out. The first is that bereaved children and young people are more likely to have a serious illness or accident than their non-bereaved peers during the first year following the death of a parent. The second fact drawn from the studies conducted in this area is that they have higher rates of substance and alcohol abuse than their non-bereaved peers. Thirdly, one-third will show clinical levels of mental health difficulty at some point during the first two years after the death of their parent, and those bereaved suddenly of a parent are three times more likely to develop depression than their non-bereaved peers. Fourthly, there is an increased risk of suicide attempt and hospitalisation for psychiatric disorder. The fifth element is that parentally bereaved children score lower at GCSE than their non-bereaved peers. In other words, it affects their life chances through the examination system. The death of a parent by the age of 16 is associated with girls failing to gain any sort of qualification, and with men and women being unemployed by the age of 30. Sixthly, bereaved children and young people are overrepresented in the criminal justice system.
Of course, the increased risks outlined above do not mean that every bereaved child will go on to develop such difficulties, but they show that, as a group, they are more vulnerable than those who have not been bereaved. The most reliable longitudinal study that we have, which looks at the impact on bereaved children over a period of two years, conducted by JW Worden, Children and Grief: When a Parent Dies, found that the capacity of the surviving parent to care for their child was—and I am sure that no noble Lord will be surprised by this—the most important factor in securing better outcomes, emotionally and behaviourally, for the children. This included the surviving parent’s availability to the child—obviously emotionally but, more than that, in terms of being able to spend time with them and continuing routines where possible. Successful interventions with families generally involve supporting parents to communicate with and be available to their children, all of which point to allowing the surviving parent as much time as possible to be with their child in the year following the death.
Clearly, the conditions for claiming universal credit are intended to be as close to having a job as possible. It is important to think through the parallels between those who are bereaved and claiming UC, and those who are bereaved while in employment. While most employers clearly would not be able to offer a full year off work to a newly bereaved parent, many parents choose to change jobs, or even stop working, if their employer cannot be flexible, so that they can meet the needs of their children better.
This is the most important of issues and the most difficult time for children—when they lose a parent. Given that this is an anomaly compared to when a bereaved child is placed with a kinship carer, I believe that the Government should think again on this very important issue. I hope my noble friend will consider that.
Lord Browne of Ladyton (Lab)
My Lords, I will speak to Amendments 62ZZA and 62ZB, in my name and that of my noble friend Lady Sherlock, to Amendments 59, 60, 61 and 66 in the name of my noble friend Lady Hollis and Amendment 62ZA in the name of the noble Baroness, Lady Meacher.
At Second Reading, this part of the Bill figured large. The mood of your Lordships’ House then was that these provisions merited further debate and possible revision. We were all particularly indebted to the right reverend Prelate the Bishop of Derby for his powerful contribution that day. A lifetime of providing pastoral care to those suffering bereavement amounts to a wealth of experience and knowledge that we ignore at our peril, particularly when the lessons drawn from it are supported by the best research, as the contribution of the noble Lord, Lord German, has just suggested.
I expect that a strong thread of the Minister’s response will be an argument that the principal aim of these reforms is to make bereavement payments more effective in the 21st-century context. The Government have concluded that doing so requires only short-term intervention to allow a bereaved spouse or civil partner the time to deal with the immediate costs of the death of a partner and to come to terms with the consequential emotional and financial implications. In the longer term, they argue, if support is needed to cope with the consequences of bereavement, the universal credit system will provide that long-term support.
Broadly, those whom the Government consulted supported that approach, but significant reservations were expressed about the impact of the proposed changes on bereaved families. I believe, like many noble Lords and, perhaps surprisingly, the Pensions Minister himself, that there is a debate to be had about how long support should last, particularly in relation to bereaved families with children. On 29 October, on Report in the House of Commons, the Pensions Minister, Steve Webb, in restating the basic design of his reforms, said,
“there is a debate to be had about how long support should last”.—[Official Report, Commons, 29/10/13; col. 867.]
Thanks to the amendments before the Committee this evening, we have the chance to have part of that debate. I am indebted, once again, to my noble friends and other noble Lords who, in speeches moving and supporting the amendments, have set out the relevant differences in the proposed new financial support provisions compared to the status quo, saving me the need to repeat them and sparing your Lordships the tedium of having to listen to me do it. However, I have some points that complement their contributions and are worth emphasising.
The Bill—certainly this part of it—is cost-neutral, or at least broadly cost-neutral. It achieves its objective of paying out to all bereaved partners, regardless of age, mainly by reducing the level of support for bereaved families and by redistributing that money to those without children. The biggest beneficiaries are bereaved partners under 45—who are also the group most likely to be in work.
Secondly, the Government’s own figures on the number of families affected and what their numbers mean tell us some things, but not everything. The total number of deaths of people aged 25 to 64 in 2012, according to the ONS statistics, was about 73,000: 43,799 men and 29,413 women. The number of deaths increases with age, as one might expect. The number of people in receipt of each of the current three benefits includes 10,000-12,000 receiving bereavement support payments per annum. In November 2012, there were 21,000 people in receipt of one-year bereavement payments and 44,000 in receipt of the widowed parent’s allowance.
If I understand these statistics—and I might not—it appears that only half of bereaved partners in any one year are receiving bereavement benefits. This indicates that either bereaved partners are not claiming, they are not married or in civil partnerships, or they are unable to meet the national insurance contributions criteria. It would be interesting to know whether the Minister has any more detailed statistics than this. The estimated total expenditure of these benefits in 2013-14 is £575 million, falling to £531 million in 2016-17. The total is falling as the number of people dying below state pension age is falling and it is expected to continue to fall as people live longer. Importantly, however, as my noble friend Lady Hollis and the noble Baroness, Lady Finlay, reminded us very forcefully, behind these statistics each death is a great family tragedy. It is the loss of a loved partner or a loved parent, in some cases both.
This reform package includes a simplification of the conditions of entitlement and a relaxation of the qualifying national insurance contributions conditions. At this stage, I want to make two points. First, the contribution record of the deceased partner is still the principle qualification for these benefits, and that is important. This is not a case of something for nothing: it is a payment out for people who have paid in. Secondly, it is argued—although this is not reflected in any amendment before the Committee this afternoon—that in these reforms, the proposed contribution condition is more restrictive than at present. In particular, the proposed contribution condition requires Class 1 or Class 2 contributions, while the existing contribution condition allows payment of Class 3 contributions. Furthermore, unlike the current arrangements, it is argued, where the contributor dies before the end of the relevant year for the necessary contributions, there is no provision for earlier years to be aggregated and treated as if made in the relevant year. Will the Minister tell us whether this was intentional and, if so, why? Would the Government be sympathetic to an amendment that reflected the current rules?
As has already been explained by my noble friends, the existing system is replaced by the payment of a lump sum and monthly payments for one year to all bereaved spouses or civil partners regardless of age. We understand that the lump sum will be tax-free. Although the impact assessment assumes that the monthly payment will also be tax-free, we understand that this is still a matter about which the DWP is in discussion with the Treasury.
Amendment 62ZZA in the names of my noble friend Lady Sherlock and myself would ensure that both the lump sum and the instalment element of BSP would be tax-free. In the House of Commons, the Pensions Minister argued that if BSP is paid for just one year, it is easier to make the case that it is not a replacement for income, but a grant to meet the extra costs of bereavement. Therefore, he told us, it was easier to argue that it should be exempt from tax. Accepting that this is, of course, a matter for Her Majesty’s Treasury, a proper understanding of the effect of BSP requires more certainty than the Government are providing about its tax status. It would be helpful if the Minister could tell us when he hopes to have more clarity about this issue. Would it be helpful to the DWP if an amendment similar to our Amendment 62ZZA were passed on Report?
Amendment 59, in the name of my noble friend Lady Hollis engages directly with the Pensions Minister’s call for a debate about how long support should last. As explained by my noble friend, it seeks to extend the time of payment of BSP to a bereaved parent with children for at least three years or until the second year of schooling is complete for all dependent children, whichever is the longer period. The Childhood Bereavement Network states its confidence that this could be done cost-neutrally by adjusting down the monthly rate of BSP for parents and by reducing the lump sum for non-parents. Is the Minister willing to use his resources to test whether that brief is well founded? If it is, surely it significantly supports my noble friend’s amendment. She has shared not only her own experience of the effect of the loss of a parent on a child, but referred to research to which the noble Lord, Lord German, referred extensively. This demonstrated that the impact of a parent’s death on a child will be significant beyond a period of three years. This proposal is therefore evidence-based and, interestingly, is less generous than the current arrangements that my noble friend herself introduced.
The question that we are all asking is: to what extent are the Minister and the Government considering the needs of children in making this significant change of policy, by moving money from parents with children to those without? We hope that the Minister will engage with that question when he responds.
Lord Freud
My Lords, I start by thanking noble Lords for their thoughtful speeches. I know that they have been considering these issues very carefully and I appreciate and take on board the sentiments that have been expressed. Bereavement benefit forms an important part of state support. Reforms have been made over the years, but they have tended to have been in response to particular pressures, and until now no one has really considered how this benefit fits in with wider changes in society and, indeed, within a new structure of benefits. By not addressing the radical social and demographic changes that we have seen or accounting for the far-reaching changes to the welfare system, the benefit is out of date, difficult to administer and hard to understand. Radical reform is necessary to make it more effective for this century.
Baroness Hollis of Heigham
This benefit was introduced or revised after quite a lot of work and research in 2000. In what ways is it out of date? I can understand that the Minister may wish to make savings, but his proposals are cost-neutral. So, apart from the fact that funeral costs have gone up, and therefore there is a need for a larger lump sum, in what way is it out of date?
Lord Freud
The history is where it is thought that a partner is a dependent rather than an independent agent—and that is a fundamental change in our demography, and something that I know the noble Baroness welcomes, with the rise of women’s equality. It is one of the biggest structural changes that we have seen since the war.
Baroness Hollis of Heigham
I entirely agree with the Minister, but it is my belief that since 2000 the percentage of people in work, particularly mothers with young children, has changed by only three or four percentage points.
Lord Freud
I do not think that I want to get into a debate with the noble Baroness on whether the reforms that she was responsible for and those that I am responsible for are better. Let me try not to do it in that context. I shall describe what these reforms are doing.
The design is for the bereavement and support payment to be a significantly simpler benefit and to provide specific financial support at a time when it is needed most without affecting access to further support through other parts of the welfare system. The evidence from independent social research and our public consultation exercise found that the financial impact of spousal bereavement is particularly acute in the first months. Bereavement support payment is designed to provide a significant cash boost for people in these early months, with a lump sum followed by 12 monthly instalments. We recognise that those with dependent children need a greater level of support, so the Bill provides the ability to set out a higher amount in regulations, which is what we intend to do.
Amendment 61 is intended to allow us to pay a higher amount to those who have been caring for their spouse or civil partner prior to bereavement. Caring responsibilities at the end of life can be particularly difficult and distressing and we recognise this by continuing the payment of carer’s allowance for up to eight weeks after the death of the person being cared for. Under the new system, this will be paid in addition to bereavement support payment as opposed to being taken into account in widow’s parent’s allowance and bereavement allowance.
The Bill does not preclude us from specifying a higher rate in regulations for people who meet certain conditions. However, making receipt of or eligibility for carer’s allowance or carer’s credit a condition is neither targeted nor fair. It would be particularly difficult to prove that someone would have been eligible for carer’s allowance, or would have met any other such conditions, after their spouse had died. Moreover, while we are spending more money on bereavement benefits over the first few years of reform, clearly we are in no position to significantly increase benefit expenditure. Money for increased payments to certain groups would have to be taken from elsewhere in the bereavement benefit budget, either resulting in lower payments for those without dependants or lower payments for all.
On the duration of payment, the 12 monthly instalments are not intended to equate to the period of an individual’s grief, nor are they intended to provide ongoing income replacement; rather, they seek with an initial lump sum to provide support when it is needed most.
To pick up on the points from the noble Baroness, Lady Hollis, on the overall effect, the DWP ad hoc report shows that overall, 52% of recipients are better off under the reform and that 62% of those out of work, who are typically poorer people, are better off, while 100% of those who currently receive the least, the BPT group, who get the lump sum of £2,000 but no regular payment, are better off after the policy change. On average, out-of-work parents in the poorest 25% notionally gain for 12 years. Out-of-work parents in the next poorest income quartile notionally gain for up to eight years. On average, out-of-work childless people in the bottom 50% of the income range notionally gain irrespective of age. In-work childless people in the poorest 25% notionally gain, regardless of age. In the structure I am describing, bereavement support payment must be taken in the context of the provision of universal credit, which is efficiently directed at helping the poorest people.
Baroness Hollis of Heigham
Perhaps the Minister could help me. He is arguing that this is an improvement and an increase in generosity in work conditionality, but he is comparing what would be the case if someone did not get this payment under the new universal credit regime. At the moment there is no such requirement, if the income that has been provided is adequate for someone to live on. As I understand it, work conditionality therefore does not apply. If I have misunderstood, I am very happy for the Minister to correct me, but I think that he is making the comparison that we did not make, and he is therefore answering a different comparison.
Lord Freud
Clearly, if people can live on the current bereavement payments alone, no conditionality is implied. That is the difference between the systems. Under universal credit if people are reliant on universal credit, work conditionality will be implied.
Baroness Hollis of Heigham
In other words, at the moment someone could get a full widow’s benefit under this, together with tax credits, housing benefit and so forth, and they would be free from work conditionality. In the future, I absolutely accept that there will be a different regime, but the point is that at the moment the Minister is making a comparison with the position of people who are not bereaved enjoying universal credit compared with those who will be bereaved under universal credit. I am concerned, as are many other noble Lords, with the position of those who are currently free and exempt from work conditionality with additional incomes coming through tax credits, housing benefit and the like, which therefore give them a higher or sufficient income which does not attract to it work conditionality.
Lord Freud
The noble Baroness is looking at a pretty narrow group where people are taking general bereavement benefits plus an income from work at over 16 hours to get the tax credits, which do not contain conditionality. Yes, there is a different system, but that is what the noble Baroness is describing in that particular example.
There are types of tailored work search requirements. There are no work-related requirements at all for the lead carer of a child who is under the age of one. There would be some work-focused interviews when the child is older, and noble Lords will be familiar with these. The work-related requirements can be limited in cases where the claimant has childcare responsibilities or has a physical or mental impairment. This is a flexible approach to conditionality, allowing it to be tailored to the individual, which ensures that all claimants receive the right support.
I am absolutely committed to making sure that parents who have suffered a bereavement receive an appropriate conditionality regime, so I have asked the Childhood Bereavement Network to advise us on how we should develop this guidance. Of course, the point about this, as noble Lords have made clear, is that we are talking about the married bereaved. Lots of other people suffer equivalently who are not eligible for bereavement benefit, and I know that there is some pressure to widen it. This conditionality regime could have wide benefits and I would be prepared to develop that guidance in a relatively transparent way.
We need to consider other people who are bereaved in order to ensure that the system is fair to everyone. Bereaved people in employment are not likely to be allowed to stay away from work for six months. On parental bereavement leave, which is a statutory entitlement, the ten-minute rule Bill was asking for a statutory period of only two weeks’ bereavement leave for an employed person following the death of a child. An additional 4,000 bereaved, non-married, non-civil partnered but nevertheless partnered people who are on UC will also be exempt, although they will not be entitled to the bereavement payments themselves.
Our analysis from the current flow of bereavement benefit claims indicates that 55% of claimants are in employment. Out of the remainder, only 9% of widowed parents are unemployed and, if they claimed universal credit, would be required to undertake work-related activity six months after bereavement. Given that the policy of not imposing conditionality requirements on bereaved claimants claiming universal credit for six months is already more generous than that for bereaved individuals in other circumstances, and that our flexible conditionality regime allows us to reflect on and respond to individual circumstances, I see no merit in having a longer period.
I turn to the distinction of kinship carers; I enjoy boasting about the one-year concession on conditionality for kinship carers. I did that for very particular reasons. The death of a parent at any time is clearly a huge loss to a family and children need support during the grieving period, which can be a long period of time, as my noble friend pointed out. In fact, the evidence tends to show that grief comes out well beyond the one-year period. The support will be not only for the surviving parent who has knowledge of their child and how best to support them, but in most cases there is an existing support network of extended family, friends, schools and clubs. Unlike bereaved children who still have a parent to support them, other children do not have that support as they move into a kinship situation. They may have moved away from their home and school, meaning that their social support network has also been removed, and they need time to make new friends, settle into school and learn completely new routines. The difference with kinship carers is that this marks a huge change for both the child and the adult. On top of that, the adult concerned may have little or no experience of looking after a child, and will need time to make adjustments to their own life in order to accommodate the child.
On the point raised by my noble friend on the move to part-time work, I can confirm that a bereaved parent who changes their employment to part-time work will still be eligible to claim universal credit.
Removing any requirement to engage with the labour market through universal credit for a longer or even indefinite period could have a negative effect on a person’s recovery and long-term job prospects. We believe that allowing people to engage with the labour market through universal credit is necessary to help them adjust and regain control of their lives.
Baroness Hollis of Heigham
Did the Minister say “allowing people”; in other words, is he suggesting that it is the choice of the bereaved parent?
Lord Freud
Yes, I did. There is an element of push-pull and expectation, and the expectation here is that people would engage with the labour market after six months except where there would be difficulties in doing so. That is exactly why we want to develop a good guidance package, which we shall do in consultation with the key stakeholder.
Baroness Finlay of Llandaff
I apologise if I am interrupting the Minister when he is about to clarify something further, but I have a question about those situations where things are even more complicated. For example, one parent may have been driving the car, the other parent killed and one of the other siblings killed, so that the bereaved child feels anger towards the surviving parent as the person who was in control of the vehicle when the accident happened, as well as being bereaved of another sibling. Are those the sort of situations that the guidance will address, and will it allow a more flexible interpretation and some flexibility, particularly, over the six-month type of requirement? It is incredibly likely that the surviving child will have an extremely difficult time, including in establishing a relationship with the surviving parent.
Lord Freud
One of the key things is that there are clearly some terribly tragic and difficult situations involved here. However, the risk is that one looks at the very worst cases and draws up a policy that suits them, even though the majority of people are not in those extreme circumstances. What we are trying to develop here is a reasonable norm and then a capacity to adjust for the kind of extreme circumstances that do happen. We need to make absolutely sure that we are able to adjust for those—that is the structure we are looking at here. The risk is, as noble Lords know, that we do something for everyone when literally only 2%, 3% or 4% are affected. Noble Lords will have heard the percentages I gave about the number of families, which is 9% of the total. I want to try to avoid designing a system based on one particular example.
Baroness Hollis of Heigham
But why, unless the Minister is actually accusing widowed parents of exploiting or milking the system? Being more generous in the case of the very moving examples given by the noble Baroness, Lady Finlay, would give greater choice for other widowed parents with perhaps less difficult circumstances. Unless the Minister thinks they are milking the system, they will find their path back into the labour market. Why does he have to make it quite so tidy and precise? Why does he have to second-guess all the time?
Lord Freud
It is important that the system sets out some generous norms against other examples we are looking at. There are people in employment, who would very rarely see a norm of six months, and people who are cohabiting—a huge proportion of the people who suffer this are in that situation and, as I will go on to say, it is very difficult to help them any more. We set up a good norm and then have a robust system to make sure that we can make the appropriate adjustments for people for whom that norm is not appropriate. As I said, I have asked my officials to meet with the Childhood Bereavement Network in the coming months to discuss the policy approach in universal credit and to look at the guidance. I hope that I will be able to report back in time to inform our next debate on this.
I turn to the amendment in the name of the noble Baroness, Lady Meacher, and how widowed mother’s allowance and widowed parent’s allowance are to be treated under universal credit. She is not here now but I know she will read very closely what I say. As in the assessment of any income-related benefit, it is necessary to consider the income the house or individual has access to, including income from other social security benefits. As both the two benefits—the WMA and the WPA—are income-replacement benefits, it is right that they are taken into account under universal credit. Disregarding them would increase government spend on universal credit by a commensurate amount of around £300 million. Claimants migrating to universal credit from legacy benefits, where their circumstances have otherwise remained the same, will be transitionally protected.
This is what Cruse Bereavement Care said about the new system:
“It is a simple system that would provide bereaved people with access to immediate help. It gives immediate financial support at a time when other available sources can be rendered inaccessible … If the principle is that the universal credit should ensure that the bereaved family are adequately supported on an on-going basis then a lump sum to help enable them to get back on their feet may be simpler and more appropriate”.
Of course, this is exactly what we are doing.
Baroness Hollis of Heigham
Except that it may be better for some, but what the Minister is doing is making it a requirement for all.
Lord Freud
The noble Baroness is now going back to the conditionality debate, but I am now going on to the actual level of payments, which is a somewhat different point. I understand that there is a concern that there could still be a potential impact on a small subset of those universal credit claimants who also receive widowed parent’s allowance. This is the point about them being worse off by £7.56 a week. This is not an unintended consequence, because we have been clear about treatment of unearned income and that widowed parent’s allowance would be deducted pound for pound in assessing universal credit. As noble Lords know, universal credit is a fundamental reform of the current benefits system and leads clearly to both increases and reductions in the level of entitlements. However, no one already on benefit whose circumstances remain the same will lose out in cash terms as a direct result of the move because of the transitional protection.
The point is that widowed parent’s allowance is a taxable benefit. Working claimants might not only have their allowance deducted from the universal credit entitlement, but also pay tax on it through the tax code in their earnings. The reduction in net earnings as a result of the additional tax will be only partly offset by an increase in universal credit because of the 65% taper. Noble Lords will appreciate that there are good reasons why universal credit works on the basis of net earnings and tapered withdrawal, because that is the mechanism that is designed to incentivise work. Nevertheless, I will look carefully at the points that have been made on this issue in this debate and by stakeholders. I need to emphasise, however, that it would be a disproportionate and expensive response to move to a full disregard for all claimants of either of these two awards.
I now move on to the question of allowing bereavement support payment for unmarried couples and the request for a review within six months following Royal Assent. Our law and tax systems recognise inheritance rights and needs of bereaved people only if they have a recognised marriage or civil partnership. This stems from the founding principle of the national insurance system, which is that all rights to benefits derived from another person’s contributions are based on the concept of legal marriage and civil partnership. Allowing cohabiting couples to have access to bereavement benefits would significantly increase complexity; and proving cohabitation can be incredibly challenging, not to say an intrusion into claimants’ private lives.
On the request for a review, there clearly needs to be a period following introduction of the new payment to allow changes to bed down before we can review its effectiveness and impact on the different groups of claimants. I can assure the noble Lord, Lord Browne, that we have already committed to review the change in our impact assessment at a point when sufficient evidence is available to assess all aspects of the policy.
I want to pick up another point made by the noble Lord on the take-up of bereavement benefits. The take-up is high at around 90%, which has been helped by the rollout of the Tell Us Once information service. The majority may not qualify for the full amount due to the complex contribution conditions. Indeed, this is why we have simplified them into a position where someone is entitled to the new payment on the basis of payments of 25 times the lower earnings limit in any one tax year. I believe that the bereavement support payment will be simpler and fairer than the current system, providing support when and where it is needed most by supporting people to regain control of their lives as soon as they can. These amendments would be a backward step resulting in more complexity in a system that would provide less help to those who need it when they need it.
Lord McKenzie of Luton
Will the noble Lord perhaps deal more fully with the point raised by my noble friend Lord Browne about contributions and be a bit more specific about why Class 3 contributions are no longer a route to qualification?
Lord Freud
We think that it is essential to retain the contributory principle, and it is reasonable for people to have made those contributions for at least six months in order to qualify. However, the noble Lord and the noble Lord, Lord Browne, will appreciate that this is a radical simplification of the contribution conditions.
Lord McKenzie of Luton
We have been considering this for a long time and I do not want to prolong the debate, but that really will not do. All that has been done is that one route has been chopped off for people who satisfy the contribution conditions. Class 3 contributions are payments. We are not talking about credits into the system here, this is a payment. Presumably the noble Lord will argue that one should reduce the Class 3 rate on the basis that someone will get less for it.
Lord Freud
The point is that, depending on if it is a late payment, it would be possible to make a very small contribution and get a large payment of £9,800 back. I am happy to write to the noble Lord with a full justification of that decision.
Baroness Hollis of Heigham
My Lords, I am very appreciative of everyone’s contributions. A lot of issues have been explored, and although the Minister has been as fastidious and careful as he always is in trying to respond to the points, I have to say that, on what is now our fifth day in Committee, I thought that his responses here have been less persuasive than they have been to almost all of our other debates. They will certainly require us to look very carefully indeed at the small print of his responses because I am not persuaded by almost any of his points.
Let me first thank the noble Baronesses, Lady Finlay and Lady Meacher, and the noble Lord, Lord German, who I think actually used the word “cruel”. If the noble Lord wishes to resile from that, I apologise. I think that they all spoke very well and movingly about the situations in which families find themselves—not just singly bereaved but doubly bereaved. Sometimes the surviving partner or spouse may be seriously injured, which means that they cannot support a child in the family in the way they would wish. We know that such tragedies exist and the consequences multiply in what is a ripple effect for families for many years. That is especially the case when there are multiple losses. All sorts of feelings of guilt continue to plague unreasonably and irrationally but completely understandably, those who survive such a situation.
Lord Freud
I want to make sure that the noble Baroness adjusts the figure of 88% on the record, because that is not the figure. I was trying to supply the figures. Across all groups, 50% are better off compared to 48%. The figure of 88% is for a narrow group of those in work who are receiving the widowed parent’s allowance. A lot of misleading figures have been going around on the structure of this. There are effects of the combination of these payments with other benefits in the system, particularly universal credit. You cannot ignore those interactions and our figures show that poorer people in particular do well out of this new system.
Baroness Hollis of Heigham
I emphasise again that without seeing the Minister’s detailed working I will sustain the figures I have, unless, until or if the Minister can show me the points at which they are inaccurate. Is it 88% of widows with children in work who will be worse off, and 57% of those not in work who will be worse off? To put it another way, any widow with children who would have claimed for two years or more will in future be worse off. It may be that the Minister has not fully taken into account the cohort effect with regard to the point people at which join the labour market. Obviously, we should continue this in correspondence.
My noble friend Lord Browne pressed the Minister hard and showed again that targets interlocking with financial need are going to leave very many widowed parents in a far worse position. He encouraged the Minister to consult further with the Childhood Bereavement Network group of voluntary organisations to see whether a rearrangement of these benefits can meet some of our concerns. I am pleased that the Minister is willing to do this. He also argued not just for a reconsideration but, if necessary, a review, especially as regards cohabiting parents. If the Minister is serious about trying to bring benefits up to date, he should recognise that 50% of all children are now born outside marriage, even though the relationship may be an entirely stable one with two committed parents. The Minister deploys the argument of bringing structures up to date to suit his case, but apparently refuses to recognise other people’s positions. He is obviously right to want to continue to keep all benefits under review as an act of stewardship. However, if he is going to take account of this changed world, he is selecting what factors he chooses to take account of and ignoring others that are equally significant—and possibly in many ways more so—in their effects on families and their children.
The Minister made several points. First, as regards structure, I accept that we need to review it but I think that he is going about it the wrong way. Secondly, as regards money, he paraded the gainers against the losers and implied that somehow that is all right because there is some mythical average. It is not all right and I am sure we will come back to that point. The point on which he was least persuasive was that of conditionality. He seems to think that when you have lost a spouse and your children are very insecure, fearful and frightened, and need the surviving parent’s full-time attention, six months’ relief from conditionality is generous. I would tell him that he needs to live in the world that such parents inhabit. It really is not generous. He is making the comparison with, say, a single parent under UC. I accept that a widowed parent in that situation would be more generously placed in terms of work conditionality than a single parent unaffected by widowhood would be under UC, but that is not the point we are making.
I cannot believe that the noble Lord is deliberately bypassing this point. Our knowledge of what those widowed parents and their children experience was built into the previous structure that is now being abandoned. There is an apparent reliance on the fact that the relevant provision is somewhat better than UC, and therefore what have we got to complain about? The Minister needs to ponder some of the literature which the noble Lord, Lord German, identified; perhaps he has. It may shape his perception of this issue of work conditionality. He is so completely wrong on this that I am puzzled because I know that he tries to enter into the situation of recipients of benefit.
Finally, the Minister referred to kinship carers and charmingly boasted that he had been responsible for making their situation better. I am very glad indeed that he did, but the lesson I draw from that is that widowed parents should now turn themselves into kinship carers. Is it his intention to make the regime harsher for the parent and their children who are suffering grief than is likely to be the case for kinship carers, given that the latter are nearly always grandparents? I know they are nearly always grandparents as I have done some work on this. Is it the Minister’s intention that the regime should be harsher for the widowed parent with children than for a grandparent caring for the children, particularly if the maternal grandparent is involved who has suffered not the direct loss of a son but, say, that of a son-in-law? Is that what he is really arguing? I wonder how much experience he or his team have had of engaging with families in that situation. I would hope that at the very least he will take away from this the argument that whatever he may or may not be able to do in terms of budgets and cost neutrality—and that may follow discussions with the voluntary groups, which we welcome—he will at least extend his empathy for kinship carers, which we respond to and recognise, to the similar group of widowed parents, and at the very least not deploy work conditionality until a year has passed. That would at least go some way to meeting our concerns. Unless the Minister wants to respond to me further now, I beg leave to withdraw the amendment.
Lord Freud
ScheduleOption to boost old retirement pensions Part 1Great BritainSocial Security Contributions and Benefits Act 19921 The Social Security Contributions and Benefits Act 1992 is amended as follows.
2 (1) Section 1 (outline of contributory system) is amended as follows.
(2) In subsection (2)—
(a) omit “six”;(b) in paragraph (d), after “making up entitlement;” insert—“(da) Class 3A, payable by eligible people voluntarily under section 14A with a view to obtaining units of additional pension;”.(3) In subsection (4)(a), for “and 3” substitute “, 3 and 3A”.
3 After section 14 insert—
“Class 3A contributions14A Class 3A contributions in return for units of additional pension
(1) An eligible person is entitled to pay a Class 3A contribution in return for a unit of additional pension.
(2) A person is eligible to pay a Class 3A contribution if the person—
(a) is entitled to a Category A, Category B or Category D retirement pension or graduated retirement benefit, or(b) has deferred entitlement to a Category A or Category B retirement pension or graduated retirement benefit.(3) The amount of a Class 3A contribution needed to obtain a unit of additional pension is to be determined in accordance with regulations made by the Treasury.
(4) Before making those regulations the Treasury must consult the Government Actuary or the Deputy Government Actuary.
(5) A person—
(a) may pay Class 3A contributions on more than one occasion, but(b) may not obtain more than the maximum number of units of additional pension.(6) The maximum number of units of additional pension that a person may obtain is to be specified by the Treasury in regulations.
(7) In this section “deferred”, in relation to graduated retirement benefit, has the meaning given by section 36(4A) of the National Insurance Act 1965.
(8) For the meaning of “deferred” in relation to a Category A or Category B retirement pension, see section 55(3) of this Act.
14B Class 3A contributions: repayment
(1) The Treasury may by regulations provide for a Class 3A contribution to be repaid in specified circumstances.
(2) Regulations under subsection (1) may, in particular, make provision about applications for repayments and other procedural matters.
(3) A person is to be treated as never having had a unit of additional pension if the Class 3A contribution paid in respect of it is repaid.
(4) Regulations under subsection (1) may provide for benefits paid to a person because of the unit of additional pension to be recovered by deducting them from the repayment.
14C Class 3A contributions: power to change eligibility or remove the option to pay
(1) The Treasury may by regulations change who is eligible to pay Class 3A contributions.
(2) The Treasury may by regulations remove the option for people to pay Class 3A contributions
(3) Regulations under this section may, in particular, amend an Act.”
4 If paragraph 3 comes into force before the day mentioned in section 51(5), section 14A(2) as inserted by that paragraph has effect as if the reference to entitlement included the prospective entitlement of a person who—
(a) has not yet reached pensionable age, but (b) will reach pensionable age before that day (assuming that the person lives until pensionable age).5 In section 43 (persons entitled to more than one retirement pension), in subsection (1), after “subsection (2) below” insert “and section 61ZC below (which deals with unusual cases involving units of additional pension)”.
6 In section 44 (Category A retirement pension), in subsection (3)—
(a) in paragraph (b), at the end insert “or where the pensioner has one or more units of additional pension”;(b) after paragraph (b) insert—“For units of additional pension, see section 14A.”
7 (1) Section 45 (rate of additional pension in a Category A retirement pension) is amended as follows.
(2) In subsection (1)—
(a) after “shall be” insert “the sum of the following—(a) in relation to any surpluses in the pensioner’s earnings factors,”;(b) at the end insert “; and(b) if the pensioner has one or more units of additional pension, a specified amount for each of those units.”(3) In subsection (2), at the end of paragraph (d) insert “; and
(e) if the pensioner has one or more units of additional pension, a specified amount for each of those units.”(4) After subsection (2) insert—
“(2A) For the purposes of subsections (1)(b) and (2)(e) the “specified amount” is an amount to be specified by the Secretary of State in regulations.”
8 In section 52 (special provision for surviving spouses), after subsection (3) insert—
“(3A) In subsection (3) the references to additional pension in a Category A or Category B retirement pension do not include any amount of additional pension attributable to units of additional pension.
(3B) If an amount of additional pension in the Category B retirement pension is attributable to units of additional pension, the additional pension in the Category A retirement pension is increased by that amount (in addition to any increase under subsection (3)).”
9 After section 61 insert—
“61ZA Shortfall in contributions: people with units of additional pension
(1) This section applies to a person who has one or more units of additional pension if the person—
(a) is not entitled to a Category A retirement pension, but(b) would be entitled to a Category A retirement pension if the relevant contribution conditions were satisfied.(2) The relevant contribution conditions are to be taken to be satisfied for the purposes of the person’s entitlement to a Category A retirement pension.
(3) But where a person is entitled to a Category A retirement pension because of this section, the only element of that pension to which the person is so entitled is the additional pension attributable to the units of additional pension.
(4) For units of additional pension, see section 14A.
61ZB Shortfall in contributions: people whose dead spouse had units of additional pension
(1) This section applies to a person whose spouse or civil partner died with one or more units of additional pension if the person—
(a) is not entitled to a Category B retirement pension as a result of the death, but (b) would be entitled to a Category B retirement pension as a result of the death if the relevant contribution conditions were satisfied.(2) The relevant contribution conditions are to be taken to be satisfied for the purposes of the person’s entitlement to that Category B retirement pension.
(3) But where a person is entitled to a Category B retirement pension because of this section, the only element of that pension to which the person is so entitled is the additional pension attributable to the units of additional pension.
(4) For units of additional pension, see section 14A.
61ZC Entitlement to more than one pension: sections 61ZA and 61ZB
(1) Section 43 does not prevent a person from being entitled for the same period to both—
(a) a Category A retirement pension because of section 61ZA, and(b) one Category B retirement pension.(2) Section 43 does not prevent a person from being entitled for the same period to both—
(a) a Category A retirement pension, and(b) one Category B retirement pension because of section 61ZB (or, if there is more than one such Category B retirement pension, the most favourable of them).(3) Accordingly—
(a) in section 43(2)(a) the reference to “a Category A or a Category B retirement pension”, in a case in which subsection (1) or (2) of this section applies, includes “a Category A and a Category B retirement pension”,(b) in sections 43(3)(a) and (aa), 51A and 52 “Category A retirement pension” does not include a pension to which a person is entitled because of section 61ZA, and(c) in sections 43(3)(a) and 52 “Category B retirement pension” does not include a pension to which a person is entitled because of section 61ZB.”10 In section 122 (interpretation), in subsection (1), at the appropriate place insert—
““unit of additional pension” means a unit of additional pension for which a person has paid a Class 3A contribution under section 14A;”.11 In section 176 (parliamentary control), in subsection (1)(a), at the appropriate places insert—
“section 14A;”“section 45(2A);”12 In the heading to Schedule 1, for “and 3” substitute “, 3 and 3A”.
Social Security Administration Act 1992 (c. 5)13 (1) Section 162 of the Social Security Administration Act 1992 (destination of contributions) is amended as follows.
(2) In subsection (5)(e), after “those contributions;” insert—
“(ea) in the case of Class 3A contributions, 15.5 per cent of the amount estimated to be the total of those contributions;”.(3) In subsection (8)(c), for “or (e)” substitute “, (e) or (ea)”.
Welfare Reform and Pensions Act 1999 (c. 30)14 In section 47 of the Welfare Reform and Pensions Act 1999 (shareable state scheme rights), in subsection (2)(a), omit “earnings-related”.
Part 2Northern IrelandSocial Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)15 The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.
16 (1) Section 1 (outline of contributory system) is amended as follows.
(2) In subsection (2)—
(a) omit “six”;(b) in paragraph (d), after “making up entitlement;” insert—“(da) Class 3A, payable by eligible people voluntarily under section 14A with a view to obtaining units of additional pension;”.(3) In subsection (4)(a), for “and 3” substitute “, 3 and 3A”.
17 After section 14 insert—
“Class 3A contributions14A Class 3A contributions in return for units of additional pension
(1) An eligible person is entitled to pay a Class 3A contribution in return for a unit of additional pension.
(2) A person is eligible to pay a Class 3A contribution if the person—
(a) is entitled to a Category A, Category B or Category D retirement pension or graduated retirement benefit, or(b) has deferred entitlement to a Category A or Category B retirement pension or graduated retirement benefit.(3) The amount of a Class 3A contribution needed to obtain a unit of additional pension is to be determined in accordance with regulations made by the Treasury.
