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Kevin Brennan (Cardiff West) (Lab)
1. What discussions he has had with the Chancellor of the Exchequer on removing VAT from the Severn bridge tolls.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
My hon. Friend the Secretary of State has regular discussions with the Chancellor of the Exchequer. Once the Severn crossings revert to public ownership at the end of the concession, which is anticipated to be in 2018, VAT will no longer be payable on the tolls.
Kevin Brennan
Will the Minister confirm that in their discussions with the Chancellor of the Exchequer, he and the Welsh Secretary have firmly taken this matter into account and that, should there be a continuation of this Administration, they are committed to removing this VAT, which is basically a tax on the south Wales economy?
Stephen Crabb
We in the Wales Office are very mindful of the concerns of businesses in south Wales, in particular, about the levels of tolls. No decisions have yet been made on what the tolling regime will look like at the end of the concession period after 2018, but we are hearing representations from Welsh business. As the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), confirmed in a recent Westminster Hall debate, at the end of the concession period, VAT is no longer to be levied on the tolls.
Hywel Williams (Arfon) (PC)
Will the Minister also press the Treasury to look at VAT on the tourism business, which would be a great fillip to employment and to the rural economy?
Stephen Crabb
We have discussed VAT and tourism on several occasions at Wales questions. The fact remains that if we were to lower VAT on tourism and hospitality in the way that I think the hon. Gentleman is suggesting, somebody else has to pay the shortfall. Taxation will need to be levied elsewhere at a time when we have to bring in some revenue to make further progress on reducing the deficit.
Jesse Norman (Hereford and South Herefordshire) (Con)
2. What discussions he has had with the Department of Health and Ministers of the Welsh Government on facilitating access for patients from Wales and English border areas to hospital services in England.
Mr Mark Harper (Forest of Dean) (Con)
3. What discussions he has had with the Department of Health and Ministers of the Welsh Government on facilitating access for patients from Wales and English border areas to hospital services in England.
The Secretary of State for Wales (Mr David Jones)
I recently met the public health Minister, my hon. Friend the Member for Battersea (Jane Ellison), and my hon. Friend the Member for Forest of Dean (Mr Harper) to discuss cross-border health issues. It is essential that we continue to work with the Welsh Government to ensure that patients on both sides of the border have access to the best health services possible.
Jesse Norman
Over 20,000 English residents are registered with GP practices in Wales and have been denied access to hospitals of their choice in England. Does the Secretary of State share my view that NHS Wales has seriously overreached itself by denying patients living in England the right to choose where they receive hospital treatment? Does he agree that we urgently need to change the cross-border protocols to ensure that all patients have access to the highest standards of care?
Mr Jones
My hon. Friend will be keenly aware of this issue; as he says, many of his constituents rely on GPs from Wales. Similarly, Hereford hospital is an important hospital for patients from Wales. I entirely agree that the cross-border protocol needs to be made fit for purpose, and my office and the Department of Health are working closely together to that end.
Mr Harper
The Secretary of State will know—I am very grateful for his support at my recent meeting—that thousands of my constituents are forced to use the NHS in Wales rather than being able to access hospital services in England, as is their legal right. The Health Secretary has said he is going to fix that by the end of the year. In the meantime, is the Secretary of State as concerned as I am that some of the mortality statistics in Welsh hospitals are dangerously high? Has he discussed that in his discussions?
Mr Jones
I repeat that the cross-border protocol is of prime importance, and my office, the Department of Health and the Welsh Government are working closely on it. I am glad to see, however, that the Aneurin Bevan health board is allowing patients from England some element of choice. The issue of mortality is of course a concern, and it has been expressed not only by us but by the chief executive of the Healthcare Inspectorate Wales.
Mr Peter Hain (Neath) (Lab)
When I was Secretary of State, I was always keen to praise success in Wales. Would the Secretary of State care to congratulate the Welsh NHS on having a nurse-to-patient ratio that is a fifth higher than that of England, where his Government have cut the number of nurses by 7,000? Will he also congratulate the Welsh Government on recruiting doctors at a much faster rate than in England?
Mr Jones
I am always keen and ready to give praise where praise is due. Certainly, Welsh clinicians and nurses do a wonderful job. The fact remains, however, that outcomes in Wales are significantly worse than they are in England, which, to be frank, is something about which the right hon. Gentleman should join me in expressing concern. I also suggest that he have a word with his friend the Welsh Minister for Health and suggest to him that he might wish to take on board the recommendations of Professor Keogh.
Ian Lucas (Wrexham) (Lab)
Is the Secretary of State aware of the superb service provided for north Wales patients by the Midlands centre for spinal injuries in Gobowen, which carries out life-changing work? Specialist services are being changed by the Government, of which the right hon. Gentleman is the Welsh Secretary. Will he visit the spinal injuries centre and meet me to discuss the concerns about the specialist care proposed by his Government?
Mr Jones
I am always keen to praise the work of hospitals that offer such important services to Wales. I fully agree with the hon. Gentleman that the hospital in Gobowen is of world-class standard but, sadly, in terms of waiting times, the target time for English patients is only 18 weeks, whereas in Wales it is 26 weeks, which is unacceptable. Frankly, the hon. Gentleman should agree with me that it is not right that Welsh patients, who pay their taxes at the same rate as English patients, should have substandard care.
Roger Williams (Brecon and Radnorshire) (LD)
Powys local health board has just closed six beds at Knighton hospital because of recruitment problems. With Llandrindod hospital almost always full, that could cause bed-blocking in Hereford hospital. Will the Secretary of State work with the Department of Health and the Welsh Assembly to ensure that those beds are reopened as soon as possible, that Welsh patients can recover from their illnesses in their own community and that capacity is kept available in Hereford hospital?
Mr Jones
My hon. Friend illustrates an important point, which is that patients on both sides of the border are frequently reliant on care provided on the other side of the border. He makes a sensible point, because it is clear that Knighton hospital will be put under pressure if the current arrangements in the health care system in Wales continue to prevail.
Owen Smith (Pontypridd) (Lab)
The Tory war on Wales has reached a new low in this House today: four questions from compliant Tory Back Benchers, all suggesting that a higher proportion of Welsh patients are being treated in England when the reverse is the case. Would the Secretary of State like to correct the record and tell those Members the truth, which is that the proportion of Welsh patients being treated in England has fallen and the reverse proportion has risen?
Owen Smith
I am particularly surprised that the right hon. Gentleman should choose cancer as a topic of debate, because the truth is that, in cancer care, Wales is outperforming England. In fact, in the trusts of the hon. Member for Hereford and South Herefordshire (Jesse Norman), the numbers show that 81% of patients are meeting the 62-week target, which is worse than three quarters of all the trusts in Wales. We spend more on cancer in Wales and we have faster improving outcomes. This is a smear by a Secretary of State and a Tory party that used to speak for Wales.
Mr Jones
That is actually a smear from a Labour party which is in total dereliction of its duty to Welsh patients. Frankly, the Welsh Government cannot afford to be complacent when they have not met the urgent suspected cancer waiting time since 2008. Furthermore, there is no cancer drugs fund in Wales. Instead of reacting so badly to criticism, the hon. Gentleman might wish to criticise his own friends in the Welsh Government.
Stephen Mosley (City of Chester) (Con)
13. Despite the claims of the shadow Secretary of State, tens of thousands of people flee the Welsh NHS to seek treatment in Chester every year. Is that not a damning indictment of the Welsh Labour party, which has cut health spending in Wales by 8%?
Mr Jones
My hon. Friend is entirely right. We have protected the health budget in England, but the Welsh Government have cut their health budget by 8%. That is, to be frank, disgraceful and unsupportable. I suggest to Opposition Members that, rather than being in denial, they should criticise their own colleagues in the Welsh Assembly for their dereliction of duty to patients in Wales.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
4. What discussions he has had with the First Minister of Wales in the past six weeks on the implementation of the proposals of the Commission on Devolution in Wales; and if he will make a statement.
The Secretary of State for Wales (Mr David Jones)
The Wales Bill, which I introduced in this House last week, implements most of the recommendations made by the Commission on Devolution in Wales in its first report. I had proposed to discuss the Bill and the commission’s second report with the First Minister on Monday but, sadly, the meeting was postponed.
Mr Llwyd
It is absolutely disgraceful that it has taken the Government one year to respond to the first recommendations of the Silk report. Why does the Secretary of State not get a grip now and bring in the second tranche of recommendations in the new Bill that he has introduced? We have been treading water in Parliament for the past few weeks. There is plenty of legislative time. If the will is there, let us get on with it.
Mr Jones
I am surprised to hear that criticism from the right hon. Gentleman, as he knows that we will implement the recommendations of part I of the Silk commission in this Parliament. So far as part II is concerned, he should surely recognise that the recommendations will require significant consideration. Where those recommendations do not require primary legislation, we will look at implementing them in this Parliament, but we clearly cannot guarantee to do that.
Mr Llwyd
May I ask about zero-hours contracts? Does the Secretary of State appreciate that they are exploitative, and no more so than in the care sector, which the Resolution Foundation has said is
“where their use is most entrenched and where their impact on vulnerable workers and care recipients is most worrying”?
Does he not agree that to hear Labour carping about that matter here and voting against an amendment to delete it in Wales is a bit unfortunate? Does it appear at all on his radar, or is he above all this?
Mr Speaker
I am listening with rapt attention to the observations of the right hon. Gentleman, but I am struggling to ascertain the connection between the important matter he has just raised and the subject matter of the question, which is about the Commission on Devolution in Wales.
Mr Jones
That is extremely generous, Mr Speaker.
I do not recall that zero-hours contracts were subject to the recommendations of part II of Silk report. I will look again at the report more closely, but the right hon. Gentleman will know that, as a proportion, zero-hours contracts are only 2% of all contracts for work in Wales.
Guto Bebb (Aberconwy) (Con)
Does my right hon. Friend agree that it is difficult to see the justification for the devolution of further powers given that the Welsh Government are refusing any fiscal accountability?
Albert Owen (Ynys Môn) (Lab)
5. What estimate he has made of the number of jobs in Wales that depend on the UK’s membership of the EU.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
Businesses in Wales and across the UK are not satisfied with the current relationship with the EU, and want reform and renegotiation. That is what our Prime Minister is committed to achieving to boost our growth and competitiveness, and to secure new jobs.
Albert Owen
I am surprised that the Minister did not mention the number of jobs that are dependent on the EU. He will know that the business community wants both stability and certainty, and they want to see Wales at the heart of the United Kingdom and the European Union. Does he therefore agree with the CBI, which says that Labour’s policy of reforming from within is good for jobs in Wales and the United Kingdom?
Stephen Crabb
I am surprised by the hon. Gentleman’s question, because he should know that 77% of all British businesses support the position that this Government are taking on reform and renegotiation. That position is supported by the CBI, the Institute of Directors and the British Chambers of Commerce. There is widespread support within the business community for reforming our relationship with Europe to become more competitive, and to secure new investment and jobs.
Mr Mark Williams (Ceredigion) (LD)
The Government’s position is not, however, supported by the Farmers Union of Wales. Given that €400 million are pumped into the rural Welsh economy, convergence funding for west Wales and the valleys has had a huge impact. Will my hon. Friend be cheering on Nick or Nigel in this evening’s debate?
Stephen Crabb
The hon. Gentleman will forgive me if I say that I will be cheering on neither Nick nor Nigel in this evening’s debate. I hear what he is saying. I, too, speak to a lot of farmers in west Wales and they tell me that they do not want to be seen as just reliant on handouts from the European Union. They want to be regarded as business men and women in their own right, so they support our position to reform the European Union and to become more competitive.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister should be aware that 150,000 jobs in Wales and 25,000 jobs in the Swansea bay city region depend on trade with Europe. Does he accept that firms such as Unilever, Nissan and others are saying that even talk of a referendum is undermining investment and jobs in Wales today, and that if we do in fact end up outside Europe following a referendum, they will withdraw jobs and investment from Wales and Britain? Will he therefore oppose such a referendum?
Stephen Crabb
The hon. Gentleman’s position is not correct and is not supported by the facts on the ground. He should not scaremonger and use old figures to suggest that businesses are scared to talk about reform and renegotiation. Investment is coming into the United Kingdom and into Wales. The prospects for the Welsh economy are very positive indeed.
Alun Cairns (Vale of Glamorgan) (Con)
6. What discussions he has had with Ministers of the Welsh Government on NHS waiting times in Wales.
The Secretary of State for Wales (Mr David Jones)
As we have heard this morning, care standards in Wales are a matter of general concern. Long waiting times are just one aspect of that. As it is a devolved matter, it is for the Welsh Government to act.
Alun Cairns
Nearly 10% of urgent cancer cases wait more than 62 days for treatment. The target has not been met since 2008. Some 57% of urgent ambulance calls arrive within eight minutes. The target has been met only once in 22 months. Some 33% of patients wait longer than eight weeks for diagnostic services. Does the Secretary of State agree that that is completely unacceptable? Will he take the matter up with the First Minister in Wales, with the support of the Secretary of State for Health, to ensure that my—
Mr Speaker
Order. The hon. Gentleman should resume his seat. He has to work out his questions in advance. That question was far too long. He really has to practise.
Mr David Hanson (Delyn) (Lab)
My constituents and the constituents of the Secretary of State go to the hospital in Gobowen in Shropshire, the Countess of Chester hospital in England, Clatterbridge hospital in Wirral and the Christie in Manchester for cancer services, and the Royal Liverpool university hospital for heart surgery. Will he guarantee that the changes to the health service in England, which are very damaging, will not increase Welsh waiting times?
Mr Jones
I fully agree with the right hon. Gentleman about the importance of those hospitals to Welsh patients. In England, the waiting time for treatment is 18 weeks. In Wales, it is 26 weeks. That is completely unacceptable. I hope that he agrees that there is no reason why his constituents or mine should be treated worse than patients from England.
Charlie Elphicke (Dover) (Con)
10. Does the Minister not think, as a basic matter of principle, that it is incredibly unfair that waiting times in so many areas are so much longer in Wales? All of us, as British MPs, have a duty to take this matter seriously, particularly the right hon. Member for Neath (Mr Hain), whose constituents are affected. I agree entirely. Waiting times are a matter of huge concern. In most cases, the Welsh NHS is not meeting its own waiting time target of 26 weeks, which is considerably longer than the 18-week target in England. Frankly, that is unacceptable. I hope that the Welsh Government are listening carefully to the points that are being expressed in this Question Time.
Nia Griffith (Llanelli) (Lab)
We have heard some strange statements today. On cancer waiting times, the Secretary of State must recognise that, with 92% of patients in Wales starting treatment within the 62-day target, Wales performs better than three quarters of the NHS areas in England. What does he think the priority should be for English MPs: scrutinising the NHS in their own area or making ill-informed comments about the NHS in Wales?
Mr Simon Burns (Chelmsford) (Con)
Has my right hon. Friend seen the written answer that I received two weeks ago about cancer waiting times in Wales, which shows that the number of patients fleeing Wales to get treatment in England has increased dramatically in the last 10 years? Does he agree that that is a damning indictment of the administration of the NHS in Wales, and that Nye Bevan must be turning in his grave?
Mr Jones
I agree entirely. Anybody with a reasonable mind would agree that those figures are entirely unacceptable. Again, I suggest to Opposition Members from Wales that they should have a discreet word with their colleagues in the Assembly to ensure that Welsh patients get the standard of health care that they deserve and need.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
7. What discussions he has had with Cabinet Office Ministers and the Electoral Commission on administrative management of the forthcoming elections in Wales to the European Parliament.
The Secretary of State for Wales (Mr David Jones)
Wales Office Ministers have discussed the administration of the forthcoming elections to the European Parliament with both the Electoral Commissioner for Wales, and the cities and constitution Minister, my right hon. Friend the Member for Tunbridge Wells (Greg Clark).
Jonathan Edwards
As the Secretary of State knows, the chief executive of Carmarthenshire county council is not at his desk because of a criminal investigation following a damning Wales Audit Office report into unlawful payments. However, he retains responsibility for the forthcoming European elections as local returning officer. Indeed, if memory serves me correctly, he was a deputy for the whole of Wales at the last European elections. Will the Secretary of State discuss urgently with the Cabinet Office the need for statutory protocol for removing electoral duties from public officials who are suspended from their everyday roles?
Mr Jones
As the hon. Gentleman says, an investigation is currently being conducted by the police. The Government’s priority is, of course, to ensure the smooth running of the European elections. The Cabinet Office is responsible for that and is keeping a close eye on the situation.
Chris Ruane (Vale of Clwyd) (Lab)
14. There are currently 6.5 million people missing from the electoral register in the UK, and in the dry run, matching Department for Work and Pensions databases to local election registers, where others have an 80% hit, there are wards in Aberystwyth where only 18% of people are registered on the data crossover. What will the Minister do about that?
Mr Jones
I am sure the hon. Gentleman would support the principle of individual electoral registration. The recent confirmation dry run matched 78% of electors across Great Britain, 79.9% across Wales, and in the hon. Gentleman’s constituency of the Vale of Clwyd it was 81.4%. I have faith in the process and I am sure that he should too. [Interruption.]
Mr Speaker
Order. There is far too much noise in the Chamber and it would be good if it would quieten down. I encourage the Secretary of State, whom I am sure wants his answers to be heard, perhaps to speak up a little.
Mr Speaker
The hon. Gentleman is always heard; we do not need any more volume from him.
Michael Fabricant (Lichfield) (Con)
8. What discussions he has had with the Secretary of State for Education and Ministers of the Welsh Government on facilitating access by primary and secondary school students in Wales to schools in border areas in England.
The Secretary of State for Wales (Mr David Jones)
Young people in border areas of Wales can apply to attend schools in England, provided they meet the admissions criteria. It is essential that all young people have access to the best possible education and training, regardless of where they live.
Michael Fabricant
We have already heard how the Welsh Labour Government have let people down with the health service, but they are also letting people down on education, with scores from the programme for international student assessment stating that education levels in Wales are lower than in rural areas of Romania. What can my right hon. Friend do to have any influence at all over the Welsh Government, to ensure that school children in Wales get as good an education as they do in England?
Mr Jones
My hon. Friend is entirely right to identify the PISA results, which have declined progressively over the past few years. Indeed, the First Minister acknowledged that he had taken his eye off the ball. We are concerned about that and hope the First Minister is too, and that he will address the situation as quickly as possible.
Paul Flynn (Newport West) (Lab)
9. What recent discussions he has had with the First Minister of Wales on maximising tourism opportunities in south-East Wales.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
The Secretary of State has had a number of discussions with the First Minister, in particular on the opportunities that hosting the NATO summit will bring.
Paul Flynn
Newport’s magnificent Tredegar House trebled its numbers of visitors last year, and visitors to the city’s Roman baths, amphitheatre and museum are at a record high. What will the Minister do to encourage more people to have the unique, enjoyable experience of a visit to Newport?
Stephen Crabb
My right hon. Friend the Prime Minister is clear that hosting the NATO summit is a huge opportunity to showcase the best of Wales, and particularly south-east Wales. I am delighted to tell the hon. Gentleman that my colleagues in the Wales Offices have recently visited both those tourist attractions and are well aware of the opportunities they afford for visitors to the summit.
Mr Speaker
Na h-Eileanan an Iar is some distance from south-east Wales, but let us hear Mr Angus Brendan MacNeil.
Mr MacNeil
Surely tourism in Wales would be helped by action on VAT, as in the Republic of Ireland, and that would also help my constituency of Na h-Eileanan an Iar.
Stephen Crabb
Visitor numbers to Wales increased strongly last year and they are increasing faster than for visitors to England and Scotland. There is no evidence to suggest that VAT rates are a deterrent for visitors to Wales.
Mr Speaker
The principals are present and correct and we can proceed with questions to the Prime Minister.
Rosie Cooper (West Lancashire) (Lab)
Q1. If he will list his official engagements for Wednesday 26 March.
The Prime Minister (Mr David Cameron)
This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House, I shall have further such meetings later today.
Rosie Cooper
What assurances can the Prime Minister give to residents in West Lancashire that localism will give them a fair chance against greed and profit when it comes to their wish to end hazardous waste dumping at Whitemoss landfill site? Given that there is no evidence of need and a promise that it would end in 1995, and that the community, including its MP, are saying “No more dumping” time and again, does the Prime Minister really believe in localism?
The Prime Minister
I do believe in localism. That is why we got rid of a lot of the regional spatial strategies and a lot of the regional organisations, and returned power to local government. We did a number of things that local councils had been asking for in terms of empowering them, not least giving them a general duty of competence so that they can act when they think it is necessary to act. I will look closely at the specific issue the hon. Lady raises and write to her.
Justin Tomlinson (North Swindon) (Con)
I know that my right hon. Friend will be as concerned as I am about potential job losses at Honda in my constituency, but will he work with me and my hon. Friend the Member for South Swindon (Mr Buckland) to help support those who are affected at this difficult time?
The Prime Minister
I completely understand my hon. Friend’s concern. We will be working with local partners to minimise the impact of the job losses. Honda has assured us that it is committed to the long-term success of the plant in Swindon, which I have visited—it is a remarkable plant—and the 3,000 people who work there. I know that Honda remains committed to the UK and committed to Honda. We will work with the local council and local people to ensure that Swindon continues to have a strong and successful economic future.
Edward Miliband (Doncaster North) (Lab)
This morning, we learned that the energy company, SSE, will be freezing its energy prices for 20 months. Would we be right to assume that the Prime Minister believes that the price freeze is unworkable, impossible to implement and probably a communist plot?
The Prime Minister
It is hugely welcome in our country that energy companies are cutting and freezing their bills. As ever with the right hon. Gentleman, he has failed to read the small print. This is what Scottish and Southern Energy says about why it has been able to cut bills in that way. It says today that “the decisions taken” by the Government
“to reduce the…costs of the ECO were a principal factor in SSE being able to make this price commitment”.
That is what is happening under this Government. What a contrast with the doubling of the gas bills and the 50% increase in electricity bills when Labour was in power.
Edward Miliband
So, over the past six months, we have obviously misunderstood the Prime Minister. He is the champion of the price freeze—that is what he wants us to understand. Week after week, he denounced Labour’s call for an energy price freeze to help families and business, but now—apparently—he supports the price freeze. Can he explain why a price freeze was wrong six months ago but the right thing to do today?
The Prime Minister
What we have done is reduce the costs of energy charges so that companies are able to cut their bills. Let me give the right hon. Gentleman the list of what has happened since I made the announcement about rolling back the costs of green charges—[Interruption.]
Mr Speaker
Order. We must be able to hear both the questions and the answers.
The Prime Minister
You are right, Mr Speaker. Opposition Members shout in support of the Leader of the Opposition in the Chamber and brief against him outside. That is what happens.
This is what has happened since I made that announcement. For dual-fuel users, British Gas has cut £50 off bills; Scottish Power £54 off bills; E.ON £50 off bills; EDF £65 off bills; and npower, Scottish Power and EDF have announced that prices will not go up further in 2014. May I therefore thank the right hon. Gentleman for the opportunity to demonstrate how that part of our long-term economic plan is as successful as all the other parts?
Edward Miliband
Once again, the Prime Minister shows how totally out of touch he is. The Office for Budget Responsibility itself says that energy prices are rising by more than double the rate of inflation. That is the reality. I am very interested in his position now on price freezes, because this morning the Energy Secretary said—[Hon. Members: “Weak.”] I will tell Government Members what is weak: not standing up to the energy companies. That is what they are not doing. The Energy Secretary, who I see over there, said this morning that he was calling on other suppliers to do the same and freeze their bills. Is it now the Prime Minister’s policy that we should freeze bills?
The Prime Minister
It is our policy that bills should be cut, and bills are being cut under this Government. That is what is happening. When we come to the small print, let us have a look at what Scottish and Southern said about the Labour policy. [Hon. Members: “Weak.”] I will tell hon. Members what is weak: weak is not having an economic policy; weak is not responding to the Budget; weak is having no long-term plan for Britain—that is what is weak. This is what Scottish and Southern says about Labour’s plans. It is worth listening to. It says that Labour policy
“does not appear to include a clear commitment or a long-term solution to reduce the costs of supplying electricity and gas…An externally-imposed 20-month price freeze would not reduce the costs of supplying energy.”
That is what Scottish and Southern says, and that is why, I assume, a Labour business supporter called John Mills said about Labour’s policy yesterday:
“I don’t think the Labour party would do that if it were in power”.
If Labour cannot convince its one business supporter, how on earth can it convince the country?
Edward Miliband
The right hon. Gentleman is not the Prime Minister at all; he is the PR man for the energy companies—that is what he is. Bills are rising and what is clear is that his argument against a freeze has been totally demolished today. A price freeze for households and businesses is feasible, workable and will happen under a Labour Government. All of this shows that he just does not get the cost of living crisis that is happening in this country. Will he confirm that the OBR itself shows that, over the course of this Parliament, living standards will be falling and that it is the first time that has happened since the war?
The Prime Minister
Is it not great that, after a week, we have finally got to the Budget? The right hon. Gentleman has finally got something to say about the Budget. If he is concerned about energy prices, he might want to explain why he voted against a Budget that has a £7 billion cut in energy prices for businesses and consumers up and down this country. Why did the Opposition vote against that? If he is concerned about the cost of living, why did they vote against a personal allowance of £10,500 for every single worker in our country? If they are concerned about the cost of living, why did they vote against giving pensioners the right to spend their own money as they choose? If they care about the cost of living, why did they vote against abolishing the savings tax, paid for by the poorest people in our country? They do not have a clue about how to help working people, no clue about how to run the economy and no clue about the Budget.
Edward Miliband
Not for the first time, “Calm down, dear, calm down.” Or should I say, for the benefit of the Chancellor, “Eyes down, dear, eyes down”? The truth is that living standards are falling over this Parliament. The Prime Minister talks about what the Chancellor did on energy, but it is classic “Give with one hand and take with another.” He introduced a carbon price floor and now he wants credit for giving part of it back to families and businesses. Let us try the Prime Minister again. Will he confirm that page 87 of the OBR document says that living standards are falling over this Parliament—yes or no?
The Prime Minister
The figures that the right hon. Gentleman quotes time and again at the Dispatch Box—[Interruption.]
The Prime Minister
Of course we were made poorer by the great recession over which the Opposition presided, but I am happy to compare our records on the cost of living any time. We are cutting income tax for 25 million people; they voted against it. We have taken 3.2 million people out of income tax altogether; they voted against it. We voted to freeze the council tax; they voted against it. We are freezing fuel duty; they voted against it. We are cutting spending so that we can cut taxes for hard-working people; they have voted against every single change. Their vote against the Budget last night will go down in the history of this Parliament as a massive own goal for Labour.
Edward Miliband
The Prime Minister will go down in history as the Prime Minister who cut people’s living standards over the course of this Parliament, and he cannot deny it. He cannot solve the cost of living crisis because he does not think there is one. He will not freeze energy bills because he thinks that that is nothing to do with the Government. The thing on which we can always rely with the Prime Minister is that he will always stand up for the wrong people.
The Prime Minister
What is happening under this Government is that inflation is falling, unemployment is coming down, 1.3 million more people are in work, and there are 400,000 more businesses in our country. We are helping the economy to recover from the ravages with which it was left by Labour. That is the truth. Everyone can see that we have a plan for a better future for our country, and everyone can see that the right hon. Gentleman is flailing around, a man with no plan and, increasingly, no future.
Paul Burstow (Sutton and Cheam) (LD)
Children with cancer are being denied new life-saving drugs because out-of-date rules governing clinical trials allow companies to exclude children, even when the drugs could treat childhood cancers. Will the Prime Minister meet me, and members of the Institute of Cancer Research, to discuss how we can get the rules changed through the European Commission so that families can have hope and we can get those treatments to children?
The Prime Minister
I am very happy to listen to the right hon. Gentleman and his suggestions. He and I strongly support the cancer drugs fund, which has made a huge difference in getting cancer drugs to people in our country, including children. I shall be very happy to consider the suggestion that he has made.
Stephen Pound (Ealing North) (Lab)
Q2. A little calm, please.Beer and bingo may not exactly be the bread and circuses of our age, but, as leading lights of the coalition rush forward to express their love for them, will the Prime Minister dissociate himself from the snobbish and disdainful comments made by his party chairman?
The Prime Minister
I thank the hon. Gentleman for once again advertising the fact that this Government are cutting the tax on bingo operators, which is quite right, because their industry was decimated by Labour. I also thank him for drawing attention to the Chancellor’s approach of cutting beer duty because we want to back responsible drinkers, and because we back the pub trade. I am sure that the right hon. Member for Doncaster North (Edward Miliband) enjoys a game of bingo: it is the only time he ever gets close to No. 10. [Laughter.]
Stuart Andrew (Pudsey) (Con)
Yesterday the all-party parliamentary group on mental health heard a very powerful and moving account of the effects of post-traumatic stress disorder. Will my right hon. Friend join me in paying tribute to Simon and Louisa, who completed an epic run from Leeds to Parliament yesterday to promote their organisation which seeks greater research into the condition? Is it not the case that, as well as being one of the hidden costs of armed conflict, post-traumatic stress disorder affects thousands of people who have been victims of rape, sexual assault and other life-changing traumas?
The Prime Minister
I am happy to join my hon. Friend in paying tribute to those people, who achieved so much through their run and by raising and highlighting the importance of this issue. Organisations such as Combat Stress do an extraordinary job in our country. We must face up to the fact that because of the conflicts in Iraq and Afghanistan, there will be many more people suffering from post-traumatic stress disorder who will need our help and support not just this year and next year, but long into the future. That is why I think that the Chancellor’s decision to take the money from the LIBOR fines and use it to back military charities, including those that deal with this issue, is very far-sighted.
Derek Twigg (Halton) (Lab)
Q3. The 25th anniversary of the Hillsborough disaster is less than three weeks away and the fresh inquests are due to start. Does the Prime Minister agree that it is a scandal that some police officers who were on duty on the day of the disaster are refusing to co-operate with the investigation, and may I ask what he will do to stop such a situation happening again?
The Prime Minister
An important anniversary is coming up. As the hon. Gentleman knows, the Independent Police Complaints Commission is investigating all these complaints, and in addition the families can make complaints to the Investigatory Powers Tribunal. The Home Secretary has written to all police forces asking them to ensure they make available all the information they hold on Hillsborough, and in my view that should include police officers co-operating with this vital inquiry.
Duncan Hames (Chippenham) (LD)
After Dunlop’s departure, does the Prime Minister agree that we should assist investment in the most energy-efficient plants in order to ensure a competitive and sustainable future for tyre manufacturers committed to keeping jobs in Britain?
The Prime Minister
We should certainly do that. We have seen a huge recovery in our automotive industry. Obviously, Dunlop’s decision is disappointing, but we have some huge success stories in component supplies and manufacture for the automotive industry. The programme in the Budget for helping energy-intensive industries will clearly help some of the companies involved in this industry, but the broader help—the £7 billion I referred to earlier—will help all businesses, including those in automotive supply.
Jenny Chapman (Darlington) (Lab)
Q4. A month ago I asked the Prime Minister about ambulance response times and he read an answer from his folder that did not answer the question at all. Since then, an elderly Darlington woman was left for more than four hours vomiting blood before an ambulance arrived. This time, please may I not have a prepared answer; can we please have some action?
The Prime Minister
I am very happy to look at the case the hon. Lady mentions. She says she does not want that, but I think that is the right thing to do: to look at this individual case. In all our ambulance areas we have waiting time targets that ambulances are meant to meet in response times, and I am very happy to look to see what happened in this case and whether lessons can be learned for the future.
Mr Graham Brady (Altrincham and Sale West) (Con)
Q5. With consensus breaking out in support of Budget measures to help those providing for themselves, will my right hon. Friend join me in seeking a new consensus against imposing penal taxes on houses that have risen in value but whose owners may well be retired on modest incomes?
The Prime Minister
We want a fair tax system, and under this Government the rich have paid more in tax—specifically more in income tax—than they ever did in any year under Labour. We have made sure we have raised taxes fairly, not least through stamp duty, but we do not support a tax on the family home; we do not think that is the right step forward and we will fight it very vigorously.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Q6. Seventy per cent. of stay-at-home mums say going back to work just would not add up because rising child care costs would leave them worse off. With maternal employment rates going down on the Prime Minister’s watch, why is he doing nothing before the general election to help with rising child care costs?
The Prime Minister
We are helping families with child care, not least by giving 15 hours—[Interruption.] That is happening before the election; it has happened under this Government in this Parliament—15 hours of free nursery care for three-year-olds and four-year-olds. [Interruption.] Opposition Members say it is not enough; it is more than Labour ever provided. [Interruption.] It is good to see the shadow Chancellor gesticulating in favour of his leader now; he will be outside in a minute briefing against him.
Mr James Gray (North Wiltshire) (Con)
The whole world has watched with grave concern events in Crimea and the massing of Russian troops on the eastern border of Ukraine. Coming on top of other instability in the world—in Syria, north Africa, the Central African Republic, Venezuela and elsewhere—is it not time that the Prime Minister re-examined the national security strategy and maybe, just maybe, thought about revising some of the recent deep and damaging defence cuts?
The Prime Minister
We will review the national security strategy on the four-year rolling basis that we established it—that is the right thing to do. On what we have done on defence spending, we still have a top five defence budget of any country in the world; we have removed the £38 billion black hole that we inherited; and we have set out spending of £160 billion over the next decade on defence equipment. But we would not be able to get that modern defence equipment—the things that modern defence forces need—if we had not taken difficult and long-term decisions at the start of this Parliament.
Andy McDonald (Middlesbrough) (Lab)
Q7. More than 80% of spending on transport infra-structure will be in London and the south-east—nearly £5,000 per head there compared with less than £250 per person in the north-east. That gross disparity does nothing to help constituencies such as Middlesbrough pursue their ambitions for growth. Should not such investment be more equitably distributed across all the regions?
The Prime Minister
This Government have spent £8 billion on transport in the north of England in the first two years of this Parliament, including: the modernisation of the Tyne and Wear metro; the new Tyne crossing; £380 million to upgrade the A1 from Dishforth to Barton; and we have committed to feasibility studies to improve the A1 north of Newcastle and between Newcastle and Gateshead. All those proposals were brought forward under this Government. We are rebalancing our economy, we are investing in infrastructure and we are making sure that the north of England gets its fair share.
Mel Stride (Central Devon) (Con)
Q8. Unemployment in my constituency has fallen by more than 20% in the past 12 months and with inflation recently falling, too, that is providing welcome upward pressure on living standards. Does my right hon. Friend therefore agree that we should take no lessons from the persistent negativity of the Labour party talking our country down, and that we should stick to our long-term economic plan?
The Prime Minister
An absolutely key part of our long-term economic plan is helping business to create the jobs that our country needs. We have got 1.3 million more people in work, and 1.7 million more private sector jobs than in 2010. So we are seeing a rebalancing of our economy. What that means for people is the safety and security of having a pay packet at the end of the week so they can support their families. That is what is changing in our country and that is why we will stick to our long-term economic plan.
Mrs Mary Glindon (North Tyneside) (Lab)
Q9. Despite what the Government have said about cutting energy costs, 71% of the people in North Tyneside I surveyed are still worried about their bills and want a full energy bill price freeze now. Will the Prime Minister listen to the people of North Tyneside and meet that demand?
The Prime Minister
The most important thing we can do is to help the energy companies reduce bills by rolling back the costs of these green levies and charges. Only since we have done that have we seen energy company after energy company reduce the costs of people’s bills. We also want to see a more competitive market and to see more players in this market. These are all things we are having to correct from the disastrous stewardship of the energy Department when the right hon. Member for Doncaster North (Edward Miliband) was in charge.
Mr John Baron (Basildon and Billericay) (Con)
Q10. Each year, thousands of lives are needlessly lost in this country because people’s cancers are diagnosed far too late. The all-party group on cancer and the wider cancer community have successfully lobbied the Government to make sure that the local and national NHS are measured by their one-year survival rates in order to encourage clinical commissioning groups to introduce initiatives to promote early diagnosis—cancer’s magic key. The Government deserve great credit for listening, but twice now, and at late notice, the publication of the one-year figures has been postponed. Will the Prime Minister do what he can to ensure that we meet the next deadline?
The Prime Minister
On the specific point that my hon. Friend raises, yes we will publish those figures—they are important figures and they should be published in June. What we are doing on cancer is backing the NHS with extra money—that is important; we have the cancer drugs fund, which I spoke about earlier and which has helped more than 44,000 people since this Government came to office. Of course, no cancer drugs fund is made available for people in Wales, but it is here in England, and we are spending £750 million on cancer services. But he is absolutely right about early diagnosis, which is why it is really important to make sure that we are doing everything with our GPs to diagnose and recognise cancer earlier.
Mr Nigel Dodds (Belfast North) (DUP)
The Prime Minister, and indeed the whole House, will be well aware of the contribution to the immense suffering of thousands of innocent victims across the United Kingdom made by the Gaddafi regime’s state sponsorship of IRA terrorism and the supply of arms and Semtex over many years to republican groups. Does he agree with what he previously said: the issue of compensation from Libya remains a priority for this Government? Will he agree to meet me to review the case and to discuss what further progress might be made?
The Prime Minister
I am happy to repeat what I said earlier. The Libyan authorities are in no doubt of the importance that we attach to their engaging properly with UK victims seeking redress. I raised it most recently with the Libyan Prime Minister last September. Of course the country faces huge challenges, which makes it difficult to make progress on this issue, but I am committed to doing that, and I am happy to meet the right hon. Gentleman.
Mr David Burrowes (Enfield, Southgate) (Con)
Q11. Does the Prime Minister welcome the change from the previous Labour Government, who talked loosely about British jobs for British workers but who saw 90% of new jobs going to foreign nationals? This Government let the success of their long-term economic plan do the talking, with nearly 90% of new jobs going to British workers last year.
The Prime Minister
My hon. Friend is absolutely right. Last year, employment in our country went up by 425,000—that is 425,000 more families with a breadwinner earning money for that family’s security—and 87% of those jobs went to British nationals. There is much more we need to do. We are aiming for 2 million apprenticeships in this Parliament. We have had excellent announcements this week, with Marston’s creating 3,000 jobs, Siemens creating 1,000 jobs in Hull and Barratt Homes creating 3,000 jobs in housing. We want to ensure that young people are available and trained for those jobs, which means improving our schools and our skills and investing in apprenticeships.
Angela Smith (Penistone and Stocksbridge) (Lab)
Westminster is awash with the rumour that the Government are considering an amendment to the Hunting Act 2004. Will the Prime Minister take this opportunity to quash that rumour by confirming his commitment to the coalition agreement, which allows only for a free vote on the repeal of the legislation?
The Prime Minister
There are always lots of rumours going around Westminster, and it is a good moment to talk about them. The hon. Lady will know, as I have said it before at the Dispatch Box, that proposals were made on a cross-party basis to the Environment Secretary about an amendment to the Hunting Act that would help in particular upland farmers deal with the problem of fox predation of their lands. That letter has been received and is being considered, but I regret to say that I do not think there will be Government agreement to go forward.
Mr Speaker
Order. Members are in a state of high excitement. One hopes that they are in a state of high excitement to hear the hon. Gentleman.
Mr Robertson
I thank the Prime Minister for visiting my constituency of Tewkesbury during the recent floods. We met in a village called Longford, which floods badly, yet there are plans to build 3,500 houses in that very area. Will the Prime Minister consider strengthening the planning guidance that he gives on flooding? Will he give stronger guidance to the Environment Agency, because there is a big difference, I am afraid, between rhetoric and what is happening in reality?
The Prime Minister
I know that my hon. Friend’s constituency has suffered repeatedly from flooding, and I have visited it twice in recent years to discuss it with him and with local people and businesses. Let me make two points. As he knows, any future developments have to comply with the national planning policy, which makes it clear that inappropriate development in areas at risk of flooding should be avoided. Secondly, and more importantly, in 95% of cases where the Environment Agency objects to planning on flood-risk grounds, the final decision is in line with agency advice.
Clive Efford (Eltham) (Lab)
Q13. When bankers’ salaries have gone up by five times the rate of ordinary workers’ salaries and the top 100 chief executive officers are earning 133 times more than the average worker in their companies, is it not right that those on the highest incomes contribute the most through tax? With that in mind, will the Prime Minister rule out any consideration of a further cut in the highest rate of tax for the richest 1%?
The Prime Minister
We have said that that is not our priority, but I agree with the hon. Gentleman that the richest should be paying more in income tax and making a bigger contribution. Under this Government, that is exactly what is happening. In a way, that is what is interesting about the Opposition’s argument. They cannot talk about jobs because there are more of them. They cannot talk about inflation because it has come down, and they cannot talk about the deficit because we are cutting it. They have one argument left, which is about fairness. If they look at the figures, they will see that inequality is at its lowest level since 1986: 1 million fewer people are in relative poverty and half a million fewer children are in child poverty than when Opposition Members were in the Cabinet. The facts show that the Government are not only delivering recovery but delivering it fairly, too.
Mr Adam Holloway (Gravesham) (Con)
Q14. I know that the Prime Minister is acutely aware that we are coming up to the 30th anniversary of the appalling carnage at the Golden Temple at Amritsar. What more can be done at last to bring someone to justice for the appalling events that followed across India?
The Prime Minister
My hon. Friend is right that what happened at Amritsar 30 years ago led to a tragic loss of life. It remains a deep source of pain to Sikhs everywhere and a stain on the post-independence history of India. We cannot interfere in the Indian justice system, nor should we. The most important thing we can do in this country is celebrate the immense contribution that British Sikhs make to our country, to our armed forces, to our culture and to our business life and celebrate what they do for this country.
Mr David Winnick (Walsall North) (Lab)
As the Prime Minister is so keen on boasting, is he proud of the fact that many elderly people in need are no longer able to get essential assistance because of the policies being pursued by this Government? Why is it that a Cabinet made up of so many multi-millionaires is so indifferent to the needs of the most vulnerable in our society?
The Prime Minister
I remember sitting on that side of the House when Labour gave pensioners a 75p increase. Do not think that we have forgotten about that. Do not think that we have forgotten about the abolition of the 10p income tax, either. This Government have taken 3 million of the poorest people out of tax and pensions have gone up by £15 a week. We are putting money into the social care system, because we have protected the national health service. That record compares very favourably with that of the Opposition.
Karen Lumley (Redditch) (Con)
Q15. In the week of my 50th birthday and the month of Redditch’s 50th anniversary as a new town, will the Prime Minister join me in congratulating Ken Williams, the head of the Kingfisher centre, for helping me to organise the anniversary as well as my first apprenticeship fair, from which we will get more apprenticeships on top of the 3,000 we have had since this Government came to power?
The Prime Minister
First, let me very publicly wish my hon. Friend a very happy 50th birthday and, at the same time, wish everyone in Redditch a very happy 50th anniversary and thank them for the kind present that she gave me of a Monopoly set with Redditch as its basis. That was a very kind gift. I do not think I have yet put it in the Register of Members’ Financial Interests, so I had better put that right after this exchange. My hon. Friend is absolutely right to be pushing apprenticeship fairs and job fairs. We are aiming for 2 million apprenticeships in this Parliament and we have 1.6 million already trained. That is one of the most important things we can do to provide a strong and secure future for our country.
European Council and Nuclear Security Summit
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
With permission, Mr Speaker, I should like to make a statement on last week’s European Council and this week’s summit in The Hague, which included the first meeting of G7 leaders—without Russia—in almost two decades.
Before I turn to the subject of Ukraine, let me briefly update the House on discussions on the economy, on energy and climate change, on the situation in Sri Lanka and on efforts to combat nuclear terrorism.
First, our long-term economic plan is supporting the growth of a new trend, reshoring, in which jobs are starting to come back to the UK. A recent report from EEF, the manufacturers’ organisation, found that one in six firms had brought all or part of their production to UK suppliers over the past three years. That reshoring of jobs is vital because it means that more of the benefits of globalisation can be felt by the British people, so, with the support of the CBI and Business Europe, I argued at the European Council that we should do more to develop reshoring in Britain and across Europe. The Council agreed to encourage that by doing more to cut red tape, attract investment, stimulate innovation and pioneer more work on reducing energy costs, including shale gas.
Secondly, businesses need affordable energy prices to keep pace with their competitors, so we agreed to accelerate efforts to complete the internal energy market and we agreed to improve the energy flow across the continent with more interconnections. On climate change, we want the EU to play a strong leadership role in efforts to secure a global climate deal next year in Paris. That means swift agreement on a target for reducing greenhouse gas emissions in the European Union, and I fully support the 40% target proposed. At the European Council meeting we did not reach full agreement in the EU and further attempts will be made on that later in the year.
Thirdly, on reconciliation in Sri Lanka, President Rajapaksa has failed to address the issue of the past properly, so in the coming hours the United Nations will vote on a UK-sponsored resolution for an international and independent investigation into alleged war crimes. At the Council, I secured the full backing of all EU member states for this approach and it is reflected in the conclusions of the Council. At The Hague I urged leaders from countries as diverse as South Korea, Kazakhstan, Gabon and Japan to support this crucial resolution.
On combating nuclear terrorism, which was the subject of the summit in The Hague, the meeting reaffirmed our determination to push through reforms of global security systems to ensure that vulnerable nuclear material does not fall into the wrong hands. This initiative, launched by President Obama back in 2010, has led to a remarkable amount of nuclear material being secured and reduced across the world, which should be commended.
On Russia’s actions in Ukraine, I had four clear objectives at these meetings: to secure an increase in the number of people subject to travel bans and asset freezes; to agree specific measures in response to what has happened in Crimea; to develop more clarity on what would happen if Russia were to take further steps to destabilise the situation in Ukraine; and to join efforts to build support for a democratic, successful and independent Ukraine. I want to say a word about each.
First, as I made clear in this House two weeks ago, if Russia did not engage in dialogue with the Ukrainian Government, or if those talks did not start producing results, there must be clear consequences. As a result, travel bans and asset freezes have been imposed, and last week the European Council agreed to extend these measures to another 12 individuals, bringing the total to 33—broadly the same number as has been imposed in the US. We have cancelled the EU-Russia summit, agreed not to hold bilateral summits, and decided to block Russian membership of the OECD and the International Energy Agency. In The Hague, G7 leaders agreed that there would be no G8 summit in Sochi and no further participation in any G8 activities until Russia changed course. We agreed there would instead be a G7 meeting in Brussels in place of the Sochi summit on the same day.
I also pushed hard on the need to reduce Europe’s dependency on energy from Russia. The G7 agreed that energy Ministers would meet ahead of the Brussels summit, and the European Council tasked the Commission to produce a comprehensive plan for reducing Europe’s dependency on Russia by June. This work is long term but vital. It requires new gas pipelines, new liquefied natural gas terminals, more shale gas, more sources from outside Russia and greater connectivity. Above all, it requires political will and I am determined that, although the UK has almost no reliance on Russian gas, we should play our part in this important work.
Secondly, it was important to take specific measures in response to what has happened in Crimea. This was a sham and illegal referendum conducted at the barrel of a Kalashnikov. Both the European Council and the G7 leaders made very strong statements condemning the illegal referendum and condemning Russia’s illegal attempt to annex Crimea in contravention of international law and specific international obligations. Both meetings were clear: the international community will not recognise either. The European Council also agreed to implement economic, trade and financial restrictions on occupied Crimea, accepting Crimean goods only if they came from Ukraine, not Russia.
Thirdly, both the G7 and the European Council sent a very clear message to President Putin that it would be totally unacceptable to go further into Ukraine. The international community remains ready to intensify sanctions if Russia continues to escalate this situation, and I pushed hard at both meetings to secure greater clarity on what this should mean. The G7 agreed that this could include co-ordinated sectoral sanctions that would have an increasingly significant impact on the Russian economy; and for the first time, the EU Council tasked the European Commission to prepare measures that would have far-reaching economic consequences. Russia has a clear choice to make. It does not have to continue on this path. Diplomatic avenues remain open—and we encourage the Russian Government to take them.
Finally, both meetings reaffirmed the strength and breadth of international support for the Ukrainian Government and their people. It is clear what needs to happen. We need a broad and generous International Monetary Fund package of financial assistance to help the Ukrainian Government stabilise and repair their economy. We need a Ukrainian Government who reach out to the regions and respect the rights of Russian-speaking minorities. We need an association agreement between the EU and Ukraine; that is now signed, but it needs to be backed by reduced tariffs on Ukrainian goods. We need international support for free elections, which should enable all Ukrainians to choose their leaders fairly. Britain will support all of these things.
Russia’s violation of international law is a challenge to the rule of law around the world, and should be a concern for all nations. We have to be clear how unacceptable it is, and to see through these economic sanctions and consequences. Otherwise, we will face similar situations in similar countries with a similar sort of unacceptable behaviour. Britain must continue to play its part in standing up to Russia’s actions—pressing for Russia to change course, and helping the Ukrainian people in their hour of need. I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
I start by welcoming the Prime Minister’s statement. I want to start where he did, on the formal substance of the EU summit and its conclusions.
We welcome the steps that were agreed in efforts to complete the internal energy market, to improve the energy flow across the continent, to strengthen EU tax rules on the exchange of information, and on nuclear proliferation. On climate change, I agree with the Prime Minister on the importance of the EU reaching agreement, if possible in advance of the UN climate leaders summit in September. The EU has shown leadership on this issue before. Some countries in the EU have doubts about the strength of the 40% target, but it is a target that we support and I know he supports, and he will have our support in pushing for maximum ambition on this issue.
On discussions regarding the vote at the UN Human Rights Council on Sri Lanka today, I am grateful to the Prime Minister for setting out the actions that have been taken. In the event of the UN resolution being passed, which is what we all hope for, will he say what he sees as the next steps to ensure that the inquiry we all want to see actually happens?
Let me turn to the main substance of the summit—Ukraine. The House is united in outrage at Russia’s annexation of Crimea. It is an action in direct violation of Ukraine’s territorial integrity and it is a clear breach of international law. Russia’s actions have created the most significant security threat on the European continent in decades. I believe that Members across the House will want to praise the measured response shown so far by the Ukrainian authorities in response to this terrible act of aggression. I also want to express support for the shared goals set out at last week’s EU Council meeting—of both isolating Russia for its actions and reassuring our allies and partners in the region.
I will take the specific outcomes of the summit in turn. First, I welcome the signing of the political chapters of the association agreement between the EU and the Ukrainian Government. It was that strengthening of co-operation with the EU, spurned by the former President, that partly sparked the current crisis. It is right that the EU should continue to make it clear that these agreements are not a zero-sum game between the EU and Russia—but it is also right that the EU now pushes ahead with similar pacts for Moldova and Georgia.
Secondly, it is vital, as the Prime Minister acknowledged, that the international community imposes real costs on President Putin and his key supporters. For that reason, we welcome the agreement at the EU summit on extending the list of individuals targeted by visa bans and asset freezes. But unlike the Washington list, the EU list avoided placing sanctions on certain senior Kremlin figures. Will the Prime Minister explain the reasons behind that, and say whether any specific proposals were put forward for consideration before the final agreement on the publication of the EU list?
Thirdly, given that the US has added sanctions on the Bank Rossiya and indicated that the economic sectors may be targeted as part of its approach, the Prime Minister said we would have a sectoral approach on these matters. Will he say what sectors are being looked at as part of the EU discussions?
Turning to the meeting of the G7 and the EU, we welcome the decision taken by members of the G7 to suspend the 16-year collaboration with Russia. It is absolutely right, not only that the Sochi summit does not go ahead, but that no future summits can be envisaged while the Russian action is outstanding. I note also, though, that this week the Russian Foreign Minister held talks with his Ukrainian counterpart for the first time since Russia’s move into Crimea. May I ask the Prime Minister what steps are being taken to ensure that such dialogue continues between Ukraine and Russia in the weeks ahead?
Finally, given that the Prime Minister said this week that Britain and its NATO allies would help to bolster the defences of the alliance’s Baltic members, which have Russian minorities and will be feeling particularly vulnerable at this time, will he tell the House what the nature of any such UK contribution would be?
The actions of the whole international community should be designed to strengthen Ukraine’s sovereignty and democratic transition, to impose real costs on the Government of President Putin, and to bring all sides together in a meaningful dialogue to de-escalate the situation and find a political solution. As we have said throughout this crisis, in taking this action, the Prime Minister will have our full support.
The Prime Minister
I thank the Leader of the Opposition for his response and for the points that he made in support of the approach that we are taking. Let me try to answer every point in turn.
On the Council communiqué, the right hon. Gentleman is right to mention the advances on tax transparency. This has been hard going, but there was a real breakthrough with Luxembourg and Austria now signing up to the approach. It means we have to put pressure on Switzerland to make sure it does that too, but we have made real breakthroughs in realising proper exchange of tax information, and I want to thank Austrian and Luxembourg colleagues for doing that.
On climate change, we agree that we need an agreement for the 40% reduction in carbon emissions. I think it will be achieved later in the year. We have to engage with the Polish Government and others. They do have an understandable concern, which is that if we are trying to control carbon and restrict supplies of Russian gas, that could lead to some countries burning coal. That does not help on the climate change front, and we need to work with them to find a solution.
On Sri Lanka, I am very grateful for the support we have for this co-sponsored UK motion. We hope it will be carried. If it is, then it is mandated that the review has properly to go ahead.
On Ukraine, the right hon. Gentleman is completely right that we should not see this as a zero-sum game—either a Ukraine that leans to Russia, or a Ukraine that leans to Europe. We want Ukraine to be a bridge between the two. It should have a proper relationship with Russia, but also a growing relationship with Europe—if that is what its people want. He is right to say that we should push ahead with these agreements, not only with Ukraine, but with Moldova and Georgia. It would send a terrible message if, because of what Russia has done, we were to pull back from these agreements that we would otherwise be signing.
On the question about why the US is taking a slightly different approach to the EU in terms of the specific individuals targeted for asset freezes and travel bans, the approach we take in the EU is that the individual concerned should have a proper link with the action taken in Crimea. [Interruption.] The right hon. Gentleman asks why. I think it is because of the legal processes under which the EU has to act. There is a logic in saying that it is right to target those—including Russian MPs—who have played a role in this illegal act.
In terms of economic sectors and future sanctions were Putin to go further in Ukraine, because the EU talks about wide-ranging economic sectors, that would have to include areas such as energy, financial services, trade and arms. The breakthrough here was to get the Commission to start the work, because it is no good warning about economic sanctions if work is not under way to deliver what they should be. That was a real breakthrough at the meeting which Britain strongly supported.
The Russian Foreign Minister’s talks with the Ukrainian Foreign Minister are hugely welcome. I met Ban Ki-moon yesterday to encourage further such contacts and for the UN to do everything it can to bring together Ukrainian and Russian Ministers.
Finally, the right hon. Gentleman asked about NATO and what we were doing to help to provide certainty and security particularly to Baltic countries. We are increasing our help with their air policing and are making four aircraft available. We should do everything we can to reassure our friends and colleagues in Latvia, Lithuania and Estonia and in Poland that we really believe in their NATO membership and the guarantees that we have given to them, and that we will work together to secure the future of Europe, as we have in the past.
Sir Malcolm Rifkind (Kensington) (Con)
Does the Prime Minister agree that when the history of the Crimea crisis comes to be written, it will be found that there were no winners? President Putin has, of course, control of Crimea, but he has lost Ukraine and done much to unite the Ukrainian people. Will my right hon. Friend also accept that the international community—the United States and European countries—will not fare well in the judgment of history either? The response that we have made to the invasion of a European country by its neighbour and to the annexation of its territory in contrast to all its neighbour’s international legal obligations has resulted in a very timid and hesitant response, with no financial sanctions or sanctions that might influence future Russian behaviour. That surely is not the best way to deter future aggression.
The Prime Minister
My right hon. and learned Friend speaks with great force and a huge amount of wisdom on this issue, but I think it is too early for the history books to be written. What really matters is that the countries of the European Union, the United States and the international organisations, such as the UN, recognise that we need a long-term approach. When the history books are written, I hope they will show that Europe decided to become more energy independent, that the UN stood up for the importance of its charter and that Britain, America and our allies took a series of predictable and consistent steps to demonstrate to Russia that what she was doing was wrong. If we take a long-term approach, I think we will achieve an outcome that the history books might be kinder about.
