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Oral Answers to Questions
(10 years, 9 months ago)
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Jesse Norman (Hereford and South Herefordshire) (Con)
1. What steps he is taking to support small contractors in military procurement.
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
I recognise that small businesses are an important source of innovation and flexibility in meeting defence and security requirements. I am determined to help small and medium-sized enterprises access defence opportunities, including standardising and simplifying our procurement systems, so from this month we are minimising the use of pre-qualification questionnaires and increasing use of standard contract templates for low-risk requirements of under £100,000.
We are regularly making progress on these and other SME initiatives, but we also need to inform the SME community that it is getting easier to do business with the Ministry of Defence, which is why we publish the SME action plan on the gov.uk website and why I am undertaking a series of regional visits to talk to SMEs, such as the excellent event that my hon. Friend hosted in Hereford on 6 December 2013.
Jesse Norman
I very much thank my hon. Friend for that reply and for the extremely encouraging news that he has described. There are a large number of specialist defence suppliers in my constituency in Herefordshire. They provide vital new technologies and training for the troops, but they often face huge and apparently unnecessary mark-ups and delays forced on them by the requirement to be part of prime contracts. What can the MOD do to help these companies compete more fairly?
Mr Dunne
I agree with my hon. Friend that SMEs have an important role to play across defence procurement, but in particular in new technologies and in training. That is why the Government are committed to increasing the proportion of our annual spend on SMEs. Last year that rose to 15% by value of all spend, with some £1 billion spent directly and £2 billion spent indirectly through larger prime contractors, but the proportion of new contracts is even greater with over a third of all new contracts placed with SMEs in each of the last three years.
Mrs Madeleine Moon (Bridgend) (Lab)
Devolved Administrations and their arm’s length agencies often have very close relationships with their SME community. What discussions is the Ministry of Defence having with the devolved Administrations to make sure defence contractors based outside England also have an opportunity to bid?
Mr Dunne
Of course defence, and therefore defence procurement, is not a devolved matter and therefore the work the Ministry of Defence does is primarily with industries right across the country. I have undertaken events in Scotland and I am looking forward to an event in Wales in due course later this year.
Angus Robertson (Moray) (SNP)
May I wish you a very happy St Patrick’s day, Mr Speaker, and no doubt MOD Ministers will be pleased to put on record their appreciation for the increasing co-operation with the Irish defence forces?
In a parliamentary answer on 3 October 2011 the MOD admitted that out of 6,000 SME contracts with the MOD, only 50 contracts were in Scotland, which is 0.83%, just under 10 times less than Scotland’s population share. When will the MOD answer my question on SME spending across the UK by region, which was tabled in January?
Mr Dunne
As I have said to the hon. Gentleman previously, we do not believe it is relevant to look at the location of where we procure equipment. We want to procure the best equipment for our armed forces from the best place. Scotland of course has a significant share of much of our spending, not least through the aircraft carrier contracts, which I saw for myself last week, and much of that defence work would be at risk were Scotland to vote yes in the referendum in September.
Mrs Emma Lewell-Buck (South Shields) (Lab)
2. What discussions he has had with the Chancellor of the Exchequer on staff pay and conditions in the new DE&S model.
The Secretary of State for Defence (Mr Philip Hammond)
We have agreed with Treasury Ministers that Defence Equipment and Support will be established as a bespoke central Government trading entity from 1 April this year, with the necessary freedom to operate, including freedom, within very broad limits, to set the pay and conditions of its civil service staff.
Mrs Lewell-Buck
I thank the Secretary of State for that response, but bearing in mind that bringing private skills into Defence Equipment and Support is likely to create a two-tier work force and, if handled badly, could demoralise an already hollowed-out department, will the Secretary of State update the House on what discussions he has had with employee representatives and trade unions within Defence Equipment and Support regarding changes to employees’ pay and conditions?
Mr Hammond
There have been discussions with the trade unions and there will of course be further discussions with the trade unions as DE&S-plus develops its pay model, but we do have to face the reality that this part of the public service is very much commercial-facing. It deals with commercial bodies and it interacts and exchanges staff with commercial contractors, and we have to be able to pay competitive rates and we have to adopt competitive employment practices if we are to get the best deal for the taxpayer and the best deal for our armed forces.
Jack Lopresti (Filton and Bradley Stoke) (Con)
Does my right hon. Friend agree that reforming defence procurement is a key step in driving better value for money for the defence budget, and will he join me in paying tribute to the staff of DE&S in my constituency, especially those involved in the draw-down of kit and equipment from Afghanistan?
Mr Hammond
The staff at DE&S at Abbey Wood perform an extraordinary range of functions and play a vital part in this new whole-force concept. It is about how the armed forces work together, regulars and reserves, with civilian employees of the Ministry of Defence—whom I am happy to put on the record in the House today are not pen-pushers, as some parts of our media would have us believe, but vital components of our defence infrastructure.
Alison Seabeck (Plymouth, Moor View) (Lab)
The Secretary of State is ever the optimist, but he will know that staff in DE&S and industry need certainty, and nothing in the changes to DE&S fits that description. His Department still has not confirmed the arrangements to bring the managed service providers into the business. He talked about the flexibilities and freedoms being broad—they are not in the public domain yet, and April is almost upon us. Is he not cutting it just a little fine?
Mr Hammond
No. The contract notices for the procurement of the managed service providers will be published shortly. We are finalising the terms of the memorandum of understanding between the Treasury and the MOD, but the broad parameters have been agreed. The freedoms will be very broad, but there will be some constraints, as I hope the hon. Lady would expect. There will be an overall envelope of resources for operating costs, which will be subject to a downward trajectory over time, representing efficiency. Within that envelope, there will be very broad freedom to tailor pay and conditions to the requirements of the marketplace.
Sir Tony Baldry (Banbury) (Con)
Did the shadow Secretary of State for Defence not say in December of last year that we all wanted to see the best of the public sector alongside the best of the private sector? If everyone is in agreement on this—from the shadow Secretary of State for Defence to Lord Levene—it must be a good idea. Presumably, the only really important thing here is ensuring value for money for taxpayers.
Mr Hammond
My right hon. Friend is exactly right: it is about ensuring that the armed forces get the kit they need and have been promised when they need it, and that the taxpayer gets a fair deal. By creating DE&S as a trading entity with freedoms and flexibilities to enter the marketplace and hire the people it needs to do the job properly and effectively, we will ensure that outcome.
Sarah Newton (Truro and Falmouth) (Con)
3. What progress his Department has made on its planned increase in the activity of reserves in Cornwall.
The Minister for the Armed Forces (Mr Mark Francois)
I know my hon. Friend is concerned about the future of reserves in her constituency following the proposed relocation of D company, 6th Rifles, and I welcome her strong interest in this issue on behalf of her constituents. I understand that my predecessor, my right hon. Friend for South Leicestershire (Mr Robathan), gave her a commitment that we would look closely at this decision, but that examination is not yet complete.
Sarah Newton
I thank my right hon. Friend for that response. We have had good news in Cornwall about more RAF reservists being stationed at RAF St Mawgan, but the continued uncertainty about the future of The Rifles in Cornwall is a major concern. People in Cornwall want to support their country and to have the opportunity to serve as Army reservists. May I therefore urge my right hon. Friend to make a speedy, and the right, decision to enable people to serve from Truro?
Mr Francois
I stress to my hon. Friend that we are not closing the Truro Army Reserve centre, which will remain the home of elements of both medical and logistics units, as well as supporting local cadet forces in any event. However, I do understand the strong historical attachment The Rifles have to Cornwall, so I hope to be able to give her a clear answer on this matter in the near future.
Dan Jarvis (Barnsley Central) (Lab)
Whether people are seeking to join the reserves in Cornwall or in any other part of the country, everyone I talk to says it is still taking too long from the point at which they express an interest in joining the reserves to the point at which they are subsequently enlisted. What is the Minister doing and what more can be done to speed up that process, so we can get more people serving in the reserves—in Cornwall and in the rest of the country?
Mr Francois
I am glad to be able to say to the hon. Gentleman, whom I know in view of his past service takes a close interest in these matters, that we have reduced some of the bureaucracy in the process—we have simplified the forms and some of the medical procedures—and we launched a new recruitment campaign in January, the benefits of which are beginning to feed through. The process was too bureaucratic; it is less so now, and it is beginning to work.
Sir Nick Harvey (North Devon) (LD)
May I urge the Minister, when considering the move of The Rifles from Truro to Barnstaple, to recognise that the Army Reserve centre in Barnstaple is the only opportunity for people to participate in the Army Reserve, covering an area from west Somerset down to North Cornwall? If we are to achieve the targets we set ourselves nationally for increasing the size of the reserves, it is very important that people in all communities, however rural, have a realistic opportunity to participate in the reserves.
Mr Francois
I understand the point being made by the hon. Gentleman, a predecessor of mine in this job. We are looking to grow the Army Reserve in Cornwall and in Devon, and indeed across the whole United Kingdom.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
4. What assessment he has made of the effectiveness of military assistance provided to civil authorities during recent flooding.
The Secretary of State for Defence (Mr Philip Hammond)
The MOD’s ongoing support to the civil authorities has been significant and achieved real effect on the ground, with a peak of about 5,000 personnel from all three services available to provide everything from sandbagging to aerial reconnaissance. We provided assistance to nine county councils and five unitary authorities. We are now in the recovery phase, with 220 service personnel still engaged. Once the task is complete, we will work with the civil authorities to assess in detail our armed forces’ contribution to the overall national response and to look at how the contribution of the armed forces to civil resilience can be enhanced and accelerated in future emergencies.
Dr Coffey
I thank my right hon. Friend for that answer. I bring to the House’s attention the honourable membership of the Institution of Royal Engineers that I hold because I am a Member of Parliament for a constituency with Royal Engineers in it. Will he join me in congratulating the Royal Engineers on their work across the country, not only in helping to fix the problems, but in being involved in the emergency checks, which means that we are able to get around the entire country in just a matter of weeks?
Mr Hammond
I am happy to join my hon. Friend in congratulating the Royal Engineers on the role they have played. There is a continuing detachment of Royal Engineers inspecting thousands of flood defences around the country, triaging them so that the Environment Agency can target its specialist engineers on those most at risk.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
One reason why civil authorities may be reluctant to call in military assistance is the full costing regime in the MOD. Has the Secretary of State considered introducing a marginal costing scheme, which would make that interaction easier for all the parties concerned?
Mr Hammond
The hon. Lady is understating the case—one of the reasons most certainly is fear of what the costs will be. The MOD’s position is clear: we would like to do more to support the civil authorities, and we want to make sure that the defence budget is neither advantaged nor disadvantaged from doing so. That implies a full marginal costing recovery regime, and I have written to my colleagues at the Treasury suggesting that we look at a change to the regime to make the situation much clearer to the civil authorities in advance.
Miss Anne McIntosh (Thirsk and Malton) (Con)
May I add my congratulations to RAF Linton-on-Ouse and the neighbouring Royal Engineers who have helped in both the vale of York, and Thirsk and Malton during previous floods? On the funding, I understand that one reason why civil authorities were slow to take up the offer from the military was precisely the issue of who was to pay. Will my right hon. Friend explain to the House from which budget the payment will be drawn?
Mr Hammond
In almost all cases—perhaps I can say in all cases—the net additional cost of military operations that is recoverable from authorities that have lead responsibility under the Civil Contingencies Act 2004 will be 100% funded under the Bellwin formula, in accordance with the statement that the Secretary of State for Communities and Local Government made to the House about the increase in the percentage recovery rates to 100% to cover this emergency.
Mr Robert Buckland (South Swindon) (Con)
5. What plans he has to increase employment opportunities for the spouses of armed forces personnel.
The Parliamentary Under-Secretary of State for Defence (Anna Soubry)
We know that one of the most important factors in enabling spouses to enter employment is making sure that good child care provision is available at a good cost. In addition to the measures that the Government have taken to help all workers, I am pleased to tell the House that £20 million of the LIBOR funding announced by the Chancellor in the autumn will specifically go to help the provision of child care facilities for service families, particularly the infrastructure. We also have a number of excellent schemes to encourage people to go into employment and to support them to set up their own businesses, as well, of course, as the corporate covenant.
Mr Buckland
I thank my hon. Friend for that answer. May I commend to her the work of the social enterprise Recruit for Spouses, which is doing so much to challenge outdated perceptions of military families always being on the move and to engage with businesses to unlock the potential of armed forces spouses? Recruit for Spouses is based in Wiltshire, and it does a lot of work in both Wiltshire and in Swindon.
Anna Soubry
As it happens, I have heard of Recruit for Spouses and I know that its aims are admirable, and of course we support all such projects. That is one reason why I mentioned the corporate covenant: it is very important that businesses recognise the real benefits they get when they employ people who are married to our excellent service personnel, because their spouses tend to be as good.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister not living a little bit in the 20th century rather than the 21st century? It is not just child care that spouses need, but a tailor-made system that allows them to use their enormous talent for a productive purpose. Could she not do something more adventurous? We are talking about not trailing spouses, but people who give a great deal to this country under enormous stress.
Anna Soubry
I am sorry, but I do not think that the hon. Gentleman heard what I said. I will happily go into more detail. We have programmes in place with the Royal British Legion Industries and the university of Wolverhampton, which run workshops specifically for spouses on finding jobs and on helping them to start businesses, so, on the contrary, I am far from living in a previous century. I do not underestimate the issues. I have spoken to various families’ federations, which told me in no uncertain terms that child care costs and the availability of good provision are absolutely critical. The hon. Gentleman should welcome my announcement of £20 million of LIBOR funding. I do not think that he matched that when he was in Government.
Graham Evans (Weaver Vale) (Con)
19. As a graduate of the excellent armed forces parliamentary scheme, I have had the privilege of learning about all aspects of military life, including the ability to settle in one location thus enabling military spouses to find and to keep down regular employment. What estimates has my hon. Friend made about whether the return of British troops from Germany will help increase the opportunity for spousal employment in the future?
Anna Soubry
That is a good question. We believe that the return of units from Germany offers a major opportunity for more service families to lead more stable lives, and we also know that that is important. It is vital that Government, local authorities, employers, the Army and the other services work together and plan carefully. A good case in point is the great work that is being undertaken by Rutland county council and its partners. Let me give one quick example of that. Its latest initiative is to hold a job fair at Kendrew barracks next month.
Mr James Gray (North Wiltshire) (Con)
6. What recent progress he has made on the Army 2020 proposals.
The Minister for the Armed Forces (Mr Mark Francois)
The Army remains on track to implement Army 2020 structures in accordance with the announcement made by the Secretary of State on 5 July 2012.
Of particular note is the fact that all units have now been assigned to the new reaction force, adaptable force or force troops; regular and reserve units have been paired, in line with the move to a fully integrated Army; and future unit locations have been confirmed, taking account of the return of units from Germany to the United Kingdom.
Mr Gray
The Defence Committee’s report into Army 2020, which was published last week, expressed grave concerns about the reduction to 82,000 soldiers, the way in which that figure was arrived at and the fact that the Army was informed of it rather than consulted about it. When the Minister for the Armed Forces opened our report and read it, did he have even the slightest momentary frisson of worry that he might—just might—have done the wrong thing?
Mr Francois
I have a frisson when I open any Defence Committee report. It is worth taking into account the fact that the report has only recently been received and the implications of its recommendations are being reviewed by the respective staffs. We will be providing a full response to the report in the normal way in May 2014. It is clear to me that the Army’s response to the challenges posed by the end of combat operations in Afghanistan and the move to a UK base force remains fully valid.
Mr Andrew Love (Edmonton) (Lab/Co-op)
In that Select Committee report, Sir Peter Wall, the Chief of the General Staff, says that Army 2020 was financially driven. Does the Minister agree with that? Furthermore, will the shortfall of 8,000 not lead to capability gaps? If so, what will he do to plug those gaps?
Mr Francois
As my right hon. Friend the Defence Secretary has said on numerous occasions, the Ministry of Defence and the armed forces cannot operate oblivious to the country’s fiscal position. However, we and the Army are quite clear that Army 2020 represents the best answers to the challenges, fiscal and otherwise, the country faces and is best placed to help us address the future.
Mr John Baron (Basildon and Billericay) (Con)
Events such as in Crimea and the South China sea remind us of the need for strong defence. Has the time not now come for a fundamental reassessment of how much we spend on our armed forces? That figure should be increased even if white elephants such High Speed 2 have to be sacrificed along the way. We may have the fourth or fifth biggest defence budget, but we rank nearer 30th when it comes to deploying troops overseas, which is nonsense given the extent of our global interests.
Mr Francois
My hon. Friend might want to turn up to Treasury questions in the near future and ask the same question. In the meantime, as he mentions overseas deployments, he might be interested to hear that last week I visited 2nd Battalion the Royal Regiment of Fusiliers in Cyprus, in which I know he takes a strong interest. I can report to him and the House that despite difficult circumstances its members are in good order. The planning for the merger of the two regiments of the Royal Regiment of Fusiliers is almost complete and a number of soldiers in the 2nd Battalion have expressed interest in remaining in the Army. We are seeking to facilitate that wherever possible.
Mr Kevan Jones (North Durham) (Lab)
In paragraph 32 of its recent report on Army 2020, the Defence Committee stated:
“We were…concerned to hear that it was the Ministry of Defence’s Permanent Secretary who told the Chief of the General Staff the future size of the Army under the Army 2020 plan.”
Will the Minister say what exactly the role of the Chief of the General Staff was in determining the size of the Army? Why was it left to the permanent secretary to inform him what the size of the Army would be under Army 2020?
Mr Francois
Decisions about the overall size of the armed forces are ultimately taken by Ministers, but the Army 2020 plan was designed by the Army, and it is the Army that has the primary responsibility for implementing it. While we are on the subject of advice, one thing we will not do in trying to grow the Army and the reserves is follow the example of the previous Government, who thought that it was a good idea, for growing the Territorial Army, to threaten not to pay its members for turning up for training.
Andrea Leadsom (South Northamptonshire) (Con)
7. What progress he has made on using funding from LIBOR fines to benefit former and serving military personnel.
Andrew Stephenson (Pendle) (Con)
9. What progress he has made on using funding from LIBOR fines to benefit former and serving military personnel.
The Parliamentary Under-Secretary of State for Defence (Anna Soubry)
The short answer is that a great deal of progress has been made. As Members will know, in December 2012 the Chancellor transferred £35 million from fines levied on the banks following the LIBOR scandal. The whole of that £35 million has now been allocated to almost 100 projects that will provide support to members of the armed forces community. In addition, we can now look forward to the £40 million recently announced for the veterans accommodation fund, the £20 million about which I have already given details and, in perpetuity, £10 million each year for our service charities.
Andrea Leadsom
I am grateful to my hon. Friend for her answer. Will some of the money from the LIBOR fines be used to deal with the awful mental illness that comes to those who have lost loved ones in conflict, and to help the families of those who have suffered mental health problems after spending time overseas in conflict areas?
Anna Soubry
I am happy to confirm that Cruse Bereavement Care, a wonderful charity that comforts bereaved people—not only service families but anyone who has lost someone—has received £500,000 of LIBOR funding. An additional £2.77 million has gone to Combat Stress, and SSAFA has a number of projects that have benefited, to the tune of £2 million. I hope that shows that we take this work very seriously.
Andrew Stephenson
Finding the right accommodation for veterans who have been wounded or injured is an important part of upholding the duty we owe them for their sacrifice. What assistance is the Ministry of Defence providing to ensure that veterans with a housing need are properly supported?
Anna Soubry
As I have explained, £40 million of LIBOR funding has been set aside specifically for what we are calling the veterans accommodation fund. It will make a big difference, and is available to fund the building of purpose-built accommodation and the purchase or refurbishment of existing housing. The bid criteria have been published and the fund is open for applications now.