(4) Before making those regulations the Treasury must consult the Government Actuary or the Deputy Government Actuary.
(5) A person—
(a) may pay Class 3A contributions on more than one occasion, but(b) may not obtain more than the maximum number of units of additional pension.(6) The maximum number of units of additional pension that a person may obtain is to be specified by the Treasury in regulations.
(7) In this section “deferred”, in relation to graduated retirement benefit, has the meaning given by section 35(4A) of the National Insurance Act (Northern Ireland) 1966.
(8) For the meaning of “deferred” in relation to a Category A or Category B retirement pension, see section 55(3) of this Act.
14B Class 3A contributions: repayment
(1) The Treasury may by regulations provide for a Class 3A contribution to be repaid in specified circumstances.
(2) Regulations under subsection (1) may, in particular, make provision about applications for repayments and other procedural matters.
(3) A person is to be treated as never having had a unit of additional pension if the Class 3A contribution paid in respect of it is repaid.
(4) Regulations under subsection (1) may provide for benefits paid to a person because of the unit of additional pension to be recovered by deducting them from the repayment.
14C Class 3A contributions: power to change eligibility or remove the option to pay
(1) The Treasury may by regulations change who is eligible to pay Class 3A contributions.
(2) The Treasury may by regulations remove the option for people to pay Class 3A contributions.
(3) Regulations under this section may, in particular, amend an Act.”
18 (1) If paragraph 17 comes into force before the new state pension commencement date for Northern Ireland, section 14A(2) as inserted by that paragraph has effect as if the reference to entitlement included the prospective entitlement of a person who—
(a) has not yet reached pensionable age, but (b) will reach pensionable age before that day (assuming that the person lives until pensionable age). (2) In this paragraph “the new state pension commencement date for Northern Ireland” means the date on which legislation in Northern Ireland corresponding to section 2 of this Act comes fully into force.
19 In section 121 (interpretation), in subsection (1), at the appropriate place insert—
““unit of additional pension” means a unit of additional pension for which a person has paid a Class 3A contribution under section 14A;”.20 In section 172 (procedure for regulations etc), in subsection (11A), after “11(3)” insert “, 14A”.
21 In the heading to Schedule 1, for “and 3” substitute “, 3 and 3A”.
Social Security Administration (Northern Ireland) Act 1992 (c. 8)22 (1) Section 142 of the Social Security Administration (Northern Ireland) Act 1992 (destination of contributions) is amended as follows.
(2) In subsection (5)(e), after “those contributions;” insert—
“(ea) in the case of Class 3A contributions, 15.5 per cent of the amount estimated to be the total of those contributions;”.(3) In subsection (8)(c), for “or (e)” substitute “, (e) or (ea)”.”
Baroness Sherlock
Baroness Sherlock
My Lords, as we move on to Part 5 of the Bill on private pensions, I want to take the opportunity to remind the Committee of my interests in the register. I have a remunerated interest as the senior independent director of the Financial Ombudsman Service.
This group of amendments looks lengthy, but its aim is remarkably precise. Amendment 62ZC to Clause 32 is actually very simple; it retains the power of the Secretary of State to put in place the consolidation of small pension pots but removes the part of the sentence that limits this to the pot follows member form of consolidation. I will focus my contribution on Amendment 62ZC, as the other amendments in the group address the consequences arising from that specific change. The Government believe that action is needed to address the large number of dormant small pension pots which will arise under auto-enrolment when employees move to new jobs, as they do on average 11 times in their careers. We from these Benches agree that action is needed, but not the form of action proposed.
The impact assessment confirms that the Government considered two default transfer options. The first option would be pot follows member, where small pension pots follow the member to the new employer’s pension scheme. The second is an aggregated scheme in which the small pension pots are transferred to an aggregator such as NEST. The Government had two choices, and I believe strongly that they made the wrong one.
As it stands, the clause allows only for pot follows member. Our amendments would allow the possibility of using a default aggregator model without the need for new primary legislation. I propose to comment on the problem in order to demonstrate why I believe that the Government’s proposed solution is flawed, to put forward an alternative, and then pose some questions to the Minister. I promise to do it as quickly as is practical.
I turn first to the context. The core issues of trust and confidence which we have discussed previously are still centre stage in getting people to start and to continue saving for their retirement. We were reminded afresh by my noble friend Lord Hutton that we do not have a savings culture in this country in Committee last week. This Bill and auto-enrolment need to give people the confidence that they need to save for their old age. but how can we demand that people save if they do not trust the saving vehicles and they do not trust the pensions market as offering value for money?
The pensions market is not a typical retail market where the consumer chooses the product. Under auto-enrolment, the consumer does not choose the product at all—the employer does. The employee choice is either to stay in or opt out and lose the employer contribution completely. There are also many intermediaries in the pension supply chain. Pensions are a complex product; they lack transparency, and while large employers may have the resources to pay for good advice and assessment of fund performance, SMEs may not. The demand side is weak.
The pensions market also has some very big players who offer pension fund products, asset management, and annuities. The OFT says that the four largest players have between them 68% of the assets, 76% of the schemes and 61% of the members. The results are predictable; the combination of a concentrated supply side and a weak demand side is bad for savers and allows conflicts between the two to go unresolved, which is not in savers’ interests. Those characteristics of the pension market combine, as the OFT report puts it, to make the market “dysfunctional”. The OFT concluded that,
“competition cannot be relied upon to ensure value for money for savers in the DC workplace pensions market”.
Future clauses and amendments deal with the criticisms raised by the OFT in its report, but this clause and our associated amendments deal specifically with the challenges of small pension pots created by auto-enrolment. The Government estimate that 50 million pension pots will be created by auto-enrolment by 2050, 12 million of them under £2,000. Already, one in six people have lost track of their pension pots, and there are 1 million unclaimed pension pots out there. The evidence is clear that the Secretary of State needs power to make regulations automatically to transfer and consolidate small pension pots. We all agree that a default consolidation mechanism is needed for those people who do not make an active choice to transfer their pensions. The point of contention is how this should be done.
Lord Turner of Ecchinswell (CB)
My Lords, I would like to speak in support of this amendment. When the Pensions Commission addressed the issue of private pensions eight years ago, we had two absolute priorities. The first was the use of inertia through auto-enrolment to increase the number of people involved in savings schemes. I think we all agree that the degree of support for that principle across society, industry and the political parties has been most heartening, and indeed we are now seeing auto-enrolment coming through with a considerable degree of success. Our other absolute priority followed from the first one because once you auto-enrol someone into a pension, you have to make sure that there is good value. It was to bring down the extremely high costs of pension provision for people on modest or low incomes in small and medium-sized enterprises. We observed that if people went through the private competitive system, by the time they retired, 25% or even more of their entire pension pot had disappeared in cumulative charges over the years. We believed that it ought to be possible to get that figure down to something like 5% or 10%, which makes an extraordinary difference to someone’s income throughout their retirement. We are talking about people living with incomes in retirement that are 20% or so higher than they would otherwise have been.
Those extremely high costs derived from the fundamental inefficiency of the market for private pension provision. It is a system absolutely shot through with market failure where the process of trying to provide in a competitive fashion simply does not work well. We have heard already from the noble Baroness, Lady Sherlock, the quote from the Office of Fair Trading on that.
To get the costs down, it is important to ensure that there are low costs for active members in the scheme to which they are contributing, and it is also important that low charges are levied on those who have already accumulated pots, and on those pots derived from past employment. That requires two things. First, it requires measures to facilitate or require the consolidation of pots, thus removing the costs of multiple proliferation, which are of no benefit either to the industry or to the individual. Secondly, it requires measures to ensure low costs in the scheme into which we consolidate. Again, it is good that a consensus has emerged over the years on the importance of those objectives. I recognise that the pot following the member is proposed as being one way to that end, but I am concerned that while it achieves the first of the two crucial objectives of consolidation, it does not necessarily achieve the second. It does not necessarily achieve low cost in the scheme into which the person is being consolidated because there are dangers that PFM could involve people being consolidated into a scheme where they are paying higher charges than they were paying into the scheme they had been contributing to, and higher charges than necessary. I believe, therefore, that the aggregator option may be the better one and that it needs to be looked at carefully and fairly.
I agree that there are some trade-offs here, but I am not convinced that the impact assessment which has been put before us is a good and fair assessment of that trade-off. The key argument in the impact assessment is that if we go down the aggregated route, we would need to apply it only to “the smallest unprofitable pots” to ensure that the aggregator scheme did not monopolise the market. It states then that the department has interpreted that for the purposes of assessment by assuming that you would aggregate pots only up to a maximum of £2,000, because that was the figure which was suggested in discussions with providers. That compares with the £10,000 assumed when it looks at the pot follows members. Indeed, it is quite noticeable that when it looks at the PFM option, it gives us a set of impact assessments for a variety of options—£2,000, £5,000, £10,000 and £20,000—but when it turns to the aggregator model, it considers only the £2,000 maximum pot.
I accept that if it was really necessary and unavoidable that if we go down the aggregator route we apply it only to pots of up to £2,000, that might be a good argument for taking the PFM route. But I believe that there is no such necessity and that the logic in favour of it is invalid and needs to be challenged. The argument is that a higher level would interfere with the effectiveness of competition in the market and lead to dominant aggregators. However, the whole of the edifice of auto-enrolment, of NEST and of the regulations relating to value for money is based on the recognition that we are dealing with massive market failure and that we cannot rely on fair competition. We cannot therefore consider the argument that some dominant aggregators might emerge to be a valid argument against aggregation. Indeed, dominant aggregators will only emerge if they are lower cost, and that—to go back to my earlier point—is the absolutely central thing and the criteria above all on which we should focus. Will we get the costs down? Will we reduce the total reduction in yield?
I do not believe, therefore, that the danger that the aggregators may become relatively dominant in the market—which is really the only argument put forward against it in the impact assessment—is a valid argument against aggregation. I would urge that, to have a useful impact assessment, we should be considering a range of options with a higher maximum of £2,000 transfer. I see no inherent reason why we should consider having no limit; I certainly believe that if we are to have a fair comparison, we should be thinking about the same limit that applies to the PFM option. I believe, therefore, that this choice between PFM and aggregation should not be concluded at this point. It requires more flexibility and thought to enable further consideration. I am personally, in my gut, in favour of the aggregator limit option, and I think it will be favoured over time, but all that this amendment does is keep that flexibility open for future consideration without the need for later primary legislation. I certainly think that that is required.
Lord Stoneham of Droxford (LD)
My Lords, the previous two speakers have covered the main arguments that I was planning to raise, because there is concern—even from those close friends of the Minister, Steve Webb—on this issue. It is valid, therefore, to register that—there are certainly concerns in our group here this afternoon. The issues have been raised, including the issue of the inefficient market. The issue does not cover the consolidation of old pots. It considers the consolidation of the mobile or live pots. It does not raise the issue of what you do with those people in the labour force who are constantly changing jobs and the costs and the impact on their pension pots every time they do that. It also needs to address the fact that there is a smaller number of aggregators. I agree there is a problem with competition, but it is much easier to supervise them and make sure that the quality of those aggregators is adequate.
The final issue that needs to be raised is that there is a concern that without that supervision, people will be transferring into poor schemes or run the risk of doing so. They need to be protected. For all those reasons, it is right—and the noble Lord, Lord Turner, raised this point—that this is a time for reflection before we make any final decisions.
Baroness Drake (Lab)
My Lords, I will try not to duplicate some of the excellent contributions that have been made. Perhaps I could say that the areas of concern with pot follows member can basically be grouped into three categories. One is confidence in the basis for the Government’s decision to choose pot follows member; the second is differing views on what benefits the saver, and the third is the need to protect dormant pension pots that have already accrued.
When it comes to confidence in the basis for the Government’s decision, the noble Lord, Lord Turner, did a splendid job in identifying the limitations in the impact assessment. I stress that there are significant barriers to overcome before the Government can be confident about the superiority of the PFM model. The consequences of getting this wrong are absolutely huge.
Baroness Drake
My Lords, perhaps I may reiterate for continuity that the areas for concern with PFM can be grouped into three: confidence in the basis for the Government’s decision, differing views on what benefits the saver and the need to protect dormant pots already accrued.
When it comes to the basis for the Government’s decision, where are the significant barriers to be overcome before the Government can be confident about the superiority of the PFM model? The consequences of getting this wrong are huge. Yet the transfer model is in the Bill when there are so many conditionalities still to work through, and confidence in securing lower charges, which is the main benefit claimed for the PFM model, are by no means assured.
PFM requires effective pan-industry collaboration, but what if that is not forthcoming? Are the Government confident that they can overcome industry inefficiencies and conflicts of interest, so well articulated by the noble Lord, Lord Turner? The DWP is working with the industry to find an IT solution to match pots to members. There are significant technical challenges to overcome, standardisation to be achieved and the industry as a whole has to reach a consensus that prioritises the savers’ interests. If and when that is achievable are unknowns, but the Bill locks us into pot follows members.
Some providers will have an interest in getting rid of small, less profitable pots but will also have an interest in setting a pot size cap to defend their more profitable pots. They will have a natural antipathy to an aggregator with a pot cap that increases to a certain level. However, the pot limit chosen for automatic transfer will affect the number of separate pots that a saver builds up over their working life. It is one of the issues that goes to the heart of the efficiency of the aggregator model or the consolidation model chosen. Depending on the assumptions about the aggregator or how many active member and dormant-member pots that it has, the administrative savings can be greater than those that have been estimated in the impact assessment.
The department comments in its impact assessment that, overall, the results of its modelling suggest the aggregator scheme will achieve slightly less consolidation than PFM, but that needs to be set against the greater control that an aggregator scheme could provide in mitigating other risks that come with an automatic transfer mechanism. It would also be interesting to see the results of modelling that includes today’s dormant pots. I would like to come back to this. Equally, pot follows member cannot be implemented without raising quality standards, or the Government risk transferring the savings of millions of ordinary people into myriad schemes over which they currently have little quality control.
Even if the Government succeed in getting all schemes to a minimum quality standard, there will be a wide range between minimum standard and best practice. For example, consider a modestly paid worker who leaves a good scheme provided by a major retailer and goes to work for a two-person employer running a small shop, whose workplace scheme has higher charges, poor governance and a less suitable investment strategy. Would it really be wise to default several thousands of pounds of the worker’s savings into the new employer’s scheme? Regulation could set standards for aggregated schemes above the qualifying standards for automatic enrolment schemes, raising those standards in order to mitigate the risks that can occur on transfer.
Against that, PFM increases the regulatory burden to oversee a myriad schemes into which automatic transfers would be made, rather than focusing on leveraging very high standards in a few aggregated schemes. There is the potential for significant burdens on employers involved in transferring small pots to any number of schemes. Under PFM, every scheme would potentially need to be capable of communicating with every other scheme. Aggregators could pose a lower burden, as there would be—or could be—a much smaller number of such schemes.
Automatic enrolment was intended to carry a lighter regulatory burden for employers, especially SMEs, but this seems to be rowing in the opposite direction. The National Employment Savings Trust, which embraces the most transient low to moderate market, could consequently face higher administrative costs as a result of PFM. What is the consumer detriment to NEST members whose pots are transferred into the schemes of new, small employers, and out of the protection of the high governance standards in NEST?
With pot follows member schemes, the department expects that over the long run average charges would reduce as efficiency savings are made by the industry, but a reading of the impact assessment lacks confidence. Paragraphs 67 to 69 list some of the risks to which I have referred, but paragraph 70 concludes rather sweepingly that,
“the Department would expect the gains and losses from differences between scheme charges and investment performance to cancel out on average”.
When it comes to savers benefitting through lower charges from the administrative savings that providers may make from PFM, paragraph 71 comments that,
“there is a risk that some providers will not experience the resource savings projected”.
Paragraph 72 reminds us of the,
“uncertainty surrounding the assumption over the savings that providers will make”.
This is not the firmest of springboards from which to lock into a solution on the front of a Bill. On the differing views of what benefits the saver, PFM does not currently accommodate people who leave the labour force or become self-employed, as they have no employer scheme into which to transfer their pot. Their ex-employer may nevertheless default them into a poorer personal pension because they do not allow ex-employees in their existing scheme, which I must say is a growing trend. What of women who leave to become carers, move to a new employer, or who work part-time but because of the level of the earnings trigger are not auto-enrolled into the new employer’s scheme?
As has been argued by NAPF and others, pot follows member increases the risk of charges and transaction costs being incurred on the whole pension pot, rather than on the incremental amount saved with the previous employer. If the saver works in an industry characterised by frequent job changes they will be more vulnerable to these risks, which an aggregator could reduce.
Even where individuals choose to transfer to their new employer’s scheme, they face supply-side barriers. Transfers can take weeks if not months, and complexity and lack of standardisation combine to cause delay and increase costs. At decumulation the buying power of a larger pot can be harnessed by the individual, but the buying power is even better if open-market options can be exercised in bulk. Aggregators could facilitate and do this.
I turn to the third element, which is the need to protect dormant pots that have already been accrued. A key weakness in pot follows member is that it excludes existing dormant pots. An aggregator could pool an individual’s dormant and live pots because aggregation would not depend on an active scheme member moving to a new employer. Pot follows member at the point of introduction only consolidates live pots with future live pots. Today’s dormant pots are completely ignored. No start date has been set for pot follows member, as my noble friend Lady Sherlock has indicated, but by 2016 some five years’ worth of dormant pots will have been built up under automatic enrolment, and they will be excluded from the PFM proposition. The summary of the impact assessment points out that those with dormant pots before the start date will,
“remain in their existing scheme”.
That is a key weakness in this solution. Equally, it cannot be right that they should stay with their existing scheme in every instance because some employers will simply default these pots into alternative arrangements anyway if the former employee does not voluntarily transfer. If they are not allowed the option of access to PFM or the aggregator, the employer may well default them anyway into a personal pension.
Finally, the issue of pension pots is not only a future one, it is also one of legacy. Quite a lot of work is being done on standards and reviewing legacy pots by the DWP and the OFT, and there is work to come out of the FCA. I would ask this question: is there to be no synergy on the solution to transferring small pots post-2016 under auto-enrolment, and the solution to the problems that may be revealed in the audit of legacy schemes arising from the OFT investigation? Is it really going to be a set of parallel lines in looking for the solutions to cover the legacy problem, which could also be in auto-enrolment savings pots because of the 2016 dateline and what evolves in the future?
Amendment 62ZC clearly maintains the power of the Secretary of State to make arrangements for the transfer of pension pots, because everyone sees the compelling need to have some way of aggregating or consolidating these small pots. This amendment provides an opportunity to rethink the model to be chosen, but it does not of itself substitute an alternative model. The Government can eventually decide on the alternative model, and new primary legislation would not be needed—but it would not lock us in. The effect of the amendment would not be to lock us in to the PFM model at this stage. The reason for that is, I would say, because the case is not proved, members’ interests are not truly being defended, and there is no synergy with any dormant savings that may exist prior to the implementation of PFM before 2016. I believe that all these issues need much more consideration.
Baroness Turner of Camden (Lab)
My Lords, I have not spoken on this item hitherto except briefly at Second Reading. In my opinion, it is one of the most important issues before the Committee. That is because it is quite obvious that the Government want people to save. Everything they have been telling us about pensions indicates that they want people to save. What happens if people do save, but then they transfer jobs? Nowadays, of course, people do not stay in the same job for their lifetime. They may have several or even many changes of job in the course of a career. What happens to the pension pots that they accumulate? If there is no safety in those pension pots, the whole thing will be a disaster. I support strongly what my noble friends have said. It is clear that this is something that requires a great deal of attention.
Is the regulator to have more powers to deal with this? It is obvious that you cannot have a situation in which pension pots are put at risk because there is no way of handling the market or for dealing with people who will be forced to make choices for which they do not have the necessary skills or experience. They cannot make the right kind of choices and they may end up with a bit of a disaster instead of a reasonable pension, or even a reasonable lump sum to place with another pension provider. Again, I hope that the Government will take seriously what has been said in this debate. It is a very important issue.
Lord Bates (Con)
My Lords, I can certainly assure the noble Baroness, Lady Turner, that we will take very seriously what has been said this afternoon because it comes from such authoritative sources. We have had a high-quality discussion, as is typical of this entire Committee. In fact, at one point I think that we had a Turner commission quorum. This is a very important discussion. We are agreed about the urgent need to tackle small pots and to keep people engaged as regards the value of their savings with a view to their increasing them and being able to purchase a bigger pension when they retire. The savings culture to which the noble Baroness, Lady Turner, has just referred is at the heart of this amendment and the proposals we have put forward.
First, I wish to put some general remarks on the record and, in so doing, speak to government Amendments 62A and 62B, standing in the name of my noble friend Lord Freud. I will then turn to the issues and questions raised and, I hope, give noble Lords some comfort on them.
I think it is worth starting on a note of consensus. Clearly, there is a strong sense that the issue of the proliferation of small pots is one that needs to be addressed. There is some disagreement about how we get there—an issue on which we have consulted extensively since 2011. We announced our preference for the pot-follows-member-model in 2012 and reiterated it in the Command Paper published last year. A full and proper policy-making process has been followed in coming to this conclusion. These amendments seek fundamentally to change our proposals to a type of aggregator model, where pension pots will be moved to a separate nominated transfer scheme. We consulted on the option of an aggregator and there was no clear consensus for a particular type of aggregator. We received views on single, multiple and virtual aggregator models and only 19% of respondents preferred a multiple aggregator which these amendments seek to introduce. Therefore, these provisions, while providing a broad framework, legislate specifically for the pot-follows-member model, providing a clear direction to drive development of the detailed transfer process and to enable the industry to plan for the future.
I will take some time to set out why this Government believe it is right to take this approach. The rationale behind automatic transfers has always been to ensure that individuals have better retirement outcomes and we believe that pot follows member will help to achieve this because it brings greater pension pot consolidation. The proportion of people reaching retirement with five or more dormant pots could fall from one in four without reform to nearly one in 30. We estimate that pot follows member will halve the number of dormant pots and make net administrative savings of £6.4 billion by 2050. That is a key point because the administrative costs of pensions are at the heart of what we are talking about in terms of charges, so therefore reductions in costs mean a bonus for the savers.
In contrast, by their very nature, aggregator models mean less consolidation than pot follows member. Individuals will have at least two pots in a single aggregator model and they could have many more in a multiple aggregator model. Our research shows that a single aggregator scheme would achieve only around half the net present value of a pot-follows-member system to the new employer’s scheme. Given that people are more likely to engage with pension saving as they see their pot grow, coupled with the fact that most annuity providers require a minimum of at least £5,000 or £10,000 in a pension pot to achieve the market option to which the noble Baroness, Lady Drake, referred, consolidation is a key objective to achieve greater results and economies from the purchase of annuities.
Baroness Drake
Will the Minister accept that, whereas getting every automatic enrolment qualifying scheme up to a minimum standard is an excellent aspiration, getting everyone up to a minimum standard is not the same as setting a very high set of standards for a scheme that you are using to default people’s pensions into?
Lord Bates
The Government are not averse to excellent aspirations in a whole range of policy areas but in that particular area we need to look at the issue of the quality. In many ways, this goes back to the introduction of auto-enrolment, when perhaps it should have been the case that scheme quality was dealt with at that time. That would have made an awful lot of sense.
Baroness Drake
I do not want to get into that political debate because there might be some merit in what the noble Lord said. One of the core issues is that a default pension scheme was not chosen but I do not want to drift there. However, it does not matter who should have dealt with the minimum standards for qualifying schemes and when. If the Government are going to take to themselves the power to say, on behalf of millions of people in this country, “We will automatically transfer”, then the governance standards required in the scheme receiving the pots transferred under those terms have to be pretty high, do they not?
Lord Bates
Yes, and our hope and belief is that there will be higher standards. That cannot be issued by diktat and has not been covered. We are simply giving the powers and setting out the framework as to how we will go about that, but that discussion has to be had with the pensions industry. The conversation is ongoing and we will certainly be reporting on that progress.
I turn to some of the specific points that have been raised. The noble Baroness, Lady Sherlock, talked about the level of support and seemed to be fairly sceptical about whether there was any.
Lord Bates
The noble Baroness always asks an honest and genuine question, and I am trying to give an honest and genuine response, which is to say that we are not necessarily comparing like with like here. Although people understand how the pot-follows-member scheme might work—in other words, they will have just one pot, and everything will be transferred into it—they do not necessarily understand what the noble Baroness is proposing in terms of alternatives, whether they are single, multiple or virtual aggregators. Therefore, to give a clear-cut position on that is somewhat difficult.
It was drawn to my attention today that Adrian Boulding of Legal and General, one of the largest pension providers, in today’s Pensions Expert, formerly Pensions Week, says:
“the concept of your pension pot following automatically to a new employer is now not far off. The long-term benefits of people having ‘one big fat pension pot’, as the minister likes to call it”—
I think the Minister he is referring to is my right honourable friend Steven Webb—
“will be greater consumer engagement, more informed decisions, greater buying power and better pension outcomes. All well worth striving for”.
Lord Bates
He might say that but he is one of the providers and I therefore think that that is certainly well worth listening to. Another reason why we have come to this conclusion is because there is a great deal of uncertainty about what is happening out there. Auto-enrolment in pension schemes has been a huge success and the previous Government deserve credit for introducing it in the 2007 and 2008 Acts, based on the recommendations of the Turner commission. The price of the success of auto-enrolment is that it is creating a larger number of smaller pension pots as people move on. Figures have been quoted of there already being 370,000, and the noble Baroness, Lady Drake, has talked about a future figure of 600,000. That means that the need to make a decision is more urgent than ever. The noble Baroness was asking, “What does the industry think? What are people actually thinking?”. Pensions Expert, in its comment and analysis section said:
“If last year was about policy, then this year it is going to be all about making things work. Government have now clearly set the direction of travel. The success of auto-enrolment—in terms of low opt-out rates—means even more small pots are going to be created than were expected. Previous estimates that auto-enrolment would create around 370,000 new pots of less than £2,000 each year now look woefully low”.
They are very clear in what they are saying: they want direction. That does not mean to say that that direction cannot be changed by a future Government—just that they are getting clear direction. We consulted about it in 2011; in 2012 we issued a response; in 2013 we actually said what we were going to do. It seems as if finally, the industry—and, we hope, members—are getting their heads around the fact that this is the preferred option and the route that we are going down to ensure that we actually make it work.
Baroness Hollis of Heigham
They may be getting their heads around the Government’s position, but that does not mean that they agree with it.
Lord Bates
The noble Baroness says they do not agree with it, but when the ABI actually carried out a survey and asked people which one they preferred, 58% of consumers said they preferred pot follow member.
Lord McKenzie of Luton
Did the noble Lord not say a moment ago that perhaps the aggregator model was initially slightly more difficult to understand than the pot-follows-member model? It is not surprising, therefore, that initially, some of these surveys may have shown less support for that model.
Lord Bates
The noble Lord makes my point: it is more difficult to understand. What are we trying to do? We are trying to make it simpler. We are trying to get people to be able to understand it. That is one of the reasons why it appeals to people. They will only ever have one pension pot; under the other scheme they may have several; they will be able to keep track of that and follow it through. Anyway, we can discuss and debate that, but in all of the consultation that was undertaken, it was clear that there was a strong view in favour—not only from the respondents of the consultation, but also in the opinion polls that followed from the industry.
The noble Lord, Lord Turner, raised the important issue that pot follows member fails to deal with high charges. We strongly agree that driving up scheme quality is of paramount importance. This is an issue wider than just a scheme used for transfers in the aggregator model, but actually should be something that applies to all, to set minimum standards across a broader range of schemes. Therefore, in doing so, it would benefit not just those affected by these pension pot transfers, but also the existing members of those schemes.
The noble Lord, Lord Turner, said he did not accept the pot size comparisons that were being put forward. He spoke about the £2,000 limit: why was it £2,000? We actually consulted not just on £10,000: we consulted on £20,000, £10,000, £5,000, all the way down to £2,000 and even £1,000, which is similar to the amount that is currently used in the Australian model, which is often cited in this context. In all of those different levels, pot follows member came out ahead of the aggregator in terms of individual responses.
Baroness Drake
I would not presume to speak for the noble Lord, Lord Turner—I learn from him, not the other way around—but the point he was making was that one of the Government’s arguments against aggregator was that they would have to limit the pot size, which would introduce inefficiencies, because if they did not do so, it would distort the market. He was saying, I think, that he did not necessarily accept that that was a compelling argument against aggregator.
Lord Bates
It is a shame that the noble Lord, Lord Turner, is not here to respond to that himself or to clarify the point, but I take the clarification from the noble Baroness about where he was going. On the issue of how to drive down costs, the noble Lord referred to the potential and mentioned some horrendous numbers—25% or 30% of accrued pension disappearing in charges and how low it was possible to get that. There are some very interesting findings, which we are consulting on at present, about how technology would be a key ally in this. The noble Baroness, Lady Sherlock, asked about this too, wondering whether we preferred a paper-based system or an electronic system. Our preference, based on the current evidence, is invariably towards electronic, because there are associated costs every time you push a bit of paper around. I was interested to read in various articles that you might be able to get the figure for the entire transaction of a transfer down to £105 for both transmitting and receiving the amount if you do it electronically. There needs to be an electronic element to this and that probably points in the direction of a database. We are still consulting on that. We are open to advice, but that is probably something on which the industry will have to offer views.
Baroness Sherlock
I thank the Minister for that response and am also very grateful to all noble Lords who have contributed to this discussion. The noble Lord joked at the beginning that the Turner commission had been quorate. I think when he reads Hansard he may find that slightly less funny than it seemed on the face of it. If I was sitting where he was sitting and two-thirds of the members of the pensions commission told me that I had got this wrong—auto-enrolment and all that flowed from it was based on their recommendations—I would be thinking very hard indeed at this point.
I am very grateful to the noble Lord, Lord Turner, for what seemed to me a pretty damning indictment of the fact that, although we may share an objective, the way the Government are going about trying to achieve this will not tackle the very grave consequences of market failure in the pensions market for savers who are depending on the results of those investments for their retirement income. As my noble friend Lady Turner pointed out, that is one of the most significant issues facing not just the Government but, frankly, this Committee.
I am sorry. I have a great deal of respect for the Minister but I am afraid that he was unable to answer the major questions that came up today. I do not blame him for that. He did not invent the policy: it was invented in another place and he is doing a good job of defending it. But the fundamental questions are out there unanswered. The noble Lord, Lord Turner, pushed home the consequences of that market failure on high costs and charges and what that does to savers’ incomes, and the fact that, despite the Government's best intentions, pot follows member simply does not contain within it the means for addressing that.
The noble Lord also pointed out the consequence of what happens to savers’ incomes in retirement of not getting that right now. Those effects will run for a long time. I was very grateful for the intervention of the noble Lord, Lord Stoneham. Given the origins of this Bill, I thought it was a brave and helpful intervention. But the questions that he posed about how pot follows member can deal with old pots and multiple moves are still sitting on the table. It will be interesting to hear whether there is some small movement on auto enrolment pots, but we will still have the issue of significant numbers of dormant small pots.
We still do not have an answer, as my noble friend Lady Drake pointed out, to the problem of people who are leaving the labour market altogether either to become self-employed or simply to leave the labour market. What happens to those pots?
We did not really get an answer as to why, when so much of the Bill is remarkably loose, the Government suddenly get very prescriptive in this area and solely specify PFM on the face of the Bill. As my noble friend Lady Drake pointed out very powerfully, there are some major difficulties of implementation. The Minister is calling for speed and action now. He must know that the barriers to implementation described by my noble friend Lady Drake are such that he is not in a position to press that button now. If he is, he might want to respond to the questions that she posed about the IT challenges, the standardisation challenges, the huge issues of implementation and the need to build consensus across the industry to prioritise savers’ interests. If he feels that the Government have all those cracked, I encourage him to stand up and intervene and tell me now. Otherwise, there is a lot more work to be done. All this amendment is trying to do is to make sure that that work does not abandon the alternative option—which may in the end be the saving of our shared objective—when there is no need to do so at this stage.
I am also concerned about some of the points that the Minister raised in response to there being no single model. I would be very happy to work with the Government to see if we can build consensus around a single model of an aggregator. If that is what the Minister offers, let us work together to try to do that.
The Minister said that there would be more consolidation in pot follows member. Leaving aside for one moment the serious concerns about the judgment made in the impact assessment raised by my noble friend Lady Drake and the noble Lord, Lord Turner, if pot follows member does not tackle the full range of risks that have been described, then that simply does not answer the question. The Minister again gave an argument that most annuity providers would require a minimum level of pot and the point of decumulation, but again he did not take on the point made by my noble friend Lady Drake, which is that being able to buy in bulk in the market, which an aggregator could do at the point of decumulation, actually opens up whole opportunities in that area.
He made the point about good and bad schemes and that there should not be any bad schemes. I completely agree with him, but there are 200,000 pension schemes in this country. The chances of getting all those up to an optimum level before this is introduced are frankly unrealistic. Given that, the point made by my noble friend Lady Drake stands even more strongly. Even if the Government could guarantee to get all those schemes up to what they would regard as an acceptable minimum standard in the context of the criticism of market failure made by the noble Lord, Lord Turner, and even if they could do that fast, there will still be a significant difference between the best and worst returns. For reasons I will explain in a moment, that seems to be very difficult in the context of auto enrolment.
I was pleased that the Minister managed to find some backing for his scheme from a survey. Did he say that the survey was conducted by the ABI?
Baroness Sherlock
That is marvellous. So the ABI backs a scheme and the survey conducted by the ABI backs the scheme. That is excellent. I think it still leaves out some possibility that there may be other people out there who do not back the scheme. Perhaps it was the other way round. Either way, I think it is the same point made differently. None the less, I take the point and thank him for sharing that with us.
The Minister also made the point that there will be real attractions—and he quoted someone from Legal & General saying that it was clear that the direction of travel from the Government was for pot follows member. There are—but, of course, this is a Bill, not an Act. It is open to Parliament to make a decision if it does not agree with what the Government are proposing, and so far this Committee clearly does not agree with what the Government are proposing. Not one person who has spoken backed the Government’s plan; all backed the alternative. So we still have an opportunity. He also went on to say that many advantages have been mentioned of people having one big, fat pension pot. Of course, there is no reason why that big, fat pension pot could not be sitting in a well performing, well regulated, successful aggregator.
That takes us to the fact that we have two significant public policy dilemmas or issues. The challenge that we have here is made all the more significant by the fact that it comes on the back of auto-enrolment. This is not an individual employee making a choice to go to a pension fund, place their money in it and take their risks in the market. This is somebody who is not choosing, but is simply choosing a job, and by doing so will be forced by default, if they make no other choice, automatically, without their express consent, their pension pot will be moved from their previous employers to their new employers. That is in the context whereby already the state has auto-enrolled them. So step one, without any active consent, we have auto-enrolled them in a pension scheme. Step two, when they move jobs, without any active consent we default moving it with them to the new employer. Doing that in a context where the level of return that they might have expected to gain with the old employer could, potentially, be significantly higher than that which might be enjoyed with the new employer, creates the possibility that the state is creating consumer detriment on a significant scale. That is a very serious challenge, and in that context I suggest that the Government’s proposal of pot follows member has a very high bar to pass.
Finally, the other public policy point is that, if one of the consequences of this is that significant numbers of savers end up with lower retirement incomes than they might otherwise do, that is bad for them, but it is also bad for us as a country. I think that my noble friend Lady Drake quoted from the impact assessment, which suggested that the gains and losses would balance out across the piece. Even if that is true, and I do not know the impact assessment well enough to be sure—I do not have enough confidence in it yet to be confident of that—that does not help us individually. On average, the life expectancy may be X, but if mine is significantly below and yours is significantly higher, the difference matters quite a lot to me, because although on average we may both die at 84, if I die at 60 and you die at 100, that does not make me happy. So the consequences for individuals are really quite significant.
Given all that, there is also the fact that the distribution will mean that, if savers do not go into retirement with the kind of incomes that the Government expect them to have, the whole strategy for retirement on which this is predicated begins to be called into question. So this whole Bill is predicated on an assumption that future generations of savers will have higher retirement incomes because of all these actions taken. It is, therefore, absolutely incumbent on all of us to make sure that the Government get this right. All this amendment does is to put the aggregator option into the Bill. I urge the Minister to accept it and to work with us in doing that. We will definitely return to this matter at a later stage but, since this is the Moses Room, I beg leave to withdraw the amendment.
Lord Freud
Lord Freud
House of Lords
(10 years, 3 months ago)
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Shipping: Passenger Safety
(10 years, 3 months ago)
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Lord Berkeley
To ask Her Majesty’s Government what assessment they have made of the impact on passenger safety of their application to the Committee on Safe Seas and the Prevention of Pollution from Ships for exemption for certain ships and areas of operation from European safety requirements in order to substitute life rings for life rafts.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, Her Majesty’s Government require all vessels to carry enough life rafts to meet the risk to those on board in an emergency. The proposal submitted to the Committee on Safe Seas and the Prevention of Pollution from Ships is based on UK regulations for domestic passenger ships and is supported by the department’s formal safety assessment of domestic passenger ships carried out between 2002 and 2004 in response to Lord Justice Clarke’s formal inquiry into the “Marchioness”/“Bowbelle” collision.
Lord Berkeley (Lab)
I am grateful to the noble Baroness for that response. My understanding is that this exemption application applies to passenger ships with up to 130 people on them, which, under directive 2009/45, article 4, allows them to go 15 miles from the place of refuge or five miles from the coast in the summer. The idea is to reduce the number of life rafts to the maximum number of passengers—not allowing, of course, for the fact that you cannot always launch life rafts if a ship is heeling—and to replace the rafts removed with life rings. Does the Minister really think that it is a good idea for people who might be wrecked in an accident in the North Sea or off the Hebrides to have to get into a life ring rather than a life raft?
