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Richard Fuller (Bedford) (Con)
1. What steps the Government are taking with local enterprise partnerships to promote entrepreneurship in towns and communities across the UK.
The Minister of State, Cabinet Office (Greg Clark)
Local enterprise partnerships, independently and through city deals, promote entrepreneurship in a variety of ways, including by providing help and advice to small businesses, premises for start-ups and access to venture capital funds. Next month, in my hon. Friend’s area, a small business support service will begin, bringing together the local enterprise partnership, the chambers of commerce, the Federation of Small Businesses, the Institute of Directors and the Engineering Employers Federation, to assist new and growing businesses in his area.
Richard Fuller
Successful entrepreneurs, particularly in local communities, are best placed to promote growth, jobs and prosperity. May I meet the Minister to discuss how we can work together to develop a national network of local enterprise funds to tap into communities’ sense of entrepreneurship?
Greg Clark
I would be delighted to do that. I pay tribute to my hon. Friend’s efforts in Bedford, where I think he has brought investors together to fund start-ups and rapidly growing businesses. That is characteristic of many of the city deals that we have struck around the country. For example, in Nottingham, £40 million has been made available, jointly by the Government, Nottinghamshire county council and Nottingham city council, as well as local investors, to help invest in Nottingham businesses. I commend that to colleagues across the House.
Ian Lucas (Wrexham) (Lab)
The most consistent barrier to entrepreneurship in my constituency is the lack of available finance from banks. Does the right hon. Gentleman accept that today’s announcement by Barclays—of further bonus finance available to its staff—tells us that the Government do not get that it is necessary for them to pressure the banks to start lending in order to encourage entrepreneurship?
Greg Clark
The hon. Gentleman knows that the funding for lending scheme, which the Government and the Bank of England have promoted, has explicitly concentrated on getting lending going to small businesses, but as my hon. Friend the Member for Bedford (Richard Fuller) said, bank lending is not the only source of finance needed. The venture capital funds established under our city deals are an important and welcome way in which small businesses can benefit from the finance they need to expand.
Nadhim Zahawi (Stratford-on-Avon) (Con)
2. What assessment he has made of how city deals are working.
The Minister of State, Cabinet Office (Greg Clark)
We have now agreed 19 city deals, and although they are for the long term, those in the first wave are already making a significant difference. For example, in Birmingham, more than 2,000 new apprenticeships have been provided. In Newcastle, infrastructure works are nearly complete on the Science Central development on what was previously derelict land. In Manchester, work will shortly begin on the airport relief road, and Liverpool is hosting the international business festival in June and July, which I know the hon. Member for Liverpool, West Derby (Stephen Twigg) will be supporting and to which I will ensure all colleagues receive an invitation.
Nadhim Zahawi
Will the Minister consider spreading the excellent city deal initiative to all parts of the country?
Greg Clark
I can confirm that there is in fact a city deal covering my hon. Friend’s constituency, the Coventry and Warwickshire city deal, which is focused on making the most of the opportunities in the supply chain for advanced manufacturing. Furthermore, through the available local growth funds, the principle of city deals is being established across the whole of England, and I am looking forward to visiting each LEP to conduct negotiations.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Is the Minister’s long-term vision that the various city deals will in essence mesh together to become a city region deal and therefore be spread more comprehensively across the regions?
Greg Clark
The hon. Lady, who takes a great interest in these matters, makes a good point. In the past few days, I have met in Birmingham all the LEPs and local authorities from across the west midlands area precisely to ensure that their individual city and growth deals reinforce each other, so that the west midlands’ strong advantages, especially in advanced manufacturing, can be combined.
Mr Andrew Turner (Isle of Wight) (Con)
What freedoms are granted to rural areas to match the Heseltine review and the city deals being given to urban areas?
Greg Clark
My hon. Friend, speaking for the Isle of Wight, makes an important point. In our response to the Heseltine review, we have extended the principle of city deals to rural areas, including the Isle of Wight, so that the same financial flexibilities and powers will be available, as they have been to cities.
David Wright (Telford) (Lab)
In towns such as Telford, the Government still own a large portion of land through the Homes and Communities Agency structure. Would the Minister be willing to meet councillors and officials from Telford and Wrekin council to consider how we could use that land in a city deal-type partnership to promote more growth and development?
Greg Clark
I have already done that. I went to Telford last week to have precisely the conversations that the hon. Gentleman has in mind, and I was impressed with the conversations that took place. [Interruption.] He is quite right that he should have been informed. I hope he was, but if he was not, I apologise for the discourtesy. However, I met his council leader. I was impressed with the work going on there, and I look forward to a future visit, to which the hon. Gentleman will certainly be invited.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Forgive my naivety, but I understood that city deals were a creation of the previous Government, and that, as suggested by my hon. Friend the Member for Isle of Wight (Mr Turner), they channelled transport and economic development funds into cities and other urban areas and away from rural areas.
Greg Clark
My hon. Friend is not right about that. City deals are not an invention of the last Government; they were minted by this Government. In fact, we are told, the Labour leader of Manchester city council, Sir Richard Leese, believes that
“there has been more progress towards the core cities taking control of their own destiny in three years of the coalition than during 13 years of Labour.”
Robert Flello (Stoke-on-Trent South) (Lab)
3. What discussions he had with human rights organisations, trade unions and opposition movements during his recent visit to Colombia; and if he will make a statement.
The Deputy Prime Minister (Mr Nick Clegg)
I met the deputy director of the national victims unit, Iris Marin, as well as representatives of displaced groups and other victims of the armed conflict who sit on the round table. I also met representatives of a number of non-governmental organisations who work on human rights issues, including members of a Colombian human rights lawyers’ collective and members of Peace Brigades International, a British NGO which is active in Colombia. In addition, of course, I discussed directly with President Santos the importance of protecting human rights defenders and trade unionists.
Robert Flello
Last summer, the Deputy Prime Minister said:
“Britain must not step back from its historical commitment to human rights for the sake of commercial expediency.”
While he was in Colombia, an eight-month-old baby was shot dead as a result of indiscriminate army gunfire. Congressman Ivan Cepeda, Carlos Lozano and many others received appalling death threats, and the Colombian Defence Secretary continued to brand them as terrorists. Colombia’s human rights record is appalling. Why is the Deputy Prime Minister now turning a blind eye for the purpose of “commercial expediency”?
The Deputy Prime Minister
I do not agree with the characterisation of what we are trying to do in our relationship with Colombia. Colombia is a society traumatised by horrific violence, and, as the hon. Gentleman has said, there are still some instances of terrible abuses and violence. It seems to me that, in the long run, the only way in which the country can find its feet and have a proper, law-abiding system in which human rights are protected is through peace and non-violence throughout the country.
It is important for us to support the negotiations between President Santos and the FARC terrorist group so that we can try to establish peace for the people of Colombia. In the meantime, we are very unambiguous in what we say and do in supporting human rights activists in the country—including NGO activists—and, indeed, in supporting the Government of Colombia in ensuring that human rights are promoted.
Mark Durkan (Foyle) (SDLP)
Will the Deputy Prime Minister meet the all-party parliamentary group on human rights to discuss issues such as land rights, human rights and the health of the peace process, on which he will have been able to reflect during his visit?
The Deputy Prime Minister
Of course I am keen to look constantly at ways in which we can collectively reinforce our messages on human rights in troubled parts of the world such as Colombia, but we know from peace processes of our own that, in the long run, the best way of guaranteeing human rights and the rule of law is to entrench peace, and to ensure that violence subsides and is then stopped altogether. That is what we are doing in our work with President Santos’s Government. We are also ensuring that the free trade agreements into which the European Union has entered with Colombia contain very clear human rights provisions, to be enshrined in 54 specific measures that the Colombian Government need to introduce in order to protect human rights under the terms of the free trade agreement.
Sadiq Khan (Tooting) (Lab)
How much more authority and influence does the Deputy Prime Minister think that a future Deputy Prime Minister would have when raising the issue of human rights in a country that he or she visited if we had abolished our human rights legislation and replaced it with a diluted Bill of Rights, or had withdrawn from the European convention on human rights?
The Deputy Prime Minister
As the right hon. Gentleman knows, that is one of the reasons why I am so staunchly opposed to diluting the human rights that British citizens enjoy under British and European law. It is very difficult to urge—as we do—the Governments of countries such as Colombia to aspire to the highest standards of human rights if we do not do so ourselves, as a country.
Fiona Bruce (Congleton) (Con)
4. What support the Government are giving to business growth opportunities in Cheshire East through the Cheshire and Warrington local enterprise partnership.
The Minister of State, Cabinet Office (Greg Clark)
I look forward to meeting members of the Cheshire and Warrington local enterprise partnership to provide feedback on its proposed bid for access to the local growth fund. The sum of £2 billion has been taken from Whitehall Departments to fund local projects that can drive growth. I urge my hon. Friend, and all Members, to work with their local enterprise partnerships and help to shape their bids during the weeks ahead.
Fiona Bruce
Does the Minister agree that, in a county such as Cheshire, one priority should be to support innovative approaches to strengthening our rural economy? An example is the Cheshire Fresh agricultural hub at Middlewich, which will provide up to 700 jobs and promote best practice, young enterprise, training, inward investment and food security.
Greg Clark
I agree with my hon. Friend. I know that that project features in the draft proposals from her local enterprise partnership, and I hope that when she meets representatives of her LEP, she will encourage them to ensure that it has the priority that she rightly thinks should be attached to it.
Helen Jones (Warrington North) (Lab)
Despite the fact that huge amounts of public money are being channelled through local enterprise partnerships, the Government have admitted that they carry out no formal assessment of their effectiveness. What is the Minister going to do to make these partnerships more accountable, so that the people in Warrington can get a better deal from the Cheshire and Warrington LEP?
Greg Clark
The hon. Lady can play a role in that. She can hold her local enterprise partnership to account and scrutinise its proposals. Every LEP in England will be putting forward a bid for funds from the £2 billion that I have mentioned, and I have made it clear to them that they should consult and involve their Members of Parliament. I hope that she will take up that invitation.
Clive Efford (Eltham) (Lab)
5. What steps the Government plan to take to improve the accuracy and completeness of the electoral register.
The Minister of State, Cabinet Office (Greg Clark)
Individual electoral registration will help to enhance the accuracy of the register and, from June, applications will be verified against Government records. We will also use data matching to ensure the completeness of the register during the transition to the new system, by confirming the vast majority of electors. Moreover, five national organisations and every local authority in Great Britain will be sharing £4.2 million of funding aimed at maximising registration. The introduction of online registration will improve accessibility for groups such as overseas voters and home movers.
Clive Efford
The Minister knows that there is widespread concern about the fall in the number of people on the electoral register as a result of individual electoral registration. Just how many people would have to disappear from the list before the Government pulled the plug on the project?
Greg Clark
Everyone who has scrutinised this matter knows that every effort is being made to ensure a smooth transition. For example, the existing register will follow into the period of the next general election campaign. Through the funding that we have made available for the year ahead to every local authority in the country, including £26,000 for Greenwich, to promote people staying on the register, there is every opportunity to increase the level of registration. That is one of the features of the new exercise.
Mr David Ward (Bradford East) (LD)
11. Does the Minister agree that we could improve the completeness of the register by replicating the Northern Ireland initiative of working with local authorities in schools to register young people in schools?
Greg Clark
My hon. Friend makes a good point. That is one of the purposes of the funding that we have made available. I participated in a very good exercise organised by a group of young people called Bite the Ballot to encourage registration in my constituency. It was a great success. I can tell my hon. Friend that £48,000 has been provided to the electoral registration officer in Bradford precisely for that kind of activity.
Natascha Engel (North East Derbyshire) (Lab)
Almost half of all 16 and 17-year-olds are missing from the electoral register. If they are not on the register, they cannot vote when they turn 18. What additional support is the Minister making available to help local authorities to get young people on to the register?
Greg Clark
As I have just said, £4.2 million has been made available across the country, the majority of which has gone to the electoral registration officers in local authorities, who know their area best. They have been invited to concentrate on the areas of under-registration, which have historically included schools. There are good examples of lessons and materials that can be used in schools that have a demonstrated record of achievement in enthusing young people and getting them to register, and I hope that the hon. Lady will be able to do the same in Derbyshire.
Mr David Nuttall (Bury North) (Con)
The Minister is clearly doing a good job of ensuring that the register is accurate, but may I urge him to check that the people who turn up to vote are actually the people on the register?
Greg Clark
My hon. Friend makes an important point about accuracy. The duties of electoral registration officers involve ensuring accuracy as well as completeness. The transition to individual electoral registration is precisely to ensure that the identity of people on the register can be confirmed, which does not happen at the moment. That will be a major step forward for the security of our electoral system.
Mr Nigel Dodds (Belfast North) (DUP)
In Northern Ireland, which has been mentioned, we have individual registration but big problems with registration remain, particularly among young people and in socially deprived areas. Does the Minister not agree that, as well as resources, we need a much more proactive, outgoing approach on the part of registration officers? I find that unless they are pushed they often sit back and do not take a proactive approach.
Greg Clark
The lessons that were to be learned from the experience in Northern Ireland have been learned. For example, the canvass that was not followed in Northern Ireland will be followed here in this country. The right hon. Gentleman rightly says that there is a positive duty on electoral registration officers to ensure that the register is complete. I take that very seriously, and I know that they do.
Mr James Gray (North Wiltshire) (Con)
A unique opportunity will arise to improve the scope, depth and accuracy of the electoral register in the next couple of years as our servicemen and women return from Afghanistan and Germany. What new initiative will the Government take to ensure that when these personnel are settled in their seven super-garrisons across Britain they will be almost 100% registered to vote?
Greg Clark
My hon. Friend makes a very important point. It is crucial that our armed forces serving the country overseas are part of the franchise. He will know that arrangements have been put in place to make sure that the need for registration—the renewal of registration —should happen only once every five years, rather than annually, to reflect the difficulties that are sometimes experienced in registering during active service.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I welcome the Minister’s praise for the excellent organisation Bite the Ballot, whose national voter registration day last week signed up thousands of young people. Another way in which we could engage more young people would be to allow 16-year-olds and 17-year-olds to have the vote. Will he join me in welcoming tomorrow’s lobby of Parliament by the Votes at 16 campaign?
Greg Clark
I do welcome the lobby of Parliament; I met one of the young people in my constituency and he made a very articulate case for that measure. The debate is taking off. There is not agreement across the Government —across this House—that this change should take place, but I think it is very good that the debate is happening and that young people are engaged in it.
Roger Williams (Brecon and Radnorshire) (LD)
T1. If he will make a statement on his departmental responsibilities.
The Deputy Prime Minister (Mr Nick Clegg)
As Deputy Prime Minister, I support the Prime Minister on a full range of Government policy and initiatives. Within Government, I take special responsibility for this Government’s programme of political and constitutional reform.
Roger Williams
Will the Deputy Prime Minister update us on introducing legislation to implement the Silk commission recommendations, which have all-party support in the National Assembly for Wales but seem to lack wholehearted support from Her Majesty’s Opposition in Westminster?
The Deputy Prime Minister
I agree with my hon. Friend that Opposition Members have a very ambivalent attitude towards further devolution to Wales, but on the Government Benches we are unambiguous in our support for following up the Silk commission and translating it into legislation. That is why we published the draft Bill, which is subject to pre-legislative scrutiny by the Welsh Affairs Committee right now. I cannot pre-empt the Queen’s Speech, but I hope he will be in no doubt about our determination to translate the Silk report into action.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
The whole House will be concerned about the impact of the severe floods on those living and working in the Somerset levels and in the Thames valley. It is hard to imagine the distress at seeing one’s home wrecked by flood water, but that is the situation facing so many families today. The armed forces, fire and rescue services, the police, local council workers and Environment Agency staff are all doing a heroic job in the stricken areas, often in difficult and dangerous conditions, and they deserve our respect and our thanks for that. Will the Deputy Prime Minister update the House on the response to the floods?
The Deputy Prime Minister
I strongly agree with the right hon. and learned Lady that we should all join together to pay tribute to everybody who is working so hard around the clock. I was in the Somerset levels on Sunday night and yesterday morning, and, in addition to the emergency services, all the people in the gold command, the local authorities and the volunteers, who have gone several days without sleeping properly, are helping their families, neighbours and friends. It really is an extremely impressive collective effort. The bad weather is still with us. The Met Office is keeping us updated, as she knows. We are holding a series of Cobra meetings on an ongoing basis to monitor the situation. We are working with local authorities, the Environment Agency and all the emergency services to put contingency measures in place where we think threats might arise and, of course, to do our best to deal with the rising water in all the places it has affected, particularly the Thames valley and the Somerset levels.
Ms Harman
I thank the right hon. Gentleman for his response. The absolute priority for everyone now must be a total focus on working together to help people hit by the floods and those who are still threatened. People will still face huge challenges and great anxiety about the future even after the floodwater recedes. They will have to get their homes straight, their farms and businesses back on track and rebuild their livelihoods and communities. We all know how impossible it can be, even at the best of times, wrestling with compensation schemes and dealing with insurance companies. Will he assure the House that the Government are working on that now? Will they bring together the insurance companies and co-ordinate all the Government compensation processes so that once the water subsides and the TV cameras move on, people are not left in the lurch and get the ongoing help they need?
The Deputy Prime Minister
I strongly agree with the right hon. and learned Lady—I am sure that everyone does from all parts of the House—that that is precisely what we should be doing. She may know that we have already reached an agreement with the insurance industry on a long-term approach to insuring properties that are susceptible to flooding, and we can now move forward on that. She will know that we have increased the coverage under the Bellwin formula in terms of the money provided to councils that have had to spend more of their own resources to deal with this terrible emergency. Yes, of course we will need to work with the insurance industry, businesses, the farming community and local authorities to ensure that proper coverage and compensation is provided.
Mark Pritchard (The Wrekin) (Con)
T3. I know the Deputy Prime Minister respects the Court in Strasbourg, but I also know that he respects the courts and judges in this country. Therefore does he agree with Lord Justice Laws who recently said that treating Strasbourg decisions as authoritative represents a wrong turning in British law?
The Deputy Prime Minister
It is absolutely essential that we as a country always abide by the law and by our international legal commitments. The hon. Gentleman will know that an independent commission looked into the case for a UK Bill of Rights, of which he is a great advocate, and provided its final report in December 2012. It concluded that this was not the right time to change the legal framework that governs the application of human rights in this country and the translation of the European convention, not least because of the knock-on effect on the devolved judicial systems within the United Kingdom.
Roberta Blackman-Woods (City of Durham) (Lab)
T2. The Deputy Prime Minister will know that local authorities with the highest levels of deprivation are facing unprecedented cuts. Will he assure the House that the cost of securing individual voter registration will not be at the cost of council services aimed at supporting the poorest and most vulnerable in our society and will be fully met by central Government?
The Deputy Prime Minister
Those parts of the country where we have the highest number of under-registered populations, such as student areas, will receive more resources to do what is clearly a more resource-intensive job than in other areas. That will be reflected in the way in which the individual electoral registration system is funded.
Karen Lumley (Redditch) (Con)
T4. Will my right hon. Friend join me in welcoming the target set by Worcestershire local enterprise partnership of creating 10,000 new apprenticeships by 2016? Those are real jobs and real training for local people.
The Deputy Prime Minister
I will certainly join her in celebrating the work of Worcestershire LEP, and indeed the LEPs, businesses and local authorities up and down the country that are expanding apprenticeships. As my hon. Friend knows, notwithstanding all the very difficult costs and savings we have had to make in this coalition Government to clear up the mess we inherited from the Labour party, we have none the less increased the number of apprenticeships across the country to unprecedented levels. We will roll out 250,000 more apprenticeships during this Parliament than were planned by the Labour party when it was in office.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
T5. Speaking of messes, the Deputy Prime Minister went on LBC to defend the handling of the Royal Mail sale by saying that the Business Secretary is not a share price expert. Will he now concede to this House that Royal Mail was sold off too cheaply?
The Deputy Prime Minister
The point I was making then, and that my right hon. Friend the Business Secretary has also made, is that the price was set following independent advice provided to him and to the Department for Business, Innovation and Skills. I do not think that anybody here should be seeking to second guess the advice that was received. I hope the hon. Gentleman will join me in hoping that Royal Mail will continue to be a successful company, providing universal coverage of postal deliveries across the country.
Graham Evans (Weaver Vale) (Con)
T6. Last Friday, I held an export fair with UK Trade & Investment at Sci-Tech’s enterprise zone in my constituency to encourage business and entrepreneurs to look at expanding into the export trade. Will my right hon. Friend set out what steps the Government have taken to encourage small and medium-sized enterprises to work with local enterprise partnerships, enterprise zones and UKTI to promote growth and entrepreneurship?
The Deputy Prime Minister
I certainly want to welcome what the hon. Gentleman is doing with his local LEP and others. He is right that there are dangers in too much duplication—too many Government and non-governmental bodies, quangos and other arm’s length bodies all aiming at the same objective. That is why the Government have encouraged local authorities and LEPs to work together to create growth hubs in which there is a single port of call for businesses that want to access the assistance they need to improve exports for businesses in the local area.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
T7. Does the Deputy Prime Minister agree that London and the south-east are increasingly powerful compared with regional cities? Does he agree with Boris Johnson’s campaign, which would allow London to retain an even greater share of taxes down in London and the south?
The Deputy Prime Minister
I certainly agree with the characterisation that over-centralisation, both economically and politically, is a problem that has blighted our country for a very, very long time, which is why I would highlight the importance of city deals—the most radical cutting of the purse strings that have controlled the way in which cities in the north of England and elsewhere behave by the Treasury. It is a radical step in decentralisation, as is the localising of business rates and the investment in HS2 to make sure that the north prospers in future just as much as the south.
Sir Andrew Stunell (Hazel Grove) (LD)
T8. Does my right hon. Friend agree that the electoral conduct report by the all-party group against anti-Semitism has provided useful recommendations on how we can conduct our election campaigns vigorously, but without grossly discriminatory campaigning? Will he agree to meet a deputation from that panel to discuss its recommendations?
The Deputy Prime Minister
I certainly thank my right hon. Friend and the hon. Member for North East Derbyshire (Natascha Engel), the Chair of the Backbench Business Committee, and others for their report, which is extremely good. We have looked closely at the recommendations, and I wrote to the Chair recently with my views both as a party leader and on behalf of the Government on how we can respond to them. Quite a lot of the recommendations, funnily enough, are enshrined in the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014, especially on non-party campaigning. A number of other recommendations can be dealt with only with proper cross-party consensus, with political parties taking action as political parties, and I very much hope that we will all do that.
Kevin Brennan (Cardiff West) (Lab)
Has the Deputy Prime Minister seen the comments of the Parliamentary Private Secretary to the Chancellor, who said on Monday that
“Nick Clegg complains quite often that Danny Alexander has gone native in the Treasury. I think there is some truth in the fact that he has gone native in the Treasury.”
He said:
“The relationship between George and Danny Alexander is very, very good.”
The Deputy Prime Minister will be aware of Stockholm syndrome, in which captives increasingly empathise with their captives. What is he going to do to de-programme “the Treasury one”?
The Deputy Prime Minister
I have just seen those quotes from the hon. Member for Reading East (Mr Wilson)—I am not sure if he is in the Chamber—who claims that he is extremely close to the Chancellor, knows his mind and that he is his “wingman”. He is as good a wing man as Icarus was in flying off on his own wings, judging by his comments. The Chief Secretary to the Treasury is doing an outstanding job on behalf of the Government and the Liberal Democrats. Only last week he said that further cuts for the wealthiest in society would happen over his dead body. That and so many other examples show that his Liberal Democrat heart is exactly where it should be.
Charlie Elphicke (Dover) (Con)
T10. Does the Deputy Prime Minister share my concern that 75% of the British people tell pollsters that they think that human rights are a charter for criminals and the undeserving? Is it not time that we introduced a British Bill of Rights with constitutional reform that gives the final say back to the Supreme Court?
The Deputy Prime Minister
As I said earlier, when this was looked at very carefully by a number of eminent experts they concluded in December 2012 that it would not be right to undo or unwind a lot of the protections that we all enjoy under existing human rights law, and that a British Bill of Rights would run the risk of unpicking many of the protections enjoyed across the United Kingdom, given the fact that we have a fairly devolved legal system. More generally, of course, this sometimes poses difficult problems for the House and we have to wrestle with difficult issues, but it is worth reminding people that these are human rights for British citizens, and are already enshrined in British law.
Robert Flello (Stoke-on-Trent South) (Lab)
T12. When the Deputy Prime Minister was getting close to President Santos, did he mention the names Huber Ballesteros, Francisco Toloza, David Ravelo, and did he inquire when those political prisoners might be released from incarceration in Colombian prisons?
The Deputy Prime Minister
As I said to the hon. Gentleman in answer to an earlier question, of course I discussed the need to improve human rights in Colombia. As he knows, President Santos is committed to embarking on a new human rights initiative during the course of this year. I urge the hon. Gentleman to ask the simple question: if we want to protect human rights abroad as much as we do here—I think we share that view—surely one of the best ways to do that is to work hard with other Governments, including President Santos’s Government, to create peace. If there is constant violence, it is very difficult to protect human rights.
Dan Byles (North Warwickshire) (Con)
T11. Does the Deputy Prime Minister agree that the Coventry and Warwickshire city deal initiative could see tens of millions of pounds invested locally, which would build on the recent successes that we have seen in the automotive supply chain industry and manufacturing industry, creating jobs and boosting investment?
The Deputy Prime Minister
I congratulate my hon. Friend on the excellent support that he has given to the Coventry and Warwickshire city deal, which we were able finally to conclude. It is as a result of that deal and other initiatives that we will be able to support more than 15,000 new jobs by 2025 and unlock £91 million of public and private sector investment—yet another example of economic decentralisation that will help to create jobs throughout the country.
Jenny Chapman (Darlington) (Lab)
In order to serve on a jury, one needs to be on the electoral register. Are the Government increasing the maximum age for jurors from 70 to 75 to make up the numbers of all those young people who will no longer be eligible to serve?
The Deputy Prime Minister
The ambition is to increase the number of young people who are registered. A number of Members have already mentioned the work of Bite the Ballot and other organisations that are campaigning hard to do that. If we get individual voter registration right, as I hope we will—which was first proposed by the Labour Government, not the coalition Government—levels of registration in under-registered populations should increase rather than decrease.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
T13. As I am sure my right hon. Friend knows, last Wednesday was Bite the Ballot national voter registration day, designed to engage with the 4 million young people who are missing from our register. What actions will he take to engage those people and get them registered, such as perhaps emulating the schools initiative in Northern Ireland?
The Deputy Prime Minister
As was said earlier, we announced last week that five national organisations and every local authority in Great Britain will be sharing £4.2 million-worth of new resources to maximise registration. As my hon. Friend mentioned schools, it is worth remembering that next September a new citizenship programme will be taught that stipulates that pupils in schools should learn about parliamentary democracy and citizenship more widely. That is another opportunity to raise the profile of the importance of getting young people registered on the electoral roll.
Lisa Nandy (Wigan) (Lab)
The Deputy Prime Minister promised this week that there will be no politicisation of Ofsted, so will he take this opportunity to restore some of the public confidence that has been lost in recent days and give the House an assurance that the major Conservative party donor, Theodore Agnew, will not be appointed as chair of Ofsted, which the Education Secretary is reportedly trying to achieve?
The Deputy Prime Minister
I can certainly reassure the hon. Lady and the House that any appointments to Ofsted, or indeed any other important public bodies, will conform to the code for the appointment to public bodies, and that the panel that is being established to put forward candidates for that new Ofsted position will be entirely independent and will be asked to propose candidates based only on merit. There will be no political interference in the creation of the short-list of candidates whatsoever.
Gordon Birtwistle (Burnley) (LD)
Last week, I visited Wellfield school in my constituency, an excellent junior school that fully supports the Government’s plans for free school meals. Its problem is that it does not have a facility within the school to provide those meals. It has spoken to the county council and the diocese, but it is getting nowhere with them. Will my right hon. Friend meet me, or ask his Education Secretary to meet me, to try to resolve the problem before the plans are introduced in September?
The Deputy Prime Minister
I will certainly ask a Minister in the Department for Education to meet my hon. Friend to discuss that. As he knows, we have set aside £1 billion in revenue funding to deliver that next September so that all young children in the first three years of primary school get a healthy meal at lunch time, which raises educational standards and helps close the attainment gap, as study after study have shown. In addition—this addresses his point—we have set aside £150 million in capital investment to improve kitchen and dining facilities for schools that do not have them and nearly £10 million to fund an implementation support service. I think that will be a great progressive step towards helping children who do not get a healthy meal get one and to help their education.
Kate Green (Stretford and Urmston) (Lab)
People from ethnic minority backgrounds are as likely to vote as the population as a whole if they are registered, but registration rates are much lower among certain ethnic minority communities. Can the Deputy Prime Minister say what is being done specifically to encourage people from ethnic minority backgrounds to vote, particularly under individual voter registration?
The Deputy Prime Minister
Yes, I can. The £4.5 million that I mentioned earlier was allocated only a few days ago to all local authorities and to a number of organisations. Their work will be tested against the objective of helping black and minority ethnic groups, students and others who are under-represented on the register be more fully represented on it. That is what that money and that work is for, and I hope that it will be successful.
Mr Simon Burns (Chelmsford) (Con)
What specific measures, rather than general ones, have been put in place to make it easier, quicker and cheaper to remove people from the electoral register who legally should not be on it?
The Deputy Prime Minister
I think that awareness of the integrity of the register has increased significantly. The work that I have already alluded to, and indeed the introduction of individual voter registration, is all about improving the integrity of the register to ensure that those who should not be on it are not on it. Ultimately, that is what individual voter registration is all about—bearing down on fraud and improving the integrity of the register.
Mr Iain McKenzie (Inverclyde) (Lab)
In Scotland, 16 and 17-year-olds are about to vote for the first time this year. Does the Deputy Prime Minister agree that there is inconsistency in the voting age across the UK and, if so, what does he intend to do to address it?
The Deputy Prime Minister
As the hon. Gentleman knows, I am an advocate of votes at 16. People can do all sorts of things at age 16 or 17, such as paying taxes and serving in the armed forces, but they cannot vote. That is why my party will remain a staunch advocate of votes at 16. As my hon. Friend said earlier, we have not agreed that across the coalition, but I hope that it will happen eventually.
Mr Philip Hollobone (Kettering) (Con)
Does the Deputy Prime Minister believe that the level of immigration into this country is too high, too low or about right?
The Deputy Prime Minister
I do not think that there is a magical number. I think that the key to encouraging public confidence in the immigration system is ensuring that it is tough where it needs to be—stamping out abuse, cutting out the loopholes, ensuring that illegal immigration is diminishing and counting people in as well as out, which is why I am so keen to reintroduce the exit checks that previous Governments removed—but at the same time remaining open for business, because we are nothing as an economy if we are not open to the rest of the world.
Andrew Gwynne (Denton and Reddish) (Lab)
The Deputy Prime Minister’s rhetoric on electoral registration might carry a bit more weight if his own local council followed his advice. Is he aware that in Stockport, in the wards that I represent, electoral registration is 20% below the level in the Tameside wards? What is he going to do to ensure that Liberal Democrat Stockport gets its act together?
The Deputy Prime Minister
I can see how angry the hon. Gentleman is about that—[Interruption.] As he should be, as Opposition Front Benchers say portentously from a sedentary position. He should welcome the £4.5 million that we recently allocated to the five organisations working nationally and to all local authorities precisely to address the issue he highlights.
Mr David Hanson (Delyn) (Lab)
1. How many local authorities have signed up to the information-sharing protocol for cases of child abuse launched in November 2013 by the Director of Public Prosecutions.
Mrs Mary Glindon (North Tyneside) (Lab)
5. How many local authorities have signed up to the information-sharing protocol for cases of child abuse launched in November 2013 by the Director of Public Prosecutions.
The Solicitor-General (Oliver Heald)
The national protocol came into force on 1 January this year. The aim is for all parties to sign a local protocol as soon as possible. The Crown Prosecution Service intends to carry out a survey of all CPS areas to monitor progress.
Mr Hanson
If the voluntary approach does not produce the goods that the Minister and the Opposition wish to see, will he consider making it compulsory for local authorities to sign such protocols, given the importance of the issue? In particular, will he discuss it in my area with the National Assembly for Wales?
The Solicitor-General
It is very important that local protocols should be signed so that there is a clear, seamless process and when an investigation starts the information is shared with the other authorities. A draft protocol has now been sent to contacts in all the local authorities in the right hon. Gentleman’s area, and discussions are continuing. It is thought that it will be possible to have the protocol signed by the middle of March.
Mrs Glindon
Given that openness and information sharing are key to prosecuting these cases, what assurance can the Solicitor-General give that the Government will resist calls to introduce suspect anonymity in cases of historical child abuse and rape?
The Solicitor-General
On the subject of information sharing, tomorrow the judges in Newcastle are meeting all the local authorities to try to agree a way forward. There are certainly no current plans to change the anonymity rules. If the hon. Lady wants to discuss this with me, I would be more than happy to do so.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
My hon. and learned Friend knows how important information sharing is in this very sensitive area. He is no doubt aware of the successful conviction of the former head teacher of Caldicott preparatory school the week before last in my constituency. Will he join me in paying tribute to Mr Tom Perry, who revealed his own historical child abuse to enable this prosecution to go forward? What encouragement can he give to Mr Perry and his colleagues as regards the Government looking favourably on mandatory reporting for regulated activities, which could help to protect more of our children in future?
The Solicitor-General
This was an horrendous case, and, like my right hon. Friend, I pay tribute to Tom Perry for his courage. She is absolutely right about information sharing and, as I said in response to the right hon. Member for Delyn (Mr Hanson), it is important to have these local protocols in place so that information is shared expeditiously from the very beginning. We believe that that will happen; certainly, very good progress is being made. We will look at the results of the survey and at that point we will be able to see where we stand.
Mr David Winnick (Walsall North) (Lab)
On child abuse, is any progress being made on prosecutions for female genital mutilation? Is the Solicitor-General aware of the disappointment felt by so many people all round the country that so far it seems that this issue is not being taken seriously enough? Can we expect prosecutions in the near future?
The Solicitor-General
I thank the hon. Gentleman for that question, because this is a very important issue. Ministers met non-governmental organisations last week to discuss how to make progress. A number of things are happening. He will know that the Crown Prosecution Service is currently reviewing 10 cases, and it is very much hoped that it will be possible to ground a prosecution. However, the key thing is that one does need evidence, so it is very important that the information gathering for the sort of evidence that is needed for a successful prosecution is found and pursued. Every effort is being made, and I have recently visited all the units concerned.
Emily Thornberry (Islington South and Finsbury) (Lab)
Child abuse and rape prosecutions are falling because the agencies are not working together. I have uncovered the fact that local authorities are not disclosing information to police and prosecutors and the fact that the police are referring fewer and fewer cases to prosecutors. We now need to know what the Solicitor-General and his brother and sister Ministers are going to do to show some leadership on this issue. Are the Government doing nothing about it because violence against women and girls is not a priority for them, or because the 27% cuts to the CPS and the loss of a quarter of its lawyers mean that the Solicitor-General is resigned to the idea that more and more cases are going to be dropped?
The Solicitor-General
It is sad to hear the hon. Lady traduce the Crown Prosecution Service in that way. The fact is that we have the highest ever level of conviction rates for rape, for domestic violence and for child abuse, and the people who are prosecuting these cases are doing an excellent job. She knows that we are investigating fully, through a six-point plan, why referrals are falling in some parts of the country, but the idea that the Crown Prosecution Service can be criticised when it is doing the best it has ever done in terms of conviction rates is quite wrong.
Jake Berry (Rossendale and Darwen) (Con)
2. What recent discussions he has had with the Treasury Solicitor on the development of a shared legal service. [R]
The Attorney-General (Mr Dominic Grieve)
I have regular discussions with the Treasury Solicitor, Sir Paul Jenkins, on matters of mutual interest. Sir Paul is the architect of the shared legal service, which has led to a much improved organisation and streamlining of the Government legal service. I trust that that will continue. Sir Paul has been a Government lawyer for 35 years. He will retire at the end of the month and I would like to take this opportunity to thank him for his major contribution to this issue, for his years of service to the Government legal service and, indeed, for helping the good governance of our country.
Jake Berry
I draw the House’s attention to my declaration in the Register of Members’ Financial Interests. Will my right hon. and learned Friend set out what benefits will be gained from sharing legal services across Government Departments?
The Attorney-General
Sharing legal services brings considerable benefits in greater flexibility and reliance; more efficient deployment of legal resources, including specialist expertise; and more opportunities for savings and improved knowledge sharing. It also provides a more coherent legal service for Government as a whole and good career development opportunities for lawyers, and it improves the legal support to individual Departments.
Robert Neill (Bromley and Chislehurst) (Con)
Does my right hon. and learned Friend agree that one area of expertise that could be improved by shared legal service is that of awareness of and consistent access to expertise in forms of alternative dispute resolution, such as mediation, which should be available to all Government Departments?
The Attorney-General
I agree entirely with my hon. Friend. That is precisely the benefit of bringing the legal advisers from different Departments into one organisation. There is now a single board that groups those people together in the Treasury Solicitor’s Department, and I am confident it can deliver savings, lower charging costs for Departments—we have already seen that—and greater efficiency and expertise in-house.
Mark Menzies (Fylde) (Con)
3. What steps the Government are taking to ensure the repatriation of stolen assets to emerging democracies in the middle east and north Africa.
The Attorney-General (Mr Dominic Grieve)
In September 2012, the Prime Minister established a taskforce to speed up our efforts to return stolen assets to the people of Egypt, Libya and Tunisia. The Metropolitan Police Service is currently investigating a number of specific cases alongside its Egyptian counterparts. At international level, we used our G8 presidency last year to promote that agenda. That included co-hosting an international conference in Marrakesh on asset recovery last October, which I attended.
Mark Menzies
Will my right hon. and learned Friend confirm that this Government have been at the forefront of helping with the issue, particularly with regard to returning stolen assets to Egypt, and that that was key at the Arab Forum on asset recovery?
The Attorney-General
Yes, I can confirm that we have been at the forefront of asset recovery efforts. A number of priority cases have been identified with the Egyptian authorities. UK investigators have opened domestic money laundering investigations into individuals with significant assets in the UK and they are in daily contact with their Egyptian counterparts. I hope that that will improve with some secondments to Egypt shortly.
The Arab Forum on asset recovery allowed us an opportunity to have an overall discussion about the issue. One of the difficulties is a lack of understanding in some countries about the due process of law that has to be gone through in order for recovery to take place. I hope, therefore, that the conference facilitated a greater understanding of that.
Andrew Gwynne (Denton and Reddish) (Lab)
A National Audit Office report on the proceeds of crime shows that, as a result of poor co-ordination and a lack of leadership, out of every £100 generated in the criminal economy, as much as £99.64 is retained by the perpetrator. What is the Attorney-General doing to address those findings so that victims in north African and middle eastern emerging democracies can get their—
Mr Speaker
Order. We are fully seized of the purport of the hon. Gentleman’s inquiry at just about the same time as he has become seized himself.
The Attorney-General
The hon. Gentleman shows some ingenuity in linking his question to that asked by my hon. Friend the Member for Fylde (Mark Menzies). I assure the hon. Gentleman that asset recovery is given a high priority and that a taskforce within Government is looking at how we can improve it overall. There are a number of interesting challenges, which go back long before this Government came into office. For example, there is a mismatch between the amounts ordered to be seized and the actual realisable amounts and, in some cases, the orders made bear very little relation to the assets available. We are looking at all those things and seeking to prioritise how we can identify those assets that can best be recovered. I would be happy to write to the hon. Gentleman about that so that he can be brought up to date on our thinking.
Rehman Chishti (Gillingham and Rainham) (Con)
In relation to repatriation from north Africa and the middle east, the Attorney-General will know that, in 2012, 500 children were abducted from the United Kingdom contrary to UK court orders and taken to countries in such areas. What steps have been taken and what discussions have taken place with those countries about returning the children to the United Kingdom?
The Attorney-General
This matter does not fall within my departmental responsibility, and it would be best for my hon. Friend to raise that with the Ministry of Justice. I accept that there are areas of real difficulty in respect of children who are abducted, but that complex issue above all involves international co-operation and respect for the orders made by family courts in other countries.
Mr Philip Hollobone (Kettering) (Con)
Does the Attorney-General have any estimate of the amount of stolen assets that might be in this country?
The Attorney-General
It is probably foolish to engage in speculation about precise figures, but I will simply say that it is recognised that there are likely to be substantial sums in this country.
Priti Patel (Witham) (Con)
4. What recent discussions he has had with the Crown Prosecution Service on the use of diminished responsibility defences in domestic homicide cases.
The Solicitor-General (Oliver Heald)
The CPS is working to strengthen its approach to domestic homicide cases, particularly where the partial defence of diminished responsibility is raised.
Priti Patel
My hon. and learned Friend will be aware that domestic homicide trials where the defence is one of diminished responsibility deteriorate into character assassinations of the victim, rather than focusing on the facts of the case. Will he say what steps the CPS is taking to mitigate that issue, particularly to reduce the trauma to victims and their families?
The Solicitor-General
I pay tribute to my hon. Friend for her work on homicide as a subject, and I agree with her. The Crown Prosecution Services needs to take and will take a challenging attitude in three areas. The first is unwarranted attacks on the deceased’s character. The second is the need to emphasise the context of domestic violence, which is an aggregating feature, and to bring out evidence about the true dynamics of the relationship, so that such cases are treated as cases of domestic violence. The third is that the CPS should be aware that the existence of a recognised mental condition does not necessarily mean that it amounts to an abnormality of mental functioning sufficient for grounds of diminished responsibility.
Fiona Mactaggart (Slough) (Lab)
The “Domestic Homicide Reviews” lessons learned paper published last year stated that the CPS was “looking to strengthen guidance” for prosecutors about bail applications. Has that happened, because people on bail too often go on to reoffend?
The Solicitor-General
The guidance on that area is being worked on at present, but I will certainly ensure that the hon. Lady’s concern is reflected back.
Mr Robert Buckland (South Swindon) (Con)
The law of diminished responsibility very often depends on expert evidence from psychiatrists. In complex cases, decisions about such important offences are far too often made at the last minute. Is my hon. and learned Friend happy about existing protocols in relation to making sure that psychiatric evidence can be agreed at the earliest possible opportunity, and that the consequences of important decisions based on that evidence can be explained in ordinary English to the families of the victims?
The Solicitor-General
My hon. Friend makes the very important point that the bereaved should meet the prosecutor post-charge and pre-trial. As I said a moment ago, the troubled issue of the meaning of a recognised mental condition in these circumstances should be examined in a challenging way by Crown prosecutors.
Keith Vaz (Leicester East) (Lab)
These are very serious and complex cases. Does the Solicitor-General propose to look at sentencing guidelines for cases where it is found that any of the parties involved suffers from a mental illness?
The Solicitor-General
As the right hon. Gentleman will know, there are guideline cases dealing with manslaughter. The judge has to have discretion because, as he will know only too well, there are cases in which the mental condition is suddenly there and an incident occurs that is totally out of character for the accused. In those cases, adequate discretion needs to be available.
David Wright (Telford) (Lab)
6. What recent steps he has taken to promote awareness among prosecutors of the tools available to secure the removal from the UK of low-level foreign offenders.
The Attorney-General (Mr Dominic Grieve)
The Crown Prosecution Service has worked with the Association of Chief Police Officers and the UK Border Force to develop joint guidance for the foreign national offender conditional caution scheme in advance of its introduction in April 2013. Prosecutors are advised that where the criteria are met, there is a strong public interest in issuing a conditional caution to foreign national offenders.
David Wright
I understand that 20 cautions were issued in the six months from April 2013 and that 13 were successful in removing the offender. What happened to the other seven?
The Attorney-General
It is important that the hon. Gentleman understands that any decision to go down that road pre-charge is for the police to make, not for the CPS. The CPS can be consulted and after charge, when it is reviewing cases, it may identify cases that it can recommend should go down that route and have the charges dropped. I cannot tell him what happened to the other seven; I shall try to find out and write to him. It is desirable that the project be taken forward. It is not without difficulty: there are human rights issues, and often people say they are asylum seekers or have claimed asylum and therefore cannot be removed. That said, the fact that even that small number of people have been removed seems to me to be a step in the right direction.
Mr Peter Bone (Wellingborough) (Con)
What happens when those foreigners have been repatriated? Are they allowed automatically to come back to this country at a later date, or are they banned from returning?
The Attorney-General
Generally speaking, they are banned from returning to the United Kingdom, at least for a period of time. It depends on the nature of the offence: in some cases, the offence will be an immigration offence and may lead to a ban for a period of time; a serious criminal offence is likely to lead to a ban for ever.
Chris Bryant (Rhondda) (Lab)
Last week, the Government introduced a new provision in the Immigration Bill allowing the Home Secretary to remove the British citizenship of people from other countries who have been naturalised. In cases where the individual is resident in this country, what will happen to them? Will they be banished from the realm? Will they be exiled, and if so, where to?
The Attorney-General
I think the hon. Gentleman has taken a slightly simplistic view. The measure passed by the House returns us to the status quo ante 2006, which allows for such a power to be exercised by the Home Secretary. Obviously, if that power is to be exercised it has to be exercised bearing in mind, first, whether the person may obtain another nationality, and secondly, whether they can be deported. A number of criteria can be brought into play before a decision is made on such a case.
Mr Stewart Jackson (Peterborough) (Con)
The cost to the taxpayer of every 1,000 prisoners kept on the prison estate is £28 million. What work has my right hon. and learned Friend done and what advice has he given the Home Office and Ministry of Justice to expedite bilateral agreements with countries such as Ireland and Poland to bring about the quick removal of foreign national offenders?
The Attorney-General
I am not allowed to say what I do or do not advise on, but in countries such as Ireland and Poland—signatories to the European convention on human rights and fellow members of the EU—it ought to be possible by bilateral dialogue to speed up the removal of prisoners from the United Kingdom, either to serve the rest of their sentence in their country of origin, or deporting them at the end of their sentence.
Mr Simon Burns (Chelmsford) (Con)
7. What assessment he has made of the effects of increased digital working by the Crown Prosecution Service; and what estimate he has made of the savings to the public purse as a result of that increase.
The Solicitor-General (Oliver Heald)
The CPS has led progress in implementing digital working with other criminal justice agencies. It is estimated that most police forces are now transferring 90% of case files electronically and that savings of £30 million a year can be achieved by 2015-16.
The Solicitor-General
Yes, all parts of the criminal justice system are embracing digitalisation, with Essex and Chelmsford playing a key role. Essex police lead on the development of the Athena digital police system—the largest ever collaboration on a police IT project, taking a case from report to court—and Chelmsford is piloting court wi-fi and clickshare video.
Mr Speaker
I am sure that the right hon. Gentleman is pleased to represent the new white heat of the technological revolution.
Clive Efford (Eltham) (Lab)
8. In what ways the Serious Fraud Office co-operates with prosecutors overseas; and if he will make a statement.
The Attorney-General (Mr Dominic Grieve)
The Serious Fraud Office co-operates with prosecutors overseas during joint investigations, SFO investigations with which overseas prosecutors can assist, building capacity internationally, and executing requests for legal assistance when asked to do so by the Home Office.
Clive Efford
Can the Attorney-General say what discussions he has had with America regarding the extradition of people who may be guilty of fixing the LIBOR? Progress is lacking in prosecuting people involved in LIBOR-fixing; does this increase the likelihood of their being extradited?
The Attorney-General
The Serious Fraud Office is in touch frequently with its United States counterparts in respect of investigations that have a transnational dimension. I will not talk about a specific case, but looking at the matter hypothetically, in such circumstances it will be decided in which jurisdiction a prosecution would best be brought. The hon. Gentleman will be aware that a LIBOR investigation is progressing in this country. There are also investigations in the United States. From what I know of the matter, I am satisfied that there will be good co-operation between the two jurisdictions to ensure that any alleged criminality is brought to justice.
James Wharton (Stockton South) (Con)
9. What recent discussions he has had with the Secretary of State for Justice on reform of the law of contempt.
The Attorney-General (Mr Dominic Grieve)
I met the Justice Secretary recently to discuss proposals for reforming the law of contempt. The proposals will implement recommendations that were made by the Law Commission and have been included in the Criminal Justice and Courts Bill. I strongly support the reforms, which include the creation of criminal offences for jury misconduct. If enacted, the legislation will reform the contempt law that is applicable to publication contempt, with the aim of providing greater clarity and certainty for the media and the courts about when material that is published online should be removed when proceedings are active.
James Wharton
What success has my right hon. and learned Friend had in prosecuting jurors who ignore judges’ pre-trial advice, particularly with regard to the unlawful use of social media?
The Attorney-General
Since coming to office, the Solicitor-General, his predecessor, my hon. and learned Friend the Member for Harborough (Sir Edward Garnier), and I have successfully instituted proceedings against five jurors. Four of those cases involved the misuse of the internet, including using the internet to conduct research. In two of those cases, social media were used to commit the contempt. As a result of those proceedings, judicial directions to jurors have been revised and strengthened. The purpose of those prosecutions is to send out a clear message about the unacceptability of such behaviour and, thereby, to ensure that further prosecutions are not necessary. By turning it into a straightforward criminal offence, we will make quite clear the gravity of the matter, while also providing statutory defences.
Mr Speaker
We will hear very shortly from the man in the conker-coloured suit. I look forward to that, as does the House. I hope that the hon. Gentleman will bear with me for a moment.
Point of Order
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Mr Speaker. The first business on today’s Order Paper is entitled, “Oral Questions to the Deputy Prime Minister”. Twelve substantive questions are then listed. However, during questions, the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark) was on his feet for most of the time. The Deputy Prime Minister answered only one question. If we were to change the rules so that we had Minister of State questions, that would be fine, but I would have thought that it is discourteous to the House if the Deputy Prime Minister does not respond to his own questions.
Mr Speaker
The hon. Gentleman is an ingenious parliamentarian and he has made his point in his own way. He will know that the distribution of questions among Ministers is entirely a matter for them; it is not a matter for me. I have never regarded the Deputy Prime Minister as a shy or reticent individual. I doubt that he is ever cowed into quietude by the hon. Gentleman. The hon. Gentleman’s point has been registered and doubtless he will correspond with the Deputy Prime Minister on the matter. If I stretch my imagination to its limit, he might even have a cup of tea with the Deputy Prime Minister to discuss the matter. [Interruption.] We really are indulging in flights of fancy, I fear, but the point has been made and I am glad that the House is in good humour.
Additional Charges for Utility Bills not Paid by Direct Debit (Limits)
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Robert Halfon (Harlow) (Con)
I beg to move,
That leave be given to bring in a Bill to limit levels of additional amounts charged by utility companies on bills not paid by direct debit; and for connected purposes.
The purpose of the Bill is very simple. Energy companies should not charge people excessive amounts for the energy they use just because of how the consumer prefers to pay. Energy bills continue to rise. Gas bills have gone up by 43% since 2007. Many families are struggling to pay the high prices. To the Government’s credit, they have taken some important steps to help ease the pressure, such as forcing companies to put customers on the lowest possible tariff, providing a rebate to every domestic electricity customer, and reducing bills by £130 for 2 million of the poorest householders who are most in need.
One month ago, a pensioner in my constituency told me that her energy company had written to her to say that she would be charged an extra £63 per year unless she started paying by direct debit. She has always paid on time. Her relative then tried to pay online, but was charged the same amount, giving the lie to the reasons given by the energy companies of there being an extra administrative charge. I spoke to the energy company concerned, which told me that it charges less than most other companies, so I looked into all energy companies across the UK. Out of 26 companies that responded, five allow their customers to pay only by direct debit, while 17 charge their customers different rates, depending on the method they use to pay. Only four companies charge their consumers the same whether they pay by direct debit or not.
The companies involved say that they have to charge more due to increased costs, and all reasonable people would accept that there will be additional costs and genuine administrative charges if someone does not pay by direct debit. I had a meeting with the Post Office, however, which said that the administrative charges of sending out a bill should not amount to more than 19p per head. Some companies have added not 19p but as much as £390 more to the bills of those not paying by direct debit, and the average charge was around £80 more per year.
Figures from the Department of Energy and Climate Change show that people who do not pay by direct debit tend to spend £114 more per year, and those who use a prepayment meter even more than that. Even worse, many of the companies that charge extra did not say they were adding a surcharge, but rather that they were “discounting” the bills of those who use direct debit because they incur lower costs. That is a bit like calling a mortuary a negative patients output.
Although many people do not pay by direct debit, they are often among the most poor and vulnerable. Since starting this campaign, I have been inundated with letters from pensioners who have told me that they are hit by these extra charges. They all pay on time, but they do not like direct debit as they feel it does not give them control over their finances. They say that they put their money aside and do not want to get into debt by overspending. It is not just pensioners—anyone on a limited income might feel the same—and with the recent financial crisis in mind, that is exactly the sort of personal responsibility we should be encouraging. Some people do not have access to proper banking facilities and are therefore unable to take advantage of certain payment methods. Nearly 2 million households in the UK do not have access to a bank account that has an overdraft facility, and half a million of those do not even have access to a basic bank account that can accept direct payments. Those households are vulnerable and have extremely limited options over how they pay. It is wrong that they should be penalised.
The energy companies say, first, that their charges are cost reflective, and they back up that claim by saying that it forms part of the conditions of their licence. As I have said, I have no problem with a small administrative charge to reflect the extra cost that companies face for processing a cheque, but I do not believe that the £390 charged by Spark Energy, despite my conversations with it, is in any way reflective of the cost of sending out paper bills. Although the market has since changed, it is worth noting that in 2008 Ofgem stated in a report that the annual cost to companies of a standard credit customer was just £25 higher than a direct debit customer. Even then, it expressed concerns that those charges were not proportional.
Secondly, energy companies say that they need to charge more because of the extra cost of providing credit to customers. If something is paid for retrospectively there will, of course, be an extra cost, but many companies that charge for services retrospectively charge customers far less for not paying by direct debit than energy companies —for instance, BT charges £24 a year. Furthermore, companies should be able to meet some of these extra costs themselves, and those currently paying for their energy by direct debit often pay too much. Figures from Go Compare show that one in five accounts of energy consumers are more than £100 in credit. Energy companies sit on that money and gain significant interest from it. That does not take into account the extraordinary profits that some energy companies have been making, and I am glad that the Minister is looking into their profit margins.
The third argument is that the difference in price is due to the discount that energy companies offer to customers who pay by direct debit. As I said, however, it is not a discount; it is a premium on the 45% of people who do not pay by direct debit.
The fourth argument is that those who do not pay by direct debit are more of a credit risk. Depending on the company, about half of the premium of not paying by direct debit is made up of paying for bad debt. Is it just that those who always pay on time, such as the elderly constituent I mentioned, have to pay for other people who are late payers or who do not pay on time? Furthermore, this argument cannot be used for those who use prepayment meters, and therefore pay in advance.
Finally, there is the argument that introducing a cap will result in prices increasing for everyone. I believe in competition and I welcome the fact that the Government have extended competition in the energy market. I do not believe that prices will increase. In fact, since Members across the House began to conduct this campaign, First Utility has announced, only last week, that it is dropping its price for people who do not pay by direct debit from £96 to £24; in essence, to my recommended £2 a month, but with no price increase elsewhere.
In conclusion, the Bill calls for a thorough investigation by the Government and Ofgem into what has been going on; real transparency for consumers, so that consumers can understand why they are being charged so much if they do not pay by direct debit; and a cap of about £2 a month on the amount that companies can charge. I commend the Bill to the House.
Philip Davies (Shipley) (Con)
I commend my hon. Friend the Member for Harlow (Robert Halfon) for his campaigning zeal and for bringing to light another issue that has much popular support. He is renowned for such campaigns. I guess that if I am renowned for anything, which probably is not much, it is probably for sticking up for unpopular and unfashionable causes. Hence, I felt that the other side of this particular argument deserved a hearing.
First, I want to look at what is covered in the Bill. The motion refers to utility bills, but my hon. Friend seems to have concentrated on energy companies. I do not think he believes there is an issue in relation to water companies, and he praised telecommunication companies, so I presume the Bill is about energy companies. Looking at the Monopoly board, I cannot think of any other utilities that it could apply to, if it does not apply to water and telecommunications.
My hon. Friend’s motion refers to additional amounts charged for paying by direct debit. As I understand it, however, the difference in amounts is actually a discount for paying by direct debit, rather than an additional charge for paying by alternative methods. This is an important point, because the presumption is that if the gap were narrowed between paying by direct debit and paying by other means, that would inevitably mean that the costs would be levelled down. It is quite possible, however, that if we prevent these discounts, the cost to consumers will be levelled up and nobody will be better off. We will find that people paying by direct debit are made worse off, and I do not think that is particularly helpful to anybody.
The reduction for paying by direct debit is lauded by many people, including the regulator Ofgem, as well as consumer rights champions, such as Martin Lewis of moneysavingexpert.com and Which?, which states:
“The cheapest way to pay for energy is almost always monthly direct debit, as most energy companies offer a discount to those who pay for energy in this way.”
The benefits of direct debit payment are widely accepted. For example, councils in London, including, I think, Islington and Westminster, have offered council tax payers the chance to win £25,000 simply for switching to payment by direct debit. There are good reasons why direct debit payments are encouraged. They help with monthly budgeting, especially in these difficult times, and avoid the need for people to find bigger amounts of money in one go. They reduce the risk of the customer being cut off for non-payment and having to face huge penalties, or even the bailiffs, for not paying their bills on time. They save the provider extra costs incurred administering the payments and the debts that build up on accounts, which ultimately they have to pass on to someone, whether through increased bills or the loss of staff. Paying by direct debit is probably the easiest, quickest and cheapest way for people to pay, and companies and councils should be free to encourage this practice with monetary incentives if they wish to do so.
I think that my hon. Friend’s proposed Bill is unnecessary, because the power is already there to do what he wishes, should the regulator wish to use it. I think he mentioned this briefly. Ofgem writes:
“Ofgem has introduced new rules which prohibit undue discrimination between consumers. One of these rules ensures that terms and conditions for energy supply do not treat any group of customers differently without justification. The other rule requires that any difference in price between payment methods offered by a supplier should reflect the costs they incur for providing that payment method.”
It seems to me, therefore, that we do not need a new law along these lines. He merely needs to ask Ofgem to do its job properly, if he feels it is not already doing that, by enforcing the existing rules. The power is already there; we do not need a new law to do what can already be done.
My hon. Friend talked about people who pay bills promptly and who should not be penalised for not paying by direct debit. I agree wholeheartedly. In the past, some companies, including British Gas, offered their customers a prompt payment discount, no matter how they paid their bill—even if they paid other than through direct debit—but that discount was scrapped because Ofgem insisted on it as part of its retail market review. If he wants to help customers who choose to pay other than by direct debit but who are good customers who pay promptly, he should encourage the regulator to allow companies to reintroduce the prompt payment discount, which many used in the first place. That would be of great help to many of the customers he wishes to target with his Bill.
Many things get on my nerves in this House, but what does so more than most is politicians—I do not include my hon. Friend in this criticism; it is directed at others—who complain about excessive energy bills and talk about fuel poverty and how disgraceful it is that people have to pay so much for their energy, when they are exactly the same people who piled extra costs on to people’s energy bills by passing law after law pursuing some climate change ideology. Most energy bills nowadays contain more than £100 a year simply because of the policy decisions made by the same people who complain that energy bills are too high and should be reduced by about £100. That nerve and hypocrisy is the type of thing that does politics no credit whatsoever and makes my blood boil.
I want lower energy bills. That is why I am proud to have been one of the five MPs who voted against the Climate Change Act 2008 in the previous Parliament. It certainly is not becoming for the Leader of the Opposition to claim to be the friend of people who pay energy bills when he did more than most to bump up energy bills with his Climate Change Act. Funnily enough, the £113 typically added to bills by climate change policies is roughly the same as the average discount given to people paying by direct debit. If we want to reduce everybody’s bills by the £113 that my hon. Friend seeks for people who pay other than by direct debit, the easiest way to do it would be to scrap all this nonsense on climate change—this gesture politics that will not make a blind bit of difference to global temperatures, but which makes a massive difference to people’s energy bills.
On that basis, I commend my hon. Friend for bringing this matter to the attention of the House, but on the whole it is undesirable and certainly unnecessary. I do not intend to divide the House, but I thought it was worth while ensuring that the alternative view was at least heard so that people can make an informed decision about whether, after all of that, they agree with his Bill.
Question put and agreed to.
Ordered,
That Robert Halfon, Tracey Crouch, Jackie Doyle-Price, Charlie Elphicke, Stephen McPartland, Albert Owen, Mark Durkan, Lady Hermon, Mr Elfyn Llwyd, Ian Swales and Henry Smith present the Bill.
Robert Halfon accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 28 February, and to be printed (Bill 173).
Opposition Day
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Fairness and Inequality
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House divided: - Ayes: 11 / Noes: 287 - Question accordingly negatived.
Mr Speaker
I can inform the House that no amendment has been selected to the motion.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I beg to move,
That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses; further notes that low and middle income families have borne the brunt of the Government’s austerity measures; further notes that the Government has plans to cut a further £60 billion in public spending over the next four years; further notes that successive governments of all political hues have presided over an underlying trend of rising income inequality since the early 1980s; recognises that men have consistently higher employment rates than women and that women are more likely to work in lower paid, lower-skilled occupations; further notes the growing numbers of workers on minimum wage and zero-hours contracts, and that there are more people now in working poverty than out of work poverty; further notes with concern the sharp rise in the number of people relying on foodbanks across the UK, including significant numbers of people in work; and calls on the Government to halt its further spending and welfare cuts and to establish a Commission of Inquiry to investigate the impact of the Government’s austerity measures on the incidence of poverty and inequality.
Hywel Dda, a native of the west of my country, is one of the most esteemed early kings of Wales. His main historical contribution was that he codified early Welsh law. It is no coincidence that the building that houses National Assembly Members, the Welsh national Parliament, Ty Hywel, is named after him. His name is translated into English as “Hywel the Good”. He is so known because his laws were visionary, based on compassion rather than punishment, and were seen as just. In particular, early Welsh law clearly recognised the contribution of women to society, offering clear legal protections and status in society.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I once prepared a thesis on Hywel Dda. Did my hon. Friend know that back in 998 there were laws in Wales allowing women to own property? Unfortunately, our friends in England only caught up in 1882.
Jonathan Edwards
I am grateful to my right hon. Friend. He makes my point for me, and his knowledge on these matters is unsurpassed.
In 928, Hywel made a pilgrimage to Rome. On his return, he held a legal conference in my home country of Carmarthenshire, at Ty Gwyn ar Daf, his residence near Whitland on the Pembrokeshire borders, which led to the legal system practised in Wales before our country was regrettably conquered. His laws meant that those higher up the social spectrum paid more for their crimes—a reverse of the post-2008 financial crash situation in the UK, where the financial elite have got off scot free while the most disadvantaged in society are paying the price through the obliteration of the public services and support they depend on. The basic founding principle of the Hywel Dda laws was equality. Following the death of the head of a family, the estate was distributed equally between all male siblings, rather than passing under the sole control of the eldest, as under the English system.
My reason for taking the House on this historical journey through mediaeval Wales is to make the case that the Welsh political tradition, even going back more than 1,000 years, has been based on the principles of equality and fairness. Those principles were essential elements to the sort of society that Welsh political rulers wanted to build and enshrine in law. Owain Glyndwr was the last ruler of an independent Wales and the seventh most important person of the last millennium, according to a Times poll in 1999. He heralded the return to the laws of Hywel Dda as the founding principle of his independent Wales at the beginning of the 15th century.
Robert Owen, another great Welshman from the county of Powys, is recognised throughout the world as one of the founding pioneers of socialism. In the early 19th century, he contributed to the work of a Committee of this House that was investigating the Poor Law. He called for a society of complete equality, and set about trying to create one with the communities that he had established.
Wales was, of course, the incubator of the industrial revolution, and the working-class uprisings of Merthyr in 1831 and the Chartists later in the same decade were driven by that Welsh aspiration for a more equal society, in which the working classes had a fair share of the proceeds of wealth generated by their toil. As the central element of his proclamation “The Red Dragon and the Red Flag”, Keir Hardie, a proud Scotsman who became the first-ever Independent Labour party Member of Parliament, declared clearly—probably after having given up faith in this place—that the way in which to create a more fair and equal society in Wales was to advance the cause of Welsh home rule.
Mr Jim Cunningham (Coventry South) (Lab)
There are many inequalities in present-day society, but one of the biggest burdens at present is borne by women. The Government have made tax adjustments of £14 billion, and £11 billion of that has been taken from women. Does the hon. Gentleman agree that women are the hardest hit, whether we are talking about crèche charges or about nursery charges?
Jonathan Edwards
I do not disagree with that at all. Some of my colleagues may wish later to expand on what the hon. Gentleman has said
Angus Robertson (Moray) (SNP)
My hon. Friend has made an excellent start to his speech. I do not know whether he has had an opportunity to read the first report from the Living Wage Commission, which was published yesterday. It contains a number of key points which I think are important in the context of the debate. It states that 6.7 million of the 13 million people in poverty in the UK are in a family where someone works, that 5.24 million workers in Britain—equal to 21% of the work force—are paid less than the living wage, that housing costs have tripled in the last 15 years, that 2.9 million people classed as over-indebted have a household income of less than £15,000 a year, and that low-paid workers are increasingly turning to support in order to get by. That is the context of governance in the United Kingdom at the present time. Does the hon. Gentleman agree that Westminster is failing not just the people of Scotland and Wales, but those in the rest of the United Kingdom?
Jonathan Edwards
I am grateful to my hon. Friend for that valuable contribution. I intend to develop some of those themes later in my speech.
What a pity that the Labour party is so completely removed from the vision of Keir Hardie today. Last Wednesday, during a meeting of the Welsh Grand Committee, the shadow Secretary of State for Wales, the hon. Member for Pontypridd (Owen Smith), made one of the most depressing speeches that I have heard since being elected to serve the people of Carmarthenshire. He returned the Labour party to the dark days of the 1970s, when it was clearly the most anti-devolution party in Wales. His speech was Kinnock-esque, and I certainly do not mean that as a compliment.
Mr Mark Williams (Ceredigion) (LD)
I share the hon. Gentleman’s concern. Was that not made all the worse by the fact that until then there had been a consensus among all four political parties in Wales about the inevitability of the movement towards devolution, which was torpedoed by those on the Labour party’s Front Bench last week?
Jonathan Edwards
The speech made by the hon. Member for Pontypridd was a truly staggering intervention in the Silk commission debate, not least because only a year or so earlier, the very same Member and his colleagues voted in favour of the very same proposals for Scotland, which were in the Bill that became the Scotland Act 2012. I find it staggering that they now believe that those measures, if applied to Wales, would completely deconstruct the United Kingdom.
I could travel much further on my historical journey, but I shall end it now by giving a mention to my political hero, D.J. Davies.
Jacob Rees-Mogg (North East Somerset) (Con)
The House would very much like the hon. Gentleman to continue his history lesson. It was being much enjoyed.
Jonathan Edwards
I am grateful for that observation from such a distinguished Member. I do not want to bore the House too much, but I want to give a mention to D.J. Davies, who is my political hero, and who was born in the same industrial valley as me, the Amman valley. In particular, I want to mention his masterpiece, “The Economics of Welsh Self-Government”, published in 1931. In that book, he made the case that the crusade for social justice for working people and the political empowerment for Wales—my country—were intrinsically intertwined. That position continues to be central to the position of my party, and to my personal political beliefs.
The national movements in these isles and the crusade to tackle inequalities in our communities are one and the same. In ignoring the founding principles of the Welsh, Scottish and Irish political traditions—and in its inability to tackle the gaping inequalities that exist in both individual and geographical terms—the Westminster élite is directly undermining the case for a United Kingdom, and furthering the aims of national freedom in Wales and Scotland. I should add that the Irish proclamation of independence contains an explicit commitment to equality.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I am listening carefully to the hon. Gentleman’s speech, and I am sure that he is absolutely sincere, but I am baffled by his statement that the Scottish nationalists believe in reducing inequality at a time when they want to slash corporation tax for big business. Will he explain how the two fit together?
Jonathan Edwards
I do not want to become too involved in the Scottish independence debate. I have colleagues who are better qualified to do that. I will say, however, that the case for the creation of a more equal society is based on the generation of prosperity, and that the job-creating levers resulting from fiscal devolution would clearly allow the Welsh and Scottish Governments to achieve that aim.
In my eyes, the case for the creation of that more equal society is crystal clear, and should be the overriding priority of our politics. Equality improves the well-being of citizens, reduces social tensions, and creates a fairer and more democratic society. Democracy, in its wider sense, is about far more than voting; it is about creating a fully participatory society in which everyone has an opportunity to contribute.
Is it any wonder that voting levels are so disgracefully low? Why would those at the bottom of the pile have any interest in participating in electoral events when the main protagonists have a common vision of preserving the status of the élites that currently rule? The Huffington Post reports today that a generation of Londoners have given up all hope of owning their own homes. I certainly felt like that in my twenties, when I had a relatively well-paid job but house prices were rocketing out of control. I can assure Members that that situation is completely demoralising. It is no wonder that young people in particular feel completely disfranchised: their overriding feeling is that the world is passing them by.
Respected academics and commentators have declared that the UK is the fourth most unequal country in the developed world, and that, given current trends, it could even end up being the most unequal. It is certainly the most unequal in terms of individual and geographical disparity anywhere in the European Union, according to last year’s EUROSTAT figures.
Andrew Selous (South West Bedfordshire) (Con)
The hon. Gentleman mentioned prosperity a few moments ago. Having have looked carefully at the motion, I am disappointed to see nothing about skills, nothing about productivity, and nothing about the creation of high-value-added businesses. Is the hon. Gentleman not encouraged by the creation of university technical colleges, and by the millions of apprenticeship starts that will give our young people the skills that will enable them to obtain high-paid jobs?
Jonathan Edwards
Plaid Cymru has certainly prioritised apprenticeships in Wales. We struck a budget deal with the Welsh Government to secure more of them.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The aim of the motion is to ensure that a commission is established to investigate inequality and poverty. The commission would deal with the details to which the hon. Member for South West Bedfordshire (Andrew Selous) has referred, and I hope that he will support the motion on that basis.
Jonathan Edwards
I am grateful to my colleague for making a very valid point on my behalf.
I was talking about the inequality that exists in the United Kingdom. Why is this so, how is it so, and why has it been allowed to happen under successive Labour and Tory Governments? I am sure that many Members will be able to cite numerous facts and figures that amply demonstrate the inequality and lack of fairness that exist in the UK; indeed, we have already heard several interventions to that effect.
Mr Nigel Dodds (Belfast North) (DUP)
I may not agree with everything that the hon. Gentleman says today, but I can tell him that in September 2013 the average Northern Ireland household was surviving on discretionary income of £60 a week, while average discretionary income in the United Kingdom was £157 a week. There is clearly a big discrepancy throughout the UK. Does the hon. Gentleman agree that one of the reasons why devolution is so important is that it can lead to local solutions, and can enable local help to benefit the citizens of the devolved countries?
Jonathan Edwards
In that regard, the Democratic Unionist party and Plaid Cymru share a common vision, in that we need to empower our respective Governments to deal with the economic and social challenges that our people face.
I want to set out how and why this inequality has been allowed to take a grip and, indeed, been actively pursued by the powers that be. I will also set out how that can be reversed, and how places such as Wales can become more prosperous and egalitarian societies. We have seen the over-concentration of power, status and influence in a narrow and unrepresentative financial elite over the past three decades. That has allowed greed, avarice and hubris to take hold among the elite’s own ranks, while poverty, destitution and exclusion have risen among much of the rest of society.
The uneven economic development of the UK and the concentration of so much wealth and power around London and the south-east distort much of the UK’s public life. They influence and shape many of the political, media and business perceptions about what is good for the entire UK, and lead to geographical polarisation and a super-concentration by Westminster politicians on certain sectors of the population whose opinion is seen as worth courting and listening to.
Richard Fuller (Bedford) (Con)
I am listening with great interest to what the hon. Gentleman is saying. Does he think that that concentration of power and authority in London and certain other parts of the country was a natural change that occurred as a result of global changes and that the Government did nothing to mitigate it, or does he think that it was a result of active Government policies over the past three decades?
Jonathan Edwards
I shall endeavour to answer that very valid question in my speech.
The electoral system plays a large part in creating the distortion. Using a small number of so-called swing seats, predominantly in more affluent areas, political strategists base their politics on the philosophy of triangulation, ignoring those on the periphery. Anyone interested in changing the course of Westminster politics should embrace the cause of a more proportional electoral system, which would immediately lead to a wider realignment. It is no wonder that the Tories would die in a ditch rather than reform the first-past-the-post system. More disappointing is the position of some on the Opposition Benches, who would torpedo any such reform. The only explanation I can offer is that the self-interest of super-safe majorities and a job for life trump the desire to achieve worthy political objectives such as a fairer society.
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman’s assertion that a change in the voting system would do away with jobs for life is not borne out by the way in which things have worked out in practice. In Scotland, for example, there is concern that someone can go from being a list MSP to a constituency MSP then back to being a list MSP without ever feeling that their job is unsafe. Also, people can be in a similar position in local government for a long time. So doing away with jobs for life is not inherent in getting rid of first past the post.
Jonathan Edwards
The answer to that is to have openness rather than party-controlled lists. I am sorry that the hon. Lady does not share my ambition for wider political realignment in the United Kingdom, and that she prefers a system in which priority is always given to the affluent areas in the south-east of England.
Ms Margaret Ritchie (South Down) (SDLP)
I am sure that my hon. Friend is aware that Northern Ireland has had a system of proportional representation for about 40 years. Does he agree that a PR electoral system provides opportunities that would not otherwise exist for minorities to be represented?
Jonathan Edwards
I believe that the House of Commons would be far better if we had such a system, rather than a system that bases its politics on preserving the power of two political parties.
Economic development has become radically distorted as inequality has risen. My constituency predecessor pointed out last year in an economic study entitled “Offa’s Gap” that the Welsh economy had been growing more slowly in relation to its historical trend growth and to that of the UK economy for the past two decades. He and Plaid Cymru’s other noted economics adviser, Eurfyl ap Gwilym, concluded that Wales needed the kind of defined economic and export development strategy that is sadly lacking under the current Labour Welsh Government. Similarly, the economic policies of the current Westminster Government are woefully inadequate and ignore the requirements of my country.
Mr MacNeil
Given the lag in growth in the Welsh economy, is it not all the more perplexing that the Government in Cardiff—who must know far more about the situation there than I do—are choosing not to take the powers to do anything about it? It is like a man on a ship that is heading for the rocks refusing to put his hand on the tiller and instead letting it carry on merrily towards the rocks. It is a scandal that Labour has chosen that route.
Jonathan Edwards
The people of Wales might want to ask themselves what is behind that decision. Are the Welsh Government afraid of their own ability to use those powers effectively, or do they have a vested interest in our communities remaining poor and disadvantaged?
The legacy of de-industrialisation in places such as Wales is well known. Levels of poverty, disability, and ill health are high. There is a lack of economic opportunities, and the flight of the many young ambitious people understandably wanting to make something of themselves is invariably known as the brain drain. That creates a vicious circle of its own. A Centre for Cities report at the end of last month noted that 80% of private sector job growth since 2010 was in London, that one in three young people now move here for work, and that power should ultimately be devolved in order to allow greater freedom for areas outside London to develop.
Historically, vast areas of the British state have been economically depressed, with most political efforts concentrated on the south-east. Today, GDP per person in inner London is almost 10 times that of many parts of Wales, including the communities I represent. Many areas of northern England are in the same boat as Wales. Great inequalities exist within London itself, and we must not forget that challenge, but there is an overwhelming concentration of wealth in that region—70% higher than the UK average. It is the current political structures and policy priorities of the Labour-Tory tag team that have allowed this to happen.
One would hope that when one part of the state is the richest in the European Union and others are the poorest, there would be a clarion call for action. Alas, the Westminster elite seem oblivious to the matter, pursuing the same old failed policies of the past. Indeed, who could forget Lord Mandelson, the man who so epitomised Labour in office, saying that he was
“intensely relaxed about people getting filthy rich”?
It is no wonder that wealth inequalities gathered pace under the last Labour Government. Incredibly, west Wales and the valleys now find themselves below parts of Bulgaria and Romania in the EU wealth league.
There are many indicators of rising inequality, besides individual and geographical disparity. Over the past decade, the number of households in fuel poverty in Wales has risen from around 140,000 to 386,000 at the last count in 2012. That is 30% of the Welsh total. I strongly suspect that the total will have risen since then, given the combination of oil price inflation and a real-terms reduction in wages.
Caroline Lucas (Brighton, Pavilion) (Green)
The hon. Gentleman is making a compelling case. I wonder whether he is aware of the new research by the High Pay Centre, which finds that workplaces with big pay gaps between the highest and lowest paid suffer from far more industrial disputes, more sickness and higher staff turnover than those with more equitable pay differentials. Does he recognise that, as well as addressing levels of pay, we need to reduce pay ratios and advocate concrete steps towards ensuring that the maximum wage in any organisation is no more than, say, 10 times the minimum wage in that same organisation?
Jonathan Edwards
I fully concur with my hon. Friend. One thing that is often not mentioned is the cost of inequality, particularly the health costs. If the Government pursued a policy of creating a more equal society, the Treasury would benefit from the reduction in expenditure on health care.
Charles Hendry (Wealden) (Con)
The hon. Gentleman mentioned fuel poverty. Does he agree that it is much worse in areas that are off the gas grid? That particularly affects Wales, Scotland and Northern Ireland, as well as rural parts of England. Does he also agree that we need a comprehensive strategy to extend the gas grid so that more people can benefit from heating their homes with gas?
Jonathan Edwards
My constituency is largely off the gas grid, despite being in a mining valley and containing some large urban areas. The coal miners campaigned against having the gas grid there, because they wanted to use coal. The impacts that the hon. Gentleman mentioned are clear. I can speak from personal experience, having moved from an area where gas was my main form of heating and gone back to live in my home community, which is off the gas grid. The difference is staggering, and quite eye-watering. The policies that have been put forward by the other parties completely neglect this huge problem affecting rural areas.
Mr Mike Weir (Angus) (SNP)
Given the interest of the hon. Member for Wealden (Charles Hendry) in areas that are off the gas grid, does the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) think he should support our initiatives on giving pensioners their winter fuel allowance at an earlier date and ensuring that the energy company obligation extends to off-grid gas boilers, which is not the case currently?
Jonathan Edwards
I am grateful for that intervention, and I congratulate my hon. Friend on all the work he has done on this issue. He has twice presented Bills to pursue that common-sense proposal, and when it comes before the House again I intend to be here to support him—I hope that the hon. Member for Wealden will be, too.
Mr Dodds
May I endorse the point made by the hon. Member for Wealden, because Northern Ireland is dependent to a high degree on home heating oil—off-grid energy supply—with some 70% of our households using it. Our household bills are, on average, way beyond the highest bills in the rest of the UK. It is important that the issue is highlighted and something is done to address the situation of those who are off grid.
Jonathan Edwards
The right hon. Gentleman makes a very valid point. He will be aware of the lack of competition in the market, where there are perhaps five or six suppliers with more or less mirrored pricing policies. The Government should examine that, and let us hope they remedy the situation affecting those individuals who are off the gas grid.
Wales is a country rich in natural resources, and it is a net exporter of electricity. No one in an energy-rich country such as mine should have to live in fuel poverty, yet 30% of the people in my country do. The energy sector was privatised by the Tories and the current market was set up by Labour in 2002, allowing the previous regional monopolies to merge into the big six. It is symbolic of the profiteering, privatisation and corporate greed that has undermined poorer areas and poorer people under Labour and Tory misrule.
Wales is a colonial economy, where our natural capital is extracted for no or little economic and social benefit to our people. No wonder the Westminster elite oppose empowering the Welsh Government by giving them control over our natural assets. Last week, the shadow Environment Secretary made an incredible intervention in the Scottish independence debate when she said that if Scotland votes yes, the remnants of the UK might stop importing Scottish electricity if Labour were in power and look to other markets for supply. That one intervention summarises the Westminster elite and how they view Wales and Scotland. No wonder that on social media these sort of “Project Fear” scare stories have earned the hashtag “know your place”. I would wager that my friends in the yes campaign in Scotland are delighted at such ill-judged interventions.
Jonathan Edwards
That is a very useful intervention, and I think the answer depends on the progress on the desalination plants. I am following the debate in Scotland with great interest, because we will be having the same debate in Wales within the next couple of decades and we will have the “Project Fear” manifesto off the bookshelf ready to read.
Mr MacNeil
I just want to tell the hon. Gentleman that the “Project Fear” manual has a short lifespan. It is almost as Robert Burns said, in that it is a snowflake in a river:
“A moment white—then melts for ever”.
The fears fall apart on a daily basis; they last only for about 48 hours, but that does not stop them being reheated.
Jonathan Edwards
I am grateful for those insightful remarks. In Scotland, we are seeing the same stories as were used in other parts of the British empire when they endeavoured to seek their political independence. That approach will fail in Scotland and it will fail in Wales when our turn comes.
By the end of Labour’s time in office, child poverty had increased, with 32% of children in Wales living in poverty, according to the Joseph Rowntree Foundation. The number fell in 2012, but only because wages had fallen across the board. That technicality in the way child poverty is calculated ignores the fact that falling wages mean even less resources with which to feed hungry young mouths. The recent rapid rise of food banks is yet another symptom of growing inequality. The Labour Welsh Government had set the target of eradicating child poverty by 2020, but they cannot and will never achieve that if they do not stand up for Wales. It cannot be achieved while their masters in London refuse to confront the widening gulf in equality that has been emerging over the past 30 years and even accelerated under their watch.
Sheila Gilmore
Constantly saying that there is no difference between the Labour Governments and the Conservative Government is not helpful. Does the hon. Gentleman have no memory of the reduction in pensioner poverty and the reductions in child poverty achieved under the Labour Government? Do those things not matter in the story that he wants to tell?
Jonathan Edwards
As the former head of policy for Citizens Advice in Wales, I have some expertise in this matter; the Labour party achieved its reduction in the child poverty figures by changing the way in which the statistics were calculated, thus removing 1 million children from child poverty overnight.
Last summer, the TUC produced a report that concluded that workers’ pay had fallen by 8% in real terms between 2007 and 2012 in Wales—the sharpest fall in any of the nations and regions of the UK. That is the level of the drop in living standards that Labour and the Tories have presided over. The UK is badly damaged and corroded, if not completely broken. The old pillars of the British establishment—banking, media and politics—have crumbled one by one, leaving an unrestrained crony capitalism which is not about good business or genuine wealth creation, but about monopoly, oligopoly and corporate self-interest.
Angus Robertson
My hon. Friend is right to point out that litany of failure, but is it not right that in a debate such as this we should be able to compare and contrast the reality here with that elsewhere? Has he had an opportunity to look at the world happiness report, an annual publication taking into account GDP, life expectancy and social support internationally? It showed that eight of the top 10 countries are small European independent states. What makes them so successful while the UK fails so dramatically for people across its nations and regions?
Jonathan Edwards
It comes down to the fact that Governments of small countries are far closer to the aspirations and requirements of their people, whereas larger states find that far more difficult to achieve, especially where the state is very centralised, as ours is in the United Kingdom, with power heavily concentrated in Westminster.
Symptoms of what I am describing include the privatisation of the health service in England—the current Tory policy of building on the layers laid down by Labour, with its introduction of foundation hospitals and use of the private finance initiative. The privatisation of services and assets has carried on unabated. For example, Labour's plan to privatise Royal Mail has been carried out by the Tories and Lib Dems during this Parliament. Is it any wonder that Scotland is now beginning to believe that it can do things better and differently, or that the people of Wales increasingly demand that we have more powers to control our lives and better reflect our political values?
The most detailed research since devolution began was undertaken by the Silk commission, which has been tasked with pathfinding the next steps in the Welsh devolution journey. The findings of that detailed research are extremely encouraging: 62% want more powers for Wales, with only a paltry 20% against—that reflects all the geographical areas of my country; 80% believe that the National Assembly defends Welsh interests better than Westminster; 80% want responsibility for energy policy to be in Wales; 63% want powers over policing; 58% want powers over broadcasting; and there was also a clear majority for devolving social protection—or at least its administration, as is the case in Northern Ireland, which has enabled its Government to stop the implementation of the bedroom tax. However, only 20% support devolution of defence and foreign affairs, so clearly there is a bit of work to do to progress those two areas in my country.
In many areas of the UK, it is taken for granted that the Tory party long ago discarded any pretensions to a one-nation paternalist conservatism that sought to mould itself around social democratic values. Instead it embraced Thatcherism and its resultant rise in economic inequality. Of greater concern, however, is the complete dereliction of duty by Labour in its failure and unwillingness to deal with rising inequality. Westminster is now synonymous with inequality from its representation to its policies.
Following the 2010 Westminster election and the aftershocks of the 2008 financial crash, a new UK coalition Government pledged to rebalance the economy of the British state by sector and on a geographical basis. Who can forget the Chancellor’s triumphant claim, “We’re all in this together”? He told us that he was creating an economy
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
What is more worrying is the Government’s admission that this is failing. The Business Secretary now fully admits that London
“is a giant suction machine draining the life out of the rest of the country.”
Yet the Government do precious little to rectify that. Only last month the Financial Times reported that the wealth gap between London and the nations and regions is set to widen. A professor at the London School of Economics has noted that London is the
“dark star of the economy, inexorably sucking in resources, people and energy.”
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
If the hon. Gentleman looks at the most recent economic data for gross value added growth in Wales and across the UK, he will see that growth in Wales is rebounding stronger than the UK average. It is closing the gap rather than, as he purports, increasing it.
Jonathan Edwards
We welcome the fact that Wales has moved up. None the less, we are still at the bottom of the wealth league. West Wales, the area that both the Minister and I represent, fell by 4%. That is a record of failure. It says something about the Welsh Government’s policies as well—I am not just slinging my sticks at my friend on the Government Benches.
Today, Aditya Chakrabortty’s article in the Guardian highlights how public money and private wealth are being hoovered up by London. He notes that last year, the Institute for Public Policy Research published research that showed that the transport spending system is broken. Transport spending is £2,731 per head in London, compared with £5 per head in the north-east of England. In Wales, we receive only 0.7% of the transport infrastructure spend, yet we represent 5% of the population. There is still not a single mile of electrified track in Wales, which puts us on a par with the likes of Albania—so much for Labour standing up for Wales during 13 years in power. We welcome the announcement by this Government that they will electrify the line to Swansea. However, the pressing issue for us is whether we will get our fair share from the vast expenditure on High Speed 2, which the Government are intent on pursuing. As everyone has noted, that expenditure on HS2 will hoover up all transport infrastructure spending for generations to come. Given that it is an England-only railway—the last time I looked on a map, Manchester, York and Birmingham were all in England—Wales deserves at least 5% of that expenditure.
After decades of increasing wealth inequality under successive Westminster Administrations, it was hoped that finally there would be a change of direction. Instead, what we have seen is ideological austerity and ultra-loose monetary policy, which has seen redistribution in reverse. Amazingly, Labour has signed up to the same fiscal strategy if it forms the next UK Government. It is an incredible strategic decision that overrides all others, but it has barely been mentioned in dispatches by a London-centric media that views it as par for the course.
Plaid Cymru, the party of Wales, believes that Wales is best served when we are free to decide our future and set our own course. That is why it is so important that the job-creation and economy-boosting financial powers recommended by the UK Commission on Devolution in Wales are implemented as soon as possible; they are a bare minimum. However, on their own they are unlikely to reverse the decades of inverted wealth distribution. For as long as Wales continues to be a part of the UK and Plaid Cymru MPs are in this place, we will seek to reform it. An economic fairness Act would force the UK Government—whoever they were—to implement a range of measures to ensure that more economic and job opportunities are created outside the south-east of England with statutory obligations to tackle individual inequality.
Such an Act would concentrate minds on a genuine rebalancing of the economy, turning us away from financial services and banking towards areas such as manufacturing and engineering. It would allow for measures such as prioritising poorer areas for infrastructure spending and investment, bringing jobs and growth. Legislation based on the Communities Reinvestment Act in the US would be included to ensure that the private banking sector operates fairly in terms of which geographical areas it prioritises for lending. I need not remind the House of the enormous problems that Welsh businesses have faced as a result of banks’ activities since the crash. It is a complete disgrace that in 2008 £1.4 trillion of taxpayers’ money—100% of the country’s wealth—was put into loans, grants and guarantees and used to pull up the banking sector.
In Wales, a national public development bank should be set up to ensure businesses in our country are able to access finance to grow and develop. The devolved Government would be empowered with the job creation levers to incentivise economic development.
Nia Griffith (Llanelli) (Lab)
Will the hon. Gentleman explain how, with a tax take from people living in Wales being some £9 billion short of tax expenditure, an independent Wales would put right that hole in the economy?
Jonathan Edwards
I have been totally clear in my comments about the constitutional journey of my country: we are not in a position to fight for independence at this very moment, which is why Wales needs the economic powers to build up its economy to be in a position to do so. We are in a different situation to Scotland. We will not get anywhere if we continue with the policies of the Labour party, which aims to keep economic control in London and to keep our communities impoverished. It is in its vested interest to do so, which is why it is opposed to all the measures being put forward by the Silk commission.
Mr MacNeil
People who say that Wales’ tax take is not equivalent to its expenditure are quite short-sighted. They fail to realise that they are living in the United Kingdom, the tax take of which has not matched expenditure since 2001, and is not likely to do so until 2018. This is a UK that records a deficit year after year, and has a debt that grows year after year.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Obviously, Mr MacNeil will want to catch my eye to make his speech. I would not like him to use it all up now, so shorter interventions.
Jonathan Edwards
The point that is often forgotten is that despite the fact that London is one of the richest parts of the European Union and that communities such as mine in Carmarthenshire are at the bottom of the European wealth league, public expenditure per head is higher in London than it is in Wales—that is until very recent figures, which showed that Welsh spending had caught up. It is an incredible situation. I could not make this up.
The way in which monetary policy is formulated is also in severe need of reform. The week before last, I tabled an early-day motion calling for the Bank of England, or the Sterling Central Bank as it should be renamed, to be reformed better to take into account the economies of the UK when formulating monetary policy. The Governor should appear for scrutiny before the relevant Committees of the devolved legislatures, and meet with the devolved Governments, just as he has to with the Chancellor and the relevant Select Committees in Westminster.
In addition, the four external members of the Monetary Policy Committee should be nominated by the four nations, rather than hand-picked by the Chancellor of the day from the self-serving banking elite. [Interruption.] I am grateful to my friends from Northern Ireland who supported that early-day motion. There is an interesting story in the Western Mail about the need for the Welsh Government and the Northern Ireland Assembly to collaborate in the event of Scottish independence, be it a yes or a no vote, to ensure that we are not bombarded by Westminster. I hope that it might be a small step on the road to greater collaboration. Instead, what we have is a drive towards regional pay in the public sector, introduced by the previous UK Government and now developed by the coalition, which ghettoises low-wage economies outside London.
Labour has gone a step further, with a pledge to cap benefits on a geographical basis if it forms the next Government. That means that the unemployed and disabled in Wales will receive fewer payments than those who happen to live in London. Wales will have lost more than £1 billion during 2013-14 due to cuts in benefits. Those include payments that people in work receive to top-up low wages. That money would have been spent directly in the Welsh economy, but is now lost.
Rather than hitting the sick and unemployed with a stick and labelling them “scroungers”, why do we not embrace the active labour market programme employed so successfully in Sweden? It is an interventionist policy, in which the Swedish Government spend twice the amount per capita that is spent in the UK, creating tailored action plans. The programme has productivity and mental health benefits, so it ends up costing the taxpayer far less, as individuals are moved from social security into employment, and it eases considerable pressure on heath services.
It is increasingly clear that the Treasury has been re-infected with the British disease of basing growth on inflating house prices backed up with taxpayers’ cash—the Help to Buy policy. Far from rebalancing the economy, the Treasury is reintroducing boom and bust. Instead of delivering an equitable share of infrastructure investment across the UK, the Exchequer lavishes London with its grand design projects, be it the Olympics, Crossrail 1 and 2 or High Speed 2. UK Trade & Investment does not deliberately channel foreign direct investment into the poorest parts of the state, unlike its German counterpart, Germany Trade & Invest, which has a statutory duty to do so. Is it not sobering that despite the cold war and a physical wall between the east and west of its country, Germany today is far more balanced in geographical wealth than the UK?
Other places have shown the way. Germany is a federal republic, and the constitution requires fiscal equalisation among the Länder. That is a timeless requirement on all parts of government, and policies are required no matter the era. After reunification, when poorer East Germany joined developed West Germany, a massive effort meant a variety of measures were implemented, including financial transfers to poorer regions and industrial development policies.
The same could be done from Westminster, but it has not been. The alternative is the approach favoured by the London parties, whereby investment is concentrated in London and the south-east, and wealth inequalities continue to rise. It is clear that it is time for a change. Where are the voices in support of such a change? Who will turn back the tide of growing inequality? We know that we cannot rely on the Tories in London, so unashamed are they in their love of banking and the financial elite. Where is Labour? Why is it not standing up against inequality? Its amendment seeks to wreck our motion, absolving it of its role in creating rising inequality over the past decade, but it is bereft of policies.
Last week, some of Labour’s Wales-based Members defended the UK as a redistributive Union. They are deluding themselves, both about their record in government, as inequality rose during that period, and about the current situation. A closer examination of their voting record would suggest that their rhetoric is unsupported by action. I cite their abstention on the Welfare Reform Bill, which introduced the cruel and dreaded bedroom tax; their abstention on a cut in the top rate of income tax; and their refusal to support any measure to help to promote measures to provide the Welsh Government with the economic powers that they need to move the Welsh economy forward.
Mr Iain McKenzie (Inverclyde) (Lab)
The hon. Gentleman mentioned the bedroom tax, and I invite him to congratulate Scottish Labour which, in the Scottish Parliament, pushed the Scottish Government to end the bedroom tax in Scotland. Will he further assist me in calling on the Scottish Government to reimburse those good citizens who have already paid the bedroom tax?
Jonathan Edwards
The hon. Gentleman seems to forget that his party is not in power in Scotland any more—it is the Scottish National party Government who introduced that policy. Rather than grandstanding, he would be better advised to congratulate the SNP on its progressive track record in government.