Mr Jack Straw (Blackburn) (Lab)
I commend the Prime Minister and Foreign Secretary’s strategy. In the absence of sending gunboats, which I think few of us would recommend, a step-by-step, long-term approach is sensible. Ukraine is one of the very few countries in the world that voluntarily gave up nuclear weapons on its soil, and it did so in return for clear guarantees of its territorial integrity, including from Russia. Given the talks on nuclear security that he has been involved in, can he say what further steps need to be taken to ensure that Russia’s invasion of Crimea does not undermine the international strategy to reduce nuclear proliferation?
The Prime Minister
The right hon. Gentleman, who served as Foreign Secretary, makes a very good point. There was never an option of sending gunboats. There is not some military answer to this. The only approach is a considered, long-term, tough and predictable one so that Russia knows that if it goes further into eastern Ukraine there will be very significant economic consequences. He makes an important point about countries that have given up their nuclear weapons not fearing that they have made the wrong decision, because there were countries, such as Kazakhstan, represented at the conference in The Hague which made the point that they had taken those steps too. That only serves to underline the importance of taking a long-term and tough approach to Russia on this.
Sir Menzies Campbell (North East Fife) (LD)
Does my right hon. Friend agree that an unresolved question is whether the annexation of Crimea was opportunistic or part of a wider strategy? Against the possibility of the latter, is it not now time to reaffirm the transatlantic alliance, enhance defence and political co-operation in Europe and strengthen the capabilities of NATO?
The Prime Minister
My right hon. and learned Friend asks a very good question: whether it was opportunistic or part of a strategy. I think that one can argue that it is part of a pattern. If we look at Abkhazia, South Ossetia, Transnistria and other frozen conflicts, we see a pattern emerging. That reinforces the importance of not just the west—NATO, the EU and the US—but the UN and other countries recognising that if we reward that sort of aggression in this part of Europe, others in other parts of the world will draw lessons from that. With regard to strengthening NATO, we have the opportunity of the NATO conference in Wales this year to reaffirm and refresh NATO’s vows, and I expect there to be a good and strong conversation about how to ensure that it maintains its relevance in the modern age.
Mr Bob Ainsworth (Coventry North East) (Lab)
Does not the annexation of Crimea demonstrate the weakness of our strategic approach to the Putin regime over many years? I understand the need for short-term reactions and rhetoric, but surely the emphasis must now be on long-term measures, because the nature of the regime has been apparent for many years. Energy dependency, economic dependency and defence capability through NATO are where our emphasis needs to be with regard to this crisis.
The Prime Minister
The right hon. Gentleman makes some very good points. The UK is not reliant on Russia for energy; we use a very small supply of gas that comes from Russia. That contrasts hugely with some other European countries, many of which rely on Russia for 80% or more of their gas. I agree that we need a long-term approach, as I said in my statement and in answers to questions, but I take issue slightly with what he said, because I think that this Government, and indeed the previous Government, have tried to engage with Russia not on the basis of softening the real concerns we have—we did not water down the Litvinenko measures, for example—but by arguing very strongly about the importance of human rights, civil rights and democracy, and in meetings with President Putin I have raised things such as the importance of gay equality. So we engage, but in a hard-headed way. I do not think that that engagement was wrong, but clearly if Russia chooses to go down this path there will be big consequences for the way that relationship works in future.
Mr William Cash (Stone) (Con)
Will my right hon. Friend immediately ensure—this has not happened so far, either in this statement or in those made by the Foreign Secretary over the past few weeks—that the House, and indeed the European Scrutiny Committee, is given a full and formal report explaining the foreign security and defence implications for the United Kingdom of the whole of the association agreement between the EU and Ukraine, including the political chapters, and the implications of the Final Act endorsed by the presidency conclusions over the weekend, particularly given the crisis with Russia and the EU’s assertion that Ukraine still includes Crimea? What will the timetable and procedure be for parliamentary ratification of both, because it is understood that the political parts of the association agreement will take effect before parliamentary ratification?
The Prime Minister
The assurance I can give my hon. Friend is that the association agreement between the EU and Ukraine is a document that will be in the House of Commons Library, if it is not there already, and people can study it. It is important that we sign the agreement. Imagine if we got ourselves into a position in which we were prepared to sign it when Yanukovych was running Ukraine but, because of what has happened, decided as a country and as a European Union to walk away from it. That would have been an extraordinary decision, so I think it is right to sign the political chapter and then try to open Europe’s markets to help the people of Ukraine.
Mr Peter Hain (Neath) (Lab)
I agree with much of what the Prime Minister has said, but does he not agree that bluster and bombast by diplomats and military leaders is unlikely to resolve the problem? Instead, we need a negotiated solution in which Ukraine’s military neutrality is guaranteed by both Moscow and Washington and in which NATO does not engage in any further enlargement or encirclement of Russia’s border, in return for a clear guarantee that Russia will not conduct any more aggressive moves in Ukraine, Moldova or any of its other neighbours. It seems to me that unless we get a deal like that, we will not make much progress.
The Prime Minister
I certainly agree that we do not want bluster and bombast; we want a talked process. But we have to be clear that a really good offer of a talked process and a contact group was on the table and the Russians refused to engage with it. That is why I think that the action taken—limited to start with, but growing—is necessary to demonstrate that there are two paths Russia can take: one of increased international isolation, and one of talks. As for the extension of NATO, I hear what the right hon. Gentleman says, but there must be many people in Lithuania, Latvia and Estonia who, looking at their own country and the future they want, and because they have Russian minorities there, must feel glad that they have the protective cloak of NATO.
Sir Gerald Howarth (Aldershot) (Con)
By annexing Crimea, Russia stands in flagrant breach of its commitments under the Budapest agreement of 1994, to which the United Kingdom and the United States are signatories. I say to my right hon. Friend, whose leadership on this I salute—it is a shame that some other European countries have not been so resolute—that if we are to deter Russia from further breaches of that agreement, we need to do more than issue hollow threats of further measures that are as yet unspecified. At the risk of being accused of being slightly militaristic about this, I will add that this is what NATO is for. I suggest that we need to consider a NATO maritime force to deter Russia from going further and annexing eastern Ukraine, which would give it a land corridor to Crimea, and indeed to Odessa.
The Prime Minister
I thank my hon. Friend for what he says. There are two things we need to stress here. One is that NATO is a defensive alliance and we should now be working hard to reassure NATO members about our commitment to their collective security and all the things that means. That is very important, and President Obama was very clear about it at the G7 meeting. The second thing we need to do—here I part company a little bit with my hon. Friend—is to make clear what steps we would take if Russia were to go further in eastern Ukraine. Those would be economic steps, but do not let us doubt how strong and powerful they could be. My argument in the European Council has been, given we know that if Russia were to go into eastern Ukraine we would have to put in place pretty robust sanctions, that it is worth trying to set out some of the arguments in advance so that Russia can see the very serious consequence of these actions.
Frank Dobson (Holborn and St Pancras) (Lab)
Alexander Litvinenko died in University College hospital having been murdered by the agencies of the Russian Government. The British Government’s response to that so far has been to prevent the establishment of a proper inquest. Will the Prime Minister now demonstrate that he believes in the rule of law here and that that inquest should be started, and carried out thoroughly and completely?
The Prime Minister
The murder of Alexander Litvinenko was a dreadful act, it took place on British soil, and we should take the strongest possible exception to that. That is why the Litvinenko measures were put in place and remain in place. Yes, of course there needs to be a proper process of finding out what happened. My view has been that an inquest, properly constituted, should be able to deal with these issues, including dealing with sensitive information that will need to be taken into account, but I have always made it clear that if that is not possible and we need a different form of inquiry, that will have to take place instead.
Penny Mordaunt (Portsmouth North) (Con)
May I thank the Prime Minister and the Foreign Secretary for the role they have played in getting a united, strong response to Russia’s actions? Does he agree that it is vital that the situation on the ground in Crimea is properly monitored, and can he provide this House with reassurances that that can and will be done?
The Prime Minister
First of all, I thank my hon. Friend for what she says. It is sometimes difficult getting 28 countries to agree to the steps that are being taken, but that is what we have achieved at two European Council meetings so far, and these sets of measures have greater strength having all 28 countries behind them. Monitoring will be difficult in Crimea, specifically, because of what is happening right now. But what is even more important is to get the OSCE monitors into Ukraine, and we said very clearly at the European Council that if that is not possible, an EU monitoring mission should be sent instead. The importance of this cannot be overstated. It is very important that we reveal to the world what is actually happening in eastern Ukraine rather than simply believing the propaganda that the Russians are pumping out.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Some time ago, it might have seemed a remote possibility that article 5 obligations would be triggered, but given the events in Russia and Ukraine, it is now more likely than it has been for a very long time. Has the Prime Minister talked to other NATO members about a capacity review so that we can not only be sure of the political will to respond, should the need arise, but actually have the military capacity on the ground?
The Prime Minister
The hon. Lady makes an important point. Building the capabilities of NATO is going to be an important theme of the summit, but NATO is holding its normal regular meetings to discuss how to respond properly to what is happening, and we have added to that by the offer that we have made to the Baltic states.
Sir Richard Ottaway (Croydon South) (Con)
The Prime Minister has made it quite clear that he considers that Russia’s behaviour and breaches of international law are a wake-up call to the west, but is it not time to reassess whether our capacity matches our aims and objectives? For example, with difficult situations in Iran, Syria, north Africa and now Ukraine, does he think it right that the Foreign Office budget is less than we spend on the winter fuel allowance?
The Prime Minister
I think we do a huge amount with the Foreign Office budget, if you look at what my right hon. Friend the Secretary of State has been able to squeeze out of the Treasury. He is opening embassies across south-east Asia and parts of Africa. He has reopened the foreign language school of the Foreign Office, and that is making a real difference. It is the capacity of what we are able to do that matters most of all. In terms of the defence reviews and strategic reviews we have carried out, I repeat what I said at Prime Minister’s questions, which is that if we make difficult decisions—for instance, about the number of battle tanks in Europe and the moving of forces back from Germany to Britain—and we make some long-term savings, we can then invest in the sorts of capabilities that we will need. Of course, those capabilities, as my right hon. Friend the Minister for the Armed Forces reminds me, include a brand-new aircraft carrier coming very soon.
Mr Ben Bradshaw (Exeter) (Lab)
President Obama’s sanctions are so much stronger, and they target directly members of Putin’s corrupt inner circle who have dirty assets in London. Why is the Prime Minister so reluctant to do the same?
The Prime Minister
I am not reluctant to do the same at all. As I said, the EU process is about finding people who have a connection with the decision in Crimea and making sure they are properly targeted. I do not think it is fair to say that the Americans have taken tough actions and the Europeans have been slow to follow. One of the things we agreed at the European Council was specifically to target goods and services from occupied Crimea that cannot now be sold in Europe unless they go through Ukraine. That is a step that the Americans have not yet taken and a point I made at the G7.
Sir Edward Leigh (Gainsborough) (Con)
Contrary to what some have said, particularly my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), is the Prime Minister aware that many of us support his careful and proportionate response, and we think that he might be an arbiter, because there is no history between us and Russia in these matters? Is he aware that many of us welcome his remark today that Ukraine—Ukrayina, which means “borderland” in Russian—might become a bridge to peace, not a path to war, if we promote free trade for Ukraine both with the EU and with Russia?
The Prime Minister
I want us to promote free trade with Ukraine. That is why the association agreement—the political part of it that is signed—now needs to be accompanied by the European Parliament lifting tariffs so that we can see Ukrainian goods come into the EU. I repeat what I said: we would like Ukraine to be a bridge between the EU and Russia. We are not asking it to take sides—to choose one path or another path; it is the Ukrainian people who should determine the path that that country takes. It is obvious from the history, geography, economy and everything else that it needs to have a very strong relationship with Russia as well as with the European Union.
Mr Nigel Dodds (Belfast North) (DUP)
May I welcome the Prime Minister’s statement? These developments in Ukraine and Crimea certainly underline and emphasise the relevance of NATO in the modern era. I support what has been said about defence capacity. Will he undertake at the NATO summit later this year to raise with our NATO partners and Governments the need for everyone to step up to the plate in terms of their contributions towards defence capacity so that we can ensure that a proper and measured response is available if needed?
The Prime Minister
I agree with the right hon. Gentleman. This is always a difficult subject in NATO because people do not want to give up national capabilities and invest in capabilities that enhance NATO as a whole. There are some steps we need to take. We should continue to oppose the establishment of EU headquarters as unnecessary duplication. We should be working very closely with major allies that have similar capabilities, like the French, which is what the Lancaster House agreement is all about. We should encourage other countries to do what Britain is doing in matching our contribution of at least 2% of GDP and defence spending. If we did all those things, plus some more creative working together, we could enhance our capacities.
Dr Julian Lewis (New Forest East) (Con)
May I take it from what the Prime Minister has just said that there is then no question of the British defence budget dropping below 2% of GDP?
The Prime Minister
We currently meet the 2% threshold. These things are calculated by different countries in different ways, but I am confident that we will go on meeting our obligations to NATO.
Angus Robertson (Moray) (SNP)
Will the Prime Minister confirm that all the important security issues being discussed at the G7 and in the European Union are also being discussed within the context of NATO—an organisation currently going through a change in its general secretary? Will he confirm that he is supporting the candidacy of the excellent former Norwegian Prime Minister, Jens Stoltenberg?
The Prime Minister
I think Jens Stoltenberg would be an excellent candidate. I have worked very closely with him, and it is very good to have such a candidate who has filled such a high office in his own country. Obviously, if we want to be part of NATO, we have to remain part of the United Kingdom.
Rory Stewart (Penrith and The Border) (Con)
The lesson of Ukraine seems to be not just a wake-up call, but one in humility and a reminder of how unbelievably difficult it is to understand, predict or control events in places such as Ukraine, Syria, Libya, Afghanistan and Sahel simultaneously. The only solution has to be better deep country knowledge. Does the Prime Minister agree that we need to invest far more in the policy and linguistic capacity of the Foreign Office if we are to deal with this range of threats in the future?
The Prime Minister
My hon. Friend is completely right. The deep country knowledge that resides in our Foreign Office and diplomatic service is an immense asset for the Untied Kingdom. As Prime Minister, I see that all the time, particularly when dealing with some of the countries mentioned by hon. Friend that suddenly have a significance far beyond what they previously had. That is why we are opening embassies and investing in the language school and why the Foreign Office is a very important part of our soft power.
Mike Gapes (Ilford South) (Lab/Co-op)
NATO is based on extended deterrence. Russia has thousands of nuclear weapons and huge conventional forces. What discussions has the Prime Minister had with the United States and countries such as Poland and the Baltic states about reconsidering some of the approaches to ensure enhanced security for those countries that border Russia?
The Prime Minister
My right hon. Friend the Defence Secretary is in the United States at the moment discussing exactly those sorts of issues. As I have said, I think the most important thing is to reaffirm our NATO commitments, reassure our NATO allies and make sure that we are providing things such as aircraft to help with air patrols, so that the Russians can see that, on Latvia, Lithuania, Estonia and Poland, they are not just dealing with national forces, but international forces that are part of NATO. I do not agree with the suggestion that sending more troops to be stationed in Germany would somehow make an important statement. I think that the most important thing is the reassurance of NATO allies and a very clear message to Russia about the consequences of further action.
James Duddridge (Rochford and Southend East) (Con)
Does my right hon. Friend agree that there is a world of difference between the EU referendum the Conservative Government will offer in 2017 and the Crimean referendum, which has no basis in law and is totally illegitimate?
The Prime Minister
The important thing about using referendums in democratic states is to make sure that they are done on a legal, fair and constitutional basis. That is why I think the Scottish referendum is probably the best comparator to what is happening in Crimea, because there were proper discussions and negotiations between the Scottish Government and the Westminster Government and a proper agreement was put in place to have a fair, decisive and legal referendum. The referendum in Crimea was put together in a few weeks, at a time when there were troops all over Crimea and no proper electoral registration, and there was a complete mess as a result.
Keith Vaz (Leicester East) (Lab)
I warmly welcome the leadership role that the Prime Minister and our Government are playing in respect of Sri Lanka. It will be strongly welcomed by the thousands of Tamils settled in our country. The Prime Minister has himself travelled to Sri Lanka and heard the personal testimony of those who have been affected by the atrocities. The problem is that President Rajapaksa and his Government do not keep their word. If this resolution goes through and they do not co-operate, what will be the next step?
The Prime Minister
I thank the right hon. Gentleman for his remarks. I will never forget going to northern Sri Lanka and Jaffna and hearing some of that testimony for myself. The point is that we want to see proper reconciliation and a secure future for this extraordinary country, which could be a massive success story if it properly reconciles its past. The problem is that its Government are not doing enough to make that happen, and that is why the United Nations vote is so important. If the vote is positive, the human rights commissioner, Navi Pillay, can get on with setting up a proper inquiry. Far from hindering reconciliation in Sri Lanka, I think that will actually help.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I commend my right hon. Friend’s calm approach to this diplomatic crisis and his determination to achieve a diplomatic solution. Will he tell us what Russia actually thinks of the EU-Ukraine association agreement, particularly title II, article 7, which states:
“The Parties shall…promote gradual convergence in the area of foreign and security policy, including the Common Security and Defence Policy”?
The Prime Minister
I think the truth is—we saw this when the association agreement was first promoted and Yanukovych could not make up his mind about whether to sign it or not—that the Russians would rather that Ukraine does not sign the association agreement. I think it is safe to assume that, but we should be explaining to Russia that association agreements between countries that were part of the former Soviet Union and Europe are good for those countries and, over time, can be part of a better relationship between the EU and Russia. EU-Russia summits have been happening twice a year up until now, so those are good relations. Frankly, the idea that all our foreign polices should converge in terms of other issues—not least that which we are discussing today—is not something we should be frightened of.
Jeremy Corbyn (Islington North) (Lab)
I welcome the Prime Minister’s recognition of the problem of nuclear fissile material and the need for it to be controlled, but could he assure me that the Government will support the humanitarian effects of war conference that will be held in Austria later this year and that, at the non-proliferation treaty prep com at the end of April, the Government will resolutely work to get a middle east nuclear weapon free zone conference under way as a way of reducing and trying to prevent any nuclear proliferation in that region?
The Prime Minister
I can confirm that we will be working towards that goal and will continue the excellent work the Foreign Office does on it.
Martin Horwood (Cheltenham) (LD)
Freezing a few bank accounts may look pretty feeble, but a strategy to reduce eastern Europe’s energy dependence on Gazprom could send a much stronger and much more painful signal to Russia. In that context, are we committed not just to the military defence of Estonia, Latvia and Lithuania, but, more importantly, to their economic and political defence as well?
The Prime Minister
My hon. Friend is absolutely right. We will not reduce Europe’s energy dependence on Russia overnight. Hungary is more than 80% reliant on Russian gas and some of the Baltic states have an ever greater reliance on it. The truth is that this a long-term piece of work that involves building liquefied natural gas terminals, having reverse flows through pipelines, exploiting shale gas, including shale gas in south-eastern Europe and in the Baltic states, and building pipelines from Azerbaijan and other countries where gas can be supplied directly to Europe. All of those things will make a difference, and they will make a long-term difference to the relationship between the EU and Russia in a way that will make the EU more resilient. Although we are not reliant on Russian gas, we should be helping to push that process.
Chris Bryant (Rhondda) (Lab)
One of President Putin’s vanity projects—there are many and some of them are very expensive—is the economic forum he intends to hold from 22 to 24 May in St Petersburg. Will the Prime Minister make sure that no British officials are going to that event, and will he urge British business representatives not to attend, either?
The Prime Minister
The hon. Gentleman raises a good point. I have asked for a complete review of all the engagement between Britain and Russia in terms of trade promotion events, diplomatic events and summit-style events, including the sort of thing the hon. Gentleman has mentioned, to make sure that we are not engaging in a business-as-usual relationship. It is very important that the Russians understand that.
Henry Smith (Crawley) (Con)
As mainland Europe seeks to minimise its dependence on energy from Russia, will my right hon. Friend assure the House that there will not be any unintended consequences, such as a loss of British sovereignty over energy policy?
The Prime Minister
I do not believe that would be the case. I made sure that somewhere in the EU Council conclusions it says very clearly that the energy mix that a country pursues is a matter for the country concerned. Obviously, we did not spend as much time on energy and climate change policy as we might have expected to, but I am very clear that, while it is one thing to have an EU goal for another renewable target, that should not be translated into national goals. These are important matters of domestic sovereignty and it is in our national interest to work with other European countries to make the whole of the European continent less reliant on Russian gas and have a more flexible energy market.
John Woodcock (Barrow and Furness) (Lab/Co-op)
The nuclear security summit was timely, given the real fears of NATO members on Russian borders. The Prime Minister knows that we increase global threat when we show weakness in the face of resolve, so will he rule out any downgrading to a part-time UK deterrent in this uncertain environment?
The Prime Minister
I can certainly give the hon. Gentleman that assurance. It is very important that we maintain Britain’s nuclear deterrent as the ultimate insurance policy. All the information I have seen and all the arguments I have had lead me to believe that that means a submarine-based deterrent based on continuous at-sea presence.
Mr David Nuttall (Bury North) (Con)
Given that there is no realistic prospect of Russia returning Crimea to Ukraine, how long does my right hon. Friend envisage that the sanctions so far taken will continue, and is this the end of the G8?
The Prime Minister
Whether or not this is the end of the G8 depends on what Russia does next. The G7—the seven other countries of the G8—has now met and decided to have a G7 conference on the same day that the Sochi conference would have gone ahead. That does not signal the end of the G8 if Russia rapidly changes her approach.
On sanctions, we have to be clear that because of what has happened in Ukraine, it cannot be business as usual, and that those sanctions need to remain in place because what has happened is illegitimate. We want a talks process between Ukraine and Russia to begin in which these issues can be resolved, but there is no sign of that happening so far.
Ms Margaret Ritchie (South Down) (SDLP)
In view of the fact that there is a need to mitigate the impact of nuclear terrorism, will the Prime Minister now consider revisiting the policy of returning plutonium to Sellafield’s customers, such as Germany, Japan and Switzerland, in the light of President Obama’s declaration that nuclear terrorism is one of the greatest threats to international security?
The Prime Minister
We agree with President Obama about the importance of this issue. Indeed, when he set up the first nuclear security summit, British diplomats did an enormous amount to help to realise the progress that there has been over recent years. We have seen 12 countries worldwide removing all highly enriched uranium from their territory, and 15 metric tonnes of highly enriched uranium have been down-blended to low-enriched uranium since 2012, which is the equivalent to approximately 500 nuclear weapons, so good progress has been made. The test for what we do at Sellafield should be whether what we do will lead to a safer world in terms of nuclear resources, and we should not do things unless we have such assurances.
Crispin Blunt (Reigate) (Con)
I welcome the Prime Minister’s support for travel bans and asset seizures as a symbolic statement, and as a vehicle for inflicting personal pain on those responsible for policy who depart from international norms. As he has referenced his work in relation to gay people in Russia, would it not also be an appropriate response by the United Kingdom and European Union to impose travel bans on the dozen or so people responsible for the promotion of the Anti-Homosexuality Act in Uganda?
The Prime Minister
We should take a robust approach in defending and promoting the values we care about wherever we engage in the world. We should not hold back from making our views clear, whether about the law on homosexuality in Uganda or the issues in Russia. On the issue of travel bans and asset freezes, they are focused on Russia and Crimea, and that is the right way to do it.
Dr William McCrea (South Antrim) (DUP)
Does the Prime Minister believe that the actions taken or proposed by the EU and the US will actually stop Russian aggression? If they do not stop Russian aggression, has he a clear understanding of what steps should be taken next to stop Russia invading the rest of Ukraine?
The Prime Minister
The hon. Gentleman makes an important point. What has changed is that the European Council, which had previously resisted the idea of saying that we should prepare economic sanctions, has now agreed—all 28 countries, including those that have quite strong relations or energy relationships with Russia—to task the European Commission with preparing a range of economic sanctions to be put in place if Russia goes into eastern Ukraine. That is an important change. I am obviously at the front end of pushing harder for clarity, because the best way to ask Russia to take the right path is to be clear about the consequence of its taking the wrong path.
Mr Jonathan Djanogly (Huntingdon) (Con)
The Prime Minister’s friend Mrs Merkel and our nation’s very good friend Germany are dragging their feet against countering Russian aggression. I recognise the sterling work done by my right hon. Friend to date, but does he agree that history shows that short-term appeasement of dictators leads to longer-term problems, which means that we should insist on tougher sanctions on Russia and those close to Mr Putin right now?
The Prime Minister
I thank my hon. Friend for what he says. It is absolutely clear that if we do not take robust, predictable and firm long-term action, we will pay the consequences for many years to come, and not just in Europe, because other countries in the world would see the resolve of the international community and of the UN as weak and would draw the conclusions. We are working well with the Germans in trying to agree a common position. So far at European Councils, we have been able to agree some robust measures.
Toby Perkins (Chesterfield) (Lab)
People remember the Prime Minister, when he was Leader of the Opposition, taking a very robust line on Russian aggression in Georgia, and they may well contrast that with the position that the EU has taken against Russian aggression in Ukraine. What does he consider to be the reasons for the different approach? Is he happy with the overall approach taken by the EU at this moment, or does he think that it should be stronger?
The Prime Minister
I have taken a robust approach against this sort of Russian action whether, in opposition, with respect to Georgia or, in government, with respect to Ukraine. What has changed is that, while I have been in government, the EU has been able to go further, not least because Britain has pushed firmly, consistently and clearly for the sort of action that is required. When we look at Georgia, we see a good example in the two frozen conflict states of South Ossetia and Abkhazia. We did not take action against Russia with respect to those areas in the way that we have with respect to Crimea.
Mr Ben Wallace (Wyre and Preston North) (Con)
In the past, President Putin has used his intelligence services aggressively not only to undermine his neighbours, but to suppress dissent at home and abroad. In the light of the annexation of Crimea, will my right hon. Friend look again at whether our intelligence services have the correct level of funding and capabilities required to counter Mr Putin’s FSB and to make sure that we are in a good place to resist any of the so-called consequences, as Mr Putin and his Russian friends have described them, of European sanctions?
The Prime Minister
I strongly support the work of our intelligence services. Obviously, we never comment on the specifics of their work, but I can tell my hon. Friend that they got a good outcome from spending rounds and reviews of the national security strategy in terms of ensuring that we maintain and in certain ways enhance their capabilities.
Nia Griffith (Llanelli) (Lab)
I very much welcome the Prime Minister’s expression of full support for the 40% emissions reduction target, but notwithstanding the important issue of sovereignty, the UK should really lead by example. Why will he not endorse the target of decarbonising our UK energy sector by 2030, given that a commitment to that target would give industry the certainty that it needs to invest?
The Prime Minister
I am grateful to the hon. Lady for what she says about Britain’s support for the 40% carbon reduction target. It is important to get the EU to sign up to that deal, so that the EU can provide global leadership at the Paris summit.
The reason why I do not support total decarbonisation of our energy sector—[Interruption.]—our electricity sector is that until we can prove that carbon capture and storage is a workable and deliverable technology, setting such a target could mean the closure of every gas-fired power station in the country, which is not a sensible approach. I know the green movement pushes this, but, frankly, until we have worked out carbon capture and storage properly, it would not be a sensible thing to do.
George Freeman (Mid Norfolk) (Con)
I welcome my right hon. Friend’s statement and his continued diplomatic success at EU Councils, which suggests that his leadership of the EU reform agenda is strengthening the UK’s hand, while our reliance on economic sanctions makes that drive for a more competitive Europe all the more important. I also welcome the steps to reduce our energy dependence on Russia. Does he agree that UK geopolitical energy security should now be the No. 1 feature of our energy policy for the next Parliament?
The Prime Minister
My hon. Friend makes the important point that in looking at considerations within energy policy—security of supply, making sure that there is capacity, contributing to the decline in carbon emissions, and national security—there is no doubt that the national security part of the picture for Britain and for Europe has become a much more pressing issue. We have good, diverse supplies of electricity; we are reinvesting in nuclear; we have the world’s leading offshore wind industry, which I saw for myself in Hull yesterday; but we obviously need to help Europe to diversify away from Russian gas, and we should recognise our strategic interests in helping it to do just that.
Mr Jamie Reed (Copeland) (Lab)
I welcome the Prime Minister’s statement and the answer that he gave earlier that related to my constituency. Away from diplomatic processes and soft power, our efforts on nuclear security must be underpinned by an effective plutonium disposition strategy. We have the potential to lead the world in that regard. To that end, will the Prime Minister commit to funding fully and commissioning the National Nuclear Laboratory, and will he commit to a timeline so that the plutonium that is stored in my constituency, which I believe is the biggest stockpile in the world, can be utilised as nuclear fuel, thereby helping us to meet our non-proliferation objectives, secure our energy supplies and fight climate change?
The Prime Minister
What I say to the hon. Gentleman, who has an important constituency interest in this matter, is that the National Security Council has met specifically to consider how to make progress on Britain’s plutonium supplies and the work that we want to see on energy generation. Perhaps I could write to him to update him on that work and on the decisions that we are taking.
Dr Phillip Lee (Bracknell) (Con)
In light of the recent events in Ukraine, the ongoing instability in the middle east, the significant energy price differential between the US and Europe, and the broad analysis of the latest “World Energy Outlook”, does the Prime Minister agree that one of our strategic challenges is to develop a coherent UK energy policy that concentrates primarily on how we use energy, and not on the generation of energy? Put simply, energy price is linked directly to GDP. If we use less energy, it means smaller bills for businesses and domestic users, and less dependence on the increasingly unstable wider world.
The Prime Minister
Where I absolutely agree with my hon. Friend is that we need a strategy that focuses on how we use energy, so that we have greater energy efficiency. We should have smarter grids and smart meters to ensure that households and businesses do not waste energy. We are making big technological breakthroughs on that. However, it is important that we have a diverse range of supplies, so the generation of electricity does matter. We should not be too reliant on any one fuel or any one part of the world. That is why the capacity mechanism for gas, the nuclear refreshment and renewables are important.
Ian Austin (Dudley North) (Lab)
The Prime Minister threatens tougher measures if the Russians go into eastern Ukraine. Many of us think that those tougher measures should be introduced right now. Will he look again at targeting Putin’s inner circle? What consideration has he given to freezing the assets of and denying visas to members of the Duma who voted for military action in Ukraine? What consideration has been given to seizing the UK assets of state-owned Russian companies and the Russian central bank?
The Prime Minister
It is easier and better to do that through the European Union, with all 28 countries deciding who to designate, whose assets to freeze and whose travel to ban. I have tried to explain that the process for doing that focuses on the people who played a part in the illegitimate decision. That includes members of the Duma, some of whom have been sanctioned. I agree with the hon. Gentleman that we should take other measures in respect of what happened in Crimea. That is why the measures on goods and services that come from occupied Crimea, which America has not taken but Europe has, are significant. Finally, it is important to be clear about the next steps that we would take if Russia went into eastern Ukraine. Those steps should be reserved for if Russia goes into eastern Ukraine and should not be brought in before that happens.
Rehman Chishti (Gillingham and Rainham) (Con)
I very much welcome the statement by the Prime Minister. Paragraph 23 of the conclusions of the European Council, which relates to Cyprus, states:
“The European Council supports a comprehensive and viable settlement of the Cyprus problem within the UN framework”.
What steps are we taking to resolve that problem?
The Prime Minister
We continue to talk with the Cypriot Government. I had meetings with the President of Cyprus in the UK this year and I continue to speak to him at European Council meetings. There is a talks process that has made some progress. As one of the guarantor powers, we should continue to support that process.
Geraint Davies (Swansea West) (Lab/Co-op)
The level of state pensions in Crimea was just 10% of that in Russia until the Russians increased it to the same level by cutting benefits in Russia. Major construction work has also been moved out of Russia and into Crimea. Both those moves are very popular in Crimea and very unpopular in Russia, as is the fall in the rouble. Will the Prime Minister stir up further resistance to Putin in Russia by clarifying what economic sanctions there will be if further steps are taken into Ukraine, to bring him into line with international law?
The Prime Minister
I agree with the hon. Gentleman that we should aim to be clear and predictable about the sanctions so that Russia knows what will happen if eastern Ukraine is threatened in any way. We made progress on that in the European Council. I hope that we will make further progress when we meet again. It is good to try to secure the agreement of all 28 countries, because then such moves will have greater power.
Julian Smith (Skipton and Ripon) (Con)
As well as leading the way on EU reform, the Prime Minister has been a fantastic backer of the trade negotiations between the EU and the US. Does he agree that now, more than ever, we need to get that deal signed, sealed and delivered?
The Prime Minister
My hon. Friend is absolutely right. The trade deals that Europe has signed with the Republic of Korea and Singapore are hugely influential in European trade and are beneficial for Britain. The transatlantic trade and investment partnership between the EU and the US dwarfs all the other potential deals. Meetings have taken place in the past few days between the EU and President Obama. I hope that we can make further progress.
Gavin Shuker (Luton South) (Lab/Co-op)
The Prime Minister is right that getting the EU to speak with one voice on decarbonisation going into next year’s Paris meeting is hugely important. Does he accept that it will be deeply problematic if we fail to get a deal at this point, before the make-up of the European Parliament changes and before the trade and other Commissioners change?
The Prime Minister
There will be changes in Europe and a new Commission after the European parliamentary elections. It is important for the European Council to set a clear work programme for the new Commission. The headlines that I would set for the work programme would definitely be deregulation, more reshoring, and cutting the costs and bureaucracy of Europe, but we must also ensure that Europe plays its role in getting a good outcome from the Paris talks next year.
Glyn Davies (Montgomeryshire) (Con)
In his measured statement, the Prime Minister reminded us of the impact on energy security of a dependence on Russian energy supplies. Does he agree that we have a duty to move as quickly as is safely possible to establish the potential of shale gas to strengthen the UK’s energy security and that of our European partners?
The Prime Minister
I really do think that my hon. Friend is right about that. We have quite a lot of shale gas deposits in the UK and shale is also available in Europe, particularly in south-eastern Europe, the Baltic states and Poland. We have 75% of the capacity of shale gas that the United States has, but whereas the US has dug 10,000 wells, we have dug closer to 100. It is not written that Europe has to have higher gas prices and energy prices than the US. If we have the political will, we can deliver this safe and secure technology for our future.
Ian Paisley (North Antrim) (DUP)
The charge levelled at President Rajapaksa that he has failed to address the issues of the past properly is frequently levelled, in slightly different circumstances, at politicians in Northern Ireland. That being the case, why is the Prime Minister being inconsistent? He steadfastly opposes the internationalisation of our internal affairs. Surely he should also oppose the internationalisation of the internal affairs of a trading partner such as Sri Lanka and urge it to sort out its own problems.
The Prime Minister
I would give two answers to that very incisive question from the hon. Gentleman. First, here in the United Kingdom, including in Northern Ireland, we have taken major steps to disinter the past and to discuss it and deal with it. The Bloody Sunday inquiry is one such example. That has not happened in Sri Lanka. Its lessons learned exercise is not going into the detail that is needed about the appalling events that happened, particularly at the end of the war. Secondly, although we guard our independence and sovereignty jealously, we did call upon friendly nations, including the United States, to help us with our peace processes. Frankly, in confronting one’s own past and one’s own problems, other countries can sometimes help. I think that Sri Lanka should take the same approach.
Mr Robert Buckland (South Swindon) (Con)
Institutionalised corruption is a key source of power for the Putin regime, but at the same time it is its greatest long-term weakness. What more can we do to extend visa bans and sanctions to deal not only with those implicated in the Crimean issue, but also those responsible for scandals such as the Magnitsky killing?
The Prime Minister
I do not want to say anything new about the Magnitsky case today, but I agree wholeheartedly with my hon. Friend that the scourge of corruption lies at the heart of much of the crisis in Ukraine, just as it lies at the heart of so many countries today that are not getting the economic growth, prosperity and fairness that their peoples yearn for. As we go forward in these endeavours, we should do everything that we can to help ensure a non-corrupt Government for Ukraine in the future.
Huw Irranca-Davies (Ogmore) (Lab)
I welcome the agreement of the European Council to fast-track the completion of the internal market in energy, which I am sure the Prime Minister would not refer to, although others do, as the “Europeanisation” of energy. What part do renewables play in that? The Prime Minister has gone big on shale today, but we have also heard a great announcement from Siemens about offshore wind energy development in the UK. I am sure he will want to pay tribute to the fact that that process was set in place by the Labour Government’s £60 million ports investment.
The Prime Minister
All I can say is that, three and a half years into this Government, I feel that I have lived and breathed the Siemens investment, making frequent calls and trying to unlock the investment. I am sure others have played their role in that as well.
The Prime Minister
Well, it was a lot more generous than anything my predecessor ever said about anything done by any previous Government. For once, silence. Yesterday I worked very hard with Hull city council, and local MPs. We do not have to talk too much about renewable energy today because Britain has the biggest offshore wind market anywhere in the world, and we should be proud of that. We do not have the largest shale gas market anywhere in the world; indeed, we have barely started. I give so much emphasis to shale gas because I think it can be an important part of our future, and I am sure that that will have all-party support.
Mark Menzies (Fylde) (Con)
The Prime Minister has set out the role that shale gas can play in UK and European energy security, but can he assure me and my constituents that we will not develop shale gas unless we are sure that it is safe, with safety enshrined in a robust regulatory framework?
The Prime Minister
I absolutely agree with my hon. Friend. I am convinced that we can develop shale gas in a way that is safe, and in a way that provides useful supplies of gas and can benefit local communities. I think we should look carefully at what has happened in the United States. The overwhelming lesson from the United States is that this can be done, and it can be a real bonus for local communities and for our country.
Jim Shannon (Strangford) (DUP)
I thank the Prime Minister for his statement. Will he tell the House what progress has been made to address human rights and war crimes in Sri Lanka, including accountability for those who have committed murder and rape, and the issue of the disappeared? What discussions did he have with the Sri Lankan Government about the persecution of the Christian Church there, which is a big issue?
The Prime Minister
I have not had any recent discussions with the Sri Lankan Government about that issue because they were not present at the conference at The Hague. I raised Sri Lanka in the House today simply because the European Council briefly discussed it and reached conclusions that mean that every member of the Human Rights Council will vote for our motion. I raised the issue at The Hague because there were other undecided countries there that I was able to lobby, hopefully moving one or two of them into the right camp. If this happens, it will be a much better way of investigating the human rights abuses that have taken place.
Jason McCartney (Colne Valley) (Con)
As a proud Yorkshireman, I, too, welcome the huge investment by Siemens and Associated British Ports in east Yorkshire and our renewables sector. Will the Prime Minister confirm that we are talking about offshore wind investment, and that my constituents in beautiful places such as Slaithwaite do not have to worry too much about huge industrial turbines blocking their beautiful views of the Pennine landscape?
The Prime Minister
I can confirm that. Yesterday I went to see the Siemens investment, and the extraordinary scale of development, for myself. An entire port area is being cleared out and extended to take two enormous factories, including one that will make the turbine blades. The development is at a port because it is not just for the offshore wind market in the UK; there will be a real opportunity for export as well. That is what the investment is all about. It will provide 1,000 jobs, but much more than that, it will bring a whole new industry to Humberside and Hull because of the massive opportunity for the supply and component part of the industry to locate in that area.
Illegal Importation of Dogs (Fixed Penalty)
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I beg to move,
That leave be given to bring in a Bill to provide for a fixed penalty charge for those caught smuggling dogs into the United Kingdom; and for connected purposes.
I am grateful for this opportunity and wish to thank Clarissa Baldwin and Laura Vallance of the Dogs Trust, and David Bowles from the Royal Society for the Prevention of Cruelty to Animals, for their help in preparing for today. I also thank my researcher, Tom Evans, and the Table Office and Public Bill Office for their assistance. Members from both sides of the House have indicated their support for this Bill. I stress that this motion is not a criticism of the officers and staff who do so much to protect us; this is about policy. I am grateful to see the Minister and the shadow Minister in their places, and I hope that after today we might be able to follow up the issues I will raise over the next few minutes.
I wish not only to outline the problem that the Bill seeks to address, but explain why the present arrangements do not appear to be working and make some suggestions that could be pursued. The problem is threefold: the risk of rabies and other diseases; the criminal smuggling for profit in breach of regulations; and the animal welfare issues of puppies being transported with minimum food and water to prevent or reduce any mess they might make in the vehicles transporting them.
The problem is partly caused by the harmonisation of European Union rules and the relaxation of our quarantine controls, because—perversely—of the successful management of the risks. It is now easier to import dogs into the United Kingdom if they are microchipped, vaccinated and—most importantly—not for commercial sale. Here is my first interesting statistic: before the relaxation of our rules in 2010, 26,000 dogs were imported for non-commercial purposes; in 2013, 53,000 dogs were imported for non-commercial purposes. From 26,000 to 53,000 is quite a significant leap in a short period.
I hope I am not regarded in this place as a cynic, or—usually—as a sceptic, but I find some things difficult to believe: Elvis lives, West Ham United will win the premiership, and 53,000 dogs were imported into the United Kingdom in 2013 and none was for sale—not a single one. No doubt there are thousands of legitimate pets travelling, but it is a stretch of the imagination, to say the least, to believe that that includes all those dogs—I see a smile on the Minister’s face and I suspect there might be an element of understanding and agreement.
Here are a few more statistics that will add to the doubt that exists. Between 2011 and 2012 there was a 400% increase in illegal entries. Trading standards seized 127 dogs in 2011, but 417 in 2012. Some 2,800 dogs were refused entry in 2011, and 3,700 in 2012—another 40% increase. My final statistic is that in 2011 the number of puppies from eastern Europe—for example from Poland, Romania, Hungary and other countries—was 2,000, but it was 12,000 in 2013. That is a sixfold increase in two years, yet none of them—not one—was for commercial sale. Really? Those are the declared dogs, and it is believed that a lot more is going on under the radar than the data suggest.
Current penalties are severe: prison, and/or a fine of up to £5,000 for smugglers. However, I have no information about any prosecutions, and the suggestion is that the deterrent is simply not working. This Bill, which highlights the issues and offers another way to tackle the problem, will, I hope, make a difference. The fixed penalty provides another tool in the box, and could be introduced flexibly with higher penalties for more puppies smuggled, in the same way that smugglers of cigarettes can be fined more, the greater the number of cigarettes they carry.
There are other suggestions. We could increase spot checks at Dover and Holyhead; transfer the pet travel scheme monitoring responsibility from ferry operators to the UK Border Agency; and monitor internet sales to help target offenders. We could have better liaison with the European Commission and eastern European veterinary authorities to reduce the use of fraudulent passports and certificates. We could have better liaison with the Irish authorities—the Republic supplies so many dogs to the UK. We could have new risk modelling to scope the depth of the problem, create a new central database and have more quarantine spaces. The Minister answered a parliamentary question from my hon. Friend the Member for Ogmore (Huw Irranca-Davies)—the shadow Minister—this morning on the number of dogs licensed into quarantine in Great Britain in the past four years. In 2010, 89 dogs were licensed into quarantine. In 2013, 376 dogs were licensed. That is another 400% increase—there are repeated 40% and 400% increases.
Rabies and diseases such as Echinococcus, Leishmaniasis and parvovirus must be stopped because they are a risk to domestic and well animals, especially in the light of rabies reports in western France and Holland last year in which the disease was suspected to have come from eastern European imports.
In conclusion, we are a nation of animal lovers, whether through rescuing abandoned animals or paying between £500 and £750 for rare-breed pups. However, there are unscrupulous individuals and organisations out there, prepared to take advantage and make money at whatever cost to humans or animals. They also undermine legitimate businesses that play by the rules. Not only are the regulations open to abuse, but the monitoring appears to be too light touch. We need a review to assess the size of the problem.
The Bill will not solve all the problems and it might not resolve any of the them—hon. Members know that it will not go anywhere after today—but I hope that raising the matter today might improve the protection we need to ensure against the spread of disease, raise animal welfare standards, and act as an additional deterrent to criminals. I therefore commend the Bill to the House.
Question put and agreed to.
Ordered,
That Jim Fitzpatrick, Robert Flello, Andrew Rosindell, Mr Adrian Sanders, Mark Pritchard, Sheryll Murray, Angela Smith, Sir Peter Bottomley, Mrs Mary Glindon, Miss Anne McIntosh and Sir Roger Gale present the Bill.
Jim Fitzpatrick accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 April and to be printed (Bill 189).
Mr Deputy Speaker (Mr Lindsay Hoyle)
The hon. Gentleman is claiming he is 21, but we are not quite that convinced.
Charter for Budget Responsibility
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:23 - The House divided: - Ayes: 520 / Noes: 22 - Question accordingly agreed to.
The Chancellor of the Exchequer (Mr George Osborne)
I beg to move,
That the modified Charter for Budget Responsibility, which was laid before this House on 19 March, be approved.
I am putting before the House today a charter for budget responsibility updated to include a new cap on welfare spending. I am conscious that this is a time-limited debate and will keep my remarks brief so that others can speak. The welfare cap marks an important moment in the development of the British welfare state. I believe the public back a welfare system that provides fair support for those genuinely in need and that supports those who have a disability and cannot work; those caring for others; those on maternity or paternity leave; and those who have lost a job and are trying hard to find work. The public, through their taxes on that hard work, are willing to pay for that support. It is a level of support that a country such as ours—we now have a growing economy—can afford to give.
However, that is not the welfare state we inherited in 2010. That welfare state was not fair and not affordable. It was not fair that some received £50,000, £60,000 or up to £100,000 in housing benefit, paid for by taxpayers who could never dream of affording homes with rents that big, so we capped housing benefit payments at just over £20,000 a year.
Mr Osborne
I will give way in a moment.
It was not fair that many out-of-work families received more as an income in welfare than the average family got from going out to work, so we capped the total benefits that one family can receive at £26,000. Thirty-six thousand households are now subject to the cap.
Sheila Gilmore
How many families received housing benefit at the level he first mentioned—the £50,000-plus mark? Is he aware that, of the families covered by the benefit cap, nearly half are in temporary accommodation provided by councils because they owe them the statutory duty?
Mr Osborne
First of all, 21,000 people have been affected by the housing benefit cap, so 21,000 people were receiving housing benefit more than that. Secondly, the hon. Lady seems to be suggesting that she is against the cap on benefits. That points to a wider truth that we will discover today about the welfare cap, and specifically whether the Labour party is committed to the cap we are setting out today, with the list of benefits in it. We will discover whether Labour is committed to the cap at the level we have set—not just the principle of a welfare cap, but the practical application of it.
Mr Osborne
We will explore that point later, but let me take my hon. Friend’s intervention.
Robert Halfon
Is my right hon. Friend aware that a person on average wages pays roughly £1,200 a year in taxation just to pay the welfare bill, not including pensions? Does he agree that the welfare cap is fair on lower earners?
Mr Osborne
It is absolutely fair. That is what the cap is about—building a welfare system that is fair to those who need it and fair to those who pay for it.
Mr Osborne
I will take a couple of interventions in a while. I have only 15 minutes for my opening remarks because we want lots of contributions later in the debate.
It was not fair that benefits were unlimited. We have introduced a cap. It was not fair that those looking for work faced marginal tax rates as high as 96%, sapping the incentives to find a job. We are addressing that through universal credit. It was not fair that benefits were rising much faster than wages; not fair that people who could never afford a place with a spare room subsidised the spare rooms of others; not fair that people who did not speak English could receive out-of-work benefits without even trying to learn it; and not fair that the long-term unemployed were cycled and recycled through the new deal. That was not fair, but it was the welfare system we inherited. It was unfair to those trapped in poverty and to the millions of people who paid for it. It was a perverse distortion of what William Beveridge had conceived. In the face of opposition to each and every measure we have introduced, we are removing those distortions, restoring the work incentives and creating a fair welfare state.
Mr Osborne
I will take an intervention from the hon. Member for Rhondda (Chris Bryant).
Chris Bryant
Will the Chancellor confirm that, since his initial spending review, he has had to spend £13 billion more on welfare than he predicted? He has had to put it up by £1 billion this year and another £1 billion next year, so if the cap he envisages had been in place during this Parliament, he would have had to come to the House and apologise on four occasions?
Mr Osborne
For a start, welfare spending is £3.7 billion lower than I set out in my first Budget. It is also £10 billion less than the Labour party proposed. Labour Members cannot have it both ways. They keep claiming that we are cutting the welfare system and then complain that the cost is too high. That is one thing that we will explore in the debate—what exactly is the Labour policy.
Mr Osborne
I will give way to my hon. Friend the Member for Rochford and Southend East (James Duddridge) and then make progress.
James Duddridge (Rochford and Southend East) (Con)
If we had followed the policies of the Labour party, we would not have created 1.3 million jobs and those people would have been on benefits.
Mr Osborne
My hon. Friend is absolutely right. We have also created the right incentives so that work pays. Alongside supporting business—by the way, extraordinarily, the Labour party last night voted to increase taxes on business—we are creating an environment in which jobs are being created.
We are creating a fairer welfare state.
Andrew Gwynne (Denton and Reddish) (Lab)
Will the right hon. Gentleman give way?
Mr Osborne
I will give way in a little moment, but let me make some more progress.
We are creating a welfare state that the country—
Ed Balls (Morley and Outwood) (Lab/Co-op)
Will the right hon. Gentleman give way?
Mr Osborne
Of course I will give way, but will the shadow Chancellor confirm, so that we know the terms of this debate, whether he is committed to the specific welfare cap, the list of the benefits included and the level to which the Government have committed? The shadow Work and Pensions Secretary, the hon. Member for Leeds West (Rachel Reeves), said on the radio that Labour would do things differently. Perhaps he could confirm that.
Ed Balls
I will make my speech on the welfare cap in a moment. I want to go back to the remark the Chancellor just made about last night’s vote. We have said that we do not think we should go ahead with the next cut in corporation tax and instead use all the money for a freeze in business rates for small businesses. Is the Chancellor really saying that large companies are business, but small businesses do not count? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to remind everybody, shorter interventions would be helpful. We have 11 speakers to follow and I know the Front Benchers are desperate to hear the Back Benchers.
Chris Ruane (Vale of Clwyd) (Lab)
Both the Chancellor and the Prime Minister have used the line that people on benefits are getting £60,000, £70,000, £80,000 and £90,000 a year. I have tabled parliamentary questions and freedom of information requests on this point. Will the Chancellor tell me how many people are receiving more than £100,000 a year?
Mr Osborne
None, because we have capped housing benefit payments. [Interruption.] Just to clear up the previous point, Labour is going to say to the country, “Elect a Labour Government and business tax will be higher and corporation tax will be higher.” That is a terrible message to send to the rest of the world. [Interruption.]
Mr Deputy Speaker
Order. I want to hear the Chancellor. All the howling behind the Chancellor is not helping me, or other people who want to listen to him. I want to hear the Chancellor as, I am sure, do those on his own side.
Mr Osborne
If the right hon. Gentleman has something useful to say, let us hear it.
Mr Deputy Speaker
Seriously, I could not hear the Chancellor and I want to hear the shadow Chancellor. I want a little bit more respect to both sides.
Ed Balls
We are proposing that all the money from deferring the cut in corporation tax goes to small business in a business rates freeze. That is not a rise in the taxes on business, unless the Chancellor thinks that somehow small businesses are second class and do not count. Is that really what the Chancellor is saying?
Mr Osborne
We have cut the corporation tax rate for small businesses. We have capped rates for small businesses. We are giving a £1,000 discount to high street stores. Those are the measures we are taking for small businesses, and we are also cutting the corporation tax rate. The truth is that Labour is now committed to higher business taxes in Britain with a high corporation tax rate.
Mr Osborne
May I just say to the shadow Chancellor that he does not need to talk to me? He needs to talk to the business community of Britain, which knows that he is anti-business. His party is anti-business, anti-job creation and, as I am about to explain, it is the welfare party, too. If he waits a little, he can intervene and answer the question that we need answered.
Mr Osborne
I will give way in a moment. Let me make progress with my speech. [Interruption.] All right, I will give way if the right hon. Gentleman answers this question in his intervention: is Labour committed to a higher rate of corporation tax? Yes or no?
Mr Deputy Speaker
Order. I think we have heard enough noise. I want to hear the question that has been posed to the Chancellor of the Exchequer and I want to hear the reply. If people do not want to hear, I can explain where the door is. Somebody will be going through it if we do not have calm.
Ed Balls
The Chancellor must not mislead and misrepresent on the welfare state or on business taxes. Labour is not committed to an increase in business tax. He has said that three times. Every time he has said that, he has misled this House. I am saying that all the money from the corporation tax rate will go back to small business. That is the right position. Every time he misleads this House I will correct him, Mr Deputy Speaker.
Mr Osborne
This is desperate stuff from the shadow Chancellor. If Labour had had its way in the vote last night, business taxes would be higher—yes or no?
Mr Osborne
Yes, they would be, because corporation tax would be higher and businesses would be paying more. No wonder Labour does not have a clue about how to fix the economy or how to deal with the welfare system. That is evident from its period in office, when welfare spending, which will be contained by the cap, went up 42% in real terms. Housing benefit went up by £7.6 billion alone, as a real increase—bigger than the entire police budget. Every single one of the pounds the Labour Government spent on working age welfare was not earned, but borrowed—borrowed because Britain could not pay its way in the world. Rather than using valuable public resources to pay for apprenticeships, science, roads and railways, money was spent on an unaffordable, unfair and out-of-control benefits bill. That economic insecurity is being addressed and control is being re-established. We insist that welfare is affordable and we insist that it is fair: fair to those who need it and fair to those who pay for it.
Mr Osborne
I will make a bit of progress and then take some interventions.
Today, we take another important step towards the goal. We seek the support of Parliament not just for the principle of this welfare cap—important as that is—but its practical application: the list of benefits in it and the cash limit we set out today. I have noticed, in the past 24 hours, a change in the language being used by those on the Labour Front Bench. A day or two ago it was, “We are going to vote for the Government’s welfare cap.” Clearly, Labour MPs did not like that, so this morning the shadow Work and Pensions Secretary, said that Labour will sign up to something called a welfare cap, but that
“We would do it in different ways”.
What different ways? Does that mean different benefits would be included? [Interruption.] Will the shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), explain Labour’s welfare cap? Does that mean different levels of benefits? Does it mean a different level of spending? Every time the Opposition are faced with a difficult decision and asked to prove their fiscal credibility, they buckle because they are weak. We know what has happened. They have read the polls and seen the focus groups. They are being told not to vote against the welfare cap, but everyone knows what their instincts are. Everyone knows what gets them a cheer at the Labour conference: more spending on welfare paid for by more borrowing. Indeed, their only welfare policy is a £500,000 increase in housing benefit. The shadow Work and Pensions Secretary gave it away last week, in a private left-wing meeting. She said this, in private:
“it will be much better if we can say that all of the changes the Government have introduced we can reverse and all benefits can be universal.”
At least those Labour MPs voting against the welfare cap today are being true to what they believe in. No one thinks that of the shadow Chancellor and the Labour leadership today.
Time is short, so let me set out briefly how the cap will operate, first by enforcing public expenditure control where there was none previously. Welfare spending was called annual managed expenditure by the previous Government—no doubt a term dreamt up by the shadow Chancellor when he was running things so badly—but it was expenditure that was neither managed nor set annually. Now it will be. The Budget document sets out the 26 different benefits that will sit under the cap. They include almost all transfer payments from tax credits, housing benefit and employment and support allowance to statutory maternity pay, carer’s allowance and disability living allowance.
Some of those benefits, such as statutory maternity pay, have relatively stable and predictable costs, while others, such as housing benefit, have consistently grown much faster than forecast; but each one involves many hundreds of millions, often billions, of pounds of spending, and deserves the same careful management and scrutiny as items in the defence budget or the education budget. Some of those benefits, such as disability living allowance, help some of the most vulnerable citizens, but that is not an excuse for failure to manage their budgets. After all, our national health service also cares for the most vulnerable, but that does not prevent us from giving it an annual budget.
Mr Nigel Dodds (Belfast North) (DUP)
Will the Chancellor spell out the implications for devolved regions such as Northern Ireland, where welfare spending is devolved? What is the implication for the block grant if there is a rise in welfare expenditure through no fault of the Northern Ireland Executive?