Baroness Kramer
My Lords, my understanding is that this exemption is for up to five miles and therefore would not apply in most of the circumstances that the noble Lord has just described. It is for small craft of less than 24 metres which have to be travelling in daylight and in summer only. They are required to have sufficient life rafts for all passengers but additional safety can be provided by buoyancy apparatus.
Lord Higgins (Con)
My Lords, are life rafts generally not preferable to life rings, particularly if the water is cold? Is the saving in this negotiation really significant? Presumably all existing vessels already have the current requirement rather than the reduced one.
Baroness Kramer
My Lords, there is clearly some confusion. The EU directive was designed for the large, steel ferries that I think noble Lords are referring to. These are small craft. Existing small craft already have this exemption; it is simply as they are replaced that newer craft can have the same exemption. The rationale is simply that on a very small boat there is very little space for adding one additional life raft, which is what would be required by the directive. You would have to take off passengers. These are usually small, family operations operating on a tight financial margin and, as I say, it is within five miles of the coast so that if something untoward were to happen, modern life rafts are very reliable and air-sea rescue is very close at hand. Therefore, the marginal benefit is considered very marginal.
Lord Lea of Crondall (Lab)
My Lords, I am rather exercised by the fact that Britain over the past 100 years has had the reputation of giving leadership in the International Maritime Organisation, which is across the road there, with the highest standards in world shipping. I am trying to think of the read-across of this to the Philippines archipelago, to Indonesia and so on. Two very brilliant new books on seafaring that have just come out show that many safety standards are now deteriorating. Will the Minister give an assurance that, within the IMO and elsewhere, the British Government will continue to listen to the problems of workers on seagoing ships and that the Government’s contacts with the employers will be equally matched by their contacts with the trade unions?
Baroness Kramer
My Lords, the UK has been an absolute leader in marine safety and I can guarantee that this Government will continue to be. I will ask about various discussions that are taking place with the IMO and other stakeholders, and make sure that we write back to the noble Lord.
Lord West of Spithead (Lab)
Is the Department for Transport involved in any studies looking at lessons learnt from, for example, the “Costa Concordia”, and at the inability to launch lifeboats and life rafts at excessive degrees of heel?
Baroness Kramer
My Lords, I do not have the answer to the noble Lord’s question but I will obtain it. I want to make it very clear, however, that the exemption being sought is not for a boat like the “Costa Concordia”. We are talking about something much smaller in benign waters very close to shore.
Lord Greenway (CB)
My Lords, is not this application one of a number which have arisen from the formal safety assessment by the Maritime and Coastguard Agency which I as a mariner regard as entirely practical?
Baroness Kramer
The noble Lord is exactly right. I think that this is regarded by almost everybody as a practical, reasonable and sensible measure. It has withstood over many years a reputation of providing sufficient safety in the relevant circumstances.
Lord Swinfen (Con)
My Lords, what would be the comparative rates of survival for the two methods, life rafts and life rings, in cold winter water around our northern coasts?
Baroness Kramer
I assure your Lordships that this standard could not apply in winter weather; it is for summer only. It is for boats that are very close to the coast and for small excursion vessels. It is part of an appropriate safety regime to look at how the vessels are being used and to make sure that safety is appropriate to that rather than circumstances in which they cannot be used.
Lord Wigley (PC)
My Lords, may I invite the Minister to reconsider her reference to benign waters? Very often, waters that appear benign can rapidly become less benign, and lifeboats are not available at close proximity all along the coast. Can we make sure that if we are erring, we are erring on the side of safety?
Baroness Kramer
I can assure your Lordships that, from a UK perspective, this measure meets a very high standard of safety. Both the safety required of the boats themselves and the quality required of the life rafts have been very closely examined. I have learnt in this House that the word “benign” can be wrongly used, but I think that these are generally benign waters.
Lord Davies of Oldham (Lab)
My Lords, the Minister is still trying to convince the House that there is virtue in pitching British safety standards below the minimum of European safety standards. Why on earth should that be done unless it is just some doctrinaire response to Europe?
Baroness Kramer
Perhaps I may explain, because I think that there is some confusion here. The EU directive which would require an additional life raft is not intended for this kind of vessel; it is for steel vessels and for large-scale ferries, so it does not apply to most of these craft because typically they are fibreglass, and so on. We want to be sure that we are getting an appropriate exemption for future replacement of existing craft. As I said, the EU directive is not intended to deal with this kind of craft; they are expected to be handled through an exemption process.
Employment
(10 years, 3 months ago)
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Lord Holmes of Richmond
To ask Her Majesty’s Government what assessment they have made of the number of people in full-time employment in the United Kingdom.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
There are more people in work than ever before. The latest figures show that we have reached a record high employment level in the UK, with more than 30 million people now in work. Three in every four workers—about 22 million people—are in full-time employment. In the past year, the number of people in full-time work has risen by 460,000. This represents 95% of the increase in total employment in the UK.
Lord Holmes of Richmond (Con)
I thank my noble friend for his response. These figures are very good news. Work represents the greatest way for people not only to escape poverty but for most of us to realise our potential. What are the Government doing to ensure that all groups benefit from this employment boom, not least young people and disabled people?
Lord Freud
My noble friend is right to concentrate on specifics, and I am happy to assure him that we have campaigns to get the disabled into work. We have just launched the two-year Disability Confident campaign for employers, and in December we issued the disability health employment strategy. As for youth, I am pleased to be able to say that JSA for youth has now fallen for 18 consecutive months. The number of young NEETs is the lowest for a decade. We have 1.5 million apprenticeship places. The key measure that I have used in this House before is the number of young out of work and out of education, which rose under the previous Government, even though we had the biggest boom. We have now got it under control and it is beginning to fall. The number is now down by 100,000 since the election.
Lord Peston (Lab)
My Lords, is the Minister aware that quite a few people in full-time employment are in jobs below their qualifications and abilities, so the figures need to be looked at more carefully? Much more to the point, is he aware that if we look at the present state of the British economy, to cite that great liberal economist John Maynard Keynes, it is nowhere near full employment and the Government’s policies will never get us there?
Lord Freud
My Lords, the leader of the Labour Party said in 2010 that we had a programme that would lead to the loss of 1 million jobs. In fact, we have had a programme that has led to an increase of 1.2 million jobs. We have the right policies to get this country back on the move.
Lord Kirkwood of Kirkhope (LD)
My Lords, whereas it is quite clear that the headline unemployment figures are welcome, there is a problem about emerging underemployment and intermittent hours. While we are waiting, with more and more impatience, for the arrival of universal credit, which in due course will help, will the Minister do all he can to encourage people to take advantage of the existing in-work benefits, which can help employees get into full-time, sustainable jobs? While he is at it, will he do his best to try to tone down the Government’s anti-welfare rhetoric, which indiscriminately and unfairly seeks to caricature every social security claimant as either a scrounger or a cheat?
Lord Freud
My Lords, as my noble friend is fully aware, we are introducing a programme to blend the out-of-work benefits with the in-work tax credits. That is vital because it gets rid of that distinction and makes a smooth transition from being out of work to being in work. That is a vital reform which, as my noble friend knows, I am pursuing with all my energy.
Lord Low of Dalston (CB)
Is the noble Lord able to say when the Government expect unemployment to fall to the level of 7% and we can expect to see interest rates rising again?
Lord Freud
My Lords, that is, of course, a reference to the Bank of England’s target of 7%. Unemployment has been falling pretty dramatically: it fell 0.3 percentage points to 7.4% in the latest three-month period. It is not the job of a government Minister to predict when unemployment will hit any particular rate; all I can say is that these trends are immensely encouraging. We should all look for them to continue to improve and I have no doubt that they will.
Lord Soley (Lab)
Bearing in mind his first Answer, can the Minister tell us what discussions there are in government about the relative economic merits of raising the minimum wage?
Lord Freud
There are two distinct factors. The higher the minimum wage, the more people will not go into the market. Estimates show that if we were to go with the recommended living wage, we would lose 300,000 jobs, particularly among youngsters. On the other side of the argument, there are benefits in terms of pay, particularly for the Government, because—as my noble friend mentioned—the tax credit system boosts the pay of low-paid people. That is the balance of the debate.
The Lord Bishop of Newcastle
My Lords, the Minister will be aware that there are still significant regional differences in unemployment levels in the UK. Can he tell us what regional policies the Government may have in mind to help the situation in areas such as the one where I live, in the north-east of England, where unemployment levels are still in double figures?
Lord Freud
My Lords, I was encouraged, as other noble Lords will have been, to hear the very optimistic remarks about what is happening in the north; namely, that it is outpacing London at this particular time. Let us hope that that is and remains the case.
Taxation: Fuel Duty
(10 years, 3 months ago)
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The Earl of Shrewsbury
To ask Her Majesty’s Government whether they plan to extend the freeze in fuel duty beyond 2014.
Lord Newby (LD)
My Lords, the Government have taken substantial action to support motorists with the cost of living while reducing the budget deficit. As a result of this Government’s action, fuel duty will be frozen for the remainder of this Parliament, which will result in pump prices being 20p per litre lower than under previous government plans by 2015-16. The Government must exercise flexibility to target tax support where it is most needed. The Government will continue to review fuel duty in the context of all taxes and the public finances.
The Earl of Shrewsbury (Con)
My Lords, I thank the Minister for that encouraging reply. Is he aware that in upland, moorland and less favoured areas, such as where I live in the Peak District, the ownership and use of a vehicle—let alone a four-wheel drive vehicle—is a necessity and not a luxury. That therefore causes those communities to have problems with fuel prices, which are a very significant component of their viability. Will Her Majesty’s Government make every possible effort in the future to assist those areas in terms of cost of fuel?
Lord Newby
My Lords, the policy that we have already adopted will assist people in those areas, as it will everywhere else. We are looking at the scope for extension of the rural fuel rebate scheme, which gives an additional 5p rebate in the most sparsely populated areas. We hope to be able to make an announcement of that in the relatively near future.
Lord Barnett (Lab)
My Lords, the Question on the Order Paper asked the Minister a simple question. Should not his answer have been no?
Lord Newby
No, my Lords. The noble Lord knows better than anybody else that it would be foolish to set out at this point firm plans for individual taxes for the course of the next Parliament.
Lord Marlesford (Con)
Has my noble friend noted that the price of petrol in the petrol stations varies up to 3p within a few miles, and sometimes more? Does he realise therefore that if people are able to pay the extra 3p rather than going to a cheaper place, that suggests what the economists call a bit of a consumer surplus since they are prepared to pay extra? What is the cost to the Exchequer of this reduction? First, I think that it was £400 million for this year but what will it be by the end of the Parliament? Secondly, is it really the best way of spending public money, given all the other demands on the Exchequer?
Lord Newby
My Lords, the Government will have eased the burden on motorists by £22.5 billion over the Parliament to 2015-16. The kind of differential that my noble friend describes in a small area is a classic example of a competitive market operating. I am told, although I do not have one myself, that if you have a certain kind of sat-nav it will automatically tell you the price of petrol at petrol stations in your vicinity at the time, which is a very good way of facilitating the market working.
Lord Davies of Oldham (Lab)
My Lords, the Minister will however recognise that the Chancellor, through his VAT increase, increased the price of fuel by 3p. Why do the Government not go further and introduce a price freeze on domestic fuels?
Lord Newby
My Lords, it is true that the effect of the VAT increase ate into the benefit but the price is still 10p less than it would have been, even taking the VAT increase into account. I am not sure whether the noble Lord supports that policy but that is a very considerable net increase. As far as domestic energy prices are concerned, the noble Lord knows that his party’s proposed policy is nothing more than a gimmick.
Lord Lea of Crondall (Lab)
Arising from the question asked by the noble Lord, Lord Marlesford, about what economists call consumer surplus, is the Minister in agreement with the official data of the ONS that hydrocarbon taxes are the most regressive taxes in the country? In other words, they show that the lowest-paid pay—I think—four times more on petrol, as a percentage of their income, than the top decile. There is therefore a distinct impact on poverty, as was implicit in the original Question.
Lord Newby
My Lords, the noble Lord has made a powerful argument for the Government’s policy.
Education: Academy Chains
(10 years, 3 months ago)
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Baroness Jones of Whitchurch
To ask Her Majesty’s Government what controls are in place on the disbursement of public funds by academy chains to their directors and trustees or private contractors linked to them.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, the relevant rules that academies must abide by are quite clear and have been considerably tightened under this Government. No individual or organisation with a governing relationship to an academy can make a profit; any goods or services delivered by these parties to these academies must be delivered transparently and at no more than cost; and proportionate and fair procurement processes must always be followed. As charities, academies are required to adhere to accounting standards. These require the full disclosure of related-party transactions, and independent auditors check those disclosures every year. Unlike local authority schools, academies produce and publish annual third-party audited accounts.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lord for that reply and of course I accept that the accounts of these firms are audited. However, is the Minister concerned by reports of excessive sums of taxpayers’ money being paid to academy chain directors for travel, subsistence, consultancy and legal services? Is he also concerned that many of these businesses are employing members of their immediate family to provide services for the academies, and does he accept that academy chains lack the involvement of parents and the local community, which could provide a degree of independent scrutiny and governance for the academies? What more is his department planning to do to get a grip on the situation, which seems to be one of prioritising the expansion of the academies over the protection of public money?
Lord Nash
I stand by my original Answer regarding the rigid regime that academies operate under, and resent any allegation that we do not have a grip of the situation. When we came into the Department for Education in May 2010, we found a department with, frankly, a very poor understanding of value for money. Since then, we have halved the cost of building schools under the previous Government; by 2015 we will have cut the cost of running the department by half in real terms; we have slashed the amount of money spent on sponsored academies from an average of more than £300,000 under the previous Government to under £100,000; and we have substantially tightened the rather loose arrangements that the previous Government had in force in relation to these arrangements. I stand by the results of the academies. Sponsored academies open for three years improve their results by 12% versus 5% at secondary level, and primary converter academies are far more likely than local authority schools to be rated outstanding at their next Ofsted when they have previously been rated good.
Lord Forsyth of Drumlean (Con)
My Lords, did my noble friend have the opportunity over the Christmas Recess to read the interview in the Times given by our noble friend Lord Harris of Peckham about the huge success in transforming the lifetime chances of youngsters in this country? Would a responsible Opposition not be asking why we are not getting value for money like that from local authority schools, which are cheating a generation of those opportunities?
Lord Nash
I entirely share my noble friend’s sentiment. We should be praising philanthropists like my noble friend Lord Harris and encouraging more of them into the academies programme, as we are attempting to do. In 2013 the Audit Commission carried out a survey of annual detected fraud and corruption within local authorities and reported 191 cases of fraud in schools. My department is considering what we can do about improving procedures in local authorities in relation to this.
Lord Foulkes of Cumnock (Lab)
My Lords, what are the arrangements for the trustees and directors of these companies declaring their interests?
Baroness Perry of Southwark (Con)
My Lords, does my noble friend agree that the most important form of accountability is the accountability of the school to its pupils, and their parents, to raise the standards of achievement? The huge success that my noble friend has already described is surely evidence of the success of the accountability that has left academies accountable to their pupils to raise standards.
Lord Whitty (Lab)
In replying to the Question, the Minister was trying to be very reassuring. Does that reassurance extend to a circumstance where a charity or an academy chain, having taken over the running of a school, then decides to dispose of property attached to it? Do the proceeds from that property go back to the school or do they accrue to the academy chain or charity?
Lord Nash
The noble Lord asks a very good question. In just about every case—if I can find other cases that are relevant to this answer, I will identify them for him—the land stays with the local authority, with a 125-year lease to the academy, so the circumstances that the noble Lord refers to are unlikely to apply. Certainly, nothing like what he mentioned could possibly happen without the consent of the Secretary of State.
Lord Edmiston (Con)
My Lords, I declare a personal interest as a sponsor of Grace Academy, which has featured in recent articles. Is the Minister aware that many sponsors have put multiple millions into the academy programme rather than taking funds out?
Lord Nash
I share my noble friend’s sentiment entirely. I am fully aware of that. I am extremely grateful to him for his support of the academy programme and, as I said earlier, we should encourage more philanthropists like him to come into the system, rather than trying to score cheap points against them.
Lord Griffiths of Burry Port (Lab)
My Lords, does the Minister agree that, while there is a full-blooded debate to be had about the relative merits of academies and schools that have some local authority involvement—a debate that I suggest will have its full import when we have rather more evidence from the academies than we have at the moment—it does not do anybody any good to castigate those schools that are not yet academies and whose results are manifestly brilliant and would hold any academy’s results to shame? Can we have some assurance that the language we use is not polarised in a way that damages schools in the public sector?
Baroness Hussein-Ece (LD)
Who are some of these academy chains responsible or accountable to? For example, the Academies Enterprise Trust has grown to the size of a local authority. At least local authorities are accountable to the electorate. Who is AET accountable to when it has more than 60 company directors on more than £60,000 a year?
Lord Peston (Lab)
My Lords, the noble Lord, Lord Forsyth, referred to raising standards for all children. If the schools that the Minister is talking about are so good, why do not any noble Lords opposite send their own children—or more likely, their grandchildren—to those schools, as many of us did, because we felt it was our responsibility to be supportive of local schools?
Lord West of Spithead (Lab)
My Lords, bearing in mind the history curriculum that is taught in academy schools, does the Minister agree with his Secretary of State, who wrote in a recent article that those on the left were unpatriotic?
Draft Modern Slavery Bill Committee
(10 years, 3 months ago)
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The Chairman of Committees
That the Commons message of 9 January be considered and that a Committee of seven Lords be appointed to join with the Committee appointed by the Commons to consider and report on the draft Modern Slavery Bill presented to both Houses on 16 December 2013 (Cm 8770) and that the Committee should report on the draft Bill by 10 April;
That, as proposed by the Committee of Selection, the following members be appointed to the Committee:
B Butler-Sloss, Bp Derby, B Doocey, B Hanham, B Kennedy of Cradley, L McColl of Dulwich, L Warner.
That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;
That the Committee have power to send for persons, papers and records;
That the Committee have power to appoint specialist advisers;
That the Committee have leave to report from time to time;
That the Committee have power to adjourn from place to place within the United Kingdom;
That the reports of the Committee from time to time shall be printed, regardless of any adjournment of the House; and
That the evidence taken by the Committee shall, if the Committee so wishes, be published.
Joint Human Rights Committee
(10 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text
The Chairman of Committees
That Baroness Buscombe be appointed a member of the Joint Committee in place of Lord Faulks, resigned.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
(10 years, 3 months ago)
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18:29 - Division on Amendment 45 - Ayes: 236 / Noes: 193 - Amendment 45 agreed.
21:37 - Division on Amendment 119 - Ayes: 28 / Noes: 148 - Amendment 119 disagreed.
“unless the expenditure relates to legislation before Parliament during the regulated period”
Lord Harries of Pentregarth (CB)
My Lords, before I focus on the first amendment—
Baroness Anelay of St Johns
May I assist the noble and right reverend Lord, Lord Harries? We allow some latitude, of course, at the beginning of any stage when Members are exiting the House in some large number, but may I advise any other Peer who leaves that they should not walk in front of the person who is moving the amendment? It was impossible for those on the Front Bench, who were listening to the noble and right reverend Lord, Lord Harries, even to hear the first word. I am sure that the noble and right reverend Lord, Lord Harries, may now wish to resume.
Lord Harries of Pentregarth
I thank the noble Baroness very much.
Before I focus on the first amendment in this group, I thank the Minister for responding to a good number of concerns raised by the commission which I have the privilege of chairing. He has responded to quite a lot of our concerns, in particular, I note, with government Amendments 41 to 44 in this group, which we are glad to see. All these issues were mentioned in the second report of the Commission on Civic Society and Democratic Engagement. The government amendments deal with issues of safety and security, particularly in Northern Ireland, extra expenses due to disability and travelling expenses, and they take out the time of volunteers. They also include translation from Welsh to English, although I note that the noble and learned Lord, Lord Morris of Aberavon, has his own amendment to include production costs as well as translation costs, and I hope that the Government will look sympathetically on that. I am very grateful on behalf of the commission to the Minister; he has taken a lot of trouble to listen.
However—and it is a big however—there remain a significant number of concerns, on which we are hoping to have a positive response from the Government. I have in my hands a petition which was started only last Thursday by the commission and, since then, has gained the support of more than 130 NGOs and 160,000 signatures from charities and campaigning groups that are still concerned about the effect of the Bill on the workings of our democratic society.
Briefly, the amendment of the noble Lord, Lord Tyler, is about the distinction between the general public and supporters. The commission put forward an amendment to try to widen out the definition of a supporter because, in a digital age, a supporter cannot simply be considered as somebody who gives money to a charity. As that petition indicates, with its 160,000 signatures, the term “supporters” now has a much wider character. Although the Government did not accept the amendment which we tabled earlier because they thought it was too wide, I hope that they will look sympathetically at that of the noble Lord, Lord Tyler.
To focus specifically on Amendment 34, my amendment concerns legislation before Parliament during an electoral period. It is absolutely fundamental to the healthy working of democratic society that people should be able to campaign quite freely, without being inhibited by too much regulation, against legislation that is going through Parliament during the electoral period. I was disappointed that the Electoral Commission, which has been helpful at a number of points in supporting our amendments, does not support this one in its latest briefing. I will examine its arguments as to why not.
The Electoral Commission says that, if the amendment were allowed, it would allow unlimited spending on what may promote or procure the election of any particular candidate or party. Secondly, it suggests that the range of topics is potentially wide, even if it is covered by primary legislation indicated by the Government. Let us take an example and test that out. In election year, the Government decide to start legislation for, let us say, a new town of 500,000 people not far from an area of outstanding natural beauty. This policy is strongly supported by the Government of the day, but is opposed by the two other parties; it is a highly political issue. Furthermore, the town will actually cover three constituencies where there is a narrow majority.
Surely people ought to be able to campaign either for or against that quite freely without an excessive regulatory burden, even during an electoral period. Otherwise, think what would happen. The Government could save their most controversial legislation until the beginning of the electoral period and bring it forward then, knowing that the opposition to it would be more muted than if it were outside the electoral period. We must remember that one year in five will be an electoral period. This will severely hamper and inhibit the proper workings of our democratic society.
Lord Morris of Aberavon (Lab)
My Lords, I am grateful to the noble Lord, Lord Gardiner of Kimble, for the unfailing courtesy in the discussion that we had on my amendment. When I moved a similar amendment in Committee, with the support of a number of my noble friends and no one dissenting, I said that I hoped that I and all of us concerned with the status of the use of the Welsh language had nothing to worry about. Now the Government have tabled Amendment 44, which includes such provision in new paragraph 1A(1)(b), and I welcome that as a very important step indeed.
Given the history of the success in ensuring equal validity for the language over the years, I presume the failure to include in the Bill a declaratory statement of the kind now in the Government’s amendment was an unintended omission. I was particularly encouraged by the considered statement of the noble Lord, Lord Gardiner, in his reply to the previous debate, where he stated that,
“the Government believe that the Welsh Language Act 1993 includes an obligation to treat Welsh and English on an equal basis and that there is a strong and compelling case for translation costs to be excluded”—
that is, excluded from the ceiling. He added, with regard to the references that had been made to the history of the language, that,
“the Government will consider how this exclusion would operate and will want to return to this important issue on Report”. —[Official Report, 16/12/13; col. 1093.]
That is what they have done, and I welcome that. Hence my noble friend and I tabled the original amendment, and I am grateful for the support of all who spoke in Committee.
The Minister said that there is “no legal obligation” to translate election material from English to Welsh and vice versa, and that is absolutely right. In reality, however, given the sea change in the use of the Welsh language in Wales, in some parts in practice it would not be possible to make any electoral headway without the use of both languages. All parties in Wales recognise this and implement the public expectation of the use of both languages. Indeed, in my time as a constituency Member of Parliament, this is what happened and many people made representations to me in both languages.
The Welsh Language Commissioner, Meri Huws, was concerned about this lacuna in the Bill and sought my support. The Bill defines “controlled expenditure” to include,
“the production … of material which is made available to the public at large”.
Since the cost of translation of electoral material falls within that definition, the commissioner was concerned that the reduced expenditure would adversely affect the provision of bilingual election material in Wales. Non-political organisations might well choose not to use bilingual election material. That was the issue. The mischief which concerned the Welsh Language Commissioner was the possible inhibition of third parties from issuing bilingual material.
I would argue that the Government have sought to meet our need. You cannot translate anything unless you have an original document. Material produced for the public at large by definition includes the production cost. The bilingual production of the document for translation is a preliminary step towards its publication, so it is totally unreasonable to limit the exception to, for example, the actual payment to the translator, which could be quite small. Following my conversation with the noble Lord, Lord Gardiner, this morning, I hope that the noble and learned Lord, Lord Wallace, who I understand will reply, will give me the assurance I seek that “production” is basically a part of the process leading to the translation. Any other interpretation would put my noble friends, and indeed the Government, in an impossible situation.
Let me describe the situation where I was wrong and the expenditure was confined strictly to the actual costs of, for example, paying the translator. Whereas in England the NSPCC may issue material only in one language, the NSPCC in Wales would be obliged to prepare and translate a similar document in both languages. If the whole costs could not be excluded from the expenditure ceiling, that would certainly inhibit it from doing what it would like to do. If I am wrong—perhaps those advising the Minister will want to consider the reply, which I am sure will be helpful—the mischief of discouraging people from producing bilingual pamphlets and material would still be there.
I hope very much that I can have the assurance that I want. I refer again to what the noble Lord, Lord Gardiner, said in Committee, that the Government want to fulfil their obligations,
“to treat Welsh and English on an equal basis”.—[Official Report, 16/12/13; col. 1093.]
I hope and believe that the legislation should leave this House on as perfect a basis as possible.
Lord Wigley (PC)
Before the noble and learned Lord sits down, can he emphasise that the cost of production includes additional paper and printing as well as the cost of translation? That is the point where his amendment, to which my name is attached, has merit over and above the Government’s amendment. There needs to be clarification that the cost of production includes the extra costs related to having the production in two languages.
Lord Morris of Aberavon
Given that the definition I have quoted refers to “production of material”, I assume that that material is included in the definition. You cannot usually translate anything unless you have something on paper to look at, which enables you to translate it. Therefore, this is an initial step in production. I emphasise, for the third time, that the definition refers to,
“the production … of material which is made available to the public”.
Lord Cormack (Con)
My Lords, I very much hope that the comments made by the noble and learned Lord, Lord Morris, will be taken seriously by my noble and learned friend, as I am sure they will be. However, I will direct some very brief comments to Amendment 34, which was moved with commendable brevity by the noble and right reverend Lord, Lord Harries of Pentregarth.
We live in a very different age from people who were active in politics even 20 or 30 years ago. I do not know whether the mass membership political party is a thing of the past or not, but it is certainly not a thing of the present. We live in an age in which single-issue groups and associations predominate and have a collective membership far in excess of the Conservative Party, the Labour Party and the Liberal Democrat party put together. One can illustrate that with one statistic: the National Trust now has over 4 million paid-up members. In this new age, we have to be very conscious of the fact that we should pass no legislation in this House that in any way inhibits the expression of legitimate opinion. The Bill endangers that expression of legitimate opinion.
If ever there was a Bill that cried out for pre-legislative scrutiny, it is this one, but it has not had it. In saying that, I level no criticism at my noble and learned friend Lord Wallace of Tankerness, who has been exemplary in the manner in which he personally has sought to meet and discuss with people who have legitimate concerns and interests. Therefore, I exonerate him from all blame, but I still say to him that this is a Bill that is far from perfect. It is a Bill that should never have been presented in this form to either House of Parliament.
Another thing that makes the present age different from very recent ones is the dynamics of the fixed-term Parliament. Until a future Parliament has the good sense to repeal that Act—which I hope will not be too long distant—the fact is that we know when the next election will be and the election after that and so on. So we have a year of purdah as far as interests groups, charities and others are concerned. The simple aim of Amendment 34 is to try to alleviate some of the problems that that creates.
I very much hope that when my noble friend responds to this brief debate—and I hope that it will be a brief debate because we have a long day before us and many important issues to discuss—he will acknowledge the powerful arguments put forward by the noble and right reverend Lord, Lord Harries, which are supported by many of us. If the Minister cannot give the assurances that we seek, I hope that he will at least give the assurance that he will reflect on this matter, have further discussions and come back at Third Reading, because we need to make this very, very imperfect—no, this very, very bad—Bill a little more palatable than it is currently.
Lord Tyler (LD)
My Lords, I have two amendments in this group. In preparing my notes, I had intended to say precisely what the noble and learned Lord, Lord Morris, said just a few minutes ago. It is the responsibility of this House to try to make sure that anything that leaves us is as good as it can be and as perfect as we can achieve. Today, therefore, we are all together in seeking modest amendments in most cases, but important ones that make the Bill more workable, more acceptable and more democratic.
Before I come to the two specific amendments on which my name leads, I should very much like to support the noble and right reverend Lord, Lord Harries, in his Amendment 34. It is important for the sake of civic society that we enable people to get fully involved in the dialogue with Parliament about the legislation that goes through the two Houses. I hope that, in one way or another, my noble friend will be able to make that absolutely clear. It must surely be right that, when legislation is going through both Houses of Parliament, our fellow citizens are in a position to campaign without let or hindrance to improve that legislation. I very much hope that we will have reassurance on that point.
Amendment 40, which stands in my name and in the names of the noble and right reverend Lord, Lord Harries, my noble friend Lord Cormack and the noble Baroness, Lady Mallalieu, is quite simply about bringing the concept of supporter up to date. I echo here a point made by my noble friend Lord Cormack a few minutes ago. When I was first involved in politics, those of us who wanted to engage in the political process, in the main, joined a political party. I did so as a student and I suspect that many others in your Lordships’ House did the same. Some then drifted off into other occupations. I stayed with politics, to my obvious detriment in terms of income compared with the lawyers in your Lordships’ House. From that period to now there have been dramatic changes in society. Many then did join parties; others might have joined campaigning groups. Some of those groups are still with us and still have a mass membership. In those days, it was very much the culture of the age, particularly among young people, but people today support campaigns à la carte. They do not get involved in just one campaign and stick with it to the exclusion of all others. They are involved for a time but their priorities change, just as in the consumer world people expect now to pick and choose. You go to one supermarket for one purpose and to another for another, to one airline for an outward flight and another to come home again. You do not necessarily feel that you have to join up to one hospital even—you choose. It is part of the culture of our age.
Baroness Mallalieu (Lab)
My Lords, my name is added to Amendments 34 and 40 in this group, which I support. To my mind, Clause 26 goes to the heart of the damage that the Bill as it stands has the ability to do to free speech, to the right to campaign and to the right to protest. It exposes what I believe was an unintended consequence of a Bill which, as we have already heard, was placed before Parliament in haste and without proper consideration.
Clause 26 has the capacity to prevent any campaigning organisation mounting a major campaign against a Bill before Parliament in the regulatory period proposed —in other words, from September this year to May 2015 and, as others have said, for one year in every five thereafter. If Clause 26, together with the rest of the provisions in the Bill currently proposed by the Government, including today’s government amendments, had been in force in 2005, because of the 60% spending limit reduction and the inclusion of staff costs in the expenditure that has to be accounted for, it would simply not have been possible, for example, to mount rallies and marches on the scale organised by the Countryside Alliance—of which, I remind the House, I am president—all of which took place in what would have been the regulatory period for the 2005 election. I suspect that other major protests, such as the Stop the War march, would also have been troubled by the spending limits.
Although it is defective, PPERA was liveable with because the expenditure limits were set at a level which did not capture the activity of most campaigners and because staff costs did not have to be included in returns. Campaigners were therefore able to live with the legislation. However, this is not so with Clause 26 as it currently stands. As the noble and right reverend Lord, Lord Harries, said, it provides an opportunity for a Government to reserve the introduction of particularly contentious legislation to the year before an election—the regulatory period—knowing full well that opposition will be seriously restricted by the financial limits imposed under the Bill. While I accept that opposition would not be wholly silenced, it would, effectively, be seriously curtailed.
For those who have not followed it as closely as others, political campaigning under the Bill does not necessarily involve campaigning for or against a particular candidate or party. I prefer to call that “Political” campaigning with a capital “P”. Under the Charity Commission’s guidance, no charity is permitted to do that. The Bill goes further and restricts what I call political campaigning with a small “p”: in other words, campaigning on a policy, which is what many charities do. You do not have to make any mention of a particular party or candidate to be caught by the Bill, but you will be if your campaign can reasonably be regarded as intended to promote or secure electoral success, even if it can be regarded as intending to achieve some other purpose too. It does not matter that your campaign is long-standing if it fulfils those criteria. As the Minister has repeatedly said, the test is an objective one. So it is also irrelevant if your intentions, as the campaigner, were solely concerned with the issue and not with the election.
The current guidance of the Electoral Commission suggests that where, for example, one political party allies itself with the campaign of a particular organisation, it does not necessarily mean that the campaign and its material become regulated, but if there is a change in the scale and nature of the campaigning it may well do so. However, what if a party in government introduces a contentious Bill, during the regulatory period, which directly impacts adversely on your existing campaign? How can a campaigning organisation reasonably not draw attention to the fact and campaign vigorously against it? Indeed, why should it not?
Legislation before Parliament will, of course, reach a conclusion one way or another with Prorogation. The campaigning directed at legislation, albeit during the regulated period, is aimed not at the election but at something which will have concluded by election day—indeed six weeks beforehand—with Prorogation. A way must be found to enable the people of this country to express the strength of their feelings about proposed legislation at any time in the course of a Parliament. I hope that the Minister, who has repeatedly said that it is not the Government’s intention to stifle protest, will agree to take the amendment away for urgent discussion with the Electoral Commission and return next week, if not with an amendment to meet this real objection to Clause 26 then at least with an unequivocal indication of guidance to be given to permit legitimate campaigning in these circumstances. As the Minister will know, it is not enough for him to make some form of Pepper v Hart statement in this House because the courts, in due course, will not look at what is said in the debates of this House unless the legislation is itself unclear or ambiguous. The Bill is perfectly clear in what it says in that respect.
If the Minister cannot do either, I regret that we would be better off, for the 2015 election, to continue with PPERA until a proper Bill can be produced and Clause 26 should go completely.
Lord Elystan-Morgan (CB)
My Lords, I support Amendment 35 in the names of my friend the noble and learned Lord, Lord Morris, my noble friend Lord Wigley and myself. The case has been put clearly and in very great detail by the noble and learned Lord. I am sure that on the only real issue, the Minister could dispel all doubts very easily, as the Government are showing obvious good will for the Welsh language. I was extremely appreciative of the words of the noble Lord, Lord Gardiner of Kimble, on 16 December when he reiterated the point that many of us have made; namely, that the Welsh language is one of the oldest living languages in Europe. It has been spoken for more than 1,500 years.
Would it not be churlish if the whole concession made by the Government were limited only to the fees paid to a translator—that is the issue—and did not include all other costs which are consequential or involved in translation? That clearly was the intention of the Government and, if there is any doubt whatever in the matter, I would like to see them make assurance doubly sure in that respect.
The noble and learned Lord, Lord Morris, speaks with the authority of a former Attorney-General. Indeed, he is clearly of the view that the words in Amendment 44 are wide enough to encompass exactly what is required in this case. However, if there should be any question of dubiety or it is necessary to remove any peradventure of doubt, it seems that it would be an easy matter to cure this small anomaly by Third Reading.
This is a small skirmish in relation to the Welsh language, which has suffered many attacks and anomalies in the 478 years since the Act of Union 1536. The field of endeavour still remains redolent with possibilities. One obvious campaign that will have to be fought some day is in relation to the right of a person in Wales to be tried by a jury in the Welsh language in an appropriate case, bearing in mind that a tribunal of fact such as a magistrates’ court, dealing with 98% of cases, is entitled to do that and does so under the 1967 Act. I hope that such an issue will be raised before too long in this place.
Lord Horam (Con)
My Lords, first, I thank the noble and right reverend Lord, Lord Harries, for welcoming the amendments made by the Government. He was characteristically generous about that and he gave quite a long list. Secondly, I thank my noble friends for what they have done, despite being incapacitated for a period, in bringing amendments of the scope that there has been in this case. Certainly, I, as a supporter of the Government, have been surprised by the extent to which the Government have agreed to the amendments originally put down.
I take the point made by my noble friend Lord Cormack that the Government were deficient in the way in which they failed to do pre-legislative scrutiny. One has to agree that post that situation, with the pause and with the extent of the amendments that the Government have put down in the past few days, they have responded generously to the points fairly made by Members on all sides of the House.
In his short remarks, the noble and right reverend Lord, Lord Harries, mentioned Amendment 34 in particular. He said that, for instance, if a new Bill came before Parliament during the regulatory period from September 2014 to the general election in 2015, it would be a big issue in any particular constituency and that therefore the Bill would inhibit discussion of the new town in that constituency, which would be wrong.
Baroness Hayter of Kentish Town (Lab)
My Lords, I join the noble and right reverend Lord, Lord Harries, in thanking the Government for the sensible and welcome amendments that they have tabled. We have just heard from the noble Lord, Lord Horam. I wonder if when he used the word “harried” he meant someone who had been harried by the noble and right reverend Lord, Lord Harries, but I will leave that to one side.