Who could forget the hon. Member for Leeds West (Rachel Reeves), the shadow Work and Pensions Secretary, promising to be “tougher than the Tories” on benefits? Only today, the Leader of the Opposition has praised none other than Baroness Thatcher, that well known proponent of fairness and equality, in a bid to reform public services. By that, he can only mean more privatisation. Perhaps the greatest let down, and without a doubt Labour’s greatest folly, reflecting its abandonment of the fight against inequality, is its commitment to Tory austerity cuts post-2015. It is now blocking fiscal devolution to Wales, which would enable us to develop our own economy. It has also failed to commit to fair funding for Wales, even though it admits underfunding by more than £300 million a year as a result of the Barnett formula.
The national parties of Wales and Scotland fight for a partnership of equals between the nations of these isles. However, it is about far more than that. It is about what we do once we achieve that aim. The main reason is to honour the political traditions of our countries, which I have set out today and which have been undermined by centuries of Westminster rule.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
I am grateful for the opportunity to follow the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—my hon. Friend—who spoke with trademark passion. He gave us a treat by dipping into Welsh political traditions. Like my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), I greatly enjoyed his history lesson. I, too, went to school in Wales, and I remember some of that history. I caution the hon. Member for Carmarthen East and Dinefwr against looking back to the days of Hywel Dda through rose-tinted spectacles, as it was a brutal and unpleasant time.
I would also caution the hon. Gentleman against drawing a direct, continuous line from the days of Hywel Dda to 20th-century state socialism. If we are talking about the long-term economic problems with which Wales is still struggling, I would point out that state socialism was part of the problem for much of the 20th century, not part of the solution. I would also refer him to other political traditions in Wales that point to a stronger civic society and a culture of self-help. There is a more communitarian tradition, which risks being emasculated by any return to state socialism.
I pay tribute to the SNP and Plaid Cymru for choosing the topic for today’s debate, and I am happy to have the opportunity to set out what the Government are doing to reduce inequality and ensure fairness in society. Where the hon. Gentleman’s speech was a little disappointing, if I may say so, was in—
Stephen Crabb
The content was marked by the absence of a really attractive vision for what the Welsh economy could be. I was sitting expectantly, hoping that the hon. Member for Carmarthen East and Dinefwr would set out a vision of what small-country, successful economics might look like under a Plaid Cymru Administration, but we heard precious little about that. I hope that some of his colleagues will be able to enlighten us on that. Instead, there was a familiar return to the talk of more spending, more borrowing and more debt—exactly the things that will shackle the people of Wales and their children for generations to come with more economic problems.
Andrew Selous
Does the Minister agree that there is nothing fair at all about getting the next generation to pay even more of this generation’s debts?
Stephen Crabb
My hon. Friend is exactly right. There is nothing fair, progressive or just about loading future generations with more debt and the consequences of debt. If we are a responsible political generation in the House, we will take care to ensure that our decisions minimise the impact on future generations.
This country continues to face deep-seated, long-standing economic challenges. The UK underwent an economic trauma between 2008 and 2010, and we are still living with the consequences. As a result of that trauma in those two years, there was a huge destruction of value in the economy, and a destruction of wealth, and we are still recovering from that, even in 2014. Although it is difficult for Opposition parties to admit, the Government have made difficult, challenging decisions and taken practical steps to reduce the deficit and restore stability and order to our national finances, which is the starting point—the foundation—for tackling all the other social and economic issues that the hon. Member for Carmarthen East and Dinefwr and others have begun to raise in the House this afternoon. As a coalition Government, we are ambitious that the emerging economic recovery should be a recovery for all parts of the UK, including Scotland and Wales, and for all people from all walks of life in our country. That is at the heart of our vision of fairness as a coalition Government.
Mr John Redwood (Wokingham) (Con)
Does the Minister agree that the socialist remedy is so often to think of tax and regulations to get rid of the rich from London to abroad, and hopeless in thinking of ways of promoting other people to good jobs and success so that they can enjoy and share the prosperity?
Stephen Crabb
My right hon. Friend is exactly right. There seems to be a blind spot in the left in that respect. We have begun to discuss fiscal powers for Wales and Scotland, and as that debate continues, what we should see from all the parties in Wales and Scotland are new, creative ideas to increase wealth and incentivise entrepreneurialism in those two challenged parts of the country.
Before I set out what the Government have done to tackle inequality and build a recovery for all, I want to deal with some of the issues that are already starting to be raised in this important debate. On the issue of spending and the necessary cuts to spending that we still have to make, the simple truth is that the previous Government left Britain borrowing more than £400 million every single day to pay for Government spending. As a result of the difficult decisions that we have taken, the deficit is now down by a third and we are borrowing nearly £3,000 less for every hard-working family in the country. However, there is still a long way to go. We are still borrowing around £100 billion a year and paying half that a year in interest just to service our debts, so there remain some difficult and challenging spending decisions further down the line. Whichever party or parties are in government after the next election, they will have to meet those decisions and challenges head on.
Caroline Lucas
For the benefit of us all and to enable a more enlightened debate, it would be helpful if the Government stopped pretending that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)was responsible for the collapse of Lehman Brothers. I blame the Labour party for a lot, but the idea that the current economic crisis was somehow caused by that is ludicrous. It was a global economic crisis and—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think the Minister has got the message.
Stephen Crabb
I applaud the hon. Lady for her attempt to rescue the reputation of the former Chancellor of the Exchequer and Prime Minister. The truth is that the trajectory of public spending was already far too high, even before the banking collapse. There was a structural deficit that placed at risk the stability of the UK finances even before the banking collapse.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Does the Minister not accept that official statistics show that the debt-to-GDP ratio was lower in 2008 than when we came into power in 1997? Those are the official figures.
Stephen Crabb
I am not sure that I recognise the figures that the hon. Lady gives.
Richard Fuller
Will the Minister assure the House that he understands the figures even if the Opposition do not, and that between 1995 and 2010 the total indebtedness of the UK went from twice the size of the economy to five times the size of the economy, making us the most indebted major economy in the world?
Stephen Crabb
My hon. Friend explains it very well for the benefit of Members of all parties. Under the previous Labour Government, the trajectory of public spending was set on a reckless course, and when the banking crisis hit, the true consequences were felt by hard-working families throughout the country.
Andrea Leadsom (South Northamptonshire) (Con)
While Opposition Members would like to absolve Gordon Brown of any guilt over the collapse of the banking system, only this morning in the Treasury Committee we were looking still at the debacle of the Co-operative bank—
Mr Deputy Speaker
Order. When I say “Order” I expect the hon. Lady to sit down. The intervention is becoming a ramble, but more importantly we are talking about a Member of Parliament, not by name I hope.
Stephen Crabb
The choice still facing the United Kingdom is either to stick to the long-term economic plan to secure a better, more financially secure future for hard-working people and their families throughout the country, or to listen to the Opposition parties and the motion before us calling for a return to the days of spending and borrowing beyond our means, leaving our children and their children to pick up the bill.
Angus Robertson
As we are talking about getting the record straight, recent quotes of the Business Secretary have been raised a number of times. He said that London
“is becoming a giant suction machine draining the life out of the rest of the country”.
Does the Minister agree with the Business Secretary?
Stephen Crabb
We touched on this point during the opening speech of the hon. Member for Carmarthen East and Dinefwr. I remind hon. Members that the most recent gross value added figures show that parts of the United Kingdom far from London are rebounding strongly with growth and starting to narrow some of the economic gap that we are all concerned about.
Mr Redwood
I think the Minister could agree that the former Prime Minister and Chancellor was not responsible for Lehman Brothers, but by the same token, should my hon. Friend not remind the House that the right hon. Gentleman was responsible for the competition and banking regulation regime that led to the collapse on his watch of the Scottish banks RBS and HBOS?
Stephen Crabb
My right hon. Friend makes the point perfectly well.
It is the firmly held belief of this Government that it must pay to be in work, and we are restoring the incentives to work; restoring the value of work in our society. That is one of the reasons why we have brought in the benefit cap, opposed by the Opposition parties, to ensure that families are always better off in work rather than claiming benefit. We are also increasing the incentives in the tax system, putting money back into the pockets of working people by raising the income tax personal allowance to £10,000, taking 2.7 million people, many of whom are on the lowest wages, out of income tax altogether. In Wales alone, that will benefit 1.2 million workers, taking 130,000 people out of income tax altogether. For the record, in Scotland 2.2 million workers will benefit and 240,000 will be taken out of income tax altogether.
Sheila Gilmore
The Minister is very quick to talk about taxation issues, but surely the net effect of the Government’s policies on tax, on payments of benefits and tax credits, is that people on lower incomes have suffered a loss.
Stephen Crabb
I simply disagree with the hon. Lady’s argument. The Government are determined that, as the economic recovery emerges throughout the country, people on the lowest incomes should be at the front of the queue to benefit from that recovery.
We recognise that for those on the lowest pay things remain challenging. Wage levels are not where we want them to be. That is why we need a strong minimum wage. I am proud that the coalition Government have not only implemented the recommendations of the Low Pay Commission in full, but that last year we were able to go beyond its recommendations and increase the apprentice rate too. We can afford that only because we have taken difficult and responsible financial decisions.
Mr Russell Brown (Dumfries and Galloway) (Lab)
The Minister is exactly right. The coalition Government have taken tens of thousands of people out of paying tax, but does he agree with his Liberal Democrat colleagues, that if they raised that tax-free allowance any higher, people who are not paying tax at the moment will see no benefit from that?
Stephen Crabb
I have just given the House the numbers of people who are benefiting from the steps that we are taking to increase the personal allowance. With that measure and the other steps that we are taking, such as strengthening the minimum wage, we are providing real practical tools to ensure that those on the lowest incomes start to see the benefit of the economic recovery.
Mr William Bain (Glasgow North East) (Lab)
The Minister omitted to mention that 279,000 people in this country go to work every day but do not even receive the minimum wage. I want to take him to the point he made about making work pay. What would he say to a low-income worker in Wales, England, Northern Ireland or Scotland who will see the work allowance of universal credit frozen this year, next year and the year after, taking £600 million away from low-paid workers?
Stephen Crabb
In Wales, when universal credit is rolled out fully, 200,000 households will see their entitlements increase. Alongside that are all of the incentives brought in to encourage work and more hours of work, so that people are not penalised for choosing to work rather than stay at home on benefit.
The hon. Member for Carmarthen East and Dinefwr started his contribution by referring to Hwyel Dda and the position of women in society in Wales in the 15th century, so I want to take a moment to look at the role of women in our society, which I expect will be raised more as we get further into the debate. There are more women at work than ever before. Nearly 14 million women are in employment—an increase of more than half a million since May 2010. Let us compare that with the record of the previous Government, who oversaw a rise in female unemployment of 30%. We recognise that for some women the work that is available might be part time or reduced hours, and we should not be tempted to fall into lazy thinking that women always prefer to work part time. A great many do not; a great many women want to work full time.
Caroline Lucas
I certainly agree with the Minister on that. Does he agree that it is a scandal that we still do not have equal pay for equal work? Will he join me in calling for compulsory equal pay audits for larger employers, as well as legislation to require that within five years 40% of board members of larger companies are female, so that we can begin to address this fundamental inequality?
Stephen Crabb
I absolutely agree with the aspiration to have greater fairness in the workplace and to narrow the gender pay gap, but I will not be tempted to agree with all the compulsory measures and burdens that the hon. Lady would place on businesses. We want businesses to be the engines of job creation for both men and women in Scotland, Wales, England and Northern Ireland, so we should resist the temptation always to call for more regulations and burdens to be placed on them. The best way to increase the availability of work that fits the needs of women, and indeed the needs of all those seeking work, is to grow the economy and create more opportunities for work.
The hon. Member for Carmarthen East and Dinefwr also mentioned food banks. Unlike the previous Government, who did not want even to admit that food banks existed and refused to allow them to be advertised in jobcentres—Labour Members still try to duck the fact that the number of food banks increased more than tenfold when they were in government—we take a positive view of their role. I have been the trustee of a food bank in my constituency in west Wales. I am proud that this Government are working in partnership with food banks, which are a vital part of a social economy at what is still a difficult time for a great many families.
Gordon Banks
Despite the Minister’s rhetoric at the Dispatch Box, can he not just for once agree, openly and honestly, that the number of food banks and the number of people in work who are using them have gone through the roof on this Government’s watch?
Stephen Crabb
The number of food banks has been increasing for a great many years, as has the number of people using them, but the hon. Gentleman is wrong to pretend that 2010 was somehow year zero. The food bank that I was a trustee of was set up in 2007, under the previous Labour Government. We should not forget that one of the reasons people are driven to use food banks is household debt. The Labour party, as well as being intensely relaxed about people getting filthy rich, was also far too relaxed about people being pushed into excessive household debt.
Mr Weir
I accept that 2010 was not year zero for food banks, but the reality is that they are increasing exponentially, mostly because of the benefit changes introduced by this Government, who are clobbering many low-paid families, and often the people using them are in work.
Stephen Crabb
I hear what the hon. Gentleman says, but the reasons that drive people to use food banks are complex and it is a mistake to try to single out any one cause. When I speak with food banks in Wales, they do not tell me that it is the benefit changes that are responsible in most cases. Household debt is a far more important factor.
Debbie Abrahams
I thank the Minister for giving way again; he is being very generous with his time. Citizens Advice has analysed why people are going to food banks and found that inappropriate sanctions as a result of welfare reforms and low pay are the key contributors.
Stephen Crabb
The hon. Lady talks about inappropriate sanctions on benefits. I recall hearing one of her Front-Bench colleagues say only a few weeks ago that the Labour party would be even tougher on benefits than this Government have been. I think that she needs to get some consistency with her Front Benchers on whether they support sanctions.
The best way to reduce economic inequality is to have a growing economy and to ensure that people are in work. Today, more people in Wales have gone out to work than at any time before, with economic inactivity at its lowest level since records began. However, the tragedy is that there are still 200,000 people in our country who have never worked a day in their lives. I hope that the hon. Member for Carmarthen East and Dinefwr agrees wholeheartedly that that represents an enormous waste of talent, potential and skill and that a small nation such as ours cannot afford to lose that potential. I hope that he shares my ambition for welfare reform to see those people who have been locked in worklessness brought back into the labour market to achieve their full economic and social contribution.
Mr MacNeil
Does the Minister think that the situation he describes is the result of something inherent in those people or the result of the circumstances and structures they are living in?
Stephen Crabb
That question probably warrants a separate debate. I firmly believe that the vast majority of people want to work. I believe that human beings are hard-wired to want to make an economic and social contribution, but the welfare system, which too often the Opposition parties run to the barricades to defend, blunted that inherent instinct that people have to want to better themselves and to choose work over dependency.
Mr MacNeil
The Minister has accepted that it is not the result of something inherent in those people, so why do they not work, and why can they not work? I contend that it is the structure of the United Kingdom that leaves them in that situation.
Stephen Crabb
I think that I answered the hon. Gentleman’s question the first time.
More than 1.6 million private sector jobs have been created since 2010, and the way to ensure that that number keeps growing is to maintain this Government’s economic discipline and not to follow the discredited plan-B economics of the Opposition parties, which would see growth slow down and inequality widen.
We recognise that the economic situation is still challenging for many people across the UK, but we are committed to reducing the burden on the cost of living where we can. Inflation is at its lowest for four years, benefiting families and businesses across the UK. The Government recognise the impact that persistently high pump prices have on the cost of living and on business costs. We have taken action to support the motorist by freezing duty for almost four years. Had we continued on the path set by the previous Government and followed their taxation plans in full, petrol would be 13p higher per litre than it is today and the average motorist would be paying more than £7 extra for a tank of fuel.
Under the previous Government, energy prices escalated, with the average domestic gas bill doubling between 1997 and 2010. It is this Government who have brought forward changes to help reduce energy bills. We are ensuring that the most vulnerable get direct help with their bills: 230,000 homes will be warmer this year by getting energy efficiency measures installed under the energy company obligation; and 2 million households will get help under the warm home discount, including more than 1 million of the poorest pensioners.
Gordon Banks
The Minister now has an opportunity to say whether he will support Labour’s plan to freeze energy prices to cut the burden on hard-pressed households.
Stephen Crabb
I will not be tempted to support an unworkable and generalised plan that has been criticised by industry stakeholders and the people who really know about these matters. What I support are the practical steps that this Government are taking on a broad range of fronts to return money to the pockets of hard-working people and insulate the most vulnerable against the challenges that remain in our economy.
Hon. Members would not know it from the interventions of Opposition Members, but inequality surged when the Labour party was in government. It is the party that was, as the hon. Member for Carmarthen East and Dinefwr said, intensely relaxed about people getting filthy rich. This Government are determined to see inequality fall. It is under this Government that those with the broadest shoulders are facing the greatest burden. The richest members of society now pay a higher proportion of tax than they have ever done, with the richest 1% paying almost 30% of the total income tax take and the richest 5% paying almost half.
There is nothing fair about ignoring or ducking the challenge of welfare reform. If we are serious about tackling inequality, we must be serious about tackling the wasted opportunities we see before us. In Wales, 92,000 children are growing up in households where no one works, and 200,000 people in Wales are yet to work a day in their lives. That is the result not of this Government’s policies but of years of failing to stand up to the problems of dependency and the decline of work incentives. I make no apologies for the fact that it is this Government who are taking this once-in-a-generation opportunity to embrace welfare reform.
The Labour party championed welfare reform 20 years ago. Where have all the Labour party’s welfare reformers gone? Labour MPs 20 years ago were among the first to recognise the problems of dependency and the decline of work incentives that were emerging in our welfare system, but these days no one on the Opposition Benches speaks up for people caught in welfare traps. Instead, they turn poverty into a political football. They have opposed every sensible measure that we have put in place to restore fairness and opportunity to our welfare system.
Stephen Crabb
I will not give way.
This Government are working for a recovery that benefits the whole of the United Kingdom. We recognise that there are specific challenges for Scotland, for Wales and for Northern Ireland—challenges for devolution but also the long-standing economic challenges that these parts of the UK have borne. Devolution provides the best of both worlds. Strong devolved legislatures ensure that key decisions are taken closest to those affected, but so too can this Parliament make decisions in the shared interests of the whole of the United Kingdom. The devolution settlements are flexible. We have seen this most recently with the Scotland Act 2012; the Northern Ireland (Miscellaneous Provisions) Bill, currently in the House of Lords; and, most recently, the draft Wales Bill, currently being scrutinised by the Welsh Affairs Committee.
I am sure that we will hear more today about Labour Members’ apparent position on the proposals to devolve an element of taxation to the Welsh Government in Cardiff. Previously they seemed to be supporting the consensus on the Silk commission’s proposals, but, as the hon. Member for Carmarthen East and Dinefwr rightly highlighted, since a week ago they seem to have reneged on that cross-party agreement and are now full speed in reverse in trying to backtrack and ditch the proposals.
Before I conclude, it is only right that I focus briefly on the situation in Wales as part of the broader devolution settlement. There has been much positive economic news for Wales. Over the past year, the employment rate has increased by more than in any other region. The number of unemployed people has fallen by 24,000 since the election—it is down by 12,000 only in the last quarter —and the number of economically inactive people in Wales has never been lower. The majority of jobs created in the past year were full-time. The number of people in part-time work who want full-time work is only 18%, and through growing the economy we can help those 18% to find the full-time work they want. A positive future for Wales has been set out by the Silk commission, whose work I praise. The Government have responded to part 2 of its work by bringing forward ambitious proposals in the draft Wales Bill. I am pleased that the hon. Member for Carmarthen East and Dinefwr and his party have welcomed the moves towards greater devolution for Wales. There are of course areas on which we do not agree, but we have at least set out a positive vision for Wales that we share on this issue.
By contrast, Labour Members in Westminster seem to be suffering from a complete lack of vision for the future of Wales and its part in the UK and seem to have run out of steam as regards devolution. Rather than embracing the proposals in the draft Wales Bill and the Government’s response to the Silk commission, they have shied away from anything other than borrowing. When they speak, I hope that they will set out their plans for tackling economic inequality, although I am yet to see any evidence from them of such a vision for Wales or beyond.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Thank you very much, Mr Deputy Speaker. [Interruption.] I also thank the hon. Member for North East Somerset (Jacob Rees-Mogg) for his usual cheer as I start to speak.
We are having an important debate today. In recent months we have had a number of debates on subjects such as the minimum wage, the bedroom tax, and gender issues. Those are all important debates in themselves, but they are also, if I might be so bold, symptoms of a bigger issue that is afflicting our society and other societies—inequality and unfairness. In many ways, this debate has been screaming out to be had, especially in recent times as people are waking up to how things are arranged in our society or societies.
Yesterday, a commission headed by Church of England bishop, Dr John Sentamu, published a thoughtful report on the problem of working for poverty wages in the UK. Much has been written on this subject by eminent Nobel-winning academics and economists. Last week, when we realised that this debate was going to happen, my hon. Friend the Member for Moray (Angus Robertson) said that he was going to play word bingo during my speech and had chosen the word “Stiglitz”. I suppose that many of my thoughts and much of my further outrage on this issue have been ignited by Joe Stiglitz, and that propelled the idea for this debate. I would hope to do him justice, but I know I will not, so I recommend reading his book, “The Price of Inequality”, available on anybody’s Kindle app for £5—or, indeed, Paul Krugman’s “End This Depression Now!” Another interesting book I have seen but not read is “The Cost of Inequality: Why Economic Equality is Essential for Recovery” by Stewart Lansley. Perhaps the aim of economic equality is too far away, but certainly the aim of reducing inequality should be uppermost in all our minds; indeed, I think we shall see that it is becoming so.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
Can the hon. Gentleman enlighten the House on how his proposal to cut corporation tax for the biggest businesses in Scotland will reduce inequality?
Mr MacNeil
It is quite simple—if we start to create jobs and opportunities for people, we will reduce inequality. I would certainly not be in the position of one of the hon. Gentleman’s colleagues who said last week:
“If the Scottish people are going to be better off economically and so on, I would still be against breaking away from the Union.”—[Official Report, 6 February 2014; Vol. 575, c. 467.]
It does not seem to matter whether we can cure poverty—Labour Members would still be against independence because they have made careers talking about it, and handsome careers at that.
Jacob Rees-Mogg
I am interested in the hon. Gentleman’s call for lower tax rates. Has he now become a tartan Tory?
Mr MacNeil
Devil the fear, as my old Irish mother would have said, devil the fear—no chance at all. I think the hon. Gentleman will see, as he pays more attention to the words to come, that the only Tories on this side of the House are probably the red Tories.
I listed the books I mentioned earlier for a reason. We must be aware that we do not have to reinvent the wheel to get people more opportunities and chances in life. Much of the research and science has been done, and the information has been gathered. Perhaps if we stopped, looked and learned from what is around us we would stop falling into the same traps that different generations have fallen into. Why should inequality matter—why is it important? Is it merely because a number of influential professors with Nobel prizes have written books? I would contend that they have put intellectual bones on our instinctive emotions of sympathy and empathy for our fellow people when we see them in situations that disturb us and we think are wrong. This is why nations have international aid budgets and why we give to charity. Sometimes it can be argued that the money is not always best directed, but nevertheless it is useful in the main. It shows an underlying striving for fairness and is a reproach against inequality within the broad set of people.
My first engagement with the idea of inequality was in the religious education class in Craigston primary school at the age of seven or eight, or perhaps even six, with Mrs MacCormick, God bless her. Looking back, I often think that we were really doing philosophy classes rather than RE classes. The example given was this: “If you’re given a box of chocolates at home would it be best to eat them all yourself or share them with your brothers and sisters who have not been given any chocolates?” I have to say that this scenario created a tension in my mind given my great love of chocolates. As you can see, Mr Deputy Speaker, I do not have so much a sweet tooth as a whole set of sweet teeth. I was caught in the tension between doing what was manifestly right and what I really wanted to do on another level. The consensus quickly grew in the class that it was best to share—even among six, seven or eight-year-olds. I am pleased to see you nodding in agreement, Mr Deputy Speaker.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I assure the hon. Gentleman that I was not nodding in agreement; I was just wondering whether there were inequalities within the chocolates.
Mr MacNeil
Very good, Mr Deputy Speaker.
It is a slight concern of mine, however, that the captains of industry, as they get called, or the high-bonus City bankers or hedge fund managers, have never had that experience at a young age and have not engaged meaningfully with sympathy for the situation that others may be in as they gobble all the chocolates of productivity that our economy has produced, believing instead that they are self-made men and self-made women who worship their own creators.
Richard Fuller
Before the hon. Gentleman moves on from his Milk Tray doctrine of equality, will he accept that very many of us do learn those lessons in school and do not necessarily need the Government to act for us to fulfil our responsibilities as individuals? What would he say about considering ways to exhort people who have wealth, regardless of the taxes they pay, to give more to others?
Mr MacNeil
The hon. Gentleman’s intervention is laudable, and I understand what he says, but I disagree. The consensus post the great depression of the 1930s showed the importance of regulation, and that lesson was probably forgotten by the 1980s in the era of the Reagan-Thatcher deregulation that led up to the precipitous problems that finally exploded six years ago. In the absence of regulation, people have to look into their own hearts, but sometimes we can spend far too long doing that. The rule of politics, Parliament and Government is to ensure that we have the structures whereby all can benefit and they are not just dependent on the whim of some well-meaning individuals who may be a minority among the wealthy and could direct their contribution in the wrong way.
Before I get to the body of my speech, I have a final example of something that I think informs the human condition, namely the observations of anthropologists on hunter-gatherer societies. I hope this will also inform the debate, because I think that inequality is essentially about human choices—perhaps even bias—whether they be conscious or subconscious.
Anthropologists note that hunter-gatherer bands did two main things: they hunted and they gathered, hence, of course, the name—there is no need to be a Nobel prize winner to spot that. The crucial observation is that they treated the products of the hunt and the gather very differently. The products of the hunt were shared out almost instinctively, with many people who might not even have been on the hunt getting a share. Anthropologists explain this as the sharing of luck and good fortune, with those on the hunt realising that they might not have had a successful hunt in different circumstances and that, given the way in which the society of the day was arranged, they might earn the good will of others who might be lucky on another day.
That sharing, however, was not mirrored in the gather, and anthropologists reckon that that was due to the labour and endeavours of the individual graft and application of the gather.
Caroline Lucas
I am enjoying the hon. Gentleman’s exposition of hunters and gatherers. I wonder whether it could lead us to a discussion about access to ownership of land. Does he share my concern that very little has been done by successive Governments to address the inequality that arises from the fact that the richest 0.6% of the population own 46% of the UK’s land? Will he join me and others—indeed, this applied to Winston Churchill—who support a system of progressive land value taxation as a much fairer way of taxing land than council tax and business rates?
Mr MacNeil
I hear what the hon. Lady says. I am tempted to go down the route of the argument about the taxation of land and labour. I hope the hon. Member for North East Somerset agrees that it has many merits and that he will move a little closer to me on the left wing as a result.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
On taxation, does the hon. Gentleman agree that the 50p tax rate should be brought back, and would he support it in a separate Scotland?
Mr MacNeil
I have two points to make in response to that. First, when the 50p tax rate was abolished, Members from Plaid Cymru, the Scottish National party and a number of other minority parties—as they are termed in this place, even though we, of course, are the only majority Government on these islands—went through the Lobby to oppose the cut. If memory serves me right, Labour Members sat on their hands and did not do so.
Secondly, I would support the return of the 50p rate on the basis of need and argument. I understand that the UK Labour party is suggesting an increase to 50p for a short fixed term, probably because of the level of the UK deficit, but the Scottish deficit is at a different level. Is the increase necessary in the UK because of economic circumstances—that is one argument—or is the hon. Lady saying that a 50p rate is Labour policy for ever?
Gemma Doyle
I am happy to clarify that the question was whether the hon. Gentleman supports the 50p tax rate.
Mr MacNeil
We voted against its abolition. It would not have gone—we would have the 50p tax rate right now—if the hon. Lady and many others had joined us in the Lobby. The question is: why did she and her colleagues not go through the Lobby to vote against the cut? Where were Labour Members that night? There was no sign of them. Would anybody from the Labour party care to tell me why they did not vote against the cut to the 50p tax rate? I would be very pleased to hear why not. Will one of the about 20 Members on the Labour Benches please stand and explain why Labour did not oppose the cut to the 50p tax rate? Going once, going twice, gone: Labour has refused to explain.
Pete Wishart (Perth and North Perthshire) (SNP)
I remember that evening very well. To call Labour Members headless chickens would be an affront to headless chickenry, given the way they were running around. Does my hon. Friend agree that perhaps it was a principled abstention that the Labour party pursued that evening on the 50p tax rate?
Mr MacNeil
Well, a principled abstention by the Labour party is news to me, but I take on board what my hon. Friend says.
I was talking about hunter-gathering. I was not so much hunting Labour Members as asking why they did not go through the Lobby on the 50p tax rate. I was discussing why people have certain outlooks in life. I think that when people view the fruits of their success as being the result of a hunt that involved a great deal of good fortune and support, they might have a tendency to be slightly more left wing, whereas those who think the fruits are the result of their own individual hard graft might have a tendency to be more right wing and view their gains as a gather. I will make no further judgment on that idea—I just want to put it out there and let people chew it over—but I think there is something deep-seated in our own personal biases as to why we arrive at certain points of view.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Will the hon. Gentleman give way?
Mr MacNeil
It would be a great pleasure to give way to the hon. Gentleman. Perhaps he will tell us why Labour did not vote against the cut to the 50p tax rate.
Michael Connarty
I would be quite willing to brief the hon. Gentleman later about the technicalities of why the vote was not called on that particular night.
The hon. Gentleman is talking about a sociological analysis, but some people have moved on since then and done a socialist analysis. When society is divided into those who support capital and those who support labour, what happens is that the forces of those who have the power in the land—the landed classes—join with the merchant class to support capital, and they have succeeded in increasing the value of capital by driving down the cost of labour. That is why we have the inequality we have, and that is the structure of the society we—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. It is very good to have a lecture, but not during an intervention. If the hon. Gentleman wants to catch my eye later, I am sure he will be able to do so and give me a lecture then.
Mr MacNeil
I thank the hon. Gentleman for that interesting intervention. As an MP for a left-of-centre party—sadly, the hon. Member for North East Somerset is no longer in his place to hear this—I am asking how it is possible that our society and, indeed, many other societies, particularly in the English-speaking world, can tolerate inequality, which has now grown to levels beyond those of the 1920s. Has something primitive been transmitted to our minds through the media? The belief that the poor are poor because they are undeserving and have not worked hard enough is a primitive thought. People have to be helped, because we are complex creatures living together in society. People have deep psychological needs and some can suffer from the paralysis of feeling swamped or depressed when they feel stuck or trapped.
Yesterday’s report by the Living Wage Commission, “Working for Poverty”, looked into the scale and problem of low pay and working poverty in the UK. The first shocking statistic I stumbled on came from the work of the Resolution Foundation, which had tracked low-paid workers for a decade between 2002 and 2012. Despite working for a decade, only 18% of those people had managed to escape low pay in that 10-year stretch. In other words, people in low pay had a four in five chance of remaining there.
The report further notes:
“1.3 million employees remained stuck in low pay for the subsequent decade, and a further 2.2 million workers held higher paid jobs but returned to low paid jobs by the end of the decade.”
That is and should be depressing. Imagine the feelings of the people we eyeball who have been living with that reality on a daily basis for a decade.
There is good news and bad news. Over the past decades, the wealth of this and other countries in the west has grown as productivity has increased. The bad news is that the fruits of that productivity have been disproportionately distributed. According to the BBC’s wealth gap analysis, as the wealth pie grew and there was more to slice up, many people got roughly the same slice of the pie while others took a share that would embarrass a lion.
Between 1997 and 2007, the income of the top 0.1% grew by 82% to an average of £1.179 million annually; the top 0.5% saw an increase of 66.5% to an average of £452,000 annually; and the top 1%, which, of course, includes the previous two groups, saw their income rise by 60%, but their rise was only about a quarter of that of the 0.1%.
Meanwhile, between 1997 and 2007—the happy decade, as some in financial circles call it, before the crash of six years ago—the bottom 90%, which includes most of society, saw their wages rise by only 17%, a disproportionate slice of the economic pie. Another way of looking at it is that the fraction of pay the bottom 90% were getting in comparison with the top 1% had fallen by a fifth over that decade. As Professor Stiglitz says:
“A corporate CEO will not exert less effort to make the company work well simply because his take-home pay is $10 million a year rather than $12 million.”
The “Working for Poverty” report contains a series of nuggets and goes fearlessly into some thought-provoking factors.
Mr McKenzie
The hon. Gentleman has mentioned poverty and how to tackle it, which is welcome, but can he explain why the SNP Government in Edinburgh have taken £1.2 billion out of anti-poverty programmes since 2008?
Mr MacNeil
The hon. Gentleman will find that the efforts of the SNP have been very laudable in Scotland, with unemployment and youth unemployment lower than in the rest of the UK. The SNP Government have done all they can. He should realise that the Government in Edinburgh are in a financial straitjacket set by the philosophies of the Chancellor of the Exchequer and the Secretary of State for Work and Pensions in London. If the hon. Gentleman really wanted to tackle such issues, he would free himself from that straitjacket, and the SNP or whichever party was in government in Edinburgh would be fully accountable, rather than held within the straitjacket of another Government’s philosophy with which we disagree. Does he want to intervene again?
Gregg McClymont
Can the Scottish Government not spend the block grant in any way they see fit?
Mr MacNeil
The hon. Gentleman is absolutely correct: the Scottish Government can do so, but they have to balance the budget. In fact, although John Swinney, the Finance Secretary, balances it every year, the Chancellor of the Exchequer does not. If the hon. Gentleman wants extra expenditure, he knows full well that, under the devolution settlement, he must explain what he will cut. It is, “Want, want, want,” but he has not made any suggestions about what he will cut.
Mr Weir
Will my hon. Friend acknowledge that although funds for fuel poverty programmes have all been slashed down here, they have continued to be invested in Scotland; that child poverty in Scotland is now lower than in the UK as a whole; and that, worst of all from the Scottish Parliament’s point of view, one of the drivers of poverty is the welfare changes controlled by this Parliament, not by the Scottish Parliament?
Mr MacNeil
My hon. Friend is absolutely correct. We can see that again in the philosophy behind the bedroom tax, which is not one that I subscribe to in any way. Last night, I stumbled across a Channel 4 programme on Walsall and Glasgow housing authorities. It talked about having to demolish houses in Walsall, due to their being left empty: people cannot stay in them because of their cost and what people have lost in welfare. Glasgow housing authority has demand for 1,500 more one-bedroom properties—people want them so that they will not be penalised—but it does not have them. It is, inefficiently, trying to build them so that people can avoid the bedroom tax, but the costs are colossal.
Pete Wishart
I am loth to interrupt my hon. Friend’s fantastic speech, but perhaps I can help him a little. We know a bit about what the Labour party proposes to do with the Scottish budget because of the cuts commission. It intends to do away with universal benefits and it does not like free bus passes and free prescriptions. That is what it would do if it gets control of the levers of power in the Scottish Parliament. We know exactly where it is going with its cuts commission.
Mr MacNeil
My hon. Friend is absolutely correct. Johann Lamont has a cuts commission. [Interruption.] I hear from the Labour Front Bench that she does not have a cuts commission, which is another example of how Labour Scottish Members say one thing while Labour in Scotland says another. If Labour Front Benchers want to tell us what Johann Lamont is doing—if she has told them—they are more than welcome to intervene.
Mr Russell Brown
Will the hon. Gentleman tell us why £1 billion has been removed from anti-poverty programmes since 2008 under his Government? Perhaps that might paint a clearer picture.
Mr MacNeil
I thought the hon. Gentleman was going to stand at the Dispatch Box to tell us what Johann Lamont is thinking about the cuts commission, but he failed to do that.
Stewart Hosie (Dundee East) (SNP)
There is a lot of deflection going on. The Labour party has said that nothing is off the table, which might mean £9,000 per child per year to go to university, a return to a tax on ill health with charge-free prescriptions going and all that. In his heart, does my hon. Friend not agree that this is ideological: the British Labour party thinks that we are part of a something-for-nothing society, when all we are doing is caring for those most in need?
Mr MacNeil
My hon. Friend puts it very well: we are caring for those in need. Our hearts should go out to those needing help, and we should not be thought of as part of a something-for-nothing society.
Gemma Doyle
Will the hon. Gentleman tell us how much less money there would be to spend on public services in Scotland if his party gets its way and cuts tax for big business?
Mr MacNeil
If my party gets its way, there will be more money for services in Scotland, because our fiscal position is far better than the UK’s and our deficit per capita is lower. If we become independent, we can do a lot more to help. I hope that the hon. Lady does not hold the position of the hon. Member for Lanark and Hamilton East (Mr Hood). Last Thursday, he told us:
“If the Scottish people are going to be better off economically and so on, I would still be against breaking away from the Union.”—[Official Report, 6 February 2014; Vol. 575, c. 467.]
If by becoming independent we can fight poverty, will the hon. Lady support independence?
Mr Jim Hood (Lanark and Hamilton East) (Lab)
I am quite amazed that the hon. Gentleman is surprised that I and many other hon. Members are against his nationalism. To put my comment last week in context, I said that despite the lying of the SNP Government and the Westminster Government here, I would not support nationalism and would therefore vote against his Government. He should not be surprised, because I have always opposed nationalism. I always will oppose nationalism, because I do not make judgments about people on the basis of the side of the road or the side of the bed they were born on.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think the hon. Gentleman has got the message across.
Mr MacNeil
I am pleased that the hon. Gentleman has intervened, but I am surprised that he says he is against nationalism, because we live in nations. That is why we have the United Nations of about 193 nations. I am not sure exactly what structure he favours. Is he is in favour of the abolition of the Parliament in Westminster and of the UK state?
Mr Deputy Speaker
Order. The hon. Gentleman must sit down. I will be helpful: we have had a good debate about chocolates, and I want to get back to inequality. I certainly do not want to get bogged down in the rights and wrongs of abolition. I know that he is desperate to finish his speech on inequalities, and I am desperate to hear it.
Mr MacNeil
My speech is about making lives better for people wherever they are from and wherever they are worldwide. That is the important point to bear in mind.
The “Working for Poverty” report even touches on the untouchables of our society—football clubs. It states:
“Research from Citizens UK shows it would take a full-time cleaner 13 years to earn what top footballers earn in a week. Football clubs are important institutions in communities across the UK. They should be setting an example to employers nationwide.”
I must praise the columnist for The Observer Kevin McKenna who, like me, is a supporter of Celtic football club in Glasgow, the richest team in Scotland. Sadly, a few months ago, Celtic refused to pay the living wage to all its staff at the ground. It turned Mr McKenna’s stomach that those subject to such wage inequality could rub along, shoulder to shoulder, with people earning tens of thousands of pounds a week. That has also turned the stomachs of many football fans, especially given that Celtic had cashed in on the story of Brother Walfrid, a Marist brother who now lies at rest in Dumfries, who started Celtic as a means to help the poor of the Glasgow east end in the 1880s. I do not mean to single out Celtic, but to give an example of the toleration of those in even rich organisations for the shocking pay levels given to people the whites of whose eyes they see daily. Frankly, it removes the shine, lustre and glitz from the big football clubs of our land when we realise that gritty reality and see it up close.
Lorely Burt (Solihull) (LD)
I have every sympathy for what the hon. Gentleman is saying, but what is his party’s policy on tackling the scourge of overpaid football players?
Mr MacNeil
I must tell the hon. Lady that, to be absolutely honest, I have not considered that question politically. [Interruption.] Labour Members are mocking, but they would, because they probably have no response. If they have one, they are more than welcome to intervene. If the hon. Member for Ochil and South Perthshire (Gordon Banks) wants to limit the pay of top footballers, he can jump up to the Dispatch Box and tell us how. The hon. Member for Solihull (Lorely Burt) addresses a point that we should look at and think about in our society, since it is one of the jarring unfairnesses and inequalities. People working together shoulder to shoulder with such massive disparities sums up what is happening in our society.
In the report “Working for Poverty”, Dr John Sentamu’s foreword starts with a nugget from the CBI director-general John Cridland, who said that there are
“still far too many people stuck in minimum wage jobs without routes to progression…and that’s a serious challenge that business and government must address.”
I again praise the Archbishop of York for saying elsewhere in his report that business itself has to step up to the plate and make sure that people are getting a fair day’s pay for a fair day’s work, but praise is due to John Cridland also, for his remarks at the outset of the report.
Making work pay is important—very important. The UK taxpayer is paying a staggering £3 billion to £6 billion to cover the costs of inadequate pay, which affects a colossal 5.24 million workers—an increase of 400,000 in the past 12 months alone. That is welfare on a sadly grand scale, for which we should not be asking the taxpayer to foot the bill.
The report notes that the prices of everyday items have risen faster than prices of other goods. Food costs 44% more than in 2005 and energy costs have more than doubled. On the bright side, it notes that vehicle costs have remained stable and the cost of audiovisual equipment has halved. In more serious terms, the report notes that children of parents on low pay are less likely to achieve in school compared with their peers at every stage of their childhood education. A living wage employee gets nearly double the amount of family time in a typical working week as someone on the national minimum wage—a subject I shall return to later in my speech.
The report lays out more correctly the problem in the gains of productivity and their distribution, noting that the arrangements are such that economic growth alone will not necessarily solve Britain’s low pay crisis. Unlike the hon. Member for Bedford (Richard Fuller), I think the Government have a role to play; it is not just a matter for well-meaning individuals. Paul Krugman and Joe Stiglitz observe that low pay takes demand out of the economy, as the people circulating money in the economy are those who are on low pay. There is even an argument that higher unemployment benefit is an economic multiplier, in that the money that goes into recipients’ pockets circulates more quickly.
Gemma Doyle
The hon. Gentleman is being generous. He mentions the opinions of Professor Joseph Stiglitz. Is he aware of another of Professor Stiglitz’s comments:
“Some of you have been told that lowering tax rates on corporations will lead to more investment. The fact is that’s not true. It is just a gift to the corporations increasing inequality in our society.”?
Will he reconsider his position on corporation tax?
Mr MacNeil
Had the hon. Lady been in Parliament when Labour were in power and seen what her party did in that period, she might be less bold. We have to look at what is good for Scotland and what we can do to create opportunity and employment in Scotland, and I will not resile or shy away from that in any way, shape or form.
The contention is that money is not circulating. That is why some years ago we had a fiscal stimulus and why we have had quantitative easing. My problem with QE is that it has not been aimed at the demand recovery for which Stiglitz and Krugman would look; instead, in the opinion of many, it is propping up financial institutions. I note that, at one time, Ben Bernanke suggested that the way to return demand to Japan 20 years ago, when the country was experiencing stagflation, was to take a helicopter full of yen notes and fly above Japanese cities shovelling them out. That is certainly one way to return demand to the economy, but of course serious voices would recoil at the idea and not allow it to happen. There are some answers in economics, however, that are counter-intuitive to many of the things we naturally feel and do daily. We should not be afraid of looking at some of the other, more grounded, ideas, but I fear that a Government who have chosen the cult of austerity over the pursuit of growth are unlikely to look imaginatively at what they can do for the economy—they certainly have not done so in the past three years.
Growth in productivity has not been matched by growth in wages. The “Working for Poverty” report notes that
“Wages and economic output began to decouple in 2003, five years before the onset of the financial crisis. Real average wages have grown by 13% since 1999, whereas economic output”—
that is, productivity—
“has risen by four times this rate.”
That means again that economic growth alone will not solve Britain’s low pay crisis. The Government should set up a commission of inquiry into poverty and inequality, as we call for in the motion, to look at how we can improve the lives of citizens—people we see daily; people we perhaps knew in school, or relatives; people who live in our communities. They should not be left behind, with only 18% escaping low pay over a decade, as we heard earlier. In a further example, the report notes that
“Productivity growth and median pay began to decouple in the 1980s and median hourly earnings have failed to keep pace with the average value of output that workers produce.”
I am heartened to know that even the Prime Minister supports the living wage, saying that where companies can afford to pay the living wage, they should. A living wage is only £7.65 an hour—that is the figure mentioned in the White Paper for independence and in the “Working for Poverty” report. That is only £306 for a 40-hour week or about £16,000 per annum—not a king’s ransom by any means. We should remember that the minimum wage is £6.31 an hour, so it takes an increase of only £1.34 an hour to get to the living wage. I praise the Prime Minister for what he said, but while he apparently sees the justice and wisdom of the measure, as a politician in charge of a Government, he is doing nothing about it. We should realise that life is short, life in politics is shorter, and life in power is shortest of all, so Governments should take the opportunity when they have power to do a lot to improve the lives of the people they govern.
Some of this debate is mere dry statistics. We should look at some of the human stories in the “Working for Poverty” report—the accounts of normal, decent people across the countries who are trying to earn an honest living in a state, the UK, that does not value all its citizens fairly. Their stories should be heard and understood; they inform the debate and help to remove the dryness of the statistics.
Stewart Hosie
Very generously indeed, my hon. Friend has praised the Prime Minister, who at least wants to do something about the minimum wage, but is it not disappointing when the hon. Member for East Dunbartonshire (Jo Swinson) was answering questions about the living wage, she said, even though it is £7.65 in Scotland and £8.80 in London, that it was “too difficult to calculate”? Is not that a rather bizarre position for the UK Government to take, given that we already know what the figures are?
Mr MacNeil
My hon. Friend puts it very well indeed. I do not think any more needs to be said.
Case study 1 in the interim report from the Living Wage Commission is Paul’s story. The report tells us that
“Paul is a support worker in the care sector in the North West of England. His partner is a youth worker in the youth justice sector for the local Borough Council. They have a sixteen year old daughter and are both paid below the Living Wage.”
Paul says:
“I started work for my current employer in 2009 and have never been given a pay rise. During this time I have experienced a palpable leap in the cost of living. My wife started her employment in 2010 and she has witnessed a drop in the amount of money she is paid for her considerable and anti-social working hours.
We are both working full-time, living in local housing association rented accommodation and we are always struggling to pay our way. We have no luxuries, we have not been on holiday and we do not socialise. We work, eat and sleep. There are no extra benefits we can claim to help us. There is little we can hope to do but keep on working in the hope that we will eventually see some ‘light at the end of the tunnel’.
I have juggled our debt as best as I am able to. I have moved some debt onto zero interest credit cards which have given us an 18 month window to clear some debt without accruing the hefty interest charges which would be crippling.
We are substantially in arrears with the rental of our home. The landlord is attempting to negotiate a payment plan to help us to manage this debt. We avoid doing so to enable us to more flexibly manage our debt. One week we can pay a little off our rental debt but the next we must buy food and fuel, pay outstanding vets bills, and more besides.
We often spend days apart. This is due to my low pay and the need for me to do sleep-in duties as a carer to garner something like a liveable income. We can often only communicate through rushed text messages and leaving voicemails for each other. Our sixteen year old daughter misses us both greatly. We did not even have a day out together as a family in 2013.”
That one story crystallises in many ways the nub of today’s debate. I am grateful to the Archbishop of York for his report and for setting out people’s experiences. Perhaps the saddest line in that quotation is:
“We work, eat and sleep”.
It is shocking that the citizens of a first-world, G7 country are living in that way.
Government Members often talk about the importance of family as a building block of society. I would argue that the living wage benefits and reinforces families. To take home the same wage that an employee on the living wage would receive for a typical 37.5 hour week, minimum wage earners would have to work 52.3 hours a week in London or 45.5 hours a week outside London. In a typical Monday-to-Friday working week, that is equivalent to working 10.5 hours a day in London or 9.1 hours a day outside London. That rises to 11.5 hours for London or 10.1 hours outside London if we include an hour’s lunch break.
A worker who does a Monday-to-Friday job in London on the national minimum wage, who gets the Government’s recommended amount of sleep each night and who has an average commute therefore gets only three hours and 45 minutes to spend as they wish in each week day. The same employee would get six hours and 45 minutes of time each day if they were paid the living wage. That is an extra three hours a day or almost double the time that a minimum wage worker has to spend with their family or to do anything else that they want to do. That shows how those in low-paid jobs have little work-life balance and have to sacrifice the time that they spend with their children or on social engagement. That can lead to other problems further down the line. If ever there was an example of what an additional £1.43 an hour could bring, that is it.
When we hear people using the family as a political argument in future, it must be backed up by some economic and legislative muscle in order that people have a decent wage and a decent start in life. The most important point to make is that the people we are discussing are working—they are the working poor. They work long hours to do what they can for themselves and their families, yet they are unable to participate properly in society.
It is a damning indictment of all of us in this House that we have tolerated the emergence of such a reality in our midst over the past few decades. Although I am only 43, all of us have a responsibility for that. We have a responsibility to speak out about it. That is why we are having this debate. I hope that the Government will listen and will bring forward a commission of inquiry on inequality and poverty, because those issues blight the lives of far too many people. It should simply be stopped.
Jonathan Edwards
Does my hon. Friend share my concern at the lack of interest in this policy agenda, which is demonstrated by the number of Members who have put their names forward to speak in this debate? The Westminster parties do not care and just do not get it.
Mr MacNeil
It is disappointing that more Members have not engaged in the issues of poverty and inequality. Cynics would say that if this were a debate on Members’ pay, conditions and benefits or any other reform of the House of Commons, the Benches would be full. Alas, we are debating a topic far removed from that. That is why I have tried to humanise the debate.
I was not going to read Becca’s story from the Living Wage Commission, but it is a cracker of a story. The report states that she
“lives in Leeds and has worked in minimum wage jobs since she was a teenager. Now in her thirties, she has a degree and wants to start up her own business, but she can not find the money or the time.”
She says:
“I have pretty much always worked for minimum wage. I worked in an office photocopying for two years, I have worked in customer service, I once sat watching a TV screen and counting cars on clickers. I’ve done all sorts.”
That is another example of a person who is trying to better herself, but who is—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have a good feel for the examples, as, I am sure, does the House. This should be the hon. Gentleman’s speech, not just a speech full of examples from other people. I have allowed a few examples to go, but I have heard enough for now. I want to hear from the hon. Gentleman, rather than other people.
Mr MacNeil
Thank you, Mr Deputy Speaker. It is because of my modesty and kindness that I want to share the wisdom of others. I do not see myself as the sole well of wisdom. [Interruption.] “Thankfully,” say my SNP colleagues.
We have to consider how poverty and inequality are affecting young people. I spoke to a young person recently who said, “It’s difficult being young. Houses are expensive. We have tons of student debt. The costs of living are rising and wages don’t go up. It’s sort of tough being young at the moment.” That young person was right. I was at university when student loans came in. I followed a demonstration against student loans that was led by a student who later became an MP. I later saw him on television backing Labour’s introduction of tuition fees in 1998. I cannot remember his constituency.
There has been a sharp rise in the number of 24 to 34-year-olds who are living at home with their parents. As Joe Stiglitz said, that is not due to a rush of filial devotion, but because they have no choice. The economic cards are stacked against them. Youth unemployment is high in many countries. It is too high in Scotland and higher still in the UK as a whole. Instead of getting on with their lives, the young find themselves in a holding pattern.
The SNP has done what it can in Scotland by keeping tuition fees at zero, which is saving families from paying £36,000 for a four-year degree. Families risk having to pay that if we vote no to independence. We know that there are cuts down the line and some people think that this is a something-for-nothing society and that certain things should be taken off the table. We do what we can with the powers that we have, but we want to do so much more.
An exciting proposal in the White Paper that will tackle inequality is to follow Sweden’s example on child care. Parents of early-years children in the UK face the highest child care costs in Europe. Parents in Scotland spend about 27% of household income on child care, compared with the OECD average of 12%. Independence would give us the opportunity to make transformational changes to the way in which Scotland provides child care services. That will allow women, in particular, to work without worrying about the cost of looking after their children. With independence, the benefits of their work, such as economic growth and tax revenue, will stay in Scotland and contribute to the costs of child care provision.
The Scottish Government plan to have a universal system of high-quality early learning and child care from the age of one up to school entry. At the end of the first year of an independent Scottish Parliament, every three and four-year-old and vulnerable two-year-old will be entitled to 1,140 hours of child care. That is the same amount of time as children spend in primary school each year and is equivalent to 30 hours per week over 38 weeks. That is an important aspiration. It demonstrates one way in which we should be moving our society forward. It would certainly be a way to reduce inequality.
It has been argued that inequality has caused the rise in household debt because people try to keep up with the Joneses. There are more pernicious examples of what inequality can do. Professor Paul Krugman states:
“Before the financial crisis of 2008 struck, I would often give talks to lay audiences about income inequality, in which I would point out that top income shares had risen to levels not seen since 1929. Invariably there would be questions about whether that meant that we were on the verge of another Great Depression—and I would declare that this wasn’t necessarily so”.
In the end, it turned out that that was the case. Once again, we are not arresting the growth in inequality. Are we on the verge of repeating the same mistake? I wish that we would learn, but we seem not to be doing so.
Some voices in the world are talking about inequality. Yesterday, the mayor of New York, Bill de Blasio, made a speech about tackling inequality in New York. My only criticism is that, when one looks at the detail, it is quite timid. The Pope has said:
“The promise was that when the glass was full, it would overflow, benefiting the poor. But what happens instead, is that when the glass is full, it magically gets bigger nothing ever comes out for the poor.”
The church and nation committee of the Church of Scotland addresses that issue frequently and, as I said, the Church of England’s Archbishop of York has also done great work. A number of US Senators are aware of the problems and what is happening.
In my view, Governments should concentrate on growth and jobs. The deficit obsession and austerity cult has taken demand from the economy and probably led to a slower recovery—we have probably lost years as a result of the policies that were followed. We cannot fully prove that because we do not have a controlled environment in which to do so scientifically, but the feeling among many economists is that growth has not returned as strongly as it should have done, and that when it did come back it was three years delayed.
We are in food-bank Britain; we have the bedroom tax hammering people. VAT, one of the most regressive taxes, has been increased to 20% in this Parliament. That is a real shame and something that hits people disproportionately. We have had the cut to the 50p tax rate. That probably cost £4 billion to £5 billion in revenues, although the Commons Library has stated that behaviour alteration should mean that it will cost only £0.5 billion. Only £0.5 billion? That means that the cut to the 50p rate of tax has cost the Exchequer and not raised any extra revenue.
In the debate last Thursday—I am coming to a conclusion, Mr Deputy Speaker—it was sad that many of those Members who had the opportunity to speak in a very time-limited debate made no real mention of the future, and there was no mention at all of poverty. Unfortunately, we seem to have made a god of money, and we treat those who do not get hold of it as somehow inferior beings. In fact, as somebody once remarked, the cure for cancer might well be found in a child living in a poor household. They should be given a helping hand and an opportunity for their future because—who knows?—they could help us some day.
I have a couple of final reflections. It was said of Nelson Mandela that he not only liberated the blacks in South Africa, but also the oppressors. When I look at inequality I see, of course, great insecurity at the bottom, but I also see insecurity at the top. People realise that when the safety nets are removed, they themselves are a step or an accident or two away from going down. If those people do not have a society with safety nets in place for their own security, they can never fully relax. They need to get more and gather more because—who knows?—they, a relative or a friend might need it.
That struck me very strongly when I was at Alabama state university on an exchange programme with a US Congressman and we went to see a game of American football. We were taken to the president’s box of the university, and there were people who had made it in life. I met a man from Leeds, but it struck me that despite having made it, the talk was all about health insurance, health care, and what sort of plan people had—conversations we do not have in this country. In reality, there was deep insecurity because the social nets were not there to help everybody. When the nets are not there for the poorest and most vulnerable, we, our friends, our relatives, the relatives of relatives and friends of friends, are all but one step away. It is not a nice situation to be in, and I could see the fear in the whites of their eyes. Even though they personally had made it in society, there was massive insecurity around them.
Just as Nelson Mandela liberated the blacks and the oppressors, so too does the arresting of inequality liberate the poor and the rich—not quite in equal measure, but it certainly liberates them both from the insecurity that inequality brings to us all. We should work to get rid of inequality, and I hope that when we have independence, we can prove that one of the best ways of fighting inequality and poverty is through the prosperity that I expect we shall bring to Scotland.
Guto Bebb (Aberconwy) (Con)
It is a pleasure to follow the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). In 1979 I spent a fantastic summer holiday on the Isle of Barra—something that I have promised my children I will repeat at some point.
Guto Bebb
Thank you.
This has been an interesting and passionate debate thus far, but I would like to pick up on a few points made by the hon. Gentleman about the minimum wage. Members across the House will share the aspiration to increase the minimum wage, but to accuse the Prime Minister of inaction when he has simply stated a need to consider the facts is slightly unfair. On Friday, I met a number of constituents who run small hotels in my constituency. Not a single one of those six businesses had posted a profit in excess of £15,000 for the past three years, yet they all employed people and each paid slightly above the minimum wage. They want to do the right thing and retain their staff, but when talking about prosperity and creating jobs, we must ensure that anything we do with the minimum wage does not destroy the very thing that helps people out of poverty, which is having a job.
Lorely Burt
I understand the hon. Gentleman’s point about the minimum wage, but is he aware that were the Government to adopt the Liberal Democrat policy of increasing the threshold at which people start to pay tax to the minimum wage, that would achieve the living wage?
Guto Bebb
There is certainly an argument that to increase the minimum wage when, as things currently stand, the Government have already taken tax out of the minimum wage, would look as if they were kicking businesses for the sake of kicking them. I have supported the fact that the Government have increased the personal allowance dramatically, which has made work pay for people in many circumstances, but my point is that taking time over a decision is not something we should be ashamed of. Indeed, we should be proud of taking time to make the right decision on something that is so important for a constituency such as mine, where 27% of the working population are either self-employed or work for small businesses.
I must take issue with a few points raised by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in his opening remarks. He began his speech by talking about Hywel Dda, who was indeed classified as one of the better Welsh kings. I was, however, surprised to hear the hymn of praise to a royalist from an avowed republican. Indeed, in terms of Hywel Dda, or Hywel the Good, being good, perhaps the true title should be Hywel the not-so-good. In addition to being the man who classified and created Welsh law, he also ordered the execution—the murder, I should say—of his brother-in-law in order to take over the kingdom of Dyfed, which is the current constituency of the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Furthermore, so as to extend his kingdom to the north and take over the whole of Wales, he also dispossessed the two sons of Idwal Foel from Gwynedd. When giving examples, I think we must put the man in the context of his time. It is interesting to highlight, however, that the Hywel Dda laws were in many ways ahead of their time in trying to achieve a level of equality between the sexes—not something that we saw in other parts of the United Kingdom for a very long time.
I also take issue with the comments by the hon. Member for Carmarthen East and Dinefwr about a proportional system of electing people leading to greater engagement with the political process. It is an attractive argument, but one that can be rejected simply by looking at the situation in Wales. We have 40 Members of Parliament who are elected on a first-past-the-post basis, and 60 Members elected to the Welsh Assembly, which uses a version of proportional representation. In a constituency such as mine, however, 70% of the electorate—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am a bit worried that we are getting in to a debate on proportional representation. I presume the point is linked to fairness and equality somewhere.
Guto Bebb
I am responding to the initial comments that proportional representation leads to a more involved electorate. I would challenge that because, as I was about to say, in my constituency 70% of constituents turned out in 2010 on a first-past-the-post race, but under a PR system in 2011, the turnout was only 40%. If we want democratic engagement, I argue that the evidence for the hon. Gentleman’s point is not clear.
Finally, I agree with the hon. Gentleman that when trying to ensure full employment in Wales and supporting businesses—all part and parcel of improving equality and job opportunities—we must support our small businesses and ensure that our banks are lending. My right hon. Friend the Chancellor of the Exchequer has made huge strides in trying to ensure that the banks support small businesses, but I accept the arguments about the need for further intervention to support small businesses in Wales.
I take from the comments of the hon. Member for Carmarthen East and Dinefwr an implied rejection of the work of Finance Wales, an organisation which has existed in Wales for a long time and has the purpose of supporting small businesses. In my view, it is a Government-supported way of supporting small businesses. On Friday, however, in my constituency I met a small hi-tech IT company employing 23 people, which had been asked to pay 9% above base to be lent money by Finance Wales. That is the type of behaviour that, if undertaken by the banks, we would be criticising openly. The initiative is supported by the Welsh Labour Government, and they should ask themselves serious questions when small businesses trying to create employment opportunities in my constituency are offered penal rates to borrow money.
I have some sympathy with the comments made by the hon. Member for Carmarthen East and Dinefwr. I share his surprise at the behaviour of the Labour party in the Welsh Grand Committee last week. Democratic engagement is part and parcel of the process through which we engage people and tackle inequality. However, the Labour party’s rejection of the entirety of the Silk commission report, with the exception of borrowing powers, should concern us greatly. If we are to create equality, in Wales and in the United Kingdom as a whole, we should avoid spending more money on debt repayment than we do on education. The only part of the Silk commission report that the Labour party seemed willing to support was more borrowing powers—no surprise, perhaps—but that is a betrayal of the aspirations that those of us on the Government Benches have for the people of Wales.
Mr MacNeil
I have been hearing quite a bit about the Welsh Labour Government’s rejection of more powers going to Wales, but I still cannot find the reason for that. Do they doubt their own abilities of stewardship and governance? Does the hon. Gentleman know why they do not want them?
Guto Bebb
It is not for me to correct the hon. Gentleman, but I am not sure whether the proposals were rejected by the Welsh Government. They were certainly rejected by the Labour Front-Bench team in Westminster—a significant difference. Perhaps Labour Members can enlighten us on whether there is a lack of trust between the Westminster team and the Assembly team.
The motion is wrong-headed in many ways, but its key failure is highlighted in the final sentence, which
“calls on the Government to halt its further spending and welfare cuts”.
That tells us that the motion is not serious. It talks about the importance of creating equality and opportunities and supporting people and communities, yet it does not recognise that to have a successful, sustainable economy we cannot carry on borrowing at rates that are unsustainable in the long term. There is nothing moral, fair or reasonable about asking our children and grandchildren to pay for our mistakes. We have a responsibility to future generations not to saddle them with unsustainable debts. We have an ageing population and a demographic problem, nowhere more so than in parts of north Wales that I represent. We face a real challenge to care for the elderly and to ensure that we have a fair pension system. Future generations will have to meet those obligations. In asking them also to meet our inability to take hard decisions, the motion is not a serious one, and it deserves to be rejected.
Jonathan Edwards
Will the hon. Gentleman inform the House what the debt to GDP ratio is now—it has risen under this Government, of course—and what it was in 1947, when the NHS was created?
Guto Bebb
The hon. Gentleman has made this point on numerous occasions. He is absolutely correct to say that the level of debt has increased under this Government, but for a party that says the level of debt should have increased at an even faster pace, it is hardly reasonable to argue that this Government have therefore failed. It should also be pointed out that we have an NHS that is, rightly, much more expensive and costly than it was in 1948, so that is a false analogy.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Dare I say it, but the comment by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) shows that until we balance our books and are in surplus we will never start to pay down debt. His motion contradicts his desire to reduce the debt to GDP ratio.
Guto Bebb
I fully accept and endorse my hon. Friend’s comments. It is important, when we debate public spending and the level of so-called cuts, to bear in mind that we are running a state that is not meeting its obligations. Even in this financial year, we are borrowing £110 billion. We are not out of the woods by any stretch of the imagination. It would be an irresponsible Government who would damage the opportunity for people to have more equality through a willingness to borrow more without any plan to reduce the country’s level of debt.
Mr MacNeil
Is the problem for the Government not that the rush and the desire to attack the deficit has taken the focus away from what they should be doing: returning demand and growth to the economy? To make an equivalence between the national economy and a household budget is wrong-headed in the extreme and has led to the three-year delay in growth. It is leading to the wrong policies and—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. In fairness, the hon. Gentleman has had a good day. He has made a lot of interventions and he spoke for almost an hour, so to try to make another speech is unacceptable. A lot of Members want to get in.
Guto Bebb
I reject the hon. Gentleman’s argument. To have more equality, we need more jobs and economic opportunities. The hon. Gentleman argues that that would happen with more Government spending as a proportion of the economy. If that was the case, then Wales would be, by a long stretch, the most successful part of the United Kingdom, because there is no part of the UK more dependent on the public purse. The dependency on public spending in Wales has led to failure not over the past three or four years, but over a 15 to 20-year period. It has not led to economic growth or prosperity, and it has not led to economic opportunities. Indeed, the very reverse is true: the size of the state in Wales is one of the reasons why the rebuilding job being undertaken by the Westminster Government is so important. In a Welsh context, we have created an economy that is unbalanced and has not created the variety of jobs needed to support our young people and ensure that we have an equal society. I argue very strongly that anybody who says that the answer to all economic issues in a Welsh context is more public spending is simply wrong.
Guto Bebb
I will try to make a bit of progress.
The key point to remember is that those who now claim that the economic recovery has been too slow in coming are the exact same people who claimed that unemployment would increase dramatically because of the decisions taken in 2010. They are often the same voices who argued that there could be no growth without public spending, yet in Wales and in the whole of the UK we are seeing a vast increase in private sector employment. We have 1.5 million new private sector jobs, a ratio of almost 4:1 in comparison with the loss of jobs in the public sector. Wales is not an exception. Time and again when this is debated in the Welsh media, we hear people saying that the economic recovery is happening in London and the south-east. That is simply not reflected in the facts. In Wales, unemployment is falling and employment rates are increasing.
Anyone who is genuine about the opportunities necessary to reduce inequality would welcome the jobs that are being created. What we often hear from the parties on the Opposition Benches, however, is a complaint about the type of jobs being created: that they are not proper jobs and not the type of jobs we should be proud of. That is such a demeaning comment to make to people going out of their way to try to earn their living. I wonder how someone working in a Tesco or an Asda in my constituency feels when they hear a member of the Labour party demeaning a job as nothing more than shelf stacking. Such comments from a party that claims to represent labour are utterly disgraceful. I have made this point to the House previously and I will make it again.
One of the most moving things I have done as an MP was to visit a Tesco partnership store in Toxteth, in Liverpool. I can tell Members that a visit from a Conservative MP from north Wales is not something that happens very often at any store in Liverpool. The Tesco store in Toxteth was the largest inward investment into Toxteth since the riots in 1982. It was Tesco that undertook that investment. Half the staff employed at that store had been unemployed long term—for more than 18 months. The retention rate was more than 94% and the pride they showed in the fact that they were now working for a living was moving—there is no other way of describing it. I met one lady who ran the bakery section and asked whether she would ever want to move on. Her response was, “I’d have to be taken out of here in a box. It has given me my life back.”
Mr Russell Brown
I apologise to the hon. Gentleman—perhaps I am not in the Chamber as often as I should be—but I have yet to hear any of my colleagues condemn anyone in the retail sector. Those are valued jobs and, as the hon. Gentleman, I and many other colleagues know, working in retail is about much more than serving customers and stacking shelves.
Guto Bebb
I welcome that intervention from the hon. Gentleman, who clearly understands the importance of the retail sector. I was talking about comments made on radio and television by members of the Labour party. When I hear those comments I get annoyed as they refuse to acknowledge the fact that the sector provides the individuals in Tesco in Toxteth, or in various businesses in my constituency, with the opportunity to start a career, learn a skill and move on—and I would argue that people need a job to be able to move on to another job. It makes such a difference and those opportunities should not be dismissed by those who earn far too much to appreciate how important it is to earn a living, perhaps for the first time, and, in some cases, to be the first member of a family for a generation to take a job.
We need to be aware of the fact that the success we are seeing across the UK is being replicated in Wales. In a Welsh economy with relatively low levels of pay, it is even more important that we reduce the tax burden on those individuals. I have heard Opposition Members complain that although it is all very well to reduce people’s tax bills, by increasing the personal allowance tax credits have been reduced. That is not about what is right for the individuals; it represents the significant difference between the Government and Opposition. Government Members want to allow people to keep as much of their earnings as possible, because if a person goes out there and works we should tax them as little as possible. The Opposition were quite happy to tax people earning as little as £6,000 a year and recycle the money through an expensive, well-paid bureaucracy before paying it back to buy a client state. That was the dishonesty of the tax credit policy.
Nia Griffith
Will the hon. Gentleman explain why his party has introduced measures that have cut the taper on the tax credit system, making it much more severe and causing more difficulties for people? Does he not agree that the only way to reduce the tax credit bill, as tax credits top people up to a decent wage, is to ensure that wages go up through a strong minimum wage and incentivise employers to introduce a living wage?
Guto Bebb
As the hon. Lady knows, as I have already touched on the minimum wage, I believe that it is a complex issue that must be considered carefully. My view is that we should carefully consider moving towards a point where we do not need tax credits, as the imperative is to allow people to earn a living and pay as little tax as possible on their earnings. That should be the aspiration.
Mr Marcus Jones (Nuneaton) (Con)
My hon. Friend mentions the issues caused for his constituents by the way in which the Labour party dealt with income tax and the tax threshold, but were they not compounded by the removal of the 10p tax rate?
Guto Bebb
It undoubtedly did not help.
When we discuss inequality we should be aware of the key point that the Government have been very proactive in ensuring that the inequality faced by pensioners is dealt with. We can compare the impact of the triple lock on pensioner poverty with the previous Labour Government’s decision to increase pensions by a paltry 75p.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Taxation is not just about income tax, but about VAT. Is that not perhaps the most unfair tax on those at the bottom of the pile?
Guto Bebb
I would reject that argument. We talk about VAT, we often forget the exemptions. If somebody is buying a new Ferrari, I have no problem with their paying £50,000 in VAT. If somebody buys their food in a supermarket, they pay 0% in VAT. If VAT were 20% on every single item, it would be a regressive tax. For those who spend a significant proportion of their income on food, or on household fuel, which is taxed at 5% rather than 20%, the VAT issue is not as clear cut as Opposition Members try to make it.
Guto Bebb
Not at the moment.
When we talk about inequality, it is important to recognise that the Government’s work on pensioner benefits has significantly reduced pensioner poverty. We should also recognise that in a country such as Wales, with such a high dependence on self-employment, the Government’s moves to introduce a single-tier state pension will make a huge difference for those who are self-employed and will result in less inequality when people reach retirement.
The hon. Member for Carmarthen East and Dinefwr, who has now, unfortunately, left his seat, said that there was a need for more investment in a Welsh context. Let me be very specific about the situation in Wales. Since 2000 and 2001, the Welsh Government, supported by European structural funding, has invested billions of pounds in so-called initiatives to deal with Wales’s lack of economic progress. When people talk about the need for public sector investment to create wealth and employment opportunities, it is important to consider the case study of how European funding, spent under the guidance of the Welsh Labour Government—and under the Welsh Labour and Plaid Government for four years—was used through so-called interventions that were meant to create employment opportunities and ensure that we had a more equal society. That has failed dramatically and for the entire period of intervention by the Welsh Government and the EU, west Wales and the valleys have gone backwards rather than prospering.
Guto Bebb
Let me finish this point.
Back in 2000, when the decision was made to apply for objective 1 funding it was argued that this was a once-in-a-lifetime opportunity for Wales as the GDP of west Wales and the valleys as a percentage of the European average was roughly 74%. As hon. Members will be aware, once that percentage is above 75% the highest level of EU intervention is not available. It was also described as a once-in-a-lifetime opportunity because in 2004 all the accession countries from eastern Europe, which had been behind the iron curtain for decades, would become part of the European Union. Lo and behold, in two rounds since 2001 Wales not only has qualified for such funding but has qualified because we are going backwards rather than forwards. Those Members who argue that public spending, Government intervention and the “Government know best” mentality are the way forward for the Welsh economy should seriously consider the impact of public spending on west Wales and the valleys.
I shall now take a final intervention from the hon. Member for Na h-Eileanan an Iar.
Mr MacNeil
What the hon. Gentleman is describing in Wales is a symptom of picking winners; things cannot happen there organically. What is the difference between the EU accession states and Wales? What is the difference between Wales and the Republic Ireland, which used to be behind, but is now well ahead of Wales? The difference is that they have Governments who can make things happen organically within their nations, instead of having to join the “picking winners” line because of policies from another country’s capital that do not fit their needs.
Guto Bebb
Obviously, I do not accept most of the hon. Gentleman’s arguments; certainly, we should be careful about taking lessons from the Irish implosion. Ireland is probably one of the few countries to have a banking crisis even greater than ours. Many of the eastern European accession countries have managed to create vibrant economies by imposing low-tax regimes, and the whole of the UK should look carefully at those countries’ performance.
In the debate about whether we have a 50p, a 45p or a 40p tax rate, I remind Labour that it found the 40p tax rate completely acceptable for the vast majority of its 13 years in government. What is the purpose of income tax? That is a question that is often forgotten. Its purpose is not to bring down and punish the successful. If we believe in a more equal society, we want more money coming into the Exchequer, because that means we can do more to support the less well-off in society, but we have lost sight of that argument. If we reduce taxes and get more money coming into the Exchequer, that is something that should be welcomed. Time and again, it has been shown that when taxes are reduced, more often than not, the result is more economic activity and a greater success story.
Richard Fuller
Does it not strike at the economic illiteracy of the shadow Front-Bench team that they are far more interested in a headline tax rate than in raising revenue to pay for the public services people want?
Madam Deputy Speaker (Dawn Primarolo)
Order. Before the hon. Gentleman continues, I should point out that this debate has been going for more than two and a half hours, and he is only the fourth speaker. If every Member insists on taking this long, there will be a lot of disappointed people in the Chamber. I am sure he has lots to say, but so have other Members, and some consideration on both sides of the Chamber could help in making speeches just a little shorter than over half an hour.
Guto Bebb
Thank you, Madam Deputy Speaker. I took my cue from the initial speeches, which I think lasted an hour.
The issue of tax is crucial. I do not want to reduce tax for the sake of it; I want to reduce it because it will stimulate the economy and bring more money into the Exchequer. The hon. Member for Na h-Eileanan an Iar said he wanted to reduce corporation tax to stimulate the economy. I do not understand why reducing corporation tax stimulates the economy, but the same does not work for individuals.
I turn to inequality and the attack in the motion on the Government’s welfare reforms. Those reforms are crucial to the coalition Government’s legacy. In 2010, it was said the coalition came together to deal with the deficit, but just as important, I would argue, was the welfare reform agenda. It might not work, but if it does not, it will be the greatest shame. This brave effort to reform our welfare system is not about penalising people or depriving them of money; its whole purpose is to show faith in people—a faith never shown by the opposition parties.
The Labour Government had a make-believe target for taking people out of poverty. Poverty was defined as below 60% of the average wage, so if the average wage rose by 10% and the wage of somebody on 60% went up by 10%, they moved from not being in poverty to being in poverty. They were better off, but because the line had moved, they were defined as being in poverty. Even worse, if somebody was on 60% plus £1, they were defined as not being in poverty and therefore a success for the Government. That person did not necessarily feel suddenly out of poverty—they still struggled and found life difficult—but policy makers could forget them because they were above that line. That is why we ended up with 5 million unemployed people during 13 years of the previous Labour Government—5 million people, yes, who had money thrown at them so as not to embarrass Labour in relation to its poverty target, but 5 million people forgotten by Labour and denied the initiative to work because they were being paid to be on welfare. It was deeply shameful that they ignored people in that way, and I am proud to be part of a coalition Government who are at least making an effort to deal with it.
Between 2005 and 2010, 400,000 people born in the UK moved into unemployment, yet 700,000 jobs were taken by people not born in this country. There was something wrong with a system that said to people in my constituency, “You can be on welfare, while someone from eastern Europe works in the local hotel or the abattoir.” That is shameful, and we need to deal with it, because the opportunity to develop must start somewhere.
I feel passionately about this issue when I talk to the deputy manager of a hotel in my constituency. He came to this country from the Czech Republic, and within 18 months he was a deputy manager. I was very pleased for him, but I thought that the job could have been given to someone from the locality if that person had not been held back by the welfare trap that we had created. Our gradual move towards universal benefit is a brave move, but although it has been supported by Opposition Members in terms of their rhetoric, in terms of their actions they have rejected every effort that we have made to reform a system that is immoral, and is the basic reason for the fact that we have so much inequality in Wales.
The Labour party in Wales should feel particularly ashamed. The areas in Wales that are really struggling have given their loyalty to the Labour party not for one generation, not for two generations, but for three or four generations, and they have been failed time and again. It is clear from today’s debate that the Government are making really brave decisions to try to ensure that people are not seen merely as numbers so that they can be taken £1 over a moveable poverty line. Our coalition tries to see the value of each and every individual, and the contribution that the individual can make. Nothing will make a bigger impact on inequality than getting people back to work when they are capable of making a huge contribution that is currently being wasted.
When I see motions of this kind, what I see is the same old rhetoric of the middle-class, left-wing readers of The Guardian who have dominated this country for far too long. What we need are the reforms that are being implemented by the Secretary of State for Work and Pensions. What we need are the tax reductions that are being implemented by the Chancellor of the Exchequer. What we need is to show faith in the people of the country, whether that country is Wales, Scotland or the United Kingdom. Government Members see those people’s potential, but I fear that Opposition Members—especially those in the Labour ranks—saw them simply as numbers to be dealt with in the context of their poverty targets while doing nothing to help them, and they should be truly ashamed of that.
Mr Russell Brown (Dumfries and Galloway) (Lab)
It is a great pleasure to follow the hon. Member for Aberconwy (Guto Bebb).
Some of the best debates that we experience in the House—on all too few occasions, it must be said—are those that mean a great deal to the people whom we represent, and at the same time manage to secure a degree of consensus. It is therefore a great shame that the Scottish National party, Plaid Cymru and the Greens have chosen to go somewhat native today. Rather than providing an opportunity for a straight vote on a commission of inquiry to put pressure on the Government, they have chosen to show their real side by playing gesture politics.
Just over four weeks ago, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) led a Back-Bench business debate on the subject of welfare reforms and poverty. Winding up the debate for the Opposition, my hon. Friend the Member for Rhondda (Chris Bryant) made it clear that there was a need for a commission of inquiry.
Nia Griffith
Is my hon. Friend aware that 18 Labour Members spoke in that debate, and not a single nationalist did so? I do not blame the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he was on paternity leave, but is it not shocking that the nationalists should dare to suggest that Labour is not equally concerned about poverty?
Mr Brown
I have a copy of the report of the debate, so I am well aware of its content and of which Members contributed to it.
We may find little common ground today, but we can at least agree with the nationalist parties on the need for an inquiry into the impact of the coalition’s cuts on poverty throughout the United Kingdom.
The motion opens with the words:
“That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses”.
It is those last four words—“according to some analyses”—that present the problem. If we look at the OECD figures, we can see that the most recent ones are out of date. Definitions are provided for these figures, and statistics are also provided, but because different surveys and methodologies have been used, it is a real problem to get fully behind the figures and to determine what they are saying. In other words, statistics can prove one thing to one individual but tell a different story to another.
The coalition’s austerity measures have undoubtedly resulted in the greatest burden falling on low and middle-income families, while the richest have been given significant tax cuts to ensure that they do not feel the cold draught of the current economic climate. That is why Labour Members have consistently called for action to tackle the cost of living crisis caused by this Government. Such action would include freezing energy prices, taking real action to end exploitative zero-hours contracts, and strengthening the minimum wage now.
My right hon. Friend the Member for Morley and Outwood (Ed Balls) recently said that if Labour forms the next Government,
“we will restore the 50p top rate of tax”.
I know that that causes anxiety for Government Members, but we believe that, in tough times like these, those with the broadest shoulders should bear the greatest burden.
Lorely Burt
Will the hon. Gentleman tell the House for how many days the 50p rate of tax was in force during the 13 years Labour was in power?
Mr Brown
The hon. Lady knows as well as I do that it was a matter of days, but this also relates to the comments made by the hon. Member for Aberconwy about the impact of taxation on individuals. For most of that time, there was never a need for that higher rate of tax to be imposed. The hon. Lady knows that it was a Budget decision to raise the rate from 40p in the pound to 50p. Yes, that rate applied only for a matter of days, but the Labour Government had not felt the need to increase it at any other time.
Alun Cairns (Vale of Glamorgan) (Con)
Will the hon. Gentleman tell us how much he expects the 50p tax rate to raise in net gains to the Treasury, and how that squares with the comments from the Institute for Fiscal Studies about the policy?
Alun Cairns
I notice that the hon. Gentleman did not answer my question about the comments from the IFS. Does he accept its view that the net gain from Labour’s policy would be negligible?
Mr Brown
The net gain will be significant. It will be some 11% more than is currently being raised.
It is notable that there is no mention in the motion of creating a fairer tax system. The Scottish National party’s plans for independence include slashing corporation tax, but it has been unable to provide any certainty on whether it would follow Labour in introducing a 50p tax rate. In fact, the SNP Finance Secretary in the Scottish Government has resisted making the party’s tax policy clear in any way.
We now accept that the driver of inequality has been the rate at which salaries at the top have increased in recent years. Again, however, the motion makes no mention of that. It says nothing about how we are to get to grips with high pay in the UK. The Labour Opposition have accepted the recommendations of the High Pay Commission, and we have outlined three key tests that the Government must meet to show they are serious about executive pay being at such high levels. First, we want firms to publish details on the ratio of employee average salaries to executive pay, and for the Department for Business, Innovation and Skills to publish a league table showing the highest ratios. Secondly, we want to see an employee representative on the remuneration committee of every company. Finally, we would repeat Labour’s tax on bank bonuses to fund a compulsory jobs guarantee for any young person on unemployment benefits for 12 months or more. These young people are not our future—they are part of today, and they need to be employed today and well into the future. That is real action to bring about fairness in our society, but what we have heard from the Scottish National party and Plaid Cymru this afternoon often bears closer resemblance to what those on the Government Benches have been saying.
Yesterday, during a question on economic inequality, Lord Newby stated that
“according to the latest ONS statistics, income inequality in the UK is at its lowest level since 1986. The Government are committed to ensuring that all families benefit from the return of growth to the economy”.—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408.]
That is not what far too many individuals and households are actually experiencing. Any economic recovery here in the UK is patchwork in its nature. As I have said in the Chamber previously, there are many rural localities where households are in a desperate plight, with below average earnings.
Stephen Crabb
Is the hon. Gentleman saying that he does not believe the statistics and that he does not believe that income inequality is dropping in the UK at the moment?
Mr Brown
I am saying that a rosy picture is being painted. Some will say, “It is happening in London and the south-east”, but the Minister represents a Welsh constituency, which is rural, just as mine is. People in rural constituencies and in some urban constituencies are finding things really difficult indeed. The situation is still pretty tough and they do not recognise this rosy picture that is often painted.
Also in the other place yesterday, Lord Lawson stated that
“it is far more important to focus on making the poor richer than on making the rich poorer”.
I have to agree with that, but the Minister replied:
“we want to make sure that everybody makes a fair contribution to society and that all those in work get a fair wage for their labour. Obviously, there comes a point when taking too much tax from those right at the top becomes counterproductive.”—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408-09.]
I would have to argue with that; those comments by the Minister tell us an awful lot about what those on the Government Benches are thinking.
Where we disagree with the text of the motion is on the words
“successive governments of all political hues have presided over an underlying trend of rising income inequality since the early 1980s”.
There can be no doubt that over the past 30 years or so there have been some particularly difficult and distressing times for many families, but during the early years after the change of government in 1997 rapid improvements were made right across the country. [Interruption.] I am not about to rewrite history; I am about to tell the Chamber what actually happened, because we tend to forget. This relates to a point made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he said that if Labour were to win the next election we would be carrying out the current Government’s spending plans. When Labour came to power in 1997 we held by the tight budgetary constraints, but as a party coming from opposition to government we decided that we would spend the money in a wholly different manner. What did we do with the chance that came our way? We created employment opportunities for young unemployed and long-term unemployed people, the disabled and lone parents through the new deal, and those very chances that were given to so many people brought about a marked change when coupled with the introduction of the national minimum wage and working tax credits. It was not the answer to every woe that people had suffered under the previous Government, but it was a major step forward. For many individuals, especially women, it meant that they no longer had to try to hold down two or three jobs to make ends meet.
The motion makes reference to inequality between men and women, but fails to recognise the gains made by women under the Labour Government from 1997 to 2010. I am talking about not just the minimum wage and tax credits but extensions to child care, which allowed more women to participate in the labour market, and extensions to maternity leave, which meant that women no longer had to choose between work and family life soon after having a child.
Let me now mention one or two things that have been raised this afternoon, including the issue of food banks. Over the past 12 months, there has been a 170% increase in the number of people using food banks. Between 2010 and 2011—some two years ago—61,468 people were using food banks, compared with more than 346,000 now. Those are only the Trussell Trust figures. There are other ad hoc, less regulated, food bank systems.
The Minister mentioned welfare reform. Let me tell him, in case it has slipped his mind, that the previous Labour Government introduced three welfare reform Bills, and we maintained that those who could work should work and should be given help and support into work.
Pete Wishart
Where does the hon. Gentleman stand on the great “more powers” debate in the Labour party? Is he one of the boycotters, or is he an enthusiast of more powers? Would he give welfare powers to the Scottish Parliament, so that it is under Scottish people’s democratic control, or does he want to keep it with the Westminster Tories?
Mr Brown
I will come to that in just a moment. It is not that I need time to think. [Interruption.] Let me tell the hon. Gentleman that I am a solid believer in devolution.
We put three welfare reform Bills through the House. They were designed to ensure that those with the greatest need received benefits not just to exist but to live. We were able to recover that money by getting others into work. We were making progress on that when the banking crisis hit and turned the world upside down.
Stephen Crabb
The hon. Gentleman’s party may have introduced three Bills on welfare reform during its 13 years in government, but the records show that it ducked all the really difficult decisions on welfare reform. It was frit on that and, as a consequence, there are 200,000 people in Wales who have never worked a day in their lives.
Mr Brown
I hear what the hon. Gentleman is saying, but there is an element of him trying to rewrite history. We were making progress. I cannot say what he experienced in his constituency, but there were people in my constituency, some of whom had been out of work for a long time, were disabled, or had been seen as people who would never work, who got into employment, and that was thanks to the excellent work of the Department for Work and Pensions staff. We did make progress; it was just that it was not as much as we would have liked.
Alun Cairns
Can the hon. Gentleman point me to any Labour Government in the past who left office with unemployment lower than it was when they entered office?
Mr Brown
I will be honest with hon. Gentleman and say that I cannot give him that figure. However, I think he is trying to forget that there were almost 3 million people who were unemployed under the previous Conservative Government. We worked massively hard to reduce the levels of unemployment in this country, so much so that, as a Government, we were talking about the potential of full employment in this country, which is a long way away from where we are today.
Mr Brown
Let me just mention one or two other things. The hon. Member for Suffolk Coastal (Dr Coffey) has left the Chamber, but she spoke about paying down debt. In case the House has forgotten, when we came to power in 1997, there was 43% debt, and we paid down debt as we progressed over the years to 37%.
The hon. Member for Aberconwy spoke about taxation. I do not have a problem, as he has, with a 50p income tax rate, but I do have a problem with value added tax. Our colleagues in the SNP need to be absolutely clear and honest with the people of Scotland: if Scotland achieves independence on 18 September and becomes a full EU member state, the people of Scotland will be looking at VAT on food, children’s clothing, and books and newspapers. That is fact.
The SNP is very good—and I have heard this a couple of times this afternoon—at comparing other small nations with Scotland. It is keen to mention Sweden, and all too often it mentions Norway, but the problem is that they have Conservative Governments. I do not know if that is what it wants in an independent Scotland.
Jacob Rees-Mogg
I think that a Conservative Government for Scotland is being a little optimistic.
Mr Brown
I am absolutely delighted that I allowed the hon. Gentleman to intervene. I have no wish to see that either.
The one thing that the SNP does not tell the people of Scotland is just how high taxation is in those countries that they are keen to mention and with which they make comparisons. It cannot run away from that.
On how the devolved Governments have operated in the UK until now and their record on increasing fairness and tackling inequality, the Welsh Labour Government, even in tough times, have worked to protect the most vulnerable in Wales from the Tory Government with Jobs Growth Wales, which will create over 16,000 jobs for young people in Wales, and the £35 million boost to the pupil deprivation grant in the next year. The same cannot be said for the SNP Government in Scotland. A recent report by the Joseph Rowntree Foundation noted that cuts by the UK Government and the Scottish Government in England and Scotland have meant that the most deprived local government areas receive £100 a head less in funding. Professor Arthur Midwinter of Edinburgh university recently concluded that
“the SNP’s budget strategy adds to the austerity agenda”.
I made a similar point in an intervention, as £l billion has been removed from anti-poverty programmes since 2008. Analysis by the House of Commons Library shows that cuts to the most deprived areas in Scotland are greater than those for the least deprived.
On local government and the underfunding resulting from the council tax freeze in Scotland, this is a debate about fairness and equality, so let me share with the House what we have seen as a result of local government being badly underfunded. Some of the poorest and most vulnerable people in our communities—those who need social services or who have to pay for services—have seen an increase in the cost of services or, if those services were free, charges have been introduced. That hits the poorest and most vulnerable the hardest.
Mr MacNeil
How much does the hon. Gentleman want to raise council tax by and what else is on the agenda for the cuts commission of Johann Lamont?
Mr Brown
That really is a naive question, but it is not unexpected. I am not asking for a council tax increase; I am asking for local government in Scotland to be properly funded. It has to be properly funded. To do otherwise is a false idea, especially when it falls on the shoulders of the poorest.
If the SNP was serious about tackling inequality in Scotland, it would be using the tools of the Scottish Government, like our colleagues in Wales, to protect people from the worst of the Tories. Instead, it would rather not let Westminster, in the words of its Finance Secretary, off the hook. At no point in the debate have SNP Members explained why they think this is acceptable for the people of Scotland. I would only hope that if there are to be further contributions from their Benches, they will explain away some of the inaccuracies that they think are in my contribution.
Lorely Burt (Solihull) (LD)
As a Member of Parliament from Solihull, I would not dream of presuming to talk about the very specialised problems of other parts of the UK, but I hope that I have a word or two to say about fairness and inequality. What was unfair was inheriting a £160 billion deficit from the Labour party. I appreciate that it was not all the fault of Labour. The banking crash all started with a company called Lehman Brothers, which makes one wonder what might have happened if it had been called Lehman Sisters. I can blame Labour for failing to regulate banks properly for 13 years, and then having to bail them out with a £500 billion rescue package. I can also blame Labour for allowing welfare spending to spiral up by 20% when the economy was growing. That has made circumstances difficult for our coalition Government.
I am proud of what the coalition Government have succeeded in doing. We have cut the deficit by a third, with more coming from the better-off, I hasten to say. Our flagship policy of raising the tax threshold at which people start to pay tax to £10,000 has taken 2.7 million people out of tax altogether, of which 60% will be women.
Mr MacNeil
The hon. Lady says that more tax is coming from the better-off, which is true, but are the better-off not getting a far larger slice of the productivity pie than they have in years and decades past?
Lorely Burt
I am not entirely sure what the hon. Gentleman means by the productivity pie, but over the same period of time a millionaire would have paid over £300,000 more in tax under the coalition Government than under the previous Labour Government. In addition, 24 million people have had a tax cut of £700 or more. Those are good things. In addressing unfairness, we seek to ensure that those with the broadest shoulders bear the greatest burden of the tax. The coalition helped 900,000 people out of poverty altogether between 2010 and 2012, so when Labour Members talk about increasingly harmful circumstances, it should be pointed out that poverty increased under the Labour Government and has decreased under this Liberal Democrat and Conservative Government.
We have also helped the rich to be relieved of more than their fair share of tax by increasing capital gains tax and closing pension loopholes. No company now will review its tax arrangements without considering the general anti-avoidance rule that we have introduced, which helps focus the mind because it concentrates on the spirit in which tax is paid, as well the fact. Sticking strictly to the law is no longer an excuse for not paying a fair share of tax. Under Labour, capital gains tax was 18%. We have increased that to 28%.
We fully appreciate that households are under great pressure and we have taken steps to remedy that—for example, by abolishing Labour’s fuel duty escalator, so that when the average motorist fills up their tank, they are paying £7 less to do that. No one denies that it is still expensive, but we are doing what we can to help.
Liberal Democrats have made a big contribution on fairness. There is now free child care for all three and four-year-olds, as well as for 260,000 two-year-olds. For parents who have children in child care, we have a £1,200 tax break coming down the line. We have frozen council tax and helped local authorities to achieve that. The average family will be paying around £600 less today in council tax than would otherwise have been the case. There are now 494,000 more women in employment and 100,000 more women in self-employment, which is an encouraging step. We will be introducing free schools meals for five, six and seven-year-olds, and as I have already mentioned, 60% of the 2.7 million women on low pay will be taken out of tax altogether.
Mike Thornton (Eastleigh) (LD)
Does my hon. Friend agree that it is a wonderful aim of the Liberal Democrat party that everyone on the minimum wage should be taken out of tax altogether?
Lorely Burt
Indeed. As I said to the hon. Member for Aberconwy (Guto Bebb), if our aspirations are realised and we can raise the threshold at which people start to pay tax to the minimum wage, we will achieve something very close to what is currently regarded as the living wage. That would be a tremendous help to the lowest-paid in Britain today.
The hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in her place, mentioned women on boards. Although we do not subscribe to a compulsory threshold of 40%, it is encouraging to see that the percentage of women on boards has risen from 12% to 19% since 2010.
Pensions are an extremely important issue for women because they have been suffering as some of the lowest pension receivers in the United Kingdom. The triple lock is creating a lot of support for women, but it will make a big difference when we reach the citizen’s pension and women receive, as they deserve, the same amount a week as men, at £140 a week or whatever the equivalent will eventually be. There are many other Liberal Democrat policies coming down the line, such as flexible working and shared parental leave.
In conclusion, the Liberal Democrats will continue to work for greater fairness, not by stripping down the state, like our coalition colleagues, but by creating strong public services. We have stopped some of the more ambitious aspirations of our coalition colleagues, such as the Beecroft report’s proposals on firing at will. We have stopped schools being run for profit and stopped inheritance tax breaks for millionaires, and we are continuing to work to raise the threshold at which people start paying income tax.
We want more equality and more fairness, but we also want opportunity for everyone. The work we are doing, particularly in relation to young children, will make a big difference. We want everyone to have opportunity, but we also want to have a safety net. We are yet to persuade our coalition colleagues that our proposed mansion tax on properties worth more than £2 million is a brilliant idea, but I think that it will be. I understand from the research that we commissioned—I will now make my only reference to Wales and Scotland—that the millionaires’ tax will apply to no one in Wales, and we identified 17 mansions in Scotland. I think that is very fair, and I am sure that Welsh and Scottish colleagues in the Chamber will applaud that as a very fair tax for the people they represent.
Mr Mike Weir (Angus) (SNP)
The Scottish National party’s manifesto for the 2011 Scottish Parliament elections stated:
“Scotland can never be considered truly successful until all of its citizens consider themselves to be equally valued members of society. We are determined that Scotland will constantly strive to be a more equal society.”