Thomas Docherty (Dunfermline and West Fife) (Lab)
8. What recent assessment he has made of the economic effects on west Fife of the Queen Elizabeth class carrier programme.
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
The carrier programme as a whole is estimated to have sustained about 10,000 jobs across the UK, 4,000 of which are based in Scotland. Although we have made no specific assessment of the impact on the hon. Gentleman’s constituency, to the end of January the Ministry of Defence had spent about £2.3 billion on work billed to the programme by BAE Systems on the Clyde, and by Babcock at Rosyth. I was pleased to visit Rosyth last week to see the progress of the work on the Queen Elizabeth carrier, which is on track to be flooded up in July. The initial bow sections of the Prince of Wales carrier are dockside, ready for assembly to start later this year.
Thomas Docherty
I am grateful for that answer. Is the Minister aware that Babcock commented last week that if Scotland votes yes it would be highly unlikely that my constituency dockyard would get further orders for maintenance work from the MOD? Is that why the Scottish National party has admitted that there would be significant job losses at Rosyth in the event of independence?
Mr Dunne
The hon. Gentleman will not be surprised to learn that I keep an eye on press cuttings relating to all defence procurement matters. The in-service support solution for the Queen Elizabeth class carriers is still in development and will not be decided until next year, but much support will be delivered at the base port and on deployment at sea. I think, however, that the hon. Gentleman was referring to depth maintenance and refit, and the security implications of that work being undertaken in a non-sovereign dock outside the UK would need to be carefully considered. Several dry docks in the UK are physically capable of accommodating such ships outside Scotland.
Jason McCartney (Colne Valley) (Con)
10. What discussions he has had with his counterparts in NATO member states in preparation for the NATO summit in September 2014.
The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)
My right hon. Friend the Secretary of State has had a range of discussions with his counterparts in recent months in relation to the NATO summit in Wales this September. Most recently he discussed the summit and its possible content with fellow Defence Ministers at the NATO defence ministerial in Brussels on 26 and 27 February. The Wales summit falls at a crucial time for partners as they contemplate a post-2014 future and the importance of the transatlantic alliance. It is also a great opportunity to showcase the best of British to our allies and partners.
Jason McCartney
As an active member of the NATO Parliamentary Assembly, may I ask what plans there are for parliamentarians from the 28 member nations—to engage with the NATO summit later this year?
Dr Murrison
We look forward to members of the NATO Parliamentary Assembly playing an active role, and we are exploring what that might mean. May I say how pleased I am that the hon. Member for York Central (Hugh Bayley) is president of the Assembly? The Prime Minister has appointed my hon. Friend the Member for Bournemouth East (Mr Ellwood) as his parliamentary adviser on the summit. I know that my hon. Friend is working hard, and I look forward to working with him on the preparations.
Mr Speaker
The hon. Member for Bournemouth East (Mr Ellwood) has already approached me about an event that he wishes to stage, so he is going about his duties with great conscientiousness, and I hope to be able to assist him in his endeavours.
Mr Russell Brown (Dumfries and Galloway) (Lab)
With the threat of cyber-attack and espionage rising substantially, will the UK play an active part at the summit in pushing for NATO-wide cyber-capability?
Dr Murrison
The hon. Gentleman is right to raise that point. He will know that the UK’s preparations are reckoned to be far advanced, but he will also understand that cyber-defence is a sovereign capability. However, it is important that supranational institutions such as NATO ensure that their own systems are protected from cyber-attack.
Sir Menzies Campbell (North East Fife) (LD)
May we have an assurance that if there is any discussion of Ukraine at the NATO summit, careful attention will be paid to the defence anxieties of Latvia, Lithuania and Estonia about what appears to be the emergence of a Putin doctrine, not least because of the close proximity of Kaliningrad to all three countries?
Dr Murrison
The right hon. and learned Gentleman is right to raise the concerns of the Baltic states, which are nervous at the moment. Of course, they are covered by article 5, so they have a particular relationship with NATO that is not enjoyed by Ukraine.
Paul Flynn (Newport West) (Lab)
Does the best of British that we are hoping to show to the delegates include the best of Newport, which is a wonderful habitat for the conference? Will the conference arrangements be such that the delegates will have plenty of time to see and enjoy the robust personality of Newport and its beautiful hinterland?
Dr Murrison
The hon. Gentleman is a doughty advocate for the area that he represents, and he is absolutely right that the summit is an opportunity to show off Newport and Wales in general. It will clearly be great to showcase our military, but the summit is also a great opportunity for Wales.
Vernon Coaker (Gedling) (Lab)
There is, rightly, broad consensus on both sides of the House that military action in Crimea is not an option, but will the Minister confirm what contribution the UK has made to NATO in response to the Ukraine crisis, and what role our forces have played in NATO training exercises in Europe? Will the matter be discussed up to and including at the autumn summit?
Dr Murrison
The hon. Gentleman knows of the strategic concept in relation to NATO and what it implies. He will also be aware of our contribution of the E-3D airborne warning and control system aircraft that is currently deployed to make sure that we have situation awareness in Poland and Romania. We are, of course, open to requests from NATO, in relation to what we might do on collective security, but he knows very well the implications of article 5. The importance here is to de-escalate, not escalate.
Vernon Coaker
I thank the Minister for that considered reply. It is the Opposition’s view that we must be prepared to ask serious questions about the UK’s role in NATO and about the security of our allies, including those in the Baltic states and eastern Europe. Does the Minister agree that the forthcoming summit should discuss how NATO can best protect our own security, as well as that of our allies? Is it not clear that one of the most important discussions up to and at the autumn summit must be about the future long-term strategic direction for NATO following the present crisis?
Dr Murrison
The agenda is primarily a matter for the Secretary-General of NATO, not for the host nation, although it is probably true to say that the host nation traditionally has a role in trying to suggest and shape the agenda for summits on its soil. The hon. Gentleman might expect us to be considering what NATO means post-2014. He would probably expect the transatlantic alliance to be debated at some length, and what will happen with regard to Afghanistan and NATO’s involvement in that country. I suspect that all those things will be important and top of the agenda in Cardiff, but it is important to note that this is primarily a matter for the Secretary-General.
Mr Dominic Raab (Esher and Walton) (Con)
11. What steps he is taking to strengthen the armed forces covenant.
The Parliamentary Under-Secretary of State for Defence (Anna Soubry)
We continually review areas where we can make a difference, from home purchase schemes and health care to transition and increased pupil premiums in schools, and our approach is making a difference right across the armed forces community. Upholding the covenant is not a matter just for the Government; it is the responsibility of the whole of society. Charities, employers, local authorities and individuals are all asked to recognise members of the armed forces community and give them the respect, support and fair treatment that they so richly deserve.
Mr Raab
A 2012 survey showed that one in five of our armed forces received abuse back home, and 6% were victims of violence. I do not think we need to legislate for new offences, but is my hon. Friend satisfied that the police properly investigate all allegations, and has she considered with other Government colleagues the case for raising the sentence for criminal violence harassment where it deliberately targets serving British troops?
Anna Soubry
As my hon. Friend will know, different offences relating to violence have different sentences attached to them. I do not think there is a case for raising those sentences overall, and the sentencing guidelines make it clear that if somebody is assaulted by virtue of their being in the armed forces, that is clearly an aggravating feature and as a result, in simple terms, the perpetrator receives a higher sentence—and rightly so.
Andrew Gwynne (Denton and Reddish) (Lab)
In opening, the Minister rightly mentioned transition. Given the concerns about members of the armed forces’ transition that were highlighted in the recent review by Lord Ashcroft, which of his recommendations will the Ministry of Defence be taking forward?
Anna Soubry
We are considering all the recommendations in Lord Ashcroft’s report. On balance, it was a positive report, and it shows what many of us know—that when our personnel transit out of service, they do so extremely well. They are more likely to find a job than other members of society, because of the remarkable skills that they have, often as a result of the experience that they gained as members of our military. On balance, things are working well, but that does not mean that we cannot do more. We are looking at that report and at improving things, and much of the work I am doing leads to that.
Mr James Arbuthnot (North East Hampshire) (Con)
On Thursday, my right hon. Friend the Secretary of State for Defence announced that the Service Complaints Commissioner would become an ombudsman, for which the existing commissioner, the excellent Dr Susan Atkins, and the Defence Committee have been calling for years. Does the Under-Secretary agree that this very welcome move will mean that the complaints system will be both quicker and fairer, and will help to bring in more aspects of the armed forces covenant?
Anna Soubry
Absolutely. I completely agree with my right hon. Friend in his assessment of the benefits of this new system. As he says, Dr Susan Atkins has welcomed this greatly, and may I use this opportunity to pay tribute to the great work she has done? I notice that the Royal British Legion also welcomed these changes. The new system will do exactly as he says: it will help to speed things up, and where there has been maladministration the service complaints ombudsman will not shirk from making recommendations to the Defence Council, and we will see huge improvements.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
12. What progress his Department has made on its procurement of three new offshore patrol vessels from BAE Systems.
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
We are in negotiations with BAE Systems for the contract to build the three new offshore patrol vessels announced in November. As part of these arrangements, only last Wednesday, during a visit to Scotstoun, I announced that the MOD had committed £20 million to this programme, with the award of a contract for long-lead items, such as engines and gearboxes, which need to be ordered in advance. The main investment decision is due in coming months and construction work of the vessels is due to begin this autumn.
Oliver Colvile
Will my hon. Friend also set out the timetable for the building of these frigates and ships, and say a little about when the base porting announcement might be made?
Mr Dunne
I thought that my hon. Friend might be interested in the base porting announcement. As is normal practice, we will make the announcement around the time of the main gate investment decision, which, as I have already said, is likely to be this autumn. I am sure that he will advocate strongly his constituency interest, but I have to advise him that other hon. Members will be doing so as well.
Sir Edward Leigh (Gainsborough) (Con)
13. What effect the Army 2020 review has had on the operational capability of the armed forces.
The Minister for the Armed Forces (Mr Mark Francois)
Under Army 2020, the Army will be equipped to face future threats after more than a decade of enduring operations and will remain capable of operating across the full spectrum of military capability, either at home or overseas.
Sir Edward Leigh
The Minister said earlier this afternoon that the MOD cannot be “oblivious” to the country’s fiscal position, but the Treasury cannot have it both ways. If it insisted that the Army had to suffer dangerous cuts in a non-strategic review in 2010, surely in 2020, when the economy will be growing, the Army, in a dangerous world, is entitled to share in the proceeds of growth.
Mr Francois
Again, my hon. Friend tempts me to stray into what are perhaps Treasury matters. It is evident that the Ministry of Defence must live within its means, as must all other Departments. There is no national security without economic security. That said, we believe that with Army 2020 we have a credible and realistic plan, and we are determined to carry it through.
Mr Julian Brazier (Canterbury) (Con)
Does my right hon. Friend agree that while many of us would like to see more emphasis on and funding for defence within the money available, the rebalancing brings us into line with all other English-speaking countries? May I further report that my local TA battalion has recruited as many people during the last two months as during the previous 10, because at last the pipeline is starting to come unblocked?
Mr Francois
On behalf of the whole House, I am delighted to receive my hon. Friend’s positive report. We do believe that we can meet the target. The reserve forces when I served in the 1980s had 75,000 men and women under arms. I have to believe that now, with a larger population, we can get to 30,000 trained, particularly as we start with 19,000 trained now. Put another way, it would require a net increase of only about 20 in each of the 650 parliamentary constituencies in this country across a period of four years. I believe that is eminently achievable and, backed by initiatives such as the corporate covenant to get employers’ support, we are getting on with it. We will deliver this programme.
Martin Horwood (Cheltenham) (LD)
14. What steps his Department is taking to support conflict prevention; and if he will make a statement.
The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)
Together with the Department for International Development and the Foreign and Commonwealth Office, the Ministry of Defence is a full partner in the delivery of the July 2011 building stability overseas strategy, and uses a multi-departmental approach to prioritise UK activity in upstream conflict prevention and stabilising fragile and conflict-affected states around the world in association with partner nations.
In addition, the Ministry of Defence has developed the international defence engagement strategy jointly with the FCO. Published in February 2013, this sets out how the Ministry of Defence can contribute most effectively to the building stability overseas strategy, as well as wider overseas Government objectives.
Martin Horwood
I welcome the Ministry of Defence’s involvement in the strategy. Security sector reform is one of its key elements with regard to conflict prevention. How do we ensure that, by building capacity among local security forces, we do not inadvertently enable repression and repressive tactics among those organisations, and that we instead make people feel safer in those countries?
Dr Murrison
My hon. Friend will be aware that, when taking training to countries we partner, we put a great deal of effort into instilling what might be called the “moral component” of warfare very directly into what we teach and into what we inculcate in them. That is a very strong part of our overall offer. We can never guarantee that the people we train will not go on to do terrible things, but we can reduce the chances of that happening and make sure that the ethos we are rightly proud of in our own armed forces is exported to others.
Dr Julian Huppert (Cambridge) (LD)
21. The Minister spoke about multi-departmental work, but may I press him on multilateral work? What is he doing to make sure that a priority of work with NATO and the European Union is a focus on conflict prevention?
Dr Murrison
My hon. Friend takes a great interest in this and will be aware of the large number of military and civilian missions that the European Union has mounted: there are 16 in all, four of which are military. My hon. Friend will be aware of the EU training mission to Mali—EUTM Mali—and EUCAP Nestor. It is very important to understand that in all of these scenarios we have to work with partners, meaning NATO first and foremost, but other partnerships where it is expedient to do so.
Katy Clark (North Ayrshire and Arran) (Lab)
15. What recent progress his Department has made on its response to the internal radiation leak aboard HMS Vanguard; and if he will make a statement.
The Secretary of State for Defence (Mr Philip Hammond)
Let me make it clear to the hon. Lady that there has been no issue with the reactor on HMS Vanguard or, indeed, any of our submarines. I announced to the House on 6 March that there had been a small fuel element breach in the naval test reactor at Dounreay, but that did not lead to a leak of radiation from the reactor circuit.
Katy Clark
I thank the Secretary of State for his answer. What assessment has he made of whether the reactors on all Vanguard and Astute-class submarines will last the full lifetime of the submarines?
Mr Hammond
As I explained to the House when I made my statement, the purpose of the naval test reactor at Dounreay is to run the reactor hard and flat out, as it were, ahead of the operational reactors on the submarines, to see what happens as they approach the end of their planned life. The reactors on board our submarines have nothing like the percentage fuel burn that the reactor at Dounreay has now experienced, so we are looking at something that has developed at a much further advanced stage of the life of the reactor. We have, however, taken the decision, on a precautionary basis, to refuel HMS Vanguard during her planned deep-maintenance period. Once the reactor at Dounreay is decommissioned, it will be examined in detail and we will then have much greater evidence of what has caused the issue and be able to make sensible decisions about the future.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
Will the Secretary of State advise whether and when the Commodore at Clyde naval base was alerted to a potential issue with the reactors of the Vanguard submarines, and whether, no matter whose responsibility it was, he would have expected the relevant local authorities— namely Argyll and Bute and West Dunbartonshire councils—to be alerted?
Mr Hammond
If there had been any health and safety risk or any risk to the environment, I certainly would have expected the relevant local authorities to have been notified, but there was none at any time. The Scottish Environment Protection Agency has a written agreement with the MOD that allows it oversight of these matters in military bases in Scotland. If it had thought there was any risk at any time, it would have notified the necessary civil authorities.
Mr James Gray (North Wiltshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Defence (Mr Philip Hammond)
My first priority remains the success of our operations in Afghanistan. Beyond that, my priorities are maintaining budgets in balance, developing our reserve forces, reinforcing the armed forces covenant and reforming the defence procurement organisation so that our armed forces can be confident of being properly equipped.
Mr Gray
The people of Wiltshire love the Army and will welcome the 4,000 soldiers who are shortly due to return there from Germany, but we also love Stonehenge and the mysterious mists and swirling druidical mysteries that surround the stones. Will the Secretary of State look carefully at reports that houses to be built to house the 4,000 soldiers will block off the rising sun at the summer equinox, and if they do, will he make sure that it does not happen?
Mr Hammond
My hon. Friend is right to highlight the importance of preserving important sites such as Stonehenge and of having a careful approach to the design of any development that might impact on them. I, too, have seen the press articles to which he referred. I am happy to reassure him that although Larkhill is an important element of our strategy for accommodating troops returning from Germany—we intend to invest about £800 million in the area to accommodate 4,300 service personnel—no decision has been taken about the location of additional service accommodation. A public consultation is about to close, and organisations such as English Heritage have very clearly expressed the issues that he has raised. We will make a decision in due course.
Yvonne Fovargue (Makerfield) (Lab)
Although we welcome the events in France and, indeed, around the UK to commemorate the 70th anniversary of D-day in 1944, does the Secretary of State not agree that it would be appropriate to hold a national event in London at that great symbol of sacrifice, the Cenotaph, to provide a real focal point for remembrance here?
The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)
I share the hon. Lady’s concern that we should mark the 70th anniversary appropriately and, indeed, that we should learn the lessons of the past in this respect. I know that considerable work is under way to make sure that the 70th anniversary in France is a huge success, and that veterans and their carers who want to go are supported in returning to the beaches to commemorate this huge anniversary. On anything more than that, we will have to wait and see, but the important thing is to make sure that veterans and carers who want to go can do so in the manner they wish.
Sir Edward Leigh (Gainsborough) (Con)
T2. An attack on one NATO country is an attack on all of them. Can we therefore thank God that Ukraine never did join NATO, because otherwise we might now be involved in a European war?
Mr Hammond
As the Under-Secretary of State for Defence, my hon. Friend the Member for South West Wiltshire (Dr Murrison), has already said, the status of Ukraine is quite different from the status of NATO countries—NATO countries enjoy the article 5 guarantee, which protects and assures their security—but we are doing everything we can to reassure our NATO allies about the protection that we offer. I am able to advise the House this afternoon that we have taken the decision this morning to offer NATO UK Typhoon aircraft from late April to augment the Polish contribution to the NATO Baltic air policing mission. I hope that will provide reassurance to our NATO allies in the east.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
T6. In thinking about the importance of learning from the past, has the Secretary of State read “Why England Slept”, a little book by John Fitzgerald Kennedy? It is about Britain not being prepared in the 1930s for what was going to happen in Germany. Does he think that England, or Britain, is sleeping now, with an uncertain and unpredictable presence in the east of Europe?
Mr Hammond
I have not read the book, but I have said consistently in this House and elsewhere since I came into this post that we should not forget Russia’s very significant rearmament programme. Russia remains a major military force on the continent of Europe, and its interests are not always aligned with ours, as we have seen only too clearly over the past few weeks.
Dr Julian Lewis (New Forest East) (Con)
T4. Much as no one wishes to see the cold war return, do not recent events between Russia and Ukraine indicate that this is not some flight of fancy, but that it really could happen, and does that not mean that we must be extremely careful never to let down our nuclear or conventional defence guard?
Mr Hammond
What those events do show is that we have been right throughout in maintaining the need to continue with a strategic nuclear deterrent as the ultimate guarantor of Britain’s sovereignty and freedom of action. The world is a very uncertain place, while the time horizons for the provision of military equipment are very long, and we are looking forward 40 or 50 years in the planning. The events of the past months and years show that it would be a very brave man indeed who said that there would be no threat to our sovereignty and independence over that time horizon.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T7. Last week, the Under-Secretary of State for Defence, the hon. Member for Ludlow (Mr Dunne), admitted that he had wasted £50 million on the Cipher cyber-security project. This weekend, we heard that the NATO website and other websites came under attack following the recent actions in Ukraine. Will the Minister give us a timely assessment of the UK’s and NATO’s cyber readiness, particularly with regard to the situation in Ukraine?