However, we feel that more changes are needed to the Bill, which we have opposed from the start, for the very cogent reason spelt out by the noble Lord, Lord Cormack: it inhibits the expression of legitimate opinion. Amendment 34 goes to the heart of that. The noble Lord, Lord Horam, spoke about constituencies, which I think is a different issue, but we might be talking about something like the bedroom tax, which the National Housing Federation campaigned against, worried about the rents coming to it. Anyone who followed the Welfare Bill will know all the detail of that, so I will not go through it. Unless we can get rid of staff costs—which I hope we will within the next hour—had the bedroom tax been in the past 12 months, it is very unlikely that the National Housing Federation, which is not a charity, would have been able to campaign in the way that it is telling us its members wanted. That was not in the past 12 months but something like that could have been.
This is legitimate campaigning. Although we have heard statements from Ministers that it was never the intention of the Government that that type of activity would be within the scope of the Bill, I think all of us feel that despite good—or bad—intentions, that is not a sufficient safeguard and clarity should be provided in the Bill along the lines spelt out in Amendment 34.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, first, I thank those who have contributed to this debate, in particular those who have welcomed the government amendments. We certainly sought to listen and take on board comments from a wide range of those engaged in campaigning. I pay tribute to my noble friend Lord Wallace of Saltaire, who met far more groups than I did. These meetings and deliberations, and indeed the contributions made in Committee in your Lordships’ House, have very much informed the proposals that we have come forward with today. Again, I thank the noble and right reverend Lord, Lord Harries of Pentregarth, and the other members of the Commission on Civil Society and Democratic Engagement for their contribution to this debate.
The purpose of Schedule 3 is to extend the range of activities for which a third party incurs controlled expenditure. It takes forward a recommendation from the independent Electoral Commission to align the range of activities for which third parties incur controlled expenditure with that for political parties. The Electoral Commission has highlighted that there is no clear reason why controlled expenditure for third parties applies only to election material. This difference means that a potential gap arises in the rules governing elections in our country.
The Government and the Electoral Commission believe it is important that this potential gap in the regulatory regime is addressed. However, the Government also acknowledge some important issues that have been raised, not only by noble Lords but a number of campaigning groups. As such, we have tabled a number of amendments to Clause 26 and Schedule 3. I will take the opportunity to explain what they do.
Currently, the regime under the Political Parties, Elections and Referendums Act 2000 outlines specific activities that do not incur controlled expenditure. These include volunteers, publications which are not advertisements in newspapers, broadcasts on certain channels such as the BBC or S4C, and certain reasonable personal expenses. Government Amendment 37 removes these exclusions from Section 87 of PPERA and Amendment 44 inserts them into new Schedule 8A and expands the types of expenses that are excluded from incurring controlled expenditure.
The full range of exclusions that the Government have brought forward includes amendments to expenses in respect of the translation of materials from English to Welsh or Welsh to English. I shall say something about the important points made by the noble and learned Lord, Lord Morris, and the noble Lords, Lord Wigley and Lord Elystan-Morgan. At present, controlled expenditure is incurred on the production and publication of election materials, such as leaflets. The Bill retains this, but costs associated with translating these materials from English to Welsh or vice versa will be excluded. The noble and learned Lord, Lord Morris, said he hoped that this was an oversight and that it was not there in the first place. If there was an oversight, and I think there probably was, it was probably also an oversight in the 2000 Act, because election materials are covered by the provisions in that Act. I hope, albeit belatedly, that there is considerable cross-party and non-party consensus that it is something we should be doing.
The Government believe that this highlights the importance of the Welsh Language Act 1993, which treats the Welsh and English languages as equal. It follows the practice of producing election material and ballot papers in Welsh. We are grateful to the noble and learned Lord for raising this issue in Committee. He asked about production costs. When we are giving something it is easy to say that it is not as much as you thought we were giving, but we believe that extending the exemption further than the cost of translation would go too far. It would allow campaigns to print different material for different addresses without being regulated. For example, if a campaigner prints 100 leaflets in English, he can then print 100 leaflets in Welsh for an entirely different purpose. Therefore, we thought it important that this amendment should relate to the cost of translation, rather than the production of material.
Indeed, that is what we thought was intended by the noble and learned Lord’s amendment, when it says that production,
“shall not include costs incurred by the translation of those materials from English into Welsh or from Welsh into English”.
Indeed, the Government’s amendment refers to,
“expenses incurred in respect of the translation of anything from English into Welsh or from Welsh into English”,
which may even go further—there may be expenses other than translation expenses. I want to make it clear that we think, having considered this, that to relate it to the publication costs—to the printing of the leaflets—goes further than is needed to address the important point about Welsh translation.
Lord Wigley
Surely the Minister accepts that if an organisation—say, the NSPCC—requires a leaflet to be put out in England and in Wales, in England it might be in other languages but it need be only in English to meet the law. In Wales, it would be in Welsh bilingually with English. Sometimes that can mean double the size of the leaflet. Sometimes it might be constrained to six instead of eight pages in the way that bilingualism can be laid out, but the cost of producing something in a bilingual format for the customers is significant because of the print and the paper, not just the time taken to translate a leaflet. That is relative peanuts in the operation. If the Minister is excluding the other parts, there is a very serious implication.
Lord Wallace of Tankerness
My Lords, as I have indicated, we thought that the amendment that the noble Lord, Lord Wigley, has signed did not actually go further than we were going. I think there has been a proper debate on this. I do not want to mislead the House into thinking that we are willing to countenance in the Bill an opportunity to exploit it and to double up on the number of leaflets. I hear what the noble Lord says and, subject to what I have already said about not wanting to incur a loophole, I am prepared to consider whether the wording reflects what might be called a marginal cost of translation but not costs that might allow more leaflets to be published. The noble Lord is nodding his head; perhaps he agrees that that is not an unreasonable position.
I hope that the noble and learned Lord, Lord Morris, will agree that it is not entirely clear that these additional production costs were covered by his amendment either. Certainly, we did not think they were.
Lord Morris of Aberavon
I thank the noble and learned Lord. It is obvious to me that, in accordance with the definition of “controlled expenditure”, production is specifically referred to. You cannot have anything to translate unless you have something produced: that means a piece of paper. I was certainly not encouraging a vast increase in the whole gamut of informational literature, but rather the specific translation and the costs incurred in preparing for the translation, particularly the paper. It may be that I was not ambitious enough. That is entirely my fault and that of those who were advising me—they were not ambitious enough in putting forward that the provision should include specifically the preparation of a document for the purpose of translating. That is all that I am asking.
Lord Wallace of Tankerness
My Lords, I do not think that there is really all that much between our position and what has been said both by the noble and learned Lord and the noble Lord, Lord Wigley. I hope that we can look at it and get the right wording to capture the consensus among us without creating loopholes for having much more material produced. On that basis, I hope that the noble and learned Lord will not press his amendment and, all being well, we will get our amendment on to the Order Paper.
Lord Morris of Aberavon
I am encouraged by that. I hope that, if I do not press my amendment, we will return to the matter at Third Reading after further consideration.
Lord Wallace of Tankerness
That is indeed what I had in mind. Time may be short, but I think that we can have some useful engagement on that.
Government Amendment 43 excludes the costs associated with providing protection of persons or property in relation to a public rally or event. While the Government believe that it is important that third parties who organise public rallies or events which seek to influence voting intentions incur controlled expenditure, it is only right that third parties do not incur controlled expenditure ensuring that such events are run safely.
Government Amendment 44 excludes expenses that are reasonably attributable to a person’s disability. This would mean that costs associated with, for example, providing materials in Braille, or ensuring that any person with a disability could attend a public event or meeting, would not count towards the third party’s controlled expenditure.
Government Amendment 42 provides that parades notified under the Public Processions (Northern Ireland) Act 1998 are excluded from the provisions of PPERA. Your Lordships will recall that we had a debate in Committee on Northern Ireland. Although the particular issue of parades was not raised, we were aware that it was a concern that some people had expressed. The noble Lord, Lord Rooker, led an important and helpful debate on Northern Ireland, and we seek to address it here.
Government Amendment 38 amends the defence, currently in the Bill, for a person or third party charged with an offence of incurring controlled expenditure in excess of the spending limit—that is, above the limit in a part of the UK or the constituency limit—to show that they complied with the relevant code of practice so that it covers both recognised and non-recognised third parties. The amendment is needed to reflect the changes to the reporting requirements in a later government amendment which provides for no spending return if the threshold is not reached. We have since identified a couple of points not properly dealt with in the amendment. The first is that the defence does not adequately cover the case where an offence might be committed by virtue of expenditure incurred on behalf of the third party. Secondly, the defence should also cover the offence in relation to targeted expenditure. We think that it is important in both these cases that those subject to regulation should have the benefit of the defence and we will therefore bring forward amendments at Third Reading to deal with these outstanding anomalies.
Government Amendment 41 clarifies the drafting on public rallies, so that it is “public rallies or events” to be inserted by Amendment 42. The reference to “public meetings” is removed, as it was unnecessary and potentially confusing because “other public events” includes public meetings.
I turn to the amendment moved by the noble and reverend Lord, Lord Harries of Pentregarth, and a number of other amendments that have been spoken to in this group. Amendment 34 would amend Clause 26 so that any campaign which could reasonably be regarded as intended to promote or procure electoral success, involving legislation going through Parliament during the regulated period, would not count as controlled expenditure. I listened carefully to the speech made by my noble friend and agree with him that we should not pass legislation which inhibits expression of legitimate opinion.
To incur controlled expenditure and be included in the regulatory regime, it is important to remind ourselves that the third party must be carrying out activity which could reasonably be regarded as intended to promote or procure the electoral success of a party or a group of candidates. We have heard concerns that campaigns against specific policies or pieces of legislation will be caught by the regulation. It might assist the House if I set out how, generally, this will not be the case and the circumstances in which it might be. The noble Baroness, Lady Mallalieu, asked whether we would meet the Electoral Commission. I can tell her that this issue has been raised with us. We have been in discussion with the Electoral Commission and I can confirm that it agrees with this interpretation.
If a campaign group wished to lobby parliamentarians over legislation going through the House, this would not be subject to regulation under Part 2. It is only where the expenditure by a campaign group can reasonably—that is, objectively—be regarded as intended to promote or procure the electoral success of a party or candidates that such activity will be subject to regulation. For example, encouraging constituents not to vote for MPs in the general election if they had voted a certain way on the legislation before Parliament should and would be included as activity leading to controlled expenditure. If a group so closely aligns itself with a policy of a particular party that its campaigning on behalf of that policy can only reasonably be seen as encouraging support for that party, that would also count. That is campaign activity, and where it takes place the Government believe that spending on it should be transparent to the public.
The noble and right reverend Lord, Lord Harries, gave a good example when he talked about new towns. We believe that under his example, people will be able to support or oppose such a proposition freely. It would be caught only if they promoted electoral success, for example, by distributing leaflets reading, “Don’t vote for candidate X”—or X party—“at the next election”, because he or she had supported or opposed the new town. The amendment states,
“unless the expenditure relates to legislation before Parliament during the regulated period”.
If Parliament were to accept that definition, it would really open the door to any amount of expenditure. My noble friend Lord Horam suggested a limit of £300,000; in fact, it would not be controlled expenditure, it would be unlimited expenditure in the run-up to an election which could be directed against or for a particular party. Given that there are restrictions on what the political parties can spend during that period, it is not reasonable that there should be such a wide gap in the provisions that an unlimited amount of expenditure could be related to a particular campaign.
I reiterate that the general position is that if a campaign group wishes to lobby Parliament and parliamentarians over legislation, that is primarily directed at trying to change legislation and would not be subject to regulation under Part 2. As my noble friend Lord Horam said, we are seeking a balance, allowing proper room to campaign but not to swamp.
I also highlight that the Electoral Commission does not support this amendment. It states that such an exemption would allow unlimited spending on a potentially wide range of topics. It believes that it could produce significant and unintended gaps in the coverage of the rules. The issue of the year up to the campaign was raised generally in the debate. Of course, a later amendment will mean that this is actually only a seven-and-a-half-month period. Clearly, if, as a result of experience, people feel that the guidance has not been sufficiently helpful, as we have provided in later amendments, there will be a review post the 2015 election. The amendment as it stands opens up a considerable gap and would lead to an imbalance whereas, as my noble friend said, we should be seeking a balance.
On Amendment 40, my noble friend Lord Tyler seeks to amend Schedule 3 so that costs associated with sending materials to committed supporters who have been actively involved in the activity of the third party would be excluded from the calculation of costs for controlled expenditure. Costs of sending material to members or certain supporters are already excluded, as PPERA and the Bill make clear. The material or activity must be available or open to the “public”, which for these purposes would not include those members or supporters.
As the existing Electoral Commission guidance makes clear, the exact nature of a committed supporter will vary between organisations, but could include regular donors by direct debit, people with an annual subscription or people who are actively involved in the third party. The amendment goes much further than that. Amendment 40 defines those actively involved as those who have made a donation to the recognised third party, or those who have made a direct communication to the recognised third party in the past 12 months.
Consequently, an individual who writes to a campaign organisation with a general inquiry about their activities, or even one who lives next to an animal sanctuary who writes to them complaining about the noise, might possibly be regarded as being actively involved. I do not believe that that is my noble friend’s intention, but I fear that using that definition allows the provision to become ineffective, particularly in an age of instant electronic communication.
The Electoral Commission does not consider people to be committed supporters if they have simply signed up to social networking sites or tools, or appear on mailing lists that may have been compiled for general commercial, campaigning or other purposes. An exclusion of costs, based on direct communications with third parties—whatever the nature of that communication—creates a wide exemption.
I know that my noble friend has worked hard and has met officials to try to resolve this; I regret, however, that we fear the definition he has come up with is too wide. We believe that the better way is that the Government and the Electoral Commission believe that the Electoral Commission’s guidance is the proper place to outline who counts as a committed supporter. In its briefing the commission outlined that it does not support this amendment due to the fact that it is unclear what scale of campaigning would be exempted from the regime or how the test would apply in practice.
Finally, my noble friend referred to Amendment 45A to ensure that any changes to the range of activities outlined in new Schedule 8A would be made through an affirmative resolution procedure. That is already the case in the Bill as drafted. I draw noble Lords’ attention to Clause 26(12), which amends Section 156 of PPERA so that any order under new Schedule 8A, as inserted by Schedule 3 to the Bill, is by affirmative resolution. It does so by amending the existing section of PPERA, setting out what parliamentary procedure applies to orders and regulations. The Government agree that it is important that any changes to the list of activities that incur controlled expenditure should be subject to the affirmative resolution procedure.
I hope that that reassures my noble friend. In the light of the explanations given, I hope that the noble and right reverend Lord, Lord Harries, is prepared to withdraw his amendment.
Lord Rooker (Lab)
I have thought of a question while the Minister has been speaking, which is not in any way diversionary. It ties in with the comments made earlier about what would happen if, in this period of a year, a Government sought quite deliberately to save legislation. The Minister answered the point about legislation in Parliament, but there are highly controversial matters outside Parliament; people do newspaper adverts and all kinds of things. I have been thinking about this question, having gone through paperwork recently. When we get close to an election, the Cabinet Secretary and the head of the Civil Service will issue an edict around Government to Ministers and departments about what you can do and what you cannot do in that period. Is that going to change now that we have a fixed-term Parliament, with this window and this picture of a much larger window?
This is not purdah, but an extended period in which other people are constrained about what they can say and do. Will the advice that normally comes out close to an election from the Civil Service to Ministers actually change and take account of what is being done in this legislation?
Lord Wallace of Tankerness
My Lords, I always know it to be dangerous when the noble Lord stands up and says he has been thinking about something—and so it was.
I took the fixed-term Parliament legislation through your Lordships’ House and I do not recall—nor, indeed, have I seen at the present time—anything that suggests there is going to be any change. Of course, that means that there still will be a period during which Governments are not allowed to do this; but I have not seen any proposal to reflect the fact that there is a fixed-term Parliament. When that period will arise will become more apparent, or more foreseeable. If I have got that wrong, although I do not think I have, I will inform the noble Lord.
Lord Harries of Pentregarth
I thank all noble Lords who spoke in favour of my amendments and the other amendments to which my name has been attached and I thank the Minister for his response.
The noble Lord, Lord Horam, drew attention to some of the unfortunate consequences, as he understands it, of this legislation at constituency level. However, what I had in mind was primarily what happens at the national level. He suggested that political parties would be limited in what they can campaign; but the Government, in pursuing their legislation, are not limited in the amount of money they can spend in order to get legislation through Parliament, and nor are the Opposition.
Suppose you have two third parties: one, the Countryside Alliance, which wants to campaign against a new town, and the other the National Housing Federation, which wants to campaign in favour of more housing. Why should they be inhibited by the Bill in a way that the political parties would not be inhibited? As the noble Baroness, Lady Mallalieu, pointed out, we are not talking about the post-Dissolution period, so a lot of the ill effects that the noble Lord suggested might happen at constituency level would not be allowed by this amendment, because we are talking about only legislation going through Parliament and that ends when Parliament is prorogued. Therefore I believe that this is a crucial issue that goes to the heart of our democracy.
Lord Wallace of Tankerness
The noble and right reverend Lord indicated, when referring to what my noble friend Lord Horam had said, that it had not been his intention to engage in constituency expenditure. Does he accept that if this is not controlled expenditure, it could lead to expenditure in a constituency up until the time when the Representation of the People Act kicks in?
Lord Harries of Pentregarth
I accept that there are certainly implications for what might happen at local level. However, I ask the noble and learned Lord to continue to think about it because this issue goes to the very heart of the democratic process. I very much hope that, having talked to the Electoral Commission to see whether there might be a way forward, he might give the very clearest statement at Third Reading, which would then be translated into advice for the Electoral Commission. We need something here to safeguard the fundamental rights of campaigners to campaign during this period. With that, I beg leave to withdraw the amendment.
Lord Morris of Aberavon
“(5A) Before subsection (5) insert—
“( ) Any limit applying to campaign expenditure under this Act where that expenditure is incurred by or on behalf of third parties in connection with the production or publication of election material which is made available to the public at large, or any section of the public in Wales, shall not include costs incurred by the translation of those materials from English into Welsh or from Welsh into English.””
Lord Morris of Aberavon
My Lords, I welcome the promise of a discussion with Ministers before Third Reading and if a satisfactory formula is not found, I would wish to return to the matter then. The Government might seek the advice and elicit the views of the Electoral Commission in the short period we have, so perhaps we could make progress on that basis.
Lord Phillips of Sudbury
“( ) In subsection 8(a) after “body” insert “(except a body which is a charity)”.”
Lord Phillips of Sudbury (LD)
My Lords, first, I should like to say how good it is to see the other Lord Wallace—my noble friend Lord Wallace of Saltaire—back in his place on the Front Bench having, I hope, had restorative attention.
In Committee, there was a long debate on this amendment, which has a simple purpose: to remove charities altogether from both the Bill and PPERA 2000. I am bound to say that in the intervening period there has been a great deal of discussion, meetings and lobbying. It is fair to say that the dear old charity sector —which must be one of the slowest of any sector in our society to get the hang of things, while being a most invaluable element in our society—is now showing its support, late in the day, for the proposal that charities are taken right out of the Bill. It is a pity that this movement did not show itself a good deal earlier.
I must also explain that in Committee there were three different supporting names on this amendment: my noble friends Lady Williams, Lord Tyler and Lord Greaves. They—how shall I put it?—stood back at this stage of the Bill to enable Peers from other parts of the House to put their names to an amendment which is felt strongly about. It is a great resource and support to have the names of the noble and learned Lord, Lord Mackay of Clashfern, and the noble Lords, Lord Best and Lord Low of Dalston, on the amendment. They are, respectively, an ex-Lord Chancellor, an ex-chief executive of the Joseph Rowntree Foundation and an ex-chief executive of the Royal National Institute of the Blind.
We have put this amendment forward today and continue to feel really strongly about it because we are convinced that to draw charities into this net is counterproductive, legally illogical, because they are the subject of a completely separate and rigorous branch of law in a way that no other NGOs are, and wasteful of scarce and valuable volunteer time and philanthropic resources if we persist in so doing. I shall address only a few points. I am very mindful of the time and my colleagues will deal with different points relating to the amendment and its consequences.
The one word that keeps coming back to me in relation to all this is “practical”—or, in this case, “impractical”. It seems a thoroughly impractical proposal to lump charities in with NGOs, which can range right across the board from being relatively public-spirited—as, for example, most of the supporters of the Harris commission certainly are—to completely self-interested NGOs, some of them acting as fronts for commercial organisations and others with political aspirations. The one thing you know for certain and beyond peradventure about a charity is that it exists exclusively for the public benefit. Private benefit and charity are wholly incompatible dimensions.
This branch of our law is not some Johnny-come-lately or some rather weak branch of law, if I may put it that way; it is about as fiercely and strongly embedded in our culture as any aspect of law. What is more, the Charity Commission, which has been doing its job for more than 150 years, is a committed body with vast experience, though admittedly with inadequate resources, which is there to try to police this extraordinary sector. Extraordinary it is because it actually needs wonderfully little policing. The amount of fraud and—how shall I put it?—manipulation in the charity sector is a tribute to the best in British society and culture.
The duty on us as legislators, when touching on this sector in particular, is to act with extreme caution because one can so easily damage that which one hopes to assist. Above all, we need to avoid confusion in the legislation that we shower on the British public. There is one way of avoiding confusion in the issue of the regulation of NGOs: to avoid shackling charities of all organisations with duplicatory regulation and thus the responsibility for two sets of regulations and indeed regulators. Of all the groups in our society that surely do not need that, above all others by far are charities. Although of course the Bill is vital and it is good that amendments have been introduced—we thank the Government for being so receptive—it is important that we retain our civic vitality, which, let us be honest, is languishing somewhat. However, in the process, we must not damage that which we seek to uphold.
The confusion surrounding charities in relation to the Bill is quite extraordinary. I can illustrate that by referring the House to the letter written last night by the Charity Commission to a number of us now in the Chamber. It deals in particular with this amendment because the Charity Commission considers it of such importance. I confess that many of us have been trying for some considerable while to get the Charity Commission to come out of its shell and be clear about what it thinks of the arguments advanced on each side of this debate. At least now we have a letter, written by the public affairs manager of the Charity Commission at 6.30 pm last night. Pretty early this morning, as one might guess, I was on the telephone to seek clarification.
The letter has four paragraphs. Can one ask Peers to put up their hands if they have had this letter? It is probably unprecedented, but I have seen one, anyhow. I suspect that a minority of those here have seen this letter and that it will be helpful to quote from it. It is important given that the Charity Commission is the kingpin in this field. The first point that it makes in relation to this amendment is under the heading “Charity law and electoral law—the current situation”. It states:
“Charities must never support political parties or candidates for election”.
That is the basic premise. It continues:
“A charity can engage in campaigning to influence public policy but only in the context of supporting the delivery of its charitable purposes. We recognise that there are some circumstances where a charity’s activities can adhere to charity law but may still require them to register with the Electoral Commission during an election period”.
I have to be honest. I was slightly crestfallen when I saw that because my proposition hitherto has been that charity law and election law in this bit of the landscape are so similar as to be no different from each other. I argued this with the senior member of the commission who is fielding calls in relation to this letter and after a while, she said, “Well, perhaps we did not put this as we intended”. It then became apparent that when the Charity Commission made this statement it was talking about the law as it stands now, not the law as it will be after the Bill is enacted.
Lord Tyler
I am grateful to my noble friend because I shared his confusion about that missive last night. I too quite separately raised a question with the same person at the Charity Commission and was sent back this very explicit statement:
“We are by no means suggesting that CC9 is not fit for purpose. Instead we believe that CC9 provides clear and concise guidance on what is and is not acceptable for charities when campaigning. This is an issue that we regulate firmly and take action where necessary”.
In other words, far from saying as seemed to be the first impression that I had from the previous letter that the Charity Commission was not up to this job, it thinks it is up to the job and does not think it is necessary to change the situation so that another commission is so actively involved, as the Bill would suggest.
Lord Phillips of Sudbury
I am grateful for that. My noble friend is lucky in having had a letter. When I finished the conversation, the Charity Commission said to me that it would send a new communication forthwith to everybody who received the first one to make clear that this statement did not relate to the law as it will be after the passing of this Bill. That is just one small example of—
Lord Harries of Pentregarth
I am fortunate enough to have the original letter before me. I wonder what the noble Lord makes of the statement:
“We do not believe that in the best interests of public trust and confidence in charities an exemption for charities is the most appropriate method for the regulation of charities during an election period”.
There cannot be anything clearer than that. I know it is very disappointing for the noble Lord, but the Charity Commission has come out unequivocally in opposition to his amendment and I think he will have to face that.
Lord Phillips of Sudbury
My Lords, the noble and right reverend Lord, Lord Harries, is actually addressing a different issue in this letter. I was dealing with paragraph one. He is dealing with paragraph two, about public trust and confidence in charities, which I was about to come on to and which, if I may, I will deal with in a second.
I emphasise the fact that the Charity Commission has delivered to those in this House who are particularly involved with this issue some guidance in relation to the law—comparing electoral law with charity law—that leaves us at best in a state of some confusion. I think, as I will say in a minute, that the approximation of charity law and electoral law is now so close that to all intents and purposes it is in practical terms the same. However, as we know better than anybody on earth, the capacity of lawyers—and not only lawyers—to argue about that is infinite. When you get a letter such as this from the Charity Commission, you can see why.
Lord Rooker
I was minded to vote for the amendment, but, having read the letter twice now, does the noble Lord not accept that the Charity Commission does not agree with Amendment 36? That is crystal clear. There is incompetence of a very high order by the Charity Commission, by the way, because it does not do a very good job. However, it does not agree with Amendment 36, so do we have to spend a lot of time on this?
Lord Phillips of Sudbury
My Lords, that is, on the face of it, a compelling argument. However, I am trying to put it to the House that the Charity Commission’s own advice here is faulty. It admitted as much in our conversation this morning and said that it would circulate a letter forthwith.
Lord Phillips of Sudbury
Which, of course, it has not done. I suspect the reason is that when the person I was speaking to went back to the chief commissioner and the chief executive, they said, “My goodness, we can’t go into print admitting that we’ve made a mistake”.
Lord Cormack
I am very grateful. Of course, I was also minded to support my noble friend. However, time is at a premium. There is clearly a problem here. Would it not be better to have discussions with the Charity Commission and the Minister between now and Third Reading, and then, perhaps, to table an amendment that does have their support? We can waste an awful lot of time on this. I am not being critical of my noble friend, for whom I have very real regard, but he has been speaking for a quarter of an hour or more and we have very important issues that we must determine today.
Lord Phillips of Sudbury
My Lords, I am in a cleft stick; I have indeed got 15 minutes on the Clock, but my noble friend will accept that I have been interrupted five times now, which takes a wee bit out of one’s available argument time. I will keep this as short as I can. It is unfortunate—let us put it that way—that we have a letter at the 59th minute of the 11th hour which is, at best, unclear.
I know that a number of my colleagues have different points to make. It has been said, time and again, that there should be a level playing field between non-charitable NGOs and charitable NGOs. Well, yes and no. First, we have a whole lot of improvements for the non-charity NGOs. Secondly, however, the reason we persist in seeking this important change is precisely because charities are basically different in kind, not just because they have a separate branch of law and a separate regulator.
The bureaucratic consequences for charities having to meet the demands of two regulators will be significant. Although the thresholds have been raised, which is important, the number of charities that will still be swept up by this legislation is far greater than many Members of this House may think. It will be many thousands. It does not take a great deal to rack up £20,000 if you are a charity with a few branches around the country.
Secondly, given that the vast majority of charities have no paid staff, the people who will have to implement this complex bureaucratic stuff are not professionals but volunteers. Simply tooling up a charity that is wholly run by volunteers to cope with this new regime and all that it means will be a massive and demoralising task for so many of them. Frankly, volunteers do not want to spend their precious hours getting to understand the legislation that we are in the process of putting on the statute book and then trying to get to grips with it in practical terms, filling in the forms and all the rest of it. The consequences, I put it to the House, will still be huge, despite the number of charities that are, on the face of it, taken out of the purview of these provisions by the raising of thresholds and the rest of it. I cannot emphasise that too strongly.
Let us suppose that you are a trustee of a charity. You will not have a paid chief executive, so it may be a senior volunteer who comes to you and says, “Look, Mr Phillips, we have this new legislation. We do not think we are touched by it because we do not think we will reach the threshold, but what do you want us to do?”. I am afraid an awful lot of trustees will say—
Lord Hodgson of Astley Abbotts (Con)
Not only the Charity Commission opposes this amendment; the Electoral Commission does, too. Also, we have a situation where the Government have given way on the review period. We argue there is going to be a review of this piece of legislation, so if the matters that the noble Lord is so concerned about come to pass, the review will pick them up. We are now in supposition territory. I hope that the noble Lord will reflect on that before deciding what to do with his amendment.
Lord Phillips of Sudbury
I certainly will. I am grateful for that point, because I was going to say that a review of this will be essential in light of what happens at the next general election. Indeed, the noble Lord, Lord Hodgson, tabled an amendment that I think—
Lord Phillips of Sudbury
It is now a government amendment, so we are going to get it—and that is vital because we will learn a great deal after that. I will just finish the point that volunteer trustees, perfectly understandably, are going to be cautious about this new legislation. The last thing in the world they will take a risk with is the prospect that things may get a bit out of hand or may not be perfectly understood, and that they, the trustees, will end up being personally liable. As I am sure everybody hearing this debate knows, they are personally liable. It does not matter if they are a limited-liability charity.
All in all, therefore, these are some of the reasons—I think other contributors to the debate will add others—that we should avoid the huge confusion that will follow if we subject charities to both charity law and electoral law. For good reason, I will not detain the House now beyond saying that this is still a very important issue that touches a hugely important part of our civic society—the very part of our civic society that does so much to uphold and vivify election campaigns. I beg to move.
Lord Mackay of Clashfern (Con)
My Lords, I am extremely well aware that the Charity Commission has given us a document to say that it is against this amendment, but the charity commissioners do not actually do legislation; that is our responsibility. They have set out in this missive that we got about 6.30 pm yesterday some of the reasons for their opposition.
Charities are, as I understand it, very fully regulated by law. Charities are those bodies that are established for charitable purposes only, and charitable purposes are defined as falling into certain classes, with the general provision that a charitable purpose is one that must be for public benefit. When I got this missive and had a chance to look at it, I e-mailed back the writer of the document asking, “Are you saying that a charity can lawfully, under existing charity law, engage in activities regulated by this Bill?”. I got an e-mail back to say that he was out of the office today and that, if it was urgent, I should ring a number. So I rang the number, and no one answered—although these things happen, even in the best regulated circles.
This is an extremely important point, as I see it. Charity law is sufficiently robust to require charities to obey the rules, which state that they can use their expenditure and efforts only in support of or in pursuance of their charitable purposes. As the missive says:
“Charities must never support political parties or candidates for election”.
At the moment, I cannot see why it is necessary that the Bill applies to charities. However, the Charity Commission, in the missive we got last night, goes on to explain that if the charities were exempted, its task of making sure that the charities obeyed the law in this regard would be too much for it, particularly in an election period. The Government have cut its budget so much that it cannot support this or do it properly. If that is the reason for passing the responsibility for seeing to this from a government organisation, the Charity Commission—which has a very long history of 150 years or so—on to charities, which depend on voluntary contributions for their financial support and to a great extent for their personnel support, it is an extremely bad one. Why should the government organisation pass on its responsibility to ensure that this is happening to the charities themselves and have them registered for that purpose?
This is an extremely serious matter that the Charities Commission has raised in this missive to us. So far as I am concerned, it requires the Government to look into the matter. I would like to see the Government undertake to look into this between now and Third Reading. I do not wish to pursue the matter further today. I originally raised this matter with the noble Lord, Lord Wallace of Saltaire, before he was away, and I am extremely glad to see that he is able to be back with us again. This is an important matter that I feel strongly about, and one that your Lordships’ House should not just pass over. We do not need to spend long on it, because it is a short but very important point.
Baroness Lister of Burtersett (Lab)
Before the noble and learned Lord sits down, I have a question about the e-mail from the Charity Commission, which I have here. My reading of it is that the question about resource implications is a subsidiary argument, and that the key argument is:
“We do not believe that, in the best interests of public trust and confidence in charities, an exemption for charities is the most appropriate method for the regulation of charities during an election period”.
Surely that is the argument that the Charity Commission is putting forward against this amendment. The question about resources is just supporting that.
Lord Mackay of Clashfern
The reason that that is a difficulty is because it cannot be relied upon to enforce the law. There is no question of trust in charities being damaged by propaganda and that kind of thing. If it were shown that charities were not obeying charitable law, that would damage trust and confidence. If the commission does not have enough resources to pursue that properly—as paragraph 4, I think, says—that is a problem. I can see that if that is justified, it is a problem, but it is a very serious problem if organisations set up to ensure that the law is observed in a particular area say that they do not have sufficient resources to do it properly.
Lord Harries of Pentregarth
Does the noble and learned Lord not accept that the Electoral Commission has come out exceedingly strongly against this amendment? It is not just the Charity Commission but the Electoral Commission, which has a specific statutory duty.
Lord Mackay of Clashfern
I understand that, but I do not understand why they have come out against it, because it must be based on an understanding that charities could in fact engage in activities that are regulated by this Bill.
Lord Low of Dalston (CB)
My Lords, my name is added to this amendment and I do support it, but I think that we have been somewhat blown off course by the reference to this letter that we have had from the Charity Commission, which we have not had very long to consider, and also by the briefing that we have received from the Electoral Commission.
On the Charity Commission’s letter, I honestly think that this faces both ways: at one point the commission says that it is not in favour of an exemption but elsewhere it says that it believes in keeping the burden of regulations on trustees and charities to the minimum that is consistent with effective regulation. If that is what the commission is saying, then why on earth impose another burdensome layer of regulation on charities? Or is the commission saying that the regulation that it provides is not effective? I honestly think that the letter that we have received from the Charity Commission is not robust enough to sustain any argument and I do not think that we should be further diverted by it, certainly not today.
I agree that this has rather blown the debate off course and I think that the suggestion made by the noble and learned Lord, Lord Mackay of Clashfern, that this be taken away, that discussions take place and that we ask the Government to review the situation and come back with something at Third Reading, would honestly be the best way of proceeding.
Lord Best (CB)
My Lords, I think that I shall go with the suggestion that we defer debate on this until Third Reading. I will just throw one or two thoughts into the pot that have not yet been fully explored.
Charity law is currently very much under review. The noble Lord, Lord Hodgson of Astley Abbotts, has reported on the workings of the Charities Act 2006 and the Select Committee on Public Administration has looked into the operations of the Charity Commission. Both the noble Lord, Lord Hodgson, and the Select Committee on Public Administration issued reports last year recommending changes, and the Government have accepted many of those recommendations. In addition, the National Audit Office recently issued a report calling for a reform of the Charity Commission, and the Law Commission is looking at charity law and will report this year.
It is almost certain, therefore, that there will be significant reforms to charity law in the near future, so if charities are taken out of the lobbying Bill, which is the proposition here, there will be an opportunity, if necessary, to amend charity law and to see changes of this kind in a broader and wider context at a later date. The many arguments on why charities should be taken out of this particular Bill stand on their own, I think, and although we are giving great deference to the quangos, I find the comments of the noble and learned Lord, Lord Mackay of Clashfern, and others to be compelling. Possibly we should not be debating all those details if legislation that is specifically about the future of charities, charity law and the Charity Commission is in the pipeline. It would be better to defer our debate until then, but I would be very happy to see this brought back at Third Reading.
Lord Harries of Pentregarth
Perhaps the House will allow me just a couple of minutes to put the opposing point of view to the noble Lords who have spoken so far. Their proposal is superficially very attractive and would be possible if the definition in Clause 26 were different. If the definition of “controlled expenditure” in the Bill said that it was expenditure whose prime purpose was the promotion, or procuring the election, of a particular candidate or party, it would be possible to take out charities. They should be taken out because, as the noble and learned Lord, Lord Mackay, rightly said, charities are not allowed to have as their prime purpose the support of political parties.
However, that is not what the Bill says. Clause 26—and we have heard it thousands of times—includes two important points, which are that you do not have to mention the name of the party and it does not have to be your prime intention. Therefore, you can campaign on an issue and still be caught by the regulation of the Bill. That is why—
Lord Low of Dalston
I thank the noble and right reverend Lord for giving way. Does he not agree that to be caught by the legislation the expenditure has to be “intended” to procure that effect?
Lord Harries of Pentregarth
The whole point of those provisions, which is where the sting is, is that you can campaign on and focus on an issue and that can be reasonably regarded as indirectly supporting a particular candidate or party, or you can even do so inadvertently. Let us be quite clear: charities are able to campaign on issues.
Lord Phillips of Sudbury
I am grateful to the noble and right reverend Lord for giving way, but he really cannot get away with that. You cannot inadvertently satisfy the requirements of Clause 26 when it says that you “intend” to promote or procure electoral success. Intention is not the same as inadvertence at all, and it is a very strong test. The fact that there are other matters that you are trying to advance at the same time does not get away from that test.
Lord Harries of Pentregarth
Then why does the Charity Commission guidance—and I have read carefully both its main guidance and its guidance in relation to the Electoral Commission—include a series of examples, just like the Electoral Commission, where charities may or may not be caught? This is a borderline area. Charities are able to campaign and to campaign vigorously, and many trustees encourage them to do so. Therefore, it is always possible for them to come within the scope of this provision.