We said that because we believe in Scotland.
Within the UK, Scotland is unfortunately part of an increasingly unequal society, with too many trapped in poverty and prevented from reaching their full potential. As has been said, the UK ranks 28th out of 34 nations on the measure of overall inequality. OECD analysis shows that since 1975 income inequality among working-age people has increased faster in the UK than in any other country in the organisation. Academic analysis also suggests that the UK is the fourth most unequal nation of the world’s richest nations.
In a rich nation such as Scotland, it is ridiculous that in 2011-12, 710,000 people—14% of our population—lived in relative poverty. That includes 420,000 people of working age, 150,000 children and 140,000 pensioners. Despite periods of time when overall poverty has reduced, in-work poverty has remained high. Two thirds of children who live in poverty in the whole UK have at least one parent in paid work. We believe that it is absolutely unacceptable that in a nation with the wealth and resources of Scotland one in seven of our population live in poverty.
Since devolution, Scottish Administrations have sought to promote social inclusion and cohesion. Since devolution, child poverty levels in Scotland have fallen substantially, from 28% in 1999-2000 to 15% today, compared with a UK rate of 17%. That is a tremendous achievement by the Scottish Parliament. However, 200,000 more children across the UK will be pushed into relative poverty by 2016 as a result of the 1% cap on increases in benefit payments. That equates to around 15,000 children in Scotland. The Child Poverty Action Group has estimated that Scotland’s child poverty rate will increase by between 50,000 and 100,000 by 2020 as a result of the UK Government’s tax and benefits policy. That is a terrible indictment of what is happening in our country. That is why we seek independence: to tackle these problems.
With devolution, the Scottish Parliament has used its limited powers to tackle inequality. Our continuing commitment to a social wage will deliver benefits to everyone in Scotland in tough financial times. We have maintained the council tax freeze, saving the average band D taxpayer about £1,682 by 2016-17. We have kept higher education fee-free and we are keeping student debt levels the lowest in the UK. To me, that is vital. I was the first of my generation to go to university, and I was able to do so only because there were no tuition fees and I got a grant. My daughter has recently gone through university and, even with no tuition fees, it is now a very expensive process. I dread to think about what debt has been piled up on kids who are going through university now and how they are ever going to start in life, buy a house, buy a car or get married. As my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) said, there is an increasing trend for children to stay at home much longer and to live in flat-shares well into their 40s, in some cases, because they simply cannot afford the price of property.
The Scottish Parliament has abolished prescription charges, making the NHS truly free at the point of need, and we are supporting concessionary bus travel for over 1.2 million of our people—over-60s, people with disabilities, and injured veterans. We have provided NHS eye examinations free for all, and we have committed to free personal nursing care, benefiting more than 77,000 older people. Labour attacked many of these things in its cuts commission. The Labour leader said they were just wee things it is not in favour of—unless, of course, it is fighting by-elections, when it tries to take credit for them.
Mr Russell Brown
The hon. Gentleman mentioned free prescriptions. Why am I now coming across pensioners in my constituency who are visiting their doctor and instead of being given a prescription for painkillers are told to go to the chemist and buy them over the counter?
Mr Weir
I have never heard of that one; perhaps the hon. Gentleman should ask the doctors why they are doing that. We have made it clear that free prescriptions are an important policy for pensioners throughout Scotland. Too often, pensioners and those with multiple prescriptions had to choose whether to buy their prescription or eat, and they do not have to make that choice any more. This is a really progressive policy, despite what his leader may say.
We are investing in skills, training and education for our young people to make sure that they all have an opportunity in life. I recently visited the Angus training group in my constituency, where tremendous work is being done to train youngsters who are leaving school and have got apprenticeships in engineering. While the Chancellor may talk about the march of the makers, we are making sure that that actually happens and there is power behind it. We are protecting the education maintenance allowance for 16 and 19-year-olds while the Westminster Government have scrapped it. These are just a few of the things that we have already done.
We are committed to ensuring, where we can, that people get paid a decent wage. Since 2011-12, the SNP Government have paid all staff covered by Scottish Government pay policy a living wage, and that includes NHS staff. No compulsory redundancy policy has been in place since 2007, helping to protect about 10,000 jobs a year. We are funding the Poverty Alliance to deliver the living wage accreditation scheme to promote the living wage and increase the number of private companies that pay it.
We have done a lot to deal with inequality in Scotland, but what holds us back so much is the fact that the Scottish Parliament has to depend on and fit within a block grant determined by Westminster that has been steadily cut in the past few years. The Chancellor has said that another £25 billion of cuts is coming round the corner, so we can only imagine what will happen to the Scottish block grant in that event.
Sheila Gilmore
The hon. Gentleman made a great deal of issues such as free personal care. Does he not accept that there are still major problems in Scotland, and if we do not address them but simply say, “We’ve cracked it, we’ve solved it”, we are not helping the people who give and who need care? When care workers have very poor conditions and people are getting 15-minute visits, if that, we have not really solved the problems. Should we not be talking about them instead of being so complacent about somehow having solved them all?
Mr Weir
I cannot believe what I am hearing from the hon. Lady. What I said is that the Scottish Government have taken action on and invested money in those matters. We have not claimed that we have solved every problem under the sun—we cannot possibly do that—but what we have said is that we have done all we can with the powers we have and that with the powers of independence we will be able to do so much more.
Pete Wishart
My hon. Friend is making a very powerful speech. Does he share my great concerns about the cuts commission? Labour has said that everything is on the table and has set out a whole list of things, including tuition fees, free bus passes, prescription charges and free personal care. Is my hon. Friend as worried as I am that if Labour gets its hands on the levers of power, those things will be under threat?
Mr Weir
I do indeed have great fears about what will happen to our country if we do not get a yes vote in September, because either this lot will continue in power with the cuts already promised by the Chancellor, or we will have the Labour cuts commission and heaven knows what it might come up with.
We have a different vision for our country. We will be able to do many things with independence that we cannot do under devolution. The problem of child care, for example, is not just about improving the early education of our children and helping families, important as those things are; it is also an important economic policy. If we can raise female participation in the labour market to the levels achieved in, for example, Sweden, we will not only boost general economic performance, but raise an extra £700 million a year in tax revenue.
Under devolution, the Scottish Parliament has been able to increase the amount of child care available and it has recently announced a further extension, but with independence we could go beyond that and deliver our ambitious plan for the provision of free universal child care for all children aged one to five—a policy that, when fully implemented, would save families up to £4,600 per child per year.
Why do we need independence to deliver that? Because at the moment, as I have said, Scotland receives a fixed budget from Westminster. We would not receive the increased tax revenues resulting from having more women in the workforce unless Westminster decided that we should, so under devolution the costs of providing increased child care would have to be met from within a fixed budget, which would inevitably mean cuts in other services. Those who are making that argument need to tell us where they want to see the cuts. That social and economic transformation can be achieved only when we have access to all of Scotland’s resources, and that is why we need independence delivered to the full.
We could also take action to ensure that most people are treated fairly and that work is genuinely a route out of poverty. We should not accept this as a given, but the fact is that many women work in low-paid jobs, so what we do with the minimum wage really matters to the living standards of women and their children. With independence, we will able to guarantee that the minimum wage will rise at least in line with inflation every year and not leave it to the whim of the Government of the day.
It is interesting to note that, if the minimum wage had increased in line with inflation over the past five years, the lowest paid would be £600 a year better off than they are now. That has been the cost to the lowest paid of not being able to take such decisions ourselves and of not being able to make the impact we want on the inequality that stalks our nation.
With independence, we and not Westminster will be responsible for implementing the Equal Pay Act 1970, closing the scandalous 32% gap that still exists between the pay of men and women. Why is it that 44 years after that Act was passed there is still such a huge gap between their pay?
Decisions being made down here about the retirement age are also a problem. Just a few years ago, women could expect to retire at 60. By 2020 the retirement age for women will be 66—an increase of six years in just a decade. As things stand, young women entering the work force today will probably have to work until they are about 70. Of course, we all have to accept that people are living longer and that things cannot stand absolutely still—we accepted the first rise in the retirement age—but the rapid increases being imposed by Westminster are not right for Scotland, because we have different demographics. We have serious problems in some of our communities and we are working hard to deal with them. The fact is that life expectancy is often much lower in some of those communities than in the general population. It is, therefore, surely better that decisions about the retirement age are taken in Scotland, where such distinctive circumstances will be properly taken into account.
I have often spoken in the House on energy, and it will be no surprise that I want to say a few words about it. In its recent campaign, Energy Bill Revolution made the point that fuel poverty has increased across the UK by 13%, but one gain from devolution is that that is not the case in Scotland. Under the latest Scottish house condition survey, which was revealed at the end of last year, the number of those in fuel poverty in Scotland has decreased by 3.4% at a time when energy prices are rocketing. That is a tremendous achievement by successive Scottish Administrations, who have made real efforts to tackle fuel poverty. However, there is so much more we could do.
Mr McKenzie
On fuel poverty, will the hon. Gentleman explain why the SNP Scottish Government have changed the criteria for boiler replacements for the elderly, which Labour set up? None of them can get boiler replacements.
Mr Weir
The Scottish Government have invested much more in fuel poverty measures: more is now being spent than was spent in the last year in which Labour was in power, and much more is being spent there than is spent down here. As I have said, we have reduced fuel poverty at a time when it is rising in the UK as a whole, but we need to do more. We need to transfer fuel poverty measures from energy bills, which need to be reduced, and put money into a direct programme to increase the fuel efficiency of many houses in Scotland—particularly hard-to-heat houses of solid wall construction—which will help people.
Mr Weir
I am getting a bit tired of hearing that from the Labour party. I have explained our position on the energy price freeze time and again. The freeze will not work. There has already been a massive increase in bills prior to its coming in, and there is likely to be another after it comes in. We had a debate in the Chamber last week about inequalities in the system of billing by energy companies. Those inequalities will be frozen in place by an energy freeze, making things even worse for Scottish consumers. A freeze will also hit the investment needed to ensure that we have jobs for the future and can bring down energy prices through moving to renewables.
Mr Weir
No, I have given way enough for the moment.
The present UK Government have repeatedly said that they took powers in the latest energy legislation to implement the Prime Minister’s promise to put everyone on the lowest tariff. I have pointed out before, and I will do so again, that the measures in the Energy Act 2013 will not have that effect. The relevant sections do not require energy companies to do that, but only to make an offer, which may well be lost in the mass of paper that people receive from them.
Even if those changes work, they will do nothing to help some of the poorest in our society—those who have to rely on prepayment meters. It may be fine for someone on a direct debit tariff, but those on prepayment meters will be stuck on a higher tariff. Such tariffs are generally higher than those available to someone paying by direct debit, as would happen under Labour’s price freeze. That locks in price inequality. It seems to me that if the Government are truly intent on ensuring that everyone has the lowest possible bill, they need to ensure that that does not apply only within the type of contract people already have, but allows them to move to a cheaper type of contract.
I have already mentioned the particular problems with prepayment meters. As I have always said, they seem to me to be slightly perverse: it is one of the few examples of consumers ending up paying much more by paying cash in advance. It was interesting to see the hon. Member for Harlow (Robert Halfon) introduce his ten-minute rule Bill earlier this afternoon. I very much hope that it is successful, but given how many Bills are to be debated on 28 February, I somehow doubt it.
Citizens Advice Scotland recently issued a report on energy that shows the true difficulties people face. It states that
“the cases highlighted by bureaux regarding difficulty paying are most commonly with regards to prepayment meters recouping an unaffordable amount for arrears every time the consumer tops up.”
Citizens Advice Scotland quotes an example that sticks in my mind of a single parent with two children who has to lose £7 towards arrears every time she puts £10 in the meter; the £3 remaining is entirely insufficient to heat her home. That is totally unacceptable and is a clear example of the inequalities facing many of our fellow citizens. In those circumstances, she has no chance of getting out of the cycle of debt—the hon. Member for Bedford (Richard Fuller) made that point—or even keeping her home warm.
Many of our people are being forced into household debt by the difficulties they find themselves in. The rise of the payday lenders is one of the horrible side effects. We heard last week about the difficulty for those who cannot pay for their energy by direct debit and who have to pay higher prices. It was pointed out that some £2 billion sits with the energy companies, making money for them rather than for consumers—another inequality that afflicts our society.
Gregg McClymont
The hon. Gentleman is being most generous. He is talking about the profits made by energy companies. Is he aware that anyone in Scotland listening to this debate will be surprised that he and his party do not support a price freeze, but instead are in the same position as the energy fat cats?
Mr Weir
The hon. Gentleman is like a broken record. I have explained already, and have done so on numerous occasions, our objections to the energy price freeze. It is easy for Labour to say, “Let’s have an energy price freeze.” It sounds great and I am sure many people love to hear it; unfortunately, it simply will not happen. It will not lead to lower bills, it will freeze in the inequalities already in the system, and it will leave people with higher bills, while his party leader flails about trying to find some flesh to put on the bones of that policy.
Mr MacNeil
When Labour Members talk about an energy price freeze, are they not basically saying to the people, “Do you want your energy bills to go up before we announce the freeze and to go up again afterwards?” It is a total con, and they know that full well. It was done one weekend for a headline in a Sunday newspaper and they are sticking with it now. That is the long and the short of it.
Alun Cairns
Does the hon. Gentleman agree that it is easy for Labour Members to call for an energy price freeze when it involves other people’s money or other companies’ money, but it is different when it comes to council tax rates? They have the power to freeze council tax rates in Wales, but in the past three years we have seen a 9% increase in council tax. Would they not do better to channel their efforts into an area of policy where they have control and could deliver lower bills?
Mr Weir
The hon. Gentleman makes his point. I just point out that in Scotland we have frozen council tax for several years. We have also taken action to pay extra money from our already constrained budget to get rid of the effects of the bedroom tax in Scotland. We cannot get rid of the tax itself because that is controlled by the Westminster Government; we can only mitigate the effects.
Another issue I have talked about in the past is the inequality between rural and urban areas and between different sections of society, particularly in relation to energy and the problems of those who are off the gas grid. Far too often when energy is discussed, we focus on the evils of the big six. It may be good to give them a kicking in passing, but there are also serious problems in the off-grid market. All of us who are off grid will have found that prices have rocketed, much higher than the price of energy from the big six companies and from the grid. Pensioners in particular face serious difficulties in paying their winter bills.
I have twice introduced Bills in this House and on two occasions, I think, I have tried to amend energy legislation to tackle the problem by suggesting that the winter fuel allowance should be paid earlier. I do not think it would be terribly difficult, but this Government, like the previous Government, seem to have a horror of doing that and making a real difference to the people affected by the problem.
Nia Griffith
I give credit to the hon. Gentleman for the introduction of those Bills, but does he not recognise that it is now the policy of the Labour party to pay the winter fuel payment in the summer so that customers can benefit from cheaper prices? Will he also support Labour’s policy of having a tougher regulator that can look at off-grid issues?
Mr Weir
I am glad that Labour has finally adopted that policy—better late than never. In the last Parliament, I had numerous discussions with Labour Ministers who would not adopt it. I would be interested in what powers a stronger regulator would have. I have often argued that the regulator should have powers over the off-grid sector. When I sat on the Business and Enterprise Committee, before the Department of Energy and Climate Change was formed, we produced a report that asked for that to happen. I have raised that issue repeatedly.
After an intervention by the hon. Member for Wealden (Charles Hendry) earlier in this debate, I raised the way in which the energy company obligation discriminates against off-grid gas consumers. The ECO is controlled by the big six energy companies and none of them include off-grid gas boilers in their schemes. I wrote to all of them and received various letters back that tried to obscure that fact, but there was no getting around it at the end of the day. I raised the matter at DECC questions last month. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) replied that he was meeting the suppliers to tackle the issue. If the Under-Secretary of State for Wales takes nothing else away from this debate, perhaps he could ask DECC Ministers whether any action has been taken. I am sure that it is a huge issue in his constituency, as it is in mine. Such action would not solve these problems completely, but it would help many off-grid customers.
I will end by saying a little about the Scottish Government’s energy assistance package, which has helped 150,000 people on low incomes to reduce their energy bills. It has been extended for two years, which should help a further 300,000 people. Originally, it was targeted at pensioners, but it has been extended to help other vulnerable people in these difficult times, such as the disabled—including those with severe disabilities—families with young or disabled children, the terminally ill and people who are on carer’s allowance. It is now a much greater scheme than the one that was introduced originally. The number of homes installing loft insulation has more than doubled from 40,000 in 2008-09 to 104,000 in 2011-12. That was praised by the Committee on Climate Change in its report, “Reducing emissions in Scotland”, which was published in March.
While the UK Government have slashed their schemes, the Scottish Government have continued to invest. We have invested £220 million since 2009, which has resulted in an estimated return in household income of more than £1 billion. A further £250 million will be invested over a three-year period to tackle fuel poverty. That is a great record. As I said earlier, the number of people in fuel poverty is falling in Scotland, unlike in the rest of the UK. Those are significant improvements, but we still have much to do.
We could achieve further improvements much more easily if we had the full powers afforded by independence. We would really get to grips with inequality if we did not have the dead hand of Westminster holding us back. It is interesting that the Labour party is quite happy to let the Tories stay in power, rather than have Scotland tackle its own problems.
Jacob Rees-Mogg (North East Somerset) (Con)
I am glad, as an Englishman, finally to be allowed to enter into this debate, because the motion refers to the United Kingdom. It is a great honour to speak in this debate, because the nationalists appear to have a very clever plot, whereby they send their best and brightest people down to Westminster to make us realise how much we would miss them if they went independent. Since entering this House in 2010, I have become more and more pro-Union, simply because of the fantastic speeches we hear from nationalist Members.
Today was a model of its kind. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) gave an absolutely brilliant speech that started with the ancient history of Wales and had the House gripped by his every word. I was sorry that I could not hear the whole speech by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), as I had to go to European Committee A for a moment, but I was relieved that he was not too brief because there was so much to be said, and he was almost still speaking by the time the Committee ended.
The motion itself, however, though presented with panache and oratory, is fundamentally misplaced. It goes completely the wrong way about tackling issues of inequality because it argues fundamentally that we should all be impoverished. It is an argument that says that inequality is the important issue, not how prosperous people ought to be. It mentions the
“underlying trend of rising income inequality”
but the problem is that the point at which income inequality has been reduced has coincided with the recession. Yes, it is easy to reduce income inequality if we ruin the economy. If we make everybody poorer, we can all be poor—and perhaps happy—together. Actually, I think the British people will not be happy if they get poorer; they will be happier if they get richer. It is of no pleasure to me that during the recession, the income of the top decile of income receivers in the United Kingdom fell by 9%, and that of the bottom decile by 2.4%. Although it could be argued that the better off are making a bigger contribution than the worse off, I do not want to see anybody’s income decline. I want everybody’s income to increase, and that requires the economic policies that this Government have followed.
Mr MacNeil
As our state is getting wealthier and productivity is growing, does the hon. Gentleman agree that all should share in that, and that the rent seekers at the top end should not abuse their positions as CEOs or hedge fund managers and see their wealth grow by 60% to 80%, while over a decade the equivalent bottom 90% will see their wealth grow by only 17%?
Jacob Rees-Mogg
Where I disagree with the hon. Gentleman is when he fails to recognise what those very wealthy people do. By and large, hedge fund managers and corporate tycoons spend their money, and if they do not spend it they save it.
Jacob Rees-Mogg
If they spent it on wine, that would help the French, rather more perhaps than the English, but that is slightly beside the point. They might spend it on whisky, which will help the hon. Gentleman’s constituency. If they spend money, they create employment and economic activity, and if they save it and put it in a bank, they provide the deposits against which banks can lend. One of the great problems of the banking crisis was that the loan-to-deposit ratio went way above 100%—I think the Royal Bank of Scotland got up to 135%. It is not practical for banks to lend when they are not taking in deposits, because they then become dependent on overnight money, which can be withdrawn much more easily, and has a tendency to be withdrawn more quickly than long-term stable deposits. When the income of the wealthy is saved, it is an economic good.
Mr MacNeil
Is the hon. Gentleman saying that before the crash the wealthy were not saving enough of their money and were perhaps squandering it in various ways, and that one of the main reasons for the crash was that the banks did not have enough deposits from the wealthy? Surely if it had been in everybody’s hands, it would have been in the banks.
Jacob Rees-Mogg
The hon. Gentleman has taken one bit of what I have said and applied it incorrectly. It is uncharacteristic of him not to listen more carefully, and I will come on to the issue of spending cuts.
Jacob Rees-Mogg
Of course I will give way to a Member who represents a seat with “North East” in its title.
Mr Bain
What would be the hon. Gentleman’s answer to those well-known leftists in the International Monetary Fund who have published detailed research indicating that when the gap between rich and poor gets too large in an economy, it diminishes growth and therefore living standards for everyone?
Jacob Rees-Mogg
The IMF is not full of well-known leftists, but it does seem to be run, by and large, by the French, who have a very different understanding of economics, an absolutely rotten economy, and are the last people from whom I would take lessons. We will not in this Chamber go into the behaviour of the previous managing director—it would shock the viewers of the Parliament channel if they were to consider how Monsieur Strauss-Kahn had behaved. Anyway, I will not be told what to do by people who cannot behave.
I want to come back to the economic benefits of the spending and saving of the wealthy. That is what provides the employment and investment that leads to economic growth, and leads to the rising of living standards for the poorest in society. That is not done by the state. The state can indeed pass money around—it can reallocate money from pot A to pot B—but that does not increase the fundamental size of the pot. It merely reallocates what is already there, whereas the expenditure, saving and investment of individuals in the private sector grows the total amount that is available and therefore leads to cascading wealth.
This is where I must come on to the specific point in the motion calling on the Government
“to halt its further spending and welfare cuts”.
The spending cuts have been essential. The Government and the Chancellor of the Exchequer have been a model to other countries in how they have behaved. In a cross-partisan moment, I thank the Liberal Democrats for the role they have played. It must have been particularly difficult for them to take these tough decisions, having not been in government for so many generations and facing up to more serious responsibilities than parties in opposition sometimes have to deal with. I think they deserve a huge amount of credit for the support they have given to the Conservatives. Lots of economists, some of them quoted by the hon. Member for Na h-Eileanan an Iar, were saying that it was the wrong thing to do. Even the IMF had to eat its words a year after saying that austerity was not the right thing to do. The IMF was wrong and the Government were right. Why was that?
First, when the Government came into office there was a risk that there would be a funding crisis. There was a risk that the Government would simply not be able to raise the money in the gilt market that they needed to pay for the services that the British people wished to receive. That was the first problem. The second problem was that Government expenditure and very high debt crowd out private sector activity. If the Government had not reduced spending, businesses would not have been able to have access to the capital they needed to begin the recovery. The third problem was that by taking money out of the economy, there was a general depression of economic activity as individuals and their families had less to spend throughout the economic spectrum. It was being taken out of productive capacity and used unproductively merely on a money merry-go-round of the state.
This is, again, where I like the fact that the coalition has raised the basic threshold of income tax. I share the ambition of my hon. Friend the Member for Solihull (Lorely Burt) that this should be increased. It is absolutely barmy to tax people on low incomes and then give them their own money back in benefits. Not only do we want to get it to £10,000, we want to get it to the point where people on the minimum wage are neither paying national insurance nor income tax.
Mr MacNeil
The hon. Gentleman is mainly making points about redistribution and I disagree with him on that. In one of the longest parts of my speech, I made a point on the living wage and the number of people who are now working poor. He mentioned the billionaires and rich people that we have in apparent abundance around the place. Should we not be seeing people at least earning a wage that means that they do not need to benefit from state welfare to top up the lack in their wages?
Jacob Rees-Mogg
The wages that people are paid in this country are set on an economically competitive basis, not just against what goes on in this country but on what goes on in the rest of the world. As a nation, we need to produce goods and services that people will buy. Then, when we have profitability and successful businesses that grow, there will be money to pay people more. We want more billionaires, because billionaires spend money. Who do we think are buying all these Rolls-Royces, Bentleys and Jaguars? In Portugal, the people buying them might be quite poor, because it has a special scheme where one can win a car if one buys a cup of coffee and makes the person selling the cup of coffee promise to pay tax, but outside Portugal—in China, India, America and the United Kingdom itself—the people who buy these luxury goods are those who are well off. We need those people to provide the good jobs.
I want to move on to the dead hand of welfare, as it appears that the feeling expressed by those on the Opposition Benches—particularly by the nationalists, although Labour is not a million miles away—is that if a Government take money and dish it out that helps people. I fundamentally disagree. I do not think that it is fair that people who do not work should be better off than people who do. Indeed, I think that is wrong. I do not think that it is fair that people should be trapped in poverty by decisions that the state makes.
One of the noblest things that this Government are doing is the reform of the welfare state. I agree with my hon. Friend the Member for Aberconwy (Guto Bebb) that if people are lifted out of state dependency, they can take charge of their lives and become prosperous. They can then contribute to the overall economy. If benefits are set too high and the percentage of its withdrawal is so high that there is no incentive to work, people are trapped.
Mr MacNeil
The hon. Gentleman will be aware of yesterday’s report on working poverty by the Archbishop of York. It showed that most of the people in receipt of benefits are working and the efforts people are making to earn a decent wage are not having an effect because they are not being paid properly. Let me ask the hon. Gentleman again: does he support efforts to ensure that people are paid properly so that companies are not subsidised by the state? In the United States of America, one of the biggest recipients of welfare is Walmart and we have different examples in this country.
Jacob Rees-Mogg
Once again, I am sorry to say that I disagree with the hon. Gentleman on that specific point. It is much preferable that the state should pay benefits to people who are working and being paid the economic rate for their job.
Nia Griffith
Will the hon. Gentleman speak to his right hon. Friend the Secretary of State for Work and Pensions about the specific issue of universal credit and its acting as a disincentive, particularly for the second earner in a family?
Jacob Rees-Mogg
The basic principle of universal credit, which is that everybody should be better off in employment than not in employment, is fundamentally right and reducing the withdrawal rates is possibly the most exciting thing that the Government are doing. If we go back to 1979—I promise you, Madam Deputy Speaker, that this will not be a history lesson—and look at the reductions in the tax rates from 98% to 80% and then to 60%, we see that on every occasion the incentive to work increased and revenue to the Government increased too. Some of the percentages for the withdrawal rates for benefits are in the 90s. If people would not work harder when taxed at 98%, surely they will not work harder when benefits are withdrawn at 90%-plus. The model follows that if the withdrawal rates are reduced, motivation to work will miraculously be improved and increased.
That benefits the whole of society and brings me to the fundamental flaw in the motion, which is that it takes the view that there is a bottomless pit of money to be spent and that we can go on spending like there is no tomorrow, ignoring the financial markets.
David T. C. Davies (Monmouth) (Con)
Does my hon. Friend find it as surprising as I do that people on the left of the political spectrum seem to want to borrow more money and therefore make us even more dependent on the banks that they pretend to dislike? Why not put up a sign saying “Borrow more money and make us more dependent on the banks” instead of calling for more state spending, as they mean the same thing?
Jacob Rees-Mogg
My hon. Friend makes a good point. There must be fears that if the Bank of England goes on printing money, the printing presses will eventually wear out in an inflationary burst.
There is hope from the Opposition Benches. We heard that the hon. Member for Na h-Eileanan an Iar supported the reduction in corporation tax in Scotland because he thought that it would produce more revenue, more business and more prosperity for Scotland. That is the vision of fairness and of reducing inequality that we should have. It is a vision in which people succeed through their own efforts rather than being trapped by the state; in which people prosper through their own efforts, rather than being held down by the state; and in which people contribute through their own efforts to the growth of the rest of society and the economy, rather than being prevented from doing so by the state and being left unproductive .
Mr MacNeil
The hon. Gentleman talks about the state as a malign influence, but does he accept that markets have their flaws and do not work properly? Influences and biases in the markets can conspire so that the CEO gets far more, in ratio with the pay at the bottom end, than at one time he used to whereas the people at the bottom end cannot even make a living wage. There are huge iniquities in the private sector and it is not all “State bad”. The hon. Gentleman should realise that the state can be good as well and there can be big problems in the private sector.
Jacob Rees-Mogg
The hon. Gentleman and I are co-religionists, and if we are not careful we will start talking about original sin and the imperfectability of mankind. It is true, of course, that there is no perfect man-made system, and that would be an interesting debate for another day, but by and large the markets work better than state direction, which essentially re-circulates money that is created in the private sector. We need a flourishing private sector if we are to help people to improve their standard of living, their lives and their livelihoods, and if we are to take them out of this awful poverty trap. There is great nobility in what the Government are doing. They do not want unfairness; they want fairness for those people and families doing their bit for society, working hard and getting on, and they want to take away the clamping down, the closing down, the almost bankrupting of the country that was being done before.
For those reasons, I oppose the motion. It is fundamentally wrong-headed in all it seeks to do, and I hope the Government stick to their guns and carry on with economic and welfare policies that enable people to become better off through their own efforts.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I was not sure whether the hon. Member for North East Somerset (Jacob Rees-Mogg) agreed or disagreed that inequalities are bad. I certainly believe—and I can present evidence—that inequalities between rich and poor are bad not just for the people who experience them, but for society as a whole. A large swathe of international academic evidence shows—most poignantly in “The Spirit Level”, published a few years ago—that the gap between rich and poor is bad for everyone in society. Inequalities affect life expectancy, mental health, social mobility, educational attainment and the extent of crime. So I start from the premise that inequalities are bad.
In my previous life in public health, I worked on socio-economic inequalities and their impact on health inequalities, which is what I want to discuss today. Again, I was not clear from what the hon. Gentleman said, but he talked about the separate position of the state and the responsibility of individuals within society. I believe—again, I think there is evidence to support this—that the Government set the tone for the culture of a society, in both their explicit and implicit policies, and how we divvy up spending reflects those policies.
As I said, considerable evidence shows that the systematic, socially produced differential distribution of resources and power—I mean income, wealth, knowledge, status and connections—is the key determinant of health inequalities. Mortality and morbidity increase as people’s social position declines. My constituency contains an affluent part, in Saddleworth, although there are pockets of deprivation, as in every community, and a poorer part, in Oldham East, and that differential is reflected in a 10-year difference in life expectancy, which is a situation that can be replicated across the country.
That social pattern of disease is universal. It is produced by social processes influenced by Government policies, both written and unwritten, rather than by biological differences. There is no law of nature that decrees that children born to poor families will die at twice the rate of children born to rich families. We should, however, take some comfort from the fact that those inequalities are socially produced and, as such, neither fixed nor inevitable. That means that we have some hope of doing something about them.
I am very concerned about the direction of Government policy, which, although largely driven by the Tory party, is to a large extent supported by the Liberal Democrats. The Health and Social Care Act 2012, for instance, completed its passage because it was propped up by them. One of the key objectives of the original policy was to reduce health inequalities, but there is absolutely no evidence that this privatisation Act will do anything of the kind. The Government have tried to suggest that increasing competition in the NHS will improve quality and reduce the number of inequalities, but I recently organised an inquiry in my capacity as chair of the parliamentary Labour party’s health committee, and eminent academics were saying exactly the opposite. One was
“shocked to see the move to wholesale competition and Any Qualified Provider as a primary driver in NHS reforms on the basis of”
very few observational studies conducted by the London School of Economics and others. Another said that
“clearly different drivers are motivating the private healthcare sector”.
In the US, there is both under and overtreatment, and huge disparities in health care. We know that the Government are already putting out to tender seven out of 10 contracts.
Before the Health and Social Care Bill became an Act, directors of public health and public health academics wrote that it would exacerbate inequality rather than reduce it, but the Government pressed on, and they continue to press on. The implications of the EU-US trade negotiations are of particular concern, because the Government have still not committed themselves to exempting the NHS from the free trade agreement. We will challenge them vigorously on that.
The recent debacle over NHS resources allocations is another example of the Government’s total lack of commitment to reducing health inequality. We saw the writing on the wall back in 2012, when the former Secretary of State for Health—the present Leader of the House, the right hon. Member for South Cambridgeshire (Mr Lansley)—reduced the health inequalities weighting from 15% to 10%, which would have a direct impact on areas where health was particularly poor. Following last year’s consultation about how NHS resources should be allocated, the Government were prompted to withdraw their previous policy and include an element that took account of deprivation in order to avoid another furore, but there are still major problems in connection with the allocation. A recent analysis undertaken by academics shows that the Labour Government’s health inequalities weighting saved lives: three lives per 100,000 in the population. I am extremely concerned about the new formula, and about its failure to take inequalities into account.
However, health policy is not the only problem. Other Members have already mentioned the Government’s economic policies. Although the personal allowance has been increased, the cut in tax credits means that 40% of the worst-off members of the population will be about £1,500 worse off. Those policies are doing nothing to reduce the economic inequalities that ultimately lead to health inequalities.
The Government are reducing access to education by trebling tuition fees and by scrapping education maintenance allowance, which was a key funding mechanism to enable young people from deprived areas to buy books and travel to college. They have now been denied that.
Nia Griffith
Will my hon. Friend join me in congratulating the Welsh Government on protecting education maintenance allowance for the poorest families, for the reasons that she has outlined?
Debbie Abrahams
I will indeed. I also want to pay tribute to Oldham college, which has introduced its own system to ensure that people from the poorest backgrounds can still attend college without being financially penalised.
The Government are restricting access to justice through their legal aid changes. Inequalities are also being created through job insecurity resulting from zero-hours contracts. The swathe of policies that the Government have introduced have done nothing to reduce inequalities. On the Government’s so-called welfare reforms, I absolutely detest the divide and rule narrative that has been deliberately introduced in an attempt to vilify people receiving social security as the new undeserving poor. The pejorative language of “shirkers” and “scroungers” has been really disingenuous, and the Government are distorting statistics to try to prop up their welfare reforms. That is absolutely shameful.
Collectively, the impact of public spending cuts is significantly greater in deprived areas. Academic studies also show the relationship between public spending and, for example, life expectancy at birth. The immediate impact of these socio-economic inequalities on health inequalities is already showing. Following the 2008 recession, there was an increase in male suicides, with an additional 437 suicides registered in the UK in 2011, roughly mirroring the increase in unemployment. It will take time for health conditions such as cancer and heart disease to develop. There is always a time lag between such conditions and their immediate precursors. We also know that the protective, positive factors that can mitigate these negatives are being eroded.
Mr MacNeil
The hon. Lady is making a clear, thoughtful speech. She has touched on regulation, and on positive factors. Does she agree that one of the malign aspects of state regulation is the excessive regulation of trade unions, especially when the OECD has shown that strong trade unions can help to reduce inequalities? Does she also agree that this is one area in which the UK has definitely gone too far?
Debbie Abrahams
I am a trade unionist and I fully support trade unions.
On the current policy trajectory, the social pattern of health inequalities will continue. For example, the gap in life expectancy is set to increase, rather than decrease. In England, there is now a nine-year difference for men and a seven year difference for women. The Government’s indifference to inequality reflects their belief in the dated theory that reducing inequality reduces incentives and slows growth. That theory has had a number of iterations, but the converse has been shown to be the case. For example, Stiglitz produced evidence last year to show that inequality caused financial instability, undermined productivity and retarded growth.
The previous Labour Government did not get everything right, but I am proud that we achieved our targets on health inequalities. Our key successes were in achieving our objectives, first, to reduce health inequalities by 10% as measured by life expectancy at birth for men in spearhead areas, and, secondly, to narrow the gap in infant mortality by at least 10% between routine and manual socio-economic groups and the England average. That was quite a feat, and it has not been acknowledged by this Government. I am sure that the Minister will take an opportunity to mention it in his closing remarks. We did not get it right, but we are definitely moving in the right direction with the policy initiatives we have announced: strengthening the minimum wage; increasing support on child care; freezing energy bills; repealing the bedroom tax; providing support on business rates; and improving the quality of jobs.
Mark Durkan (Foyle) (SDLP)
Reflecting on not just the previous Administration, but the previous Parliament, does the hon. Lady agree that one of their collective achievements was the Child Poverty Act 2010, which was supported by all parties? The Welfare Reform Act 2012 was used to gut the key component of that Act by removing the key element of targets and annual reports. That was not done properly, by its inclusion in the original Bill, but by a Government-sponsored amendment in the Lords, which came back here and was not even voted on.
Debbie Abrahams
I share the hon. Gentleman’s concern about the increase in child poverty. The Labour Government made some strides in reducing that. As he will know, the Institute for Fiscal Studies estimates that child poverty will increase by 1.1 million by 2020 because of this Government’s policies.
Let me finish on a quote from my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), a former Health Secretary:
“Inequality in health is the worst inequality of all. There is no more serious inequality than knowing that you'll die sooner because you’re badly off”.
I hope that focuses all our minds.
Richard Fuller (Bedford) (Con)
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) brings to this House a wealth of experience and understanding from her previous work in the area of health, and I hope that the House listened carefully, as I did, to her comments about the interaction between differences in health and the perpetuation of inequality in our country. However, I did disagree with some points in her critique, which I shall discuss later; most importantly, there was an absence of a full understanding of the context in which this Government are taking actions to address fairness and inequality.
I, like many people, get somewhat concerned and uneasy when I hear politicians bandying around words such as “fairness”, “equality” or “inequality”. History has taught people that when politicians profess themselves in favour of fairness, they too often end up enriching themselves and those politicians who would rally people to the banner of equality too often end up repressing those same people once power has been given to them. So it was with some trepidation that I came to this debate, but the prospect of being able to listen to perspectives on those issues from Members of this Parliament from different parts of the UK attracted me, and I have not been disappointed, either by the opening speech or by those of other hon. Members.
Judgments about what is fair or not fair, or about the balance between equality and inequality, are best left to individuals and families. People are perfectly capable of making those decisions based on what they have learned from their parents and grandparents, on what they have been taught in school or, perhaps, on the lessons they have learned in their church, synagogue, mosque or temple. Politicians fall rather low down the list of people who can be persuasive on those topics. Nevertheless, we shall battle forth.
Mr MacNeil
I do not disagree in any way, shape or form that people can make assessments about what is iniquitous or unfair, but the hon. Gentleman needs to go further down the road, because when people see inequity and unfairness they do not have the power to do anything about it. That is when this place and national Parliaments around the world have to regulate, reform things and so on to make sure we have the situation we had after world war two: a better settlement for the greatest breadth of citizenry.
Richard Fuller
I am grateful to the hon. Gentleman for that helpful intervention. Let us assess the ability of Government today to fulfil that positive role. One of the most important aspects of fairness is the future that we bequeath to our children and grandchildren. It is a natural aspect of human behaviour to want to give the best start in life to our children and grandchildren. One of the worst aspects of the context in which we are operating today, as a Government and as a Parliament, is that under the previous Government, we built up the most significant amount of debt to pass on to our children and grandchildren. One of the most important aspects of what the Opposition call the cost of living crisis—my constituents think of it as trying to meet the family budget—is the debt that was left by the previous Government for this Government to deal with.
The Opposition like to talk about the level of Government debt at that time, but a Chancellor of the Exchequer is custodian not just of part of the economy but of the entire economy, and, before he makes a decision, he has to look at the strength of the economy. It is an incontrovertible fact that the level of indebtedness of this country in 1995—Government debt, household debt and corporate debt—was about two times the size of the economy, and when the Labour party left office, it was five times the size of the economy. We do not need to have a credit card to know that we have to pay off all that debt, and not just part of it.
Debbie Abrahams
Will the hon. Gentleman explain the decisions that were made in the Health and Social Care Act 2012, which had nothing to do with the debt? We recognise the economic context, although we could quibble about the causes and whether we reduced the level of debt. I believe that we reduced it while we were in power. None the less, the specific policies of the Act had nothing to do with that debt. They were choices that the Government would have driven through regardless of the economic context.
Richard Fuller
The hon. Lady is repeating the point that she made in her speech. I am sure that the Minister will want to address it now or later. Earlier on, she missed this major contextual factor, which is somehow the Government must be able to manage the economy while dealing with a substantial overhang of debt, and individual families are doing that as well. That is a root and crucial part of how we can achieve a more equal society. We cannot achieve an equal society if we permit Government to pass on massive debts to future generations without any liability themselves.
David T. C. Davies
My hon. Friend is making an excellent speech. Does he find it as extraordinary as I do that that debt was being racked up from 2001 onwards at an average rate of about £30 billion a year, long before the financial crisis struck?
Richard Fuller
I appreciate my hon. Friend’s intervention. He is drawing our attention to the Government part of the debt, but I have to tell him that the stewardship of the economy by the Government was worse even before then. We, as people who can vote in Governments and as citizens, have to take that responsibility ourselves, too. We are responsible for what this generation does, whether it is our Government, our corporations or any other aspect of society, but we pass on those consequences to our children and grandchildren and they will inherit either a more equal and more prosperous society or a less equal and less prosperous society because of the decisions that we make as individuals and the way in which we hold our Government to account.
Richard Fuller
With respect, others wish to speak, so I will move on now to specific parts of the motion.
Let me address the issue of austerity measures and why they are in place. First, there is the fact that we have accumulated too much debt. Another issue is the ripple effects of that debt crisis. As the Government deal with the overriding debt, individual families, especially those in vulnerable circumstances, are pushed to the edge and need to go to payday lenders and other high interest rate lenders to deal with the consequences of that macro-financial situation. The individual circumstances of individual households have to be taken into account.
The other issue—again, it is the legacy of what occurred in preceding years—is the way in which house prices have become detached from incomes. Shelter is running a campaign on the issue, and although it is an interesting point to raise, I think that it is about 10 years too late. In the Living Wage Commission report, to which many hon. Members have referred, there is an interesting chart—figure 1.21—which looks at the ratio of house prices to earnings for the years 1952, 1975, 1997 and 2012. For the entire period from 1952 to 1997, the ratio of house prices to income fell. In 1952, it was five times the average income, but by 1997, it was 4.1 times. In the period from 1997 to 2012, it rose from 4.1 times to 6.7 times; 100% of that increase took place in the period to 2007. If we look at the cost of living and the cost of housing—part of enabling people to own their own home, get on the property ladder and pay their rent—we see that the issue of inequality will take time to resolve, because it took us a long time to get into that mess in the first place.
The motion refers to women and relative pay. I want to draw to the attention of the House, not by way of answer but by way of contribution to the argument, the House of Commons economic indicators report for February 2014. It looks at the gender pay gap and it makes the broad point that the overall pay gap between men and women has decreased steadily from 1997, but in considering whether the gap will be perpetuated in the future, it examines the gender pay gap by age range. For women and men between 18 and 39, the pay gap oscillates between 1.4% and 0.3%. For women over 40, it oscillates between 12% and 18%, which raises a question for policy makers such as the Minister: is that issue to do with career breaks and will it persist over time, or is it the result of a fairly good news story, with younger women and younger men on average having access to the same sort of jobs and pay, so that in about 20 years’ time the differential will go down? I do not put that forward as an answer, because I do not know the answer, but as a contribution to the debate and to broaden understanding.
There have been a number of contributions about the working poor, poverty and the living wage. We have discussed raising wages from the minimum wage level to living wage levels, but too frequently that would result in a small pay increase for the individuals concerned. It is a transaction between the employer and the Government in terms of the interaction of benefits and compensation. To contradict my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who discussed the free market in wages—it is a small difference—I would argue that if in the low-pay sector Government are topping up wages to the tune of £10,000 on a £13,000 wage, which is the case for a married person with two children earning the minimum wage, the free market is far from working. There could be a strong argument, not only from the point of view of public finances but in order to have a freer market, for urging the Government to increase the pressure on companies by removing that subsidy, which is supporting labour. However, I should be interested to hear more from my hon. Friend.
Jacob Rees-Mogg
Is my hon. Friend aware that someone working 40 hours a week in receipt of the minimum wage would pay over £2,200 a year in tax, which must be part of the problem? I include in that employers’ national insurance.
Richard Fuller
My hon. Friend is absolutely right. This Government have sought to reverse the level of tax that people on low incomes pay, unlike the previous Government. In addition, with the employment allowance, the Government have a tool to encourage employers to increase pay for people on low incomes, and I hope that the Chancellor will do something about that.
We talk a lot about improving skills, which is important, but that does not work for everyone. Not everyone will want to take on additional skills. One aspect of pay that during my career in business changed dramatically was the recognition of tenure. It used to be the case that by doing the same job for two, three, five or 10 years, not improving one’s skills but just getting better at what one did, an increase in pay could be anticipated. We have lost sight of that too much over the last 10 or 15 years. We have said it is just one rate for the job, with no regard to tenure. I ask the Government to look at tenure as part of a more widespread response to the persistence of low pay in this country.
In addition to the promotion of a living wage by councils, there is an important point about the commissioning that councils do. There have been reports in the media recently about the commissioning of various types of service by local authorities that impact on the pay that can be earned by individuals, which is also an important point for the Government to consider.
I will not get into the debate about the rise of food banks under the last Government compared with now. Food banks provide a good service and I encourage people to support them as much as possible. I went to the food bank in Bedford and I pay tribute to the All Nations Church, to the Salvation Army and to the other Churches that run the food bank.
Gordon Banks
May I entice the hon. Gentleman to go into the matter of food banks a little? Has he seen the latest newsletter from the Trussell Trust, which somewhat contradicts the Minister’s position earlier? It says that 42% of all food bank users cite benefit-related problems as the reason why they use food banks.
Richard Fuller
I have not seen that report, but I have seen the data on those using the food bank in Bedford. For a large proportion of people the causes are related to benefit changes. I do not have the statistics, but within that group some people have been sanctioned for not complying with the benefit rules. Would the hon. Gentleman support policies that sanction people for not conforming with the benefit rules, or does he believe that they should not be sanctioned?
Sheila Gilmore
My constituents are not being sanctioned for not looking for a job, but for one-off incidents. One constituent rearranged an interview with the Work programme provider because of difficulties with her child’s school start times and was told that that was okay, but she was subsequently sanctioned. People are being sanctioned for minor infringements, almost on a whim.
Richard Fuller
I do not want the hon. Lady to conflate two things. If the 42% figure reflects the situation in Bedford, it is to do with the broader issues of benefits, which includes sanctions, changes to benefits and the specific examples that the hon. Lady mentioned, where the reason is fairly spurious or there is just a plain error. I do not believe such cases make up the 42% proportion, but they are part of it. But I am a Tory, so I understand that large bureaucracies forget the individual and people are caught by that. In my constituency—as I am sure the hon. Lady is in her constituency—I am creating a form with the local food bank provider so that when circumstances such as she describes occur, my office can be informed straight away. It is important that we as Members of Parliament use our power, when such spurious changes to benefits are made, to shorten the time that they take to resolve. For some of my constituents that can take six, seven, eight weeks or more, which is not correct if a sanction has been inappropriately applied.
Gordon Banks
I endorse what my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said. I commend the hon. Gentleman on his work in moving things on for his constituents in respect of food banks. I do the same, as I am sure do many other right hon. and hon. Members, but I have had constituents who have been sanctioned because they have been ill and then, because they are sanctioned, they have no money to go to appointments, and are sanctioned again. That system is totally out of control.
Richard Fuller
I will not dwell on the matter. I have asked the hon. Gentleman whether he supports the process of sanctions. I would be interested to hear him explain in his speech what type of sanctions he supports and how he would implement them, if he had to take that responsibility.
The final part of the motion asks the Government to halt their spending cuts. If they halt that process, they have to look at increasing taxation. I am sure many hon. Members know that the ways in which we raise tax are moving more and more towards fewer people paying a larger proportion of tax, with 1% of the population paying 30% of income tax and 29,000 people paying 14% of income tax. On the one hand, this may be seen as an aspect of inequality. On the other, it may be seen as a fairly dangerous way in which a Government can raise money, in which case the shadow Chancellor’s proposal to increase tax rates again is probably inappropriate.
In some of the contributions from even those on the Government Benches, we convey the impression that the Labour Government were benign on tax. I draw the attention of the House and the Minister to what was going on between 2000 and 2010. It is in a House of Commons Library note called “Income tax: the additional 50p rate”, which looks at the top rate of tax, including social security contributions, between 2000 and 2010. It shows that in France that rate went down 10.6 percentage points, in Germany it went down by 5.8 percentage points, but in the United Kingdom between 2000 and 2010 that rate went up by 11 percentage points. So it is not fair to use the word that has been common in this debate or to maintain the perspective that somehow, under the Labour Government, the rich were getting off with low tax rates. The Labour Government were taxing people at a high rate. They started the process of a higher proportion of taxes being raised from fewer people, which results in a very difficult situation for people overall.
We have had an interesting debate and I look forward to hearing more contributions from hon. Members on fairness and equality. I have not yet been persuaded that politicians are best placed to determine that. I believe that individuals make their own judgments. I hope that by using some of the information that I have presented today, other contributions may be better placed to consider the issue.
Nia Griffith (Llanelli) (Lab)
Fairness and equality are fundamental to Labour’s vision for society. Our roots are in the philosophy and movements that worked for a fairer society, such as the democratically controlled non-conformist chapels, friendly societies and trade unions. We believe in a community in which power, wealth and opportunity are in the hands of the many, not the few. We want to see a fair day’s pay for a fair day’s work. However, it is not just the less well off who benefit from a more equal society. As has been well documented, more equal societies deliver better outcomes not only for the less well off, but across the whole community —not only are the least well off less disadvantaged, but people feel more secure, safer and less threatened, and society is more cohesive.
Tackling inequality is about challenging those structures that perpetuate inequality and about creating the necessary structures to challenge and mitigate that inequality. It is about challenging and ending exploitation in its many guises. It is about responsible trade unions negotiating with managers to ensure a fair share of rewards for working people and, as we saw in 2008, safeguarding jobs and retaining skilled workers, even if that meant their accepting temporary reductions in pay or hours. Tackling inequality is about siding with ordinary people against the powerful, against whom they feel they have no redress. It is about empowering them and giving them the means to achieve that redress. It is about setting priorities to try to redress inequalities and developing the tools and structures to continue to tackle inequality.
Things do not stand still. We need to continue to tackle inequality. For example, we have said that we will impose a freeze on energy prices, but that is not enough. It is the immediate first step. We will then break up the energy market to make it work better for the consumer. In other words, we need an ongoing solution. We will also introduce a tougher regulator to ensure that the market works for people. It will have the power to tackle the off-grid issues that many hon. Members have mentioned today. With this Government there is absolutely no redress for the ordinary person. They are not standing up to the energy companies, which are making massive profits, but instead are just moving the green taxes on to general taxation.
The Government have imposed massive cuts to legal aid and introduced disproportionate charges for employment tribunals. Someone who is wrongly dismissed from a low-paid job will have to pay £500 up front to go to an employment tribunal, but because they were on low pay they might not have any savings. The Government are trying to tear up employment legislation and make people feel even more insecure than they do now.
The Government are using the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 to attack trade unions that are standing up for workers’ rights. Despicably, they have been using the same Act to attack charities standing up for, and highlighting the needs of, vulnerable people. They are charging people an up-front fee to go to the Child Support Agency to get an estranged parent to pay their fair share of child maintenance.
Everywhere we look, the Government are making it harder for ordinary people to get what they are entitled to: harder to get a fair wage for a fair day’s work; harder to get energy supplies at a fair price; harder to make ends meet if they fall sick, lose their job or cannot find more hours to work; and harder to stay in their house, which might have been specially adapted, if they are hit by the bedroom tax—a cruel and ill-thought-out tax that Labour would reverse.
We all understand that the banking crisis has led to severe financial restraint, but there are still different options and priorities that Governments can adopt. They can choose to give tax cuts to millionaires, as this Government have done, or they could ask the better-off to bear a greater share of the burden. Under this Government, however, we have seen the very poor get even poorer.
Successive Governments have uprated benefits in line with inflation, mostly using the retail prices index until 2011. Since then we have seen the breaking of the link between inflation and the rates at which benefits rise. Do not forget that 68% of those affected by the Government’s benefits changes are in work. Universal credit will be subject to annual review, but not to mandatory uprating. There is a huge danger that it will fall behind inflation.
However, well before we get to universal credit, with its myriad problems, which are not helped by the sheer incompetence with which it is being introduced, the Government should look at the impact of the Welfare Benefits Up-rating Act 2013. Most working-age benefits have been limited to rises of 1% a year, yet the cost of basic items, such as food and energy, are rising by significantly more. Even Government estimates suggest that there might be 200,000 more children living in poverty, and the Child Poverty Action Group estimates that there could be 1 million more children living in poverty by 2020.
Let us look at some of the benefits that have been affected. The first is tax credits, which have a huge impact. We have called the cut to tax credits a strivers’ tax, because it affects the very people who are desperately trying to make ends meet, often working two or three jobs and patching together a few hours here and a few hours there. Then they are told that they have to find more hours, but they are simply not available—otherwise, they would be working them. Those are some of the issues that I think the Government need to address. In particular, they need to look at how they are hitting those who are in work and doing their best to try to make ends meet.
We all know the proverb, “Give a person a fish and you feed them for a day; give them a fishing rod and they can feed themselves for life.” In the same way, we need measures that can make an immediate difference to inequality. For example, Labour introduced pension credit as a fast and targeted means of taking the very poorest pensioners out of poverty. Many of them were women who had had little opportunity to earn much money outside the home.
We also need mechanisms and structures that can continue to make a difference. In 1998 Labour introduced the national minimum wage despite fierce opposition from the Conservatives—I welcome their late conversion— and complete indifference from the Welsh nationalists, who absented themselves from the vote. During our time in office, we raised the national minimum wage to above the rate of inflation, but what has happened under this Government? As I warned when speaking for the Opposition in the debate on this Government’s first statutory instrument on the subject, the national minimum wage has been weakened by galloping inflation. I am glad that the Chancellor is now talking about the need to raise it to £7, but the question is when, because as the national minimum wage moves forward, so does inflation. Any rise needs to be tied to a particular time and we need to know exactly what is planned.
We have clearly stated that we want to strengthen the national minimum wage and pursue firms that are trying to find ways of avoiding it by, for example, exceeding the limit for deductions for accommodation. We introduced the Gangmasters (Licensing) Act 2004 to tackle abusive exploitation of workers, and we want to extend such provisions to the construction and care sectors, yet many Government Members want to get rid of it, just as they got rid of the Agricultural Wages Board.
We want to incentivise wider adoption of the living wage, so we will bring in tax breaks for the first year to encourage employers to introduce it. We could make £3 billion-worth of savings simply by helping people to earn more and pay more tax, and then we would not need to pay out so much in tax credits. As the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), has said, and has been quoted today as saying, we will get the benefits bill down. We will do that by putting people back to work, by ensuring that the national minimum wage keeps up with inflation, and by bringing in measures to encourage employers to introduce the living wage. In those ways, we can save on tax credits, make sure that work pays, and bring the benefits bill down without hitting the poorest hardest.
Stephen Crabb
The hon. Lady talks about Labour’s promise to bring the welfare bill down. I remember that on the eve of the 1997 general election, the Labour leader, Tony Blair, promised to do exactly the same thing. What went wrong over the 13 years that Labour was in power?
Nia Griffith
We are saying now that we want to tackle the reasons why people are on such poverty wages. If we try to reduce the price of fuel, that helps people with the amount of money they have in their pocket. If we look at the amount that they earn, that helps them to get the right amount of money in their pocket without it having to be topped up so much by the tax system. There are ways forward and we have to tackle these issues. It would be very welcome if this Government were prepared to look a bit more at ways of doing so.
We will also tackle zero-hours contracts. In September, my right hon. Friend the Leader of the Opposition announced Labour’s plans to tackle zero-hours contracts where they exploit people. This would be achieved by banning employers from insisting that zero-hours workers be available even when there is no guarantee of any work, by stopping zero-hours contracts that require workers to work exclusively for one business, and by ending the misuse of zero-hours contracts where employees are, in practice, working regular hours over a sustained period.
Jonathan Edwards
As the hon. Lady is aware, Carmarthenshire county council—run, of course, by the Labour party—makes extensive use of zero-hours contracts across its portfolio of employment. Will she join me in strongly condemning its leadership for the manner in which it uses zero-hours contracts to exploit its workers?
Nia Griffith
As the hon. Gentleman points out, there is still a long way to go. There are still many things that we all need to put right. Carmarthenshire county council has decided that over the next two years the 1% pay increase should be weighted towards those on the lowest pay to try to bring them up to the living wage, thus penalising the people at the top, because that is a way of bringing in a measure of equality.
Yes, of course there is still a lot to do. We began with the Gangmasters (Licensing) Act and the agency workers directive, but there is still a lot more to be done on the whole issue of zero-hours contracts, including using procurement, in the same way as the Welsh Government, to tackle blacklisting. When someone is blacklisted—they can no longer get employment in particular industries because their name has been passed round from employer to employer—it can be a terrible blight for a family. As in Wales, through the power of procurement we will say that we do not want public bodies to use contractors that are blacklisting people. That will be a powerful provision to raise the living standards of all those being paid from the public purse, whether by councils directly or by contractors.
People are able to make choices and there are mitigating factors and different ways of tackling poverty. In Wales, for example, by 2015 the Welsh Government will have doubled the number of children and families benefiting from Flying Start, whereas in England 500 Sure Start centres have closed. The Jobs Growth Wales programme is ahead of target in enabling 4,000 young people a year to take on a job, mostly in the private sector. It has a very high success rate, with some 80% being offered permanent jobs at the end of their stay. The Welsh Government have also increased the funding of the pupil deprivation grant, giving it a £35 million boost to help those from the least well-off homes to achieve their potential.
Equality is also about making those with the broadest shoulders take the biggest load. That is why we introduced the 50p tax rate, and we would reintroduce it for those earning more than £150,000 per annum. It has now emerged, from figures produced by Her Majesty’s Revenue and Customs, that almost £10 billion more was raised by the 50p tax rate during the three years it was in place than was originally estimated by the Government in 2012. The shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has confirmed our support for a mansion tax. We have used the tool of a bankers’ bonus tax in the past and would do so again in order to provide thousands of job opportunities for young people. We would roll out a house-building programme of 200,000 houses a year to help bring down the price of housing. Labour’s Companies Act 2006 includes provisions the Government have refused to implement that would enable pensioners and investors to see how pension fund managers vote on remuneration packages, which would bring transparency to what is happening at the very top of the pay scales.
As prices continue to rise faster than wages, people are unable to cope with the expenses they face at the end of the month, which is making them ever more prey to exploitation by payday loan companies charging exorbitant interest rates and costs. That is why we have called for the Financial Conduct Authority to use its powers to implement, as soon as possible, a total cost cap on the amount that payday lenders can charge, in order to protect borrowers and ensure that Britain has a consumer credit market that works for everyone. Under pressure from Labour and other campaigners, such as Sharkstoppers and Debtbusters, the Government have now agreed to grant the newly created FCA the power to cap the total cost of credit through the Financial Services Act 2012 and to compel it to use that power through the Financial Services (Banking Reform) Act 2013.
As well as capping interest rates, we need to find alternative sources of loans to help people in difficult circumstances and to put further pressure on the payday loan companies and squeeze them out of the market. With some lenders making profits of as much as £1 million a week, my right hon. Friend the Leader of the Opposition has called for a levy on such profits in order to raise capital for alternative and affordable sources of credit such as the credit unions. That would give an additional £13 million to credit unions to offer more financial support to people who are in need of loans.
Guto Bebb
Like the hon. Lady, I am a great supporter of the credit union movement, so I was surprised to be informed by my local credit union last Friday that the funding from the Welsh Labour Government to the credit union movement in Wales will be reduced dramatically next year.
Nia Griffith
I am not aware of that, so I will not comment on it, but we certainly need to look at alternative forms of credit in order to stop people having to go to payday loan sharks. Given the explosion in the volume of payday loan company adverts in the past few years, we have also pledged to take action to exclude them from children’s programming in the same way as alcohol and gambling advertisements are excluded.
We very much support setting up a commission of inquiry to investigate the impact of the Government’s welfare reforms on the incidence of poverty. I, together with many Labour colleagues, spoke in favour of such a commission in the debate on 13 January, and I am wondering what the Government will do about that. I urge them to set up such an inquiry as soon as possible.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before I call the next speaker, it may help the House to know that we have plenty of time left for this debate. I consider it important, however, that the parties that tabled the motion should have adequate time to complete a proper winding-up speech. I therefore propose that Back-Bench speeches should finish at about 6.30 pm. If every hon. Member who is still to speak speaks for approximately 10 minutes, that will give all their colleagues and fellow Members an equal opportunity to make their points.
Jim Shannon (Strangford) (DUP)
I certainly understand the motion’s sentiments. When I looked through it, several things came to my attention—income inequality, the impact on low and middle income families, the number of workers on the minimum wage and zero-hours contracts, people in working poverty, the sharp rise in the number of people using food banks, and welfare cuts. I very much understand and would want to speak about all those points in the motion.
At the same time, I do not totally agree with my colleagues in Plaid Cymru and the Scottish National party about their wish to break up the Union. As a committed Unionist who sees the importance of the United Kingdom of Great Britain and Northern Ireland, I want the four regions of England, Wales, Scotland and Northern Ireland to be together as one nation—one nationhood together—under the Union flag. I cannot agree with them about that, but I honestly have real affection, as they know, for each and every one of them. I want to see them in this Chamber after the referendum in Scotland and the one, whenever it is—perhaps a decade or two away—in Wales.
Mr MacNeil
I want to make sure that the hon. Gentleman fully understands that the hand of friendship is there: whenever he wants to visit Scotland after independence, I will personally make sure that he is made very welcome.
Jim Shannon
I knew that there would always be a welcome for me in the hillsides. It is a real pleasure to know that the hon. Gentleman would do that.
Any hon. Member who works in their constituency will have come across the problems that people face, but I know that a lot is being done to combat those problems in many Departments, as should be noted. Perhaps full credit has not been given to the Government of the day for the economic turnaround that we have had. It is only fair to say that, and I want to put it on the record. I know that much blame passes from side to side in this Chamber about why we are where we are. My friends on the Government Benches point to the legacy left by the previous Government that is still being felt, and my friends on the Opposition Benches mention the austerity cuts and decisions that have been taken, but we in the middle are simply saying, “Let’s forget the blame, and focus on how we can make things better for our constituents and our country.”
I am conscious that the debate is about fairness and inequality, which of course relate to many spheres of life. It was only fair, because the best team won, when Ireland beat Scotland 28-6. As for inequality, we saw an example of it when Ireland, the better team, beat Wales 26-3, an indication of skill and experience. Fairness and inequality therefore go into many things, and that is just one of them.
Ms Ritchie
Irrespective of our political differences and affiliation, does the hon. Gentleman agree that it was Ireland as a united country that played in that rugby team?
Jim Shannon
I know that, of course, but it would not have been a team without the Ulstermen, and that—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It may help the hon. Gentleman to know that if he mentions the Calcutta cup on Saturday, he will be in big trouble.
Jim Shannon
Who am I to get on the wrong side of you, Madam Deputy Speaker? Of course I will not mention it.
We are coming out of a recession, and times are tough for many people throughout the whole of the United Kingdom, but may I point to the fact that there have certainly been some successes? I am thinking of the recent contracts and job creation secured in Northern Ireland, thanks in no small part to the tremendous work done by the Minister of Enterprise, Trade and Investment. Yesterday, for example, she secured a contract in Singapore to supply defibrillators to the Singapore army, and she has secured a new contract through her “Going Dutch” campaign. Of course, everyone here knows that Northern Ireland has a strong relationship with Holland—something to do with the 16th and 17th centuries—but we have relationships across the whole of the United Kingdom and into Europe, where Northern Ireland can have influence and be better for it.
David Simpson (Upper Bann) (DUP)
I agree with my hon. Friend that we are seeing some economic recovery and that is very important, but does he agree that we still have inequality and unfairness affecting the younger generation, who want to buy homes but cannot and will not be able to do so for the foreseeable future?
Jim Shannon
I thank my hon. Friend for making that point—not one of us here would disagree. Just this morning, we discussed VAT and tourism in Westminster Hall, in a debate led by the hon. Member for South Down (Ms Ritchie). We talked about opportunities for jobs in tourism, and most of those who benefit will be young people, so we would like to see that happen.
My hon. Friend is right: I cannot, in all fairness, paint a completely rosy picture. People are struggling, and we in this place are tasked with finding ways to help them and to help those who are trying to help others. As time has passed in this economic climate, we are seeing people who once had more than enough struggle to make ends meet. I can think of developers who, five years ago, were donating hundreds, sometimes thousands, of pounds to charity, but who are now seeking help with their benefits as a result not of losing the desire to work, but of losing the work to do. That is a fact facing many people in my area.
With more and more people struggling, one of the local churches took matters into its own hands and set up the first Trussell Trust food bank in Northern Ireland. Like the Minister, I see the benefits of the food bank in bringing people together, with people energised to help others in a clear, practical and physical demonstration of love for others. Thriving Life church in Newtownards realised that people simply needed help and was the first to do this, but there are now 12 food banks across the Province, all manned by people who volunteer to make a difference, all stocked by a community who understand that by donating a few groceries, they can help others who are struggling.
Since opening, the food bank in Newtownards has fed some 3,000 people and the number rises every day. Forty tonnes of food were donated by the local community. The food bank is staffed by a group of volunteers who collect, sift and sort through donations and make up the packs—they even have foodstuffs specifically for diabetic people donated by constituents. They keep a record of why people are referred to the food bank and they worked out four reasons, of which the first is low income. At the time the work was done, last summer, there were 604 referrals because of low income, almost 500 because of debt, just over 410 because of benefits changes and almost 400 because of benefit delays, so 65% to 70% of people were referred because of low income or debt and 30% to 35% because of benefit issues.
There are 86 regular donors to the food bank, including churches, businesses, schools and community organisations. Mash Direct and Willowbrook Foods—two major companies in my constituency—give regularly, and such donations are crucial to the Newtownards food bank. The sense of community has been expanded to supermarket stores such as Tesco and Asda, whose partnerships are crucial: not only do they allow store collections, but one store recently donated an additional 30% of food to what had been collected in a two-day drive. I have been pleased to be present and helping on the two occasions they did that. The big stores recognise the problem and try to help.
Not only does our food bank provide food in a crisis but, through the organisation Christians Against Poverty operating from the church, it also provides professional assistance with budgeting and debt issues and teaches people how to live on their income. Trained workers go through people’s debts to find a manageable payment scheme and do all the set-up work. That work is very important and must happen. Not only can people get food to feed their children, but they can get help to lift them out of the dark hole of despair that many are in.
This does not absolve the Government of doing all they can to ensure that no family in the UK goes to bed hungry. We have a role to play through ensuring that our welfare system runs smoothly, so that delays in benefits do not mean delays in provision. The Government have a massive role to play. They must begin by thanking the individuals and groups that work tirelessly to make a difference to people’s lives and to communities, and by asking how they can assist them.
In conclusion, tough decisions have been made. I have agreed with some and disagreed with many others. I oppose the implementation of the bedroom tax when no housing is available for people to move into. We have to work in this House to make savings. At the same time, we must work hard to ensure that we change lives for the better. Further, we must ensure that when the game of blame is finished, we are taking action to make those changes.
Mr William Bain (Glasgow North East) (Lab)
It is a pleasure to speak in this debate.
I agree with some of the analysis that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) presented in his opening speech. He was right to talk about the industrial policy successes that have been seen in Germany over the past few decades. Such successes are greatly needed in this country. I want to strike just one discordant note by reminding him of the record of the previous Government in reducing child poverty in the UK by 1.1 million and in cutting pensioner poverty by two thirds.
I turn to the speech of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). At one point, I thought that he might set a record in Parliament by exceeding the four hours and 45 minutes that Gladstone took to deliver his Budget in 1853. However, the hon. Gentleman curtailed his remarks to below an hour. He had some interesting things to say. Again, I will pick out the points of agreement. He was right to point to the work of the many esteemed economists who have said that the share of growth that goes to people in the lower half of the income scale has been insufficient over the past 30 years.
It was revealing that there was a philosophical difference between the hon. Member for Na h-Eileanan an Iar and the hon. Member for Angus (Mr Weir) in their approach to markets. The hon. Member for Na h-Eileanan an Iar pointed out that markets should serve the public interest, but the hon. Member for Angus did not seem to think that the reforms to the energy market that Labour Members want to see, which would give people a welcome freeze in energy prices to tackle the cost of living crisis that is hurting households across Scotland, were required. It was interesting to see that philosophical dissonance among the Scottish nationalist parliamentarians, who are usually a steely monolith.
The hon. Member for North East Somerset (Jacob Rees-Mogg), who is sadly no longer in his place, spoke about what has caused the reduction in the wage share. If he were in his place, I would direct him to the excellent report issued by the Resolution Foundation today, which demonstrates that 72% of the falling wage share over the past two decades has been down to growing wage inequality. The hon. Gentleman and his hon. Friends should reflect on that.
There was a fine speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who reflected many of the points that were made in the Social Mobility and Child Poverty Commission report that was published last year. Prolonged periods of income inequality lead to massive and dramatic health and educational inequalities. I see that in my constituency and across many parts of the United Kingdom.
As my right hon. Friend the Member for Doncaster North (Edward Miliband) set out in his Hugo Young lecture last night, the economic model that has persisted over the past 30 years is not fit to generate the sustainable growth shared properly across the whole of society that will be needed in the next 30 years. Oxfam showed only last week that the 85 richest people in the world have the same wealth as the 3.5 billion people who make up the poorest half of the world’s population. We need growth that serves the interests of people across the United Kingdom and the world. It is also important to put on record that there is absolutely no tension between tackling poverty and inequality in these islands, and our responsibilities to the poorest and most disadvantaged in other parts of the world.
The fundamental point of this debate is that when we look at the condition of our country, we see that people are working harder. The numbers of hours worked are higher than they were before the crisis hit in 2008, but people have a lot less to show for it. We know from the Institute for Fiscal Studies that, taking into account tax and benefit changes, on average people are £891 a year worse off under this Government. In 2015 this will be the first Government in decades who have to go back to the electorate, unable to answer the question about whether, during their time in office, they made people better off than they were before.
The reason our economy is not working for ordinary people and the recovery—welcome though it is—is not yet sustained and secured, and is different from those of the ‘80s and ‘90s, is that we have not seen the promised rise in business investment. Productivity has fallen in seven of the past nine quarters under this Government, and in 2012 this country saw the biggest fall in productivity in the EU, and the second biggest in the G20. We can begin to detect the reasons for that slump in productivity because people’s wages—even people in part-time employment—have steadily fallen in the past four years. That failure to have a wage, investment, and trade and export-led recovery poses severe questions about the durability of the economic model that the Government are following.
Under that flawed model, more than 13 million people are in poverty on these islands—more than half in working households—and two in every three children are growing up in poverty in a household where at least one adult is in work. Given that, it is no surprise that three out of four people are severely concerned about what rising inequality means for every person across our country.
Today, Shelter published data that demonstrate the impact that the lack of housing supply—a responsibility in my constituency of both this Government and the Scottish Government—is having on inequality. House prices are now 87 times what they were half a century ago, while wages have lagged way behind. Rising house prices in the past year have not been matched by the adequate supply of housing from either Government that is necessary to deal with the cost of living crisis.
The Joseph Rowntree Foundation pointed out last week that in Scotland poverty among workless households has reached 54%. In my constituency, and in many like it in west and central Scotland and parts of eastern Scotland, between 600 and 700 people who are under 25 or who have not worked for two years or longer would benefit from the right to work. They want to be in work but cannot find it, and it is incumbent on both Governments to ease those people’s personal cost of living crisis by implementing policies that will give them a proper jobs guarantee. That is critical in securing greater equality for the constituents I represent, who are on an average wage of £342 a week—5% less in real terms compared with 2012.
We have also seen the hollowing out of our jobs market, and a lack of jobs in the construction and manufacturing sectors. We have seen a welcome increase in jobs in business and the financial services, but nothing has replaced the jobs lost in construction in 2008 and 2009. It is incumbent on Government at every single tier to ensure that this hole in our labour market is repaired.
The banking sector also needs to be reformed, as the hon. Member for Carmarthen East and Dinefwr pointed out. We have not seen the degree of lending to small businesses in this country that we have seen in Germany, and that speaks to a structural flaw in our banking system. There are insufficient banks to provide the necessary competition. We do not have a proper and fully fledged investment bank to support firms that want to invest in infrastructure. The UK Green Investment Bank does not have the borrowing powers it needs to drive investment in the renewables sector.
Only a Labour Government, in the Scottish Parliament and in this Parliament, can get to grips with the root causes of this unbalanced recovery: the lack of a sectorally and regionally balanced industrial policy, weak business investment, skill shortages, poor exports, a worsening productivity crisis and the lowest number of new starts in housing since the 1920s. We need to earn and make our way to a real recovery in Britain with a long-term plan to raise living standards for all.
Sheila Gilmore (Edinburgh East) (Lab)
In some ways this is a triangular debate, because there so many different views across the House.
We were treated to what I can only call a reprise of the 1930s from the hon. Member for North East Somerset (Jacob Rees-Mogg), who is no longer in his seat. Many of his arguments were made in this place in the 1930s on issues such as unemployment benefit. Many people said then that unemployment benefit, such as it was, was holding people back from working because it made them lazy and they did not try very hard to get jobs, and it was a very bad thing. Indeed, we could probably go back even beyond the 1930s. I suspect that the hon. Gentleman’s great, great, great, great ancestor in the early 19th century was probably saying something similar about the poor law—that provisions had to be made really tough and that people should not get out-relief but in-workhouse relief, because it was making them lazy and unwilling to work for low wages. This argument is constantly reproduced. Nobody—I think nobody—would say now that high unemployment went on for so long in the 1930s because unemployment benefit was too generous. Blaming the problem of unemployment on the unemployed is no new thing, but it is, frankly, wrong, and it is too simple an explanation.
At the other extreme, we have the “wouldn’t it be nice if we could do everything” brigade, which is how much of the yes to independence campaign is being waged in Scotland. This is the idea that we can do it all and can have everything: a lower retirement age, better social security benefits and lower taxes all at one and the same time, and that this is the solution to all our problems. Back in the real world—which, I have to say, will be the world facing a Scottish Government whether under independence or not—there are real challenges and we have to consider how we can deal with them properly.
Other myths have been perpetrated. The hon. Member for Bedford (Richard Fuller) wanted us to feel that he and many of his colleagues would like to reduce inequality, too, and that the way to do it is to get the economy back on its feet; there would be no reason why inequality would not then be reduced. The problem—he is no longer in his place to intervene to tell me I am wrong—is that I suspect he thinks that the Conservative Government in the years between 1979 and 1997 were right in the way they ran the economy. The trouble is that during those years inequality rose at a very fast rate. In these debates, Members frequently say that it continued to rise under the Labour Government, but it rose far less and the big rises in inequality came during the years of Conservative government. During those years—when, in the view of Members such as the hon. Member for Bedford, the economy was getting back on the right path—inequality rose substantially, so if some of us are less than convinced that this Government want genuinely to deal with inequality, we have historical precedents on which to base that opinion.
Stephen Crabb
We have had some discussion about income inequality. Let me put it on the record once again that income inequality reached record levels during the previous Parliament and under the previous Labour Government. Income inequality is falling under this Government.
Sheila Gilmore
The big increase in income inequality was clearly between 1979 and 1997. Any graph will make that quite clear.
There is a danger in perpetuating the myth mentioned by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). I apologise to the House for missing some speeches, including the one by the Member who represents the Western Isles—I am sorry, but as a lowland Scot I genuinely find it difficult to pronounce the name of his constituency in Gaelic so I shall just call it the Western Isles. I missed his virtuoso performance because I was sitting on a Public Bill Committee, not because I did not want to hear what he had to say.
The hon. Member for Carmarthen East and Dinefwr said that there was no difference between a Labour Government and the current Government. As I have said in some of my interventions, that is not correct. It is dangerous to say so, too, because it makes a lot of people think that there is no point in voting or trying to change things because Governments do not make any difference and because there is no difference between the parties.
For example, the reduction in pensioner poverty during the years of Labour government should not be forgotten. Many pensioners will not forget that. A lot of what that Government did created the base on which this Government propose to build with the single-tier pension. As I have said before, it was not the triple lock that produced the highest cash payment to pensioners but inflation—an inflationary rise made necessary by the Government’s own—[Interruption.] I apologise to the Chair of the Select Committee on Work and Pensions, of which I am a member, for not seeing her try to intervene.
Dame Anne Begg (Aberdeen South) (Lab)
Does my hon. Friend agree that one of the great achievements of the previous Labour Government on pensioner income, in particular, was the introduction of pension credit, which took every single pensioner out of absolute poverty? Not one was left in absolute poverty at the end of that Labour Government.
Sheila Gilmore
I entirely agree. That was a hugely important step forward, but we also addressed the issue of getting people back to work. One myth is that we are not at all interested in getting people back to work, but the tax credit system did a lot to help people to get into work, particularly single parents—350,000 of them were helped into work as a result of that policy—and that is important.
I accept that employment for those who are fit and able to work is an important prerequisite of increasing their income—remaining on benefits is not the way to increase one’s income and has not been under any Government—but that is not always sufficient as a marker that people can become better off. It is a necessary beginning, but it has not been sufficient and we must consider the hours of work that people are doing and the low wages that many receive. If we do not tackle that, people in work will still be very poor, as they are now. That is why the child poverty measures show that 60% of those in child poverty have members of their families in work.
We should look at what is happening in places such as Scotland, instead of assuming that these problems have been magically addressed, because there are still problems, some of which, in relation to social care, I alluded to earlier. I am not saying that free social care should not be looked at—it was introduced not by the current Scottish Government, but by the previous Administration—but it does present severe challenges, and if we do not discuss those honestly, we will confuse people about what we can achieve, and then no wonder they become cynical. Those in Scotland struggling with poor quality care know that. In addition, there are issues in Scotland in the education field. Universities give free tuition, but as a result the colleges, which are hugely important for social mobility—they give people a second chance in education—have been starved of finance. That is important.
To sum up, we have to be somewhere in the middle and make real changes in people’s lives, not pontificate about what might be possible in some wonderful place where the sun always shines and no one is ever poor.
Pamela Nash (Airdrie and Shotts) (Lab)
The sun is certainly not shining in Scotland; I have had to send my constituency office staff home because of the snow back in Airdrie.
I am delighted to make a late contribution to this debate, the title of which—fairness and inequality—is the essence of why I got into politics. I am sure that many of my colleagues, at least on the Opposition Benches, would say the same. Much has been said already about the tragedy of in-work poverty, so I shall restrict my comments to the impact of welfare reform and Government cuts on inequality, and I will add my voice, and that of my constituents, to the call for a commission of inquiry to look into the impact of welfare reform and the Government’s other austerity measures on inequality and poverty.
Jonathan Edwards
I believe the hon. Lady when she says that fairness and inequality were why she entered politics in the first place, but will she tell the House how she will vote later when we divide on our motion?
Pamela Nash
It will not come as a surprise that while I agree with the majority of the motion, I am disappointed by its tone. It does not recognise what the Labour Government achieved on inequality between 1997 and 2010—in fact, it attacks that Government—so I will be abstaining, and I am glad to have had the opportunity to put on the record my reasons for doing so.
In my region of north Lanarkshire, the welfare reforms will take £55 million out of the economy every year, which affects not just individuals whose benefits are being cut, but local businesses in our town centres which are now struggling to cope with a vast reduction in customer numbers. That is damaging the development and visible progress of the last 20 years, during which time we have struggled to repair the damage done to our depleted heavy industry and manufacturing in the west of Scotland.
Partly owing to our industrial heritage, my constituency has relatively high levels of disability and chronic illness—as a result of old injuries from those days—and that has made my community particularly vulnerable to the welfare cuts. Many households have a member living with a disability or illness, as I see every day. I have been particularly perturbed by the scrapping of crisis loans, which is affecting the most vulnerable in our society, and although many of the changes have been mitigated by the Scottish welfare fund, many people are still being left in dire straits. Every day I see people whose benefits have been sanctioned and who are no longer entitled to a crisis loan.
Dame Anne Begg
I am sure that my hon. Friend will be as disappointed as I was to learn that, according to figures published today, the Scottish welfare fund has been underspent by a considerable amount. Obviously, those who are losing out are the most vulnerable families. It is a great shame that the SNP Government did not see their way to ensuring that the money was properly spent and properly allocated.
Pamela Nash
That does indeed upset me. When people come to me and tell me that their benefits have been subject to sanctions, it usually proves to have been due to an honest error; but are we really saying that, in this day and age, even those who have been sanctioned through their own fault should be starving? The only places that I can tell those people to turn to are my local food banks—and food banks throughout the country are confirming that benefit sanctions are one of the main reasons why people are going to them to obtain food just to survive.
I know that time is limited, so I shall try to keep the rest of my comments brief. The myriad statistics that have been shouted across the Chamber today, and all the political posturing, have sometimes made it difficult to bear in mind that individual people with whose cases we all deal as constituency Members are affected by the cuts that are taking place. An old classmate of mine from primary school came to see me a few weeks ago. He is a former serviceman, and when he came out of the Army he became a security guard, but he is now struggling to find employment. How can he be expected to find a job at a time when more than 2 million people are still unemployed, and at a time when many other servicemen and servicewomen will be joining him in the dole queue as further job cuts in the military are announced?
Most of the jobs that will be available to that ex-serviceman will be part-time jobs, or jobs involving zero-hours contracts. Moreover, he depends on housing benefit to keep a roof over his head, and he has been hit by the bedroom tax. His child’s bedroom has been deemed to be a spare room by the Department for Work and Pensions, because the child also has a bedroom in the mother’s house, so he has had to pay bedroom tax for a long time in order to ensure that he still has regular access to the child.
The Scottish Parliament recently passed a budget to fund complete mitigation of the bedroom tax. I welcome that measure, and I am glad that the Scottish Parliament eventually listened to the Scottish Affairs Committee—of which I am a member, although we are not allowed into the Parliament—but many people have already been affected by the tax, and I have to say that the “smoke and mirrors” approach taken by the SNP to one of the clearest examples of UK Government policy making the poor poorer has been nothing short of shameful. They have sat on their hands and done nothing when they could have taken action.
The UK Government made it very clear that the Scottish Government had the power to mitigate the bedroom tax long ago. The SNP said that there was no cash, and then found £20 million. It subsequently said that its hands were tied, but the Scottish Affairs Committee was told by the Scotland Office months ago that that was rubbish, and that the Scottish Government already had the power to mitigate the tax for all the people who were suffering in Scotland. I ask them now to think about the people who have suffered since the bedroom tax was introduced 10 months ago, and to consider apologising to those people and telling them how they will be recompensed.
As I have said, I regret the tone of the motion, which does not acknowledge the progress made under the Labour Government in alleviating the poverty of families both in and out of work. I hope that the Government will heed the many important points that have been raised by members of all parties today, and that they will establish a commission of inquiry to examine the impact of welfare reform—on the most vulnerable in particular—and to investigate inequality throughout the United Kingdom. I also hope, for my constituents’ sake, that the Scottish Government will immediately take advantage of every lever that their devolved powers have made available to them to protect the people of Scotland, and will not continue to pretend that they are powerless to tackle inequality without independence.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Inequality is one of the great political scandals of our age, and it is important that we have had a chance to debate the subject at length today. I have been somewhat disappointed, however, at how few speeches there have been from Government Members. Nevertheless, what we have lacked in quantity we have made up for in quality, with a number of substantial and considered speeches from both sides.
Over the past three decades, the gap between the rich and the poor in our society and elsewhere has grown exponentially. The rewards of economic growth have become increasingly concentrated in the hands of a small minority, while those in the lower half of the income spectrum are being increasingly deprived of the just rewards for their efforts. We on these Benches have made the case that inequality, on the scale that we see in the UK and internationally, is bad for all of us. It is in no one’s interest to have a society that is so divided by extremes of income and so damaged by social deprivation, but it is especially bad for those people who find themselves trapped on low incomes and who have seen their spending power and social mobility reduced dramatically over the past 25 years.
We have had a wide-ranging debate today. It has tackled issues as diverse as land ownership, fuel poverty, health inequalities, taxation and social policy, as well as a range of other disparate policy issues that would normally be debated separately. All those topics have been underpinned by the issue of economic inequality and the income gap that has grown so wide over recent decades. We have argued that inequality is not inevitable, and that it is a political choice. The Government have at their disposal the fiscal levers to enable progressive and more redistributive measures, but in recent times we have seen tax and benefit policies that have allowed the gulf between the haves and the have-nots to widen. A number of hon. Members have pointed out that the impact of the tax and benefit changes has fallen disproportionately on those in the lower half of the income distribution, particularly those in the lowest quintile, who have paid the highest price for economic austerity.
Mr MacNeil
It is important to bear in mind that redistribution applies not only after tax but before tax. In regard to productivity gains, we need to ensure that people get a fair day’s pay for a fair day’s work.
Dr Whiteford
My hon. Friend makes a useful point.
It is also important to note that those fiscal levers are not the only tools at the Government’s disposal for tackling inequality. Addressing the underlying drivers of wage inequality requires sustained effort and a fresh mindset about the policy choices that we can make to further a more equitable model of economic growth and to build a fairer, more inclusive and less divided society.
My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) outlined some of the positive ways in which equitable growth could be pursued in Wales. He opened the debate by drawing our attention to the geographical distribution of inequality across the UK, and argued convincingly that while much of Government policy was oriented towards the needs of London and its surrounds, the consequences of that for the other nations and regions of the UK could be dire. Many of us have paid a heavy price for London’s prosperity.
It is notable that, with a few honourable exceptions, the speakers in today’s debate have come from Wales, Scotland and Northern Ireland. Perhaps that shows how seriously the issue of inequality—which is distinct from, but related to, poverty—is taken in these islands. It is obviously a pertinent issue in the context of Scotland’s referendum later this year, as we weigh up the two futures that are opening up before us and consider not only the benefits of making policy decisions based on our own values and aspirations but the uncertain consequences of continuing along the path that the UK seems determined to follow, with wealth and opportunity being increasingly concentrated among a small elite.
Dame Anne Begg
Obviously, if we are going to pursue a more equal society, we will have to ensure that those at the top do not get richer. What are the SNP’s policies for ensuring that those who are already rich become poorer in order to narrow the income gap?
Dr Whiteford
Had the hon. Lady been here for the earlier part of the debate, she would have heard some back-and-forth chat about tax rates and such like. I will not rehearse those arguments. For Labour, there still seems to be a zero sum game in which rich and poor have to share out a very small cake. The fundamental point that my hon. Friend the Member for Carmarthen East and Dinefwr made earlier was that if we want to tackle inequality, we need to grow the economy. Once we have done that, we will be in a much better position to tackle inequality and poverty alike.
Dr Whiteford
I will not give way. I want to make some progress; I have a lot to get through in a limited amount of time.
The extremes of income inequality that we see today had their genesis in the late 1970s. The hon. Member for Dumfries and Galloway (Mr Brown) challenged the motion’s wording about the upward trend of inequality in the UK. I am prepared to grant him that, in the early years of the Labour Government after 1997, there was a stem in the rising tide of inequality, but if we look at the long-term historical perspective we find that it is clear that from 2003 onwards inequality started to rise again. We can argue the piece about that, and I would not take away from the Labour party things it managed to achieve in government that were beneficial to people, but I question the lack of responsibility we have seen from Members on both sides of the House. They have tried to blame each other for not only the financial collapse, but how we have been dealing with the aftermath. It is incumbent on us all to take responsibility for the situation in which we find ourselves and work out how we can build a more prosperous future for everyone, in which the rewards of our prosperity are shared more evenly.
Today, the richest 10% of the population across the developed world have incomes nine times greater than those of the poorest 10%, but in the UK the margins are even more stark, with the richest 10% having incomes 12 times greater than the incomes of the poorest 10%. Can we really say that a person’s contribution is worth 12 times that of another person? I find that a difficult piece of maths to do; I certainly do not think I work 12 times harder than people who are earning a lot less than me in my constituency, as I know they work very hard in difficult and often demanding jobs.
According to the OECD, the UK is now placed 28th out of 34 in its inequality league, as measured by the Gini coefficient. Of course that is not the only way in which to measure inequality, and some commentators who use a wider range of measures consider the UK’s inequalities to be even more stark. For example, Professor Dorling of Oxford university considers the UK to be the fourth most unequal country in the developed world, despite being one of the wealthiest. Those of us who aspire to live in a fairer, more equitable society will have been shocked by the research published by the Joseph Rowntree Foundation in December, to which reference has been made. It showed not just that 13 million people in the UK are living in poverty, but, for the first time, that more than half of those people live in working families.
We used to hear the mantra that work is the route out of poverty. For people who are able to secure better-paid, full-time jobs that is undoubtedly true, but the reality of modern Britain is that now most poor people are working, but that work no longer guarantees a life above the breadline. About 5 million people in the UK are paid below what would be considered a living wage, and millions of working people find they have to depend on the benefits system to top up their income to adequate levels. My hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) made the point that the report published yesterday by the Living Wage Commission showed that 21% of the work force are being paid below a living wage, which is a 9% increase in the past 12 months. People cannot get out of low-paid work. One of the most important points in the report, which echoes comments made by the hon. Members for North East Somerset (Jacob Rees-Mogg) and for Strangford (Jim Shannon), and my hon. Friend the Member for Moray (Angus Robertson), was that once people are in a low-paid job, it is extremely difficult for them to get out of it. Only 18% of those people manage to get out of minimum wage work in the course of their working lives; a decade later those people are still stuck in those jobs. So work is a route out of poverty only for those people who have well-paid jobs.
A number of hon. Members, the first being the Minister, mentioned food banks. We have seen a huge increase in their use over the past two years, which is a shocking development in a wealthy country. We know that that increase has been driven by changes to the benefits system, particularly by delays in benefits payments and the increased use of sanctions. It has also been driven by the rising cost of living. One thing that has shocked me most in my constituency is the number of working people who are now dependent on food aid parcels. Half a million people in the UK now depend on food aid, and instead of squabbling about whose fault it is and whose Government the levels rose most under, we should be trying to tackle the problem and ensure that people have enough to eat.
Ours is a mature democracy with a well-developed welfare state, but the tax and benefits system remains the main lever through which Governments mitigate poverty and inequality. The recent reforms of the past couple of years have been overwhelmingly regressive and have exacerbated hardship. The promise from the Chancellor in recent weeks that £60 billion of further cuts are on the way shows that there will be no respite for disadvantaged people in modern Britain. Of all the regressive measures we have seen in the past few years, perhaps the changes to housing benefit best illustrate both the willingness of the Government to squeeze the incomes of the poorest households and the London-centric drivers of policy making. The under-occupancy penalty, or the bedroom tax as it is better known, is punishing disadvantaged people in our society who live in social housing and need help with their rent. It is squeezing the incomes of those who are already most hard pressed financially and driving the most extreme forms of inequality. In Scotland, around 80% of those affected by the bedroom tax are also affected by disability, which highlights that link between poverty and disability. Disabled people are still disadvantaged in the workplace and often find it hard to make ends meet. The proportion of disabled people in the UK as a whole is slightly smaller than it is in Scotland, but it still represents two-thirds of the households affected by the bedroom tax.
We also have a structural mismatch between the available housing stock and the needs of tenants. Some 23% of the housing stock is one-bedroom accommodation, yet 60% of tenants need a one-bedroom house. Even if it was in anyone’s interest to play musical chairs with housing allocations, there are simply not enough one-bedroom homes to go round. Provision of one-bedroom lets in the private sector also falls well short of demand and, in any case, costs the public purse considerably more than renting from social landlords. As well as pushing low-income households into debt, the policy is costing more than it saves, and the Government’s persistence in pursuing the policy is foolhardy in the extreme.
I know that the Scottish Government have already made extensive efforts to mitigate the impact of the bedroom tax by increasing the budget for discretionary housing payments to the legal limit. In answer to the strange and bizarre interventions by the hon. Member for Airdrie and Shotts (Pamela Nash), there are legal constraints on how much the Scottish Government can top up those payments.
Dr Whiteford
No, I will not waste time taking an intervention from the hon. Lady. Her earlier intervention was really quite unbecoming. There has been cross-party support in the Scottish Parliament—not just from the Labour party and the SNP but from the Liberal Democrats who are represented on the Government Benches—to increase the discretionary housing payments budget to mitigate the effects of the bedroom tax. I therefore ask the Secretary of State, who is in his place, to talk to his colleagues in the Department for Work and Pensions about the matter so that when the Deputy First Minister, Nicola Sturgeon, is in London on Thursday, she can meet the Secretary of State for Work and Pensions to progress the issue further.
Transfers made to low-income households are the major tool through which our tax and benefits system compensates for the low-wage culture and, in a small way, mitigate the inequalities created by the structure of our labour market. Over the past two years, as the hon. Member for Llanelli (Nia Griffith) highlighted, changes to tax credits have created significant reductions in the incomes of families in low-paid work. Although some very low earners have been lifted out of tax, the gains have been more than cancelled out by cuts to tax credits and the freeze in the uprating of other benefits, which have fallen in real-terms value. That point was also made at length by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).
The Government’s own distributional analysis of their tax and benefit changes shows that the lower half of the income spectrum has paid the greatest price of austerity, while tax cuts at the very top end have allowed the gap to grow between the haves and the have-nots.
A number of Members have drawn our attention to the fact that women make up a disproportionate share of the low-paid work force. In an early intervention, the hon. Member for Coventry South (Mr Cunningham) made the point that the Government have made tax adjustments of £14 billion, £11 billion of which have fallen on women. It is unfortunate that he was not able to stay to make a longer contribution, as I am sure that it would have been worth while.
Women are more likely to be in low-paid, part-time work. They are more likely to be working in insecure, temporary jobs, or on zero-hours contracts, and more likely to be working in jobs for which they are overqualified. More than 40 years after the Equal Pay Act 1970, women are still paid 12% less than men. When we look at who is poor in the UK, we find that women, especially women with children, are over-represented. When we look at who has been impacted most by the UK’s benefit reforms, we see women once again in the front line. That is largely because women take on the greater share of responsibility for child care and for looking after elderly relatives. Child benefit, child tax credit and working tax credit are all paid to the main carer of children, and when the changes were introduced, 83% of in-work families receiving those benefits had a woman payee.
The second half of the 20th century saw women enter the labour market in ever-greater numbers, to some extent masking the ever-widening gulf in wages by increasing overall household incomes. None the less, women are losing out heavily and as a society we lose out because women are not reaching their full potential. According to a recent report by the Resolution Foundation, two thirds of mothers find the cost of child care a barrier to working more. The UK labour market has some of the lowest participation rates by mothers of any OECD country. Some women make a choice not to work when their children are small and choose to take a break in their working life. Many, particularly those with more than one child, want to work part time, but most women find that their choices are financially constrained. There is clear evidence that many women who want to work full time or work more hours face barriers because they cannot afford child care. They cannot get work in the hours for which they are available, or they cannot get the kind of work for which they are qualified. We all know families in which a second earner has given up work because they cannot afford the cost of child care for pre-school children. That is particularly the case for people on low and average earnings, but I know men and women on graduate-level salaries who have given up work because child care for more than one child, plus commuting costs, adds up to working for free. That is bad for families in the longer term, but it also extremely bad for our economy.