Mr Osborne
Many benefits apply universally throughout the United Kingdom, but some areas of welfare spending are devolved. I know that there are specific arrangements with Northern Ireland, and we have been having discussions with the Northern Ireland Executive. I am well aware that the right hon. Gentleman represents only one party in the power-sharing arrangement, but we are keen to see the Executive make progress on welfare reforms and help to control the bills, and, as he knows, we are discussing that with him and his colleagues. However, I shall be happy to sit down and work out with him how some of the principles of the welfare cap here can be used to control welfare spending in Northern Ireland.
Mr Osborne
Let me make a few more points first. I will give way in a second—or a minute, perhaps.
The only benefits that we are excluding from the cap are the most cyclical ones which track the performance of the economy directly, such as jobseeker’s allowance and the housing benefit that is passported with it. They are the basic automatic stabilisers. By excluding only those benefits, we ensure that the economic cycle does not drive permanently higher spending on, for instance, sickness and disability benefits. We have also excluded the state pension and the additional pension. I know that the shadow Chancellor wanted to include them, but I would think it pretty unfair if a Chancellor who, for example, lost control of tax credit spending responded by cutting the basic state pension. That would not be sensible, and it would certainly not be fair. I think that adjusting the pension age is the best way to control expenditure on pensions over the long term as life expectancy rises.
In the Budget, we set the cash limit for the benefit cap at £119.5 billion in 2015-16—
Mr Osborne
I shall now ask the hon. Member for Denton and Reddish (Andrew Gwynne) whether he supports that cash limit.
Andrew Gwynne
In one breath, the Chancellor talks of fairness to taxpayers and the need to impose budgetary control on welfare spending. Can he perhaps explain to the House why setting up universal credit has cost taxpayers about £161,000 per claimant?
Mr Osborne
This is a huge system that will apply to millions and millions of people. Let me tell the House what we are going to do. I know that this will come as a complete shock to the Labour party, but we are going to take our time, get it right, and make sure that we do not put everyone on to a new credit with which the system cannot cope, which is exactly what the Labour party did with tax credits. All of us who were Members of Parliament at that time remember people coming to our surgeries who had been treated shockingly by a Labour Administration who had not got their administration right.
As I was saying, we will set the cash limit for the welfare cap at £119 billion. If inflation is higher than forecast, the Government cannot wash their hands of that either. Public services such as the police and transport have to absorb higher inflation, so why should welfare budgets be different? [Interruption.] I am sorry, Mr Deputy Speaker; there is a private conversation going on. My right hon. Friend the Secretary of State for Work and Pensions has done more to reform the welfare state than any of that lot.
The charter makes clear what will happen if the welfare cap is breached. The Chancellor must come to Parliament, account for the failure of public expenditure control, and set out the action that will be taken to address the breach. Then the House of Commons—the ultimate guardian of the people’s money—
Mr Osborne
No; I am going to end my speech now. [Interruption.] Well, I want to make sure that all these Labour Members have a chance to stand up and say exactly what they think of the welfare cap, and tell us that they support it, and that they should have introduced it when they were in office. They look such a cheery bunch. I want to make sure that they have a chance to explain what they are voting for this afternoon—or perhaps some of them will not.
I could set out more of the details, but much of that has already been done in the Red Book. This is the key point that I want to make to Labour Members. The welfare cap brings responsibility, accountability and fairness. Those who want to undo our welfare reforms will now have to tell us about the other cuts that they will make, or else come clean and admit to the public that what they really want are higher welfare bills. The phoney argument that welfare can be magically cut by a Government’s spending more and borrowing more will run into the brick wall of the OBR’s independent assessment. The phoney argument that a Government can spend half a billion pounds of taxpayers’ money on a spare room subsidy and pay for it with a cut in winter fuel payments worth a fifth of that will be exposed by an inevitable breach of the welfare cap. The “welfare party” will have to make its case for more welfare spending in the plain sight of the British people.
Our welfare cap ensures that never again can the costs spiral out of control and the incentives become so distorted that it pays not to work. From now on, any Government who want to spend more on welfare will have to be honest with the public—honest about the costs—and secure the approval of Parliament in order to breach the cap. Twenty-six benefits will be controlled by the welfare cap as part of our long-term economic plan to restore sanity to the public finances. This is a system that is affordable and fair, and I commend it to the House.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Labour Members support the capping of social security spending, a policy advocated by the Leader of the Opposition last year. With welfare spending now £13 billion higher than the Government planned in their spending review, Labour will make different and fairer choices to get the social security bill under control and tackle the root causes of rising spending. On that basis, we will support the motion.
I shall come to the welfare cap in a moment, but let us first be clear about the background to the motion and the charter for budget responsibility. In the charter, the Government have set out their fiscal targets and reforms, and have also included the welfare cap details. Four years ago, the Chancellor promised to balance the budget in 2015. The Prime Minister said:
“In five years’ time, we will have balanced the books.”
But because they choked off the recovery and flatlined the economy, they are not going to balance the budget at all.
Ed Balls
I am going to speak first about what is in the charter, and then about the welfare cap. I will give way in a moment.
Last week, the Budget revealed that the Government were not balancing the books. The deficit is set to be £75 billion. In this Parliament, partly owing to rising welfare costs, it will be £190 billion more than they planned.
Ed Balls
I will give way in a moment. I want the House to know what is in this document first.
The Chancellor pledged to get the national debt falling. Page 7 of the charter says that
“the Treasury’s mandate for fiscal policy is supplemented by: a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16”.
So the charter says that the national debt should be falling in 2015-16, but the OBR said in respect of last week’s Budget that it expects the national debt to be rising next year. The national debt is not falling according to this charter, and it is rising according to the OBR. I want the House to understand what is before us. I have to ask the Chancellor this: how on earth did he end up putting before the House a week after his Budget a motion that puts up in lights the fact that he is failing his own target to reduce the national debt? What an own goal! Is he going to blame the chair of the Conservative party for that one, too?
It gets worse for the Chancellor. The charter goes on to say—[Interruption.] Government Members should listen—[Interruption.] They should listen to this:
“The Treasury’s mandate for fiscal policy lapses at the dissolution of this Parliament.”
Lapses! It has already collapsed. It has expired; it has ceased to be; it is an ex-mandate. The charter goes on to say:
“The duty to set out a fiscal mandate will require the Treasury to set out a revised mandate for fiscal policy as soon as possible in the life of the new Parliament”.
That is what we will do: we will balance the current budget and deliver a surplus in the next Parliament. We will get the national debt falling. We will do those things as soon as we can in the next Parliament, but we will do so in a different way, starting by reversing the Chancellor’s £3 billion tax cut for people earning more than £150,000. That is what we mean by doing things in a different and fairer way.
Julian Smith (Skipton and Ripon) (Con)
Will the right hon. Gentleman confirm his announcement earlier that Labour will be raising taxes on British business?
Mr Deputy Speaker (Mr Lindsay Hoyle)
It was not aimed at an individual; it was aimed at the speech, I presume.
Ed Balls
We have said, Mr Deputy Speaker, that all the money from not proceeding with a further cut in corporation tax will go to small business with a business rates—[Interruption.] When the hon. Member for Skipton and Ripon (Julian Smith) and the Chancellor say that is a tax rise for business, that is only true if they do not think small businesses are proper businesses, which is a bit like saying, “If you didn’t go to Eton, you didn’t go to a proper public school.”
Mark Pritchard (The Wrekin) (Con)
I know the shadow Chancellor always wants to be accurate. Not everybody on the Government Benches went to private or public school, unlike many on the Opposition Benches, including him.
On the specific point, I believe the shadow Chancellor is a fair and reasonable man, so will he join me in welcoming the fact that in the last 12 months 4,000 jobs have been created in Shropshire? Surely that is good news for everybody to celebrate, whatever our party affiliation.
Ed Balls
First, I went to an even lesser private school than the Chancellor of the Exchequer. [Interruption.] Neither of us went to Eton, unfortunately. [Interruption.] I agree with the hon. Member for The Wrekin (Mark Pritchard) that the rise in employment is good news, but I am concerned that in his—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Shelbrooke, we missed you on Budget day, but I am not missing you today, am I?
Ed Balls
The thing I am concerned about—this relates directly to the welfare cap—is that in the constituency of the hon. Member for The Wrekin long-term youth unemployment has gone up by 129% since 2010. I presume the hon. Gentleman would agree that that rise, based on the jobseeker’s allowance claimant count, is a real concern. I think he should be backing our welfare reforms. The fact is—[Interruption.] If the deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands), is saying that because the hon. Member for The Wrekin has got a large majority, he does not have to worry about youth unemployment, that would be rather revealing. I hope he was not saying that.
Let me get on to the subject of the welfare cap. The Chancellor has failed to balance the books, he is contradicting his own charter by increasing national debt when it says he should be reducing it in 2015, and he has failed to control welfare spending. We have had plenty of tough talk and divisive rhetoric from the Chancellor, but his failure to tackle low wages, to deal with the cost of living crisis and to get more homes built means that he is spending £13 billion more than he planned in the spending review of 2010, and in last week’s Budget that was revised up by £1 billion in social security spending next year and the year after.
I want to explain where we are. We support the welfare cap. We support what is in the welfare cap. We agree that long-term bearing down on the costs of ageing is a good idea, but it should not be in the welfare cap in the next Parliament; we have agreed with that all along. We have also said we would match the Government’s spending in 2015-16, and the welfare cap over these five years, which we support, would rise on that basis. Although we support that, however, we will make different—
Mark Pritchard
On a point of order, Mr Deputy Speaker. I said that the shadow Chancellor is a fair and reasonable man, and I know he would not want, even unintentionally, to mislead the House. He has got a lot of figures before him, so I have a great deal of sympathy for him, but the fact is that in my constituency of The Wrekin there has been a fall of more than 27% in youth unemployment over the past 12 months.
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is a point of correction, rather than of order.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Mr Burns, I think you need to relax as well. No hon. Member will mislead this House, and I am sure that is not what the shadow Chancellor intended to say and I am sure he will be happy to withdraw it.
Ed Balls
Let me answer the hon. Member for The Wrekin and then I will come to the soon to be ex-hon. Member for Dover. [Interruption.] If hon. Members quieten down, I will answer the point. Since 2010 there has been a 129% rise in long-term youth unemployment: that is young people on the claimant count who have been out of work for more than 12 months. That figure has gone up by 129%. That is the truth. It is a fact, and I will place the information in the House of Commons Library. There has been a 129% rise since 2010 and I think the hon. Member for The Wrekin should support what I am about to say.
Ben Gummer
I thank the right hon. Gentleman for giving way. He chooses his words carefully, but he should know that youth unemployment is lower than it was in 2010, and not only that: it is lower than it was before the crisis partly caused by his Government.
Ed Balls
In the constituency of Ipswich there has been a 140% rise in long-term youth unemployment over 12 months, and long-term youth unemployment is a real problem. I am glad the hon. Gentleman intervened because I was reading his Hansard remarks from 2012 when he said that asking the Office for Budget Responsibility to audit the parties’ manifestos at the next election was the right thing to do. He said there was no reason why that could not be done. I will come back to him in a moment on that one.
We support the welfare cap. We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending. Let me explain—
Mr David Burrowes (Enfield, Southgate) (Con)
Will the shadow Chancellor give way?
Ed Balls
No, I am not going to give way until I have made these points. I will give way to both hon. Gentlemen, but if they shout “Give way, give way” at me in the middle of a sentence, I am not going to do so.
We will do things in a different way. We will introduce a compulsory jobs guarantee to get young people who have been out of work for more than 12 months—up by over 129% in The Wrekin and 140% in Ipswich—and the long-term unemployed all back to work, and we will sort out the shambles of the universal credit. As for the idea that the Chancellor should say to the Work and Pensions Secretary, “Take your time to get universal credit right. Have as much money as you want,” how irresponsible is that?
We will stop paying the winter fuel allowance for the richest 5% of pensioners; we will scrap the bedroom tax, which is not only unfair, but may end up costing more money than it saves; we will get more houses built; we will restore the value of the national minimum wage; and we will tackle the low wages which the OBR has said have pushed up the bill for housing benefit. We will make different and fairer choices to keep the social security bill under control and tackle the root causes of higher welfare spending.
Mr Burrowes
Now that the shadow Chancellor has explained that he is going to support the welfare cap, will he also clarify whether he will increase housing benefit? If so, where will he make the welfare savings to keep within the welfare cap? When he finds the statistics on Enfield, he will be able to get confirmation that the youth unemployment claimant count is at its lowest since 1997.
Ed Balls
As we and many others have pointed out, including the National Housing Federation, the Government’s bedroom tax is pushing people on to housing benefit in the private sector—on higher rents—so there is a grave risk that it is going to cost money, rather than save money. We will abolish the bedroom tax, within the welfare cap set out on page 87 of the Red Book. That is our very clear position. I have to say to the hon. Gentleman that in Enfield, Southgate there has been a 500% rise in long-term youth unemployment, and he should be backing our compulsory jobs guarantee.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Will the Chancellor take this opportunity to confirm that he will never follow the shameful record of the Conservative party, which in the 1990s took people off jobseeker’s allowance and actively put them on the sick? We still bear the scars of that policy today.
Ed Balls
It started in 1986 under a Conservative Prime Minister and social security Secretary, it was called “restart” and it actively moved people from JSA— unemployment benefit—on to long-term sickness and invalidity benefits. It meant that very many people then spent many years out of work. It was a shameful policy.
Stephen Doughty
I am glad that my right hon. Friend has mentioned the compulsory jobs guarantee, because is it not an absolute contrast with the manifest failures of the Work programme? Does he agree that the Government ought to be learning from, rather than smearing, the Welsh Labour Government and the success of the jobs growth Wales programme?
Ed Balls
All the evidence shows that action to get young people back to work, especially the long-term unemployed, pays real dividends. It is what we mean by tackling the root causes, and it is the right way to implement a tough welfare cap. That is the approach we will take.
Charlie Elphicke
Is the shadow Chancellor committed to a welfare cap on the same benefits and of the same numbers as this Budget—yes or no?
Ed Balls
Yes.
Let me end by discussing the role of the OBR, because that is also set out in this charter. Page 5 states:
“The Coalition Government’s major reform to the fiscal framework has been the creation of the Office for Budget Responsibility”.
We agree with that, which is why we have proposed a reform to enhance the OBR’s role and allow it, as the hon. Member for Ipswich has advocated, independently to audit the tax and spending commitments in the manifestos of the main political parties. Why has the Chancellor not used the opportunity of this updated budget responsibility charter to make that reform? If he were to think again, he would be joining not only me, but the Chair of the Treasury Committee and the Chief Secretary to the Treasury, who have both supported this reform. We need legislation in the Finance Bill to make that happen.
Ed Balls
I will not give way. We know from the head of the OBR that if an agreement is reached by this summer, this reform independently to audit all tax and spending commitments, including all issues referring to social security spending, can be done in time for next year’s general election. It is a matter of political will. The Chancellor seems to be happy to spend his time, and that of the House, trying to set political traps—traps that keep backfiring on him—but he does not seem happy, and neither do other Government Members, to join the hon. Member for Ipswich and allow the OBR to audit the Conservative party manifesto or our manifesto, so that we can have a proper, open and transparent debate at the next election. Why does the Chancellor not join this cross-party consensus and let the OBR play that role? What has he got to hide? This is really not a trap—it is just the right thing to do.
Mr Deputy Speaker (Mr Lindsay Hoyle)
May I just announce that we will start with a five-minute limit and see how we go from there?
Ben Gummer (Ipswich) (Con)
This is an important moment in the way that we run Budgets in this country, it is an important moment for the accountability of politics and it is an important moment for the way we deal with the welfare crisis we were left by the previous Government. It is an important moment in the way we run the Budget in this country because most people would be astounded by the notion that we do not already have a managed expenditure limit on welfare. What most people, even in this Chamber, will not be aware of is that last year, for the first time in the history of setting Budgets in this country, unmanaged expenditure rose above managed expenditure—51% of Government spending came within annually managed expenditure, or AME, and not within departmental limits. So for the first time we are, in effect, writing a larger portion of the Budget on a blank cheque, rather than on the basis of the limits set by the Chancellor at his Budget every year. That, in itself, is astounding, but in five and 10 years’ time people will look back and wonder why on earth we had not come to this point earlier.
The reason, as we have heard so often from Opposition Members—they prefer to pretend that it is not their position now, because the shadow Work and Pensions Secretary said in private a few days ago that they would prefer all the Government’s reforms on welfare to have been reversed—[Interruption.] It is down there in the transcript. She would prefer all the Government’s reforms to be reversed—not only that, she would prefer all existing benefits to be made universal. She is very welcome to intervene on me to deny in the House that she made those comments. I am open to have that discussion with her. She has been given that opportunity before, she is not doing it and the House will draw its own conclusions. The fact is that what the Opposition say in private is very different from what they say in public.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Burrowes, you have nothing to hide, and I certainly do not want to hear you shout again—I want to hear Mr Gummer. You may not. If you do, you know where to go. Mr Gummer, you have the Floor.
Ben Gummer
Thank you, Mr Deputy Speaker. To return to the core of the matter, this is important because it will hold both Governments and Oppositions to account. The shadow Chancellor might have wished to misconstrue the purpose of my private Member’s Bill. It is a pity he does that when he claims he is trying to forge a cross-party consensus, because it is wrong—
Ben Gummer
I will give way, but does the right hon. Gentleman want to let me finish my point before he intervenes? [Interruption.] I will say merely that I was proposing a fiscal rule on the Swedish model in which, as the Swedes have, there would be an opportunity for all parties’ budgets to be judged. That clearly is not possible under the existing settlement, not least because the head of the OBR said it would not be.
Ed Balls
I most certainly would not want to misrepresent the hon. Gentleman, so let me read out the quote from Hansard. He said:
“I…further suggest that the Office for Budget Responsibility be required to assess the major parties’ manifestos at election time, at the request of those parties…A similar role is performed by the Congressional Budget Office in the United States, and there is no reason why it cannot be so here.”—[Official Report, 25 January 2012; Vol. 539, c. 305.]
I agree, and so does the head of the OBR, and this can be done before the next election. In no way have I misrepresented the hon. Gentleman—the problem is that he disagrees with the Chancellor.
Ben Gummer
Actually, I do not. If the shadow Chancellor reads further, he will find the key point. There is an entire portion beforehand suggesting something, which his colleague, the hon. Member for Leeds West (Rachel Reeves), said that the Opposition disagreed with. Here we come to the crux of the matter. The fact is that people will not believe the Chancellor when he talks about sticking to a cap—[Interruption.] I mean the shadow Chancellor—[Interruption.] Yes, it is as close as he will get. He was the author of the golden rule, which claimed that there would be no excess debt over the economic cycle of his Government. None the less from 2002, the Government were running a deficit—[Interruption.] Will he deny that the Government were running a deficit from 2002?
Ed Balls
We said that we would balance the current Budget over the cycle, which is exactly what is in the mandate before us. It says that there will be
“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.”
That is the golden rule. If the hon. Gentleman is attacking the golden rule, it is the second thing on which he is attacking the Chancellor today.
Ben Gummer
The shadow Chancellor is again digging himself into a hole. He wrote a golden rule that claimed that there were would be no deficit over the cycle. He ran a deficit and he is now proposing that there should be a cap on welfare spending. I wish to pin him precisely on the terms of his agreement with the Government. What he has told his Back Benchers in private seems to be rather different from what he is saying in public. [Hon. Members: “Ah.”] Let me list what we have within the frame of the welfare cap proposed by my right hon. Friend. If the shadow Chancellor disagrees with any one of these items, he should stand up and intervene, and his own Back Benchers can draw their own inferences. We have the attendance allowance, bereavement benefits, carer’s allowance, Christmas bonus, disability living allowance, employment and support allowance, financial assistance scheme, housing benefit, incapacity benefit, income support, industrial injuries benefit, in-work credit, maternity allowance, pension credit, personal independence payment, return to work credit, severe disablement allowance, social fund, cold weather payments, statutory adoption pay and statutory maternity pay, statutory paternity pay, universal credit, winter fuel payments, personal tax credits, child benefit and tax-free child care. Is there any single element of that that he would change in the next five years?
Ben Gummer
Not at all. Now his Back Benchers may wish to draw their own inference from that. In private, the shadow Chancellor has been going round saying that he would change it. He would put one in and take one out. [Hon. Members: “Ah.”] Even in the House, he will say that he will supplement one benefit—withdrawing the winter fuel allowance from richer pensioners will raise £100 million and he would use it to pay for the reversal of the under-occupancy charge, which will cost £500 million. How does he make up that £400 million difference? He has been forced to come to this House to explain his maths. That is precisely why this cap is important. It forces a degree of accountability on the shadow Chancellor in making him explain to the British public how his sums add up, when it is clear that they do not. How does he account for the £400 million difference between the two? [Interruption.] I wish to know the answer as does the British public. [Interruption.]
Mr Deputy Speaker
Order. The hon. Gentleman has only 30 seconds remaining. Stop shouting him down. I want to hear him.
Ben Gummer
The cap is good for Government finances and it is good for accountability because it forces the Opposition to be honest, even though they are seemingly unwilling to be so. It is also important in terms of how we deal with this welfare crisis. It will force Governments to deal with the underlying causes of welfare dependency rather than just jacking up the bill every time they are faced with a difficult problem.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Any member of the public watching this debate this afternoon and listening to people jeer, laugh, smirk and joke might imagine that some Members of this House were playing a game. Well, I am rising to say to the House that this is not a game; this is about people’s lives. Whether they be elderly people who are dependent on some of the age-related benefits that will fall under the cap, the disabled or people in low-paid work who depend on the system of tax credits, this is not a game; this is people’s lives. If it is really the position of Government Members that poor people should be made to live on even less, they should at least have the grace to be dignified about it, and not turn it into a game. I put it to Government Members and to those on my own Front Bench that social security and people’s lives should not be made a matter of short-term political positioning.
Everyone in the House wants to bring down welfare spending, because welfare spending is the price of Government and social failure. The Chancellor talked as if he were some brave warrior wreaking vengeance on an army of “Benefits Street” layabouts. The reality for British people is very different. Just this week, we saw 1,500 people queuing for three hours for a low-paid job at Aldi. The picture Government Members like to paint of the British people and what is happening in the benefit system is false, misleading and derogatory, yet it is feeding through to public attitudes. The public thinks that 41% of the benefits bill goes to the unemployed. In fact, it is only 3% of the benefits bill. The public thinks that 27% of benefits are claimed fraudulently. In fact, only 0.7% is so claimed. The truth is that 80% of the people who claim jobseeker’s allowance—those so-called “Benefits Street” layabouts—only claim it for less than a year. There is no credit to MPs if they constantly talk in a derogatory way about people who claim benefits when, at any given point in our lives, we may be dependent on social security—be it child benefit, benefits for the elderly or in-work benefits.
This benefits cap is arbitrary and bears no relationship to need, as our benefits system should. It does not allow for changing circumstances—rents going up and population rising—and will make inequality harder to tackle. There are ways to cut welfare. We could put people back to work, introduce a national living wage, build affordable homes and have our compulsory jobs guarantee. An arbitrary cap is the wrong way in which to go and sends out the wrong message. The Chancellor does not say many things that I think are correct, but he is correct to say that voting for this cap locks us into the coalition’s cuts. I say to the House that the issue of social security should not be about political positioning. As the months turn into years, people will be coming to our advice surgeries wanting explanations for totally arbitrary and counter-productive cuts. Will we say that it was a game we were playing with the Chancellor one afternoon in March? Our welfare system should be based on the facts and on need. Whatever short-term political advantage people think is gained by voting for this cap, it is far outweighed by what is problematic, so, no, I will not be voting for this cap in the Lobby tonight.
Mark Reckless (Rochester and Strood) (Con)
We have to make these cuts because the expenditure has been unmanaged. As my hon. Friend the Member for Ipswich (Ben Gummer) says, for the first time there will be more within the supposed “annually managed” category than the amount that is subject to departmental expenditure limits. The measure that the Chancellor has brought before us today will mean that for the first time this £120 billion of public spending will be properly managed annually by the Treasury and will be subject annually to a vote of this House.
Imagine the Home Office or the Department for Transport letting it slip out that it was spending £1.5 billion more than previously planned. The first thing a Minister must do if a budget is exceeded is bear down on it, find out why, do something about it, and, if necessary, find another area of the departmental budget where savings can be made. If absolutely necessary, they must go to the Chancellor and see whether they can make a case for a proportion of the strictly limited contingency reserve.
Mr Mark Harper (Forest of Dean) (Con)
I listened carefully to what the hon. Member for Hackney North and Stoke Newington (Ms Abbott) said and at no point during her speech did she think about the other side of the coin: the people who have to pay the bills. They were the people referred to by my hon. Friend the Member for Harlow (Robert Halfon) and the Chancellor. They have needs and requirements. Many low-paid people have to pay the bills, but she never mentioned them once.
Mark Reckless
As we learnt in the Budget, the amount we will spend on benefits for the disabled—as the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Wirral West (Esther McVey), will know well—is £1.5 billion more than was estimated in the autumn statement just three and a half months ago. In the past, we would have just ignored that and borrowed the extra money without even debating it in this House, but at least now we must have a debate.
The OBR expects that that money will be clawed back over the next couple of years—we will spend a similar amount extra next year, but not the following year. If that estimate is not right, however, surely we as MPs, representing the taxpayer and those who benefit from other benefits and from the NHS, must look into that and ask what we can do about it. Many people who are applying for the personal independence payment or employment and support allowance come to my surgeries and I see cases to which I am sympathetic and in which I think a misjudgment has been made in the assessment. The OBR might be right about what the spending will be—I am not saying that we should reduce eligibility for those benefits or that that is where the reductions must fall—but if it continues to increase we must either borrow the extra money, raise taxes, as the Opposition might wish, or find savings elsewhere.
Constituents of mine who, if they were lucky, were getting a 1% wage increase earlier in this Parliament were seeing people on benefits getting increases above 5%. In the five years since 2007, benefit payments increased by 10% relative to increases for those people who were in work. This year, for the first time, we have a 1% limit. Inflation has come down: it is now 1.7% rather than nearly 3%, as it was when we introduced this measure. I do not want to make further reductions to welfare benefits, but if payments to people who are disabled are £1.5 billion more than we thought they would be this year and if that continues to rise, we must make a decision about the priorities and where we want to make savings. Alternatively, should we just have more taxes and more borrowing, as the Opposition would like?
The other important principle of the measure before us is that the Chancellor is returning the control of spending to Parliament. Parliament used to debate the Government estimates in detail, but now the last thing that we debate on estimates day is anything to do with spending. Between the wars, Parliament lost that power and since then we have seen an explosion in state spending. We are spending £120 billion. It would be good news if spending came in below that, and the Treasury would not have to come to us for permission to spend more taxpayers’ money. But if spending is more than 2% above the projected figure there ought to be a debate and a vote in this House about whether to accept that.
George Freeman (Mid Norfolk) (Con)
My hon. Friend is making an extremely elegant point. Is it not true that the Labour party’s positioning of itself as the welfare party has betrayed those who depend on the welfare system in two ways? First, it has meant that money required for those most in need is spent on those who are not most in need and, secondly, it has entrenched and locked hundreds of thousands of the most vulnerable families into dependency on welfare, which is the great tragedy of the welfare state that the Opposition have supported.
Mark Reckless
My hon. Friend is completely right. The Labour party used to be the workers’ party, but it has become the welfare party. It has become the defender of the public sector. When Parliament discussed these matters 90 years ago and before, the radicals were those who were trying to control Government spending and who were standing up for the taxpayers—the people in their constituencies—and trying to reduce the amount of money that Ministers were spending on their behalf. Today, all we see from the Labour party is a defence of welfare spending and of whatever is paid in the public sector while our constituents, who have to pay for all that and who are often on very low incomes, are ignored. For the first time, we are considering the comparison between what we are spending on welfare and what we need to do with that money elsewhere.
I wholeheartedly support this House’s having its say on spending. There is an excellent precedent for such a debate in Parliament. The Government came to the House with a motion saying that we should freeze spending within the European Union, but the House looked at the motion, decided that that was not good enough and that we wanted a cut. We voted for one, and the Government went out and delivered it. Parliament took control of spending.
Previously, spending in the welfare area covered by the £120 billion has gone up and up, and people have said, “Oh well, there is a problem and we will have to spend more on these disabled claimants, but we are sympathetic to them so that is fine. We will just borrow the extra money.” For the first time, we will be forced into making a decision about what we can do to get proper control of public spending, represent our constituents and stand up for the taxpayer. Not only has the Chancellor brought in the fiscal watchdog and reformed pensions, but, in this third area, he will be remembered for restoring control of spending to Parliament.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
This welfare cap is a reprehensible and regressive measure that once again puts the most disadvantaged people in our communities on the front line. The cap that has been proposed is a crude blunt instrument. It is arbitrary and it simply will not be flexible enough to respond if the economy or our changing democracy drive greater structural need.
The Government recognise implicitly that the drivers of welfare spending are largely structural and they have excluded the most obviously cyclical benefits from the cap, notably jobseeker’s allowance and pensions. Other benefits also have a cyclical component, however, and the Government persist instead in pursuing an agenda that victimises and stigmatises people on low incomes and punishes them for the shortcomings of Government economic policy.
In the short time we have to debate the motion today, I want to address the impact of the welfare cap on sections of our society that are likely to be affected. State pensions have been excluded from the cap, but it does not exclude pension and savings credits. The very poorest pensioners, those who have spent their working lives in low-paid private sector jobs or who have spent years caring for others, will potentially be hit. That could affect 300,000 pensioners in Scotland, most of them women.
The second group I want to mention is children. We already know that as a consequence of the UK Government’s welfare cuts 100,000 more children in Scotland will be growing up in poverty by 2020. We also know that the majority are the children of parents in low-paid work. The cuts to tax credits and the below-inflation uprating of child benefit, housing benefit and other forms of support for families are already expected to drive up child poverty, and the arbitrary welfare cap just puts a tin lid on it.
The Child Poverty Action Group points out that child poverty places a huge burden on our economy, not least through the £15 billion spent on addressing its consequences through social services and extra educational support. The group makes the point that in the medium to longer term, the Government’s approach will hinder deficit reduction and we will all pay for the costly long-term legacy of low skills and poor health associated with childhood deprivation.
Disabled people and their unpaid carers are also in the firing line, again. We need to understand the structural challenge as the baby boomer generation develop more health problems and disabilities associated with old age. We need to support family carers, who are the backbone of our community care system. It is a wholly false economy to subject the benefits paid to carers to the welfare cap.
Underpinning the circumstances of all those people is the UK’s pernicious combination of low pay, wide labour market inequality and high housing costs. Housing benefit remains one of the biggest ticket items in welfare expenditure. Increases are driven by chronic shortages of affordable homes, soaring private sector rents in areas of high demand—most notably in London and the south-east—and the failure of Governments to address that. The welfare cap will not address those underlying structural problems and the scandal is that people in good jobs cannot afford to pay rent.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will my hon. Friend give way?
Dr Whiteford
I will not, because other people need to speak.
The best way to reduce and manage welfare spending is to restore the economy to a state of health and that is exactly what the Government are failing to do quickly enough. If the Government were serious about reducing welfare spending, they would be creating more job opportunities in sectors that pay a living wage, investing in child care to enable parents to work or increase their hours, and building more affordable homes and taking action on housing costs.
In Scotland, we spend a lower proportion of revenue and GDP on social protection than the UK as a whole. We have invested heavily in affordable housing and in child care and we have increased apprenticeships. That has enabled more people to work full time, which is why our child poverty rates have fallen more quickly. Those long-term efforts to address the drivers of welfare spending, not just the symptoms, stand in sharp contrast to the Government’s ill-conceived, punitive and counter-productive approach.
I intend to vote against this measure today and I hope that Scottish MPs from all parties will do so too. To acquiesce in this nasty Tory nonsense that piles yet more pain on our poorest pensioners, carers, disabled people and low-income families would be an abject failure of leadership and a betrayal of the people of Scotland who elected us and who, frankly, deserve better.
John Hemming (Birmingham, Yardley) (LD)
It is often said that a week is a long time in politics, but in one sense that is wrong. Dealing with Government finance and the economy takes multiple years, so the problem that we had in 2010 will take at least eight years to resolve. People who interview me every so often say, “Oh, we have more cuts this year,” but those decisions were made in 2010 and they were driven by Government policy in the previous years.
I shall quote a few comments about Government policy from 2005 to 2010 because they are relevant to this debate and the issue of budget responsibility in the long term. One person said in his memoirs:
“However, we should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
That was Tony Blair, who was Prime Minister at the time.
Lord Turnbull, who at one stage was the Cabinet Secretary, the chief civil servant, noted that excessive borrowing started to be a problem from 2005. He said:
“It kind of crept up on us in 2005, 2006 and 2007, and we were still expanding public spending at 4.5 percent a year”.
His argument, essentially, was that the Labour Government should have been aiming to put money aside in the good years. He cited examples of other places that began to accumulate surpluses for a rainy day—places such as Australia.
The Government were borrowing £2,500 on behalf of every person in the country so that, in effect, a baby would have borrowed £45,000 by the time it reached the age of 18. That had to be brought under control, but it cannot be done immediately. It is important that we properly manage Government finances. If anyone can be bothered to read the charter for budget responsibility March 2014 update, they will find on page 10 that if the welfare cap is found to be breached, there are three options, one of which is to
“explain why a breach of the welfare cap is considered justified.”
Members can vote against the motion only if they do not believe in the Government managing and knowing what they are doing. I would be worried if there was a scheme whereby somebody came and said, “I need benefits. I’ve got no money,” and the Government said, “We’ve run out of money. We have no money to give you jobseeker’s allowance.” People will still have entitlements, but if we spend more than we intend to spend, the Minister will, as an absolute minimum, have to explain why.
I worry still about how the Government manage finances. I have asked questions, for example, on tax credits, to try to work out how many effectively fraudulent self-employed schemes there are, often run by people who are recent migrants. People set up nonsense scrap metal businesses that exist not as businesses, but to qualify for tax credits, but the Government cannot give that information. That is bad. We should be able to analyse the figures.
We need a good benefits system that ensures that there is a solid and straightforward safety net so that if people end up in difficulty, there is a way of rescuing them and keeping them from destitution. However, to argue that we should not try to manage the total costs is nonsense. Hence, I am not surprised that the official Opposition are backing the motion. Anyone who believes in having the money available to look after people believes in managing the accounts and knowing what is happening, and if we spend more than we expect, as an absolute minimum the Minister should explain why.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
If my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) did nothing else in her contribution, she exposed the behaviour of the Government during this debate, reminding us that this is about people. The experience today shows that the Tories are at their happiest and their loudest when they are attacking the poor and the vulnerable. I was reminded that the reason I came into politics was to take on such people.
Events shape our lives and our experiences. I say this as someone who was a recipient of benefits for three years, through no fault of my own. I was unemployed, and when I did get a job, it usually lasted a week before the Economic League, which funded the Tory party, caught up with me and I was blacklisted and out of a job again. I was not lying in my bed waiting for the next girocheque to come in; I was desperate for work.
The vast majority of people on benefits are desperate for work, but they are forced into low-pay zero-hours contracts and it is the fault of the employers. Not one single Tory MP today has mentioned the fact that employers are lucky if they are paying the minimum wage and that therefore people are dependent on taxpayers and their handouts. That is what we should be attacking — the employers who are paying the minimum wage and sometimes even below it and forcing people on to benefits.
I was horrified to see the performance of Members on the Government Benches, none more so than our own Mrs Brown, epitomised by the hon. Member for Elmet and Rothwell (Alec Shelbrooke), whose behaviour was somewhat disappointing, shall we say. The Government will argue that a welfare cap is needed to keep social security under control, but they do not understand the root causes of that spending. I have great difficulty even with the position of my own Front Bench on the welfare cap.
Yesterday I spoke about tax avoidance. I draw a parallel. If I were to call the tax office and report Mrs Brown down the road for not paying her tax or wrongly receiving welfare benefits, an official would probably be at her door the next day. Yesterday I highlighted the disgraceful behaviour of Alliance Boots and its tax evasion, and not one single Member on the Government Benches or on the Government Front Bench has asked what Boots was up to. That is a sad reflection of where our priorities lie.
The welfare cap is portrayed by the Tories and the Lib Dems as a fiscal policy. It is a trap laid by the Conservatives to suck in the Labour Front Bench, and I am extremely uneasy about the position we are taking. I recognise a bear trap when I see it and I hope I will not be seduced into falling into the trap set by the Tories. It is a campaigning slogan which seems to demonise the poor and those on benefits.
As I said at the outset, I am probably one of the few people in the House who has been a recipient of benefits. There certainly are none on the Government Benches, and very few on the Opposition Benches. I was proud to get a job and proud of the company that gave me a job and got me back into work. I was not a benefits cheat, as some would have us believe.
Stephen Phillips (Sleaford and North Hykeham) (Con)
When this Government came to office in 2010, they faced immediate and terrifying problems. Listening to some of the contributions from Opposition Members, that seems to have been forgotten. The prudence of the policies that have been pursued by the Government over the past four years has done much to make us forget what we knew at the time—that this country had been brought to the brink of bankruptcy by a Labour Government who, in their 13 years in office, borrowed more money than all their predecessors put together since the foundation of the Bank of England.
If we are never again to repeat the mistakes of the past, we must not forget where this country found itself in 2010, as we should not forget that the authors of the crisis that this country faced are now sitting on the Opposition Front Bench and who would again be king, notwithstanding their clear demonstration in their handling of the British economy in their time in office, that they are unfit to hold it.
Guy Opperman (Hexham) (Con)
Given that the Opposition have opposed every budgetary and welfare cut throughout this Parliament thus far, why should we ask the public to believe them now, particularly given what the shadow team say in private?
Stephen Phillips
I do not know what the shadow Chancellor and his Treasury shadow team say in private. I do know that when I talk to people in my constituency, they have not forgotten that the authors of the troubles that we found ourselves in and that we are still recovering from and will be for a considerable time are those who again want to hold the reins of power.
Mrs Anne McGuire (Stirling) (Lab)
In the hon. and learned Gentleman’s historical and economic analysis, when is he going to factor in a little thing such as an international financial crisis that did not start in Britain?
Stephen Phillips
He is going to factor it in right now, and he is going to tell the right hon. Lady the truth. The truth is that this country was in a much worse place to weather that financial crisis because of the fact that we had borrowed more money than any other developed economy. Indeed, we had borrowed just about as far as we could possibly go. The truth of the matter is that we would have weathered the financial crisis, which I quite accept was an international crisis, if the last Government had done their job properly, fixed the roof while the sun was shining and had not over-borrowed—if they had not done all the things that led to the difficulties that this coalition Government have had to pick up.
It is quite apparent that the hubris of Opposition Members knows no bounds. There is no plan. They have no plan for the British economy other than the plan that they had during their time in office: spend, spend, spend. That is one reason why it is important that this measure comes before the House today.
Let us recall precisely what we are talking about. This is a prudent measure from this Government, and it updates the charter that was previously laid before the House, and which the House approved. When history comes to look at the record of this Government and the things that they have done, it will see not just that the Government have taken steps to cure the British economy of the malaise from which it was suffering in 2010; they have in addition taken the necessary measures to address the structural changes that were required so that we can go forward. The establishment of the Office for Budget Responsibility—obviously, four years ago—means that we can never again see economic and fiscal forecasts of the type that enabled the previous Government to spend so foolishly the money that we simply did not have.
The charter comes before us again today, and in part it does so because of the announcement, quite correctly, by my right hon. Friend the Chancellor of the Exchequer that we need to take action. We need to take action to stop benefits running out of control as they ran out of control under the previous Government. The figures have been quite startling, and they have been given in this debate. The simple fact of the matter is that this charter, with its cap on benefits, is something that the House should support. I am pleased that the Opposition are going to support it; they should all be supporting it, because it is the right thing to do.
Chris Leslie (Nottingham East) (Lab/Co-op)
The debate has been all too short, so let me briefly reiterate to the House that the Opposition support capping social security spending—an approach that my right hon. Friend the Leader of the Opposition first proposed in June 2013. Welfare expenditure is the largest part of total Government spending and it is now £13 billion higher than the Chancellor planned in his first spending review in 2010. We must get a grip of these rising costs but do so in a fair way—tough on welfare inflation but tough on the causes of welfare inflation as well.
The Government might not realise it, but low wages and job insecurity are pushing the welfare bill higher and higher. The collapse in earnings during this cost of living crisis has hit the taxpayer too. Rising rents and the lack of housing supply push up the housing benefit bill. We need action on house building and a help to build scheme far more urgently than ever before. And long-term youth unemployment has doubled under these Ministers, costing the taxpayer more in benefits but also losing revenue to the Exchequer.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the hon. Gentleman give way?
Chris Leslie
I am afraid I will not give way because we have very little time. I have to give the Chief Secretary some time to try to make some sense of his proposals.
It is no wonder, I say to the Ministers, that in just the four months since the December autumn statement, they have had to revise their projections for welfare spending. In the Budget on Wednesday, they had to revise up predicted social security spending for next year by a further £1 billion and revise up the expected bill for the year after that, 2015-16, by another £1 billion. Controlling welfare inflation will mean tough decisions, such as ending the winter allowance for the richest 5% of pensioners, but we cannot afford the waste and ineptitude of the current Secretary of State for Work and Pensions, who cannot even be bothered to come back into the Chamber for the end of this debate. That Secretary of State has squandered £34 million by scrapping the Department for Work and Pensions inquiry service, in an astonishing waste of taxpayers’ money. He has written off millions of pounds of universal credit IT spending at an alarming rate. He has failed to tackle fraud and tackle the error and overpayments made by his Department of £700 million last year. The country and the taxpayer need protecting from the failures and the incompetence of this Chancellor and this Tory-led Government.
On the modified charter before us, why have the Government not taken the opportunity to revise the OBR’s mandate to allow the independent audit of policy costings and commitments in the manifestos of the main political parties? Perhaps the Chief Secretary can explain why the Government withdrew their first version of the motion last week, which could have allowed an amendment on that matter, and then hastily retabled a fresh version, which was not amendable. I wonder why they did that.
On the wider set of fiscal targets, will the Chief Secretary explain why the Treasury want to reiterate, in their charter today, the particular points on which they fail? If they want to restate the promise that they originally made to get the national debt falling by next year, be our guest. The motion before us today serves to remind the world of their failure to get the national debt down in 2015-16, and as the OBR said last week,
“We expect public sector net debt”
still to be rising in that year.
So the fiscal mandate is already in tatters. It had expired even before today’s debate. Is the Chancellor even aware of what he is doing? In his Budget speech on Wednesday he used the phrase,
“as a nation, we are getting on top of our debts”.—[Official Report, 19 March 2014; Vol. 577, c. 781.]
Does he not even realise that he has increased the national debt by a third—£1.2 trillion?
A new fiscal mandate will be needed in the new Parliament and we will obtain just that. We will balance the books and get the current budget into surplus as soon as possible in the next Parliament—a fairer approach to deficit reduction and tough on the causes of welfare inflation. We need long-term recovery and long-term growth, not the same old short-term politicking from the Chancellor. Sound management and stronger control are necessary to prove to taxpayers that the important safety net of social security for the vulnerable and those in need is sustainable for the longer term, so we will support the motion, should the House divide.
The Chief Secretary to the Treasury (Danny Alexander)
I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.
Danny Alexander
Shadow Chancellor. I am glad he agrees that he is flatlining.
This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.
Danny Alexander
I do not have much time; I intend to make some progress.
Fundamentally, the motion is about ensuring that we have greater control over public expenditure in this country, and that where a Government wish to deviate from the plans they set out to this House, they must return to the House to explain why they want to make a change, or what action they will take to deal with the pressures that have emerged.
One of my priorities when I came into office as Chief Secretary was to increase the amount of public expenditure that is under the direct control of Government, and indeed under the direct control and accountability of this House.
Danny Alexander
I will not give way.
When we came into office, only 53.8% of public expenditure was under a direct mechanism of control—departmental expenditure limits. That means that nearly half of public expenditure was simply beyond control—it was so-called annually managed expenditure, which in practice meant annually unmanaged expenditure. Progressively, over the course of this Parliament, we have put in place additional mechanisms to control an ever-rising amount of public expenditure. The pension reforms, which mean that in future the state pension age will be linked to life expectancy, bring greater control over the costs of the basic state pension. The reforms of public service pensions, which include a cap on the costs within public sector pension schemes, bring that source of expenditure, which had ballooned out of control under Labour, much more directly under the control of Government.
In total, when the measures in the welfare cap are included, we will have increased the amount of expenditure under direct control and directly accountable and transparent to this House from around 50% at the start of the Parliament to 77% at the end of it. From the perspective of every Member in the House, that ought to be a welcome change, because it means that this House has more say and more ability to scrutinise and hold accountable the Government for changes in public expenditure that take place on their watch.
A number of hon. Members mentioned unemployment benefits and jobseeker’s allowance. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) referred to his experience in receipt of unemployment benefits. He is right that most people in that situation are not there through any fault of their own. That is precisely why jobseeker’s allowance is excluded from the scope of the cap. The benefits that are the so-called automatic stabilisers that fluctuate with the state of the economy—jobseeker’s allowance and the benefits that are passported from it and, in due course, those elements of universal credit, too—will not be in the scope of the cap, precisely for the reasons that he described in his speech. That perhaps ought to reassure him and encourage him to vote for the measure.
Fundamentally in the end, I think those people who are speaking against the cap betray their own lack of confidence in their ability, should they wish to, to come to the House transparently and accountably and persuade the House—
Danny Alexander
I have one minute left. No, I am not going to take any interventions; I am going to make progress.
Those people who speak against the cap betray an enormous lack of confidence in the ability of those who think that, in response to circumstances, welfare spending should be increased above the cap, to come here and persuade the House that that increase in expenditure would be necessary. The truth, over many years, has been that where there have been changes in forecasts, and where decisions have been made that have led to increased costs, they have been sneaked in through the back door, through the forecast, without any direct accountability to this House.
The people who say that the cap involves expenditure cuts are also wrong. The cap starts at around £120 billion and rises over five years to £127 billion, in line with inflation, so we have set it at a reasonable level. In this House, we should never again go back to the situation we had under the previous Government, where public expenditure was uncontrolled, and where debt and the deficit were allowed to balloon uncontrollably. This is part of clearing up the mess that was made of the public finances, and I commend the motion to the House.
Question put.
Gambling (Licensing and Advertising) Bill
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
I beg to move, That this House agrees with Lords amendment 1.
The Lords amendment gives the Secretary of State reserve powers to extend the horserace betting levy to all bookmakers holding a remote operating licence from the Gambling Commission after the remote gambling Bill has been enacted. The amendment is fully in keeping with the context and purpose of the Bill, which is about levelling the playing field for bookmakers engaging with British punters.
Subsections (1) and (2) are broadly drafted to ensure that the Secretary of State can make all the changes necessary to secure extension compatible with the UK’s obligations under European Union law. Members may recall that we resisted previous levy amendments because we believed they failed to offer that necessary scope.
Subsection (3) provides that secondary legislation introduced under this amendment will be subject to affirmative procedure in both Houses of Parliament. Subsection (4) makes it clear that existing provisions to abolish the levy once a suitable replacement has been found are unaffected by the amendment.
We have tabled our own amendment because we are persuaded that a statutory levy should be applied fairly, but we remain firmly of the view that the need for genuine levy reform cannot be satisfied through extension to offshore remote bookmakers alone. That is why this amendment is part of a wider levy reform package, which was announced by the Chancellor a week ago in the Budget. We will now move forward very quickly on two concurrent pieces of work.
On extending the levy, we will seek to complete all of the necessary work in time for the 2015 negotiations on the 55th levy scheme, which will apply from April 2016. The timing will, of course, be subject to the outcome of discussions with the European Commission, which began last Friday. We hope to launch a consultation in May on the mechanics of extension.
Guy Opperman (Hexham) (Con)
Does my hon. Friend agree that this announcement and today’s developments are very good news for racing, which provides tremendous support for jobs and local tourism, and that it is good that the Government are now beginning to work properly with British racing?
Ian Swales (Redcar) (LD)
Following on from the intervention of the hon. Member for Hexham (Guy Opperman), is the Minister aware of the damage that has been done to racing by bookmakers moving offshore and not paying the levy, and will she join me and Redcar race course in welcoming the fact that racing will be more healthy as a result of these measures?
Mrs Grant
My hon. Friend makes a very important point. We have to look after racing. It is an important industry that provides many jobs. This is a sensible move, making a level playing field for all operators.
At the same time, we will develop wider levy reform options and publish a consultation in the summer. The consultation will seek views on a range of options, which are likely to include commercial arrangements, modernising the existing levy and a horse race betting right. The amendment is about collecting the horserace betting levy in a fair and consistent way.
Mr David Nuttall (Bury North) (Con)
Will the Minister confirm that it would not be possible to extend the levy to offshore bookmakers without the approval of the EU and that we are totally dependent on receiving that approval in order to be able to do it legally?
Mrs Grant
My hon. Friend makes a fair point. Certainly, the levy scheme amounts to state aid and, because of the terms, we need to let the EU know if there is any substantial change in state aid and get permission for it.
The amendment is reasonable and I believe it commands widespread support. It signals the Government’s commitment to modernising the levy and it is, of course, part of, but not a substitute for, a wider reform programme.
Clive Efford (Eltham) (Lab)
We welcome the Government amendment and their change of heart on the alteration that we proposed both in Committee and on Report.
We pay tribute to the Members of the House of Lords who took up several of the issues that we raised during the Bill’s passage through this House. They have been very successful in gaining Government support for our amendments, notably in relation to sport spread betting, pre-watershed gambling advertising and its impact on children, a one-stop shop for problem gamblers and financial blocking. On all those areas, the Government said that change was not necessary or desirable, but it is very welcome that they have now changed their mind.
We welcome the Lords amendment on the horserace betting levy. There are two key issues: the application of the existing levy to online gamblers, and a consultation on the levy’s replacement in the long term. It is worth putting in context why the levy is necessary to support the horse racing industry.
British horse racing is a major sport. It is the country’s second most popular sport, with 5.68 million attendees, according to the British Horseracing Authority. It is also the second largest sporting employer. British racing supports a predominantly rural industry that makes a significant contribution to the British economy. It generates £3.45 billion in annual expenditure, provides direct and associated employment for 85,000 people and assists in leveraging billions of pounds of inward investment.
Horse racing is inextricably linked with gambling like no other sport, with the exception of greyhound racing. As online gambling has grown, betting operators have moved offshore, which has contributed to a fall in revenue from the levy from an average of about £106 million between 2003-04 and 2008-09 to £66.7 million now. The industry says that that has led the number of horses in training to go down by 14.2% between 2008 and 2013, and foal production to go down by 25.3% during the same period. The Lords amendment is therefore very important. We welcome the Government’s about-turn and their support for our position on the levy.
The Minister has accepted our position, but a review may take a very long time. What does she think is the time scale for the review? When will the end date be for a major review of the betting levy?
In Committee, I warned the Minister that she might face more tenacious support for the horse racing industry than comes from most Members of the House of Commons. After I had told her that she might face more fanatical opposition in the House of Lords, she said:
“I am not sure that I understand quite what the hon. Member means by the horse racing fanatics in the other place, but I look forward to finding out.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 19 November 2013; c. 141.]
She well and truly found out when the Bill arrived in the Lords.
When I moved the amendment on Report, the Minister said:
“First, I do not believe that we should assume that genuine levy reform lies in merely extending the existing levy scheme… Secondly, as I have said previously, any extension of the levy to offshore bookmakers as a result of the new clauses”—
the ones I had tabled—
“would require EU Commission approval because the levy is a state aid scheme. I will not implement the proposals, for which we do not have EU approval in respect of state aid.”—[Official Report, 26 November 2013; Vol. 571, c. 195.]
When the Bill reached the Lords—following some to-ing and fro-ing between the Opposition, Cross Benchers and the Government—Lord Gardiner of Kimble moved an amendment, and said:
“We agree with the view that while we still have a statutory levy, it should be fairly applied. Furthermore, we are persuaded that including a clause about extending the levy to offshore remote operators is fully in keeping with the context and purpose of the Bill.”—[Official Report, House of Lords, 4 March 2014; Vol. 752, c. 1301.]
Will the Minister explain to the House—I will allow her to intervene—exactly what changed between our discussions in the House of Commons and those in the House of Lords? There has been a complete about-turn in the Government’s position on this issue.
It is important that there are no delays. The Minister said that she hoped that the consultation would start in May. Will she clarify whether it will conclude before the annual review of the levy terms, which will take place in October?
I know that there is concern about the horserace betting levy. My noble Friend Lord Lipsey spoke of his opposition to it in the other place. I share some of his concerns. If we go ahead with extending the levy and it generates an additional £20 million for the horse racing industry, what exactly will the Minister do to ensure that it benefits the wider horse racing industry and not just the haves at the expense of the have-nots? That investment should benefit the low-paid workers in the industry, generate economic activity in rural areas, and perhaps even support struggling race courses to become viable and keep people in their jobs.
The amendment will provide a great deal of support to the industry and could mean £20 million of investment. The industry must use it wisely. If it is used not to provide those wider benefits, but to inflate prizes at the expense of lower-paid workers in the industry, the support for the levy in the House might dissipate and the industry might lose important income. We all have a duty to pay close attention to what the money is used for when it finally reaches the industry.
I pay tribute to the Members of the House of Lords who supported the amendments that we tabled, not least the amendment before us. I pay particular tribute to Lord Stevenson of Balmacara, Baroness Jones of Whitchurch and Lord Collins of Highbury. I would not go so far as to suggest that someone should name a racehorse or even a stakes race after each of them. However, I received an e-mail of gratitude from the British Horseracing Authority, expressing its appreciation for my support, which said:
“I hope that we can get you along to a race meeting in the near future, potentially for the inaugural running of the ‘Clive Efford Cup’”.
I am sure that that was said in jest, but I will not stand in anyone’s way if that is what they want to do.
This is a welcome about-turn from the Government. We certainly support the amendment. I hope that the Minister will give an assurance about the time scales, because we do not want there to be any delay that could be avoided in implementing the levy on online gambling because, in the meantime, the industry will be missing out on significant income that could be put to good use, as I have set out today. I hope that the House will support the amendment.
Mr Nuttall
I want to raise two matters. Both have been touched on, but I want to expand on them.
First, as the hon. Member for Eltham (Clive Efford) rightly said, a new clause very similar to the Lords amendment was tabled on Report. I, along with other Government Members, voted against it. Of course, it was not the same clause, but it was very similar to the amendment we are being asked to support today, and if I am anything, I like to be constant and consistent in my position.
Clive Efford
May I point out to the hon. Gentleman that the outcome is the same? We will apply the existing levy—assuming we get European Commission approval—to online gamblers, and the Government will consult on a future levy for the longer term. The outcome is the same whether the amendment has been mildly adjusted or not.
Mr Nuttall
I appreciate that the aim might be the same, but as I understand it, the Lords amendment creates a reserved power straight away—
Mr Nuttall
I thought it was to do it straight away, which is slightly different.
Clive Efford
In Committee we tabled two amendments, one of which would have done what the hon. Gentleman has set out. We also offered the Government the opportunity to consider taking the reserved power in the longer term. That was the amendment we brought to the House on Report, and he voted against the reserved power, which is again set out in this amendment.
Mr Nuttall
This is a very time-limited debate and I do not want to spend all my time on a preliminary point. The substantive point is that, whether or not the amendment is identical or slightly different to the previous one, this new clause certainly does provide for a reserved power. That is somewhat confusing given what the Chancellor said in his Budget statement last Wednesday:
“We will also extend the horserace betting levy to bookmakers who are based offshore, and we will look at wider levy reform and at introducing a ‘racing right’ to support the sport.”—[Official Report, 19 March 2014; Vol. 577, c. 791.]
That makes it apparent, or gives the impression, that it is going to happen, and that the reserved power will not be kept for a rainy day but is something that the Government definitely want to proceed with. We must assume that that is the case; otherwise, why introduce it in the first place?