If you take out charities, only two courses are open to you. Either you have an unlevel playing field so that you have a charity campaigning against a campaigning group which is not a charity, and the charity, if it were taken out, would be able to spend an unlimited amount of money, whereas the non-charitable campaigning group would have very strict limits on what it was allowed to spend, or the Charity Commission could set up a much stronger policing body than it has at the moment—one which would match that of the Electoral Commission.
Lord Low of Dalston
I am grateful to the noble and right reverend Lord and I apologise for intervening again, but does he not agree that we are continuing to get bogged down in technicalities about the interpretation of very detailed points in this clause? If the point is taken that there will be discussions before Third Reading and we can look for something more fully considered to come back then, it will make a lot of sense to put into that review the points that the noble and right reverend Lord, Lord Harries, is dealing with at the moment.
Lord Harries of Pentregarth
My Lords, I take the point but it was important to state the argument because some people are understandably initially very attracted to this idea. It would lift the regulatory burden, and people are attracted to the idea of taking out charities. However, there are very strong, compelling and rational reasons why this should not be done, and that is why it is opposed by the Electoral Commission, the Charity Commission, the commission that I chair, the NCVO, ACEVO and all the others.
Lord Gardiner of Kimble (Con)
My Lords, with the greatest respect, we are really getting beyond the guidance in the Companion regarding Report stage. I think that in a sense the House would like to make some progress.
Lord Rooker
My Lords, I will take three minutes; I am not going into technicalities and I freely admit I am going to introduce a bit of partisanship.
The Charity Commission states:
“Charities must never support political parties”.
If that was the case—if that was the norm—we would not have a problem. I would like to vote for this but charities have got to be regulated, even during the electoral period. I make no apology: I raised this before, at Second Reading.
Page 14 of the Conservative manifesto for the 2010 election shows a full-page portrait of the chief executive of a large national charity, extolling the virtues of the policies set out on the subsequent pages. This was the Conservative Party manifesto using a charity for party-political purposes. I was appalled when I saw it and could not understand why there was not a row about it. That chief executive, whom I later recognised, turned up in this House a few months later. I am not going to mention her name because I have not given notice, but the charity is Tomorrow’s People. This was a thundering disgrace and I would like, in the discussions that are about to take place, an assurance that political parties will submit their manifestos to the Charity Commission and the Electoral Commission to make sure that this kind of abuse of the system and of charities does not happen again, either by the Conservative Party or, inadvertently, by any other political party.
I apologise for introducing a note of partisanship, but I have been waiting a long time to say this.
Baroness Howarth of Breckland (CB)
My Lords, with due respect to the House, as I have not spoken on this, a number of the noble Lords who are proposing the amendment are suggesting that they will not take it forward but that there will be other debates. There are amendments later which are extremely important and vital to the sector if it is to carry out its work. I would be grateful if the House could move on.
Baroness Hayter of Kentish Town
My Lords, that being said, I will speak quickly and shortly to say that, while we absolutely understand the desire to stop the bureaucracy being placed on charities, we do not want that for other bits of the third sector either. This is why we want a much more fundamental change which takes them out too. They also use volunteers and have all these problems. We do not think the rest of the voluntary sector should be caught by something which other campaigners will not be. We are, obviously, interested in the Government’s response, but if the issue is simply about dual regulation then there may be a way for the Electoral Commission to devolve its responsibilities in this area to the Charity Commission. However, if it could not answer its phone to the noble and learned Lord, Lord Mackay, last night, I am not sure I would devolve much to it at the moment.
There is a difference: there is an area of activity which is completely legitimate for charities but which will not be covered by the Charity Commission, which only polices charitable law. Even at the moment, under PPERA, there are a whole lot of things which charities are covered by but which are not policed by the Charity Commission, so extra work would be going to them. As the noble Lord, Lord Horam, said, this clause covers work which is completely within their charitable aims and, therefore, eligible under charitable law. To take out one part of the voluntary sector and leave the other in is something we cannot understand. The charities themselves did not ask for this when they gave evidence—oral and written—to the commission chaired by the noble and right reverend Lord, Lord Harries. The Electoral Commission is against it, as are the NCVO and the Charity Commission. There may be a good reason for this: the overwhelming majority of charities that have contacted me are not in favour of it.
As I think the last speaker said, we are very interested in the important issue of staff costs. That is what the charities really want taking out, so I hope we can move quickly to it and the House can have a decision.
Lord Wallace of Tankerness
My Lords, I thank my noble friend Lord Phillips for raising the important issue of charities and seeking to exclude them from the regulatory regime governed by controlled expenditure for third parties. In Committee, we had a useful debate during which I indicated that some very important points had been made and undertook to give consideration to them. To those who ask the Government to take this issue away and to think about it, I say to your Lordships’ House that we have given this very serious thought. I probably spent more of my time on it than I had necessarily expected over Christmas and the new year in Orkney. I will not overegg it but I think my wife thought that it probably was more than was healthy.
With other Ministers, the Government have seriously thought about this matter and looked into it. Under present charity law, charities are organisations which must be established for charitable purposes only which are for the public benefit. An organisation will not be charitable if its purposes are political. Campaigning and political activity are legitimate and valuable activities for charities to undertake. However, this must be undertaken by a charity only in the context of supporting the delivery of its charitable purposes.
The Charity Commission and the Electoral Commission produce guidance for charities on campaigning and political activity. Both regulators acknowledge that there may be a narrow range of circumstances—noble Lords who took part in Committee will remember that the word given to me by officials was “sliver”, which I did not particularly like but was meant to show that it was a very narrow range of activities—in which charities may be compliant with charity law and also operate within the regulatory regime established by the Political Parties, Elections and Referendums Act 2000. I listened carefully to the speech of my noble and learned friend Lord Mackay of Clashfern. The Charity Commission guidance updated in January 2011 on charities, elections and referendum states:
“A charity may publish the views of candidates in local and national elections where these views relate to the charity’s purposes and publishing them will raise public interest and debate about the underlying issues. The charity must not encourage support for any particular parties or candidates”.
It goes on to say that “even if” a charity is,
“following the guidelines set out in this document and in Speaking Out: Guidance on campaigning and political activities by charities (CC9), if you use material that could be seen as indicating to the public that particular candidates or parties support or oppose your policies, it is possible that you may need to register as a third party with the Electoral Commission”.
Indeed, that has been the position following PPERA 2000. My understanding is that two charities registered in 2010 .
I admit that the circumstances may be very narrow but the important point to remember is that we are using an objective test. It is not a subjective intention of the charities: it is how a reasonable person might perceive what the charities have done. As the noble and right reverend Lord, Lord Harries of Pentregarth, pointed out, Clause 26(4)(c) states that,
“a course of conduct may constitute the doing of one of those things even though it does not involve any express mention being made of the name of any party or candidate”.
Applying that consideration and the objective test is the considered view of the Electoral Commission and the Charities Commission that there could be circumstances in which PPERA should apply.
Lord Low of Dalston
I am sorry to intervene on the noble and learned Lord, but does he not agree that the test is only partly objective because the test is not what a reasonable person would make of what the charity has done but what a reasonable person would make of the charity’s intention?
Lord Wallace of Tankerness
My Lords, I can do no better than remind your Lordships of Clause 26, which states that,
“the expenditure can reasonably be regarded as intended to promote or procure electoral success at any relevant election for—”.
The point is that there is a distinction between an objective and a subjective test. It may be that if the charity was complying it was not intending, but if objectively it was thought to have done so it would fall into that narrow range of activity. The important point was made by the commission chaired by the noble and right reverend Lord, Lord Harries; namely, that it is the activity that is important rather than who is undertaking the activity.
I know that the House wants to move on, but the e-mail issued yesterday evening by Mr Rowley has been referred to by a number of noble Lords. He says:
“We recognise that there are some circumstances where a charity’s activities can adhere to charity law but may still require them to register with the Electoral Commission during an election period. Indeed, during the last General Election a small number of charities did register with the Electoral Commission. Due to the increased awareness and scrutiny of this area we believe that this number may increase, regardless of the change in the scope of activities and limits that this Bill proposes”.
My noble friend Lord Phillips was suggesting that somehow or other the information on this coming from the Charities Commission was out of date. It is important to recall that it does set out the current position, but it is a situation in which PPERA is not changing with regard to the definition. It will not change as a result of this Bill, so the case remains that a narrow scope of activities could be covered. The Electoral Commission is clear that charities should not be exempt from the PPERA regime. It highlights that such an exemption would undermine the effectiveness of the PPERA regime and create incentives for campaigners to carry out as much campaigning activity as possible via charitable channels. Potentially that could have implications for the reputations of the charities.
I repeat what the commission said:
“It is the Commission’s view that it is right that charities are not excluded from within this legislation, and we believe the Government’s approach to distinguish by activity rather than by type of organisations is correct”.
The Government’s view, however, is that the nature of the PPERA test, to which I have referred, and the constraints of charity law will mean that the circumstances in which charities are brought within the scope of PPERA rules will be very rare. First, they must meet the PPERA test where their activities can reasonably be regarded as intended to promote or procure the electoral success of a party or candidate. Secondly, if they meet this test they must incur controlled expenditure over the registration threshold. The amendments that we will debate later and that are being brought forward by the Government to raise the registration threshold in essence will ensure that smaller or even medium-size charities will not have to register with the Electoral Commission.
I heard comments in Committee and in the meetings that I have had about the importance of trying to keep the administrative burden to a minimum. I accept that there was force in the concerns expressed when I first became engaged in this Bill and attended meetings with my noble friend Lord Wallace of Saltaire, in which charities said that there was a possibility that they could do something that took them into PPERA-controlled expenditure, with the limit at £5,000—£2,500 in Scotland, Wales and Northern Ireland. That might happen, without their knowing that there could be a freeze on their activity. But limits of £20,000 for registration are now proposed; in Scotland, Wales and Northern Ireland it is £10,000.
If charities are undertaking that level of expenditure this is neither unreasonable nor the sort of thing that will get lost in the loose change. It is significant expenditure. Therefore many charities will be removed from any concern by the thresholds that we are setting. Those approaching that level of expenditure may wish to consider whether it is appropriate. In terms of the general core principles of accountability and transparency in the Bill, it is important that if a body is undertaking the kind of activity that falls within this scope it should be accountable and transparent. In some of my discussions with the chief executive of OSCR, the Scottish charities regulator, he said that he thought that the transparency argument was important: if two organisations were doing exactly the same thing that brought them within the scope of the Bill or PPERA, it was wrong that one should have to be accountable and transparent, and the other, because it was a registered charity, should not. In transparency and accountability terms, this departed from an objective of the Bill.
Charities have raised concerns as to what happens if a party or a candidate adopts one of their policies. The Electoral Commission guidance is clear on this point. If a party or a candidate adopts a charity’s policy this will not automatically result in the charity incurring controlled expenditure. A charity will incur controlled expenditure only if it subsequently highlights the fact that party A or candidate B supports its policy, or ramps up its campaign. As such, the Government are not persuaded that there is a compelling case to take such a significant step as to exempt charities from the regulatory regime. It is the activities of the third party and not the type of organisation that should be subject to regulation. I can assure my noble friend, who raised the matter, as did other contributors to the debate, that the regulatory regime on charities will be explored during the review of third-party campaigning that we have indicated, as laid out in later amendments, will take place after the 2015 election.
We have had a good debate. I am not sure that I can elaborate these points much further. The noble and learned Lord, Lord Mackay of Clashfern, very properly made the point that the shape of the Bill will not be determined by the Charity Commission or the Electoral Commission; it will be done by Parliament, by your Lordships’ House and the other place. But, in doing so, it is important that we have some regard to those who have dealt with these issues in elections past, and to the Charity Commission and the Electoral Commission, which agree that the amendment proposed by my noble friend would not be appropriate in these circumstances. I therefore invite my noble friend to withdraw it.
Lord Mackay of Clashfern
Is my noble and learned friend saying, as a law officer of the Crown, that it is lawful for a charity in pursuance of its charitable purpose to do something that can,
“reasonably be regarded as intended to promote”,
the interests of a particular party or candidate?
Lord Wallace of Tankerness
My Lords, that has been the legal position since 2000. It is very rare that it would happen but, conceivably, there is a very limited range of activities that could fall within that. It would not be the intention of the charity but it might be reasonably seen by others to be the intention of the charity. It is because of that very limited possibility that it is important to maintain the provision as it is rather than implement the exemption proposed by my noble friend.
Lord Phillips of Sudbury
My Lords, I am grateful to my noble and learned friend the Minister for the way in which he summed up the debate. I am grateful to all those who have participated in discussing this important amendment. Given that Third Reading is on Tuesday, realistically there is not time to have the sorts of discussions that some noble Lords have looked for, particularly in terms of the speed at which the Charity Commission will move in relation to these sensitive matters. One has to look to the review of the workings of this legislation in the wake of the 2015 election. That will be vital. Having said that, I beg leave to withdraw the amendment.
“( ) In section 87 of that Act (expenditure by third parties which is not controlled expenditure)—
(a) in subsection (1), omit paragraph (a) and the “or” at the end of it;(b) omit subsection (2).”
“( ) After subsection (4) insert—
“(4A) It is a defence for any person or third party charged with an offence under subsection (2) or (4) to show—
(a) that any code of practice for the time being issued under paragraph 2 of Schedule 8A was complied with in determining whether any expenditure is controlled expenditure for the purposes of this Part, and(b) that the person or third party’s acts or omissions would not have amounted to an offence on the basis of the controlled expenditure as determined in accordance with the code.””
“Arrangements between third parties notified to the Electoral Commission
(1) Part 6 of the Political Parties, Elections and Referendums Act 2000 (controls relating to third party national election campaigns) is amended as follows.
(2) In section 94 (limits on controlled expenditure by third parties)—
(a) after subsection (3) insert—“(3A) For provision requiring certain controlled expenditure to be disregarded in determining for the purposes of subsection (3)(a) whether a limit is exceeded, see section 94A(5) (arrangements between third parties notified to the Commission).”;
(b) in subsection (4), for “such a case” substitute “the case mentioned in subsection (3)”;(c) in subsection (5A)—(i) after “Subsections (3) to (5)” insert “and section 94A”;(ii) for “those subsections” substitute “those provisions”;(d) in subsections (8) and (10), after “the purposes of this section” insert “, section 94A”;(e) in subsection (11)(a), after “this section” insert “and section 94A”.(3) After section 94 insert—
“94A Arrangements between third parties notified to the Commission
(1) A recognised third party (“a lead campaigner”) may, at any time before the end of a regulated period, send a notice to the Commission—
(a) stating that the lead campaigner is party to an arrangement of the kind mentioned in section 94(6), and(b) identifying one or more third parties that—(i) are parties to the arrangement, and (ii) have agreed to be minor campaigners in relation to the arrangement.(2) A notice under subsection (1)—
(a) may not identify a third party as a minor campaigner if the third party is a lead campaigner in relation to the same arrangement, and(b) may not be sent by a recognised Gibraltar third party.(3) On receipt of a notice under subsection (1) by the Commission, a third party identified in the notice becomes “a minor campaigner” in relation to the arrangement in question.
(4) Controlled expenditure that is incurred during the regulated period in a part of the United Kingdom by or on behalf of a minor campaigner in pursuance of the arrangement is to be treated for the purposes of section 96 (returns as to controlled expenditure) as having also been incurred during the period and in the part of the United Kingdom concerned by or on behalf of the lead campaigner.
(5) In determining for the purposes of section 94(3)(a) whether a limit is exceeded by a third party in relation to a regulated period, controlled expenditure incurred in a part of the United Kingdom is to be disregarded if conditions A to C are met in relation to the expenditure.
(6) Condition A is that the expenditure—
(a) is incurred in pursuance of an arrangement that has been notified to the Commission under subsection (1), and(b) is, by virtue of section 94(6), treated for the purposes of section 94 and Schedule 10 as incurred by or on behalf of the third party.(7) Condition B is that the third party is, at the time the expenditure is incurred, a minor campaigner in relation to the arrangement.
(8) Condition C is that the total of the controlled expenditure incurred during the regulated period in the part of the United Kingdom by or on behalf of the third party (disregarding any expenditure in relation to which conditions A and B are met) does not exceed the limit for that part mentioned in section 94(5).
(9) Section 94(6) applies for the purposes of subsection (8).””
Lord Wallace of Tankerness
My Lords, Amendment 39 relates to arrangements between third parties notified to the Electoral Commission. In our earlier debates, this was referred to as the coalition issue—not be confused with the coalition—and in the meetings I attended with charities and campaign groups it was probably the issue that was raised more often than any other. My noble friend Lord Wallace of Saltaire agrees.
The Government received many representations to this effect and I would like to make it clear, as I have done on previous occasions, that this Bill does not amend the controls on third parties that each incur controlled expenditure as part of a coalition. In addition, only coalitions that incur expenditure that can, in the phrase we have been using,
“reasonably be regarded as intended to promote or procure the electoral success”,
of political parties or candidates are regulated and will continue to be regulated. Those rules are necessary and I will take a moment to clarify their operation.
Section 94(6) of PPERA requires that if two or more third parties work together to incur expenditure to a common plan or arrangement, the entirety of the expenditure they incur as part of that coalition must count against each third party’s individual spending limit. However, it is also important to be clear about what is not caught.
Lord Tyler
As my noble and learned friend Lord Wallace has said, I and the noble and right reverend Lord, Lord Harries, the noble Baroness, Lady Mallalieu, and my noble friend Lord Cormack have a subsidiary but quite important additional amendment, Amendment 39A. I am sure that all four of us welcome the recognition that my noble and learned friend Lord Wallace has given to the fact that the 2000 Act—this is not about this Bill; it is about the 2000 Act—has caused real problems for any organisations that were encouraged to work together in what were then called coalitions. Since then, the term “coalition” has gained a different connotation, so perhaps we should talk just about “working together”. The way in which this matter was handled in 2000 has caused real concerns. I know from reading Hansard that this confusion was caused at the last minute by a government amendment during the Committee stage of the Political Parties, Elections and Referendums Bill, as it then was, in this House.
It is curious that, over the years since 2000, very few of us seem to have heard of the problems that were caused by those provisions. Neither the Electoral Commission nor the Charity Commission ever came forward and said that these matters needed review and either repeal or revision. However, we now know, because a large number of organisations have been in touch with many Members of your Lordships’ House saying that this is a real practical problem—hence the Government’s amendment, which is excellent so far as it goes. However, as I shall seek to explain in a moment, there is one additional problem which I hope my noble and learned friend will be able to say he can look at again, since, as he just said, there will be some additional clarification at Third Reading.
As my noble and learned friend has said, the new provisions should be a major help to smaller players in those joint campaigns, ensuring that others can account for their spending, but the approach in Amendment 39 does not go quite far enough. The fundamental problem with the so-called coalition arrangements in the 2000 Act is as follows. If, let us say, Friends of Earth intends to spend £300,000 on a campaign about climate change and does so in coalition with, for example, Oxfam, which contributes £25,000, under PPERA both are deemed to have spent, or to plan to spend, £325,000. Clearly, that is absurd, because that would mean that Oxfam, which had contributed only £25,000 to that campaign, might well then be precluded from doing anything else on other issues, which it is clear was not intended by the 2000 Act and which, I hope, is not something that we would intend to do today.
To prevent people working together and therefore having to multiply the spending limits under the 2000 Act by a factor equal to the number of organisations involved seems to be most peculiar. Removing the rules altogether would create another new loophole. I keep saying to colleagues in the third sector, “We’ve got to be very careful that we don’t increase flexibility for what we think is a good cause only to create a loophole for much less meritorious campaigning activity”. However, what is unfair about the rules is not that some spending on common campaigns is counted together to prevent an overall breach of the limits but the fact that spending by one organisation on one campaign can then restrict the campaigning of another organisation on a totally different campaign. In my example, Oxfam would be deemed to have spent £325,000 not just for the purposes of that climate change campaign but for all purposes. It would then be very close to the limit, which would then mean that it would have to worry about whether any of its other spending on, let us say, development targets could,
“reasonably be regarded as intended to promote or procure electoral success”,
of a party or candidate.
If that organisation’s trustees believe that the future spending could be so regarded, they would be left with a very small amount of headroom in the national spending limit even though they had contributed a relatively small amount of money to the tune of £25,000. Therefore, £25,000 spent on climate change would mean very little room left for spending on other development targets. I am sure your Lordships will see that that would not be just and right and does not meet the objectives either of the existing law or of this Bill.
Our Amendment 39A would build on the progress made by the amendment moved by my noble and learned friend Lord Wallace in setting out the principle that there should be an overall cap on spending by any one joint campaign or by any one individual organisation. However, new subsection (6B) proposed by my amendment states that,
“expenditure by a third party within the limits set out in Schedule 10 in pursuance of any matter unrelated to an arrangement and which could not reasonably be regarded as intended to achieve a purpose common to an arrangement”,
should not be so restricted by the coalition rules in PPERA 2000.
The amendment would provide for some affected organisations a silver lining in the passage of this Bill. In short, it would remove a very unjust element of the existing law which has caused quite unintended problems for many non-party campaigners. Their arrangements would be improved immeasurably. The amendment would also improve significantly what the Government have so far managed to come up with. I hope that my noble friends will recognise that the problems with the 2000 Act are considerable. This was one very specific problem that was caused to a large number of organisations. I hope therefore that before Third Reading, when, as my noble and learned friend has already indicated, there has to be some further clarification and therefore amendment of the set of amendments that he is putting before the House today, he could look also at this additional problem, which otherwise will go unresolved and continue to cause considerable difficulty for all sorts of organisations.
Lord Harries of Pentregarth
I, too, thank the noble and learned Lord, Lord Wallace, for the government amendment, which is a positive response to the suggestion put forward in our commission’s report, as he acknowledged. I have added my name to the amendment tabled by the noble Lord, Lord Tyler. I shall not repeat the reasons that he has already put forward, but it is an important amendment for charities and campaigning groups generally because they do a huge amount of campaigning not just with one coalition but with a whole series of coalitions. For instance, aid agencies may be engaged in a coalition on overseas aid and, at the same time, be engaged in a coalition on climate change. That is the way in which they work.
I want to make a point that has not been made so far in any of these debates. It concerns the fundamental purpose of this part of the legislation and whether it will achieve what the Government hope. The purpose of the legislation at this point is to stop front organisations drawing on large sums of money to distort campaigning, but I suggest that the legislation as we have it now will not have that effect. Let us take a hypothetical example. Six very strong anti-Europeans have dinner together. They have access to large amounts of money from various sources. They go away to different parts of the country and they decide to start six different campaigning organisations under different names. But, in fact, everybody knows that their purpose is to get Britain out of Europe. Would they be caught by this legislation? No. I have read carefully the briefing note presented by the Electoral Commission, which says that you are not working together—that is, you are not engaged in co-ordinated campaigning—if you have informal discussions with other campaigners but do not discuss your plans with them in any detail—all this party will have done is have dinner together; if you speak at an event organised by another campaigner but do not participate in other ways—they could even speak at each other’s events; and if you do not consult other campaigners about what you should say in your campaign or how you should organise it. However, it goes on to say that you can sign a joint letter together. I hope that the noble and learned Lord will take seriously the fact that the legislation as it now stands will not have the desired effect of stopping big money coming in and using front organisations. We firmly support the intent but we do not think that the Bill will achieve it.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I intervene very briefly. I tabled an amendment on coalition working and I am very grateful to the Government for adopting this way forward.
The other issue that charities raised frequently was the question of nil returns. I know that we shall come to nil returns later under government Amendments 81 and 89, but that, I hope, will cross-ruff into this amendment. In other words, we will make sure that when the new rules for coalition working come in charities will be able to take advantage of the nil return provisions, which the Government properly propose in Amendments 81 and 89. I should be grateful for the Minister’s clarification on that.
Lord Ramsbotham (CB)
I, too, welcome the government amendments and repeat something that I have said on earlier occasions about the importance of getting the issues about coalitions right in relation to the criminal justice system. If you look at the transforming rehabilitation revolution, you will find that the Government are trying to encourage coalitions to take on the supervision of offenders. They consist of a large number of different organisations, private and voluntary, and it is important that they are crystal clear on anything to do with coalitions before they are formed to take on that very important public work.
The Earl of Sandwich (CB)
My Lords, I detect self-restraint in the House at the moment, and I know that we need to move on rapidly, but I just wanted to say a word in support of Amendment 39A. I have to repeat what the noble Lord, Lord Cormack, said earlier about the value of charities generally within the political system and the role of networks, which have become so important and have been encouraged by government. If the noble Baroness, Lady Chalker, were here—she could not be here today—she would explain how the Government were siding with charities all the way through the 1980s and 1990s to achieve consensus with coalitions. The idea of attacking even the larger coalitions seems to be against the Government’s own policy.
The noble Baroness, Lady Mallalieu, said on an earlier amendment that a lot of damage had been caused by Part 2, but it must also be said that the Bill has strengthened the charities in opposition to it. That must be a force for good. But one damaging effect of the Bill, which was not intended by the Government, is that if it is unamended, many charities will become more wary in their campaigning. They will in many cases withdraw from the front line. I have been 40 years in charities and church organisations attending party conferences. What would they all be like without those charities displaying their wares, and so forth?
I know that the Government have come quite a long way to meet the smaller charities, but I do not think that they have moved far enough. The noble and learned Lord should recognise the injustice of netting so many legitimate activities just to catch one or two miscreants who would probably be recognised anyway in the context of a local constituency. Charities are usually pretty visible in what they do. The Electoral Commission itself says that we are talking only about a small number. Although the numbers add up and may increase, we are all in danger of exaggerating the number involved. It is the sledgehammer effect.
Surely, when there is disaffection with elections generally and with mainstream politics and politicians, we want more awareness among the public of the range of current non-party political issues. The amendment leads us in the right direction.
Baroness Tyler of Enfield (LD)
My Lords, I rise briefly to support Amendment 39A and, in doing so, very much welcome Amendment 39 introduced by my noble and learned friend. In Committee, I drew on my personal experience of being involved in coalitions of charities both previously and currently. It is very important —Amendment 39A achieves this—that even small and medium-sized charities are not restricted to being involved in only one coalition. I end by giving the example of when I was chief executive of a charity in the field of family relationships. At any one time, with a very small amount of money, we would be involved in a campaign to do with children and young people, a campaign to do with domestic violence, and a campaign to do with older people and the role of grandparents. All of those were important activities. We could never have done that ourselves; we simply did not have the money. That is why Amendment 39 is so important.
Lord Wallace of Tankerness
My Lords, I expressed appreciation for those who have welcomed Amendment 39, not least my noble friend Lady Tyler, because—I do not say this in any critical way—that is where we have managed to build on the amendment moved in Committee by the noble and right reverend Lord, Lord Harries. It would allow smaller charities, without reaching the threshold limit, to engage in a number of different campaigns.
I respond to the example used by my noble friend, and to the noble Lord, Lord Ramsbotham, and the noble Earl, Lord Sandwich, about the kind of campaigning that charities are doing. My noble friend talked about promoting grandparents’ rights, and I know that the noble Lord, Lord Ramsbotham, has a passionate interest in rehabilitation issues. As he said, the Government have encouraged the work of coalitions. One has to remember that to be subject to controlled expenditure, a campaign must fall within the definition set out in Clause 26. I honestly do not believe, without a huge leap of imagination, that the valuable work done by coalitions to promote the rehabilitation of offenders or grandparents’ rights could be interpreted as seeking the election or promotion of a particular party. By no stretch of the imagination could a reasonable person think that that was intended to secure the promotion of a particular party or candidate in an election. The noble Earl, Lord Sandwich, raised similar concerns.
The overwhelming amount of campaigning by charities will not fall within the definition of controlled expenditure here. I hope that that gives some reassurance, because I recognise the sincerity with which these concerns are expressed. Work that is being done to promote rehabilitation in prisons cannot be seen in any way as falling within the ambit and scope of activity that would bring it within PPERA-regulated controlled expenditure.
My noble friend’s amendment is intended to allow third parties that set up a coalition to move away from the common plan rules by allowing that coalition to have both its own spending limit and separate, individual spending limits for the members of the coalition. The coalition will be able to spend up to the national limit, and its members will also be able to spend up to the national limit on activities not taken forward as part of the common plan.
My noble friend was right to point out that the issue we are grappling with here has been in place since 2000; I accept that the range of activities increases under the Bill, but the problem has been with us since the outset. I point out that under existing legislation, there is nothing to stop a coalition establishing itself as a distinct third party. This allows the organisations and their members also to campaign on separate issues individually, with a separate spending limit.
The Electoral Commission has been very clear on this point, both in its guidance and in its evidence to the Commission on Civil Society and Democratic Engagement. That evidence gave the example of a lead campaigner which runs the coalition’s campaign and authorises its spending. Only the lead campaigner would be required to register with the Electoral Commission. Contributions to the coalition campaign from other third parties will be treated as donations or donations in kind to the campaign. In the words of the Electoral Commission,
“this means that the ... campaigners do not need to register themselves or report anything themselves to the Electoral Commission”.
Those campaigners would therefore be able to continue to campaign independently, too, to the maximum spending limit.
However, the Electoral Commission also made it clear in its Report stage briefing that it cannot support this particular provision. It noted that the amendment,
“would allow an individual or organisation to spend substantial amounts campaigning on an unlimited number of issues, as long as they are working together with someone else in each of those campaigns. For instance, someone could spend hundreds of thousands of pounds on each of a series of campaigns with others that attack different aspects of a political party’s manifesto in the run-up to an election”.
For example, it could be that you have an energy company that went into campaign with other energy companies, set up a coalition in favour of fracking and supported candidates who would support that. It could spend up to, say, £300,000 on that. Quite separately, under my noble friend’s amendment, it could be engaged in another campaign, with other participants, in which it tried to promote onshore wind power and could spend up to £300,000 on that. I am sure that that is not the intention of what my noble friend is proposing, but I fear that might well be the result his amendment would have.
I know that my noble friend has worked hard on this—as have many people—to try to find the right way to deal with this coalition issue. I do not believe that his amendment would have an effect that was helpful; and, as I indicated earlier, it is possible for a coalition to set itself up as a third party in itself. In these circumstances I invite my noble friend not to press his amendment, as it may have consequences that he does not intend. However, I hope we have indicated to the House, through the amendment that the Government have brought forward, that they have listened, have grappled with the issue and have built upon the amendment proposed by the noble and right reverend Lord, Lord Harries, in Committee.
(a) ”
(b) any public procession or protest meeting, within the meaning of the Public Processions (Northern Ireland) Act 1998, in respect of which notice is given in accordance with section 6 or 7 of that Act (advance notice of public processions or related protest meetings)”
“But expenses in respect of such events do not include costs incurred in providing for the protection of persons or property.”
“1A (1) Nothing in paragraph 1 extends to—
(a) expenses incurred in respect of the publication of any matter relating to an election, other than an advertisement, in—(i) a newspaper or periodical,(ii) a broadcast made by the British Broadcasting Corporation, by Sianel Pedwar Cymru or by the Gibraltar Broadcasting Corporation, or(iii) a programme included in any service licensed under Part 1 or 3 of the Broadcasting Act 1990 or Part 1 or 2 of the Broadcasting Act 1996;(b) expenses incurred in respect of the translation of anything from English into Welsh or from Welsh into English;(c) reasonable personal expenses incurred by an individual in travelling or in providing for the individual’s accommodation or other personal needs;(d) reasonable expenses incurred that are reasonably attributable to an individual’s disability;(e) expenses incurred in respect of the provision by any individual of the individual’s own services which the individual provides voluntarily in the individual’s own time and free of charge.(2) In sub-paragraph (1)(d), “disability” has the same meaning as in the Equality Act 2010 (see section 6 of that Act).”
“Exclusions of background staff costs1AA Nothing in sub-paragraphs (3) to (5) of paragraph 1 shall be taken as extending to any expenses incurred in respect of remuneration or allowances payable to any member of staff (whether permanent or otherwise) of the third party.”
Lord Harries of Pentregarth
My Lords, this amendment is very important for campaigning groups and charities, but I can move it very briefly: it is quite clear and simple.
First, let me say that the charities and campaigning groups, as part of the commission, very much support the aim both of transparency and accountability, and with that aim in mind support the extension of activities that should be regulated and are set out in new Schedule 8A. This amendment is about removing the background staff costs from those activities in sub-paragraphs (3) to (5) of that schedule. They refer to press conferences and media events; transport costs, when those are directed towards obtaining publicity—for instance, a campaign bus; and public rallies and other meetings.
We agree that all those should of course be brought into regulation, but this amendment is about excluding the background cost: that is, the cost of the member of staff of the third party. That is not primarily on cost grounds, but because of the additional bureaucracy that it would involve. How do you delineate the amount of time that the staff member spends—let us say, on mounting a public rally—from the amount of staff time they spend on their campaigning work anyway?
It is easy to assess the amount of money you are going to spend on hiring the hall for a public rally; you get an invoice for that. You do not get an invoice for a member of staff or the 10% of their time spent over four weeks doing that. Therefore, we think that the best thing to do is eliminate the background staff costs from the regulated costs in those three areas. It should be noted that the Electoral Commission recommends the removal of all staff costs, at least for the 2015 election. We are not going as far as that; we refer only to the background staff costs in relation to these three activities that are being brought into regulation. I beg to move.
Lord Tyler
My Lords, I strongly support the noble and right reverend Lord, Lord Harries, on this amendment. Indeed, we had very co-operative discussions about how best to tackle this problem. I am grateful to him and, indeed, to others who effectively endorsed an amendment we tabled in Committee on this crucial issue.
Given that there was much quotation of the Electoral Commission’s advice earlier, it is important that it has very explicitly said that Amendment 45 offers some advantages over the current position in the Bill. With this amendment, at least, we have that endorsement.
As I said in Committee, the Electoral Commission actually thinks that counting staff costs for political parties’ election expenses would be an appropriate way to proceed. Of course, that is not in front of us today; it may be for another day and another Bill. For the purposes of this Bill, the NGOs have been dealing with a considerable problem: namely, that the Bill includes not only staff costs on direct campaigning but what are called “background costs”.
As my noble friend will no doubt point out, staff costs for non-parties are already regulated for the production and distribution of election material. Our amendment suggests that this should continue but that costs should also be accounted for if they are incurred in direct relation to canvassing voters. In that context it seems that it would not be very difficult to identify the particular costs; equally, however, we do not want to increase the difficulties that could be caused by burdensome regulation on background costs that are not in any way so easy to account for. For example, the costs in relation to organising meeting rooms, travelling to a venue or setting up a press conference might be a matter of a few minutes of somebody’s time—and therefore, for many small organisations, a considerable absurdity.
Bluntly, I do not think that anyone cares if a policy officer, whose job for the rest of the year is something completely different, spends a little time booking a room for an election rally, or incurs costs travelling to it. These matters cannot be said to be likely to greatly affect the outcome of an election in that particular area, or nationally. However, if the regulations go through without us thinking about the implications, they could unnecessarily tie up campaigners in accounting for their time—and, worse still, could deter some from campaigning at all.
As was said so forcibly earlier, there are many organisations in this country—and thank God for them—that rely entirely on time being given voluntarily to this sort of activity. Would it be necessary to try to cost that time, or would it be difficult, in any case, whether they were employed or volunteers? Many a charity and many a non-charity would find that totally inconsistent with the Government’s intention of avoiding unnecessary spending on unnecessary bureaucracy.
This amendment, along with some of the others, helps the Government to do what they say they want to do. I hope, therefore, that my noble and learned friend will be able to find some way of making a sensible compromise on the whole issue of staffing costs.
The Government have moved sensibly in so many ways to try to meet the concerns and anxieties about the so-called chilling effect that many of us have understood to be the case with organisations with which we are involved. Many noble Lords are active members of charities and non-charities that do such important work in civil society today. Surely, the last thing that we want to happen is for the time, energy, enterprise, inventive activity and, indeed, the cost of those organisations to be unnecessarily distorted by new bureaucracy of the sort that could occur. Therefore, I very much hope that the Government will see that this is a sensible compromise on the whole issue of staffing costs.
Lord Cormack
My Lords, I have attended a number of meetings which the noble and right reverend Lord, Lord Harries, has convened and I, for one, am extremely grateful to him for the leadership that he has given and the amount of time he has devoted to the Bill over the past few months. Last week, following those meetings, I met with the chief executive officers of two important charities. I do not intend to name them because I did not say that I would, but when I asked them, “If we could get only one amendment through the House next week, where would your priority be?”, they said that it would be on staffing costs.
Any regulations imposed as a result of the Bill should be clear, simple and, above all, fair. The problem with this is that we would be faced with regulations that would be far from clear or simple, and which would most certainly not be fair. Because I do not want to take the time of the House when we have already had a clear and brief exposition from the noble and right reverend Lord, all I will say is: let us this evening make sure, as far as we can, that that clarity, simplicity and fairness is in the Bill.
I, too, am grateful to my noble and learned friend Lord Wallace of Tankerness and to the other Lord Wallace, my noble friend Lord Wallace of Saltaire, who we are all delighted to see back—but I urge them to go this one further step. They have done a great deal to try to make a bad Bill better; they can take another step this evening.
Baroness Royall of Blaisdon (Lab)
My Lords, the inclusion of staffing costs is hugely burdensome for large and small campaigning organisations. We have heard that tonight and we have all received e-mails and had discussions with campaigning organisations. Like the Electoral Commission, our preference would be for all staffing costs to be taken out for the 2015 election period. However, we recognise that this is an excellent compromise and I urge the noble and learned Lord, Lord Wallace, to accept it. Later on this evening the noble and learned Lord will be putting a review into the Bill, which could be an opportunity to revisit these things, so I very much hope that he will accept the amendment.