Child care has been mentioned by a number of speakers, and in my view, a step change in child care would be the single most transformative policy that the UK Government could make in tackling inequality, because it would boost prosperity, improve work incentives for parents, empower women in the workplace, and would help to tackle child poverty. The hon. Member for Foyle (Mark Durkan), in an important intervention, discussed the Child Poverty Act 2010, and the important gains that were won with cross-party support in the House in the previous Parliament. This week, the Joseph Rowntree Foundation published a report on child poverty in Scotland that showed that, although gains have been made, progress is under real threat because of the austerity measures introduced by the Government.
Child poverty in Scotland has fallen by twice as much as in England. Most reductions in poverty are attributable to improvements in employment rates, but it has been argued that the additional fall in child poverty in Scotland, where it is now 40% lower, is due to a shift to full working—both parents in the family are working, and at least one of them is full time. That has not been replicated across the UK. I have no doubt that that is partly due to the fact that in Scotland we have the best child-care package anywhere in these islands. We have to go significantly further if we are to compete with the best in Europe and have ambitions for the next generation. Otherwise, we face the threat of more and more children falling into child poverty.
The Scottish Government have made huge efforts to try to ensure that all our young people have opportunities. A point made early in the debate by the hon. Member for South West Bedfordshire (Andrew Selous), which was not picked up very much, concerned the issue of skills, which are at the heart of how we increase prosperity and close the wage gap between high earners and lower earners. The Scottish Government have introduced the “Opportunities for All” programme, which means that every single school leaver has the offer of a positive destination to take up when they leave. We have record numbers of young people in apprenticeships. We also have record numbers of people completing apprenticeships. Some 92% of young people who complete an apprenticeship are in work six months later, with 79% of them in full-time work. Over 90% of our school leavers are now in positive destinations, and 89.5% of them are in work nine months later, or in education or training. That is the highest it has ever been, and it shows what can be done when we put our mind to it.
Today’s debate shows exactly why Scotland needs the full fiscal levers of a normal country to tackle inequality, why Wales needs the power to grow its economy and improve the prospects of its people, and why it is in the interests of the whole UK not to bury its head in the sand any longer but take responsibility for the failures of the past and respond to the needs of our citizens in the next generation. The motion calls for a commission to investigate the impact of welfare and spending cuts on poverty and inequality, which reflects the wishes of the House expressed on 13 January. Importantly, it goes further, because we cannot really tackle poverty, particularly the kind of poverty that we have in the UK, unless we understand inequality and take steps to tackle its long-term drivers. That is why I fully support the motion, and I hope that Members on both sides of the House who have listened carefully to the debate will join us in the Lobby. The motion would allow us to address the shortcomings of the past, and I hope that all Members will join us in building a fairer and more equal society.
Stephen Crabb
With the leave of the House, I start by thanking the hon. Member for Banff and Buchan (Dr Whiteford) for summarising the debate in her usual intelligent way, and all right hon. and hon. Members who have participated in this wide-ranging and interesting debate on subjects of huge importance to Members on both sides of the House—fairness and inequality.
I will meet head on some of the criticism that has been levelled at the Government by saying that no Government Member is painting a rosy picture about the challenges that many households and families still face. None of us is complacent about the issues that we have been debating. As the country is still recovering from the economic trauma that it was subjected to between 2008 and 2010, much progress remains to be made in seeing wages increase, seeing the emerging economic recovery spread to all parts of the country, and ensuring that people from all walks of life in all parts of the UK can share in that emerging economic recovery.
We are not painting a rosy picture about that recovery, but neither do we subscribe to the view that has been put consistently today by Opposition Members that the growth is somehow not real; that it is somehow patchy and fuelled by London and the south-east and what is happening in the housing market. If they take time to look at what the statistics tell them, they will see that the emerging recovery is broadly balanced across all the sectors of the economy—manufacturing, construction, tourism, services and exports. Progress must still be made to ensure that the recovery reaches all parts of the UK, but just as three years ago they were deficit deniers, as we come to the end of this Parliament they have become growth deniers. They deny that the growth and the recovery are taking place.
This evening I will be urging hon. Members to reject the motion, because at its heart is the biggest risk of all to the emerging economic recovery, which is a return to the failed economics of more spending, more borrowing and more debt. Just as so many Government Members this afternoon have asked where the equity is in saddling our children and grandchildren with yet more debt, the fair, compassionate, progressive thing to do is to meet that challenge head on and see the deficit come down.
In the minutes that remain I will refer to a number of the speeches made by hon. Members. I pay tribute to the opening speech by my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards), who spoke with typical passion and made a plea for fairness. However I take issue with his description of Wales as a colonial economy. I absolutely reject that term. Wales is not a colonial economy. The economy of Wales is highly integrated with the rest of the United Kingdom. One reason why support for separatism is so low in the Principality is that real people out there understand how integrated the Welsh economy is with the rest of the United Kingdom. They reject the separatism of Plaid Cymru and the Opposition.
We had a long and interesting speech from the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). He started by introducing the philosophical challenge of what to do with a box of chocolates among children. I disagreed with a lot of his economic analysis, but I strongly agreed with him when he said that behind all the economic statistics that we are talking about are real lives. Members on both sides of the House should not lose sight of the fact that when we talk about record numbers of people returning to work and unemployment falling in our constituencies, those are real lives. People are making their way back into the jobs market, upping their skills and getting new confidence, which will make a powerful difference in our communities.
The hon. Gentleman also made an important point about the decline of social mobility. I put on record that both his nation of Scotland and mine of Wales at one time were beacons of social mobility. There was a time in Wales and Scotland when increasingly it did not matter who one’s mum and dad were, what street one grew up in or what jobs one’s parents did. There was a progressive trend of social mobility. We have gone into reverse on that, and that is one of the great tragedies of what has happened in the economy in recent decades.
My hon. Friend the Member for Aberconwy (Guto Bebb) made what I think was the speech of the day. He spoke with expertise and experience about small businesses being the engines of job creation, not only in Wales but across the UK. Members on both sides of the House should pay tribute to him for the work he has done, particularly on interest rate swaps and on challenging the banks on the way in which they have treated small businesses in recent years. He spoke powerfully and passionately about the ethical and moral underpinning of our welfare reforms and what we are trying to achieve. It is not just about deficit reduction, and it is not about attacking the poor or anything so absurd; it is about seeing lives changed and communities that were blighted by worklessness unlock their potential so that they can increasingly share in the emerging economic growth.
The hon. Member for Angus (Mr Weir) drew on his expertise on fuel poverty and energy markets. I promise to write to him, or to ensure that one of my ministerial colleagues does, on the specific point he raised. He mentioned pensioner poverty, as did other Members, so let us remind ourselves of the figures. In 2011-12, 1.6 million pensioners were in relative poverty, which is close to the lowest rate recorded. Pensioners are less likely to be in relative low income than the population as a whole. The Government want all pensioners to have a decent and secure income in retirement.
The hon. Member for Dumfries and Galloway (Mr Brown) seemed a little confused and uncertain about what is happening to income inequality, so let us put on the record what the statistics show: income inequality is falling under this Government, having reached record levels under the previous Labour Government. I very much agree with his comment that young people are not only our future—they are more important than that—but our today. That is why we are making efforts to see youth unemployment fall, just as unemployment is falling right across the country. We take seriously the opportunities facing our young people and are in no way complacent about the challenges that today’s generation of young people will face. However, let me remind Opposition Members that if we are serious about the kind of future young people will face, we absolutely must reject the terms of the motion, which calls for a return to more borrowing, more spending, more deficit and more debt.
My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) made a characteristically entertaining speech in which he made some extremely important points about business being the generator of growth and the creator of jobs in the economy. He used the analogy of a rising tide carrying all boats, but it is business and private sector growth that makes that tide rise. We absolutely agree.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) drew on her expertise in health inequality and made a characteristically well-judged speech. I just remind her that in the nations of Wales and Scotland, which we have focused on today, many of the policy levers that relate to health inequality—housing, health and education, for example—lie with the devolved Governments. I encourage her to look at what is happening in Wales. If she studies that in detail, she might have some serious and difficult questions for her Labour colleagues in Cardiff.
My hon. Friend the Member for Bedford (Richard Fuller) made an excellent speech reinforcing the point that if we are serious about fairness, we must take seriously the issue of what kind of future our young people and their children will face. That is why we remain absolutely committed to reducing the deficit and restoring stability, discipline and order to our national finances.
The hon. Member for Llanelli (Nia Griffith) spoke about zero-hours contracts, which she clearly regards as a negative thing. The number of zero-hours contracts in the economy was the same in 2013 as it was in 2000, so the idea that there has been some kind of explosion in the number is just not correct. If she really regards them as such a bad thing, she should speak to her colleagues running Carmarthenshire—
Pete Wishart
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.
Business without Debate
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text
Nagorno-Karabakh and Azerbaijan
(10 years, 9 months ago)
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Stephen Pound (Ealing North) (Lab)
May I share with the House the fact that this month marks the 20th anniversary of the ceasefire between Azerbaijan and Nagorno-Karabakh, which is also known as the mountainous Karabakh republic? Many people know very little about the political situation in the south Caucasus, but I am very grateful to the hon. Member for Maldon (Mr Whittingdale), my hon. Friend the Member for Bishop Auckland (Helen Goodman) and the noble Lady, Baroness Cox in the other House, for frequently raising the subject. My purpose in raising it in this Adjournment debate is that the Minsk process has sought to resolve the conflict since the ceasefire 20 years ago, but now appears to be stalled, if not frozen. I seek tonight to try to apply the gentlest of nudges to the three Minsk co-chairs, to see if we cannot make progress.
It is difficult to understand and almost impossible to appreciate the full extent and horror of the war that raged between February 1988 and May 1994 in Nagorno-Karabakh. One has to go back many centuries if one wants to discover its origin, but, for the sake of brevity, Mr Speaker, and to avoid testing your patience and indulgence, I shall refer to a couple of simple and basic facts. In that war—and it was a war; it was not a regional conflict, a local conflagration or skirmish—on one side was an Azerbaijani army of 42,000 people, of whom 11,000 died, and on the Armenian side was an army of 20,000, of whom 6,000 died. There were Afghan mujaheddin and Chechen volunteers fighting on the side of the Azeris, and Armenian volunteers and people from the diaspora fighting on the other side. It was an extraordinarily bloody war, and I think that, because there was UK-British involvement in the early days of the creation of the boundaries of these republics, we have a duty to do what we can to nudge the matter forward.
After the Russian revolution in 1917, the three south Caucasian republics, Armenia, Azerbaijan and Georgia, together formed a trans-Caucasian federation, which sadly did not last long, collapsing after three months. British troops occupied a great deal of the south Caucasus, particularly Baku in Azerbaijan, in 1919, pending the Paris peace conference—a period in which we were rightly involved in the area. However, the Soviet army invaded and set up something called the Kavburo—the Caucasus bureau—which at the time voted 4:3 in favour of the area we know as the mountainous Karabakh republic or Nagorno-Karabakh being allocated to Armenia.
You will know, Mr Speaker, as will many in this House, that the dividing line between the two communities is very deep and very ancient. Armenia has been a Christian country since 301 AD; the vast majority of the population of Nagorno-Karabakh are Christian, and the majority of the population of Azerbaijan Muslim. There has been a degree of tension, which has spilled over into bloody ethnic conflict.
Jim Shannon (Strangford) (DUP)
Churches had to register in Azerbaijan by 1 January 2010. Any house churches active after that date were raided by police and state authorities, with church leaders arrested and sent to jail. Should not our Government make representations to the Azerbaijan Government to stop the persecution of Christians and actions against the churches?
Stephen Pound
The hon. Gentleman’s record on addressing the persecution of Christians is second to none, and I hope that his words reverberate and are heard beyond this Chamber.
After the Caucasus bureau voted for Nagorno-Karabakh being allocated to Armenia, there was an intervention by the Communist party leader in Azerbaijan, Nariman Narimanov, who reversed that decision. He was guided in this by the people’s commissar for nationalities—better known to us as Joseph Stalin.
Things came to a head in 1985, when Gorbachev was elected in the Soviet Union. In the ensuing feeling of perestroika—the slight lifting of the yoke—there were demonstrations in Yerevan and Baku, which were very much about determination of what was then called an enclave between the two countries. In February 1988, there were skirmishes near Askeran in Artsakh, on the Stepanakert-Agdam road. Then there was what is still—rightly—called the pogram in Sumgait, in which many Armenians were killed in the most horrendous circumstances. There were riots for three days and then the Soviet Army intervened. As if that were not enough, in December 1988 there was an enormous earthquake, which killed 25,000 people in what was then called Leninakan and is now Gyumri.
That period saw increasing tension along the borders, including in January 1990 an air and rail blockade by the Azerbaijan Soviet Socialist Republic, another pogrom, and finally Gorbachev declaring a state of emergency. There was fighting throughout the Azeri cities, and then, in spring 1991, Operation Ring, in which Ayas Mutalibov—the Azerbaijani leader, who was seen at the time as one of the new wave of non-communist leaders that included Yeltsin, who had just been elected in Russia, and Levon Ter-Petrossian in Armenia—launched a military offensive against Armenians in the Shahumyan area, with a view to ethnically cleansing the area. That is when the diaspora, personified in some ways by Monte Melkonian, who was one of the great leaders, realised that it had to support ethnic Armenians in their homeland.
Gorbachev resigned in December 1991. That allowed the old Soviet Union to collapse in the south Caucasus region. Azerbaijan voted to rescind the autonomous oblast status of Nagorno-Karabakh. The Armenians did the same and declared independence on 6 January 1992.
Then the war started, and it was a war. There was a complete imbalance between the two armies. Together, Nagorno-Karabakh and Armenia had 170 tanks and 360 armoured personnel carriers, but no fighter aircraft. The Azeris had 300 tanks, the same number of APCs and, crucially, 170 fighter aircraft. They were helicopter gunships—the old Mil Mi-24s that were left over from the Russian retreat. Throughout this sad and sorry story, almost all the weapons, armaments, ordnance and artillery pieces were left by the retreating Russians. It was like there was a vast warehouse of weaponry throughout the south Caucasus—an enormous bonfire waiting for the spark.
There were appalling scenes throughout the war. There were accusations of atrocities on both sides, many of which have been investigated. In May 1992, the war took a crucial turn when the Armenians captured the headland or redoubt of the Azerbaijan army in the area that most people now know as Shushi, but which at that time was called Shusha. At that time, much of the fighting was being done by Chechens, who were fighting for jihad. Their leader, Shamil Basayev, referred to the soldiers of the so-called Dashnak battalion, which is also known as the Dashnaktsutyun or the Armenian Revolutionary Federation, as the only people who had ever defeated him.
I could describe the war further, but that is not really the point of this debate. Towards the end of the war, in January 1994, even by the horrific standards of modern warfare, things had got to an almost unbearably painful phase. Azerbaijan extended the call-up to boys of 16. The war entered what objective, independent observers call the “human wave” phase. Andrei Sakharov, who is often quoted in this Chamber, said at the time:
“For Azerbaijan the issue of Karabakh is a matter of ambition, for the Armenians of Karabakh, it is a matter of life or death”.
The peace process started. In 1994, it was recognised that it was, in effect, a frozen conflict. The Minsk group, with its three co-chairs, who are currently Igor Popov from the Russian Federation, Jacques Faure from France and James Warlick of the USA, is working as hard as it can to move matters forward. I hope and believe that it is doing so with the support, knowledge and understanding of Her Majesty’s Government. The co-chairs visited Baku and Yerevan just this month.
However, matters along the line of contact are not good. Twenty soldiers were killed along the ceasefire line in 2013, despite the existence of the ceasefire. There were nearly 200 ceasefire violations between 2 and 8 February of this year. Often, the violations involve people firing across the border, including snipers, but there are also more violent incidents. The line of contact is porous and is coming under increased pressure.
People will be asking themselves the question, as I would be if I were listening to this debate, “What can we do?” Every Member of Parliament is inundated by letters saying, “Please put pressure on country X or nation Y and do something about it.” What can we do in this case? I think that we have a crucial role to play. There is not a massive amount of trade between the United Kingdom and Armenia. Fewer than 10 UK firms are active in Armenia. We gave Armenia £882,000 in aid last year. I pay credit to our remarkable joint ambassadors in Yerevan, Kathy Leach and Jonathan Aves, who work extraordinarily hard to progress British trade interests in the area. However, we could do much more. By contrast, Azerbaijan was given £1,335,000 in aid over the same period, and we have very close trade links. The United Kingdom is actually the 15th largest trade partner of Azerbaijan, and the major role of BP in oil extraction, refining and marketing cannot be underestimated.
Charles Hendry (Wealden) (Con)
The hon. Gentleman will be aware that I am the Prime Minister’s trade envoy to Azerbaijan. Our trading links go much further than that, and indeed, we are by far the biggest investor in Azerbaijan through BP and other companies in that sector. The country is increasingly important to the British economy, and I hope he will reflect that in his comments.
Stephen Pound
I am grateful, and I place on record my appreciation for the hon. Gentleman and the work he is undertaking in that area. To show how important that link is, when President Ilham Aliyev made critical comments fairly recently—I think it was on 17 October 2012—in connection with British Petroleum’s output from the Azeri–Chirag–Guneshli field, our ambassador to Azerbaijan, Peter Bateman, said:
“I shall be calling on BP in London next week to find out what more, if anything, we can do to help”.
That shows a remarkable degree of association with the British Government, and of involvement at a very high level. Indeed, the FCO was vital in negotiating what was widely called the “contract of the century”, which was signed in Azerbaijan in 1994. Co-operation was so close that when we first posted ambassadorial staff to the Republic of Azerbaijan they were located in BP’s offices in Baku. The relationship continues and prospers. In fact, the Foreign Secretary attended the signing ceremony for the final investment decision on the Shah Deniz 2 project in Baku.
Helen Goodman (Bishop Auckland) (Lab)
The Foreign Secretary told me in response to a parliamentary question that he raised human rights issues on that visit. Does my hon. Friend know, and will he press the Minister on whether the Foreign Secretary also raised the issue of Nagorno-Karabakh?
Stephen Pound
Like many Members, I was in the Chamber for the debate that my hon. Friend initiated on that issue, but I think, with respect, that the Minister may be a more appropriate person to respond. I am not entirely privy to every detail of the negotiations and discussions, but I certainly recall the debate on this important issue.
There are some signs of movement. Just this week, the United States ambassador to Azerbaijan, Richard Morningstar, issued a statement to say that the United States is being even more active in resolution of the Nagorno-Karabakh conflict than in the past. He said:
“I can understand the frustration of the Azerbaijani people about the Nagorno-Karabakh conflict. We are committed to trying to bring about resolution. It is a good thing that presidents met in November.”
There is some movement. This week, the co-chairs of the OSCE Minsk group have spoken of their hope for moving forward on this issue, particularly because of the additional truce that was agreed before the winter games in Sochi.
Human rights issues in Azerbaijan are probably not the subject of this debate, but I am looking to get some movement to allow some peace to return to a deeply troubled part of the world. This may be commonplace and obvious, and it may almost be otiose for me to say it, but it is one of the great tragedies that some of the most beautiful parts of the world are the places that are most troubled. One thinks of parts of central Africa, East Timor, and so many countries of great heart-stopping beauty. Anyone who has been to Nagorno-Karabakh—as I know many Members of the House have—will never forget those great sweeping, soaring mountains, those deep, eye-stretching valleys, and the churches going back nearly 2,000 years, with distinctive Armenian crosses everywhere one looks. We need to do something to bring back that peace.
In addition, we are approaching the anniversary of the great Armenian genocide of 1915. If ever there was a time when this House could look to Armenia with support, friendship and solidarity, it is as we approach this anniversary. The Member for Portsmouth South (Mr Hancock) is not in the Chamber, but I notified him that I was likely to mention his name. Every time we have discussed the Armenian genocide and the current situation, he has chosen to use comments such as “the so-called genocide” and say how he disapproves of any democratic opposition in Azerbaijan. He never misses an opportunity to defend President Aliyev. That is a shame, because I would have thought that if there is one thing the House can agree on it is that a genocide of the most horrendous proportions did take place in Anatolia, Van and what was then called western Armenia. The 1915 genocide was the third genocide and was particularly horrendous. Would it not be a good thing if we were to lend our support, put our shoulder to the wheel, and try to move Minsk forward in time for the commemorations of this appalling genocide?
Some would say, “Can we not put this matter behind us?” I am not Armenian and I am not Azeri. I do not have a drop of blood of either of those nations in my veins. However, I cannot help but note that even though much of what we talked about this evening appears to be in the past, it is a past that still resonates.
Many people will know the situation that occurred on 18 February 2004. Extraordinarily, soldiers from Azerbaijan and Armenia were present at a NATO partnership for peace activity in Budapest. One Azerbaijani soldier, Ramil Safarov, decided to buy an axe and take the head off an Armenian soldier, Gurgen Markarian. This happened in Hungary in 2004. This is not ancient history; this is recent history. At the time, the Azerbaijan human rights commissioner said that Safarov must become an example of patriotism for Azerbaijani youth and the National Democratic party awarded him the man of the year award in 2005. When the Hungarians released Ramil Safarov, he returned to Azerbaijan to be promoted to the rank of major. He received eight years back pay and was given accommodation. It is that raw and it is that recent. My point is that these emotions simply cannot be allowed to fester. When we have a feeling of animosity between two peoples that leads to a fellow soldier on a NATO joint exercise decapitating another soldier, that is something intensely felt and we must be able to somehow push that forward and improve the situation.
The British Government cannot demand action, but what we can do is to show our concern. I know the Minister and respect him, as do most in the House. We have an opportunity to put down a marker: to say it was an awful, bloody and terrible war, but that it finished 20 years ago. Let us finally end this awful conflict, and allow two nations to emerge into the sunshine to live in peace. Then we can talk about human rights, but at least let us talk without the sound of gunfire, without the smell of cordite and without the chill anticipation of death.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
I congratulate the hon. Member for Ealing North (Stephen Pound) on securing the debate and on the extremely articulate, comprehensive and passionate way in which he set out his case. He combined a detailed understanding of the history with an extreme passion for trying to find a satisfactory lasting resolution to this long-standing conflict in the south Caucasus region. He, and all Members of this House, will be extremely concerned with the lack of progress in resolving this conflict. This is not just an issue for Members of this House, but for many of the hon. Gentleman’s constituents, as well as those people living in the south Caucasus region.
The hon. Gentleman was right to highlight the fact that the conflict dates back to before world war one. Its causes are very deep-rooted. The conflict that broke out between Armenia and Azerbaijan over Nagorno-Karabakh as the Soviet Union disintegrated created not only the problems to which he alluded but hundreds of thousands of refugees. For many of those refugees, the situation either has not improved or has improved little since then. The conflict continues to hamper development in both Armenia and Azerbaijan and cause further instability in the already troubled region of the south Caucasus.
It goes without saying that finding a lasting solution will be vital in alleviating the suffering still felt in the region. I am extremely grateful for the work being done by the hon. Gentleman and other Members of both Houses to raise awareness of that tragic conflict. Of course, it does not need to be said that we are not much further on than we were 20 years ago, and we are almost at that 20th anniversary.
The hon. Gentleman used the phrase “a frozen conflict”. Let me gently say that I think that that is misleading. As he rightly pointed out, fighting continues to this day. The UK is concerned by the ongoing breach of the ceasefire along the line of contact as well as along the Armenia-Azerbaijan border. There were reports of increasing numbers of ceasefire violations in January and early February, as he rightly mentioned. We were pleased that the Presidents of both countries committed to a truce during the winter Olympics. While fighting continues, there is always a danger of escalation, whether that is deliberate or not, and we urge both sides to exercise restraint and avoid provocation.
The UK strongly supports the work of the co-chairs of the Minsk group-led peace process and I agree with the hon. Gentleman on that point. We also recognise the frustration that he rightly articulated about the fact that progress has been slow and that it feels as though we are no closer to a resolution than we were 20 years ago. However, at last year’s G8 summit in Lough Erne the three co-chairs primarily made the point that it was for the Armenian and Azerbaijani Governments to take ownership of the peace process. It is their conflict and they must take responsibility to resolve it. Of course, the co-chairs work hard to facilitate progress and we and the international community stand ready to provide further support when the time is right.
The UK is concerned that neither Armenia nor Azerbaijan is creating a situation in which a peace agreement would be acceptable to their populations. A generation of people from both countries now exists that has had no contact with anyone from the other country. That is all the more regrettable given that throughout much of the region’s history the two communities resided peacefully alongside each other, as they still do in neighbouring Georgia. Armenians and Azerbaijanis living in isolation goes against that trend and we need collectively to address that.
The perceptions that many citizens of both countries have of their close neighbour are now founded on negative stereotypes and aggressive rhetoric. Neither Government have done enough to counter that image and, at times, they have actively encouraged those perceptions. The longer the conflict continues and the longer both Governments shy from preparing their populations for peace, the greater the loss of life will be for both sides and the more difficult it will be to find a lasting solution to the conflict. The UK Government do not underestimate the fact that finding peace will involve difficult decisions and compromises. Despite the difficulties, we are committed to doing everything we can to foster efforts to find a resolution to the conflict.
We continue to encourage Azerbaijan and Armenia to follow the Madrid principles, to exercise restraint, to avoid provocation and to redouble efforts to achieve a negotiated settlement based on the principles of refraining from the threat or use of force, territorial integrity and the people’s right to self-determination.
The hon. Member for Bishop Auckland (Helen Goodman) rightly mentioned the Foreign Secretary’s discussions, and I can assure her, the hon. Member for Ealing North and the hon. Member for Strangford (Jim Shannon), who has a particular passion for the plight of Christians everywhere in the world, that the Foreign Secretary raised the importance of human rights and Nagorno-Karabakh when he met President Aliyev. He also raised those issues with Armenian Foreign Minister Nalbandian last May. We regularly speak and raise these important issues with representatives of both Governments at all levels.
The UK has invested more than £1.5 million over the last three years funding projects that attempt to break down walls and develop an understanding between the communities affected by the conflict. However, the leaders of both sides must play their part, and we consistently urge Armenia and Azerbaijan to work with the Minsk group to reduce tensions and create an environment conducive to a peaceful, long-lasting settlement. My hon. Friend the Member for Wealden (Charles Hendry), the Prime Minister’s special trade envoy to Azerbaijan, was right that a peaceful solution will be beneficial, in economic and trade terms, to Azerbaijan, Armenia and the whole of the south Caucasus. We feel that is a way for the UK to play a significant part in engagement and reducing tensions, and we specifically encouraged the meeting of the Presidents of Armenia and Azerbaijan, which happened last November, after almost two years, and we hope that further meetings between them will take place soon.
These two countries occupy a pivotal geographical position just east of the EU and are an important part of the EU’s wider neighbourhood, and the EU works with them through the Eastern Partnership. Both have huge potential, vibrant, dynamic populations and geostrategic locations, situated, as they are, between Europe and Asia, with Russia to the north and the Gulf states to the south. The south Caucasus can be a crossroads for trade, transport and energy, linking China, central Asia, the Caspian sea, Turkey, Europe and the middle east. Given that potential, it is hugely disappointing that this conflict remains unresolved, not least as we approach the 20th anniversary of the ceasefire agreement this May. The UK, as a friend of both countries, will continue to support all efforts to resolve this protracted conflict. These efforts are crucial to helping both countries and the broader south Caucasus region reap the substantial rewards and benefits that lasting peace and stability will bring.
Question put and agreed to.
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(10 years, 9 months ago)
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Tourism (VAT)
(10 years, 9 months ago)
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Ms Margaret Ritchie (South Down) (SDLP)
I am pleased not only to have secured the debate but to serve under your chairmanship, Mr Hollobone. I am pleased that the Minister is here to listen and to respond. I thank my co-signatories to the debate, my friends the hon. Members for Brighton, Pavilion (Caroline Lucas), and for Strangford (Jim Shannon). I am pleased to see an excellent turnout from MPs across the UK and across the House, which reflects the importance of the debate. I offer an apology from my hon. Friend the Member for Foyle (Mark Durkan), who is on a Public Bill Committee on consumer rights this morning. During the past couple of years, he has submitted an early-day motion on the subject, and tabled an amendment to a Finance Bill on the issue.
A reduction in VAT is important for tourism, which is a vital industry across these islands; it provides 10% of GDP and supports more than 2 million jobs in the UK. In Ireland, the industry employs some 180,000 people and generates an estimated €5 billion a year. There is potential for significant growth in the sector, especially in Northern Ireland, and that growth would boost associated industries and the wider economy.
Those who come to the UK as tourists spend money in our hotels, pubs, restaurants and shops. They bring economic life to areas that have struggled in the recent economic climate. However, the tourism industry was hit particularly hard by the higher rate of VAT introduced by the Government, and no alleviation has been offered. It is common practice across the EU for member states to introduce sector-specific cuts for the tourism industry, which some offer for accommodation rates, some for tourist and cultural attractions and some for restaurant charges. The UK is one of only four states that ignore all those options. As a result, the industry in Britain and Northern Ireland confronts one of the worst policy regimes possible.
Roger Williams (Brecon and Radnorshire) (LD)
I congratulate the hon. Lady on securing the debate. Small hospitality businesses in my constituency are afraid to go above the threshold for VAT registration for fear of having to pay a rate of 20% on their income. Does she agree that reducing the VAT rate would encourage such small businesses to expand?
Ms Ritchie
I thank the hon. Gentleman for his helpful intervention, and I completely agree with him. In our nearest neighbour, the Republic of Ireland, VAT on tourism products is now 9%. Even in the difficult economic climate that the Republic has experienced—it has just come out of the bail-out situation—the VAT rate reduction has underpinned businesses in the tourism sector and encouraged new ones to emerge.
Mr Nigel Dodds (Belfast North) (DUP)
I, too, commend the hon. Lady and her colleagues on securing this important debate. To be parochial for a moment, in Northern Ireland the problem is our land frontier with the Irish Republic where, as she has just mentioned, there is a lower rate of VAT. Is that not a particular issue for the Province, given people’s propensity simply to go south to enjoy better VAT rates?
Ms Ritchie
I thank the right hon. Gentleman for his very helpful intervention. I absolutely agree with him. My constituency borders County Louth in the Republic of Ireland. Many people come to the island of Ireland via Dublin airport, where there will be a zero rate of air passenger duty from April this year. The lower VAT rate on tourism products encourages many of them to use their purchasing power on accommodation and restaurants in the Republic of Ireland, rather than travelling north, where they would have an opportunity to invest in our local economy.
As a labour-intensive industry, the tourism sector is a leading employer. In particular, it offers younger people entry-level jobs at the start of their careers, and more than 44% of people employed in the sector are less than 30 years old. We face a youth unemployment crisis, with more than one in four young people out of work, and the Government’s lack of support for the tourism sector is clearly impairing job creation. A cut in the rate of VAT would create demand, which would spur job creation and go some way towards reducing youth unemployment. In Ireland, the VAT cut for tourism has produced an extra 10,000 jobs in just over a year. A prominent report on the subject published by Deloitte produced evidence that a similar tourist VAT cut in the UK would create some 80,000 jobs.
Mr Geoffrey Cox (Torridge and West Devon) (Con)
I congratulate the hon. Lady on securing this extremely important debate. I represent an area of the south-west that is affected by flooding. Does she empathise, and does she agree that if the Chancellor considered a cut in VAT, it would be a hugely welcome boost to the thousands of small tourist businesses on which the economy of the south-west depends, and that it would help those who are shivering in the midst of the flooding?
Ms Ritchie
I thank the hon. and learned Gentleman for his helpful intervention. My colleagues from Northern Ireland and I offer our sympathy, support and empathy to the people of the south-west. My aunt used to work in the hospitality industry in Plymouth many years ago, so I know it quite well. I suggest to the Minister that a cut in VAT would help those who are struggling economically, financially and emotionally at this difficult time.
Mr George Howarth (Knowsley) (Lab)
I congratulate the hon. Lady on securing the debate and on the forceful way in which she is putting her case. Does she agree that attractive tourist destinations such as Northern Ireland and Merseyside are being hampered competitively by the arrangements elsewhere in Europe that she has described?
Ms Ritchie
The right hon. Gentleman is absolutely correct. Other countries in the EU, including Belgium, the Netherlands and Germany, have much more competitive rates. In France, for example, there is a banking agreement between the Government and the industry. Such measures help to attract visitors and ensure that the money they spend is invested in the local economy.
Tim Farron (Westmorland and Lonsdale) (LD)
I congratulate the hon. Lady on securing this incredibly important debate. She mentioned the possibility that a VAT rate reduction for the tourism industry would lead to increased job creation. Would she recognise that many people in the tourism industry—particularly in places such as my constituency, the Lake district, and the Yorkshire dales—are desperate not only to create more jobs but to ensure that jobs are better paid and that a living wage can be paid to people working in the tourism industry? Does she acknowledge that a cut to a fairer level of VAT would help to make tourism a more high-wage industry?
Ms Ritchie
I thank the hon. Gentleman for his intervention and I agree with him. Many jobs in the tourism sector are quite low paid, but if there was a level playing field in taxation rates, that would afford the opportunity for employers to pay better rates. It would also ensure that people have confidence and trust, and would allow them to do a better job in promoting their local areas.
I would like to make a little progress. Will the Minister robustly consider the case for a reduction in VAT on hotel accommodation and visitor attractions from 20% to 5%? Would he also consider broadening that out in future to the wider hospitality sector, including to food served in pubs and restaurants? That would encourage many more foreign visitors and provide an incentive for staycations in the domestic market. It would boost coastal resorts, rural retreats and cities and towns that have been hit hard by the economic downturn since 2008.
The industry is significantly constrained by its lack of price competitiveness. The Chancellor is not long back from Davos. While there, he may have learned that the World Economic Forum places the UK in 138th place for price competitiveness for tourism, out of 140 countries. The UK sits at the bottom of the international league table, with businesses facing the challenge of the highest rates in the world for VAT, air passenger duty and visa charges. The purpose of today’s debate is not to rehearse the arguments on issues such as air passenger duty, but that placing shows that the Government’s lack of action on VAT forms part of a broader lethargy when it comes to supporting the tourism industry.
The Government say that visitor numbers remain strong, but I would suggest that that is in spite of the current pricing policy, rather than because of it. The UK’s balance of payments for tourist products has declined steeply in the past 15 years, making it clear that tourism growth has not been what it could have been in recent years, and that we are not maximising the industry’s enormous potential to deliver revenue and jobs. I would argue that the blame for that lies with the policy regime, which is holding back the industry’s potential. Any argument from the Government based on the cost of a VAT cut being prohibitive is highly dubious.
There is strong evidence from the Treasury’s own economic modelling, as used by Professor Adam Blake in a study for the British Hospitality Association, that a VAT cut for the sector would benefit the whole economy. Yes, there might be a loss of some £640 million in the first year, but that would be comfortably offset by years 2 and 3 of the programme. Figures show that a 15% cut in tourism VAT would quickly become revenue-neutral and would result in a radically increased tax take of £2.6 billion over 10 years, delivering a £4 billion boost to the gross domestic product. I repeat: those figures do not come from the industry or lobbying consultants. They are derived from the Treasury’s own internal economic models.
Mr Laurence Robertson (Tewkesbury) (Con)
The hon. Lady will be aware that alongside this debate and campaign there is great concern, as expressed in the main Chamber just a few days ago, about the plight of struggling pubs, many of which are closing each and every week. There are a number of issues behind that. Beer taxation, which the Government started to address, is certainly one of them, but VAT is hampering that industry as well, particularly when pubs survive through the food that they provide. Does the hon. Lady agree that one way to help pubs, which are a vital part of the tourism industry, would be to consider how they are affected by VAT?
Ms Ritchie
I thank the hon. Gentleman, who is the Chair of the Northern Ireland Affairs Committee, for his intervention. I agree with him on that point, but I see restaurants and pubs that serve food as being further down the line, so to speak. Nevertheless, I do not disagree with his point, because we must invest in local economies and jobs throughout the UK.
Mark Field (Cities of London and Westminster) (Con)
The hon. Lady will appreciate that my constituency attracts a huge amount of tourism, being right in the centre of London. I therefore have some sympathy with a lot of what she says—a number of operators have lobbied me on the matter. However, she recognised and referred to the idea that the Treasury would potentially lose money in the short term. She mentioned some specifics on which she would want immediate action—tourist attractions and accommodation—but does she not recognise that if we include other things, such as pub food, we are looking at a very uncertain tax break? It could cost considerably more money at a difficult time for the public finances. Is it not therefore important that she focuses specifically on measures that will have the maximum benefit for the UK’s tourism industry, without negative effects on the public purse?
Ms Ritchie
I thank the hon. Gentleman for his intervention. Although I understand that at this stage the focus must be on accommodation and visitor attractions, it would be wrong not to pursue the Treasury and the Minister to try to ensure that we get a better deal for our tourism industry and the wider population we represent.
It might be helpful if I gave a little information from the British Hospitality Association and the Cut Tourism VAT campaign. The Government have asserted that they cannot afford to take a loss on VAT income. It is worth pointing out, however, that the direct loss of VAT incurred by a reduction for visitor accommodation and attractions would be £1.2 billion. Half of that loss would be made good within the first year via savings from social security benefits—more people would be employed—and increased tax yields, principally from employment-related taxes. The year 1 deficit would therefore be £645 million.
Stephen Lloyd
I thank the hon. Lady for giving way, and for securing this debate. Professor Blake said that he felt that a VAT cut would be
“one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the exchequer”
that he had seen, under the Treasury’s own model. Furthermore, a week or so ago I had a comprehensive meeting with VisitBritain and was reminded that such a reduction would create 80,000 new jobs. That would make a significant difference and neutralise the cost to the Treasury, exactly as the hon. Lady says.
Ms Ritchie
I thank the hon. Gentleman for his helpful intervention. It is worth pointing out that Professor Blake used the Treasury’s model for the research that resulted in his recommendation that the focus of a VAT cut be on accommodation and visitor attractions.
I would like to make a little more progress. I would like the Minister to clarify whether the Treasury accepts the figures resulting from its modelling, and whether it contests that this measure would be revenue-neutral and bring a long-term benefit, in terms of tourism numbers, tax revenue and job creation. If the Minister has figures that dispute that, I think everybody would be grateful to see them.
I would like to set the issue in the EU context. Even if the Government concede that the cost would not be excessive, they frequently argue that if such a cut was granted to the tourism sector, every other industry would be queuing up to get a similar cut. That is simply not the case. The EU has already established that the tourism industry is one of very few labour-intensive services that would be eligible for a reduced rate of VAT. Strikingly, the vast majority of other EU member states, which appreciate the importance of the industry, have exercised that right, but not the UK. As was pointed out in a report by Deloitte in 2011, the UK is the only country in the EU that does not apply a reduced rate of VAT to some part of its tourism sector.
The UK is one of only four of the EU’s 27 member states that do not take advantage of the reduced VAT rate on visitor accommodation, one of only 14 that apply the full VAT rate to admissions to amusement parks, and one of only nine that apply the full rate to admissions to cultural attractions. Thirteen countries, including Ireland, also have a reduced VAT rate for restaurant meals. That is not a record of which the UK can be proud. We hear much from the Government about how they are constrained and restrained by Brussels; here is a perfect example of where the Government have the right to be flexible, but they have so far refused to exercise that right.
Other countries are a rich seam of information on the benefits of a cut. It is no coincidence that after such measures are implemented, countries tend to stick with them. If we compare Ireland and the UK, we see a tale of two Governments. The introduction of a 9% VAT rate for tourism-related business and services made 2013 the most successful year since the financial crisis for Irish tourism, with visitor numbers up 10% and more than 9,000 jobs created.
Tessa Munt (Wells) (LD)
The Minister will know of my passion for caravans, because there are so many in my constituency. I thank him for the work that he did last year to ensure that the proposed VAT rate on caravan sales was dropped from 20% to 5%, which has saved the industry in my area and other parts of the UK. I ask him to consider a tourism-related VAT cut in exactly the same vein. Holidaymakers’ loyalty to the UK, holiday businesses’ investment in the UK, and the passion for people felt by tourism staff, of whom I was one for a decade, deserve to be rewarded with a sensible approach to this issue.
Ms Ritchie
Yes, that is what many of us are saying. We are making a special plea to the Treasury for a sensible approach that ensures growth in our local economies.
In conclusion, to take the case of Ireland, north and south, the island is marketed as one area, but it has two different taxation regimes and two different rates of tax on tourism products, including both visitor attractions and accommodation. We believe that that needs to be synchronised in some measure. I hope that the Minister sees that there is a strong case for a VAT reduction for accommodation and attractions. It could subsequently be widened to include food served in pubs and restaurants, which forms an integral part of our wider tourism sector. That would send a strong message of support to the tourism industry and, importantly, enable it to compete on a more even basis with other European nations, which have almost unanimously introduced such measures. I know that the local tourism industry in Northern Ireland—particularly in my constituency, where wonderful work is already being done—would welcome it with open arms.
There are many MPs here from England, Scotland and Wales, and I know, having talked to some of them, that they would also welcome such measures to pump-prime and grow the local economy, and enable the tourism industry to invest in growth and jobs. This Government talk a great deal about creating growth in the private sector, delivering jobs and supporting local businesses. Here is a ready-made policy that could be implemented quickly and would deliver instant results. I hope that we have a full and frank debate about the issue, leading up to the Minister’s response and, hopefully, to some better news in the Budget report on 19 March.
Mr Philip Hollobone (in the Chair)
Order. I have some good news and some bad news. The bad news is that I am afraid you are going to have to tear up your 15-minute speeches. The good news is that I shall do my level best to ensure that everyone gets to speak, but it will only be for a limited period. With the permission of the Chairman of Ways and Means, I will impose a three-and-a-half-minute time limit, which will work only if there are no interventions. If there are no interventions and everyone sticks to the time limit, that should leave 10 minutes each for Front-Bench speeches.
Dr Sarah Wollaston (Totnes) (Con)
I congratulate the hon. Member for South Down (Ms Ritchie) on her excellent speech. I do not intend to repeat it, but I will start by saying that the south-west is open for business. Times are difficult for us at the moment. I send my condolences to all those in Somerset affected by the terrible flooding. In my own coastal constituency, many families and business have been severely affected.
What we need at the moment is help. We offer a fantastic range of opportunities for people who want to come to visit—if God made constituencies, he would have designed Totnes—and I hope that people will visit, but those businesses are struggling. I have heard from numerous business owners in my constituency about the effect of competition across Europe. As people decide where they will stay this summer, they are considering things such as food prices in restaurants and the cost of accommodation. Right now, our businesses are crying out for support from the Treasury. Can we consider seriously the impact that a 5% VAT rate would have, particularly if applied to hotel rooms and visitor attractions? It is not just competition across national boundaries that makes a difference; it is competition within the tourism sector.
Perhaps the Minister will clarify the effect in his response. Riverboat and tourist rail companies currently are not hit by the higher rate of VAT because they count as transport, but neighbouring attractions are. I am also told that there is concern across the industry about the position of charities. We need a level playing field. I am not suggesting for a minute that we should apply a higher rate to other businesses; only that we should make the playing field level across the sector. That would be widely appreciated.
I would like to mention the impact on employment. Yesterday, I met a large group of young people from my constituency, where youth unemployment is, sadly, an ongoing issue. The tourism sector is particularly important in providing opportunities for young people in my constituency. We have a very low-wage economy. Numerous businesses have written to me to say that they would like to pay a living wage but are unable to do so at the moment. Will the Minister consider what impact higher wages across this important sector would have on allowing young people to stay in places such as south Devon? Will he consider the evidence? I have been contacted this week by one very successful business saying that, normally, it would employ far more people, but it has had to cut its staff from the 35 people that it usually employs on the payroll at this time of year to 27. Will he confirm in his response that he has considered the impact that a VAT cut could have on that?
Most importantly, I reiterate that the south-west is open for business. I encourage anyone listening to this debate to come see what we have to offer, but I would also like the Government to do their bit by allowing businesses to offer lower prices, so that people will make the right decisions as the summer comes on.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to follow the hon. Member for Totnes (Dr Wollaston). I, too, congratulate the hon. Member for South Down (Ms Ritchie) on an excellent introductory speech. I know that we are time-limited, so I will concentrate on some items local to my area and on general issues. As both speakers have said, VAT is a consumer tax that impairs employment opportunities, so it is in many respects a tax on jobs. The Government claim, quite rightly, that they want to eradicate the deficit, but they have chosen the wrong tax to increase, because it has a negative effect on jobs and the economy. In the United States, where there has been fiscal stimulus, the economy has grown much more quickly since the recession than in this country.
VAT has an impact on jobs directly and on the tourism sector in particular, and not only the journals of the hospitality industry are saying that: The Daily Telegraph, which is not a left-leaning paper by any stretch of the imagination, has said that VAT
“is forcing many businesses into a tight corner.”
VAT is hurting small businesses, and as a consequence, it is affecting the number of jobs that could be created.
The tax take is being unfairly concentrated on small and medium-sized businesses. We are seeing a 19% increase in VAT on small businesses at the same time as large corporations are experiencing a decrease in the tax taken from them by the Treasury. We need to even out that situation.
The suggestion made in this debate—including by the hon. Member for South Down, who secured it—to reduce VAT on tourism is a sensible one. Tourism is one of the fastest growing global industries, and we live in a global time, as the hon. Member for Totnes suggested. My area has a link with the Republic of Ireland, which is only two hours away, and many tourists who come to north-west Wales “do Europe” and they can compare the prices in Britain with those in other countries in the European Union. That is true in my area, to the south and west of us—Pembrokeshire is also close to the Republic of Ireland—and in the south-east of England, which is close to France and the rest of the continent.
I represent Ynys Môn, the Isle of Anglesey, and the area is very proud of its tradition of drawing many people from across the world. We need to help tourism businesses. In the short time that I have left to speak, I will highlight the experience of one business, whose owners have written to me. At the moment, their business is just below the VAT threshold. They want to invest in the local economy and local people, but they cannot do so because they are inhibited by the fact that they would face a 20% hike in VAT if they choose to go above the threshold.
VAT is a tax on jobs and it can be reduced. People right across the United Kingdom want a fair and level playing field for our tourism and hospitality industries. Reducing VAT is a simple measure that could achieve that level playing field.
I finish by saying to colleagues who represent areas that are being flooded that the UK is a great destination and that it is open for business. The heart of the British Isles is Ynys Môn, the Isle of Anglesey, but the rest of Britain would also benefit from a policy of reducing VAT.
Mr Mark Williams (Ceredigion) (LD)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I, too, congratulate the hon. Member for South Down (Ms Ritchie) on securing this debate. She spoke as a Member for Northern Ireland, but she also took a UK perspective, and I will add a Welsh dimension to the debate. I suppose that the benefit of having a limit of three and a half minutes to speak is that we will not have huge opportunities to advertise the merits of our own constituencies, although both the hon. Members for Totnes (Dr Wollaston) and for Ynys Môn (Albert Owen) did a good job in advertising theirs. I look forward to going to Totnes to meet the members of the South Brent women’s institute in a week or so.
Ceredigion speaks for itself: there are huge opportunities for growth in our tourism sector. I reiterate the comments that have been made about flooding. Many Members will have seen on their TV screens the great Victorian promenade on our seafront in Aberystwyth being battered by the storms. That has caused significant damage, but the message from me, as from others, is that businesses in my area are open for business. I concur with what the hon. and learned Member for Torridge and West Devon (Mr Cox) said about the message that a reduction in VAT would send out to those businesses that have suffered recently.
In Wales, of course, the responsibility for tourism is shared—there is a partnership between our National Assembly Government and this place—but the taxation regime across the UK directly impedes the development of the tourism sector. Two years ago, the British Hospitality Association commissioned Oxford Economics to produce a report that specifically examined the impact of VAT on the tourist sector in Wales. The report was appropriately named, “Hospitality: driving local economies” and showed how hospitality underpins communities. It highlighted the importance of tourism and hospitality to jobs in Wales.
In Wales, more than 112,000 people are employed directly, and another 56,000 people are employed indirectly, in tourism and hospitality. In my constituency, 3,000 people are employed in the sector, which is about 8% of total employment in my constituency. If we take the big players out of our economy—our universities, our NHS and our local government—tourism is at the top of the list of employers.
As I say, 8% of people in Ceredigion are employed in the sector, and as we heard from the hon. Member for South Down, potentially another 80,000 jobs could be created in tourism. Therefore, 10,000 jobs could be created in Wales, which would mean 2,000 new jobs in my constituency. In turn, that would create opportunities for young people and keep people in our communities, rather than seeing them move away. The key phrase is giving the right support to the tourism sector, and I am very much of the opinion that the sector would be boosted if the 5% VAT rate was introduced.
My hon. Friend the Member for Wells (Tessa Munt) talked about the importance of caravans in her constituency, and they are important in my constituency, too. I will quote the Prime Minister, who has said:
“There are always good cases for cutting VAT on individual items. The leisure industry and the hotel industry make a very good argument”.
Of course, he is right on that and the Government were right to take the action that they took on the VAT rate for static caravans. I and many other Members who are here in Westminster Hall today presented petitions on that issue, making the point about the need to reduce VAT to stimulate our local economies, and of course that is what we are all calling on the Government to undertake to do today. We do so in the expectation that that move would be costly in the short term but that, further down the road, it would be cost-neutral, as well as being of huge benefit to the national economy and particularly to our local economies.
Caroline Lucas (Brighton, Pavilion) (Green)
I congratulate the hon. Member for South Down (Ms Ritchie) on securing this debate and on her compelling opening speech.
I am hugely cheered by the number of people who have come out for this debate, which demonstrates the strength of feeling across the House about the importance of this measure. However, there is the sad downside that I cannot talk about quite as many of the wonders of Brighton and Hove as I had hoped to. Nevertheless, I will highlight the testimonies that I have received from the Brighton and Hove chamber of commerce and from Brighton and Hove Tourism Alliance, both of which have told me—in no uncertain terms—what a big difference this measure would make to the local economy in the city.
There are not many win-wins in politics, but this measure is one of them. In fact, it is not even a win-win. It is a win-win-win, in the sense that it is good for jobs and for the economy, because over time it is likely to raise revenue for the Exchequer, and it addresses the competitive disadvantage that the UK suffers by comparison with other parts of the European Union. In a few years’ time, we will look back to today and think, “Why on earth didn’t we move this whole debate sooner?” because it is such an obvious issue to act on. It is like the famous £20 note on the street that people walk past because they cannot quite believe that it is there and such a benefit. This measure would be a benefit; there is a chance now to grasp this opportunity; and I hope that the Treasury is listening to this debate.
Many hon. Members have referred to jobs in tourism. I will just underline one aspect of tourism: 44% of those employed in the sector are under 30, compared with a national average of 24% for all sectors. Therefore, it is anticipated that a cut in VAT for tourism would particularly encourage the creation of employment opportunities for young people. That is incredibly important.
Significantly, the tourism industry has expressed a willingness to consider entering into a collaborative agreement along the lines of the French contrat d’avenir, which would include taking on long-term unemployed people as well as increased involvement in training and product improvement. Again, there is a real opportunity to create more apprenticeships and to get more young people into jobs, so that they can move forward.
Many hon. Members have talked about fiscal neutrality, and there is strong evidence to support the case that this measure would be fiscally neutral. The key evidence for the case to reduce VAT on attractions and accommodation comes, as other Members have said, from Professor Adam Blake, the Treasury adviser, who has used the Treasury’s own economic model. As we have heard, he concludes that a reduction in VAT for accommodation and attractions would be
“one of the most efficient, if not the most efficient, means of generating GDP gains at low cost to the Exchequer”.
The standard Treasury reply to correspondence on this issue states that a cut in VAT would cost the Exchequer an estimated £1.2 billion a year. However, we have heard that Professor Blake found that, based on reasonable and plausible assumptions, the modelling exercise seems to support a general case that a reduction in VAT on tourism services
“would be fairly close to fiscal neutrality.”
He reports that the modelling shows substantially higher GDP gains than others have predicted, peaking at about £4 billion a year.
We also heard earlier about the research that was undertaken by Deloitte and Tourism Respect, which included case studies of tourism VAT changes in other countries and detailed analysis of the price sensitivity of UK tourism. The research found that cutting VAT on tourism would deliver £2.6 billion in extra revenue to the Treasury over a decade and create 80,000 jobs over two to three years. There would be a one-year shortfall in fiscal income, which is projected to be £645 million net or £1.2 billion gross. However, there is a key question that I would like to hear the Minister answer today: if it were possible to find a way of bridging that gap—
Andrew Bingham (High Peak) (Con)
I thank the hon. Member for Brighton, Pavilion (Caroline Lucas). I am pleased to serve under your chairmanship, Mr Hollobone, and I congratulate the hon. Member for South Down (Ms Ritchie) on securing this debate.
Three and a half minutes is not enough time for me to extol all the virtues of my High Peak constituency. Suffice it to say that many hon. Members have heard of High Peak and of Buxton, Glossop and all our fantastic attractions, such as the caves of Castleton. Tourism is a huge source of income for the High Peak. I would support a cut in VAT, which would boost the local economy by bringing more tourists into High Peak and across the country. The hon. Member for Westmorland and Lonsdale (Tim Farron), from the Lake district, who is no longer in his place, may argue with me about this, but the Peak district, which covers a lot of my constituency, is the best national park in the country; it is the second most visited in the world, after Mount Fuji. Let us make it the most visited.
A cut in VAT would boost the economy and create jobs for local people, including young people. Many young people work in tourism. One of my first jobs was working as a waiter in a restaurant, often serving tourists. A VAT cut would help in that regard.
Tourism is a competitive market. It is not just about getting people from this country; it is about bringing international visitors into the country. It is part of my job to get them up from London—up the M1 and the M6, and the west coast main line—into High Peak, to see what we have to offer. In an international marketplace, a cut in VAT would help. VAT charged on visitor accommodation in France and Spain, our two biggest competitors in Europe in terms of tourists, is charged at 10%, but it is 20% here. Studies say that, if we cut VAT, operators would pass that on to the customer. We need to try to compete on a level playing field with France and Spain, not on the one that we are encountering at the moment. We must get visitors in from abroad. We must encourage staycations as well, keeping British people here holidaying. We had a good summer last year; let us hope we have another good one this year.
I appreciate that we live in difficult times and that the Treasury is not overdone with cash at the moment, and I hear the talk about fiscal neutrality. However, I regard today almost as a start of a conversation. In an ideal world, we would like to see this cut included in the Budget, but money is tight. Let us start a conversation and look at this idea. I have seen various studies about its benefit to tourism and to the country. We should give this matter serious consideration.
I am sure that the Minister and his colleagues in the Treasury are badgered repeatedly by colleagues who want money for this, that and the other, but as a Member of Parliament representing a seat in a place that exists on huge tourism income, it is incumbent on me to say to the Treasury, “Give this priority among other requests for cash and for money.” If we cut VAT on tourist attractions and hotel accommodation, we will get the benefit.
High Peak is a rural area and we have rural disadvantage. People talk about rural deprivation: we have poor broadband and things like that. A VAT cut will give the economy a boost to offset the difficulties that we face. I am glad that the Minister is here and I am sure that he is listening. On behalf of everybody in High Peak, I ask him to look carefully at this proposal. If we cannot do it in this Budget, let us look at it sooner rather than later.
Mr Mike Weir (Angus) (SNP)
I am pleased to contribute to this important debate under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing it.
I have pursued this issue over the years. In fact, I first asked a question about it in 2004. To my last question on the subject, in October, the Exchequer Secretary, who will respond to this debate, replied:
“I have written to the Chairman of the Campaign for Reduced Tourism VAT explaining that while there is no prospect of a VAT cut for tourism, the Government is committed to a wide range of measures to support tourism.”—[Official Report, 8 October 2013; Vol. 568, c. 161W.]
That does not give me a great deal of confidence that he will change his mind today, but, never being one to give up, I will give it a try.
In 24 of the current 28 European Union states, including Germany, France and Spain, there is a lower rate of VAT for tourist accommodation. In fact, the UK has the second highest rate of VAT on hotel accommodation, exceeded only by Denmark and Lithuania. The rate in Luxembourg is 3%, and in Portugal, which is, of course, a major tourist destination, it is only 6%. At a time when tourist businesses are fighting hard to retain their business against cheaper destinations, these lower rates give many continental destinations a considerable advantage over businesses within the UK. This is an important issue for Scotland, where tourism contributes 4.9% to our GDP. Indeed, almost 10% of my constituents work in tourism or tourism-related businesses.
Even the UK Government have not been averse to cutting VAT on selected tourism-related operations. In the 2012 Budget, they cut the VAT chargeable on small cable-suspended transport systems—ski lifts, to you and me, Mr Hollobone—which was a welcome change, especially for ski-lift businesses. I am sure that it is entirely coincidental that most of those businesses are in the constituency of the Chief Secretary to the Treasury. However, that illustrates what can be done and that the UK Government have done it in other areas.
The Irish 9% rate specifically applies to facilities used by those taking part in sporting activities and extends to green fees charged for golf and subscriptions charged by non-member-owned golf clubs. Again, that puts them at an advantage in a competitive market against the wonderful golf clubs in Scotland and other parts of the UK. In addition to the 9% rate, Ireland has for some time had a 13.5% rate on other services, including short-term car hire and tour guide services.
When the present UK Government published their tourism strategy in 2011, they stated that they aimed to generate 4 million extra visitors up to 2015 and that,
“The increase in overseas visitors would bring an extra £2 billion worth of visitor spend and help to create 50,000 new jobs across the country over that period, securing tourism’s place as one of Britain’s”
greatest
“industries.”
I struggle to see how the GREAT campaign and simplifying visa applications for Chinese visitors, as mentioned in documents, could do that. A VAT cut would go a long way to helping hard-pressed tourism operators.
Hon. Members have talked about Professor Blake’s research and the amount of jobs and income that would be created. I will not go over that again, but whatever research says, a cut of VAT to tourism-related businesses would lead to increased employment and give a significant boost to the rural economy in all parts of the UK.
We need to give our tourism industries a boost and a chance to fight back, rather than asking them to fight with one hand tied behind their backs because we refuse to match the change in VAT in the EU.
Mr Alan Reid (Argyll and Bute) (LD)
I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate.
I am fortunate to represent the beautiful constituency of Argyll and Bute. The scenery is beautiful, but the economy is fragile. “You can’t eat the scenery”, as the old saying goes, but we can sell the scenery to visitors, and that is where tourism plays such a vital role. Tourism provides jobs in remote areas where alternative employment would be difficult to find. It is a labour-intensive industry, so much of the spend goes straight into jobs. This is a very competitive international industry. With many people struggling to make ends meet, price is an important factor in their choice of holiday, and Britain’s tourism businesses have to cope with a VAT rate double, or even more than double, the rate in Spain, Germany, France, Italy and the Republic of Ireland.
The UK is now one of only four EU states with no reduced VAT rate for tourism. In a price-sensitive international market, the high rate of VAT compared with our competitors must be damaging our tourism industry. Reducing tourism VAT would lower prices, attract more visitors to the UK and encourage businesses to invest in Britain’s tourist attractions.
Of course, cutting any tax means reduced revenue in the short term, but surely the key is whether the cut will stimulate the economy to such an extent that the public purse benefits more in the long run from the extra economic activity than is lost in the short term by the tax cut. Stimulating the tourism sector will lead to more people working—so fewer benefit payments and more income tax and national insurance coming into the Treasury.
Many detailed independent studies and analyses have all found that reducing VAT on tourism to a rate of 5% would stimulate both domestic and overseas demand, leading to expansion of the tourism sector, the creation of many jobs and a fiscal return to the Treasury that would reverse the long-term trend of Britain’s worsening tourism balance of payments.
We do not just have to rely on theoretical modelling. The Isle of Man cut VAT on tourism to 5% 20 years ago and that was such a success that the Manx Government have never even considered reversing it. Visitor numbers to the Isle of Man show that, in the nine years before the cut, there was a sharp decline in tourism, but after the VAT cut, visitor numbers recovered strongly and have stayed high since then.
Britain has a vibrant tourism industry. We have a wonderful product to sell, but common sense says that we cannot compete if our VAT rate is double that of our competitors. The experience of the Isle of Man and the independent modelling both indicate that cutting VAT on tourism will bring in more tax revenue than will be lost. Theory and practice are in agreement.
I hope that the Government accept the findings of the independent reports and cut VAT on tourism. I know that the Minister cannot pre-empt the Budget by making an announcement today, but I expect him to say in his winding-up speech that the Treasury is taking the campaign seriously and will study carefully the findings of the independent reports and respond to them.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Members for South Down (Ms Ritchie), and for Brighton, Pavilion (Caroline Lucas), on having joined me in securing this debate.
Members will not be surprised to hear that I am unashamedly vocal about the beauties of my constituency, and I truly believe that I represent the most breathtaking constituency in the whole United Kingdom. I have previously spoken of the potential for tourism in Northern Ireland that has yet to be explored, and if that potential were to be exposed to the rest of the world, the entire United Kingdom would benefit. The first part of my three-and-a-half minute contribution is on the question of how we go about that task.
The Northern Ireland issue is highlighted and exposed by the fact that we border the Republic of Ireland. The industry in Northern Ireland is linked to tourism in the Republic of Ireland, so the discrepancy in VAT rates is noticeable. VAT in the Republic of Ireland has been reduced for hotel accommodation since 1986. In 2011, the VAT reduction was extended to cover out-of-home meals. Take those two things together and Northern Ireland—and, indeed, the United Kingdom—is 11% behind the Republic of Ireland’s VAT rate. That puts the United Kingdom, and especially Northern Ireland, on an uneven keel.
The Northern Ireland Hotels Federation gives figures that justify a VAT reduction. The federation indicates that 14,900 jobs would be created by reducing VAT. Gross value added would increase by £155 million, and wages would increase by £64 million to £225 million by 2020. Those figures indicate a clear win-win-win, because as the hon. Member for Brighton, Pavilion, said, a VAT reduction would mean more jobs, more money in people’s pockets, and a reduction in benefits paid to the unemployed. That can clearly be done. The Republic of Ireland produced 6,500 new jobs and saved 31,000 jobs, which indicates the seriousness of our position. We are one of only four countries in Europe that are not availing themselves of a reduced VAT rate. The VAT rate on hotels is 7% in Germany and 10% in France, and that encourages UK and EU residents to holiday in those countries. It is time that we did something about that. Perhaps the Minister will indicate what he hopes to do.
The industry is anxious to find the best way to use a VAT cut for the benefit of the Treasury and the UK as a whole, for example by ensuring that at least half the cut is passed on in lower prices, with the rest used for increased staff wages, training, employment and increased investment; that would be similar to what the French Government did with their restaurant industry.
Time is against me, but others will join me in proving beyond reasonable doubt that a short-term investment in the tourism industry will yield long-term dividends, as has been proved in Europe and can be shown here, if the chance is taken. Some might ask, “How can we do that?” I would simply tell them to book a flight to Belfast and take the 20-minute journey to my constituency. They will see within seconds why I believe that, with a little bit of help and support, tourism can and will thrive. There is an opportunity for us all to take our place on the world tourism stage and to allow others to enjoy what we have: great lodgings, fantastic scenery, wonderful shopping, world-class golf, hotels, salons, historical journeys and, most importantly, our unique Northern Irish hospitality, which draws people and makes them feel part of the family. It is not for nothing that we are called the happiest people in the United Kingdom. A holiday in Northern Ireland will refresh and renew. The Minister has a chance to enhance that potential, and I hope that he will take it.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
About two years ago, I spoke to a Treasury Minister about this issue. He was a much more junior Treasury Minister than the one here today, but none the less he was a Treasury Minister. He simply said that the Treasury would dismiss any suggestion of a reduction in VAT because anything that contributes, even in the short term, to an increase in the deficit is a threat to interest rates. The Treasury therefore dismissed such a reduction out of hand, but times have changed. We have heard much about the Deloitte survey and about Professor Blake’s use of the Treasury’s model. We have a much enhanced and increased coalition of stakeholders and interests, which have put compelling evidence before all of us and, I think, before the Treasury. In the past few weeks we have seen a huge climatic impact on coastal communities such as mine, and on inland communities, and that has altered the outlook somewhat for tourism businesses in those areas.
I will quickly refer to a fairly formal letter that the Prime Minister wrote to the late John Cook, one of the three founding fathers of Bourne Leisure, the big holiday company, in October 2010. The little bit in the Prime Minister’s own handwriting at the bottom is interesting:
“The figures for other EU countries are—as you say—striking. But the fiscal challenge right now is so bad that it will be tough to persuade HMT, as you say, to accept short term loss for medium term gain. It is the early years where the need for deficit reduction is so great.”
Things have changed since October 2010, and I am not sure that the Treasury is able to argue with the force that it did then that such measures should be resisted. The Prime Minister, I thought, left the door open in his letter to Bourne Leisure and John Cook: a VAT reduction is not beyond the Treasury’s grip when economic conditions improve.
Not for the first time, it is the Treasury versus everyone else, including people in the tourism industry represented here, and many businesses dotted around various constituencies, represented here or not. It cannot be completely true that the Treasury is always right and the experts in the industry are always wrong. The circumstances have changed. They changed recently because of the weather, but they have changed over a longer period because of improved economic conditions, and because of the evidence put before us by experts in the field. I hope that the Treasury will take those changing circumstances into account. For the benefit of those in the tourism industry, whose representatives are here to make the case, the Treasury should not dismiss these matters out of hand, as it did quite reasonably three or four years ago.
Lindsay Roy (Glenrothes) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I commend the hon. Member for South Down (Ms Ritchie) on her powerful presentation. Many of the points I wish to make have already been raised, so I will concentrate on constructive reinforcement, rather than on unnecessary duplication. I hope hon. Members are able to distinguish between the two.
Commendably, the Prime Minister has been quoted as saying:
“There are always good cases for cutting VAT on individual items. The leisure industry and the hotel industry make a very good argument.”
I would go further: there is a compelling case. Indeed, it is extremely ironic that the Prime Minister, who wants to negotiate flexibility within the EU and to reduce bureaucratic orthodoxy, has failed to capitalise on one of the key areas on which there is considerable flexibility—the VAT charges on tourism, particularly on the hotel and leisure industries. Indeed, it is shocking that we are at such a disadvantage compared with other European countries, as was highlighted by a number of speakers, when the Government have the power to reduce VAT. It is all the more disturbing that a party that espouses the virtues of innovation, enterprise, grasping opportunity and promoting sustainable growth in business has so far failed to reduce VAT. UK tourism is almost at the bottom of the league table of international competitiveness —we are 138th out of 140—yet it is our economy’s sixth largest export earner.
The Chancellor pleads repeatedly for removing barriers to growth and for promoting investment. The conservative estimates of an independent and reputable academic highlight the potential to boost GDP by £4 billion a year, to create 80,000-plus jobs and to improve professionalism in the industry. Professor Blake confirms that such an initiative would be fiscally neutral, so what on earth is holding the Chancellor back? The tourism industry feels that it has to operate with one hand tied behind its back, with declining opportunities for sustainable growth.
It is economic madness not to reverse the long-term trend of decline in the UK’s tourism balance of payments. We are clearly not operating on a level playing field. My home county of Fife is the Mecca of world golf, yet tourist numbers are declining. In my neck of the woods in Glenrothes, the Balbirnie House hotel, a small country house hotel that achieves the highest standards of excellence and employs more than 100 people, is fleeced for more than £800,000 in tax and rates. That is more than £8,000 per employee, and it is only through innovative marketing, outstanding quality of service and tenacity in the face of adversity that the hotel has been able to consolidate its business.
We are clearly not on a level playing field, so a marked reduction in VAT on UK tourism is a no-brainer, to use a colloquial expression. I urge the Chancellor to heed the powerful arguments presented in this debate and reduce VAT on tourism. That would attract foreign investment and domestic tourists, create employment, encourage much-needed investment, promote sustainable growth and improve further standards in the industry. He must know that makes sense.
Mr Adrian Sanders (Torbay) (LD)
I congratulate the hon. Member for South Down (Ms Ritchie) on securing this debate. I repeat the message that the far south-west is open for business, particularly the spectacular English riviera. People might bag a bargain if they book their summer holiday there now, and I am sure that the hon. Member for Totnes (Dr Wollaston) and I will be there to welcome them, if we are free.
This is the fourth debate in which I have raised this issue, so it is not new. We have seen that Ireland, France and many other countries have successfully used VAT reductions as a stimulus for tourism, which has been disproportionately affected by the recession, both overseas and here. There is no doubt but that such a reduction would help areas, especially coastal towns, that have particularly weak local economies. It is therefore puzzling that the Government have so strongly ruled out looking at how to help the tourism industry. On the one hand, there is rhetoric from the Prime Minister and senior members of the Government saying that the UK should be the most competitive economy in the world, and woe betide any suggestion that we increase tax rates, lest that scare off investment; but on the other hand, there is a twisted adherence to a particular idea of credibility that insists that we do not want to minimise the burden on businesses and consumers.
I specifically mention credibility because it has been the bulwark of the Government’s argument against VAT cuts. That argument misses a vital point, because credibility is not particularly quantifiable and is decidedly context-specific. One could argue that the inconsistencies in the Government’s fiscal approach undermine economic confidence and credibility more than the state of the figures produced by the Treasury. If the Government chose to, they could incorporate VAT cuts into a narrative of growth, prosperity, stability and a competitive economy. Those cuts can and should be a credible and legitimate approach. We have long heard the message that we have structural economic problems that require long-term solutions. It is not as if a VAT reduction would be a fiscal disaster. What we lost in VAT revenues would be regained within a few years by greater income tax revenue from the estimated 200,000 jobs that the reduction would create, and significant savings on out-of-work and low-wage benefits.
I have several tourism businesses in my Torbay constituency, and the tourist trade represents the biggest contributor to the private sector locally. We have some of the toughest economic conditions in the UK, with the associated social ills of poor health and housing, high rates of teenage pregnancy and drug dependency, low educational achievement and aspiration, and so on. Driving local economic investment is the only way out. Thankfully, the Government have realised one part of that and are investing locally in business infrastructure, such as the Kingskerswell bypass, but we need to do more.
The main thing local businesses point out to me is that the UK is one of only four EU members not to exercise its discretion somewhere within tourism and leisure spending. We already have high costs compared with much of Europe, and that unnecessarily harms businesses when they try to attract visitors. South-west England has a great deal to offer, but when it is cheaper to visit just about any other country in Europe, how can we even start being the most competitive in the global race?
Sammy Wilson (East Antrim) (DUP)
I thank the hon. Member for South Down (Ms Ritchie) for her speech on the impact of VAT on tourism. I take issue with what she and my hon. Friend the Member for Strangford (Jim Shannon) said, because I look across the Belfast lough to their constituencies, which are shrouded in mist and doused in rain, from the stunning coastline and glens of Antrim, which are bathed in sunshine.
I understand the Minister’s dilemma. He is being battered in all directions by people pleading special cases. As he contemplates this issue, he should think of one thing: what principles have the Government and the Chancellor laid down on the tax regime? The first is that tax changes should be judged by their impact on growth and efficiency. As the Minister contemplates that, I draw three facts to his attention. First, 19 Governments across Europe have reduced VAT on tourism, and some of them have done that not when fiscal times were good, but when they were difficult. France in 2009, Germany in 2010 and the Irish Republic in 2011 all did that when facing the same problems as the Minister. They made a judgment that, because of the tax elasticity in demand for tourism, there were benefits, and that has proved to be the case. Some 28,200 new jobs have been created in France, with 15,000 businesses saved. Tourism in the Irish Republic is up 16%.
Secondly, I do not want to go into the issue of the model, which has been referred to time and again, but that model shows that a reduction in VAT on accommodation and tourist attractions would be four times more efficient at generating GDP increases than the 2p reduction in corporation tax that the Government have announced. Extending that VAT reduction to food would be three times more efficient at generating GDP than the corporation tax reduction.
Thirdly, to be parochial, the estimates for the Northern Ireland economy show that a VAT reduction could result in 10,000 new jobs in the tourism industry, a 50% increase in tourism revenue and a 40% increase in the number of hotel industry jobs. All those jobs would be available to young people and would help deal with youth unemployment. The reduction would also help increase investment in hotels. One hotel owner told me that they take £500,000 a year, and a 15% reduction in VAT would give them £75,000 to invest in facilities and to train and take on new staff. I hope that the Government will listen to those arguments.
Nick de Bois (Enfield North) (Con)
I draw Members’ attention to my declaration in the Register of Members’ Financial Interests. I am also the chair of the all-party group on the UK events industry. I commend our report on the international competitiveness of the UK events industry to the Minister and to Members. That report is relevant to today’s debate, because I want to draw a distinction between business tourism and leisure tourism. Business sector tourism is defined as conferences, meetings, exhibitions, trade shows, corporate hospitality, music industry festivals and sports events, and that sector is worth £36 billion per annum to the UK economy. The industry forecasts that that will rise to £48 billion by 2020. It is worth noting that business visitors to the UK spend £131 a day on average, which is 72% more than leisure visitors. Visitors from overseas spend nearly 200% more on business trips, so the issue applies as much to the business sector as to the leisure sector.
The Minister will be interested to note that there are more than 25,000 businesses in the sector, including organisers, venues, suppliers and direct marketing organisations, representing roughly half a million full-time jobs. The international inbound event industry not only advertises Britain as a place fit to do business with in the permanent long term, but drives additional leisure tourism traffic. The many varied items that bring people to choose the UK, and London in particular, as a destination of choice are all discussed in our report, but I highlight the impact of the delegate fee for visitors. That is critical when choosing whether to come to this country for events, and our VAT position puts us at a competitive disadvantage. The league tables show that the UK is one of the top 10 countries for international meetings, but we are dwarfed by countries where VAT is outside the scope of being reclaimed. That reclaiming adds to the cost of visitors coming to this country. The USA, Japan and Singapore all dwarf us, as do other European countries that have lower VAT rates.
Whether the industry thrives or survives is not just down to VAT, but VAT influences decisions on where to hold events. I urge the Minister to understand that the impact both on the business events industry delegate price, which will influence choice, and on the subsequent leisure prices represent significant leverage in the pursuit of the industry’s goal of £48 billion in attendee expenditure by 2020. I commend the report to the Minister; in it, he will see the argument set out in great detail.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I congratulate the hon. Members for South Down (Ms Ritchie), for Brighton, Pavilion (Caroline Lucas) and for Strangford (Jim Shannon) on securing the debate. It has been well attended, as proven by the time limit on speeches. We have had some brilliant contributions, some of which were rather fast-paced as people struggled with the time constraints. The debate has served as an important reminder of the importance of tourism to UK plc, and we heard some compelling arguments in favour of supporting the tourism sector and for reducing VAT to improve the sector’s international competitiveness.
The hon. Member for South Down opened the debate with a powerful speech. Her comparison of the UK and the Republic of Ireland was particularly forceful, and she spoke impressively on the potential impact on youth unemployment, given the relative youth of those employed by the tourism sector—a point that was also expressed by the hon. Member for Brighton, Pavilion. A connected point was made about low pay in the tourism sector, so the work force being relatively young is not the only issue. I am sure that all hon. Members will agree that tackling low pay in the sector is important not only for individuals who want to be paid more, but for the growth of the economy overall.
The hon. Member for Totnes (Dr Wollaston) made me smile when she said that, if God were designing the best constituency, he would create Totnes. I would of course argue strongly in favour of Birmingham, Ladywood. I was a little worried after her speech that every contribution would turn into a PR pitch for individual constituencies. One or two Members did indulge in that, so we will have to agree to disagree about the relative merits of the places that we represent.
The hon. Lady also expressed solidarity and support for those struggling with the floods, and I join her in expressing that sentiment. People are suffering desperately, and we must work together to get them the help that they need and to tackle the long-term issues that have led to the problems.
The hon. Member for Ceredigion (Mr Williams) said that his constituency is open for business, but the country should also be viewed as such. We are a favoured destination for tourists and rank as the seventh most-visited country in the world. We hold a unique position in terms of culture, heritage and language that makes us a destination of choice. Regardless of our position on VAT and expense, we are still well visited, and we should continue to reinforce that at every opportunity.
I will require photographic proof from the hon. Member for East Antrim (Sammy Wilson) that there is sunshine in his constituency given the horrible weather that we are experiencing at the moment.
I am interested in the all-party parliamentary group for the UK events industry’s report, which was mentioned by the hon. Member for Enfield North (Nick de Bois), who is the group’s chair, and the distinction between leisure and business visitors. I will discuss the matter later in my speech.
I will disappoint hon. Members today by not making a spending commitment to reduce VAT for the tourism sector. I apologise for that, but I would get into a lot of trouble if I did. I acknowledge the passionate views of Members present and the strong arguments of the Cut Tourism VAT campaign, but the Opposition’s stance is that an incoming Labour Government in 2015 will inherit a difficult financial situation. Deficit reduction alone does not make for a successful economic policy, but it is a necessary and important part of it.
Caroline Lucas
I thank the hon. Lady for giving way, but does she not accept what several hon. Members have said: precisely at a time of economic difficulty, we should be investing to get people into jobs and thus paying taxes to the Revenue? The idea that VAT should not be cut because we are in a time of economic difficulty indicates a misreading of the situation.
Shabana Mahmood
I am grateful for the hon. Lady’s intervention, and I will in a moment explain why I cannot quite go as far as she would perhaps like.
Although we are determined to build a fairer society and to deliver the long-term changes that our economy needs, including rebalancing, of which the tourism sector could and should play an important part, we must ensure that the sums add up. We will therefore not be able to reverse all the cuts and tax rises that this Government have pushed through to date, but we have had well-documented disagreements with the Government over VAT.
Although we are too far away from the general election to make detailed commitments across all the areas that may appear in our manifesto, we know now that we will face difficult choices. The Government’s day-to-day spending plans for 2015-16 will be our starting point, and we will not borrow any more for such spending. Any changes to the current spending plans for that year must and will be fully funded. That is not only a statement of our current economic policy, but an invitation to those involved in the VAT campaign perhaps to present some proposals that might work under the tests that we have set for policies come 2015, and I can confirm that my hon. Friends the Members for Barnsley Central (Dan Jarvis) and for Eltham (Clive Efford) are already working closely with the tourism sector.
Although I cannot commit to the VAT cut that the campaign calls for, I can commit to engaging in the conversation and working with the shadow Business, Innovation and Skills team, the shadow Culture, Media and Sport team and the shadow Treasury team to examine what else we can do to support the industry and to ensure that it plays its full part in getting us towards sustained economic growth.
Tourism is one of the UK’s biggest employers. The sector provides 9% of total jobs and contributes £134 billion to the economy, with revenue increasing by £9 billion last year. As I said earlier, we are the seventh most-visited country in the world. It is important that we continue to engage in the conversation and with the campaign to ensure that we support this vital industry as much as possible.
One or two Members touched on this topic, but we have not discussed in detail immigration policy and whether we make ourselves as easy to visit as other countries. The visitor visa regime has well-documented concerns, for example. On this subject, I speak not only as a shadow Treasury Minister, but as a former shadow universities and science spokeswoman. Higher education is our seventh largest export industry, and there is tension between the economic benefits, which are similar to those of tourism, and effective immigration control.
Our regime for visa applications, fees and monitoring to avoid over-staying is not the simplest. There is particular tension with the countries that we deem to be at risk, from where we may expect people with visitor visas to visit with the intention of over-staying. Countries that have historically been placed in that group, such as India, can actually be those from which we benefit greatly. In tourism, for example, growing numbers of genuine visitors want to come to this country, spend their money and help to boost our economy, while having a great time. It is important to resolve that tension, so that those growth sectors do not suffer unnecessarily and so that we get the maximum benefit from our tourism policy.
We cannot agree now to the cut that has been called for by campaigners and hon. Members present for the debate; however, we are committed to working closely with the sector. We will take seriously other help for the sector that does not have cost implications, including immigration changes.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate and putting her case so strongly and on the fact that the debate is so well attended. Her constituency is known as one of the most beautiful in the United Kingdom, but I appreciate the strong case made by several other hon. Members for their constituencies to be on that list. In the interest of time, I shall not attempt to comment on each of those areas, but I can reassure hon. Members that the Government appreciate the value and importance of the tourism sector. Ministers from the Treasury and the Department for Culture, Media and Sport have been working closely with the industry to increase inbound and domestic tourism.
VAT is governed by EU law, which strictly limits reliefs. However, as hon. Members have pointed out, VAT law allows member states to implement certain reduced rates of VAT, which are listed in annex III of the VAT directive, at the discretion of the member states. Two of the reliefs are
“accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites;”
and restaurant and catering services, excluding alcoholic drinks. As several hon. Members have pointed out, when the list of optional reduced rates of VAT entered into force in 2006, the UK opted not to implement those two reliefs and has maintained that position since.
Several other member states have chosen to implement a reduced rate of VAT on tourism, but the Government have yet to find any evidence of a causal link between VAT rates and tourism activity. Comparisons with other countries tend not to take into account the significant VAT reliefs that the UK provides for cultural attractions and public transport, or the other tourist taxes that other member states choose to levy. In addition to the sector-specific reliefs, the UK’s VAT registration threshold is the highest in the EU. Therefore, many tourist attractions do not have to charge any VAT to their customers. It is interesting to note that France, which is often the country quoted as reducing the rate and reaping the rewards, put its VAT rate on restaurant services up from 7% to 10% in January. Also, many businesses in the tourism sector are small businesses and will benefit from the £2,000 cut in national insurance contributions—the employment allowance—that will come into effect in April.
As I mentioned, Treasury and DCMS Ministers have discussed the Cut Tourism VAT campaign, and I have met campaigners and engaged in correspondence with them about the report mentioned by the hon. Member for South Down, among other things. The campaign’s analysis assumes that the revenue shortfall associated with a VAT cut should be met by increasing Government borrowing, but the latest figures from the Office for National Statistics suggest that reducing VAT to 5% for all catering services provided by restaurants, pubs, cafes and canteens would cost the Exchequer between £9 billion and £10 billion a year. Cutting VAT to 5% for accommodation would cost the Exchequer an estimated £2 billion a year. I do not have to remind hon. Members that those costs would have to be met by increasing other taxes, which would be likely to affect growth and jobs adversely elsewhere in the economy, by reducing spending or by increases in borrowing. That would be contrary to the Government’s long-term economic plan and risk raising interest rates, undermining the recovery and adversely affecting families and small businesses.
Jim Shannon
Many hon. Members spoke in the debate about the jobs that could be created; the figure for Northern Ireland was almost 15,000. Those jobs would result in taxes being paid and people coming off benefits. What weight has the Minister given to that part of the equation, in the figures he has just outlined?
Mr Gauke
I reiterate that funding the cut by additional borrowing would be contrary to our long-term economic plan to get the deficit down and put our public finances in a credible position. It would entail a risk to the recovery. As all hon. Members know, the Government’s priority is to tackle the record budget deficit decisively but fairly and to restore confidence in the economy and support the economic recovery. The conclusion that we reached, therefore, which I announced in Parliament last year, is that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. I have not seen any new evidence since then that has led me to revisit that conclusion, so, at present, the Government have no plans to introduce a VAT cut for the sector.
Ms Ritchie
The Minister will be aware of the report of Professor Adam Blake, who I understand is a Treasury adviser, and who used the Government’s computable general equilibrium model and maintained that it would be possible for a reduction in VAT on tourism to end up fiscally neutral. Has the Minister a comment to make on that, and did he talk to Professor Blake about the report and to Deloitte?
Mr Gauke
I think that I have touched on that, but I want to emphasise that the figures produced by the industry and Professor Blake represent independent research; the Treasury has engaged with the campaign and has concluded that VAT cuts would lead to a significant revenue shortfall. I could go into more detail about the modelling, but because of the time I will not. We do not accept the conclusions that the hon. Lady refers to.
A more targeted VAT cut, on a regional basis, is not possible under EU VAT law, because a single rate of VAT for a particular good or service must apply throughout a member state. A reduced rate for Northern Ireland is not possible, and it is also not possible to distinguish between tourists, locals and people on business who use a restaurant or hotel. However, I reassure hon. Members that we recognise the importance of the tourism industry and remain committed to a wide range of measures to support the sector.
Since 2011-12, we have put £37 million into the tourism pillar of the GREAT campaign, which in 2012-13 generated a return of more than 400,000 visits to the target cities; those visits brought in £200 million, which is a return of 8:1 on the investment. Between 2011 and 2015, we are spending £50 million on a tactical marketing campaign via VisitBritain, with a further £50 million match-funded by the private sector to market what the UK has to offer overseas. Between 2011-12 and 2014-15, we are spending £10 million on a campaign to encourage domestic tourism, which has already generated about £300 million in additional spending. There are also good results in Northern Ireland, where in the 12 months to September there was an 8% increase in the number of visits compared with the previous 12 months.
We are taking action to help the tourism industry, but a cut in VAT would be expensive and would create a revenue shortfall. That would put the Government’s economic credibility and long-term economic plan at risk.
Medical Records (Confidentiality)
(10 years, 9 months ago)
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Mr George Mudie (Leeds East) (Lab)
It is a pleasure to hold this debate under your distinguished chairmanship, Mr Hollobone.
The debate deals with one of the most accepted and appreciated relationships, which is that between patients and their doctor, with the knowledge that whatever information is recorded by the GP is confidential and kept securely in the medical records held by the practice. Next month, that will change. Under controversial legislation passed in 2012, family doctors will be required to pass to a new national database created by NHS England all the medical records of the patients in that practice.
The personal GP record may be added to by any other social care organisation that deals with the patient and with hospital records that exist for an individual. This is being done, according to NHS England, to improve the delivery of health care to benefit researchers inside and outside the national health service. I have no reason to suggest that this move will not lead to improvements in health care, and, no doubt, the Minister will deal with that matter more fully.
I have sought the debate for two main reasons. My first concern is shared by many people, including some present in the Chamber: the security dangers of bringing all such personal data together in one huge national database. The second reason is my dismay and even anger at the deliberate manner in which the public have been deprived of consultation and information on what could be, and I think will be, a significant threat to their right of privacy in respect of their medical records.
On the first threat, to security, we are assured by NHS England that the information
“will be stored…in a secure environment with the highest standards of information governance and technical expertise to protect the data.”
If patients are reassured by that statement, the US Government must have lower standards. For example, Angela Merkel, the German Chancellor, learned about the USA hacking her personal phone from sources inside the US. A young lad from Glasgow was extradited to the USA in the past 19 months to face charges, because from his Govan bedroom he had breached military systems in the US. This weekend, closer to home, Barclays bank admitted that delicate, sensitive and important financial details of 35,000 of its customers had been stolen.
Dr Julian Lewis (New Forest East) (Con)
Does the hon. Gentleman believe, as I do, that the single most important point, which I hope that he will elaborate for us, is whether the identities of the people whose data are being stored are also being stored? If they are being stored, I am entirely with him; if they are not and only data without identity are being stored, there might be more to be said for the scheme. I am interested to know what he has to say.
Mr David Davis (Haltemprice and Howden) (Con)
Importantly, the fear is not only of professional hacking, but of amateur hacking, which can break into major databases. The problem about the medical database is that someone’s medical data are almost as strong as a fingerprint. If people were looking for me, for example, I have five broken noses on my medical record, which probably reduces the numbers that they are looking at from 60 million to about 100; they could also probably work out my age, if that is removed, from when I had my diphtheria jab and various other early jabs. It is still possible to reverse engineer from so-called anonymised data. In the States, that was done with an anonymised data system—the record of the Governor of Massachusetts was picked out by an academic, to demonstrate how weak such systems are.
Mr Mudie
I read with interest about the right hon. Gentleman’s unfortunate nose. He makes an important point.
My point is that there will eventually be a breach of security. It is inevitable, given the size of the database and the information stored in it. The human cost to the patient whose identity and medical history are made public is potentially disastrous. Careers could be ended, jobs lost, insurance refused and relationships destroyed if sensitive medical facts are made public or used by private firms, other people or, indeed, the media.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing this matter to the House for consideration. He said rightly that there is a medical need to have some of the information, but many patients fear that their confidentiality could be taken over by money-making ventures from those involved in the process. Instead of an opt-out system, should there not be an opt-in system, whereby the GP and the patient get together and discuss confidentiality and an understanding of the system before anything happens?
Mr Mudie
The hon. Gentleman makes an important point, which I will cover when discussing the second issue that I identified. At the moment, I am dealing with security, but I will come on to the opt-out arrangements, which are far from satisfactory.
A further reason for concern is that the information will not be available for analysis and research in the national health service alone, but will be made available to non-NHS organisations. A Library note describes an interesting situation in which, without the consent of individuals, the information given can identify patients:
“In most cases, researchers can carry out their studies using information that does not identify you. Occasionally, however, medical researchers need to use information that does identify you. Only researchers who have obtained your permission or who have been granted special approval are allowed to access your identifiable data… The CAG approves requests where it is not possible to use information that does not identify you and it is not possible to ask you. There are a variety of reasons why it might not be possible to ask people; for example, where there are extremely large numbers of patients”—
so it is okay if researchers pinch a lot of patient information and identify the patients, but such patients would have no come-back, because that is reasonable in the eyes of the national health service.
Another interesting but concerning document includes a diagram helpfully provided by the Information Commissioner that describes three different levels of anonymity. First, in the public domain, there is no information—none. It is totally anonymous. Secondly, for approved organisations, whether NHS or outside organisations given permission, there is potentially identifiable data. Finally, organisations that have a legal basis, such as the police, have all the data—nothing is hidden. Interestingly enough, the police will not have to do what they have to do now, which is to get a court order to get the information; they will have an automatic right to it.
NHS England has explained that information given to private researchers will be anonymised before release, but that is undermined by its statement that the standard of anonymity it is using requires it to
“ensure that, as far as it is reasonably practicable to do so, information published does not identify individuals.”
That is hardly reassuring.
All those instances could be dismissed as speculation, but we should be aware that NHS England and the Government see the whole exercise as an opportunity for the UK to become a major player in medical research, with both the NHS and the private sector seeing strong economic growth and income from the use of the data. I forgot to mention that in the database will be included people’s national health service number, postcode, date of birth, gender and ethnicity. With all that information—particularly the postcode—it will be fairly easy to identify someone.
I turn now to the question of permission. This genuinely makes me very cross. The handover from GPs will take place in March—one month’s time—and after three months, depending on opt-out numbers, 100% of records will be on the national database. That should have happened already, but the Information Commissioner stopped the process late last year because the NHS had not consulted or, in the commissioner’s view, given enough information to the public. The commissioner ordered the NHS to postpone the process and take steps to give more information on both what was happening and the right to opt out. It has been given £2 million to do so, but it is far from clear that it is doing it willingly—it is doing it in bad grace.
I should mention the summary care record, another IT exercise that was carried out five or six years ago, more limited in its function but with the same organisational structure. A key element was that, unless a patient objected, their records would automatically go on the database. That tactic of forcing people to opt out rather than in was successful and with summary care records only 1% of patients in the pilot schemes opted out. There was a discussion about what system should be used for opting out for the new, greater system, a report was written, and surprise—officials chose the opt-out. With no real publicity, involvement or consultation, they have reckoned from the pilots that that might be the result nationwide. I thoroughly object to that.
NHS England published a leaflet, which might have come through Members’ doors, that supposedly meets the Information Commissioner’s request, but it is so bland, patronising and uninformative that it seems to have been written, miraculously, by a dead author—Enid Blyton. It is an insult to the general public. Opting out is not actually spelled out within the leaflet. NHS England is demanding that people go to their doctor’s surgery, discuss the matter with a doctor or practice manager and then give their decision on opting out. The House knows how busy doctors are and how busy their surgeries are. Is somebody going to take a day off work to go and see their doctor not because they are ill but because they want to discuss opting out? It is not sensible.
I suggest that NHS England is not serious about involving and empowering the general public. That is the second reason why real questions should be asked about this plan. The leaflet does not make the point that there are two opt-out options, one for giving the information out within the health service and one for giving it out outside the health service, or that people can obtain a form, fill that in and send it in to a practice.
I am taking up time and I know that a colleague wants to speak. I want the Minister to take his lead from the Information Commissioner and postpone the introduction of the scheme to allow further consultation and discussion about whether there should be an opt-in or an opt-out, about what information is being shared and about the security of that information. If the medical records of members of the public are going to be given out, they should have knowledge of that and should have had the opportunity to opt out.
George Freeman (Mid Norfolk) (Con)
I congratulate the hon. Member for Leeds East (Mr Mudie) on raising this issue for a debate that I think merits a bigger attendance. I hope that the subject will be debated subsequently on the Floor of the House.
This is an important issue. We have seen in recent months and years in the House that data sit at the heart of so much of the transparency revolution that is taking place in health care, not least in the Francis report, which was indeed in part driven by a revolution in transparency, with outcomes data revealing differences in outcomes across the UK. That has highlighted that, within our precious and beloved NHS, there is huge variability in standards and outputs. The genie is out of the bottle, in terms of the public interest in the power of those data to drive both transparency on outcomes and patient empowerment—a theme that the hon. Gentleman rightly touched on.
I declare an interest in that I come to this matter after a 15-year career in biomedical science and research, in the last seven years of which I helped to create partnerships in the national health service between NHS clinician scientists, research charities, industry and university scientists to try to accelerate the process by which modern medicines are discovered and developed. My experience is that, over the past 10 years, this country has quietly come to lead in the appliance and use of anonymised cohort datasets and, indeed, specific patient datasets in particular disease areas to drive and accelerate the development of modern medicines, with extraordinary benefits for patients in the NHS.
The truth is that the traditional model of medicines development, on which we and the NHS have relied for nearly 50 years, in which the pharmaceutical industry goes away and spends hundreds of millions—or increasingly, billions—of pounds and comes back to us with a perfect drug that suits everybody, is a model that it cannot afford, and we cannot either. The more we learn about genetics and genomics, and patients and disease, the more we know that your disease, Mr Hollobone, will be different from mine: our susceptibility to it will be different, as will be our response to drugs. The revolution in research data offers an extraordinary opportunity for the NHS to be the place in the world where we develop and design 21st century medicines targeted at the patients who need them and generate extraordinary opportunities for our NHS patients and clinicians.