That leads neatly to my second point. I will not quote word for word what the hon. Member for Eltham said on Report, because he mentioned some of it in his speech. On 26 November last year, when new clauses 10 and 11 were being considered, the Minister stated:
“Nor am I convinced that we should seek EU approval for an extension of the current levy when we do not know that it will satisfy the need for proper reform. I am not prepared to act in a way that could jeopardise the stability provided by the recent voluntary arrangement.
I have also been urged to take a power to extend the levy at a future point, but that assumes that all that we might wish to do is extend the existing system, and that would not be genuine levy reform. Even if we took such a power, we could find that it was too narrowly scoped to enable us to achieve what we wanted—for example, to meet the EC—”
I presume that means the European Union—
“requirements for any reform scheme to be state aid compliant.”—[Official Report, 26 November 2013; Vol. 571, c. 195.]
There are therefore two matters of confusion. First, what is the Government’s position on the proposal? Is it simply to have a reserved power, or is it to seek to introduce a measure at the earliest opportunity? Secondly, for what will the Government seek approval from the EU? Will they simply seek approval to extend the levy, or will they seek a wider reform, which was the reason given on 26 November for the delay?
Essentially, those are the two points that I would be grateful to the Minister for addressing when she replies to this brief debate.
Jim Shannon (Strangford) (DUP)
I want to make a few quick comments on holding a remote operating licence from the Gambling Commission. I will also comment on those based overseas who will be required to obtain a remote operating licence from the commission as a result of measures in the Bill.
I bring that to the Minister’s attention because of the changes that will be introduced off the back of the Bill. Currently, remote gambling operators in only 31 jurisdictions can advertise in the UK. As a consequence of the Bill, the scope for advertising will widen sixfold to 196 jurisdictions, as long as providers get the operating licence. Providers from, for example, China and Brazil cannot advertise in the UK, but under the Bill, they will be able to do so for the first time if they get a Gambling Commission licence under Lords amendment 1. I make that point because, between 2006 and 2012, advertising on TV increased by 600%. With the licence comes the advertising. Perhaps the Government will give the House an indication of how they intend, through the licensing grant, to ensure that advertising does not spiral out of control.
I thank the Minister and the Lords for making the changes. Two welcome and important commitments were made in the other place. I divided the House on the introduction of a one-stop shop self-exclusion mechanism and got support from Labour colleagues to make that happen. I am pleased that those changes are included in the Bill because they will strengthen player protection. Put simply, a customer need ask only once in their local betting shop and their exclusion will apply to all shops in that chain and to all chains in the UK. That, too, is good news. The concept of a one-stop shop is to help to deliver an important tool to assist problem gamblers to take back control over their lives, as it is often described. That is good news.
I am pleased to see the financial transaction blocking amendments, which are good news. I am also pleased to confirm that the Gambling Commission has reached agreement with major payment systems organisations, namely MasterCard, PayPal and Visa Europe, to work together to block financial transactions with unlicensed operators that seek to use payment systems for illegal purposes. That is good news for the Bill and for the good work put into the process by Members of the House, and those in the other place especially, who made that happen.
I want to ask the Minister two questions. On the voluntary approach to the fixed odds betting terminals, there is an indication that there will be regulations. Will she indicate whether it is the Government’s intention to put the situation right in the Consumer Rights Bill? If so, we are probably at the stage where those measures need to be included in it. Consumer protection is also important. Is it the Government’s intention to provide for the FOBT voluntary approach regulations in the Consumer Rights Bill?
Lastly, I want to ask the Minister about a technical point. I would welcome any clarification she can give on how, prior to legislation, the voluntary approach to financial transaction blocking will apply to Northern Ireland. I ask because, as I understand it, the Gambling Commission, which does not have jurisdiction in Northern Ireland, will play the key mediating role. Will she indicate how that will work? Will it be done through the Northern Ireland Assembly and an amendment there, or will it be done through further UK Government changes?
I am very pleased that, at long last, the amended Bill seems to be going in the direction we want it go in. That is down to the hard work of Members in this Chamber and in the other place. In particular, I thank the hon. Member for Eltham (Clive Efford) for his hard work. I thank the Minister, too.
Guy Opperman
I started out aged 14 as an apprentice stable lad. I worked my way up through a racing stable and then became a jockey at various stages of my life. I am lucky enough and privileged enough to have ridden upsides Tony McCoy, who famously asked me what my real job was. I am also very fortunate to be the Member of Parliament for Hexham, which is one of the finest racecourses in the country. It will strongly welcome the Bill as demonstrating support for smaller racecourses, as more money goes back into the racing community.
Any interpretation of the Bill will show that it is right that bookmakers now support the industry from which they benefit so much. I have met many bookmakers over the years as this matter has gone through the House. This is not an anti-bookmaker measure; it will produce a level playing field where bookmakers make a proper contribution to the racing community.
I welcome the announcements in the Budget. It is worth reminding the House that it is right that the LIBOR fines, paid for by those who demonstrated the worst of values, should now be supporting those who demonstrate the best of values. I support LIBOR fines going to St John Ambulance—I have certainly used its services in point-to-points and the like—and the VAT relief on fuel for air ambulances. We cannot have racecourses without those facilities. The Chancellor’s decision, ably set out by my hon. Friend the Member for Bury North (Mr Nuttall), to extend the horseracing betting levy to offshore bookmakers and to consider wider levy reforms—something that has been a nirvana for so many people involved in racing—is fantastically good news. I will come on to the racing right to support the sport, which we need to address and expand on, in a moment.
In addressing the comments by the hon. Member for Eltham (Clive Efford), it is important to understand that the Gambling Act 2005, introduced by the previous Government, effectively introduced the system that we have had to amend, control and change. The Act was far from helpful. As someone who was working in racing throughout the period of the previous Government, I can assure the House that they were deeply unsupportive of horseracing.
I welcome the introduction of the racing right, which is fantastic. After all, racing is key to tourism, local jobs and the rural package that several small towns offer. I have been lucky enough to ride at all the big tracks, such as Cheltenham and Kempton Park. I am not denigrating, in any way, those tracks—their fences are a bit bigger and stiffer, and when one falls one certainly falls quite hard—but it is the smaller tracks, the Towcesters, the Ludlows and, of course, the Hexhams that are the true lifeblood of racing. They are vital to its future. The Bill will introduce the support that we want.
It is important to understand and make the wider point that some have touched on, which is that without support for racing there will be no bloodstock sales, no breeding, no studs and no veterinary support. I, for one, broke several bones. Without racing, I would have put various orthopaedic surgeons in the NHS in fewer situations. All those people will benefit from an enhancement of racing.
We need more from the Minister on what constitutes the racing right. We accept and acknowledge that this is a good Bill and that we are heading in the right direction, and we accept and acknowledge that wider levy reform is for the benefit of one and all in racing, but we need to understand what exactly the racing right entails. That needs to be expanded on to a greater degree, because British racing is a wonderful institution and it needs all our support.
Mr John Leech (Manchester, Withington) (LD)
I do not intend to detain the House for long, but I want to put on record the Liberal Democrats’ support for the Lords amendment. This change has been campaigned for by Members in all parts of the House, but particularly by my right hon. Friend the Member for Bath (Mr Foster). I found it rather frustrating that we could not deal with it in the House of Commons rather than expecting the Lords to improve a Bill that is generally considered acceptable. However, the amendment will help to level the playing field between onshore bookies and offshore gambling providers, which I think is in line with the overall aims of the Bill, and I am happy to support it.
Mrs Grant
With the leave of the House, Mr Deputy Speaker. I thank all Members for what they have said today about this important issue, and for their contributions during the Bill’s earlier stages. I shall be fairly brief, but I want to deal with some of the points that they have raised.
The shadow Minister, the hon. Member for Eltham (Clive Efford), accused us of performing a U-turn. I certainly do not accept that accusation, and I am a little surprised that he made it. I have said time and again—and the hon. Gentleman has heard me say it—that the extension on its own does not equate to genuine levy reform. The amendment is part of a wider levy reform programme, which is essential and which will involve our looking at all the various options.
The shadow Minister rightly asked for further details about time scales and delay. Delay is the last thing that I want: we need to move ahead. I can tell the hon. Gentleman that we will seek to complete all the necessary extension work in time for the 2015 negotiations on the 55th levy scheme, and that we will begin consultation on wider levy reform this summer. We hope to complete that consultation by the autumn. We want to get on with this, but it must be done properly, and there are a number of practical considerations that prevent us from doing it any earlier. As the hon. Gentleman will know, any significant change beyond extension would require primary legislation.
Clive Efford
A review of the levy terms will take place in October. We are pretty clear about what we want to consult on in relation to the extension of the existing levy. Why can we not complete the consultation in time for the review, so that we can aim for earlier implementation? The longer we delay, the more the horseracing industry will miss out on potential income.
Mrs Grant
I hear what the hon. Gentleman says. Of course no one wants delay, which is why we want to take this power. However, as I am sure the hon. Gentleman appreciates, things must be done properly and carefully, and that is indeed how they will be done.
The hon. Gentleman also asked about the benefits of the levy. The levy contribution is likely to constitute a considerable sum, which, as he knows, will fund integrity, veterinary and breeding activities. As was pointed out earlier, the prize money from what we hope will be an increased levy will support the maintenance of quality racing at all the different kinds of courses throughout the country.
My hon. Friend the Member for Hexham (Guy Opperman), who I know has considerable knowledge of the industry, referred to the “racing right”. It is not a foregone conclusion that there will be a racing right, but we will certainly consider it during the consultation.
Inheritance and Trustees’ Powers Bill [Lords]
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Ministry of Justice (Simon Hughes)
I beg to move, That the Bill be now read the Third time.
I am happy to be able to inform the House that the consensus that clearly prevailed in the last debate on the previous piece of proposed legislation will, I believe, prevail here. I am very happy to bring for the first time on to the Floor of the House a Bill which is small, perfectly formed, but very important and which will affect a very large number of people.
The Bill reforms certain aspects of the law of inheritance and the law relating to trustees’ statutory powers. The purpose and effect of the Bill will be to modernise and simplify this area of the law to create a fairer and more comprehensible set of rules and to make the process of administering an estate faster and easier for people at what will always be a difficult time.
The Bill gives effect to most of the recommendations made in the Law Commission’s report “Intestacy and Family Provision Claims on Death”. It will modernise and simplify not just the law of intestacy to make it fairer, but the process of administering an estate to make it faster and easier for all concerned. The Bill also makes some important technical improvements to the family provision legislation and to the statutory powers of trustees, to make sure that they, too, are clearer, more consistent and easier to apply.
A considerable amount of consultation was undertaken on the Bill—as the Law Commission would do—so it came to Parliament built on a broad consensus of support, and having been through the Lords, it now comes to the Commons. That support is very welcome. I wish to refer to the Bill’s two core proposals, briefly address the four bits of the background “scenery” to it and deal with some of the details. Slightly unusually, I am doing so on Third Reading, because as the hon. Member for Barnsley Central (Dan Jarvis), who leads for the Opposition, and others will know, the Bill has come through a procedure which has been used only a few times in Parliament. When we deal with proposals from the Law Commission which are regarded as matters not likely to cause great controversy in the House, we have a procedure that predominantly takes place upstairs, so we have not looked at these matters in the Chamber of the House of Commons before.
The two significant proposals are that in future surviving spouses will be the sole beneficiary of an estate where somebody dies leaving no will and there are no children. Not only do we believe that is right, but the Law Commission’s research showed that a majority of people in the country favoured giving priority to a surviving spouse in those circumstances. The Bill therefore reflects public expectations by making the surviving spouse the sole beneficiary in such circumstances.
The other key issue is what happens when a person who dies intestate has surviving children. The Bill seeks to simplify the sharing of assets on intestacy in a way that is fair to those who have been closest to the deceased—so first comes the surviving spouse or civil partner, and next come any children or their children. We think that the Bill ensures that all those people will be adequately provided for in future. Removing the current requirement that there be life interest trusts will reduce costs and make the law easier to understand and apply.
Of course, we would probably never be able to pass a law that everyone in the country thought right or fair, but we hope we are legislating for the occasions when people do not leave a will in a way that most reflects what we believe they would have intended, given that we have no written evidence of what their wish would be. We hope we are reflecting the real life expectations of what somebody would want for their partner and children.
That leads me to the four short background points about why the Bill is important. Obviously, making a will is and remains the best way to make provision for loved ones and others after we have gone, but the figures are surprising. In 2011, just under 50% of the registered deaths in England and Wales were those that might be classified as intestate: where there was no written provision. First, therefore, it is important to say to people that making a will is really important. Many people do not do it and we hope that this debate and the consideration given to the Bill will remind people of the benefit of making a will.
Making or updating a will is not a complicated process. Some 480,000 people died in England and Wales in 2011, with 220,000 of those deaths leading to the personal representatives obtaining a grant of probate in respect of a valid will and 40,000 leading to letters of administration being granted. We do not know for sure whether that means that the remaining 220,000 did write anything, or even thought about writing anything. None the less that was the figure. Nearly a quarter of a million people died without any evidence of written arrangements. Therefore, with the support of colleagues and the hon. Member for Barnsley Central, with whom I am meeting formally to discuss how best to proceed, we want to add to the work already done in the voluntary and legal sectors to encourage people to make their wills.
The Government provide information on a number of websites, including gov.uk and the probate services website, to help people who are considering making a will. Other organisations also provide advice. “Dying Matters” runs an annual awareness campaign about planning for old age and death. This year it is planned for 12 to 18 May, and the theme is, “You only die once”. That was not my title, but it seems a good one.
There is also a free wills month for those over 55. It is running this month, so people need to get on with it because there are not many days left. In November, there is a scheme called Will Aid. I make no apologies for wanting to encourage people to make wills. It is the one way that we can be certain that what is done with people’s assets is what they intended to be done. It is fundamental to the law of England and Wales that the person who writes the will decides what he or she wants to happen to their property after their death, and where the law applies it will give effect to those wishes, subject only to one qualification, which is that, under the Inheritance (Provision for Family and Dependants) Act 1975, there is a safety net for people who should have been provided for in wills but were not.
My second point has become topical in recent days, so I want to make the Government’s position and the legal position clear. There has been some press coverage on whether Islamic law or sharia law trumps English law in relation to these matters. There was certainly a headline and a lead story in one of the Sunday papers last weekend that may have alarmed some people. People in this country are free to leave their property in accordance with their preferences and beliefs. The Law Society issued to its members a practice note on sharia law succession—it was the subject of the article in the Sunday press—which indicated that there has been a demand from some solicitors and their clients for information on how to plan ahead for death in a way that complies with English law. Far from promoting sharia law as an alternative jurisdiction within our country, the Law Society is clear that it is promoting English law and English legal services. Let me say this clearly. To suggest, as one newspaper did, that the guidance means that,
“Islamic law is to be effectively enshrined in the British legal system for the first time”
is both wrong and misleading.
If people wish to arrange their last will and testament in accordance with the principles underpinning Islamic law or any other faith or belief tradition, then of course they are entitled to do that, provided they comply with the law of England and Wales. They can write down how they want to dispose of their assets according to their faith view, but it is within English law, in a will that then gets implemented and is subject to rules that allow people who should have been included but have been left out to apply.
Mr David Nuttall (Bury North) (Con)
I declare my interest as a non-practising solicitor and as someone who has drawn up thousands of wills in the past. Does the Minister agree that there has been no change in the law? It has always been possible for solicitors to draw up wills in accordance with their instructions under English law. If they want, they can draw them up under laws of other countries, as long as they make it clear that they will be applicable in that other country, but not under English law. In so far as wills that are meant to be controlled by English law are concerned, there has been no change whatever in the law.
Simon Hughes
The hon. Gentleman is absolutely correct. He knows from his practice outside the House and from his time in this place that that is exactly the position. The law has not changed. The guidance does not change the law, it has not been changed elsewhere and it is not about to be changed. The Government have no plans to change it. We are simply reinforcing the clear view, implied by his question, that if somebody goes to their solicitor and says that they would like their will to be drafted in a way that reflects their beliefs about how they want to dispose of their assets, they can do so, subject to the overarching rule of English law. That often applies to the Jewish tradition, and might be the same for some Christians and people of other faiths. The law has not been changed and I want to knock on the head the assertion that the Law Society was somehow facilitating a change. The Law Society was simply ensuring that when it had had enquiries from its members about how to proceed they were given guidance, but that does not change the law one jot.
A third general point, which is important, is that people are living longer—and thank God for that. We are very lucky to have in this country a great, and growing, life expectancy. The Office for National Statistics tells us that nearly 14.5 million people in the UK are over 60, but with old age comes an increasing incidence of dementia and Alzheimer’s. According to Alzheimer’s UK, 800,000 people in this country have dementia. The Government are keen that it should be known that there is a legal facility open to people to make what is called a lasting power of attorney—an LPA—that gives an individual the opportunity to plan ahead for the time when they might lack the capacity to deal with their own affairs. We are talking not about after death, but about when people are still alive but might not have the physical or mental capacity to deal with their own affairs.
People can appoint somebody of their choice to make decisions on their behalf about their property and financial affairs or health and welfare. They can do that online through a facility introduced last year by the Office of the Public Guardian. The process is relatively simple: people are guided and prompted through each page so that the form is completed correctly. It can be printed off for signature and the LPA can then be applied for, and the fee is currently £110. It is registered as a document recognised in law.
There are 51 million adults in England and Wales, but the number of people who have made such an arrangement is small, and I hope the Bill will also remind people that one way of dealing with their affairs, for not just after they have left this earth but before, is to make provision now. The lasting power of attorney is the way to do that.
Jake Berry (Rossendale and Darwen) (Con)
I declare my interest as a solicitor. A worrying number of people are still dying intestate. What further steps will the Government take to encourage them to make a will? Will the Minister also take this opportunity to encourage initiatives such as will week, in which people can make a will and the solicitor will donate the fee to charity? Rossendale hospice takes part in that with great effect.
Simon Hughes
I was going to deal with that later, but as it has been raised it seems logical to do so now. I am very clear that although the Government cannot make people do such things we have a duty to lead. At the moment, if people go on to the Government website they will be directed to places where they can receive advice about such matters, but clearly the numbers are still surprisingly low. A lot of people of all levels of intelligence—this is not a matter only for people with fewer exams and qualifications—have not written anything down, as their families discover when the time comes for them to leave.
Such programmes are run, by different organisations, across the year, and I have referred to three already. We want to make them more effective and I have started to engage with officials and my colleague in the other House, Lord Faulks, who leads specifically on wills in the Ministry of Justice, to work together with him—[Interruption.] He does other things as well, but, bizarrely, lasting powers of attorney and inheritance come to me and wills go to him for reasons that are above my pay grade.
Lord Faulks and I have had a conversation. We are working together and we hope to work with our colleagues in the Department of Health, because the other part of the planning-ahead system is thinking about organ donation, and I know that the Secretary of State for Health is keen that that, too, should be better promoted. I hope that by the end of this year we will have a co-ordinated approach so that from this year on, we will have an annual, regular, clear promotion for people to make their will, to arrange lasting powers of attorney if they need to do so, and to arrange to donate their organs if they wish to do so. One of the reasons why the hon. Member for Barnsley Central and I are to meet is to try to get maximum agreement, the best ideas, the most effective systems and the easiest use of the internet so that it is as easy as possible for somebody to find the right place and use it. I am sold on the idea that this is an area in which the Government need to do more and will do more.
Jake Berry
I thank my right hon. Friend for that answer. Will he say specifically what steps he will take to encourage charities to increase the take-up of wills? I have seen for myself that it is a hugely successful fundraising activity for local charities in Rossendale and Darwen. It is also a big public service that they are providing to people who live locally. Often, the hospice movement, which will be managing the end-of-life journey for so many people in this country, can be a good place to find that information. There is surely a role for Government to support such charities in their work to encourage the take-up of wills.
Simon Hughes
I apologise for not dealing with that specifically. It is a very good idea and one that the Government support. I will take on board my hon. Friend’s idea. Perhaps he would like to come and have a cup of coffee, a cup of tea or even something else, and share his experience. The more people can be encouraged, the more charities can be helped and the more organisations can feel part of owning the process to the benefit of the community, the better, so I will be as helpful as I can. That is the backdrop. I hope everyone has got the message that we would rather people did not die intestate, but we must provide for those who do so.
I said that the Bill came from work by the Law Commission. Following a consultation paper that it published in 2009, it issued a report in 2011 entitled “Intestacy and Family Provision Claims on Death”, which included the draft Bill. The Ministry of Justice then carried out a public consultation. We published our response in July 2013, explaining the changes we proposed to make to the Bill. As a result of that consultative process, we are largely in agreement today.
There was a proposal to deal with the rights of cohabiting couples in intestacy. The Government have decided that it would not be appropriate to take those matters forward at present. They are not uncontroversial and raise other, wider issues. The Law Commission recognised that its work on cohabitation raised issues that do not apply specifically to the matters in the Bill. The Ministry of Justice is in the middle of a very large programme of reform of the family justice system, which I believe will be hugely beneficial, and we do not want to be distracted from that. The new family courts come into operation next month and we want to concentrate on sorting out and getting a much better service there, and on the issue of inheritance and trustees. Therefore there is no proposal to deal with cohabitees’ rights in this Session or in this Parliament.
The Bill started in the Lords on 30 July last year. The Lords took their job very seriously and I am grateful to them for being so attentive. It underwent detailed scrutiny and was amended three times in the other place. It then came to us in the Second Reading Committee upstairs and from there to the Public Bill Committee, where I believe we gave it adequate attention, although there were no further amendments.
There are two aspects to the Bill—intestacy rules and family provision. The first part deals with the division of property when somebody dies without leaving a will. The second part allows family members and dependants to apply to the court to vary the distribution, either under the intestacy rules or under the terms of a will.
Clause 1—this is the core and simple but important proposition—deals with the situation where the intestate leaves no children and has no other direct descendants. From the time the Bill receives Royal Assent—in a few weeks’ time—the surviving spouse or civil partner will be the sole beneficiary of the estate. That changes the current law. Under the current law, a surviving parent or full sibling or sibling’s children are entitled to share, after the spouse or civil partner has received the deceased’s personal effects and what is commonly called a statutory legacy—a lump sum, in this case the first £450,000. The clause will change those arrangements. The estate will go to the surviving spouse.
Clause 1 will also mean that where the intestate does leave children or other descendants, the surviving spouse or civil partner will be absolutely entitled to the deceased’s personal chattels, to a statutory sum of £250,000, and then to half of whatever remains on top of that. The other half will be shared between the children or other descendants. That also changes the current arrangements, because at the moment a surviving spouse or civil partner has only a life interest in the rest. That is complicated and it will go. Life interest trusts are really only an area of benefit to lawyers and are often a source of confusion, so they have gone. I hope that is clear. Spouses will know where they stand; children will know where they stand.
Clause 2 and schedule 1 deal with the way that the statutory legacy—the fixed net sum—is decided. It is the amount that the surviving spouse will receive where there are children or other descendants. The Bill will implement a new system whereby the Lord Chancellor will be obliged to make an order raising the level of the legacy if the consumer prices index rises by more than 15%, or at least every five years. So there is an automatic trigger when my right hon. Friend the Lord Chancellor will address whether we ought to have more given as a lump sum to the surviving spouse. That was the result of a Government amendment on Report in the other place. As to the actual level to be set—this was debated in Committee—the Bill provides that unless the Lord Chancellor decides otherwise, the level will be set according to the procedure in the Bill. It will index the statutory legacy by an amount that reflects any increase in the CPI measure of inflation. The legacy can only increase; it cannot be reduced, so in the event of no inflation or deflation, it will not go down but will stay the same.
Clause 2 gives the Lord Chancellor the power to set the level of the statutory legacy without using that mechanism, and he is at liberty to set a level equal to, or even lower than, the pre-existing figure if he wants to. If he does want to do so, he must come to Parliament and explain why he has not used the mechanism in the legislation. We hope that the benefit of that is that spouses and civil partners will have an inheritance that does not slip behind in real value with the changing value of money in this country.
Clause 3 deals with what are called personal chattels. Under the current law, the surviving spouse or civil partner is entitled to all of the personal chattels that are not disposed of in the will. That has not changed as a principle, but it is updated by the legislation. We have defined personal chattels in the Bill as “tangible movable property”—the lawyers will know exactly what I am talking about—but with three defined exceptions. The first is money, and securities for money. That is not new. The second is property used at the death of the deceased person solely or mainly for their business purposes. The words “solely or mainly” have been added, and they will ensure that, for example, if there is a vehicle, such as a van, that was used by the individual and for their business, it is treated as something that is personal as well as a business asset. The third exception, which is new, relates to property held at the death of an intestate person solely as an investment. That is a narrow exception, which would apply only to property owned as an investment and which had no personal use. We are trying to be very clear about those things that go to the spouse because they are the personal assets of the deceased person. Again, that is what the public would expect and we want to make sure that what is reasonable and normal and to be expected is what the Bill does.
The numbers in clause 4 are small in significance, but as we agreed in Committee, the clause is important as a principle. It seeks to protect the position of children who are adopted after the death of a parent. Madam Deputy Speaker, you and all colleagues will know that, very occasionally, there are tragedies in which one or both parents of youngsters are killed, and they are then often brought up by aunts, uncles, godparents, or whoever it might be. However, the will may have made arrangements on the basis that the parents will be alive indefinitely, and certainly for many years after the children become adults, or there may be no will, because it will have been a sudden event that afflicted the family. The general rule is that after adoption, a child is regarded as the legal child of the adoptive parents and has no other legal parents.
Clause 4 ensures that a child whose parent has already died before adoption will not lose, as a result of adoption, any of the rights that they had before, in terms of interest in their natural parents’ assets. It is relevant where a child is adopted as a result of the birth parents’ death. That is normally a fairly speedy process, and it is not a secret one. We are clear that we want to do what common sense and justice would want us to do, which is to make sure that no orphan child should lose the inheritance from their parents. We are sure that that is what the parents would have intended. At the moment, that is not what would happen. We are changing the law to make sure that children in that very particular circumstance are better protected. It only affects children who are adopted after the death of a birth parent, which is obviously an important distinction.
Clause 5 disapplies section 18(2) of the Family Law Reform Act 1987 in certain circumstances. Again, that is a small point, but we feel it is important to correct and modernise the law. At the moment, when somebody dies intestate and the parents were not married to each other at the time of their birth, rights do not follow in terms of inheritance. Under the proposal, the administrators of the estate may presume that the parent died first, as did any other person to whom they may be related only by virtue of the father—that might be somebody who is another parent by virtue of the Human Fertilisation and Embryology Act 2008, in very unusual circumstances. The rule discriminates against unmarried fathers. In practice, it makes it less likely that the deceased’s estate will pass under intestacy rules to such a parent.
Nowadays, it is quite usual for both unmarried parents to be identified as the parent of a child. Both are often on the register of birth so there is no longer any reason for both parents not to have equal entitlement in law. Therefore, we will disapply the presumption if a person is recorded as the intestate’s father, or as a second female parent in the specified formal register of births. In that case, the estate’s administrators will have the same responsibility to the deceased’s father or other parent as they would to any other relative entitled under the intestacy rules. The change clarifies that where somebody is recognised as a parent, irrespective of whether there is a marriage certificate, that parent should have the same right as an unmarried counterpart.
Clause 6 amends various provisions in the Inheritance (Provision for Family and Dependants) Act 1975 by way of schedule 2 in the Bill. The Government’s original intention was to create an additional ground of jurisdiction for family provision claims to enable claimants who are habitually resident in England and Wales to bring such a claim, irrespective of the deceased’s place of domicile. Scottish colleagues raised concerns about how that would operate in practice across the border, and particularly, if it could displace Scots law. The Government therefore decided that we would not proceed with the proposal. We amended the Bill in the other place and therefore, there is no change that would impact adversely on Scotland or on any other jurisdiction.
The remainder of clause 6 makes a number of changes to the procedure for family provision claims, including some amendments to the categories of people who can apply to the court for provision. There is already a rule that allows someone to go to the court and say, “I’m a family member. I need some financial help.” The Bill modernises the law so that a “child of the family”—someone who might have been adopted in practice but not formally, for example—would be treated the same as any other child brought up in the same family. Therefore, the relationship between the parent and the “child of the family” would allow the inheritance rules to apply to the benefit of that child. We believe that it would be wrong for a deserving child who was brought up by the family not to be able to inherit in the same way as someone who was formally their child, either biologically or by adoption.
Clause 6 also amends the wording of the 1975 Act, which defines a person who may make a family provision claim because they are considered to be a dependant of the deceased. Under the current law, the court has to balance the deceased’s contribution towards the needs of the applicant against any benefits flowing the other way before deciding whether the applicant can be assisted. If the applicant is found to have contributed more to the deceased than the deceased contributed to the applicant, the applicant is not regarded as a dependant. We think that this “balance sheet test” is technical and inappropriate in a modern society. Of course there has to be a link, but we understand that dependency is often mutual and that therefore someone should not be debarred from applying because there has been some benefit in the other direction.
Clause 7 makes various amendments to provisions that require certain types of grant to be left out of account when deciding the date when representation with respect to the estate of the deceased was first taken out. They are technical changes, so I do not intend to elaborate on them for the House.
The last few clauses are highly relevant to a large number of people. Clause 8 concerns a situation in which a trustee is able to use income from a trust for the maintenance, education or benefit of a beneficiary under the age of 18. It is common for a trust to be set up and for applications to be made for school fees, medical attention or for sending a child on a holiday or arranging an apprenticeship. The Bill provides that in future the amount of income that can be used for such purposes should be entirely a matter for the trustees’ discretion. Currently, there has to be an objective test of reasonableness, together with a proviso listing all the factors that trustees must consider and a specific restriction on the amount that can be paid out. We do not think that those are necessary, so clause 8 removed them. Trustees will still be governed by the need to fulfil their fiduciary duties, so beneficiaries will not lose out, but they will, following a request, have the flexibility to give to meet the need.
Clause 9 deals with a similar situation in which trustees are able to use their powers of advancement to make payments of capital to beneficiaries where that is thought necessary. Such payments are limited by the current law to one half of the beneficiary’s future share. We believe that this limit should go. In future, trustees will, if they think fit, be able to pay out the whole of a beneficiary’s share under the power of advancement. That gives trustees the flexibility they would certainly have if they were acting under a professionally drafted will or trust. Of course, payments cannot amount to more than the beneficiary’s future share. The clause was amended in the other place to make it clear that if trustees have exercised their power of advancement, the money or property given to the beneficiary can be treated either as a percentage of the overall value of the trust or according to its monetary value at the time of advancement. Trustees may expressly exercise their choice to treat advancement in that way, for example by writing it in the trust deed or by dividing up the trust fund.
The Bill is expected to receive Royal Assent next month. We intend all its provisions to come into force simultaneously later this year on a common commencement date of 1 October. The date is to be confirmed by an order made by the Lord Chancellor.
Of course, the provisions will apply only to deaths that occur after the Bill comes into force, because it is not retrospective. It is an England and Wales Bill, not a United Kingdom Bill, except for one part that repeals some technical matters. The only exceptions to its forward-looking nature are in clause 4, which deals with adoptions of children that take place after the death of a parent. The relevant date in that case is that the adoption has to take place after the Bill has come into force.
Clauses 8 and 10 also make changes that do not have the same timetable application. These are changes to trustees’ powers rather than arrangements for dealing with the deceased’s property, and they will apply only to trusts or trust interests that are created or arise after the Bill comes into force. The exception is the clarification of the powers in clause 9 that allow trustees to make non-cash advancements and to treat an advancement as a percentage of the overall value of the trusts. This provision is not governed by the timetable rule. It will apply to all trusts, including those created before the Bill comes into force, because it is a clarification of powers that exist in current law.
Some of that sounds technical, but the fundamental purpose of the Bill is to rid the law of a lot of technical restrictions. Hundreds of thousands of people still die without writing their will, and we believe that, for their families, this Bill will make life simpler and easier and lead to less conflict, less tension, and less cause for dispute. It will still be better for people to make a will, and we hope that they will, but where they do not, as I hope the House agrees, this Bill makes the law much clearer and provides for families where there is no will a much better, safer and simpler future.
Dan Jarvis (Barnsley Central) (Lab)
I thank the Minister for laying out in some detail the Government’s position on the Bill. As he outlined, it introduces a number of logical and constructive changes to the current laws on intestacy and family provision that apply in cases where a person dies without having made a valid will. As I have said in our previous debates, these are sensible reforms and Labour Members welcome them. The Bill simplifies what is, in practice, often an over-complicated area of family law. It revises legislation that has not been reviewed for over 20 years, in some instances amending laws dating as far back as 1925. It updates rules better to reflect the circumstances of families living in 21st-century Britain, and it irons out a number of minor technical issues.
I thank the Minister for the way in which he has steered the Bill through the House and engaged with Labour Members during this process. I also thank those in the other place and all the other Members of this House who have helped to scrutinise and improve the Bill, as well as the officials, officers and staff of the House who have helped to facilitate matters. I pay particular tribute to the Law Commission. The changes we are considering today are ultimately the culmination of a project it began in 2008 and the draft Bill it published in 2011. I thank it for its work over the past five years in helping to bring us to this point.
Let me turn briefly to the substance of the Bill. I have two general comments to make and one very brief question to put to the Minister. Both my points are reflected in the case of Pablo Picasso, with whom right hon. and hon. Members will be familiar as one of the great artists of the late 19th and early 20th centuries. Forty years ago, Picasso died at the age of 91. As well as a glittering career and a substantial artistic legacy, he left behind a significant estate that included much of his artwork, five homes, and a small fortune in cash, bonds and other assets. This would become the subject of some dispute, because what Picasso did not leave behind was a valid will. It would take six years before his estate was settled. It was eventually divided up between six different heirs, and the whole case cost some $30 million.
That is not a unique case and right hon. and hon. Members will know of other, more contemporary examples, but, even though Picasso was born in Spain and died in France, the lesson is just the same for us considering laws here in the UK. In essence, matters of intestacy and family provision claims can be long and complicated processes. There are numerous cases every year and, although some of them are unavoidable, the law should be as simple and straightforward as possible and we should encourage people to avoid them altogether by making a valid will.
As I said on Second Reading, the Law Commission stated in its 2011 report on intestacy that there are
“many instances where the current law is outdated, confusing or places unnecessary obstacles in the way of those with a valid claim to share in a deceased person’s assets.”
I know that the Minister will agree that that simply is not acceptable, especially when the people who have to manage the distribution—or unsatisfactory distribution—of an estate will also be coping with the loss of a loved one at the same time. Therefore, although these are largely technical changes, we should be mindful that even the most minor of improvements to the way in which the system works could make a world of difference to those families affected. The Opposition are hopeful and confident that this Bill will resolve many of the issues and we will be looking closely at the situation.
The Minister and I are united in recognising the importance of encouraging people to make wills. As has been acknowledged many times during our debates on the Bill, its proposals will come into effect only when someone has sadly passed away without having made a will or some other sort of binding declaration. If I may restate the figures, roughly 220,000 people died in such circumstances in 2011 and the Law Commission estimates that as many as two thirds of the UK adult population do not have a will. According to a survey carried out by the National Centre for Social Research, that includes as many as a fifth of people over the age of 75 and more than 90% of young adults under the age of 25. The Law Commission has also stressed that those who need a will most are the least likely to have made one. We need to do all we can to reach out to all sections of society on the importance of this particular issue.
Discussing what to pass on after one dies is not the easiest thing to talk about, but we need to get much better at it. I know that the Minister agrees with that. As he has said, we will meet shortly to discuss that and I look forward to continuing this debate with him over the weeks ahead.
May I ask the Minister to clarify one issue? The Government have accepted almost all of the Law Commission’s recommendations for reforming the intestacy laws. However, they have not adopted rules that would have applied to the surviving partner in a co-habiting couple. The Minister has said that there are no immediate plans to address that, but it is an issue, because will-making is far less common among couples who live together but are not married. More than 2 million couples live in such circumstances, but only about 13% of them have made a will and many do not appreciate that they have no automatic right of inheritance if one of them dies without leaving a valid will.
The Law Commission set out proposals to address the situation in its draft Inheritance (Cohabitants) Bill, but the Government previously indicated that the changes would not be implemented during this Parliament. In 2011 the then Minister, the hon. Member for Huntingdon (Mr Djanogly), informed the House that they had no intention to focus their efforts on them at that particular time. I am mindful of the Minister’s earlier comments, but given that the Inheritance and Trustees’ Powers Bill is so close to receiving Royal Assent, will he reconsider and agree to look at that specific area prior to the next general election?
Let me conclude by repeating that the Opposition welcome the action that is being taken and we are ready to work with the Minister to help to get the reforms right, because if we can save just a few grieving families from having to go through the intestacy procedures and make life a little easier for those who have to, that will make a real difference.
Simon Hughes
With the leave of the House, I rise briefly to answer the question asked by the hon. Member for Barnsley Central (Dan Jarvis) and to wind up the debate.
I absolutely understand the hon. Gentleman’s point about the very many people who cohabit or live together, but are not married. I am grateful to him for his prompt, because it is very important to send out from this debate and from the work that we will do later in the year—this ties in with an intervention—the message that people who live together but are not married should understand that, under the law of the land, there is no automatic transfer to the surviving partner and that they do not have the same rights. In our constituencies, we have all heard the old phrase about being married by “common law”—“a common law husband” or “a common law wife”—but it has no legal status at all.
People can perfectly properly make a decision that they do not wish to get married—that is entirely up to them—but it is much more important for them to write a will to make the appropriate provision. If they want their partner to inherit everything, they need to say so, because that does not necessarily follow under the law of the land.
On the specifics of the process, I have said that the Government have no plans to legislate on the matter in this Parliament, and that remains the case. The reason is that we are putting this Bill through Parliament to be in force by the end of the year, our reforms of the family courts are to start in April and there are many other reforms to the legal system. However, I am very conscious of the need for the Government not to run away from the issue, and for parties in the run-up to an election not to run away from it in our manifestos. It will be an issue for whoever forms the next Administration. The law is already different in parts of the United Kingdom; for example, cohabitation rights north of the border are different from those here. I accept that we must not ignore this business.
I end by thanking the Law Commission, which does an extremely good job for us in this country. I add my tributes to it for the work that it does all the time to present us with considered and measured proposals for legislation. On behalf of the Ministry of Justice, I repeat our thanks to the members of the Law Commission in general, and to the lead commissioner in particular, as well as to the staff. I also thank our staff in the MOJ and others who have made sure that the Bill is a very good piece of legislation—agreed across the House—which will stand many people in good stead. We are indebted to many people for the work that they have done. I hope that the House will now give the Bill a Third Reading.
Question put and agreed to.
Bill accordingly read the Third time and passed, without amendment.
Electoral Commission
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Leader of the House of Commons (Tom Brake)
I beg to move,
That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint as Electoral Commissioners:
(1) Ms Bridget Prentice for the period ending on 30 September 2018; and
(2) Mr Alasdair Morgan for the period ending on 30 September 2016.
The Electoral Commission was established by the Political Parties, Elections and Referendums Act 2000 as a body independent of Government. The chair of the Electoral Commission and the other electoral commissioners are appointed by Her Majesty the Queen, following an address from the House of Commons.
The procedure for appointing electoral commissioners is put in place and overseen by the Speaker’s Committee on the Electoral Commission. Candidates’ names are put before the House with the agreement of the Speaker. The Speaker’s Committee follows best practice guidance from the Office of the Commissioner for Public Appointments in relation to commissioner appointments.
Section 5 of the Political Parties and Elections Act 2009, which inserted new section 3A into the Political Parties, Elections and Referendums Act, states that four of the electoral commissioners should be persons put forward by the registered leader of a qualifying party for consideration for appointment. Those commissioners are described in the statute as “nominated Commissioners”. A qualifying party is one with two or more Members on the Floor of the House of Commons.
The motion before the House asks Her Majesty to appoint Ms Bridget Prentice as the electoral commissioner nominated by the leader of the Labour party to succeed Lord Kennedy of Southwark, and Mr Alasdair Morgan as the electoral commissioner nominated by the leader of the Scottish National party to succeed the right hon. Sir George Reid. Lord Kennedy and Sir George Reid have served the Speaker’s Committee and the House diligently. I know that Mr Speaker and the other members of the Speaker’s Committee would want me to place on the record their gratitude for the dedication of those commissioners to the work of the Electoral Commission.
Ms Prentice’s term will end on 30 September 2018 and Mr Morgan’s term will run until 30 September 2016, as has been the practice for such appointments. Given that both posts are vacant, the terms of both candidates will commence following Her Majesty’s decision to appoint them.
The candidates who are named in the motion have extensive political and electoral experience, as is highlighted in the report that was published by the Speaker’s Committee, which has been tagged as a document relevant to this debate. Ms Prentice served as the Member of Parliament for Lewisham East from 1992 to 2010, and as a Minister in the Ministry of Justice from 2005 to 2010. As a Minister, she was responsible for 14 areas of policy, including electoral administration. Mr Morgan was a Member of the House of Commons and the Scottish Parliament. He has demonstrated a deep knowledge of electoral processes and regulations. He also has a record of building consensus through chairing and convening a number of parliamentary Committees, including the Justice and Home Affairs Committee in the Scottish Parliament.
The statute requires that the motion be tabled with the agreement of the Speaker. I confirm that Mr Speaker has signified his consent. I trust that the House will approve the motion, and I commend it to the House.
Angela Smith (Penistone and Stocksbridge) (Lab)
I will make a few brief comments and broadly echo the contribution of the Deputy Leader of the House.
It is clear that the procedure laid down by the House for the appointment of the commissioners has been followed thoroughly and rigorously, and that the nominations have gone through all due processes. The parties that were involved in making the decisions are clearly confident about the two nominees, and those who have been consulted are content with them.
The Deputy Leader of the House made a few remarks about the capacities of the two nominees. Mr Morgan clearly has a great deal of experience in the matters that concern the Electoral Commission, as has Bridget Prentice. Bridget Prentice was known to many Members of the House. She was a Member of the House for 18 years and I think most Members would agree that she gave distinguished service. She was a Whip and a Minister at the Department for Constitutional Affairs and then the Ministry of Justice. As the Deputy Leader of the House said, she was responsible for the reform of electoral administration. She was a very well regarded Member of the House. The Opposition are happy to endorse her nomination and that of Mr Morgan.
Question put and agreed to.
Business without Debate
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we shall take motions 7 to 10 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Representation of the People, Northern Ireland
That the draft Anonymous Registration (Northern Ireland) Order 2014, which was laid before this House on 24 February, be approved.
Competition
That the draft Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014, which was laid before this House on 3 March, be approved.
That the draft Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014, which was laid before this House on 3 March, be approved.
Pensions
That the draft Financial Assistance Scheme (Qualifying Pension Scheme Amendments) Regulations 2014, which were laid before this House on 5 February, be approved.—(Mr Evennett.)
Question agreed to.
Willenhall Crown Post Office
(10 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Winnick (Walsall North) (Lab)
I applied for this Adjournment debate because of the strong concern felt in Willenhall, in the borough of Walsall, about the closure of the Crown post office. It is one of 70 such post offices that I understand are listed to be closed—[Interruption.] Perhaps I could have the Minister’s attention for a second.
Willenhall has been known over centuries for its lock manufacturing, and locks such as those by Yale are recognised everywhere and must have been used in every part of the country. Many of those lock firms have closed or move abroad, but Willenhall remains a thriving, residential, industrial place, and certainly needs to retain the Crown post office. Many people come to Willenhall market and frequently use the post office facilities, and the traders are obviously busy customers. The post office is located in the centre of the town, opposite the police station, and is very much part of the character of Willenhall. It certainly has no shortage of customers, and when I look in from time to time there is usually a queue. As far as I understand it, the argument for closure is not that the post office lacks customers, because that would not stand up.
I have no complaint about the way that the senior stakeholder manager—I think that is how he describes himself as part of the post office management—has kept me informed of developments. He has done so in a courteous way with e-mails about various developments, which I appreciate. Moreover, he has been willing to meet me and the councillors, including at a public meeting where he and his colleague were virtually in a minority of two.
My strong opposition to the closure is shared by those who live and do business in Willenhall. Willenhall should have its post office; it should be retained and I am totally opposed—obviously, hence this debate—to the decision to close it. As far as is possible, opposition to the closure is simply unanimous. I do not suppose the Minister is particularly surprised, because if a post office were to close in his area, there would no doubt be the same reaction. When I collected signatures for the petition, no one said, “I’m not interested,” which often happens with other issues. Indeed, they were only too willing to sign and knew what they were signing for. They were customers of the post office, or they were passing on the day that I was around collecting signatures, or on other days, and they took the view that the petition should be supported.
I do not take the view that the proposed alternative—a retail outlet—is an adequate replacement. The Post Office says, “The Crown post office will close, but before that happens a replacement will be found,” but as I set out, that will be along the lines of a retail outlet. I simply do not accept, any more than the elected representatives, the councillors, and those who live or do business in Willenhall, that that is a viable alternative.
The Communication Workers Union has also been active in supporting the community to oppose the closure. It will, of course, be said, “Well, one would expect it to do so; it is safeguarding jobs,” and even under this Government it is not considered a sin to try to preserve jobs. Nevertheless, we appreciate CWU support. Indeed, some of those in the CWU live locally and support the opposition to closure as residents as well as union members. The CWU makes the point that, in a recent report published in November 2012, Consumer Focus said that WH Smith was the worst performer on queue time, and that it scored badly on quality of service and accessibility. The report said that Crowns, on the other hand, perform the best on accessibility and show the most significant improvement, as well as scoring highly on quality of service. Perhaps that, too, can be taken on board.
Post Office management say that, once a transfer to a retail outlet is negotiated, there will be a public consultation over a six-week period. That seems nice and democratic. We are all in favour of consultation and going out asking people their views—I doubt whether anyone in the House would object to that—but the snag is that the consultation will be on anything but the crucial issue. It will not be a consultation on whether people want the post office to close. Indeed, at the public meeting I attended, I asked the person representing Post Office management who I have mentioned whether there will be any paper on which people can give their preferences, so they could say, “We want the post office to continue,” but there will be nothing of the kind. It is an odd form of consultation. The major issue is whether the Crown post office remains open. What is the consultation about? Will it be about whether there is enough car space in the proposed retail outlet or whether it is near toilet facilities and the rest of it? The crucial issue is the one I have described, but the people will not be asked.
The Minister—fair enough—might say in reply, “That’s not the normal practice.” I accept that and cannot say that things have been different elsewhere, but it would be a good idea to consult the public when a Crown post office is going to close, even if, at the end of the day, the decision remains the same. In that way, at least the people can give their views, for what that is worth.
A petition signed by many people, which I have mentioned, was handed to the Post Office. Walsall council, the local authority, at its meeting on 23 September 2013 carried a motion supported by all councillors. The motion stated that the council opposes proposals to franchise and/or close the Crown post office in Willenhall. The motion also states that to do so would downgrade the status of the office and lead to inferior customer service. It ends by saying that the closure of Willenhall Crown post office would have a negative effect on the local economy.
The latest information sent to me is that the franchise proposals, as they are described, will not occur in this financial year. There is not much left of this financial year, but the intention remains for franchising to occur in 2014-15. I wrote to the then Minister, the hon. Member for East Dunbartonshire (Jo Swinson), who replied on 30 June. Her letter could have been written by the Post Office—she did not add anything different from what Post Office management have told me. I invited her in my letter to come and visit Willenhall to see the position for herself. If she came in her ministerial role, she would be welcome—she would not be welcome in her politician role. No doubt she will say that Government policy is Government policy. Would it do any harm for a Minister to come and have a look at the situation? Since the Minister of State is responding to the debate, the invitation extends to him too. In Willenhall, he would be treated in a courteous manner, as one would expect, and he could have a look at the situation for himself. Would that do any harm? I do not think so. Perhaps in his reply he can state whether he will take up my invitation.
In conclusion, it is to be hoped that this decision is not set in concrete and that it can be looked at again. It is to be hoped that the views of the people of Willenhall can be taken into consideration in the proper way, and that it is recognised that this is a Crown post office with plenty of business. It is not a question of keeping it open out of sentiment. As I said, it does not lack customers. It is always busy and every time I go, there is a queue. We talk about localism. I hope that the views of the community can be taken into consideration on all these matters.
I do not have a great deal of hope. I will not pretend otherwise. I am sure, unfortunately, that the Minister will more or less state what was said to me in the ministerial reply. If that is so, I regret that, but I have no regrets at all—absolutely none—at raising on the Floor of the House of Commons an issue that is very important to my constituents. I believe I have a responsibility to do so. In doing so, I have the very strong feeling that there is hardly anybody in Willenhall, whether they are residents or traders, who would wish otherwise than to see the Crown post office remain open. I hope that that can somehow be taken into account by the Minister when he responds to my remarks.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
Let me begin by saying that the hon. Member for Walsall North (Mr Winnick) has certainly discharged his responsibility to his constituents by raising Post Office Ltd’s proposals to seek a franchise partner to operate Willenhall Crown post office. He has set out very clearly his concerns, and the concerns of his constituents, on the proposed changes, and I fully appreciate those concerns. As Members of Parliament, we all recognise that post offices are a vital part of the local community, and I understand the real issues and worries that some constituents may feel when changes to our post offices are proposed.
Such concern is not surprising given that there were two major closure programmes between 2003 and 2008, when six branches in his constituency were permanently closed. Five branches in my constituency were also permanently closed. I hope the hon. Gentleman recognises that this Government are taking a different approach. There is no programme of post office closures under this Government and there will be no such programme. We recognise the important social role that post offices play in our communities. Since 2010, we have committed nearly £2 billion to maintaining the post office network at a minimum of 11,500 branches. We are providing for the modernisation of up to 8,300 branches by 2018, bringing improvements such as longer opening hours for the Post Office’s millions of customers. We are also protecting 3,400 community branches and providing an investment fund to deliver improvements to those branches.
The post office network is made up of nearly 12,000 branches, the vast majority of which are owned and operated by private businesses and individuals more commonly known as sub-postmasters. Just 3% of the network—approximately 370 branches—is directly operated by Post Office Ltd. That is the so-called “Crown” network that the hon. Gentleman has spoken about. This small segment of the much wider post office network has historically incurred heavy losses, which amounted to some £37 million in the last full financial year. They account for nearly a third of the losses incurred by the whole network. That is not sustainable, and those losses cannot continue. They are a drain on the company, but, more important, they are a drain on the taxpayer. No business, including the Post Office, can continue to allow some of its high street branches to cost substantially more to run than they bring in. That, I am sorry to say, includes the branch at Willenhall, which I understand costs £1.44 for every £1 of income that it generates.
In return for the historic financial commitment that the Government are providing for the Post Office, we require the company to eliminate Crown losses by 2015. That is good commercial practice, and it is also fair to the taxpayer. The Post Office has a plan to end the losses, which includes working with retail franchise partners in 70 locations to provide continued access to post office services where the Post Office cannot do so viably itself.
As for the franchising proposals, it is important to be clear that Willlenhall is a loss-making branch. Following a process of careful consideration and modelling, the Post Office does not believe that it can operate the branch profitably or sustainably. However, it does believe that another retailer in the community can do so. It has therefore advertised the opportunity to local businesses and retailers, and has received expressions of interest from a number of parties. It is assessing those responses to ensure that the most appropriate partner is chosen to provide access to services, but until we know more details, we cannot take a proper view of how the franchising proposals will affect residents of Willenhall. However, I can reassure the hon. Gentleman and his constituents that this is not a branch closure. Customers will continue to enjoy access to post office services at a new branch close to the existing one.
Mr Winnick
The Minister says that it is not a closure, but it is a closure, to the extent that the existing building will close. There is no doubt about that, and indeed the Minister has not said otherwise. What he is saying is that the post office facilities will be transferred to a retail outlet, and I have not challenged that.
While I am on my feet, may I ask the Minister a simple question? Are the views of the local community on the role that the Crown post office in Willenhall plays and has played for so many years being taken into account?
Michael Fallon
As the hon. Gentleman himself mentioned, a consultation will take place, and the views of local residents will be important. I think he will concede that the post office is not in an ideal condition, in terms of the state of the building. It could also be argued that it is not in an ideal location. The key, surely, is to ensure that customers can continue to access post office services at a new branch that is close to the existing one. What we do know is that the full range of services that are currently offered will continue to be available at the new branch.
I assure the hon. Gentleman that before any changes are made, there will be that six-week local public consultation, under the terms of the code of practice agreed between the Post Office and the organisation Consumer Futures. The consultation will focus—perhaps this answers the hon. Gentleman’s question more directly—on the specific and detailed proposal to relocate the service. That will include issues such as the accessibility of the branch, the layout of the store, and the parking that would be provided. Anyone can express an opinion, and all responses will be considered carefully by the Post Office before a final decision is reached.
Already 17 former Crown branches have been reopened by the Post Office’s franchise partners. In these communities, customers are benefiting from continued access to the Post Office services they rely on, but in more modernised stores that deliver an improved customer environment and are fit for the 21st century. In all franchised branches customers are, importantly, also benefiting from longer opening hours, including in many cases on Sundays, too. That is important. It allows the Post Office to offer its customers the flexibility that they enjoy across the rest of the high street. Responding to its customer needs is the key to securing the long-term future of the network.
It is also the case that these franchised branches are now no longer a financial cost to the Post Office network. Franchising branches presents an excellent opportunity for a business in the locality, or a sub-postmaster, to take on and improve the branch. As with the many thousands of branches already operated by sub-postmasters, these franchised branches are being successfully operated by the Post Office’s business partners and sub-postmasters who are meeting the needs of their customers. They are also helping the Post Office become more sustainable and viable in the long term and reducing the need for taxpayer handouts.
Mr Winnick
I was not aware that the Minister was conversant with Willenhall, and he will no doubt respond on whether he will accept my invitation. He said that the post office is not in the most central place, but it is in the centre of Willenhall town. It is very near the market. I do not know of any location that could be more central in the town.
Michael Fallon
I am certainly going to pass the hon. Gentleman’s kind invitation on to the post office Minister, my hon. Friend the Member for Cardiff Central (Jenny Willott), and perhaps she can go and see for herself and establish beyond any doubt whether the location is optimal. Of course, I stand to be corrected by the hon. Gentleman, as he will know it far better than any of the Ministers, but it is my understanding that it is not on the main high street. All I have seen is a photograph of the location, but let me pass on his very kind invitation and we will see whether my hon. Friend is able to find time in her diary to take it up herself.
Mr Speaker
Order. May I just say to the Minister of State that we wish his hon. Friend the post office Minister an early recovery from her indisposition, but in the unfortunate event that it were to be lengthy, which we very much hope will not be the case, the Minister of State could always consider taking responsibility for the invitation and attending in her stead, and I am sure he would anticipate that with enthusiasm?
Michael Fallon
The House always benefits from your interventions, Mr Speaker, and thank you for your kind good wishes to my hon. Friend. I think the House has already guessed that my hon. Friend would normally have been answering this debate. I receive a number of kind invitations from all quarters of the House to visit, and I will certainly consider a visit to Walsall when I next draw up my regional visits programme.
The commitment I have outlined demonstrates that the Post Office has a plan that sustains and improves services. It is a plan that sees the introduction of new products and services. This is not a return to the closure programmes seen under the last Administration.
Alongside the plans to modernise and improve the Crown network, we are also delivering our network transformation programme, which is seeing the modernisation of up to 8,300 post offices by 2018. That includes Bloxwich post office in the hon. Gentleman’s constituency, which has converted to the new main model. The customers of that branch can now access Post Office services between 8.30 in the morning on their way to work and 7 o’clock in the evening on their way home. Across the UK, more than 3,000 sub-postmasters have signed up to convert, and nearly 2,000 branches, such as the one in Bloxwich, have already converted and are open and operating.
In 2010, we set out our commitments to the post office network in our policy statement, “Securing the Post Office network in the digital age”. I stand here three years later and tell the House that we are delivering on those commitments, and we will continue to deliver. We said then that there will be no programme of post office closures under this Government and there is not—and nor will there be. We said that we will provide £1.34 billion for the Post Office to modernise the network—we are providing that money and the Post Office is modernising. In November last year, we announced a further £640 million funding package to enable the programme to be extended to modernise and protect the whole network by 2018.