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
The Cipher contract cost the MOD £46 million. Work under the contract ceased in June of last year at the end of a protracted assessment phase, which concluded that the project would not meet the full defence capability requirement at value for money for the taxpayer. I remind the hon. Lady that the contract was placed in November 2008. It is a classic example of the legacy of out-of-control procurement contracts that we were left when we took office in May 2010.
Mr Crispin Blunt (Reigate) (Con)
T5. To pick up the theme from the hon. Member for Huddersfield (Mr Sheerman), between 1935 and 1939, defence expenditure doubled in response to the deteriorating security situation in Europe. Does the Department do any contingency planning to determine how our defence capability could be improved rapidly if there was a greater call on our nation’s defence resources?
Mr Philip Hammond
As I have said before in the House, part of the outcome of the strategic defence and security review in 2010 was that we should focus, while consolidating our armed forces, on our regeneration capability in case the need arose, or the resources became available, for capabilities or scale of operations that we do not have.
John Woodcock (Barrow and Furness) (Lab/Co-op)
We were delighted that the Secretary of State and his Australian counterpart made it through the Barrow fog to visit the shipyard on Thursday to announce major new infrastructure investment to make the Successor programme possible and the cutting of steel on the seventh Astute-class submarine. Did his conversations with the company and the work force on that day maintain his confidence that the leak in the test Vanguard reactor will not affect the build of the Astute programme?
Mr Hammond
I am not sure that I discussed that matter with the work force at Barrow, although I did have some interesting conversations that reassured me greatly about their commitment to the programme. We are clear that the incident at Dounreay will not have any impact on the progress of the Astute or Successor programmes.
Andrew Rosindell (Romford) (Con)
T8. Will the Secretary of State join me in paying tribute on St Patrick’s day to all the Irish citizens who currently serve in Her Majesty’s armed forces and the 100,000 who sacrificed their lives in the British armed forces during the first world war? Does he agree that our defence partnership with Ireland would be immensely strengthened if it considered joining NATO?
Dr Murrison
My hon. Friend will know that we are working closely with the Republic of Ireland to ensure that our period of shared history is commemorated appropriately. Today, we are operating with troops from the Republic of Ireland in Mali. He will know that the UK and Ireland stand shoulder to shoulder in EUTM Mali. It is a strengthening relationship and one that has great promise.
Steve McCabe (Birmingham, Selly Oak) (Lab)
As the Secretary of State says, procurement times are long. Joint Helicopter Command has indicated that it requires a new fleet of Apache AH-64E attack helicopters for operational use by 2020. Has that contract been signed yet?
Mr Dunne
If the hon. Gentleman is familiar with the AgustaWestland contracts, he will be aware that last month the Secretary of State announced a contract for the sustainment of the existing Apache fleet for the next five years. Thereafter, we are looking to introduce a contract that will take the effective use of the helicopter up to 2040. Discussions on how we should go about procuring that sustainment upgrade are under way.
Mr Tobias Ellwood (Bournemouth East) (Con)
T9. In Budget week, will the Defence Secretary join me in commending Britain’s improved economic outlook, thanks to the Chancellor’s stewardship, which potentially gives rise to finding the annual £65 million required to run the second aircraft carrier? Does my right hon. Friend agree that operating two carriers would strategically extend and involve Britain’s diplomatic military influence in a manner not seen for a generation?
Mr Philip Hammond
I am happy to join my hon. Friend in congratulating the Chancellor on the remarkable recovery in Britain’s economic prospects. He knows well my own view, which is that having invested £3 billion each in building our carriers, it would look strange if we did not make every possible effort to find the relatively small amounts of money that will enable them to be operated, so that we can have a set of doctrine based on the continuous availability of a carrier at sea.
Mrs Madeleine Moon (Bridgend) (Lab)
The Secretary of State gave a written statement saying that the armed forces complaints commissioner is now to become an armed forces ombudsman. Will he explain why an announcement of such importance to the House and the armed forces family was not made on the Floor of the House, rather than through The Times and through a written statement, as that would have given us far greater awareness of what was going to happen?
Mr Hammond
May I suggest to the hon. Lady that, as many of her colleagues have clearly understood, if Members wish to pursue a written statement further, they always have the option of asking an urgent question?
Sir Gerald Howarth (Aldershot) (Con)
Given that Russia has effectively annexed Crimea, in contravention of the Budapest agreement signed by Britain, the United States and Ukraine in 1994, and that it continues to threaten eastern Ukraine, what consideration has my right hon. Friend the Secretary of State, or indeed NATO, given to mounting maritime exercises in the Black sea so that a message may be sent to Mr Putin’s Russia that any attack on Odessa would be a step too far?
Mr Hammond
We are clear that a graduated response to these unjustified actions by Russia is necessary, but it should be a diplomatic response in terms of economic and trade sanctions. Meetings are ongoing today across the European Union to try to agree the best way to deliver that response.
Dan Jarvis (Barnsley Central) (Lab)
There is no doubt that the late Corporal McLaughlin of 3 Para demonstrated outstanding courage during the battle for Mount Longdon in the Falklands conflict of 1982. We know that a citation was put forward by his commanding officer, but it was apparently not considered by the MOD. Given that new evidence now casts doubt on the reason it was not considered, would it be reasonable for Ministers to look at the detail of the case and satisfy themselves that an injustice has not been served on Corporal McLaughlin, his unit and his family?
The Minister for the Armed Forces (Mr Mark Francois)
I have been to the Falkland Islands and visited the battlefield at Mount Longdon. Having done so, I can appreciate what a remarkable feat of arms it was for that assault to have taken place and to have succeeded. I fully acknowledge the hon. Gentleman’s regimental links in all of this, but as he will know, the decision to give individual military awards is not a matter for Ministers of the Crown. Such things are examined through well-established procedures, and it is not down to Ministers to take individual decisions.
Mr Henry Bellingham (North West Norfolk) (Con)
Is the Secretary of State aware that some Scandinavian armies are not allowed out after dark? This pernicious human rights culture is already infiltrating our armed forces. What will he do to exempt our armed forces from human rights laws?
Mr Philip Hammond
There are issues about the encroachment of judicial processes into the operation of the armed forces. A number of cases currently before the courts, or pending, could have a significant impact, and we are watching them closely. We are clear that once we commit our armed forces to combat, they must be able to carry out operations without fear of constant review in the civil courts. If we find that the current cases develop in a way that makes that difficult, we will come back to the House with proposals to remedy the situation.
Bingo Duty
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is my pleasure to present a petition signed by 220 people that was arranged by those who enjoy bingo at Palace Bingo in Felixstowe. I thank Vivienne Warren for organising the petition.
The petition states:
The Petition of the people of Suffolk Coastal,
Declares that the bingo industry is currently subjected to bingo duty at 20% whereas most other forms of gambling are taxed at 15% and further that the Petitioners believe that bingo venues offer a pleasant and safe environment for people to come together and enjoy themselves.
The Petitioners therefore request that the House of Commons urges the Government to reduce bingo duty from 20% to 15% so investment can take place in the bingo industry modernising premises and creating jobs.
And the Petitioners remain, etc.
[P001332]
Speaker’s Statement
Mr Speaker
It is my sad duty to have to report today to the House the death, at the age of 88, of the right hon. Tony Benn, who served in this House from 1950 with only very modest interruptions until 2001, representing over that period of half a century two parliamentary constituencies, Bristol South East and Chesterfield, the first for 30 years and the second for approximately 17 years. Colleagues in all parts of the House will remember Tony Benn very well. For my part, I believe he was a man of deep socialist principle, of great integrity, and of demonstrable passion and compassion; a brilliant parliamentarian, a brilliant platform speaker, and a brilliant diarist. The House will also doubtless know—I can recall for Members’ benefit—that, when he left the House, alongside, at the time, only Sir Edward Heath, Tony was granted the freedom of the House. It was a freedom that he exercised. I think it is right that a book of condolence should be established, and it has been—it sits in the Library and is there for Members, staff of the House, Members’ staff and others to sign.
I thought it might perhaps also be convenient for the House to know what arrangements are intended by me and by the usual channels to acknowledge Tony’s contribution. On Wednesday, there will be an opportunity for the Prime Minister and the Leader of the Opposition to pay tribute to Tony, and on Thursday, after Question Time, a tributes session will be opened by the Deputy Prime Minister and responded to by the deputy Leader of the Opposition. There will then be an opportunity for Back Bench Members to record their own recollections and impressions of Tony Benn. The intention is that that set of exchanges will be wound up by the shadow Leader of the House and by the Leader of the House. At what is, in particular for the family, a very sad time, a difficult time, a time of trauma and a time for grief, I hope that we collectively want to extend our condolences to Tony’s children, two of whom, Hilary and Stephen, I can see in my line of vision, to all his grandchildren—it is a privilege to see Emily present today—and to all members of the family.
Points of Order
Toby Perkins (Chesterfield) (Lab)
On a point of order, Mr Speaker. I thank you very much for what you have just said. I wonder if you might assist me and my hon. Friend the Member for Bristol East (Kerry McCarthy) in making our constituents aware that books of condolence lie in Chesterfield Labour club and Bristol city hall. We know people want to make their comments known and hope they provide some comfort to the family.
Mr Speaker
I am grateful to the hon. Gentleman. He has effectively advertised his own point. It will be on the record and I am sure he will be taking further steps to ensure that people are aware of those important facts.
Bill Wiggin (North Herefordshire) (Con)
On a point of order, Mr Speaker. I am sure that, should it have been my father you were speaking about, I would have been delighted with your very kind comments.
On a completely unrelated matter, sadly, last Thursday, I raised a point of order about Members who shout “Aye” and then vote no, and vice versa. Mr Deputy Speaker was kind enough to repeat your judgment. Subsequently, at least three witnesses have come to me to say that they have seen hon. Members ignoring that advice. I have not named them and would not do so because I have not warned them, but I wonder what you would like me to do, Mr Speaker. Should the witnesses write to you?
Mr Speaker
I was not present at the time, but I am advised by a very high—even bewigged, dare I say—authority that the matter was dealt with at the time, and that there is no particular merit in going back over the incident, as far as I am aware. However, I say to the hon. Gentleman that Members are free to write to me at any time if they feel that there has been an impropriety or a breach of protocol. The matter should be treated on its merits. It is the case—[Interruption.] Order. It is the case that vote should follow voice. That is a very long-established principle. Vote should not go in opposition to voice.
Mr Speaker
The hon. Gentleman is gesticulating in an eccentric fashion, but we will come to him in a moment.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Further to that point of order, Mr Speaker. It is helpful to have your ruling on the record, but the matter was most certainly not dealt with, because we were advised to wait for the recorded vote to be made available. Your ruling is clear, but one wonders what the situation is now for those who called a vote in false circumstances.
Mr Speaker
I thank the hon. Lady for what she has said. I know that she always seeks to be helpful to the House, and I always listen to her.
Dr Lewis
Further to that point of order, Mr Speaker. I apologise for my eccentric gesticulations, but one cannot change the habit of a lifetime. I speak as one who, within living memory, may have been guilty of that practice in getting what we considered to be a rather important vote on Syria on the record. If it is decided that the practice is unsuitable and should never be repeated, when there is an important Back-Bench debate on which there needs to be a vote to make the public well aware of the opinion of the House, and the Government choose for technical reasons to advise everyone to abstain, are there other mechanisms available that would enable that vote to be called?
Mr Speaker
For a moment I thought that, not for the first time, the hon. Gentleman had foxed me. I am sorry to disappoint him, but his point is not quite as powerful, or his inquiry as penetrating, as he imagined. The short answer to his question is yes. There is a simple mechanism by which a Member who is anxious to ensure that the will of the House is tested can see to it that it is, and that is the mechanism of putting in Tellers. That is a different matter from registering a vote in opposition to what the voice has said.
Mr Speaker
The hon. Member for New Forest East (Dr Lewis) says that he did that once before, but I think he was operating under cover at the time.
Mr Dennis Skinner (Bolsover) (Lab)
Further to that point of order, Mr Speaker. The hon. Member for New Forest East (Dr Lewis) has got form. He is the last person who should talk about doing things for other reasons. He joined the Labour party many years ago because he wanted to protect a so-called Labour MP who, when he next came to Parliament, crossed the Floor of the House and joined the Tories. The hon. Gentleman has got form.
Mr Speaker
There are only two responses to the hon. Gentleman. First, lots of us have got form. Secondly, he has made the point conclusively for me that it is time to move on.
Robert Flello (Stoke-on-Trent South) (Lab)
On a point of order, Mr Speaker. This morning, Sir David Higgins announced his proposals on High Speed 2, which include the suggestion that there should be a station at Crewe. That completely ignores the excellent proposal advanced by Stoke-on-Trent city council that would save £5 billion and bring services to Manchester seven years earlier. Has the Secretary of State for Transport given any indication that he will come to the House and explain why Sir David Higgins has apparently ignored the recently concluded consultation and introduced proposals that completely fail to take into account the other sound suggestions that have been made?
Mr Speaker
I thank the hon. Gentleman for that point of order, to which there are two responses. First, the observations by Sir David in his report will be the subject of ongoing debate, and probably dispute, for a long time to come. I make that point, within the boundaries of what the Chair can say, with some personal feeling.
Secondly, I know that it is the Secretary of State’s intention to make a statement on that important matter. Initially, I believe he had intended to make an oral statement to the House today, but it may have come to the hon. Gentleman’s notice that the Secretary of State is engaged elsewhere, and quite unavoidably would not be able to make that statement at this time. I am hopeful, however, that he will soon make it.
Business without Debate
Pensions Bill (Ways and Means) (No. 2)
Pensions Bill
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
16:35 - The House divided: - Ayes: 274 / Noes: 198 - Question accordingly agreed to.
17:50 - The House divided: - Ayes: 214 / Noes: 277 - Question accordingly negatived.
Mr Speaker
I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 1, 3, 9 to 13, 15 to 23, 27, 29 and 32 to 38. If the House agrees to them, an appropriate entry will be made in the Journal.
Clause 2
Entitlement to state pension at full or reduced rate
The Minister of State, Department for Work and Pensions (Steve Webb)
I beg to move, That this House disagrees with Lords amendment 1.
We are on the home straight of the Pensions Bill. It has been all the way through this House and their lordships’ House, and we have come back to it today to deal with amendments that, with one exception, make it a better Bill. I am grateful to my noble Friends Lord Freud and Lord Bates who, from the ministerial Benches, took the Bill through another place. I am also grateful to all my colleagues who have contributed to the Bill, and to peers on both sides of the House of Lords who have made insightful contributions and improved the Bill in a number of ways.
We have made a number of amendments in response to concerns raised by noble Lords, so I emphasise that our decision to ask this House to disagree with their amendment 1 is exceptional. Indeed, that is the only amendment with which we are asking the House to disagree, so I hope that we will be seen to have taken a constructive approach and that we have sought to improve the Bill on a cross-party basis wherever possible. For reasons that I will explain, however, we ask the House to disagree with this amendment.
As the House will know, access to the national insurance system through employment is dependent on earning above the lower earnings limit, which is currently £109 a week or, expressed annually, £5,668. People earning above the lower earnings limit but below the primary threshold of £149 a week receive a credit and do not pay national insurance but effectively build up national insurance rights. The issue raised by Baroness Hollis in another place related to the position of people who have more than one job, none of which, by itself, results in their paying national insurance but whose wages, if added together, would be above the lower earnings limit. It was suggested that there was apparent unfairness, because someone with a single job that pays £120 a week would get a year of national insurance, whereas someone with two jobs, each paying £60 a week, would not.
We are grateful to Baroness Hollis for raising the issue. We will set out the extent to which we think the issue is significant, the extent to which we think there is evidence for it and how the Government plan to address it. We ask the House to disagree with the amendment, but we accept the principle that we need a pensions and national insurance system that is fit for the modern age. Crediting and various other issues have evolved and need to evolve to reflect the fact that we are dealing with a changing labour market. I want to share with the House some examples of how that has happened and will continue to happen. One particular example is the introduction of universal credit.
At present, there is a set of low-earning individuals who do not get credits. When universal credit is fully in place and they come within its scope, they will receive credits. Potentially, some will be the very same people we are talking about in relation to the amendment. The House may not be aware that the introduction of universal credit will bring an estimated 800,000 additional low-earning households into the scope of crediting. That demonstrates that the Government are not complacent about the changing labour market, or the position of low earners and their access to the national insurance system. This is a concrete and substantive way through which people will gain access in future.
I understand the concern of Baroness Hollis that people might miss out on a qualifying year for national insurance. Why does that matter? If they were repeatedly to miss out on qualifying years, they might fail to build up a full single-tier pension. That requires 35 qualifying years, bearing in mind that these are years of contributions or credits. However, the mere fact that I have used the phrase “35 qualifying years” demonstrates the first reason why the problem might not be as significant as one might, at first sight, imagine. An 18-year-old might, for the sake of argument, have a 50-year working life, or possibly slightly more. Of that 50 years, only 35 years need to be qualifying years for a full single-tier pension. That person could, therefore, spend 15 years doing multiple small jobs—which is exactly what the noble Baroness is concerned about—and it would not make a jot of difference to their single-tier pension entitlement.
We do not know how many people spend how many years in this situation, and that brings me to one of my central points: we do not have the evidence base to know the scale of any potential problem, let alone to rush to solutions, which is what the amendment does. We have cross-sectional data. On the basis of surveys, we know how many people report having multiple jobs in any given year. We know what the wages are and we can have a stab at aggregating them. What we do not know very reliably is how that changes over time: whether the people who in any given year have multiple small jobs are the same people the next year and the next year. If it is just a transient phase that happens for a few years of someone’s working life and does not happen again, it may be entirely irrelevant to their state pension position.
Sheila Gilmore (Edinburgh East) (Lab)
This matter came to my attention through a constituent who was in exactly this position, and the Minister will be aware that I raised it in Committee. The amendment is an enabling amendment rather than a prescriptive amendment, and even if there are only a few people who will be in that position, is it not worth making provision for them? Not everybody will necessarily enter the labour force at 18, particularly with greater further education and so on, so reaching 35 years might be quite difficult for some people. If there is a small number, as the Minister keeps telling us, I do not understand the objection to the amendment.
Steve Webb
I am grateful to the hon. Lady who, as she says, has shown an interest in this issue. There will be an issue of proportionality in any change. We estimate that perhaps 50,000 people might at any given point be doing multiple small jobs that together take them over the floor, but do not on their own. If, for most of those people, this happened for a few years and did not happen again, and it was relevant to the state pension for only a handful of people, should we legislate for that handful? It could happen and it probably does happen to some people, but to make well-informed policy the Government ought at least to assess the scale of the problem.
In particular, we should not rush into specific solutions. The amendment advocates a specific model, but I believe that we must begin by identifying not just the number but the types of people who are doing multiple part-time jobs of this kind. For instance, are they people with children? Is that why they are doing such jobs? If they have children under 12, they will receive credits under the general system.
We must match our data on multiple small jobs with data from other sources. We must look at longitudinal as well as cross-sectional data in order to gain a sense of the scale of the problem and the types of people affected, rather than legislating for a single solution. We believe that the amendment is technically flawed for a number of reasons, but we certainly think that rushing to amend the Bill in order to give ourselves power to do something that we might or might not want to do because it is one possible solution to a problem whose scale we do not know would be premature.
Sarah Newton (Truro and Falmouth) (Con)
Is it not especially important to enable women to juggle caring for young children with part-time employment? Will the Minister reassure me that the great improvements that we have made in relation to credits will continue, so that women will retain the flexibility that so many of us really appreciate when our children are young?