Lord Wallace of Tankerness
My Lords, I thank the noble and right reverend Lord, Lord Harries, for his amendment, because I, too, recognise that this issue has been regularly raised in many of the meetings that we have had—as did my noble friend Lord Cormack and the noble Baroness, Lady Royall. The noble and right reverend Lord’s amendment seeks to exclude those staff costs associated with staff directly employed by a third party from the calculation of controlled expenditure for transport, press conferences and organised media events, and for public rallies and public events.
The starting point is to recognise that the PPERA Act 2000 has always required third parties to account for staff costs. I acknowledge that the Bill extends the range of activities that may incur controlled expenditure; these are the activities that the noble and right reverend Lord seeks by his amendment to remove from staff costs. The Bill seeks to retain the need for staff costs to be included. As I said, I recognise that there has been concern, first, over the unfairness of third parties having to account for these costs when political parties do not. I think that my noble friend Lord Tyler mentioned that. Secondly, there has been concern about the difficulty for third parties in calculating the staff time attributable to activities giving rise to controlled expenditure.
On the issue of third parties having to account for these costs while political parties do not, your Lordships will be aware that when Parliament passed the 2000 Act it felt that it would be transparent and proportionate for a third party to account for staff time. This was on the basis that a third party undertakes campaigning activities other than simply political campaigning, and where a third party enters into political campaigning its spending for those purposes should be fully transparent. I am sure that that was the underlying thinking behind the 2000 Act. I would at least hope that someone who is employed by the Liberal Democrats during an election is actually working for the Liberal Democrats. Indeed, I am sure that the other parties would hope the same on behalf of their staff. It is as transparent as it possibly can be.
Regarding the concerns of third parties over the difficulties associated with calculating staff time, this is an existing element of the regulatory regimes. Its operation in the last two general elections, alongside Electoral Commission guidance on this, highlighted that such costs can be accounted for without becoming overly burdensome. The Electoral Commission takes a proportionate approach in current guidance to the calculation of controlled expenditure, including staff costs, by clearly stating that third parties should make an honest assessment of the costs that need to be reported.
I have shared with a number of the groups which have come to see me since Committee the fact that we did examine whether it would be possible to put in a de minimis exemption. Quite frankly, having seen what its terms would be, it would give rise to more concern about legal definitions than it merited, particularly if we had a de minimis exemption in statute. That would make it much more difficult for the Electoral Commission to take that proportionate approach to the calculation of controlled expenditure which it has done through its guidance.
It should also be noted that with the increases in the registration threshold the smaller organisations to which my noble friend referred, be they charities or campaigning organisations, will not be subject to regulation and the need to calculate staff costs. The best way of addressing the de minimis question is by what we have done in raising the threshold and taking so many of these organisations outwith the scope of controlled expenditure altogether.
My noble friend quite properly paid tribute to the work done by volunteers, not only for charities but for so many campaigning organisations. In many respects, they are the people who make the wheels of campaigning and democracy go round. However, volunteer costs will continue to be excluded from the calculation of controlled expenditure. In Amendment 44, which the House has just agreed, volunteer costs are excluded from the calculation of staff costs by virtue of paragraph 1A(1)(c) of new Schedule 8A. They were excluded under the existing regime, but it is important to emphasise that volunteer costs will also be excluded under what we are proposing. There is a world of difference between volunteer costs, which will be excluded, and the great advantage that there can be to candidates or political parties of third parties putting paid staff into campaigning activity in constituencies, or into running media events, press conferences or rallies.
The result of the amendment proposed by the noble and right reverend Lord, Lord Harries, would be to exempt that kind of expenditure associated with paid staff being moved in at the time of an election to facilitate the electoral advantage of a particular party or candidate. It is for that reason that the Government do not feel able to accept the noble and right reverend Lord’s amendment, and I invite him to withdraw it.
Lord Harries of Pentregarth
I am disappointed with the noble and learned Lord’s reply. This was a very simple step that the Government could have taken to ease the regulatory burden on charities and campaigning groups. It is disappointing. He stressed the fact that staff costs were already in PPERA. With due respect, that is no good reason for continuing them, if we have an opportunity to improve that Act and make it not just workable but one which eases the burden on charities and campaigning groups.
The Minister stressed that the Electoral Commission had found it possible to regulate this, but the fact is, as he knows, that charities and campaigning groups find this whole area very burdensome. I really do not see how the Electoral Commission can possibly police this area and work out what percentage of the time has been allotted, let us say, to the mounting of a public rally. What kind of receipts or statements is it going to get from the charity concerned? I am afraid that I find it very disappointing and I would like to test the opinion of the House.
“(1) Section 94 of the Political Parties, Elections and Referendums Act 2000 (limits on controlled expenditure by third parties) is amended in accordance with subsections (1A) to (1E).
“(1A) In subsection (3), for paragraph (a) (but not the “and” after it) substitute—
“(a) during a regulated period—(i) any controlled expenditure is incurred in a part of the United Kingdom by or on behalf of a third party in excess of the limit for that part of the United Kingdom mentioned in subsection (5), or(ii) any controlled expenditure is incurred in a particular parliamentary constituency by or on behalf of a third party in excess of the limit mentioned in subsection (5ZA),”.(1B) In subsection (5)—
(a) in the opening words, for “(3)” substitute “(3)(a)(i)”;(b) in paragraph (a), for “£10,000” substitute “£20,000”;(c) in paragraph (b), for “£5,000” substitute “£10,000.”(1C) After subsection (5) insert—
“(5ZA) The limit referred to in subsection (3)(a)(ii) is 0.05% of the total of the maximum campaign expenditure limits in England, Scotland, Wales and Northern Ireland.”
(1D) In subsection (5A) for “(5)” substitute “(5ZA)”.
(1E) In subsection (10), omit the “and” at the end of paragraph (c) and after paragraph (d) insert—
“(e) the “maximum campaign expenditure limit” in a part of the United Kingdom is the limit imposed by paragraph 3 of Schedule 9 in relation to campaign expenditure incurred in the relevant period (within the meaning of that paragraph) by or on behalf of a registered party which contests all the constituencies in that part (and to which sub-paragraph (6) of that paragraph does not apply).””
Lord Wallace of Tankerness
My Lords, one of the aspects of the Bill that has received considerable attention and debate during our discussions, not only in your Lordships’ House but with campaign groups, relates to the registration thresholds, spending limits and constituency limits.
On registration thresholds, the point has been made repeatedly that small campaigners who do not incur much expenditure would be brought into the regulatory regime. This would, it has been claimed, impose undue administrative burdens on organisations that are not equipped to handle those responsibilities.
Noble Lords will recall that the Government have been considering this issue for some time. Indeed, my noble friend Lord Wallace of Saltaire gave a commitment on the first day in Committee that the thresholds would be revised. Extensive debate in Committee followed, at which representations were made to either revert to the existing PPERA thresholds, or to raise them further. I am grateful to my noble friend Lord Hodgson and to the noble and right reverend Lord, Lord Harries of Pentregarth, for leading that highly useful debate.
The Government have considered this matter and the appropriate level for registration thresholds further. Amendment 46 proposes to raise the levels to £20,000 in England and £10,000 in Scotland, Wales and Northern Ireland. The noble and learned Lord, Lord Hardie, has tabled an amendment proposing those levels be set at £20,000 for each constituent part of our United Kingdom. I simply observe that the Government’s amendment represents not only a substantial increase from the levels currently in the Bill, but reflects the original structure where the amounts were higher in England than in Scotland, Wales and Northern Ireland, no doubt due to the fact that there is a substantially greater number of constituencies and voters in England than in Wales, Scotland and Northern Ireland. Nevertheless, this is still a significant increase not only for England, but for Scotland, Wales and Northern Ireland, and it doubles the current registration thresholds in PPERA.
These thresholds will effectively exclude from the controls those campaigners who incur only small amounts of money. They will be able to campaign as they currently do, secure in the knowledge that unless they spend a substantial amount of money on controlled expenditure, they will not be subject to any aspect of the regulatory regime.
Bearing in mind what not only noble Lords but people outside sometimes hear in general debates or see in e-mails, it is also important to point out that these are thresholds for registration. It has sometimes been represented that there are limits on what organisations can spend, but the thresholds for registration are consistent with our objective of promoting transparency and accountability. We are maintaining the constituency limit of £9,750 throughout the regulated period to prevent a third party focusing a significant amount of its spending power on a small part of the United Kingdom.
Amendment 46 also specifies that, where a third party spends £9,750 in a constituency, it must register with the Electoral Commission. This is to ensure that the offence of spending more than £9,750 in a constituency is fully effective. I know my noble friend Lord Tyler is particularly interested in that point. As constituency limits apply only in relation to regulated periods involving a parliamentary general election, so the constituency threshold will have effect only in relation to such periods. We recognise that the current draft does not accurately reflect this, and the Government will accordingly bring forward an amendment at Third Reading to correct that.
In contrast, my noble friend Lord Tyler has proposed that rather than require a constituency registration threshold of £9,750, the registration threshold should be only £5,000. Reintroducing a lower constituency threshold than £9,750, as proposed by my noble friend, would only reinsert an extra layer of bureaucracy and confusion, particularly as the Government have also tabled Amendment 53, which would remove a post-dissolution limit of £5,850. The government amendment means that campaigners may spend the entire £9,750 throughout the regulated period, or just in the last few weeks before the election. Having just one constituency limit will be a much more straightforward and easier regulation to follow.
Finally, on spending limits, campaigners and Members of your Lordships’ House have sought to retain third parties’ spending limits at either the existing PPERA amounts, or even beyond those. The noble and learned Lord, Lord Hardie, and the noble and right reverend Lord, Lord Harries of Pentregarth, were clear on this point when we addressed this issue in Committee. The spending limits in the Bill for Scotland, Wales and Northern Ireland have particularly concerned campaigners. It has been argued that third-party campaigning in any part of the UK generally has a fixed cost; leaflets, for example, cost the same whether printed in Wales or England, and billboards cost the same, whether they are placed in Scotland or Northern Ireland. As a result, the spending limits for Scotland, Wales and Northern Ireland were felt to be disproportionately low. It is with that in mind that government Amendment 47 would uplift those limits by an extra £20,000 each. This would mean that there would be a spending limit of £55,400 in Scotland, £44,000 in Wales and £30,800 in Northern Ireland.
The Bill proposes spending limits for each of the parts of the UK which add up to £450,000. It is important to remind your Lordships that while these limits were initially to be over not quite a year—from the day after the European elections—if your Lordships approve our amendment which we will debate later, these will apply over the length of the reduced seven-and-a-half-month regulated period, which is also reflected in another government amendment. In fact, therefore, there is a larger amount in Scotland, Wales and Northern Ireland over a shorter period. Indeed, the amount for England is over a shorter period.
I have previously sought to explain that considerable amounts of campaigning can still be undertaken for that amount. In Committee, I gave the example of £390,000 buying a campaigner 40 million leaflets, a dozen front-page adverts in a national newspaper or even 780,000 telephone calls from a professional phone bank. I hope that noble Lords will agree that these government amendments as a whole will lead to a substantial increase in the registration thresholds and a significant uplift to the limits in the Bill for campaigning by third parties in Scotland, Wales and Northern Ireland.
I note that the noble and right reverend Lord, Lord Harries of Pentregarth, has further amendments on spending limits. I will respond to them when I wind up. I beg to move.
Lord Hardie (CB)
My Lords, before speaking to the amendment in my name, I thank the Government and the noble and learned Lord the Advocate-General for listening to the concerns from all sides of the House about the original proposal in the Bill to reduce the existing thresholds for registration as a recognised third party. The government amendment addresses these concerns and, rather than reducing the limits, they have accepted that the limits should be increased. It is appropriate that tribute is paid to the efforts made by the Government and the noble and learned Lord.
However, Amendment 46 does not address the anomaly that I mentioned in Committee, caused by having different registration thresholds for England and the rest of the United Kingdom. My amendment would remedy that by having the same registration thresholds throughout the United Kingdom. I noted that the Minister suggested that the distinction between England and the rest of the United Kingdom was the larger number of constituencies and voters. It is important to appreciate that there is a distinction that should be drawn between total expenditure by third parties in each constituent part of the United Kingdom, as against expenditure limits that determine whether the third party is required to register for recognition.
I accept that a distinction must be drawn between the various countries when one considers the total expenditure by a recognised third party in each country. That distinction reflects the number of parliamentary constituencies in each country and the greater number of voters in England than in any of the other three countries. That is the point that has been addressed since the 2000 Act, and is preserved in that Act, notwithstanding the amendments, in paragraph 3(2) of Schedule 10.
However, the threshold for registration is different. There is no justification for distinguishing between the different countries in this respect. The distinction was introduced in the 2000 Act, which followed the fifth report of the Committee on Standards in Public Life on the funding of political parties in the United Kingdom, which was presented to Parliament in October 1998. I referred to this in Committee and will not repeat these references. However, in Committee I explained that that report and the Government’s response to it never suggested any distinction between the different countries. There was a reference in a footnote which suggested that the reduced figure of £10,000 across the United Kingdom might be more significant in the three countries other than England, but it did not go as far as suggesting that there should be a difference.
I have been unable to find any subsequent explanation for halving the limit of £10,000 allowed for England in the other countries of the United Kingdom. I do not understand the need for a distinction when it comes to the threshold for registration. It is illogical and risks inhibiting local people from engaging in effective political debate about issues that are of concern in their constituency at a crucial time in the electoral process, by imposing upon them what my noble and right reverend friend Lord Harries of Pentregarth described at Second Reading as a,
“bureaucratic burden on small charities or campaigning groups, especially during the actual election period”.—[Official Report, 22/10/2013; col. 914.]
For example, suppose that a local hospital is threatened with closure and a group of individuals in the constituency wish to make this an issue at the general election but stop short of fielding their own candidate. If some candidates in that election support the retention of the hospital while others do not, the expenditure by the local group will be controlled expenditure. If this occurs in England, the pressure group can spend £20,000 before the need for registration and the administrative burden that entails, but if it occurs in Scotland, Wales or Northern Ireland, it can spend only £10,000. The expenses of running such a campaign in Scottish, Welsh and Northern Irish constituencies will be similar to those in many English constituencies. Do the Government seriously suggest that the cost of transport to meetings or venues of meetings in every English constituency is double that in any constituency elsewhere? In his reply, will the noble and learned Lord the Advocate-General explain the justification for this distinction?
My final point is that my amendment is not academic. Apart from being fair to all people across the United Kingdom who wish to campaign in the course of a general election about a matter of local importance to them, there is also a question of perhaps greater significance: that the consequences of not registering but exceeding the registration threshold are a criminal offence under Section 94 of the 2000 Act. Why should electors face prosecution in Edinburgh, Cardiff or Belfast for spending £6,000 on a campaign without registering as recognised third parties but have immunity in Newcastle for identical activity?
Lord Tyler
I have a separate amendment in this group. We all welcome the way in which my noble friend Lord Wallace of Saltaire and my noble and learned friend Lord Wallace of Tankerness have responded to the request for an increase in the registration thresholds. This was a key recommendation of the commission headed by the noble and right reverend Lord, Lord Harries, and it certainly deserved to be listened to.
In this last-minute change to the Government’s position, however, there is one new outstanding problem. The interaction between the national thresholds for registration and the constituency limits in the Bill simply do not hold together. As we will discuss in the next group, I believe very strongly that the constituency limits are a very important part of this Bill. Indeed, I am sure Members on all sides of your Lordships’ House are aware that if we did send back to the other place a Bill that did not deal with this point, many people there would think that we were not doing our duty.
For the constituency limits to be effective, those who spend at a constituency level will surely need to make an expenses return about what they are spending. The rules in the 2000 Act and in the Bill rightly also ask where the money is coming from. There is, however, a problem. As the Bill will stand in the light of these new government amendments, someone could be spending £9,750 in a constituency, or indeed could spend £19,500 across two English constituencies, yet would not have to register. The registration limit is now raised to £20,000, and therefore that spending and its sources would be totally opaque. It would not be transparent even though £9,750 could have a significant impact on the constituency result.
In my own amendments on thresholds in Committee, I suggested that this problem could be dealt with by stipulating that the threshold should be at a particular level which would take that into account. The Government have chosen £20,000, and that is fine, except that all the spending could be concentrated in one target marginal constituency. A group could spend a significant sum—I am suggesting £5,000 in my amendment—all in one place. Surely in those circumstances it should have to register.
The Government’s answer has been that somebody who spends more than £9,750 in one constituency will be committing an offence under their proposals. If that someone does not have to register, because he is below the new registration threshold, how can anyone know that he is committing that offence? I cannot think—and I know a little bit about these things—of any other part of electoral law in which someone who is subject to a spending limit is yet not required to produce any paperwork on what he is spending. Introducing that concept now would make for a completely absurd anomaly.
Lord Cormack
Will the noble Lord not agree with me that there would be more logic in having a figure that was close to that which an individual candidate is entitled to spend? No individual candidate is entitled to spend as much as £20,000 in any constituency in the United Kingdom.
Lord Tyler
My noble friend is right. He and I have relatively recent experience of these things. The normal figure is around £12,000 during the election period. As I will come to in a moment, that could be swamped under these proposals, and therefore this is an absurd anomaly. I understand why the Government have arrived at their position. Their formula sounds simple, but it may be so simple as to be unequal to the task in hand. Equally, the move in Amendment 53 to do away with different limits for constituency spending seven months before an election, and constituency spending seven days before, seems to me to lose what is an important and not particularly complex distinction in the name of simplicity—and I am not sure the Government have got this right.
I ask the Minister to consider carefully the horror story that could emerge. Imagine: a campaigning group could come into a constituency and spend £19,999.99 in the last seven days of the campaign with the aim of affecting the outcome in that constituency, and it would not need to register. A second group, unrelated to the first, could, during those seven days, do the same. It would not register. A third group, unrelated to the other two—not a coalition, not working together— could do the same. In the last few days of a campaign in a marginal constituency, just under £60,000 could be spent, completely swamping the amount permitted for a candidate and a party, which is around £12,000, in one constituency. The candidates are, as I say, limited in those final four to six weeks.
Because this spending would not be registered, it might not be revealed until after polling day. Think of the mess that that would cause to our electoral law. Because such groups, though technically in breach of the law, would not need to register, no one would be any the wiser about what they had been up to. My noble and learned friend has said that he is looking at this section with a view to some clarification, and I think he will have to agree that there is a major loophole looming in front of us. I therefore request that he look carefully at Amendment 46ZA. He may find a better solution but a solution must be found, otherwise political parties and those who will be looking at this legislation when it goes back to the other place will not have seen this particular problem, because until now the registration threshold has not been so high. It is only under the present Government’s changes in this House that it has been raised to this height.
I hope that my noble and learned friend will be able to give some reassurance to those of us on all sides of the House who are concerned about such spending that the Government are not prepared to accept this loophole.
Lord Harries of Pentregarth
My Lords, Amendment 46A in my name concerns the spending cap for England. First I would like, on behalf of the commission, to warmly welcome the raising of the registration thresholds by the Government. I think that has done more than anything else to reassure the smaller charities; we give the Government a very warm thank you. We also warmly welcome the raising of the spending cap for Wales, Northern Ireland and Scotland. The spending cap for England, unlike that for Wales, Northern Ireland and Scotland, has been reduced by 60%. That reduction has taken place with an increase in the number of activities to be regulated and without taking inflation into account.
It is true that not many campaigning groups and very few, if any, charities would spend a high figure coming anywhere near that. The one I have checked that does spend quite a lot of money is Hope not Hate, which campaigns against racism all over the country. It is not a charity but a campaigning group. In 2010 it spent £319,231. That is very nearly the limit for England as we have it under the Bill, which is £319,800.
There was no evidence of abuse with the previous spending caps for England, and no rationale has been given for this reduction by 60%. Even if the Government are not willing to revert to the PPERA limits for England, I ask the Minister whether he sees any scope for some kind of compromise between the drastic reduction which has been brought about by the Bill and the spending limits there were for PPERA.
Lord Cormack
My Lords, I will add just a few words to what I said a few minutes ago. I fought 12 general elections, in 10 of which I was elected, to go to the other place. In every one of those the expenditure that I was allowed was very clearly defined. The returns that one had to make afterwards were minutely examined, and there have been cases within our memory where candidates have been challenged on their returns because they were a little careless in submitting them. We have to be extremely careful. The last election I fought was in 2005, and if I remember rightly I was allowed to spend around £8,000 or £9,000. My noble friend says that it is now about £12,000, and I accept that—I am sure he is right. It was all very carefully defined, and we have to be careful, much as we all want to protect free speech and engagement in campaign and all the rest of it, that the expenditure of candidates who stand for particular political parties or as independents is not put into the shade by the expenditure that is allowed to campaigning organisations within individual constituencies. Although I do not suppose that my noble friend Lord Tyler will push his amendment to the vote, I hope that the Minister will reflect upon what he and I have said.
Baroness Williams of Crosby (LD)
My Lords, when at these debates, I have always felt that not enough attention is paid to the real danger of our fragile system of controlling election expenditure beginning to break down altogether. I am strongly in favour of charities having the right to campaign and being free to speak out about what they believe—that is absolutely right—and a huge contribution is made to us as a society in that way. Frankly, however, I am frightened that here, on the edge of the Third Reading of the Bill, we have observed and commented upon two huge anomalies that are still with us and still in the Bill, which open the door to the misuse of some aspects of the Bill in a way that would make the holding of that line against the misuse of public and private expenditure very difficult to hold.
Throughout my whole political life I have been very conscious, like the noble Lord, Lord Cormack, of the importance of the restrictions on the amount of money that passes into the British political system and what a huge benefit that has been to us in terms of retaining a democracy that is genuinely a democracy of the right of every individual to vote. Some of my colleagues in this House will know that I have been very much affected by the recent history of the United States, having been for 10 years an elective politics professor at Harvard, between 1986 and 1996. I will quickly say what so frightens me.
In 2010, the American Supreme Court decided to lift all restrictions on what amounts of money could be given by either corporations or trade unions directly to campaigns at the federal level. One of the outcomes of that—a decision that was made, let the House not forget, in 2010—was that in 2012 no less than $6 billion was poured into federal elections in the United States in a one-year electoral cycle. That was not enough. The sweeping away of all those restrictions was based upon the constitutional right of free speech, in my view distorted in a very troubling way. Today, the Supreme Court of 2014 has on its agenda yet another proposal, McCutcheon v Federal Election Commission, which would enable any individual, without restriction, to contribute any amount he or she wishes to the election of an individual named federal candidate—in other words, it is back to Eatanswill and the buying of politicians.
The United States is a great and very open democracy, but we are rapidly seeing the gradual distortion of its democracy by huge expenditure of money for other purposes than simply a desire to register a particular campaigning goal. I fully take the point that every step that can be taken has been taken to avoid that in the Bill. I am dubious about the proposal of the noble and learned Lord, Lord Hardie, to increase substantially the limit. However, I appreciate that the original limit was almost certainly too drastically cut. There is a median way there.
Lord Wallace of Tankerness
My Lords, I thank all noble Lords who have contributed to this debate. I express particular appreciation of the welcome that has been given to the very significant increase in the registration thresholds that the Government have brought forward and to the uplift in the spending limit in Scotland, Wales and Northern Ireland. To follow on from my noble friend Lady Williams, it is certainly useful to remind ourselves, as she also did very eloquently in Committee, of the core purpose of the Bill, which is to ensure that our electoral and democratic system is not hijacked by people who can spend large amounts of money without proper accountability, and that there is proper transparency. It is important that we keep those important points in our minds when we consider the different measures.
Perhaps that is consistent with the point made by my noble friend Lord Tyler, which I addressed in my opening remarks, on not wanting a particular constituency to be overwhelmed. He proposed a threshold of £5,000 and said that he did not wish to find a situation where an organisation could come rattling into a constituency with one week to go, spend £19,999, get away with it and not be accountable for that. It is important that the Representation of the People Act might have a certain impact on that kind of expenditure, if it offended that Act; under the Bill that expenditure is increased from £500 to £700. I ask my noble friend to reflect on that, although I know that he does not overlook it as he knows full well about it.
But, more importantly, there is not that kind of loophole. My noble friend seems to have overlooked—and I did try to draw his attention to it in my opening remarks —that it will be an offence under the Bill to spend more that £9,750 in a constituency, even where the RPA does not apply. One of the consequences of a situation where we are amending another piece of legislation is that it is not always self-evident. Amendment 46 says:
“In subsection (3), for paragraph (a) (but not the “and” after it) substitute … (ii) any controlled expenditure is incurred in a particular parliamentary constituency by or on behalf of a third party in excess of the limit mentioned in subsection (5ZA)”.
I think that the purpose of that is in fact to make a registration requirement if the constituency limit of £9,750 is reached, or at least that is what I am reliably advised and I know that it is certainly the intent that there should be a registration of the maximum for each constituency to make more effective the criminal sanction that will follow if a party or third party spends in excess of £9,750. His example of spending £19,000 could not actually happen under the Bill, in line with the proposed amendment.
Lord Tyler
Whether it is £9,000 or £19,000, my general point is that I have been unable to find anything in electoral law where there is a spending limit but no paperwork for anybody to provide that shows that they are keeping within that spending limit. It seems to me that there is a potential anomaly. I am just asking my noble and learned friend to be absolutely certain before, as has been said, we send back to the other House a potential anomaly in these circumstances.
Lord Wallace of Tankerness
My Lords, I do not think that there is an anomaly. One of the reasons for putting in the registration requirement was to try to address the kind of anomaly that my noble friend mentions. We share the same objective and if he thinks that there is a loophole there then I will certainly make sure that we look at that, because these provisions have been worked up over recent days. I think that it is okay, but it is probably quite good counsel that we should check to make sure that that is in fact the case.
The noble and learned Lord, Lord Hardie, made his case for having similar registration thresholds in Scotland, Wales and Northern Ireland as in England, and I can see some force in what he is saying. He says that he has not been able to divine why there has been a difference, which has been in place since the very outset. Since PPERA, a distinction has been made: it was £10,000 for England and £5,000 for Scotland, Wales and Northern Ireland. I will not allow myself the cheap debating point that that was what the noble and learned Lord proposed in Committee, but I think that his purpose behind that was to make sure that the Government considered the threshold properly.
It is interesting too—I will finish this point and then let the noble and learned Lord come in—that what is actually proposed by the Government is also the architecture proposed by the commission chaired by the noble and right reverend Lord, Lord Harries of Pentregarth. The commission report proposes £20,000 for England and £10,000 for Scotland, Wales and Northern Ireland.
Lord Hardie
I was going to say that I would not add such an adjective. The noble and learned Lord will remember that I tabled two amendments: the first was to preserve the status quo and the other was to seek an increase in the limits. As the noble and learned Lord has much more experience in political matters than I have, he will appreciate that it is useful to have a stop-gap in case the main objective is not achieved. In relation to the comment about the point made by my noble and right reverend friend Lord Harries, the noble and learned Lord might remember that, in Committee, when the noble and right reverend Lord was speaking, having heard my suggestion that there should be uniformity for registration levels, he indicated that he thought that there was some force in that and that it had not been a point considered by the commission.
Lord Wallace of Tankerness
My Lords, I was going to say that I was aware that the noble and learned Lord had also tabled an amendment in that group to raise the threshold to provide an equalisation—at, I think, £25,000 if my information serves me correctly.
It is a fair question as to why there is such a difference. I think one of the reasons, which I gave at the outset, is that there is a difference in the number of voters and number of constituencies. It is also the case that spending of less than £20,000 could have a more significant impact in, say, Northern Ireland, which is a very compact area with a very focused media. Spending of less than £20,000 could have a much more significant impact there than in England, and I suspect that the different political and media circumstances was one of the considerations as to why the difference came about in the first place.
There are one or two points made by the noble and learned Lord that I could not quite follow. He said that if there was a hospital closure in a particular constituency, a pressure group could spend up to £20,000 in England but just under £10,000 in Scotland. Of course, following on from the debate that we have just had about constituency limits, they would be restricted to £9,750 in Scotland, Wales, England and Northern Ireland regarding the kind of example that he gave. He suggested—I apologise if I misheard him—that someone could be prosecuted for spending £6,000 in campaign expenditure in Edinburgh but not in, for example, Birmingham. I think that he will accept that, with a £10,000 threshold, that would not happen in either Birmingham or Edinburgh. I do not think that I misheard him, but sometimes people get that impression and suddenly there are concerns.
Lord Hardie
The noble and learned Lord is correct; it was a mistake on my part, I should have said £12,000. The point was that it is simply over the limit in Scotland but under the limit in England.
Lord Wallace of Tankerness
My Lords, we recognised the core expenditure that was needed in Scotland, Wales and Northern Ireland in order to mount campaigns and that has been reflected by—for the first time, actually—making a distinction and giving an uplift for Scotland, Wales and Northern Ireland over and above the percentages that have otherwise been applied.
The noble and right reverend Lord, Lord Harries of Pentregarth, proposes reverting to the total national spending limit of £988,500. As I have explained, the Government have brought forward amendments to increase spending limits for Scotland, Wales and Northern Ireland but, as I explained in Committee, only a few political parties at the last general election spent more than £390,000—the total now would be £450,000—on the full range of activities that we now wish to extend to third parties. Only the Conservative Party, Labour Party, Liberal Democrats and UKIP spent more than £390,000 and, I assume, more than £450,000.
As my noble friend Lady Williams said, there are risks associated with allowing third parties to incur vast amounts of spending. Given that third parties campaign for or against electoral success of political parties, it is a very reasonable assumption that a relationship can and does develop between some third parties and political parties. This opens up the potential for supporters of political parties to demonstrate their backing by diverting their funding to an aligned third party and away from the political parties themselves, which have their own limits. I do not think it is right that, where limits are imposed on political parties, they can be circumvented in this way.
Even the limits that we have allow very extensive campaigns to be mounted. I do not wish to indulge in too much repetition, but £390,000—and of course it has gone up by £60,000—is 40 million leaflets, a dozen front-page adverts in a national newspaper, or 780,000 telephone calls from a professional phone bank. These are not insignificant campaigning activities and I therefore believe that the judgment that we reached in coming to these figures is the right one.
I therefore urge the House to support the Government’s amendments with regard to thresholds and I invite noble Lords not to press their amendments.
(a) in relation to England, 2% of the maximum campaign expenditure limit in England;(b) in relation to Scotland, £20,000 plus 2% of the maximum campaign expenditure limit in Scotland;(c) in relation to Wales, £20,000 plus 2% of the maximum campaign expenditure limit in Wales;(d) in relation to Northern Ireland, £20,000 plus 2% of the maximum campaign expenditure limit in Northern Ireland.”;”
Lord Tyler
(a) sending election material falling within paragraph 1 of Schedule 8A which is addressed to electors (whether addressed to them by name or intended for delivery to households within any particular area or areas);(b) unsolicited telephone calls falling within paragraph 2 of Schedule 8A, made to such persons or households, which may reasonably be regarded as intended to ascertain or influence their voting intention.( ) For the purposes of this paragraph, “election material” is defined as in section 143A.”
Lord Tyler
My Lords, this amendment, which I am moving on behalf of a number of noble Lords in different parts of the House, deals with some small changes to a previous amendment that we looked at in Committee on constituency limits, but they are changes that I know will be very welcome to a number of organisations which have been in touch with several Members of your Lordships’ House. It received considerable support across the Chamber in Committee and has two compelling advantages to recommend it.
First, it retains the Government’s intention to have a constituency limit. That is surely central to the Bill. As I have said consistently, I strongly support that and I know that a large number of other Members of your Lordships’ House also think it is important to retain that. However, even if we were to take it out, as some have suggested, I would certainly expect that Members of the other place would need no whipping at all to put it back in, for the reasons that were advanced so eloquently by my noble friend Lord Cormack a few minutes ago. Surely even Labour MPs would want it to be put back in.
The second advantage to the amendment is that it very closely and carefully defines what the constituency limits should apply to. As many charities and NGOs, big and small, have pointed out to me and to other Members of your Lordships’ House, they are not used to dealing with constituency boundaries; they have quite a different sort of geography from those of us who are involved in politics. Therefore, trying to assess the relative effect of, say, a rally in different constituencies would be quite problematic. It would be problematic for the political parties too, and for that reason we, as politicians, are not asked to account for it.
I shall give a practical example. I once chaired a rally for the five constituencies, as they then were, in Cornwall, and it took place in one particular constituency. It just so happened that we won all five seats but that did not have anything to do with my chairmanship at that rally. However, how would the costs of that rally be allocated to each constituency? You could allocate the costs to one constituency but what about the other four? That clearly is not what this Bill is all about. It really is not possible to measure the effect of a rally, or indeed a billboard or a press conference, on the result in an individual constituency.
I have one other example. I lost a lot of hair—or, rather, most of it went grey—in two elections arranging the national tour of the battle bus for the then joint leaders. Your Lordships may remember that at one stage we had two leaders in the alliance—the two Davids—although they did not always see eye to eye. That caused me a great deal of aggro. However, how I would ever have accounted for five minutes in this constituency, 10 minutes in that constituency and an hour in that constituency if I were running a campaign on behalf of a non-political organisation is quite beyond me.
Amendment 52, on which I am very grateful for the support of the noble and right reverend Lord, Lord Harries, the noble Lord, Lord Cormack, and the noble Baroness, Lady Mallalieu, would limit the scope of the constituency regulations to just activities where people communicate with specific voters. The one advantage of this amendment is that it ties down very specifically the activities that target specific people at a specific address in a specific constituency—letters or leaflets sent or delivered to voters, or telephone calls directed specifically to them—and which try to influence or ascertain their voting intention. Other activity would still have to be accounted for but only on a national basis. Therefore, if it is the national tour of a battle bus, arranging rallies or whatever, that has to be accounted for nationally but under the more generous national limits.
What has been made clear to us by many organisations which think that they may be involved in the activities covered by the Bill is that, if they are asked to account only for those activities that specifically target specific individuals, that will make their lives a great deal easier. It will retain the central purpose of the Bill, which is to stop big-money campaigns dwarfing the limits that candidates have to adhere to—my noble friend was very eloquent on this point a few minutes ago, as was my noble friend Lady Williams—and it will mean that the additional costs of activity directed at specific candidates can be identified neatly, clearly and succinctly.
The Electoral Commission has very clearly endorsed this amendment and expressed clear support for it because it makes simpler the guidance that it will have to give and the subsequent monitoring that it will have to undertake. I beg to move.
Lord Harries of Pentregarth
I support the amendment for the reasons that the noble Lord has set out. Constituency limits have been of very great concern to charities and campaigning organisations. I am fully aware of the kind of concerns raised by the noble Baroness, and, as the noble Lord, Lord Tyler, indicated, this issue has also been a very great concern for the Electoral Commission because it does not see how it can regulate and enforce this area. The noble Lord’s amendment will make it far easier for charities to be regulated by the law and for the Electoral Commission to regulate it.
Lord Cormack
My Lords, an amendment that can produce a joint letter from the National Secular Society and the Christian Institute clearly deserves careful consideration. When they take into account that the Electoral Commission also believes that there is good sense in this proposal, I hope that your Lordships will feel likewise. I hope that we will not have to exercise ourselves by going into the Lobbies. I hope that my noble and learned friend will be able to indicate at least a significant degree of sympathy with this and, if he cannot accept these precise words, that he will undertake to come back at Third Reading next week with something similar.
Baroness Hayter of Kentish Town
My Lords, we also strongly support the amendment. It is not the provision’s intention that we have problems with but its workability. It will add an enormous bureaucratic burden. When people campaign against the proposed path of HS2, flight paths around Heathrow or fracking and so on, that is not divided up by constituency. It is strange that a Government who are cutting red tape elsewhere, and who on Monday said that they could not possibly ask special advisers to list their meetings with lobbyists, seem to want this for really small organisations. Amendment 52, which limits the requirement to telephone calls and literature aimed at households, is immensely sensible. I hope that the Government will do one of two things: either accept the amendment or put off their new rules until after the next election.
Lord Wallace of Tankerness
My Lords, we have just had a discussion on constituency limits, and it was also covered extensively in Committee. The House has agreed to a government amendment to remove the post-Dissolution limit to make the provision less complex, yet there remains some concern about it. From what was said in a previous debate, I think that my noble friends Lord Cormack and Lord Tyler believe that there should be some limit on constituency spending. My noble friend Lord Tyler argued for a lower limit but now wants lots of expenditure to be incurred without any limit at all. That is a concern that we have.
It is important to put this in context. Constituency spending limits do not replace the existing controls under the Representation of the People Act 1983. Those long-standing rules stipulate that third parties campaigning for or against a particular candidate may spend only up to £500 in doing so. Other than raising that amount to £700, and requiring records to be kept of such expenditure, this Bill does not affect those provisions.
In contrast to the RPA rules, Clause 28 introduces a new limit on how much a third party that is promoting the electoral success of parties, or candidates who support particular positions, can spend in individual constituencies. As has already been explained, the limit is £9,750. The reason for this amount—which might, on the surface, appear somewhat odd—is that it is equivalent to 0.05% of the maximum campaign expenditure limit applied to political parties. This limit will apply for the duration of the regulated period for a UK parliamentary election.
As has already been rehearsed, the need for constituency limits is profound. It is not right that candidates and parties should effectively be bowled out of the field purely because well funded campaigners are able to outspend them. Elections are the principal domain of political parties and candidates, and those who are not campaigning for their own electoral success should still be able to participate: that is the essence of our democracy. However, in these circumstances, we believe that the voices of such campaigners do not diminish the voices of the political parties and candidates and that constituency limits will ensure that.