We said that we want to see the Post Office become a genuine front office for Government, and the company has so far won every contract it has bid for in the past three years, including the vital Driver and Vehicle Licensing Agency front office contract. We said that we will support the expansion of accessible and affordable personal financial services through the Post Office, and we are doing so. My hon. Friend the Member for East Dunbartonshire (Jo Swinson) was delighted to be one of the first people to open a Post Office current account last year when the company began a pilot in East Anglia. We also said that we will create the opportunity for a mutually owned Post Office. We have held a public consultation on that, and the company, alongside its stakeholders, is engaging the public to agree its public benefit purpose.
In summary, this Government’s track record on the Post Office speaks for itself. We remain committed to the network and we are continuing to invest in it to secure its future. The proposals of the Post Office to seek a franchise partner in Willenhall will ensure that the hon. Gentleman and his constituents will continue to benefit from continued and improved access to vital post office services.
Mr Speaker
Order. Before I put the Question on the Adjournment, the hon. Member for Devizes (Claire Perry) has a point of order relating to the Division at 3.23 pm, in respect of which she was a Teller.
Claire Perry (Devizes) (Con)
On a point of order, Mr Speaker. As one of the Tellers on the motion on the charter for budget responsibility earlier today, I have to report that the correct number of Noes was 23, not 22 as called—mea culpa.
Mr Speaker
I am extremely grateful to the hon. Lady for that helpful point of order, as will be the House.
Question put and agreed to.
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Westminster Hall
(10 years, 1 month ago)
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Energy Markets (Competition)
(10 years, 1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir Roger. I am delighted to have secured this debate, which is even more topical this morning than when I submitted my request last week.
The debate’s background is the rise in energy prices faced by domestic and business consumers over the past few years. Since 2010, energy bills for domestic consumers have risen on average by almost £300, and businesses say that energy bills are their second biggest cost. Many consumers find it difficult to pay their increasing bills and are concerned that they may face further rises. The issue’s importance was recognised by my right hon. Friend the leader of the Labour party when he announced that a Labour Government would freeze energy prices until 2017, thereby making an effort to help people facing today’s cost of living crisis. There is no doubt that that announcement struck a chord with the public, but the freeze was always envisaged as an interim measure to allow time for more fundamental questions to be addressed. It is important to have that discussion here today.
One fundamental question is how far there is effective competition in the energy market, or whether competition is, to a greater or lesser degree, ineffective and whether, as a consequence of any such weakness, lack of competition leads to higher prices for customers. Customers often feel there is lack of competition in the market’s operation. They see that when world prices go up, the price for the consumer goes up; but when world prices go down, the retail price does not appear to go down as far or as fast. That can be seen by comparing the movement of wholesale energy prices over the three years up to the winter of 2013. Wholesale energy prices were relatively stable from the winter of 2011, rising by an average of 1% a year, but during that period large energy companies increased their retail prices by an average of more than 10% a year. That is not just a recent phenomenon, and it is not just a phenomenon under this Government. If we go back to 2008, there was a dramatic rise in wholesale prices for both gas and electricity followed by a substantial increase in retail prices that was roughly commensurate with the increase in wholesale prices, but when there was a dramatic drop in wholesale prices in 2009—a drop of about 45%—it was not followed by a big drop in retail prices, which went down by only 5%.
We have to ask why that is the case. What does it show, and what needs to be done? Various reasons have been suggested for the apparent lack of effective competition in the market. It has been suggested that one factor might be customers’ lack of willingness to move from their traditional regional supplier, and it is certainly true that in most parts of the country—although in some parts more than others, with Scotland being one such example—most customers still stick with their traditional regional supplier. The dominance of the big six has barely shifted. The figures from the Department of Energy and Climate Change show that, until the end of 2012, at least, SSE, E.ON UK and RWE npower held exactly the same market share in gas as they did five years previously. British Gas’s market share dropped from 44% to 40%, and EDF’s share rose from 7% to 9%. Similarly, there were no real changes in the share of the electricity market held by those companies over that five-year period.
Some suggest there is inherent weakness in a system dominated by vertically integrated companies—that is what we have for the most part—in which both the supply and generation businesses are closely linked. Others point to the unwillingness of consumers to move because of the complexity of tariffs. Until recent changes, by some counts there were more than 400 tariffs across the various companies.
Of course, the companies point to other factors as being the principal reason for the gap between wholesale and retail prices and for the system’s apparent difficulties and shortcomings. I accept that it is a complex world and that the market is influenced by many factors, but important questions need to be asked, and it is certainly not just the Labour party that is asking those questions. As hon. and right hon. Members know, the consumer organisation Which? recently published material estimating that the flaws in the market, as Which? describes them, have left consumers paying almost £3.9 billion more than they ought to have paid since 2010.
Businesses are also concerned. Along with Which?, the Federation of Small Businesses wrote to the competition authorities a few days ago saying:
“We all want to see a transparent market where consumers and businesses alike can understand their bills, compare prices and switch easily. We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy.”
Small businesses, consumers and the Labour party are raising those concerns and questions.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Gentleman on securing this debate. Does he agree that, in addition to the lack of competition, there is widespread concern that millions of customers are making complaints, particularly against the big six?
Mark Lazarowicz
Indeed, and the figures have been rising, as the hon. Gentleman knows.
As I said at the start of my remarks, the Opposition see energy prices not just as the first step to reduce pressure on customers but as part of a much more fundamental reset of the energy market. In summary, we propose to get the energy companies to separate the generation and supply sides of their businesses, and we want to see all energy companies trading for energy in an open market by selling into a pool. We want a simplified tariff structure and a new, tough energy watchdog with new powers to police the market, including the power and remit to force energy companies to cut their prices when there is evidence of overcharging. All those proposals would make the market more transparent, and no doubt my hon. Friend the Member for Sunderland Central (Julie Elliott), our Front-Bench spokesperson, will refer to those proposals in more detail.
The proposals in the Labour party’s consultative document are welcome, and I note with interest the response to the consultation published today by SSE, although I have had only a brief opportunity to look at it this morning. I suspect that the Minister will say that, yes, there are weaknesses but they are being addressed. He will no doubt point to increased competition and to the new entrants into the market. Indeed, there has been an increase in the role and market share of new entrants, but they still represent a fairly small proportion of the market as a whole.
There is a long way to go, and we all know that many customers are reluctant to switch for all sorts of reasons. They might be uncertain about how to go about switching, for example. Some of my constituents switched and found that, after an apparently attractive offer, within a few months they were paying even more than they did under their previous supplier. The tariff simplification introduced by the Government, which on paper seemed a good idea, has in practice led to a number of difficult consequences. Many of us know of cases in which people have ended up paying substantially more following the tariff changes because those changes are in some cases biased against people who use little energy, either by choice or by lack of income or resources.
A much more fundamental change is needed, which is recognised across the industry. I also recognise that the weakness in the market is not the only reason for higher prices. World supply and demand is a major factor, and taxes and support for energy efficiency and renewables have an impact. There is certainly a need for changes there as well. Like many Members, I am concerned that the changes the Government have introduced so far will mainly result in the watering down of energy efficiency measures, which are the single biggest way of enabling consumers to cut energy waste and cost.
Albert Owen (Ynys Môn) (Lab)
Another factor in the increase in prices and the high prices is distribution cost. In the distribution areas, there is no competition at all. That monopoly contributes somewhere between 19% and 24% of a bill. Does my hon. Friend agree that we should look for greater competition in that area?
Mark Lazarowicz
Absolutely. That is one of the areas where a fundamental investigation is needed, with fundamental questions asked and fundamental changes made. I recognise that businesses have to make a profit for their shareholders and future investments. They are big businesses, so the profits will have big numbers in them. Nevertheless, there are fundamental questions. Today, SSE has made an announcement that promises an energy price freeze until at least 2016 and it is preparing to separate legally the retail and wholesale sides of its business. Those changes are in line with the policies announced by the Labour party last year.
David Mowat (Warrington South) (Con)
This debate is indeed timely, given the SSE announcement. The hon. Gentleman will also be aware that SSE announced this morning that of the four offshore wind farms it was planning, three will not now go ahead.
Mark Lazarowicz
I see that that is how it has been described by some in the media. I have not had a chance to look at the SSE comments in great detail, but I am not sure that the causal linkage that the hon. Gentleman suggests exists. It was interesting, given the various comments on the Labour party proposals, that SSE has welcomed the need for long-term stability in the framework for investment. Perhaps the single biggest problem for long-term investment in offshore wind has been the confused and mixed messages sent by the Government recently.
Mark Lazarowicz
I will draw to an end, because I know a lot of colleagues want to speak in the debate, including the hon. Gentleman. There is an increasing focus on price, the customer, the structure of industry, long-term prices and long-term investment, and that focus comes from many quarters. If it had not been for the intervention of my right hon. Friend the Leader of the Opposition and our policies last year, we would not have seen this welcome concentration of minds on the issues. That has encouraged many to bring forward their proposals for change. I hope that this debate will contribute to getting the changes in the industry’s structure that are so desperately and urgently needed.
Sir Roger Gale (in the Chair)
Order. At least seven Members have indicated a desire to speak, and we have an hour and a quarter for the debate. I will not impose a time limit at this stage, but I urge Members to exercise a degree of self-restraint. If everyone keeps their remarks to about six minutes, all Members should be accommodated.
David Mowat (Warrington South) (Con)
I did not rise to indicate that I wanted to speak, because I was with a colleague last night and I left my speech in the pub. I have been trying to rewrite it and I will happily now go ahead.
Sir Roger Gale (in the Chair)
Order. The hon. Gentleman did the courtesy of putting his name down to speak, which is why he was called. We try to call people, as a general rule, who bother to put their names in first. No doubt the circumstances he faces will lead to brevity.
David Mowat
Certainly the second part of my remarks will be brief, Sir Roger.
The issue before us is serious. Everyone at this debate is concerned about fuel poverty in their constituencies and high fuel prices. Most of us, I think, are concerned about energy intensive industries, particularly in the north-west and the north-east. Some 900,000 people work in industries where the price of energy is a significant determinant of profitability, and it behoves us all to take the issue seriously. We are where we are because issues have been raised on the market fairness and market effectiveness of the energy industry in the UK, and it is right that we look at that. The Secretary of State has talked about referring the industry to the competition authorities, and I support that.
It is important—the opening remarks did not do this—to distinguish between gas and electricity, because they are different markets. I want to talk a little bit differently about each of them. There are suggestions that the industry is some kind of cartel and “the big six” is, frankly, often used in this House almost like a swear word. We hear that the big six do this and do that. I have heard the shadow Secretary of State use the phrases “price fixing” and “secret deals”. If the Opposition have evidence of cartels or price fixing, that is extremely serious. If it exists, directors of public companies will go to prison. Fines can be levied that are several times the turnover of those companies. It is important that the Opposition bring that evidence forward, if it exists.
When words like “cartel” and phrases like “secret deals” and “price fixing” are being used, be aware of what is being suggested and be willing to take that forward and give that evidence to the competition authorities in the European Union and the UK and to the police. If such evidence does not exist, it might behove the Opposition to use more moderate language, which they were doing in their opening remarks in this debate, at least.
I want to make some comments on how the UK market compares with the EU market. One way to find out whether there is price fixing, cartels or other problems is to see how our market compares in structure and outcome with the rest of the EU. I have done a little analysis on that, under three headings. The first is out-turn prices for gas and electricity in the UK compared with other EU countries. The second is market structure. People say that we broadly have the big six in gas and electricity, and other countries in Europe do not have that structure. The third is the profitability of those energy retailers in the UK versus other places. I report that the answer is different for gas and electricity.
On gas, we have to distinguish between taxed and untaxed prices. In this country, we tax gas very little, while the EU taxes it much more heavily. It can appear that prices are higher there, so it is only fair to look at untaxed prices; on that basis, our gas prices are the second lowest in the EU, although it is true that they are significantly more than in some other countries. They are triple the prices in the United States of America, but we know that that is to do with shale gas and all that goes around that. Our gas prices are the second lowest in the EU, yet broadly speaking we have an EU energy market for gas, and some comparability would be expected. If a cartel is operating in the gas market, it is hard to see that it is being very effective.
On electricity, our retail prices are among the lowest in the EU. When we look at the position without tax, it is a little more nuanced. According to the EU portal, our untaxed electricity prices are slightly higher than those in Germany, Holland and France, although not by very much—5% or 6% higher. That is a lot of money, however, by the time that all works through. On the face of it, there might be a more significant issue with electricity than there is with gas. I would be interested to know whether Opposition Members are talking about the need for a price freeze for both industries or just for electricity.
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the hon. Gentleman accept that the production of electricity using gas means that there is a substantial link between gas and electricity? Investors in new gas-fired power stations claim that the relationship between gas and electricity prices means that they are currently not particularly willing to invest. The hon. Gentleman’s decoupling of the two markets is a bit over-precise and ought to bear that fact in mind.
David Mowat
That is a fair point. It is true that no gas power stations are currently being built in this country, but the principal reason is that shale gas in the United States has meant that coal has become cheap on the world market. We will therefore be burning coal in this country at a great rate—even more so in Europe—until we are stopped.
I accept the hon. Gentleman’s point that the markets are not entirely distinct, but my point was simpler than that. I have looked at what we are paying in this country for gas, which is a separate market, and it is the second lowest price in the EU. Members should bear that in mind when making comments later in the debate.
I was about to come on to market structure. I have always thought it a little odd that having six participants was regarded as a monopoly. Looking elsewhere in EU, Germany has two retailers in electricity and three in gas, Holland has three in each and Italy has five in gas and two in electricity. France is a little different because of nuclear power. In terms of market concentration, the report I used for this is the—I do not have it here—
David Mowat
It’s in the pub. It was the “Energy Retail Markets Comparability Study” report completed for the Department of Energy and Climate Change, which stated that we have the least concentrated energy market in the EU, with the possible exemption of Austria. Opposition Members may want to reflect on that as well.
The next thing is profitability. Are companies making massive profits? The report states that there are two ways of looking at profits. They can be earnings before interest and tax, known as EBIT, or the return on capital employed or ROCE. On both measures, profitability in the UK market is similar to that in the rest of Europe. It is of course perfectly possible that I have missed the point—that every country in Europe has a cartel, of which the UK market is just one part, and that we are luckily going to fix that in the UK. That may well be the case, but all I am saying is that, by many measures, we seem to be no worse off, and often much better off, than some of our competitors.
Dr William McCrea (South Antrim) (DUP)
Listening to the hon. Gentleman, it is as if our constituents were getting a real bargain for gas and electricity, but I assure him that that is not what my constituents are telling me. They are facing a choice between heating and eating and do not believe that they are getting a bargain.
David Mowat
I thank the hon. Gentleman for that intervention. I have not said that people are getting a real bargain. I am trying to compare prices here with those in the rest of Europe, including the Republic of Ireland, and to examine whether there is evidence of exploitative behaviour. That is my point.
I wish we had less fuel poverty—I will come on to how we need to vote on measures to reduce it—and would like to see lower prices, which more competition can achieve. The Government’s work on making switching easier and price comparability is important, but switching is still too difficult and leads to stickiness in the market. If it was easier to switch, the market would work better and prices would be lower, so we need more work on that.
I agree that it would be better if there were more new entrants in the market. Having more game-changing new guys coming into the retail market would be beneficial. All I am saying, however, is that there is nothing in the structure of our market that implies that it is worse than elsewhere in the EU. Indeed, it would appear to be slightly better.
We need to be careful about what we wish for on energy policy, because security will be a significant issue over the next three or four years. In my earlier intervention, I mentioned SSE’s decision, announced this morning, to pull out of offshore wind, which I very much regret. I hope that there will be no trend of similar announcements from other players in response to the slow-motion car crash that is Opposition energy policy. We need energy stations to be built to replace ageing nuclear and coal power stations, and they need to be built pretty quickly or we will have a problem.
Finally, I have voted four times against the Opposition on matters of energy prices. Three years ago, there was a Government motion to reduce the solar subsidy from six times grid parity to four times grid parity, but the Opposition voted against the Government on what was a moderate reform to the market. They also voted against the Government on a Lords amendment regarding the accelerated replacement of coal. How we vote on green issues matters. Many of our constituents are in fuel poverty, and we need to be thoughtful as to how we vote.
Sir Roger Gale (in the Chair)
Order. I intend to call the Opposition Front-Bench spokesperson at 10.35 am, so I am imposing a six-minute limit on speeches.
Dr Alan Whitehead (Southampton, Test) (Lab)
Why are we having a debate on the energy market when, with the Energy Act 2013 having passed through the House, energy has apparently been done to death? The simple answer is that, although all the material that went into the Energy Act mentioned electricity market reform, the electricity market was the one thing that was not reformed as a result.
As my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz), whom I congratulate on securing the debate, outlined, the market in the UK is not working well, in particular because the present structure—I take issue with the suggestion that markets elsewhere in Europe are more concentrated than the UK’s—is concentrated and vertically integrated on both sides. The big six have 95% of the retail market and some 70% of the wholesale generation market. The hon. Member for Warrington South (David Mowat) mentioned Germany, where nearly 50% of generating capacity is in the hands of independents, communities or local agencies, which is a different landscape from the UK’s. Switching is only part of the solution to competition and to market dysfunction.
Indeed, what we need to understand about switching is that small suppliers, which have recently seen their miniscule share of the retail market marginally increase, are subject to a reduction in energy company obligation fees when they have fewer than 250,000 customers. When Mrs Miggins of 7 Acacia avenue switches and becomes a small supplier’s 250,001st customer, that costs the supplier £7 million in the changeover from non-obligation to obligation—[Interruption.] The Minister shakes his head, but I am afraid that that is how that works.
How one fixes and deals with market competition is about looking at the whole question—how the market works together. The Opposition proposals on the separation of retail and wholesale businesses and the development of a pool—essentially an exchange to secure transparency and access to the market for all, including independents—start to tackle that overall market issue. The Government will pray in aid an Ofgem report—I believe the final report is out tomorrow—about wholesale power market liquidity, and the “secure and promote” licensing conditions. It will, clearly—certainly in relation to what has been proposed so far—deal only with the day-ahead market, one end of the trading arrangements, and not with the arrangements whereby companies trade with themselves.
That is an essential question in dealing with how to get the market working better. In bilateral deals, companies trade with themselves. They not only buy extended amounts in advance and then whittle amounts down to balance, but, at gate-closure time, they trade with themselves so as to balance their own arrangements much better, to avoid being fined in relation to balancing arrangements. That provides, among other things, a particular advantage compared with independent suppliers or, indeed, retailers, who have to buy from the spot market or the day-ahead market to balance their own supplies. It is a completely integrated arrangement as far as self-supply is concerned.
It is no coincidence, therefore, that SSE announced this morning a price freeze until 2016 and possibly beyond, and a separation of supply from retail. I think that what we should read into that is that SSE anticipates a Labour Government making the changes and getting ahead of the game. That change is greatly to be welcomed, and we need to put that on the table in discussions on competition.
Damian Hinds (East Hampshire) (Con)
I congratulate the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on securing the debate. As the hon. Member for South Antrim (Dr McCrea), who has just left the Chamber, said, the issue is very important to many of our constituents. They are at the sharp end and they feel the effect of the high price of heating their homes. It is also a big issue, of course, for firms and for the competitiveness of the UK economy.
There are several elements to the price we pay for energy: the wholesale cost, which accounts for about 44% of a typical dual fuel bill; the cost of supply; the policy costs; taxes, of course; and, finally, profits. Today we are focusing on competition and competitiveness in the market. That will flow through; it will be seen in companies’ profits, of course, and to an extent in the cost base—the part of the operating cost that is retail distribution in particular. Of course there is also the question of the allocation of costs, where there is vertical integration in the market. In 2012, the big six made an average margin on domestic energy of about 4.3%, which is not the sort of level to raise alarm bells. However, the question that many people want to ask is whether the vertically integrated companies are making super-normal profits elsewhere in the chain, and in particular in generation. That is a question that even the collective wisdom of all the hon. Members in Westminster Hall today will probably not be able to solve. It needs a full-on economic analysis by the competition authorities, and I hope that that will come soon.
For today, we are focusing on retail distribution. I do not want to get all theoretical about it, because, as the hon. Member for Edinburgh North and Leith said, the issue is a practical one that people feel in their pockets and in the heat or cold in their homes. Perhaps not the stupidest place to start a discussion about competitiveness in any market is the conditions for perfect competition. The things that are needed are a commodity product; many buyers; many sellers; no barriers to entry; perfect information; and no switching costs. In the market that we are concerned with, the first two are given: there is a commodity product, whether it is gas or electricity; and clearly lots of people need to buy it. Everything else in the list does not come naturally. There are not, naturally, many sellers. There would not naturally be perfect information or an absence of switching costs and barriers to entry. Those are the things that public policy should be concerned with, for competitiveness.
It is worth dwelling for a moment on history. There is a rumour, although I do not think that the hon. Gentleman perpetuates it, that there began to be a problem with high energy prices in about May 2010, and that it is all the fault of the present Government. That is of course absolutely and wholly untrue. According to the Office for National Statistics, in 2002, 2003 and 2004 the average monthly household energy bill was £70. That rose to £108 by 2009 at otherwise constant prices—a massive rise of 50%. The rise was even worse as a proportion of income for the poorest fifth of customers. The price came down, but only slightly, I am afraid, after 2009-10. If I had more time, I would talk more about the international comparisons, although my hon. Friend the Member for Warrington South (David Mowat) did that extremely well. We should remember that, of course, the biggest factors in the price of energy are, sadly, things that we cannot control, to do with wholesale energy prices. However, a lot could be said another day in another debate about how those markets might work more in this country’s favour.
Whatever the other main factors may be, we always want a more competitive market, and that always has an impact on price. There are two areas where that is particularly relevant: the number of sellers in the market and the barriers to new ones coming in. There are many markets in this country with high concentration ratios, including confectionery, soap powder and grocery retail. However, we would all agree that they are competitive markets in which companies compete hard with each other. A problem arises, particularly, when products are less comparable, at higher value, and harder to switch between; so in a market such as banks, where there are high concentration ratios, there are concerns about the way competitiveness works. Challenges therefore become important, and I greatly welcome what the Government have done to encourage more companies into the market, but we need more trusted brand names in the market, to which people would feel more comfortable about switching. I should be interested to hear what the Minister thinks could be done to encourage more of those in.
A bigger issue is comparability and ease of switching. I acknowledge that we are part way through a process. Much has already been done through the regulator and in legislation, and the full effects have not yet been felt. It would be wrong to prejudge things. Tariff complexity reached almost comic proportions when there were hundreds of tariffs, including one that came with a free football shirt, for some reason. That, combined with the intangible nature of the product, and the fact that none of us really understood the dynamics of consumption and volumes, made the market a hard one for any consumer to master.
There is more that I should like to say, but I will not be saying it this morning. Suffice it to say, we obviously have high energy prices, and we all care about that and want to bring the price down. Several issues are relevant, but we cannot say that lack of competitiveness is the largest, or even a very large, single factor. However, we know that factors in competitiveness need more attention, and I hope that the competition authorities will deal with that, and that the Government will continue their push for diversity and competitiveness in the market.
Barry Gardiner (Brent North) (Lab)
It is a pleasure to speak in the debate, and I congratulate my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) on securing it.
“The party’s over for the big six.” Those are not my words, but those of Evan Davis on the “Today” programme this morning. I was delighted to hear that, but was even more delighted to hear the comments of Alistair Phillips-Davies, the chief executive of SSE. He made them quite calmly, given all the furore when a few months ago my right hon. Friend the Leader of the Opposition announced that we would impose a price freeze and break up the vertical integration of the big six.
Alistair Phillips-Davies said, “If that’s what the customer wants, we are very happy to participate in that agenda.” Labour party policy, it seems, has moved from the unimaginable and unacceptable to the mainstream in just a few short months, and that has to be welcomed. If the second largest company in the UK is saying that it is happy to participate in that agenda, it seems that it has seen the writing on the wall.
Energy bills have risen by almost £300 for families and businesses. More importantly than simply that, however—this should be of specific concern to the Minister, whether he is listening or not—the employers’ federation, EEF, in its “Executive Survey 2014”, highlighted rising input costs as the primary risk to growth: I repeat, the primary risk. In 2014, 61% of companies surveyed by EEF cited input costs as a risk to their growth plans. That figure was up four percentage points on the 57% of just one year earlier. That is fundamental for business. Bills are going up because when the price of energy increases, energy companies pass that on, although they are reluctant to see the change passed on when prices go down, or at least they are not nearly so quick about it.
Why has that been possible? Why has it been allowed to happen? The answer is limited competition and weak regulation by Ofgem. Evidence presented to the Select Committee on Energy and Climate Change showed that the big six were engaged in inconsistent accounting. The hon. Member for Warrington South (David Mowat) asked for evidence—thank God he left his speech at the pub, because he managed to take twice as long as your recommended time limit without the speech, Sir Roger; goodness knows what would have happened had he brought it with him. He said that if anyone knows about such things, they should report it, so let us look at what evidence there is and at what has been presented.
BDO found that the vertically integrated companies were using four different accounting standards. The improving reporting transparency review conducted by BDO for Ofgem recommended that Ofgem
“Require the reporting of trading function results, including disclosure of the risk each trading function assumes”,
as part of companies’ segmented accounts. Ofgem, however, will not act on the proposal, because, it stated, that would have meant the need to change company structures and Ofgem does not have the powers to require such a change. That is, in part, because four of the big six are not UK companies, but it also shows that Ofgem is far too weak to effect the changes needed to our energy market.
It is worth noting that EDF opposed recommendation 2 of the improving reporting transparency inquiry—that would require an independent auditor to provide an opinion on segmental statements—and that the trading arms of the vertically integrated energy companies were implicated in the fixing of the benchmark price for gas. The hon. Member for Warrington South said, “Where’s the evidence?”, and asked us to produce it. Well, with the fixing of that benchmark price for gas, unusual trading activity reduced the price of gas just before the end of the financial year, and that was reported to the Financial Services Authority by a company responsible for setting so-called benchmark prices, ICIS Heren. The practice was indeed reported to the FSA at the time. That type of activity enables the big six to reduce the cost of gas relative to the price paid by independents, creating further barriers to market entry and ensuring that the big six retain their unhealthy monopoly.
I know what the Minister will say about competition in the market, because he has said it on a number of occasions in the House. It is the Government’s prepared agenda. They say, “Oh, but there were 14 players in the market before it was reduced to the big six by the Labour Government through the new electricity trading arrangements, or NETA.” There were 14 regional monopolies, not six national players; I wanted to nail that one before the Minister had the chance to say it.
My hon. Friend the Member for Edinburgh North and Leith has already said what Labour will do differently and that is clear. I am running out of time, but I must add that the decision of my right hon. Friend the Leader of the Opposition has proved prophetic, and it will prove right.
Mr Mike Weir (Angus) (SNP)
I am pleased to be able to make a contribution to the debate under your chairmanship, Sir Roger.
I congratulate the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on securing the debate on such a momentous day, when SSE has announced a price freeze until January 2016, which neatly takes us past the next general election. I should declare an interest: I am a customer of SSE and pay by direct debit, so I will benefit from the freeze, with the added advantage of avoiding the annual argument when the company tries to put up the amount of the direct debit, even though use might have fallen.
SSE also announced that it is to split its generation and retail arms. The Labour party is, of course, seeking to take the credit—as good politicians, that is not surprising—but given what the chief executive said on the “Today” programme this morning, the decision is clearly a commercial one, driven by the fact that Ofgem is due tomorrow to announce possible further action against energy companies.
Ofgem has already taken action to force generators to trade fairly with independent suppliers or face financial penalties, and to post the prices at which they will trade wholesale power up to two years in advance, as well as ensuring that more information is given in annual statements. I have not always been the greatest fan of Ofgem, but in this case its actions appear to have borne some fruit. It will be interesting to see how things develop after the SSE announcement and whether others of the big six energy companies will follow suit.
Another competition problem arises, however, in how a price freeze will affect the smaller players in the market—especially in the gas market, where many buy gas on the spot market using the day-to-day price. At a time of international uncertainty, that price can fluctuate wildly. A freeze by the big six may cause problems for the smaller companies.
It has long been a major frustration that we find it difficult to discover the true costs of energy and have to wade through the opaque ways in which it is traded within companies. The Ofgem decision should at least give us some greater information. We have to take care and keep a close eye on how things work.
Last year, the “Dispatches” programme on Channel 4 investigated energy prices and described how E.ON, another of the big six, internally deals with its existing split between retail and wholesale markets. Apparently, its retail arm makes no money, because it pays huge rates of interest on money borrowed entirely from associated companies within the group. Although E.ON is already in theory split between generation and retail, it is far from clear what real profit is being made, because of the accountancy practices employed. Will the Minister assure us that the new Ofgem rules will tackle such abuses and make it clear what is actually being earned by both sides of the company?
We can all welcome a freeze on energy bills, but we should not get too carried away because far from everyone will benefit from such an action. Again on the radio this morning, it was pointed out that SSE has higher charges with some tariffs than other companies, and that it is possible to get a better deal by shopping around even among others of the big six companies. That illustrates another problem with a simple freeze, which is that many customers are on less than great tariffs, especially those on prepayment meters. A freeze will lock in those inequalities within the system. We need to look closely at the inequalities among the different tariffs and ensure that those with the most need get lower energy prices.
It is also worth noting that a simple freeze will produce regional anomalies, because the proportion of people paying by direct debit fluctuates wildly. For example, in the south-east of England it is 63% and in my own area of the north of Scotland it is 56%—curiously, the very two areas in which SSE is the dominant player—while in London it is only 41%, possibly because of the much more transient population and the many houses of multiple occupation in the city. The effect of the freeze will therefore vary greatly.
It is also worth noting in passing that a price freeze comes with a cost. SSE also announced today that it is shedding 500 jobs and pulling out of three of its proposed offshore wind farm developments. It has said previously that it is pulling out of some wind farm developments, but I remind the hon. Member for Warrington South (David Mowat) that although SSE is pulling out, several parties are involved in most of the developments, so that does not mean a development will not go ahead.
Many of us warned that a simple price freeze would have the effect of endangering the investment urgently required to ensure that we have an energy infrastructure that meets our future needs. SSE’s announcement is an indication that that could indeed be a problem. Both Ofgem and the Government need to address that to ensure the correct balance between prices and investment. If SSE’s decision to withdraw from the wind farm development is replicated by other companies, that will pose a real threat to future renewables development. The future is in renewables, and if we are to get prices down and keep them down we must ensure that such development goes ahead.
Albert Owen (Ynys Môn) (Lab)
It is always a pleasure to serve under your chairmanship, Sir Roger.
I speak today as a member of the Select Committee on Energy and Climate Change—we have already heard from another member, my hon. Friend the Member for Southampton, Test (Dr Whitehead). Over the past few years, the Committee has looked seriously at and conducted some in-depth inquiries into electricity market reform, profit, prices and poverty. We have been looking at the energy market in great depth, and I welcome its being raised on the political agenda, as that has focused attention on some of those big issues. For too long we were seen as not really addressing the big issues, but the subject has now become one, for a number of reasons. Prices have been hiked in recent years at a time when many households have seen their incomes frozen or cut. The cost of energy and the impact of energy prices have become a profound problem.
I want to talk about an area that has not yet been discussed this morning, but I will begin by talking about how we have got to this position, and why I and many others believe that the UK energy market is not working. There are historical reasons. In the 1980s and 1990s, there was an ideological privatisation of the energy market, and in the first instance monopolies were set up. British Gas became a vertically integrated monopoly in 1986, and liberalisation came in much later. Electricity monopolies were also set up. My hon. Friend the Member for Brent North (Barry Gardiner) was absolutely correct to say that privatisation created regional monopolies. Those monopolies still exist in transmission and distribution.
That is the issue that I shall concentrate on. The Energy and Climate Change Committee will hold an inquiry into the issue, because, as I said in an intervention earlier, it contributes to some 19% to 24% of the bills that all households and businesses in this country pay. There is a lack of competition within transmission and distribution. Companies pass on the costs of distribution and transmission to customers and we end up paying that bill. That is something we need to take seriously and look into.
At the moment, many of those companies are foreign-owned and have a profit motive, so their first priority is the shareholder. During the passage of the Energy Bill and the reform of the electricity market brought forward by the Government—whoever had been in government would have had to bring in such measures—there was discussion of the fact that National Grid is an American-owned monopoly that controls the high velocity distribution of electricity in this country, with its shareholders as its first priority. It will be the system operator of any new-build system in the future. We have a monopoly, then, that will have a big say in the development of new technologies and the different projects that go forward. There is a worrying lack of competition that impacts on prices.
The Minister is a generous person who tries to give an answer either on his feet in the debate or else in writing. Will he comment on the distribution and transmission systems in this country, in which there is no competition whatever at the moment? As I said, that contributes to the prices that businesses and other customers pay.
I want now to deal with the announcement made this morning by SSE. The hon. Member for Warrington South (David Mowat) spoke about the language used when we talk about the big six. I have been careful in my choice of language today, but I have not held back in any shape or form when the big six have been giving evidence to our Committee. They have been hiking prices considerably and are their own worst enemies, because of the lack of transparency within the system.
To be fair, the hon. Member for Angus (Mr Weir) was right: Ofgem has tried—a little late, to many people’s minds—to open up tariffs and make companies more transparent, so that we have a greater understanding of the market. But my right hon. Friend the Leader of the Opposition was absolutely right, and ahead of the game, when he suggested that we should have a price freeze—for two reasons.
First, as I said, energy price hikes have caused real hardship to families and businesses throughout the country. Secondly, the aim is to have a deliberate pause to look at the regulatory system itself, because it is not working as many who supported privatisation in the 1980s and 1990s thought it would, as it is not bringing down prices for businesses and domestic customers.
I would like the Minister and the Government to comment on distribution and transmission. When the Energy and Climate Change Committee has a thorough inquiry into that matter, I am certain that he and the Government will respond to our findings. The monopolies that exist in many areas are contributing to hardship throughout the business community and the United Kingdom. Transmission and distribution should be treated in the same way as retail and wholesale. I welcome SSE’s announcement today as a first step to common sense. We should have a freeze so that we can address those big issues.
Mr Iain McKenzie (Inverclyde) (Lab)
It is a pleasure to serve under your chairmanship this morning, Sir Roger. I congratulate my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) on securing this important and timely debate.
We are all agreed that the energy market is not working for families or businesses. Energy bills have risen by almost £300 for families, and businesses say it is the second biggest cost they face. With that in mind, businesses have focused on reducing their energy consumption, to the point that people in Inverclyde see that as almost an attraction to set up business there—by going back to the future. Previously, industry energy costs were subsidised by hydropower, and we still have that infrastructure. We are investigating that and hope we will be allowed to approach industries and businesses to offer them a subsidy on their energy costs if they set up in our area. We hope that transpires, because energy prices are a big issue.
It is not only we politicians who are saying that. In a recent survey, almost 80% of the people who responded said that energy costs were the biggest worry for them. More tellingly, in that survey only one in five people said that they trust their energy provider to act in their best interests. That stems from the days when we witnessed something that I am glad to say we do not witness as much—indeed, I hope it has ended—door-to-door selling to encourage people to switch energy supplier. That has unfortunately had a knock-on effect on those who are genuinely trying to assist people with energy costs, as the distrust is still there when they knock on the door. We have seen that in my own area.
In Inverclyde, we are trying an exciting new project called iHeat, which is not about reducing energy prices but assisting people in reducing consumption. We have been reasonably successful in installing insulation in most of the housing in Inverclyde, and so have gone beyond advice on insulation. We are also giving advice to families. It is traditionally thought that pensioners are the ones whom we have to advise on energy consumption, but that advice is now being targeted more at families who are struggling with their energy costs.
People are advised to look at switching tariffs. The hon. Member for Warrington South (David Mowat) touched upon that, saying that it is still not as easy as it should be, and indeed it is not. When I visited the iHeat project, I spoke to many of the staff who were assisting people in switching tariffs. They sometimes spent upwards of an hour on the phone, waiting to get through to an energy company for help with tariff switching.
The issue is not only about assistance with reducing energy consumption; it is about changing the marketplace and separating generation from supply. The current market structure may provide consumers with a reliable supply of energy, but there is no evidence to suggest that costs are fair and efficient. An incident across the water from me highlighted that. Scottish Power was making quite a bit of profit, but its maintenance was low and it plunged many rural communities into a situation of no energy supply not for days but for weeks. It was noted that fairness and efficiency, and its profit margin, did not extend to simple, basic, regular maintenance.
What should be done? We have three suggestions: separating the parts of the business that generate energy from those that sell to customers; selling energy in an open pool; and introducing a new, simple tariff structure. We also suggest that Ofgem should be abolished because it has failed to stand up for customers. Until those reforms kick in, we will put a stop to unfair price rises by freezing energy bills up to January 2017 for people having to cope with increasing energy costs and the cost-of-living crisis.
In future weeks, months and years, people will fall into fuel poverty, which is why we must introduce projects such as those suggested by iHeat. The number of families falling into fuel poverty is rocketing, and if we do not try to help them, their choice will be between heating and eating.
Julie Elliott (Sunderland Central) (Lab)
As ever, Sir Roger, it is a pleasure to serve under your chairmanship. I congratulate my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) on securing this important debate. No one could have predicted the news this morning, which has turned this debate on an important matter of concern on both sides of the House into one on the topical issue of the day. That is almost unprecedented.
I will start by responding to SSE’s announcement, which the Labour party welcomes. It shows that energy companies can and should freeze their prices to reset the energy market. We also welcome their decision to separate their generation and supply businesses. That is a vital reform necessary to improve transparency and competition in the energy market. SSE should go further and commit to freezing their prices until 2017, but they have said they will review the situation.
In a recent press article, the Minister said that the decision of my right hon. Friend the Member for Doncaster North (Edward Miliband) to freeze energy bills is extremely dangerous. Will he comment on that in the light of SSE’s announcement? He also said that most voters will see that as a gimmick, but companies of the size and complexity of SSE do not employ gimmicks in the energy market. Perhaps he will comment on that.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The hon. Lady has tempted me. When she clarifies her party’s policy, perhaps she will confirm that the price freeze will apply to all companies, not just the big six? Does she intend to catch all the smaller companies, or just the big six?
Julie Elliott
I will outline our policy, but it is not for me to answer questions about it today; it is for the Minister to respond to the debate.
Before coming to the bulk of what I want to talk about, I want to comment on some of the issues raised by the hon. Members for Warrington South (David Mowat) and for East Hampshire (Damian Hinds). The hon. Member for Warrington South referred to SSE’s announcement on wind farms. We need to look at the detail of that, but while energy company profits have been rising during the last few years, renewable energy investment has been falling, and only about half of such investment is coming from the big six. Despite huge annual price increases since 2010, investment in clean energy has halved under the Government’s watch, costing jobs and threatening our energy security. Furthermore, there is no correlation between profits and investment. The energy companies with the biggest profits do not make the biggest investment in clean energy.
The Minister has commented on energy costs. Electricity prices in the UK, excluding tax, are the fourth highest in the EU15 and second highest in the G7. They are not what the hon. Gentleman quoted: they are among the highest in Europe. Gas prices are not as high, and are at the European average.
Barry Gardiner
I am listening carefully to my hon. Friend’s comments. She is doing very well. Will she comment on the fact that in the UK the profit margin for shareholders has been between 5% and 7%, whereas on the continent it is between 2% and 3%? The hon. Member for Warrington South did not mention those figures when he compared the UK with the continent.
David Mowat
I am glad that my remarks have at least made this into a debate. On gas, it is impossible for us to get to the bottom of these numbers in a debate, particularly those given in the intervention from the hon. Member for Brent North (Barry Gardiner). Does the hon. Lady think that our gas prices are not among the lowest in the EU?
Julie Elliott
My understanding is that our gas prices are at the EU average, according to the Department of Energy and Climate Change.
David Mowat
I want to put on the record the fact that our gas prices are the second lowest in the EU, according to the EU energy portal and the International Energy Agency. I realise that we cannot spend our time bandying this around.
Julie Elliott
I will go with the Government’s stats.
What would a genuinely competitive energy market look like? It would provide good customer service, competitive pricing, pressure on supplier costs and profit margins, high levels of consumer engagement, and a wide range of retailers and rivalry between suppliers, with changing market shares and new entrants. That is what our energy market would look like, but it is not what it looks like today. It provides consistently poor levels of customer service. Complaints to the energy ombudsman are up 71% compared with last year. There are uncompetitive prices. Energy companies often say that prices here are lower than in the rest of Europe, but that is true only when tax is included. There is evidence of what is known as “rockets and feathers”. If pricing is competitive, falls in the wholesale cost should be passed on as quickly as when it increases. However, in 2011 Ofgem found evidence that energy bills respond more rapidly to rising supplier costs compared with falling costs.
There is mixed evidence on supplier costs. In a competitive market, operational costs should converge, but the Institute for Public Policy Research found that operational costs for energy suppliers had in fact diverged.
On high and rising profits, given the complex ways in which energy companies organise their affairs, it is not clear exactly how much money they are making. That is not completely straightforward. The segmental accounts, which they file with Ofgem, usually have gaps and provide a snapshot of earnings. They show collective profits up by about £1 billion a year compared with 2010, at a time when sales are down and there have not been any significant reductions in fuel or operating costs. Most companies publicly aspire to a 5% margin on supply, but that is significantly higher than any other comparable industry and is obviously on top of their profits from generation.
Levels of consumer engagement are low. Notwithstanding what seems to be a one-off spike in switching following the last round of price increases in November 2013, the number of people switching supplier has fallen by about half since 2008, and switching levels are the lowest on record. That was clearly outlined by my hon. Friend the Member for Inverclyde (Mr McKenzie). The situation is exacerbated by very low levels of trust in the industry. A recent report by Edelman showed that energy companies are less trusted in the UK than in nearly every other country in the world. That is a frightening state of affairs.
There is a static market, which is dominated by the big six firms, which hold 97% of the domestic market and 82% of the smaller business market. The domination of those six firms does not in itself indicate that competition in the market is ineffective, but the fact that no new entrant has achieved anything like the scale of operations to challenge the big six suggests significant barriers for newcomers. There has been little change in companies’ market shares in the past six years, and much evidence suggests that “sticky” customers—those who have stayed with the companies they were with before privatisation—pay a premium compared with those who switch, as my hon. Friend the Member for Ynys Môn (Albert Owen) highlighted.
What are Labour’s plans to promote competition in the energy market? We will make companies buy and sell all their electricity via a pool or open exchange. Currently, most energy is traded bilaterally or even within vertically integrated companies. Other European markets have much more exchange-based trading, such as in Nord Pool, which is one reason why those markets are more liquid, more transparent and more competitive.
We will ring-fence supply and generation businesses within vertically integrated companies. If companies can supply most of their own generating capacity, they have much less incentive to trade on the open market. That again makes it more difficult for independent generators and suppliers to find a market to trade in, and prevents any proper scrutiny of the prices companies pay for electricity from their own power stations. We will therefore put a ring fence between companies’ generation arms and their retail businesses.
In the retail market, we will make it much easier for consumers to find the best deal by introducing a simplified tariff structure. I accept that Ofgem has taken some steps to reduce the number of tariffs, but to drive real consumer engagement we need to create a consistent pricing system and standardise the tariff structure. We propose to create a simple structure with a daily standing charge and cost per unit.
To sustain the benefits that those structural reforms will bring, we will create a new regulator. Our green paper proposes additional powers to penalise anti-competitive behaviour to ensure that consumers get what would be expected from a functioning, competitive market. Therefore, if wholesale prices fall and that reduction is not passed on fairly by suppliers to consumers, the regulator would have the power to require suppliers to do that. We also propose additional protections for non-domestic customers in bringing the off-grid market under the regulatory framework. A Labour Government would, until our reforms kick in, put a stop to unfair price rises by freezing energy bills until 2017.
I end with a few questions for the Minister. I outlined the comments he made about Labour’s proposed price freeze being “extremely dangerous”, but does SSE’s announcement today prove that he was completely wrong? Does he now welcome SSE’s move and agree that it should go further and commit to freezing its prices until 2017? The Minister and his colleagues have argued against Labour’s plans to ring-fence generation and supply in separate businesses within energy companies. Given SSE’s announcement today, does he now admit that they were wrong on that as well?
According to Which?, only one in five people trust their energy provider to act in their best interests. If the Minister believes that the energy market is working so well, what does he put that statistic down to? Does he also accept that the 5% profit margin that the big six energy companies aspire to is greater than in comparable industries and utilities in Europe?
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, too, congratulate the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on securing the debate and on his immaculate timing in fitting it between SSE’s announcement this morning and the forthcoming publication of Ofgem’s assessment. We have had a good debate on some of the major issues.
My hon. Friend the Member for Warrington South (David Mowat) made an excellent speech, which was all the more impressive for him not being able to stick to his prepared text. He made some important points of comparison with the European Union and the key point that all of us need to have regard to the need to ensure that energy companies are able and willing to invest in the new energy capacity the country requires. He also made the point that, in the end—this answers a question from the shadow Minister, the hon. Member for Sunderland Central (Julie Elliott)—it is not for politicians to decide on profit margins or the merits or disadvantages of vertical integration. Such matters need to be weighed up on the basis of evidence and investigated by regulators that are independent of Government.
The hon. Member for Southampton, Test (Dr Whitehead) is usually knowledgeable on these matters, but he was not right about the effect of the threshold on the smaller suppliers. Three suppliers now have more than 250,000 customers and a taper is in place to deal with what I think he called the £7 million problem.
My hon. Friend the Member for East Hampshire (Damian Hinds) emphasised the importance of switching. I will later give him the latest statistics on that, which are encouraging.
The hon. Member for Brent North (Barry Gardiner) was a little out of date in his reference to the Engineering Employers Federation. It was concerned about energy costs, but I do not think that he has picked up its latest release, which followed my right hon. Friend the Chancellor’s excellent Budget last week, in which it welcomed the new support package being given to the most energy intensive industries. He was also not quite right about the regional monopoly among the suppliers. After 2000, the 14 suppliers were free to compete nationally, not just in their regions, but after 10 years, we discovered that there was still a regional concentration and that obviously needs to be looked at.
The hon. Member for Angus (Mr Weir) spoke about the importance of transparency. I confirm that that is one issue that Ofgem has been looking at and a great deal needs to be investigated. The hon. Member for Ynys Môn (Albert Owen) asked me about distribution and transmission. Perhaps he will allow me to write to him on some of the detail. It is difficult to get more competition into the major transmission network, but he makes a point about distribution companies. They are monopolies at the moment, although they are rigorously regulated. Perhaps he will allow me to write to him on that particular point.
The hon. Member for Inverclyde (Mr McKenzie) wants to see simpler tariffs. We certainly do, too. That power has been taken and Ofgem has managed to simplify the tariff structure, which will apply from next week. He also said that supply should be separated from generation. I make the point again that integration has advantages and disadvantages. The best way to weigh those up is independently on the basis of evidence so that we can understand whether change is needed.
The hon. Member for Sunderland Central was not able to clarify whether Labour’s proposed price freeze will apply to the very smallest companies outside the big six. There still seems to be some confusion about that. She asked me specifically whether I welcomed SSE’s announcement this morning. The answer is yes, I do. I strongly welcome that and I am sure that customers of other suppliers will be asking whether they will follow suit. She asked me whether that was evidence that the market is not working well. That is exactly why we have referred the market to Ofgem for the annual competition assessment.
Competition is at the heart of our energy policy. Consumers get the best deal when suppliers face tough competition. Competition also helps to deliver innovation, and ensures that prices are kept as low as possible. Investors will only have confidence in a market that they see as fair and in which all participants compete on equal terms. That is what—
Michael Fallon
I hope that the hon. Gentleman will allow me to proceed, because I have a number of points to cover.
That is what both Government and Ofgem are working to achieve. Through the Energy Act 2013, supported by all the major parties in the House, we have introduced far-reaching reforms to the electricity market and supported Ofgem’s reforms to the retail market and the improvements that it is seeking in liquidity in the wholesale market.
Poor liquidity in the wholesale market is cited by small suppliers and independent generators as a key barrier to entry and growth. Since 2010, trading in the day-ahead market has grown rapidly. The amount of power traded on the day-ahead exchanges has increased from just 6% in 2010 to more than 50% last year.
However, we also need to strengthen liquidity in the forward market. That is one of the key concerns. From next week, Ofgem will be introducing tougher licence conditions that further strengthen forward market liquidity. Those conditions will require the big six suppliers and the largest independent generators to trade fairly with small suppliers or face financial penalties. They will also impose a market-making obligation on the big six, meaning that they will have to post the prices at which they will buy and sell power up to two years in advance. That will make it easier for independent suppliers to buy power for their customers. Knowing that the big six will buy power at the prices that they post will also help independent generators to sell their output in the forward market. The new licence conditions will be supported by Ofgem’s powers to fine companies if they are in breach of them. We have underpinned those reforms by taking powers in the Energy Act to act if Ofgem’s reforms are delayed or frustrated.
Michael Fallon
I hope that the hon. Gentleman will forgive me if I do not.
Our work to break down barriers to entry into the retail energy market is already bearing fruit. The supplier base that we inherited had shrunk, as I have said, from 15 majors in 2000 to just six in 2010. In 2011, we raised the customer threshold for participation in the key energy programmes from 50,000 to 250,000. Since 2010, 11 new companies have entered the domestic supply market—they include one that now has more than 800,000 customers—and we see more companies preparing to enter. There are now 18 independent suppliers, which are increasingly penetrating the market share of the larger, more established players. Their market share, although small, has doubled since 2010, and we will continue to work to remove barriers to entry and growth.
According to industry figures—this is the answer to the point made by my hon. Friend the Member for East Hampshire—between October and February alone, about 1.5 million customers switched their electricity supplier and, of those, nearly 500,000 switched their account to one of the smaller suppliers. The smaller suppliers are of course the ones that would be most exposed by Labour’s price freeze. They are less able to absorb any increased costs arising from network charges or increases in the price of wholesale energy and would struggle to compete with the big six in those conditions, so we do need an answer to the question that I put to the shadow Minister.
I was also asked about consumer engagement. An engaged consumer base is a key component of a competitive market, which is why we are reforming the retail energy market and making it easier for consumers to navigate. In 2010, we inherited a market that was not working in the best interests of consumers. There was a profusion of more than 350 complex tariffs, no doubt supported by Opposition Members, but that complexity made it very difficult for people to work out how to get on to the right tariff for their circumstances. Bills were complicated and unclear, making it difficult for consumers to compare their existing tariffs against others on offer.
The retail market review that Ofgem has already carried out has simplified tariffs and limited suppliers to offering just four simply structured tariffs per fuel. New rules, introduced next week, will make bills clearer and simpler. Suppliers will be required to tell their customers about the cheapest tariff that is available to them and the savings that they could make by moving to it. That information will now be provided on bills and annual statements. By June, all customers on poor-value dead tariffs will be moved to the cheapest variable tariff.
The measures that I have outlined demonstrate our determination to drive greater competition in the energy market, but those measures are not, of course, all that we are doing. My right hon. Friend the Prime Minister announced last autumn that the competition authorities would carry out an annual competition assessment. The first assessment is being carried out by Ofgem, the Office of Fair Trading and the Competition and Markets Authority. We expect it to be published very soon.
Barry Gardiner
I am grateful to the Minister for eventually giving way. He has spoken about competition a great deal. Does he accept that the whole purpose of vertical integration by a company is precisely to be a bulwark against competition and, although what he has said about introducing greater liquidity into the long-term market is absolutely right, does he not accept that that would be achieved by breaking up that vertical integration?
Michael Fallon
That is something, as I have said, that we require independent investigation to establish on the basis of evidence. There are arguments in favour of vertical integration. I am not putting them forward today, but there are those who argue that vertical integration can lower the cost of capital and lead to more efficient risk management. These are issues on which the evidence needs to be properly weighed—with the greatest respect, neither by the hon. Gentleman nor by me, but by independent investigators who are detached from the political process. I am very disappointed to see that the regulator would be abolished if Labour ever came to power. The evidence needs to be weighed independently, and we need to have a proper judgment. The first competition assessment is being completed—
Michael Fallon
If the hon. Gentleman will allow me, I will not, because I am running out of time. The first competition assessment is now being carried out by the three competition authorities and will be published very, very soon. The independent authorities set out the scope of the assessment in December. They are looking at all aspects of competition in the energy markets, including market share and how easy it is for innovative new entrants to enter the market and compete. They have also been examining, as I have said to the hon. Member for Brent North, the impact of vertical integration, the degree of consumer engagement in the market and, indeed, the levels of profitability, to which a number of hon. Members have referred.
Real progress has already been made to incentivise the driving forces of competition: greater consumer choice and increased participation in the energy markets. However, we are not complacent. By commissioning an annual competition assessment, we are creating a formal process for the independent regulatory authorities to test the effectiveness of our reforms and to test annually whether the market is working in the interests of consumers.
I do not want to speculate on the outcome, but it is essential that we respect the independence of the process and any decisions that the regulatory authorities may take to strengthen competition and to protect the consumer. Independent regulation is fundamental to investor confidence. I hope that hon. Members on both sides of the House will therefore be able to support the independent regulator and the competition authorities when they publish their assessment very shortly.
Minimum Practice Income Guarantee
(10 years, 1 month ago)
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Tim Farron (Westmorland and Lonsdale) (LD)
It is a huge pleasure to serve under your chairmanship, Sir Roger. I am extremely grateful for the opportunity to raise the problems caused by the removal of the minimum practice income guarantee. The removal of the minimum practice income guarantee is not the sole cause of the crisis facing some of England’s rural surgeries, but it has unveiled the failure over several decades to provide a sustainable basis for funding GP surgeries in rural communities. The coming crisis, which could have the unintended consequence of closing dozens of rural surgeries, will be immensely costly to our communities and to the taxpayer. Taking intelligent, targeted and swift action to prevent those closures will be extraordinarily cheap by comparison.
Over the past few months, I have been working with our communities in and around Hawkshead and Coniston in my constituency, whose surgeries are undoubtedly at risk. Last August, 500 local people filled the school hall at John Ruskin school in Coniston at a public meeting. Five hundred people is an impressive turnout in any community, but when we realise that the total number of patients listed at Coniston is just 900, we see how important the issue is. Those 500 people turned up because they know that it would be impossible for them reasonably to access another surgery, given how remote and isolated they are. My job today is to convince the Minister—I hope it will not take much doing—that my constituents are right and he should take action to help them. Let us be clear: unless a specific decision is taken to provide new and additional support for small rural surgeries, there will be a series of surgery closures that will be hugely damaging to our communities, harmful to patient safety, costly to the taxpayer and utterly embarrassing for Government.
In my constituency, two practices stand out as being in need of immediate aid from NHS England and the Department of Health: Coniston and Hawkshead, two communities in the central Lake district, which are about as remote as one can get in England. Both communities have a GP surgery, and both surgeries are at risk because of unsustainable funding. If you would care to have a look at your Ordnance Survey map of the Lake district, Sir Roger, you will see that if either of those surgeries were to close, the next nearest surgery would be on the other side of at least one lake, not to mention a couple of mountain ranges.
Across the country, there will, of course, be some small practices that should amalgamate with others, predominantly in urban areas where access and sparsity are not such an issue. The number of small rural GP surgeries, such as Coniston and Hawkshead, which are facing up to falling off the funding cliff is relatively small. At the last count, there were 36 in the whole country. Therefore, although intervention is vital, it is manageable and affordable. It is not a big problem to solve if we do it now, but it will become an enormous problem if it is not tackled. The evidence is clear that for that to happen, there will need to be strong and unmistakeable political leadership. In other words, Ministers must state unequivocally that they want NHS England to protect small, strategically vital GP surgeries, and that they expect a formal fund to be set up to make that happen—a small strategic surgeries fund—just as our Government have successfully done to protect small, strategically important schools in rural areas. It will cost little, but it will save a lot.
A couple of weeks ago, controversially, our Government fought to permit the Secretary of State to have the right to intervene in local trust matters when there is a patient safety issue. They were right to do so, because elected Governments should involve themselves to ensure that strategic priorities are met. Here is one such example. It is strategically vital that people in rural areas across the country, including Coniston and Hawkshead, have the same rights to access health care as anyone else.
Dr Sarah Wollaston (Totnes) (Con)
As somebody who has worked in a small rural community, where there are high levels of deprivation in an area of relative affluence, the difficulty is that many people cannot access transport to get to services in other locations. I agree with my hon. Friend that we must prioritise access in small rural communities and recognise the problems of rural poverty.