Steve Webb
My hon. Friend is right. It is important to attribute value to the time that people—both men and women—spend at home bringing up young children, and I can reassure her that years spent doing that will count in full as qualifying years towards a single-tier pension. For the first time, more or less, since the introduction of the system—at least, since earnings-related pensions were introduced— those years will count just as much as years spent running a FTSE 100 company. A year is a year, and a qualifying year is a qualifying year.
The provision will apply to anyone who is looking after a child under 12 and entitled to child benefit—well, it is slightly more complicated, but that is the basic idea—and to anyone who is caring for an elderly relative and receiving carers allowance, or, in certain cases, caring for more than 20 hours a week. There is, rightly, a network of credits which bring people into the system. Those will remain, and, in many respects, will become more valuable in the single-tier context.
Sheila Gilmore
The Minister advanced exactly the same arguments on Second Reading and in Committee. He said on those occasions that he did not have enough information. Given that we last considered the Bill several months ago, may I ask what steps he has taken to obtain the information that he feels is needed?
Steve Webb
We have increased our earlier estimate of the number affected from about 20,000 to about 50,000. In 2010, the last Government reduced the scope of what used to be known as home responsibilities protection by reducing the upper age of children being cared for following the end of child benefit and not being covered by credits from 16 to 12, and that has slightly increased the number affected by our proposals. We also made a technical change in starting credits for 16 to 18-year-olds. Those two factors, combined with more recent data, give us an estimate of 50,000. So we have updated our estimates, but, as the hon. Lady says, we need to take the matter further. Although we do not accept the amendment, we do accept the need to build an evidence base, and I will explain in a moment how we plan to do that.
Steve Baker (Wycombe) (Con)
The Minister is demonstrating that for low-paid people the system is currently so complicated that they cannot tell whether or not it is worth working an extra hour. Will he make it simple for me? If the amendment were adopted, would low-paid people be worse off in that year while they were earning?
Steve Webb
The honest answer to the question is that because there is not enough information in the amendment, we do not know, but that might be so.
Let us take the example of someone with two jobs paying £75 a week, who does not currently pay national insurance. If the two sums were added together to make £150 and national insurance were levied on that basis, that person would then have to pay national insurance. Such people might turn out not to need the qualifying year, because they would already have 35 qualifying years. As the hon. Gentleman says, a set of people could be worse off if the amendment were interpreted to mean what we assume that it means. It may merely mean opting in for a credit, which would be a free entitlement and would therefore constitute pure gain, but in that case there would be a different unfairness. We would have people who did a single job at £150 a week who had to pay NI and somebody else who had two jobs paying £75 a week who did not have to pay NI but got a free year of national insurance. My hon. Friend highlights an important point, and I am grateful to him.
Sheila Gilmore
Does the Minister feel that there is a technical problem in including such people, however small a group he thinks they form, because he seems to accept that people might end up not making up the 35 years towards a pension?
Steve Webb
We have always been clear that there will be people who will not make the 35 years, particularly those who come into the country later in life, for example, but the link between multiple mini-jobs and not making the 35 years, which we are talking about here, is unclear at best. We simply do not know whether it is a transient phase for people or whether they are in a recurring pattern. Again, I counsel the House against rushing to policy conclusions in amendments that are not accurately drafted rather than saying, “Let’s get the evidence base together.”
As well as undertaking to update our own figures, we are happy to commit to a literature review of what is known about this end of the labour market, making sure we have access to all the available data. We are also content to convene what we have grandly called an analytical stakeholder forum—that is three words of jargon in one go, so it must be impressive. The point of that is to pick the brains of those who study this end of the labour market, and we will be very pleased to benefit from the insights of the noble Baroness Hollis, with whom I have already had an informal conversation about this matter. I should stress that she would like us to retain Lords amendment 1 to avoid misrepresenting her views. We are very keen to gain her insights and those of economists and others who study this end of the labour market to try to establish what more we might be able to find out through existing data and whether any further work needs to be done.
It seems to us that we need to take a step-by-step approach, rather than rushing to policy conclusions as the amendment would. If we found that there were lots of people in this situation and that something must be done, even the something that must be done might not be the thing proposed in this amendment, and it seems a bit odd to pick one option, which as far as we can see is a sort of opt-in crediting option, when there might be others. For example, one might think that lowering the lower earnings limit might be a better solution. That would reduce the number of people in this position because their combined wages would be more likely to be above that floor. It would not necessarily require an opt-in process, and it would be simpler. That might therefore be a better solution; there might be others. We might relax the rules on voluntary national insurance contributions and the deadlines for payment. One can think of a whole raft of solutions, but if we are not clear about the scale of the problem, the groups affected and the permanence or otherwise of the situation, putting just one such provision in primary legislation—giving ourselves a power we might not use through what is, at that, an ambiguous amendment—does not seem to us to be the way forward.
Let me try to draw these threads together, because we have a lot to get through. We are concerned that the amendment itself is unclear, and I have run through a number of reasons why, such as the reference to the lower earnings “level”, not “limit”, and the reference to “income”, not “earnings”. National insurance liability is based on earnings, so the wording would have to be thus changed. The lower earnings limit figure is currently a weekly figure, whereas the amendment refers to an annual figure. Of course, all these things could normally be tidied up, but we do not have the opportunity to do so because if the House accepts the amendment, that is it: it is the end of the parliamentary process, the Bill becomes law and a deeply flawed amendment is on the statute book.
It is unclear exactly how the amendment is meant to work. As was said earlier, would people have to opt in and get credited, or would there be a duty on Her Majesty’s Revenue and Customs to combine these incomes and then levy national insurance, which might be to the detriment of some? There are a great many issues to be examined, but it is not our view that we should not look at them. We should, and as I said at the outset I absolutely accept the principle that we should have a system of pension rights and national insurance that reflects the current labour market, rather than the one in existence after the second world war. We are making a number of changes in that regard, but as I have said, the amendment as it stands is flawed in a number of respects and ambiguous in others. It rushes to a single solution to a problem whose scale and nature we simply are not year clear about, so we believe that—
Steve Webb
A poetic conclusion was nearly reached; but before I conclude I give way to the hon. Lady.
Sheila Gilmore
I understand that the Minister is anxious not to rush to a conclusion, but can he tell us what time scale he has in mind?
Steve Webb
We envisage updating our own estimates by the summer and would be very happy to do that, and bringing together experts and trawling through the related literature in the latter part of this year. We do not want to kick this into the long grass. If we concluded that further data-gathering was needed, and it was qualitative rather than quantitative, that would take some time, but well-informed evidence-based policy making sometimes does take time, frustrating though it may be, and that is the approach the Government wish to take.
I urge the House to disagree with the Lords in their amendment 1.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
I shall of course be disagreeing with the Government’s disagreement with Lords amendment 1.
Let me begin by putting the amendment and the labour market issues it pertains to into some context. Since 2008, only one quarter of the jobs created in this country have been permanent. There are hundreds of thousands of short-hours contracts and, according to some figures, approximately 1 million zero-hours contracts, in addition to other non-standard job patterns. Some 40% of all jobs are not the permanent, full-time positions that we traditionally associate with the UK labour market. That context is important to bear in mind: the Minister rightly referred to the need for the pensions system to keep up to date with changes in the labour market, and that is the reality of the labour market we are now all living with and working in.
Steve Webb
For the avoidance of doubt, I think the hon. Gentleman will find that the record shows that I did not say there were 17 logical flaws in the amendment. I said that there were 17 logical flaws in leaping from the assertion that there are lots of zero-hours jobs nowadays, to this amendment. My point was that it takes an awful lot of logical assumptions, all of which are false, to get to the amendment.
Gregg McClymont
Of course Hansard will tell this story, but it was a short quote and I think I managed to get it down correctly. If the Minister is saying that it was not that there were 17 flaws in the amendment, I am sure the whole House is delighted to have that clarification.
Let us probe a little further into the Minister’s argument. He says that on the Government’s estimates only about 50,000 people are affected, that there should be no “rush to solutions” and that the amendment is flawed technically for many reasons—but perhaps not 17. He says that the Government need to build their evidence base on the issue. Interestingly, he said that the Office for National Statistics has urged caution about the notion of an upsurge in zero-hours contracts. His point was, and the ONS’s point is, that it might be that individuals are more aware that they are on such a contract than that the upsurge has been so great. If that is the case, it does not negate the point that there are a significant number of these sorts of contracts around, and that has significant implications for a state pension system based on contribution.
I asked the Minister about the 17 logical flaws, but his argument also was that we do not know enough to go forward with an amendment to solve the problem. However, he also said he understands that the average zero-hours contract gives an individual between 15 and 20 hours of work a week. Is that his estimate or is it based on research? In a world where we are not precisely aware of the figures involved, there is a danger of bandying around our own figures without a relevant citation.
What situation are we trying to deal with through this amendment? As I said, we have an increasingly fractured and insecure labour market, and the question is whether individuals in that labour market and the pension system relating to that market are appropriately structured and linked. The amendment, introduced effectively in the other place by Baroness Hollis, seeks to deal with what is, on any measure, a significant problem. We welcome the fact that the Bill brings 4 million self-employed individuals into the state pension without an employer’s contribution, and of course those self-employed people pay £2.70 a week. The amendment’s thrust is that we need a similar approach for short-hours workers. The Minister rightly said that this is not just about zero-hours contracts; it is about the insecurity of short-hours working in the labour market more broadly and matching that up effectively with a universal state pension—the Minister is keen on that.
Susan Elan Jones (Clwyd South) (Lab)
I have been listening to my hon. Friend and to the Minister, and I was alarmed by the Minister’s statement that people on zero-hours contracts “could” be okay, be that to do with their working arrangements in other areas or the fact that they may work a sufficient number of hours. That implies that they also might not be okay.
Gregg McClymont
As usual, my hon. Friend makes a pertinent intervention.
There is an issue to address and the question is how to do it. The Minister suggested that Baroness Hollis’s amendment, which my colleagues and I agree with, prescribes a specific solution, but of course it does not; it is a permissive amendment. As the Minister, using that fertile mind of his, started to think about different solutions, one could see the point of the amendment even more: to give him and his colleagues in the Department for Work and Pensions the authority to think carefully about how to solve this problem. He gave a number of ideas as to how it might be solved, which was when we particularly saw the function of this amendment. It would bring the best minds in the DWP together to deliver a solution, and it would remove the need for subsequent primary legislation. So, by his own words, the Minister gives succour to the amendment.
The amendment has a clear purpose: it is a permissive amendment to enable the Government more finely to match the state pension reform that the Minister is introducing with the nature of the modern labour market. He talked about estimates of the number of individuals involved. As he will know, Baroness Hollis has come to a different conclusion about the number affected and is very clear that the universal credit, which he mentioned, will not help the largest group—single people—nor, usually, will it help women without younger children or households where the joint income, including the man’s income, floats them off universal credit altogether. She calculates the number of individuals affected as being 250,000, which is a very different figure from the one the Minister gives. Universal credit, which he said would ameliorate the problem, will not help single people, women without younger children or households where the joint income, including the male income, floats them off universal credit. It is important to put that on the record. If a significant number of people are affected by this and if the Minister wants to make the state pension as universal as possible, as the Opposition believe he does, it would seem sensible for him to accept a permissive amendment allowing him to go forward on the basis of his thoughts about the various ways in which this might be taken up by the Government and to get cracking on it. The fundamental point is: why should those who, through no fault of their own, are in short-hours working or zero-hours contracts—those various kinds of flexible employment contracts—be denied the benefits of a full state pension?
The Minister said that the problem is not as significant as Baroness Hollis has suggested and that someone would need only 35 of 50 years in the labour market to qualify, but the issue is that where people spend significant parts of their life on these contracts, what is meant to be a universal state pension does not necessarily become one.
Steve Webb
I sense that the hon. Gentleman is concluding. The amendment is flawed in a number of respects. For example, it refers to a lower earnings level, but there is no such thing. Does he not have any qualms about the fact that if his vote were to succeed, he would be putting flawed legislation on to the statute book?
Gregg McClymont
The Opposition’s view is clear: the issue of job insecurity, of short-hours working and of zero-hours contracts is a significant problem for the pensions market and, specifically, for the state pension. In that context, it seems wise to us to allow the Minister to crack on with solving this problem. I have confidence that he will ensure that this amendment, if agreed to by the House, provides the basis for matching up the state pension with people on these insecure and flexible employment contracts. On that basis, we disagree with the Minister’s disagreement, and we intend to support the Lords amendment.
Sheila Gilmore
Having been with this Bill from the outset, I remain disappointed, given the answers that the Minister gave to my interventions, that we have not made any substantial progress on resolving this issue. It will be predominantly women, although not necessarily entirely so, who will be disadvantaged. In other aspects of the Pensions Bill, the Minister has said how important it is that people will now build up their own entitlements for their own individual pensions. Being able to get a derived pension from a spouse, a deceased spouse or an ex-spouse will disappear from the system. We discussed that issue at considerable length during the passage of the Bill. Indeed the Minister has majored on this whole issue of people having their own individual entitlement.
Steve Webb
Let me respond briefly to the debate. On the issue about the typical number of hours worked by someone on a zero-hours contract, I said 15 to 20 from memory, but the exact figure is 20 hours. The ONS estimates that the average number of hours worked by people on zero-hours contracts in 2013 was more than 20 hours. There is a danger that when we hear the words “zero hours” we assume that it means there is no money coming in. However, it simply refers to the number of hours guaranteed under the contract. Lots of people with zero-hours contracts are building up full qualifying years.
Gregg McClymont
Of course the Minister will be more than aware that averages can hide a multitude of sins; I am sure he accepts that.
Steve Webb
Yes, I do. The point is that 20 hours on a minimum wage would get someone above the lower earnings limit. If half of everyone on zero-hours contracts are doing more than 20 hours, we can immediately say that they will qualify, and those doing slightly fewer hours will also qualify. The link between zero-hours contracts and multi mini-jobs, which is the subject of the amendment, is, at best, unclear. In extremis, it could be that no one on a zero-hours contract is even covered by this amendment, if they have only one job at a time and no other job. We do not know and nor does the hon. Gentleman. Our sequencing is evidence first and policy next; the Opposition’s is the other way around.
The hon. Gentleman refers to the emerging labour market, and chose 2008 as his base because that enabled him to get a figure that worked for him. However, let me bring him right up to date. In the past year, the number of women working full-time increased by 270,000 while the number of women in two jobs, which is germane to the amendment, decreased by 25,000. The suggestion that there is some sort of inexorable rise might be wrong. If we were to update our figures, we might find that the number has continued to go down. There is a whole raft of statistics I could give the hon. Gentleman, but to assume that this is a vast issue and that the numbers are inexorably rising is far from the case.
The case of the hon. Member for Edinburgh East (Sheila Gilmore) is that even if only one person were in this situation, we should fix it, but there is an issue of proportionality here. To set up the lightest touch crediting regime based on past precedent would probably cost about £1 million and more than £1 million to run. One must always ask the question—as least we do on the Government Benches—about value for money. That is why we need to know how many people are affected, who is affected and the best way to deal with the issue.
Finally, when the hon. Gentleman was asked whether he cared about putting flawed amendments in the Bill, he essentially said that he did not; he simply wanted to make a political point. That is regrettable. As legislators, we are voting today on legislation. This is not an Opposition day debate where he can make a point. This is deciding what goes into the law of the land. I am rather disappointed that he feels that it does not matter if an ambiguous and unclear amendment, which uses terms that have no meaning in reality, should just go in the Bill, so that he has the chance to have a vote and put out a press release. That is obviously where he is coming from. I regret that, and urge the House to disagree with the Lords amendment.
Question put, That this House disagrees with Lords amendment 1.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss Lords amendments 3, 12, 13 and 19 to 27.
Steve Webb
Following that brief moment of disagreement with their lordships, I am pleased to say that we encourage the House to agree with all other Lords amendments to the Bill. Some amendments in this group were initiated by the Government all on their own, while others are constructive amendments that we tabled in response to concerns raised by noble Lords and others. That shows our willingness to improve the Bill when we think that valid arguments have been made.
Lords amendments 19 and 21 will affect the spouses of service personnel. In the context of our motion to disagree with Lords amendment 1, which was tabled by Baroness Hollis, it is appropriate to say that Lords amendments 19 and 21 respond to a concern that she helpfully raised during the Commons Public Bill Committee’s oral evidence sessions about the position, under the single-tier state pension, of wives of service personnel who have served overseas.
Lords amendment 21 places a duty on the Secretary of State to legislate for a new retrospective national insurance credit for spouses and civil partners of armed forces personnel who accompanied their partner on postings outside the UK from 1975-76 onwards. We promised to think about the matter as long ago as last June—have we really been considering the Bill for that long?—after it was raised in our oral evidence sessions. As we know, the single-tier pension is essentially based on one’s own record of national insurance contributions and credits, rather than a derived entitlement from a partner. However, that creates a problem for women who were posted overseas with their husband and, for entirely legitimate reasons—because, say, they did not speak the language of the country they were in—were unable to work, or could not build up national insurance rights because of their role supporting their husband.
It is right that we take action for that group. There is a cross-Government commitment in the armed forces covenant to removing the disadvantages caused by military life, and we recognise the difficulty that spouses and civil partners would have faced in maintaining their national insurance record while on an overseas posting. Their prospects of securing employment during the posting would have been significantly hampered by language barriers, for example, and they may have been unable to accrue UK qualifying years while abroad. Since last June, we have worked closely with colleagues in the Ministry of Defence to devise a workable solution, and we are pleased to offer an approach that addresses this unique difficulty faced by the service community.
Under the Lords amendments and subsequent regulations, credits will be available for people who reach state pension age on or after 2016. Those credits build on the prospective credits in place from 2010-11, and help to ensure that people will not be prevented from gaining a full single-tier pension, even if they are in the now rare situation of having spent their entire working life accompanying their spouse abroad. The detailed design of the scheme, including the application process and information on when applications may start to be made, will be set out in regulations. Although it is difficult to give a precise figure, we estimate that about 20,000 people could benefit from the credits. Lords amendment 19 is a technical measure to accommodate the retrospective credits in the calculation of an individual’s foundation amount.
Lords amendment 2 deals with the issue of a statutory override for protected persons. The single-tier pension means the end of contracting out, so employers will have to pay more national insurance. The Bill provides for a statutory override to allow employers to change future contribution levels or accrual rates in order to recoup that increased national insurance when they would otherwise be prevented from making changes by their scheme rules. During the Bill’s passage through this House, the Government consulted on whether protected persons should be within the scope of the statutory override. We think that a relatively small group of individuals—perhaps 60,000—are affected.
The responses to the consultation were polarised, as employers wanted the flexibility to apply the override, while trade unions and others representing employees did not. We took the balanced judgment that we should honour promises made at the time of privatisation—promises that, in many cases, were subsequently confirmed by Ministers when legislation providing for pension protection was enacted. Lords amendment 2 makes it explicit that the statutory override cannot be used in relation to protected persons. Regulations will specify the details of who is considered to be a protected person, but the intention is to include all the people set out in our consultation response, especially rail workers, including Transport for London employees, and workers in the electricity, coal, and nuclear waste and decommissioning industries.
The group includes several technical amendments. Lords amendments 20 and 22 amend the Social Security Contributions and Benefits Act 1992 to make it clear that funds for paying the single-tier pension are provided by national insurance contributions, and that references to “benefit” include the single-tier pension. Lords amendment 23 repeals redundant provisions in the Marriage (Same Sex Couples) Act 2013, while Lords amendment 24 removes a redundant reference in legislation to the contracting-out compliance standard. Lords amendment 25 deals with the application of the statutory override to shared-cost arrangements. Lords amendment 26 is a response to a recommendation made by the Delegated Powers and Regulatory Reform Committee. It removes the power to create exceptions to the limit on the amount that employers may recoup under the override. The Bill originally allowed regulations to be made to create exemptions to the limit to deal with unconventional funding arrangements, but we are now making provision for such a power in primary legislation under Lords amendment 25.