I want to mention an example that brings this matter to life. The last project that I worked on was here in London, at King’s college, with Professor Simon Lovestone, the head of research at King’s academic health science centre and professor of psychiatry. The project was funded by the National Institute for Health Research, an NHS body, and looked at the catchment population for the South London and Maudsley NHS mental health trust—250,000 patients suffering from a range of mental health ailments. As Members will be aware, in mental health, there is no magic bullet drug; there is a huge cocktail of some very difficult drugs, with hugely traumatic experiences for patients, who often have to change dosage. It is an unsatisfactory area of modern health care, in which we are really failing a large number of patients. The system that was put in place, funded by the NIHR, created an anonymised dataset of the 250,000 patients, which allows researchers to look across that cohort at relationships between medicines and outcomes, disease and MRI scans, and really shines a light on which drugs are working for which patients. That gives extraordinary opportunities to us here in London and in Britain to lead in the field of developing treatments for a whole range of mental health ailments, from Alzheimer’s to a range of other indicators.
The truth is that these data are utterly key to the quiet revolution in 21st century health care and medicine that we are beginning to see for three reasons. The first is research, as we have discussed. The second is accountability, as we saw in the Francis report most traumatically, but across the board. My constituents want to understand and to see that their patient journey from care is properly tracked. I have power of attorney for my mother, and last summer I wanted to be able to log on quickly to see what she had been prescribed and what her diagnosis was when she was unable to do that for herself. The younger generation particularly want and are beginning to expect to be able to use data to drive accountability.
The third and most important reason is empowerment, which the hon. Member for Leeds East touched on. We are moving from an age when health care and medicine was something that was done to us by the Government to something that we want modern 21st century citizens to take more responsibility for. Several concerns have been touched on, some of which are valid and important to discuss.
Mr David Davis
My hon. Friend is making a fabulously compelling case and I think that I agree with everything that he says except for one presumption: this is being advanced with one, all-singing, all-dancing database, instead of a set of tailored, directed ones.
George Freeman
My right hon. Friend makes an excellent point, as ever, and I was just coming to it.
The hon. Member for Leeds East raised several important points that I want to touch on. We should be clear that the data will be anonymised, and it might be worth looking at a framework to ensure that only anonymised data are released. No one is even beginning to think or talk about insurance or anything to do with insurance companies. That has not been mentioned, and it is important to say that here. That is not what the issue is about. We should all remember that it is illegal for pharma companies to contact any patient even if they have got hold of data.
On opting in and opting out, the evidence suggests that patients want their data to be used in research. The opt-in rate to the biobank project is 98%, and when patients are told that the data are not being used for research, they want to know what on earth is being done with them.
An additional point worth making concerns doctor-patient confidentiality. There are layers of data, and my right hon. Friend’s broken nose would sit quite high. More discreet information such as notes by a GP may not be appropriate for release, and we should acknowledge that we are talking about layers of data.
I will wrap up by saying that there is a huge danger in the Government’s laudable initiative to link their datasets together to drive the revolution: a clear statement of patient rights is needed. Patient data are involved, and patients should have a framework and the architecture to access them for themselves. We should encourage them to take responsibility for their outcomes, their health and their data. If we did that, I think that we would find much more public support for this important initiative, which I welcome.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
It is a pleasure, Mr Hollobone, to serve under your chairmanship. I congratulate the hon. Member for Leeds East (Mr Mudie) on securing this debate and all hon. Members on their contributions.
I pay particular tribute to my hon. Friend the Member for Mid Norfolk (George Freeman) for his excellent speech, in which he highlighted the importance of sharing data to improve patient care. He talked about empowering patients to take greater control over their health care. That is important and the key to it is ensuring that patients have the right data to do so. He also talked about improving research, ensuring that we can properly combat disease and linking data properly to understand exactly how to find cures for rare diseases. Importantly, he referred to the fact that we need properly to understand how good health services are, and to recognise where there is good practice. That is particularly important following the Francis inquiry and report, which outlined the importance of delivering high-quality care and transparent and properly used data to deliver that. He made those points very well.
Dr Julian Lewis
My hon. Friend the Member for Mid Norfolk (George Freeman) also referred to a major project involving people at the Maudsley hospital who had suffered serious mental illness. I want to hear from the Minister that there is no way under the sun that people who have suffered mental illness, for example, would find their data getting into the wrong hands. Without that guarantee, the project seems to be very dangerous.
Dr Poulter
In the time available, it is difficult to speak about detailed points. I apologise to my hon. Friend for that and I will write to him addressing some of the points that he raises. However, I can assure him that robust safeguards are already in place to protect patients with mental illness, and those safeguards will remain robust, if not more so under the systems that we will put in place.
It is important to recognise that the big challenge facing the health and care system is the fact that in the past we have had too much silo working, which has been to the detriment of patient care. The health system has often operated in a fragmented and siloed way. The operation of the health and care systems is not integrated and joined up. Key to driving improvements in patient care is ensuring that we join up the information that informs what good care looks like. Integration involves ensuring that a process exists to join up health and care information to improve care for patients.
We want to look after people with diabetes, dementia and long-term illnesses and to give them dignity of care in their own homes. It is important to do that and to have the right information and evidence to do so. We are well into that journey. The £3.8 billion integration fund will help with the provision of services, and the health and social care information centre will help us to get the right evidence base to drive properly joined-up, integrated care.
George Freeman
Will the Minister confirm that the situation at the moment—that is, under the previous Care.Data initiative—is more or less that GPs have patients’ records, many of which are not electronic but in paper format with treasury tags, but there is no formal link across to hospital records? Hospitals can say whether a patient has been admitted, but most of them do not have an integrated system to know what treatment a patient received in different parts of the hospital. Normally, someone pushes a wagon along the corridor with the treasury-tagged information. Also, there is no integration at the moment with the care system. The data of many of my constituents who go in and out of hospital for acute care and community care are chaotic. That makes transparency difficult, and it was one of the things at the heart of the Francis report and some of the Winterbourne View issues. We must remember that we would all gain from this public health benefit.
Dr Poulter
My hon. Friend makes an excellent point, and he is right to highlight the fact that we are talking about an evolutionary process. The health and social care information centre is not a sudden revolution. It will allow better use of information to join up care in exactly the way that he describes. It is no good having a £3.8 billion integration fund for better provision of services unless we have the right information and can join up intelligence to understand what good care looks like.
Mr Mudie
The two professionals in the Chamber are having an interesting conversation, but the public want to know whether the Minister is content, first, that the use of personal data will not lead to the identification of individuals and, secondly, with the present system of consultation on opting-out.
Dr Poulter
We already have robust procedures in place, and they will exist under the new system to protect patient confidentiality. I would describe them in more detail if I had more time, but it is worth highlighting some of the history. It is not revolutionary to store information; it is evolutionary. Hospital episode statistics started being collected in the following care settings in, I believe, the following years: in-patient data in 1989, out-patient data in 2003, A and E data in 2007-08, and primary care data from 2014.
We already have systems for collecting and analysing information, and patient safeguards exist in those systems. We will now see a system that better joins up and builds that evidence base to drive better care for patients, which is exactly the point that my hon. Friend the Member for Mid Norfolk made. We need to expand the evidence base, and it is absolutely right that we ensure patient confidentiality when doing so. I believe that we have the right safeguards in place to do that.
A number of points have been raised in the debate, and I will write to hon. Members with further clarification. I hope that that will be helpful.
Fuel Poverty
(10 years, 9 months ago)
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Roger Williams (Brecon and Radnorshire) (LD)
As always, it is a great pleasure to serve under your chairmanship, Mr Sheridan. I had anticipated that this debate would be more heavily subscribed, but I am sure that what we lack in quantity, we will make up for in quality. I know that some members of the Environmental Audit Committee who would have been anxious to take part are away on a Select Committee visit.
The main focus of my remarks is the report by the Energy Bill Revolution, which finds that the core of the problem of fuel poverty lies with the poor heat efficiency of our housing stock. For many years, it has been more important to put a roof over people’s heads than to provide a warm home that is well insulated. That comes from a time when energy prices were cheap and carbon emissions were not considered to be a problem. Even if we build 200,000 new homes a year of good thermal efficiency for the next 15 years, 90% of the houses we live in by 2030 will have been built before 2014, and most of them will have poor thermal characteristics.
I congratulate the Energy Bill Revolution for assembling such a powerful group of charities, companies, disability groups, environmental groups, trade unions and trade associations to tackle this important issue. I also wish to congratulate it on highlighting the matter during cold homes week.
The causes of fuel poverty are a complicated nexus of poorly insulated homes, rising fuel prices, low incomes and limited accessibility to the cheapest fuel and best tariffs. The Energy Bill Revolution rightly focuses on retrofitting substandard properties. We have a large legacy of poorly insulated properties in this country. Such is the backlog of that essential work that, if 600,000 houses were treated every year, it would take until 2027 to deal with 90% of the homes.
Guy Opperman (Hexham) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree that there is a need for local authorities to insist on proper energy efficiency measures in any new build?
Roger Williams
My hon. Friend is completely right. The regulation and specification for energy efficiency in new houses today is to be welcomed. Some of us believe that a higher degree of that could have been aspired to.
The Energy Bill Revolution is calling for the revenues from two carbon taxes—the EU emissions trading scheme and the carbon price floor—to be invested in a massive energy efficiency programme that would eliminate the scourge of fuel poverty once and for all. Compared with much of Europe, the UK has a bigger fuel poverty problem because of our poor quality housing.
Mr Mark Williams (Ceredigion) (LD)
Does my hon. Friend agree that that is a particular problem in the area he represents and in my neighbouring constituency? It is about the age of the housing stock coupled with the problem, as a rural area, of the absence of any gas provision. It is a case of lacking alternatives, as well as older housing stock.
Roger Williams
My hon. Friend is correct, and I shall come on to that later. Most houses in rural areas tend to have solid walls, and insulating them is much more difficult and much more expensive than dealing with properties with cavity walls.
Improving the poor quality has to be the focus of solving the problem. Investing in better housing should be the next Government’s top infrastructure priority and funds need to be found. The last Liberal Democrat conference passed policies to recycle carbon taxes for that purpose. Investing in better housing is also good for jobs and the economy, as well as having major health benefits.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate the hon. Gentleman on securing the debate, which is happening at a most appropriate time, given the problems that we face, which are about not only energy costs, but people staying in badly insulated housing. Is it not the case that public housing, as it was, was always better than the private sector for insulation? The U-values in public housing were much greater than they were in the private sector.
Roger Williams
I thank the hon. Gentleman for that point, but I am not in a position to answer his question. I suspect that different local authorities might have had different standards in building houses. Whether they were better or worse than the private sector, I guess, depended on the developer.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate the hon. Gentleman on securing the debate. We have had lots of debates about fuel poverty, and Government spending on fuel poverty is down 25% on 2010. Having said that, should we not learn a lesson from the past and look at the possibilities of improvement grants, which were often used—certainly in the late ’60s and ’70s—to deal with this sort of problem and for when people lacked amenities, such as toilets?
Roger Williams
I agree with the hon. Gentleman. Finding a way forward to get improvements in heat efficiency will be key to solving the problem. The Energy Bill Revolution believes that the quality of the housing, rather than other aspects, is key to the problem.
Caroline Dinenage (Gosport) (Con)
The hon. Gentleman is being generous in allowing interventions. Pensioners are among those most at risk of falling into fuel poverty. Does he agree that the Government’s warm home discount scheme has been helpful—in fact, invaluable—in providing financial support for more than 1 million pensioners to help them make their homes warmer and safer?
Roger Williams
I agree that the warm home discount scheme is very important, as are winter fuel payments and cold weather payments. A combination of those enables old-age pensioners, particularly in poor housing, to have a fairly decent standard of living and a decent quality of life.
Mr Nigel Dodds (Belfast North) (DUP)
I, too, congratulate the hon. Gentleman on securing this important debate. He is right to point to the necessity of insulating homes better and of concentrating on that. Will he join me in welcoming the Northern Ireland Executive’s approach? We have the highest levels of fuel poverty of anywhere in the UK—42% of all households are in fuel poverty, which is a shocking statistic—but the Housing Executive has now embarked on a campaign to get all social housing double-glazed, so that there is no single-glazing or substandard windows in any of these houses in Northern Ireland.
Roger Williams
I thank the right hon. Gentleman for those comments. They are of interest to me; I think the devolved nations in the UK very often show the way to best practice in such matters and that other nations can learn from them. Getting double-glazing into social housing and local authority housing is a way forward.
The three factors that make it more likely that a household will be fuel poor are low income, high energy prices and energy inefficiency of the home, although people would not know that from much of the noisy debate in recent months, and from party promises of fuel price freezes and rolling back charges on bills. By far the most important of those in the UK context is the state of homes. UK incomes are not especially low. EUROSTAT figures for real adjusted gross disposable income of households per capita in 2011 put the UK right in the middle of the table, coming seventh out of the 13 countries for which data are available. We are within €1,000 of Finland and the Netherlands, which have marginally less income, and Sweden and Belgium, which have marginally more.
Rushanara Ali (Bethnal Green and Bow) (Lab)
I, too, congratulate the hon. Gentleman on securing this very important debate. According to Barnardo’s, the impact of fuel poverty is being felt by families and older people, but, in addition, 90% of the respondents to its survey said that families were cutting back financially on other services and other things to meet their fuel costs. Therefore, although I support the hon. Gentleman’s debate, I appeal to him to recognise and highlight the fact that families are facing a squeeze. In areas with high levels of child poverty, such as in my constituency, the fuel poverty dimension is a huge issue in the cost of living crisis. I therefore hope that he will join us in campaigning on that and ensure that this debate falls into the context of wider poverty issues.
Roger Williams
I thank the hon. Lady for making that point. I do not underestimate the effect that fuel poverty has on families. It is particularly troublesome that children are drawn into this problem. There will be ways in which we can deal with the immediate issues. The purpose of this debate, as I see it, is to find a much more long-term approach to the problem that will get rid of fuel poverty for ever, rather than mitigating it as it appears.
Guy Opperman
On that point, does my hon. Friend agree with me that the progress in, for example, Northumberland, where we have 13 oil-buying clubs, providing more than 1 million litres of oil and a 10% to 20% discount for off-grid customers, and the role of the Church and credit unions in assisting those who need finance for off-grid supplies are the sort of long-term solutions that we need to reduce prices and generally address the problem?
Roger Williams
I thank my hon. Friend for bringing that to my attention. I will move on to rural issues later, but certainly fuel-buying clubs have a big future in rural areas and make a real difference. One of the ways forward that I will be suggesting later is extending the gas main to ensure that other people have the opportunity that most people in towns take for granted.
Mr Donohoe
I am grateful once again to the hon. Gentleman for giving way, but it must be put on the record that we can have long-term solutions to the problem, but we have immediate problems—problems right now. If one in five people are turning off the heating in their house, it is the case that either they heat the house or they feed the house. It is far more important to have that as the basis of a debate today on fuel poverty.
Roger Williams
I agree with the hon. Gentleman that that is a debate to be had, but successive Governments have been putting off taking the tough decisions that need quite a large amount of expenditure and that would make a real difference to the problem. Yes, we have to deal with the situation of pensioners and families as they experience it today, but we also must look to the future.
Annette Brooke (Mid Dorset and North Poole) (LD)
I congratulate my hon. Friend on securing the debate. Does he agree that we should not forget a significant minority, which is those who live in park homes? They struggle because they have to pay for a share of the electricity and it is very difficult to be included in schemes because of the construction of the properties. These really are people on low incomes.
Roger Williams
My hon. Friend has a great record of campaigning on behalf of park home owners. Indeed, in Wales, through the Welsh Government, legislation has been brought through to support park home owners. One issue is how the people who live in park homes are charged for energy and water and what the owner of the park takes as a percentage of the charge made to the residents. My hon. Friend has done an enormous amount of work on that.
In terms of prices in the UK, I accept that lower prices are always welcome, but we must recognise that the Department of Energy and Climate Change quarterly energy prices update shows that in 2011 the cost of a unit of domestic electricity in the UK, including taxes, was the third lowest in the EU15 countries. Similarly, the cost of a unit of gas was the second lowest in the EU15. Buying a unit of energy in the UK is cheap by international standards. What makes the bills expensive—the bills are the key issue—is that we have to buy so many units because our houses just do not keep the heat in.
Only when we look at housing quality do the reasons for our fuel poverty problems become clear. EUROSTAT conducts an annual survey about “Statistics on Income and Living Conditions”. That includes a question on whether households live in a dwelling with a leaking roof, damp walls, floors or foundations, or rot in the window frames or floor. Such substandard homes may be hard to keep warm, as well as presenting a health risk to the occupants. On that, the UK ranks 11th out of 15, with almost 16% of households in leaky homes. Finland is at the top of the table with just 5.7%. However, a second indicator shows that even UK homes without leaks or damp lose more heat than those of most of our neighbours. The amount of heat that a wall allows to escape is measured by using what is known as a U-value. Data from the Buildings Performance Institute Europe data hub show that homes in the UK are further from the optimal U-value than those in almost every other country for which figures are available. We come seventh out of eight countries.
There is a real warning in these figures for politicians of all parties. Talking big on price cuts may be popular, but they will not solve the problem of fuel poverty. A politician without a serious plan to improve housing is very unlikely to be serious about tackling fuel poverty.
Guy Opperman
My hon. Friend has not mentioned thus far the green deal, which, as part of the coalition’s policy, is one of the finest things, and one of the things of which I am most proud, in terms of improving housing stock on a very cost-efficient basis that addresses both energy efficiency and environmental concerns.
Roger Williams
I thank my hon. Friend for picking me up on that. The green deal is indeed a very important part of the coalition’s policy. Figures show that more and more people are making use of green deal assessments. Indeed, some of the companies providing those assessments are not charging for them, but see that as an opportunity to suggest ways forward that will improve the environment of the house. As I understand it, though, some of the green deal finance is not taken up. Some of the green deal recommendations are put into practice without taking up the green deal finance.
Albert Owen (Ynys Môn) (Lab)
I congratulate the hon. Gentleman on securing the debate. On the green deal, he is correct to say that the number of assessments is going up, but the Government’s targets have not quite been met. However, when the assessments have been done, the practical steps that are taken are to replace boilers, for example. Surely it would be more cost-effective to have a scrappage scheme and a boiler efficiency scheme, which would help people on grid and off grid.
Roger Williams
I understand that the hon. Gentleman has a real passion for this issue. We share that, as we represent rural areas. I am not quite sure how a scrappage scheme would fit into the green deal, but I am sure that he will enlighten me on that after the debate. I will come on to some of my concerns about the ECO—energy company obligation—scheme later.
On the rural situation—this is a caveat on the comments that I have just made—certain parts of the UK face significantly higher energy prices. Rural areas in particular are far less likely to be on the mains gas grid. The Department for Environment, Food and Rural Affairs has found that although 10% of the houses in urban areas do not have a gas connection, that figure rises to 36% in rural areas. In villages, the figure rises to more than 50%, and for hamlets and isolated dwellings it is more than 60%. Those figures are for England in 2009, but they illustrate the point well, although I am sure that for some of the devolved nations they could be much higher.
Age UK says that household energy bills in rural areas are, on average, 27% higher than in urban areas. Without mains gas, people in such homes rely on more expensive forms of fuel such as heating oil, liquid petroleum gas, solid fuel or even electric heating. The extension of the gas grid would bring benefits to many such homes. The Government must also ensure that homes that rely on more expensive heating fuels are better insulated if people are to be able to afford energy bills in the future.
Mr Dodds
The hon. Gentleman has raised a significant point about off-grid households, and he is right to say that the problem is far worse in some areas of the country than in others. In Northern Ireland, 70% of households are dependent on home heating oil, which is a massive extra cost burden, and the warm home discount does not apply in the Province. Does he agree that the matter should be looked at as a priority? The problems faced by off-grid households are critical for rural areas and peripheral parts of the UK.
Roger Williams
I absolutely agree with the right hon. Gentleman. One of the first things I did when I was elected to the House was to continue the work of my predecessor, who wanted to bring real competition into the supply of liquid petroleum gas. We managed to get the Competition Commission to conduct an inquiry into the procedures that limited people’s ability to change providers, and the commission introduced proposals to allow people to change their supplier without having to change their bulk tank. That has made people much more likely to choose their own supplier.
Mr Alan Reid (Argyll and Bute) (LD)
I congratulate my hon. Friend on the success of his campaign. I am sure that he was as disappointed as me by the Office of Fair Trading investigation into the heating oil market, which concluded that it was working fine, when it is quite clear that in rural constituencies such as mine people are subject to monopolies because they do not have a choice of suppliers. Does he agree that the OFT should look at the situation again?
Roger Williams
I absolutely agree with my hon. Friend, and I would join him if he made such a proposal. At the height of concern about the lack of competition in heating oil, we looked at a price comparison site that was available to my constituents, which appeared to show four potential suppliers of oil. When we looked into it, however, those suppliers were all the same company pretending to provide competition and offering marginal differences in oil price. That was undoubtedly illegal, and I believe that the company concerned has been prosecuted.
Mr Jim Cunningham
I sometimes think that the suggestion that poor families should shop around for cheaper fuel is a cop-out. We should, as I said in a debate in this place about three years ago, carry out a proper investigation into the companies involved, because they are frankly rigging the market. Some years ago when I was in Cornwall, I saw five fuel tankers lined up for about three weeks to force the price up. Does the hon. Gentleman agree that it is time we had a proper inquiry into the industry to break those companies up?
Roger Williams
I completely agree with the hon. Gentleman, because transparency is essential. I have already told hon. Members about the experience that I had in my constituency, and I have even suggested that in the energy supply industry, we need a different type of company to come in and promote real competition. I have suggested that Welsh Water, a not-for-profit company that pays no dividends to shareholders and is responsible only to its customers, might provide good competition in the system. People should be able to choose to take services such as water, electricity or gas from such a company.
Ending fuel poverty is undoubtedly a massive task. At its launch, the Energy Bill Revolution estimated that we need to improve slightly more than 9 million homes, and it assessed the average cost of improving each home to be £6,500. Many homes can be improved for far less than that, but the most difficult to treat can be very expensive indeed. Improvements have already been made to many cavity-wall homes, but improving the insulation of those with solid walls, which are the ones that really need it, can be expensive.
The Energy Bill Revolution has pointed out that the Treasury is already receiving the proceeds from the auction of carbon permits under the EU emissions trading scheme, which along with money from the carbon price floor, may raise an average of £4 billion over the next five years. That money ultimately comes from those who pay energy bills, and the Energy Bill Revolution suggests that it should be invested in energy efficiency measures to help cut those bills. I am proud that as part of the zero-carbon Britain policy that we passed at our most recent party conference, the Liberal Democrat party decided, in common with other EU Governments, to allocate revenue from the EU ETS and the carbon price floor to an energy efficiency programme designed to assist households suffering from fuel poverty. I hope that the Minister will take that large ask seriously and consider the use of carbon taxes to achieve it. I also ask him to consider how to support hard-to-treat homes, because improvements to easy-to-treat homes, cavity walls and loft insulation will all soon be done.
I turn to a favourite theme of mine, which is extending the gas main. The fuel poverty problems of at least three villages in my constituency would be greatly reduced by the installation of mains gas. Abercraf, a former mining community of some 1,000 people, used to rely on the free coal that was available to many of its inhabitants who were coal miners, their widows or their relations. Sadly, such free fuel is no longer available to many of the residents, and they have no mains gas. In Llangynidr, another village, the mains gas supply runs on the other side of the River Usk, and the installation of a crossing for the mains pipeline is thought to be too expensive. The third village, Howey, needs only a short extension from Llandrindod Wells. At the moment, however, they all remain excluded from mains gas. I know that the expense of installing such facilities is great and that individuals will be asked to contribute to that cost, but some of them will find it difficult to do so because they are pensioners. With funds shortly beginning to flow from income streams such as shale gas, can the Minister give some good news to those communities? Those are big asks for a big solution, but they would bring great benefits to our constituents.
My hon. Friend the Member for Southport (John Pugh), who cannot be present in the debate, has concerns about the operation of the ECO scheme with regard to the replacement of boilers. Manufacturers tell him that because the scheme is about carbon reduction rather than fuel poverty, it is being directed at people with large homes and old boilers rather than at the fuel poor. Many of the big six have already met their targets, and no more funding is available for free boilers for people in need. Many boiler companies have done the work only to be told that there is no funding. Suppliers are switching to inferior boilers manufactured abroad, which puts consumers at risk. Will the Minister address that today or contact my hon. Friend to answer his questions?
We have covered quite a lot of ground, and there have been some helpful interventions from other hon. Members. I look forward to the rest of the debate.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to serve under your chairmanship again, Mr Sheridan, and to follow the hon. Member for Brecon and Radnorshire (Roger Williams). He has been a sincere campaigner on behalf of the fuel poor for many years, particularly since we both came into the House in 2001. I very much agreed with the tone of his speech and the outcomes that he asked for. I make no apology for concentrating in my speech on some of the issues that he raised because they are very important.
One statistic, which comes from the Department of Energy and Climate Change, is that, on average, fuel poverty in rural areas is twice that of urban areas. The fuel-poor are concentrated in many of the rural areas of the United Kingdom. I am glad that the Minister is present, because he has given evidence to the Energy and Climate Change Committee on a number of occasions, and I know that he is sincere in his wish for an all-UK solution to fuel poverty, whether for those in a large urban town or city or those in a small rural area.
I would like to give some context on why we must do more for rural areas. I have been campaigning for some time about off-grid gas and for the extension of the gas mains. I am pleased that the Energy Bill Revolution campaign has come up with funding mechanisms for that from the EU emissions trading scheme and the carbon floor tax. That is important, but I would like to add a third stream to that funding equation. Shale gas has great potential for this country’s future revenues. If the exploration goes ahead and the volume of recoverable gas is sufficient, the profits should be used to extend the gas mains into rural areas of the UK.
As regulator, Ofgem insists that its policy is to extend the gas mains, but currently the incentives are just not there for the energy distribution companies. I support the Government’s stance on shale gas, and it is quite right that, if we have a bonanza, there must be local community benefits, but there should also be national benefits. If the Exchequer is going to enjoy greater revenues from the exploration of shale gas, similar to those that we have seen from North sea oil and gas, we should have a national strategy. I would like such revenue to be put towards extending the gas grid of Great Britain and Northern Ireland. I stress Northern Ireland because I am fully aware of the problems that people there have with the high price of oil.
I am as disappointed as other Members who have intervened about the fact that the OFT has not strongly concluded that those who live off-grid do not enjoy the benefits of those who are on the grid. It has looked at competition very narrowly. It is difficult to unpick that, and the Competition Commission has been unable to unpick the unfairness that lies behind people’s lack of choice when they are off-grid. For example, they do not enjoy the dual-fuel discounts that the big six and other energy companies boast about because they do not have dual fuels. They cannot get gas and electricity from the same supplier so that they can enjoy a reduction in their bills. That opportunity does not exist for them.
I am pleased that the Labour party has made the commitment that the regulator will look after those who are off-grid in the same way that it looks after those who are on the gas mains grid. I have pressed the Government on that issue on a number of occasions. It is important that the regulator is the champion of people who live in rural areas. The electricity and gas markets were privatised rather hastily and the regulations were put in place to look after privatised areas. The off-grid issue was neglected in many ways, but it is time for that to end.
With the rise of energy prices, we have seen a fuel poverty crisis in many places. DECC’s own figures show that people who live off-grid and those in rural areas have been hurt more than those who are on the grid, so we must take an important step. The Minister and the Government are looking at extending the gas mains, but will he comment today on the possibility of the revenues from shale gas being used as an incentive for the distribution companies that often have no competition?
The electricity and gas market is not fully competitive. Monopolies set the prices in the transmission and distribution of gas—huge prices that contribute between 19% and 24% of gas and electricity bills. We are not talking about a small fraction like the green levy, which was X%. A quarter of the actual price is the result of distribution and transmission. That must be looked into, because bills are increasing. I was very keen on what the hon. Member for Brecon and Radnorshire said about the comparison with European prices. He said that that included tax, but if he looks at the matter closely, the fact that we have a 5% VAT threshold on energy gives us an advantage, because the rate is higher in many other European countries. I know that he was present at this morning’s debate on the effect of VAT on tourism. The off-grid is disadvantaged. We need a regulator and champion to bring benefits to off-grid consumers.
I want also to talk about transportation in rural areas, because it also has an effect. There is a double whammy: people are paying more for oil and off-grid gas and more for transportation and fuel. I very much welcome the Government’s freeze on fuel duty. I have campaigned for it for a long time, under previous Governments, and previous Chancellors have frozen the duty for many years. Members will recall that the fuel duty escalator was introduced in the ’90s. It escalated quite a lot, and there was a crisis point in 2000, when there were fuel protests in this country. There were price freezes thereafter for a number of years. People in my constituency and many rural areas in the UK are affected by the fact that they are paying VAT on their fuel. That 2.5p in every pound that people spend on diesel or petrol has an impact and creates a cost of living crisis in such areas. We are not talking about cars as luxury items; we are talking about essential means of transport.
Mr Mark Williams
Does the hon. Gentleman share my disappointment that the whole of Wales is excluded from the Government’s laudable attempt to achieve a derogation of fuel duty? That is despite Wales being a sparsely populated area by anyone’s standards—his constituency and mine certainly are.
Albert Owen
I agree with the hon. Gentleman. I compliment the Government for introducing the fuel duty rebate and for making representations on the issue. I am sure that the Minister and my hon. Friend the shadow Minister will know that I am not shy of criticising my own party, and I was not shy of criticising it when we were in government, because it should have taken that step. Nevertheless, it is wrong now to exclude a whole area—a whole country—because it is within 100 miles of a refinery. No one in my area, the most north-western point of Wales, can plug into a refinery. The independent suppliers are paying extra for fuel because of the cost of transport from those very refineries. The 100 mile radius principle is really a fly in the ointment. People in Wales, unlike those in remote areas of Scotland and in some parts of England, have been seriously disadvantaged. They are paying extra.
Mr Dodds
I want to pick up on a point made in the previous intervention. The hon. Gentleman will no doubt join me in expressing concern and anger that the rural fuel rebate scheme does not apply to any part of Northern Ireland either, even though we have the highest diesel and petrol prices anywhere in the UK and, indeed, sometimes in Europe. This is a major issue for us as well, and it must be revised and looked at.
Albert Owen
Absolutely. The criteria should take rural areas into account, as well as peripheral areas of the UK, because they are the ones that are disadvantaged. Someone in a rural area of central Yorkshire, for example, could probably travel in all directions to get a better deal on their fuel. However, for someone in a peripheral area, such as the hon. Member for Ceredigion (Mr Williams), there is only one way to get their fuel.
Roger Williams
The hon. Gentleman and I are at one on this issue. I emphasise the importance of independent petrol retailers, without whom many rural areas would not be served. They also serve to keep the bigger suppliers and supermarkets honest: without the independents, we do not know what the supermarkets would charge.
Albert Owen
Absolutely. I ask the Minister to put pressure on the Treasury to reconsider the criteria for the fuel rebate, so that areas such as the periphery areas in west and north Wales and Northern Ireland can be given a fair chance. There is absolutely no doubt that people in those areas pay more for their fuel, as any cost comparison shows. That fly in the ointment—being 100 miles from a refinery—should be excluded from the criteria and the formula. I reiterate that I congratulate the Government on taking the initiative forward, because some areas of the UK will benefit.
I finish on the green deal, which I think everybody in the House welcomes. We welcome the focus of attention on alleviating fuel poverty and introducing energy efficiency measures. However, the green deal that has gone through the House and is now in place is a little cumbersome and expensive. It is well-intentioned, but the rates at which people would borrow money are too high. Again, there is a simpler solution.
I will try to answer the question asked by the hon. Member for Brecon and Radnorshire about boiler replacement. The evidence that I am hearing—I am talking to many of the energy companies as well—is that most energy is lost through inefficient boilers, many of which are in older properties. They are placed in the living room, and most of the heat goes up the chimney. The boilers themselves are inefficient, so the heat goes out through the flues. A package is needed to help with boiler replacements, because modern boilers—condensing boilers, for example—are hugely energy-efficient.
We must remember that most households replace their boilers only after they break down. We are probably all guilty of that: “Oh, this inefficient boiler’s got another year left in it.” That is why the scrappage scheme under the last Government was so successful. People realised, “I might have a year or two to go on this one, but it’s well worth replacing it now.” We are finding—anecdotally, but I have read it on numerous occasions—that there is a pattern. Many people who want to use the green deal get the assessment, go through all the paperwork and find out that just replacing the boiler or the thermostat on the radiator does the job. That is why I think that we should have a reduced version of the green deal, so that people can get quick fixes, perhaps while raising revenues for exterior insulation, for example, for hard-to-heat homes.
There are some good examples in Wales of energy companies—yes, I pay tribute to the big six for this—giving free insulation for lofts, or giving pensioners additional insulation in their lofts and walls. That has been a huge success, but the green deal is missing a trick due to its cumbersome nature. Fuel poverty is hugely important, and I am pleased that it has come to the House. This is an important debate on an important issue. The hon. Member for Brecon and Radnorshire has outlined the issues in a measured way, and I know that the Minister will respond in an equally measured way.
It is in everybody’s interest that we reduce fuel poverty and the amount of carbon emissions. It is in everybody’s interest that we have energy-efficient homes and businesses. When we have this debate, we tend to exclude businesses. We need energy-efficient businesses. Members from all parts of the United Kingdom have businesses in their constituency that are concerned about their energy prices, and they do not get the deals that many individuals get that are easy to switch. It is difficult for small businesses as well. I am pleased to have taken part in this debate, and I hope that the Minister will consider some of the points made by the hon. Member for Brecon and Radnorshire and me. The issue unites the House, and the House of Commons is at its best when united.
Mr Mark Williams (Ceredigion) (LD)
It is a pleasure to serve under your chairmanship, Mr Sheridan, and a privilege to follow the hon. Member for Ynys Môn (Albert Owen) and my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), who has done so much in this area. He has done the House a good service in securing this debate. He set the parameters for the debate clearly and effectively, stating what we can do to improve energy performance and reduce bills in our homes. We heard some interventions from the Opposition about the immediacy of the issue—a point that I do not think is lost on anybody—and my hon. Friend gave a longer-term vision of the action that must start soon. The truth is that both approaches must be undertaken.
This debate is particularly timely, given that last week was cold homes week, a campaign to raise awareness of the Energy Bill Revolution that we have heard about in gatherings here over the last week. I will use this opportunity to discuss some smaller measures that could be taken to make our homes more fuel-efficient and keep them warm, an issue on which my local authority has been active.
Research undertaken by the Energy Bill Revolution campaign has shown that overall, the UK ranks bottom of 16 western European countries with comparable properties on a range of factors, including the affordability of space heating units, the share of household energy spent on heating, the percentage of households in energy poverty, the number of homes in a poor state of repair and the thermal performance of walls. That is particularly pertinent to rural Wales, as I said in an intervention, as much of our housing stock is dated and of a poor standard, with poor heating systems, insulation and so on. It is of great concern to hear that we are performing so badly compared with our European counterparts, but it goes to show that if the issue is dealt with in the right way, it can be addressed effectively, as it has been elsewhere.
Rushanara Ali
Does the hon. Gentleman agree that although the Prime Minister spoke well, before he was elected, about having the greenest Government ever, the Government are missing a trick by not investing in the kinds of initiative that can genuinely create a green economy and jobs, and deal with some of the issues that he and other colleagues have raised, including retrofitting and improving energy efficiency? Will he join us in encouraging his Government to take more active steps to consider how to promote the green economy while addressing fuel poverty?
Mr Williams
I am grateful for that provocative intervention. I will not join the hon. Lady. I actually aspire, like the hon. Member for Ynys Môn, to a cross-party approach to the issue. The Prime Minister and my party leader made various comments before the general election, many of which have been or are being delivered on, through the green deal. However, I do agree with the hon. Lady that we must be even more ambitious and take the agenda forward, so there is partial agreement.
The Energy Bill Revolution campaign, in whose measures I am particularly interested in this debate, calls for revenues from two carbon taxes—the EU emissions trading scheme and the carbon floor price—to be invested in a widespread energy efficiency programme in the hope of eliminating poverty. The campaign believes that investment in improving the energy efficiency of the UK’s leaky homes would save the average family money, provide the jobs mentioned by the hon. Member for Bethnal Green and Bow (Rushanara Ali) by developing the green economy, and boost growth. Incidentally, it has also undertaken polling that suggests that it would be a popular form of investment. Most people feel that it would bring them more benefit than some of the more controversial road or rail projects.
What makes the debate even more timely, especially for Wales, is the fact that figures released last week indicate that in Wales, fuel poverty has increased by 13% over the past year and that, more worryingly, more than one in four families with dependent children are fuel-poor. Families are struggling to keep their homes warm at a reasonable price due to our poor housing stock, as has been outlined. The hon. Member for Bethnal Green and Bow alluded to work done by Barnardo’s; I concur with that work. Barnardo’s and the Children’s Society support the Energy Bill Revolution. The Children’s Society found, in a survey of 2,000 children across the UK, that about 28% of them thought that their homes were too cold, and this winter more than 3 million families are likely to have to cut back on essentials such as food to pay their energy bills.
Some good moves have been made, as was pointed out by the hon. Member for Gosport (Caroline Dinenage). One of those was the warm home discount introduced in 2011—inadequate in its coverage, of course, and not enough, but important to many. It required the big six to provide £135 towards energy bills to low-income, more vulnerable households. Low-income pensioners are in the core eligibility group. However, energy companies can use criteria to decide whether struggling families qualify. It is scandalous that although it may be known that a family are struggling, they may still not get that support. I endorse the Children’s Society’s call on the Government to ensure that no household is without a warm home discount if it is known that there is a child living in poverty there.
Will the Minister consider encouraging companies to extend the eligibility criteria for a warm home discount so that poorer families are automatically included? Perhaps that would be families who receive extra child tax credits, or households earning less than £10,000. The Government have done wonderful things on tax thresholds for those earning less than £10,000, and have taken many people out of tax altogether. The additional action that I suggest is something immediate and pertinent that could be done. Does the Minister have any dialogue with energy companies, or does he plan to have any, about extending the criteria for the warm home discount to working families in which there are children living in poverty? That would help many of my constituents.
I want to mention some local initiatives. The hon. Member for Hexham (Guy Opperman) spoke about the need to develop bulk-buying oil syndicates; 70% of my constituency, including my house, does not have access to mains gas, and I wonder what the Department of Energy and Climate Change is doing to support the development of such syndicates, for domestic oil in particular. There have been schemes in the past. I think that a predecessor of the Minister’s alluded, in a letter, to a competition; I think it is less a question of a competition than of a drive to encourage the development of oil syndicates. I declare an interest, because my family is the beneficiary of one, organised by an inspiring lady, Jane Wakeham, in the village of Llanddewi Brefi. She has built an oil syndicate for her community; we have talked about the big society, but I think that that initiative was always there. What should the Department do to encourage the development of such syndicates? We need them on a much bigger scale, not least in my area, which is off-grid for gas.
I was delighted, for cold homes week, to visit two projects in my constituency that do fantastic work to help my constituents make the most of the energy on which they spend their hard-earned money. One is Ymlaen Ceredigion, a charity that runs the Keep Cosy initiative in conjunction with Ceredigion county council and Aberystwyth university. It gives residents free advice in a home visit, pointing out ways to minimise energy consumption, including through draught-proofing, energy monitors and radiator backing, and signposting them towards energy schemes. Funding to enable 400 households to benefit has been secured, and built into the project is the expectation that the information on energy conservation will cascade down to other families. I also visited Cymdogion Cynnes—the Ceredigion Warm Neighbour scheme—which aims to help residents by collating all information on available energy grants and schemes in one place. That is a valuable resource; we hear time and again that lack of access to information about schemes is a barrier. That county council project is most welcome.
I was sitting at home on Sunday evening and the telephone rang; it was an automated message offering me a free home insulation service. I was supposed to press 2 on the telephone and an agent would enlighten me and my wife about the benefits on offer. I am not sure where that came from, or whether it was from green deal operatives; perhaps the Minister or his shadow would know. I await enlightenment. It is a good, proactive way to deal with things, but it makes the point that people need to know where to get information, or, in my case, where it is coming from.
Annette Brooke
I agree with my hon. Friend that small community initiatives are incredibly important. The point has come my way that some older people, who could have free loft insulation, cannot face dealing with the loft to make it possible; we need voluntary bodies on hand to help and make things easier—and to explain that perhaps it will not be the upheaval they imagine.
Mr Williams
I agree. Elderly people are one of the target groups that we want to approach, and briefings from Age Cymru or Age UK make that point strongly. What my hon. Friend says is important; somewhere along the line, more of a one-to-one dialogue will be needed to get those people engaged in schemes.
I want to reiterate the point that the hon. Member for Ynys Môn made when he talked about his passion for getting people on to mains gas. As I have mentioned, 70% of my constituents do not have mains gas in their homes. People talk about swapping suppliers, but we are limited in our choices and there is a need to renew work on that. I am sure—or I hope—that DECC is undertaking such work. I was in the main Chamber earlier, and in a discussion of energy policy in the nations of the UK, the Minister’s predecessor, the hon. Member for Wealden (Charles Hendry), pointed out that there is a need for that renewed emphasis, particularly for rural areas and people who do not have the range of choices that many others have.
The Government have undertaken some good initiatives, and the hon. Member for Ynys Môn was big enough to acknowledge that. We must build consensus on some of those; that is what the campaign that I am associated with is about, and the number of organisations that have joined the Energy Bill Revolution campaign is relevant to that. I want a renewed vision for rural areas. If the Minister will answer me on one matter, perhaps it could be the development of community oil syndicates. I feel strongly about that, because it is a good and proven way for consumers, in the absence of choice, to get something approaching justice in relation to the bills that they pay.
Julie Elliott (Sunderland Central) (Lab)
It is, as ever, a pleasure to serve under your chairmanship, Mr Sheridan. I thank and pay tribute to the hon. Member for Brecon and Radnorshire (Roger Williams) for securing this vital debate. We could almost say that we have had a Welsh debate, because the three speeches have come from Welsh Members of Parliament, but that is not what it was; it has been much broader, although the speeches highlighted issues that affect rural communities, and much of Wales is rural.
There is wide agreement throughout the House that whatever measurement is used, the number of people in the country classed as fuel-poor is too high. It should be a source of shame that in Europe only Estonia has a higher proportion of its population in fuel poverty. Things appear to be getting worse, and among the reasons for that is the fact that the issues raised in the debate are so complex and wide-ranging that there is not one solution. There are knock-on effects for many Departments. Housing issues have been mentioned a number of times in this debate, but they are not the responsibility of the Department of Energy and Climate Change. There are also issues about the supply of energy to off-grid homes. The solutions to these difficulties will be many and multifaceted, and we must recognise that.
The scale of the problem of fuel poverty is severe. As a result of the age profile of the UK’s housing stock, we have some of the least energy-efficient dwellings in Europe. Earlier, an hon. Member mentioned the U-rating of public housing as opposed to private housing. In my experience, public housing—social housing—is often of a far better standard, particularly in the rented sector, than private rented housing, which has some of the worst energy insulation standards in our housing stock. There are some difficulties. The fact that our country has a long-standing population going back many thousands of years means that we have some beautiful old buildings, but we do not have buildings that are particularly energy-efficient, and some of the issues around modernising them are complex.
Recent figures show that 2.4 million households in the UK are classified as being fuel-poor. Furthermore, the distressing statistic that there were 31,000 excess winter deaths last year shows just how vital it is that we combat fuel poverty. I recognise the important work being carried out by organisations such as the Energy Bill Revolution, which the hon. Member for Brecon and Radnorshire talked about in some detail; the Association for the Conservation of Energy; and Age UK. Last Friday, I went along to support Age UK’s bobble day in my constituency, which highlighted some of the issues that we are debating. Such organisations are bringing the issue of fuel poverty to a wider audience, and I hope that the coalition of groups committed to fighting fuel poverty continues to grow.
I am proud of the good work that the last Labour Government did on fuel poverty, and I am concerned that the current Government are undoing much of it. Projects such as the carbon emissions reduction target, the community energy saving programme and Warm Front were not perfect, but they all helped to lift people out of fuel poverty.
The energy market reforms that my right hon. Friends the Members for Doncaster North (Edward Miliband), and for Don Valley (Caroline Flint), have set out in detail will help to address the issue of rising energy bills. Our reforms will improve competition and transparency in both the wholesale market and the retail market, establish a new energy security board to plan and deliver the capacity that Britain needs, and replace Ofgem with a new regulator with real teeth to prevent overcharging. Moreover, while these reforms are being implemented, we will freeze energy bills for 20 months.
It should go without saying that energy efficiency must also be a key consideration when combating fuel poverty. However, the Government’s record on fuel poverty and energy efficiency has been hugely disappointing. The energy company obligation in its original form, which I should remind Members was the only energy efficiency programme available to the public under this Government, was expensive, bureaucratic and poorly targeted at the fuel-poor. Of course, any scheme that attempts to address fuel poverty must be welcomed, particularly after the Government scrapped Warm Front. However, ECO was a scheme of only modest ambition, aiming to lift only 125,000 to 250,000 households out of fuel poverty, and it has been condemned by the Select Committee on Energy and Climate Change as
“insufficient considering the scale of fuel poverty”.
ECO could certainly be much improved. It could be made more efficient by focusing its delivery on specific geographic areas, and by devoting a far higher proportion of the money that it raises to lifting people out of fuel poverty. Alongside a properly functioning green deal, an improved ECO would also allow us to hit our carbon reduction targets and generate many thousands of jobs.
The Government’s announcement on ECO in the autumn statement was all the more frustrating and disappointing because just as ECO was beginning to achieve limited success, the Government caved in to pressure from the energy companies and let them off the hook, so that they did not have to extend ECO. The effect of that has been disastrous.
Many of the consequences of the changes to ECO are still unknown. In his response, can the Minister tell us when the impact assessment and consultation on the changes to ECO will happen? There are numerous examples of the devastating repercussions that followed the changes to ECO, such as the effect on the scheme in Clifton, which is in the constituency of my hon. Friend the Member for Nottingham South (Lilian Greenwood); there, the Government’s changes allowed British Gas simply to walk away from a project that was due to deal with problems affecting somewhere in the region of 4,000 homes. Does the Minister agree that where deals have been signed but the work has not been done, the energy company should honour its commitment?
The greater worry about some of the changes to ECO is that the more difficult solid-wall insulations will simply not happen and, as is often said, only the low-hanging fruit will be picked. However, until we start to tackle the very complex properties, particularly the solid-wall properties, we will not really tackle the problems.
I will briefly mention the green deal, the Government’s flagship project on energy efficiency. It was meant to dovetail with ECO, but it has been an abject failure. Just over 600 homes have taken advantage of the green deal financial packages. In its current form, the green deal is an unattractive offer, with a sky-high interest rate and an incredible amount of bureaucracy for both home owners and installers. To all intents and purposes, it has become a boiler replacement scheme. There is nothing wrong with boiler replacement schemes, but it was not the ambition and objective of the green deal that it should be a boiler replacement scheme. Boilers need replacing and get replaced, but the issues are so much more complex than that. We need a scheme that really works to address the wide-ranging problems, and that makes finance accessible to everybody to solve those problems.
I must comment on the reference the hon. Member for Brecon and Radnorshire made to Liberal Democrat party policy on energy. Much of it is honourable, and much of it I would not disagree with. However, it is a shame that the Secretary of State for Energy and Climate Change, who is a member of the Liberal Democrat party, does not vote in the House for Liberal Democrat policy. A particular example is the 2030 decarbonisation target. He is on public record as saying that he agrees with it, but he does not vote for it. Everyone I meet in the sector who invests in energy, whether they are in insulation or renewables, says that one of the things they want is that 2030 target, in order to secure investment. I had to draw attention to that.
At every stage of life, living in fuel poverty is a terrible way to live. Young people in cold homes are twice as likely to suffer from respiratory diseases and five times more likely to suffer from mental health problems. For adults, cold homes impact on existing health conditions, and for older people, cold homes can be a killer. We need to improve energy efficiency in all homes in the UK, but particularly in the homes where people need it most. That is why Labour would ensure that the help that is available would first go to people in fuel poverty and others who need it most. Better insulated homes mean warmer homes, lower bills and more comfortable lives, so it is shocking that the Government are scaling back their energy efficiency programmes.
It is our intention in the spring to publish our Green Paper on energy efficiency, which my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) will lead on.
Chris Williamson (Derby North) (Lab)
Is my hon. Friend aware of the poll carried out for the Energy Bill Revolution group, which showed that 85% of people—a massive proportion—want the Government to prioritise energy efficiency and make it one of the key things that they use their investment in infrastructure for? Clearly, that would be a popular policy, as well as one that would help to address the implications of climate change and take people out of fuel poverty.
Julie Elliott
I thank my hon. Friend for that intervention. Fuel poverty and energy efficiency are important issues. Whenever I knock on doors and talk to people, they are among the main issues that they are very concerned about. People are very worried about their heating bills, and tackling heating bills is not only about tackling energy costs at source but about ensuring that homes are insulated as well as they possibly can be, so that the amount of energy used is as low as possible; that is important because of the impact that it would have on not only climate change, but household bills. Of course, it is not just in the domestic market that energy is a key factor; energy bills are one of the biggest factors in industry, and in employing people. The knock-on implications of energy are massive, so getting it right is very important.
Albert Owen
Will my hon. Friend share with the House her views on the regulator being the champion for people who are not on the gas grid? This is the crux of the issue. Many people who are off-grid do not have somebody to speak up for them in an impartial way. She mentioned the Secretary of State, who is looking at the Office of Fair Trading and the Competition Commission in respect of gas prices. Many hon. Members have been calling for that for some time. Again, the OFT and the Competition Commission are being brought in, whereas, if we had a strong regulator, it could deal with this matter.
Julie Elliott
I thank my hon. Friend for making those two important points. Of course, we are proposing, as a party, to abolish the current regulator and bring in a new one with more teeth, which will cover some of the off-grid issues that are not covered at the moment. I represent an urban community, and it has been shocking for me to hear, over the past few years, some of the stories about off-grid people’s problems. The situation is bad for everybody, but they have so many other issues on top of that, and that needs sorting out for the long term.
The Secretary of State made great play yesterday of the moneys involved in the big six, and figures were quoted that we published a month ago, so that is not new news. However, at least he has suddenly found that what is going on is a problem. The problem in all this is that the regulator is simply not working and operating in the interests of the general public. We need to focus not just on paying less for energy, but on using less energy. Hon. Members from all parties care passionately about fuel poverty. I hope that the Minister listened carefully to what was said in the debate. I urge him to place fuel poverty, cold homes and, ultimately, energy efficiency at the top of the Government’s agenda.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I, too, congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing this debate on fuel poverty and cold homes. Like the hon. Member for Sunderland Central (Julie Elliott), I note that all the Back-Bench speakers were from Wales. I make no complaint about that at all; these are important issues. I note that fuel poverty, as a subject, is a devolved matter. I am not trying to escape responsibility—I will try to answer a lot of these points—but perhaps some questions should also be addressed to the Welsh Government and their spending decisions.
Let me begin by saying a little bit about fuel poverty, something on the retail market and prices and something about the off-grid issue, which a number of hon. Members mentioned. I will then try to answer some points made by hon. Members in their speeches. I hope that they will allow me to write to them if I do not cover every point that has been mentioned.
I hope that hon. Members welcome the fall in the last reported fuel poverty figures as much as I do. Of course, that followed a period in which fuel poverty rose between 2004 and 2009, reaching a peak of 5.5 million households. I put that on the record as a criticism not of the previous Government, but of how fuel poverty was measured. To help us meet the challenge better, with the new more accurate measure that we are introducing, which deals with low income and higher cost together, we will be better able to design and deliver effective policies that can cut bills and increase comfort for those on low incomes who live in the very coldest homes. I am pleased that the House agreed to the Energy Act 2013, which allows us to bring in the new definition.
Chris Williamson
Does the Minister understand the scepticism out there about the Government’s changing how fuel poverty is calculated? People want to see significant investment in energy efficiency, to ensure that the shocking increase in excess winter deaths last winter is not repeated in future. Fiddling around with the measurement of fuel poverty will do little to address that. People see winter deaths rising and fuel poverty increasing, but they see spending on tackling it falling. The Government need to deal with that, rather than simply changing the definition of what constitutes fuel poverty.
Michael Fallon
I am a little disappointed about that. We all deplore any excess deaths arising in the winter months, but in terms of fiddling with the figures, the new definition of fuel poverty that we are securing was reached by agreement with fuel poverty action groups that have welcomed the new focus, which, as I say, is on low-income households as well as high-cost households. The problem with the previous definition was that it essentially picked out large houses and wealthy people can be living in large houses. That was not the right way to tackle fuel poverty. It was also a measure that kept moving; people kept moving in and out of the definition.
We are now moving to a better definition, with the agreement with those who work in the area. That will form the foundation for a new fuel poverty strategy that we will publish later this year, which will be deliverable and on which the public can hold us to account.
Albert Owen
The Minister makes an important point. There will be issues about whatever calculation we use. However, now that we have moved to a different definition of fuel poverty, will DECC, the Government and other Departments ensure that there is a comparison with the old figures, so that people are not as sceptical about the change for change’s sake? I agree with the Minister that drawing wealthy people into this is not the way forward, but for people to have confidence in the new calculation, there needs to be a comparison over the transition period.
Michael Fallon
That seems to me a reasonable point. I will see whether we can set the tables side by side. Of course, I have to tell the House that the figure was not dreamt up by the Government; it was the work of Professor Hills, who consulted widely on it. It has been supported by those who work in this area.
We had already moved, under the 2013 Act, to ensure that the energy market, with its confusingly large number and range of tariffs, which had not been serving the consumer as well as they might, could make it much simpler for consumers to understand prices and ensure that everybody is put on the cheapest tariff that meets their preference. I am glad, too, that that seemed to secure all-party support, as the energy legislation went through the House.
We were confronted in the autumn with some quite unacceptably large price increases, by some major suppliers, of 8%, 9% and 10%. We moved immediately, as would be expected of a listening Government, to consider what could be done to reduce the bit on the bill—the green levies—that the Government have control over. We have secured an average reduction of some £50 per household. That is important. People do not have to wait for an unworkable price freeze. This Government take action immediately to ensure that people see a reduction in their bills as quickly as possible.
Julie Elliott
Although we would welcome any reduction in bills, does the Minister acknowledge that the average consumer will still pay about £60 more this winter than last winter?
Michael Fallon
No, I do not think that is the right figure. In any case, the hon. Lady would be advised to go a little bit further back and see the scale of the increase under the final years of her Government. This debate, so far, has been reasonably good natured. I am not sure how useful it is to tempt her back on to previous ground, but I will come to some remarks that she made.
I want finally to say something about off-grid and then deal with hon. Members’ individual points. Four million households are off the gas grid and face higher than average energy bills. Of course, winter is a particularly expensive time for them. One of my first duties as Energy Minister was to chair the off-grid gas round table, not least at the instigation of the all-party group on off-gas grid, which has been working on this issue. I launched, at the all-party group’s request, the Buy Oil Early campaign in September and promulgated a better code of practice for oil suppliers, so that people pay the price advertised, and so on.
The group meets every six months, and we will reconvene in May to learn the lessons of this winter. We will have the regulators, the advisory bodies, the charitable bodies, people who have worked in oil-buying clubs and representatives from Northern Ireland, where there have been real difficulties. We will learn the lessons of this winter again to see what more can be done to improve the security and affordability of the off-grid fuel supply and to share best practice. One of the things on which we are working is how we can better pool data between Government agencies to ensure that we better understand which off-grid households need the most help.
Roger Williams
I welcome the Minister’s insistence that people are sold, for instance, heating fuel at the price quoted by the supplier, but will he also try to insist that the supplier includes VAT in his quote? When the supplier trades with other wholesalers, he might do so at a price that is minus VAT, but VAT is included in the price that the consumer has to pay.
Michael Fallon
I will take up that point. It is important for those who are off-grid that there is as much transparency as possible, so that they understand what the costs are likely to be.
I will now address some of the individual points that have been raised. The hon. Gentleman drew our attention to harder-to-treat homes, which probably lie at the core of the long-term challenge. Getting energy efficiency measures into harder-to-treat homes lies at the heart of solving the problem and catching up with the progress that has been made elsewhere in Europe. I accept that those comparisons are not encouraging for us as one of the wealthier member states.
The hon. Gentleman asked about hypothecating some of the carbon taxes towards this objective. If that were to involve additional spending, the revenue from those taxes would have to be produced from elsewhere, or else we would become involved in additional borrowing. None of that is easy at a time when we still face a deficit of more than £100 billion. He asked specifically about extending the gas grid, and the grid is being extended in the current seven-year period that runs from 2013 to 2020. The aim is to connect some 75,000 off-grid homes each year. Those homes will be reasonably close to the existing grid, but that is expensive and a contribution has to be made by the householder, by some other agency or by the local authority. I do not want him to be under the impression that nothing is happening. I will take his points back to the transmission operators and the companies, including his view that more should be done. The aim is to connect more homes to the grid in each successive year.
Chris Williamson
I am grateful to the Minister for giving way again. Extending the grid is welcome, but is not the key actually to reduce energy demand? Surely, a huge uplift in investment is needed to address fuel poverty—in other words, properly insulating people’s homes—using the money that is already in the system. Unless we can do that, extending the grid will not address the problem of fuel poverty for millions of people.
Michael Fallon
I understand that this problem must be addressed across a number of fronts. The hon. Gentleman is right that energy efficiency has a huge part to play, which allows me now to address the energy company obligation. The ECO has been criticised, so I will first address the suggestion that some of those who work in the ECO scheme have run out of budget. I am advised that, by the end of November 2013, published figures from Ofgem showed that approved ECO measures accounted for some 60% of the affordable warmth obligation that was to be delivered by March 2014, so there is still work to do. There are still affordable warmth targets out there for 2015, and we are now extending the scheme to run through to the end of March 2017. We are also ensuring that, having considered the working of the scheme, it is better targeted at lower-income households.
I welcome the support of the hon. Member for Ynys Môn (Albert Owen) for shale gas, and I am sorry that he will not be able to demonstrate that support for any application in his constituency at the moment. No application has yet been made that would allow him to campaign more openly on the scene of an application, but I note what he says. We simply do not know the full potential for shale, so we are not able to estimate the likely revenues, which is what he was homing in on. I am sure that if shale takes off here, as it has taken off in the United States, there will be many claims on the additional revenues that it brings in. The revenues will, of course, not only simply be brought into the Treasury and reallocated outwards to public services; they will also be brought into local communities through the local community benefits package that the industry has already agreed.
The hon. Gentleman asked about the green deal. Some 130,000 assessments have now been made through the green deal, and it is perfectly true, as I think he said, that not all have taken up green deal finance, but the green deal is being taken up. More and more assessments are being made, and the scheme is proving successful.
The hon. Member for Ceredigion (Mr Williams) welcomes the warm home discount, and he asked about eligibility. He will be pleased to know that 2 million households get the warm home discount each year, but we have committed to extending the scheme not simply for 2015-16, but with an additional spend of some £320 million. More than 1 million additional low-income households will therefore receive the payment, without having to take any action at all.
The hon. Gentleman also asked about oil syndication, which we are pursuing through the twice-yearly round table that I chair. We will pick up experience from his constituency and from other constituencies to see what the Government can do to encourage syndicates. There are some good examples of syndication and oil buying in the north-east of England, in Ceredigion and in Northern Ireland, and I want to see what role the Government can play in incentivising that form of syndication.
The hon. Member for Sunderland Central said that she is proud of the previous Labour Government’s record, but she then outlined the reforms that she wants to make. I am not sure why she should be both proud of Ofgem and determined to abolish it. Her Government set up Ofgem, and now they are going to abolish it. I am not sure that she should be proud of that or of having started with 14 energy suppliers and ending up with the big six. She must develop her policy for a future Labour Government, if there is ever to be such a thing, in her own way.
I preferred the hon. Lady’s earlier remarks, in which she said that the Labour Government did not get everything absolutely right. That is probably a good motto for any Government. I am not pretending that the current Government have all the answers on fuel poverty, which is a deep-rooted problem. A lot depends on the state of our housing stock, which needs to be addressed. The hon. Member for Derby North (Chris Williamson) is right that we need to do more on energy efficiency, but we also need to measure the problem better to ensure that the data that we have are properly matched so that, with all the different schemes, we get help to those who need it most.
I am sure, Mr Sheridan, that you would like me, on behalf of all the hon. Members who have spoken, to thank the hon. Member for Brecon and Radnorshire for bringing this important subject to the House today. I assure him that the Government will respond to him and the other Members who have spoken on all the points that have been raised. This is a serious subject, and we are grateful to him for raising it.
Welfare Reform
(10 years, 9 months ago)
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Charlie Elphicke (Dover) (Con)
It is a pleasure, Mr Sheridan, to have this debate under your chairmanship. I want to explore where we are with welfare reform and the options for the future. The coalition Government inherited a broken welfare system that was in desperate need of reform. We have started and are seeing through the most far-reaching reforms in more than half a century. The reforms are not about saving money; they are about saving lives. They are about replacing dependence with independence.
Let us look at what has been done to date. Labour left the biggest ever peacetime deficit, with £120 million a day in interest bills. Under Labour, welfare spending increased by 60%, taking inflation into account. That is £3,000 a year for every household in Britain. More than £170 billion was spent on tax credits, four and a half times the cost of the benefits they replaced. By the end, out-of-work benefits were increasing nearly twice as quickly as earnings. That was the toxic legacy left by the Labour party, and that is the out-of-control spending that the Government have fought to keep in check while protecting pensioners with the triple lock.
Welfare spending is now falling as a share of GDP. Savings of £25 billion will have been made by the end of this financial year, with £50 billion having been saved by the end of the Parliament. At every turn Labour has been unapologetic. Labour has opposed every single reform, including universal credit, and has provided no ideas. Labour has nothing to say. Indeed, the few policies developed so far are spending pledges, rather than savings. For example, the jobs guarantee will cost a staggering £1 billion. On my count, it is the 10th time that Labour’s bank bonus tax has been spent. To every problem, its answer is the same: more spending, more borrowing, more debt and more welfare. It is small wonder that the Labour party is increasingly known as the welfare party.
The Institute for Fiscal Studies says that we need to reduce the benefits bill by a third, but Labour has failed to name even one working age benefit it would cut. Government Members have given thought to the reforms that could be made to promote a greater sense of fairness: fairness to people on welfare, so that they might have independence in place of dependence; and fairness to hard-working people and their families, who expect their taxes to be used to help people escape poverty and welfare, rather than further to enchain them within it.
I have been giving thought to how work-based benefits could be reformed, particularly to improve the position of women in the workplace. In our system, industrial injuries benefits cost £907 million a year, while maternity pay costs £2.3 billion. The maternity pay system, however, too often hampers rather than safeguards the position of women in the workplace. There are still too many barriers to hiring women. Too often employers are scared of employing women who may go on maternity leave. Even the Labour peer, Lord Sugar, was moved to say:
“We have maternity laws where people are entitled to too much.”
He also said that the prospect of women becoming pregnant and taking maternity leave puts businesses off hiring women.
That attitude needs to change, as does the shocking complexity of the system, which involves complex reclaims though the tax system and leaves people at risk of their employer going bust or otherwise failing to pay. Women are increasingly self-employed, yet the self-employed are worse off with maternity allowance, and injury benefits are sparse indeed. Meanwhile, pay is not even at minimum wage levels. Pay is set at £137 a week, which is a far cry from the £220 received by a minimum wage earner for a 35-hour week. To my mind, the system is ripe for reform, to safeguard and improve the position of women in the workplace, to increase simplicity and security, to treat the employed and self-employed alike, and to pay parental leave more fairly.
How can that be done? We should think about a new system of workplace benefits, paid for by the workplaces of the nation. We should set up an at-work scheme—a compulsory pooled risk system along the lines of the Financial Services Compensation Scheme, backed up by the state but funded by business with reference to the total pay-as-you-earn income tax paid by each business. In return, businesses would see a corresponding cut in their net employers’ national insurance contributions. That way, the cost would not be affected by the number of injuries or the amount of maternity leave that might at any one time affect any one workplace. The at-work scheme would pay out regardless, whether there were no parental leave absences or many. In that way, the fear of the burden of maternity would be reduced, and so too would the barriers to women in the workplace. The self-employed would contribute on the same basis and be treated in the same way as employed people. Pay for leave could more easily be increased from the current £137 a week to the minimum wage level of £220, and that would ensure that the minimum basic standard would be the minimum wage.
We have seen the toxic legacy left by the Labour party and we have passed welfare reforms to save lives and promote independence in place of dependence.
Mr Nigel Dodds (Belfast North) (DUP)
The hon. Gentleman raises an important issue about the future of welfare reform. Will he join me in deploring the fact that the current welfare reform measures have still not been implemented in Northern Ireland, at a possible cost of more than £1 billion over the next five years? The Finance Minister there indicated that the Northern Ireland Executive have already lost £15 million. We have negotiated good tweaks to the system to suit the Northern Ireland situation, yet Sinn Fein holds up that reform, at a massive cost to the Northern Ireland block grant. Does the hon. Gentleman agree that it is time for Northern Ireland to move into line with what is happening elsewhere?
Charlie Elphicke
Yes, I would. It is about fairness to hard-working people and their families. They pay their taxes and want to see those taxes used to help people escape poverty, rather than to enchain them within it. They want their taxes to fund doctors, teachers and nurses, rather than those on welfare. It is also about fairness to people on welfare and their having a greater sense of independence, rather than being locked into a cycle of dependence. I hope that the Northern Ireland Executive will think more carefully about the future, and fairness for working people and those not in work.
In the absence of any positive ideas from the Labour party, I hope the Government will consider new reforms like the one I am suggesting. It would promote the role of women in the workplace, increase simplicity and security, treat employed and self-employed alike, and ensure that maternity and parental leave is paid fairly and that the system is funded by the workplaces of the nation on a long-term sustainable basis.
Jim Sheridan (in the Chair)
Order. Mr Kwarteng, I notice that you have not registered to speak in today’s debate. Protocol suggests that, with the agreement of the hon. Gentleman who introduced the debate and the Minister, you can speak. Do you have permission?
The Minister of State, Department for Work and Pensions (Steve Webb)
indicated assent.
Jim Sheridan (in the Chair)
You have permission, but I ask you to leave some time for the Minister.
Kwasi Kwarteng (Spelthorne) (Con)
I am very grateful for being allowed to speak in the debate. I am also pleased to speak after my hon. Friend the Member for Dover (Charlie Elphicke), who is an innovative and creative thinker on these subjects. I want to say a few words on welfare reform, which is probably the single most important thing that the coalition Government are embarking upon, because the principal reason why the coalition came into being was to reduce the deficit. Everyone here knows that welfare spending, including pensions, is 28% of the entire budget. Surely it makes sense, if we are to reduce the deficit, to look at the biggest part of expenditure.
My hon. Friend is right when he says that there was a huge problem under the previous Government with welfare spending. Between 1997 and 2010, it rose by more than 60% in real terms. Even if pensions are excluded, the welfare bill went up by 55% in real terms. It is right for everyone in the House to realise that that is a real problem. I am grateful to my hon. Friend for bringing the matter up in such a timely fashion and for allowing others to contribute to this important debate. I do not have much time to speak, but I want to say that it is disappointing that so few Labour Members are present, given that they have said nothing constructive about welfare reform over the past four years. They have opposed all the coalition Government’s messages. [Interruption.] The hon. Member for Rhondda (Chris Bryant) looks at me quizzically, but it is true.
Chris Bryant (Rhondda) (Lab)
The convention for half-hour debates is that only two people—the Member who secured the debate and the Minister—speak. It is perfectly customary for there not to be anybody else, including the shadow Minister, present.
Kwasi Kwarteng
I am grateful for the hon. Gentleman’s contribution, but it is extraordinary to say that Members cannot contribute to debates simply because of convention. This is an important matter and I wanted to put something on the record. That is all I have to say.
Jim Sheridan (in the Chair)
Order. Mr Bryant, you also did not register to speak. Do you have the permission of the promoter and the Minister to speak?
Chris Bryant (Rhondda) (Lab)
I am grateful, Mr Sheridan. I also thank the hon. Member for Dover (Charlie Elphicke) for securing this debate. If it had been an hour-and-a-half debate, it would have been more conventional to have several people speaking. I say to the hon. Member for Spelthorne (Kwasi Kwarteng) that it is not only a convention, but a rule of the House that only two people are allowed to speak in these half-hour debates. We are therefore engaging in a rather unusual practice this afternoon, which is why things are slightly confusing. The hon. Member for Dover gave a rather short speech—the debate’s promoter normally takes 15 minutes—and he devoted quite a lot of it to saying nasty things about the Labour party. I understand why he wants to do that, but I want to correct some impressions.
The Labour party has been engaged in a process of welfare reform and was when in government. One of the key things that we wanted to achieve was ensuring that work pays. In my constituency, which has historically high levels of people on one form or other of sickness benefit, people have been trapped in a style of poverty that ends up being inherited from one generation to the next. Opposition Members are desperately keen to ensure that we have a system under which work always pays. That is why we supported the introduction of the national minimum wage, which we see as part of welfare reform, and why we introduced tax credits as another means of making it possible for people to get into work.
I do not accept the argument of the hon. Member for Spelthorne that Labour has never been in favour of welfare reform. Indeed, key elements of what the Government are doing now are right. The move towards universal credit is right. The Government have been too ambitious in the time scale that they have set themselves, and it would help the Government’s cause were they a bit more honest about the fact that the scheme is neither on time nor on budget and that a great amount of money has been wasted. Ministers have not yet made key decisions, such as when somebody goes on to universal credit, whether their children will be entitled to free school meals. At the moment, there is a difference between those on in-work benefits and those on out-of-work benefits. The latter’s children get free school meals, but the former’s do not. Universal credit does not recognise the difference between the two, which is a key policy issue that will have to be determined.
Charlie Elphicke
The Labour party initially voted against universal credit. Labour should be more supportive of the Government during a big, important reform, rather than too often appearing to throw rocks from the sidelines.
Chris Bryant
We are keen to try to help the Government make universal credit work, but it is difficult so to do if the Secretary of State is mouthing inanities and presenting such an optimistic version of events that some might construe it not to be entirely true, which is what the Labour party believe has happened. It is a convention that people receive absolution only after confessing, and the Government need to own up to a few more of the problems that they are experiencing with universal credit. We would then be more than happy to help them.
Another classic example is the bedroom tax. People have different views about whether it is right and proper, but my argument is that while it might be a legitimate thing if we knew that everyone had smaller properties to move to, in truth, when those smaller properties are not available, it is a fairly cruel and vindictive assault on some of the most vulnerable people in society, including hundreds of thousands of disabled people. Even more bizarrely, the Government managed to mess that up by not spotting the loophole in their legislation. On the same day, three different Ministers said different things: one said that only 3,000 to 5,000 would be affected; another said in the House of Lords that the number would be insignificant; and a third Minister said that she had no idea how many people would be affected. Through freedom of information requests, which the Government should have submitted, we already know that, from the third of local authorities who have replied, 16,000 households are affected. In other words, it is likely that some 48,000 to 50,000 people are affected.
The Labour party is engaged in a process of welfare reform. We always have been. We want to make welfare work, so that it both supports those who desperately need it at key times in their lives and gives people an opportunity to stand on their own two feet. In your constituency, Mr Sheridan, and in mine, the vast majority of people are not looking for handouts; they are looking to stand on their own feet, to put food on the table for their family and to provide a better future for their children.
The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate my hon. Friend the Member for Dover (Charlie Elphicke) on securing this wide-ranging debate, which has actually been quite refreshing, because we so often get caught up in the minutiae of a clause, amendment or fine detail and it is good to get back to first principles and the context of what the Government have done over the past four years. I also enjoyed his blue-skies thinking about workplace and maternity benefits and so on. I will try to address both those issues, while providing some reflections on his idea for workplace benefits.
The context that my hon. Friend described was one where, for every £3 that the Government received, they were spending £4. There is nothing progressive or fair about saying that we will pay for a higher standard of living for ourselves now and expect our children to meet the bill. The biggest task that we faced—as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) said, this was one of the reasons for forming the coalition— was to provide the country with a stable Government at a time of economic crisis and to try to get the nation’s finances on an even keel, which has required a series of difficult decisions, particularly because social security spending is the biggest area of Government spending, every one of which was opposed by Labour, but only one of which it now says that it will reverse. There is a distinct lack of consistency.
I am pretty sure that the record will show—the hon. Member for Rhondda (Chris Bryant) will correct me if I am wrong—that Labour voted against the Welfare Reform Act 2013 on Second Reading. He may not recall, but I am pretty sure that Labour did—it may have voted against it on Third Reading, which is even worse. The 2013 Act introduced universal credit, so it is a bit rich to say that Labour supports universal credit when it voted against the legislation that introduced it. That shows no credibility.
The hon. Gentleman may say that Labour has been engaged in welfare reform for the past four years, but it has only said what it is against. It is against our getting the books balanced by the measures that we have taken, but the positive agenda has largely been avoided. On the odd occasion that we get a positive suggestion, it often involves spending more money, not less. A humane welfare system during a time of austerity is a challenging task. One would have hoped that the party that paints itself as progressive would have engaged constructively over the past four years in how to design such a system, but we have essentially heard nothing on that front.
My hon. Friend the Member for Dover is right that the driver of the reforms that my right hon. Friend the Secretary of State for Work and Pensions and the ministerial team have brought forward has absolutely been fiscal rectitude, but it has also been about more than that. My right hon. Friend has said—I do not think that I am revealing any secrets here—that he did not come into his present role simply to cut, but rather to reform. During difficult times, we are reforming and bringing together a fractured system. Why should people have to go to Her Majesty’s Revenue and Customs for tax credits, to the local council for housing benefit and to the Department for Work and Pensions for income support? Why should there not be a single system? One of the fatal flaws of tax credits, which the hon. Member for Rhondda praised, is that, because the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—the previous Chancellor and then Prime Minister—wanted to pretend that it was not welfare, it was claimed that they were negative tax. They were nothing of the sort. They were social security benefits, but paid over the course of a year. People’s needs, however, arise on a weekly or monthly basis. They cannot wait for end-year reconciliation and a following-year clawback.
The beauty of universal credit is that it is real time. It meets people’s needs when they happen, rather than saying at the end of the year, “Oh, guess what? We underpaid you,” or, more often, “Guess what? We overpaid you three years ago by several thousand quid. Please may we have it back?” That shambles will be over as we introduce universal credit.
Steve Webb
I will not, because it is the debate of my hon. Friend the Member for Dover. I want to respond to some of his specific ideas on workplace benefits. I agree with his goals. I absolutely agree that we need a system that is fair for women; that we need to think hard about anything in the system that makes an employer less likely to employ a woman of childbearing age; and that we clearly want the system to work for self-employed women. He has made some important points.
As the system currently works, however, 93% of the cost of statutory maternity pay is refunded to employers. In fact, more than 100% is refunded to small firms. Small firms that take on a woman who becomes pregnant and goes on maternity leave will get back all the maternity pay that they pay out, plus what is essentially a handling charge—another 3% on top. Even a large employer gets 92% or thereabouts of reimbursement.
If an employer is reluctant to take on a woman who might have a child, therefore, the pure finances should not make a huge difference. Clearly, there is a bureaucracy issue with the reclaiming and so on, and we are happy to look at whether that can be streamlined, but the basic principle is that the employers get the lion’s share of the money back. The thing that might put them off, as my hon. Friend said in his speech, is the thought, “Well, I employ this person. They might not be there in some months’ time. I might have to provide maternity cover, retraining and so on,” but however we reimburse maternity pay, that will still be a feature of the system.
I am not therefore sure that having a collectivised—I hesitate to use the word, but my hon. Friend knows what I mean—system of insurance is any different substantively for the employer. Either way, employers are getting reimbursed—the costs are being met and are not in essence falling on the employer.
My hon. Friend’s proposal is interesting and I am grateful to him for suggesting it, but one of my worries arises from something that I have learnt as a Minister. Whenever we set up a new scheme, we have new infrastructure, bureaucracy and sets of rules. If we had the levy—the at-work scheme that he described—we would have to define the new tax base, have a new levy collection mechanism, work out who was in and who was out, have appeals and all that kind of stuff. There is always a dead weight to such things. Simply setting up new infrastructure costs money. I would have to be convinced that we were getting something back for it.
In essence, my hon. Friend is proposing that, instead of the general taxpayer paying into the pot and employers handing out statutory maternity pay, which is reimbursed by the Government from the general taxpayer—the current system—we have a new levy on employers, although he recognises that he does not want a new jobs tax, so that it is offset by a reduction in something else that employers pay and the tax in that world is neutral overall. However, he then says that he wants the rate not to be some £130 a week, but to be £200 and something a week.
My hon. Friend was commendably brief, so I apologise if I misunderstood, but I was not clear where that extra money would come from. If we pay women on maternity leave double, someone must pay for it. If he does not want that to be an extra burden on firms, paying for it will simply be a tax increase. That might be the right thing to do—increasing taxes to pay for it—but it is an increase.
Charlie Elphicke
Part of the reason for raising the rate is to bring it into line with the self-employed position. Also, however, most work places have the extra maternity leave as well, yet a small number of less good employers do not top up the statutory amount. The idea is to raise the threshold, so that women on maternity leave are overall in a better position.
Steve Webb
I appreciate that my hon. Friend would like to make the scheme more generous, but my sense is that that is potentially quite a substantial cost. If we spend £2 billion already and he wants to double the rate, is that another £2 billion? I do not know. Without more detail, I could not say, but it might be a substantial cost that we have to think through.
On the important issue of self-employed women, the dilemma is that if they have chosen to be self-employed, they are paying class 2 national insurance of about £2.70 a week, while their employed sisters are paying national insurance of 12%, or whatever the rate is, as an employee, while their employer is paying another 13.8%. The best part of 25% of wages is raised in national insurance from the employed earner, while £2.70 something a week comes from the self-employed—or at class 4, depending on how much she is earning. The amount going into the system from the self-employed is vastly lower; the maternity provision for the self-employed, however, is only a bit lower for some women.
In that first six weeks, when we are on 90% of earnings, the employed earner could get more, but some self-employed women get more than their employed counterparts, because of the detail of the rules. There is an issue about some women who pay voluntary class 2 at two or three quid a week for a period of time, but then become entitled to maternity allowance running into thousands, having only put in £50 or £100 into the system. There is a worry that the system is possibly too lax in that area and we might need to think about it.
It is absolutely right that self-employed women get proper maternity provision, which is what the maternity allowance is for. Relative to what they put into the system, however, what they get out of it is a fantastic rate of return compared with an employed earner. An employed earner is putting far more in, while the employer is also putting in.
On the tax base for my hon. Friend’s idea, he proposes that all firms should contribute. Unless the self-employed are also going to contribute, they will either benefit without contributing, or we are talking about another levy on the self-employed as well. Having chosen to be self-employed, people often change, because of the lack of burdens, costs and levies of being an employed earner. We would have to think about whether we are distorting the choice between becoming an employed earner or a self-employed person if we made those changes.
I do not want to end on a discouraging note, because my hon. Friend has raised an important challenge. We do not want to be in a situation in which employers, through prejudice or for other reasons, are disinclined to employ women of childbearing age. That is clearly an important issue. We must ensure, however, that the social security system reflects the labour market as it is now and not as it was after the second world war. We need to reflect on the fact that there are growing numbers of, first, women working and, secondly, self-employed women. The Department is not currently doing work in this area, because we have our hands full with reform, but it is always good to look at such things.
Charlie Elphicke
Part of my thinking is that we are about to have a revolution with the whole concept of shared parental leave, so that issue of men versus women in the workplace will tend to blur. That might be a good time to look at reworking the system in this way, to encourage and help parents in the workplace.
Steve Webb
My hon. Friend is right, and the coalition can be proud of the shared parental leave approach and for rethinking the nature of what happens after a child is born and whether it is mum, dad or a combination of the two who take time off. My hon. Friend is also right to encourage us to think outside departmental silos: the Department for Business, Innovation and Skills does parental leave, but the Department for Work and Pensions does maternity pay, and so on. He makes a welcome link. I am not convinced that his scheme is necessarily affordable, because of the additional cost involved, but he makes an important link.
I have a final word of encouragement to employers, who may be listening to our proceedings. About 10 years ago, less than half of mothers who went on maternity leave came back and worked in the same job; that figure was about 40%, but it is now 80%. The norm now for an employer who takes on a woman who goes on maternity leave is that—four times out of five—she will come back to the job for which she was trained, in which she is experienced and to which she can contribute.
Likewise, we now find that three quarters of women return to work within 12 to 18 months of having their baby. There is a norm: if someone takes on a woman of childbearing age, the odds are that she will come back to the same job within 12 to 18 months. We need to educate employers about the fact that, if they do not employ women of childbearing age, they are depriving themselves of talented people who contribute to the work force. Not employing such women is clearly a bad thing, not only from a social point of view, but from an economic point of view.
I congratulate my hon. Friend on raising the issue and my hon. Friend the Member for Spelthorne, who serves on the Select Committee now and is thinking hard about such issues, on his contribution. We have done a huge amount of reform in this Parliament, and we want to see our reforms through and deliver them, because we want our legacy to be a system that, as my hon. Friend the Member for Dover said, encourages independence, not dependence, that is fiscally responsible, but that works with the grain of people, so that those who want to work hard and get on are encouraged and enabled to do so, rather than being trapped on benefit, which was the risk of the system that we inherited.
UK Citizenship
(10 years, 9 months ago)
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Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
I am grateful for the opportunity to air this issue in the House this afternoon. Although the power to deprive British nationals of citizenship, amplified in clause 60 of the Immigration Bill, might seem to some a mere legal technicality, important issues lie behind it. Clause 60 is wrong-headed, and I hope that airing the issues this afternoon will lead people in another place to throw the clause out of the Bill.
The clause provides for the Secretary of State to render a person stateless by depriving him or her of their nationality where citizenship has been gained through naturalisation and where
“the Secretary of State is satisfied that the deprivation is conducive to the public good because the person, while having that citizenship status, has conducted him or herself in a manner which is seriously prejudicial to the vital interests of the United Kingdom”.
First, I would remind the House that we are talking about terror suspects. Nowadays in Parliament, saying that someone is suspected of terrorist activity is enough for the political class to assume that that person does not deserve due process. It is worth reminding the House that those people have not actually been convicted of any crime. Sadly, I have to say, the currency of political debate about terrorism has been so debased, first under Tony Blair and now under the coalition, that alleged terrorists are now routinely deemed to be the only category of alleged criminal who are not allowed due process—even alleged paedophiles have to have due process, but not alleged terrorists.
My view is that if someone is suspected of terrorism, the obvious step is to put them on trial. I am supported in that view by no less a person than the late Lord Kingsland, the former Conservative shadow Lord Chancellor, who said in 2002:
“If we identify someone as a person proposing to commit a serious terrorist offence…surely the obligation is on us to deal with that person. If we simply deport him, we shall be handing on…this terrorist problem to another state which may not have the same capability of dealing with it…It cannot be a proper response to the terrorist threat to refuse to deal with it ourselves”.—[Official Report, House of Lords, 9 October 2002; Vol. 639, c. 277-278.]
That was the view of the Conservative party in 2002, but clearly things have changed in the intervening time.
Being realistic, we know that the security services have always resisted trial for many suspected terrorists because—this is my understanding—they do not want to make public their wire-tapping and other surveillance methods. I have always found that argument dubious, and it is even less credible post the Snowden revelations, which have revealed to us all more about state surveillance than we ever wanted to know. Instead of due process, the security services and their political adherents in both parties prefer secret courts, detention without trial and now this attempt to strip away citizenship.
That leads me to one of the big problems with clause 60 of the Immigration Bill: it creates two different classes of British citizenship. There are those, such as myself, who are British citizens because we were born here, and there are those, including some of the people who work for me, who are British citizens by naturalisation. We will have two classes of British citizens. That is a dangerous road to go down. In support of that view I quote no less a person than the hon. Member for North East Somerset (Jacob Rees-Mogg), who, as I think most people know, is a Conservative MP and not someone who could be described as a bleeding-heart liberal. On Report, when clause 60 was added to the Immigration Bill, he said:
“I am perhaps rather romantic in my view of what it means to be a British subject. I always thought that Palmerston got it right on the Don Pacifico affair—the ‘civis Romanus sum’ principle. Once any one of us has a passport that says we are British, we are as British as anybody else, whether they were born here or got their passport five minutes ago. It is incredibly important that there is equality before the law for all Her Majesty’s subjects who are living in this country and have right of residence here. I worry that if we give the Government the ability to take passports away from a certain category of British subject but not from others, it will create a potential unfairness and a second category of citizen.”—[Official Report, 30 January 2014; Vol. 574, c. 1086.]
That goes to the heart of one of the problems with the legislation.
We should not have, as it were, class A and class B British citizens. In communities such as mine, the fear will be that although this has started with suspected terrorists, where will it end, once the state decides that British citizenship is not indivisible? The Home Secretary has said, rather unfortunately, that citizenship is a privilege, not a right, but citizenship is not a privilege or a right; it is a fact. Deciding that it is not a fact and that the state can chop and change when it comes to the light in which it regards someone’s citizenship, is, I believe—as does the hon. Member for North East Somerset—a dangerous road to go down.
Another problem with the proposal is that in stripping a terrorism suspect of their nationality, there is a danger that we could render them stateless. That problem was raised on Report. The Secretary of State argued that
“we are talking about a situation in which they”—
that is, the person deprived of citizenship—
“would be able to acquire statehood from somewhere else.”—[Official Report, 30 January 2014; Vol. 574, c. 1040.]
However, even the most cursory glance at clause 60 reveals that the provision is not limited in that way, but allows individuals to be rendered stateless without reference to the possibility of securing citizenship elsewhere. The Home Secretary said:
“The whole point of the measure is to be able to remove certain people”.—[Official Report, 30 January 2014; Vol. 574, c. 1043.]
That assertion raises a number of important questions. I am interested to hear from the Minister how the Government will remove people who have no nationality and no travel documents.
Duncan Hames (Chippenham) (LD)
The hon. Lady is making an important point. If another state were to remove citizenship from a naturalised citizen who was originally from the UK, does she envisage that it would be at all likely that our country would be enthusiastic about offering citizenship to that person? If we would not, why should we imagine that other countries would offer citizenship to someone who has had their citizenship revoked by this Government?
Chris Bryant (Rhondda) (Lab)
It is even worse, is it not? Potentially, the only countries that would offer nationality to a person reckoned to be a suspected terrorist would be countries where we probably would not want that person to end up, because they would by definition be countries that sponsor terrorism. We would end up with people in this country who we would simply be keeping completely stateless, without any role or standing. We cannot simply banish them to France as we would have done in the middle ages.
Ms Abbott
My hon. Friend makes an excellent point. In saying that, I am accepting an argument that I do not really support, namely that somehow, because someone is alleged to be a terrorist, that makes them a terrorist. Even if we accept that logic, we will not be making the country any safer, because we cannot move such people on anywhere.
Statelessness is a notion that the British Government were trying to move away from for a long time. In 1930, Britain was among the first to ratify the convention on certain questions relating to the conflict of nationality, which included a protocol relating to certain cases of statelessness. The universal declaration of human rights, which was adopted by the UN General Assembly with UK support as far back as 1948, says:
“Everyone has the right to a nationality…No one shall be arbitrarily deprived of his nationality”,
yet that is what clause 60 of the Immigration Bill seeks to do.
Deprivation of citizenship is a severe sanction and statelessness is a separate and even more brutal punishment with unique practical and legal consequences. Although it is an aspiration of human rights activists that fundamental rights such as the right to life and the prohibition on torture should attach to all human beings, the reality is that we live in a world deeply divided along national borders, in which it is notoriously difficult to access redress for, or protection on, human rights matters without nationality.
Going further forward, the UN convention on the reduction of statelessness, which is where we are supposed to be going, was adopted in 1961 and ratified by the UK in 1966. It stipulates that, absent circumstances of fraudulent application or disloyalty toward the contracting state, deprivations and renunciations of citizenship will take effect only where a person has or subsequently obtains another nationality in replacement. The clause moves away from that. This country has spent a generation trying to move away from statelessness, but we are now going in reverse.
We may not have seen the end of this matter; that is why the other place should look at the provision. We had the Home Secretary saying that citizenship was a privilege, not a right, but citizenship is a fact. During the same debate, Alok Sharma MP—
Jim Sheridan (in the Chair)
Order. It would be preferable to mention hon. Members not by name, but by their constituency.
Ms Abbott
The hon. Member for Reading West (Alok Sharma) raised with the Home Secretary the question of whether we could extend the stripping away of citizenship from naturalised citizenship. He said:
“I am a naturalised British citizen and the clause therefore applies to me. I support it wholeheartedly…Perhaps my right hon. Friend should go even further…and introduce similar sanctions against anyone who is British, irrespective of how they got British citizenship”.
The Home Secretary responded:
“My hon. Friend makes an important point about…the desire that we have in the House to ensure that we can take appropriate action against people who are acting in a manner that is not conducive to the public good”.—[Official Report, 30 January 2014; Vol. 574, c. 1042.]
One of the problems with the new clause is that it opens the door to further arbitrary deprivation of citizenship. It must be wrong in principle to create two classes of citizenship. It is wrong in practice because it will create a class of stateless people who, in practice, cannot be moved out of the UK. It seems that the coalition Government introduced the clause as a short-term strategy to see off a related but separate clause covering the ability of foreign criminals to resist deportation on the grounds that they have a right to family life. I suggest that the civil liberties of British citizens are too important to be tampered with for short-term political advantage.
Coming as I do from a family in which many members of my parents’ generation obtained British citizenship through naturalisation, and representing as I do a part of London where many of my constituents obtained British citizenship through naturalisation, I am naturally wary of any move to create two classes of British citizenship, as that could affect so many of my constituents and even members of my family. The clause was thought up in a hurry, and as with so much legislation that is thought up in a hurry, it is deeply flawed. I sincerely hope that when Members of the other place consider it, they will take it out of the Bill.
The Minister for Security and Immigration (James Brokenshire)
I welcome you, Mr Sheridan, to the Chair. I congratulate the hon. Member for Hackney North and Stoke Newington (Ms Abbott) on securing this debate, and I respect the passion with which she made her points this afternoon. I hope that my comments will reassure her and clarify some of the misapprehensions she has raised in the context of the measures that have been introduced into the Immigration Bill, which is starting its consideration in another place.
I welcome the opportunity to correct some of the issues surrounding the powers to deprive a person of citizenship and the Government’s proposed legislative changes in the Bill. As the Home Secretary outlined in her speech to the House last month, depriving people of their citizenship is a very serious matter, and the hon. Member for Hackney North and Stoke Newington rightly emphasised that in her contribution this afternoon. It is one of the most serious sanctions a state can take against a person. The decision requires considerable research, evidence gathering and consultation by officials throughout the Government, and the Home Secretary herself reviews and signs it off to ensure that it is proportionate and necessary. The issue also concerns national security and our attempts to remove dangerous individuals from the UK.
It may be helpful if I start by outlining the Government’s existing provisions and powers, and the safeguards that already exist, before going on to explain the purpose of the proposals in the Immigration Bill and addressing some of the hon. Lady’s specific questions.
Ms Abbott
The Minister will be aware that in response to a freedom of information request, we now know that between 2010 and 2013, the Home Secretary revoked the passports of 16 British nationals under the current section 40 of the British Nationality Act 1981 on public good grounds. At least five of those people were born in the UK and one had been resident for almost 50 years. When the Home Secretary was asked during Report stage of the Immigration Bill what happened to those 16 people, she did not provide specific information. Can the Minister provide information now, or at least write to me with an explanation?
James Brokenshire
I will certainly address some of the hon. Lady’s points, but I am unable to provide further details about specific cases. She is right about existing powers being utilised. Since 2006, there have been 27 examples of that. The powers have their origin in legislation dating back to the first world war—the hon. Lady looked at some of the history—when provision was made for the revocation of citizenship if a naturalised person was suspected of treasonable activities.
The current position under section 40 of the British Nationality Act 1981, as amended by the previous Labour Government in 2002 and 2006, is that the Home Secretary can deprive a British citizen of their citizenship in two scenarios. The first is when the person acquired it using fraud, false representation or concealment of a material fact. That essentially means that they used deception to obtain citizenship for which they were not eligible or, had we known the full and true facts, we would not have granted the application. In such cases, the person involved may be left stateless. The second scenario is when the Home Secretary is satisfied that deprivation is
“conducive to the public good”
and the person would not be left stateless as a result. We want to amend the second of those two conditions to ensure that individuals who are a serious threat to this country cannot retain citizenship simply because deprivation would leave them stateless.
As I said, a Labour Government amended the British Nationality Act 1981 in 2002 and 2006. That provided for deprivation when it was
“conducive to the public good”.
That is a broad power which gives the Home Secretary discretion to respond to changing threats, and covers cases involving national security, including espionage, war crimes, serious and organised crime and unacceptable behaviours such as the glorification of terrorism. Conducive deprivation can be pursued against any British citizen, including British-born citizens, as a result of the changes introduced in 2002. In practice, because a person cannot be left stateless, it applies only to those who would have another nationality when they are deprived. That provision would remain and is unchanged by our proposals.
A number of safeguards are in place for deprivation cases and those will remain, which is important to understand. First, any decision to deprive will arise only after extensive research and understanding of an individual’s previous behaviour, any potential human rights issues and the threats that they pose to the UK. Officials from the Home Office and other Departments are consulted before the information is reviewed and a final decision made by the Home Secretary.
Secondly, any person deprived of their citizenship has a full right of appeal. Grounds for appeal can include both the legality of the action and the merits of the Secretary of State’s decision. Such appeals are heard at either the first-tier tribunal—the immigration and asylum chamber—or, where issues of national security are relevant, at the Special Immigration Appeals Commission, or SIAC. In both cases, any onward challenge can be to the Court of Appeal or other higher courts. That is not being changed by the wider, necessary changes to the appeals system contained in the Immigration Bill.
Thirdly, deprivation action is taken only against those individuals who meet the thresholds that I have outlined. We do not and cannot take deprivation action against family members—husbands, wives or children—on the basis of their relationship to the person being deprived.
Finally, let me be clear: this Government do not take deprivation action lightly. There is a high threshold and only a small number of individuals are deprived of their citizenship. As I said, since 2006, 27 people have been deprived under these conducive powers.
The hon. Lady highlighted the new provisions in the Immigration Bill. Clause 60 is the relevant clause that she touched on: it seeks to address the most serious deprivation cases where we have previously been prevented from taking action because it may leave the individual stateless. At present, we cannot deprive someone of citizenship even in circumstances where an individual could acquire another nationality or reacquire their previous one.