The Bill makes clear that a third party’s expenditure would be wholly attributed to a constituency only if that expenditure had “no significant effect” in any other constituency. That means expenditure in a local area could, of course, be attributed to several constituencies if the effect was felt in them all. Expenditure with a wider regional, or even national, reach would be attributed proportionately to all the relevant constituencies.
My noble friend Lord Tyler has proposed an amendment to dampen the effect of these constituency limits. The amendment proposes that only certain costs —in other words, only expenditure related to certain activities—should count towards constituency limits. Specifically, the amendment says that only costs associated with election materials should be counted. That would mean the costs related to leaflets, mailshots and adverts, all of which must also have been either specifically addressed to or delivered to households in a constituency, and unsolicited telephone calls to such households.
I recognise the issue which my noble friend is trying to address, but I believe there are drawbacks. For instance, significant activities such as rallies and events would not be regulated at a constituency level if his amendment passed. I gave some of my colleagues an example of Scottish Liberal Democrat pre-election rallies in Edinburgh East. Anyone who knows Scotland will know that Liberal Democrats would not be spending money in that constituency; no doubt Edinburgh East Liberal Democrats will now write to me and say, “Do not let us down”. That was a national campaign, but an event in my own former constituency could not, by any stretch of the imagination, relate to any other—not even Caithness, Sutherland and Easter Ross.
In addition, material otherwise distributed or displayed would also not count towards the constituency limit. A third party could therefore freely distribute leaflets by hand in a town centre, or, indeed, in shopping areas in different parts of a constituency, in the knowledge that, because they are not being delivered to voters’ homes, the associated costs need not be accounted for in that constituency’s limit.
We are concerned that these are key gaps which would allow a third party to target an area by holding large partisan events, or flood an area by handing out election material in the street or in shopping precincts. Allowing only certain activities to count towards constituency limits would undermine the entire principle of constituency limits, on which my noble friend spoke so eloquently earlier. For that reason, I urge my noble friend to think again and to withdraw his amendment.
Lord Tyler
My Lords, I am rather disappointed by that. Throughout today’s debate and, indeed, on previous occasions, many noble Lords—particularly my noble friends on the government Front Bench—have quoted the advice of the Electoral Commission. I apologise to the House for detaining it for a minute, but this is what the Electoral Commission says about this amendment:
“In principle, we support Amendment 52, tabled by Lord Tyler and others. It narrows the scope of the constituency limits so that they only cover spending in respect of election material sent to voters and households in a constituency, and unsolicited phone contact with such voters”.
Then, in heavy type, it continues:
“We see benefits in defining the scope of activity covered by the constituency controls more narrowly than in Part 2 of the Bill generally”.
The Electoral Commission feels there is a need to deal with this question and has identified it as one of the problems with campaigning organisations. Even if the amendment in our names does not meet the particular point and is not the right way to go about it, there is clearly a need to do something. Will the Minister undertake, in these last few days before Third Reading, to go back to the Electoral Commission and discuss this issue with it again? On that basis, I am prepared to withdraw the amendment.
Lord Gardiner of Kimble
I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that Report should begin again not earlier than 8.15 pm.
Lord Harries of Pentregarth
My Lords, Amendment 52A concerns constituency spending limits. It proposes that the spending limit for constituencies, instead of being 0.05%, is 0.1013%. I think your Lordships are well aware that campaigning groups and charities have found the regulation regarding constituencies exceedingly burdensome and the Electoral Commission has found them unenforceable. We take very seriously all that the noble Baroness, Lady Williams, has said about ensuring that big money does not come in. Nevertheless, we think that the constituency limits are too low. Raising them by this percentage, which reflects the wider percentage of caps, would give that greater degree of freedom which the charities and campaigning groups would like. I beg to move.
Baroness Hayter of Kentish Town
My Lords, we have Amendment 62A in this group. In order that the notes in reply can be thrown away, I give notice that I will not speak to it. Essentially, the issues were covered in the earlier group. Nevertheless, we retain our concerns about constituency limits and would very much like to have voted on the previous amendment, but there we are. However, we support the other amendment.
Lord Wallace of Tankerness
My Lords, the noble and right reverend Lord, Lord Harries of Pentregarth, has tabled an amendment which would raise the constituency limits from being the equivalent of 0.05% of the maximum campaign expenditure limit applied to political parties to 0.1013%. This would amount to almost £20,000—specifically, £19,753.50. As the noble Baroness indicated, we have already debated the issues on constituency limits. I have explained the necessity of constituency limits being in place. Without these limits in place, a third party could otherwise be able to focus the entirety of its spending power on a small part of the United Kingdom, outspending even candidates and parties in that location. That point was forcefully made by my noble friends Lord Cormack and Lord Tyler. It is important that those limits are set at an appropriate level and it is our view that the noble Lord’s amendment would not be appropriate.
I will not repeat the earlier points. We wish to promote accountability and transparency. Constituency limits relate to campaigning for or against a particular party and instances where a campaign is intended, or may reasonably be regarded as intended, to support groups of candidates who might hold particular views or support particular policies. Where such campaigning is subject to a national limit, it is also right that it is subject to a proposed constituency limit but we believe that that must be at a proportionate level. The comments we heard in earlier debates suggest that the limit we have set is too generous. Indeed, even my noble friend Lord Tyler might think it. However, we think that the limit we have set is proportionate, especially as we have removed the distinction between spending throughout the regulated period and spending during the period between the dissolution and election day. The limits are intended to remove undue influence, particularly by those campaigners who can afford to spend significant amounts of money. I do not believe that the noble and right reverend Lord’s proposal would be proportionate. It could allow substantial sums of money—sums, as we have heard, such as £12,000, which is the candidate’s limit. To have a third-party sum that is almost half as much again does not appear to be proportionate. I therefore urge the noble Lord to withdraw his amendment.
Lord Harries of Pentregarth
My Lords, I can well appreciate the noble and learned Lord’s answer to that. The issue that is continually raised by the commission I chair is the rationale for always linking third-party spending and regulation to political-party spending and regulation. That has never really been fully set out. I take the point that the noble and learned Lord has made but I hope that he will take on board the fact that there is continuing concern among charities and campaigning groups about constituency spending, and not just the spending but the regulation for campaigning in constituencies. As the noble and learned Lord knows, there is also great concern in the Electoral Commission. Even if he is not prepared to consider this amendment again, will he look seriously at Amendment 52 in the name of the noble Lord, Lord Tyler? That would help significantly. If he is not sympathetic to my amendment, I hope that he might be able to look again at Amendment 52 and bring something back in relation to it. With that, I beg leave to withdraw the amendment.
Lord Gardiner of Kimble
“( ) In subsection (2), after paragraph (c) insert—
“(ca) a body incorporated by Royal Charter which does not fall within any of those paragraphs of section 54(2),(cb) a charitable incorporated organisation within the meaning of Part 11 of the Charities Act 2011 or within the meaning of the Charities Act (Northern Ireland) 2008,(cc) a Scottish charitable incorporated organisation within the meaning of Chapter 7 of Part 1 of the Charities and Trustee Investment (Scotland) Act 2005 (asp 10),(cd) a partnership constituted under the law of Scotland which carries on business in the United Kingdom,”.”
Lord Gardiner of Kimble
My Lords, Clause 31 seeks to require registered third parties to identify members of their body, management committee or relevant officers. It places requirements on those bodies that are allowed to register as third parties under the Political Parties, Elections and Referendums Act 2000.
As outlined in Committee, when PPERA was passed, a number of groups were specified: individuals, companies, trade unions, building societies, limited liability partnerships, friendly societies and unincorporated associations. The Government acknowledge that as almost 14 years have passed since PPERA was enacted there may be other bodies that should now be added to the list. My noble friend Lord Hodgson of Astley Abbotts made this point persuasively in Committee. In the light of this, the Government have brought forward amendments to allow royal chartered bodies, charitable incorporated organisations and Scottish partnerships to register as recognised third parties should they incur controlled expenditure over one of the registration thresholds.
These amendments address the Government’s commitment in Committee to ensure that those bodies which would like to register as third parties are able to do so. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I will detain the House only for a moment to thank my noble friend and the Government very much for having listened to the persuasive arguments put forward by the Law Society and others and for providing a way forward for CIOs, a new corporate form that has emerged since PPERA was passed. There are more than 1,000 royal charter bodies. This is a very helpful and beneficial result and I thank the Government for it.
“( ) After subsection (3)(c) insert—
“(d) if given by a body falling within any of paragraphs (ca) to (cd) of subsection (2), state—and be signed by the body’s secretary or a person who acts in a similar capacity in relation to the body.”(i) the relevant details in relation to the body (see subsection (3C)), and(ii) the name of the person or officer who will be responsible for compliance on the part of the body with the provisions of Chapter 2,and be signed by the body’s secretary or a person who acts in a similar capacity in relation to the body.”( ) In subsection (3A)—
(a) for “or (c)(ii)” (in both places) substitute “, (c)(ii) or (d)(ii)”;(b) after “(3)(c)” insert “or (d)”.”
“(3C) For the purposes of subsection (3)(d), the “relevant details” in relation to a body are—
(a) in the case of a body falling within subsection (2)(ca) (body incorporated by Royal Charter)—(i) the name of the body,(ii) the address of its main office in the United Kingdom, and(iii) the names of its officers or the members of its governing body;(b) in the case of a body falling within subsection (2)(cb) or (cc) (charitable incorporated organisation)—(i) the name of the body,(ii) the address of its principal office, and(iii) the names of its charity trustees within the meaning of the Charities Act 2011, the Charities Act (Northern Ireland) 2008 or the Charities and Trustee Investment (Scotland) Act 2005 (asp 10);(c) in the case of a body falling within subsection (2)(cd) (Scottish partnership)—(i) the name of the body,(ii) the address of its main office in the United Kingdom, and(iii) the names of the partners.””
“( ) In section 85(7)(c) of that Act (definition of “responsible person”), after “88(3)(c)(ii)” insert “or (d)(ii)”.”
Lord Wallace of Tankerness
My Lords, these amendments address concerns raised by noble Lords in Committee and by campaigning groups in the discussions we have had with them. It is important to guard against the risk that significant donors might use third parties to aid political parties and evade the party spending controls. That is why at present third parties campaigning nationally during regulated elections are subject to rules on donations similar to those of political parties.
However, recognised third parties need to report only donations related to controlled spending, and currently are required to do this only once at the end of every campaign, as part of a return to the Electoral Commission after the relevant election, rather than at the regular intervals required of the political parties. Therefore, Clause 32 introduces important measures to improve transparency by ensuring that people know the source of reportable donations received by third parties during the regulated period via quarterly and weekly donation reports.
I hope that noble Lords support the principle of providing information on reportable donations during the election campaign. However, the Government acknowledged in Committee that the right balance needed to be struck between increased transparency and the avoidance of overly burdensome reporting requirements. As set out in the Bill, only third parties that are required to register with the Electoral Commission are required to provide reports on the donations they receive. The amendments that this House agreed earlier today to increase the registration thresholds mean that only third parties which incur controlled expenditure of more than £20,000 in England or more than £10,000 in each of Scotland, Wales or Northern Ireland will have to produce donation reports.
Furthermore, government Amendments 81 and 89 remove the need for recognised third parties to provide nil reports. Instead, a recognised third party will be required to provide a donations report to the Electoral Commission only when they receive a reportable donation. Only donations over £7,500 are reportable. If a third party does not receive a reportable large donation, they will not have to provide a report.
The Government have also brought forward amendments to take account of snap general elections. The Government accept that these provisions, while important in the regulated period for an election the date of which is known in advance, may cause problems if they were to be applied to an early parliamentary election. If a snap general election were to occur, third parties would have to provide weekly reports to the Electoral Commission only during the post-dissolution period, and then only if they receive a reportable donation. They would not have to prepare quarterly reports.
The Government believe that these amendments meet the concerns of charities, particularly in relation to the removal of nil reporting, which was a key area of concern for both the NCVO and the Commission on Civil Society and Democratic Engagement. They retain the vital transparency measures introduced by the Bill, but ensure that unnecessary burdens are not placed on campaigners.
I apologise to my noble friend Lord Hodgson, who asked me about nil returns in the debate we had on coalitions. I assure him that if a coalition spends less than the registration threshold, it will not have to produce a spending return. If a coalition does not receive a donation, it will not have to provide a nil return.
At present, recognised third parties have to provide details of their campaign income and expenditure to the Electoral Commission after a UK general parliamentary election and after the poll for certain other elections. Campaigners pointed out that many third parties register with the Electoral Commission with the intention of incurring controlled expenditure but at the end of the regulated period find that they have not spent above the registration threshold. While it is important to ensure transparency in spending any donations, we have listened carefully to the concerns of campaigners and, as I have said previously, we do not want to impose unnecessary administrative burdens, particularly on small campaigners.
To ensure that these provisions are proportionate, government Amendment 98 provides that a third party which registers with the Electoral Commission but does not incur controlled expenditure in excess of the required registration threshold does not have to submit a spending return or a statement of accounts. The intention is that a recognised third party should also have to prepare a report if its expenditure in a constituency, in the case of a regulated period involving a parliamentary election, exceeds the constituency threshold that will from now on apply to non-recognised third parties. We recognise that the amendment does not currently do that so we will bring forward a small amendment at Third Reading to put that right.
To improve transparency by providing a clearer understanding of the finance of those involved in elections and to align the reporting requirements of third parties more closely with those of political parties, the Bill provides that a statement of accounts should also be submitted to the Electoral Commission. To ensure that this additional obligation is proportionate, individuals would be excluded from this requirement. The Government believe that not to exclude individuals would result in an unwarranted intrusion into their personal financial matters. However, individuals who exceed the spending threshold would still be required to provide details of their campaign income and expenditure, as is currently the case.
Under the Bill as introduced, the Government also provided that those third parties, such as companies, charities and trade unions, which provide statements of accounts under another legislative framework that could be reviewed by the Commission would also be exempt from any requirement to provide a separate set of accounts.
Government Amendments 108 to 111 make minor amendments to improve the working of this arrangement. Government Amendment 112 provides that a statement of accounts can be sent to the Electoral Commission in a longer timeframe: within nine months of the end of the regulated period where they do not have to be audited, or 12 months where they do have to be audited.
Again, the Government believe that these amendments, alongside the existing provisions in the Bill, ensure that transparency is improved without overly burdensome requirements being placed on third parties. I therefore beg to move.
Lord Tyler
My Lords, I welcome this group of amendments. I said at Second Reading that the Government and, indeed, the House, have a very difficult task in getting exactly the right balance between improving transparency and accountability on one hand and the inevitable potential for more bureaucracy. These amendments are a real improvement on where we were and I commend my noble and learned friend for them. The irony is, however, that we have the complexity of the number of amendments—I have not counted them—that have been necessary to remove complexity. It is a bit alarming, but I particularly welcome the amendment concerning the nil return, which is Amendment 98 if I have got it right.
It is particularly helpful because there really was rather an absurd situation when the organisations with which Members on all sides of your Lordships’ House have been in contact thought that they might be caught up in some elaborate new accountancy exercise when they did not anticipate that they would be engaged in the kind of activities that are caught by the Bill. This is a good balance and we are achieving the right threshold for transparency and accountability, but I just forewarn my noble and learned friend that it will take some time for the organisations that we have all been in contact with to understand the full significance of this battery of complex amendments.
Lord Hodgson of Astley Abbotts
My Lords, I add my thanks to those of my noble friend Lord Tyler, particularly for Amendments 81 and 89, which concern nil returns. It was extraordinarily difficult to justify to people why nil returns should be made. I am also very grateful to my noble and learned friend on the Front Bench for his reassurance about the interaction with the coalition working returns that we discussed earlier.
Lord Harries of Pentregarth
My Lords, while I welcome the government amendments, I draw the attention of the House to the report of the Electoral Commission on Amendments 74 to 81, 83 to 97 and 99 to 106. It says that it supports the amendments,
“which go some way to simplify the donation reporting requirements”,
but it goes on to say:
“We regret that the Government has not adopted other recommendations we have made to reduce burdens on registered campaigners further without affecting transparency”.
It indicates what these are and ends:
“We continue to recommend these changes … we now recommend two further changes to reduce burdens further”.
Will the Minister, even in the short time between now and Third Reading, have further conversations with the Electoral Commission to see whether some of its recommendations could be accepted by the Government? From the point of view of the charities and campaigning groups there is still a huge amount of regulation to be carried with the Bill.
Baroness Royall of Blaisdon
My Lords, I, too, welcome the amendments that have been put forward by the Government, as far as they go, but as the noble and right reverend Lord, Lord Harries, said, there is more work to be done and it would be excellent if the Government would commit to come back at Third Reading with further amendments. This might seem a bit curmudgeonly, because the Government have received plaudits throughout our debate this afternoon for having moved a long way and tabled many amendments. However, if it had not been for the noble and right reverend Lord, Lord Harries, his commission, which has also received praise this afternoon, and the excellent work that it has done, the Bill would still be the exceedingly bad Bill that it was when it arrived in our House, precisely because it was rushed, did not have proper pre-legislative scrutiny and a great deal of it was not necessary. So while I thank the Government for having listened—and they have moved—I place on record that none of that would have happened without the noble and right reverend Lord, Lord Harries, and his fellow commissioners, who undertook the consultation that the Government themselves should have undertaken in the first place.
Lord Wallace of Tankerness
My Lords, I acknowledge the welcome that has been expressed for these amendments, which lift a considerable administrative burden from campaigning organisations. I note what the noble and right reverend Lord, Lord Harries, has said, echoed by the noble Baroness, Lady Royall.
I will look specifically at what the noble and right reverend Lord said, but I know that there were a number of other things that the Government looked at and decided they did not wish to accept—it is not as if they have come out of the blue. However, I will check that the suggestions that we looked at and decided not to go ahead with were those to which he referred; it is only fair that we do so. However, I do not want to do that with any raising of expectation, because, as I think the noble and right reverend Lord will realise, we have given considerable consideration to these points. I ask the House to accept the amendments.
“( ) A “pre-dissolution period” means a period—
(a) beginning with the first day of a qualifying regulated period, and(b) ending with the day before the day (or the last day) during that qualifying regulated period on which Parliament is dissolved.”
( ) An “early parliamentary general election” is a parliamentary general election the date of the poll for which is appointed under section 2(7) of the Fixed-term Parliaments Act 2011.”
“( ) This section does not require the preparation of a quarterly report in respect of a reporting period if no reportable donations are accepted, or dealt with, as described in subsection (5)(b), by the recognised third party during that period.”
“( ) This section does not require the preparation of a weekly report in respect of a reporting period if no substantial donations are received by the recognised third party during that period.”
“Returns as to controlled expenditure
(1) Section 96 of the Political Parties, Elections and Referendums Act 2000 (returns as to controlled expenditure) is amended as follows.
(2) For subsection (1) substitute—
“(1) Subsection (1A) applies where, during a regulated period, any controlled expenditure is incurred by or on behalf of a recognised third party in a relevant part of the United Kingdom in excess of the limit for that part mentioned in section 94(5).
“(1A) The responsible person must prepare a return in respect of the controlled expenditure incurred by or on behalf of the third party during that period in each relevant part of the United Kingdom.”
(3) In subsection (7)—
(a) in the opening words, for “(1)(a)” substitute “(1A)”;(b) in paragraph (a), omit “falling within subsection (1)(a)”.”
(a) a statement of the income and expenditure of the third party for the regulated period, and(b) a statement of its assets and liabilities at the end of that period.”
“( ) that a statement or statements prepared or to be prepared by the third party under any enactment contains or will contain the information required by subsection (2) or equivalent information, and”
“( ) Equivalent information is—
(a) a statement or statements of the income and expenditure for a period or periods other than the regulated period, or(b) a statement or statements of assets and liabilities at a date or dates other than the end of that period, but which in the Commission’s opinion gives a sufficient indication of the third party’s accounts for, or at the end of, the regulated period.”
““(2A) Where a statement of accounts falls to be prepared under section 96A, the responsible person must deliver—
(a) the statement, and(b) if an auditor’s report on the statement falls to be prepared under section 97(1A), that report,to the Commission before the end of the period of 6 months beginning with the end of the period under subsection (1) or (2) for the delivery of the relevant section 96 return.(2B) “The relevant section 96 return” means the return mentioned in section 96A(1)(a) which gives rise to the duty to prepare the statement of accounts.””
“(5) In subsection (4)(a), “the relevant section 96 return” has the meaning given by section 98(2B).””
“Candidate’s personal expenses not to count for local election expenses limit in England and Wales
(1) In section 76(5) of the RPA 1983 (exclusion of personal expenses from limitation on election expenses), after “subsection (1A) above” insert “or a local government election in England or Wales”.
(2) Subsection (3) applies where, before the relevant date, an enactment—
(a) provides that section 76 of the RPA 1983 is to have effect in relation to an election of any description as it has effect in relation to a local government election in England or Wales, or(b) otherwise makes provision (however expressed) to the effect that that section applies to an election of any description as it applies to a local government election in England and Wales.(3) If the date of the poll at an election of that description is on or after the relevant date, section 76 of the RPA 1983 applies to the election as amended by subsection (1).
(4) In this section—
“the RPA 1983” means the Representation of the People Act 1983,
“the relevant date” means the date on which the amendment made by subsection (1) comes into force, and
“an enactment” means an Act of Parliament or any subordinate legislation (within the meaning of the Interpretation Act 1978).”
Lord Wallace of Tankerness
My Lords, government Amendment 117 would exclude personal expenses from being considered for the purposes of candidates’ expenses limits at local elections in England and Wales. I do not think that this issue has yet been referred to in any of our deliberations.
The Government have brought forward the amendment to bring greater consistency to the treatment of personal expenses across the different types of election. It will also ensure that the Access to Elected Office for Disabled People Fund can successfully continue operating following the expiry of existing secondary legislation.
The access to elected office fund was set up by the Government to award grants to disabled people who are, or go on to become, candidates at elections. The fund’s grants are intended to help candidates overcome barriers to elected office that might arise as a result of their disability. Currently, such awards from the fund would not count towards candidates’ spending limits at certain elections, as they would be considered personal expenses. Noble Lords will no doubt be aware that personal expenses are exempted from candidates’ limits at certain elections, such as UK general elections, police and crime commissioner elections and Greater London Authority elections, among others.
However, there is currently no such exemption at local government elections. Given the generally low expenses limits that apply at those elections, recipients of the fund are likely to find themselves in the unusual and punitive position of having their entire expenses limit taken up by fund awards. It is a distinct unfairness that disabled candidates should have to account for costs associated with their disability when campaigning in elections. The Government therefore brought forward secondary legislation last year so that fund awards would be excluded from candidates’ spending limits at all elections. That secondary legislation will cease to have effect in June this year. The Government therefore consider that the Bill presents a key opportunity to make such an exclusion permanent, while also rationalising the position of personal expenses across various elections.
Rather than merely exclude disability expenses financed by fund payments from candidates’ limits, as the order does, this amendment instead extends the personal expenses exemption to local elections, including parish and community council elections, in England and Wales. It will cover any disability-related expenses incurred by a candidate personally, regardless of whether they are financed by the fund. This is a sensible amendment. It seems unfair to require that disability costs should count towards candidates’ spending limits at local elections when they are already excluded from certain other elections.
Amendment 127 is a related amendment that will allow the new clause inserted by Amendment 117 to be commenced by order. I beg to move.
Baroness Hayter of Kentish Town
My Lords, I simply give the amendment a warm welcome. We previously discussed this with the noble Lord, Lord Wallace of Saltaire, probably in the Moses Room last year, but we had not seen this clever device to add the provision. We should congratulate the Government on finding a nice wheeze for this.
Lord Gardiner of Kimble
“Post-election review
(1) The Minister must, within the period of 12 months beginning with the day on which this Act is passed, appoint a person to conduct a review of the operation of Part 6 of the Political Parties, Elections and Referendums Act 2000 in relation to the first relevant parliamentary general election.
(2) The “first relevant parliamentary general election” is the first parliamentary general election to be held after the beginning of the first Part 6 regulated period in relation to which one or more of the amendments made by Part 2 mentioned in section 42(1) have effect.
(3) A “Part 6 regulated period” is a regulated period within the meaning given by section 42(2)(b).
(4) The Minister may specify matters which the review must, in particular, consider.
(5) On completion of the review, the appointed person must—
(a) make a written report on the review, and(b) provide a copy of the report to the Minister.(6) The Minister must—
(a) lay a copy of the report before Parliament, and(b) publish the report in such manner as the Minister considers appropriate.(7) The Minister may pay to the appointed person such remuneration and expenses as the Minister may determine.
(8) “The Minister” means the Secretary of State or the Lord President of the Council.”
Lord Gardiner of Kimble
My Lords, government Amendment 118 requires that within 12 months of the Bill receiving Royal Assent, the Minister must appoint a person to review the operation of Part 6 of PPERA as it is amended by Part 2 of the Bill. Noble Lords will recall that in Committee there was some debate about the need for a post-legislative review of the provisions of Part 2.
I am most grateful to the noble and right reverend Lord, Lord Harries, and my noble friend Lord Hodgson of Astley Abbotts, who tabled amendments in Committee to ensure that this important matter was discussed. As was explained during Committee, it is right that an assessment should be made of the entire system of rules governing third-party campaign expenditure. That assessment should of course extend to the changes made by the Bill. The entire range of existing and newly introduced rules should be carefully reviewed after their first operation, which is expected to be at the 2015 UK parliamentary general election. A commitment was given by my noble and learned friend that an amendment would therefore be brought forward at Report to require a review of the operation of Part 6 of PPERA as it is amended by Part 2 of this Bill. That is indeed what the Government have now done. The next scheduled general election presents the first opportunity at which all the third-party campaigning rules will be in operation, and it is a timely opportunity to review the effectiveness of those rules.
The Minister must appoint a person within 12 months of Royal Assent to allow the reviewer to start work during the general election campaign. The Government believe that it is particularly important that a reviewer should be appointed sufficiently ahead of the general election to allow him or her to fully assess the operation of the rules. The amendment requires that on completion, the person carrying out the review must produce a written report. That report must then be laid before Parliament by the Minister. I am sure that noble Lords will agree that it is only right that Parliament should have the opportunity to consider how to respond to the findings in the report. Noble Lords will also have noted that in its most recent parliamentary briefing, the Electoral Commission gave its support to the amendment.
Government Amendment 135 is a related but minor amendment, which clarifies that government Amendment 118 extends to the United Kingdom only. I beg to move.
Lord Hodgson of Astley Abbotts
I congratulate the Government on having brought this forward. It is really important, because so much of what we have been discussing is supposition. We are peering into the fog of the future concerning how things will work out. This will be a chance to see what the reality is. I have just one question. The amendment talks about the person—the lucky person—who will presumably be imposed for about a year, if they start in March 2015. There will be the aftermath of the general election, and the returns required after that will be six to nine months later, so they will have to be in post for a year.
The amendment refers to remuneration and expenses. One issue when people undertake such reviews is access to skilled manpower and a team who can help them. No matter what he or she is paid, if they are trying to do it on their own, they will undoubtedly be in a much weakened position. I assume, but I want to have it confirmed, that the amendment implies that adequate manpower resources will be available to the reviewer to ensure that he or she can carry out their work and appropriate investigations. I think it is an excellent proposal.
Baroness Williams of Crosby (LD)
My Lords, I will not trespass on the delicate field of remuneration; but I would like to congratulate the Government on doing what they said they were going to do in putting this excellent review in the Bill.
I will add something that I can only say because of my parliamentary background. It would be immensely helpful if it could be understood that the person who conducts a review will, in the course of doing so, consult and listen to evidence from parliamentarians of all parties engaged in the campaign. They are likely, at grass-roots level, to know more than—with great respect—most leading lawyers or leading statesmen are likely to know. I very hope that it will be indicated to the person who conducts the review that he or she will be expected to invite evidence from people who are standing for Parliament and to consider the particular evidence they would like to bring to his or her attention.
Lord Harries of Pentregarth
It is a great relief to be able to welcome an amendment without any qualification at all; but it might be worth reminding ourselves why a review is so essential. First, with the existing PPERA, most charities were not even aware that they were regulated; it is only recently that they have come up against it. Therefore, there are fundamental problems with PPERA that have only just been revealed, and probably we have not yet had proper time to put them right.
Secondly, we have had a very short time to think about and amend the Bill before us. As we know, there was no pre-legislative scrutiny and no six-month period for consultation—which we recommended. We have had only a very short five-week period. The commission that I chair has always made it clear that the recommendations we put forward were only for the 2015 election, because we could not see the answer to a number of issues. In particular, the issue of coalition working keeps coming up and we have not yet found a satisfactory answer to that. Therefore, it is extremely good that the review body is going to be set up and that it will be in time to watch what happens with the election. It is going to have to report within a year, which of course meets the concern raised earlier by the noble Baroness about a sunset clause. It will now have to report within a year.
I have only one question: why have the Government decided that the review should be done by one person, rather than by a committee of Parliament?
Lord Tyler
I very much welcome the initiative that my noble friends have taken on this. It is vastly preferable to a sunset clause, precisely because it will start at the right moment. The timing is going to be critical, as the noble and right reverend Lord and my noble and learned friend said, because it will see right through the process of the next election and beyond. For that reason it is preferable to a sunset clause.
I, too, wonder whether the precise definition of a “person” is appropriate to this, but we will have to judge it on its results. Because my noble and learned friend has put into his amendment that a copy of the report will be laid before Parliament, the process thereon is extremely interesting. If major changes are required in this legislation, we will need to know quite quickly in order that we do not run into another period of rapid digestion, as we have on the Bill.
I particularly want to underline the point made by the noble and right reverend Lord, Lord Harries, just now. We should have this review of the 2000 Act. I take some responsibility, because I sit on a little, totally informal cross-party advisory group for the Electoral Commission. We were never forewarned of all the problems with the 2000 Act that have now come to light—not least, the coalition issue to which the noble Lord has just referred. It has been 13 years; the Electoral Commission never forewarned us of the difficulties it was encountering in giving appropriate advice to organisations that wished to campaign in this field. The Minister has taken elaborate and proper precautions to make sure that the situation never arises again, and I congratulate the Government on that.
Lord Cormack
Briefly, I add my congratulations and thanks. Those who criticise—and I have been very critical of aspects of the Bill—should always praise when the right thing is done. I am exceptionally grateful to my noble friend and his ministerial colleagues for putting this amendment into the Bill. It is a very satisfactory outcome and I agree entirely with what the noble and right reverend Lord, Lord Harries, and my noble friend Lord Tyler said.
Baroness Royall of Blaisdon
My Lords, we, too, warmly welcome this amendment and the fact that there will be a review, and that a report will be laid before Parliament. The timing is absolutely correct. Should there be a Labour Government after 2015—and in 2016 when the report is laid before Parliament—as I very much hope, if there are any recommendations for change I will guarantee at this Dispatch Box that there will be proper consultation and that if any legislation is necessary, there will be pre-legislative scrutiny of such legislation.
Lord Gardiner of Kimble
My Lords, I am most grateful for what has been a short but quite buoyant debate. It is important that we have this review. My noble friend Lord Tyler referred to the 2000 Act and a number of problems there which had not been properly identified. I am very mindful of what the noble Baroness, Lady Royall, has said. Who knows what the result will be? However, there are always lessons to be learnt from all these adventures that we have.
I say to my noble friend Lord Hodgson that it is absolutely clear that the reviewer has to have the appropriate resources to do a proper job. My noble friend Lady Williams of Crosby asked about evidence. It is clear that for the reviewer to do a proper and thorough task, that person should seek views from many sources. Clearly, it would be sensible that those in the front line of political activity, such as candidates and elected representatives, should be part of that process.
It was nice of my noble friend Lord Cormack to be cheerful about this amendment. There is important work to be done and I understand what the noble and right reverend Lord said about his inclination or desire to have a parliamentary committee. However, I have no doubt that we will see the reviewer doing what we expect him or her to do—a thorough piece of work. I look forward to that, in whatever capacity I remain.
Lord Campbell-Savours
“Part 2ATax relief on donationsTax relief on donations
(1) In the Political Parties, Elections and Referendums Act 2000, after section 70 insert—
“70A Tax relief on donations
Tax relief shall be given, subject to Schedule (Tax relief on donations), to individuals who make donations to a registered political party.”(2) Schedule (Tax relief on donations) has effect.”
Lord Campbell-Savours (Lab)
My Lords, in moving Amendment 119, I shall speak also to Amendment 119A. We had a long debate on this subject in Committee and I do not intend to rehearse all the arguments that I used on that occasion. In Committee, it was quite clear that support for the amendment was overwhelming. Apart from the two Front-Benchers, and the noble Lord, Lord Finkelstein, no one spoke against the amendment. Everyone supported the amendment as it was phrased on that occasion. Perhaps I should clarify at the beginning of my contribution what my amendment would do. It would incentivise a system of donations by individuals by allowing taxpayers to reclaim the basic rate of tax on their donations to political parties. It would limit the relief to the standard rate and operate in the same way as gift aid to charities or covenanting to your local church.
This issue has had much support over the years from all political parties and all the organisations associated with political debate. The Committee on Standards in Public Life, chaired by the noble Lord, Lord Neill of Bladen, recommended essentially this amendment in 1998, some 15 years ago. The Electoral Commission’s report of 2004 on the funding of political parties recommended a similar change in the law, with a £200 cap. In 2006 the Constitutional Affairs Committee in the House of Commons made a similar recommendation in line with my amendment. The Conservative Party’s Tyrie report of 2006, entitled Clean Politics, also made reference to an amendment of this nature. In 2004 the Liberal Democrats called for a scheme of tax relief of a similar nature, and indeed in 2009 moved a very similar amendment to this during the proceedings on the Political Parties and Elections Act. When the Labour Government established the Hayden Phillips inquiry in 2007, they recommended a tax relief match funding scheme that bore a close resemblance to the scheme that I am proposing, but on that occasion with a £500 cap on contributions.
Over recent weeks I have not found a single Member of this House, apart from those supporting the hierarchies of the political parties, who is opposed to my amendment. Everyone I speak to cannot understand how it is that sane politicians in sane political parties can possibly oppose what is deemed to be a perfectly reasonable and sensible amendment. They all ask, “What is the problem?”. I intend to set out briefly what the four principal objections are and how they are being answered.
First, I am told that there is a need to continue negotiations. Indeed, a colleague sent me a note on my BlackBerry today to say that that was one of the reasons why my colleagues were being advised to vote against my amendment. The fact is that no negotiations are going on. They terminated earlier this year and anyone who suggests that they are continuing is actually fibbing and not telling the truth. There are no negotiations. They fizzled out and there are people in this Chamber today who were party to those negotiations and know exactly what the position is. Indeed, I understand that Mr Clegg has stated in the other place that the negotiations have finished and, obviously, will not be reopened until some time in the future, perhaps under a separate Government. My view is simple: negotiations on these matters will not work and the only way in which we will get change is by introducing incremental improvements—a little bit here, a small change there—and over a period of time we will see a new regime established for political donations in the UK.
Secondly, I was told that a party might gain out of the proposals that I am making and indeed might abuse its position by unilaterally increasing the contribution threshold in future. I took that problem on board. In the amendment before the House today there is a change to ensure that the only way in which the contribution threshold can be changed in future is by way of primary legislation and not by regulation. A new Bill would have to be introduced in primary legislative form to change the thresholds in the Bill. In my view there is another argument in favour of the amendment. It is right to allow a scheme to percolate throughout the system to see how it beds in and whether it works. My view is that it will work and that at some stage in the future there will be a need to review the thresholds as set out in my amendment.
Thirdly, there is the cost of the scheme. When the Hayden Phillips report was published in 2007, there was a reference to a £500 cap on contributions. That cap is 25 times greater than the cap that I have set for the first year in my amendment and five times greater than my third-year figure of £96 per calendar year. My view is simple—and it is the view of others—that my proposal would cost but a few million pounds, perhaps £2 million or £3 million per year. We need to balance the problems of introducing that against all the malevolent publicity that surrounds political institutions today. Is it worth £2 million or £3 million to begin the process of avoiding all the adverse publicity that surrounds donations?
However, the fourth objection to my amendment—the one I found most ludicrous—is the view that it would be impossible to sell the principle of support for political parties through tax relief at a time of austerity. That objection surfaced during the course of discussions. It is always a time of austerity. There is never a right time to spend money, but we are talking only about a very small amount of money. However, again in a spirit of generosity, I have amended my amendment for proceedings in the House today to ensure that it would not trigger until the financial year that follows the next general election so as to avoid the very debate that people might be concerned about. I have made two concessions on my amendment, almost neutering it, but it would still stand on the statute book as a scheme to be introduced in the first year, 2016-17, at £16; in 2017-18 at £32 and in 2018-19 at £96—the threshold under which tax relief could be secured on a donation.
Today I can be even more flexible. If the Government, even after all these concessions, feel that they cannot give way, I understand that it would be possible for them to introduce an amendment to delay commencement of my proposed scheme pending an order to be brought in by the Secretary of State under the next Government. In other words, an amendment to Clause 41 could be introduced at Third Reading to allow for an order to be introduced to delay the date of commencement of the scheme.
I cannot understand, in the light of all the concessions that I have made on my amendment and the way in which I have bent over backwards to make it possible for the Government to deal with all the problems and objections that have been raised, how the Front Benches of both parties find it objectionable to introduce an amendment which I know is supported in reality in free debate by an overwhelming majority of this House as well. I say that having talked to colleagues across Parliament who simply cannot understand why the Government refuse to go down this route.