In response to points made by the Delegated Powers and Regulatory Reform Committee, Lords amendments 12 and 13 provide that several regulations under the Bill will be subject to the affirmative procedure, rather than the negative procedure. Lords amendment 13 specifically provides that frozen-rate regulations should be subject to the affirmative procedure on every use.
Lords amendments 3 and 27 create a new class of voluntary national insurance contributions—class 3A. As the concept of the contributions was introduced in the other place, it is worth my spending a moment explaining more about it, as the House has not yet had the chance to consider it. The new class of contributions will allow pensioners to top up their additional state pension. It will be available to people who reach state pension age before the introduction of the single-tier pension on 6 April 2016. Details of the scheme, including the pricing, the maximum number of units and the administrative processes, will be set out in regulations. We will make details of the prices available shortly, but they will be set on an actuarially fair basis using the latest longevity figures. We envisage that the scheme will open in October 2015 and run for 18 months. It will help groups who have only modest amounts of additional pension, if any, such as women and the self-employed whose social and economic contributions were not captured in the state earnings-related pension scheme and are not fully reflected in the state second pension.
The scheme has just two simple entitlement conditions: first, a person must reach state pension age before 6 April 2016; secondly, they must be entitled to a UK pension. Even if someone has the full 30 qualifying years for a full basic state pension, they will not be debarred from paying class 3A contributions and boosting their state pension because they will be buying additional state pension, not basic state pension. I stress that that distinguishes the contributions from class 3 national insurance contributions, which fill gaps in the basic state pension.
We intend to cap the amount of additional pension payable as a result of class 3A at about £25 a week. As that extra pension will be additional state pension, it will be uprated according to the consumer prices index. The pension will be inheritable and people will be able to defer it in line with existing rules. More details of the scheme will be announced shortly, but the main regulations will be subject to the affirmative procedure, so Members will have the opportunity to debate the detail.
We have undertaken research and polling to gauge interest in the scheme. We expect to publish more information on likely interest and take-up shortly after the Budget, but our first poll suggests that 14% of pensioners might be interested. People’s ability to pay class 3 voluntary national insurance contributions to cover gaps in their contribution record for the basic state pension will be unaffected by the introduction of class 3A. We will put in place administrative arrangements to ensure that individuals who apply to pay class 3A contributions are made aware that they should first check their eligibility to pay class 3 contributions. People will need to consider whether making class 3A contributions is the best option for them. We believe that class 3A will allow some people to boost their state pension income with a secure, inflation-proof income that has the added advantage of survivor benefits.
I hope that the House, like their lordships, will support the Lords amendments. They improve the system for military wives and offer protection for protected workers. They tidy up several technical aspects of the Bill and, for people reaching state pension age before April 2016, introduce a new option of paying voluntary national insurance to top up their additional state pension. I commend the Lords amendments to the House.
Gregg McClymont
I do not intend to detain the House too long on this group. On Lords amendment 2, I welcome the Government’s decision. The issue of individuals with protected status in pension schemes that were nationalised has been significant, both for the House and for the people concerned. Those with protected status are a group of approximately 60,000 individuals employed on the railways, including by Transport for London, and in the electricity, nuclear waste and decommissioning and coal industries. They are protected because they were given guarantees by the Government of the day when the industries were privatised. On Report, the official Opposition made clear their view, and tabled an amendment that aimed to remove these protected schemes from the scope of the provisions on the statutory override as it pertains to the new flat-rate state pension and the end of contracting out.
I welcome the Government’s decision on the continued protection of these schemes. I pay tribute to my hon. Friends, the trade unions, and others with whom Members have worked closely to make the case. It is a good example of how a case properly made, and a Government prepared to listen to the detail and the reality, can produce an outcome that we all welcome.
Grahame M. Morris (Easington) (Lab)
My hon. Friend is making excellent points, and I thank him for his efforts to prosecute the case. Does he agree that the principle of trustee consent is an important one that we should honour?
Gregg McClymont
I thank my hon. Friend for his intervention and for his work on the issue. As he knows, we tabled an amendment to clause 24 in Committee on this issue. We welcome the decision to accept Lords amendment 2, a concessionary Government amendment moved on Report.
Let me say a little about Lords amendment 21, another concessionary Government amendment moved on Report, which will place a duty on the Secretary of State to make regulations to allow service spouses and civil partners who are due to reach state pension age from 6 April 2016 to apply for national insurance credits for periods during which they accompanied their spouse abroad. I agree with the Minister that the amendment will strengthen the armed forces covenant and remove some of the disadvantages that the armed forces community may face in comparison with other citizens. I add to the Minister’s tribute to Baroness Hollis for her work in ensuring that the provision was included in the Bill.
I look forward to the provisions in Lords amendment 3 being taken forward by the Government. I look forward also to the pricing of those provisions. It will be striking to see what take-up there is of the offer to procure more state pension for people who retire before the new flat-rate state pension is brought in. On that note of consensus, we welcome this group of amendments.
Grahame M. Morris
I, too, will not detain the House for long, but there are a few points that I wish to place on record. I thank the Minister for meeting the trade unions on a number of occasions, and the Department for its active engagement in the consultation exercise.
I shall not rehearse the arguments about the importance of maintaining trustee consent, which were made by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) from the Front Bench. The workers concerned are those in former nationalised industries, including coal mining; electricity transmission workers; workers in Transport for London and the train operating companies; and workers in the nuclear waste and decommissioning industries. An important principle is at stake, and I am grateful to the Minister for accepting the Lords amendments. As was pointed out, it is important that we have ongoing discussions, and I hope that the Minister will commit to that. If he would engage with the trade unions, which have undisputed expertise in this area and could assist the Department in the drafting of the regulations, that would be much appreciated.
Steve Webb
I am grateful to both hon. Gentlemen who have spoken for their constructive responses. The amendments relating to protected persons have been welcomed, and I am grateful for that. I welcomed the opportunity recently to meet the hon. Member for Easington (Grahame M. Morris) and his colleagues from the relevant trade unions. I am pleased to assure him that we will be happy to have that ongoing dialogue when it comes to drafting the regulations that will implement these changes. As he knows, we take the view that a statutory override is not a statutory override if trustees have the power to block it. We differ on this point—I understand that—but we are imposing a substantial cost on employers, and we believe that they need to be able to recoup that. We hope and believe that many will do so in a constructive and collaborative way, with engagement with trustees and others.
The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) mentioned what might loosely be called the army wives provisions. As he says, they are an attempt to do right by our armed forces personnel and their families, and again, the measure seems to have attracted wide support. I am grateful for the support from across the House for these amendments from their lordships, which we accept. I commend Lords amendment 2 to the House.
Lords amendment 2 agreed to.
Lords amendment 3 agreed to, with Commons financial privileges waived.
Clause 37
Automatic Enrolment: powers to create general exceptions
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this we may consider Lords amendments 5 to 8, 9 and amendment (a) thereto, 10, 11, 14 to 18 and 28 to 38.
Steve Webb
We move to the final group of amendments and, as I mentioned earlier, we urge the House to agree with their lordships in all of them. For reasons that I shall explain, we do not accept Opposition amendment (a) to Lords amendment 9.
I shall run through the categories of amendment before us. I shall deal at the end with the charges and disclosure amendments, where there appears to be the remaining lack of agreement. I apologise in advance for the fact that it might take me a moment or two to work my way through the amendments as some of them are quite technical, but at this stage in our proceedings it is important not simply to nod these measures through. In some cases quite substantive changes were made in another place—welcome changes, we believe, but they are ones to which this House should give proper scrutiny.
I shall begin with amendments 5 and 6 and then 4, which relate to automatic enrolment. It is worth putting it on the record that automatic enrolment is already a huge success story, with 3.2 million people now enrolled. I had the pleasure last week of visiting Upton Park to meet someone who I am told is the three millionth person to be automatically enrolled. I have my doubts, but one never knows. I have to declare in some sort of register somewhere that I was given a West Ham shirt with the squad number 3 million on the back, which may be my transfer fee—I do not know. We have certainly reached an important stage in the process. It is one of the almost unsung success stories of this coalition Government to implement automatic enrolment in an effective way, to see more than 3 million brought in and to have very high levels of staying in—of the order of 90%—which means that getting on for 3 million people are now in workplace pensions who were not in such pensions just a couple of years ago. All the signs are that this will continue to be a success.
But ongoing success is dependent on being able to learn as we go and to make changes where necessary, and amendments 5 and 6 are tabled in that spirit and relate to defined benefit schemes. In general, DB schemes are high-quality pension schemes provided by employers who take pensions seriously, and we would not want employers to feel that they could not use a DB pension scheme for auto-enrolment because of some technicality or because in some way we provided a higher hurdle for a DB pension scheme to be used for automatic enrolment than for a defined contribution scheme. Amendments 5 and 6 allow for simpler alternative quality requirements for employers providing good quality DB schemes.
The amendments will allow DB schemes to meet either the existing test for money purchase schemes, or a test based on the cost of future accruals. More work has to be done on adding the detail in regulations, and we look forward to working with our stakeholders on that. The simpler tests will help those employers providing good schemes to meet their automatic enrolment duties. This is important because of the end of contracting out. Contracting out itself had a set of standards that schemes that wanted to contract out had to meet, and once contracting out has gone and those standards have gone we can use the opportunity to set simpler equality requirements for employers wanting to use DB schemes. I hope that that will be welcomed by the House.
Also in the context of making automatic enrolment work, amendment 4 relates to the power to ensure that employers do not have to enrol individuals for whom it makes no sense. We tabled a clause at the beginning of the process that would give us the power to exclude a small group of people where it would not make any sense for employers to have a legal duty automatically to enrol them. For example, employers said to us that they had employees who were high earners or who had exhausted their lifetime tax limits and had some protected or enhanced status who were asking not to be put into a pension scheme because that could jeopardise their tax status, and having been auto-enrolled they would have to opt out straight away. That would be a waste of employers’ and employees’ time. If they failed to opt out, they could lose valuable tax protection, which would create unnecessary bureaucracy for the employer and hassle for the employee, and we do not want to do any of that when it comes to auto-enrolment.
We always envisaged that we would exclude tightly defined and limited categories of employees from the auto-enrolment duty. Following consultation, we have now indicated specifically which groups of people those are. I have mentioned those with tax protection status and another would be those on the brink of retirement or leaving. Someone might have said that they were about to leave the company, but the legal requirements on automatic enrolment or re-enrolment meant that the firm had to put them in the pension scheme, perhaps days before they left. Clearly, we do not want to bring automatic enrolment into disrepute. We do not want firms to be required to do things that are not common sense, that have a cost to the firm, perhaps create hassle for the individual and are unnecessary, and we always envisaged that the exceptions would be limited in scope.
Gregg McClymont
I know the Minister believes that God is a Liberal, but does he really have to be so pious?
Steve Webb
I usually sound grateful to the hon. Gentleman for his interventions, but I am not sure I am for that one. There is a bit of a pattern here. Labour has already called one vote on an amendment that was flawed, but it decided to vote for it anyway in order to make a point. I am explaining why amendment (a) is flawed, even according to the terms of what the Opposition want it to achieve, and it is obvious that the message has hit home, given the tenor of the hon. Gentleman’s response.
Richard Graham (Gloucester) (Con)
On the charges that will be outlined later and the requirement for them to be disclosed, how does the Minister envisage that process being taken forward? Will there be a consultation? Within what sort of time frame does he imagine the charges being outlined?
Steve Webb
I am grateful to my hon. Friend who, as chair of the all-party group on pensions, has great knowledge and expertise on these issues. We need to take forward the matter in partnership with the FCA. As he knows, the Pensions Regulator regulates defined benefit and occupational defined contribution schemes, while the FCA works on group personal pensions, for example, but we want to make sure that, as far as possible, parallel regulations apply to both. We will, indeed, consult on exactly what should be included. We certainly want to get a move on with it all, so we will move as fast as we can, but we want to do so in partnership with other regulatory bodies. I hope that that offers him the assurance he seeks.
Gregg McClymont
I rise to speak to amendment (a), but let me start with Lords amendment 4. In Committee, the Opposition argued strongly that clause 37, as drafted, was far too widely drawn and left a possibility that those with an agenda to exempt smaller businesses from auto-enrolment could do so. We therefore welcome the Government’s concession. Among the Minister’s rather curious language, he said that I “got very excited” and that there was “almost universal cynicism” from the Opposition, but within that odd framing he has actually accepted what we said in Committee. That is very welcome, because it makes the Bill better.
Let us think about amendment (a) in the context of the wider debate. The issue of costs and charges for pensions has shot up the political agenda for obvious reasons. If the Government are enrolling millions of people into a pension scheme for the first time, they had better make sure that the schemes are all value for money.
Steve Webb
I agree that the Government had better make sure that the schemes are value for money. Why, therefore, did Labour not legislate for that when it could have done so?
Gregg McClymont
The Minister made that point in his speech, as he has done repeatedly, and he has now put it on the record again. Let me pick him up on something he said. In what has become his quite common style, he suggested that it was rather peculiar to give the Secretary of State powers to ensure that transaction costs are disclosed. However, he must be aware—in fact, he alluded to this—that the FCA already has powers to require transparency of transaction costs, but has never exercised them. Making the Secretary of State responsible does not mean that the Government should not use the FCA’s expertise. Indeed, the Government’s amendment states that the Secretary of State must consult the FCA when setting transaction costs for those pensions over which he wishes to retain responsibility, so why could the same model not be maintained for contract-based pensions? Of course it could be so maintained.
On the Minister’s suggestion that it is somehow peculiar in his world to list the transaction costs that must be disclosed in amendment (a), I have to tell him that we used Lord Lawson’s amendment in the House of Lords, where it was commended by Members on all sides, including by the Government spokesman, Lord Freud. [Interruption.] The Minister is mumbling, but he suggested that the amendment was peculiar, although Lord Lawson’s amendment was along exactly the same lines. I am afraid that the Minister is disagreeing not just with the Opposition, but with Government Members.
Let me say a little about our additions to Lord Lawson’s list. I make it very clear that our list of transaction costs is the same as that tabled by Lord Lawson in the Lords, with two additions—transaction costs in underlying funds; and interest on client cash balances or profits from stock lending retained by the fund manager. The reason for including such additional transaction costs is that it needs to be strongly signalled to the body setting the rule—whether the FCA or the Secretary of State—that those items should be declared.
Let us remember that the Investment Management Association has deliberately failed to include those items in its draft statement of recommended practice. Amendment (a) should be discussed in that context, not the diversionary trail thrown up by the Minister. It is important that transaction costs in underlying schemes are disclosed because a transparency regime can otherwise easily be bypassed by any fund manager that operates multiple funds. The fund receiving moneys can simply use them to purchase units in another house fund. The IMA SORP recognises that the fixed charges in underlying funds should be reported, but it fails to apply the same principle to transaction costs, which is why they are laid down in the amendment.
The House should be aware of the wider context. The Government have previously left it to the fund managers’ trade association to decide what, if any, transaction costs should be declared. The IMA has put forward a draft statement of recommended practice, which would require fund managers to declare some transaction costs in their annual accounts. The SORP must be agreed by a Government quango called the Financial Reporting Council. The concern that the SORP failed to include significant types of transaction costs led a cross-party group of MPs and peers to write to the FRC to say that it would be inappropriate for it to agree to a statement of transaction costs that omits significant types of transaction costs. That was widely reported at the time. It is common knowledge that a number of critical submissions were made to the FRC. Unusually, those submissions were not released at the end of the consultation period, and we still await them.
Gregg McClymont
I am always delighted to hear from the hon. Gentleman, but I must make progress.
It is worth adding that the FCA sits on the working group that reviews the IMA’s SORP.
To put the SORP of the IMA—the fund managers’ trade association—in context, the Government refused to accept Labour amendments in Committee and on Report that specified a non-exhaustive list of transaction costs that needed to be made transparent. The noble Lord Lawson then made it clear that the Government’s position was not acceptable. He said that it was like putting the fox in charge of the hen coop. He added that there is a reason why fund managers meet in Monte Carlo and pension fund trustees meet in Manchester. That was the context in which Lords amendment 9 appeared. Lord Lawson, who sits on the Government Benches, made it clear that he agreed with the Opposition, rather than the Minister, who has failed to get to grips with the disclosure of transaction costs. That is the context in which this debate has been taking place for the past year and a half.
Lords amendment 9 does not state which transaction costs will be included. It gives the Secretary of State the right to include
“some or all of the transaction costs”.
It also allows the Secretary of State to not require full transparency in contract-based defined contribution schemes—those that are provided by insurance companies —if the transparency regime is “equivalent”. Lord Freud, speaking for the Government, emphasised that those words were intended to ensure that no costs were missed and that they were not an attempt to water down the regime for contract-based DC pensions.
Lords amendment 9 removes the responsibility to set transparency rules for workplace DC pension schemes from the Secretary of State and gives that power to the FCA. The FCA does not currently require the publication of transaction costs for workplace pension schemes. Its view is that any transparency requirements should be identical to those for retail investment products.
Richard Graham
Is not the key point that is under discussion whether the list of charges to be covered should be included in the Bill? We agree that there are many issues of detail, especially on the transaction side, that should be consulted on. The Minister has said that that will happen. The hon. Gentleman has not answered the central question of why the list should be included in primary legislation.
Gregg McClymont
The answer to the hon. Gentleman’s question is that nobody who looks at this matter reasonably can have confidence that the Government will deliver the disclosure of any transaction costs. The only reason we have the inadequate Lords amendment 9 is that there was a rebellion among Conservatives in the House of Lords that was supported by Cross Benchers. Before that, the Government had no intention of disclosing transaction costs, as far as one could see. To answer his question, amendment (a) is a way of ensuring that the Government deliver what they say they want to deliver.
To sum up, the Government have brought forward in the Bill a hard, fast, rapid wind-up of the state second pension. If that is to be successful for those who can no longer accrue into the state second pension, there must be similarly speedy action to ensure that there is an adequate, meaningful pensions cap as quickly as possible. Alongside that pensions cap, all transaction costs must be disclosed. Before the campaign by the Opposition and, more recently, Lord Lawson, the Government had been very slow to get to grips with the disclosure of transaction costs, never mind the pensions cap. The intervention of Lord Lawson has led the Government some of the way down the necessary path towards ensuring that there is disclosure of transaction costs, but they have got to that stage only because of the threat of a rebellion in the other place.
Steve Webb
I will respond briefly to the hon. Gentleman. However, I suspect that he decided to press for a vote on amendment (a) a good deal earlier this afternoon, so I do not think that anything that I say will have the power to change his view.
For the record, the hon. Gentleman seems to be confusing a power and a duty. He says that the FCA has the power to require transparency, but it has not done so. If he reads Lords amendment 9, which I encourage him to do, he will see that it states in subsection (2):
“The FCA must make”.
That is the bit that he wants to take out—the bit that requires the FCA to do the thing that he wants it to do—so his amendment (a) is incoherent. Instead, he would give the duty to the Secretary of State, but the Secretary of State does not have the same powers as the FCA over the schemes that it regulates. The hon. Gentleman wants to take the duty away from the body that has the sanctions and give it to somebody who does not have the sanctions. That would not achieve what he wants to achieve.
Gregg McClymont
Will the Minister confirm that the Government’s amendment states only that
“some or all of the transaction costs”
should be disclosed? Will he put that clearly on the record?