We recognise the need to avoid statelessness and are committed to maintaining our international obligations. However, we do not believe that that should be at a cost to the national security of the UK. It is a fact that article 8(3) of 1961 UN convention on the reduction of statelessness specifies that a state may retain the right to deprive any person of their nationality, regardless of whether it would leave them stateless, if the person has
“conducted himself in a manner seriously prejudicial to the vital interests of the State”,
if, at the time of ratification, those grounds exist in domestic law.
Therefore, when the UK ratified that UN convention, it made such a declaration that allowed for the prospect of leaving a person stateless in certain circumstances. Those circumstances, as they existed in the domestic law of the time, include the ability to deprive a naturalised person of their citizenship—regardless of whether it would leave them stateless—when an individual has conducted themselves in a manner seriously prejudicial to the vital interests of Her Britannic Majesty. That is a high threshold for cases involving national security and those who take up arms against British or allied forces. Clause 60 of the Immigration Bill seeks to recreate that very set of circumstances.
Ms Abbott
Many of us are puzzled about why the Minister calls in aid national security in making people stateless, if making people stateless would in effect make it almost impossible to move them to another country. Some people cite the case of Bilal al-Berjawi, who was a British-Lebanese citizen whom we did make stateless when he was overseas. His solicitor has argued that
“the process of deprivation of citizenship made it easier for the US to then designate Sakr”—
who accompanied Bilal al-Berjawi—
“as an enemy combatant, to whom the UK owes no responsibility whatsoever.”
This man was killed in a drone attack. Are we really talking about making people stateless when they are overseas in order to make them vulnerable targets of drone attacks by the United States?
James Brokenshire
May I directly address the suggestion that any action on deprivation of citizenship is linked, in any way, to the sort of activity that the hon. Lady highlighted? I strenuously deny that. They are two clearly separate issues and there is nothing to indicate, in any respect, that they are linked.
It is true that people have been deprived while outside the UK, but I do not accept that it is a particular tactic. It is simply an operational reality that in some cases the information comes to light when the person is outside the UK or that it is the final piece of the picture, confirming what has been suspected. In other cases, we may determine that the most appropriate response to the actions of an individual is to deprive that person while they are outside the UK. Equally, there are cases where it can be determined that it is appropriate to take action to deprive individuals while they are inside the UK.
It is not true that all those deprived under the clause will be stateless. Some may be able to acquire or reacquire another nationality. In those cases, where the individual has been deprived while in the UK, we would seek to remove that individual from the UK once they had acquired another nationality. However, the clause is not limited to those cases and can be applicable to those who cannot acquire another nationality. In that event, it is open to them to make an application to stay in the UK as a stateless person.
The UK would continue to comply with the provisions of the 1961 UN convention on the reduction of statelessness, regarding the rights of stateless persons. Where appropriate, we could regularise a person’s position in the UK by granting limited leave—possibly with conditions relating to access to public funds and their right to work and study.
I come back to the hon. Lady’s point about the concept, as she described it, of two-tier citizenship. We do not accept that there is, or will be, a two-tier citizenship system. The proposal merely reflects the fact that there are differing routes to citizenship, and therefore, different actions permissible depending on the actions of the person concerned. The power to deprive a person of citizenship, as I have explained, already exists and certain aspects can only be applied depending on a person’s route to citizenship. Naturalised or registered citizens can be deprived if they obtained it by means of fraud, false representation or concealment of a material fact. Any citizen can be deprived if the Secretary of State considers it conducive to the public good and the person would not be left stateless as a result, so I do not accept the hon. Lady’s suggestion.
I understand that Members are concerned about instances where deprivation action takes places when a person is outside the UK, and I hear the hon. Lady’s point. I restate that the Home Secretary takes deprivation action only when she considers it is appropriate and that may mean doing so when an individual is abroad, which prevents their return and reduces the risk to the UK. That individual would still have a full right of appeal and the ability to resolve their nationality issues accordingly. It is often the travel abroad to terrorist training camps or to countries with internal fighting that is the tipping point—the crucial piece of the jigsaw—that instigates the need to act.
Duncan Hames
The Minister refers to the right of appeal, and he outlined earlier the courts available for that process. Will he confirm that it would therefore, in some cases, be an appeal that is conducted under closed material proceedings?
James Brokenshire
As I indicated, a route is open to SIAC to consider that, and closed material proceedings could be applicable in certain circumstances—not automatically; it would depend on the nature of the individual case. It is appropriate, however, that there is that right of appeal and right of challenge, and SIAC effectively provides that ability to do so.
I reassure Members that the new power would apply only to those who are naturalised citizens—crucially, not children, who are not able to naturalise as British citizens, nor anyone who is British by birth or registration. That is because our original declaration reasonably limits action only to those who have sought the privilege of British citizenship but then betray the values and laws that they swore to maintain.
Ultimately, the new power will be used sparingly. It will be relevant only in a small subset of the most serious deprivation cases, where we are currently precluded from taking action because those people would be left stateless. Our proposed clause is a targeted and proportionate measure that protects the security of the UK without jeopardising our international obligations. It provides for effective rights of appeal and for upholding the 1961 UN convention on the reduction of statelessness.
I am grateful to the hon. Member for Hackney North and Stoke Newington for bringing the matter to the Chamber this afternoon and for enabling me to set out more details on the proposals. As she has rightly identified, this matter is before the other place, and I am sure that it will give the issues careful scrutiny and consideration.
Written Statements
(10 years, 9 months ago)
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Elexon Ltd (Contingent Liability)
(10 years, 9 months ago)
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The Minister of State, Department of Energy and Climate Change (Michael Fallon)
The Energy Act 2013 makes provision for electricity market reform (EMR) measures which are intended to ensure sufficient investment comes forward to replace old generation plant with new low-carbon generation.
The Act enables amendments to the transmission licence and the balancing and settlement code (BSC) to allow Elexon Ltd to undertake settlement functions for EMR. To ensure these functions can be discharged effectively and on time, Elexon Ltd has begun preparatory work to put in place the necessary arrangements.
Elexon’s existing role, expertise and experience will help ensure that settlement systems are delivered in a manner that reduces administrative burdens for suppliers, for generators, the CfD counterparty and capacity market settlement body—thereby reducing costs to consumers.
Reflecting the critical nature of this preparatory work, I am writing to inform the House of a departmental minute which will be presented to Parliament today, giving notice of a contingent liability for the issuing of indemnity provisions to Elexon Ltd for actions it undertakes during the settlement system set-up phase.
We believe it appropriate to offer an indemnity for claims that could arise. This is because Elexon Ltd is a company that operates on a not-for-profit basis and is funded by parties to the BSC. In the absence of an indemnity, any costs would need to be passed on to the parties to the BSC. As this group is not identical to EMR participants, passing on costs to BSC parties would not be appropriate.
The indemnity would cover costs over and above those reclaimed by Elexon Ltd from insurers or through contractual arrangements with their service providers. The indemnity would not extend to any losses arising where Elexon Ltd is shown to have been wilfully negligent or for claims brought by employees of Elexon Ltd.
We judge the likelihood of the indemnity being invoked against the Department to be low. It is not possible to provide a meaningful assessment of the scale of the potential liability.
Hong Kong (Sino/British Joint Declaration)
(10 years, 9 months ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The latest report on the implementation of the Sino/British joint declaration on Hong Kong was published today. Copies have been placed in the Library of the House. A copy of the report is also available on the Foreign and Commonwealth Office website (www.gov.uk/government/organisations/foreign-commonwealth-office). The report covers the period from 1 July to 31 December 2013. I recommend the report to the House.
Anti-social Behaviour, Crime and Policing Bill
(10 years, 9 months ago)
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The Minister for Crime Prevention (Norman Baker)
Currently schedule 7 to the Government of Wales Act 2006 includes an exception to the National Assembly’s competence in relation to “anti-social behaviour orders”. As a result, an amendment to schedule 7 to that Act is necessary to ensure the exception’s continuing operation following the reforms made in this Bill.
In line with the devolution settlement, this amendment should have the same scope as the current exception. Criminal justice is not devolved to the Assembly but the exception is necessary to make clear that in legislating about social welfare or any other transferred subject, the Assembly does not have the competence to make provision for orders equivalent to those first created by the Crime and Disorder Act 1998. As this Bill abolishes these orders and repeals the relevant sections of the 1998 Act—among other things—an amendment to the exception was also necessary as a consequence. The amendment maintains the existing scope by relating only to orders that deal with the kinds of behaviour that could have been restricted under the existing regime and which we would reasonably regard as part of the criminal justice system.
In the Government’s evidence to the Silk commission in March this year, we highlighted that there was some confusion as to how the current exception should be interpreted. Since submitting that evidence, we have concluded that the exception should be interpreted narrowly, to mean the subject matter of orders under the Crime and Disorder Act 1998. The amendment is designed to reflect that conclusion.
IPSA Supplementary Estimate 2013-14
(10 years, 9 months ago)
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Mr Charles Walker (Broxbourne)
The Speaker’s Committee for the IPSA is established under the Parliamentary Standards Act 2009. The Committee is reviewing IPSA’s draft supplementary estimate and will announce whether it is satisfied that it is consistent with the efficient and cost-effective discharge by the IPSA of its functions before the supplementary estimate is laid before the House.
Local Government Boundary Commission for England (Estimate)
(10 years, 9 months ago)
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Mr Gary Streeter (South West Devon)
The Speaker’s Committee on the Electoral Commission is established under the Political Parties, Elections and Referendum Act (PPERA) 2000. Under paragraph 11, schedule 1 of the Local Democracy, Economic Development and Construction Act 2009 it must review the Local Government Boundary Commission for England’s (LGBCE) estimate before it is laid before the House and decide whether it is satisfied that the estimate is consistent with the economical, efficient and effective discharge by the Commission of its functions.
The Committee has approved the draft supplementary estimate without modification, in line with the advice provided to it under statute by HM Treasury.
Grand Committee
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Defence Reform Bill
(10 years, 9 months ago)
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The Deputy Chairman of Committees (Baroness Harris of Richmond) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Lord Rosser
“(5A) Regulations under this section may provide for variation in payment size on the basis of the recipient company, specifically including provision for larger payments to be provided to companies defined as “small” or “medium” under sections 382 and 465 of the Companies Act 2006 or individuals who are self-employed.”
Lord Rosser (Lab)
Clause 46 deals with the issue of additional payments to employers of members of the Reserve Forces. This amendment would enable regulations to provide for a variation in the size of the payment made by specifically including provision for larger payments to be provided to small and medium-sized companies.
An Answer to a Parliamentary Question in 2010 revealed that at that time 15% of current TA members came from large organisations employing 500 people or more, 17% came from medium-sized organisations employing between 50 and 499 people, and 17% came from small organisations with between one and 49 employees. Self-employed people made up 5%, with unemployed people, including students, making up 42%, and the mobilised TA making up the remaining 4%.
When the Minister responds, perhaps he could say whether the percentages that I have just quoted are basically the same today, some four years later, in respect of where current TA members come from. If that is the case, are the Government looking to change that breakdown by employment of sources of Reserve Forces recruitment, bearing in mind that one of the key roles of the reserves in future will be to provide key specialist skills needed to support our Regular Forces to a greater extent than today?
I should like to raise a question about reservists who are unemployed—in particular, to ask the Minister how Jobcentre Plus views unemployed potential reservists going off for extended periods, in light of the requirement that they should sign on and apply for jobs on a regular basis. Presumably we should be encouraging the unemployed to consider reservist occupations; so the question of how that fits in with the requirement to sign on for benefits is of some importance.
The figures given in the Parliamentary Answer to which I referred indicate the importance of small and medium-sized firms as a source of reservists. The additional payment proposed over and above the current arrangements is, I believe, £500 a month for each month in which a reservist is mobilised. The question is: will that prove to be a sufficient incentive for smaller firms, bearing in mind that the impact on them of one or more of their employees being reservists, and away from the workplace for periods of time, could be greater than for a large firm that has more resources, both human and financial, at its disposal to cover for employees away on Reserve Forces commitments?
I appreciate that we want to draw the attention of employers to the benefits to them of their employees being reservists and the positive impact that this can have on career development, but that may not necessarily be the first point that will strike a small employer when faced with the potential problem of covering for an employee away on reserve duties; there are many small employers in the IT field, which is a skill that we look to reservists to provide. A survey by the Federation of Small Businesses in 2012 suggested that this might be an issue, but I hope the Minister will say whether that is proving to be the case in respect of small and medium-sized firms.
We believe that there is a case for flexibility over the size of the additional payment in relation to small and medium-sized businesses, but we want to hear what the Government’s intentions are on the points I have raised, including how specific or otherwise the regulations relating to these payments are likely to be. I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, I am not happy with this amendment. Having listened to the explanation by the noble Lord, Lord Rosser, I shall explain why. Small and medium-sized enterprises—I was the director of one for many years—are concerned not so much with the money but with replacing the person. The noble Lord, Lord Rosser, touched upon that. I do not think that money is the problem. Giving SMEs a bit more money does not solve the problem that a key person in a very small organisation is not there. The argument for larger payments to smaller companies will only annoy larger companies which are the source of reservists—or territorials, at the moment.
The amendment in the name of the noble Lords, Lord Rosser and Lord Tunnicliffe, also mentions the self-employed. The idea of the self-employed going into the reserves under the new arrangements is that they will receive £500 a month, or whatever it is, to substitute for their self-employed earnings. That is a decision that they would need to make, and I hope they will make it positively; but the self-employed person is not so much worried about the £500 per month substitute for earnings from their customers or their clients as about keeping their customers and their clients while they are away, and money does not solve that.
I was interested in the comment made by the noble Lord, Lord Rosser, about the unemployed. It was a point that I had not thought about, and I, too, would welcome the Minister’s reply on that point.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, the Bill proposes granting the Secretary of State a power, by regulations, to make payments to the employers of reservists over and above those which may currently be made. The current scheme allows employers to recover costs incurred in covering the work of employees who are mobilised. Those costs may include the hiring of temporary staff or the payment of overtime.
The new power is intended to allow the Secretary of State some flexibility as to the provision to be made in regulations made under it—for example, as to which employers may receive a payment and which Reserve Forces activities trigger entitlement to a payment. However, the current intention is that the regulations will authorise the making of payments only to employers in small and medium-sized enterprises whose reservist employees are mobilised. The Secretary of State will be required to consult various bodies before making the regulations, including the Reserve Forces and cadet associations and a body representing the interests of employers.
I welcome the noble Lord’s desire to recognise that while all employers may feel some impact from the medium or long-term absence of staff, it is small and medium-sized enterprises that are likely to feel the greatest effects. We listened to employers during the Green Paper consultation and seek to reflect this concern in the regulations.
Amendment 17A would allow the regulations to make provision in such a way that the sums payable could vary depending on the size of the employer’s business. In particular, it would allow larger payments to be made to small and medium-sized businesses and to employers who are self-employed. The effect that this amendment seeks to achieve is already achieved by new Section 84A, taken together with the amendments made to Section 85(1) of the Reserve Forces Act 1996. Sections 84A and 85(1) already give the Secretary of State the flexibility to provide in the regulations so that the sums payable vary depending on the size of the employer’s business. The current intention is that the regulations will authorise the making of payments to employers in SMEs only. This is because larger companies are more likely to be able to absorb the costs and disruptions associated with absences from work to undertake Reserve Forces activities.
We have not made provision for the making of payments to the self-employed in respect of their own Reserve Forces activities, as such payments are made in recognition of the impact placed on employers. The self-employed reservist has elected to become a reservist and so accepted the risk of being mobilised themselves. Were we to pay them, we would, in effect, be handing the self-employed reservist a pay rise of up to £500 per month when mobilised. I do not believe that that would be a good use of taxpayers’ money, or would be well received by those reservists who are not self-employed, or by regulars.
I would like briefly to highlight what current payments we make to both the reservist and their employer when we mobilise a reservist. Reservists are entitled to claim for a “reservist award” and to make an allowable expenses claim. The reservist award consists of a salary top-up—a payment made to reservists whose military salary, when called out for operations, is less than their civilian earnings. Reservists can also claim for benefits in kind—benefits that have been suspended or withdrawn by their employers while the reservist is mobilised. The benefits covered include, but are not limited to, health or medical insurance, life insurance, accommodation, education fees for dependent children and the loss of a company car used by the reservist’s dependants. The resulting payment for all these elements of the reservist’s award, taken together, is subject to an upper limit or cap—less their service pay—of £548 per day, or £822 per day for certain medical officers. When, in connection with their mobilised service, a reservist chooses to remain in his occupational pension scheme and continues to make his employee pension payments, any contributions withdrawn by his employer will be paid by the MoD.
The allowable expenses claim consists of additional payments for the care of a dependent child or relative, additional expenses for the care of a pet, additional home insurance premiums and payments for the essential maintenance of the reservist’s main residence and garden for security purposes to ensure that the property looks lived-in. The resulting allowable expenses claim is without limit, but is subject to providing clear documentation of claims.
Employers are entitled to claim certain costs related to the mobilisation of an employee. The “employer’s award” consists of up to £110 per day—in other words, approximately £40,000 per year—which is the amount by which the following “replacement costs” incurred by the employer exceed the reservist’s earnings. These replacement costs are limited to pay for, if appropriate, the replacement of the reservist, and, if relevant, any overtime payments to existing employees and an increase in salary for an existing employee, as well as certain non-recurring or one-off agency fees and advertising costs—VAT exclusive only, where the employer’s business is registered for VAT purposes. An employer may claim the cost of retraining a reservist on return to work, where needed, for the reservist’s re-employment. There is no provision for additional administration costs and the extra costs of training an external replacement for the reservist or, indeed, one of his colleagues now doing his work. The capped amount—that is, £110 per day—is intended to represent the quantifiable extra costs, above the reservist’s normal pay, of employing a temporary replacement. The employer is not, of course, paying the reservist during their mobilisation.
Depending on their personal circumstances, a self-employed reservist may claim under SI 2005/859 as a reservist, as an employer, or both. However, such a reservist cannot make a claim for an award to recover the same cost as a part of the reservist’s or employer’s award.
We recognise the importance of reserve service and have sought to address the financial issues for both reservists and employers that mobilisation brings. In relation to the power to make further payments that we are bringing in with Clause 46, I can assure noble Lords that we will keep the payments under review and, if we need to make alterations and adjustments in future, we will have the flexibility to do so.
I am grateful to my noble friend Lord Palmer for his support, and I very much agree with the points that he made. I will try to answer his question along with the answer I will give to the noble Lord, Lord Rosser.
The noble Lord asked whether percentages were still the same, and broadly the answer is yes. He asked about the Jobcentre view of reservist training; it is provided for and is counted as being available for work. He asked whether financial assistance at £500 would be enough for small businesses. The Federation of Small Businesses said that it was more than it expected. It is always a judgment and if we need to be flexible, we can be.
Lord Rosser
Before I withdraw my amendment, can I clarify what I think has been said? We are talking about the additional payments to the employer, over and above what has already been paid—and I thank the Minister for setting out what the current arrangements are. On the additional payment, which is one of £500 a month for each month that a reservist is mobilised, can I confirm that the intention is that that will be paid only to small and medium-sized businesses? I think that he then said that there would be flexibility over the level of the payment. Does that flexibility mean that it could exceed that £500?
Lord Astor of Hever
The answer to the noble Lord’s first question is definitely yes—it is just for the SMEs. I shall need to get back to the noble Lord on the second question.
Lord Rosser
I thank the Minister for his reply and the noble Lord, Lord Palmer of Childs Hill, for his contribution. I am grateful to the Minister for setting out on the record what the current situation is and what the Government’s intentions are as regards this additional payment. In the light of the reply, I beg leave to withdraw the amendment.
Lord Astor of Hever
“Report on volunteer reserve forces
In Part 11 of the Reserve Forces Act 1996 (reserve associations), after section 113 insert—“113A Duty to prepare report on volunteer reserve forces
(1) An association must prepare an annual report on the state of the volunteer reserve forces so far as concerns the area for which the association is established.
(2) A report on the state of the volunteer reserve forces is a report that sets out the association’s assessment of the capabilities of the volunteer reserve forces, having regard to the duties that may be imposed on members of those forces by or under this Act or any other enactment.
(3) The assessment referred to in subsection (2) must, in particular, include the association’s views on the effect of each of the following matters on the capabilities of the volunteer reserve forces—
(a) the recruiting of members for the volunteer reserve forces;(b) the retention of members of those forces;(c) the provision of training for those forces;(d) the upkeep of land and buildings for whose management and maintenance the association is responsible.(4) A report under subsection (1) must also set out the association’s assessment of the provision that is made as regards the mental welfare of members and former members of the volunteer reserve forces.
(5) An association must send a report under subsection (1) to the Secretary of State—
(a) in the case of the first report, before the first anniversary of the day on which the last Future Reserves 2020 report prepared before the coming into force of this section was presented to the Secretary of State, and(b) in the case of subsequent reports, before the anniversary of the day on which the first report was laid before Parliament under subsection (6).(6) On receiving a report under subsection (1), the Secretary of State must lay a copy of it before Parliament.
(7) The duties under this section may, instead of being performed by an association, be performed by a joint committee appointed under section 116 by two or more associations in relation to their combined areas.
(8) Where by virtue of subsection (7) a joint committee has the duty to prepare a report—
(a) references in subsections (1) to (5) to an association are to be read as if they were to the joint committee, and(b) section 117(1)(a) (power to regulate manner in which functions are exercised) has effect as if the reference to associations were to the joint committee.(9) In subsection (5)(a), “Future Reserves 2020 report” means a report prepared by the External Scrutiny Group on the Future Reserves 2020 programme.””
Lord Astor of Hever
My Lords, during consideration of this Bill in the House of Commons, the Secretary of State made a commitment to introduce in this House a government amendment on Reserve Forces that would reflect an amendment tabled by Julian Brazier and 37 other Members of Parliament. Amendment 18 is that amendment, inserting a new clause into the Bill. It amends the Reserve Forces Act 1996 to place reserve associations, also known as Reserve Forces and cadets associations, under a statutory duty to report annually to the Secretary of State for Defence on the state of the volunteer Reserve Forces. The new clause requires the Secretary of State to lay a copy of any such report before Parliament.
Reserve associations are community-facing organisations which provide an essential bridge between our Armed Forces and the civilian population. An association exists for each of 13 administrative areas of the United Kingdom. They provide advice and support on behalf of our volunteer Reserve Forces and cadets, work with the chains of command of the Royal Navy, the Army and the Royal Air Force and establish and maintain links with the community.
The new clause recognises the importance of the receipt of independent reports from reserve associations to ensure programme success in growing and revitalising the Reserve Forces. The reporting requirement that the new clause introduces is working with the grain of what the Government are already doing. It is based on the existing non-statutory arrangement under which a scrutiny group, appointed by the Council of Reserve Forces’ and Cadets’ Associations, reports annually on the Future Reserves 2020 programme and overall health of the Reserve Forces.
Under our plans for the whole force concept, the reserves will become an integral part of our future force structure, charged with delivering vital capability for the Armed Forces and providing resilience and reinforcement. However, we must not forget the unique and distinct nature of our reserves. They are civilians who have also elected to serve their country in uniform. That tens of thousands have volunteered to serve their country as a reservist, with some 25,000 serving in Iraq and Afghanistan in recent years, is humbling, but also a true reminder of the volunteer and community ethos across this nation, something of which we can be very proud.
In revitalising the Reserve Forces, we have been careful to recognise, and put in place measures to address, the extra challenges that reservists face in balancing their military service with their civilian employment and, in many cases, family responsibilities. That is why, when the Government undertook to revitalise the Reserve Forces through the Future Reserves 2020 programme, we focused on measures to make reserve service more attractive to reservists and their employers and put in place support measures for the reservist and their families.
The performance of defence as a whole is already subject to considerable external scrutiny, be that by the National Audit Office or the House of Commons Defence Committee—and, of course, by the many MPs and noble Lords with considerable defence interests and experience. All have shown themselves to be very proficient at examining the performance of defence in its entirety and on specific issues, programmes or projects.
I should also point out that the Ministry of Defence already provides a considerable amount of information of its own volition. The quarterly personnel report published in November 2013 gave the numbers of trained and untrained reservists and movements into and out of the reserve population. The next publication is scheduled for 13 February. On 19 December last year, the Secretary of State also published the indicative target figures for the future growth of the reserves in order to reach the identified trained strength target.
However, as I have made clear, the reserves are unique and, because of that, and the importance of the Future Reserves 2020 programme success, it is right that we should put in place a system for independent scrutiny of the state of the reserves as a specific entity. The new section which this new clause seeks to insert into the Reserve Forces Act 1996 requires an annual report to set out an assessment of the capabilities of the volunteer Reserve Forces, having regard to the duties that may be imposed on members of those forces, which include mobilised service under a call-out order.
Reports must, in particular, cover the effect of the following four matters on the capabilities of the volunteer Reserve Forces: first, the recruiting of members for the volunteer Reserve Forces; secondly, the retention of members of those forces; thirdly, the provision of training for those forces; and, fourthly, the upkeep of land and buildings for whose management and maintenance the reserve associations are responsible. Reports must also contain an assessment of the provision that is made as regards the mental welfare of members and former members of the volunteer Reserve Forces. This follows a further commitment made by the Secretary of State in the House of Commons.
This brings me neatly to Amendment 18C. The Government are absolutely committed to improving the mental health of serving and former members of both the Regular Forces and Reserve Forces. Noble Lords will be aware that my colleague, Dr Andrew Murrison, carried out a review of mental health provision within the Armed Forces. We have worked closely with the UK Department of Health, the NHS and third sector organisations to implement the recommendations from his Fighting Fit report. This has been backed by £7.4 million of government money.
Defence is already very open about the mental health of the Armed Forces population and the provisions we make to address issues. A great deal of this information is already published in the public domain. This includes the covenant annual report, which contains a specific healthcare chapter, and official defence statistics, such as those pertaining to the Veterans and Reserves Mental Health Programme. Defence is of course also engaged with and supports ongoing independent research programmes in the health arena, which are publicly available. For example, the King’s Centre for Military Health Research has been commissioned to undertake a further phase of its longitudinal cohort study, which includes reservists.
The Secretary of State made a commitment to bring forward an amendment in this House to require reserve associations to report annually on the state of the Reserve Forces. Recognising the importance of the issue of mental health, he undertook to include mental welfare provision in the list of matters that those annual reports must cover. Amendment 18 makes provision for this. Accordingly, I do not believe that subsection (1) of the new clause proposed in Amendment 18C is necessary.
In terms of annual spend on mental health provision for serving and former members of the Reserve Forces, it would not be practicable to produce meaningful financial data. In part, this is because it would be difficult to separate this cost from the cost of provision for regulars. Also, much of the provision for serving and former reservists is provided by the NHS at the local level, and extracting these financial data would be a real problem.
With regard to medical records, once demobilised, it is a long-established tradition that Reserve Forces’ medical care becomes the responsibility of their local NHS services, and the majority of their physical and mental health needs are met by this provision.
On the specifics of the current process for those leaving the Armed Forces or the Reserve Forces, when registering with their GP the veteran’s NHS record will be sent to the GP with a letter included in it that will inform the GP that they have been under the care of the Defence Medical Services and detailing how the GP can get the full record. Work is being carried out to further develop our systems in the future to allow for a summary of in-service care to be included with the NHS record when it is sent to the civilian GP. These proposed modifications will in future ensure that the NHS GP knows that they are dealing with a veteran and that the veteran is automatically given a copy of the full Defence Medical Services medical history if they decide that they require it.
As well as engaging with reservists, we have worked with the Department of Health to provide an electronic training package for GPs. This will help GPs to be more familiar with both the Reserve Forces’ and veterans’ community, and allow them to better recognise and monitor the needs of their patients.
In addition, current and former members of the Reserve Forces are entitled to attend the Veterans and Reserves Mental Health Programme. That programme is open to any current or former member of the UK volunteer reserve and regular reserve who has been demobilised since 1 January 2003 following an overseas operational deployment as a reservist and who believes that the deployment may have adversely affected their mental health. Under the programme, we liaise with the individual’s GP and offer a mental health assessment. If diagnosed to have a combat-related mental health condition, we then offer out-patient treatment via one of the MoD’s departments of community mental health. If more acute cases present themselves, the Defence Medical Services will assist access to NHS in-patient treatment.
Therefore, I believe that we are taking mental health seriously. We are working with reservists, former reservists, the medical community and other interested parties to ensure that everything that should be done is being done. However, I of course will welcome the view of the Reserve Forces and cadets associations as they report in due course on this issue.
I turn to Amendment 18F, the last amendment in this group, which seeks a report on the cost-effectiveness and viability of the Future Reserves 2020 programme. I would like to remind the Committee why we are making these changes. There are two strands to why we are doing this.
Lord Astor of Hever
I shall read that again. I refer to the period immediately after we come out of Afghanistan and finish combat operation there at the end of this year. So this is all absolutely in accordance with a strategic design that flows through the National Security Strategy.
We would all agree, I am sure, that this programme should be subject to proper and effective scrutiny. We have put forward a government amendment to do precisely that, with a report put to Parliament where it will be for the business managers to decide in the normal way what to do with that report. Leaving that report aside, the performance of defence as a whole is already subject to considerable external scrutiny, be that the National Audit Office, the House of Commons Defence Committee, or in defence Questions from MPs or Peers. Furthermore, as the Secretary of State said during an evidence session with the Defence Committee on 5 November, the strategic defence and security review 2015,
“will certainly want to look at the Future Force 2020 construct and decide whether it needs to evolve further to 2025 in response to a changing environment”.
The next strategic defence and security review will take place at a time when the programme has had some time to develop and demonstrate maturity.
Lord Robertson of Port Ellen
The Minister mentions the SDSR of 2015. That is presumably ongoing at the moment as 2015 is, after all, next year. What consultations has the department had with the various stakeholders in defence, such as Her Majesty’s Opposition, the trade unions, the press, the diplomatic corps, the think tanks and the academics who will be involved? Is there any outside involvement whatever in achieving a degree of consensus on what will be published around the time of the next general election?
Lord Astor of Hever
My Lords, I will try to answer the noble Lord’s question when I respond to other noble Lords’ questions. I repeat that the next SDSR, which will take place at a time when the programme has had some time to develop and demonstrate maturity, would be the right time to scrutinise the force structure and whether it needs to adapt to reflect new threats, opportunities or other such variables. I beg to move.
Lord Rosser
One of the joys of having amendments in a group where the Government have the first amendment is that you get the Government’s response before being able to explain the reasons for your own amendments. However, I would not wish the Minister to take that in any way as a criticism because we are always extremely grateful for the thoroughness with which he replies to amendments and for the extent of the information he provides to us. I will be as interested as my noble friend Lord Robertson of Port Ellen in the answer to the question he raised about the amount of discussion that is or is not currently going on in relation to the SDSR due in 2015.
Government Amendment 18 and my Amendments 18C and 18F have one thing in common; namely, they all provide for reports of one form or another. The Minister has explained the thinking behind the Government’s amendment, which, as he said, has arisen from a commitment given when the Bill was being considered in the other place. We have no issues with the Government’s Amendment 18. Our Amendment 18C calls on the Secretary of State to publish annually an analysis of the mental health provision for members and former members of the Reserve Forces and to report on the annual spend on such services. On that latter point, I note that the Minister said, in effect—I appreciate these were not his exact words—that this information could not be provided.
The amendment also makes provision for the transfer of medical records belonging to former members of the Reserve Forces to the National Health Service and for the monitoring of the health needs of former members of the Reserve Forces. Without such an arrangement working effectively, there is a distinct possibility of reservists going to their GP and their full medical history not being available. I appreciate what the Minister has already said in that context, but the reason for putting down the amendment with this requirement is because of claims that this is not what happens on occasions.
Mental health provision is, if anything, even more of an issue for reservists than for members of our Regular Forces as reservists after deployment go back into the civilian world rather than back to their units and can undoubtedly feel isolated on occasion. Hence the importance of the Ministry of Defence and the National Health Service knowing where reservists can be contacted and ensuring that they get the support they need.
A study published in 2012 showed a significantly higher rate of common mental health disorders and post-traumatic stress disorder among reservists, with the incidence of other types of mental illness being greater than that of PTSD, as it also is for regulars. The study also drew attention to the fact that reservists have much more difficulty with post-deployment social functioning and that such difficulties appear important not only to mental health but to fitting back into the family.
In future, we will be expecting a greater and different kind of commitment from our reserves and we need to ensure more than ever that the advances we have made with the Regular Forces with regard to mental illness, to which the Minister has already referred, are also achieved for our Reserve Forces. Government Amendment 18 provides for the annual report from reserve associations to include that association’s assessment of the provision that is made regarding the mental welfare of members and former members of the volunteer Reserve Forces but, apart from the issue of the extent to which reserve associations would be qualified to make such a full assessment, the Government’s amendment does not lay any requirement on the Secretary of State to make such an assessment or to address the issue of the transfer of medical records.
We believe it is important that there is such a requirement on the Secretary of State as well, particularly in relation to making the assessment. Making the provision set out in Amendment 18C and putting it in the Bill would help to ensure that mental health provision for members and former members of the Reserve Forces was regarded with the importance that it deserves.
Lord Dannatt (CB)
My Lords, I generally support the intention behind Amendments 18 and 18C but I draw attention to two underlying concerns that I have with regard to the overall policy that the amendments refer to.
The noble Lord, Lord Astor, in proposing Amendment 18, made reference to the fact that the Reserve Forces of the future will look very different from the Reserve Forces of the past, and that, by design, is absolutely right. However, we have to remember why we have deployed so many members of the Reserve Forces over the past 10 years. Following the defence review of 1997-98 led by the noble Lord, Lord Robertson of Port Ellen, a certain amount of work was allocated to the Army, Navy and Air Force. In the case of our land forces, we would be involved in one medium-scale ongoing operation and another medium-scale operation of six months’ duration. As we all know perfectly well, from 2003 to the present date, and particularly in that very intense period from about 2006 to 2009, we were committed to two considerable-sized—I do not use the words “large” or “medium” because the definition does not fit either—operations in Iraq and Afghanistan concurrently, well over and above the planning assumptions that were put in place in the defence review of 1997-98. Therefore, it was inevitable that we were going to have to draw heavily on our Reserve Forces in order just to be able to do what we were going to do. It was not by design; it was by consequence.
Now, in the consequences of the 2010 SDSR, we have decided to reduce significantly—and I speak particularly in terms of the land forces—the size of our Regular Army, and we are going to compensate for that loss of capability by having a large reserve training force. I understand that, and in theory I could see it working, but I have two concerns.
First—I have to choose my words carefully because I do not want to appear more critical than I intend—I challenge the transparency and perhaps honesty of some aspects of that policy. What the Ministry of Defence has done in its very constrained cash situation is effectively to move off balance sheet some of the liability of our land forces and put them back in the Treasury. We will deploy large numbers of these Reserve Forces only in a future considerable-sized operation such as that of Iraq or Afghanistan of the past 10 years. It is when we deploy those large numbers of reservists that they have to be paid for. They are not going to be paid for by the Ministry of Defence because they will come from the contingency fund held by the Treasury. So the Ministry of Defence has solved a large chunk of its problem but has not necessarily solved our national problem. I merely raise question marks about whether we are being completely transparent about its shift in policy.
My second concern, which we have already alluded to today, is to do with the provision of mental health support. We know that reservists when demobilised are in a more difficult situation than regulars when they return from operations—the facts prove that—and therefore we are taking measures to alleviate the potential situation that some of the demobilised reservists will find themselves in. I question the fundamental morality of taking a policy decision that we will use more reservists on difficult deployed operations knowing that it will place them in an adverse mental health position. I wonder whether that is right. I raise those two points as underlying concerns, albeit these amendments, at least in part, speak to them.
My third and final point, which has been mentioned already today by the noble Lord, Lord Astor, is that we know we will have a gap between 2015 and 2017-18, the regulars having been reduced and our not being able, according to current plans, to increase the number of reservists. As recently as 2011 it was still government policy that we would not reduce the Regular Forces until we had built up the reservists. We have changed that policy and so we are accepting risk. That risk could be reduced by slowing down the rundown of the Regular Forces at the moment, but I presume that the Government would say that, looking beyond Afghanistan, from the end of this year onwards they cannot see the prospect of another major operation and so it is a risk worth carrying.
Many noble Lords have mentioned the issue of risk in the past and I simply point to this as another risk that we are taking. We have Armed Forces that are less capable than they were and, certainly in terms of our land forces, they are smaller than they were, and we are willingly taking on additional risk. I raise those three points as concerns about the underlying policy, although I agree that Amendment 18C attends, at least in part, to the mental health issue.
Baroness Garden of Frognal (LD)
My Lords, we, too, welcome the Minister’s Amendment 18. As he said, there was broad support for this when it was debated in the House of Commons. It is therefore appreciated that the Government have brought forward this amendment and accepted the principle of the new clause to be agreed in this House.
Amendment 18F calls for a report within one year of enactment. Its wording is too restrictive to reflect accurately issues as they may arise around viability and cost-effectiveness and we would not wish to support that proposed clause.
Providing an annual report to the Secretary of State, which must also be laid before Parliament, provides reassurance that the position will be kept under review for all three services. We have quite naturally concentrated more on the Army than the Royal Navy and the Royal Air Force, partly because of the numbers involved and partly because the Reserves are integrated already, in a different way, with the Royal Air Force. Obviously within the annual report it will be helpful to identify where there are differences between the three services and to identify examples of best practice which might cross-refer between them.
As the noble Lord, Lord Dannatt, said in his remarks about mental health, there is a general agreement that this is an important issue. We agree with the Minister that this is covered within Amendment 18 and we do not see the need for additional medical detail, particularly in the Bill. There may well be a case for having guidance which sets this out more clearly, but not in the Bill.
It is timely that today sees the publication of the Veterans’ Transition Review of the noble Lord, Lord Ashcroft. Almost certainly within that there will be recommendations which will help to influence the response to or implementation of what is happening to the reserves under this Bill. Will there be a government response to that review? It would be helpful to have a debate on it in the light of the recommendations of the noble Lord, Lord Ashcroft.
In summary, we support Amendment 18, and while seeing value in the proposed two new clauses of the noble Lord, Lord Rosser, we do not see them as essential to the Bill.
Lord Robertson of Port Ellen
I would like to say a few words in relation to some of the more general issues concerned here. I return to the question I asked about SDSR 2015 because it concerns me that we might be going through exactly the same kind of exercise as we did for the SDSR that was done previously in six months. I do not want to draw any comparisons with the one that I supervised in 1998; it lasted a lot longer than it should have. It still managed to do so but it was affected by the circumstances which came after it, as the noble Lord, Lord Dannatt, said. However, it did not become outdated as quickly as the SDSR that the new Government brought in, which quickly came face to face with the reality of Libya after it was put in place. It focused on 2020 but was then faced with the situation in Libya as well.
Importantly, the defence review that we did in 1998 established a consensus. Perhaps for the first time in military history, the review was accepted by all the defence chiefs both in public, as one might have expected, and in private because it represented a view that was consensual. After the new Government came into place, we embarked upon a consultation exercise that made sure that all the stakeholders had an opportunity to express a view. The Ministers, Robin Cook and myself, and the Permanent Secretaries in the Ministry of Defence, the Foreign and Commonwealth Office and the Department for International Development did a roadshow that went round the country, and which also embraced pretty much every stakeholder in the business. When it came out, it was therefore a genuine security and defence review.
The failure of the last SDSR was, essentially, that it was a Treasury-led exercise, done far too quickly and involving far too few elements. I fear that that is precisely what is happening at this stage. I have consulted the Opposition to see whether anybody has bothered to ask them about the initial preparation or any of the discussions taking place at present, and the shadow Defence Secretary assures me that no such approaches have been made. We look as though we are again getting ourselves into the trap of something being prepared at or around the next election campaign, which will essentially be based on a Treasury view about what the country can afford and how the rest of it fits into that.
Lord Davies of Stamford (Lab)
My noble friend is saying some important things but does he agree that if the Government are serious about producing or drafting an SDSR, they ought at an early stage to be consulting not merely with the list of people who he quite rightly set out—the academics, think tanks and other stakeholders in this country—but with our allies, particularly the United States and our EU allies? If they do not consult them, the review that comes out may be inconsistent with the strategic intentions and plans of our key allies. Opportunities for fruitful collaboration or for the division of labour will be lost and it may well be that unfortunate misunderstandings will be sown.
Lord Robertson of Port Ellen
Indeed, my noble friend makes an extremely good point. In many ways, it goes without saying. It may well be that there are some discussions going on with our allies and inside NATO about it. I would hope so, although I am a bit pessimistic about most of these things since it becomes opaque. Part of the dispiriting nature of the way in which the British political system works is that you go from everything to zero quickly, as my noble friend will know only too well from being in government. In government, you know everything and then when you are in opposition you are allowed access to pretty much nothing at all. Therefore, having been Secretary-General of NATO and knowing everything that was going on inside that organisation, it was a grim experience to then dredge the newspapers and the occasional website to try to find out what was actually going on. The point that is being made is that the widest possible consultation is required, so that, at the end of the day, the review is fixed, has traction and makes sense in the light of the international circumstances as well as of domestic public opinion. Without that, it will fall apart, and fall apart quite quickly.
Lord Astor of Hever
My Lords, first, the noble Lord, Lord Robertson, asked in some detail about the next SDSR. I assure him that there is a lot of activity in the Ministry of Defence on this subject. I will write to him about this in some detail. The noble Lord has a great deal of experience and wisdom on this subject, and my door in the Ministry of Defence is always open to him. He has met the Secretary of State in the past and I am happy to facilitate further meetings for the noble Lord to pass on his wisdom at any time.
Secondly, the noble Lord asked me if this is a Treasury-led exercise. We do consult other departments and external shareholders, but we must be aware of the resources available. We have seen the result of not doing so in the past. In support of the Cabinet-led process, the MoD is undertaking a well defined programme of research and activity to understand the future strategic content, examine policy options and test the continued validity of Future Force 2020.
The noble Lord, Lord Davies, asked about our allies. I, as well as other Minsters and senior officials in the MoD, constantly meet our allies. I have absolutely no doubt that they are feeding their requirements and wishes into the SDSR, as they did with the last one and, I am sure, with the one that the noble Lord mentioned earlier.
The noble Lord, Lord Dannatt, was concerned about the reserves. It is not true that we are planning to use more reserves than in the past. As I said, we are trying to build up our niche skill supply of cyber and medics. The reserves will not be less capable; they will be better equipped, trained and paid, with pensions, and be given the same equipment as the regulars. I am trying to organise a day out for noble Lords who are interested in this subject to a reserve unit close to London that is paired with a regular unit. Noble Lords and noble and gallant Lords will be able to talk with the reserves and the regulars over any concerns. However, all the reserve officers and soldiers to whom I have spoken recently are very happy with the equipment that they are getting.
The noble Lord, Lord Rosser, was concerned about veterans once they leave the services. Work is being carried out further to develop our systems to allow for a summary of in-service care to be included with the NHS record when it is sent to a civilian GP. These proposed modifications will ensure that an NHS GP will know that they are dealing with a veteran and automatically give them a copy of the full Defence Medical Services medical history if they decide that they need it.
The noble Lord asked about cost and viability. This is a tier 1 programme that will be subject to the usual scrutiny by Her Majesty’s Treasury on cost. Parliament has the ability to scrutinise the issues and has done so, but this has been a military-led programme that is six months old. We should seek to implement the plan and support the reserves, not seek to unpick this.
The noble Lord, Lord Dannatt, asked whether payment for a large number of reserves was transparent. We have been clear that we are reducing the regulars and investing in the reserves. It is true that large-scale use of the reserves could fall to the Treasury reserve; the noble Lord is correct on that. He asked whether there was a draw-down gap. It is a risk, but a manageable one. We cannot retain the Regular Forces on the scale of today on the existing budget. We have to make the best use of our resources, and the reserves allow us to do that.
Is it morally right to place reserves in greater front- line roles? The reserves have served with distinction— 25,000 have been on recent operations. They themselves certainly want a greater role. We recognise a slight increase in PTSD in the reserves, which is why we have put in place the measures that I outlined earlier.
The noble Lord, Lord Robertson, asked about the veterans’ review by my noble friend Lord Ashcroft, which I understand was announced this morning. Just as I was leaving my office in the Ministry of Defence, I received a copy and have not had a chance to look at it but will write in detail to the noble Lord about it.
Finally, he asked about the role of the reserves and our reliance on them. Reserves will have a range of roles in supporting the regulars in high-intensity conflict, leading low-intensity operations—for instance, Cyprus peacekeeping—and providing capability that we cannot retain in the regulars, including cyber and medical. This is not a like-for-like replacement of regulars with reserves. Also, as the noble Lord will know from his NATO days, the United States relies far more heavily on reserves than we do, yet the US is the most capable of NATO members.
In conclusion, I must resist Amendments 18C and 18F on the basis that what they are intended to achieve is covered by Amendment 18.
Lord Davies of Stamford (Lab)
My Lords, the Minister made a full and comprehensive speech under Amendment 18. It was a very good speech and set off a kind of Second Reading debate, which was quite interesting. I broadly agree with him. As he knows, I utterly deprecate the reduction in our Regular Forces and our equipment capability, which this Government have brought in, but it is even more vital in that light that we make a success of our campaign to recruit more reservists and to train and equip them properly. Nobody on this side of the House in any way disagrees with the Government in that respect or does not want to do everything possible to make sure that that effort is a success.
However, I want to make one comment. There is a lack of clarity and frankness still about how we are planning to deploy our reserves under the new system. I am very glad that the Minister did not say, although I have heard it—and, evidently, from his speech the noble Lord, Lord Dannatt, has also heard—from government Ministers in the past few years that, “We’re reducing the regulars but we’re compensating by increasing the reserves”. That would be utterly irresponsible. There is no doubt at all that in certain areas such as those the Minister mentioned, including medics and signals experts, reservists may well play the majority part in future combat operations. But when it comes to the infantry it is extremely difficult—with the best will in the world and with motivation and discipline and morale being entirely equivalent, which is the most that one can hope for—to train up reservists to exactly the same level of confidence and alertness that the regulars have. It is therefore very difficult to avoid feeling that, if you deploy large numbers of reservists on combat operations, you will not have a higher casualty rate, which would be very irresponsible.
We have successfully deployed on an embedded basis individuals who have been chosen for that in Iraq and Iran, with front-line troops going on patrol and so forth and fighting intensive warfare. The Government need to be clear about this because reservists need to know whether under the new regime they still have a chance of that kind of experience. As I have said to the Minister privately, if they do not you may not succeed in attracting the same calibre of people into the reserves. On the other hand, with the numbers going in both directions—the decline in the regulars and increase in the reserves—it is not going to be possible to deploy large numbers of reservists, because the success of employing them on an embedded basis depends on selecting individuals and making sure that the number of reservists is relatively small in relation to the regulars, who are committed to a particular intensive operation.
I want the Government to be absolutely clear about this. There should be no beating about the bush at all. It is perfectly respectable to say that those with medical and signal skills will not be needed the whole time on a contingency basis in the regular forces but we will need to draw on them—and, in any case, we need those people to be able to exercise their own professional activities and gain skills in the civilian sector when they are not being deployed on operations, so they will be deployed on the front line, as they have been up to now. We have to be absolutely clear about our intentions for reservists, and it is really that they should not be deployed in high-intensity warfare. When the Minister said—slightly vaguely, I thought, avoiding this issue—that they would be in supporting roles, which essentially means that they would be behind the wire rather than outside it. We should be clear about that, but it is probably the right solution in all the circumstances. We need clarity, and we have not had it on that point.
Apart from that, I agreed very much with the Minister’s speech, which I thought was good. This Bill is rightly generous—I do not complain about that—to employers and reservists in the financial incentives and protections that it sets out. However, my reason for speaking on this clause is that I am slightly worried. This is not a vastly or historically momentous point—far from it—and it is not one on which I have put an amendment down, although I suppose I could table one at Report, if needed.
A potential loophole is provided by Clause 47—almost a manhole in our path that some people might fall down. Therefore, I want to raise this whole matter, and I hope that I get some reassurance. The object of Clause 47 is to provide protection for reservists who have been less than two years in employment and who then face the sack wholly or partially because of their membership of the reserve. Beyond two years, they have the protections that everyone has under the Employment Rights Act and a section—I cannot remember the number—of the Reserve Forces Act that makes it clear that people cannot be sacked when they are deployed, at risk of being deployed or about to be deployed.
Lord Astor of Hever
My Lords, I apologise to the noble Lord for the length of my speech on the last clause. It contains important issues and I wanted to cover them in some detail.
Lord Davies of Stamford
My Lords, I must have given the wrong impression. In no sense was I complaining about the length of the Minister’s speech. I thought I had congratulated him on a comprehensive speech, which had started an interesting debate.
Lord Astor of Hever
I apologise. Perhaps I misunderstood when the noble Lord referred to Second Reading speeches. Anyway, I hope that I answered all the important points.
The noble Lord referred to the lack of clarity in deploying the reserves, especially the infantry. The pairing of regulars and reserves on high-intensity combat will include individuals and up to sub-unit level. We are changing the mobilisation limits to 12 months to enable greater pre-deployment training. I mentioned earlier—I am sure the noble Lord will welcome this—that we must get more of the niche skills in the cyber field and in the medics, who we do not need the whole time.
On talking to the reserves—I am sure the noble Lord has also done so—I found that a number of them want to deploy. When the noble Lord was a Defence Minister, I went to Afghanistan on a couple of occasions and I met a number of reserves, who were very well trained. All the regulars to whom I spoke were very impressed by the reserves and how well they trained and fitted into the Regular Army. I do not think that there is any pressure on them being embedded with the regulars, and it is our plan that they train together and use the same equipment. I should like to organise for noble and gallant Lords a visit to a reserve unit paired with a regular unit to talk to the soldiers.
Lord Davies of Stamford
I thank the noble Lord and totally agree about this. The reserves have done a wonderful job. I pay tribute to them. We have all paid tribute to them. I used to go to Afghanistan and Iraq every six months when I was in the MoD, and I saw them on the front line in exactly the way the Minister describes. As he knows, reservists take it as a matter of enormous professional pride—it is a thing they really want—when their regular colleagues forget that they are reservists. That does happen. You hear that from both sides. That is a tremendously high standard to achieve. People go into the Reserve Forces because they are prepared to put themselves through the hell of training up to that level and to risk their lives when they are deployed. That is the military experience they want. If they are going to have that on offer in future, they must be honestly told that. If they are just going to be deployed behind the wire or on UN peace-keeping operations, they need to be told that too.
Lord Astor of Hever
The noble Lord makes a very good point. I will take away the points he made earlier about Clause 47 and write to him on them. The noble Lord, Lord Robertson, mentioned the Ashcroft report. If there is an appetite for it, I am very happy to organise a Peers’ brief on it. Perhaps noble Lords will get back to me on that.
Lord Rosser
“Reserve forces: publication of recruitment figures
The Secretary of State shall publish quarterly recruitment figures and trained strength numbers for reserve forces against adjusted quarterly targets.”
Lord Rosser
I almost feel as if I am once again moving an amendment after the debate on it has already taken place. Amendment 18A provides for the Secretary of State to publish quarterly recruitment figures and trained strength numbers for Reserve Forces against adjusted quarterly targets. I certainly do not wish to speak at any great length on this amendment but, as has already been said, there has been a significant change in approach by the Government to the role of the reserves since the increase in reserve strength was first announced alongside further reductions in the size of our Regular Forces. At that time, the previous Secretary of State made it clear that the reduction in the size of the Regular Forces would take place only as and when the reserves had been increased.
That is not now the Government’s stance, which has changed to saying that the reduction in the size of the Regular Forces and the Army, in particular, is not dependent on first delivering the increase in the size of our Reserve Forces. However, the increase in the size of our Reserve Forces must be for a purpose and, presumably, if we do not achieve the target that has been set within the period set, the capability of our Armed Forces as a whole will be less than it would otherwise have been. If that is not the case, it begs the question of why we are increasing the strength of our reserves.
If we can accept that our Reserve Forces will have an even more important role to play in the future, the question of whether recruitment targets will be achieved is a matter of some importance. Last autumn, there were reports in the press of the Army failing to attract and recruit sufficient Army Reserve personnel, and as a result it was claimed that the Army faced an increased risk to its structure and operational capability. If we are falling behind in recruitment, it may take time to recover lost ground since it is not simply a case of recruiting people. The people recruited have to be trained before they can become fully effective members of the reserves, and that takes time.
We are talking about ensuring the overall effectiveness of our Armed Forces and thus about our nation’s security. Our reserves are not simply something that is nice to have if people can be recruited; they will have an important and enhanced role to play in the future as part of our overall Armed Forces strength. In view of that, it does not seem unreasonable to provide in this Bill for not only the current Secretary of State but future Secretaries of State to publish the figure that will enable us all to know whether the targets for increasing the size of the our reserves are being achieved and thus that the future intended capability of our Armed Forces is being delivered in full. The fact that this information will have to be published may also help concentrate the minds of all those directly concerned in ensuring that targets set prove to be targets achieved. I beg to move.
Lord Astor of Hever
My Lords, reserves have always made an essential contribution to national security and that contribution is set to increase, with exciting opportunities being offered not just for individuals but for formed units. Reserves will be an integrated part of the whole force required for almost all operations, both at home and abroad. To do this, we are growing our reserves to 34,900 across all three services by 2018 and investing an additional £1.8 billion over 10 years. The Army will grow its reserves to a trained strength of 30,000, the Royal Air Force to 1,800 and the Royal Navy to 3,100. This is a challenging target but one that we are committed to achieving.
These requirements are challenging, but the planned overall numbers of trained reservists are well within historic levels. In 1997, the Territorial Army was more than 50,000 strong; it was reduced to around 40,000 by 2000 and, by 2009, it was down to just 26,000. We now have about 19,090 trained reserves. We should not be surprised if growth is neither uniform nor smooth. Given the time that it takes to train reservists, trained strength improvement will lag behind recruitment. Reservists will be an integral and integrated part of the whole force alongside their regular counterparts. The Committee will no doubt be aware that, recognising the interest in the progress of reserves recruitment, the MoD publishes the trained and untrained strength data for the reserves quarterly. The last figures were released on 14 November and the next set of data is due to be released in the next few days. I am sure that noble Lords would agree that, with such a commitment, there is no need to enact legislation.
The Army is undertaking a significant number of surge activities alongside recruit partnering projects to boost reserve recruiting and grow the reserve force. The initial response to the new recruiting campaign is encouraging and a number of new initiatives have been introduced. These include the revised medical process, introduced in January, and the new online application forms introduced this month. Both these new major initiatives will simplify the process and are aimed at improving the candidates’ journey into and through the application process. I must point out that the programme is still in its early stages. The White Paper was published only in July, and it is true there have been some administrative issues in the process. However, we are working with Capita and the senior Army leadership actively to address these issues. I believe that we can work them through. Adjustments have been made to the application process to ensure that we can continue to progress new recruits. Marketing campaigns based on the new White Paper proposition have just got under way; the latest marketing campaign for the reserves started in early January.
Maritime Reserves has stabilised its numbers and is working to ensure the retention of trained personnel already in the reserve and reduce wastage during the training programme by tailoring the training methods to better suit the reservist experience. Although there is a slight reduction in the Royal Auxiliary Air Force’s trained strength, the number in training is the highest since April 2012. The force looks likely to meet its end-of-year target and is seeking authority to allocate extra resources to marketing in order to improve further its recruitment rate. Recruiting activity itself is better co-ordinated across the three services than in the past; this should ensure a much more joined-up approach to recruiting. The new recruiting campaigns are delivered at a regional level, following planning and guidance from a national level. We are working hard to deliver the message through internal communications within other government departments that the reserves are recruiting and to demonstrate that the Civil Service is taking the lead in the public sector.
The additional costs of recruitment associated with growth of the reserves are all factored into the Future Reserves 2020 programme. Should recruitment be slower than planned, some funding earmarked for paying personnel who were not in fact recruited could be switched to increase the recruiting effort.
Lord Rosser
Once again, I thank the Minister for that comprehensive reply and for the information that he has provided on the progress being made with Reserve Forces recruitment. I certainly would like to have a copy of the information to which he referred during his reply.
The only comment I would make is that, while it is good to hear that the figures are being published and that it is the intention to keep providing that information, putting it in the Bill would ensure that that continued to be the case in the future. Sometimes attitudes change, and it is possible that we will find that the information is no longer being provided.
However, I will leave it at that. I thank the Minister once again for his reply and I beg leave to withdraw the amendment.
Lord Rosser
“Treatment of reservists
(1) Section 39 of the Equality Act 2010 (employees and applicants) shall apply to serving and former members of the Reserve Forces as if membership of such forces were a protected characteristic under section 4 (the protected characteristics) of that Act.
(2) Members of the Reserve Forces are required to disclose their membership to potential employers upon application for employment.
(3) The Secretary of State shall within one year of this Act coming into force establish an employer engagement committee to act as an advisory body on the recruitment and retention of members of the reserve forces.
(4) The Secretary of State shall lay before Parliament an annual Report of the Employer Engagement Committee detailing its activities and recommendations for the Government.”
Lord Rosser
Amendment 18B seeks to amend the Equality Act 2010 to prevent discrimination against reservists in employment and in seeking employment by adding membership of the Reserve Forces to the list of protected characteristics under the Act. The potential concerns are fairly obvious and, if they materialised, would constitute a serious impediment to people joining the reserves or remaining in them.
A clause in the Bill refers to the qualifying period of employment for unfair dismissal related to an employee’s membership of a reserve force, so there is obviously recognition that being unfairly penalised or discriminated against for this reason is a real possibility. That discrimination could also take place when being considered for a job, since some prospective employers might take the view that they did not wish to recruit someone purely or largely because they would be away from their job for periods of time to fulfil their commitments as a member of the reserves. Discrimination could also take place against someone in the reserves already working for the company in question, since membership of the reserves and being away from the job for a period as a result might be the sole or major factor in denying them promotion to a higher-level post. The purpose of this amendment is to reduce the likelihood of this happening but it will also give the Government, through the Minister, the opportunity to place on the record how they intend to address the potential problems that I have identified if they feel unable to accept the amendment.
Amendment 18D seeks to support recruitment to and retention in our reserves by ensuring that a reservist is entitled to be permitted by his or her employer to take time off during their working hours in order to undertake training activities connected to the reserve force, subject to the provisions laid down in the amendment, and if that does not happen to be able to present a complaint to an employment tribunal. It will be no help in encouraging recruitment or assisting retention if there are doubts about whether leave for training activities during working hours will be given by the reservist’s employer or, indeed, if it is to be given only grudgingly. Once again, if the Government feel unable to accept this amendment, I hope that the Minister will be able to indicate how they see the concerns I have raised being addressed and satisfactorily resolved from the point of view of the actual or potential member of our future Reserve Forces. I beg to move.
Baroness Garden of Frognal
My Lords, I have considerable sympathy for the spirit of the amendments spoken to by the noble Lord, Lord Rosser. There was a deal of concern expressed at Second Reading over the impact on civilian employment of the additional levels of readiness and the additional time involved in the new recruit programme. Trying to safeguard both sides was discussed then.
I picked up a leaflet at the MoD a few days ago which under “The Employer Proposition” states:
“We will develop an open and predictable relationship by: ensuring that reservists notify employers of their reserve status”,
with a rider that it is “subject to security considerations”. That part of the concerns of the noble Lord, Lord Rosser, is already being dealt with. Another paragraph of the leaflet states:
“We will introduce a new National Relationship Management scheme to establish strategic personnel relationships with major employer organisations, relevant trade bodies and the largest employers”.
It is essential for the success of this scheme that the Government have an ongoing dialogue with employers to make quite sure that their concerns are met, as well as making sure that the rights of reservists in connection with their employment are met. I hope that the Minister will be able to reassure us that the concerns which the noble Lord, Lord Rosser, has raised are already being dealt with and considered, and that safeguards have been put in place by the Government.
Lord Davies of Stamford
My noble friend’s amendment is testimony to what I spoke about earlier—the complete commitment on this side of the Committee to try to ensure that we successfully recruit and train the projected number of reservists. It would be intolerable if people who had signed up to fight for their country were subject in some way to discrimination in the employment and labour markets. Discrimination because of their sex, colour and so on is now regarded as utterly intolerable. My noble friend’s amendment is therefore absolutely appropriate.
I should make one final point. I think that I am right—the Minister will know the details—in saying that similar protections are available to members of the National Guard in the United States. We all know that the National Guard is extremely successful at recruiting and that it has enormous public support, including among employers, so I do not see any difficulty of the kind suggested by the noble Baroness whereby employers might reasonably resent such a provision. We all know that the National Guard in the United States plays a key role in the defence capability of that nation and is regularly deployed on operations. We should be encouraged by the experience of the United States to pursue the line adopted in my noble friend’s amendment.
Lord Astor of Hever
My Lords, we recognise and value the contribution of reservists and need to be sure that their interests are properly protected. Part of this is making sure that their reserve service does not negatively affect their employment prospects. That is why Clause 47 amends the Employment Rights Act 1996 to remove the current two-year qualifying period for claims of unfair dismissal where the reason for dismissal is, or is primarily because, the individual is a reservist.
I should emphasise that protection is already in place to ensure that reservists are not dismissed as a result of any duties or liabilities that they have to undertake, for example as a result of being mobilised. This protection is provided by the Reserve Forces (Safeguard of Employment) Act 1985, Section 1 of which gives a reservist who is called out for reserve service the right to apply to his or her former employer to be reinstated after they return from mobilised service. In addition, Section 17 of the 1985 Act makes it a criminal offence for an employer to dismiss an employee solely or mainly by reason of any duties or liabilities that may arise as a result of being called out.
One key strand of the White Paper was to foster an open and honest relationship with employers. Employers of reservists make a greater contribution to national security than others. We understand and value the commitment that employers make. We have seen from some of the evidence submitted—I am thinking particularly of that from the Confederation of British Industry—that employers are wary of the introduction of discrimination-type legislation, and that such an approach would run counter to the partnership approach that is needed between employers and defence. CBI members were particularly concerned that such an approach could strain working relationships between employers and reservists.
As part of this partnership approach we will: provide employers with greater awareness and predictability of training and mobilisation commitments; streamline the administrative arrangements to receive financial assistance when a reservist is mobilised; introduce additional financial incentive payments to micro, small and medium-sized enterprises; and provide appropriate recognition of the contribution that these employers make by enhancing our existing recognition schemes.
Subsection (1) of the proposed new clause in Amendment 18B would mean that Section 39(4) of the Equality Act 2010 would apply “as if membership” of the Reserve Forces “were a protected characteristic”. Surely, membership either is or is not a protected characteristic. The advice from the Government Equalities Office is that being a reservist would not count as a protected characteristic as defined in the 2010 Act—in other words, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, and sex or sexual orientation.
There have been occasional calls for various characteristics to be given protected status, particularly during the preparations for the Equality Act. These were mostly in relation to some form of physical appearance, ranging from extremes in individuals’ height and weight to the way in which people may choose to dress. However, after full consideration, the list of protected characteristics was set as already outlined. Including reserves as a protected characteristic in the Equality Act would be a disproportionate tool to tackle the problem and could give rise to the same argument being deployed successfully in relation to a number of the physical characteristics that I mentioned. This could have the result of doubling the number of characteristics, which would have an increased on-cost to businesses, public authorities and the courts.
Lord Davies of Stamford
Would the noble Lord be kind enough to address my point about the National Guard in relation to Amendment 18B? We should bear in mind that any employers’ organisation—like any other trade association or representative body—is always likely, when a new idea is put to it, to adopt a defensive, cautious position and focus on the difficulties. Good government surely does not consist of abandoning a good idea at the first hurdle. Has the MoD explored the experience of the National Guard in this context in the United States and, if so, could the Minister let us know the conclusions of that study?
Lord Astor of Hever
The noble Lord makes a very good point about the National Guard, and I apologise if I did not refer to it in my response. This is quite a detailed subject. I will write to the noble Lord and copy my letter to the other noble Lords who have taken part in this debate.
Lord Rosser
I thank the Minister for his comprehensive reply and I thank the noble Baroness, Lady Garden, for her comments. I also thank the Minister for setting out the statutory safeguards, as well as the non-statutory measures that have been, and are being, taken to address the issues that I have raised. If the Government find that working with employers and not going down the statutory route does not work, I hope that they will reflect again on providing legislation to protect the position of employees who are members of the reserves, who could find themselves in a vulnerable position.
Having said that, I appreciate that this is a difficult area. It can be very difficult to prove discrimination against somebody on the basis of membership of the Reserve Forces, particularly if one had to seek to prove that there had been discrimination through, for example, denying someone a promotion or giving them a lower salary increase or some other act of that kind. I also accept that proving discrimination on these grounds could be difficult.
I conclude by thanking the Minister for his comprehensive reply, and I beg leave to withdraw the amendment.
Lord Rosser
“Amendment of Criminal Justice Act 2003: service persons
In section 146 of the Criminal Justice Act 2003 (increase in sentences for aggravation related to disability or sexual orientation, sexual orientation or transgender identity)—(a) in the title of the section, add at the end “or status as a service person”;(b) after subsection (2)(a)(iii) insert “or (iv) the victim being, or being presumed to be, a service person.”;(c) after subsection (2)(b)(iii) insert “or(iv) by hostility towards service people.”; and(d) after subsection (6) insert—“(7) In this section “service person” means member of the reserve forces and any relative of a member of the reserve forces”.”.
Lord Rosser
Amendment 18E seeks to amend the Criminal Justice Act 2003 so that physical or verbal assault upon a member of the Reserve Forces or a member of their family would be classed as an aggravating feature of the crime and should be reflected in the sentence handed down where the prosecution could establish that service in the Reserve Forces was the motive for the assault. We know from surveys of Armed Forces personnel that physical and verbal assaults on them motivated simply by the fact that they are service personnel run at a surprisingly high rate. On a much more severe scale, we have had a recent example of a member of our Armed Forces being murdered on our streets simply because he was a member of our Armed Forces.
Attacks on service personnel, whether physical or verbal, are totally unacceptable, do nothing to assist recruitment and retention, and run contrary to the esteem in which members of our Armed Forces are held by the overwhelming majority of the population, who recognise that they are willing to put their lives on the line in defence of our country’s people and interests. We need to do as much as we can to reduce the incidence of assaults, particularly at a time when we are seeking to recruit substantial additional numbers into our reserves. I say once again that if the Government do not believe that this amendment is the best way to achieve that objective, I hope that the Minister will indicate in his reply whether they regard the issue that I have raised as a real problem and, if so, what courses of action they are taking or intend to take to address it. I beg to move.
Lord Palmer of Childs Hill
My Lords, I hope that the Minister will include in his reply what instances there have been of confusion about what a “service person” should be. I would have thought that under existing legislation “service person” would include all the things that are included in proposed new subsection (7) in the amendment. Has there been any experience that “service person” has not been taken to include the people mentioned here? It seems a rather worthy thing to protect people even more and make sure that they are included in the criminal justice legislation, but I wonder whether there is reason to believe that any of this has been necessary in the past.
Lord Davies of Stamford
My Lords, when in 2007 I chaired the national inquiry into the national recognition of the Armed Forces, this was one of the recommendations that we made. We made 40 recommendations, 38 of which, including Armed Forces Day, automatic parades for units returning from combat missions and so forth, were accepted. Two were not, and this was one of them. The other one was having an officer of the Armed Forces permanently available in the House of Commons, probably in the Library, to inform people about any military matters that they might have questions about. In that report, to which I refer the noble Lord, Lord Palmer, we cited a number of cases of grievous assaults perpetrated on members of the Armed Forces, and I am afraid that the problem has not gone away. Over the past six years or so, there have been other incidents which the Committee will know about. I retain my support for this amendment.
It has one curious feature but I think I know the explanation. It is that the protection seems to be designed merely for members of the Reserve Forces but does not currently exist for members of the Regular Forces. I imagine that it is because including all members of the Armed Forces could have been outside the scope of the Bill. I therefore imagine that my noble friend, with whom I have not discussed this matter, had this in mind as a probing amendment to try to push the way forward to achieve what we really need, which is the kind of legal protection for all members of the Armed Forces—all those who wear the Queen’s uniform—who are prepared to lay down their lives for the rest of us. The least we can do is to make sure that they do not suffer discrimination or, in this case, violence, potentially, when they are in their home country.
Lord Palmer of Childs Hill
My Lords, perhaps I may ask for some elucidation. I accept all the points that the noble Lord has made about his time in the MoD and his knowledge of this subject. Obviously these incidents have happened, but do we need legislation such as this to identify it or were the perpetrators of these actions against the service people he mentioned dealt with by the law at the time?
Lord Davies of Stamford
My Lords, I do not know that I should get into the habit of answering questions across the Floor. I would love to be a Minister again but that has not happened to me so far. I shall have to wait a bit longer. However, I shall of course respond to the noble Lord. There are the normal legal protections against assault from which he and I and every other citizen benefit. Clearly, it is a criminal offence. However, the purpose of this amendment, as I understand my noble friend, is to make it an exacerbating factor if the reason for the assault is that the victim is a member of the Armed Forces. That provides a special protection for those who might otherwise be especially vulnerable to this kind of attack. It is similar to the exacerbating factor that we already have of the motive, or part of the motive, for an assault being racial. We introduced that for a section of the community whose members might be innocent victims of gratuitous attacks which otherwise would not occur. Therefore, there is a complete analogy there and I think it was the analogy which, rightly, inspired my noble friend—if I may be so bold as to presume to answer for him—to conceive this amendment.
Lord Astor of Hever
My Lords, I am sure that I speak for all of us in saying that we hold the same view about discrimination against members of the Armed Forces. It is a completely unacceptable form of behaviour towards the men and women who have committed themselves to defending this country, its people and its way of life, and to making sacrifices that others perhaps sometimes take for granted. Those who discriminate against service personnel, or against the wider Armed Forces community, succeed only in diminishing themselves.
Discrimination can take many forms. Some of it is thoughtless or uninformed—for example, when public services fail to take account of the special circumstances in which Armed Forces personnel find themselves. Some of it is based on myth and prejudice—a view that soldiers create trouble or are unreliable customers is a misperception that we must challenge. However, some discrimination or abuse stems from genuine hostility to members of the Armed Forces, motivated by politics or perhaps by some unfortunate personal experience. It is on that narrow part of the spectrum that this amendment focuses.
The amendment would have the effect of amending Section 146 of the Criminal Justice Act 2003, which lays down circumstances in which the seriousness of a criminal offence, and thus the severity of the resulting sentence, is increased. It provides for increased sentences where an offender demonstrated hostility based on the victim’s sexual orientation, disability or transgender status, or where the offence was motivated by hostility towards persons of a particular sexual orientation, persons who have a disability or persons who are transgender. Section 145 of that Act makes similar provision in respect of “racially or religiously aggravated” offences.
The amendment would provide for increased sentences where an offender demonstrated hostility based on the victim being a,
“member of the reserve forces”,
or indeed,
“any relative of a member of the reserve forces”.
It would also provide for increased sentences where an offence was motivated by hostility towards members of the Reserve Forces.
It is important that we are clear about what the amendment would not do. It would not cover situations such as a refusal to admit members of the Armed Forces to a hotel or bar. Such situations have led to widespread public indignation but they generally do not involve a criminal offence.
The Government’s view is that there is no need for a change in the law on these lines. The courts already have a wide power in sentencing to take into account factors that make conduct more serious. Criminal acts based on irrational hostility to a person because he or she is in the Reserve Forces may lead to a higher sentence in any event. I am not aware of any evidence of courts finding that they have insufficient powers to give an appropriate sentence to an offender in such circumstances, or that we have received representations from the courts asking us to amend the law in this way.
In contrast, converting the flexibility that the courts currently have into a mandatory requirement, as the amendment proposes, may present practical difficulties. For example, demonstrating to a court that the aggravating factor was present and should be taken into consideration could be relatively straightforward in some cases, such as where a victim was in uniform, but far from straightforward in other cases, such as those in which the victim was a relative of a member of the Reserve Forces. How are the courts to deal with a situation where an offence is motivated by excessive rivalry between different sections of the Armed Forces or, perhaps, a domestic dispute? A mandatory requirement for a higher sentence reduces the court’s ability to take a sensible, common-sense approach to what is really going on in the circumstances it is examining.
There is a fundamental difference between offences provoked by hostility to the work of the victim and offences motivated by prejudice against inherent characteristics, such as homophobic crime. Section 146 of the 2003 Act is designed to help to change deep-rooted prejudices. It would be quite wrong to suggest that such provisions were necessary in relation to the Armed Forces. However, the most telling argument against this amendment is the views of the intended beneficiaries. I am not aware of any general desire in the Armed Forces community for legislation of this type. The service men and women who wear their uniforms with pride want to be respected in and considered part of their communities, and rightly so. We should not put them in a position where they are forced to explain why they require protection in law in a way not enjoyed by, for example, firemen or ambulance staff. Indeed, the amendment deals only with members of the Reserve Forces, as the noble Lord pointed out. It would not extend to members of the Regular Forces, meaning that rather than helping create the whole force which we seek the amendment would separate out members of the Reserve Forces for different treatment in law. I am not sure whether they would wish to see that in this context.
None of this means that the Government are complacent about discrimination against service personnel: quite the opposite. The Armed Forces covenant has a high profile across the whole of Whitehall and beyond. The first principle, that members of the Armed Forces community should not suffer disadvantage as a result of that membership, has given rise to many initiatives which are making a real, practical difference. In the first statutory annual report on the Armed Forces covenant, published in December 2012, we described what we were doing to make these principles a reality. We are working to remove the disadvantage that the children of service personnel can face in the schools system as a result of their mobility through the admissions code and the service pupil premium. We are ensuring that service personnel and leavers encounter a level playing field in access to social housing or Government-funded home ownership schemes.
At the same time, we are working to build the links between the Armed Forces community and the wider community to improve the knowledge and understanding that must be at the centre of that relationship. From knowledge flows the esteem for our service men and women that is ultimately the most powerful way to counter discrimination. The community covenant has now been signed in nearly 400 local authority areas, from Cornwall to the north of Scotland, and around 60 companies have signed up to the new corporate covenant, signifying a real determination to strengthen ties with the Armed Forces. I am confident that it will continue to gain further support. The grant scheme linked to the community covenant has allowed us to back a range of schemes that will help to put these declarations into practice. To that, we can now add the £35 million fund created as a result of the LIBOR fines, which will support charities with projects to help the Armed Forces and their families.
This is not an entirely new proposal. Thomas Docherty MP previously raised this issue in a Private Member’s Bill and has another for consideration this year, with its Second Reading having been scheduled for 24 January. The debate was adjourned and is expected to resume on 28 February. The previous Government, in response to a similar recommendation in the 2008 report from the then Member for Grantham and Stamford, now the noble Lord, Lord Davies of Stamford, said,
“we do not think that a change in the law is necessary or appropriate.”
As a result of the Armed Forces Act 2011, we have a new vehicle at our disposal in the form of an annual report to Parliament—effectively a report on the state of the Armed Forces covenant. In February of last year, my right honourable friend, the member for Rayleigh and Wickford, the Minister of State for the Armed Forces, indicated that the question of discrimination would be a legitimate issue for the next report at the end of 2013. The report, published on 16 December 2013, said:
“Our view is that, in the last year or so, the extent of public knowledge and sympathy for the Armed Forces has continued to grow—aided by the Community Covenant and the new Corporate Covenant. We therefore continue to believe that education, rather than legislation, is the key to eradicating the kind of behaviour that we all abhor”.
In answer to the question from my noble friend Lord Palmer about what instances there have been of service personnel not taken to include those in the amendment, we recognise a service person as a regular or reserve member of the Armed Forces. Proposed subsection (7) in the amendment seems to be drafted to enable debate in this Committee otherwise it would be out of scope, as it was judged to be in the House of Commons. The noble Lord, Lord Davies, asked about legal protection. Legal protection for all Armed Forces personnel would be out of scope of this Bill.
I hope that I have answered all the noble Lord’s concerns and I urge him to withdraw his amendment.
Lord Rosser
I thank my noble friend Lord Davies for his contribution and support and also the noble Lord, Lord Palmer of Childs Hill for his contribution. The Minister has once again done us the courtesy of giving us a very full and comprehensive response to the amendment, setting out the Government’s position. I am slightly disappointed with the reply, although I do not want to suggest that I had imagined the Minister would say that the Government would accept the amendment.
The Minister made reference to ambulance staff not having this kind of protection. That may be true in England and Wales, but I do not think that it is true in Scotland, where I believe it is offered to members of the emergency services. If I am proved wrong in saying that, I shall of course apologise. However, I think there is a wider scope in Scotland which goes beyond the police. In England and Wales, that kind of protection is there in respect of the police but does not extend beyond that.
I would like to reflect on what the Minister has said before deciding whether to pursue this at a further stage and in discussions on the Bill. In the meantime, I thank him again for his comprehensive reply, which I appreciate, and I beg leave to withdraw the amendment.
House of Lords
(10 years, 9 months ago)
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Legal Aid
(10 years, 9 months ago)
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The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, the Government consider that the exceptional funding scheme is working effectively. We are monitoring its operation and will continue to do so.
Lord Bach (Lab)
My Lords, I thank the Minister for his Answer as far as it goes. Parliament and the public were told time after time to believe that Section 10 would act as a safety net for those cases where it was manifestly unfair that the citizen should not have access to civil legal aid. However, the application forms are impossible for a non-lawyer to complete and a lawyer will not get paid a penny if the claim for legal aid is unsuccessful. Even worse is the fact that only in 3% of claims has legal aid ever been granted. The noble Lord was a member of the JCHR which, along with the Low Commission and many others, has recently criticised the working of this provision. Now that he is a distinguished member of Her Majesty’s Government, will he act to make this vital provision fit for purpose?
Lord Faulks
The provisions contained in Section 10 of the LASPO Act make it perfectly clear that it is there for exceptional cases where, in the absence of legal aid, there would be a violation of Article 6 of the European Convention on Human Rights or possibly of the provisions of the European Union. It is not about whether a case may be deserving; it has to fall specifically within the confines of the section. As to the application form, it was consulted on regularly and in detail before it became part of the process. I am surprised that solicitors are having difficulty in filling it in. It is possible for someone to fill in the form on their own and they can then have a preliminary view given to them by the Legal Aid Agency as to the prospects of success. It is true that the number of applications has been much lower than expected and it is also true that very few have been granted, but we are satisfied that the system is working in accordance with the section.
Lord Thomas of Gresford (LD)
My Lords, before the Bill was introduced, the Government said that they were expecting 5,000 to 7,000 applications a year. In fact, in the first year there were 893, of which only 23 were granted, which represents 1%. Is it not nonsense to suggest that this provision is a safety net for those who seek justice?
Lord Faulks
I can update the noble Lord by saying that in fact the total number of applications received is now 1,030, and the number granted is 31. I agree that it is a small percentage. It was difficult for the Government to predict exactly how many applications would be received. In fact, in some areas, including the area in which I practised, that of clinical negligence, there have been virtually none when it was expected that there would be very many. Trying to anticipate what might or might not be considered to be a violation of Article 6 has confounded many courts, not only in this country but also in Strasbourg.
Lord Woolf (CB)
My Lords, perhaps what the Minister has just said indicates that I may have been right when I differed as a judge from my distinguished predecessor, Lord Bingham. He took a narrow view of the word “exceptional” while I took a very broad view of it. I regard it as a word which should be used to ensure justice in all cases where justice is required. Does the noble Lord agree with my approach?
Lord Faulks
The answer to the noble and learned Lord is that it depends very much on the context in which “exceptional” is used. The context in which it is used in this particular section is by specific reference to the European Convention on Human Rights.
Lord Beecham (Lab)
My Lords, in answer to a recent Written Question from me, the Minister said that there had been 1,130 applications, of which 35 were granted, not the figures that he has given today. Be that as it may, what was the Government’s estimate of the number of successful applications and what did they anticipate would be the proportion of successful applications? Given that it has taken 14 months to reach a decision to grant legal aid in an important inquest case in which counsel appeared four times without any certainty of being paid, will the Government publish details of the times taken to determine applications?
Lord Faulks
In answer to the second part of the noble Lord’s question, the Government will be happy to publish the times taken. Indeed, I think that the noble Lord will be pleasantly surprised at how quickly these applications are being processed. In answer to the first part of his question, it was expected that some 3,700 would be funded each year. As I said in answer to an earlier question, it is somewhat mysterious as to why so few have qualified. Each case is considered separately by the Legal Aid Agency in accordance with guidelines given by the Lord Chancellor. All those doing this work are experienced and all of them follow the guidelines.
Lord Pannick (CB)
My Lords, the noble Lord said that Section 10 is working effectively. Will he give further consideration to the recommendation of the Low commission, chaired by the noble Lord, Lord Low of Dalston, that the application process for Section 10 is much in need of simplification? Will the Government act on the concern expressed by the Joint Committee on Human Rights about the lack of training for Legal Aid Agency employees who are responsible for making decisions about Section 10?
Lord Faulks
The Government are aware of the JCHR’s concern about the lack of training. I have been reassured that the employees are appropriately trained and aware of their responsibilities. In terms of the forms, I give the same answer that I gave before, which is that the matter is kept under review. It is believed that the forms are perfectly within the capabilities of solicitors to understand. If one of these forms is inadequately filled in, you are told, whereas with some forms in other contexts you never know which box you failed to tick.
Lord Phillips of Sudbury (LD)
My Lords, can the Minister say whether any research has been done into the number of cases of citizens who would wish to make applications but are unable to find anybody to help them in making those applications?
Lord Faulks
I think it is approximately 61. I will have to write to my noble friend with the precise number who actually made applications. Very often they are given a preliminary view, which they can then take to a solicitor, who will then be able, if he has been given some encouraging words, to take the matter forward.
Baroness McIntosh of Hudnall (Lab)
My Lords, will the noble Lord reassure the House, in view of the very small number of applicants who have been successful, that the Government have no plans to withdraw the funding before people have figured out how to fill in the forms?
Economy: Growth
(10 years, 9 months ago)
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Lord Spicer
To ask Her Majesty’s Government what are their latest projections for the economic growth of (1) the British, and (2) the Scottish, economy in 2014.
Lord Newby (LD)
My Lords, the Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts for the UK economy. The OBR published a full analysis of the prospects for economic growth, employment and inflation in its forecast at the Autumn Statement. The OBR forecast for the UK is that the UK economy will grow by 2.4% in 2014. The OBR does not make separate forecasts for the countries that make up the UK.
Lord Spicer (Con)
Does my noble friend agree that there is a great difference between the two economies, and that this provides one reason why the Governor of the Bank of England was so right when he said that it would be virtually impossible for an independent Scotland to keep the pound? Indeed, is it not the case that if Scotland does fly the nest, it will not take many eggs with it?
Lord Newby
My Lords, there is increasing evidence from the business community that it believes that its involvement in the Scottish economy would be reduced were Scotland to become independent; for example, in recent weeks, Bob Dudley from BP has said that there would be “big uncertainties” about its continuing investment in Scotland. He is just one of a number of representatives of major firms who have questioned their long-term involvement in the Scottish economy if Scotland became independent.
Lord McFall of Alcluith (Lab)
My Lords, the SNP White Paper said that,
“Scottish taxes will fit our distinctive social context”.
That seems curious and inexplicable, but does the Minister agree that in terms of the social context the single market between Scotland and England is crucial, since more than 70% of Scottish exports go to England and any disruption of that market will result in instability and will not be in the interests of either Scotland or the rest of the United Kingdom?
Lord Newby
My Lords, I absolutely agree with the noble Lord. The Treasury has done some work on the so-called border effect: what happens to growth if the Scottish economy and those of the rest of the UK are separated by a border. Its best estimate was that over a period of several decades, the Scottish economy could be about 4% poorer than would otherwise be the case, compared to a reduction in the rest of the UK economy of 0.2%. There are much bigger risks for the Scottish economy through independence than there are for the rest of the UK, but both sides would suffer.
Baroness Wheatcroft (Con)
My Lords, can my noble friend tell us what would happen to the BBC in the event of Scottish independence?
Lord Newby
My Lords, I am not sure I can, but that demonstrates how difficult it will be to manage the independence process. There are so many parts of what we take for granted in the way that we do things in the UK that would have to be severed; for example, one has only to think about the value of having an integrated BBC to see that if it were severed, how much of a loss that would be to everybody, whether they were in Scotland or the rest of the UK.
Lord West of Spithead (Lab)
My Lords, it is quite clear that the defence of our islands will be considerably weakened if the Scots vote for separation. Does the Minister also agree that there will be a huge economic impact from defence firms inevitably moving south of the border because there will be almost no orders for defence equipment in Scotland?
Lord Newby
My Lords, that just seems one of the many inevitable consequences were independence to take place.
Lord Razzall (LD)
My Lords, going back to the Scottish banking system, does my noble friend believe that Alex Salmond is behind the suggestion that RBS would relocate to England in the event of independence, as had the last taxpayer bailout occurred in an independent Scotland it would clearly have bankrupted the Scottish economy?
Lord Newby
My Lords, the noble Lord may be right. An independent Scotland would have banking assets equivalent to 1,254% of Scottish GDP—more than Ireland, Iceland and Cyprus when they ran into banking difficulties.
Lord Foulkes of Cumnock (Lab)
My Lords, does the Minister recall that Alex Salmond used to be an economist with the RBS? Does that not say everything? Will the Minister confirm that economic growth in Scotland in the third quarter of 2013 was much the same as economic growth in the United Kingdom, which shows that devolution is working, that Scotland is getting the best of both worlds and that we are in fact, to coin a phrase, better together?
Lord Newby
My Lords, I agree. For example, it is very interesting, looking at what has been happening to unemployment not just over the past few months but over the past couple of decades, that in the 1990s unemployment in Scotland was slightly higher than it was here. In recent years, and particularly in the past few quarters, it has been slightly lower. It shows that Scotland, while moving broadly in line with the UK, can do better than the rest of the UK, as it has done in a number of respects. It is quite difficult to see how it could replicate that pattern if it were independent.
Lord Kilclooney (CB)
My Lords, Scotland, like Northern Ireland and Wales, receives an annual block grant. Can the Minister confirm that the block grant to Scotland is now £30 billion per year, and that should Scotland become independent, the people of Scotland would lose that £30 billion?
Lord Newby
My Lords, it is not quite as straightforward as that. There are, for example, great arguments about the division of oil revenues. This has to be set against the block grant that Scotland gets. When looking at the economic consequences of independence, you have to look a long time in the future, not just a year or two. Independence is not for Christmas—it is a long-term business. The question for everyone in Scotland is not whether we are going to be better off in six months or a year or five years, but where we are going to be 10, 20 or 50 years down the line, because once you have done this, you cannot reverse it.
Food and Soft Drink Industry: Sugar
(10 years, 9 months ago)
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Baroness Morgan of Ely
To ask Her Majesty’s Government what representations they have made to the food and drink industry about reducing levels of sugar in processed products in the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, through the public health responsibility deal calorie reduction pledge, food and soft drink companies are taking a range of actions to reduce calories, including sugar, in their products. Currently 38 businesses are signed up to the pledge. We are working across the industry to encourage further sign-up.
Baroness Morgan of Ely (Lab)
My Lords, five out of eight members of the carbohydrate working group on nutrition which advises the Government have direct links to the food and drink industry. Does that explain why it has taken five years for this group to report? Can the Minister explain why we do not simply follow the position of the World Health Organisation, which is expected to report that people’s energy from added sugar should be reduced from the current recommended level of 10% to 5%?
Earl Howe
My Lords, the reason that we meet the food industry is to ask it to do more than it is doing at the moment. If that is what the noble Baroness means by the Government’s links to the food industry, then I make no apology for them. Our current emphasis is on overall calorie reduction, of which sugar can form a part. The scope for reformulation to reduce sugar levels varies widely depending on the food, and a reduction in sugar levels does not always mean that the overall calorie content is reduced. The Scientific Advisory Committee on Nutrition is currently undertaking a review of carbohydrates, as part of which it is looking at sugar. Its report will inform our future thinking.
Baroness Brinton (LD)
It is shocking that a 375-gram portion of Sharwood’s sweet and sour chicken with rice contains six teaspoons of sugar. Some of our supermarkets, notably Waitrose, are working with their suppliers to reduce the amount of sugar in processed food, but many are not. What steps are the Government taking to ensure that all supermarkets and suppliers follow those setting a good example and reduce the amount of sugar, as well as clearly labelling sugar, in their processed foods?
Earl Howe
My noble friend raises a series of important issues. I can tell her some encouraging news on this front. Sainsbury’s and Tesco, for example, have pledged to reduce the sugar content in their own-brand soft drinks. We are asking other supermarkets to follow suit. I think that the noble Baroness will be aware that Lidl made an encouraging gesture the other day in pledging not to display sweets at till exits. However, we are working across a range of areas, not just reformulation of food but pack size, introducing low-sugar or no-sugar alternatives, and looking at ways in which food is promoted.
Lord Brooke of Alverthorpe (Lab)
Will the Minister please explain why in his first Answer he referred only to the food and soft drinks industry? Why did he not refer to the alcoholic drinks industry? Is it not true that, in the 130 meetings which the Government have had with the drinks industry since 2010, no progress whatever has been made on persuading it voluntarily to show calorific effects and sugar content on the labels of its products?
Earl Howe
No, my Lords, that is not so. Ninety-two producers and retailers committed through the responsibility deal to having 80% of bottles and cans on sale in the UK displaying unit and health information and a pregnancy warning by the end of 2013. The three elements that industry has committed to display on labels are: the drink’s unit content, the Government’s guidelines for lower-risk drinking, and pregnancy warnings. I argue with the noble Lord that this is progress.
The Lord Bishop of St Albans
My Lords, while I support the need to reduce the level of sugar in processed food wherever possible, I am concerned that this alone will do little to improve the nation’s health or deal with the problem of obesity. What progress are the Department for Education and the Department of Health making on reducing the number of calories in meals served in schools, and what progress is being made on increasing the level of physical activities for the pupils in our schools?
Earl Howe
My Lords, tackling obesity calls for action by the widest possible range of partners, including the food industry but also including schools. That is what we are trying to do through the responsibility deal. Our National Child Measurement Programme, the School Food Plan, the School Games and the money that we are putting into school sports funding—£150 million a year—all contribute to the joint effort across government to influence the way in which calories are consumed by children. I have encouraging news on that front, which is that the level of child obesity is now the lowest that it has been since 1998, so we are moving in the right direction.
Lord Ribeiro (Con)
My Lords, I congratulate the noble Earl on leading on the successful amendment in this House which led to the vote going through the other place yesterday on smoking in cars. Can he further protect children by tackling the issues around obesity? What are the Government doing to encourage the soft drinks industry to take action on calorie reduction as part of the responsibility deal?
Earl Howe
My Lords, I think that the compliment should be paid to my noble friend Lord Ribeiro for the part that he played in bringing about the amendment on smoking in cars. A number of soft drinks companies have taken action to reduce calorie content in their drinks. Coca-Cola has reformulated its Sprite product. AG Barr pledged to reduce the average calorific content in its portfolio of drinks. I have mentioned Sainsbury’s and Tesco’s actions on their own brands. Premier Foods has reformulated various products and reduced sugar in those. Therefore, we are making headway and I think that the responsibility deal is proving its worth.
Lord Patel (CB)
Does the Minister think it might be advisable to ask the Government’s Scientific Advisory Committee on Nutrition to define a standard of added sugar that should not be exceeded in 100 millilitres of fluid or 100 grams of food?
Sudan
(10 years, 9 months ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government what is their assessment of the humanitarian situation in Darfur and other parts of the Republic of Sudan following the decision of the Government of Sudan to suspend the work of the International Committee of the Red Cross.
Baroness Northover (LD)
Around 3.5 million people in Darfur are in need of humanitarian assistance, including around 380,000 people who were displaced in 2013. The suspension of the ICRC’s work therefore comes at a critical time, as it supports more than a million people. We are seriously concerned about the impact of this decision on them.
Lord Alton of Liverpool (CB)
My Lords, I thank the noble Baroness for that reply. Will she confirm that in the 10 years that have elapsed since I described to your Lordships’ House the conditions in the refugee camps in Darfur, some 2 million people have been displaced and between 200,000 and 300,000 people have died there? Some 57 peacekeepers and UNAMID personnel have been murdered, with no consequences for those responsible, while humanitarian agencies are expelled and aerial bombardment continues unabated, both in Darfur and in Kordofan. Why, while these serial violations occur, do we use British resources to pay off Sudan’s debts? Why, as we approach the fifth anniversary of the indictment for crimes against humanity of Field Marshal Omar al-Bashir, the President of Sudan, can he travel abroad with impunity and continue to control vast personal and commercial interests while openly boasting that 2014 will be the year that he will finish off what he began in Darfur 10 years ago?
Baroness Northover
My Lords, I pay tribute to the noble Lord for the spotlight that he has focused on the situation in Sudan. He is right about the dire situation of many of the people there. We have no doubt about the serious shortcomings of the Khartoum Government. The UK Government’s primary and only concern is the welfare of the Sudanese people. Our engagement and support is driven by what will make a difference to them. We cannot walk away and we work at every level to try to secure the kind of humanitarian access that is required, as illustrated by what the noble Lord said. We are not paying off the debt of the Sudanese Government.
Baroness Kinnock of Holyhead (Lab)
My Lords, President al-Bashir has been indicted by the ICC for multiple charges of crimes against humanity and genocide in Darfur, yet this cruel and vicious man is free to enjoy power and wealth while his regime’s oppression, corruption and aerial bombardments continue. Will the Minister give the House a clear undertaking that the UK will not follow the lead of the Netherlands and support calls being made for debt relief for a regime that does not care about the poverty and misery inflicted on Sudanese people?
Baroness Northover
We emphasise all the time that the Government of Sudan are responsible for meeting the needs of their own people. My right honourable friend the Minister for Africa raised a number of key issues relating to the areas the noble Baroness is talking about with the Government of Sudan and key regional figures in a visit last month and at the recent AU summit.
Lord Avebury (LD)
My Lords, will my noble friend acknowledge that the Government of Sudan, led by an alleged war criminal, as has been said, has embarked on the genocidal starvation of the population of South Kordofan and Blue Nile by denying all humanitarian access to these states, and by the systematic destruction from the air of their agriculture? Could fresh charges be laid against al-Bashir at the International Criminal Court in respect of these crimes? Will the Government think of convening an international conference on the means of deterring the bombings, including the use of drones against aircraft used for that purpose?
Baroness Northover
As indicated by the previous question, the Government of Sudan have a clear obligation to co-operate with the International Criminal Court in terms of Security Council Resolution 1593 and have repeatedly failed to do so. We continue to make clear to the Government of Sudan that we expect compliance with the arrest warrants for the ICC indictees. The noble Lord mentioned further challenges and a possible new Security Council resolution. I must tell him that we think it is unlikely that that will be achievable at the moment, but obviously we take very seriously the reports that are coming through to us.