Tim Farron
I am grateful to my hon. Friend for making that strong and good point. What counts as poverty in rural areas is often very different from what counts as poverty in urban areas. It is poverty in terms not only of income but of access to services. The average age of my constituents is 10 years higher than the average age of the UK population, so isolation and lack of access to private transport, never mind public transport, make it physically impossible to access another service. That is why we need to intervene.
I have had many conversations with NHS England, our local area teams and the clinical commissioning group. In the nicest possible way, there is a sense that they are all seeking a lead from the top. They are all good people, but they seek direction from the top. To be fair, NHS England has identified some 90 GP surgeries as outliers—practices that will lose more than £3 a patient—and a further 200 or so that will lose more than £2 a patient. However, that process of identifying outliers does not tell us which practices will be sustainable and which will not. Crucially, although outliers have been identified, no resource has been identified to help to protect them. That is why the Government must take a lead and make it clear that surgeries such as Hawkshead and Coniston must be protected, and that funding must be set aside to ensure that they not only survive but thrive. I am concerned that many of the discussions and the media attention have focused around the minimum practice income guarantee when we should focus more directly on funding sustainable general practice in remote rural areas.
In south Lakeland there are vast differences in minimum practice income guarantee payments per patient. Coniston gets approximately £25 a patient, Hawkshead gets less than £1 a patient and Ambleside gets around £15 a patient. By comparison, Slaidburn in Lancashire receives £110 a patient, even though the Slaidburn practice is the same size as the one in Hawkshead. The proposed changes from April will begin to remove those differences. Arguably it is correct to do so, but it is not correct simply to leave it at that.
The process of removing the minimum practice income guarantee and redistributing the funds per capita is a staggeringly blunt instrument. It is the ultimate one-size-fits-all policy, which treats small rural practices the same as large urban ones. It is on a par with making the casual assumption that the local village shop will have the same business model as Tesco. Smaller practices do not have the economies of scale that larger practices do; for example, the core practice management costs are the same whether the practice has 1,000 patients or 5,000.
NHS England’s argument is that, because smaller surgeries are inefficient, they should merge with neighbouring practices to increase efficiency. That works in urban areas, where there are often multiple GP practices operating close together. In that case, it is safe and sensible to consider sharing resources more efficiently. In remote rural areas, however, it is not possible to achieve those savings without sacrificing patient safety. It is not possible physically to merge with a neighbouring practice if it is on the other side of a lake. Merging, say, Coniston and Hawkshead with a larger, more distant surgery in Ambleside or Ulverston will not change the fact that health care still needs to be provided in the heart of those communities.
The only way to get savings is by closing a surgery or downgrading the service significantly in one or more of the villages and asking the patients to travel to another one for their main GP service. That would, in fact, result in no savings at all. Consider the increased cost to the ambulance service, to the A and E units nearby—not that they are particularly nearby, by the way—and to social care that would be triggered by the removal of GP services from the heart of our community. The human costs of closure are immeasurable, but the financial costs are measurable. It would be extreme foolishness to let our surgeries close by accident.
NHS England suggests that the policy does not impact on large numbers of rural practices, and that a greater number of urban practices will lose out. It is correct: there are not a large number of rural surgeries at risk. However, the analysis ignores the fact that, for the rural surgeries, an alternative to the current service provision is simply not available. Patients cannot simply move to the neighbouring practice down the road, because there is no “down the road”.
The changes come on the back of an already diminishing level of income in general practice for small rural surgeries. Hawkshead’s 2013-14 income from the GP contract is down 5% on 2012-13, and that has absolutely nothing to do with the removal of the minimum practice income guarantee. We should therefore be careful not to allow the removal of the minimum practice income guarantee to mask the much wider problem of a lack of sustainable funding streams for a relatively small and very manageable number of rural surgeries.
NHS England states that the removal of the minimum practice income guarantee will be phased gradually over seven years, but only so much can be squeezed out of an ever-reducing funding stream. The core running costs of the premises cannot be cut, so all that is left to cut is staff. If the staff consists of barely a handful of committed professionals, all that is left to do is close.
Hawkshead is already at 50% of the national staffing average, which reflects its historical low level minimum practice income guarantee funding compared with similar practices. At the same time, the surgery has the highest patient satisfaction levels in the country. It is officially the best surgery in England, but, as things stand, its only options are to reduce service provision to a level that would never be tolerated in an urban area, or to close. I am sure that the Minister will agree that such unacceptable choices mean that we must intervene.
Unlike Coniston practice, Hawkshead will gain by a small amount through the proposed changes. However, it will be by only about £1,000 a year, when the historical funding shortfall is about £35,000 to £40,000. Coniston’s income will decline significantly—by around £25,000 to £30,000 a year—and, to put it mildly, both surgeries will be at severe risk.
The minimum practice income guarantee should be removed or phased out. That is not challenged by those of us in rural communities. The wide disparities between surgeries with significant minimum practice income guarantee grants and those that, like Hawkshead, get pretty much nothing, makes the case for us. Nevertheless, the removal of the minimum practice income guarantee provides an opportunity to ensure that, in the wider context of a fairer and more efficient funding model, there should also be an element in the formula that does what the minimum practice income guarantee was originally intended to do, only more efficiently, more effectively and less expensively.
A small strategic surgeries fund could cover the additional cost per patient of keeping the core expenses covered. As a basic need, Coniston must keep its current funding, and Hawkshead must rise to a similar level in order to sustain service provision. NHS England will argue that it has reverted responsibility for the decision-making process to local area teams. However, there is no ring-fenced funding to deal with the problem, so local area teams are limited in what they can do. Our local area team has given its support to ongoing service provision in Hawkshead and Coniston, and I am extremely grateful for that, but so far no additional funding has been identified to support the practices.
The Minister will know that strategic small surgery funds have been established in Scotland and Wales. They are ring-fenced at the centre to ensure that no surgery that needs to remain open is closed by accident. Rural communities in England suffer from poor funding in social care, secondary care and primary care. Far too often, people in areas such as Cumbria are forced to put up with services funded at a fraction of what is required in order to provide care equivalent to that on offer in urban areas.
It is understandable that civil servants in Whitehall and officials in NHS England should come up with funding mechanisms that, in the first instance, overlook the fact that it simply costs more money to provide equivalent care to rural communities. It may even be understandable that officials might be ignorant of the desperate social needs in rural communities caused by poverty, ageing populations and isolation. However, once those problems are made clear, it is not acceptable to shrug them off. Once we have brought them to national attention, it is imperative that we see action.
In summary, I want to make five quick points. First, a small number of small, rural surgeries in England are at risk, partly as a result of the removal of the minimum practice income guarantee. Secondly, Coniston and Hawkshead are two such surgeries, and there is no alternative to having a surgery in either of those communities that is either sensible or safe. Thirdly, rural communities have as much right to decent health care as anyone else. Fourthly, it will cost relatively little to come up with a strategic fund to protect those few dozen surgeries. Fifthly, such a fund will be created only if the Department of Health and NHS England agree that it must be, and then make it so.
My constituents deserve access to good local GP services as much as anyone in London, Birmingham or Manchester. Unless we tackle the problem I have outlined, my constituents will be put at unacceptable risk. On behalf of the people of south Lakeland, and all other rural communities, I ask for the Minister’s help in setting up a small strategic surgeries fund so that we can remove that risk.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) on securing this debate, which is pertinent to many constituencies in England. Indeed, it is pertinent to my own constituency in Suffolk. Later in the debate, I hope to reassure him by giving good local examples from Suffolk of how the joint working he has described can be very effective. The issue is not just money, but improving the quality and availability of care for patients.
We all recognise the importance of local GP practices, particularly in rural communities such as those in my hon. Friend’s constituency. I would like to reassure him that the Government believe that high-quality local services can be maintained. I will not rehearse all the background to the 2004 GP contract negotiations, which we know changed the way that GP practices were funded, but it is worth drawing out a couple of points. Rather than receiving a series of fees and allowances, since 2004, GP practices have been paid based on a formula to take account of need and work load. Practices can also earn money by participating in the quality and outcomes framework—commonly known as QOF—or offering enhanced services.
To smooth the transition to the new system, a minimum practice income guarantee was introduced and used to top up practices’ core funding to match their basic income levels before the 2004 contract was introduced. We must also remember that many GP practices are of course small businesses in their own right. They value and enjoy the flexibility that the GP contract implicitly recognises, and that can bring great benefits to patients. In a moment I will talk a little more about the minimum practice income guarantee and the changes under the recent GP contracts, which from now on will be negotiated by NHS England, as my hon. Friend outlined.
It is worth talking a little about rural practices and highlighting some of the measures in place to support them—it is important to get that on the record. We recognise the fact that rural practices, in areas such as Hawkshead and Coniston in my hon. Friend’s constituency, play a vital role for their local communities. We also recognise the rurality and the often sparsely scattered populations that such GP practices look after. Both the Government and NHS England intend high-quality local services to be supported and maintained.
My hon. Friend will be aware that the funding formula for general practice already includes an allowance for rurality, and there is also provision for the costs of temporary residents. That can be a particular issue during the summer months with the arrival of tourists in the Lake district. The funding formula already includes additional support for rural areas and places with a more transient population because of tourism, or for the seasonal population fluctuations in more agricultural constituencies where there is a high reliance on temporary, summertime or seasonal labour.
Rural GPs may also be able to increase their income in other ways. For example, dispensing practices tend to be in rural areas, although not exclusively. That is potentially another way to provide additional income for a practice, as well as important support for the community, which can have closer-to-home access to prescribed medications and drugs.
I understand that NHS England is working with local GPs through the Cumbria clinical commissioning group to decide how to maintain accessible, responsive, high-quality primary medical services—my hon. Friend alluded to that in his speech. For example, NHS England can help practices to work more closely together. It is looking at doing that by sharing IT and other back-office support in order to improve care and practice efficiency. NHS England is also ensuring that, through practice patient participation groups and local healthwatch services, patients are being kept fully informed and are able to contribute to discussions.
I would like to talk briefly about the phasing out of the minimum practice income guarantee, which last year we announced would begin this April. As my hon. Friend outlined—I was pleased that he supported this—we consider that the payments are no longer equitable, because under the system, two surgeries in the same area serving similar populations could be paid different amounts per patient they serve. That is inequitable and does not make sense.
The payments of the MPIG will be phased out not simply overnight, but over seven years. The overall intention is for the funding for GP practices to be properly matched to the number of patients they serve and the health service needs of those patients.
Funding will also continue to take into account the unavoidable costs of providing services in rural areas. The issue is not one that affects only rural practices, as both rural and non-rural practices receive MPIG payments.
Dr Wollaston
Regarding the point about funding following the number of patients, the Minister will be aware that there is now greater flexibility for patients to register. Relatively young, mobile patients may choose to be registered near their place of work; indeed, they should have that flexibility. However, that is an additional income drain on small and sparsely located practices. Is the Minister aware of that?
Dr Poulter
Absolutely. I alluded to that point in some of my earlier comments. We know that there is the tourist trade, which is an important part of the local economy in the constituency of my hon. Friend the Member for Westmorland and Lonsdale. Recognition of that factor is built into the funding formula for GP practices. People moving locally to work somewhere is already taken into account as part of the formula, which will benefit the funding of some of the local practices in my hon. Friend’s constituency. I hope that is a helpful clarification of the point about people moving from one location to another.
Dr Wollaston
Does the Minister accept that not all sparsely populated areas will see that offset by incoming tourists? Many areas of the country will not see that offset benefit.
Dr Poulter
Absolutely. As I have outlined, other parts of the formula recognises rural areas; they are already recognised in GP funding allocation. Therefore, on both counts, additional support is available for areas such as those described by my hon. Friend the Member for Westmorland and Lonsdale in his constituency, and indeed those in Totnes and in my own constituency. Rurality is already factored into GP contracts and funding for GP practices and health care.
What will happen with the money that is recycled and released from the MPIG is an important point. The money released by phasing out the MPIG will be reinvested into the basic payments made to all general medical services practices, which are based on the number of patients and key determinants of practice work load, such as the age and health needs of patients and the unavoidable costs of rurality.
Another factor that we all recognise—I know it is a factor in Totnes and, I believe, in Westmorland and Lonsdale—is that many older people choose to live in rural areas. Older people once used to retire to seaside towns, but they are increasingly retiring to predominantly rural areas. The changes and the freeing up of cash from the MPIG will benefit all practices. In the health care funding formula—not necessarily the GP funding formula, but how clinical commissioning groups allocations are allocated—there is a strong weighting for age which will bring broad benefit to rural areas, particularly those that have a high proportion of older people.
NHS England has been undertaking specific analysis of the withdrawal of the MPIG. Inevitably, a small number of practices will find themselves in more difficult circumstances. NHS England has been considering the small number of significant outlier practices, as my hon. Friend the Member for Westmorland and Lonsdale mentioned, for which alternative arrangements may need to be made to ensure that appropriate services are maintained for local patients. We appreciate that that is a matter of concern for some practices, and my hon. Friend has outlined concerns in his own constituency. That is why we have decided to take seven years to implement the change to the MPIG funding. Phasing in the changes over that period will allow the minority of practices that lose funding to adjust gradually to the reduction in payments.
NHS England has been looking carefully at how its area teams can support the practices that are most affected. It has invited practices that believe they will have problems as a result of the phasing out of the MPIG to raise that concern with their area team. In a small number of cases where there are exceptional underlying factors that necessitate additional funding, NHS England has asked its area teams to agree different arrangements to ensure that appropriate services for patients continue to be available. That includes looking at how services are funded.
Importantly, NHS England has suggested that practices with small list sizes could look at collaborating with other practices, for example through federating, networking or merging with nearby practices, to provide more cost-effective and better services for patients, a point I will come to in a moment. Practices can also identify other ways they could improve cost-efficiency, such as reviewing staffing structures, and they can review commissioning or contracting options.
Tim Farron
I am grateful to the Minister for that explanation. I simply want to point out that neither Hawkshead nor Coniston, despite both being put in an unsustainable financial situation in the future, technically count as outliers. Will he guarantee that NHS England will look at the sustainability of all surgeries, not just those that have lost the most from the withdrawal of the MPIG?
Dr Poulter
The answer is in exactly the point made by my hon. Friend in his speech: it is about local area teams working effectively with practices.
Let me provide my hon. Friend with an example of how collaboration between services and GP practices can work well, from not just a financial perspective but a patient care perspective. In Debenham, Otley and Grundisburgh in my constituency, all of which have important rural communities, there is a practice that works collaboratively and a practice that serves and looks after populations across a number of sites. That works well for local populations, because they have an accessible local GP service.
That practice model has also produced considerable economies of scale. It has allowed the practices to invest in additional services for the benefit of local patients. Where there are pressures caused by an ageing population and the complex needs of older patients, that has allowed more money to be freed up to focus resources appropriately. In some cases, it has also allowed greater flexibility in the use of the infrastructure—certainly, surgery buildings —to provide greater community benefits.
The model can work, and it is important that practices, even though they are small businesses, consider that they need to collaborate and work with neighbours, where possible—not to lose their independence or identity, but to make efficiencies where they can, so that more money can be directed into front-line patient care. That is part of the answer.
Providing a sustainable solution is about practices working well with their neighbours. Sometimes it might mean rebuilding relationships that have broken down in the past. We know that, with the best will in the world, we do not always get on well with our colleagues, although we all do our best to look after patients. Sometimes it is about practices setting aside past disagreements, working collaboratively for the benefit of patients and making efficiencies where possible.
Tim Farron
Of course, many surgeries will be able to find ways of surviving and thriving through different working arrangements. There will be some, however, that are essential and strategically vital for rural communities such as mine, which will have done everything they possibly can but cannot make ends meet. Will the Minister confirm that funding will be available through NHS England to support those surgeries?
Dr Poulter
That is a matter for area teams to look at. The first approach that area teams will take is to ask, “Where can we make efficiency savings that will mean there is more money for front-line patient care, such as IT, back-office services and administration costs?” Hospital providers have been doing well in reducing administration and freeing up money for patient care. Are there economies that can be gleaned through better procurement practices and surgeries working together?
That has got to be the first thing: surgeries looking to help themselves. Later on down the line, if everything else has been exhausted, the area team will have to make a decision about whether other mechanisms are in place to provide additional support.
I am confident that, with a funding formula that recognises rurality, and a funding formula for CCGs that particularly identifies the importance of an ageing population, we have a formula that will support rural practices into the future.
Stillbirths and Infant Mortality
(10 years, 1 month ago)
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Tracey Crouch (Chatham and Aylesford) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Mr Davies, although there is certainly no pleasure in the subject matter of this debate. The issue of stillbirth and infant mortality is a complete and utter tragedy for parents who lose their child. I have met a number of my constituents who have experienced the loss of a baby. Mothers, fathers and siblings have been devastated, left bereft and unable to comprehend what has happened and why. It was heartbreaking to meet them. However, what is equally heartbreaking is that here in the UK, which has arguably one of the best health services in the world, we have one of the highest rates of infant mortality in Europe and other parts of the developed world. It is shocking that we have higher infant mortality rates than countries such as Croatia, Lithuania, Estonia and Slovenia.
Sadly, unlike other countries we have barely seen any reduction in infant mortality rates in the last 20 years. Almost three quarters of child deaths under the age of 15 in the UK happen during the first year of a child’s life; more than half in the child’s first 28 days; and almost 40% in the child’s first week. These statistics do not include the one in 200 pregnancies in the UK that end in stillbirth. Stillbirths account for the death of a further 4,000 babies a year.
There are many reasons for perinatal, early neonatal and neonatal deaths, but I will concentrate today only on stillbirths and on sudden infant death syndrome or, as it is perhaps more commonly known, cot death. That is not because I have no interest in other forms of infant mortality, but so I can focus the Minister’s mind on a few actions that might make the difference sooner rather than later. That said, I wanted to give a wide title to the debate today because I am aware that colleagues have other issues they may wish to raise.
The figure of 4,000 stillbirths per annum is far too high. I cannot imagine the horror of having to go through labour knowing that your baby is already dead. I met one lady who gave birth to her son, Henry, at 38 weeks, but he had not grown for 16 weeks. In the intervening weeks, she had forged a bond with her unborn son, named him and planned a life ahead, but it was one that would never be fulfilled.
Our NHS is brilliant and our midwives are fantastic, but I have yet to meet a woman who has gone through pregnancy without seeing more than one midwife. One lady told me that she had seen 12 different midwives during her pregnancy, which sadly ended in stillbirth. She felt that all 12 of them had different ways of measuring her. I am not going to criticise the midwives—they do not deserve criticism—but we need to ensure continuity of care throughout gestation, to give mothers some peace of mind.
Research that the National Childbirth Trust carried out with the Women’s Institute last year into women’s experiences of maternity services highlighted the shocking statistic that 34% of women were not given the name and phone number of a midwife to contact with any concerns. We must do more to encourage people to go into midwifery, and I hope the Government’s pledge to increase the number of health visitors will help in that regard.
However, we also need to improve our standard monitoring and measuring systems, making the most of modern technology. In the case of poor Henry, who had not grown for 16 weeks, it was clear that the measuring was not as good as it could have been. I accept that not everyone agrees with me on this, but I believe that we should be looking to increase the number of scans expectant mothers receive. Having a scan at 12 weeks and again at 20 weeks is fine, but unless a mother is anticipating complications, those are the only scans she will receive.
There are examples of the successful use of increased measuring and monitoring. The Rainbow clinic at St Mary’s hospital in Manchester, which is funded by Tommy’s baby charity, has taken huge and groundbreaking steps forward in understanding the risk profiling of mothers, and it has a great success rate because of its extra monitoring and measurement. I would like to see its work rolled out. The clinic’s test on those who are deemed to be at risk—possibly due to previous multiple stillbirths or miscarriages, which we know increase the risk of future stillbirths or miscarriages—allows those in the “at risk” category to receive further monitoring and measuring in the third trimester, when placenta problems usually occur, to allow earlier delivery if necessary to prevent stillbirth.
These preventive measures involve awareness raising and risk profiling, followed by improved measuring, with new techniques and monitoring through an increased number of scans. They have led to a significant increase in healthy babies being born to women in the “at risk” group. Although the study at the Rainbow clinic is on a small scale, it has a very high success rate. However, the clinic does not have the funding to expand its work and I urge the Minister to examine its work and give it her full support.
I am not an expert on placenta. However, given that we know it starts to break down at 38 weeks but we do not induce mothers until 42 weeks—a point when we know women carrying later are more at risk of losing their baby—we need extra research into this process and to determine whether this delivery time frame is still viable. I will not dwell on that now, but it would be helpful if the Department examined both the risks and the benefits of reconsidering induction as late as 42 weeks. I have spoken to women who have had stillbirths and many of them raised this issue with me. There is genuine concern about the length of time that women are carrying babies for, particularly those at the higher risk end of the spectrum.
This issue is not all the responsibility of the NHS and it is important that we raise awareness of reduced foetal movements, so that expectant mothers can spot early signs of distress. The Count the Kicks charity has fabulous self-monitoring support, empowering mums-to-be with knowledge and confidence, including a mobile phone app and tips for dads. This understanding should be universal.
If a stillbirth does occur, it is important that the parents receive all the support they need. The third sector does an amazing job of providing advice and bereavement support for parents who lose a child before, during or shortly after birth. However, we need to ensure that parents receive good care from the health service, whether that is by ensuring the appropriate equipment is available—such as cameras and other equipment to take handprints and footprints, with staff available who know how to use it—or by providing access to all the literature and available support and advice, including bereavement services. We must also ensure that parents receive correctly handled treatment; we must remember to treat them as parents even if they do not have a baby.
Dr Phillip Lee (Bracknell) (Con)
I congratulate my hon. Friend on securing this debate. As someone who has professional first-hand experience of dealing with parents who have had a stillbirth, I know that it is an emotive topic but it is essential that we discuss it. Recently, Scotland produced a report outlining that its infant mortality rates are improving and it appears that it has a different approach to education, assessment and analysis of at-risk groups.
Tracey Crouch
I am grateful to my hon. Friend for his intervention. It was a coincidence that the Scottish Government released their statistics on infant mortality yesterday, which showed that Scotland now has the lowest infant mortality rates in the United Kingdom. It has managed to do that by introducing some of the measures I have already proposed in this debate, such as extra monitoring, extra targeted intervention and support for those at highest risk. That work should be rolled out across the United Kingdom.
We must be very clear about the bereavement services and support that people receive. A local charity in Kent, Abigail’s Footsteps, is working with the Royal College of Nursing to establish a national standard of bereavement training that it would like to see universally implemented. That is absolutely fantastic. On top of that, however, one of the best ways to accomplish good care in all the areas I have mentioned is to create the job specification of bereavement midwives within the NHS. This suggestion is supported by Sands, the leading stillbirth and neonatal deaths charity. I fully support this proposal and urge the Minister to consider introducing a nationally recognised job specification for bereavement midwives, which I believe would ensure the best possible mental health of, and support for, parents whose babies die before, during or shortly after birth.
I am aware that people have suggested that this will be an additional cost to the NHS, but we need to remember that the cost to the NHS of supporting people with mental health concerns, as well as loss of productivity because they have lost a child, is significant—some £1.5 billion to £2.5 billion. Therefore, an early investment in such support services will make a massive difference.
A bereavement midwife would be familiar with all relevant policies and procedures. They could ensure that all protocols are up to date and that relevant paperwork and equipment is always available; ensure that there are high standards in bereavement care in every relevant hospital department; and liaise with others within the hospital, such as chaplains, neonatal and paediatric pathologists and mortuary staff. They would also be able to promote good communication and building relationships with primary care providers such as GPs, as well as external bodies, including the registrar of births and deaths, and to ensure that patients have access to all appropriate available support and literature.
We are lagging behind on stillbirths, and I think the Minister will agree that we need to do more. I have outlined just a few suggestions that would help, as proposed by those who work in maternity care and who have suffered the loss of their own baby during pregnancy.
As tragic as a stillbirth is, the sudden death of a baby who was born, named, taken home and then fell asleep never to wake again is something I cannot even begin to imagine. Sudden infant death syndrome, or cot death, was dramatically reduced due to the outstanding success of the “Back to Sleep” campaign that the Government launched in the mid-1990s. The campaign, reminding parents that babies should sleep on their back, not side or front, was highly successful and led to an outstanding drop in the number of cases of babies who died of sudden infant death syndrome. As a result of that campaign, the number dropped from five babies a day in the mid-1980s to five babies a week, where it has stubbornly remained ever since, even 20 years later.
Access to information is vital. The first thing we need to do is reinstate the literature that new mothers used to receive when they left hospital with healthy babies. Unfortunately, the helpful “Safer sleep” guide was caught up in the Cabinet Office’s bonfire of public sector communications, and now new mothers are expected to rely on other organisations providing information. The Bounty pack is brilliant, although it is not necessarily immediately available or universal; however, the information provided in it could be life-saving. Risk profiling is essential if we are to reduce SIDS. Mothers need to understand the dangers of alcohol, smoking, vitamin deficiency and obesity, both during and after pregnancy, as a matter of course and not just as an optional extra, because those are the biggest causes of preventable perinatal death.
The Lullaby Trust and Bliss do wonderful work together and are helping my own local authority in Medway, which has multiple areas of deprivation, to identify risk and support professionals targeting intervention. This is essential. The statistics speak for themselves. The cross-party report published recently by colleagues, entitled “1001 Critical Days”, found that 26% of babies in the UK are estimated to be living within complex family situations, which can heighten the risks for a baby’s well-being, and that drug and alcohol problems affect more than 109,000 babies. Targeting resources at higher-risk families, parents and babies will help to reduce SIDS. It is essential to ensure that support and information are there for those who have premature babies, have babies young, or who are living in complex situations.
Furthermore, if we are really going to tackle infant mortality and reduce our embarrassingly high rates, we need to support, encourage and promote breastfeeding and improve access to “Healthy Start” vitamins, which are currently only accessible via named chemists. These should be available at all chemists. Investment should be made in both universal and targeted services, as recommended by the Healthy Child Programme. Where targeting has not made an impact—for example, vitamin D supplementation—universal approaches should be considered if they are also cost-effective. We need to highlight the message that this is not an optional extra, but is vital to ensuring foetal welfare.
We must improve awareness of smoking cessation services and the harm caused to unborn children by smoking. Similarly, we need to ensure that people understand the dangers of smoking for those who have been born. We must also do more to discourage binge drinking during pregnancy. I was shocked to learn that 18% of women still binge drink—that is, drink more than six units in one session—while pregnant, often leading to foetal alcohol syndrome.
I know I have not covered everything in this debate, but I hope it is a useful start. I thank the Royal College of Paediatrics and Child Health, Tommy’s, Sands, Kent Sands, Bliss, the Lullaby Trust, Abigail’s Footsteps, Together for Short Lives, the National Childbirth Trust, the Women’s Institutes and Bounty for their briefing materials in advance of this debate. I thank, in particular, the mothers and fathers I have met who have spoken movingly about their own personal tragic experience.
The Prime Minister said he wants to make sure that Britain is the best place to end life. Today, I am calling for us to work together to make Britain the best place to start life and give every expectant mother all the support they deserve. I look forward to the Minister’s response and the contributions of other Members, and thank them for taking the time to be here this afternoon to discuss this important issue.
Tim Loughton (East Worthing and Shoreham) (Con)
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on an excellent speech and on raising the profile of this much neglected but hugely important subject for many of our constituents who have been through the pain of stillbirth, infant mortality or perinatal mortality.
I am, slightly shamelessly, going to use this debate as a further opportunity to plug the ten-minute rule Bill that I put before the House on 14 January, with the support of my hon. Friend and other hon. Members. I am pleased to see the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison) here, as she sat in on that ten-minute rule Bill. I am glad that her colleague at the Department of Health has now, I hope, agreed on a meeting to take that forward; some of us can take constituents affected by stillbirth to that meeting and see whether we can bring about the change in the law that I will come back to in a minute.
I echo the accolades that my hon. Friend the Member for Chatham and Aylesford bestowed on all the organisations that have an interest in this matter and have for many years, quietly but assiduously, been campaigning for better care for people bereaved by stillbirths or who lose their children at an early age, giving support and advice, and campaigning for improvements and changes in the law.
This is quite a complicated area. Although the debate is entitled “Stillbirths and Infant Mortality”, we talk about neonatal deaths, perinatal deaths and post-neonatal deaths—those deaths between 28 days and a year after birth—as well as infant and stillbirth mortality rates. However, across all those fields the record of the United Kingdom is not good. My hon. Friend contrasted the UK’s record with the great progress made on sudden infant deaths, particularly on cot deaths, during the “Back to Sleep” campaign. A concerted, focused and well promoted campaign led to a decrease of more than two thirds in the horrific spate of cot deaths that afflicted so many families. It is perplexing and worrying that, although there has been some progress in reducing mortality rates across the board, pre and post-birth, they still remain alarmingly and unacceptably high, certainly compared with European partners.
Total perinatal mortality rates now stand at some 7.4 per 1,000 live births in this country. In comparison, the figure for Finland, which has the best record on this front, is 3.2 per 1,000 live births, and even Portugal, which has challenging questions to face about infant health, has a rate of 3.8 per 1,000 live births. We are still way behind. An awful lot of those perinatal mortalities, particularly the stillbirths among them, remain completely unexplained.
We also have to add miscarriages to the figures, which apply only to the official recognition of stillbirths as embryos born dead after 24 weeks. Those figures, of course, do not include miscarriages, yet more than one in five pregnancies in this country ends in miscarriage, which means that more than a quarter of a million of our constituents are affected by miscarriages each year. The problem is huge.
Most miscarriages happen in the first three months of pregnancy. Some women may hardly know that they have had a miscarriage, and some may have miscarriages without knowing they were pregnant in the first place, but many women, including some constituents who have come to me since I presented my ten-minute rule Bill, have miscarriages well into their pregnancy, when the grief, trauma and distress of losing a hoped-for child is that much greater.
The way in which we support women who have been through such experiences is also worrying. Research by the Miscarriage Association found that 45% of women who have experienced a miscarriage did not feel well informed about what was happening to them. Only 29% feel that they were cared for emotionally, and nearly four out of five, 79%, received no aftercare. We know that at least one in six women—a very large number—experience some form of perinatal mental health problems. That has a great cost, socially and emotionally to those women and financially to our national health service. It is a false economy not to ensure that we support those women, whether they have suffered a miscarriage early or late, or whether they have suffered a perinatal mortality either before or after birth.
Dr Lee
On the subject of false economies in the national health service, historically we have spent significant sums on antenatal care without a lot of evidence to support that expenditure. Does my hon. Friend agree that we need to concentrate resources in the appropriate hands? We need appropriately staffed maternity units—there are worrying statistics about midwifery-led versus obstetric-led maternity services—and by doing that we can address our infant mortality rates, which compare poorly with those of our European neighbours. As politicians, we must also accept that doing that would involve reconfiguring services. There would be fewer maternity units and perhaps more obstetricians.
Tim Loughton
My hon. Friend has great hands-on experience, and he knows a lot more about this subject than I do. He opens a far greater debate on the accessibility of maternity services. I am sure I am not alone in having marched and campaigned for the retention of midwifery-led maternity services at a local hospital. Interestingly, the biggest growth in mothers giving birth at that hospital has been among those who live outside the Worthing catchment area. Those mothers choose to go to the hospital.
Dr Lee
I want my hon. Friend to know that I campaigned to close my local midwifery-led unit because it was not delivering many babies—it was delivering less than one baby a day. I have real concerns about the potential for increased infant mortality in such midwifery-led units.
Tim Loughton
It is horses for courses. I am glad to say that my maternity unit delivers well in excess of 3,000 babies a year. It is a centre of excellence, and the customer votes with her feet by choosing to go there from outside the area. My hon. Friend is absolutely right that the assessment of units must be primarily based on the quality and safety of care for mothers, but I fear we are straying slightly beyond stillbirths and infant mortality rates into the availability of maternity services and hospitals. You would not want us to go there, Mr Davies.
My hon. Friend also raises an interesting point about delivering services in the most appropriate way. There are certain constituencies of women and certain parts of the country where the problem is that much greater. To take one of the classifications, the infant mortality rate in the UK overall is 4.4 deaths per 1,000 live births, but the variations for mothers born outside the United Kingdom are worrying. For babies of mothers born in the Caribbean, the figure more than doubles to 9.6 deaths per 1,000 live births. For babies of mothers born in Pakistan, the rate is 7.6 deaths per 1,000 live births, and so on.
There are also regional variations, particularly for perinatal mortality overall. In the south-west, the figure is 4.7 deaths per 1,000 live births, but in the north-east it is 5.8 deaths per 1,000 live births—a 23% difference. Why are there those differences? We simply do not have enough research; we have not commissioned and are not doing enough research to find out why certain types of women and certain geographical locations are faring worse. Such research would enable us to focus, say, additional scans or support services, or whatever is required, to ensure that we make the best use of our NHS resources. My first call is for there to be rather better research across perinatal mortality.
Mr Gregory Campbell (East Londonderry) (DUP)
On geographical differences, we heard earlier about the improvement recently reported in Scotland. Does the hon. Gentleman agree that when Ministers from across the United Kingdom and beyond meet either at a joint ministerial council or at other levels, best practice, where it has been established, should be carefully researched and, where possible, implemented immediately?
Tim Loughton
I agree. My hon. Friend the Member for Bracknell (Dr Lee) gave the example of Scotland, where people have clearly examined the matter a bit further; they appear to be achieving more than people in other parts of the United Kingdom. We should be sharing that best practice, rather than being parochial and not sharing it beyond the United Kingdom, with or without Scotland after 18 September. That goes beyond sharing ministerial best practice on health issues; I would guess that not just health considerations but deprivation, housing and other local environmental factors are involved, too. More than just the Health Ministers of the respective parts of the United Kingdom need to be involved. If we compare deprivation with infant mortality rates, some signs certainly start to emerge.
Last year there were 3,558 stillbirths; in 2011 there were 3,811 and in 2003 there were 3,612. The stillbirth level has remained persistently high for a long time. One in 200 pregnancies ends in stillbirth, but stillbirths are currently defined in law as being after 24 weeks of gestation, which still means that there are 15 times more stillbirths than cot deaths—the progress on cot deaths was alluded to earlier. The problem with the definition is that it masks the higher number of stillbirths that happen before the 24-week gestation qualification currently in legislation. If a woman gives birth to a stillborn child at 23 weeks and six days or earlier, the child counts not as a stillbirth but as another “miscarriage.”
That was the case for my constituent Hayley, who came to see me and was present when I presented my ten-minute rule Bill in January. She had been through the dual tragic experience of giving birth to a stillborn son at about 19-and-a-half weeks. She had to have her pregnancy induced, and she went through labour. She experienced all the pains and anguish of labour in a hospital for more than 24 hours before giving birth to her son. She and her partner, Frazer, held their son and took handprints and photographs. To all intents and purposes, their son had been born, but sadly born dead. In the eyes of the law, their son did not exist, because he had been born after less than 24 weeks. That child had no recognition in the eyes of the law. Some months afterwards, Hayley tragically went on to have a miscarriage after five or six weeks. Those two experiences were different—that is in no way to belittle the pain, anger and trauma of going through a miscarriage—but in the eyes of the law, they were identical: neither of those children was recognised as having been born.
That is what my Bill is all about. Since introducing it, I have been swamped by the experiences of women and families up and down the country. To take one example, a woman gave birth at about 21 weeks to twins. It might have been slightly more than 20 weeks—I forget now—but it was less than 24 weeks. One of the children was born just alive and lasted for a few hours. The other twin was born dead. As the first was born alive, albeit at less than 24 weeks, that child was recognised. The other twin, born dead, did not exist. How traumatic and cruel is that on the part of the state? Someone gave birth and had two dead children, but only one existed in the eyes of the law. That is why the law needs to change.
I will persist with the Bill well beyond the confines of this Session, when it will expire because of the constraints of this place, until I persuade the Government to take the issue on. It is about fairness and recognition for people who have had to go through trauma, anguish and pain unimaginable to those of us lucky enough to have had healthy, albeit slightly annoying, children. It is not acceptable for those who have lost a child before that child was ever able to breathe then to have the second blow of the state not recognising that child.
My Bill would amend the Births and Deaths Registration Act 1953, but not in a way that says that we should redefine the 24-week limit. I do not want to make it 23 weeks or 22 weeks; this has absolutely nothing to do with abortion thresholds and things like that. I want to make a differentiation between what are clearly miscarriages and instances of when women, to all intents and purposes, go through all the pains and experiences of giving birth to a child. The definition in my Bill of a “stillborn child” does not mean a child born dead from 24 weeks’ gestation onwards, but
“a child which has issued forth from its mother and which did not at any time breathe or show any other signs of life, following the recognised processes of labour including regular, painful uterine contractions resulting in progressive cervical effacement and dilation; and the expression ‘still-birth’ shall be construed accordingly.”
It is a bit technical and a bit physical, but it is a way of giving some comfort to mothers: if they gave birth to a stillborn child, it would be a birth. The Bill would say that they had had a child, that there had not been a miscarriage and that the state should recognise that.
We have not introduced the Bill to meddle with the abortion laws—it has nothing to do with that—and it is not intended to meddle with bereavement leave entitlements or benefit entitlements. The more enlightened employers of someone who has been through such an experience would give the employee some allowance on the time they need to get over the death. For them to receive some sort of closure and to give them the support and relief that they desperately need to be able to move on, the state needs to recognise what they have been through in giving birth to a stillborn child.
At the moment, a hospital or clinical practitioner can issue a certificate of birth. It has no status in law. It is of some comfort to some people, but it is certainly not sufficient comfort for many of our constituents. That is why I am putting forward the changes to the law. They are simple and do not involve a lot of cost, but they would offer huge support, relief and comfort for mothers and their partners who have been through these sorts of experience.
As well as wanting to change the law and calling for better research into why we appear to be so vulnerable to perinatal mortality and stillbirths, we need greater research and better guidance. I do, however, pay tribute to the existing guidance, particularly that issued by the Royal College of Obstetricians and Gynaecologists on recurrent first and second trimester miscarriage, and some of the best practice.
I echo the points that my hon. Friend the Member for Chatham and Aylesford made about foetal alcohol syndrome, which strays slightly beyond the confines of the debate. When I was a shadow Health Minister, I considered the issue. I visited children’s homes in Copenhagen that specialised in children born with foetal alcohol syndrome. In many cases, the child was born to parents from Greenland’s Inuit community, which has high alcoholism rates. A lot of research has been done on that in Denmark.
It is undeniable that a lot of our children are being damaged due to excessive drinking through pregnancy and that an awful lot of that is not being properly diagnosed. In my simple layman’s view, a lot of the symptoms have parallels with autism and the autism spectrum, and there may be links between autism and foetal alcohol syndrome.
The issue is very little researched in this country, but it potentially affects an awful lot of our children, and we need to do much more to identify it. More importantly, we need to give clear, stark, but accessible warnings to women about the practical perils of drinking irresponsibly at all stages during pregnancy. That is not to say that pregnant women must not drink at all, but we need to set out clearly what is and is not tolerable, just as we should for women who smoke during pregnancy.
To make a side point—a point I made during a debate on the Children and Families Bill—I cannot understand why the Government have set criminalising smoking in cars with children in them as a priority, yet have done nothing to criminalise, if that is the principle they want to follow, smoking for pregnant women whose foetuses are in rather more confined spaces than the back of a car. Smoking and drinking are highly damaging to children before and after they are born. People are irresponsible if they do that, and we need a much clearer and more pungent health message to mothers. We need to disseminate best practice better than we do now, whether that is from Scotland or other parts of the country that appear to have achieved some success in reducing some of these mortality rates.
This is a bigger public health crisis than we have given it credit for. I have met constituents and heard some tragic stories from around the country of families who have been through stillbirths and other perinatal mortalities. We need to take this issue much more seriously.
Jim Shannon (Strangford) (DUP)
I apologise for not being here on time; I had a Committee to go to. This issue is important to all of us here, as well as to those outside the Chamber. In Northern Ireland, there are four infant fatalities a week. The UK mainland has 17 to 19 infant fatalities a day. Obviously, the populations are different, but that figure tells its own story. Does the hon. Gentleman feel—perhaps it will be in the Minister’s response—that those in the health service should consider why the infant mortality rate is so low in Northern Ireland?
Tim Loughton
I agree with my hon. Friend, who is a co-sponsor of my Bill. The hon. Member for East Londonderry (Mr Campbell) made references to Northern Ireland, and earlier in my speech—I think before my hon. Friend entered the room—I did flag up the regional differences between parts of the United Kingdom. Far more research must be done to discover why certain parts of the United Kingdom are affected more or less than others and why women of certain ethnic backgrounds are affected more. We simply do not have the level of research to discover why such things are happening so we cannot better target our resources, as my hon. Friend the Member for Chatham and Aylesford mentioned earlier.
Finally, we need more work on mental health support for women before and after giving birth. There have been too many tragic stories of women self-harming or, in extreme cases, taking their own life and those of their children. We need better targeting of resources and better diagnosis of mental health problems. We need health visitors—I hope we will get the phalanx of new health visitors that the Government have rightly committed to provide—who can work with new parents and get into homes, where there is a much better chance of spotting problems. They can refer on to mental health services or parenting skills classes through children’s centres. That will form an important part of dealing with the epidemic of perinatal mental illness, in particular for first-time mothers.
This is an important subject for constituents across the country. The Minister is sympathetic to the problem and the Government would like to do more. Working with the royal colleges and some of the excellent charities, which have worked tirelessly over many years, we can get a better solution for better support for families who suffer from the pain of infant or perinatal mortality and hopefully do more to prevent the problem from occurring in the first place.
Andrew Gwynne (Denton and Reddish) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I pay tribute to the hon. Member for Chatham and Aylesford (Tracey Crouch) for securing this important and sensitive debate. There are few more pressing issues than protecting the health of small babies and reducing the deaths of babies under one.
I want to put on record my appreciation of the Rainbow clinic at St Mary’s hospital in Manchester. Mancunians—I am proud to be one—are incredibly proud of the work not only of the Rainbow clinic, but of St Mary’s in general. It is a centre of excellence for Greater Manchester and the north-west, and I am not just saying that because I was born there as a premature baby almost 40 years ago. It genuinely is a superb facility not only for babies, but for mums, and I commend its work, just as the hon. Lady has done.
Members on both sides of the House will know from their experiences and as constituency MPs the heartbreak and pain that the death of an infant can cause a family. I was particularly touched by the powerful speech by the hon. Member for East Worthing and Shoreham (Tim Loughton) about stillbirth. From a recent tragic occurrence in my family where stillborn twins were induced, I sadly know just how painful such an experience can be not only for parents, but for family members and how upsetting losing a child before birth can be. I know how unfair the law is; those children are not legally recognised by the state. The hon. Gentleman is absolutely right that it is important that the law be changed to reflect the realities, so that parents and grandparents can get closure, support and relief during such dreadful occasions.
We have seen some significant advances over the decades. It is easy to forget where we have come from, but we should recognise the work of health professionals and scientists to reduce the infant mortality rate in England and Wales to its lowest levels. In 1981, there were 11.1 infant deaths per 1,000 live births. In 2011, that had dropped to 4.2 per 1,000, equating to a 62% decrease over 30 years. It is worth reminding ourselves that, in 1911, before the introduction of the social security system and the NHS, the rate was 130 deaths per 1,000 live births.
One result of the major improvements in public health over the 20th century, such as slum clearances, the provision of fresh water, mass inoculation, health screening and the NHS, has been a huge reduction in the tragedy of infant mortality. I am proud that the previous Labour Government reduced infant mortality by 27% between 1997 and 2010, which equates to more than a 1,000 fewer baby deaths a year. As we have heard today, however, there is no room for complacency. Hundreds of babies still die each year from perinatal respiratory problems, bowel failure or infection. Such deaths are not evenly distributed across our society, which raises critical questions as to how we tackle health inequalities. In his groundbreaking report on these matters, Sir Michael Marmot said that
“one quarter of all deaths under the age of one would potentially be avoided if all births had the same level of risk as those to women with the lowest level of deprivation”.
Things are getting better, however. We achieved our ambition to narrow the gap of infant mortality by at least 10% between routine and manual socio-economic groups and the England average, but there is still far more work to do.
Office for National Statistics infant mortality statistics for 2011 show that infant mortality rates were highest for babies with fathers employed in semi-routine occupations, such as shop assistants or care assistants. One of the Minister’s predecessors as Minister responsible for public health, the hon. Member for Guildford (Anne Milton), has said that disadvantaged groups and areas have higher infant mortality rates and that poor health outcomes such as that are often linked to social factors, including education, work, income and the environment. I welcome the Government’s recognition of the link between poverty, housing, diet, neighbourhood and health, a point which was made powerfully by the hon. Members for East Worthing and Shoreham and for Chatham and Aylesford. We must continue to tackle the conditions that cause health inequalities and the unfair distribution of infant mortality across society. There is no good reason why, in the seventh richest country on this planet, the likelihood of a family’s baby surviving its first year of life should depend on their socio-economic background. Will the Minister address directly the inequalities around infant mortality and still birth?
We should also note that women over 40 are at greater risk of having a baby who dies before it is one year old. Women under 20 are at greater risk, too. Will the Minister’s speech address how health services can be specifically targeted to support pregnant women over 40 and under 20?
There is a growing understanding that early intervention is the key to preventing infant mortality. The Royal College of Paediatrics and Child Health states:
“The evidence quite clearly states that early intervention is the best form of prevention. Early intervention will not only lead to significant financial savings in the medium to long term, it is underpinned by sound science.”
A healthy pregnancy begins before conception. Action on health issues before pregnancy can prevent many problems for the mother and baby.
The hon. Member for East Worthing and Shoreham made a powerful point about understanding risk factors such as exposure to smoke and prenatal drug or alcohol use by mothers, but there are also positive steps that pregnant women can take to improve their and their unborn baby’s health, such as maintaining a healthy diet and weight, getting the right vitamins, taking folic acid and regularly being physically active. Women need proper advice, information and support to help them to understand the risk factors and make informed, healthy choices. What is the Department of Health doing to promote early intervention, and what resources is the Minister making available for that?
Of course, appropriate information continues to be important during pregnancy and after the child is born. Midwives and health visitors are our most crucial resource in ensuring that women have the information they need at every stage, and in supporting the development of confident, effective parenting. Forming trusting relationships with the women they care for is a critical part of the process, but many women do not have one midwife or health visitor whom they see regularly and with whom they can build a relationship. I hope that the Minister will explain what steps the Government are taking to deal with the problem and improve the consistency of care that women receive in pregnancy and after the birth of their child.
Two hundred babies a year die of sudden infant death syndrome and I welcome the work of the Lullaby Trust and the charity Bliss, which do an important job in advising and supporting parents in that connection. Tragically, five babies a week die without any explanation. Thanks to the “Back to Sleep” campaign, which advised parents to encourage their children to sleep on their backs, the figure is down from five babies a day in the mid-1980s; but five babies a week is still five too many, and I should like to know what the Minister and the Department are doing to try to reduce the figure further.
We have come a long way, but we still have some way to go. Advances in medical science must be matched by provision of NHS services and other social services in every part of the country. No one should be significantly disadvantaged by where they live. For pregnant women and young mothers to take responsibility for their health and that of their babies, they need the warm embrace of a strong system of health care, advice and support. If we want the coming decades to be characterised by further falls in infant mortality, and if we want many fewer families to suffer the terrible tragedy of a baby’s death, we need a continued, concerted and co-ordinated effort throughout Government.
I congratulate the hon. Member for Chatham and Aylesford on securing the debate, because it is important to discuss the matters in question. It was perhaps remiss of me not to convey the apologies of my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), the shadow Minister who leads on these issues. Sadly, just before the debate, she dislocated her shoulder and hopefully she is now receiving excellent NHS treatment at accident and emergency. I know she would want to pass on her thanks and appreciation to the hon. Member for Chatham and Aylesford for securing the debate and raising an important matter.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is a pleasure to serve under your chairmanship, Mr Davies. Like others who have spoken today, I congratulate my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) on securing a debate on a sensitive issue that it is incredibly vital that our nation makes more progress on. I apologise that the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), whose portfolio covers this policy, is not here to respond, but I undertake to report back to him and to refer him to colleagues if I am unable to respond to anything today.
The death of a baby, whether during pregnancy or following birth, is of course a tragedy. Colleagues have eloquently described the devastating impact on families of losing a baby to stillbirth or during the first year of life. Although stillbirth is now at its lowest recorded rate in England since the definition changed in 1993, a study published in The Lancet in 2011 ranked the UK 33rd worldwide on stillbirths, below a great many other high-income countries. As has been said, being in that place in the league table is not a record we can be proud of. We are making progress, which I will describe, but as everyone accepts we clearly need to do more and to be in a better place. Similarly, infant mortality rates are at historic low levels, but still higher than the European Union average.
Although the stillbirth rate has decreased dramatically over the past 50 years, until recently it had not declined significantly since the 1990s. My hon. Friend referred to that sense of stalled progress. Thus, the rate for England and Wales in 1993, when the current definition was introduced, was 5.7 stillbirths per 1,000 total births. By 1999 the rate had fallen to 5.3, but 12 years later, in 2011, it had not really changed, at 5.2. It is encouraging that the rate has now started to fall. The rate for 2012 was 4.8 stillbirths per 1,000 total births, which is the lowest rate recorded in England since the definition changed. Although that is a statistically significant fall, which we all welcome, we recognise that the decline in stillbirths in the UK has not kept pace with that in other comparable countries. My hon. Friend also demonstrated that across the UK we do not necessarily have even rates of progress. The decline in the infant mortality rate has been more encouraging, that in England falling from 5.2 to four deaths per 1,000 live births between 2002 and 2012, although that remains higher than the EU average, as I said.
Such reductions are welcome, but the rates in England are still high and there is considerable scope for future reduction. That is why we have a wide range of initiatives in place that will help to reduce stillbirth and infant mortality rates, and tackle health inequalities. The shadow Minister, the hon. Member for Denton and Reddish (Andrew Gwynne), and others, were right to refer to the relevance of this issue. It remains a source of concern that we sit where we do in international league tables.
What can be done to reduce the number of stillbirths? As colleagues have said, stillbirth has many causes, some of which are known and some not. That is one of the challenges: we are so used to identifying exactly what a problem is, what we need to do and the resources necessary to tackle it; but here we are in slightly strange terrain, in that we know some things but not enough. The known causes include lifestyle issues such as smoking and obesity; medical causes affecting the woman, baby or placenta; demographics; and the safety and effectiveness of the maternity care given.
On reducing the risk of stillbirth, an important first step is to raise the issue’s profile, so that people are aware that it needs to be dealt with and is not simply one of those things to be accepted and about which little can be done. It is not acceptable to have one of the worst stillbirth rates in comparison with similar countries. We have therefore included stillbirth and neonatal mortality as an area of improvement for the NHS in its outcomes framework. We have identified it as an area in which we need to do much better.
A range of research has been conducted that demonstrates that women who access antenatal care late have poorer outcomes. Early access to antenatal care is therefore pivotal to improving health and well-being outcomes for women and their babies. In line with the guidelines of the National Institute for Health and Care Excellence, women should have an assessment of their health and social care needs, risks and choices as early as possible in pregnancy. That enables midwives to provide pregnant women with important lifestyle messages —for example, about diet, exercise, smoking and drinking —and to identify any pre-existing conditions that might require additional support. I will say more about public health later, but I can only share in the alarm expressed by Members at some rates of drinking—quite heavy drinking—during pregnancy, for example. According to the national statistics on that, there is great variation between local authorities. I will touch later on one of the reasons why we think public health sits so well within local authorities, which are in a position to tackle that regional variation.
The Department and NHS England are working with a number of key partners, including the stillbirth charity Sands, Public Health England, the Royal College of Midwives and the Royal College of Obstetricians and Gynaecologists, to take forward a stillbirth prevention work programme. The programme covers a range of initiatives, including raising awareness of the known risk factors among pregnant women and health professionals. That will ensure that women receive consistent advice on how to minimise the risk of stillbirth—including the importance of healthy eating and the other lifestyle issues that have been raised—are aware of foetal movement and what is normal for their baby, and know where to go for help if they suspect there is a problem. It is important that each stillbirth is investigated and lessons are learned. We are therefore working with NHS England to explore how standardised perinatal death reviews could be introduced.
Growth-restricted babies are up to eight times more likely to be stillborn than non-growth-restricted babies. My hon. Friend the Member for Chatham and Aylesford is aware of the encouraging results we have achieved in reducing the stillbirth rate in the three regions where uptake of the Perinatal Institute’s growth assessment protocol training package—the GAP programme—was most prevalent. Following discussions with the Perinatal Institute, NHS England is encouraging uptake of the programme across the NHS in England. More than 75% of trusts in England have already signed up for that training.
Tracey Crouch
Will the Minister elaborate slightly on that training? Given the example of my constituent whose son, Henry, was stillborn at 38 weeks but had not grown for 16 weeks, the measurement tools currently available to midwives are clearly simplistic and some more sophisticated technology for measurement could well be of use. Will she elaborate on whether the new system is using more sophisticated technology? That is one reason why having an extra scan could help with early intervention, by identifying any growth problems sooner.
Jane Ellison
My hon. Friend has asked an extremely good question. I hope she will allow me to reply after the debate—I do not have an answer readily to hand, as the subject is not in my policy portfolio. I will come back to her on that, because it is a good question.
Although we know some of the risk factors for stillbirths, other causes are unknown, and it is important that we gain a greater understanding of those. The NHS National Institute for Health Research funds a range of research relating to causes, risk factors and prevention of stillbirth and neonatal death. Both the NIHR Cambridge and the NIHR Imperial biomedical research centres have ongoing research programmes on women’s health, including research relevant to the prevention of stillbirth and neonatal death.
In addition, the NIHR health technology assessment is funding three significant trials. The first is a £6 million trial of an intelligent system to support decision making in the management of labour using the cardiotocogram, or CTG. The second is a £1.4 million trial of nicotine replacement therapy in pregnancy, led by the university of Nottingham. The third is a £1.2 million trial of physical activity as an aid to smoking cessation during pregnancy, led by St George’s, university of London.
My hon. Friend referred to the Tommy’s stillbirth research centre at the university of Manchester, which is conducting innovative research that focuses on the unborn baby’s life support machine—the placenta. It has opened the Manchester placenta clinic, which combines specialised antenatal care for pregnancies affected by foetal growth restriction with front-line research into why the condition occurs and how it might be treated. The Government also fund MBRRACE-UK, or Mothers and Babies: Reducing Risk through Audits and Confidential Enquiries across the United Kingdom, which is continuing the national Confidential Enquiry into Maternal Deaths and national surveillance of late foetal losses, stillbirths and infant deaths.
I turn now to bereavement support and counselling, which were quite rightly raised during the debate. It is obviously important that women who have suffered a miscarriage, stillbirth or neonatal death receive evidence-based care, in an appropriate location, which supports both their physical health and their emotional well-being. In December 2012, NICE published clinical guidance that offers evidence-based advice on the diagnosis and management of ectopic pregnancy and miscarriage in early pregnancy—that is, up to 13 completed weeks of pregnancy.
We expect maternity care providers and commissioners to give due regard to NICE guidance and to ensure that there are comprehensive, culturally sensitive services and facilities for the management and support of families who have experienced a miscarriage, stillbirth or neonatal death. Skilled staff should of course be available to support parents. I take on board entirely the point that that picture might sometimes be inconsistent. Clearly, we have to work towards greater consistency. As I often say when we have debates such as this, it can only be a good thing that Parliament continues to demonstrate its great interest in this area, as we can demonstrate to those who provide and plan our health services in which Parliament has shown a particular interest. Today’s debate provides another opportunity for us to do that.
In May 2012, the then Secretary of State, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), pledged that women who have suffered a miscarriage would get more support from the NHS. Over the past two years, the Department has awarded £35 million in capital funding to improve NHS birthing environments, including facilities for bereaved parents.