Steve Webb
The text of Lords amendment 9 is before the House. The whole point is that we want all sorts of pension schemes—those that are regulated by the Pensions Regulator and those that are regulated by the FCA—to ensure that there is effective disclosure. His amendment (a) is defective because it would take the duty away from the FCA, which regulates one category of schemes, and give it to the Secretary of State, who does not have the sanctions to enforce the very thing that he wants to happen. I know that he does not care that his amendment is flawed, because he wants to make a point, rather than to pass good law, but for the record, his amendment would fail to achieve what he says he wants.
The hon. Gentleman said that the noble Lord Lawson, who has made a valuable contribution to this debate, came up with a list and that we should therefore have a list. Of course, the noble Lord Lawson did not pursue his amendment because he accepted that we did not need all the detail in primary legislation. If the hon. Gentleman lists the name of a charge in primary legislation, all it would take is for the ever-inventive investment industry to give it another name and we would need regulations anyway. Including a list would achieve nothing.
The hon. Gentleman asked about the words “some or all”. To clarify, the intention is to require full disclosure of all costs and charges. The reason for that wording is that it will future-proof the legislation—something that he has called for—by providing the flexibility to deal with new costs as they arise. That is all that we are trying to do by using that wording.
Gregg McClymont
I thank the Minister for that clarification. Has he spoken to the FCA and asked what its view is about the disclosure of all transaction costs? Does it support that?
Steve Webb
The hon. Gentleman will know that the FCA is regulated by Ministers from the Treasury, rather than the Department for Work and Pensions. However, I have met the FCA on a number of occasions, as have my Treasury colleagues, and we have corresponded on these matters. We are agreed that there should be full disclosure, as under the terms of the Bill, of all categories of pension scheme that are covered by the legislation.
The hon. Gentleman avoided the question I asked on an intervention. His amendment (a) appears to contradict what he has said in the past, and it brings transaction costs into the scope of any potential charge cap. That was not his policy this morning, but it appears to be his policy this afternoon. Quite how he would set such a cap when we do not have the data on transparency is beyond me. Clearly, amendment (a) is not about how the law of the land should be written; it is simply about making a political point and doing so rather badly. On that basis, I urge the House to reject amendment (a), and to agree with Lords amendment 9.
Lords amendment 4 agreed to.
Lords amendments 5 to 8 agreed to.
Amendment (a) proposed to Lords amendment 9.—(Gregg McClymont.)
Question put, That the amendment be made.
Payment Scheme (Mesothelioma)
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Mike Penning)
I beg to move,
That the draft Diffuse Mesothelioma Payment Scheme Regulations 2014, which were laid before this House on 3 February, be approved.
It is a pleasure to move these regulations on the Floor of the House. We had good debates on the Mesothelioma Act 2014, which allows us to move the regulations we need to ensure that the payments go to those who need them so much. The debates in the House and those with my noble Friend Lord Freud in the other place were incredibly valuable. I should like to place on the record my thanks to the late Paul Goggins. Paul campaigned for many years for the compensation for which these regulations make provision. It is a fitting tribute to him that I listened to him so much that we have moved to the figure of 80%, as I will say later in the debate.
We have debated these provisions, but it is good to mention at the start that the Act and the regulations continue to refer to 75% average civil compensation payments. I announced to the House on 6 March that, because the scheme administrator contract was let, and because we will stay within the 3% of the levy to employers, I am able to raise the percentage from 75% to 80%. I will introduce further regulations later, but I did not want to delay in any shape or form the compensation that is so badly needed.
Stephen Phillips (Sleaford and North Hykeham) (Con)
Will the Minister confirm that, now we are moving to a scheme that will have an 80% compensation rate, 80% will apply to all claimants, including those who make their application under the regulations, on the face of which is the figure of 75%?
Mike Penning
My hon. and learned Friend is absolutely right. I was going to say that, even though the regulations are being debated today, all those eligible for the scheme will get 80%. It is important that people do not get one or another of the figures. It will be 80% across the board.
Ian Lavery (Wansbeck) (Lab)
I am pleased with the increase from 75% to 80%. Will there be an opportunity in the near future to review the legislation to increase it from 80% to 100%?
Mike Penning
No, because I have to stay within the agreed 3% of the levy. The important thing, as we said throughout the deliberations on the Mesothelioma Bill, is to ensure that the cost is not passed on to new business. I have come under huge pressure not to raise payments to 80%, because of the risk to the levy. However, because we managed to let the contract to a reputable organisation, we have been able to raise payments to 80% without putting the fund at risk.
Although we will review the legislation, we will not raise payments to 100%. If nothing else, the hon. Gentleman has been consistent in pushing for 100%, and I fully understand why. I promised throughout the deliberations on the Bill that I would listen and that nothing was fixed in stone, but raising the level to 100% would push me, or whoever happened to be Minister at the time of such a review, too far.
Mr Gregory Campbell (East Londonderry) (DUP)
Everyone will welcome the move to 80%. Can the Minister give an estimate of the cash differential between 75% and 80% for potential beneficiaries?
Mike Penning
The move will take the payment up to some £126,000, which represents an extra £13,000. That is in addition to the payment of £7,000 for legal fees, which will be introduced in separate regulations. When Ministers promise the House that they will listen, it is important that they try to do what is requested of them. I stuck rigidly to 75%, because I was not confident that there would be enough money in the fund to increase payments to 80%, let alone 100%. However, I am now confident that there is enough capacity to move to 80%, so when the scheme starts—I hope that that will be on 6 April—all those affected will receive 80%, even though we have been looking at 75%
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
I am grateful to the Minister for his explanation, and I admire what he has done in getting us to 80%. In truth, compensation ought to be at 100%. Sufferers feel 100% of the injury, and the industry took 100% of the premiums at a time when it believed that it would often have to compensate for pleural plaques as well as for mesothelioma. I hope that the matter is not closed and there will be an opportunity to discuss it again.
Mike Penning
I would be amazed if we did not discuss the matter again, as we have done over the years. It would be right and proper for us to do so. If we raise compensation payments to 80%, many people will receive more than they would have done through a civil court. The payment is an average, so some people would have received less in the civil courts. By raising the level from 75% to 80%, we have ensured that more people will receive more than they would have done if they had found their employer or their employer’s insurer.
Mr Jim Cunningham (Coventry South) (Lab)
I apologise for being a little late. It would be interesting to know the difference in costs between payments of 80% and 100%.
Mike Penning
I will write to the hon. Gentleman with that information. We debated the matter at length at each stage of the Bill, and I reiterate that the key is to stick within the 3% agreement, which is not being passed on to new business. The House agreed when we debated the subject that to pass on costs to new business would be improper.
Kate Green (Stretford and Urmston) (Lab)
While we are on the subject, does the Minister accept that, as we discussed in the Mesothelioma Bill Committee, even if we maintained the levy at 3%, the Government’s impact assessment makes it clear that after four years it would at least be possible to raise payments to 90%?
Mike Penning
We looked at that extensively in Committee, but those figures are all based on assessments. When the four-year review comes up, we will look carefully to see what is in the pot, but it would be irresponsible of me or any Minister to stand before the House and commit to emptying the pot completely by going even further. By moving to 80% I have moved as far as I can, and a lot further than many wanted me to move. I promised to increase payment levels if I could, and I have done so.
Ian Mearns (Gateshead) (Lab)
The measure is not perfect, but we are greatly relieved that at last something is happening on behalf of sufferers all over the country. Has the Minister made any special provision for legal costs in the scheme?
Mike Penning
The hon. Gentleman must have been reading my notes, because I was just about to come to that. During the passage of the Bill, we made provision for payment of £7,000 for legal costs to all successful claimants, which will be made on top of the 80% payment. I was adamant that that £7,000 would go to the claimant or their families as the fund of last resort, and not directly to any lawyer. It is up to the individual to decide whom they appoint and how much they pay them.
We are looking carefully at the operation of the scheme and the website, and we think that many people will be able to make claims without the need for legal advice. If they can do so and they spend none of the £7,000, they will keep the money. If they spend part of it on legal fees, they will keep the remainder. It is important the moneys do not simply go off to lawyers as they have done in other, not dissimilar, schemes.
Steve Rotheram (Liverpool, Walton) (Lab)
I congratulate the Minister on the progress that has been made. Any progress towards the 100% that the Opposition believe to be justifiable is a step in the right direction. Can he assure the House that the legal payment of £7,000 will not be a pro rata payment, and that claimants will receive the full amount even if they do not use it all on legal advice?
Mike Penning
Let me try to be as blunt as I possibly can, which is not unusual for me. The £7,000 is theirs. Even though the money is targeted at legal fees, how claimants spend it is entirely up to them. As I have said, we are trying to make the application as simple as possible. If they spend none of the money—remembering that we are talking about a fund of last resort for those who have been unable to find their employer or their employer’s insurer, and that, sadly, the money will often go to the dependants and loved ones of sufferers of this terrible disease—they will be able to keep all of it. Others, including hon. Members and trade unions, will assist them to ensure that they are not ripped off. The important point is that the £7,000 is an additional sum on top of the 80%.
I know that some colleagues are disappointed that we have not moved to 100%. Some colleagues may also be disappointed about the cut-off date, which we discussed extensively during deliberations on the Bill. As I have said—the right hon. Member for Newcastle upon Tyne East (Mr Brown) will understand this as a former Minister—I did not want to delay compensation by breaking the existing deal. The regulations are in their current format to avoid delay and allow the scheme to start, we hope, in the first week in April. We want to help those who desperately need the funds quickly.
Grahame M. Morris (Easington) (Lab)
I congratulate the Minister and welcome his announcement that the level of compensation will be increased. We anticipate that there will be a rush of claims. If the fund is in surplus when that initial rush has been addressed and settled, will he give an assurance that the Government will look at using that money for other asbestos-related diseases or research?
Mike Penning
We expect there to be a surge, and that is why the scheme has received Government funding, which will be claimed back. It would be improper for me to make a commitment now about how any money that might be left in the fund will be used. However, we are working closely with the Department of Health and specialist research bodies. We are particularly focusing on the tissue bank, which is important in finding out why mesothelioma acts as it does so long after contact with asbestos; a gestation period of 40 or 50 years is not unusual.
If there is money in the fund when the review happens, whoever is the Minister at the time—I may still be in place; one never knows—will look at how best to use it. I am conscious that if I take any more praise from the Opposition, my reputation will be diminished enormously. With that in mind, I commend the regulations to the House.
Kate Green (Stretford and Urmston) (Lab)
I am very pleased to see the progress that has been made on the introduction of the scheme and, at risk of doing further damage to the Minister’s reputation, I should like to join colleagues from across the House in congratulating him on taking this further step towards ultimately, we hope, securing full justice for mesothelioma victims. I want to take this opportunity to pay tribute again to the many campaigners involved, especially the victim support groups and trade unionists, and to acknowledge that the uplift in the level of payments was pressed for in both Houses of Parliament and across all parties. I am grateful to the Minister for highlighting the contribution of our much-missed colleague and friend, Paul Goggins.
We are all pleased that the Minister has been able to bring this increase to the House. I note that he intends to achieve the increase in payments through negative regulations to be tabled immediately after the regulations before us come into force. On that basis, we are entirely happy to accept the motion before us tonight, although it is clear that the amount of scheme payments in schedule 4 do not represent the level of payments that we now expect to be made.
The Minister said that he had been able to achieve the increase in payments because of savings made on the administration costs. He will recall that I suggested doing exactly that in Committee on 12 March 2013, so I am pleased that he has been able to take up my suggestion. Will he give us a little more information about exactly where the savings have been found? We have discussed this before in Committee. The Government’s impact assessment told us last November that an uplift in payments from 75% to 80% of average civil damages would cost an additional £11 million in the first four years of the scheme, and an additional £22 million over the first 10 years of the scheme. It also stated that, with the payments set at 75%:
“The costs of the scheme are split between a levy of £371m on the insurance industry and £17m in government funding. This covers scheme payments direct to individuals (£261.4m), benefit recovery (£72.2m), applicant legal fees (£24.6m) and admin of £30.0m (including case legal fees of £24.2m, set up of £1.4m and running costs of £4.4m).”
The Minister will recall our extensive discussions in Committee about the detail of those admin costs, and about the legal fees within them. As the impact assessment shows, there are two sets of legal fees involved: applicants’ fees, at £24.6 million, and case legal fees, at £24.2 million. However, despite extensive discussion in Public Bill Committee—and despite what he has said tonight, which is reassuring—I am still unclear about the respective levels and purpose of the two sets of legal fees.
Claimants’ legal fees were set at £7,000 per case when the legislation was first introduced in the House of Lords, when payment was set at 70% of average civil damages. During the passage of the Bill through the House of Lords, the legal fees were reduced to £2,000 per case and payments increased to 75%. I think we understood that to be a quid pro quo. But later, during the Committee stage in the Commons, legal fees reverted to £7,000. The Minister told us that he had had discussions with the Association of Personal Injury Lawyers and felt £7,000 to be a reasonable figure after all. However, he also said that if cases could be conducted more cheaply, applicants would none the less receive the full £7,000. He has confirmed that again this evening, which we welcome. That did not cut much ice with the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) in Committee. As a lawyer himself, he might be assumed to have some insight into lawyers’ thought processes in these matters. He suggested that if £7,000 was the assumed rate for the job, that would de facto become the tariff, whether it accurately reflected lawyers’ costs or not.
Now the Minister tells us that extra moneys have been squeezed out of the admin costs to fund a further, and very welcome, uplift in payments. Can he tell us exactly where it has come from? He has placed on record that £7,000 per head remains the sum allocated to applicants for their legal fees, and that if their actual fees fall short of that amount, they will receive the difference, in cash, up to £7,000. If there are no changes in the position in relation to applicants’ legal fees, can he tell us where he has found the additional £11 million, or £22 million, necessary to pay for the uplift in payments to 80%?
On the face of it, the extra money must come from a combination of the other admin costs. Will the Minister tell us what he now assesses the running costs and set-up costs of the scheme to be? Have those costs decreased since the impact assessment was conducted? If so, will he tell us by how much, and how that was achieved? Will he tell us how much is now allocated for case legal fees, as opposed to applicant legal fees? I am still struggling to understand what these encompass, but the Minister assured us in Committee that they would be incurred for the benefit of claimants. Will he therefore tell us whether the sum of £24.2 million in the impact assessment has now been reduced, and if so, by how much? What effect will that have on the handling of cases, and what impact will it have on claimants?
Will the Minister tell us whether the contract with Gallagher Bassett International, which is to administer the scheme, includes a profit element? I assume that it does. If so, is it included in the running costs? If the additional funds to meet payments at 80% have been found elsewhere, rather than from the costs I have just mentioned, will he tell us exactly where we should look? He has just told us that the levy on the insurance industry would remain at 3%. I had hoped that the Government’s commitment to maintain it at 3% would appear in the regulations, but it has not done so. Will he tell us whether payment at 80% remains affordable within a levy of 3%, during and beyond the first four years of the scheme?
Mike Penning
We have always tried to have a consensus, and I thought the shadow Minister knew that that was exactly what I had said. That is exactly what is going to happen, and I do not know why she is going over this old ground again. We went through all this in Committee, and she seems to be reiterating the arguments that she made at that time. We are talking about the regulations that are now before us, and we need to get through this tonight so that the compensation can be paid.
Kate Green
I am simply trying to understand where the additional £11 million has been found. It would be helpful if we knew that. We are particularly anxious that this should not have a detrimental effect on the way in which the scheme works for claimants. I know that the Minister does not want that to happen, but it would be helpful to understand how he can give us an assurance that it will not.
On some of the other aspects of the scheme, regulation 5 sets out the general duties of the scheme administrator, including a duty to take reasonable steps to publicise the scheme. Now that the administrator has been appointed, will the Minister tell us more about how that will be achieved? What discussions have taken place with the administrator to ensure the widest possible dissemination of information about the scheme to those who might have a claim under it, and what discussions are taking place with trade unions, victims’ groups and others to ensure the widest possible promotion of the scheme? Have health care professionals in the NHS been alerted to it, and will there be clear signposting to the application process?
I was pleased to hear the Minister say a moment ago that he expected applications to be accepted with effect from 6 April. However, there is nothing on the Department for Work and Pensions website explaining how people should make an application—or at least, there was no such information there two or three hours ago, when I last checked. The Minister will understand the importance of making that information available very quickly, given the poor prognosis of the disease. Will he tell us when he expects the application form to be available, and how claimants will be able to access it?
Regulation 5(4) requires the scheme administrator to ensure that there are sufficient numbers of suitably qualified persons to determine applications under the scheme. Will the Minister tell us more about the likely professional background and qualifications of those persons, and in particular about their independence and how they will be employed? Will they be employees of the scheme administrator, or might they work on a freelance basis? Is it possible that they could have a conflict of interest if they held other appointments or roles within the insurance industry at the same time? How would such conflicts be identified and dealt with, and how will the public and claimants be reassured of the independence of those employed to take decisions in the scheme?
I welcome the provisions in regulation 9 on time limits for applications. The Minister has made good on his assurance in Committee that applicants would have three years from the date of diagnosis or three years from when the regulations come into force if diagnosis is after 25 July 2012 but before they come into effect. However, there are concerns about time limits when we look at regulation 18.
Generally, if a claimant dies before the case is determined, a payment may be made to his or her personal representative in the event that they leave no dependants. This will, however, still leave a small group of mesothelioma sufferers without dependants who were diagnosed on or after 25 July 2012, but who died before they could make an application, for example because the forms were not available. In those cases, it is my understanding that no payment will be made to the deceased’s personal representative. That seems unjust. It has been clear in all our discussions that the Government’s firm intention is for claims to be met for anyone with a diagnosis after 25 July 2012, and it cannot be right that a small group, who otherwise would qualify, should be excluded. Will the Minister say what he intends to do to address that situation?
I welcome regulation 11, which sets time limits for the provision of additional information. That was a suggestion made by my noble Friend Lord Browne, in discussion with the Minister’s officials. I am very pleased that it has been taken on board. I must emphasise my continuing concern, however, that where information is needed from Her Majesty’s Revenue and Customs—a situation I raised in Committee and on Report—the problem of HMRC insisting on a court order to release the employment records of deceased claimants remains totally unresolved. This is a very serious matter, as it risks building in delay and costs for claimants accessing the scheme. On Report, the Minister assured the House that a suitable vehicle for dealing with this problem would be found in good time for the establishment of the scheme, and I recall that he responded positively to the suggestion of the hon. Member for Gainsborough (Sir Edward Leigh) that it could be dealt with in secondary legislation. There is, however, no sign of any such provision in the regulations before us. Indeed, as recently as 25 February, I received a letter from the Exchequer Secretary to the Treasury which suggests that the Government have made absolutely no progress whatever on the matter since we discussed it at the beginning of January. That is really concerning, given the imminent launch of the scheme. I hope the Minister will be able to update us on what urgent action the Government are taking.
I welcome the provision in regulation 18, which provides for the applicant to request a review of a determination—another of Lord Browne’s suggestions. I also welcome regulation 24, which adopts the suggestion of the hon. and learned Member for Sleaford and North Hykeham that in conducting a review, the administrator must ensure that anyone who had responsibility for the original determination will play no role in the consideration of that review.
I am disappointed that schedule 2 continues to include eligibility for payments under the Turner and Newall schemes as grounds for exclusion from access to this scheme. As the Minister knows from our discussion in Committee, this will leave a number of people considerably worse off than if they had been able to access this scheme. I had hoped he would have wanted to be as generous as possible to those sufferers, and I regret that he has not been able to do that.