Lord Anderson of Swansea (Lab)
My Lords, will the Government refuse to be part—directly or indirectly —of any debt relief operation?
Baroness Northover
We are not negotiating any debt relief with the Government of Sudan. As the noble Lord probably knows, that has to be achieved through the Heavily Indebted Poor Countries process.
Lord Elton (Con)
My Lords, will my noble friend tell us why it is unlikely that a second resolution could be achieved, what we are doing to change that situation and what other means there are to bring this terrible man to justice?
Baroness Northover
My Lords, if we could deliver what is already there, that would be a signal achievement, and we are doing our best to achieve that. The noble Lord will be aware that the aim to ensure that the dire situation of those in Sudan is addressed means that often one has to negotiate at every level of government to try to ensure that Sudan does not hold its people to ransom as we try to get humanitarian aid in.
Baroness Masham of Ilton (CB)
My Lords, have other aid organisations also been banned? It is most extraordinary that the Red Cross has been banned as it is a non-religious, non-political organisation.
Baroness Northover
We are hoping that the ICRC will be able to deliver the humanitarian relief that it was delivering before. Negotiations are at a delicate stage. A number of other international organisations are working with enormous difficulty in the area, some with greater reach than others. Some are still there, but a number have had to pull back.
Reading Clerk
(10 years, 9 months ago)
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The Lord Speaker (Baroness D’Souza)
My Lords, following the announcement of the retirement of the Reading Clerk, Rhodri Walters, at the end of this month, I chaired a board yesterday to select his successor. Three candidates were interviewed, and the successful candidate was Simon Burton. At the appropriate time, I shall invite the House to approve his appointment, but I am sure that, meanwhile, your Lordships will wish to join me in congratulating Simon on his new appointment.
Business of the House
(10 years, 9 months ago)
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Lord Hill of Oareford
That the Question for Short Debate in the name of Lord Mawson, set down for Wednesday 12 February, be advanced to after that in the name of Baroness Jones of Moulsecoomb.
Refreshment
(10 years, 9 months ago)
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The Chairman of Committees
That Lord Fink be appointed a member of the Select Committee in place of Lord Howard of Rising, resigned.
Pensions Bill
(10 years, 9 months ago)
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Lord Bates
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 5, Schedules 1 and 2, Clauses 6 and 7, Schedules 3 and 4, Clauses 8 and 9, Schedule 5, Clauses 10 and 11, Schedule 6, Clause 12, Schedule 7, Clause 13, Schedules 8 and 9, Clause 14, Schedule 10, Clause 15, Schedule 11, Clauses 16 to 23, Schedule 12, Clause 24, Schedules 13 and 14, Clause 25, Schedule 15, Clauses 26 to 31, Schedule 16, Clauses 32 and 33, Schedule 17, Clauses 34 to 43, Schedule 18, Clauses 44 and 45, Schedule 19, Clauses 46 to 49, Schedule 20, Clauses 50 to 56.
Consumer Credit Act 1974 (Green Deal) (Amendment) Order 2014
(10 years, 9 months ago)
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Baroness Verma
That the draft order laid before the House on 9 January be approved.
Relevant document: 18th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 February.
Localism Act 2011 (Consequential Amendments) Order 2014
(10 years, 9 months ago)
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Baroness Stowell of Beeston
That the draft order laid before the House on 7 January be approved.
Relevant document: 17th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 February.
Water Bill
(10 years, 9 months ago)
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Lord Whitty
“Onshore oil or gas activities: effect on water environment
In Part 1 of Schedule 5 to the Environmental Permitting (England and Wales) Regulations 2010 there shall be inserted after paragraph 13—“Onshore oil or gas activities—effect on water environment13A (1) Without prejudice to the operation of Regulation 35(2) and paragraph 5(1)(d) of Schedule 10 and of Regulation 35(2) and paragraph 7(j) of Schedule 20, the regulator shall refuse an application for the grant or variation of an environmental permit or for the transfer in whole or in part of an environmental permit if—
(a) the regulated facility to which the application for or transfer of the environmental permit relates is to be carried on as part of an onshore oil or gas activity; and(b) the regulator is not satisfied that the applicant or the proposed transferee has made or will make adequate financial provision for preventing or mitigating pollution of the water environment, by ensuring all of the following—(i) operation of the regulated facility in accordance with the environmental permit;(ii) compliance with any enforcement notice or suspension notice or prohibition notice or mining waste facility closure notice or landfill closure notice which may be served on the applicant or transferee by the regulator under these Regulations;(iii) compliance with any order of the High Court which may be obtained against the applicant or transferee under Regulation 42 for the purpose of securing compliance with any of the notices listed in sub-paragraph (ii);(iv) compliance with any order of any court issued under Regulation 44 against the applicant or transferee; and(v) recovery by the regulator of its costs upon any exercise of its power against the applicant or transferee under Regulation 57;(c) for the purpose of this paragraph “onshore oil or gas activity” means any activity for the purpose of exploration for or extraction of onshore oil and gas;(d) for the purpose of this paragraph “adequate provision by way of financial security” means financial provision which is sufficient in value, secure and available when required.”.”
Lord Whitty (Lab)
My Lords, before we get on to this afternoon’s main business of flood insurance, I have down one amendment, relating to environmental regulation, which concerns the effect that fracking will have on the water supply system. This has been a major concern in another place for a number of Members of Parliament, who have local problems about the impact that any major expansion of fracking might have on watercourses and water supplies.
I do not intend, this afternoon, to open up the whole debate on the importance or otherwise of fracking, what its effects might be and whether we could repeat, in the UK and Europe, the experience of the United States. For what it is worth, I doubt that it will be transformational, but it will be important and will produce some significant gas and oil in this country. That will need to be tightly regulated by the Environment Agency, the HSE and local planning systems. In particular, water supplies and watercourses will need to be protected and, if anything goes wrong, fracking companies will have to be seen to be clearly liable.
On the relationship between fracking and water supplies, there are three main issues. First, there could be pollutants released, potentially, into water systems and aquifers by the fracking process—that is, the chemicals contained in the fluids that are used in the hydraulic fracturing process. There are also naturally occurring contaminants which could be released from the shale itself, including naturally occurring radioactive contaminants. There could also be fugitive emissions released into ground-water, particularly of methane. All of those could have serious effects on water quality, ecology, habitats and water supply. To a greater or lesser extent, all have been experienced in the United States, although on a limited basis.
Secondly, if the fracking industry develops on any scale, for the purposes of shale extraction fracking will also require major abstraction of water from the system. As we have already stressed in previous days in Committee, the urgency of reform of the abstraction system needs to take into account the impact of mass fracking on abstraction levels and hence on already stressed catchments. This is linked to amendments we discussed the other day. For example, if fracking companies take up the headroom in existing licences in particular catchments, then a lot of catchments could be in serious trouble, if they are not already.
Thirdly, there is the requirement for the cleaning and treatment of the water that has been used in fracking, which will need to be decontaminated.
Amendment 154 really focuses on the first of these effects, and to some extent the third, but all three are important for the water system and need to be taken into account. It is vital that we protect ground and surface water. For example, in the south of England, 70% of the water supply depends on healthy aquifers. This includes drinking water as well as water for industrial and agricultural use. Frankly, the American experience, though variable, is not completely reassuring. In another place, my colleague Joan Walley quoted an example from Pennsylvania, where methane was found in 82% of drinking water samples. We need to be reasonably confident that our regulators, the Environment Agency and the Drinking Water Inspectorate, will operate a much more effective regulatory regime here in the UK than has been operated in certain parts of the United States. Even so, and with a fairly high degree of confidence in our regulators, disasters—or at least leakages—may well happen.
We have a history of earlier energy sources to instruct us: the legacy of coal mining and, in a somewhat different vein, the earlier phases of the nuclear industry. Not only can pollution occur, we have seen the inability of the organisations that produced the pollution to finance the decontamination and the clear-up, which have required very substantial sums. We all support the “polluter pays” principle in theory, but we also have to ensure that the polluter can pay. In both coal and nuclear, it has in effect fallen to the taxpayer to pay for the clear-up over the past few decades, and that is still going on.
Lord Oxburgh (CB)
My Lords, I have a question for the Minister in this general area. Does he feel that this proposed regulatory environment would cover cases in which fracking companies pipe sea-water on to land and then either dispose of it on land or, indeed, discharge it back into the sea? If it does not, it should.
I have a brief comment on what the noble Lord, Lord Whitty, said. To be fair, almost any ground-water or well-water that is drawn in regions that are underlain by coal measures—and this is predominantly the case in Pennsylvania—have some methane in those waters.
Lord Winston (Lab)
Before the noble Lord sits down, does he have any information as to whether sea-water pumped back into the sea after fracking might be hazardous to the environment in the sea-water?
Lord Oxburgh
My Lords, I think that it depends almost exclusively on how that water has been treated by the company that has used it.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, as the noble Lord, Lord Whitty, has explained, Amendment 154 would require onshore oil and gas operators to provide financial security when applying for an environmental permit so that funds would be available to deal with any water pollution incident caused by the operator. The amendment would impact on both the conventional and unconventional oil and gas sectors. It would address any pollution that they caused to the water environment but not any other damage that might be caused by their activities.
We want a successful industry in this country—an aspiration supported at Second Reading—to provide us with an important source of gas for our future, but it is vitally important that it is safe. We already have a well established UK conventional onshore oil and gas industry that has happily coexisted with local communities, in some cases for half a century or more. This has been achieved not least because the industry has maintained a good record of environmental responsibility and competence. The existing controls and the application of good operational practice have served us well to prevent pollution from onshore oil and gas activities and to tackle in an appropriate way any problems that emerge.
The Department of Energy and Climate Change assesses as a matter of course whether a company has sufficient funding for its planned operations prior to awarding any licence. It also checks at the drilling stage and, where relevant, at the production stage that the company has appropriate insurance. Similar financial competence checks are also carried out by the Environment Agency as part of the permitting process. In the event of serious damage to surface or ground-water, the Environment Agency and Natural Resources Wales have powers, under the Environmental Damage (Prevention and Remediation) Regulations 2009 and the equivalent Welsh regulations, to serve a notice requiring that the polluter pays to clear up the pollution. If a significant environmental risk becomes apparent, the Environment Agency has the authority to stop the activity. These powers apply to a wide range of operations and activities undertaken by different industries. I do not think that it would be appropriate to create any specific provisions for the oil and gas industry.
However, the Government are aware that there are widely felt concerns about the capacity of companies exploring for shale gas to tackle any liabilities that might arise. This is the concern that the noble Lord, Lord Whitty, is pointing to. Therefore, I am pleased to inform your Lordships that the Department of Energy and Climate Change and the shale gas industry are working to put in place a robust scheme that would cover liabilities even if the relevant operator is no longer in business. They are also in discussion with leading insurers about proposals to build expertise and capacity in the insurance market to facilitate the development of products specifically appropriate for unconventional operations, which in turn could facilitate the development of an industry-wide scheme. In addition, while we already have a robust regulatory framework in place, I can confirm that it will be reviewed and refined as appropriate as we move towards the production phase. The question of the noble Lord, Lord Oxburgh, will be addressed in that process. This regulatory review will include the question of environmental liabilities in the wider sense, not solely relating to water.
I am sure that noble Lords will agree that these two initiatives, taken together, constitute a sensible approach towards ensuring that liabilities are covered in a comprehensive and proportionate way, rather than taking what might be a rigid legislative approach on a piecemeal basis. I hope that this news provides the reassurance that the noble Lord, Lord Whitty, needs that the Government are taking the right steps to ensure that liabilities are dealt with appropriately, and that he will feel able to withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister for that. It is a degree of reassurance. I thank the noble Lord, Lord Oxburgh, for expanding the area of concern into the issues of the effect that bringing sea-water on land for use may have on watercourses and the possibility of contamination of the sea-water itself.
There is the potential for such a widespread effect on the water system that I feel justified in bringing this amendment before the House. I am pleased to hear the Minister say that the industry, the insurers and the Government are looking at a scheme. This obviously recognises the very widespread concern in the country about the possible impact of fracking which, he is right to say, is wider than the issue of the effect on the water supply system.
I am still slightly concerned that we might get into a situation where, if the industry develops to the degree that many of its advocates suggest is possible, we end up with a substantial problem—a problem that could end up on the taypayer’s desk or bank account. In the nuclear industry we have provided for such a possibility for current operations, although obviously there is a huge legacy that has not been provided for and a huge bill for the taxpayer as a result. We have done the same on a much lesser scale in relation to landfill. We could probably also establish a regime in relation to fracking to ensure that this liability was covered. However, the Minister has indicated that there is some progress. I will watch this space, as I am sure will others. At this time, I beg leave to withdraw the amendment.
Baroness Parminter
Baroness Parminter (LD)
My Lords, in the face of the desperate flooding challenges that many in our country are now facing and look set to face in the future, I strongly welcome the proposals for Flood Re, which we are now coming on to debate and which will provide affordable flood cover for all households. My Amendments 154A, 154B, 156A and 156B give Flood Re, which will be a private company in receipt of public money, a duty to act in the public interest and extend its remit to help deliver a more resilient future in the face of flooding, working with other bodies to achieve that where appropriate.
The Flood Re scheme will benefit householders at risk of flooding. However, if flood risk management is not significantly improved over the lifetime of the scheme, we will be in no better a place after 25 years than we are now. The adaptation sub-committee of the Committee on Climate Change—and I am glad to see the noble Lord, Lord Krebs, in his place today—in its policy note to the Government last month makes it clear that significant increased investment in flood-risk management is required, as well as in flood defences, if the levels of risk are to be maintained, let alone reduced.
Flood Re could raise awareness of flood risk, direct policy holders to advice and support and, crucially, if sufficient reserves are generated, it could support measures that individuals or groups can take to reduce flood risk. Surplus funds could, for example, pay for property-level measures, such as flood gates and air brick covers, which typically cost £5,000 per property. Government grants of between £2,000 and £4,500 are available, so Flood Re could, for example, meet the difference. It would be a sound investment, given that every £1 invested in property-level protection typically achieves a benefit of £5 or more; or it could contribute towards the cost of Environment Agency schemes that do not justify full government grants under the partnership funding approach. Funding from Flood Re could make the difference between a flood defence scheme going ahead or not, which would be worthwhile if it were to protect some of Flood Re’s highest-risk customers.
To determine what Flood Re could do, it is critical to know how any surplus funds will be defined and what will happen to them. The evidence of a Defra stakeholder presentation on Flood Re, in a slide entitled “Flood Re’s exposure to claims”, gives a median-loss scenario of £65 million in claims per year. That means that it could have at least £100 million in reserves at the end of the first year. Defra’s final impact assessment for Flood Re, in table 5 on page 20, states that, over the life of the scheme, it should on average make an annual surplus of £27 million. This calculation is based on Flood Re’s expected loss scenario which takes account of the low-probability/high-cost flooding that could take place during the 25 years for which the scheme is operational.
Either way, Flood Re is likely to hold significant sums of public money that could be used to help manage down flood risk. This would help save everyone money: high-risk households, other policyholders and Flood Re itself. This could be achieved without the main £180 million levy needing to be increased because it could just be pursued if Flood Re were in surplus. Over the 25-year lifetime, this would make a material difference to the number of homes at significant risk while helping those households secure affordable flood insurance on an ongoing basis once Flood Re is withdrawn. It is therefore important to know how the Government expect any surplus to be defined, in order that it might support such an approach. I look forward to hearing more from the Minister on that in his response.
We need legislation that expresses how Flood Re can help to deliver social objectives without claiming that Flood Re can or should solve all flood risk management issues. I hope that I have made clear what I am seeking for Flood Re to achieve, and the wording of these amendments is an attempt to do just that. I beg to move.
Lord Shipley (LD)
My Lords, I support my noble friend Lady Parminter and strongly welcome the Government’s proposals on the Flood Re scheme. Getting insurance in high-risk areas is of fundamental importance to the individuals affected; the outcome of the negotiations and planning that have gone into the scheme is very important. All those who have taken part in that should, in my view, be congratulated.
However—I refer here specifically to Amendments 154A and 154B—Flood Re cannot be just about reinsurance: it also has to be about reducing flood risk over time by getting householders who have been flooded and claimed on their insurance and householders who are at high risk to invest in better flood protection. As my noble friend Lady Parminter said, in 25 years’ time we should not be in a position where we have not made any progress in flood protection and end up simply repeating the process. Therefore, Flood Re should not be seen simply as a financial transaction providing a means of reinsuring properties at risk, or deemed to be at risk. We have to go a step further and provide incentives for people to engage proactively in flood risk management. There are clear benefits in this for the insurance industry: better protection will lead to lower total claims. Householders will gain greater security from flooding.
Amendments 156A and 156B—which are intended to be probing amendments—are about the duty of the Flood Re scheme administrator to co-operate with all those bodies that have an existing duty to co-operate under the 2010 Act. It is very important to put this point in the Bill because, as I said, the scheme should not be seen to have just a financial role: it has to be about resilience as well. The introduction of the FR scheme administrator means that strategic interventions can be undertaken. For example, each household in a given high-risk area might be with a different insurance company, so developing strategic solutions involving the insurance industry, which has not so far been possible, now could be. Examples are in data sharing: competition rules have meant that it is not possible to get access to insurance claims data to identify trends in the scale and frequency of flooding. Having this data available through the scheme administrator, alongside public information held by the public agencies and the water companies, could be crucial in making investment decisions to reduce flood risk and, of course, future claims. The FR scheme gives us an opportunity to enable this information to be made available for high-risk areas and we need to make sure it happens as part of this Bill.
My noble friend Lady Parminter referred to the Committee on Climate Change—and we might hear more about that shortly—but the estimate that there could be up to 190,000 homes that could have their flood risks reduced through measures to protect them is a very important factor. Flood Re could be charged with taking a more proactive approach to encouraging and supporting those people in high-risk areas to protect themselves better. As my noble friend Lady Parminter has made clear, there could be systems of loans and investments as well to assist householders.
There is a danger in the proposals in the Bill that people in high-risk areas will simply be satisfied with having secured reinsurance. They might not fully understand the benefits of actually undertaking flood prevention work. They may simply end up accepting the reinsurance at the price they have to pay. There is a further factor that not everybody, even in a high-band property, is cash rich. It could be that, for some, the flood protection works that they would have to undertake would be too costly.
The benefits to the insurance industry of all four of these amendments are clear. It should reduce the level of claims it receives, and therefore the cost of that. There is a major gain for individual householders in that they will be encouraged—and able—to secure greater investment in flood prevention works to their properties. Therefore, I hope that the Minister understands, when he comes to reply, that these four probing amendments are all very positive in their approach in that they build on the excellent work that the Government have done with the insurance industry. However, let us work out ways in which we could do a little more to encourage flood prevention to be undertaken, and that greater resilience, as part of the Flood Re scheme.
Lord Campbell-Savours (Lab)
My Lords, I, too, am very interested in this amendment, which has been drawn to the attention of people who live in my former constituency, in particular in the town of Keswick, which noble Lords may recall was the victim of substantial flooding a few years back.
I received a letter from Mrs Lynne Jones, the chair of Keswick Flood Action Group, one of the bodies that was established following the floods some years ago. I will read her letter to the House, because it comes from the front of the battle against flooding, from people on the ground who have to deal with this every day. She writes:
“My particular concern has always been that there is no encouragement or independent advice to reinstate properties in a more flood-resistant, resilient manner after a flood. It can be considered as betterment. Insurance companies have to reinstate properties with insulation which satisfies government legislation, whether there was insulation before or not. However, there is no requirement to consider solid waterproof floors as opposed to floorboards or a rewire from the first floor down, or the many other measures which can make flood recovery that bit less stressful, prolonged and expensive should the worst happen”.
In other words, people on the front line in this battle against flooding are now considering to what extent this scheme can be adapted in a way that incentivises investment not just in the solution of the immediate problem but in remedial measures which can affect claims in the future.
Lord Krebs (CB)
My Lords, I support the amendment in the name of the noble Baroness, Lady Parminter. As will be apparent, the amendments that I will bring forward shortly are in the same vein. They reflect the points I made in a letter to the Secretary of State on 22 November 2013, in which I said:
“The Flood Re scheme offers the opportunity to strengthen incentives for the uptake of household flood protection measures but it is currently not designed to do this. The consequence is that Flood Re costs will be higher than they need to be, at the expense of householders funding the programme through the industry levy”.
I declare an interest as the chairman of the adaptation sub-committee of the Committee on Climate Change.
As this discussion has made clear, there is a real opportunity here and this is a helpful and supportive proposal. I will shortly describe my amendment, which would redesign Flood Re to help it, as has been said, to do two things: to provide cover for householders at risk and, at the same time, help to reduce those risks over the years ahead, so that when Flood Re comes to an end householders do not drop off a cliff after 25 years.
Earl Cathcart (Con)
My Lords, I am very nervous about these amendments, probing as they are. Flood Re has one aim: to provide flood insurance for those people who cannot buy it at the moment. The first year or two will be very difficult until it has built up its reserves, provided that there are not too many claims in those early years. However, I am very nervous about the suggestion that Flood Re ought to spend money on flood-resilient activities. What happens in 10 years’ time if we have another horrendous year of rain—floods all over the place—and these households go to Flood Re and say, “I’ve now got a claim, will you pay it?”. What happens if Flood Re replies, “I’m so sorry, I have paid it all out on building a dam here and there”? I do not think it is the right answer to get Flood Re to pay money out other than for genuine flood claims.
The Earl of Lytton (CB)
My Lords, I have a great interest in this group of amendments. I certainly understand the geometry that lies behind it, particularly that outlined by the noble Lord, Lord Campbell-Savours. I probably follow the noble Earl, Lord Cathcart, in this. As I understand it, Flood Re will have significant start-up costs. Also, the Environment Agency’s investigation and collation of information from the hazard risk assessments, which it is charged with carrying out, will be a draw-down on the Flood Re fund. That means that, in the early years, there may be significant sums taken out of the pot. I understand that the intention is that the Government should put in plan B configurations to deal with that eventuality. However, given the sporadic and capricious nature of severe flooding, we do not have any time to waste in putting measures together to improve resilience and protect properties where they can be protected.
I have a technical interest in this: I am a practising chartered surveyor and property valuer. I am also involved in the parish and town council sector, as is well known. I can see the rationale behind an early start for communities and individual property owners coming together to create robust schemes. We need to do that as soon as the present flood waters have died down, as I hope they will. Time is of the essence, because we do not know when the next flood will come. There is a conundrum between the build up of the pot of Flood Re on the one hand and spending funds on resilience and protection on the other. In a later group of amendments, I will say a bit more about Flood Re, which is intended to cover a very limited and narrow range of circumstances. I will explain why I think a larger problem of an entirely different magnitude is lurking here.
We need to make a start. On the basis that the economy is improving, this is exactly the time when these investments need to be made. I will be very interested to hear what the Minister has to say about the pot, how it will be funded and how we get the early years’ work put in place. Like the noble Earl, Lord Cathcart, I obviously would not want to see the pot devoted to one large project to the exclusion of all others. I am sure that would not be the case. If we do not get this right, the credibility of FR is likely to falter. I think that is something on which the Minister can elaborate.
Lord Crickhowell (Con)
My Lords, one of the great advantages of modern technology is that you can discover something you did not know anything about while a debate is taking place. As this debate started, I chose to look at a Defra website on obtaining flood insurance in high-risk areas. At the top of the main page, a number of participants are indicated: BIBA, the Environment Agency, Which?, ABI, the National Flood Forum and Defra. Flood Re does not appear there yet. Can the Minister say how far the department has already gone down the road that is suggested here? This website, which contains a great deal of other valuable information on the steps you could, and should, be taking, already exists. Presumably, at some point Flood Re will be fitted into the whole arrangement. My only anxiety about the Flood Re participation is that indicated by my noble friend—namely, that against the present background, I only hope that there is a surplus in the early years because the fact is that we could have a situation whereby, far from having a surplus in the early years, we have a substantial loss. However, as there is a website and as a good deal of advice is being given by the department—I think it is rather good advice—perhaps my noble friend will indicate what the department’s overall approach is and how he sees Flood Re fitting into what is already going on.
Lord Whitty
My Lords, in her opening remarks, the noble Baroness was correct to set this matter in the broader context of where we are now, and have been in recent years, with instances of serious flooding in Somerset this week, possible serious flooding in Surrey by the end of the day, that which occurred in Keswick not long ago; and the resources that are needed to ameliorate that position in the long term which are, essentially, the resources that the Government are putting in. We will no doubt return to that issue at some stage in these proceedings. However it raises the question of whose responsibility this is. I have slight reservations about these amendments in that regard. The public authorities and the Government have responsibility for ensuring that adequate resources are available for flood defence and catchment management to mitigate the impact of flooding and insurance and reinsurance schemes can help through their normal operations. However, insurers can insist on mitigation or flood recovery measures along the lines mentioned by my noble friend Lord Campbell-Savours as a condition of renewal or extension of policy cover or as a deduction, if you like, from compensation. That is a normal insurance operation.
These amendments seem to be saying that Flood Re would take on some public responsibilities and social objectives and have executive responsibility for delivering flood limitation measures. It is important and right that Flood Re should co-operate with the public authorities, landowners and everybody else in this area, so in that sense I support Amendment 156B. However, it is also important that we do not transfer the risk from public authorities and property owners to an insurance system which, at the end of the day, is viable only if it takes a cut from all policyholders, including those whose properties are not at all at risk of flooding.
This is a difficult issue. The noble Baroness referred to public money. In one sense public money is involved because we are legislating for the system and the Treasury will, therefore, regard the expenditure involved as public money, but it is not really public money—it is the policyholders’ money. At the end of the day, you cannot place too many responsibilities on the Flood Re operation when it is dependent on individual households and businesses paying into it for insurance purposes.
It may well be that a surplus is generated and that the assessment of who pays for flood defence is looked at more broadly. Clearly, there are limitations on public expenditure and expenditure on better flood defence and catchment management could be met by those who are the most direct beneficiaries of it. You could argue that insurance companies themselves benefit from fewer claims as a result of more effective flood defence, but that is a slightly wider argument than placing the statutory responsibilities for which these amendments ask on to Flood Re itself. I think that that is slightly going round the back door.
As I say, I am slightly torn on this issue because I agree with a lot of what the noble Baroness and the noble Lord, Lord Shipley, said. However, I think that we would probably place too much responsibility on Flood Re if we adopted all these amendments.
Lord De Mauley
My Lords, I am grateful to my noble friend Lady Parminter for her amendments regarding flood resilience and Flood Re’s role in that matter, and to all noble Lords who have spoken. Regarding Amendments 154A and 154B, I agree with my noble friend Lord Shipley that we need to tackle the root cause of the difficulties with the availability and affordability of flood insurance—the flood risk that households face. The coverage of the tragic events of the past couple of months, which my noble friend Lady Parminter mentioned, have brought the full impact of this home to us all. I thought that the letter read out by the noble Lord, Lord Campbell-Savours, set out the problem very well.
Households benefiting from Flood Re need to understand both their flood risk and the likely impact of the withdrawal, over time, of the subsidy on their future premiums. I hope that noble Lords will be reassured to hear that we have agreed with the Association of British Insurers the principle that insurers will be required to provide such information to customers when a property is ceded to Flood Re and at the point of a claim. I hope that the statutory requirement for the Flood Re scheme to manage, over the period of the operation of the scheme, the transition to risk-reflective pricing of flood insurance for household premises also offers some reassurance.
The ABI has now come forward with draft proposals for ensuring that the correct incentives are in place to drive uptake of resilient repairs after a flood, particularly for those properties subject to repeat flooding. We are still agreeing the detail of this approach and I hope to have more to say on Report. Encouraging households to become more resilient over the period of the scheme will help to reduce the impacts of subsequent flooding.
Turning to Amendment 156A, the subsection that my noble friends seek to amend has been drafted in such a way to provide firm pointers as to what the Flood Re scheme administrator would need to have regard but is also intended to allow for a degree of flexibility that may be needed as the scheme is finalised. I assure noble Lords, in the strongest terms, that the Government are absolutely committed to taking forward Flood Re, together with the insurance industry, and that both parties are working very hard to achieve this.
We expect the administrator to act responsibly in its management of the scheme throughout its life and we have every intention of ensuring that it discharges its functions in a proper manner, supported by the duties we will place in secondary legislation. The regulations made under Clause 54 will be subject to public consultation and we are currently considering carefully the Delegated Powers Committee’s recommendation that regulations made under this clause should be subject to the affirmative procedure. I trust that this assurance puts on the record our intentions in this regard.
As regards Amendment 156B, my noble friends are right that co-operation between Flood Re and flood risk management authorities will be important, in particular should Flood Re wish in the future to commit any of its resources to supporting flood risk mitigation measures. Clause 54 provides for Flood Re to share information held by it with the Environment Agency, its equivalents in devolved Administrations and any other bodies specified in regulations. It also provides for Flood Re to have a duty to act in the public interest, so where it is in the public interest for Flood Re to co-operate with other risk management authorities, it would be expected to do so.
Under the Flood and Water Management Act 2010, flood risk management authorities have a duty to co-operate with each other in the exercise of their flood and coastal erosion risk management functions. This is because the causes of flooding can cross organisational boundaries and responsibilities. For example, flood risk management schemes to protect one area may make the problem worse elsewhere if there is not a partnership approach to developing solutions. Flood Re will not have an operational role in designing or implementing flood risk management schemes. As I think the noble Lord, Lord Whitty, suggested, that would be beyond the scope of Flood Re and would require different skill sets. Flood Re will therefore not have the same degree of interaction with the risk management authorities that they will have with each other. I am not convinced that there is a need to extend the requirements based upon the Flood Re body.
Perhaps I may say to my noble friend Lord Cathcart that while directly managing flood risk is not the purpose of Flood Re, it is nevertheless vital that Flood Re does not just deliver affordable flood insurance. It should also contain the right incentives for householders and insurers to put in place the necessary measures to become more resilient, since otherwise the effective price limits in Flood Re may remove some of the financial incentive to take such action. He has suggested—the noble Earl, Lord Lytton, also asked about this—that Flood Re will need to build up its reserves, which is of course right, but it will have access to the proceeds of the levy and be able itself to take out reinsurance. Can I offer to meet noble Lords before Report, on which occasion I shall of course be happy to provide an update? Perhaps I could also address the point made by my noble friend Lord Crickhowell at this stage. I shall come back on Report to noble Lords with more details of how those who flood repeatedly might be treated. For the reasons I have outlined, I hope that I can persuade my noble friend to withdraw her amendment.
Baroness Parminter
I thank the Minister for that helpful response and I thank Members around the Committee who have contributed to this debate. It has helped to spell out in more detail what we are all hoping to achieve for Flood Re. We do not expect it to be able to answer all the social objectives in terms of flood risk management, but we should accept that it is not just a flood insurance vehicle, important and critical though that is. It will also need to provide the necessary incentives to transition to a stronger place in the future. The wording of the amendment may not be ideal, but at least it has facilitated this debate. I hope that noble Lords are not disappointed in my having brought it forward in that light.
I thank the Minister for agreeing to meet noble Lords between now and Report. That will be helpful because there are still questions about the surplus and how it will be defined. The comments made by my noble friend Lord Cathcart and others remind me that we are not guaranteed surpluses with Flood Re; this is only what we are saying if those surpluses are achieved. I am happy to learn that the Minister intends to say more on this issue at the next stage. On that basis, I beg leave to withdraw the amendment.
Lord Moynihan
“( ) Within 12 months of this Act coming into force, the Secretary of State must publish and lay before both Houses of Parliament a report on the ability of businesses in areas of high flood risk to secure affordable insurance cover.”
Lord Moynihan (Con)
My Lords, I shall start by echoing the view that Flood Re is a welcome scheme, and I congratulate the Minister, his colleagues and the industry on introducing it. The scheme is to be supported in principle, but the devil may be in the detail. Other amendments grouped with mine allow the Committee to consider those who will be excluded from Flood Re, their ability to get insurance, and the costs of such insurance. Mine is a probing amendment but, that said, it is important in that it focuses on the significant absence of much-needed support to SMEs in the proposed Flood Re scheme.
Under the current provisions, small businesses of up to 49 employees are covered under the statement of principles. The Bill before the Committee proposes a new scheme, Flood Re, which is substantially built on the statement of principles. However, Flood Re provisions extend only to domestic properties and offer no protection at all to any businesses except a category called “micro-businesses” at risk of flooding. This is a really important distinction between SMEs and micro-businesses. My noble friend the Minister may be able to clear up exactly what that distinction is when he comes to sum up.
Lord Sheikh (Con)
My Lords, at Second Reading I welcomed the Bill but outlined some concerns. I am extremely grateful to my noble friend the Minister both for the remarks he made during that debate and for the correspondence I have received since then. Indeed, he was able to alleviate a number of my concerns. However, there is one area where I still have a slight concern, which relates to the effect this legislation will have on small businesses.
At Second Reading I said that since small businesses will be ineligible for Flood Re, they will therefore be afforded less protection than in the statement of principles by which they are covered. In his correspondence to me, my noble friend the Minister said that it was the belief of the Government that there was not sufficient evidence to justify intervention in relation to small businesses. However, I believe that more should be done to protect our valued SMEs, many of which operate under tight budgets and may be unable to obtain affordable flood insurance. My noble friend the Minister has also said that it was his belief that SMEs were more able to protect themselves from flooding. Again, I point to the issue of cost here. Just as many SMEs struggle with the cost of insurance, they also struggle to afford to put in place measures to protect their businesses and livelihoods.
I welcome the Minister’s remarks that this issue will remain under review but I feel that this does not go far enough. If nothing further can be done to assist SMEs as part of the Bill, the amendment tabled by my noble friend Lord Moynihan could at least assist them in the future. In fact, it would benefit both the Government and SMEs because of the extra clarity it would bring. It would provide a mechanism to formally review the ability of businesses to take action to reduce flood risk and access flood insurance.
The conciliatory manner in which this Bill has progressed is most welcome and I would welcome anything further the Minister has to say on this issue. Again, I support the Bill and would like it to succeed, but suitable measures must be put in place in order that everybody gets the benefit of what we propose to do.
Lord Campbell-Savours
My Lords, I will speak to Amendment 160, in the name of my noble friends Lord Whitty and Lord Grantchester. I intend to speak on a number of amendments so I must declare an interest. I have a leasehold interest, with my wife, in a band G home on the Thames built on the flood plain. My flat is not threatened by flooding. My home has therefore never been evacuated and I have never made an insurance claim on a property I own. Nevertheless, I feel that I have an interest to declare while speaking on an issue that affects tens of thousands of home owners who similarly live in the vicinity of the Thames, many of whom are now being evacuated.
I start by congratulating the Government on introducing this scheme, which I understand was the subject of some very difficult negotiations with the insurance industry. I want to refer to a particular group of home owners, of which I am not one, who come under council tax band H. Council tax band H is pretty expensive property, as we know, and the flooding over the past few days has probably affected thousands of these properties up and down the River Thames between Chertsey and just south of Maidenhead, near Windsor. These home owners will be very worried about what is going to happen. They are excluded from this scheme. Not only do they have the problem of how to resolve their immediate difficulty of dealing with the flooding and the consequences for their homes, but they will also be worried about the longer term financial implications, in the event that their premiums are substantially increased—which they will be. I know that from my own experience in the Lake District, which I mentioned during my previous intervention. For most of my life, I lived there in the town of Keswick, which was subject to flooding. Many people there found it impossible to get insurance from insurance companies following the floods that took place some years ago.
There is going to be a real problem for these people. Many in the Thames Valley are not included in this scheme because their properties fall into band H. It is not that the Government need to interfere with this scheme. I understand its merits and it has been very sensitively negotiated. We very much support it. However, heads have got to be banged together to find a way of resolving the problem of many of these people who live in band H property.
People may ask what I am doing defending people living in band H properties from the Labour Benches. The reason is simple: many people who live in band H properties did not buy them as band H properties. They bought them when they were much cheaper, and when their incomes may well have been quite modest. Property price inflation in London and in the south of England has placed many people in this position. Even the way that the mansion tax is being construed may affect people who have quite small incomes. I am in favour of the mansion tax, but maybe the way that it is to be calibrated raises the same questions. People on low incomes who find themselves living in expensive properties—I am not one of them, as I said—have to be considered in these matters. I hope that the Government, even as late as this in the Bill, might on Third Reading at least make some statement as to what provision might be made for them, notwithstanding what the Bill provides on Flood Re.
The Earl of Lytton
My Lords, it is probably appropriate that I follow the noble Lord, Lord Campbell-Savours. I have to admit that I live in a band H property, but it is not in London and I am glad to say that it is built on a hill. My Amendments 160ZA and 161D are in this group. I shall be brief, because there is another larger issue that I want to address.
I tabled Amendment 160ZA to see whether I could flush out the rationale behind the exclusion of certain categories of property from FR, but also because there seemed to be a reluctance to consider both sides of the coin in terms of what is in and what is out of the safety net. What is in identifies and underlines what is out. It cannot be otherwise. The fact of exclusion does not mean that other insurers will not provide some cover, but it does, as the noble Lord, Lord Campbell-Savours, said, have consequences. I have certainly received correspondence suggesting some very significant rises in free market premiums based not so much on the immediate severe risk but on that broader category of material risk that will be flagged up and will lie between those that have no risk whatsoever and those that are protected by the FR safety net. It is in the public interest that any scheme report under Amendment 160 should look beyond the narrow scope of FR inclusions and also look at wider exclusions.
Baroness Parminter (LD)
My Lords, I put my name to my noble friend Lord Moynihan’s amendment and I shall speak briefly in support of it.
The Government’s impact assessment on managing the future financial risk of flooding states that there is insufficient evidence of a problem for businesses to get insurance and that there are other market mechanisms for them to get cover. However, the impact assessment focuses on the national impact, whereas flooding affects localities, so it is perhaps no surprise that it did not find that much evidence.
Further, the Government’s position is driven by their recent consultation on the issue, which asked for evidence of a need for a mechanism for small businesses and received a few responses from small businesses, which may well have had other priorities. The ABI has given the Government assurances that the broker community is doing,
“a good job working directly with business customers in getting a good deal for them”.
I contend that it is the Government’s job to insist that there be firm evidence of that, which is what the amendment is intended to deliver.
There are few studies of the impact of flooding incidents in general on business, apart from some by AXA, and they focus on the impact on individual businesses rather than the broader economic resilience of communities in the face of flooding. I could not find any research which looks at the significant impact of flooding on small businesses, which often make up the backbone of the rural economy. It is here that flooding has a huge impact not just on individual families and their businesses but on the complex web of supply and demand chains in the local economy. Ensuring adequate flood cover for small businesses, including farm businesses, is as important as supporting households if we are to protect the overall community resilience of rural areas.
As my noble friend Lord Moynihan said, small businesses were covered by the statement of principles and they were able to get flood risk insurance in the same way as households. Given that Flood Re does not guarantee them that insurance, we certainly need reassurance from the Government that they are mindful of the need for cover for businesses, particularly small businesses, and of their important role in rural communities.
Lord Ashton of Hyde (Con)
My Lords, I should declare an interest that I declared on Second Reading, which is that, until June, I was the chief executive of two insurance companies, and I still labour under some residual contract limitations.
There is an overriding need to put in place a workable solution that will, first, solve the most pressing need, which is to address the availability and cost of flood insurance and, secondly, do so in a way that is timely, affordable to the insurance industry, secured in co-operation with it and that does not allow government subsidy to create a huge deficit in the scheme over time.
Addressing the issue of small businesses raised by the amendment of the noble Lord, Lord Moynihan, we ought to remind ourselves that the statement of principles only covers the availability, not the affordability, of insurance for those small businesses. It covers only renewal policies, so the policyholder at risk of flooding cannot change insurer, and it does not cover the cost of the policy.
There is also the question of practicality. The introduction of businesses into Flood Re would dramatically complicate the pricing of the scheme, the availability of Flood Re as crucial reinsurance—on which the scheme depends—and, by no means least, the complexity of the internal model, which will have to be approved by the PRA. All the different coverage afforded by business policies, such as business interruption, contingent business interruption and loss of profits, will make the internal model much more complicated compared to what are fairly homogenous homeowners’ policies.
To address the most pressing need as soon as possible in a way that is acceptable to as many people as possible, we should concentrate on the most important issues and leave the Flood Re design as it is.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I speak to Amendments 161B and 161C in this group. Although welcoming the introduction of Flood Re and accepting that it is essentially a scheme for domestic premises, I remain concerned about the exclusion of small businesses, especially in very rural areas. I refer specifically to those which are mixed hereditaments. The key question appears to be: what happens to mixed hereditaments in terms of qualifying for inclusion in Flood Re?
There are two scenarios for mixed hereditaments. The first is where the business element is deemed by the valuation to be de minimis. This means it forms such a small part of the overall hereditament that it appears only in a domestic list for council tax. The second is where the business element is more significant, and is therefore liable to both council tax and business rates. If the property does not appear in the waiting list for business rates as well as for council tax, the liable party may qualify for business rate relief. This could be small business rate relief, where it is their only business premises.
I understand that, currently, if the rateable value is less than £6,000 the relief received would be 100%. Rateable values between £6,000 and £12,000 receive relief on a sliding scale. This enhanced small business rate relief scheme has been extended until 31 March 2015, and not beyond that at the moment. The standard scheme allows a relief of 50%. In a rural settlement it might be the case that a village shop or post office is part of a mixed hereditament. In this case it would qualify for rural rate relief. Also, in a rural settlement, a pub with living accommodation above could qualify for rural rate relief on the pub element.
I am extremely concerned about excluding mixed hereditaments from access to Flood Re. This could have a dramatic impact, not just on the business owner but on those residents who use the business. If that business cannot get flood insurance it may remain unviable and may be forced to close prematurely if flooded. Where, for example, this is the last shop or post office in the village this could have a significant impact on the villagers.
Earl Cathcart (Con)
My Lords, I congratulate my noble friends Lord Moynihan and Lady Parminter on tabling Amendment 155, as it has given us a good chance to debate flood insurance for businesses, whether in Flood Re or in another mutual set up specifically. We are all under pressure to include small businesses under the Flood Re scheme. That is quite understandable. If I had a business in a flood risk area, I would want to insure it under the Flood Re scheme. I know that the Association of British Insurers and the Government looked at whether businesses could be included within the Flood Re scheme, but found that it threw up more problems than it solved. This is best illustrated with an example.
I am a free range egg producer on my farm in Norfolk, and when it came to buying insurance for the business, I was presented with a long shopping list of types of cover relevant to my business: property; business interruption; loss of profits; contractors “all risks”; terrorism and malicious attack; livestock, including theft, worrying, death after straying, accidental or malicious death; deterioration of stock, in my case probably due to bad feed or electrical failure; perils and fatal injury; livestock in transit; disease, in my case probably something like bird flu or salmonella; goods in transit; motor, for lorries, trucks, vans or cars; employers’ liability; public liability; product liability or environmental liability; legal and professional expenses.
The list goes on, but I hope that gives your Lordships a flavour of the range of commercial insurance on offer. I, of course, had to cherry pick the cover that was most relevant to me. For instance, I did not buy livestock or goods in transit cover, because this is the responsibility of third parties with whom I have a contract. Also, I have no vehicles in that business, so motor insurance was not an issue. However, salmonella is an issue for my business, but because the insurance is so costly I chose not buy it. I hope that I got that one right. I have to choose not only the type of cover that I think is appropriate to my business but how much cover to buy for each category, the cost and the level of excess necessary to reduce that cost. The excess across my shopping list varies from £100 to £20,000.
Although there are hundreds of egg producers up and down the country with identical businesses to mine, I very much doubt that there is another that has commercial insurance exactly the same as mine. They will all be different, and that is the problem: all businesses, whether a corner shop, a pub, a guest house, a property investment company, a hotel or guest house, a manufacturing company or an engineering firm, will buy commercial insurance to suit their particular circumstances. The whole point of a mutual, whether Flood Re or one geared specifically to small businesses, is that the conditions are common to all. The price, the excess, the cover and the conditions must be standardised. This can be done for homeowner insurance—it is pretty bog-standard—but sadly, as I have tried to illustrate, not for commercial insurance. You just cannot standardise it. If it were standardised, virtually all commercial members of that mutual would end up with a policy that did not give them the cover that they wanted.
It would be good if everything could be included in Flood Re, whether owner-occupied houses, rented homes or small businesses, but the line must be drawn somewhere. It has been agreed that those with homeowner insurance, buildings and contents, will be included and that commercial insurance will not be. If I had a property in a flood-risk zone that was deemed to have commercial insurance with it and was therefore excluded from the mutual, I would ask my broker to split my insurance cover into two separate policies: one for the bog-standard homeowner cover, buildings and contents, to ensure inclusion within the Flood Re scheme, and the other to include all elements that made my cover commercial, such as owner’s liability or public liability cover. That might be a way forward for many of those finding themselves excluded from the Flood Re scheme because of the commercial element of their policy.
Flood Re will help up to 500,000 homeowners who cannot currently buy flood cover, but I am sure that with a little bit of inventiveness, many, although I am afraid not all, small businesses, including buy-to-let and leasehold properties, can buy their insurance in such a way as to be included in the scheme.
Lord Whitty
My Lords, my noble friend and I have two amendments in this rather complicated group. The group as a whole is beginning to get us into the area of who should be in and who is out of Flood Re, and we have some groups of amendments later that touch on the same issue. Before the Bill leaves this House, we must be clear who is in, who is out, and why.
My Amendment 160 would require the Secretary of State to report on the numbers of properties in flood-risk areas that were eligible, and those that were not, for inclusion in Flood Re. It would include looking at the specific exclusion as it stands of council tax band H and post-2009 new build. The report would look at how much it would cost to bring them in and who would bear the cost if they were brought into Flood Re, in terms of both premiums and the effect on the non-risky properties’ cross-subsidy.
We all have some sympathy with those groups that are excluded. However, we must be careful, as this is a delicate arithmetic deal between the Government and the ABI. I understand that negotiations were hard and long. As far as businesses are concerned, it is obvious that this must be addressed somehow. We have all seen the effects of flooding in recent weeks and the past few years, on small businesses and farms, on the Cockermouth high street a year ago and on the seafronts at Dawlish and Aberystwyth in recent weeks. We also know that the businesses that are hit—the shops, boarding houses and small businesses—are key to the prosperity of those local economies. It must be frustrating for small businesses, and those advocating their case, like the federation, because they were covered in some way under the statement of principles under the old scheme. However, the old scheme was a different sort of scheme. It was a deal struck by the ABI, agreeing that it would continue to cover—even then, it was not offering new cover—small businesses as well as households if the Government committed themselves to a certain level of expenditure on flood defence.
This is a different sort of deal; it is actuarially based. While we have all received representations on behalf of businesses, the approach now has a different basis. Even so, it is complicated. Some micro-businesses operated out of the owner’s house could be covered because they pay council tax rather than business tax. However, others will not. There are good reasons for this. The noble Earl, Lord Cathcart, described the bespoke way in which businesses negotiate their insurance as distinct from the more generalised way in which households are covered. It is difficult to see how businesses could be included in Flood Re as it stands without serious reconfiguration of the whole arithmetic. Therefore, while I have sympathy, I would not go so far as to press the Government on this front. However, I am in favour of knowing more about this. Therefore I support the proposition of the noble Lord, Lord Moynihan, that we look at this and report on it and see whether that might lead us to some other form of provision in parallel with Flood Re.
Some of the other boundary issues are even more complicated, particularly in relation to leasehold properties and the issue of whether landlords and tenants are included. The noble Earl, Lord Lytton, has dealt with one element of this and others are dealt with later on. Some of the government literature refers to leasehold properties. However, in general, the ABI and the Government do not think that leasehold properties are included. The situation with single landlords and tenants is not clear, although commercial providers of leasehold property are not included. The differentiation here is more the nature of the insurance than the nature of the property. While the property may be defined as being in risk or not, in a landlord/tenant situation, the tenant probably takes out the contents insurance, which is covered, whereas building insurance, which is the landlord’s responsibility, is not covered. That is quite a complex position, and it would also be true for multiple leasehold property. A future mortgage on such property is dependent to some extent, as the noble Earl, Lord Lytton, said, on there being ongoing insurance on the property. Leaseholders and the owners of the property may be faced with a double whammy if they are not careful.
As I said, I am not in favour of widening the group at this time because of the delicate arithmetic involved. We must address some of these issues in the Bill but for the moment I cannot support the amendments proposed by the noble Earl, Lord Lytton, nor the proposals of the noble Baroness, Lady Bakewell of Hardington Mandeville, on mixed hereditaments. I am not sure whether Amendment 160A in the name of the noble Lord, Lord Shipley, which would effectively delete the exclusion of post-2009 properties, is in this group. That is in a rather different category because people have been building in high-risk areas when they have known that they were going to be excluded under the old agreement, let alone the new one. I therefore have less sympathy for that group than I might have for the others.
Lord De Mauley
My Lords, I recognise the high degree of interest in the policies that will be covered by our proposals, and those which will be out of scope. I hope that I can provide some clarity today on what is intended and the reasons for this.
The Flood Re proposition we are debating today was carefully designed to address specific, medium-term issues in the domestic insurance market. It was not, of course, designed in light of the immediate crisis that we are facing. I heard the passion and concern from your Lordships last week, yesterday and, indeed, today, about the specific, frustrating issues affecting the broader community, including small businesses and the farming industry. It is clearly a distressing time for many, and I know that they are in all our thoughts. Again, I pass on my thanks to the Environment Agency, the emergency services and the many volunteers, including the churches, who are working tirelessly to help.
However, it is not immediately apparent that there is an insurance angle to the current situation. Those who have insurance will be covered by their insurer. I am grateful, too, for the efforts of the insurance industry, which has been working hard in communities to ensure that damage is assessed and that claims are paid quickly. Until Flood Re is in place, insurers will continue to provide insurance cover. We have no understanding with the industry about expanding the scope of the scheme. I therefore ask that your Lordships forgive me if I combine my response to this debate to the specific proposition before your Lordships today.
I turn first to Amendment 155 of my noble friend Lord Moynihan, which would require the Secretary of State to publish a report on the ability of businesses in high flood-risk areas to secure flood insurance. I emphasise that decisions about the scope of Flood Re have been evidence-based. Compared to the household sector, there is not the same evidence of market failure in the commercial sector, where the insurance market is different. Bespoke policies are more routine—as my noble friend Lord Cathcart so eloquently explained—and they are already priced to risk. I listened with interest to what he, my noble friend Lord Ashton, and the noble Lord, Lord Whitty, had to say.
Businesses, unlike households, have a de facto income stream to cover their costs and can offset the cost of their insurance for tax purposes, so they are different. Flood Re, I emphasise, is concerned with helping to protect those relatively few low-income households from high insurance premia. My noble friend Lady Parminter was, perhaps, sceptical of the suggestion of a lack of evidence. A government survey of more than 9,000 businesses in England estimated that fewer than 1% of businesses had experienced difficulty obtaining property insurance in the last year due to the risk of flooding, and that no businesses had been refused insurance cover due to the risk of flooding.
For these reasons, we do not think that Flood Re would be the right solution for this diverse sector. While there does not appear to be a systemic problem with small businesses being able to obtain flood insurance—and our public consultation endorsed our approach—I recognise that some in areas of high flood risk may face specific issues. As my honourable friend, the Parliamentary Under-Secretary of State for Water, Dan Rogerson, said in Committee in the other place, the Government and the Association of British Insurers have both committed to monitoring the market for flood insurance, including that for small businesses. If sufficient evidence emerges of a problem for businesses, then we have both agreed to look at possible solutions. This research will be published and I will be happy to place a copy of that report in the Library when it is published.
Amendments 160 in the name of the noble Lord, Lord Whitty, and Amendment 160ZA in the name of the noble Earl, Lord Lytton, seek to require the Secretary of State to prepare and publish reports on the numbers of properties which would be out of the scope of Flood Re, including properties built after 1 January 2009, band H properties, leasehold properties and private rented properties. It is very clear from his amendment that the noble Lord, Lord Whitty, has clearly understood that any increase in the amount of policies ceded to Flood Re would need to be funded by others. Indeed, he explained that in his speech on the amendments. It is important that helping households at high risk does not lead to price rises for others.
My honourable friend the Parliamentary Under-Secretary of State for Water set out indicative numbers and costs for including in Flood Re band H and equivalent properties and properties built after 1 January 2009 in a letter to the Committee examining this Bill in the other place. I would be happy to ensure that this letter is made available to noble Lords who have participated in this debate today. However, I would not want noble Lords to think that the impact on the levy is the only reason for post-January 2009 and band H or equivalent properties being ineligible. As I noted, we were very clear in designing Flood Re that we wanted to target the benefits where they were most needed, while not increasing the cost of living for those not at flood risk. That is the basis on which we made the decision that it would not be justified for band H and equivalent properties to be included.
According to the 2011 living costs and food survey published by the Office for National Statistics, 85% of those who live in band H properties and hold a combined insurance policy are in the top 30% of earners, with 48% in the top 10%. More significantly perhaps—and this is in response to the noble Lord, Lord Campbell-Savours—only 0.5% of such households are in the five lowest income deciles, which translates to roughly 45 properties in flood risk areas.
The 2009 cut-off date recognises that new housing developments should be located to avoid flood risk; or where development in a flood-risk area is necessary, they should be designed to be safe and appropriately resilient to flooding and not to increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since then should already be insurable at affordable prices.
As noble Lords may know, when the agreement between government and the insurance industry, known as the statement of principles, was signed in 2008, it was agreed that there should be a cut-off date, which was set at 1 January 2009. That marker has been in operation for several years and has been maintained under Flood Re proposals. To be clear, there has been no change in policy. Therefore for the reasons that I have set out, we believe that the proposed exclusion of properties built after January 2009 and band H properties is fair and in line with the Government’s objective.
Lord Campbell-Savours
I just want to press the noble Lord on band H. As I said, I myself have no interest in it. However, in light of what has happened in the Thames Valley, is there not an argument for reviewing those figures that the Minister has just given to the House, particularly as regards the percentage of people on lower incomes who by chance happen to live in those rather expensive properties?
Lord De Mauley
I am of course quite happy to review the figures and to write to the noble Lord on that.
On Amendment 160ZA on reporting on leasehold and private rented sector policies, I see that we will also discuss the proposals in this regard on Flood Re later on today. However, before I come on to the specific subject of reporting, I remind noble Lords that the key issue in determining the scope of Flood Re is whether the policy for a particular property is treated as commercial or residential by the industry. Commercial policies are out of scope of Flood Re, which is designed to support households. We believe this approach is fair and practical, and it was supported in the public consultation. However, we recognise that the leasehold sector presents a more complex situation, where the contents policy is classified as domestic but the buildings policy could be classified as either commercial or domestic and could cover multiple dwellings.
I have listened to representatives of the property sector who have come forward with concerns about the impact of the proposed approach on the leasehold sector. They highlighted in particular that those in a smaller building might find it difficult to afford cover in the open market. The ABI has assured me that there is no evidence of a systemic problem with freeholders being able to obtain insurance for their leasehold properties, which I am sure noble Lords will agree is very welcome. However, given the strength of feeling on the matter, particularly in light of the ongoing extreme weather conditions, we need to take time to consider it in more detail, although without evidence of market failure it will be difficult to justify action. We will examine the evidence further with the ABI and hope to provide an update on Report. We will also continue to monitor this sector over time, as a part of the commercial insurance market.
I will focus briefly on the subject of the private rented sector. I take this opportunity to explain that it is proposed that buildings insurance cover for landlords would be out of scope for Flood Re, although contents cover for tenants would be eligible. At this stage I reiterate my declaration of an interest as owner of a property that flooded in 2007. The reason that landlords’ policies are out of scope is primarily because insurers classify all types of landlord insurance as commercial business, while Flood Re is designed for the domestic market. However, it is also important to recognise that the inclusion of landlords would effectively mean that people who do not own their own home could, through their contents premium, subsidise people who own several.
Flood Re targets support towards those least able to pay, through council tax bands. A landlord’s ability to pay cannot be judged against the council tax band of the property he lets. For example, the landlord of a council tax band A property could receive the maximum support if landlords were to be included, even if they were perfectly able to pay. Landlords already benefit from tax relief on the cost of their buildings insurance policy. They can offset many of their costs through taxable allowances which can significantly reduce their tax bill.
Lord Oxburgh
Before the Minister sits down, I hope he can help me with a small matter, which nevertheless would be significant for a minority. Given the duration of the scheme, there is likely to be a rebanding of council tax during that time. Somewhere it needs to be made explicit what will happen to people who move up into, for example, band H during that time.
Lord De Mauley
I can count on the noble Lord to think of something that I did not arrive in the Committee equipped to answer. If I may, I will write to him.
Lord Moynihan
My Lords, I am very grateful to noble Lords on all sides of the Committee for the interest they have shown in this issue. Their contributions have demonstrated how critical it is and what should be in and what is out. I place on record my thanks to my noble friend the Minister for a very comprehensive reply on a lot of issues that have been raised on all sides of the Committee. The noble Lord, Lord Campbell-Savours, is a noble friend on this issue since I am in complete agreement with him. I do not agree with him on every occasion but I certainly do on this one. I say to him that it is not just that some householders did not buy their properties as band H properties; it is that there is no absolute correlation between personal wealth and band H occupancy, a point that I sought to demonstrate at Second Reading. If you accept that principle, surely it is wrong that band H should be automatically excluded. Indeed, the Minister, in his reply, mentioned the 45 properties that were in need of support; that is, owned by people who were not wealthy but would be automatically excluded as the Bill is drafted.
My noble friends Lord Ashton of Hyde and Lord Cathcart mentioned how complicated it would be to change the Bill to take appropriate care of small businesses. I agree that the Bill is complicated; it is complicated throughout. However, surely the thoughts of this House are with the SMEs, the pubs, the guest houses and the farms that have been devastated by the recent floods and cannot now secure affordable insurance provision. They have been hit incredibly hard. If it is not through Flood Re, surely we should be looking to deliver support for SMEs through an appropriate provision. I argue that the Bill is the right vehicle to do that.
I appreciate that my noble friend Lord Cathcart was eloquent in the detail he went into to secure his insurance for his egg business—or “an” egg business, to be fair to him. Such expertise cannot be expected to reside with every publican or small business at the centre of communities serving important commercial and social roles. We should look very carefully at this matter at a later stage.
My amendment simply allows us to study that in detail. I am very grateful to the noble Lord, Lord Whitty, for his support. I am also grateful to my noble friend Lord Campbell-Savours for highlighting the fact that this market will have markedly changed in the past three months. Of that, there is no doubt whatever. It is incumbent on your Lordships’ House and the Government to look at the extent to which that market has changed and to which we need to respond to those market changes.
While I hope that further consideration will be given to these issues—I, for one, will seek to bring them back for further consideration—for the time being, I place on record again my thanks to the Minister for his answer and beg leave to withdraw the amendment.
Lord Shipley
“( ) Within 24 months of this Act coming into force, the Secretary of State must review the effectiveness of the delivery of planning policy in achieving low levels of flood risk for new developments by examining—
(a) the system of planning policy delivery,(b) the role and effectiveness in reducing flood risk of those organisations with a duty to cooperate under the Flood and Water Management Act 2010, or their equivalents in the devolved administrations, and(c) the effectiveness of the delivery of the National Flood Management Strategy.”
Lord Shipley
My Lords, in 2008 when serious flooding hit Northumberland, parts of Newcastle and several parts of the north, and 1,000 people had to be moved out of their homes in Morpeth, it was a major learning exercise for the statutory authorities; that is, the Environment Agency, Northumbrian Water, the local councils and the emergency services in particular. It was a major learning exercise because they had to respond properly and to work well together in the public interest.
In the years leading up to the 2010 Act, I wondered how much of a help that would be in defining the duty to co-operate to make sure that all the agencies involved in dealing with flood and flood risk would manage to work effectively together. In the main, that has happened, although in Somerset it has become unclear whether that duty has worked effectively, given the Environment Agency’s statement that it offered to dredge on the Somerset Levels if other partners joined it. I do not have all the details but I raise the point simply to demonstrate that the duty to co-operate between the agencies matters very much.
This amendment asks for a review within 24 months. Given the changes in flooding patterns around us, we need to be clearer about how the planning and risk management systems are working in practice. The amendment would enable a review of the effectiveness of the delivery of planning policy in achieving lower levels of flood risk for new developments by examining,
“(a) the system of planning policy delivery,
(b) the role and effectiveness in reducing flood risk of those organisations with a duty to co-operate … and
(c) the effectiveness of the delivery of the National Flood Management Strategy”.
It means that we have to confirm, and regularly reconfirm, the capacity and performance of all the organisations involved in reducing flood risk. These will include developers, local government officers and their planning committees, building contractors and building inspectors. We should also look at how national organisations, which have a tendency to be centralised, work effectively with local knowledge, and how that local knowledge is incorporated into the decision-making processes of the national agencies.
I understand that there have been instances where properties built since 2009 have flooded or caused other properties to flood. We need to know better than we do how big a problem this is, how often the flooding was due to flood waters exceeding the risk anticipated, and how often it was due to poor design or poor construction.
I was somewhat concerned to discover that the Environment Agency comments only on larger developments. It is understandable why that is the case, but in 2012-13—here I am quoting from DCLG statistics—local planning authorities received 455,500 planning applications and the Environment Agency provided responses to 30,251 of them; that is, 6.6% of the total. Obviously, most planning applications are small ones in which the Environment Agency need not have a role. However, we need to be clear whether the Environment Agency should have a formal, statutory consultation role in more planning applications than is currently the case. The current position is that the bulk of applications, including those for high surface water flood risk areas, are being dealt with entirely by planning committees and their officers, who follow national guidance. One assumes that they follow that guidance, but it also means that the cumulative impact of many small developments is not commented on and may not be taken into account. There is a further issue. At a time of reducing resources in local government, is everyone confident that all councils have the technical expertise to handle the complex drainage issues that arise? The Government need to be certain that they have all of the evidence they need, and therefore a review within 24 months should be undertaken.
I want to make a last point. I am concerned that we may be being too ambitious for sustainable urban drainage systems schemes. I understand from a press report I read a couple of days ago that 10% of the homes now being built are on flood plains. Of those, 1% to 2% are in high-risk areas. If the right preventive measures are put in place, which can include such schemes, it is not necessarily a problem that 10% of new homes are being built on flood plains. However, an important statement of the obvious is this: SUDS do not work on flood plains when there is substantial flooding. I guess we all know this, but I am concerned that there is a cumulative impact on planning permission for small developments; or, rather, I would like to be convinced that that is not the case. I would like to be certain as well that there is not an overdependence on SUDS schemes being seen as a solution to the problem when they may well not be.
This is a probing amendment, and I hope that the Minister will agree that it is important that, within 24 months, there should be a review of planning policy and flood risk management and delivery, and that two years is really the maximum period within which that should be undertaken, particularly in view of current circumstances. I beg to move.
Lord Campbell-Savours (Lab)
My Lords, I intend to use Amendment 155A as a peg for discussing what is described—in paragraph (c) of the new subsection that the amendment would insert into Clause 51—as,
“the effectiveness of the delivery of the National Flood Management Strategy”.
In particular, I want to highlight limitations on the current arrangement under that strategy and how those could be modified. I shall draw on a particular example by praying in aid a particular case.
In 1990, Thames Water proposed a reservoir in Oxfordshire. Its plan set out how the company could meet demand up to the year 2015 for water supply in the south-east of England. Its proposal was for a reservoir on land south-west of Abingdon in the Vale of White Horse. In 2008, some 18 years later, Thames Water held a consultation on its draft water resource management plan for meeting water demand up to 2032. The draft plan again included a proposal for the Abingdon reservoir. If it appears that I am speaking slightly obliquely to the amendment, I am sure that noble Lords will soon recognise the relationship between what I have to say and the amendment on the Marshalled List. In 2009, following a process of consultation, the management plan from Thames Water was amended and the reservoir reduced in size, and in 2010 there was a public inquiry. In March 2011, the Secretary of State, Caroline Spelman, announced her decision to remove the proposal for a reservoir at Abingdon from the management plan. The reasons were, primarily, that Thames Water could not prove a risk to current water supplies and, secondly, that insufficient consideration had been given to transfer and reuse schemes.
It was argued that water available in other parts of the United Kingdom could be transferred to the south-west of England, although when I was doing a little research on this last week I could not understand how it was impossible to prove that there was not a risk to the water supply in the south-west of England when over a number of years, certainly in the early 2000s, we were being told that reservoirs were empty almost throughout the United Kingdom. There were blocks on the use of water for gardening, and I understand that in some areas there was even talk of introducing standpipes for the water supply. Nevertheless, that was the decision taken at that time by the Secretary of State. I suspect that there was more nimby in the decision than a proper evaluation of water supply and demand. I understand that the next review is due in 2018-19.
Why is all this relevant? To answer that question, we have to move north to Cumbria, to Thirlmere. Thirlmere supplies water to Manchester. Thirlmere is a reservoir above the town of Keswick—where I have lived most of my life—which feeds water from the dam down the Greta river through Keswick, down through Bassenthwaite Lake, down the Derwent and on to Workington, which was the subject of substantial flooding some years ago. After that flood event some years ago, I was asked to set up a group in Keswick to hold discussions with the Environment Agency and United Utilities on what action could be taken to reduce the incidence of flooding in Keswick. Our group’s case was simple: Thirlmere could be used for flood alleviation purposes as well as for water storage. If we retained within Thirlmere sufficient unused water storage capacity, in times of predicted heavy rainfall we could use the reservoir to control the flow of water into the Greta through Keswick and substantially reduce the incidence of flooding in the Keswick area.
In the beginning, United Utilities resisted because it meant the release of its valuable asset—water. However, over time it adopted a more reasonable approach and agreed to reduce the level of the reservoir in the months of high rainfall, primarily in the autumn, winter and early spring. We set target water levels for each month in the meters below the spillover at the head of the reservoir and the dam head. When the reservoir is too full, water is released. Many people in the town believe it has served the town well and avoided substantial flooding over recent years, despite the fact that on occasions they have had trouble releasing sufficient water due to mechanical release valve difficulties.
Let us return to Abingdon and what has happened over the past week in the Thames Valley. I refer again to the interest I declared earlier. Why can we not have a similar arrangement for Abingdon? Why can we not bring back the proposal for a reservoir on the Abingdon site with a dual purpose? The first would be water storage to meet increased demand in the south, and with the proposed development of new towns in the south that is part of the Government’s housing strategy, there will be increased demand—indeed, at the moment demand in drought periods is not being sufficiently met. Secondly, the reservoir could be used for flood alleviation purposes, with target storage levels providing for controlled releases into the River Thames.
Let us go back to the Thames Valley. The communities that have suffered over the past week know that there is no way of resolving their problem in the long term. You cannot build defences along the Thames on the scale necessary to protect the towns and villages—Wraysbury, Datchet, Chertsey, Staines, Sunbury and all those towns; it is impossible. We have to find a solution further up the system. I have raised this in relation to this amendment because I believe that the solution is to create large areas that can be pooled and used for flood alleviation in the future.
It seems to me that to secure that objective, the law needs to be reviewed. We need to strengthen the hand of those who wish to use reservoirs in this way. As I understand the current statute, there is no statutory requirement—a power available to the Environment Agency or to the Government—placed on water companies to use their assets in the way that I suggest. I hope that what I am suggesting today is followed up in the communities that have been affected over the past week by this vast, insuperable problem of flooding, because they need to look long-term as to what the solution is, and the solution is not in flood defences. The solution is upstream. I hope that they follow up my suggestions. In Abingdon there will no doubt be some difficulty over the proposal, but we all have to stand together to find ways to resolve the problem. Unless it is dealt with soon, it will have calamitous implications for the future.
Baroness Parminter
My Lords, briefly, I support my noble friend Lord Shipley on this important amendment. We are rightly spending the majority of our time today discussing a financial vehicle to deliver affordable flood insurance, but the planning system has a vital role in making our country more resilient for the future. On the potential effects of cuts in local authority budgets on their ability to undertake their important planning functions, which my noble friend mentioned, I add that a review in 24 months’ time is sensible, given that in the intervening 24 months there will be further significant cuts to the Environment Agency’s budget, with an expected cut of more than 550 staff.
Given the scenes we have seen in recent days, it would be only too easy for people, rightly, to make the case that we must protect front-line staff in the Environment Agency. However, it is equally important to look appropriately at people in the back room who are working hard on the consultations on significant planning applications for developments of more than 10 houses or one hectare. Equally, it is important that the national flood management strategy, which the EA devised in 2011, is carried forward.
I add my support. The timeline that my noble friend Lord Shipley has suggested of 24 months is apposite given the need to review some of the resource constraints that both local authorities and the Environment Agency will face in the forthcoming months.
Lord Krebs
My Lords, I too support the amendment of the noble Lord, Lord Shipley. I have already declared an interest as the chairman of the adaptation sub-committee of the Committee on Climate Change. The sub-committee has a useful data set that could be brought to bear were this review to happen. It has developed a set of indicators, which are published, for the resilience of planning decisions in relation to present and future risks from flooding, particularly from future impacts of climate change. For example, it has looked at the implementation of SUDS, at the implementation of household measures that could provide protection at the individual property level and at planning decisions to develop in the flood plain. As has already been said by the noble Lord, development in the flood plain has been going ahead faster than development elsewhere, but this is not necessarily a bad thing. If the properties are appropriately protected, either by community-level measures or by individual household measures, the risks can be managed. The sub-committee has a data set and a set of indicators that could be useful were the Government minded to accept the amendment moved by the noble Lord, Lord Shipley.
The Earl of Lytton
My Lords, I welcome the opportunity to debate this important point. I declare a professional interest in aspects of planning. The question of planning policy and its co-runner, which it informs, development control, raises some important issues on the ground. These need to go beyond the question of new-build developments alone. I do not know whether the noble Lord, Lord Shipley, intended to address just new-build developments but if he did, perhaps I could digress into the area of what we do about some of the existing building stock, which I flagged up at Second Reading. I alluded then to the desirability of making conditions concerning the containing of surface water run-off within existing individual properties, as opposed to just allowing each to discharge it on to the next property downstream.
I wondered whether this might be made retroactive to a degree, perhaps by requiring extensions and alterations to existing properties to incorporate, in appropriate circumstances, a surface water attenuation scheme. I do not believe that this is a general requirement but there are precedents. For instance, if you renew the roof covering of your house, you are often obliged to upgrade the insulation of the roof of your property. There is an analogy there. Surface water attenuation on a per property basis could also be combined not only with water conservation, but with habitat-friendly outcomes. The same thing could apply to the principle of reducing vulnerability of the property itself—a point made earlier by the noble Baroness, Lady Parminter—in connection with quite ordinary adaptations that can be put in place to prevent properties being so severely affected by flooding, should it happen. There is also the question of community-based schemes to protect groups of buildings. I referred to the Lower Don Valley scheme, but there are others.
One of the things that has come out—sorry, that is probably a bad term—or rather, has arisen recently is the question of making foul drainage systems safer, so that if flooding does happen, flood water does not turn into a solution of dilute sewage, adding health hazards to all the other problems of clean-up. That requires special measures, not least because shared sewer pipes that are on private property but are ultimately connected to a public sewer are now the responsibility of the statutory sewage undertaker. I have this terrible feeling that they have no idea of the routes, the condition or the materials of half of these pipes for which they have now inherited responsibility. They have my sympathy in that respect.
The noble Lord, Lord Krebs, referred to building on flood plains. My only point there is that protecting properties so that they are themselves secure against flooding is one thing. Transferring risks to properties elsewhere is self-defeating. My difficulty is that I am not sure that a holistic approach is taken to dealing with the totality of flood plains. Often, these may be in more than one local planning authority area, so there may be problems of co-ordination. With regard to that, the noble Lord, Lord Shipley, referred to the competence and capacity of local government and the noble Baroness, Lady Parminter, referred to reductions in Environment Agency budgets that might affect its ability to have this overarching, integrated view. I worry about that. It is vital that the sort of report that the noble Lord, Lord Shipley, has in mind covers all these aspects. If we start leaving bits out, we shall be no further forward in a few years’ time than we are now.
I draw attention to the catchment area management plan referred to by the noble Lord, Lord Campbell-Savours. I have some experience of this, not all of it edifying. In at least one instance, I found that half the catchment area concerned, the upstream half, was missing from the plan. The only fact that I could ascertain was that the owner of the missing part was the National Trust. I am unsure what conclusions I should draw from that, but if you have a catchment management plan, the boundary of it has to be drawn along the watershed. No other boundary is possible. The simple arithmetic that was drummed into me, probably from O-level geography onwards, has not escaped me. Making up rules to suit as one goes along will not wash. I am sorry for that terminology as well.
Some time ago, I attended a professional lecture on restoring part of southern Exmoor to a peat bog so that it would hold more water and release it more slowly into the River Barle and the River Exe systems. It had something to do with pumping and repumping water back into Wimbleball reservoir, which I shall not go into. I nicknamed the scheme the “Exmoor sponge”. I do not think anyone else has used that term. There is nothing wrong with such projects, but if they do not have durable management structures that are proof against misuse for commercial objectives, neglect because of spending cuts, simply being forgotten, or participant landowners deciding that there are better land uses that they would rather adopt, they will fail. There need to be more durable ways of dealing with these things. That is the sum total of the points that I wish to make. The last of them probably goes a bit beyond the amendment proposed by the noble Lord, Lord Shipley, but it was worth mentioning in the context of what was said by the noble Lord, Lord Campbell-Savours.
Lord Grantchester (Lab)
My Lords, the amendment would set up a review of recent outcomes of planning policy in terms of flood risk for new developments. It has received widespread support around the Committee.
The noble Lord, Lord Moynihan, has already highlighted how the market will change following recent events. In view of the terrible situation that has resulted from recent weather events in Somerset and the Thames Valley, which may well trigger a wide-ranging review of flood risk policy, it makes sense to ask why there has been more building on low-lying and flood risk areas in the past four years, even allowing for the guidance to which the Minister has already referred today. There has been plenty of notice since 2007 that not all property in areas that might be developed would be eligible for flood insurance. Recent floods have highlighted that there may be errors in the guidance. Nor have successful protection measures been achieved.
Why has planning allowed development to take place against a background of increased perception of flooding potential following the floods in 2007 and in 2012? As the Government, the Environment Agency and planning authorities—indeed, the whole country—will be reassessing flood defences and expenditure, a review of where we are now would make eminent sense.
I was struck by the comments of the noble Lord, Lord Shipley, on the cumulative development effect, which would be worth of the attention of the Environment Agency. The amendment has also prompted some interesting suggestions from my noble friend Lord Campbell-Savours, so it is worthy of further assessment by the Government.
Baroness Northover (LD)
My Lords, we strongly support the intention behind this amendment. The importance of managing the impact of flooding has been brought into very sharp focus recently, and my noble friend has made a cogent case for ensuring that all those involved, whether builders, local councils, inspectors or national organisations, are fulfilling what is required of them in terms of capacity and performance in reducing flood risk.
My noble friends Lord Shipley and Lady Parminter made the case for a review of planning policy delivery. Planning policy for flooding is set out in the National Planning Policy Framework. The framework was published by the Department for Communities and Local Government in March 2012 following extensive public consultation and is supported by practice guidance. It sets strict tests to protect people and property from flooding, which all local councils must follow. We have been very clear that where these tests are not met, new development should not be allowed.
The framework states that councils should plan the location of new development to avoid areas of flood risk where possible. Only if no sites are available in areas of lower risk of flooding can local councils even begin to consider whether to allow development in areas where there is a higher risk. For logical reasons, this is known in planning terminology as the sequential test. Where the sequential test has shown that it is not possible, consistent with wider sustainability objectives, to locate in an area with a lower risk of flooding, then—depending on the flood risk—a second stringent test must be met before a development can go ahead. This is called the exception test, which provides a very strong safeguard. To pass the exception test, you must show that the development provides wider benefits to the community that outweigh the flood risk and that it will be safe for its lifetime without increasing flood risk elsewhere—which was another point that noble Lords flagged up. Where possible, the development will reduce flood risk overall, such as through new flood defences. If there is a risk of flooding, a planning application has to be supported by a site-specific flood risk assessment. This is important because, where there is a risk of flooding, councils should give the go-ahead to new development only where, following the sequential and, if required, the exception tests, it can be demonstrated that what is to be built is flood resilient and resistant, and, as necessary, includes safe access and escape routes. Quite simply, in terms of flood risk, if there are better sites for developments, or developments demonstrated to be necessary are not made safe, they should not be permitted.
Lord Krebs
In the case of the Environment Agency lodging an objection, in what proportion of cases was it informed of the outcome? In the review that the adaptation sub-committee carried out in 2012, we found that in nearly a third of instances where the Environment Agency had been consulted, it did not know the outcome because it had not been informed. Has that figure changed?
Baroness Northover
I hope to get an inspired answer any second in order to be able to tell the noble Lord. If I do not get inspired, I will write to him.
I remind noble Lords that the Environment Agency is already required, under Section 18 of the Flood and Water Management Act, to report on the delivery of the national flood and coastal erosion risk management strategy for England. These reports must include information on all sources of flood risk and coastal erosion, and cover the work of all of the relevant accountable authorities. To reassure the noble Earl, Lord Lytton, the Environment Agency helps to provide the national overview that he seeks.
My noble friend Lord Shipley suggested that we need to know better whether properties built since 2009 are flooding or making others flood. One of the benefits of the memorandum of understanding between the Government and insurers last year, which I will come on to in the next group, is that for the first time we will have access to claims from flooding. This information will be used by the Environment Agency and its equivalents to target flood risk investment and could be used to inform policy development. In this context, I also note what the noble Lord, Lord Krebs, said about his data sets. Clearly, the more information we have, the better. I am sure that those data sets will be of interest both to Defra and to the Environment Agency.
Let me see whether I am inspired by the note I have been handed.
Where the outcome is not known, which is what the noble Lord, Lord Krebs, is talking about, the agency is satisfied that there is no significant difference in the outcomes between those cases reported and those not reported by authorities. I hope that that reassures the noble Lord. It is, of course, important that all these areas continue to be probed, because everybody needs to be reassured that that is, indeed, the case.
Coming back to the assessments that are taking place, high-level reports are produced annually, with more detailed reports provided to coincide with the six-year cycle of the flood risk regulations. Further interim reports may be produced as directed by the Government to support policy decisions such as future government spending reviews. The Government also conduct regular reviews of the effectiveness of policy delivery. For example, a review of the impact of the new partnership approach to flood risk management funding has just concluded. There are also two reviews of flood risk management in progress at the moment and one at a scoping stage. I listened to the comparison by the noble Lord, Lord Campbell-Savours, of the situations in Abingdon and Keswick. My noble friend Lord Younger, who was in his place a moment ago, noted this with interest and passed me a very interesting comment, but I hear what the noble Lord said and I will make sure that his suggestion is fed through to the relevant authorities.
Coming back to the general reviews, in addition to those I mentioned, my right honourable friend Oliver Letwin MP is leading a review of the lessons learned from the recent flooding, particularly the tidal surge, and the other review is looking at the resilience of key infrastructure to major coastal flooding. Both of these are expected to complete in the spring. Defra is also scoping an evaluation of the effectiveness of the Flood and Water Management Act 2010, which I hope will reassure my noble friend and which will initially focus on local flood risk management. Under the Act, lead local flood authorities and other risk management authorities have a duty to co-operate with each other, as he noted, to ensure that constructive and active engagement takes place and helps to build local relationships between relevant authorities within and across operational boundaries. We noted what he said about Northumberland and Somerset. Work on this evaluation is anticipated to start later this year. We therefore feel that proposed new paragraphs (b) and (c) of this amendment would duplicate existing planned work.
I hope that my noble friend is reassured by what I have said and that he will be content to withdraw his amendment.
Lord Shipley
My Lords, I am grateful to all those who have taken part in this debate. I shall just take up one question posed by the noble Earl, Lord Lytton, about whether this concerns only new properties. The amendment refers to new developments but, for the avoidance of any doubt, that includes any building post-2009, not any building purely in the future. I am very grateful for the Minister’s reassurances. We have to think further about what she said, in particular about the role of the Environment Agency as a statutory consultee and the extent to which that might be extended, but I think we could look at that again on Report, when we have had time to consider the points raised in greater detail. I beg leave to withdraw the amendment.
Lord Whitty
“(8) Prior to making any regulations under subsection (5), the Secretary of State shall require the Committee on Climate Change to provide current and projected estimates of the number of properties that would be eligible for—
(a) inclusion in the Flood Reinsurance Scheme;(b) the value of levy required under section 53; and(c) the likelihood of additional levy or contributions being needed from time to time.”
Lord Whitty
My Lords, I shall also speak to Amendment 158. As we have discussed, actuarial calculations for the establishment of Flood Re have had to be pretty robust and tight, reflecting the level of risk assessed by the insurers and by the Government at this time, but we also all know that flood risk will change over time. We cannot, therefore, establish Flood Re on a totally static basis; it needs to be a dynamic process. The reality is that the numbers at high risk of flood damage are likely to increase, particularly, but not solely, because of the effects of climate change. The Committee on Climate Change and its Adaptation Sub-Committee are the key adviser to the Government on the numbers likely to be at risk of flood.
Over the next few years, Flood Re is supposed to operate in an area in which the Committee on Climate Change has already indicated there will be a significant increase in the numbers at significant risk of flood. The definition of “significant” in this context is one in 75 years. At the moment, that relates to about 370,000 properties. The information that Defra put into the basis of the impact assessment derived from the Committee on Climate Change statistics. I am not sure whether it is the database to which the noble Lord, Lord Krebs, referred or some other, but given that we are working on a 25-year timescale it said that this figure will have increased by the 2020s to between 475,000 and 825,000 and by the 2030s to between 525,000 and 1 million. That is a pretty big increase. By the end of the 2030s, the end of the 25-year period, it is potentially three times what we are talking about now.
Obviously, some mitigation will happen, but regrettably the level of flood defence expenditure fell—it is now rising again, but it fell—and the figures that have been used in these calculations show that there is a gap between the required expenditure and what is likely to be needed of about £500 million over the period of 20 years. That means that we have a significant problem in defining what is at risk in 10 or 20 years and therefore where Flood Re has to get to in terms of its financial arithmetic and the number of properties that it is going to cover. The Committee on Climate Change can advise on the likely change in crude numbers—indeed, it already has. It can apply probabilities to that, it can indicate what degree of mitigation, at what likely cost, is likely to offset this and it can look at the change in the nature of the risk and the areas to which it applies. It is important that both the Government and the administrator of Flood Re get strong, independent assessments of this changing and growing risk.
Indeed, this goes beyond climate change; there are the interrelationships between climate change, population growth, distribution of population, development pressures, water resource pressures, ecological consequences and so forth. The Committee on Climate Change and the Adaptation Sub-Committee are the authoritative bodies to do that and their role should be written into the Bill. My Amendment 156 does that and Amendment 158 would then require the Secretary of State to take notice of the advice from the Committee on Climate Change when setting targets under Clause 58 and more broadly. I beg to move.
Lord Krebs
My Lords, I am grateful to the noble Lord, Lord Whitty, for suggesting an additional task for the Adaptation Sub-Committee of the Committee on Climate Change. While recognising that that is a task that we could carry out, I just say that one important corollary would be that the committee would need access to the relevant data from Flood Re, Defra and the insurance industry. Given access to that information, the committee could, as the noble Lord suggests, provide an independent assessment for the Government, which I think would be helpful in seeing how Flood Re is progressing.
Lord Ashton of Hyde
My Lords, perhaps I may ask the noble Lord whether the requirements should be imposed before the regulations that bring the Flood Re scheme into effect, or whether he is talking only about subsequent regulations. If that task has to be undertaken at the beginning, it might imperil the start of Flood Re.
Baroness Northover
My Lords, I am grateful to the noble Lord, Lord Whitty, for drawing attention to his wish to ensure that that the policies set out in the legislation respond to the demands that climate change may bring in future—in particular, by including a formal role for the Committee on Climate Change. I was not entirely sure whether the noble Lord, Lord Krebs, accepted that formal role.
We fully agree that climate change and adaptation to it are vital. The noble Lord, Lord Whitty, added the additional factor of population growth. He rightly challenges us on the uncertainty of the future and we are very much aware of the need to plan for the future in this regard.
The Committee on Climate Change and, in this respect, its Adaptation Sub-Committee play a very important role in providing independent advice to the Government. The information and analysis provided since the committee’s inception have helped to shape the debate on climate change. Although the evidence of climate change is becoming increasingly compelling, it is clear that we need to do more to understand and plan for its impacts. This is a challenging task, given how interrelated and unpredictable those effects are. We have seen how variable the jet stream has been over the past few years, for example, and how it has brought us drought and flood.
Although, clearly, dealing with the current devastating flooding is the immediate absolute priority, we also need to reflect on our management of flood risk and assess our preparedness for climate change. The Government published the UK’s first national adaptation programme report in July 2013, which sets out the action that we propose to take. There is great expertise in this country, not least in your Lordships’ Chamber, which we can access and are accessing, as well as learning lessons from elsewhere.
Specifically in relation to Flood Re, I assure noble Lords that climate change projections were considered alongside other risk factors during the design of the policy and that the effects of climate change will continue to be considered during future levy-setting discussions. I remind your Lordships that in the memorandum of understanding with the industry that has been used to craft the Bill—I mentioned it in relation to a previous group—we have recognised the importance of the programme of flood defence and have committed to a specified amount of expenditure for 2015-16. However, we believe that advising on the scope and financial parameters for the transitional Flood Re scheme is a role for the insurance industry and would be outside the current remit of the Committee on Climate Change.
To clarify, the number of policies that would be eligible for Flood Re is based solely on the cost of the flood risk component of any policy, which is set by the insurers. This assessment of flood risk will indeed change over time, as the noble Lord, Lord Whitty, acknowledged, and it would not be possible for the Committee on Climate Change to provide any estimates without detailed knowledge of industry pricing models. Similarly, the value of the levy required and the likelihood of the need of any additional contribution by insurers is based on a number of financial parameters that could change year on year. Those include the level of premiums received, the cost of reinsurance and the amount of levy collected.
The Government and the Association of British Insurers have worked hard to determine the value of the levy required and the likelihood of the need for additional contributions, based on industry data and assumptions that were subject to independent review by Professor Stephen Diacon. In addition, extensive modelling, using a model that was quality-assured by the Government Actuary’s Department, has been carried out by the Government using there data, as part of both the pre-consultation and post-consultation impact assessments.
Looking forward, the Environment Agency will continue to collect and analyse data on flood risk, which will feed into the Government’s ongoing assessment of the scheme. In addition, as Flood Re is directly accountable to Parliament, detailed audited information about Flood Re’s ongoing operation will be reported to Parliament regularly.
I turn now to the proposed role of the Committee on Climate Change in advising the Secretary of State on setting the target number in relation to the flood insurance obligation. Clause 58 gives the Secretary of State the power periodically to set a target for the proportion of properties on a register of properties at greater flood risk that relevant insurers are collectively required to issue with insurance policies. The register, to be created by the Environment Agency and its counterparts in the devolved Administrations, will be based on the flood risk maps published by those bodies.
The number of properties indicated as subject to flood risk may change with time, as a consequence of climate change or through better information and mapping. The Secretary of State would set an overall target for the number of registered properties that the industry as a whole needs to cover. In setting this target, the Secretary of State would consider evidence on existing take-up rates of insurance and other relevant data. This could include advice from the Committee on Climate Change, should the Secretary of State wish.
The setting of the target number is a decision regarding the appropriate breadth of support that should be given by this financial support mechanism. Again, we believe that advising on the target number would be outside the committee’s current remit and, for reasons discussed in relation to Flood Re, would not be the most appropriate use of its resources or expertise.
Although, for the reasons that I have set out, we do not feel able to accept these specific amendments, I would like to return for a moment to the wider spirit behind them. We absolutely recognise that climate change is a most important consideration for the management of future flood risk and we value the expertise of the Committee on Climate Change. We are pleased that the independent Adaptation Sub-Committee will be publishing a revised climate change risk assessment report in summer 2016. We will consider that evidence and any implications for flood risk management carefully once the report is received.
Noble Lords know about various measures that we are putting in place to reduce the risks of flooding and coastal erosion, so I will not expand on that right now. I hope that the noble Lord will have been reassured by what I have had to say, setting what we are doing here in the context of our deep understanding of the potential implications of climate change and the unpredictability of measuring it into the future. I hope that he will withdraw the amendment.
Lord Whitty
My Lords, I thank the Minister, who clearly recognises the issue. I also thank the noble Lord, Lord Krebs, who, I thought, accepted the additional responsibility—although slightly conditionally. The conditionality was that the financial information, at least in broad terms, would be available to the committee.
I am a bit disappointed by the Minister’s reply. She recognises clearly the importance of climate change in defining the nature and scope of the problem. The Government have an authoritative independent committee available to them to feed into their deliberations, along with the administrator of Flood Re, but she is saying, “Actually, the Minister might or might not take notice of what the Climate Change Committee says, but, in any case, it is not the role of the Climate Change Committee and the Adaptation Sub-Committee to talk about financial risk assessment”. That is not what we are saying, though. To feed in to the risk assessment, you need the most authoritative input that you can get, in order that the financial structure can be changed to reflect those increased risks, changed probabilities or changed distribution of risk. I would have thought that it would be useful to the Government to have it written into the Bill that they have an authoritative input on this from the Committee on Climate Change.
In response to the noble Lord, Lord Ashton, I am not looking for this input before we get Flood Re off the ground. I will be looking for an ongoing input. The administrator of Flood Re, as well as the Government, is going to look increasingly for this kind of authoritative input. At the end of the day Flood Re is—despite its statutory base and its reporting to Parliament—a private body informed by the expertise of the insurance industry, but that expertise is itself informed by the best information that can be got on risk. In my view, the best information that can be got is probably from the noble Lord, Lord Krebs, and the noble Lord, Lord Deben, who is no longer in his place. I would have thought they would be the best and most authoritative sources to be relied on. I am surprised that they are not prepared to get that reflected in the Bill. For the moment, I withdraw my amendment.
Lord Krebs
“(e) the need to build awareness of local flood risk amongst beneficiaries of the FR Scheme,(f) the need to inform beneficiaries of the FR Scheme of the need to achieve transition to risk-reflective prices as mentioned in paragraph (d).”
Lord Krebs
My Lords, in speaking to this amendment I will also speak to the other amendments standing in my name. I can be brief because the issues raised in the first of these amendments, and indeed in the second, have already been thoroughly explored by the noble Baroness, Lady Parminter, in her amendment.
Amendments 156C and 156D are really about information for householders. I find it hard to see why one would object to giving householders information that will help them now and in the future. The first part of Amendment 156C simply asks that Flood Re should build awareness among householders of their own flood risk. Earlier this afternoon we heard the noble Lord, Lord Crickhowell, alluding to a Defra website where information could be garnered, but the fact remains, from surveys of householders, that many of them are unaware that they are living in a flood risk area, and Flood Re has been designed to be invisible to the households concerned. As currently cast it will not give them any source of information. It is important that we incorporate in the Bill the requirement for the Flood Re administrator to give households information about their risk.
The other part of this, in the addition of proposed new paragraph (f) at the end of line 25, is to again alert householders who might be affected to the fact that Flood Re is not a permanent arrangement, and that there will be a transition. The transition is over a long period—over 25 years, as we are now familiar with—but it is important that householders over that 25-year period take action if they are at risk, to reduce their risk. Therefore it is important for households to have transparent information about the nature of the transition to risk-reflective prices that will arise at the end of Flood Re. It is hard to object to giving consumers information.
I now move to Amendment 156D, the second of my amendments. Again, I can be brief about this. It requires Flood Re to be explicit about the plan for transition, and to publish a transition plan so that the householder concerned will know what to expect—otherwise there will not be clarity for households. Difficult decisions to gradually withdraw the benefits of the scheme may continually be postponed, because it is always difficult to tell householders that they are going to lose a certain benefit that would arise through the coverage of Flood Re. In order to avoid confusion it is important that the Bill sets out a requirement to give a plan for the future, and therefore prevent Flood Re becoming a permanent and growing burden on the costs of insurance paid by other policyholders. So the transition must take place at the end of the 25-year period, and my Amendment 156D seeks to ensure that a plan for the transition is published, so that we can have more confidence that it will take place, and when it will take place.
Baroness Parminter
My Lords, I added my name to Amendment 156D of the noble Lord, Lord Krebs, and my related probing Amendment 156E has been grouped with it.
At present, the Bill states that the Secretary of State has the option to bring in a review process for Flood Re, but provides no detail. The first amendment, as the noble Lord pointed out, requires the scheme administrator to publish a plan to achieve a transition to risk-reflective pricing.
My second amendment would require Flood Re to publish the intended framework for reviews, outlining the decisions that needed to be made at each review point. Why is that important? The Government’s consultation document on Flood Re specified that reviews will be held in order that there should be a gradual transition to risk-reflective pricing. Discussions have centred on reviews every five years and the impact assessment for flood risk is based on that hypothesis, but there is nothing in the legislation to confirm that this will be so.
Getting a commitment to a five-yearly review is critical. Flood Re is designed by the Government to expire in 20 to 25 years’ time, with review points where decisions can be taken to reduce the benefit of the pool to claimants and the levy to all policyholders. If a linear approach is taken, this might result in a 20% drop in the levy, and the benefits, every five years. The potential problems are that the reviews could be more frequent, or never. The Treasury could require the transition period to be shortened, thus not allowing the necessary flood risk management investment to take place, or it could set the percentage drop in the levy to be higher in the earlier period. The reason why it might do so would be that under OECD rules the levy is considered to be a tax. Removing it early would reduce the percentage tax burden on the state.
The issue, though, is not just when the reviews take place but what information they provide so that the Government and parliamentarians have the necessary information to make informed decisions. As such, it would seem important to define the critical parameters in the review in some detail at the outset, understanding exactly what areas beyond affordability and accessibility will be judged to see whether or not the scheme is effective. I hope therefore that the Minister will put on record the Government’s intentions in this regard so that we can have reassurances that the scheme will achieve the outcomes that we all want.
The Earl of Lytton
My Lords, I particularly welcome Amendment 156C, moved so eloquently by the noble Lord, Lord Krebs, as it enables me to raise a series of allied issues. The first is that, Flood Re or no Flood Re, we are all on notice that the cross-subsidy of flood risk needs to be replaced by individual risk assessments. The reason for that is our better geographical knowledge and the unsustainability of the continued mutualisation of risk in those circumstances. I have absolutely no argument with that.