My hon. Friend the Member for Chatham and Aylesford raised the issue of scans. There are currently no plans to introduce routine scans in the third trimester of pregnancy to monitor foetal growth and development. I recognise that there is a challenge to that policy. The UK national screening committee advises Ministers and the NHS in all four countries of the UK about all aspects of screening policy, and supports implementation. It uses evidence based on research, pilot programmes and economic evaluation, and assesses the evidence for programmes against a set of internationally recognised criteria. If stakeholder organisations, individuals or Members feel that there is enough evidence published in peer-reviewed journals to consider screening for a condition in the third trimester of pregnancy, they can submit a policy proposal to the national screening committee. That might well be something that my hon. Friend wishes to consider.
I turn briefly to the subject of the registration of stillbirths. I say briefly, because I know that the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich, is meeting my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) in early April to discuss his ten-minute rule Bill on the registration of stillbirth. That Bill aims to amend the Births and Deaths Registration Act 1953 to provide that parents may register the death of a child stillborn before the threshold of 24 weeks’ gestation. That Act, as amended by the Still-birth (Definition) Act 1992, provides for the registration of all babies stillborn after 24 weeks’ gestation. When a baby is stillborn, the doctor or midwife who attended the delivery or who examined the baby’s body after birth gives the parents a medical certificate certifying the stillbirth.
Although some parents are very distressed that they cannot legally register the birth of a baby born before 24 weeks who did not breathe or show any signs of life, others would be distressed at the possibility of having to do so. Getting the right balance between those conflicting wishes is challenging, but the existing system, whereby hospitals can issue local commemorative certificates—my hon. Friend the Member for East Worthing and Shoreham alluded to those in his remarks—for those parents who want them goes some way to addressing the issue. I know that he will have more questions and challenges for my hon. Friend the Member for Central Suffolk and North Ipswich, and will want to discuss those at that meeting in April. I recognise that he has signalled his intention to take the matter forward.
Although infant mortality rates are at an historically low level, health inequalities remain and often reflect inequalities by socio-economic group, ethnicity, geographical area and age. There is a threefold difference in infant deaths rates between professional groups and manual groups. Mothers born in the Caribbean, west Africa, Pakistan and Bangladesh have rates between one and a half times and twice the national average. The greatest numbers of infant deaths and the highest rates are to be found in the most deprived parts of big cities such as Birmingham and Bradford. Young mothers under 20 have the highest risk of infant mortality—almost 60% higher than that for mothers aged 20 to 39, with young lone mothers at even greater risk. That is a terrible catalogue of loss, for the families concerned, for their communities and for the nation as a whole.
There has, however, been some progress in reducing those inequalities in recent years. The difference in the infant mortality rate between the routine and manual group, for example, and the population as a whole has narrowed from 18% in 2002-04 to 9% in 2009-11. We are looking to build on that progress, and that is why we have made reducing these inequalities a priority for the whole of the new health system, working with PHE and NHS England, and backed that up with new legal duties on access to and outcomes from services.
Professor Sir Michael Marmot has been referred to during the debate. He said in his post-2010 health inequalities review that there is a social gradient in health, whereby the lower a person’s social position is, the worse his or her health will be. He recommended that action should be proportionate to the level of disadvantage, including on his first priority of giving every child the best start in life, with which none of us would disagree.
On a practical note, we are strengthening the health visitor service, which Members were right to highlight. We are conscious that it is an important pledge and crucial to infant health and early child development. We are increasing the number of health visitors by 50%—4,200—by 2015. We are also doubling—by 1,600—the number of places on the family nurse partnership programme, which supports vulnerable young mothers over the same time scale. Sure Start children’s services also have a role to play.
The family nurse partnership has an exceptional record of successful intervention, particularly in the lives of young and vulnerable mothers. It has supported many thousands of them throughout the country through pregnancy and birth, and sustained the life chances of the child and the mother. I will quote a nice comment from one of the young women who were helped by this service. She said of her family nurse:
“Margaret doesn’t tell me what to do but helps me make good decisions about my baby, my life and how to be a great mum. I’m excited about my future and seeing my baby grow up. My partner and I became engaged last October and next year I start university”.
That is typical of a young life that has been turned round by effective intervention at a critical moment—not just the mother’s life but, critically, the life of her child also. We are delighted to support the family nurse partnership and to see it grow.
As expected, reference was made to midwives. It is vital to have the appropriate number of trained midwives available in the NHS. Since May 2010, the number has increased at twice the rate of the number of births. There are now 1,500 more midwives than in May 2010, and more than 5,000 in training who are due to qualify in the next three years. Obviously, Health Education England has been given a mandate by the Government in this area, but I completely accept the point about consistency of midwife care and support. That very good point was well made, and I will ensure that it is made to the NHS.
Tracey Crouch
I am delighted to hear that there are 5,000 midwives in the training programme. Are they receiving dedicated bereavement training?
Jane Ellison
Again, if my hon. Friend will forgive me, I will respond to that question after the debate. I would not want to get the answer wrong.
We have touched throughout the debate on public health, which sits within my portfolio. National action must be complemented by local action. I mentioned the extraordinary range of indicators that I see regularly on issues such as drinking in pregnancy. It makes the case for why the transfer of responsibility for public health from the NHS to local government is sensible. We have backed that with £5.4 billion over two years, and a public health outcomes framework that focuses on health inequalities and key indicators in infant mortality such as low birth weight, which is associated with prematurity and is a significant cause of infant mortality and poor infant and child health.
Some of that local action is already being taken. My home city of Bradford has an excellent record in addressing infant mortality, despite having some of the worst outcomes. It established the Born in Bradford project, a long-term cohort study of 14,000 pregnant women and their children to improve understanding of health and sickness in babies and children, tracking their health throughout pregnancy and childhood into adult life.
In Salford, which is closer to home for the shadow Minister, the city council’s health improvement service offers activities to support new mums and children, including breastfeeding, weaning, exercise and socialising, and it is working to improve MMR vaccine uptake among black and minority ethnic and other groups, where uptake remains low despite our good national statistics.
In Birmingham, pregnancy outreach workers employed by the social enterprise, Gateway family services, tackle health inequalities in infant mortality by bridging the gap between women who need support and the agencies that provide it. Those are three illustrations of some of the imaginative projects that are under way. I hope we will see more and more local government adopting best national practice and responding to the particular challenges in their areas. Some of the contrasts are stark, and local government, which knows its communities well, is well placed to respond to them.
My hon. Friend the Member for Chatham and Aylesford referred to cot deaths. We have made reducing infant mortality an area of improvement for the NHS. Comprehensive advice to parents about reducing the risk of cot death is available on the NHS Choices website, which includes a wealth of other advice. In 2012, the NHS launched the Start4Life information service for parents. They can receive regular e-mails, videos and texts about pregnancy and the first eight months of their baby’s life. It is a free digital service to provide quality-assured advice at the right moments for parents, who can sign up online for it.
The Department has also included advice about the risk of sudden infant death in the Healthy Child Programme, which is the universal programme for all children from the start of life and includes preventive services for children with additional risks. Obviously, anything more we can do to highlight the available advice and support would be valuable, and Parliament has a great role to play in that regard, as do MPs in their constituencies, and local government. The advice is there, but the challenge is always to ensure that it gets to vulnerable groups, and accessing advice across a whole range of health information is difficult.
I thank my hon. Friend for securing this debate, and other Members for their contributions. It further raises the profile of this vital issue of stillbirth and infant death. I assure the House that the Department is working collaboratively with partners, including charities such as Sands and Bliss, the royal colleges and others on a range of initiatives to help to reduce the number of tragic deaths. The Department is always open to new ideas and to working with partners throughout the health sector. We welcome these debates and the opportunity to engage further in any way that Members believe will help us to move forward in this vital area of policy for all our constituents.
US Extraterritorial Jurisdiction (British Foreign & Commercial Policy)
(10 years, 1 month ago)
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Mr Jack Straw (Blackburn) (Lab)
I draw to the House’s attention that the hon. Member for Wyre and Preston North (Mr Wallace) and I are co-chairmen of the all-party group on Iran and that, in January, we were members of a parliamentary delegation to Iran.
This debate is not about the sanctions against Iran themselves, which the UK Government and Parliament have agreed to on an all-party basis; it is about the impact of US extraterritorial jurisdiction on British foreign and commercial policy. Its aim is to highlight the way in which US sanctions on Iran are in practice freezing out many services of UK-based banks and financial institutions, to prevent them and others from participating in commercial and trading activities with Iran that remain entirely lawful under the sanctions regimes of the UK, the EU, the UN and indeed the United States.
Here is the heart of the problem:
“humanitarian trade with Iran has always been permitted under both US and EU sanctions”.
I quote directly from a letter of 6 March to me from the Foreign Secretary. Such trade includes food and agricultural products, pharmaceuticals, medical devices and services. As the Foreign Secretary said in the same letter, however:
“many banks have been wary of processing the payments required. This has been driven in large part because of risk aversion to US banking sanctions”.
That risk aversion by banks based in the UK is entirely understandable. It is compounded by the fact that those banks cannot obtain greater certainty about the reaction of the US Government by looking at the black-letter text of the US sanctions regime. Nor, because they are non-US entities, do they enjoy any of the close connections that Washington DC offers big US corporations to obtain “comfort”, formal or informal, from the US Congress or Government. Rather, our financial institutions are subject to “guidance”, sometimes of an oral and confidential kind, from the US that, if they offer any banking services for any trades with Iran, they could find themselves in difficulties with the US authorities.
The pressure on our banks is intense. Most are so scared and so scarred that they will not provide banking services even where the trades are manifestly within the sanctions regime.
Mr John Baron (Basildon and Billericay) (Con)
I congratulate the right hon. Gentleman on securing the debate. The problem is illustrated by the fact that the Iranian chargé d’affaires, up to last month, could not even open a British bank account. May I suggest to the right hon. Gentleman, while he is talking about commercial issues, that what is clearly wrong is when humanitarian aid itself is being stopped because of the inability to get bank facilities? Is he going to develop and explore that point?
Mr Straw
I am indeed and I am grateful to the hon. Gentleman. I will show that, in practice, the impact of sanctions is much worse against British trading of all kinds and banks than against any other banking operations.
The impact of this unilateral extraterritorial jurisdiction of the US is especially discriminatory against UK-based financial institutions, because of their multinational nature. In contrast, for example, some German companies have banking services for their trade with Iran from a local Landesbank, which has no activity in the US. The US corporation Coca-Cola is able lawfully to sell its product in Iran and to use banking services for remittances by the Iranian franchise. A UK corporation in a similar situation would almost certainly find it far harder, if not impossible, to obtain such banking services here.
There is another example. For reasons of which the Minister is aware, I will not go into further details in public, but an Iranian entity in this country has seen all its banking services stopped, while an exactly similar Iranian entity operating in the United States has full access to the services of US banks.
The stark fact highlighted by the trade statistics is that the United Kingdom’s trade with Iran has been the hardest hit by far of any major European Union member, while, irony of ironies, US exports to Iran have scarcely been hit at all. As sanctions tightened, all EU countries saw their exports to Iran decline in the four years 2009 to 2012—in the EU as a whole, by 33.8%. But the United Kingdom’s exports in that period slumped by 73%, from $584 million to $159 million—the biggest fall by far. The US had the smallest fall, of just 11.3%, from $282 million to $250 million.
Let us go back to 2000. In contrast with the European Union as a whole and with Germany, France, Italy and the United States individually, the United Kingdom is the only nation whose exports to Iran were lower in 2012 than they were at the beginning of this century. In the United States’ case, a man from Mars might be forgiven for thinking that the United States had been on a modest export drive with Iran. Its exports in 2000 were worth $17 million; in 2012 they were worth $250 million; and they rose last year to $313 million.
The joint plan of action agreed between the E3 plus 3 and Iran, which came into force on 20 January, allows for some relaxation of the sanctions regime, but there is precious little evidence that that is making any significant difference for UK traders or banks, because of the threat, whether real or perceived, from the United States. This unacceptable situation is a direct challenge, I say to the Minister, to the sovereignty of the United Kingdom. It is one that the United States Congress and Government would not tolerate for a moment were the situation reversed, yet the British Government preside over a catastrophic decline in our exports that is not required by sanctions and has not been suffered by any other nation, and then retreat into claiming that they cannot interfere in the “commercial decisions” of UK-based banks.
However, the circumstances that our banks face have been created not by the banks’ own “commercial decisions”, but by the actions of the United States Government. I say, with respect, to the Minister that it is time for the British Government to make it crystal clear to the US that, although we are four-square behind sanctions that they and we have agreed, we will not tolerate any longer the US preventing trading that is lawful under those sanctions and that it is itself carrying out. Effectively, it is preventing our traders from carrying it out.
The Government already have on the statute book clear powers to take counter-action against the United States if they cannot negotiate a satisfactory way through by getting the United States Government and their agencies to change their behaviour. I am referring to the Protection of Trading Interests Act 1980, passed, as I recall, with all-party support by the Government of Margaret Thatcher. Introducing the Bill, the then Secretary of State for Trade, John Nott, told the Commons that its purpose was
“to reassert and reinforce the defences of the United Kingdom”
against attempts by the United States
“to enforce their economic and commercial policies unilaterally on us”
by
“the most objectionable method”
of
“the extra-territorial application of domestic law.”—[Official Report, 15 November 1979; Vol. 973, c. 1533.]
The Bill was prompted by decisions of US anti-trust regulators against UK shipping firms. The British and all European Governments took exception to that gratuitous interference. By the Act, the British Secretary of State is given power to prohibit any United Kingdom entity from complying with any extraterritorial sanction by the United States. Indeed, the power under section 2 makes it a criminal offence here to comply with what the US is trying to impose on our banks. The Act worked. It was used again in 1992 in respect of Cuba. It was followed in 1996 by similar, EU-wide regulations, which I think the hon. Member for Wyre and Preston North will explain in more detail in a moment.
Ministers do not have to be frozen, blinking in the headlights of this unacceptable practice by the United States Government, which is inhibiting the lawful activity of British banks and hindering the step-by-step restoration of bilateral relations with Iran. The Government have strong powers, bequeathed to them by Margaret Thatcher, to deal with this situation. If Ministers make it clear that Her Majesty’s Government will be ready to use those powers if needed, their hand in negotiations will be strengthened, and with luck their use will not be necessary and we should be able to restore our trade at least to the trend set by the United States itself.
Mr Ben Wallace (Wyre and Preston North) (Con)
I congratulate the right hon. Member for Blackburn (Mr Straw), my neighbour in Lancashire, on securing the debate. I am delighted to focus on the issue of extraterritorial sanctions. I recognise that this behaviour is a growing trend. It often emanates not from the US Executive, but from Congress, whose members would say in their defence, “It’s not our business how our laws and sanctions impact on other people. This is what I, as a US law maker, have a responsibility to my constituents to do.” However, we live in a globalised world; we live in a world of international trade; and we live in a world in which we are supposed to respect the international rule of law and trade deals.
I want briefly to take this back. It is not just about Iran. I want to take it back to Cuban cigars. I like a Cuban cigar from time to time, and many hon. Members may remember that in 1992 the United States passed the Cuban Democracy Act, which was followed closely by the Cuban Liberty and Democratic Solidarity Act. One might think that came from the Greater London council and Ken Livingstone, judging by its title. The effect of that legislation was to make anybody—US citizen, EU citizen or anyone else—who was involved in the trafficking of Cuban products guilty of an offence and prosecutable in the United States, or even to bar them from going to the United States. That was quite a formidable threat. It meant that an individual selling Cuban cigars in London who had a shop or an entity in the United States might be liable to prosecution. Even if they did not but they took a trip to America, they would be a trafficker of Cuban goods.
The European Union said that that was simply unacceptable and that a British citizen carrying out trade that was lawful under British and European law should not be a victim of such extraterritorial reach. In 1996, the EU passed a directive with the catchy title of Council regulation 2271/96 protecting against the effects of the extraterritorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom. In effect, we are still obliged by the conditions of that regulation. It basically told European Union citizens and member states that, if they complied with an extraterritorial threat from a third country, they would be vulnerable to civil claims from people affected. For example, British banks could be sued by European citizens who were prevented from using their facilities in Iran, Cuba or anywhere else, and the banks would be liable to pay damages.
The regulation covered a number of Acts and it is still in existence today. Funnily enough, it worked. The United States adapted its legislation so that it covered only US citizens. If we were to put it in law, we would be saying, “We, as British law makers, do not really care about what American law makers think; our duty is to our constituents and to the sovereignty of this country, so we will make the decision, thank you very much.” That was in 1996, which was a long time ago. The annex to the regulation contains a list of Acts, and I am sure that, if the European Parliament were so minded, it could add more to that list. One that still resonates today is the Iran and Libya Sanctions Act 1996, which was recently modified to become the Iran Sanctions Act.
Some of those provisions are still in existence and we are still bound by the regulation. Will the Minister tell us why the United Kingdom Government are not enforcing the regulation as they are obliged to? Why are they not saying—perhaps they are—to the US and to third parties, “We are obliged to comply with the regulation, otherwise British banks, businesses and entities will be vulnerable to handing over sums of money to injured parties”?
We need to find a way through. We must speak to the United States and others engaged in such extraterritorial legislation to see whether we can drive a way forward. As far as I am concerned, I will soon be ringing up British banks and saying to them, “By the way, you are covered by this regulation.” I will recommend that anyone who comes to my surgeries invoke the regulation, if relevant legislation is listed in the annex, and seek damages. It is simply not good enough that we should be increasingly prohibited, even when we are doing things that are legal under British and European law and within a sanctions regime, for the sake of some far-off idea of protectionism elsewhere.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
It is a pleasure to serve under your guidance this afternoon, Mr Davies. I congratulate the right hon. Member for Blackburn (Mr Straw) on securing this important debate and, as always, on the detailed, measured and articulate way in which he set out his case.
Before I get into the granularity of some of the issues that he raises, I want to set out Her Majesty’s Government’s wider approach to tackling extraterritoriality, because it is an important issue. The impacts of extraterritorial application of another country’s domestic laws on UK businesses can be significant and are not always easy to measure or to cost. British Governments of all colours—both the current Government and their predecessor—have maintained their opposition to over-broad assertions of extraterritorial civil jurisdiction, including when the right hon. Gentleman was Foreign Secretary.
It is not that the UK is averse to legislating to regulate extraterritorial activity; we have done so ourselves in certain cases that concerned the actions of British nationals abroad, the most obvious example of which is the Bribery Act 2010. However, the UK has always opposed the exertion of jurisdiction by a foreign country over British nationals or businesses that have little or no connection to that country. In such cases, we consider that the UK or the state on whose territory the activity occurred should rightfully exercise jurisdiction. As the right hon. Gentleman rightly said, that has principally been an issue with regard to the United States. He will be aware, I hope, that the United States Supreme Court is not immune to such arguments, and has stated that
“even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”
Successive British Governments have taken an interest in seeking to ensure that US courts do not try to exert jurisdiction over cases that have no substantial links to the United States. Indeed, we have submitted amicus briefs in a number of cases to the US Supreme Court under the so-called alien tort statute, and the right hon. Gentleman may well be aware of the most recent cases involving Rio Tinto and Shell.
It is important to reiterate the importance that the UK Government attach to sanctions. I know that there is cross-party support from Members, including the right hon. Gentleman, for those sanctions. They are an essential tool of foreign policy and provide a means of coercing changes in behaviour, constraining ability to continue to behave in a particular way and signalling collective opposition to the actions of certain states or individuals. It is still Her Majesty’s Government’s view that that is the case, as has been evidenced by the reaction to the events recently in Ukraine.
I turn to Iran, which was the main focus of the right hon. Gentleman’s remarks. The international community has applied significant pressure to the Iranian economy through sanctions, because of the international concerns surrounding Iran’s nuclear programme. International sanctions, particularly the stringent measures put in place in recent years by the US and the EU, have brought Iran back to the negotiating table. I believe that sanctions have, therefore, been proven to be a vital tool in our attempts to resolve the Iranian nuclear question through peaceful means. I will drill down into what that means with specific relation to Iran in a moment.
My hon. Friend the Member for Wyre and Preston North (Mr Wallace) rightly raised the example of Cuba. In the case of Cuba, we and our EU partners have a very different view from the US on how best to engage. The US continues to impose a trade embargo and apply sanctions, but we do not feel that the US approach regarding sanctions is right and we have raised our objections with them. Clearly, however, US policy towards Cuba is a matter for the US authorities and not for the UK Government. Whereas British businesses and banks can trade freely with Cuba, the US has a sanctions regime. Companies must be fully aware of how their business is being transacted. Banks often use the US clearing systems—this goes right to the heart of the point my hon. Friend made—in which case they are subject to US laws. That is not extraterritorial application of the US-Cuban sanctions regime. We have made it clear for some time to British businesses that operate in Cuba that that is a risk that they should look to mitigate.
On the points the right hon. Member for Blackburn made about the impact of sanctions, it is important that the House understands the distinction between what is and what is not extraterritorial in nature. US sanctions impact on all businesses that operate through the US. Companies, including UK companies, that conduct business with sanctioned regimes must therefore ensure that, if their business goes through the US or there is a US link within the transactions, they comply with US law. That applies to Iran, Cuba and other regimes against which the US applies sanctions but the EU does not—for example, Sudan.
Mr Straw
I would like to make it clear that the principle of sanctions is not an issue; my concern is about their application. Does the Minister accept that, whichever way we look at the data, one cannot but come to the conclusion that United States practice and the way they pressure British banks is operating more harshly on our banks than on US banks and entities? That is the heart of the matter on which we want to see some action taken by the British Government.
Mark Simmonds
I am grateful for the right hon. Gentleman’s intervention, because it leads me on quite neatly to my next remarks. Before I move on, however, I must say that I do not think he can conflate the challenges that some UK banks have—we can come on to the specifics—with the whole range of issues that affect the bilateral trade relationship between the United Kingdom and Iran. For example, banks must consider other aspects in order to comply with regulatory authorities in the UK and the European Union, as well as in the US. Such considerations include anti-money laundering, concerns about counter-terrorism and all the other aspects that banks must consider when assessing risk and ensuring that they comply with the whole package of important regulatory regimes, US or otherwise.
The right hon. Gentleman referred to banks that have fallen foul of the US regime, but those cases concerned not extraterritorial sanctions but transactions that had a connection to US territory. The allegations were that the banks had directly violated US law by conducting business with Iran from the United States, and it is correct that those banks should respond to allegations that they have broken US regulations within US territory.
I want to move on to secondary or extraterritorial US sanctions, which are at the heart of the thrust of the right hon. Gentleman’s remarks. Along with the European Union, we have taken steps to protect UK companies from such extraterritorial jurisdiction. The key to our approach to Iran is that our sanctions are so closely aligned with those of the US that the scope for such jurisdictional conflict is small. As I mentioned, we recognise the importance of US and EU sanctions in bringing Iran to negotiations.
Mr Richard Bacon (South Norfolk) (Con)
I must say that I am rather disappointed with my hon. Friend the Minister’s response—I was hoping it would be rather more Thatcherite, if I can put it that way. It seems that the right hon. Member for Blackburn has a valid point: US trade with Iran is going up and British trade with Iran is being adversely affected. If that is happening, it is possible that the US intends that to happen. Will the Minister address that point?
Mark Simmonds
As I said in response to the right hon. Member for Blackburn, I do not think we can conflate the issues relating to the complexity of a bilateral trade relationship with alleged extraterritorial US sanctions. Many other issues are at stake—for example, the fact that the UK Government currently do not encourage or provide support for UK companies to trade with Iran. However, where trade is allowed under the existing sanctions regime—for example, within the scope of the humanitarian issues raised earlier, such as medicines and pharmaceuticals—the UK’s trade with Iran has increased by 80% since 2012. Where it is allowed within the sanctions regime, therefore, there is a significant uplift in UK trade.
I want to assure my hon. Friend the Member for Wyre and Preston North that we are implementing the EU regulation. The right hon. Member for Blackburn rightly mentioned the Protection of Trading Interests Act 1980, but that cannot stop the US applying its laws to the US arm of a British multinational company. It stops the enforcement of US sanctions here in the UK, but cannot stop British businesses making commercial decisions on the basis of perceived risks in the United States.
Mr Wallace
I am grateful to my hon. Friend the Minister for his clarification. Is he saying that a British bank choosing to trade in euros, and therefore not clearing through the United States, in order to carry out a transaction in correspondence function for an Iranian, Cuban or any other type of entity, based in London, should not fear any US sanctions? Does he also not recognise that, if they do business in euros and there is no transaction that touches the United States, it would be grossly wrong for the United States Administration to have a go at the US entity of the British parent company, because they have not broken any law in the United Kingdom or Europe?
Mark Simmonds
The Act to which reference was made—as well as the subsequent statutory orders, most recently updated in 1997—provides measures to protect British companies from the impact of, and prevent them from complying with, US sanctions. Judgments against UK companies that result from such sanctions, in the way that has been described, cannot be enforced in the UK. That sends a signal to the US that the EU is opposed to such an approach to sanctions.
What both the right hon. Gentleman and my hon. Friend the Member for Wyre and Preston North have described is a result as much of perception as of legal issues. It is true that all UK banks must ensure that they are taking a risk-based approach to transactions, and that they comply with relevant anti-money laundering and sanctions legislation. EU sanctions law does permit avenues through which certain types of key transactions with Iran can be made legitimately. Her Majesty’s Treasury works very closely with the financial sector to ensure that it is clear about applying for licences and authorisations that allow legitimate financial transactions involving Iran, particularly in the sphere of humanitarian trade, where the limit has recently been increased tenfold, since the agreement on the joint plan of action.
I am coming towards the end the time allotted for the debate, so I want to reiterate that our best approach must be to work with the US and others in seeking to minimise conflicting approaches. Although our objectives on particular policy issues vary on occasion, in most cases any difficulties arise from different regulatory approaches—we have similar objectives. That does not imply any loss of sovereignty: it is a clear UK foreign policy position.
Rail Services (Eccles)
(10 years, 1 month ago)
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Hazel Blears (Salford and Eccles) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I am very pleased to have secured this debate—I am sure that my constituents will be happy—and it is good to see the Minister present.
Trains in Eccles have a long and proud history. When we opened the very first passenger railway, the Liverpool and Manchester railway, on 15 September 1830, Eccles played a part. It was actually a sad part, because tragically, on the day that the railway was launched, the Member of Parliament for Liverpool was struck by Stephenson’s Rocket. Stephenson managed to evacuate the injured MP, Mr Huskisson, to Eccles on a train, but sadly he did not recover from his injuries and died. Eccles therefore has a proud role in the history of the railways. However, that is the past, and my constituents are very concerned about the future of railway services in Eccles.
We have an amazing campaign group called Freccles, which I hope the Minister is aware of, because the Secretary of State, when he visited us recently to mark the beginning of the electrification of the Liverpool-Manchester line, met members of Freccles. The Secretary of State, in his subsequent correspondence to me, has been very complimentary about them. They are entirely a group of volunteers—Mr Stephen Clapham, Professor David Yates, Mr Sean Dunne, Mr Eoan Edwards and Ms Nina Keshishian—and they have been campaigning since 2005 to get an improved railway service at Eccles. They first came to see me in 2009, and together we have been campaigning for the past five years to get some progress.
We have a simple request. At the moment, Eccles station has an hourly service into Manchester. We are just a few miles outside Manchester and a thriving town in our own right. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) has Patricroft station in her constituency, where there are equally good campaign groups. We have an hourly service, and we are campaigning for two trains an hour—a half-hourly service. I would not have thought that, after five years of campaigning and bringing all our powers to bear, it was too much to ask. Unfortunately, we have made little progress over that period.
Barbara Keeley (Worsley and Eccles South) (Lab)
The town of Eccles is split between my right hon. Friend’s constituency and mine—even though Eccles station is in her constituency—which is why I am here to support her debate.
Groups such as Freccles do a wonderful job in maintaining the fabric and look of that building. Nevertheless, does my right hon. Friend agree that, beyond their excellent work in making those improvements, what they want more than anything is the half-hourly service? They already do brilliant volunteering, but the issue is not just about how the station looks, but about how the train service runs.
Hazel Blears
My hon. Friend makes an important point. The group has regenerated the whole station. We have flowers on the platforms, a lovely entrance way and a mural; in fact, our station is better than the service. What we now need to do is ensure that the service lives up to the efforts of Freccles, which has done such a wonderful job.
We started in 2009. I wrote to Arriva Trains, which was operating the service between Manchester Piccadilly and Chester, asking for two trains an hour. It wrote back to me, saying, “The line is fairly congested. There is insufficient track capacity for additional stops without creating delay to other services. In addition, many of our trains are already very crowded on this route, and we would need to agree a strategy with the Department for Transport to secure sufficient rolling stock.” So, in 2009, we had little track capacity and overcrowded rolling stock, and Arriva Trains was not able to help us out.
Arriva directed me to Northern Rail, so we took the case up with that company. We had correspondence back and forth, culminating in a letter on 28 January 2011. Northern Rail gave me a much more detailed response, including the times of trains at key junctions and saying that it needed clearances of a specified number of minutes to be maintained. It said that it would not be technically feasible to insert an additional stop at Eccles station. It also talked about track capacity being limited at the Liverpool end of the route; apparently, if the train were to stop at Eccles station, it would result in the service passing Huyton junction around two minutes later, clashing with the eight minutes past the hour Wigan-Liverpool local service.
There were clearly a number of obstacles in our way, preventing a change to the system, and Northern Rail was also unable to help us. It said, “I am sorry that I cannot meet your aspiration to change the timetable on this occasion.” However, it told me that it was going to do new signage and some refurbishment. We therefore have new signage and refurbishment, but we do not have any trains.
Nevertheless, we persevered and had a number of meetings with the Greater Manchester transport executive. We also met with Salford city council, which has been supportive, and Transport for Greater Manchester. I have also been in correspondence with the Secretary of State to raise the issues.
I honestly believe that there is a good case for having two trains stopping at Eccles every hour. Over the past few years, the Eccles area has changed quite dramatically. MediaCity has now come to Salford, with the relocation of BBC and ITV. There is a lot of regeneration going on; we are about to have the regeneration of Port Salford in the constituency of my hon. Friend the Member for Worsley and Eccles South. Eccles station is now becoming much more of an interchange, signposting people to the Metrolink, which stops in Eccles and which has been able to open up the whole west side of Salford for regeneration.
Transport for Greater Manchester has a matrix on how many passengers a station must have to justify having two trains an hour. Over the past three years, the average number of passengers at Eccles station was 139,583. On TFGM’s analysis, if there are between 50,000 and 500,000 trips a year, the station is entitled to two trains an hour. The lower limit is 50,000, but we are at 140,000, so we more than meet that criterion.
TFGM said that, because Eccles station is an interchange with both Metrolink and bus services, it could justify a three-trains-an-hour, or even a four-trains-an-hour, service. It says that it has conveyed that view a number of times in its reports to the train operators, and it has met Freccles on a number of occasions.
We have been told time and again that the matter will be addressed in the new franchises that are being considered for train services in Greater Manchester and the north-west. We were hopeful that, when the line was electrified, journey times would be considerably shortened, enabling us to overcome the difficulties that Northern Rail set out—the tight time scales of trains passing one another, and there not being the minutes available in the timetable to do essential maintenance, or to manoeuvre rolling off to another siding before the train came back on. When we got electrification, we thought, “Well, at least this is a chance to achieve our aspirations.” However, we still do not have an agreement that we can have two trains an hour. The reason why I have secured this debate is that I am beginning to worry that the time scale is going on and on, and it is unacceptable.
We have now been told that a direct franchise for 22 months has been awarded, which runs from April 2014 to February 2016, after which there will be a completely new franchise. As I understand it, in that new franchise—I want the Minister to address this—there is a possibility to have more flexible commissioning in addition to the basic service. There is therefore a possibility in that new franchise to commission for two trains an hour to stop at Eccles station.
The consultation will begin this summer, as the Secretary of State has written to me to confirm. He also said that Freccles—and indeed I and my hon. Friend the Member for Worsley and Eccles South, as Members of Parliament—may make representations, which will be taken into account in drawing up the new franchise. He said, “I am pleased to note that Freccles are already working closely with Northern, a current operator,” and suggested that Freccles puts its views in for the 2016 franchise. He said, “This is because our specification for the full franchise may well give bidders flexibility to propose additional services over and above those we specify as requirements for the franchise.” Therefore, I can see just a glimmer of hope that, after nearly 10 years of campaigning to get a half-hourly service at Eccles, we might have the prospect of success.
Barbara Keeley
My right hon. Friend is making a powerful case. Taking into account her important point about passenger numbers and the access to employment that could be enabled by better train capacity, does she agree that the bigger reason why the Minister might want to consider is reduced traffic congestion? We have some of the most congested sections of motorway anywhere in the country, particularly the M60 ring road. The Highways Agency has been prevented from running its motorway widening scheme in those sections of the M60 as the air quality is too bad to tolerate any additional traffic. Motor traffic has nowhere to go, which adds to the powerful case she is making.
Hazel Blears
I am grateful to my hon. Friend for raising the wider economic issues for Eccles and the surrounding areas, which are extremely important. As the Minister knows, rail connectivity can often be a driver of regeneration. We have a particular problem with housing shortage in this part of the Salford area. We have many applications for new housing but without proper transport links, including a rail link into the centre of Manchester, it is very difficult to satisfy those demands for housing development. I said that we have a number of big regeneration schemes coming on board and there are many applications for planning permissions to our local authority. Therefore, the economic case for having a decent rail service for commuters to get from Eccles into the centre of Manchester and home again in the evening is absolutely essential.
My hon. Friend mentioned reducing congestion and emissions. Rail is a much more climate-friendly way to travel, as we all know. In fact, there has been a big push by Governments of all political opinions to get people off the roads and on to the rail service, which has been very successful. I think that there has been a 30% increase in the number of people travelling by rail in Greater Manchester, which has helped both the economy and in terms of emissions and the atmosphere.
There is an overwhelming case for the increase from an hourly service to a half-hourly service; as I have said, it is not too much to ask for. When the Minister responds, I hope that he can give me some hope that in the consultation for the 2016 franchise we will at last be able to get that service for local people. It meets the criteria that have been set out in TFGM’s assessment and it can now happen in a practical way, because of electrification and the changes to the timetable. If we are to achieve the economic benefits as well as improve the convenience of local people, it is absolutely essential that we put the half-hourly service into place. It is very rare that there is a situation where virtually every part of the system—the operators, TFGM, the local MPs and the local people—is saying that a change should happen, and therefore it cannot be beyond our wit to put that plan into practice.
I started this debate by saying that trains in Eccles have a proud history, as they do. The members of the Freccles campaign group have been working away on this issue for many years now and I want them to have some assurance that their campaigning, their commitment and the fact that they have given their own personal time to make this change happen and to improve the station in the way that they have will be rewarded with a decent service that they can rely on.
It is simple for the Minister. What do we want? We want two trains an hour. When do we want it? Before 2018. I hope that he is able to give us some assurance on that.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
Thank you, Mr Davies, for calling me to speak. I also thank the right hon. Member for Salford and Eccles (Hazel Blears) for securing this afternoon’s debate. My goodness, she is persuasive, isn’t she? She has raised a subject of interest to many of her constituents and others. I hope to address some of the points that she has raised.
The people of Eccles are served by a station that opened on the Liverpool and Manchester railway in September 1830—the world’s first major inter-city passenger railway. They have considerable pride in their local station, although we heard from the right hon. Lady about the tragic circumstances of the opening of the line. That local pride is demonstrated by the passion of the Friends of Eccles Station, which she has spoken about today.
By the way, I wonder whether George Stephenson had the same problems building his railway line as we are having building the High Speed 2 line. In Stephenson’s time, the major argument deployed against rail was, “Why do we need a railway when we have got the canals to use?”
Hazel Blears
I can help the Minister with that query. Apparently, Robert Stephenson had the same problems. He brought a Bill forward in the House of Commons; it was rejected; there was a revised Bill for a new alignment; and the revised alignment had a problem crossing Chat Moss, which was apparently a bottomless peat bog. I have no doubt that Stephenson faced exactly the same difficulties that the Minister might face in the future, but he persevered, had determination and got there in the end. I am sure that the Minister will want to do the same.
Mr Goodwill
“Plus ça change,” as I am tempted to say. I am told that only one thing is more difficult than building a new railway line: closing an existing one.
I welcome the investment made at Eccles station during 2013, which included a brand new ticket office building. That £235,000 project was funded by the national station improvement scheme, with contributions from TFGM and Salford City council. It provides a waiting area that offers much-improved facilities for passengers, and a raised section of platform—I am told it is called a “Harrington Hump”—has been provided on the eastbound platform. That will reduce the stepping distance from the platform to trains at Eccles, making it easier for people with reduced mobility or those with baggage or pushchairs to board trains to Manchester.
Northern Rail is installing a cycle hub at Eccles, which is due for completion next month. Having said all that, I understand that having a waiting room is no good if people have to wait too long for their train.
In July 2013, the Secretary of State for Transport unveiled a plaque at Eccles to commemorate the substantial completion of the first phase of electrification of the Liverpool and Manchester Chat Moss route. I commend the efforts of the volunteers who form the Friends of Eccles Station group, which has made such a contribution to improving the environment at Eccles station and promoting the benefits offered by the local railway, working with Northern Rail’s client and stakeholder manager and others.
Freccles, as we have to call the group, is just one of the groups of friends, station adopters and community rail partnerships made up of local people who volunteer their time and energy to improve their local stations and promote train services in the north of England.
Barbara Keeley
I did not want to let the Minister mention Freccles, an excellent group that does great work, without also mentioning Friends of Patricroft Station, a station near Eccles. That group is also campaigning for two trains an hour, as well as for the implementation of Sunday services. For some of these stations, a Sunday service would mean everything. It seems crazy to build up the numbers of passengers and the footfall during the week without having a Sunday service.
Mr Goodwill
It seems that there is not a friendless station in Lancashire. These volunteers who we have heard about make a considerable contribution at Eccles, other stations in the north and right across the Northern Rail network.
I am aware that Freccles wishes to see additional train services calling at both Eccles and Patricroft. The hon. Member for Worsley and Eccles South (Barbara Keeley), who also mentioned air quality issues in a brief intervention, wrote to the Secretary of State on this subject on 7 March.
I appreciate the view of Freccles that additional trains at Eccles could provide local people with a broader range of direct journey opportunities to Liverpool, Chester, north Wales and Manchester airport for work and leisure. That would make it easier for people to travel to work opportunities by train, including the opportunities at Manchester airport and the growing Media City in Salford.
Local train services at Eccles and Patricroft are sponsored and specified by TFGM, which is a co-signatory to the Northern Rail franchise agreement. The Government believe that TFGM, as the local transport authority, is well placed to decide how best to deliver local transport to serve new employment opportunities such as those at Media City, and to offer sustainable and convenient journeys that bring economic benefits and access to jobs and leisure, while helping to reduce carbon emissions from transport.
The railway industry has to develop services that best balance the competing needs and aspirations of all passengers within the capacity of the infrastructure and the funding available. A balance has to be struck between people making local journeys, who wish for trains to call at a number of stations, and other passengers making longer journeys, who are attracted to the train because it can offer a quick journey between main city centres. It is for train operators to decide, in partnership with TFGM, whether there is an appropriate business case for their existing train services to make additional calls at Patricroft and Eccles stations.
Although there may be little obvious cost in an existing express train stopping at those stations, operators have to consider whether the additional fare revenue from new passengers is likely to cover the increased use of fuel and other industry costs. There would also be an impact for existing passengers from extending journey times. By offering quick journey times, express trains offer people a competitive alternative to other modes of transport.
An additional station call would require changes to the timetable, as a station call typically adds two or three minutes to a train’s journey. At busy junctions around Manchester, slowing a train by only a few minutes could mean that it arrives at the same time as a train that is currently running behind it or one that crosses the junction in a conflicting move. The railway infrastructure around Manchester Piccadilly is used to full capacity at peak times. Additionally, train operators need to consider how busy their existing trains are. For example, would a greater number of passengers making short journeys on an existing train lead to those making longer journeys having to stand?
Hazel Blears
I am listening carefully to the Minister, and I am afraid he is not giving me a great deal of hope—my heart is not fluttering and I do not feel that, after 10 years, we might be making some progress. These are exactly the same arguments that I have been pursuing for the past few years with Arriva and Northern, and they would not change the situation because of financial reasons. Then there were issues about the time scale, and about the two minutes here and there. I understand that those are all genuine matters, but TFGM said in its letter to me that it shares our frustration and wants to get two trains per hour at “the earliest opportunity” possible. It also says that the Department for Transport is launching the consultation.
I am afraid I am asking the Minister for more than his simply saying that the issue has nothing to do with the Department and it is all a local matter, because, clearly, he has overarching responsibility. I should like to hear from him that he agrees that we have an excellent business case for making sure that we get these trains.
Mr Goodwill
I am merely outlining the problems, although they are not insurmountable. A balance needs to be struck between the needs of the express passengers, who want a quick journey, and passengers who may wish to stop at intermediate stations.
Passenger demand on Northern services has increased by more than 40% since 2004 and its trains are now used by some 85 million passengers per year. In the same period, passenger numbers at Eccles have doubled, as they have on TransPennine Express services. Such increases in demand for trains and track capacity are among the reasons why the Government are investing more than £500 million in the northern hub scheme over the next few years. That will increase capacity on the railway network serving Manchester and the cities of the north of England, enabling more trains to be operated in 2014, with further capacity improvement and more electrification due to come into use in 2016.
The right hon. Lady knows that Government investment in the railways of the north-west includes electrification of the lines between Liverpool and Manchester via Newton-le-Willows and Eccles, and from Liverpool to Wigan and Manchester to Preston and Blackpool North via Bolton. The first phase saw TransPennine Express introduce a fleet of 10 brand new four-coach electric trains between Manchester and Scotland, running via Wigan North Western. These entered service from 30 December 2013, with the full fleet now delivered.
From May 2014, TransPennine Express will provide additional carriages across its network, increasing overall capacity by 30%. That will include non-stop expresses between Liverpool and Manchester for the first time in several decades. These new train services will offer probably the fastest and most frequent express trains ever to run along the original Liverpool and Manchester railway.
Network Rail is nearing completion of the work for the next phase of electrification from Newton-le-Willows to Liverpool. Electric trains will be able to operate along the Chat Moss line from December. Some two years later, in late 2016, electric trains will be able to use the route from Manchester to Blackpool North via Bolton, too. That is all part of the Government’s massive electrification and investment project, providing more than 850 miles of electrification, which I probably do not need to remind the right hon. Lady is 842 miles more than delivered by the previous Labour Government in respect of improving our railways.
Although subject to reaching agreement, it is expected that a small number of train services between Liverpool and Manchester via the Chat Moss route will be provided using cascaded electric trains from the start of the December 2014 timetable. The planned phased introduction of four-coach electric trains will enable the operator to provide electric trains offering additional capacity for passengers travelling to Eccles and Patricroft during 2015.
Hazel Blears
I trust that the Minister will conduct the rest of this debate in the consensual way that has prevailed so far, otherwise I might be tempted to offer a different tone. Transport for Greater Manchester said:
“In the immediate short term, the major concern within TfGM is that the Department for Transport…has not confirmed when and how many electric units will come north to operate services over the newly electrified…line from this December.”
Will the Minister say how many are coming, to enable us to have that capacity?
Mr Goodwill
I will have to write to the right hon. Lady with precise details. I would not want to mislead the Chamber by giving the incorrect figure.
If agreed, it is hoped that the introduction of electric trains will enable a small number of the diesel trains used today to move to other routes. It is hoped that that will enable additional places to be provided for passengers travelling from Bolton and local stations on that line to Manchester at peak times, from the December 2014 timetable change.
Investment is being made on the Chat Moss route, to reinstate two tracks between Roby and Huyton that were removed in the 1970s. Initially, there will be a third track, but in a few years’ time, a new section of four-track railway will enable express trains to overtake local services, increasing capacity and reducing journey times.
In conclusion, we welcome the popularity of the railway in the north of England. Although I recognise that that has led to some services becoming very busy, the Government are investing to provide more, longer trains and to introduce electric trains and reduce journey times. I have outlined how the Government are working with operators and stakeholders to deliver increased capacity to the railway network, so that operators are able to provide passengers with more carriages and new, improved train services over the next few years. I hope to see electric trains calling at Eccles before the end of 2015, with operators working with TFGM and other local stakeholders to offer a more frequent service where there is a business case for doing so.
Hazel Blears
My heart fluttered a little when the Minister said “before the end of 2015”. Does that mean that he foresees the possibility, by the end of 2015, of two trains an hour—a half-hourly service—rather than the hourly service that we have now?
Mr Goodwill
The right hon. Lady mentioned this summer’s consultation and the opportunity that the new franchise may present. Let us hope that I have also seen that glimmer of hope, too, and let us hope that, in this case, it is not a false dawn.
I thank the right hon. Lady again for bringing this matter to my attention. If enthusiasm was a way of getting this matter pushed through, she would certainly have the train already. I appreciate that it is difficult for people to plan their lives around a train service that runs only on the hour. I have a similar problem with the Northern Rail service to Whitby in my constituency, where there is also a campaign for a second train, to give us an early morning service. The problems faced in Eccles are not confined to the western side of the country; they are also encountered in my constituency.
I appreciate the opportunity to make the case and to respond to the right hon. Lady’s points, and I look forward to seeing what developments come in future.
Question put and agreed to.
Written Statements
(10 years, 1 month ago)
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Lloyds Banking Group
(10 years, 1 month ago)
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The Financial Secretary to the Treasury (Sajid Javid)
Today the Government have successfully completed the sale of a second tranche of shares in Lloyds Banking Group.
The Chancellor received advice from UK Financial Investments Ltd (UKFI) yesterday that it would be appropriate to begin the process to sell a second part of the Government’s shareholding in Lloyds.
Overnight the Government were able to place 7.78% of Lloyds shares with investors at a price of 75.5p. The proceeds from that sale total approximately £4.2 billion.
The Treasury estimates that the second sale has reduced the national debt by £788 million and that in total the programme of sales of Lloyds shares to date has reduced the national debt by just under £1.4 billion.
Future sales will always be subject to value-for-money considerations and market conditions.
Environmental Taxes
(10 years, 1 month ago)
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The Economic Secretary to the Treasury (Nicky Morgan)
In May 2010, this Government committed to increasing the proportion of tax revenue accounted for by environmental taxes.
In 2012, the Government published their definition of environmental taxes which set the baseline for achieving that commitment. This statement provides an annual update of the Government’s progress against that commitment, using the independent Office for Budget Responsibility’s (OBR) forecasts published alongside the Budget.
The Government classifie environmental taxes as those that meet all of the following three principles:
The tax is explicitly linked to the Government’s environmental objectives; and
The primary objective of the tax is to encourage environmentally positive behaviour change; and
The tax is structured in relation to environmental objectives (for example: the more polluting the behaviour, the greater the tax levied).
The Government have defined the following as environmental taxes based on these principles:
Climate Change Levy;
Aggregates Levy;
Landfill Tax;
EU emissions trading system (EU ETS);
Carbon reduction commitment energy efficiency scheme;
Carbon price floor.
For Budget 2014, the OBR has changed the accounting methodology it uses for particular taxes, so that the revenue is scored at a later stage. The forecasts, using either the original or the new OBR scoring methodologies, both demonstrate that the coalition remain on track to achieve their commitment to increase the proportion of revenue accounted for by environmental taxes over the Parliament. Table 1 provides figures using the OBRs original methodology for ease of comparison with the figures released at Budget 2013. Table 2 provides an update using the OBRs new accounting methodology.
Revenue Raising Taxes and Fiscal Instruments with Environmental Benefits
These are taxes and fiscal instruments which are primarily designed to raise revenue or to achieve other objectives, and therefore do not qualify as environmental taxes on the basis of the Government’s three principles.
Differentiating environmental taxes from taxes which are designed to achieve other objectives provides greater clarity and transparency to the Government’s overall tax strategy. The Government also recognise that other taxes not included within its definition can deliver environmental benefits.
On that basis, the Government believe that it is important to make reference to transport taxes, levies and exemptions/reliefs in their overall assessment of environmental taxation.
Budget 2014 made several announcements that will act to sharpen the environmental signals of non-environmental taxes, including:
Ultra-low emissions vehicles—Budget 2014 announced that the Government are increasing the company car tax rate differential between ultra-low emissions vehicles (ULEVs) and non-ULEVs from 3 and 2 percentage points in 2017-18 and 2018-19 to 4 and 3 percentage points respectively.
Van benefit charge (VBC) exemption for electric vans—Budget 2014 announced that the Government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis. Zero emission vans will pay only 20% of the rate paid by conventionally fuelled vans in 2015-16, followed by 40% in 2016-17, 60% in 2017-18, 80% in 2018-19 and 90% in 2019-20, with the rates equalised in 2020-21.
Enhanced capital allowance (ECA) for zero emissions goods vehicles—Budget 2014 announced that the Government will extend the ECA for zero emission goods vehicles to 31 March 2018. To comply with EU state-aid rules the availability of the ECA will be limited to businesses that do not claim the Government’s plug-in van grant.
Enhanced capital allowances: energy-saving and water-efficient technologies—The list of designated energy-saving and water-efficient technologies qualifying for enhanced capital allowances will be updated during summer 2014, ensuring the most efficient technologies continue to be targeted.
Fuel duty incentives for methanol—From April 2015, the Government will apply a reduced rate of fuel duty to methanol. The size of the duty differential between the main rate and methanol will be maintained until March 2024. Like the road fuel gases already benefiting from a duty differential, methanol provides environmental benefits compared to conventional fuels. The Government will review the impact of this incentive alongside the duty incentives for road fuel gases at Budget 2018.
Tax | Actual Revenue 2010-11 | Actual Revenue Raised 2011-12 | Revenue Forecast 2012-13 | Revenue Forecast 2013-14 | Revenue Forecast 2014-15 | Revenue Forecast 2015-16 | Revenue Forecast 2016-17 | Revenue Forecast 2017-18 | Revenue Forecast 2018-19 |
|---|---|---|---|---|---|---|---|---|---|
2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 | |
Climate Change Levy and Carbon Price Floor | £0.7bn | £0.7bn | £0.7bn | £1.3bn | £2.0bn | £2.5bn | £2.3bn | £2.2bn | £2.1bn |
Aggregates Levy | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn |
Landfill Tax | £1.1bn | £1.1bn | £1.1bn | £1.2bn | £1.3bn | £1.2bn | £1.1bn | £1.1bn | £1.1bn |
EU ETS | £0.4bn | £0.2bn | £0.3bn | £0.3bn | £0.3bn | £0.4bn | £0.4bn | £0.6bn | £0.6bn |
Carbon Reduction Commitment | £0.0bn | £0.7bn | £0.7bn | £0.7bn | £0.8bn | £0.8bn | £0.7bn | £0.6bn | £0.6bn |
Total | £2.5bn | £3.0bn | £3.0bn | £3.8bn | £4.7bn | £5.1bn | £4.8bn | £4.7bn | £4.7bn |
Total Revenue from Environmental Taxes | £2.5bn | £3.0bn | £3.0bn | £3.8bn | £4.7bn | £5.1bn | £4.8bn | £4.7bn | £4.7bn |
Total Tax Forecast Receipts | £555.7bn | £577.5bn | £593.5bn | £619.8bn | £648.2bn | £675.5bn | £711.2bn | £743.6bn | £778.0bn |
Proportion of Total Tax Receipts | 0.5% | 0.5% | 0.5% | 0.6% | 0.7% | 0.8% | 0.7% | 0.6% | 0.6% |
1Numbers in both tables may not add up due to rounding. |
Tax | Actual Revenue 2010-11 | Actual Revenue Raised 2011-12 | Revenue Forecast 2012-13 | Revenue Forecast 2013-14 | Revenue Forecast 2014-15 | Revenue Forecast 2015-16 | Revenue Forecast 2016-17 | Revenue Forecast 2017-18 | Revenue Forecast 2018-19 |
|---|---|---|---|---|---|---|---|---|---|
2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 | |
Climate Change Levy and Carbon Price Floor | £0.7bn | £0.7bn | £0.7bn | £1.3bn | £2.0bn | £2.5bn | £2.3bn | £2.2bn | £2.1bn |
Aggregates Levy | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn | £0.3bn |
Landfill Tax | £1.1bn | £1.1bn | £1.1bn | £1.2bn | £1.3bn | £1.2bn | £1.1bn | £1.1bn | £1.1bn |
EU ETS2 | £0.2bn | £0.3bn | £0.3bn | £0.4bn | £0.3bn | £0.4bn | £0.4bn | £0.4bn | £0.4bn |
Carbon Reduction Commitment3 | £0.0bn | £0.0bn | £0.6bn | £0.6bn | £0.7bn | £0.7bn | £0.6bn | £0.6bn | £0.6bn |
Total | £2.3bn | £2.4bn | £2.9bn | £3.8bn | £4.6bn | £5.0bn | £4.6bn | £4.5bn | £4.4bn |
Total Revenue from Environmental Taxes | £2.3bn | £2.4bn | £2.9bn | £3.8bn | £4.6bn | £5.0bn | £4.6bn | £4.5bn | £4.4bn |
Total Tax Forecast Receipts | £555.5bn | £576.9bn | £593.4bn | £619.8bn | £648.1bn | £675.4bn | £711.0bn | £743.4bn | £777.7bn |
Proportion of Total Tax Receipts | 0.4% | 0.4% | 0.5% | 0.6% | 0.7% | 0.7% | 0.7% | 0.6% | 0.6% |
2The OBR now scores EU ETS revenue on an accruals rather than cash basis. 3 The OBR now scores CRC revenue when permits are surrendered, rather than when the emissions took place. The OBR now also excludes central Government. CRC permit revenues from its published figures. |
Council Tax
(10 years, 1 month ago)
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The Secretary of State for Communities and Local Government (Mr Eric Pickles)
Under the last Administration, council tax bills more than doubled. By contrast, this Government have been working to keep council tax down, giving hard-working people greater financial security. The coalition Government have provided total freeze funding of up to £5.2 billion up to 2015-16, which is an unprecedented five years of council tax freezes worth potentially up to £1,075 for an average band D taxpayer over the lifetime of this Parliament.
I am today publishing new official figures which show that the average council tax bill in England has fallen in real terms for the fourth year, as almost two thirds of councils have taken up the Government’s freeze offer.
National statistics released today reveal the average band D council tax level from this April to be £1,468, or a change of just 0.9%, one of the lowest changes ever and a cut in real terms. In London, council tax bills have fallen in cash terms by 0.4%.
By comparison, in Wales, which has not used Barnett funding to make a similar freeze offer, average bills are rising by twice the rate of inflation.
Since 2010, the Government have worked with local authorities to reduce council tax. This has cut average bills in England over four years by over 11% in real terms. In contrast the period between 1997 and 2010 saw council tax increase in real terms by 47%. This doubled a typical band D bill to £120 a month.
I am pleased so many councils understand the importance of keeping tax bills down and of giving families greater financial security and have chosen to freeze or even reduce their bills.
In total 251, or 60%, of local authorities signed up to the Government offer to freeze council tax for 2014-15: a similar proportion to last year. The Government have also handed local residents new rights to veto any excessive local tax hikes through a referendum. No council chose to put an increase to a local referendum.
Residents are also now able to pay their bill over 12 months rather than 10 to help spread the cost. From April, a new national council tax discount for family annexes also comes into effect, designed to support extended families and remove an unfair penalty tax surcharge on annexes.
The list of councils that have opted to take part in the Government’s 2014-15 council tax freeze initiative, and a table showing the potential financial savings in council tax by English local authority, have been published on my Department’s website and I am placing copies in the Library of the House.
FiReControl Legacy
(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I wish to update the House on my Department’s work to improve local fire control room services and on further progress on disposing of the regional control centre buildings—the main legacy asset of the terminated FiReControl project from the last Administration.
FiReControl failure
FiReControl was a poorly conceived and badly delivered top-down programme of the last Administration to create regional fire control rooms. It was terminated after running repeatedly over budget and behind schedule, and to avoid further taxpayers’ money being wasted.
The nine regional control centre buildings were procured through a private developer scheme from 2004 onwards and completed between June 2007 and February 2010. The leases run for 20 or 25 years from completion. As noted on 26 January 2009, Official Report, House of Commons, column 108W, the last Administration decided not to include break clauses in the contracts, forcing taxpayers to shoulder the ultimate liability for the empty buildings.