Finally, may I ask the Minister to say a little more on a discussion that took place a few moments ago in relation to the review of the scheme? I welcome the commitment in regulation 27 to annual review of these regulations, but will he be absolutely clear that in addition there will be a full review of the scheme after four years? In Committee, he told us:
“It is very important that the insurance companies know that the 3% is there. In Committee in the other place, Lord Freud committed to a review at the end of the smoothing period, after four years, to see exactly how things were going…I will place that fact in regulations so that the Committee has confidence that a review will take place after the four-year smoothing period. At that point, we will have a much better idea of how much the levy collector is collecting. We may be able to spend that by increasing the percentage, or we may be able to do other things with it.”––[Official Report, Mesothelioma [Lords] Public Bill Committee, 10 December 2013; c. 77-8.]
That is important, since by my calculation an even more generous level of payment—at least 90% of average civil compensation—could be affordable within the proposed 3% levy after the first four years of the scheme. I had hoped the regulations would specifically provide for a four-year review to take place, but they do not. Will the Minister say why they do not and what his intentions are in that regard?
Let me sum up as follows: we warmly welcome the progress that has been made towards the establishment of the diffuse mesothelioma payments scheme and we certainly have no intention of delaying or opposing the regulations, but there remain a number of outstanding issues. I hope the Minister will be able to respond and offer further reassurance on them.
Tracey Crouch (Chatham and Aylesford) (Con)
I do not wish to detain the House long. As the Member who tabled the amendment on Report and put it to a vote, I was disappointed when the Government did not listen to the call to raise compensation to 80%. Members will therefore not be surprised to learn that I am delighted that progress has been made and that the Minister and his officials have managed to find savings, through the tendering process, to ensure that those who contract this dreadful and fatal condition receive the compensation they deserve.
It is worth reminding the House that mesothelioma is one of the worst diseases that anyone can contract simply by going to work. There is no reason behind having mesothelioma other than exposure to asbestos. Unfortunately, those who do contract it often die very quickly, leaving their dependants without the financial security that they would have hoped to have provided in any other circumstances.
The Mesothelioma Act 2014 provides compensation to those who are unable to get compensation via the civil claims process. Increasing the compensation level to 80% is the right thing to do. I know there is still disagreement across the House on the level of compensation, but there was consensus on an initial minimum compensation level of 80%. Other hon. Members may wish to increase that to 90% or even 100%. The perfect outcome would be 100%, but that is unachievable, and I believe that 80% is the right figure to settle on at this stage.
Following Report, many people across the country—not just in my constituency—contacted me to ask when the scheme would start and how they would be able to access it. Will the Government ensure that a “How to” guide is published on the website and is readily available for all victims?
Mike Penning
It is important that we make the scheme as simple as possible. There will be a direct link on the Department for Work and Pensions website to the administrator’s website. We want to make that as simple as possible so that, as I suggested earlier, in some cases the legal profession will not need to be involved. I urge colleagues and representative bodies to get the information out there. The administrators will do that, and we need to do that in constituencies where mesothelioma has blighted the lives of so many. All hon. Members across the House have websites, and they should use them to promote the scheme.
Tracey Crouch
I am grateful to the Minister for that response. It is very important that we make it as simple as possible for people to understand exactly how to access the scheme. As long as they are aware that it is a scheme of last resort, and have gone through the appropriate civil process, we can do what is best to ensure that victims and their families receive compensation quickly and fairly.
There has been good progress, and that is a fitting tribute to the late Paul Goggins. The issue of mesothelioma is wider than just compensation, although that is very important, and I will do my bit to continue to fight on many of the issues on which he made a start, such as better research funding to ensure that we find a cure; that is beyond the remit of the Minister’s Department. I recognise that the Minister has done an incredible job. He has not just listened to Members in all parts of the House, but ensured that the level was increased, and that those in the insurance industry settled for that. I will not say that they have welcomed that, or are happy with it, but they have settled for it, and they have not walked away from the scheme. It will provide valuable financial security for those who contract this dreadful disease.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
It is a pleasure to follow the hon. Member for Chatham and Aylesford (Tracey Crouch), and to find myself broadly on the same side of the argument as her. I particularly thank her for her kind words about Paul Goggins, who had many friends in all parts of the House, and who made a really significant contribution to our debates on the Bill and on the issue more generally. He is still sadly missed.
The Minister has stuck to the departmental briefing that was agreed with the Treasury, and to his original agreement with the insurance industry on the parameters of the scheme, so no one could reasonably criticise him for the way in which he has carried out his responsibilities; I hope that the Government Whips and the Leader of the House, who are listening, will find that satisfactory. Having spelled that out, I must add that the Minister has done everything that he could to help the victims of this terrible condition. I pay tribute to him for that work, and to Lord Freud for his work in the other place.
Above all, I pay tribute to the Minister for sticking with this issue, because not every Minister would have done so; it is not a popular issue in Whitehall. It may be appropriate for me to conclude the thanks that are due by thanking the civil servants in the Minister’s Department who have helped us to reach this point. Once the administrator of the scheme was established, some issues must have become clearer. It must have been easier to see whether an agreement could be reached on the vexed issue of whether the compensation level should be the 75% at which it stood at the end of the Bill’s Committee stage, the 70% at which it stood when it started life, or the 100% that I wanted, which always seemed out of reach in view of the parameters of the scheme. As I have said, the Minister stuck with this, and has brought us to 80%. I must say to him, “Well done.”
The Minister has also preserved the “3% or less” parameter on which the industry would no doubt have insisted. That is an industry figure, and there is some scepticism about it on the Opposition Benches. In the letter that he courteously sent to those who were members of the Committee, he said that he felt that it would be possible to keep the cost to less than 3%. I wonder whether he is able to tell us today how much less, and whether this scheme of last resort involves a trade-off between that and a yet higher compensation level for victims. It is early days, and I do not criticise the Minister. I have no reason to doubt his good faith in these matters; indeed, far from it. He has stuck his neck out for our side as far as one would expect any Minister to do. However, having seen the calculations produced by his Department, I should like to hear something about the period over which the costs will be spread. Perhaps he could tell us whether there is any prospect of taking the compensation rate in this scheme of last resort closer to the 100% that many of us think is justified.
We have had to sacrifice our wishes for an earlier start date for eligibility. Opposition Members still think that eligibility should start from the date on which the last Labour Government consulted on the introduction of a scheme of this kind. We believe that the consultation exercise, during which the Government made it clear that they were minded to legislate, raised legitimate expectations in the minds of potential applicants. I wonder whether there is room for a little more generosity within the scheme’s parameters. The cost of picking up the several hundred cases that I understand to be involved would be a one-off; continuing costs would not be incurred, because eligibility would have to fall between the start date advocated by the Opposition and the date on which the Government settled.
The Minister said that he wanted a clear-cut scheme that would be easy to access and would not put undue pressure on applicants. I welcome that, but applicants still have to demonstrate that they are eligible. It is up to them to show that there is not still an employer whom they can sue, or an insurer who has an obligation to pay compensation. That is a big responsibility to put on the shoulders of an applicant. I welcomed what the Minister said about the £7,000 and the legal costs, but someone who puts £7,000 in front of a claims farmer or a lawyer will be presented with a bill of about £7,000.
Ian Mearns
I agree with my right hon. Friend that proving that one has been susceptible to exposure to asbestos during a long and sometimes diverse career can be very tough. I know that a number of people who have succumbed to mesothelioma have not worked in heavy industry but have, for instance, taught in schools in which asbestos has been present. It is very difficult to prove exposure, because asbestos fibres often lie dormant in the lungs for decades.
Mr Brown
My hon. Friend and constituency neighbour is absolutely right. The effects of this horrible condition can be with a victim for decades, but once full-blown mesothelioma has been diagnosed, life expectancy is extremely short. It is no accident that the north-east of England is disproportionately represented on the Opposition Benches today, because we represent people who are in the older tranche of victims. I know that I do not need to explain this to the Minister. I am talking about people who worked in heavy engineering, shipbuilding and ship repair, people who sprayed carriages with asbestos, and thermal insulation laggers. Members of that generation were the victims of those industries. However, as my hon. Friend the Member for Gateshead (Ian Mearns) pointed out, the new victims will be teachers who have been scraping on asbestos-based boards, school caretakers and janitors who have breathed in asbestos from insulation that is flaking because it has not been properly lagged, and builders who have carried out occasional repairs without being properly protected against the asbestos that they were drilling into, and have generated dust.
Mike Penning
The right hon. Gentleman is right to say that there has been a disproportionate effect in the north-east in particular because of the heavy industry there, and to mention many of the organisations involved. However, in such cases it is relatively easy to trace the victims’ employers, because they are large companies in large industries. This scheme is intended to cover cases in which we cannot find the employers, and hence the insurers, who are legally responsible. That is why it is a scheme of last resort. As for the right hon. Gentleman’s other point, I think it is absolutely right for us to help, because the scheme will not work if a large number of people resort to it when they could have claimed elsewhere. We need to help them to obtain compensation from the source from which they deserve it.
Mr Brown
I agree with the Minister that in the public sector it should be easier to trace a responsible insurer, and indeed a responsible employer, but there is a rich history of subcontracting, even in the public sector, and not all these people have insurers who maintain liability. It is the missing insurer, as well as the missing contracting or subcontracting company, who generates the cases with which this last-resort scheme is intended to deal.
The Minister is right to anticipate more public sector cases in the future. I have asked the Department of Health how many mesothelioma cases were being dealt with in England by the Department, and that number of cases, as you of all people will well know, Madam Deputy Speaker, is a precursor to the number of compensation claims that there will be—if, that is, the injury was inflicted through work. The House will be distressed to learn that the number is still rising. The number identified by the Department is now over 7,000 a year, and that is not a very easy fit with the projection of the number of fatalities coming from the Department via the Health and Safety Executive.
Ian Lavery
With regard to public sector workers, 10,000 teachers died because of mesothelioma. Does my right hon. Friend agree that we have to look seriously at the impact on children in schools where asbestos is present? If an adult—a teacher or a caretaker—can get mesothelioma from being at school, what has happened to the kids?
Mr Brown
Like my hon. Friend, I stand up for every single individual who has been exposed to asbestos. This is an entirely preventable condition. Although I understand why in law we draw the distinctions we do, morally this is not right. We should set out to save each and every one of the citizens we represent from being exposed to this awful condition. That applies to young children, too. My hon. Friend will recall me referring to the young children who found a pile of asbestos just lying in a yard in Leeds, and who threw it at each other as if it were snowballs. Of course, the inevitable happened, and 40 years later they are coming down with mesothelioma, but whom do they sue?
Mike Penning
As I said on Report, I think, and certainly in the Committee stage of the Mesothelioma Bill, I hope this is the start of a fund of last resort in other areas as well. What the hon. Member for Wansbeck (Ian Lavery) and the right hon. Member for Newcastle upon Tyne East (Mr Brown) are alluding to is a public liability area, not liability for employers. It is absolutely right that we should try to protect everybody, but sadly I think I have gone as far as I can within the scope of the regulations and the scheme before us.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown) who made, as usual, a very thought-provoking, good and balanced contribution. I would also like to associate myself sincerely with all the genuine and heartfelt tributes to our late friend and colleague Paul Goggins, who worked tirelessly on this issue—as I know he did on many others, but he was particularly involved with this issue for many years. As the hon. Member for Chatham and Aylesford (Tracey Crouch) said, this is a fitting tribute to him as well.
The scheme we are debating today is of course a step forward for victims of this disease, many of whom will for the first time be given recourse to compensation if the insurers of their former employers cannot be traced. There are, however, problems with this scheme which were highlighted in part from the outset, and indeed from the Second Reading of the Mesothelioma Bill onwards, and some of these problems are still with us. The hon. Member for Stretford and Urmston (Kate Green) detailed several of them.
First, the scheme, which was established under the Mesothelioma Act 2014, will apply only to the victims suffering from mesothelioma and will do nothing for those with other asbestos-related conditions, such as asbestosis. That seems fundamentally unfair. I hope that the Government will consider implementing similar schemes for all victims of asbestos-related diseases who are unable to trace the insurers of their former employers.
Secondly, it seems to me to be equally unfair that the victims who are eligible for compensation under this scheme will be able to claim not 100% of the average compensation claim but, rather, 80%. The individuals who will find themselves in a position to make a claim for compensation through this scheme will not only have been exposed to asbestos, but will also have had to go through the rigmarole of attempting to trace the employers’ insurers only to find that it cannot be done, thus they are being penalised for others’ negligence.
I also remind the Government that an individual is not usually alive for very long after being diagnosed with this awful disease. Yet still, dependants will be left with only 80% of the average value of a compensation claim after their loved one has passed away. Of course, until very recently the Government were determined that the victim should be able to gain only 75%. We heard that the Minister recently sent a letter stating that the figure has been raised to 80%, and we are grateful for that. We are grateful that he has moved on the issue, having heard representations, as the right hon. Member for Newcastle upon Tyne East said. I also understand that the letter specifies that applicants can now expect to receive average payments of about £123,000 prior to benefit recovery, as well as £7,000 towards legal fees.
We have heard from several Members this evening about the £7,000 for legal fees and the fact that people presume that lawyers will just take the money and do as little as they can. Speaking as a lawyer—I have been a solicitor and I am a barrister—I remind those who will have to claim that they are entitled to have the lawyer’s bill evaluated independently by a professional body and if it is found to be too much, the lawyer will pay it back. It is a straightforward procedure and will cost the applicant nothing. More often than not, these professional bodies are very strict in not allowing huge, unwarranted fees to go unchallenged.
I would argue that claimants should be entitled to 100% compensation, but it is easy to say that. I know the Government have worked hard and that the dead hand of the Treasury floats above us all, day in, day out, particularly those on the Treasury Bench. However, the Pneumoconiosis etc. (Workers’ Compensation) Act 1979—which I am proud to say my party, Plaid Cymru, was instrumental in introducing—did introduce 100% compensation. Indeed, Dafydd Wigley, then a Member of Parliament, together with another colleague, drove it through and had an understanding with the Labour Government that it should be introduced. My friend the noble Lord Wigley, as he now is, was instrumental in introducing the legislation before us in the other place, and I am pleased to say that it is coming to fruition. However, at the very least the scheme should follow the model of the Financial Services Compensation Scheme, which pays out 90% of the value of civil compensation claims to individuals exposed to asbestos before employer’s liability insurance was made compulsory in 1972.
Finally, the fact that claimants will be eligible for compensation under this scheme only if they were diagnosed on or before 25 July 2012 is arbitrary and will be desperately unfair on many. However, as was argued in both Houses in debates on the Mesothelioma Bill, it would surely make far more sense to allow all claimants to claim compensation if they were diagnosed during or before February 2010, when an initial draft of this scheme was first proposed, or when the consultation was proposed, as the right hon. Member for Newcastle upon Tyne East said. Just before the 2010 general election, the then Government began a consultation proposing that an employer’s liability insurance bureau should compensate all individuals with industrial diseases who were unable to trace their employer’s insurers. I am pleased that, in any event, that is now coming through. However, individuals diagnosed between these two dates are being left out of the scheme through no fault of their own, but simply because the Government did not perhaps expedite the scheme sufficiently.
I find it difficult to be hyper-critical, because I know that this measure will make a huge difference to many people, and broadly speaking we all appreciate that. However, the insurance industry could surely afford also to compensate those falling between the two dates, not least since the industry’s costs will be lowered, as it will not be entering into negotiations on a case-by-case basis, but awarding average compensation to claimants. I hope we can build on the progress thus far, in order, somehow or other, to compensate these people, who, as I have said, are being dealt with detrimentally for no good reason and through no fault of their own. After that long diatribe, I can say that there is no doubt that this scheme will assist many people, and I am sure we are all very grateful for that.
Mike Penning
Although some of this evening’s discussions were similar to those we have had previously, it was right and proper that many colleagues reiterated some of their concerns about the scheme and how it is going to work, particularly in respect of the regulations.
As we discussed at length during the passage of the Mesothelioma Bill, which is now an Act, there are different callings on the money in the pot—let us bring it down to basics. There were calls for us to go further back with the scheme, not only to when the previous Administration made the announcement, but even further; to move the compensation percentage from 75 to 80; to include others in the scheme, perhaps the wife, spouse or loved one of someone working in this industry who had contracted mesothelioma as a result of cleaning her husband’s overalls—I am not being sexist, but that was the environment at the time; and to be generous in other ways.
The right hon. Member for Newcastle upon Tyne East (Mr Brown) was kind enough to allude to the fact that I inherited the Bill. Lord Freud had done a fantastic job. When the Bill entered the Lords the compensation figure was 70% and he is the one who got the insurers around the table to come up with any scheme whatsoever—herding cats is probably a good way of describing it. I am sure that the Association of British Insurers will not like me saying that, but it is one of the reasons why, even when previous Administrations tried to do this—the right hon. Gentleman tried and so did Paul Goggins—it has taken so long. In the end we did a deal—let us be honest, we did a deal at 3% which would not be passed on to new business. We then started to frame where the money could go in the scheme of last resort.
Assumptions were made and some are still being made today, even though we have appointed a scheme administrator, which has cost us less—that was what the shadow Minister was asking about earlier. Assumptions were made about case legal fees—I am no lawyer, but my brief says that. Legal fees were highlighted by the shadow Minister and there are case legal fees that we now know we do not need, so we have saved money. I could have gone to 81% today, but that would have stretched the credibility of my honesty to the House and to the sufferers in terms of making sure the scheme is safe. A myriad different questions have been asked during our consideration of the regulations, but the crux of the matter is: how far could we go without putting the scheme at risk. That is why I have resisted some suggestions throughout our consideration, even though my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) rightly pushed me very hard. As the Minister, I had to stand firm until I knew how much money was in the pot—how much the scheme was going to cost us. So we are where we are.
Ian Lavery
Will the Minister assure the House that he will examine an anomaly outside the 3%: the situation of the people who receive 80% compensation but will have 100% of their benefits taken? Is it not right that anybody who gets 80% of what they should get should have to pay only 80% of the benefits back, too?
Mike Penning
I pay tribute to the hon. Gentleman for raising the issue again. I do not think there is an argument with the moral position, but the legal position is something completely different. When someone gets benefits—the right hon. Member for Newcastle upon Tyne East is nodding because he was dealing with exactly the same schemes—and then gets compensation, those benefits are reclaimed to the taxpayer. That is what happens across the board. I said all along that I would love to have paid 100%—my heart tells me that—but it has not been possible. I would like to have touched on a lot of the things that the right hon. Member for Newcastle upon Tyne East discussed in his speech such as groups of people outside the scheme. I would like to have dealt with those outside employee liability and with public liability. We talked earlier about young children in schools today who might inhale a tiny fraction of asbestos into their lungs and, 40 or 50 years from today, might get a preventable disease. It would be in their lungs and there is a possibility that they would get mesothelioma, which is terminal, and die within four to nine months.
Bob Stewart (Beckenham) (Con)
I apologise for my ignorance, but once a person has been diagnosed with this dreadful disease should they not go straight to a civil servant and say, “I have been diagnosed with this, what should I do? Can you please help me?” Is that the system that operates at the moment? If it is not, it should be.
Mike Penning
The motion is not carried. I appreciate that my hon. and gallant Friend has not been with us for all the debates on this, but I am afraid that that is not the case. This is a scheme of last resort. In most cases, people who get this abhorrent, horrible and preventable disease will be able to claim from their employer and thus their employer’s insurance. Employer’s liability insurance is compulsory. The stakeholder groups and the trade unions have been excellent over the years. I pay tribute not only to them but to Members across the House for representing people with mesothelioma, because it is a horrible and terminal disease. The employers who put those people into this position should be liable. This has to be a scheme of last resort.
Kate Green
Can the Minister say what progress he and the Government are making in order to obtain employers’ records from HMRC? He is right that most people will be able to make a claim against an employer, but they will need to be able to obtain those records to do so.