One issue of concern is the data produced by the Environment Agency. Obviously, those data are very important for the industry and for consultants, but they are equally important for individuals because, if we are moving to individual assessment, we must have some means of identifying the individual impact on a per property basis. I referred earlier today to my discussions with Philip Wilbourn, a very eminent environmental surveyor and valuer from the north of England. He allowed me to circulate an e-mail to a number of noble Lords setting out his views, which I have done, but there is a particular bit that I would like to repeat. He refers to,
“the data published by the various agencies, including the Environment Agency”.
Bear in mind that this is someone who carries out evaluations and does assessments on individual properties or groups of properties for a variety of different purposes.
In his e-mail, Philip Wilbourn says that he cannot use the data for commercial purposes because he is prohibited from doing so. Then he says that there is no online ordering service to acquire data for reporting purposes, and he is forced to acquire it from GroundSure or Landmark, two of the authorised resellers, at what he describes as high cost. He says:
“The data reported by commercial companies often varies depending upon the royalty return”,
which seems to be quite the wrong trigger for objective data. He tells me that the costs cannot be absorbed by residential valuers and that the banks, for which these valuations are produced, will not allow such data as a disbursement for the reports that are sent to them. His e-mail continues:
“When data is ordered direct from the EA, it can take three weeks to be sent through depending on the region”,
and he says that he has tested that.
The scale of resolution on the Environment Agency website is 1:5,000, which does not enable a particularly accurate identification on a per property basis. The Scottish Environment Protection Agency’s website fares rather worse because the scale there is 1:25,000, so individual property analysis by the home owner is clearly going to be difficult. These are the data that are supplied to insurers to make decisions.
Of course, what happens? It gets boiled down to a postcode approach—the “postcode lottery” of which we constantly hear many examples. He says:
“The problem with postcodes is that many home owners/businesses may be paying more than they should”,
and he gives an example of a postcode—in I do not know what part of the country, but it is obviously an urban area—which is neatly bisected by a blue-ink line of flood risk.
There is a particular issue here as to whether the data that are produced by this public agency, for public consumption and for the benefit of society as a whole, will be available at reasonable cost—let us not say that it should be free—for the home owner and individual consumer. That is the question that I pose in the context of this amendment.
Lord Whitty
My Lords, I broadly support most of these amendments, but I have a few queries. I support the first two amendments, Amendments 156C and 156D, unequivocally. It should be part of the role of Flood Re to help raise awareness, both among policyholders and in the community at large, and it will need to do so in conjunction with the Environment Agency, local authorities and so forth. However, clearly, the insurers also have a responsibility, as is reflected in these amendments. This will help both the beneficiaries and the insurers to move to a more systematic, cost-reflective basis for the whole system over time. It is also true that the administrator should be required to produce a plan for the operation of that scheme, as provided for in Amendment 156D. There must also be an overall longer-term plan for transition over the 25 years of the plan, as is proposed by the noble Lord, Lord Krebs, and the noble Baroness, Lady Parminter.
I am less sure that we should stipulate a five-year review period in legislation. In a sense, the scheme is always under review and will be changed in the light of new advice or new experience of flood conditions. Tying this down to every five years may not be the most sensible thing to do. Part of that assessment would be to indicate what measures would be needed to reduce long-term costs, as provided for in Amendment 156F. Insurers may encourage both individual and collective schemes of mitigation. As I have said before, this may involve mitigation by the policyholders, as a condition of that policy, or as a “cream-off” from compensation received in order to renew the policy. The noble Lord referred to Flood Re’s assessment of the need to invest in order to save in the longer term. I understand all of that. I am, however, a little worried by the term “subsidising”, which is included in Amendment 156E. I am not sure who is subsidising whom in this context. If the noble Lord means measures such as these, I think that is appropriate, but I would not use that term, as it might suggest a cross-subsidy over and above what is already provided for in the scheme.
Even after the noble Lord’s gallant attempt at explaining Amendment 156G, I do not follow it fully. As I understand it, the objective is to keep the levy cost down for those outside the scheme and the means would be some sort of quota-sharing agreement. I bow to the greater expertise of those involved in the insurance industry to tell me whether that will work. Subject to those queries and my slight lack of comprehension on the last amendment, the noble Lord, Lord Krebs, and the noble Baroness are in the right territory with these amendments.
Lord De Mauley
My Lords, I concur with the noble Lord, Lord Krebs, in Amendment 156C that it is important that householders whose policies are ceded to Flood Re are aware both of the flood risk in their vicinity and of the transitional nature of the scheme. Knowing about flood risk is vital so that households can take simple steps, such as signing up to free flood warnings, as well as investigating longer-term options for managing their flood risk, and can understand the likely impact on their future premiums of the withdrawal of the subsidy from which they are benefiting.
We will work with insurers and Flood Re to support people at flood risk to plan for and adjust to risk-based pricing. I hope that noble Lords will be reassured to know that we have agreed with the ABI that insurers will be required to provide information to customers about their flood risk, Flood Re and the actions that they can take to manage this, both when a property is ceded to Flood Re and at the point of a claim. Of course, raising awareness of flood risk remains primarily a matter for risk management authorities, such as the Environment Agency, so it will be important to ensure that any action by insurers on behalf of Flood Re complements their work.
Turning to Amendment 156D, I understand that by changing the phrasing of the power in Clause 54(3) from “may” to “shall”, the notion that Flood Re is a transitional measure is strengthened. I point to the Government’s stated policy objective in the June 2013 public consultation that,
“there should be a gradual transition towards more risk-reflective prices”,
and to the existing provisions in subsection (2) of the clause, which may require the administrator to have regard to the transitional nature of the scheme in discharging its functions. We have been clear that there should be a gradual transition to more risk-reflective prices and that we are committed to ensuring that the scheme retains incentives for flood risk to be managed. The Government will not designate the scheme until we are satisfied with the industry’s proposals. As I have already said today, the regulations designating the scheme will be subject to public consultation and we are currently considering the recommendation of the Delegated Powers Committee that regulations made under this clause should be subject to the affirmative procedure. While I recognise that the shift from a permissive power to a firm expectation could be claimed to underscore Flood Re’s duties in this regard, I believe that there is sufficient clarity in Flood Re’s role to manage the transition to risk-reflective pricing and for that to be achieved through the current drafting of the Bill.
Turning to Amendment 156E, from my noble friend Lady Parminter, I can confirm that it is, as she said, our firm intention that the policy will be reviewed every five years by the Government. This review will assess the level at which the levy and the eligibility thresholds are set to ensure that the policy objectives of Flood Re continue to be delivered, including the transition to risk-reflective pricing. The plan will be a public document and Parliament will be able to use existing powers to call Flood Re’s staff to answer any questions. On the point made by the noble Lord, Lord Whitty, in the case that Flood Re’s finances are out of kilter or the scheme is not operating effectively, that review will be brought forward. We are working with the ABI to define this process. The amount of the levy and the thresholds will be set out in secondary legislation. We intend those instruments to have a review period, always accepting that they might be reviewed early if circumstances require it. In addition, as I have just said, we are taking a power to make Flood Re’s responsible officer directly accountable to Parliament for the scheme’s value for money and for propriety and regularity. There are powers to require Flood Re’s audited accounts to be laid before Parliament and provided to the Comptroller and Auditor-General to examine and compare against Flood Re’s published transition plan.
I now turn to Amendment 156F, which would require the Flood Re scheme administrator to set out how it intends to manage the transition to risk-reflective pricing by investing in flood risk mitigation measures. Actions taken by households, communities, businesses and Government to reduce flood risk are the best and most cost-effective way to secure affordable insurance for households at risk of flooding in the long term, and I recognise the noble Lord’s intention to see this reflected in the Bill. As I said earlier, Flood Re will have a duty to have regard to the need both to act in the public interest and to ensure economy, efficiency and effectiveness in the discharge of its functions. It may well be that the Flood Re administrator decides in due course that investments of the sort that the noble Lord would like to see present an appropriate means of complying with these requirements where there is a clear case for doing so. Nothing in the Bill precludes this. However, we think that it is important for Flood Re to retain flexibility in the way that it discharges its public-interest duty and plans for transition, in order to ensure that it is in a position to balance these requirements against its core obligations as a reinsurer. Accordingly, we do not think that it would be appropriate to mandate Flood Re to subsidise flood risk mitigation measures.
Finally, Amendment 156G would limit the maximum proportion of the cost of a claim that an insurer could reclaim from the Flood Re scheme to a specific amount, as part of the Flood Re scheme’s management of transition to risk-reflective pricing. I understand that the intention is that this would restore an element of risk-reflective pricing to insurance policies in Flood Re. This could create a financial incentive for households and insurers to put in place the necessary measures to manage their flood risk. However, price is one, but not the only, signal to households for achieving that and our proposals for ensuring that households have the necessary information to make informed choices about managing their risk should also act to drive resilient behaviours. While superficially attractive, sharing an element of the risk between Flood Re and households would also have the effect of creating a more complex system to administer, thereby adding to the overall costs of the scheme. Having listened to what I have said, I hope that the noble Lord will be prepared to withdraw his amendment.
Lord Krebs
My Lords, I thank the Minister for those comments in response. Above all, my amendments are about trying to put risk communication and management at the heart of Flood Re; we have heard that in relation to previous amendments earlier this afternoon. I am pleased to hear from the Minister that this is indeed the Government’s intention. I look forward with great interest to seeing how that develops through to the next stage of the Bill.
I also thank other noble Lords who have taken part in discussion of these amendments. On the frank feedback of the noble Lord, Lord Whitty, on my lecturing skills, in Oxford we normally do that anonymously. This was non-anonymous feedback on my lecturing skills in explaining risk sharing; I will take that away and consider it for the future. In the mean time, however, I beg leave to withdraw the amendment.
Lord De Mauley
Lord De Mauley
My Lords, I take this opportunity to draw noble Lords’ attention to government amendments tabled to Clauses 54, 70, 72 and 80. These are generally minor and technical amendments but I draw your Lordships’ attention to two areas which may be of particular interest.
Amendments 162 and 163 concern the winding up of the Flood Re scheme under Clause 70 and the distribution of any reserves. As part of the operation of the Flood Re scheme it is expected that Flood Re will build up capital reserves. These reserves would contribute to the payment of the scheme liabilities including flood insurance claims for those households whose premiums have been ceded. It is expected that these reserves will be reduced over the life of the scheme and taken into account as part of the five-yearly levy-setting discussions. At the end of the scheme, Flood Re will still hold some level of residual capital reserves. Clause 70 allows for an order to be made requiring a specific amount of those reserves to be transferred to the Secretary of State upon closure of the scheme.
These amendments require that, in preparation for closure of the scheme, the Secretary of State must consult the Flood Re scheme administrator in relation to the transfer of any reserves, as defined for these purposes. This consultation must be carried out before an order requiring the transfer of reserves can be made. As drafted, this consultation duty will apply only at the end of the life of the Flood Re scheme and will not extend to any other circumstances. Because of this, I ought to mention that I may need to come forward with a further amendment in relation to reserves on Report.
The other area of interest relates to Clause 72 on internal drainage boards. This clause amends Schedule 3 to the Land Drainage Act 1991 to simplify the process by which internal drainage boards in England may seek to make organisational or structural changes. At the Welsh Government’s request, Amendments 164 and 165 extend Clause 72 to internal drainage boards and internal drainage districts in Wales. This will align the process throughout England and Wales. I beg to move.
Lord Grantchester
“Flood Reinsurance Scheme: commencement
(1) The Secretary of State may by order (the “commencement order”) appoint a day on which section 51 is to come into force.
(2) An order under subsection (1)—
(a) shall be made by statutory instrument; and(b) may not be made unless a draft has been laid before and approved by a resolution of each House of Parliament.(3) The Secretary of State may only make an order under subsection (1) if a Flood Reinsurance Scheme national database has been established.
(4) Any Flood Reinsurance Scheme national database must—
(a) be accessible by the public;(b) outline a property’s risk of flooding; and(c) indicate if the property is covered by the Flood Reinsurance Scheme.”
Lord Grantchester
My Lords, the amendment concerns information on the flood reinsurance scheme and would clarify that regulations will be brought forward to set the date of the commencement, and that Parliament will have approved by affirmative procedure the requirements on insurers of the scheme. Most critically, the proposed new clause would ensure that when these important Flood Re provisions come into effect, the database will have been established, as defined in Clause 61, with the relevant information in the right form as specified in subsection (4) of the proposed new clause. Subsection (4) of the proposed new clause says that the database must be accessible to everyone, and must allow them to check whether or not the property with which they are concerned is covered by the Flood Re scheme, and what the risk of the property flooding is.
I know that all noble Lords in the Chamber today share my heartfelt sympathies for those in Somerset and the Thames Valley who have been struggling to deal with these awful floods, and hope that this Flood Re scheme will make sure that people are able to get affordable and accessible insurance in future. The importance of the amendment is that it would provide information to someone buying a property as to whether their prospective purchase is at risk of flooding and, if so, if they will be able to get insurance under the scheme. It does not make sense that a family looking for a house in Somerset, the Thames Valley or elsewhere would be unaware of whether or not it was covered. It would add particular difficulties for them when it came to budgeting for the years ahead. It would be essential information when it came to looking for a mortgage. Lenders will require insurance on property to be able to advance money for the purchase, and will want to know whether or not the costs associated with the property are going to be high and whether insurance is affordable.
The terrible events of recent weeks show how important it is that the public should have confidence that the database is accessible, and that they will be able to access that part of the database to which insurance companies also have access. While the objective of the amendment is to emphasise transparency of and accessibility to information, including mapping, it also highlights the necessity for clarity on flood risk. The Minister may respond that subsection (4)(c) of the proposed new clause is opaque and refers only to property in the scheme. Yet the scheme must manage the situation and a transition over the period of the scheme. There must be a planned and collaborative withdrawal of the Flood Re scheme, and not a precipitate change into market conditions.
At present, it has been expressed that there is a lack of clarity concerning elements of property tenure and the mapping of risk in relation to the scheme, following changes made by the Environment Agency to information and websites in relation to the proposal of the scheme. The Minister has offered today to meet Members of the Committee concerning properties, and the scheme’s treatment of them following repeated flooding occasions. It is vital that the database is accessible as any updating occurs.
Amendment 161A, in the name of the noble Lord, Lord Oxburgh, also seems to me a good idea: it would bring the flood risks of properties further to the attention of householders. It is vital that clarity on flood insurance on a database is accessible throughout the period and is made a basic principle of the scheme. I beg to move.
Lord Oxburgh
Amendment 161A scarcely needs any detailed discussion: we have spoken this afternoon on a number of occasions of the importance of getting information to people. Certainly, this was a plea that came to us through many of the verbal representations that we had when we saw various interested groups in the lead-up to the discussion of this Bill. I simply offer this proposal to use council tax demands as a simple and almost cost-free way of disseminating information very widely, reminding people on an annual basis of their vulnerability to flood. It could serve as a portal to the various schemes and proposals that we discussed this afternoon.
Baroness Northover
My Lords, I am grateful to the noble Lords for their amendments. We are certainly supportive of their intentions in tabling them. The provision of information to households at risk of flooding is vital for managing the costs and impacts of flooding. We believe that it is essential that households benefiting from Flood Re should know about Flood Re and actions that they could take, for example, to reduce flood risk, allowing them to plan for the future. This was a key issue in the public consultation on flood insurance; some of the issues in these amendments echo some of the issues raised in earlier groups, which my noble friend Lord De Mauley has addressed.
The noble Lord, Lord Grantchester, rightly emphasised transparency; we certainly agree with that. As my noble friend Lord De Mauley has just pointed out, the Government have agreed with the Association of British Insurers the principle that insurers will be required to provide information to customers, both when a property is ceded to Flood Re and at the point of a claim, highlighting their flood risk. We are also keen to ensure that Flood Re plays its part in managing the transition to risk-reflective pricing, which we discussed earlier. We are continuing to develop with the ABI proposals in this area. We strongly believe that it is equally important that households outside Flood Re are aware of their flood risk, and the Government are committed to making this information available to the public. That is why we already have systems in place, through the Environment Agency and its devolved equivalents, to provide this information.
In England, the Environment Agency already makes comprehensive and searchable flood risk data available on its website. This has enabled people to check their flood risk from rivers and the sea and take action to prepare for flooding. The agency provides the same information for insurers to use. In addition, last December, the Environment Agency published surface water maps for all areas of England on its website and will produce a combined map, showing all sources of flooding, by December 2015. This work further helps improve public understanding of their flood risk and I hope noble Lords will be further reassured by that. While this places the onus on home owners to seek the information themselves, it provides clear information to households, is well established and is actively promoted by the agency.
The noble Lord, Lord Grantchester, raised the point about people buying properties. Clearly, anybody purchasing a property should check their flood risk by commissioning property surveys and searches or, alternatively, information on surface water risk that has been available in recent years on request from lead local flood authorities. If they conduct those kinds of searches and surveys, then this kind of information should emerge. Clearly, if, having discovered the flood risk, they discuss it with whomever they are buying their property from, the issue of Flood Re would no doubt enter their discussion.
Since June, we have been working with the insurance industry to go even further to improve the data available on flood risk. We have now agreed that the Environment Agency, and its devolved counterparts, will be able to access Flood Re’s data on where the highest-risk households are. This will help the Environment Agency to improve its own mapping of flood risk and will mean that our record levels of flood investment can be targeted at those areas most at risk.
To add to what I have said to the noble Lord, Lord Grantchester, I also point out that the seller is required to fill in a property information form—he will be aware of that—as part of the conveyancing process. This form asks questions about the flood risk history of the property, and if the seller provided misleading information there would be potential for the buyer to seek damages.
Lord Campbell-Savours
Is it not true that under the process to which the Minister refers, a purchaser would not know until lawyers had been involved and were beginning the exchange of documents? My noble friend’s amendment would mean that the buyer would have access to that information in advance. Is that not the distinction or do I have that wrong?
Baroness Northover
The noble Lord will know that a buyer can access the Environment Agency’s maps and see for themselves. When buyers are seeking to buy in a particular area, they usually check out all sorts of aspects: for example, where the schools are and public transport is. It will increasingly become a concern of people seeking to buy a property, given what has happened in recent weeks, to have a look at what the potential flood risk might be. They have access to those maps before they even start down the road of any potential purchase.
Lord Campbell-Savours
Is it possible that some property might be excluded? It might not necessarily show whether a property was actually subject to Flood Re.
Baroness Northover
Does the noble Lord mean a band H property? I would have thought that it would be fairly obvious if it were a band H property. I am happy to write with any further clarification if that would assist him.
Baroness Northover
Advice on obtaining flood insurance is also readily available. The National Flood Forum offers independent advice and guidance on how to go about getting insurance and how to reduce premiums and excesses. Separately, the Government have published a guide that provides advice on how to obtain affordable cover. We recommend that anyone finding it difficult to obtain insurance should talk to a broker and shop around—this was referred to by the noble Lord, Lord Krebs—as this is the best way to make sure that they get the best price for their insurance. There are a range of organisations that can provide help and advice, such as the British Insurance Brokers’ Association and the National Flood Forum. We hope that this reassures noble Lords and that they therefore will be content not to press their amendments. I am happy to write with further details about those people who are seeking to purchase properties.
Lord Oxburgh
Before the Minister sits down, would she care to comment on Amendment 161A?
Baroness Northover
As the noble Lord said, this creates a duty on bodies that issue demands for council tax,
“in an area designated as liable to flooding to include prominently on or with such demands the information that the relevant property lies within a flood risk area and information on where relevant advice on flood insurance may be found”.
I hope that even though I did not make explicit reference to the noble Lord’s amendment, I have laid out for him where the information is already provided, which is why we do not believe that his explicit reference is required. If the noble Lord looks at what I have said and is not reassured by what I have laid out in terms of addressing the substance of what he seeks, maybe we can have further discussions after Committee.
Lord Oxburgh
I simply say that there is a big difference between having information available—I readily concede that the Government are doing that with their proposals—and ensuring that people know about it and are reminded of its importance.
Baroness Northover
As I said in my response, we are putting the onus on home owners to seek the information—and I have indicated where that can be acquired—rather than to receive the information, as the noble Lord suggests. I appreciate that this may not be quite as strong as he would wish, but nevertheless there are a number of different sources for this information and a number of ways in which property owners, when they are ceded to Flood Re, will be informed as to their status. If they make a claim they will obviously be informed that that is the case. Therefore there are a number of ways in which they will receive information, even if it is not quite as comprehensive as the noble Lord might wish.
Lord Grantchester
My Lords, I recognise the noble Baroness’s comments in welcoming many of my remarks. She maintains that there is a system in place concerning flood risk data, and I do not for a minute doubt that she is correct about that. While I am reassured, nevertheless I am concerned that people should be able to undertake their own research without the cost of expensive searches. My noble friend Lord Campbell-Savours has further argued that case. I suggest that those expensive searches may well occur further along the process of a purchase. Nevertheless, people these days are very much concerned that they are able to undertake easily, quickly and readily their own research. I will consider further what the noble Baroness said, but meanwhile I beg leave to withdraw the amendment.
Lord Shipley
“Flood reinsurance scheme: eligibility
The FR Scheme should be eligible for all houses built and occupied before its introduction.”
Lord Shipley
My Lords, I said earlier this afternoon that I strongly supported the Flood Re scheme. Again, I thank the Association of British Insurers, individual insurance companies, Defra and Ministers, and congratulate them on their achievement, which is a much needed reform that will give comfort to householders at risk.
However, I want to probe in this amendment the issue of the cut-off date of January 2009 and, in particular, those houses bought before the cut-off at the end of 2008 but not built or occupied until 2009 or after. This amendment uses the date later than 2009, which is simply intended to probe the Government’s intentions. I support a cut-off date—there must be one for the scheme to operate effectively—but the question is whether it must be 1 January 2009 or whether it could be later.
The reason why properties have been excluded from Flood Re from January 2009 is that they were excluded from the 2008 statement of principles. However, I read the Defra briefing, which says that,
“2009 is the most appropriate date based on our current understanding of flood risk”.
Does that imply that the understanding might change because of developments since the statement of principles was established in 2008? This doubt is also important because the proposals in the Bill do not take account of surface water flood risk where information was not publicly available until December 2012, or of changing weather patterns that alter our understanding of what “high risk” is.
The essence of this amendment is: given that houses granted planning permission before 2009 but built afterwards would not covered by Flood Re, there is a case for saying that post-2009 households should be allowed to enter Flood Re where flood risk has genuinely changed since 2009 due to changing weather; where developments are affected by surface water but the risk was not taken into account as it was not understood in 2009; or where contracts had been signed before 2009 but the relevant property was not built until 2009 or later. This amendment tries to address those key questions. I very much look forward to hearing the Minister’s reasoning on this in his reply. I beg to move.
The Earl of Lytton
My Lords, we have discussed the substance of Amendment 160B already so I do not propose to move it. However, while I am on my feet, I will comment on Amendment 160A and the terms in which the noble Lord, Lord Shipley, moved it. I received a different narrative on this. The circumstances of the post-2009 cut-off, as explained to me, were that that was the time when Planning Policy Statement 25, in relation to construction on flood risk areas, came into being. As the story went, therefore, everybody was on notice that that was an issue, so that was the cut-off point. However, it occurs to me that the noble Lord, Lord Shipley, has raised rather an interesting issue.
It is fair to say that the end of summer 2008 was when the wheels came off the banking system and, with it, the property development system. If anybody had a planning consent that he was hoping to implement in 2008, he would have found that there was no money or funding to implement it—nothing would be forthcoming. Many of these schemes were put on ice. Indeed, there was a government recommendation—I do not know if you can call it an instruction—to the local planning authorities that they should look favourably on extending the three-year life of these. As I am sure noble Lords are aware, detailed planning consent has a three-year life, so it would have run out and would have had to be reapplied for. Due to the circumstances of having to reapply—maybe there are a new lot of regulations and so on—you can run into a whole raft of cost, time and delay.
The idea was that those things should be perpetuated, and with very good reason. They underpinned balance sheets, loans and all sorts of things. If they were to be effectively prejudiced by the loss of a planning consent, so that you had a property with either no verifiable development value or a lower development value, that had repercussions for precisely the sort of reasons I outlined earlier this afternoon in another context. So it is perfectly possible that a planning consent that was negotiated on the basis of rules in 2006 or 2007 would not have got going by the end of 2008 or 2009, and would have had to be preserved. The houses would not have been constructed until some time later, but the circumstances relating to that consent would have related to the antecedent circumstances at the time of granting of planning consent. I can see that there is an issue here.
I am always a bit frightened by development land values anywhere. I am even more frightened when things go wrong and people start reaching for their lawyers. What are they going to start looking at? Will they say, “The house is now constructed, it was built on what might be called an old technology basis pre-2008, and, lo and behold, it has flooded”? If they are excluded, it may have a material effect on the value. Who will they look to for recompense—the local authority or the fact that Planning Policy Statement 25 did not apply, or should have applied in some other form? This makes me think of the time-honoured American superfund arrangements, where most of the money went not to environmental clean-up but into the pockets of lawyers trying to attach liability. I do not wish to see that sort of thing happening here. Some careful thought has to go into the date and where the cut-off should be. I know it is not easy. I am happy to believe that the account of the reasons and circumstances given by the noble Lord, Lord Shipley, is the correct one, but I am slightly surprised that it seems to be a little at variance with the one that I have. I would be very interested to hear what the Minister has to say about this.
Baroness Bakewell of Hardington Mandeville
We have had a good debate on this issue, so I will be brief. I am concerned, like others, at the exclusions from Flood Re. My concerns are that many households may have no idea that their property is in a high-risk area or that they are excluded from Flood Re. Like the noble Earl, Lord Lytton, I am interested to hear from the Minister how many properties were built before 2008 but were not occupied until 2009 or after. The people living in these properties may well get a nasty shock when they realise that they are not able to do anything about it.
My concern with Amendment 160A is that all classes of people, whether they are freeholders, leaseholders or the owner of a commonhold tenancy, should be treated equally. Other noble Lords have covered this area in detail. If properties are on the flood plain, whether they are 200 or five years old and whether they are owned or rented, they should be able to access affordable flood insurance. Anything less is invidious. There will be households where a newly married couple have taken on the leasehold of a property, raised their children, lived in it all their working life and now seek to retire there. When they first took up occupancy of the dwelling, there would have been no hint of it ever flooding. However, with changes in the jetstream and continuous and persistent rainfall year on year, they now find that they and their neighbours are suffering from flooding. Are these residents now to be excluded from Flood Re? The Bill is not clear on who the person with the “qualifying interest” is. Will the Minister clarify this situation?
Earl Cathcart
My Lords, I will speak to Amendment 160A. I will be interested to hear the Minister’s response to the question asked by the noble Lord, Lord Shipley, but I shall speak to the amendment as it is written. The Flood Re scheme should be eligible for all houses built and occupied before its introduction.
We live in a blame society. Even now, the media are trying to pin the blame for the current flooding on someone. Is the worst rainfall for 200 or 300 years the fault of the Government, the Environment Agency or local government? It must be somebody’s fault.
With Amendment 160A, we are debating whether houses built after 1 January 2009 should be included in the Flood Re scheme. As was said earlier, PPS25 has made it quite clear that development should not take place in flood risk areas, and yet we all know that it still goes on. One has to ask why. Who is responsible for the houses built on flood risk areas when the rules are quite clear? Everyone is trying to pass the blame on to someone else—“It’s not my fault, guv”. Who is at fault? Is it the Government for not ensuring stricter adherence to PPS25? Is it the Environment Agency? That may be the case. Although 97% of applications that it objects to are refused, it looks at only 6.6% of the 450,000 applications, which is quite clearly not enough.
Is it the fault of local government planners? That is probably the case. One has to ask why they continue to pass applications on flood risk areas contrary to PPS25. Is it the fault of the owner for buying a home built after 1 January 2009 on a flood risk area? It probably is. Caveat emptor, or let the buyer beware: he should have known. If he did not, is it the fault of his conveyance lawyer when carrying out the searches? It raises the question of whether lawyers should be required, as a matter of course, to inform buyers if the house is on a flood risk area and, in this case, when it was built.
One can lay the blame on homes being built on flood-prone areas on any or all of the above but, as sure as eggs are eggs, it is not the fault of the insurance industry. Why should insurers pick up the tab? They have been quite clear on this. Indeed, they are the only ones who have drawn a line by saying that, if a home is built in a flood risk zone after 1 January 2009, under the statement of principles, flood cover will not be available and the property will not be eligible for the Flood Re scheme. Underwriters were quite clear that they did not want to encourage unwise and irresponsible development. Why should underwriters or contributors to the scheme pay for other people’s stupidity? The Government must decide whether PPS25 is to be adhered to or not.
Lord Campbell-Savours
My Lords, there is an element of confusion both outside and inside this House as to where the words which define the exclusion of leaseholders are to be found. I understand that Defra put out a notice in which it excluded leaseholders, but can the Minister tell us where this provision is made? The public are confused. The assumption when anyone reads this Bill that freeholders are included will be interpreted by flat-owners who have purchased their freehold but manage their blocks through leasehold companies—companies which have been established to manage the freehold, owned by the residents who have 999-year leases—to mean that they are also included. They will assume that because they are freeholders they are included. My understanding from my reading, although, as I say, I have not found the authoritative piece of literature, is that they are not included. In other words, people out there who believe they are included—freeholders of blocks of flats; not corporate interests but individual share-of-freehold owners—will think that they are included when they are not. That needs to be sorted out.
I cannot understand why they are excluded. Indeed, I would argue that they are probably less of a risk to insurance companies, even though they may well live in buildings on flood plains, because very often you find blocks of flats where no one is living on the bottom floor at all and the first flat in the block is on the first floor, above the area at risk of being flooded. If I am correct in what I am saying, will the Minister tell us why share-of-freehold owners in blocks of flats are being excluded when, in fact, they are freeholders and when, as I say, people reading the Bill will presume that they are included?
Lord Whitty
My Lords, I think my noble friend Lord Campbell-Savours is going back to a point that I raised earlier—namely, that the Flood Re parts of the Bill may have been produced relatively late in the Commons. However, the dividing line between what is included in terms of property and what is not is not as clear as it should be. My noble friend has just identified a group for whom this issue is particularly confusing, but in any case the distinction is not in the text of the Bill. As I said earlier, there is slight confusion about the various bits of paper that Defra has produced on this matter, so we need clarity one way or the other as to which groups are included and which are not. We have heard various bits of clarification from the Minister today. I think that most of those should end up in the Bill before we finalise it and I look to the Government to come forward with amendments on Report or at Third Reading to make sure that the position is clear.
I am afraid that I confused the amendment of the noble Lord, Lord Shipley, in this group with an amendment in an earlier group and commented on it earlier. However, whereas I have great sympathy with a lot of the other excluded groups, I have virtually none with those who built on and developed land in high-risk areas after 2009 because it was already clear from the previous agreement between the Government and the ABI that new insurance would not be given for those developments. Like the noble Earl, Lord Cathcart, I do not think we should give those people leeway retrospectively. If we shift the deadline now, somebody will argue for a deadline at a later stage to allow yet more development in inappropriate places, and that will skew the insurance figures and the whole calculation behind Flood Re. Therefore, I do not support the noble Lord on this occasion.
Lord De Mauley
My Lords, my noble friend’s Amendment 160A seeks to make all houses built and occupied before its introduction eligible for Flood Re. This amendment would move the cut-off date for inclusion of properties in the scheme to the start of Flood Re, rather than from 2009, and would also bring band H households in scope of the scheme.
I apologise to noble Lords as I suspect that I may be repeating what I said earlier today and, indeed, we may repeat it yet again later. First, I reiterate why we intend that properties built before 1 January 2009 and those in council tax band H and the equivalents would not be eligible for the scheme. However, before I do that, I shall respond to my noble friend Lord Shipley and a number of other noble Lords who asked what state the property must have been in at 1 January 2009 in order to qualify. It must have been in possession of a council tax band, which would imply that it was habitable at that date. I hope that is helpful.
The 2009 cut-off date recognises that new housing development should be located to avoid flood risk, or where development in a flood risk area is necessary, it should be designed to be safe, appropriately resilient to flooding and not increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since 2009 should already be insurable at affordable prices. As the noble Lord, Lord Whitty, said, that marker has been in operation for several years, and it has been maintained under the Flood Re proposals.
The noble Lord, Lord Shipley, asked about surface water mapping. The new mapping has shown that the total number of properties affected by surface water flooding is lower than previously thought.
Band H properties are not included in the scheme because, as I explained in some detail earlier today, Flood Re is designed to target support to those who need it most.
The noble Lord, Lord Campbell-Savours, raised the issue of leasehold properties. As we have discussed, commercial policies are out of scope of Flood Re, which is designed to support households. We believe that this approach is fair and practical, and it was supported in the public consultation. However, the leasehold sector presents a more complex situation, where the contents policy is classified as domestic, but a buildings policy could be classified as either commercial or domestic and could cover multiple dwellings. As I said, I recognise the strength of feeling on this issue, particularly in light of the ongoing extreme weather conditions, and I feel we need to take time to consider it in more detail, although, without evidence of market failure, it would be difficult to justify action. However, we will examine the evidence further with the ABI and I hope to provide an update on Report.
Lord Campbell-Savours
Will the Minister comment on the issue of share of freehold?
Lord De Mauley
If I may, I will include that in that consideration. I hope that my explanations have provided some helpful reassurance. I am happy to ask my officials to work with the ABI to set out the proposed scope of Flood Re in more detail before Report, as that is something noble Lords have asked for. On that basis, I ask my noble friend to withdraw the amendment.
Lord Shipley
My Lords, I thank the Minister for his helpful reply. A Written Statement would also be helpful as we move towards Report. I should like to pursue two points briefly. I say to the noble Earl, Lord Lytton, that there is more than one narrative but the outcome is the same. The issue is whether the understanding of flood risk that was apparently correct in 2008 and 2009 is still correct in 2014. I suspect that it is not, which is why I am concerned. It would be helpful if the Minister’s note that he will send before Report could inform us whether it is still correct.
The noble Lord, Lord Whitty, said that we should not include in the provision those who had continued to build on high-risk flood plains after 2009. I entirely agree with him, but that was not the point I was making. My point was slightly different—namely, that I think the definition of what is high risk is now changing around us. Therefore, people who bought in good faith properties which were not in a high-risk area may now find that they are living in a high-risk area as a consequence of climate change, changing weather patterns and so on.
We have had an interesting debate. The issues have been identified and we can consider them further prior to Report. Therefore, I beg leave to withdraw the amendment.
Chilcot Inquiry
(10 years, 9 months ago)
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Lord Morris of Aberavon
To ask Her Majesty’s Government what are the reasons for the delay in the completion of the Chilcot Inquiry.
Lord Morris of Aberavon (Lab)
My Lords, I welcome the opportunity to debate the reasons for the delay in the completion of the Chilcot report. I will confine myself to some specific questions. Despite repeated requests over the years, I have never commented on the legality of the Iraq war. My duties as Attorney-General during the Kosovo war were difficult enough and many law officers have decisions to make concerning international law which are not easy. My only comments were in my recently published memoirs in which I said:
“The equivocation of the French before the Iraq war is not an argument for the failure to try for a further sustained effort”,
in the Security Council. I added:
“Or was the die already cast? The Chilcot inquiry may tell us”.
My interest in public inquiries goes back a long time. Cabinet Office records show that my name was suggested for the Franks inquiry into the Falklands War. In the event, more experienced colleagues were chosen. The Franks inquiry took six and a half months in all. The Chilcot inquiry was set up in June 2009. Its final public hearings were in February 2011 and we were told that it would deliver its report as soon as possible. In 2009, Mr Gordon Brown told Parliament:
“No British document … will be beyond the scope of the inquiry”,
and that the final report,
“will be able to disclose all but the most sensitive information—that is, all information except that which is essential to our national security”.
As a former Attorney-General, I fully understand those considerations. It is how they are interpreted that matters and whether the correct judgment is made in balancing. Mr Brown added:
“I have accepted the Cabinet Secretary’s advice that the Franks inquiry is the best precedent”.—[Official Report, Commons, 15/6/09; col. 23.]
In the difficulties about publishing Chilcot, has there been any departure from that precedent?
At that time, Mr Cameron made a number of challenges. He said that the Franks committee reported in just six months and suggested that, because of the longer period for Chilcot, people would conclude that the inquiry had been fixed to tide the Government over until after the election. A year seemed too long for Mr Cameron in 2009. Unless progress is made, it will be more than four and a half years in the case of Chilcot.
On 7 November, the Daily Telegraph reported:
“The Cabinet Office is resisting requests to make public ‘more than 130 records of conversations’ between either Mr Brown or Tony Blair … and Mr Bush … There is also a wrangle about making public ‘25 Notes from Mr Blair to President Bush’ and some ‘200 Cabinet-level discussions’”.
First, who is responsible for the delay? Secondly, what precisely are the reasons for it?
Public inquiries are set up to deal with public disquiet, to establish facts and to learn lessons. Not to publish is to undermine the whole object. Delay is unjust and justice to the public is denied. In January, in a Written Answer, Francis Maude said that,
“the completion of its report is a matter for the Inquiry Committee”.—[Official Report, Commons, 6/1/14; col. 1W.]
Later in the month, he said:
“The Iraq Inquiry has been provided with all of the documents it has requested”.—[Official Report, Commons, 20/1/14; col. 32W.]
Your Lordships may consider, from the very tight drafting of both answers, that they are less than frank.
In December, the noble Lord, Lord Hill, said that the Prime Minister had been updated by Sir John Chilcot, who had,
“reported that continuing discussions over certain classified documents had caused a delay to the Maxwellisation process, and hence publication of the report”.—[Official Report, 12/12/13; col. WA 139.]
That was much more transparent. Maxwellisation is the name for the way the common law has developed of providing a person who is criticised in a report with an opportunity to comment. It is nothing more than fairness. If you cannot resolve what should be in the contents of a report, both the inquiry and the criticised are in an intolerable situation. Following freedom of information requests, the Information Commissioner ruled in favour of disclosing the minutes of two Cabinet meetings in 2003 prior to and concerning military action in Iraq. The Cabinet Office—would you believe it?—had curiously argued that the public interest in favour of disclosure diminished with the passage of time. That is risible. It is the original long-grass argument.
The commissioner considered that there was a presumption running through the Freedom of Information Act that openness in itself is to be regarded as something which is in the public interest. The commissioner concluded that, in line with recent legal authority, material which,
“can provide a better understanding of how the decision to go to war was made is subject to an exceptionally strong public interest in disclosure”.
The Library has failed to find any record of an appeal and I am particularly grateful for its help.
On 31 July 2012, the commissioner said that he was disappointed that a ministerial veto, as allowed by the Freedom of Information Act, had been used to override his recent decision on the two Cabinet meetings to which I have referred. Why was the route of a ministerial veto followed rather than an appeal to the court as in the recent case of Plowden—or were the Government, in whatever manifestation, afraid of another adverse finding? Perhaps I may remind the House of the background statement of the policy of the Freedom of Information Act. It states:
“The Government considers that the veto should only be used in exceptional circumstances and only following a collective decision of the Cabinet”.
Has that policy been changed by this Government? Was the Cabinet consulted? If not, who took the decision? Was it the Prime Minister or the Cabinet Secretary?
I surmise that each and every word of Prime Minister Brown’s statement announcing the Chilcot inquiry had the blessing of the then Cabinet Secretary—if indeed he did not draft it. The crucial question is: how much wider is the veto now being used than the actual words used by Mr Brown, to which I have already referred, that restrictions in publication would be limited to that which was essential to national security?
A blanket refusal to disclose Cabinet discussions, especially having regard to the commissioner’s carefully considered and balanced ruling of the need to publish, seems miles wider than Mr Brown’s promise to Parliament. Will the noble Lord give a categorical answer to my question: Has Mr Brown’s promise to Parliament been breached, either in form or in spirit? Parliament was deceived at the time of Suez. It would be most unsatisfactory if any similar allegation over Iraq were not cleared up in this independent inquiry, which Mr Brown promised,
“will receive the full co-operation of the Government”.—[Official Report, Commons, 15/6/09; col. 23.]
Lord Anderson of Swansea (Lab)
My Lords, I am pleased to follow my noble and learned friend and to adopt many of his questions. First, I shall reflect on the precise question in the Motion and then consider whether the inquiry is likely to be judged worth while.
Perhaps the first question can be answered briefly. It is largely contained in Sir John Chilcot’s letters to the Prime Minister of 15 July and 14 November last year. Apparently, only in June last year did the inquiry request that certain documents should be published to give evidential backing to its conclusions. I make two observations on that. First, why was the request made so late in the day? Secondly, surely it was unrealistic of the inquiry to believe that Cabinet Office documents and confidential exchanges between heads of state could be published. By sticking to such a principle, the inquiry ensured further delay for a process that began in June 2009 and was expected by some at the time to last but for a year. The Guardian of 29 December last claimed that a compromise agreement had been reached between Sir John and the Cabinet Secretary that extracts could be published in a redacted form. I pose this question to the Minister: is that so? Was not such a deal in effect inevitable from the start?
Many doubts remain as to whether the length and expense of the inquiry have been worth while. My noble and learned friend referred to the Saville inquiry into Bloody Sunday. However long and expensive that inquiry was, it had the merit of having a cathartic effect on divisions within Ulster. Perhaps the Chilcot inquiry was necessary because of pressures at the time, but many key questions have already been answered. Certainly, every conceivable question was asked of Tony Blair, the Prime Minister at the time. For some the motive was a sort of personal vendetta against Tony Blair—let us remember “Blair liar” and “Blair war criminal”—but they are likely to be disappointed.
I personally had the privilege of an important vantage point. Between 1997 and 2005 I chaired the Foreign Affairs Committee of the other place. I gave evidence to the Hutton inquiry and I visited key figures in the Washington establishment at least twice a year over the period between 1998 and 2005. I had one-to-one meetings with the Prime Minister, Tony Blair, and Sir Richard Dearlove. As a result, I am wholly convinced that Tony Blair acted with total integrity and relayed to Parliament and the public the advice that both he and, indeed, I too had received. There may be criticisms that he did not ask sufficiently searching questions of the intelligence services about their sources. Certainly the US Administration relied excessively on exiles and partisan sources such as Mr Chalabi and the Iraqi taxi driver, Mr Rafid al-Janabi. There was much suspicion that the US Administration was seeking revenge on Iraq for 9/11.
The Prime Minister at the time may be criticised for being insufficiently independent of the United States and having a rather starry-eyed view of President Bush and the special relationship, but again, for example, at Crawford in March 2002 he told the President that he would support military action not come what may, but provided,
“that certain conditions were met”.
He did ensure that the United States took the UN path until thwarted by Monsieur de Villepin and contrary to the neo-cons’ view in Washington. Equally, he avoided the isolation of the US, and in my judgment both of those were the objectives. The inquiry is unlikely to find a smoking gun and it has said in terms that it will not apportion blame.
What about the breaches of international law to which my noble and learned friend alluded? Even if in retrospect we recognise that there was greater weight against intervention among those international lawyers who opposed the intervention, there were respected lawyers on both sides of the argument for pre-emption. The inquiry would be well advised, in spite of its excellent legal adviser, not to seek to give a definitive view in this very uncertain field of international law. What about the role of the security services? Surely that was adequately covered in the Butler report. What about the role of the military? It has had its lessons learnt reviews. There were some concerns about the quality of military equipment, but surely the general, correct view is that it was executed superbly by our Armed Forces.
The follow-up to the Iraq intervention is that there has been much public revulsion against all intervention. There was the Chicago speech by Tony Blair in, I think, 1998. There were successful interventions in Sierra Leone and Kosovo, but following Iraq and Afghanistan, as we have seen in Libya with no boots on the ground and as we have seen in the parliamentary view on intervention in Damascus, there is now a very strong public and parliamentary tide against intervention.
What about the likely conclusion about governance? Was there too much armchair government? Was there a presidential-style Government with the Cabinet sidelined? That may be so, but the memoirs of Robin Cook, no great admirer of the former Prime Minister, suggest otherwise. What about the insights into transatlantic relations? It was the clear strategic priority of the Prime Minister not to keep the United States isolated; that was very much a major factor for him. There was a great deal of evidence of that in the US inquiries. I had a certain personal experience of the somewhat naive views of the neo-cons in Washington when on several occasions I met Mr Richard Perle, whom Denis Healey called the “Prince of Darkness”. He relayed to me his view that come the liberation, while perhaps the bells would not ring in Iraq, there would certainly be great rejoicing and that the ripples of democracy would flow out from Iraq over the whole of the Middle East. That was a view which was in part accepted by the President, and the neo-cons were then very much in a dominant position in Washington.
What about the post-conflict planning? Is the inquiry likely to tell us anything useful about that? The truth is, of course, that we in the UK played a very secondary role in the conflict and certainly a secondary one in the post-conflict planning. I saw that when I went to the green zone in Baghdad and was in the office being occupied by Sir Jeremy Greenstock. I saw the role of Mr Paul Bremer and his large component on the other side. There were two contrasting blueprints for the post conflict. The State Department had Colin Powell and Richard Armitage, who told me that there was more combat experience on his floor in the State Department than on the relevant floor of the Department of Defense. In that department were Mr Donald Rumsfeld and Mr Paul Wolfowitz. They were at the top of the department and said that the Iraqi army was dissolved. As we know, the Chilcot inquiry was unable to interview key people in the US Administration, so it has been given only a partial view of the key players in the post-intervention scene in the United States.
In conclusion, I fear that this long-awaited and long-expected inquiry, long delayed for good or bad reasons, may well prove to be no more than an historic document mainly of interest to students of government. Possibly, after an initial flurry of interest in the press and among the public, the waters will close over it and it will have as little ultimate impact as the Franks committee report on the Falklands, referred to by my noble and learned friend. At least that had a totally UK national perspective. Many expectations have been raised, but it may well be that many expectations will be dashed.
Lord Alderdice (LD)
My Lords, I suppose that if one were to ask many members of the public for their memory of the political story of Iraq, they would probably say, “Well, in the United Kingdom, the governing Labour Party and the Official Opposition, the Conservative Party, supported the invasion, and the Liberal Democrats insisted on a UN resolution, which they did not get and they opposed the war as a result”. On that kind of narrative, one might well expect that I would be standing here wanting to find out the legal background—what really happened in past—in order to produce some kind of simplistic blame. It seems to me that that would be an extremely foolish thing to do.
First of all, as the noble and learned Lord, Lord Morris, said—and we must be grateful to him for securing this debate—it is a lot more complicated than that. Almost exactly 11 years ago to the week, on 15 February 2003, between 1 million and 2 million people came out to protest. They were not all Liberal Democrats or anything like it. There were Conservatives like Ken Clarke. There were Labour people, including Robin Cook, Tony Benn and many others, who had their reservations. Indeed, within the community as a whole, there was a great debate about this question. It was not simple, and I have no doubt that when Sir John Chilcot’s report finally is published it will be a thoughtful, complex and detailed report. I got to know him very well when he was at the Northern Ireland Office and I always admired his acuity of perception and his integrity of conduct, and the same could be said of his distinguished colleagues.
From my point of view, the purpose of this inquiry is something quite different. It is to try to understand how we got ourselves into such a difficulty in order that we can look to the future with better understanding of how to deal with the problems. I will give one example. At the time of the first Gulf War, which was permitted by UN Security Council Resolution 678, there was a great debate as to how far it might be prosecuted. Noble Lords will well recall a lot of discussion as to whether it should actually be prosecuted right through to Baghdad to get rid of Saddam or whether Resolution 678 did not permit it. I had a great argument with my old friend and colleague, now the noble Lord, Lord Ashdown, on exactly this issue. It was my view that, with this particular guy in these circumstances, you needed to go the whole way to Baghdad and get rid of him. It seemed to me that to do anything other was not just a poor reading of Machiavelli but a poor judgment of the psychology of the person one was dealing with and the politics of the region. Paddy said, “No, no, no. That is not possible under UNSC Resolution 678. We cannot do that. We can just remove him from Kuwait”. Well, it is a bit ironic that so many years later it was UNSC Resolution 678 which was prayed in aid actually without a further activating resolution. If I was so hawkish—as I would have been deemed then—in the first Gulf War—why would I have spoken in your Lordships’ House in 2003 saying, “This is not the time to go ahead with it”? It is because situations change. I will come back to that because I believe it is the importance of the urgency of the Chilcot report.
The situation was that in the first Gulf War we had a huge coalition, there had been a clear breach, it obviously required military intervention, and it would have been possible to prosecute it through to the end. In the intermediate years, the Clinton Administration and others had tried to find negotiated ways of moving things forward. Indeed, as I said in your Lordships’ House on the occasion of that debate, there was a suspicion that the weapons inspectors were being put in place simply to try to produce a justification to return to Resolution 678. It seemed to me that it was not going to end well. It was not going to resolve the problems of the region and stabilise Iraq.
How does that relate to the situation now? Noble Lords will recall that Parliament, in debates in the other place and here, made an extraordinary decision that set the Prime Minister and the Government back on their heels on the question of Syria. It was a watershed decision, in my view, in that a Prime Minister and a Government had decided that they wanted to undertake a military intervention, and Parliament, with the overwhelming backing of the people, said, “No. That is not a direction in which we want to go”. It seems to me that this puts up for serious exploration our whole approach to military intervention as to when and how it should be undertaken. Should it always be with military force or are there other ways in which we should intervene? Should we ever be doing it on our own? Should it always require a UN Security Council resolution?
These are very serious questions, but not for the past—of course they are interesting for the past, and, as the noble and learned Lord said, perhaps for some students of history in the future. They are important questions for us in the present and over the next few years, not to apportion blame but to see if mistakes and misjudgments were made, and I think everybody is clear that there were, and to try to prepare ourselves—but not to deal with the last war. One of the mistakes often made by military commanders and politicians is that they prepare themselves better to fight the last war over again. Our job ought to be to become clearer about the changing dynamics of the Middle East and of other regions in order to better make judgments about how we, as a country, play our role in that complicated region and elsewhere in a time when military strength is no longer any guarantee of military success. That is why I believe that we need the report with some urgency. The situation in the Middle East and in other places is developing very quickly. We are uncertain how to proceed and we need to understand whether and how mistakes were made so that we can find a different way of working.
I have no doubt that one problem is civil servants being wary about what things should be redacted and what things should not. I was reading just yesterday a letter by Elizabeth Wilmshurst, the FCO’s deputy legal adviser who resigned; her resignation letter was published some time later. The redaction made at the time by the Foreign Office and later released through the press is quite interesting. I read the redaction and I read what was originally published, and I could not understand why on earth they had bothered to take out what they did, because it did not tell us anything that we did not know. I was not the least bit surprised because my own experience with many security and Civil Service documents is that when there is a great dust-up about what to release and what not to release, more often than not, although not all the time, when you read what is redacted, the fact that it was kept out—and it was clear that it was kept out—actually produced more suspicion that there was something really serious there. When you read it afterwards, you say, “What on earth was all the fuss about?”.
However, perhaps it is not that. Perhaps it is that our friends in the United States are very nervous about some of the conversations between the two Prime Ministers, Mr Brown and Mr Blair, and the President. I am a friend of the United States and I think we have an extremely important relationship, but good friends sometimes disagree honestly. Indeed, we are not good friends if all we ever have to say is that we support the United States. I hear this all the time with the Middle East peace process. What is the British Government’s policy? It is to listen to what the American policy is and agree with it. That is no help to our friends. We need to engage in a proper public debate about these issues and then be supportive.
Therefore, I appeal to my noble friend the Minister to help us understand why there is such a delay and to appreciate on behalf of the Government that early publication is not a matter of the past but an urgent requirement for the present and the future.
Lord Elystan-Morgan (CB)
My Lords, the House is deeply indebted to my friend, the noble and learned Lord, Lord Morris of Aberavon, for initiating this debate.
Of course, it is a very great pity that, whenever the Chilcot inquiry reports, it will be more than 11 years since the military operations occurred in Iraq, but that is not the issue before the House tonight. We are not considering whether Prime Minister Blair involved this kingdom in an illegal war or whether he is as pure as the driven snow as far as that matter is concerned. We are not concerned in any way with the issue of weapons of mass destruction or what was genuinely or not genuinely believed in that regard. We are concerned only with seeking to ask the question: why has the Chilcot inquiry been held up in the way that it has?
The truth is that the Chilcot inquiry has run into a massive roadblock. As described by the noble and learned Lord, Lord Morris, this is the release—not to the members of the Chilcot inquiry because they have seen them already but to the public if the opportunity arises—of three groups of documents: 25 notes passed between Prime Minister Blair and the President of the United States; 200 Cabinet or Cabinet-style discussions relating to the relevant matters; and 130 conversations between either Prime Minister Blair or Prime Minister Brown and the President of the United States. That is the issue.
The relevance of those documents is not that they have been seen by the Chilcot inquiry but that the Chilcot inquiry wants to use them for a very specific and very significant purpose: the so-called Maxwellisation principle, which was established in relation to the inquiry following the death of Sir Robert Maxwell. In other words, a body such as the Chilcot inquiry wants to be able to say, “We have examined all the evidence. We have come to the conclusion that there is a prima facie case against A, B, C and D—the finger of blame appears to point to them as persons who ought to be criticised. But we are not going to do that without giving them the opportunity of replying to that situation and calling evidence if they wish”. That seems an unimpeachable principle of fairness.
However, the Chilcot inquiry goes one step beyond that and says, “It is not enough that we should be able to do that. We should be able to show to the public, if our conclusions remain the same, why we regard those persons as blameworthy; in other words, that they should be condemned not out of the generality of our conclusions but out of the specific evidence that is contained in these particular pieces of documentary evidence. Unless Maxwellisation is made public and those documents are produced and published at the time the report is published, Chilcot will not be regarded as having full validity”. I absolutely say amen to that.
Who is holding up this disclosure, which, in my submission, is utterly essential to the fairness of this inquiry? It is apparently the Cabinet Secretary, Sir Jeremy Heywood. He is saying, “I am opposing this on grounds of sound precedent, a precedent laid by my predecessor” —the noble Lord, Lord O’Donnell—“that is, the law of the Medes and Persians”. I would challenge that completely and make the following submissions. First, it does not matter what the noble Lord, Lord O’Donnell, or any other civil servant in the past 1,000 years has said. It can make no difference whatever. It is not a matter for a civil servant to decide.
Secondly, it is a matter for the Government, as the sovereign and ultimate legal authority, to decide, and nobody else. The Prime Minister, making a statement on this matter last year, said that Government were responsible for disclosure. It does not matter what pressures there might be from the United States or the Civil Service. The Government are legally and morally responsible.
Thirdly, a long, long time ago when I was a law student—it almost seems like 1,000 years ago—the noble and learned Lord, Lord Morris, and I were in the same department at Aberystwyth and we were taught sound principles of equity. One of the principles of equity was: no man shall be a judge in his own suit. In other words, there are certain people who should not adjudicate in this matter. Who would be the last person who should ever be allowed to adjudicate on the question of whether or not these documents should be made public? Clearly, that is either Prime Minister Blair or Prime Minister Brown. Who would be the next? You might say someone who was the alter ego of one of the two persons. Who was the alter ego of Prime Minister Blair? It was Sir Jeremy Heywood—one of the main protagonists in this confused, complicated and altogether very strange story.
I am not saying for a moment that Sir Jeremy is other than a fair, honourable and thoroughly decent man, but there is a principle of law which says that justice must be done and must be manifestly seen to be done. Unless the Government intervene here, as it is their moral and legal responsibility to do, this matter will fester and I think it will contaminate and poison the whole body politic. The confidence that people have in parliamentary democracy, already injured, will be further demeaned.
Lord Liddle (Lab)
My Lords, I suppose I ought to declare an interest in this debate in that I worked at No. 10 at the time of the Iraq war. Indeed, I sat opposite some of the foreign affairs private secretaries whose minutes are now to be found on the Chilcot inquiry website. I saw some of it pretty much at first hand, although I was not directly involved with Iraq. It was not a very easy period, I can tell your Lordships.
I do not think it is right for our debate tonight to get into the substance of the issues that the Chilcot inquiry is addressing. It has been an extremely good debate and the speeches, as usual for the House of Lords, have been of exceptionally high quality, and I thank the noble and learned Lord, Lord Morris of Aberavon, who obviously put an awful lot of thought into what he had to say in opening the debate.
I will confine my remarks from these Benches to the question of delay and the view the Government take of that delay and of the questions relating to the disclosure that are at the heart of that delay. It is important to be clear: as I understand it, it is not that written evidence has been withheld from the inquiry; the inquiry has seen all the relevant papers. The issue at stake is how much of that evidence it can actually quote in its final report. So the question is: does the committee base its conclusions on the public taking it on trust that it has read the material and this is what it concludes, or is it able to quote from the documents?
Everyone will agree that the Chilcot process has been very thorough. If you look at that website, you will see that far more government papers are available than for any precedent that I can recall. The comparison with Suez, where no one was told about the secret deal that was done with the French and the Israelis, is very striking.
However, there are questions about the extent of disclosure. I want to see the Iraq question and as many of these issues as possible put to rest, but even then there are three areas in which questions of disclosure raise awkward issues. These are questions not just for civil servants, but for any responsible Government of any party acting in the national interest.
I think one of these questions has already been sorted out: the question about dealing with the use of intelligence, and the worries as to whether disclosure of anything to do with intelligence compromises sources. I should like the Government to confirm what I think to be the position: that in the case of Iraq those questions were sorted out in the Butler inquiry in 2004, and that there are no new intelligence issues arising in the case of Chilcot. These issues relate to national security. From our Benches, as my party leader said only yesterday, we support greater scrutiny of the way in which intelligence operates. There are obvious limits as well.
The second issue concerns relations with our allies. The committee wants to quote from private correspondence between the Prime Minister and the President of the United States. If we see ourselves as America’s closest ally there is a real question, not just of the past but for the future, as to the obligation that places on us to protect confidences in that relationship. On that point I am sure a lot of people would say, “Damn the Americans”. I do not take that view. If we are serious about our alliances—and the same would be true of our close partners in Europe in other situations—we do have obligations to our allies and partners. How do the Government see that question? Time makes a great difference, but we are talking about something that happened a little over 10 years ago. What view do the Government take of what is a reasonable time to disclose things that affect our closest allies?
Thirdly, there is the issue about freedom of information and what are called Cabinet-level discussions. Whatever decisions the Government make on disclosure as far as the Chilcot inquiry is concerned could have long-term implications for freedom of information more generally. This is a serious issue. My party introduced freedom of information in 1998. We are proud of that achievement, but there were always boundaries that had to be set. I have always thought of freedom of information, in simplistic terms, as meaning that expert advice should be open but confidential discussion should remain confidential. How do the Government see this question about disclosure of discussions right at the centre of government on the basis of papers provided? Much of the content is now available on the website, but how do the Government see this question of disclosure of Cabinet-level decisions? This will have an impact on all future Governments. This is not just about dealing with the Iraq issue. This is about whether disclosure is going to affect the relationship between Ministers and civil servants for decades ahead. We have to get that right.
Lord Elystan-Morgan
Two points arise. First, if it be the case that information of a confidential nature between states is always to be kept in the background, that is an end to any question of transparency. Does the noble Lord accept first of all that many of the thousands of documents that have been disclosed to Chilcot on the basis that they are declassified and therefore open to publication come into that particular area that he mentions?
The other matter is that it appears—if the responsible press is to be believed—that Mr Brown, in so far as his position as Prime Minister or as Chancellor is concerned during the period from 2001 to 2009 that is covered by the inquiry, says that he has no objection to the disclosure of any of the three groups of documents that have been referred to.
Lord Liddle
I am arguing here that these are very difficult decisions and that we have to have a clear view for the future. I am not looking to the past; I am wondering what the impact of this will be on future relations between Ministers and between Ministers and civil servants. I would simply be grateful if the Minister was able to give us an answer.
Lord Wallace of Saltaire (LD)
My Lords, I thank the noble Lord, Lord Liddle, for that extremely constructive and helpful speech, which took a number of themes which I, too, wish to cover.
Perhaps I, like others, should admit that I am not entirely a neutral observer in this. I was my party’s defence spokesman at the time, and I was involved in the development of what was then Liberal Democrat opposition to the war. Part of my reason for being so was that I had been a relatively frequent visitor to Washington both before and after 9/11. I met there people whom I had known when I was a graduate student in the United States in the early 1960s and who had become some of the leading neo-conservatives within the Administration. It was because of what I knew of some of their underlying assumptions and of my participation in two National Intelligence Council-sponsored conferences in Washington, one in the autumn of 2001 and one in the summer of 2002, that I concluded that the Bush Administration were determined to go to war with Iraq against the advice of some of their own intelligence analysts who knew the Middle East well.
Having said that, I should say that this is a very different inquiry from the Franks inquiry. It starts with the examination of the Government’s Iraq policy papers in 2000, before 9/11, and concludes with the withdrawal of British troops from Iraq 10 years later. It therefore covers a much longer period than the short period of the Franks report and deals with a coalition war in which we were only a secondary contender. Franks was concluded in six months, but evidence was taken in private; the report covered only the period before the conflict; it did not publish many of the documents. I again declare an interest: I was one of those who reviewed it very critically on publication because it seemed to me that it had distorted the actual situation. The intelligence community had indeed got it right. The only mistake that it had made was in thinking that the Argentinians would not be unwise enough to try to invade the Falklands before the winter; it thought that it would do it six months later.
I also looked back at the Dardanelles inquiry, and reference has been made to the situation after Suez. What we now have with the Chilcot inquiry is a very much more thorough examination in which we are talking about several thousand documents—I must correct the noble Lord, Lord Elystan-Morgan: they have not been declassified by being released to the Chilcot inquiry. This is an inquiry by privy counsellors; they have access to everything that they wish to see, including intelligence documents et cetera. The question at stake is not access; it is publication.
I am informed that, when we see the eventual publication, a great deal will be published that it has not been the custom of British Governments to publish before. However, as the noble Lord, Lord Liddle, said, when you get into the question of how far you publish Cabinet minutes that appeared less than 20 or 30 years ago, clearly, whatever happens, you will be seen to have been setting a number of precedents. Another question is how far you publish documents which relate to conversations with some of our closest allies, whether or not you have their permission. There are here some very large issues of national policy and national interest which we all have to consider.
Lord Elystan-Morgan
I quote here from the Prime Minister’s letter of 5 November in reply to the letter of the day before from Sir John Chilcot. He states:
“I am aware of the scale of the task declassification has presented to a number of Government departments, and it is good to have the acknowledgement of the work that has been done by the Cabinet Office and other departments to deal with the disclosure requests, involving several thousand documents, including many hundreds since the summer”.
That seems to me to say—I may be wrong and I apologise if I am—that thousands of documents have been declassified, but I will be corrected.
Lord Wallace of Saltaire
My Lords, I would distinguish between access and publication. The delay is very much about working through thousands of documents, many of them very lengthy, and deciding how much can safely be declassified for publication—how much therefore can be published, how much some documents should be redacted in part and whether there are documents which it would be safer not to publish at all. That has taken a good deal longer than was hoped, but it is now well under way and is what we are currently considering.
Lord Anderson of Swansea
Is it true that the request by the inquiry was only made last June?
Lord Anderson of Swansea
The request to publish the documents set out in the letters.
Lord Wallace of Saltaire
I am not informed on that matter. I know that, last July, they hoped to be able to start the process of Maxwellisation within a few months. That has been delayed because what happens in a Maxwellisation process—here again I have to correct the noble Lord, Lord Elystan-Morgan—is that those who are mentioned in the report will be allowed to see in full those elements of the report which carry their evidence and will be published. So they will not see more; they will see what will be published.
This is not, incidentally, a court of law. In no sense is this a legal inquiry. It is not a matter, if I may quote the noble Lord, of people against whom there is a case; it is a matter of those who may see themselves as being criticised in the report being given time ahead of publication to prepare their response to the criticisms. So, if I may say so to the noble Lord, Lord Elystan-Morgan, this is not a roadblock. It is, however, an obstacle course, and that takes a good deal of time and discussion among different government departments, which I regret has taken longer than we hoped. I very much hope that it will be concluded soon. The Maxwellisation letters will then be able to go out and we will proceed at the normal stately but sure pace of government publications to a publication of the final report.
I also raise the role of the Cabinet Secretary because I know that he has been criticised quite substantially in the press. The Cabinet Secretary is entitled to see all the papers of previous Governments. In the final resort, as we all know, the Cabinet Secretary only advises and the Prime Minister can always override, but I am old-fashioned about civil servants. Senior civil servants are servants of the Crown as well as of the Government, and they advise in their perception of the long-term national interest. That is what the Cabinet Secretary is doing and I regret that there has been some rather partisan criticism in the press about his role, criticism which I think is unjustified.
The question was also raised as to whether the Butler report covered intelligence, so that we do not need to take it again. The Butler report covered intelligence leading up to the war. This inquiry, which takes us several years past the war, may well need to address one or two other questions. I should perhaps also mention the Gibson inquiry, which, as noble Lords will know, provided an interim report last December on some of the issues of rendition and alleged ill treatment of British nationals and others. A picture of various different dimensions will come into that.
This does, therefore, take a good deal of time to complete. It has not been helped, sadly, by the illness of one of the five members of the Chilcot inquiry, but the other four are well under way and I stress again that Gordon Brown’s promise at the beginning that:
“No British document and no British witness will be beyond the scope of the inquiry”.—[Official Report, Commons, 15/6/09; col. 23.],
has been carried out for the inquiry. The question that therefore remains, as the noble Lord, Lord Liddle, rightly points out, is how much of this it is wise to publish. That is what has caused the delay and it is what we are currently working through.
So there are questions about how fast we can work towards this conclusion and there are, as the noble Lord, Lord Alderdice, said, questions for the future. I disagree with those who have suggested that the report, when it comes out, will be simply a historical document gathering dust. I think that it will raise precisely the sorts of questions which the noble Lord, Lord Alderdice, has suggested. What should be the conditions for future intervention? How much information should be shared with Parliament and with opposition parties in order to carry Parliament and the public with the Government? How should we handle the coalition aspects of interventions, given that it is highly unlikely that Britain will be involved in any serious military operations abroad in the future which are not in coalitions with others? There, I think, is where the debates will focus.
The Government are well aware of the sensitivity of these issues. I return to the questions raised by the noble Lord, Lord Liddle. What is a reasonable time before we disclose conversations with our closest allies and what precedents do we set if we start to publish Cabinet minutes of the previous Government, when others give their advice in Cabinet and elsewhere on the basis of full confidentiality? These are serious questions with which the Government are currently struggling.
I thank the noble and learned Lord, Lord Morris, for raising this question. I assure the House that a large number of officials are working through those issues. The Chilcot inquiry and its four active members are still at work, and we very much hope to publish the final report within the foreseeable future. I will be pushing for that future to be as foreseeable as it can be.
Water Bill
(10 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Shipley
“Duties of landlords
(1) In this section—
“landlord” means—
(a) where the relevant premises are occupied under a lease, the person for the time being entitled to the reversion expectant on that lease or who, apart from any statutory tenancy, would be entitled to possession of the premises; and
(b) where the relevant premises are occupied under a licence, the licensor, save that where the licensor is himself a tenant in respect of those premises, it means the person referred to in paragraph (a);
“lease” means—
(a) a lease for a term of less than 7 years; and
(b) a tenancy for a periodic term; and
(c) any statutory tenancy arising out of a lease or tenancy referred to in paragraph (a) or (b),
and in determining whether a lease is one which falls within paragraph (a) above—(a) any part of the term which falls before the grant shall be left out of account and the lease shall be treated as a lease for a term commencing with the grant;
(b) a lease which is determinable at the option of the lessor before the expiration of 7 years from the commencement of the term shall be treated as a lease for a term of less than 7 years;
(c) a lease (other than a lease to which paragraph (b) above applies) shall not be treated as a lease for a term of less than 7 years if it confers on the lessee an option for renewal for a term which, together with the original term, amounts to 7 years or more; and
(d) a “lease” does not include a mortgage term;
“relevant premises” means premises or any part of premises occupied, whether exclusively or not, for residential purposes (such occupation being in consideration of money or money’s worth) under—
(a) a lease; or
(b) a licence;
“statutory tenancy” means a statutory tenancy within the meaning of section 6 of the Rent Act 1977 (dwelling-houses let with other land) and section 7 of the Rent (Agriculture) Act 1976 (discretion of court giving possession);
“tenant” means a person who occupies relevant premises being—
(a) where the relevant premises are so occupied under a lease, the person for the time being entitled to the term of that lease; and
(b) where the relevant premises are so occupied under a licence, the licensee.
(2) Every landlord shall ensure that they hold suitable buildings insurance against damage from flood for the relevant premises.
(3) A landlord shall notify a tenant if the relevant premises appear on the register maintained under section 61.
(4) A record of the insurance held under subsection (2), or a copy thereof, shall be made available upon request and upon reasonable notice for the inspection of any person in lawful occupation of the relevant premises.”
Lord Shipley (LD)
My Lords, this is a probing amendment on the rights of tenants and the problems that can arise if there is no adequate buildings insurance in place. Reputable landlords will take out insurance as a matter of course. However, there is no compulsion for landlords to do that, and tenants can be particularly vulnerable if their landlords do not take out buildings insurance. They may not be covered for the cost of moving out or for temporary accommodation in the case of flood. Of course, it is understood that tenants must provide their own contents insurance. The amendment does not relate to contents insurance.
The amendment would give tenants the right to know all the facts about an insurance policy on the property that they are renting, including whether there is one at all. The solution to this problem is to make it mandatory for landlords to take up buildings insurance that includes flood risk insurance; to require landlords to tell a tenant if a property is on the register of premises subject to greater flood risk as defined in Clause 61; and to show a copy of the insurance policy to a tenant on request.
I fully understand that landlords will not benefit from the FR scheme. However, landlords pay income tax, and I understand that they would be able to offset the cost of insurance against income tax. I should be grateful for the Minister’s confirmation of that and to know whether, therefore, the Government could support an amendment on Report that protects the rights of tenants, as proposed in this amendment. I beg to move.
The Earl of Lytton (CB)
My Lords, I had not intended to make any comment on this, but perhaps I ought to. I have one or two problems with the amendment. First, it appears to refer to any type of property, so it could be residential or non-residential. It appears to cover any type of tenure. The definition of “relevant premises” includes,
“any part of premises occupied”,
which presumably includes the garden. The requirement is for the landlord to hold insurance regardless of risk.
I declare an interest in that I am a landlord of a residential property that is let. It is not itself at risk of flood, but a stream crosses part of the garden. That does not put the property itself at risk, but if it was perceived by an insurer on the basis of the postcode lottery principle that it was somehow at risk and that ratcheted up my insurance premium—which, of course, I should be delighted to cover for all normal risks—I see that there might be a needless requirement to cover for a risk that was not there.
I do not know how that provision sits, because the terminology for “landlord” is wide and the amendment would probably include other properties without any streams in the garden that I might happen to let on a holiday letting, or something like that. I can see that tenants need to be protected in some way, but let us look at what the protection might mean in practice. There is a flooding event; there is insurance cover. Let us say the interior—the inhabitable bit—of the premises is rendered incapable of occupation, not only because of the effect of the flood-water, but also because of the filth and everything else, causing damage to fittings, de-lamination of kitchen units and all the other horrors. It will need a thorough clean-out, with bits replacing, probably a renewed kitchen, and certainly redecoration and drying out. That takes time. The tenant is inevitably going to have to move out. He is going to move to somewhere else. The consequential losses presumably do not cover the loss of the tenants; they only cover the damage to the property. If it needs shoring up then that is a consequential loss.
So with the greatest respect to the noble Lord, Lord Shipley, I am not sure that this amendment achieves what it sets out to do. Maybe I have got hold of the wrong end of the stick, but the landlord’s insurance does not enure for the benefit of the tenant. If you look at a commercial lease, for instance, it normally has a cessor of rent clause which causes the rent to stop being payable at a point where damage occurs beyond a certain level, so the property is no longer fit for occupation. But if it is not reinstated within a certain period of time, the tenant has the option to move out and determine the lease. The tenant, in the mean time, whether it is a business that needs to continue its business occupation, or a tenant in residence who actually needs a roof over his head, is going to have to move, so I am unclear about the mechanics of how this would really work in practice, because I do not see that it protects the tenant.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, Amendment 161ZA from my noble friend Lord Shipley seeks to make it obligatory for landlords to hold buildings insurance, including cover for flood risk. I can confirm to him, in answer to his question, that the cost of insurance premiums can usually be offset against profits for tax purposes. I am sympathetic to the intention behind this amendment although I am not sure that this Bill is the right vehicle for this debate.
I note that while this amendment refers specifically to flood cover, buildings insurance includes protection against a range of perils including, for example, fire and theft. Although there is no legal requirement for property owners to take out insurance for their properties in the UK, owner-occupiers and landlords generally choose to do so in order to benefit from the financial protection that insurance offers. In addition, and importantly, most mortgage lenders specify buildings cover as a mandatory requirement for providing a mortgage on a property.
The Government agree that it is very sensible for landlords to take out insurance, but are conscious that the decision is a matter of individual choice, based on a commercial decision to protect an investment made in property. We are concerned that making insurance compulsory across the board could create a regulatory burden, which could deter investment in the private rented sector. I strongly encourage tenants always to check with a prospective landlord that appropriate cover is provided for the property.
If I might pause specifically on the issue of support for tenants in the event of a flood, we appreciate the concerns raised recently by the National Flood Forum and others that tenants of properties not covered by insurance might be left homeless following a flood. I note that some insurance policies have an “alternative accommodation” provision, but I would also like to assure noble Lords that, even if this is not the case, tenants do have protection. All local authorities are required to provide accommodation for households who are eligible for assistance, homeless through no fault of their own, and have a priority need for accommodation—into which category flood victims would clearly fall.
As part of its role in promoting flood awareness, the Environment Agency strongly encourages landlords to make a flood plan and to make their tenants aware of what to do in a flood. I also remind noble Lords that all residential contents policies will be eligible for cover through Flood Re, including tenants of rental properties, so long as they are not in properties built after 2009 or in band H or their equivalents. I ask that the amendment be withdrawn.
Lord Shipley
My Lords, I am grateful for the two contributions. I am reassured in part by the Minister’s reply. This is about tenants who have an entitlement to know whether or not they are in a high-risk area; indeed, we have already had discussions today about how people find that out. Tenants in private residential properties are often on low incomes, and it is reasonable that they should be told formally if they are renting a property in a high-risk area. That seems to be a basic entitlement if someone signs a lease. It is right that they should know and be given a copy of the buildings insurance with flood cover that the landlord has, so that if the landlord does not have that then the tenant is aware of that fact.
The amendment is not about contents insurance; I fully understand the law in that respect. However, we need to be very careful if there is going to be a rising incidence of flooding that means that some private tenants find themselves flooded but do not have contents insurance because they did not think they were in a high-risk area or were not aware of it, or thought that the landlord would cover it even though the landlord would not be responsible for their contents insurance. With this amendment I am seeking better clarity, given that there have been cases in recent months where flooding has occurred and tenants have in practice had a cost to bear. Of course there are costs involved in moving out that fall on the tenant, not the landlord, unless the tenant is prepared to sue the landlord. They could do that but it is very complicated for a private tenant to do.
I note the Minister’s concern and will think further about this. For the moment, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) the revocation of a scheme’s designation under section 51(1)(b) without a new designation being made under that provision, at any time before sections 51 to 56 are repealed,”
“(4A) Before making an order under subsection (3)(a)(i) or (b) which includes provision for the transfer of an amount of the reserves of the FR Scheme, the Secretary of State must consult the FR Scheme administrator about the amount to be transferred.
(4B) The Secretary of State may by regulations define “reserves” for the purposes of subsection (4A).”
Lord De Mauley
Lord Howard of Rising
“Internal drainage boards: apportionment of drainage expenses
(1) The Land Drainage Act 1991 is amended as follows.
(2) In section 37 (apportionment of drainage expenses), at end insert—
“(f) in the case of—the Secretary of State may by order define an equivalent measure for valuing the land”.”(i) any land to which none of paragraphs (a) to (d) applies and it is not possible to calculate a value under paragraph (e)(ii) as the relevant rating lists no longer exist or cannot be located, or (ii) land to which one of paragraphs (a) to (c) does apply but for which the relevant rating lists no longer exist or cannot be located,the Secretary of State may by order define an equivalent measure for valuing the land”.”
Lord Howard of Rising (Con)
My Lords, before speaking to Amendment 165ZA, I declare interests as a member of the Kings Lynn Internal Drainage Board, a payer of land drainage rates and an owner of riparian rights.
This is a simple amendment so I will not detain your Lordships long. Where an internal drainage board extends its area, it may raise special levies on billing authorities to cover expenditure in that area. This process is based on the valuation of land and is set out in Section 37 of the Land Drainage Act 1991. For one reason or another, the rating lists referred to in the Land Drainage Act no longer exist in certain parts of the country. Where it is not possible to value as set out in the 1991 Act, this amendment seeks to provide for the Secretary of State, by order, to introduce an equivalent method of assessing land. The amendment does not say how this should be achieved but would give the Secretary of State the power to do so where no other method exists. The amendment allows a gap to be plugged. In view of the simple and uncontentious nature of the amendment, I hope that the Government will feel able to support it. I beg to move.
Lord De Mauley
My Lords, I thank my noble friend for raising the issue in Amendment 165ZA. We value and support the work of internal drainage boards and I agree with my noble friend that we should act to remove unnecessary barriers where it is clear that these are preventing boards getting on with their important work. It is for this reason that we have included provisions in the Bill to streamline the legal processes for internal drainage boards, making it easier and quicker for them to amalgamate or to make other structural changes.
My department has a close and constructive working relationship with the Association of Drainage Authorities, which represents internal drainage boards. Officials meet the ADA regularly to discuss a wide range of issues related to the work of IDBs, and the ADA has not highlighted this previously as one of significant concern to it. Until my noble friend’s recent communications with me, which resulted in the tabling of this amendment, we were not aware that this issue had been identified as a potentially widespread problem.
The concern that has been raised is that some internal drainage boards may no longer have access to the rating lists referred to in Section 37(5) of the Land Drainage Act 1991, and that this could present a barrier to boards wishing to extend their boundaries. However, I am concerned that the amendment of my noble friend is a tad premature, given that we have not yet received evidence on how widespread and significant this problem may be. If there is evidence to show that it poses a significant practical problem, we must consider whether it could be addressed through other means, potentially without recourse to legislation.
I am particularly concerned that the amendment has the potential to give rise to significant unintended consequences that might impact adversely on some internal drainage boards and local authority rate payers. For example, if rating lists to be used were revalued, this could have the effect of increasing special levies on some unitary and district authorities and in turn increase council tax in those areas. The amendment also appears to provide for the creation of a two-tier system whereby some internal drainage boards would continue to use existing rating lists for the valuation of urban land while others would potentially use a different measure where those rating lists are unavailable. This could result in different levels of charge being levied on local authorities in different parts of the country. It is important that a transparent and consistent approach to calculating internal drainage board levies and rates is applied across the country.
I hope that my noble friend is prepared to withdraw his amendment. However, I will consider carefully any further evidence brought forward by my noble friend or the Association of Drainage Authorities on this issue.
Lord Howard of Rising
I thank the Minister for his comments. It is interesting that he wants to see the expansion of internal drainage boards, as my amendment is there only to facilitate that. It is very nice that he has been in touch with the association, but it is not all-knowing. Few people are.
I cannot see how there would be unintended consequences. We merely seek to give the Secretary of State the power to take action should it be so needed. If he were to take the wrong action, there might be unintended consequences.
If there are no rating lists available, what are the Government going to do—absolutely nothing? Or will they agree that the Secretary of State can produce a method of valuation that is as close to other people as is possible? The whole point of the amendment is not to tell the Government how to do it; it is merely to give Her Majesty’s Government the power to do it so that there is no blockage on what the Minister has said is their intention.
The Lord Speaker (Baroness D'Souza)
Does the noble Lord wish to withdraw his amendment?
Lord Howard of Rising
I may return to this later. I hoped that the Minister might comment, but perhaps he does not want to. I beg leave to withdraw the amendment.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the three amendments in this group deal with a specific area of the Bill, as we have heard: that surrounding the internal drainage boards. IDBs are very local partnerships, including landowners, farmers and local councillors, which work with the Environment Agency and Natural England to draw up plans to keep ditches and rhynes clear so that water can flow freely, thus minimising the impact of flooding. IDBs are well respected by local residents and these residents should be consulted on any impending changes to their local internal drainage board.
Farmers and landowners themselves are supposed to keep their ditches and streams clear for drainage, but this is not always done well. Those with river frontage have the responsibilities of the riparian owner inasmuch as they are responsible for the banks and clear flow of the river on their side for the length that they own. In some cases, this duty is not exercised and is sometimes ignored. A much stronger regime of these duties must be enforced by the IDBs and councils. The IDBs are responsible for the rhynes. There is a clear need for IDBs to be able to access money to keep all these channels open.
While I understand the need to keep council tax down to a reasonable level, if I were to ask the residents of the Somerset Levels whether they would rather have paid a little more council tax which went directly to the IDBs, or whether they wanted to take the risk of being underwater for six weeks, I am not sure what that answer would have been. However, I do not think that it would have been not to have paid more council tax.
IDBs need to have the power to act and to act quickly for the benefit of those in their communities. I am fully sympathetic to speeding up the process for publication of requirements under the Land Drainage Act 1991. However, any proposals for amalgamation or reorganisation of IDBs must be consulted on with those most affected. I agree that taking nine to 12 months for such consultation is neither efficient nor wise and I support reducing that time. I also understand that provincial newspapers have limited circulation. However, it is often the case that the local newspaper might be the only newspaper that some households read. They read it because the articles and news have relevance for them personally. These people will not be reading the London Gazette, however strange your Lordships may find this.
Everything we see on our television screens, read in our newspapers and hear on the radio indicates that these people who have been flooded feel disempowered and disillusioned. It would unwise to do anything in the Bill that might increase that feeling. It is essential that local people are able to have a say in what happens to their IDBs and, to do that, they need to be able to access the consultation when it takes place. Reducing the time during which an advertisement may be placed is reasonable, so long as it is advertised in locally accessible media, and placed in libraries, schools or other public meeting places as well as the local provincial newspapers. There is a financial cost to this, of course, but that is small compared to the value of local people feeling that they are being consulted. I beg to move.
Baroness Northover (LD)
My Lords, I thank my noble friend for her amendment. We agree with her that it is important for the necessary information to go to the relevant people and for the relevant groups to be consulted in the way that she says. I emphasise that we are here retaining all the powers that are already in place; this is just about not having to publish in local newspapers. I will just go through that: I think she has picked up on the key points anyway.
We consider that the requirement for the internal drainage boards and the Environment Agency to advertise a range of notices, procedures and orders in newspapers is inflexible, out of date—given the range of media now available—and often wasteful of public funds. We are therefore introducing more flexibility to the advertising arrangements. This is in line with recent legislation, such as the Marine and Coastal Access Act 2009 and the Flood and Water Management Act 2010, which allows relevant authorities to publish documents without being prescriptive in how they do so.
Internal drainage boards have complained that advertising in local newspapers can be costly and that, in some areas, it does not represent best value for money in reaching out to the relevant communities. We also understand that some local newspapers may not be widely distributed in rural communities, or in some cases may no longer be published. Our changes will allow for both a wider and a more targeted distribution of notices. This could mean, for example, distribution through the use of electronic means, parish notice boards or, in the way that she indicated, school notice boards and so on, while retaining a fair, open and inclusive process.
The Environment Agency and IDBs will still have a requirement to publish notices and bring these notices to the attention of the people who will be affected by the changes; I hope that is the reassurance that the noble Baroness needs. We are, however, keen to take full advantage of the extensive local knowledge and experience of internal drainage boards and the Environment Agency by enabling them to reach out to the communities affected by any changes in the most cost-effective way.
Therefore, I can assure my noble friend that we are not telling internal drainage boards and the Environment Agency not to use local newspapers. If they consider this to be a cost-effective way of getting their information out, they may still do so, as well as making use of other media. We agree that local people should be consulted in the way that my noble friend suggests. I hope that I have reassured my noble friend and that she will be content to withdraw her amendment.
Baroness Bakewell of Hardington Mandeville
I thank the Minister for her comments. I welcome the increased flexibility on advertising that she detailed and accept completely that, if the internal drainage boards are the bodies that decide how to advertise the alterations, then I should be happy with that. It seems that a wider and targeted approach is going to come forward, so I beg leave to withdraw my amendment.
The Earl of Lytton
“Liability in nuisance for a riparian owner
The Secretary of State may by regulations make provision to limit the liability in nuisance for a riparian owner when the Environment Agency or relevant authority withdraws from maintenance of flood defences.”
The Earl of Lytton
My Lords, I tabled this amendment following discussions I had with the Country Land and Business Association, of which I am a long-standing member. It relates to what might be described as a legacy issue, to do with circumstances where infrastructure in relation to flood defence or amelioration, which currently might fall under the auspices of the Environment Agency, might at some juncture, through the operation of this Bill, and the redefinition of the Environment Agency’s functions, cease to be maintained by a government agency.
The question is: what happens with this infrastructure? It has obviously been put in there for the reason of protecting life and property, some of which may be agricultural, and other residential or other property. This amendment intends to probe what the Government’s intentions are in the circumstances in which such a situation might occur. The Minister may say that there is no question of the Environment Agency or the state abandoning those things to an uncertain fate. However, they might say, “It’s going to be down to local communities to deal with it”—and then what? How are these obligations to be transferred?
Lord Grantchester (Lab)
As my noble friend Lord Whitty said in relation to an earlier amendment, it is vital that there is clarity on aspects of the scheme, especially on defining the scheme concerning the inclusions and exclusions of property and responsibilities or liabilities around flood risk.
There appears to be a lack of clarity as regards the situation concerning owners of river banks and whether they are responsible upon the withdrawal of the Environment Agency from funding many aspects of flood prevention and the consequential third-party losses. The amendment seems to assume that the responsibilities of the Environment Agency will be reduced, as well as the funding. While there may be recognition that owners should be responsible for their own situations, it is nevertheless recognised that covering third-party losses could be severely onerous to riparian owners. This amendment seeks to limit their liability. Nevertheless, a limit to their liability begs the question of who would then take it on.
Even at this late hour, perhaps I may tempt the Minister. As regards limiting the liability of riparian owners, could they claim that a flood was an act of God? Is the Minister able to pass judgment on such things? However, this serious situation needs clarity, as landowners, farmers and even boating sports clubs could find themselves in severe difficulty alongside more affluent band H properties.
Baroness Northover
My Lords, far be it from me to judge upon acts of God or even the implications of the Equality Act.
I thank the noble Earl for his amendment, which I will address at a little length, as I think he would probably like to hear my comments. He speaks of instances where the Environment Agency might decide to withdraw from maintaining some flood management assets and suggests that this could create a challenging situation for landowners, residents and others affected. He will probably know that we are discussing those concerns with the Country Land and Business Association, to which he referred, and that my honourable friend the Parliamentary Under-Secretary of State met it on 23 January.
We share the noble Earl’s wish to reduce the possibility of litigation, which is an aspect that is implied by some of the concerns expressed by the noble Earl. That is why we are promoting the asset maintenance protocol published by the Environment Agency. We strongly believe that developing partnerships and working arrangements between local parties to guarantee future maintenance is the best way to prevent problems arising that could lead to claims of liability.
The Environment Agency and other authorities maintain many thousands of flood defence assets. The situation to which the noble Earl refers is not one which is affected by this Bill. He is picking up instances where the Environment Agency may decide that it is no longer going to support certain flood defences and the responsibility for that would fall to others. So I would separate this issue from the Bill, as the noble Lord, Lord Grantchester, sort of did.
The Environment Agency is looking to withdraw maintenance of some of these assets where maintenance is no longer economically justifiable or where the work may not have a high enough priority for central government funding over the longer term. Examples of such assets are embankments in rural areas that protect grazing land or small flow control structures such as gates or penstocks.
Understanding these concerns, the Environment Agency has published, and recently updated, a protocol explaining the processes it will follow. The agency is committed to bringing together landowners and other affected parties to make sure that they are clear on their respective roles and responsibilities and that they understand the range of options that may be available to them for future management of the assets and their likely costs, benefits and impacts. This may include options for continued maintenance of assets by local groups and options involving less or no maintenance. The agency will then work with all the interested parties to help them reach agreement on how the parties involved will take forward maintenance of the asset in the future. It is possible, for example, for the landowner on whose land a defence is situated to enter into an agreement to secure contributions from his neighbours towards the costs of maintenance and repairs.
We understand the noble Earl’s concerns about whether these agreements will be possible. However, it is important to remember that third parties are also expected to play their part. If third parties refuse to make reasonable contributions for the maintenance of a flood defence asset that is protecting their property, they could diminish the success of any future claims against the landowner.
The noble Earl has suggested regulations should be drawn up to set out what actions a landowner should take in order to meet any claims of liability. This would not be the simple clarification that the noble Earl might have been expecting. Such regulations would need to cover many types of assets, the type of location, as well as a list of all possible activities that might be appropriate for their maintenance. The regulations would need to address the range of impacts of flooding, ranging from a garden becoming waterlogged to flooding of many buildings and possible loss of life. Most importantly, the regulations would need to address such complications as a flood asset being owned by one or more landowners or a number of different beneficiaries of different means. Such regulations would be complex and, to be proportionate, would need to have an element of subjectivity to what a landowner would be required to do to avoid liability.
For that reason, we do not believe that such regulations could give significantly more certainty than the current case law. We firmly believe that use of the Environment Agency’s protocol gives all the parties involved a chance to ensure an outcome that reflects the particular situation and circumstances of each individual case, while avoiding the need for litigation between landowners. For these reasons I encourage the noble Earl to withdraw his amendment.
The Earl of Lytton
My Lords, at this hour of the night it is not my intention to press the amendment; as I said at the outset, it is a probing one. I am grateful to the Minister for her explanation. I am aware of the ongoing discussions and I appreciate that this matter sort of sits outside the Bill. I suppose that if I have a hook to hang it on, it is the situation where somebody might be protected by such works and finds they are no longer protected and unable to get full cover insurance. They then go looking for the next deep pocket in order to press a claim, so the geometry of the circumstances might change.
However, it is right that the matter should be discussed by the industries concerned. I would hope that the protocol would at least give some protection in the sense that, if one had done something in accordance with the protocol that was agreed between the parties, that would be a reasonable defence in law. However, I do not think that I can ask the noble Baroness to go into that sort of detail. I would like to reserve my position in case it is necessary for me to come back to this at a later stage of the Bill but, in the mean time, I beg leave to withdraw the amendment.
Baroness Humphreys
“Duty to provide sewers
In section 101A of the Water Industry Act 1991, in subsection (2)(a) for “on which there are buildings” substitute “with permanent use and generating domestic effluent”.”
Baroness Humphreys (LD)
My Lords, I am grateful for the opportunity to move this amendment and, in so doing, refer noble Lords to the interest I have already declared as a trustee of the Crafnant Trust. The trust has responsibility for Lake Crafnant, a small reservoir in north Wales.
The amendment seeks to clarify the definition of duty properties as they appear in Section 101A of the Water Industry Act 1991 where an application is being made to connect premises to sewerage for the first time, and seeks to define “duty properties” as premises,
“with permanent use and generating domestic effluent”.
The Water Industry Act 1991 brought in a duty on water companies to provide a sewerage connection where the current arrangements were causing environmental problems, if that was the cheapest overall solution to the problem. Section 101A(1) of the Act states that,
“it shall be the duty of a sewerage undertaker to provide a public sewer to be used for the drainage for domestic sewerage purposes of premises in a particular locality in its area”.
Section 101A(2)(a) further defines the use of the word “premises” as,
“the premises in question, or any of those premises, are premises on which there are buildings”.
It is the use of the word “buildings” that has become problematic for some local authorities and a strict interpretation of the word has given rise to some environmental problems—problems that have caused conflict with the duties of local authorities under the Government’s own guidance, Planning Policy for Traveller Sites, issued in 2012. Under this guidance, local planning authorities are advised that they must have,
“due regard to the protection of local amenity and local environment”,
and that sites should be,
“sustainable economically, socially and environmentally”.
Chesterton Fen in south Cambridgeshire is a case in point, where conflict has been seen between the 1991 Act and the Government’s planning policy. The Traveller site there has full planning permission and the caravan count in January of this year showed that there were 261 caravans on the Chesterton Fen Road site but, because very few of the premises there are “buildings”, none of these is connected to a main sewer and the owners have each had to make their own arrangements for sewage disposal such as small package treatment plants, cesspits and septic tanks leading to soakaways. The development there is close to the River Cam and, because the development is dense and low, there can be environmental problems. I am told that lagoons close to the banks of the river can become less than sweet smelling at all times of the year.
Local councillors petitioned Anglian Water in September 2007 to investigate whether it had a duty to provide a mains sewerage connection but Anglian Water turned the request down in 2009 and an appeal was lost in June 2011. The judgment hinged on the number of properties in the area for which the water company had a duty to provide this service under the Act. In short, most of the Travellers’ caravans or day rooms did not count, so although there are more than 250 caravan plots in the area, only 30 duty properties—houses and a few substantial mobile homes—were considered, and the economic argument was then that it was cheaper for these 30 to provide cesspits for themselves than to lay on a sewer. If all the caravans had counted as buildings, there is no question but that the water authority would have had to provide a sewer. After all, it is impossible to imagine permission being given for an estate of 250 houses without access to sewerage being part of that permission. Therefore, the whole issue revolves around the use of the word “buildings” and the lack of guidance around its definition. Many applications and appeals have had to resort to the definition provided under building regulations guidance, which is why successive applications and appeals have failed.
Baroness Northover
My Lords, I am grateful to my noble friend for raising an issue which is clearly of no small importance to any community affected. Section 101A relates to a “Further duty to provide sewers” to relieve environmental and amenity issues caused by inadequate sewerage. This section applies to “premises” and “buildings” and the amendment seeks to change that to make the duty apply to structures which may not currently be considered buildings for the purposes of this duty.
In the case of Traveller sites, such as the one she referred to at Chesterton Fen near Cambridge, when considering an appeal in respect of a decision not to provide a sewer under Section 101A, the Environment Agency will look at the case for each individual caravan on the basis of its size, permanence and degree of physical attachment to the land. To vary the definition in this section would potentially have far-ranging and unintended consequences. We feel that the best route is to meet my noble friends to discuss their concerns further. On that basis, I hope that she will be prepared to withdraw her amendment.
Baroness Humphreys
I thank my noble friend for her reply. Given the degree of reassurance she has given me, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) section 76;“(ba) section 77 and Schedule 11;(bb) sections 78 and 79;”
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