At the end of the day, the very credibility of this institution is at stake. We have had far too many scandals over the years; political scandals relating to money and politics. All I am doing in moving my amendment today is setting in train a course of events towards bringing in the embryo of a provision of change that might one day lead to a cleaner donation regime for British political parties. I am confident that, if the measure is presented in that form, as against all the scandals that we currently have in this area of political activity, the general public will support me. I hope that noble Lords will support me in the Division Lobbies later this evening. I beg to move.
Lord Hamilton of Epsom
My Lords, I have added my name to this amendment because it is a very modest and necessary step to take towards taxpayer funding of political parties. None of us should be pleased, content or comfortable with the fact that political parties in this country are financed by the trade unions and, to a very large extent on all sides of the House, by extremely rich men who are seen to exert influence. I am not saying that they do exert more influence than anybody else who runs industries or anything, but they are seen to exert influence over policy. This does us no good at all and we should grasp this nettle and do something about it.
I am delighted that the noble Lord, Lord Campbell-Savours, has arranged that these measures would come into place after the general election. I would like to see a lot more done after the general election. I would like to see matched funding up to a certain limit, but now is not the time to talk about that. The fact remains that we are already paying opposition parties millions of pounds a year. We are paying the Opposition in your Lordships’ House Cranborne money of hundreds of thousands of pounds. I challenge anybody in this House to say that anybody has mentioned on a doorstep either Short money or Cranborne money. They do not know that it is happening. In terms of public expenditure, they are insignificant sums of money.
We should be grasping this nettle early on in a Parliament. I hope that whoever wins the election will do so at the beginning of the next Parliament and get the entire funding of our political parties in this country into a sleaze-free zone, where it should always have been. If we go on as we are, we will have endless problems. We will always be accused of having an unhealthy influence on the political system. This does nothing for politics in this country. I therefore support the amendment with enthusiasm.
Lord Tyler
My Lords, my name is also on the amendment. I will make a slightly different point from those of other noble Lords who have spoken to it.
Public service in a parliamentary democracy is an honourable activity. I look around the House, and I could say exactly the same thing about the other place, and see a great majority of people who give of their time, talents and careers, and sacrifice their family life, to public service. That is something that we should recognise as being an extremely important part of our civic life.
Yet it is absolutely true, as noble Lords have already said, that it is somehow thought that to be active in politics is less reputable than, for example, supporting a charitable or voluntary organisation; many of us do that as well. That is exaggerated, underlined and repeated every time one of us contributes something to our local church or favourite charity and gets respect from the tax system for so doing, in exactly the way that the noble Lord, Lord Campbell-Savours, has described. If politics is an honourable activity, why are we not allowing our fellow citizens to recognise that and, in their own way, be more active participants through the gift aid system?
It is not just because of the way in which politics has been supported in recent years by bigger and bigger cheques from smaller and smaller numbers of people, but also because millions of people feel disenchanted by and disconnected from the business of politics, that we have reached such a low reputation in the public mind. It is far more important to engage and incentivise millions of people than to engage and incentivise millions of pounds. In those circumstances, it is perhaps worth reminding your Lordships’ House, in addition to the points already made by my noble friend Lord Hamilton, that the taxpayer already makes a huge contribution to the business of politics. For example, the Royal Mail free delivery of election addresses for every single party and contestant in the European parliamentary election in May will cost the taxpayer something between £30 million and £40 million. The sums that the noble Lord, Lord Campbell-Savours, is referring to are a drop in the ocean compared to that. Yet it is far more likely to engage the individual citizen in the business of politics than the necessity for every single elector to receive a separate delivery from each of the parties.
It is perfectly true that there are already a number of proposals for a wider reform of the funding of political parties. Indeed, last year, I, along with colleagues from two of the other parties, produced a draft Bill that would have incorporated the latest proposals of the Committee on Standards in Public Life on this wider issue. We will not move in that direction between now and the general election but, in this modest way, we could put down a marker that we believe that the actual, practical financial support of our fellow citizens for the business of politics is just as honourable as their support for a charity or a church. It would be a very welcome development.
Lord Elystan-Morgan
I feel deeply privileged to belong to such a broad church as is suggested by this amendment. I little thought that I would have the privilege of standing in the same rank as the noble Lord, Lord Hamilton, and the noble Lord, Lord Tyler, but I am utterly sincere in the support that I give to the amendment in the name of the noble Lord, Lord Campbell-Savours. When he very respectably sought to accost me some days ago to support this matter, I had misconceived the situation. I thought he was seeking to place political parties on a charitable basis, which of course would have been utterly improper. The definition of charity, however impractical it may be in the modern period, is well laid down in the statute of Elizabeth I and in the authority of Re Pemsel, which I still remember from my student days.
That is not at all what the amendment is about. It is a question of what fuel there should be available in a democracy to any political movement. That fuel, I suggest, is the united will of millions of people, of government, opposition or a third force, or a fourth, for that matter. That fuel is the desire and hopes of millions of individual people, possibly for tens of thousands of different reasons, but it is the amalgam of that united force that gives politics significance.
If you interfere with that system from above by the injection of vast amounts of money, you corrupt that system. It was Oliver Goldsmith, in the 18th century, who had these words:
“Ill fares the land, to hastening ills a prey,
Where wealth accumulates, and men decay”.
In this case, wealth will diminish completely the significance of democratic politics. Now, we will say, “That is highly idealistic and immensely impractical”. It may well be, but we are deeply grateful to the noble Lord, Lord Campbell-Savours, who is a brave, iconoclastic, reforming character and to whom the House owes a great debt.
In America, in the two elections that President Obama has won, it may very well be that there were tactical and highly materialistic reasons why he chose to rely on millions of people rather than on the support of a few wealthy, almighty subjects. Be that as it may, it gave those campaigns impetus and significance. That is exactly what this amendment proposes. It may very well be that the amounts that are mentioned could be debated high and low. That does not matter at all. The significance is that we wish to see politics as an amalgam of millions of people with desires supported, we hope, by the substantial subvention of most of those people.
Lord Cormack
My Lords, I have always believed that public life is a vocation. I greatly regret the decline in membership of political parties over the nearly 44 years that I have been in the Palace of Westminster; I touched upon that in an earlier amendment today. We do not know the precise figures, but our three major political parties in this country together have probably less than a quarter of the membership of the National Trust. That is a dismal statistic, which we should all take to heart. However, we have to recognise the realities. One of those is that if the proposals of the noble Lord, Lord Campbell-Savours, were adopted—and in principle I support them—they would not have an immediate and enormous transforming influence. I am glad to see him nodding assent.
Lord Cormack
I will finish in one second. As one of our colleagues pointed out, this does not confuse political parties with charities but elevates the role of the political party in our national life, and it would be right to have some form of tax concession for those who nail their colours to a mast, be it blue, red or yellow.
Lord Campbell-Savours
I have fought long and hard about the point the noble Lord has just made. The difficulty is this: I know that among those who will vote against my amendment in the Lobby tonight there will be many who support it.
Lord Cormack
Of course—I was going to say “my noble friend”, but he is my friend—the noble Lord may well be right. However, I remember the famous words of Jack Straw, when a lot of people in the other place voted for an all-elected second Chamber on the advice of the Labour leader of the campaign for an appointed second Chamber, although he then acknowledged that he had made a tactical mistake. Jack Straw kept saying, “A vote is a vote, and that’s all that counts”. That is what will be said tonight. The noble Lord should reflect very seriously on that.
We also have to consider whether the Bill is the right one in which to insert such an amendment.
Lord Tyler
I am very grateful to my noble friend and I know that he shares with me the same objectives. I think that he is advancing the old, old argument of unripe time, which we hear in this House so often. If you wait for the ripe time, it is usually when it has gone bad again, when it has gone beyond ripeness. I think that the noble Lord, Lord Campbell-Savours, by saying that the actual introduction would not take place until beyond the next general election, is simply insisting that we should put down a marker of the direction in which we wish to go. If we are not permitted to do that, what are we allowed to do in this House?
Lord Cormack
Of course we are permitted to do that, but at the same time it is not unreasonable to talk about the practicalities. The fact of the matter is that if we have a vote tonight, this amendment will be very heavily defeated. It will not advance the cause. Whereas if we do not have a vote tonight, the statement of the noble Lord, Lord Campbell-Savours, which I believe not to be hyperbole but to be accurate—that there are many, many members of your Lordships’ House who are sympathetic to this point of view—will stand on the record. What will stand on the record if we have a vote is that because of a very, very small number of people, for a variety of reasons—one of them being that this may not be the right vehicle for such an amendment—the figures will not be encouraging to our cause.
I end by pleading with noble colleagues in all parts of the House that we seek in our respective parties to begin a campaign to advance this and that we talk to our colleagues in the other place as well. That is crucially important, as they are the people who get elected. Tonight is not the moment to be heavily defeated when we know, and the noble Lord in particular knows, that there is such widespread sympathy for the principle that he has very reasonably advanced.
Lord Gardiner of Kimble
My Lords, I apologise to the noble Lord, but I am very conscious of the Companion and I am very conscious that we are at Report. I sense that noble Lords would like to make progress. I apologise for intervening.
Lord Hodgson of Astley Abbotts
My reason for having supported the noble Lord in Committee and again tonight is that if, like me, noble Lords participate in the Lord Speaker’s outreach programme, they will know that when you go to schools up and down the country the issue that comes up again and again and again is that of money. We have a generation of schoolchildren about to go to university who have grown up with the idea that this is a dishonourable place where rich men and influential groups have a power because of their ability to fund.
The noble Lord, Lord Campbell-Savours, has put forward some incremental steps, which I support. I can only believe that the Front Benches cannot support them because they believe somehow, or they fear, that the comparative advantage, or competitive advantage, will be lost forever. They cannot think what it is, but something might come out of the woodwork that leaves one party at a disadvantage forever.
Sometimes, somewhere, we have to be brave, because against the £2 million to £3 million that the noble Lord, Lord Campbell-Savours, has said that it was going to cost, is the drip, drip, drip of damaging information about the behaviour and performance of this Parliament. That cannot be right for our country, whatever your political beliefs. Someone, sometime, somewhere has to be brave, and we need to give them a nod tonight to get on and be brave as soon as possible.
Baroness Corston (Lab)
My Lords, I rise very briefly to support the amendment in the name of my noble friend Lord Campbell-Savours. It takes me back 40 years to the Houghton committee on state aid for political parties. Both political parties ran away from the idea at the time—and there were only two major parties at that time, it has to be said. The campaign itself for the Houghton committee was under the slogan of “A penny from the workers to support our politics”. It was said that we had our politics on the cheap. The amount of money that is now required to mount a political campaign or to support a political party in a constituency is eye-watering compared with what was considered to be normal in 1974. Now, we are all more and more dependent on very large donations from a very small pool of people. Whether or not those people seek personal advantage from it, the public think that that is what will happen.
The noble Lord, Lord Hodgson, is entirely right about the attitude of young people towards politics. We find a great deal of apathy and disgust, as well as a decline in participation in politics and certainly a decline in turnout in local and general elections. It is never the right time to introduce a measure such as this. I have been active as an organiser and a parliamentarian for well over 40 years and I have never, ever heard anybody from a Front Bench say, “Perhaps this is the time”; it is always, “Well, this is a really good idea, but not yet”.
The person whom I think of as my noble friend, the noble Lord, Lord Elystan-Morgan, has just referred to President Obama. He was wise enough and smart enough to see that this issue was poisoning politics in the United States. What did he do? He had a deliberate strategy of asking for $20 from millions of people. Can any of us remember—I certainly can—what Washington looked like on the day of his inauguration? Washington had never seen so many people turning up for an inauguration, and I do not think that that was an accident.
Baroness Royall of Blaisdon
My Lords, I am sorry to be the sad spectre at the feast. I am grateful to my noble friend for the important changes that he has made to his amendment since Committee. I am also grateful to him for providing answers to the various hurdles raised in Committee and in the many discussions that he has had since.
All noble Lords are absolutely right to say that the current situation is untenable. None of us—nobody who is active in politics—is comfortable in any way with the current situation. We absolutely have to get big money out of politics, and we have to find a solution to the problem of party funding, which is undoubtedly a running sore that diminishes trust in politics. That trust must be restored if our democratic system is to thrive.
As has been said—and I completely agree—politics is a noble part of our civic life and we have to find a way forward. The proposal from my noble friend could well be part of that solution. Of course, it is correct to say that there is never a good time to put forward such proposals, but I take issue with my noble friend when he says that it is always a time of austerity. I do not think that that is true and I do not think that now is a particularly good time to put forward this proposal. However, I understand why my noble friend is doing it and I recognise that, should he wish to test the opinion of the House, he will undoubtedly have the support of some of my colleagues. However, my party’s position is that, while, as I said, this may well be part of a solution, it should not be dealt with in isolation. We have to find a comprehensive solution to the problem of party funding and it is incumbent on all of us to try to do that. Until we do, as has been said, politics will suffer, our democracy will suffer and young people will not have the faith in politics that we would wish them to have in order that we may have a healthy, democratic society.
Having said that, although I think that it is an interesting idea, should my noble friend wish to test the opinion of the House, I regret that I will not be following him into the Lobby this evening.
Lord Wallace of Tankerness
My Lords, perhaps I may reassure the noble Baroness, Lady Royall, that she is not the sole spectre at the feast. Indeed, as I think the noble Lord, Lord Campbell-Savours, indicated when he moved the amendment, he does not expect the Front Benches to fall into line with him. We had this debate four weeks ago. Admittedly, there are differences in this amendment—but, frankly, in the intervening four weeks the Government’s position has not changed.
That is not to say that raising these issues is not without merit. As my noble friend Lord Cormack said, it may serve to stir up the leaderships of all three parties. I endorse what was said by my noble friends Lord Tyler, Lord Cormack and Lord Hodgson, and by the noble Baroness, Lady Royall, about politics being a noble calling. We in your Lordships’ House like to think that we make a contribution. We may disagree with each other—sometimes quite strongly—but we recognise, across the House, that we have good motives for coming into politics. Although we operate, vote and make speeches by different lights, we nevertheless have the common good of the nation at heart.
However, the proposal we are dealing with this evening is not necessarily the one and only way to restore the nobility of the political calling. The rules on party financing have been the cause of much discussion. The noble Baroness, Lady Corston, gave us a very good historic perspective when she mentioned the Houghton committee. This has gone on for some time. Most notably, this Government led talks on the subject between the three main political parties during 2012 and 2013. In 2010, each of the three parties had a manifesto commitment of one kind or another to some reform of party financing.
It is a complex issue. I noted the four points that the noble Lord, Lord Campbell-Savours, said had been given as excuses. I checked the speech I made in Committee, and we advanced none of the four then. In particular, I made it very clear that talks were no longer continuing, and I quoted from the Written Ministerial Statement issued by the Deputy Prime Minister on 4 July 2013 when he announced that the talks had not produced results—I think they met seven times—and that it was clear that the reforms would not now go forward in this Parliament.
The noble Lord’s point was that some people were arguing that talks were still going on. I did not seek to do that, but it is a legitimate expectation that all parties will seek to find a way forward on this complex issue in the next Parliament. I was not party to these talks but I am told that they were close. The Government want party funding reform but, as the noble Baroness, Lady Royall, said, it should come as part of a package and by consensus. Some have asked for donations to be treated in the same way as charitable giving, and I can understand the relevance of that comparison from a tax point of view. However, I am not sure that the public necessarily see donations to charities—many of which we have been discussing in the course of our debates on the Bill—in the same light as giving support to political parties through the tax system.
I suspect that many noble Lords support state funding of political parties. As has already been mentioned, we have Short money, Cranborne money and the money that goes to the Royal Mail. However, this would be a significant step. Short funding is probably not mentioned on doorsteps. However, although I was probably still a student when it first came in, I remember that it was a major step which attracted quite a lot of discussion. It would be naive to think that a step as significant as the Exchequer funding political parties in this way through the tax system would not be devoid of any comment, which is why I think all parties have sought to go forward together by way of consensus.
As my noble friend Lord Cormack said, I do not believe that this is the appropriate Bill for dealing with this issue, but it is the Government’s hope that further discussions will take place in the next Parliament. My noble friend Lord Hamilton said that he wanted more done after the next election. I would echo that. Anyone from all party leaderships who reads our debates and follows this will realise that there is an appetite among Members of all parties that this matter should not be allowed just to gather dust in the next Parliament. But I do not believe that it is appropriate to act in the context of this Bill or at this time and without a bigger package that commands a consensus among all the parties. I therefore invite the noble Lord to withdraw his amendment. If he seeks to push it to a vote, as he has indicated, the Government will not support his amendment.
Lord Campbell-Savours
My Lords, I shall push my amendment to the vote. I thank all those who contributed in a most passionate way to the issues that we have raised in this debate. In the 1997 to 2001 Parliament, we were told that the matter would be resolved during the next Parliament and it was not. In that Parliament we were told that it would be dealt with in the next Parliament. Hayden Phillips came in the next Parliament and it was not resolved. We were told that it would be resolved in this Parliament. Again, there have been talks but it has not been resolved. We will go through Parliament after Parliament after Parliament ducking this issue. That is why it is important that we take a decision now. Some of us are becoming exasperated by the ducking and weaving.
For me, one of the great joys of coming to the House of Lords from the Commons is that I have always regarded ours as the House of free thinkers. In the Commons, you are held in a rigid, party, heavily whipped atmosphere where there is very little room for the kind of flexibility that we can exhibit as Members of this place. Because of the rigidity of debate in the other place, I believe that party reform ultimately will come through this House and not from the House of Commons. That is why tonight I am going to push my amendment to a vote. As I have said, I believe that this is the House which at the end of the day will make the reforms. I do not know, but it might well be that I will be defeated this evening—although I suspect some people will be surprised by the names of those who move into our Lobby.
As has been said, it is never the right Bill, the right time or the right moment to spend money, but this is the right time to take a decision. I should like to test the opinion of the House.
“Electoral Commission and Charity Commissions: joint guidance
Before the commencement of this Act, the Minister shall require the Electoral Commission and the Charity Commissions to produce co-ordinated guidance on the requirements of Part 2 as they apply to charities.”
Lord Hodgson of Astley Abbotts
My Lords, after the fireworks, we return to the meat and potatoes. This amendment returns us to an issue we discussed in Committee: how to ensure that the work of the two relevant regulators—the Electoral Commission and the Charity Commission—is truly joined up.
As I explained in Committee, both commissions have produced guidance. Both sets are clearly written and well signposted but they are not yet joined up. As I also explained, CC9—the Charity Commission guidance—is 35 pages long. There is a section titled “Campaigning: getting it right”, in which the Electoral Commission’s role and purpose are not mentioned at all, although the Advertising Standards Authority is. Meanwhile, in the Electoral Commission’s guidance, no reference is made to charity law; it confines itself to the two tests of the purpose test and the publicity test.
Of course, as both commissions have pointed out to me—and, indeed, in guidance to Members of your Lordships’ House—both have their individual, separate procedures for updating their guidance from time to time as the months go by. Therefore, any and all joining up has to be done by the individual charity and this is quite a challenge for a charity, especially smaller ones with limited financial and operational resources. Indeed, there must be, as some noble Lords have said, a real danger that many smaller charities will merely throw up their hands in horror and give up.
I explained to my noble and learned friend that without some ministerial pressure I was convinced that the two organisations would likely continue to plough their own individual furrows. My noble and learned friend gave the Committee some pretty honeyed words, I thought, when he said:
“I have no doubt that today’s debate, and the amendments tabled by the noble and learned Lord, Lord Hardie, and by my noble friend will have reinforced that message … I hope that the fact that the Electoral Commission and the Charity Commission have indicated an awareness of the need for clear and comprehensive guidance is of some reassurance to the Committee. However, the Government are also keen to reassure campaigners and charities that the provisions of the Bill and the PPERA rules will, and should, be clearly communicated to them. It is our view that the Electoral Commission should produce guidance in consultation with the Charity Commission, and provide specific consideration of charities”.—[Official Report, 18/12/13; cols. 1348-9.]
However, he could not quite bring himself to commit specifically to joining up the two sets of guidance. I have retabled this amendment tonight because I remain convinced that without this statutory pressure the two regulatory silos will remain intact.
The two commissions were very kind and courteous and they agreed to meet to discuss how to address this issue. Following that meeting, I have retabled my Committee stage amendments, but I have made two significant wording changes. I have replaced the phrase that I originally used, “joint guidance”, with the phrase, “co-ordinated guidance” and replaced “Commission” with “Commissions”. It was explained to me, of course, that the Charity Commission does not regulate charities in Scotland and Northern Ireland. OSCR, the Office of the Scottish Charity Regulator, and a new body recently set up in Northern Ireland will do that. By contrast, of course, the Electoral Commission regulates the whole of the United Kingdom.
So the vision I have and the vision I shared with them of co-ordinated guidance, which we discussed and they felt was a possibility, was for a homepage, prepared and signed up by the commissions, with links to policy issues or subjects that might be of more specific and important concern. This will offer two great advantages. The first is simplicity. Any charity of any size has just one place to go to look for guidance on this quite complex topic. We know it is complex because of the discussions we have been having over these past few hours. The second advantage is consistency. No regulator can introduce new policies or approaches without the other regulatory bodies knowing about it and being able to have their own specialist input. This avoids charities being caught in the crossfire of the regulators acting independently and quickly—maybe too hastily—in the heat of an election campaign.
To conclude, this amendment has, at least in principle, the support of the Electoral Commission and the Charity Commission. It certainly has the support of the NCVO and the commission of the noble and right reverend Lord, Lord Harries. I believe that it will be warmly welcomed by the sector as it grapples with the undoubted challenges of the Bill, so I hope that on this occasion my noble and learned friend can go further than honeyed words and accept this amendment. I beg to move.
Lord Horam
My Lords, the noble Lord, Lord Hodgson, certainly raises a very important point, which I am glad we are discussing, even though it is rather a late hour to do so. We should have some reassurance from the horse’s mouth: he mentioned that the Government have made various points, he has made various points and he has talked to the Charity Commission—presumably the Charity Commission for England and Wales—and the Electoral Commission. However, I remind the House and read into the record that our briefing from the Electoral Commission says specifically, under the heading, “A joint introductory guide for charities”:
“We are committed to working with the UK’s three charity regulators”—
that is, the one for England and Wales, the one for Scotland and the one for Northern Ireland—
“to ensure that charities have clear and reliable guidance about how to comply with the rules. The Electoral Commission and Charity Commission for England and Wales will produce a joint introductory guide for charities that need to understand if their activities are covered by non-party campaigning rules”.
It goes on to make various sensible points about testing its guidance, about taking campaigners’ views into account and about supporting and advising campaigners. That is all part of a process of being available in a sensible and practical way to charities and to campaigners who are not charities—which is equally important.
Given that the Electoral Commission and the Charity Commission are, I believe, working along the same lines and intend to produce joint guidance for charities and non-charity campaigners, and given the clear commitments being made, I think that it would be unnecessary to put this provision in the Bill. Neither the Charity Commission nor the Electoral Commission has the slightest doubt that it has to produce something sensible in this area. As a result of the amendments that have now been made by my noble and learned friend, there is time to do that before September, before the new arrangements kick in. While I support the spirit of my noble friend’s amendment, I think that it is unnecessary in the light of the clear commitments which have been made.
Lord Harries of Pentregarth
I am happy to have added my name to the amendment in the name of the noble Lord, Lord Hodgson, for the reasons that he articulated so clearly. Reading through the guidance provided by the Charity Commission, both its general guidance and its specific guidance for election periods, it is clear that it covers the same kind of ground as the guidance of the Electoral Commission—it has to give the same kind of detailed guidance—and it must make total sense for the two bodies to produce some co-ordinated guidance. I do not think that we need any reminding that guidance for future elections will be crucial. There are so many complex areas here, and this whole subject has been so raised, that charities and campaigning groups will need to be crystal clear as to what part of their activity is covered by the regulation and what is not. I am therefore very happy to support the amendment.
Lord Cormack
I am glad to add my name to the amendment. I was delighted to hear what my noble friend Lord Horam had to say, but I see no harm in putting this provision into the Bill. I hope that when my noble and learned friend the Minister replies, it will not just be with honeyed words but with a promise of a taste of honey.
Lord Tyler
My Lords, this will be my shortest contribution through the whole length of this Bill, as I hope the night shift will appreciate. I want to make just one point: I am not sure whether the solution suggested by the noble Lord, Lord Hodgson, is right; I am absolutely convinced that there is a problem. I instance that by saying that, as somebody who has been involved in this area for years, I have never had advice or guidance on the problems that we have heard about so often in recent weeks from anybody in the Charity Commission. The first time that I ever heard from the Charity Commission was at 6.30 last night. There is a clear need for comprehensive, careful and co-ordinated advice from the two organisations. It has not been there in the past. They have not fulfilled their responsibilities to Parliament, to which they are responsible, over many years, and it is about time that they did. Throughout today’s discussion, it has been apparent that this lack of co-ordinated information from the two organisations has been one of the major problems that many organisations have had to face, as well as parliamentarians.
Baroness Hayter of Kentish Town
My Lords, I am glad that the noble Lord, Lord Tyler, made that point about the Charity Commission, because no matter how good the commitment, we want to see this co-ordinated guidance. Having this requirement in the Bill would mean that it was not just a promise but an actuality.
In addition to making sure that it happens, the provision would be a signal to the charities, given that they will be caught by new restrictions under the Bill that they have not dealt with before, that the House has taken seriously the need for them to be absolutely clear and for there to be co-ordinated guidance on that. There is no downside to having it in the Bill, so I hope that the noble and learned Lord has one yes that he can pull out of his bag at this stage.
Lord Wallace of Tankerness
My Lords, my noble friend Lord Hodgson tabled a similar amendment in Committee and brings forward this amendment to require the Electoral Commission to produce guidance for third parties and for that guidance to be co-ordinated with the Charity Commission, particularly to consider the impact of Part 2. As has been said, the issue was discussed at length in Committee, and it is clear to the Government that there is a lack of understanding among third parties and charities as to exactly what are their responsibilities under existing PPERA provisions—the point made by my noble friend Lord Tyler. That the Bill amends those provisions reinforces the need for clarity. The Government made clear in Committee that the issue of guidance and whether a duty should be imposed on the Electoral Commission would be revisited at Report.
Those are not just honeyed words, because since our debates in Committee, the Government have discussed with the Electoral Commission the importance of its producing clear guidance. It is essential that such guidance take into account the impact on charities in particular. Although charities do not campaign in support of political parties at elections and only two have ever registered as third parties to date, there is still an obvious need to ensure that they fully understand the workings of the new regime—that has been made very apparent during our many debates today—and whether they might be held to account by the new provisions as a result of their activities.
As the independent regulator, it is of course for the commission to provide this guidance, but the Government agree that the views of the charities regulator, the Charity Commission, must also be taken into account. Indeed, this involves not just the Charity Commission but its equivalent in Scotland, OSCR, and the Charity Commission for Northern Ireland. Suitable guidance, particularly aimed at charities, can come only if it is jointly produced.
I am pleased to note what the Electoral Commission stated in its briefing to Parliament. If your Lordships will allow me, I shall repeat the words already cited by my noble friend Lord Horam, because they are important. That is why this is substance, not just words. The commission’s precise words are:
“We are committed to working with the UK’s three charity regulators to ensure that charities have clear and reliable guidance about how to comply with the rules. The Electoral Commission and Charity Commission for England and Wales will produce a joint introductory guide for charities that need to understand if their activities are covered by non-party campaigning rules ... Our guidance will explain key areas of the rules such as deciding what counts as regulated spending, how to manage regulated spending, and how the rules cover co-ordinated campaigning in coalitions”.
The Government welcome that clear commitment. At the big risk of quoting again from the e-mail from the Charity Commission, sent at 18.08 yesterday evening, in that e-mail, under the heading, “Co-ordinated guidance for charities that need to understand if they are covered by the rules”, Mr Rowley states:
“The Charity Commission and the Electoral Commission have committed to producing co-ordinated guidance along with a joint introductory guide for charities ahead of the regulated period for the 2015 General Election should charities not be exempted. We are sensitive to the particular help that some charities may need to comply with both electoral and charity law. In the past we have worked closely with the Electoral Commission to ensure their advice for charities on complying with electoral law and our guidance on charities and political campaigning in an election period is aligned and have continued to work closely together throughout the passage of this Bill”.
The Government will continue in our discussions with the Electoral Commission. We will follow them up, and I am sure that our brief debate this evening will have further reinforced to the Electoral Commission the need for it to provide clarity to campaigners. It is the Government’s view that the Electoral Commission must produce guidance in consultation or co-ordination with the Charity Commission and the other charity regulators in the United Kingdom, particularly with regard to how charities might be required to comply with the regime.
I can see why noble Lords say that there is nothing to be lost by having the provision in the Bill, but when a clear and unequivocal commitment has been made by the Electoral Commission, and by the Charity Commission in the quote I have just read, as my noble friend Lord Horam said, it is unnecessary to put this in the Bill. In the light of these commitments, which I think go further than honeyed words, I ask my noble friend to withdraw his amendment.
Lord Hodgson of Astley Abbotts
My Lords, as it is 10.05 pm I shall be brief. I am very grateful to all those who have spoken in support of this amendment—the noble and right reverend Lord, Lord Harries, my noble friends Lord Cormack, Lord Horam and Lord Tyler, and the noble Baroness, Lady Hayter of Kentish Town.
I tabled the amendment with the Hippocratic oath in mind—first, do no harm. I could not see that this could do any harm. It could only do good, because it is either superfluous—in which case, it does not matter—or, if things started slipping, it could be brought into play. Therefore, I cannot say that I am pleased with the outcome. The “too difficult” tray, in which I always thought this would end up, probably has been pushed a bit further round the desk by the words that we managed to extricate from the two commissions. However, it is late. I hope that my noble and learned friend will continue to look at this.
Another amendment that I was keen on, which the Government have accepted—namely, the review—will be an issue for the reviewer to look at. I think that there will be issues, unless we really join this up tight; charities will find things complex and difficult. However, given that it is 10.05 pm, I beg leave to withdraw the amendment.
“( ) section 26(10) and (11) (definition of “election material”);”
Lord Wallace of Tankerness
My Lords, this is the final group of amendments. There has been much discussion about the regulated period for third parties and whether it is indeed of an appropriate length. Many have argued that 365 days is simply too long. The noble and right reverend Lord, Lord Harries of Pentregarth, proposed in Committee that the regulated period should be shortened to six months. As noble Lords know, there are different regulated periods for different elections. For the general election it is 365 days. For elections to the devolved Administrations and the European Parliament it is four months.
What is the purpose of a regulated period? It is the time before an election within which financial limits on expenditure apply and campaigning rules must be adhered to. It is the time during which expenditure incurred for campaigning purposes must be reported. Noble Lords will know that the Bill already reduces the regulated period for the next general election in 2015, so that it will commence on 23 May 2014, which is the day after the European elections. The reason for this is that the original regulated period would have been a combined period for the 2014 European parliamentary election and the 2015 general election and would have started on 23 January 2014.
However, as the Bill makes changes that would have affected third party campaigning in European parliamentary elections, it would not have been sensible to have those changes take effect in the midst of the regulated period. The two regulated periods are therefore separated by the Bill, so its changes will take effect for the first time only for the 2015 general election.
The Government have now tabled Amendment 128, and Amendments 131 to 134, to shorten further the regulated period for third parties. These amendments will shorten the regulated period so that it commences on 19 September 2014. That is the day after the Scottish independence referendum. Although this Bill does not affect campaigners in the referendum—it is important that we make that clear—for the avoidance of any doubt and to ensure that there is no confusion, the day after the referendum has been chosen as an appropriate start date for the regulated period.
This step has been taken in response to calls from third party campaigners that they will need further time to fully understand the implications of the Bill and to ensure that they know how to comply with its provisions in the run-up to the 2015 UK parliamentary general election. I should stress that we are not reducing the spending limits to take account of the shorter regulated period. Campaigners will still be able to spend up to £319,800 in England, up to £55,400 in Scotland, up to £44,000 in Wales and up to £30,800 in Northern Ireland on promoting the electoral success of parties or candidates.
However—and this is crucial, not least as a follow-on to the previous amendment—delaying the start of the regulated period will give campaigners crucial time. The move has been supported by the Electoral Commission, to give it and the Charity Commission sufficient time to produce clear and easy to follow guidance. As has already been said, we believe that it is essential that campaigners have the clarity they have been asking for, and shortening the regulated period will allow the Electoral Commission enough time to test the appropriateness and clarity of its guidance with the campaigners themselves.
I should make clear here that only the regulated period for third parties is being amended. The regulated period for political parties will still begin on 23 May 2014, as under the existing transitional provision in Clause 42. It is also the case that for future general elections the period of one year will apply—although, given that there is to be a review, no doubt people will wish to raise this then. I just make it clear that the reduced period is for the 2015 general election.
The Government have also tabled Amendments 126, 129 and 130. These are minor and technical amendments to improve the drafting of Clauses 41 and 42. I beg to move.
Lord Harries of Pentregarth
My Lords, I warmly welcome this shorter regulatory period for the 2015 election, for the reasons that the noble and learned Lord stated: it will enable the Electoral Commission to prepare the guidance to educate the people who will have to conform to it. However, I express the hope that in the review, the review body will look seriously at the recommendation of the commission which I chaired, that for third-party campaigners there should be a six-month period. This seven and a half-month period is absolutely right for this election but a six-month period should be reconsidered afterwards.
Perhaps I might end on one final point. We are all very much aware that this whole process has, towards the end, been extraordinarily compressed. Normally, the Government would listen first, bring forward amendments in Committee and then report those back on Report. We did not have any government amendments in Committee. The Government listened, and I am glad that they did, but this means that this Report stage has been a kind of compression of Committee and Report all in one. The implication of this is that I very much hope that the Minister will take seriously those amendments that we did not press to a vote, while hoping that he might come back at Third Reading having thought again. Because of this very compressed period, that would be a great help to the House.
Baroness Royall of Blaisdon
My Lords, following on immediately from what the noble and right reverend Lord was saying about this compressed period, I particularly hope that in view of what the noble Lord, Lord Tyler, said in withdrawing his Amendment 52 on constituency limits, the Government will bring that back at Third Reading. As I understand it, the noble Lord, Lord Tyler, believes that the Government made a commitment to do so. That was the basis on which he withdrew his amendment. I do not wish to have a discussion this evening but I hope that the noble and learned Lord will look at it.
Lord Wallace of Tankerness
I did not actually respond to anything that my noble friend said, so there was no commitment. I said to officials immediately after that it would be appropriate if we went back and talked to the Electoral Commission, but that was without any commitment that we would bring an amendment back. We would take the points that were raised on my noble friend’s amendment to the Electoral Commission but, to make it clear, without a commitment on bringing it back. That is only fair because I did not actually make any commitment.
Baroness Royall of Blaisdon
My Lords, I am grateful for that clarification but I very much hope that, having spoken to the Electoral Commission, while I understand that the noble and learned Lord has not made a commitment, it will lead to him bringing something back at Third Reading. Having said that, I warmly welcome this group of amendments, which amend the regulated period. I am glad that it pertains only to the upcoming election, when it will be seven months. I am grateful to the noble and learned Lord and his officials for listening.
“section (Candidate’s personal expenses not to count for local election expenses limit in England and Wales) (candidate’s personal expenses not to count for local election expenses limit in England and Wales);”
“(a) regulated periods beginning after that day, or(b) (for the purposes of enactments having effect otherwise than in relation to regulated periods) expenditure incurred after that day.”
“(including a period in relation to which a limit is imposed by that Schedule by virtue of subsection (3)(b) or (6A)(b)).”
“(3) If, apart from this subsection, the day on which this Act is passed would fall within a period in relation to which one or more limits are imposed by paragraph 11 of Schedule 9 to PPERA 2000 (limit on campaign expenditure where combination of parliamentary election and other election)—
(a) paragraph 11(2) of that Schedule (which disapplies limits and periods which would otherwise be imposed by paragraph 3 of that Schedule and substitutes new limits and periods) is of no effect (and is treated as never having had effect) in relation to the parliamentary general election, and(b) for the purposes of paragraph 3 of that Schedule as it applies by virtue of paragraph (a), the relevant period is the Schedule 9 transitional period.”
“(a) beginning with 23 May 2014, and”
“(6A) If, apart from this subsection, the day on which this Act is passed would fall within a period in relation to which one or more limits are imposed by paragraph 11 of Schedule 10 to PPERA 2000 (limit on controlled expenditure when combination of parliamentary election and other election)—
(a) paragraph 11(2) of that Schedule (which disapplies limits and periods which would otherwise be imposed by paragraph 3 of that Schedule and substitutes new limits and periods) is of no effect (and is treated as never having had effect) in relation to the parliamentary general election, and(b) for the purposes of paragraph 3 of that Schedule as it applies by virtue of paragraph (a), the relevant period is the Schedule 10 transitional period.(6B) In subsection (6A) “the Schedule 10 transitional period” means the period—
(a) beginning with 19 September 2014, and(b) ending with the date of the poll for the parliamentary general election.”
“(6C) Subsections (3) and (6A) do not apply in the case of a period in relation to which one or more limits are imposed by paragraph 11 of Schedule 9, or paragraph 11 of Schedule 10, that ends with the date of the poll for an early parliamentary general election.
(6D) An “early parliamentary general election” is a parliamentary general election the date of the poll for which is appointed under section 2(7) of the Fixed-term Parliaments Act 2011.”
“( ) In Part 2 of this Act—
(a) section 32(12) to (15) extends to the United Kingdom and Gibraltar, and(b) section (Post-election review) extends to the United Kingdom.”
Offender Rehabilitation Bill [HL]
(10 years, 3 months ago)
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