Mike Penning
The hon. Lady is absolutely correct, and we are still working with HMRC to ensure that that happens. If necessary, we will introduce legislation. However, at the moment, the Data Protection Act prevents us from doing that. I explained that in Committee. I am sure that that was never the intention, but it is one of the restrictions that the Treasury lawyers have had to look at.
I want to deal with a couple of issues quickly because I do not want to delay the House. Should beneficiaries of someone who qualifies under the scheme—not dependants or loved ones—get a payment? The answer is that they will not, because the scheme is designed specifically for the sufferers of this terrible disease, their loved ones and their dependants to allow them to get on with their lives.
On the £7,000 payment, we will look enormously closely with the Association of Personal Injury Lawyers, our own lawyers and the Ministry of Justice to ensure that no rip-offs take place.
Mike Penning
Bear with me for a second, because I need to make a tiny bit of progress on this.
The scheme is as simple as we can possibly make it. There is a huge amount of skill out there among the stakeholders who know this disease and the compensation scheme back to front. I think that quite a bit of the £7,000, if not most of it, will stay with the people who are claiming.
Ian Lavery
Does the right hon. Gentleman share my fears that once the £7,000 becomes common knowledge there will be claims farmers advertising in every paper up and down the country? Can the Minister say whether claims farmers will be able to claim part of that £7,000, or is it strictly for the legal profession?
Mike Penning
It is being paid directly to those who are beneficiaries of the fund, and it is for them to decide who they pay it to. When we introduced these regulations, I was absolutely adamant that the lawyers should not get direct payments from this scheme. I am not a lawyer and I have seen what happened before, but because everybody knows exactly where we are and how simple the scheme is I would tell the stakeholders and everyone else to shop around to make sure that they are not ripped off. There are decent lawyers out there even though there are some scallywags as well.
The four-year review, which the shadow Minister specifically asked for, is in place. This is an important set of regulations that will ensure that we get this compensation through as soon as possible. I have not been able to answer all the questions that have been asked this evening, but I will write to hon. Members, including those on the Opposition Front Bench, with the answers. I hope that the House will pass the regulations this evening so that we can get the compensation to those who deserve it so much.
Question put and agreed to.
Resolved,
That the draft Diffuse Mesothelioma Payment Scheme Regulations 2014, which were laid before this House on 3 February, be approved.
Business of the House
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Mr Andrew Lansley)
I beg to move,
That at the sitting on Tuesday 18 March:
(1) proceedings on the motion in the name of the Prime Minister relating to Ukraine may continue for three hours and shall then lapse if not previously disposed of; and
(2) notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the motions in the name of Secretary Eric Pickles relating to Local Government not later than three hours after the commencement of proceedings on the first such motion; proceedings on those motions may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.
Last Thursday, during the business statement, I announced three items of business for consideration tomorrow, Tuesday 18 March. They are a general debate on Ukraine, the consideration of motions to approve statutory instruments on combined authority orders and the consideration of a motion on three EU proposals on criminal justice. The business motion before the House will control those proceedings.
The effect of passing the motion will be to allow three hours for the debate on Ukraine. It is an important debate and I am pleased that my right hon. Friend the Foreign Secretary will update the House during the opening of the debate before appearing before the Select Committee on Foreign Affairs tomorrow afternoon. The House has been kept up to date with statements, but it is important that there is also a debate so that we can hear from Members. I have provided Government time for that and we will continue to keep the situation of how the House is kept informed and can discuss such important issues under review.
The motion also allows for statutory instruments relating to combined authority orders to be considered for up to three hours. They are important orders that affect a large number of members and their constituents. I hope that the House agrees that it would be for the convenience of members for them to be debated together on the Floor of the House. If the motion is not passed tonight, those four motions would be taken separately for up to 90 minutes each. I do not think that that is a sensible way to proceed.
We will also debate a motion on three EU proposals on criminal justice for up to 90 minutes, as provided for under Standing Order No. 16. That business is therefore not directly covered by tonight’s motion as it is already governed by Standing Orders.
I commend the motion to the House.
Question put and agreed to.
petition
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is my pleasure to present a petition signed by 220 people that was arranged by those who enjoy bingo at Palace Bingo in Felixstowe. I thank Vivienne Warren for organising the petition.
The petition states:
The Petition of the people of Suffolk Coastal,
Declares that the bingo industry is currently subjected to bingo duty at 20% whereas most other forms of gambling are taxed at 15% and further that the Petitioners believe that bingo venues offer a pleasant and safe environment for people to come together and enjoy themselves.
The Petitioners therefore request that the House of Commons urges the Government to reduce bingo duty from 20% to 15% so investment can take place in the bingo industry modernising premises and creating jobs.
And the Petitioners remain, etc.
[P001332]
Transport Infrastructure (South of England)
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Caroline Dinenage (Gosport) (Con)
I am delighted to have the opportunity this evening to raise the important issue of transport infrastructure in the south of England. In particular, I want to talk about the south coast, but the regional economy of the south is undergoing deep structural changes. Improved connectivity between our southern cities and better links to the capital are vital if we are to ensure that no one gets left behind as we move forward. The presence of international hubs such as Portsmouth and Southampton means that the south and, in particular, my region of the Solent act as a gateway to the world. Good transport links are therefore crucial to connect local firms with the rest of the country and international markets. Unfortunately, people in the south too often feel cut off from prosperity due to unreliable and overcrowded transport links.
The deep pockets of deprivation across the south coast will never be overcome while we have the second-rate transport network that we currently endure. Better connections would allow suppliers to reach more businesses, allow businesses to reach more customers, and allow customers to visit more towns to spend their hard-earned cash. In short, they would increase trade, create jobs and raise the living standards of people throughout the region. They are also vital if flagship Government projects such as the Solent enterprise zone, which is an attempt to breathe new life into the disused military airfield at Daedalus in my constituency, are to fulfil their economic potential and generate the employment and prosperity that are desperately needed. Such connections would help to spread investment and raise the living standards of some of the poorest people in the country.
I know that the Government fully appreciate the importance of transport and I am glad that they are committed to investing in major developments of our rail and road networks, which are welcome and cannot come too soon after decades of rising congestion and chronic underinvestment. The UK now ranks 24th in the world for the quality of our roads, so the £28 billion that is to be spent on the maintenance and enhancement of national and local roads is long overdue. However, our debates about transport seem to focus too often on two issues: the need to deal with crises in capacity in the capital; and the nebulous desire to rebalance the economy from south to north. That dangerously overlooks the real and immediate need to invest in the south of England at a time when it is undergoing huge economic changes.
It is often incorrectly assumed that the south of England is made up of leafy suburbs and rural shires that are untouched by poverty. Sadly, parts of the south suffer from shocking deprivation. In the town of Gosport, 19% of children live in poverty, and the proportion rises to 32% in parts of neighbouring Portsmouth. Gosport has less than half a job per working adult—it has one of the lowest ratios of people to jobs in the UK—which means that 20,000 people have to commute out to work every day along a single carriageway road. Given that we have low average wages, it is testament to my constituents’ strong work ethic that our unemployment rate is not significantly higher.
As both a peninsula and the largest town in the country without a train station, we are hugely reliant on our bus network. Unfortunately, recent commercial decisions to change bus routes risk cutting people off from prosperity, stifling aspiration and allowing pockets of poverty to deepen. Local people are not afraid to get on their bikes, as Gosport has the UK’s third highest regular bicycle use. Everyone is doing their bit to try to ease the congestion, but it is plainly insufficient to have a single carriageway on and off a peninsula.
Better connections are therefore no vanity project; they are essential to fighting the deprivation that is endemic in communities throughout the south of England, and even more important as a result of recent heavy economic blows. Following BAE’s decision to end shipbuilding in Portsmouth and the job cuts at Ford in Southampton, the city deal for Portsmouth and Southampton that the Government have announced is welcome, but to maximise the potential of that investment and subsequent business opportunities, we need to improve links between towns and cities in the south.
The distance between Portsmouth and Southampton is just 20 miles, yet at peak times that journey can take well over an hour by road. The journey by rail often takes the same time, as there are only two or three direct trains an hour. Inevitably, slow journey times and poor service frequency on the rail network mean that more and more people take to the roads, thus clogging up the already hideously busy M27. I have heard that it can be quicker for commuters in the extreme western end of the Solent to get to Portsmouth via the Isle of Wight, which involves taking two ferries, than by using the M27, which is clearly ridiculous. Such wholly inadequate connections are more than just an annoyance; they hold back business. A study by Atkins estimates that road congestion is already costing Hampshire around £400 million every year. More than that, it reduces the attractiveness of the area for future inward investment. Work by Solent Transport shows that without the necessary investment in transport infrastructure, the region could miss out on around 8,000 jobs.
The naval dockyard and the commercial port in Portsmouth are significant defence and economic assets to the UK, and the port of Southampton is seeing massive growth across all its key sectors. The port master plan has identified that cruise passengers through Southampton will increase 113% between 2005 and 2020, and container handling is forecast to increase 95% over the same period. In order to take full advantage of our great southern hubs, it needs to be easier to travel between these two cities.
It is also vital that we improve links between London and the south coast. It is often assumed that geographical proximity to the capital means fast connections, yet it takes longer to get from London to Portsmouth on the fast train than it does to get from London to Doncaster—a distance that is more than twice as far. These journeys are rarely pleasant, as both the trains and the stations are packed. Passenger journeys on South West Trains are up 22% in the past six years, and more people now go through Waterloo in three hours every morning than fly from Heathrow in an entire day. We need more trains on the line as well as more carriages on those trains to deal with the crisis in capacity. I join my hon. Friend the Member for Portsmouth North (Penny Mordaunt) in her call for an express train from Portsmouth to London every half-hour. This is an excellent idea that could cut journey times and relieve passenger congestion.
After decades of underinvestment, action to address the problems of nightmare roads such as the A32 is crucial. They were described by a Deputy Prime Minister in the previous Government as strategically unimportant, which does not do much for the morale and self-esteem of an area. Investment in the area would help my constituents who frequently feel cut off from the prosperity being enjoyed in other parts of the country.
At a meeting earlier today Hampshire county council transport team gave the green light to the Solent local enterprise partnership to bid for £90 million of Government funding in order to make desperately needed road improvements around Gosport and Fareham. I hope the Government will look seriously at this bid and understand that it is vital if we are to stand a chance of redressing decades of chronic underinvestment in our local transport infrastructure. This Government have a good record on investment for London and the north. We need to make sure that every part of this country has a modern transport infrastructure that is fit to face the challenges of the 21st century.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing this debate. It follows on from an Adjournment debate that I was delighted to respond to last week when, as my hon. Friend pointed out, my hon. Friend the Member for Portsmouth North (Penny Mordaunt) made a number of salient points about transport infrastructure in the south of England. My hon. Friend the Member for Gosport clearly made the case tonight that this is a subject of great importance to her and her constituents, including businesses in the area. I am sure she will remember that when she launched her innovative suggestion that the HMS Daedalus site become an economic zone I was delighted to be with her and to support her on that first occasion, some 18 months ago. That campaign has been hugely successful and I shall comment on it later.
My hon. Friend the Member for Gosport is right that effective transport infrastructure is vital in supporting local communities, enabling people to access their workplace, and driving local economic growth, so it is right that we take time to debate these issues. She is right, too, to point out that, as many of us who are Members of Parliament for constituencies in London and the south of England know all too well, the south is not all leafy suburbs. As a man who was born and bred in Southampton, I am delighted that she raised the need for connections between Southampton and Portsmouth. They may have traditional rivalry in a number of things, but the links between the two great cities of the south need improving. I am pleased that the Government are clear that we need to invest in record amounts to maintain, upgrade and expand our road and rail infrastructure.
Bob Stewart (Beckenham) (Con)
I go to Southampton by train quite a lot and I totally support what my hon. Friend the Member for Gosport (Caroline Dinenage) says about the time that it takes to get to Southampton from London. If we had an express link, as suggested by my hon. Friend the Member for Portsmouth North (Penny Mordaunt), more people could get up to London and get more jobs, helping the depressed people of Portsmouth and Gosport.
Mr Hammond
My hon. and gallant Friend is right. I will comment on rail infrastructure in a few moments, but I want at the outset to set the debate in context.
The Government inherited not only a budget deficit but an infrastructure deficit. In doing what we are doing, we will improve the growth potential of the economy and boost demand. In total, between 2011 and 2014, we are investing £32 billion in roads, rail and local transport infrastructure, and between 2015 and 2021 we are committed to a funding plan of some £56 billion, which will be spread across the length and breadth of the country, including the south of England. We are also working with local authorities to ensure that that is being shaped by local priorities.
My hon. Friend the Member for Gosport was right to raise the issue of investment in rail infrastructure. We are committed to record levels of investment in the network, again supporting economic growth and jobs and delivering a greener and more efficient railway that is better for freight and passengers. During the next five years, Network Rail will be spending more than £38 billion running and expanding our railways. There are major infrastructure projects, as has been pointed out several times before, in and around London as well as across the country. A huge programme of electrification will provide faster and more reliable services on the Great Western main line, including some of those from Southampton to the north of England, and there is a £50 million capital contribution towards the redevelopment of Gatwick airport station.
I am clearly conscious that, as my hon. Friend the Member for Gosport pointed out, Gosport is the largest city not directly connected to the national rail network. She will know that different sections of the branch were closed from the 1950s onwards. Network Rail is identifying funding priorities for the Wessex route for the period 2019 to 2024, as well as the strategy beyond that. I know that my hon. Friend has an aspiration that the town will be reconnected with the national network, and I encourage her, as I did my hon. Friend the Member for Portsmouth North in an Adjournment debate last week, to engage with Network Rail. I will be happy to facilitate that contact. Just as I said to my hon. Friend the Member for Portsmouth North last week that I hope that in the near future there is the Mordaunt Flyer, I hope that there will be the Dinenage Dynamo in the near future from Gosport. My hon. Friend the Member for Gosport is right to mention the number of people who wish to travel to and from Waterloo. She will know that the Government, working with Network Rail, are ensuring that the Eurostar platforms will come back into use over a period of time, which will facilitate growth at Waterloo.
It is also important that the road network is fit for purpose, and the Government have already announced increased levels of funding to deliver improvements all around the strategic road network. That is a step change. As the Chancellor made clear in his statement in June last year, we will announce further infrastructure improvements and commitments during the next period. The Government will invest £28 billion in enhancements and maintenance of national and local roads. That includes £10.7 billion for national road schemes and £4.9 billion for local major projects. In addition, £12 billion has been allocated for maintenance on both the local and the strategic road network, which means that 26 new major Highways Agency projects will go ahead, subject to the usual value-for-money and deliverability requirements.
My hon. Friend the Member for Gosport is specifically interested in the south-east, where we have committed to delivering smart motorway schemes between junctions 9 and 14 of the M3 from Winchester to Southampton and between junctions 4 and 11 of the M27 from Portsmouth to Southampton and the A27 Chichester bypass, subject to the finalisation of options and consideration of the business case.
The smart motorway schemes will allow us to make maximum use of what we already have by delivering additional capacity through the conversion of the hard shoulder into an additional running lane. The schemes can be delivered more quickly and provide more real benefits than would be achieved through a conventional widening scheme.
The Highways Agency is also committed to an investment of more than £10 million in two pinch point schemes in the Solent area, on junctions 3 and 5 of the M27. Those junction improvements will help reduce congestion by increasing the capacity of the junctions, reducing the journey times experienced by most road users and improving safety at the junctions. I hope that will ensure that the sorts of delays my hon. Friend mentioned will no longer be experienced by those trying to travel on the M27 between Portsmouth, Gosport and Southampton.
My hon. Friend will be aware that the Highways Agency is currently conducting its route-based strategy process, which is, importantly, involving local stakeholders in the consideration of future priorities. Such strategies provide a new, smarter approach to investment planning across the network and will see much greater collaboration with local interest groups to determine the nature and need of future investment and to ensure that it follows local priorities.
We are in the process of producing a series of strategies for the whole network, a number of which cover the south of England, including the south coast central route, which includes consideration of the A27; the Solent to midlands route, which includes the M27; and the M25 to Solent route, which includes the A3 and M3.
The Highways Agency completed a series of local engagement events last autumn to help identify performance issues and future challenges. I congratulate stakeholders on their engagement in that process.
My hon. Friend will also know that we are committed to identifying and funding early solutions to the long-standing problems on the A27 corridor. Initially, there will be a feasibility study. The A27 corridor study aims to work with local interest groups to identify the opportunities and understand the case for future investment solutions on the corridor. The outputs of the route-based strategy work and the outcomes of the feasibility studies will inform the Department’s roads investment strategy, which is currently being developed and put together and which we have committed to publishing by the end of the year.
It is, rightly, widely recognised that the condition and efficiency of local road networks is an essential contributor to economic growth. Practically all journeys start or finish on those networks and they are relied on by local residents and local businesses alike. Responsibility for the maintenance and management of those networks lies with local authorities—in the case of Gosport, that is Hampshire county council—and it is essential that they spend money on that. Funding from the integrated transport block supports those networks, and from 2011-12 to 2014-15 the south-east and south-west will have received some £400 million for local transport schemes.
In addition, in the autumn statement of 2012 we introduced the local pinch point fund, which was designed to target local congestion and to ensure that we help facilitate the creation of jobs and the delivery of new housing. To date, the Department has awarded local authority funding of more than £266 million for 112 schemes across the whole of England, which, along with joint funding, will enable schemes costing more than £511 million to go ahead. One of the schemes being delivered by Hampshire county council is designed to ease congestion for road users in Havant and help to unlock the Dunsbury Hill farm development site, a key employment site between Waterlooville and Havant. Another scheme, which is being delivered by Southampton city council, will ensure that six key bridges in the city remain fit for purpose in the years to come.
Looking to the future, the Government have recently announced plans to create a local growth fund from 2015-16. The pot will be at least £2 billion a year until 2021, and all LEPs across the country—including the Solent LEP, which includes Gosport—will have the opportunity to bid for funding through their strategic economic plans, which are due to be submitted to the Government by the end of this month. Among other things, the fund will allow local people to identify and local authorities to prioritise infrastructure schemes that they deem essential for economic growth in their area.
I note that one of my hon. Friend’s particular priorities is to improve the traffic flow in her constituency. I urge her to work with the Solent LEP to consider the local growth fund as a possibility for funding schemes that will help deliver that priority.
Caroline Dinenage
I referred in my speech to the £90 million that Hampshire county council will ask the Solent LEP to make when it meets on Friday. That is all part of the scheme mentioned by the Minister, which is about looking at roads in the Gosport and Fareham area, including the A27 corridor, about which he has spoken. I very much hope that the Government will look very favourably on that bid.
Stephen Hammond
I obviously hear my hon. Friend’s plea. As she will know, a number of people will make such a plea.
I was going on to commend my hon. Friend, because the fact that the Solent LEP and Hampshire county council are working together will make their bid to the Government for a grant from this fund more powerful. From this Dispatch Box, as well as in writing and in one-to-one meetings, I have stressed to several colleagues that it is absolutely essential for the local economic partnership and the economic zone to work together, which will certainly achieve a higher priority in assessments. She is right that it is clear that a LEP’s agreement to a scheme ensures that it is most likely to be in the strategic economic plan, and although the process is competitive, it is of course likely that the strongest bids will receive the biggest slices of funding.
In conclusion, I again congratulate my hon. Friend on securing this debate. The powerful case that she has made tonight has reminded us of the importance of an effective transport network for the economy. As I have made clear, this Government are committed to, and have set out plans for, large-scale investments now and in the future to improve local and strategic networks both in rail and on the road and—importantly—across the whole of this country, including the south of England.
Question put and agreed to.