The National Audit Office, in their report “The Failure of the FiReControl project”, were highly critical of the top-down FiReControl project. They stated:
“The FiReControl project was flawed from the outset because it did not have the support of those essential to its success—local fire and rescue services. The Department rushed the start of the project, failing to follow proper procedures. Ineffective checks and balances during initiation and early stages meant the Department committed itself to the project on the basis of broad-brush and inaccurate estimates of costs and benefits and an unrealistic delivery timetable, and agreed an inadequate contract with its IT supplier. The Department underappreciated the project’s complexity, and then mismanaged the IT contractor’s performance and delivery. The Department failed to provide the necessary leadership to make the project successful, over-relying on poorly managed consultants and failing to sort out early problems with delivery by the contractor. The Department took a firmer grip of the project from 2009 and terminated the contract in December 2010 to avoid even more money being wasted.
The Department’s failure to manage the project as a whole has resulted in the creation of empty regional control centres. The nine regional control centres were purpose-built to house the new computerised equipment and were designed specifically for that purpose. The Department’s decision to prioritise the procurement of the centres over the IT system at an early stage meant that the first centres were completed in June 2007, just three months after the IT contract had been awarded.”
National Audit Office, “The Failure of the FiReControl project”, HC1272, 1 July 2011.
Supporting local control room improvements
This Government’s approach has been to support locally determined and delivered control room improvements. As today’s future control room update shows, the first of the projects, Tyne and Wear and Northumberland, has completed. The two fire and rescue authorities have worked in partnership to procure and implement a new resilient solution which went live on 25 November 2013. This enables both fire and rescue authorities to take the other’s calls and to act as a fallback for the other, while negating the need for secondary control rooms. This is a significant milestone in delivery of the future control rooms scheme. Furthermore, nine projects are on track to complete by the time of the September 2014 update, with an additional eight projects scheduled to complete by the end of this calendar year. Only one project is currently forecasting completion later than March 2015, and that by only eight weeks.
There has been significant progress in delivering the resilience benefits, with increases in delivery of nine of the 10 benefits identified, and significant increases in six of those. These non-monetarised benefits will improve the efficiency and effectiveness of control centres by introducing state of the art technology and effective back-up arrangements to cope with spate conditions or systems failure.
Forecasted savings now stand at £129 million. This is £2.5 million more than the September 2013 update and, significantly, £1 million more than the early estimates of March 2012. In summary, our assessment is that the future control room projects continue to remain on track to deliver the benefits outlined in the original national summary.
Dealing with the legacy buildings
The marketing and disposal of the remaining regional control centres has also made further progress.
First, the Department has reduced its overall estimated ongoing costs. Since 2012-13, facilities management costs have been reduced by approximately 45% and other running costs savings have been made, reflecting a reduction in cost from £3.8 million to £2.7 million annually. Since September 2013, electricity costs have also been reduced by approximately 40% annually. We have also taken steps to reduce energy consumption across the regional control centre sites, resulting in a reduction in costs of over 25%.
Five of the nine centres have now been sub-let or transferred. The letting of the fifth centre, Wolverhampton, in December 2013 was a considerable achievement as it was the first let to the private sector, an IT company. It is estimated that this letting will save the Department in the region of £11 million. Furthermore, heads of terms are being negotiated with public sector organisations for the Wakefield and Taunton regional control centres. The two remaining centres—Castle Donington and Cambridge—are being actively marketed and interest has been shown in both.
We will continue to market the centres and target specific sectors, for example data centres, and review our disposal and marketing strategy on a quarterly basis. Ministers will provide further updates in due course.
Both documents have been published on my Department’s website and I am placing copies in the Library of the House.
British Film Institute (Triennial Review)
(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
I am today announcing the start of the triennial review of the British Film Institute (BFI). Triennial reviews are part of the Government’s commitment to ensuring that non-departmental public bodies (NDPBs) continue to have regular independent challenge.
The review will examine whether there is a continuing need for the BFI’s function and its form and whether it should continue to exist at arm’s length from Government. Should the review conclude there is a continuing need for the body, it will go on to examine whether the body’s control and governance arrangements continue to meet the recognised principles of good corporate governance. The findings at both stages of the review will be examined by a challenge group.
I will inform the House of the outcome of the review when it is completed.
Grand Committee
(10 years, 1 month ago)
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Arrangement of Business
(10 years, 1 month ago)
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The Deputy Chairman of Committees (Viscount Simon) (Lab)
If there is a Division in the House, the Committee will adjourn for 10 minutes.
Domestic Renewable Heat Incentive Scheme Regulations 2014
(10 years, 1 month ago)
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Baroness Verma
That the Grand Committee do consider the Domestic Renewable Heat Incentive Scheme Regulations 2014.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I am pleased to open the debate on the Domestic Renewable Heat Incentive Scheme Regulations 2014. Before focusing on the details of these regulations, I will take time to provide some background to the scheme, which I shall now refer to as the RHI.
In November 2011, we introduced the world’s first long-term financial support programme for renewable heat—the non-domestic RHI. Today, I am very pleased to introduce the regulations to extend this innovative and ambitious scheme to householders.
This decade, the RHI will help to contribute to meeting the country’s 2020 renewables target. The RHI also has a longer-term ambition. By encouraging people to switch to renewable heating now, the RHI is preparing the country for the widespread rollout of low-carbon heating from 2020 onwards, helping us to achieve our 2050 aim of near-zero carbon emissions from household heating. The RHI and, in particular, the domestic scheme also have an immediate aim—to help householders to reduce their heating bills. Heating is the single biggest energy use for householders. For people living off the gas grid whose costs are greatest, this represents a significant burden. Off-gas grid consumers could see between 10% and 40% savings in their heating bills, as well as saving carbon by moving away from fossil fuels. Moreover, renewable heating systems function better within properly insulated homes. The domestic RHI, working with the Green Deal, can therefore offer a whole-house solution to high energy bills.
The RHI covers the whole of Great Britain, with Northern Ireland running its own scheme. Our non-domestic scheme, launched in 2011, supports the installation of renewable systems that heat commercial, public or not-for-profit properties and systems that heat multiple homes. The latest published figures show that we already have in excess of 4,700 applications, more than £38 million paid in RHI support and more than 978 gigawatt hours of heat generated from renewable sources under that scheme.
It has always been our intention that the RHI will be extended to cover the domestic sector. The innovative nature of the domestic RHI as a world first means that it has been a challenging and time-intensive policy to develop. We have consulted extensively. In September 2012, a public consultation was launched to seek views on proposals for the domestic scheme. This provided us with a huge amount of valuable evidence from stakeholders and a wide range of views, all of which we have to consider.
Given the current economic climate and the need to deliver value for money through government expenditure, it was particularly important to get the scheme right. Following this period of extensive analysis, the finalised scheme outline was published in July 2013. Providing support until the launch of the domestic RHI, the renewable heat premium payment grant scheme has, to date, supported the installation of more than 17,000 renewable heating systems by homeowners and social landlords. The budget for the domestic RHI allows for more than 35,000 installations in the first year of the scheme before a reduction in tariffs is triggered.
The domestic RHI scheme which these regulations will implement will extend RHI support to renewable heating systems that heat individual homes, provided they were installed on or after 15 July 2009. The scheme will be open to everyone, whether they are connected to the gas grid or not. Those who live off the gas grid with high heating costs will benefit the most from switching to renewable heating. Homeowners, social and private landlords, their tenants, and self-builders can all benefit.
The domestic RHI will support biomass-only boilers and pellet-only stoves with integrated boilers. It will also support air-to-water, ground-to-water and water-to-water heat pumps, provided that they run on electricity. Both biomass and heat-pump systems will be eligible only if they deliver heat via a liquid—for example, through radiators—and provide space heating only or both space heating and hot water. Evacuated tube and flat plate solar thermal panels will be eligible too, although only if they provide just hot water. Panels that generate electricity as well as heat will not be eligible. The list of technologies that will be eligible at the launch of the scheme is fixed. That said, however, we recognise the importance of innovation and we will consider including other technologies in the future.
To provide consumer protection, the regulations require that all products meet specified, recognised European technology standards. Furthermore, an installation must be certified by the Microgeneration Certification Scheme or an equivalent scheme. MCS is a quality mark that demonstrates compliance with industry standards. It has a framework in place to deal with any potential disputes between homeowners and installers. We also want to protect air quality from any potential impacts of increased uptake of biomass; the domestic RHI therefore follows the non-domestic scheme by setting emissions limits in relation to the two main pollutants for new biomass installations: particulate matter and oxides of nitrogen. Heat pumps need to meet an additional requirement: they must have a minimum efficiency rating—known as a seasonal performance factor—of 2.5 in order to ensure that they are genuinely renewable. Apart from self-builders who will already be meeting the requirements of current building regulations, we are also tackling the energy efficiency of homes by requiring loft and cavity wall insulation to be installed, where appropriate, and by requiring that a Green Deal assessment be undertaken.
Renewable heating technologies work best in an energy-efficient home and reducing the size of the heating demand from each house means that each home saves money on its fuel bills and that we can support more households through the RHI. The domestic RHI will provide ongoing support in the form of tariff payments based on a set rate per unit of renewable heat produced; the rate depends on the technology installed. Tariff rates compensate for the additional costs of installing a renewable heating system compared with a conventional off-gas grid system, such as an oil boiler. Ofgem will administer the domestic scheme and will make the payments over seven years. They will be calculated quarterly and adjusted to reflect inflation each year. The basis for the payments will be the amount of renewable heat produced by the technology. In most cases, it will be based on an estimate of the amount of heat that the home needs in a year, known as deeming. For biomass and heat-pump systems, this estimate will be taken from the property’s latest energy performance certificate. For heat pumps, the figure will be adjusted to take into account the estimated efficiency of the heat pump in order to ascertain the renewable proportion of the heat produced. For solar thermal systems, payments will be based on the estimate of system performance produced as part of the installation.
In certain circumstances, applicants will need to install meters and will be paid based on their meter readings—for example, where the installation is in a second home or where there is an additional system in place that also provides space heating. Any payments based on metering will be capped at the amount set by the deeming approach. On top of their RHI tariff payments, a householder could receive additional payments if they take up the metering and monitoring service package. These packages are similar to a service contract and will allow the householder and the installer to view detailed information about the heating system in order to improve its performance. Only heat pumps and pellet-only biomass boilers will be eligible for these additional payments. The payment for heat pumps will be £230 per year and for pellet boilers it will be £200 per year. A mechanism for managing the budget for the domestic scheme will be in place using degression to control costs. Degression works by gradually decreasing tariffs as quarterly thresholds of spend are reached. Any reductions will be announced with one month’s notice and the reduced tariffs will apply only to new applications. DECC will also publish monthly updates of spend and progress towards triggers which will allow applicants and installers to determine the likelihood of a future decrease to their tariff.
RHI participants will need to provide annual declarations and, in certain circumstances, further information about their ongoing compliance. Ofgem will also have the power to investigate further and to withhold or claim back payments of non-compliance.
Finally, a random selection of applicants will be chosen to have meters installed which collect data on performance of technologies for evaluation. The cost of the installation will be covered by DECC.
These regulations will have effect in England, Scotland and Wales. RHI policy in Northern Ireland is devolved. Scottish Ministers have given their consent to regulations as required by the Energy Act 2008. Northern Irish Ministers administer a separate but equivalent scheme and have been notified of these regulations, as have Welsh Ministers.
These regulations represent a significant and exciting step towards the goal of reshaping our heating market. The domestic RHI scheme will sit alongside its non-domestic counterpart in a world-first approach to incentivising the uptake of renewable heat. Its short-term aim will be to help households save on fuel bills and contribute towards helping the country meet its 2020 renewables target.
However, the ambition goes beyond that. It will also set the country on the path towards the wider rollout of renewable heating everywhere from the 2020s and onwards. Driven by RHI, we hope to see the industry expand, costs to reduce and consumer awareness and familiarity to increase. The result will be renewable heating becoming a viable and competitive alternative for all households. I commend these regulations to the Committee.
Baroness Worthington (Lab)
My Lords, I am grateful to the Minister for introducing these exciting regulations. This is a real step forward; we have been waiting for it and we are pleased that it has finally arrived.
Perhaps I may first ask some general questions on how we are doing on the RHI. We have had previous debates on other orders and I am always keen to know how we are doing in relation to our target. This is a world first and things may not be going as fast as we would like. That is understandable—it is a complex policy area—but it would be good to have an update on where we are in relation to the terawatt hour target for 2015-16, which I believe was set at five to seven terawatt hours. It is not that long away now and I would be interested to know how we are doing.
I have raised the issue of underspend before. There is a budget surplus under the RHI and I hope that we will increase the speed at which we get through this budget and that measures will be installed. The regulations refer to the earlier scheme, the renewable heating premium payments. It was a sensible move to introduce an early scheme in order to assess take-up and it would be interesting to know what the take-up was and how many people came forward to receive payments under that scheme. My questions are related to getting a sense of how we are doing and the background against which this policy should be judged.
On integration with the Green Deal, it is sensible that we should try to join up policies, particularly policies that involve interaction with householders. The Green Deal and the RHI should complement each other well.
How are we going to make sure that Green Deal assessors are fully cognisant of all RHI technologies? Perhaps the Minister could say a few words about how we make sure when training Green Deal assessors that they are fully aware of all of the RHI technologies, how they can be applied and the properties and situations which would be beneficial for consumer take-up. If they are not joined up, they could otherwise become a barrier. If we are not integrating this, people may not be aware of RHI and its availability; equally, there might be a barrier the other way in requiring a consumer to have a Green Deal assessment—if an assessor comes in and perhaps is not aware or does not give information about the RHI, that could be an unnecessary impediment towards the take-up of this technology. I want to make sure that we really are joining up the policy at a delivery level.
Baroness Verma
I thank the noble Baroness for her support. I shall try to answer her questions, but if I miss any, I will go back, read Hansard and write to her. She asked whether we would meet our renewables targets. We have managed to achieve 4% of total energy from renewables in 2011-12, compared to our interim target of 4.04%, so it is within the margin of error. We remain resolute that we will work towards even more ambitious renewables targets—I think that both the noble Baroness and I are sighted on achieving that ambition.
The noble Baroness also raised a point about underspend. In order to meet our targets, we will require growth in a broad range of renewable heating technologies, and we recognise that some technologies will need appropriate financial support through the non-domestic RHI and some technologies have lower than expected deployment. That is why we had to review the tariffs last year. In December, we published plans to increase tariff levels and introduce new technologies to the scheme. We will shortly lay regulations to bring those into force. I hope that, eventually, it will balance itself out. Like the noble Baroness, we do not want unnecessary underspend, but we want to ensure that it is being spent to achieve a more tangible outcome.
The noble Baroness also asked about the take-up. At the end of February 2014, 19,640 vouchers had been issued under the RHPP, of which 13,325 have been redeemed.
I absolutely agree with the noble Baroness that we do not want perverse incentives, so the scheme has robust enforcement mechanisms, including when a property is rented. Sanctions will include suspending payments and recovering RHI payments if a participant does not meet their obligations under the scheme. I thought that I had covered that in my opening remarks, but I hope that I have now clarified the position. Before responding to what more we can do to incentivise biofuels, I am more than happy for the noble Baroness to meet officials to go at it in a more detailed way than the brief explanation that I am about to give. They are not eligible for the domestic RHI partially because we do not believe that these renewable solutions have a sufficient role in the transformation of the domestic heating sector to subsidise them through the RHI. We are keen to see the replacement of fossil fuel systems with wholly renewable domestic heating solutions to maximise both our renewable heat generation and carbon savings. That is a debate and discussion for another time, and perhaps looking at the expression of the noble Baroness, it is better that we take this away.
The noble Baroness also asked about the gaming of the system. Participants will be required to declare annually that they are complying with the eligibility criteria of the scheme. If their circumstances have changed and they are living in the property for less than 183 days per year they will be required to install meters to measure their heat use. The noble Baroness touched on the training for Green Deal assessors. MCS installers are training to be Green Deal assessors and creating partnerships to ensure a joined-up service. I agree with the noble Baroness that we have a lot of very good programmes in place, and it would be far better if they were much more integrated. While the noble Baroness may see the Green Deal as not being as successful as it should be, I reiterate that it is a 20-year programme. People have taken out green deals not using the Green Deal finance plan; they have used other means. On those we cannot go back and measure, but we know that half a million have been undertaken. Of the people surveyed, more than 80% said that they were very happy to have had that measurement done in their homes.
We have to take it in context; we do not want short, quick fixes for what is a deeply embedded problem in our property market. I agree with the noble Baroness that the process may have been too complicated, and the Government have tried to simplify it by listening to the installers, assessors and consumers. The regime has been simplified by making sure that there is certainty in the system for both industry and consumers by being able to signpost consumers for a more informed journey. We have taken all those things on board and introduced them, but it is far too early to say that the Green Deal is not working. We have to look at the measures that are working alongside others, so the narrative needs to be much more integrated, with the smart meter programme, RHI and the Green Deal. We need to congratulate ourselves as a country on being a global leader on energy efficiency measures. We should never underrate the perception out there. By talking down programmes because they have not achieved their aims as quickly as anticipated, we undermine the very committed, dedicated small businesses that are involved in the Green Deal.
Baroness Worthington
I thank the noble Baroness for her comprehensive answers. However, if she would write to me on a couple of matters, I would be grateful.
I was specifically interested in how we are doing on the terawatt hour target for the RHI and not only renewables targets overall. A short note on that would be very helpful. On the new build installations, how will the microgeneration be counted towards the target? We do not want to miss things out of our targets, so that would be helpful. I would like to take the opportunity of having a meeting on biofuels because I do not quite follow the logic.
Baroness Verma
The noble Baroness asked two questions. On the second question, while new build installations are not supported through the domestic RHI, other than self-build, they will still be counted towards our renewables target through the use of market intelligence from the renewable energy sector based on sales figures.
I am extremely grateful to the noble Baroness and the Opposition for their support for these regulations.
Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014
(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Viscount Younger of Leckie
That the Grand Committee do consider the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, in moving the Motion on the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order 2014, I shall also speak on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014. I am afraid that these are rather dry subjects for debate, as your Lordships may have ascertained from my introduction. They are highly technical pieces of legislation, characterised by various consequential and transitional provisions. However, debate them we must and my challenge is to make this an interesting and rewarding experience for us all.
That gives me the chance to place these orders in the context of our much wider and far more interesting reforms to competition law, because the real significance of these orders is to serve as the two final pieces in the legal jigsaw that creates the Competition and Markets Authority, or CMA, within a reformed competition regime from 1 April.
Noble Lords will recall—how could any of us forget?—the Enterprise and Regulatory Reform Act, which I had the pleasure of taking through this House last year. I hope that the Committee will permit me to refer to it as the 2013 Act for the purposes of this order. In its competition elements, the 2013 Act laid the foundations for the establishment of the CMA and a major reform of the UK’s competition regime. The CMA will be responsible for promoting effective competition in markets across the UK economy and for delivering major benefits for consumers. It will have strengthened responsibilities and powers, taking on the work of the Competition Commission and a number of the responsibilities of the Office of Fair Trading. This afternoon’s brief debate gives me the opportunity to provide noble Lords with an update of what has been achieved since the 2013 Act received Royal Assent.
The CMA was launched in shadow form in October last year. The Government have appointed a well respected board for the new organisation. We have also published our strategic steer for the CMA, setting out the key benefits that it should bring for consumers, and a performance framework that explains how we will measure its impact. We are on course for the full launch of the CMA next week, on 1 April.
Both the orders that we are debating today are, as their titles suggest, largely concerned with consequential and technical amendments to other legislation. These amendments are required to give full effect to the range of administrative and legal changes to the competition regime that Parliament enacted in the 2013 Act, so it is important to stress that there is nothing novel or unexpected in what we are asking your Lordships’ approval for today.
To be clear, the changes that these orders make were both foreseen and intended by the 2013 Act. By way of a very brief recap, Part 3 of the 2013 Act abolishes both the Office of Fair Trading and the Competition Commission and creates the new CMA to assume their competition functions from 1 April. Part 4 of the 2013 Act makes various changes to those competition functions. It amends the provisions on mergers in Part 3, on market studies and market investigations in Part 4, and the definition of the cartel offence in Part 6 of the Enterprise Act 2002. It also amends the anti-trust provisions in Part 1 of the Competition Act 1998. I hope that noble Lords are all still with me, because this is where it gets slightly more complicated.
First, the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order, as its name suggests, makes consequential amendments to a wide range of primary legislation. Many of these amendments are simply replacing references to the OFT and the Competition Commission with references to the CMA. Others ensure that changes in the 2013 Act to the regime for market investigations apply across the regulated sectors, such as gas, water and rail. Where the sector regulators share powers to refer markets for investigation with the national authorities, they ensure that the streamlining and modernisation in the 2013 Act apply as appropriate to the regulators.
I should add that the order also amends the Enterprise Act 2002 to reflect the CMA’s role in the enforcement of consumer legislation. The CMA will have primary expertise on unfair contract terms. This will enable it to take enforcement action where there are structural market failures. The CMA will also have access to other enforcement powers to ensure that consumer choice is not restricted. That being said, the great majority of consumer law enforcement will continue to be done by trading standards services, with the National Trading Standards Board responsible for co-ordination and prioritisation under the chairmanship of the noble Lord, Lord Harris. As competition is a reserved matter, the order also makes similar amendments to Scottish, Welsh and Northern Irish legislation. Article 3 and Schedule 2 make transitional and saving provision in connection with the transfer of functions from the OFT and the commission to the CMA.
All of that is pretty straightforward when compared with what I am about to cover—namely, the Enterprise Act 2002 (Protection of Legitimate Interests) (Amendment) Order. This amends a previous order of the same name from 2003. Again, many of its changes reflect the abolition of the OFT and the Competition Commission and the transfer of their competition functions to the CMA. The order relates to one of the three situations under the Enterprise Act 2002 in which the Secretary of State may intervene in a merger case that raises potential public interest concerns. Specifically, it sets out when the Secretary of State may issue a European intervention notice—or EIN, for short—to repatriate elements of merger cases that otherwise fall under EU jurisdiction. This may arise in merger cases where competition jurisdiction falls exclusively to the EU but where the case raises potential public interest concerns in the UK.
The changes in the order to this EIN process replicate those already made in the 2013 Act to the other two public interest regimes. These are the public interest intervention notice, or PIN, regime, which enables the Secretary of State to intervene in merger cases where the CMA has jurisdiction, and the special public interest intervention notice, or SPIN, regime—noble Lords should perhaps insert their own punchlines here—which enables the Secretary of State to intervene in a merger case on particular public interest grounds where the threshold for CMA jurisdiction is not met. Changes have been made to the powers available to deal with pre-emptive action. Powers to accept undertakings have been repealed and powers to make orders have been strengthened.
Allow me to leave your Lordships with a closing thought. It is true that these orders are unremarkable in themselves but, by approving them today, we are reflecting Parliament’s will to establish the Competition and Markets Authority and the new competition landscape that it will oversee from 1 April. I am confident that these reforms will enhance the competition regime and deliver greater benefits for consumers. I therefore commend these orders to the Committee.
Lord Stevenson of Balmacara (Lab)
My Lords, I thought for a moment that we had doubled our numbers and increased the interest in the dry but very important issues raised by the noble Viscount, but I was wrong. He rather threw me at the end by saying that he was expecting us to approve the orders today. Perhaps he could very quickly give me an answer on that, as I do not think that that is what we are doing today; I think that we are considering them. The approval comes later and, of course, one cannot bind what I and my colleagues might wish to do when the orders are put to the House for consideration, so we may have to go through all this again. The noble Viscount should not get too carried away at this stage with his rhetoric, which I did enjoy.
The noble Viscount mentioned the pleasures that he had had on the ERR Bill and I was, again, slightly confused by that, as there were occasions where the Minister was distinctly uncomfortable about some of that Bill and may remain so deep in his heart, given the way it was taken over into other areas under his direct responsibility. Some of the points that were brought in remain, in our view, poorly drafted and badly exercised in terms of consultation and process and not up to the standards that we would expect in this House. However, we are where we are. It was always a pleasure to debate the issues with the Minister and I pay tribute to him not only for being a model of what is required at the Dispatch Box but also for being able to generate a vast number of letters that inflect, add to and complete the questions that are sometimes asked but are not able to be answered in the process. For that I thank him very much. To have that on an almost regular basis makes my days in the office much more exciting.
The noble Viscount challenged us by saying that he would make these speeches exciting; I am afraid that I cannot do that myself. I have a number of questions but, as he said, these are not novel or unexpected statutory instruments. We knew that they were coming down the line, but what is novel and unexpected is that they are so close to the start of the CMA to which they refer, which comes into force in a matter of days rather than weeks, as would normally be the case. I suspect—although I have no evidence of this—that the fact that so many colleagues from the department are here suggests that there has been a bit of a problem in getting some of the details of this correct and that it has come close to the wire. Maybe I am wrong on that but, as the noble Lord went through it, it was clear that the orders are very detailed indeed and that there must have been some difficulty in getting them right.
The points that I want to make are very limited. One question on the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014 is whether the Minister can explain a bit more for the benefit of the Committee the discussions that took place with the devolved Administrations. Although this is a reserved matter and therefore not a matter of competence in those areas, the impact that it will have and the suggestion that the Government were legislating at a time that might impact on the devolution and independence discussions going on in Scotland raise the question of what exactly would happen. I understand that there were no Sewel requirements but I would like to have a sense of that, if others have some thoughts on it.
Viscount Younger of Leckie
My Lords, first, I apologise to the noble Lord and the Committee in relation to the consideration of the order. For clarity, the Motion before the Grand Committee today is that the Grand Committee do consider the instrument. The instrument is then subject to a separate Motion to approve on the Floor of the House, usually without further debate, after Oral Questions, as is the norm. I realise that I will have to move the Motion on the next order formally at the end.
I thank the noble Lord, Lord Stevenson, for his comments in this brief debate, albeit between just two noble Lords. I, too, have greatly appreciated the discussions and debates that we have had in my office, in the Chamber and outside, as well as—if I may put it this way—his general congenial interactions. I hope that that will continue. As for the letters that I write, I rather hope that that may not continue, for the noble Lord’s sake, but my aim will be to inform and communicate to him as necessary.
A short closing speech addressing the noble Lord’s questions—I hope that I shall be able to address them all—is also a welcome opportunity to provide noble Lords, just days before it becomes a reality, with an update on the establishment of the CMA and to expand on what I said in my opening remarks. This provision will enable the CMA to fulfil its mission, which is to make markets work well in the interests of consumers, businesses and the economy.
The interests of consumers are at the heart of the CMA’s mission. We have given it a target over three years of demonstrating direct financial benefits to consumers of at least 10 times its relevant costs to the taxpayer and we are requiring the CMA to report annually on how it is delivering those consumer benefits. It will have primary expertise on unfair contract terms legislation and will have additional consumer enforcement powers to tackle practices and market conditions that make it difficult for consumers to exercise choice in an otherwise competitive market. The OFT super-complaint mechanism will be transferred to the CMA, so designated consumer bodies can continue to expect fast-tracking of issues that significantly harm the interests of consumers.
The CMA will co-ordinate its efforts with trading standards on both enforcement and the sharing of research and intelligence. We believe that there is a strong case for reform. We have created the CMA to improve the effectiveness of competition enforcement, to streamline processes by improving the quality of decisions and by taking forward the right cases and to improve speed and predictability for business. This is not to denigrate the outgoing competition bodies. That is an important point that I want to make, given the debate that we had some time ago during consideration of the ERR Bill. They had excellent reputations both at home and abroad and the CMA intends to build on that and, indeed, the leadership.
The CMA will be a non-ministerial department with full operational independence. It will have a mission to make markets work well in the interests of consumers, businesses and the economy. It will be obliged to report annually on the delivery of consumer benefits and the wider benefits in terms of growth, business and consumer confidence, compliance and the deterrence of anti-competitive behaviour.
Finally, the CMA has five strategic goals: first, to deliver effective enforcement, making strong and effective use of its powers; secondly, to extend competition frontiers proactively to identify and address markets where competition is not working well; thirdly, to refocus consumer protection, working with consumer protection partners; fourthly, to achieve professional excellence with robust decisions and effective and proportionate remedies; and, fifthly, to develop integrated performance and demonstrate improved efficiency.
I should like to attempt to answer a number of questions. The noble Lord, Lord Stevenson, asked about the reason for the delay. There have been no problems at all in getting the details correct. The timing is more a result of a proper public consultation that has been required and the scheduling of the business of the House, so it is much more of a process issue.
Lord Stevenson of Balmacara
I cannot find the exact reference. The Minister referred to extensive consultation but I think that I read somewhere that neither of these documents required much consultation. If I have got that wrong, I should be grateful if the Minister could clarify it.
Viscount Younger of Leckie
That is a fair question. Although there has not been a formal consultation, there was a need to consult a wide range of bodies. I will double-check that and write to the noble Lord if that needs to be corrected or expanded on.
The noble Lord also raised the issue of whether there had been discussions with the devolved Administrations. I can reassure him that drafts of the order were shared with the devolved Administrations, who were able to consider the provisions to amend the legislation and make some comments. He also raised the issue of errors corrected by the protection of legitimate interests order. The corrections made by the order include Article 16(7), which corrects a typo. Article 18(2)(a) is a revocation consequential on the repeal of Section 69 of the Enterprise Act 2003; the same applies to Article 18(3). Article 18(16) deals with a missed consequential amendment when Section 118(1)(aa) was added to Section 118 of the Enterprise Act. I know that this is a serious matter. Perhaps the noble Lord is attempting to compete with me on the dryness of the issues, but I hasten to add that they are important.
The noble Lord also raised the issue of who leads in different areas. Trading standards are more devolved across different nations. Competition law and enforcement is a reserved matter, however, so I can confirm that the CMA, under the leadership of the noble Lord, Lord Currie, will look across the UK. To clarify a point that I made earlier about the consultation, there was in fact a public consultation on the protection of legitimate interests order—it was on that specific order.
Lord Stevenson of Balmacara
I am sorry; I have now found my reference. The point that I was trying to make was that, in relation to these instruments being so late relative to the formation of the CMA, which we welcome, the Minister used the reason that the Government had to do extensive consultation. I would not say that it was an excuse, as that is a terrible thing to say. However, that consultation closed in July 2013 and there was plenty of time to absorb anything that came out of it, particularly as this goes on to say that there were no substantive comments.
Viscount Younger of Leckie
As I said earlier, and say again, I will definitely now write to the noble Lord to clarify the process and the element of consultation in as much depth as I can.
To conclude, these orders represent the final stage in the parliamentary process, which began with the Enterprise and Regulatory Reform Bill, to create that new competition landscape. They give effect to policy objectives and provisions that Parliament enacted in that Bill. I therefore commend these orders to the Committee.
Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014
(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Viscount Younger of Leckie
That the Grand Committee do consider the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014
(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Viscount Younger of Leckie
That the Grand Committee do consider the Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, the relevant licensing bodies—or collecting societies as they are better known—are already self-regulating and using codes of practice based on minimum standards set by the Government. The purpose of this legislation is to support their self-regulation and ensure that this good practice continues. It allows the Secretary of State for Business, Innovation and Skills to remedy any problems or gaps that may emerge in self-regulation. These gaps would emerge if a collecting society started to deviate from the minimum standards; for example, if it had no proper complaints procedure or did not make provision for an independent ombudsman for its members and users.
Collecting societies are the organisations that copyright owners use to license their rights and collect their royalties. They are an economically significant sector. The nine or so collecting societies in scope of these regulations together collect around £1 billion per year and have nearly 400,000 members. Their role is valuable; indeed, they are central to the monetisation of copyright. They bring together rights holders and users efficiently, are instrumental in ensuring that income is received by rights holders and facilitate legal access to copyright works.
These regulations have their genesis in the Hargreaves recommendation that collecting societies,
“should be required by law to adopt codes of practice”.
This recommendation was made against a background of concerns about the operation of some collecting societies. These concerns were often reflected in correspondence to Ministers—indeed, I have seen some myself—as well as in meetings with trade and representative bodies. They ranged from the levels of transparency for members to complaints by licensees about unfair practices and heavy-handed licensing tactics.
Complainants, many of whom were small businesses, were often especially frustrated because they had no choice to shop elsewhere for their copyright material if dissatisfied. This is because most collecting societies tend to be monopolies or quasi-monopolies. The regulations that have been laid before this House complete the system of co-regulation that the Government have been developing with stakeholders over the past couple of years.
Many of your Lordships may recall the extensive debate in this House during the passage of the Enterprise and Regulatory Reform Act. I emphasised our preference for self-regulation then and I do so again now. We want collecting societies to run themselves to the highest possible standards. The sector is doing this and must be congratulated on its progress. Most collecting societies now have self-regulatory codes of conduct. Noble Lords should be assured that statutory intervention is, and must be, a last resort.
Baroness Buscombe (Con)
My Lords, I should like to speak briefly on these provisions, which I welcome. The regulations give the Secretary of State a reserve power, and I think that this must be emphasised to all those who have expressed concerns over the past few months in relation to the Government’s progress following the introduction of the new legislation.
It is very important to emphasise that these are backstop reserve powers which can be used to close any gaps that may emerge in the self-regulatory system. This is nothing new. The advertising industry’s self-regulatory system has backstop powers invested in Ofcom to intervene.
Put simply, those powers work and the industry trusts them. The system remains light touch. I believe that it is in the best interests of the industry to have such a system which can be trusted. It needs to be sufficiently robust and flexible to protect the interests of all those who benefit from collecting societies. The success or effectiveness of a self-regulatory system is dependent on all those who manage that system, so if the system fails it is important to have reserve powers to deal with breaches robustly but, as we have heard from the Minister, in a very light-touch way through three stages. I genuinely believe that that is reasonable.
If there is a breach, it may affect the reputation of the system as well as those who are subject to it. I believe that these provisions will protect the light-touch self-regulatory system.
Lord Razzall (LD)
My Lords, I join the noble Baroness in welcoming these regulations. I wish to raise with the Minister four concerns which have been raised by PRS for Music. I am not sure whether he has had the benefit of its representations on these four points.
First, paragraph (2) of regulation 9 provides for information to be given within two weeks of receipt of the request. I understand that that time limit was not included in the consultation process. Does the Minister envisage that the ombudsman or the co-reviewer can extend that time limit if that is relevant to the particular inquiry for information that is made?
Secondly, paragraph (1) of regulation 9 can impose an obligation for information to be supplied “for any purpose”. That is an extremely wide provision and there is concern that this is hardly light-touch regulation. Does the Minister have any idea what constraints would be imposed on the requirement to supply information for any purpose?
My third issue is a fundamental one. Regulation 10 provides that penalties may be imposed on a licensing body itself. However, some of these licensing bodies will be voluntary, non-profit-making organisations owned by the members themselves. Therefore, the members would ultimately be liable for any penalties that may be imposed. However, the regulations are being introduced for the benefit of the members. What factors does the Secretary of State envisage taking into account in imposing any such penalties?
I think that my fourth concern is easily answered. There is a provision for fees to be charged to whichever relevant collective management organisation they are imposed on. There is a concern that it should be made clear that the fees should be charged only to a collective management organisation which is being targeted, rather than being spread more widely.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister for introducing the regulations. I declare an interest as I have received sums of money from ALCS in the past and therefore am part of a collecting society. Like other noble Lords, I support this approach which is a sensible expression of backstop powers and will be a light-touch operation. It will probably not be as rigorously regulated as was suggested by Hargreaves in the original report, but I do not think that that is necessarily a bad thing. The consultation and the accompanying debates reflect the fact that there is a good system out there which works well. Therefore, it is not necessary to introduce draconian powers and the measure being introduced is an appropriate balance between two things.
Having said that, there are two impacts and it would be helpful if the Minister would respond to them as I did not hear him mention them in his opening remarks. The first, as is set out in the papers, is the proposal that deals with an issue raised through Professor Ian Hargreaves’s review on digital opportunity. It anticipates work that is going on in Europe on similar issues, so the collective rights management directive, of which I understand a final text is now available, casts a shadow over this operation. I wonder whether the Minister could sketch out where he thinks there are differences in the current approach.
The Deputy Chairman of Committees (Viscount Simon) (Lab)
My Lords, a Division has been called so we will adjourn for 10 minutes.
Lord Stevenson of Balmacara
My Lords, I was making two points about issues contextual to the order. One was the question of whether the CRM directive would have an impact and, if so, whether the Minister could outline either how well his proposals in the draft SI fit into it or any gaps that he has already perceived in it. A monitoring period before the regulations will take place in 2016, just at the time that the CRM directive will be introduced. We therefore need to be careful that we are not overburdening the industry or those who draft the orders by having to do all that at the same time.
My second point was an issue which we raise from time to time in debates on intellectual property, which is the progress of the Copyright Hub and the impact that this secondary legislation could or would have on the operation of the hub. I suspect and hope that they have been designed to be complementary, but the issues of collecting societies fit closely with those who are operating the hub. The hub, which is trying to widen access, clearly has interesting feedback into the work of the collecting societies.
My other points have largely been touched upon. It would be helpful to have some comments on the question asked by the noble Lord, Lord Razzall, about the timescale. On the question of how penalties will apply, I note that in the impact assessment on the statutory instrument we are told that during the consultation, there was consideration of whether fees should apply to the organisations only—as has been said, some of them are quite small and voluntary—or whether it would also apply to the individual offices of those operations. It is not clear to me from reading the regulations which way that has come out. If it is the latter, issues were raised during the consultation. The report states that the relevant licensing bodies objected to the provisions for sanctions against offices, but the provision has not been amended because of the overwhelming evidence from an earlier consultation and the desire of the Government to have robust protection in place for those who deal with the relevant licensing bodies, especially as they often have the choice to shop elsewhere. Again, I want clarity about who could be subject to the fees and how that could operate in practice.
Finally, I put it on record that although we support this operation, it is intriguing to us that the policy adopted is effectively to legalise a number of monopolies operating in this area. In any situation where monopolies are recognised, there is a sense in which competition must be the right answer. Here, we are choosing a different route because it is understood that the processes going on in the collecting society area are different in both quantum and quality to those which might apply under a more vigorous competition arrangement. That having been said, we should recognise that that is what is happening. These bodies cannot have competition. They will be operating as monopoly suppliers of copyright licences in particular circumstances. Although, on behalf of the Opposition, I am happy to support the proposal, we think that we have to keep that point in mind.
Viscount Younger of Leckie
My Lords, I thank all noble Lords who have taken part in this short debate for their valuable and broadly supportive comments.
We intend to use these powers where self-regulation fails, as has been mentioned. This power is light touch, as my noble friend Lady Buscombe mentioned, and is important to guarantee minimum standards. These powers are proportionate and designed to act as a deterrent. I think there is general agreement in the Committee on that.
We recognise that collecting societies play an important role in facilitating legal access to copyright works. They bring together rights holders and users to enable them to do business efficiently. The Government have worked with the collecting societies to develop the co-regulatory framework so that they continue to operate effectively, while ensuring that there are protections in place for their members and licensees.
I should like to emphasise again that the Government’s preferred option is self-regulation. This is why these regulations are designed to allow licensing bodies to remedy matters themselves in the first instance before recourse to statutory intervention. We are confident that collecting societies can self-regulate effectively. However, when needed, these regulations will provide robust, proportionate measures.
The regulations also contain provision for financial penalties, which are designed to deter non-compliance. They can be used only should self-regulation fail. This gives members and licensees the comfort of knowing that the standards that are set out in the collecting societies’ self-regulatory code of practice are guaranteed.
I hope that I have made it clear that the Government are serious about self-regulation and it is important that collecting societies have every opportunity to put their own house in order. Equally important, if they fail to do so there should be no way to avoid the consequences. If the Secretary of State is concerned about a collecting society’s behaviour, there is an opportunity for him to act, using the three-step process in the regulations. The fallback position is to impose a statutory code if collecting societies have not taken up that opportunity. While it appears unlikely at the moment that that point will be reached, it is important that the statutory power is available so that there is a deterrent to ensure that collecting societies face consequences if they do not act in a proper manner.
My noble friend Lord Razzall raised a number of points relating to a letter received by the PRS. I will attempt to answer them. The first issue was on information and timing. The collecting society concerned should have all the relevant information to hand anyway, and therefore be able to meet the 14-day deadline. The timeframe for supplying information to the statutory licensing code ombudsman and code reviewer are included in the regulations to ensure that any investigation can be conducted as swiftly and efficiently as possible. The licensing code ombudsman will require information to effectively investigate disputes between a collecting society and the licensee or member. The code reviewer’s power relates to the information needed in order to undertake an effective review of the codes of practice adopted by collecting societies and their compliance with their provisions. If a collecting society has concerns about meeting the deadline, it is open to it to notify the licensing code ombudsman or code reviewer as soon as possible. Finally, where the collecting society concerned can show that it has made every effort to comply with any request, the Secretary of State can take these arguments into consideration when deciding whether to impose a financial penalty. If such a penalty is imposed, there remains the option to appeal against its imposition and the amount. I rather laboured that answer but I hope it provides a full response to my noble friend.
My noble friend also raised the issue of cost recovery. Where the Secretary of State has incurred costs by having to intervene, it is right that he should be able to cover the costs of that intervention, but they should not be borne by the taxpayer. Where a collecting society has had a statutory code imposed on it and/or has failed to appoint an ombudsman or code reviewer, as required, the associated costs of regulation should be borne by the collecting society concerned. Where the Secretary of State needs to appoint a statutory ombudsman or code reviewer when the self-regulatory appointment has failed, it is right that all the collecting societies which will use the new system should bear the costs of that appointment and any ongoing costs. I should state that this would have gone way down the line before that point was reached, so it would be in extremis that this provision would be realised.
My noble friend Lord Razzall raised the issue of the legal basis. The gist of his question was: what legal power enables the Secretary of State to request information from collecting societies under Regulation 9? The provisions in Schedule A1 to the Copyright, Designs and Patents Act 1988 allow for the Secretary of State to request information, as outlined in Regulation 9.
Paragraph 7(1)(a) includes the power to make incidental, supplementary or consequential provisions and paragraph 5(3)(a) allows for provisions for determining whether there has been a failure to comply with the requirement of a code of practice. The provisions in Regulation 9 will enable the Secretary of State to request the information necessary to enable them to discharge their duties equitably under the regulations.
City-to-city Diplomacy
(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
The Earl of Dundee
To ask Her Majesty’s Government what assessment they have made of the case for city-to-city diplomacy in Europe as a means for providing better practice.
The Earl of Dundee (Con)
My Lords, in my remarks today I would like to connect three themes. The first is the nature and purpose of city-to-city diplomacy. The second is how it can assist democracy and stability in Europe. The third is the ways in which the United Kingdom and Her Majesty’s Government might now take a timely lead in supporting and advancing it. In some respects this subject is quite new. That apart, its issues are, I think, consensual and cross-party. I am grateful to all colleagues who are speaking today and I look forward a great deal to their contributions and guidance.
At first sight, city-to-city diplomacy appears to be no different from twinning cities. After the Second World War the latter development was most successful. In different countries it established links between population centres recently caught up in Europe’s fighting and conflict. Such twinnings were able to express and build up good will—a very important and necessary achievement. Yet the links did not go much further than that. Nor did they need to do so. Nevertheless, for the same cities the past 20 years have provided a wider opportunity, not least as a result of the fall of the Iron Curtain in 1989, as well as through Europe’s current affiliation of states: 28 within that of the European Union and 47 within that of the Council of Europe. Thus, to the advantage of national and international democracy, this prospect is to evolve good practice and to do so through joint programmes and initiatives embarked upon by cities at their local levels.
Some programmes may be analytical, identifying potential needs, gaps in the delivery of services or weaknesses in economic growth and so on; some may be proactive, between cities implementing business, trade and tourism or education and culture exchanges; while others might set out to enhance the methods of local government, the levels of citizen participation and the well-being of civic communities.
Clearly all those endeavours benefit cities, their member states and Europe alike. For the advantages are both internal and external. City-to-city programmes can address cross-border issues and other aspects of conflict prevention, thus assisting the work of NGOs and international organisations. Within their own European states the local and national connections are fairly obvious. For to the extent that locally city-to-city diplomacy evolves good practice of any kind, it does so nationally as well. Equally, the strength of local democracy which it may inspire and engender also becomes a greater strength of national and European democracy as a result.
Then there is the current background to local democracy in Europe. This is better than and much different from what it used to be. Diplomacy is no longer the prerogative of officials from national foreign ministries. Increasingly it is advanced through people themselves. There is growing evidence of good results deriving from the absence of formalities and structures. Ever frequently it is demonstrated that economic, community and social progress have become less dependent upon public funding and strategies in the first place and, instead, for their advancement and reinvigoration more reliant upon academia, the private sector and professional bodies.
Against this background, city-to-city diplomacy reduces costs and boosts the local economies concerned. That is particularly so when the focus is upon a variety of associated initiatives rather than only a disparate few. Last month, assisted by the Council of Europe, it was in this context that between Croatia and the United Kingdom just such a project was launched between the cities of Zadar and Dundee.
So the purpose and effect of city-to-city diplomacy is to augment stability and democracy at local, national and European levels together.
When we come to the role of European Governments, and in particular that of Her Majesty’s Government, there are of course some important considerations. As a forceful expedient for local democracy, how should Governments cause working synergies between cities to form and flourish without undermining them through government direction and prescription? No doubt the simple answer is support without interference. Both the European Union and the Council of Europe are now prepared to facilitate projects. However, a great many cities are completely unaware of that, as they also are of the positive scope offered by city-to-city diplomacy in the first place. Does the Minister therefore agree that now is the time for the Government to give much more guidance and encouragement to our own cities? To that end can he say what actions he would take?
Within the United Kingdom the Government have already taken steps to promote more active citizenship. They are also researching policies to improve the well-being of communities. Does my noble friend concur that, as city-to-city diplomacy already advances each of these aims, this is a further reason for the Government to seek to advance it now?
Then there is current government policy on European Union revision, which many of us support. That is to remove competitive burdens and restrictions while completing the single market. However, this structural progress may take a long time. Meanwhile, the development of local democracy in Europe is quite another matter. Does my noble friend believe that this is where city-to-city diplomacy has a key role to play? For if the latter can serve the aims of active citizenship and community well-being at home, then the corollary is that it is also well able to do the same abroad and in Europe. Does my noble friend therefore conclude that this is exactly where the United Kingdom and Her Majesty’s Government can begin to give and be seen to provide a constructive lead to enhance local democracy in Europe?
In summary, city-to-city diplomacy is an extremely effective and attractive intervention. That is all the more so as it is free from the structures and politics of member state Governments. Yet at the same time in Europe it is central and complementary to their priority aims of stability and democracy.
Lord Anderson of Swansea (Lab)
My Lords, the noble Earl raises a challenge not only to the UK Government but to the devolved Administrations with their responsibilities for local authorities. He has been a persuasive advocate of the concept of city-to-city diplomacy and greater public participation, which I have witnessed not only in the Parliamentary Assembly of the Council of Europe but also in the All-Party Group on Croatia, culminating in the launch of the new city diplomacy project with Zadar and Dundee on 4 February.
The noble Earl tried to distinguish his concept from that of town twinning. I think that he would agree that his concept needs to be sharpened a little. In some way it stems from the concept of twinning, which began, as he said, after the Second World War and which is now, alas, on the ebb. There are a number of reasons for this: there is the austerity—it was perhaps the first cutback made by local authorities; people are travelling more; some have sought to politicise it—Cuba, the West Bank; and there is the amount of councillors going to exotic locations at council tax payers’ expense. However, city-to-city diplomacy clearly builds on the concept of town twinning.
I hope that the noble Earl will say that we need to learn the lessons of what has been good and bad in the existing town twinning system. We should also learn the lessons of what we did immediately after the fall of the Berlin Wall, where we sought to buttress local democracy and active citizenry in the countries that were formerly part of either the Soviet Union or the Soviet empire by sending senior local government officers there, be it chief executives, deputy chief executives and so on, or be it in leisure. We should consider what was done well and what lessons we learnt from that.
The noble Earl is well aware, of course, that work in this field is being done by the European Union—Europe for Citizens. This is supported by the Government, rather surprisingly, because it not only deals with commemoration but promotes the concept of Europe itself. Clearly it needs co-ordination with the European Union. The European Union has the money and the Council of Europe perhaps has the resources and the wider membership. Given the precedent of, for example, the partnerships for democracy with Morocco and the Palestinian Authority, there needs to be close co-operation between the narrower European Union and the wider 47-member Council of Europe.
There is a new wave of localism in Europe, which we need to encourage. We need to exchange best practice to learn from the initial Dundee-Zadar precedent. This is clearly good for individual countries, good for local democracy and good for international co-operation. Again, I commend the noble Earl.
Lord Shipley (LD)
My Lords, I am very grateful to my noble friend Lord Dundee for initiating this debate. My experience, which I shall draw on over the next few minutes, relates to Newcastle upon Tyne, where I was a council leader for a number of years. Newcastle has had a number of twinning relationships, particularly in the post-war period, which had, and still have, a very important role because they bring people together. They include sports club exchanges, cultural events, choirs, church group visits, youth groups and school exchanges, as well as the more formal city-led exchanges.
However, the world changes and new possibilities open up. It is not just about twinning, as my noble friend Lord Dundee said. I have concluded that there are three levels to successful city-to-city diplomacy. I mean the wider sub-region by “city”. The three levels are people to people, institution to institution and city leadership to city leadership, which includes business. In this context, I have always been struck by the words of Professor Michael Parkinson, who was founder and former director of the European Institute for Urban Affairs at Liverpool John Moores University. He said:
“A significant feature of successful continental cities is the importance they attach to internationalisation and having city ‘foreign policies’”,
investing time and,
“effort in international networking to raise their profile, gain new allies, expand market share, influence decision-makers and learn new strategies and practices”.
I find that a very useful rationale for developing city-to-city diplomacy.
When we began to rearticulate Newcastle’s approach a few years ago, it was based on those principles. It focused on networks, connections and projects with cities and city regions that have similar characteristics or special links, and where there is economic benefit for business, trade or innovation. The advantages are in sharing learning and best practice, in collective access to funding—particularly European funding, supporting key institutions, such as our universities— and scope for projects that promote language—learning and culture.
In Europe, Newcastle’s twin cities are Gelsenkirchen in Germany, Nancy in France, Groningen in the Netherlands and Bergen in Norway. They have all seen very positive outcomes in recent years—in cultural links, school twinning, shared provision in higher education and in public policy. What can be done by universities? For example, an innovative, dual award programme provides an opportunity to study for a master’s degree in advanced international business management from Newcastle University, and at the same time an MSc in international business and management from the University of Groningen in the Netherlands. At undergraduate level for a BSc honours in economics and finance, which includes international financial management, there is an optional study-year abroad at the University of Groningen to provide an international perspective. Those derive from our existing twinning relationship with the city of Groningen.
Finally, I want to draw attention to the potential of honorary consul networks in building bridges between the diplomatic establishment and local businesses and academia. In Newcastle, the honorary consulates of France and Germany have a shared facility in the civic centre. It is the first shared facility in Europe and it is an approved commitment by the city council, too. The honorary consuls help to lead the organisation of the annual North East in Europe conference, now an established and valued event. However, we can extend into new areas. Developing connectivity between the north-east of England and Sweden has been particularly impressive with a consul-led UKTI trip to Sweden for 22 new exporters and several other outward and inward- bound missions, not least in the environmental sector. That is based on a growing new relationship with the city of Malmö and the existence of a Swedish consul in Newcastle. There is enormous potential for the Government to assist and I hope that they will help to spread good practice.
Viscount Falkland (CB)
My Lords, I confess that I am somewhat daunted by the Question although I have been asked to talk about the twinning of towns and cities. Therefore, I will not talk about the actual Question but about twinning. Indeed, a noble Lord virtually said that what we are discussing is “twinning plus”.
I have always been fascinated by twinning although I did not know very much about it. When I was asked to speak in this debate, I rang a number of councils. Given the time constraint in this debate, I shall discuss only three of them. These three councils are very different but have in common the fact that their communities decide the way in which they operate their twinning systems with towns in different countries, which I like. I am sure that the noble Earl would have no difficulty answering questions on this topic but anyone who is vaguely Eurosceptic might become more so on hearing his speech. However, I obviously need to do a lot more homework on that.
The twinning system is withering on the vine. The noble Lord, Lord Anderson, gave various reasons for that but did not refer to age. People are getting older. Two local authorities told me that they had built up wonderful relationships over many years. For example, Torquay has a curious relationship with Hamelin, or Hameln as it is known, which you would not expect. Those who have read the Grimms’ stories will know the story about the pied piper and the rats. Torquay has built up a very strong relationship with Hamelin in relation to a number of issues, including life saving, which I thought was very strange. Germans from Hamelin come over every year and discuss life-saving issues with people in Torbay, which has a lifeboat service. When I asked why the citizens of Hamelin would be interested in that, I was told that the Weser is a very deep river. Noble Lords will remember the fate of the rats in the fairy story. The charming thing about twinning is that you learn such interesting and varied facts.
Barnet is an interesting example in this regard. It has a budget for this work, which it does not think is big enough. However, it wishes that it had no budget at all because most of its time is taken up dealing with freedom of information requests, which can be asked by all kinds of cranks and lunatics. This is the phenomenon of the unexpected effects that flow from seemingly perfectly worthy legislation. These requests take up all that authority’s time. People want to know how much of the relevant budget is being spent, and on what. It emerged that the cost of this work for each taxpayer in Barnet was 0.01 of 0.01p. We are in a ridiculous situation in this country. We should not impose on people all kinds of strange democratic things which I hardly understand, although I suppose that I am a democrat. Basically, we have got this right. It just needs to be brought up to date and changed as new pressures emerge.
The other council I contacted was Basingstoke, which is closest to the example given by the noble Earl as it is working on projects as they come up. I have talked to a number of people involved in this issue, including volunteers who were enthusiastic, polite and pleased that I was inquiring about it. Therefore, I put in a request that we leave the situation as it is and forget “twinning plus” for a while.
Baroness Wilcox (Con)
My Lords, as ever the noble Earl, Lord Dundee, poses an interesting Question. It is very interesting for me because I did not want to take part in the debate today as I do not believe in any of it. However, he was insistent that I did take part and listen to everybody else to see whether I could glean anything, as I certainly have in such a short time already. The noble Lord, Lord Anderson, can always talk about the nature of cities and make that sound terribly interesting for me. We have heard about good practice from the noble Lord, Lord Shipley, from whom I have learnt all about Newcastle upon Tyne. Then I listened to the noble Viscount, Lord Falkland, and thought that I should just sit down and say very little because I agree with him.
The question I ask is: what would it achieve? What would its purpose be that would actually be that different from what we already have? That may be looking a bit tired or sad, and as if it ought to be gingered up a bit. It may be just because Russia is dashing all over the place in the Council of Europe area that we are all rather overexcited about looking to and after each other. That may be what it is about a bit as well. The noble Earl has also had wonderful success with his twinning, which has been different and, by the sound of it, rather magnificent.
I have to speak from the background of being a trader. As a trader, I therefore believe in free trade right across the world, wherever possible, without many barriers if we can avoid them. I also believe that cities are mini-worlds. Every city is different and grows in its own way. It may be on a river or on the sea, or up a mountain, but it will have its own things—its own dynamic and energy. It is geography that makes us and, very often, it is trade routes that make cities unique. History also teaches us that the next things we need are talent, technology and tolerance. I would vote for those three things rather than reinventing new ways to bring along democracy or whatever we are calling it, with all sorts of other new civil servants to help us and tell us all how to run our lives.
Each city trades differently and for different reasons. The danger from what is implied here is that the greatest in size and wealth among the 47 countries of the Council of Europe will be talking only to each other. The biggest will talk to the biggest; the best will talk to the best. I cannot see any other way. What we would be looking at is city states. We have seen city states and we know what happens with them. It is hard enough to protect the countries and cities that we already have. Is there to be a war among the cities or a wasteland between them? Are these going to be cities with transport and treasure? I see sieges and armies; I see corruption and exclusion.
So as a trader, I would rather see 1,000 flowers bloom in the 47 countries of the Council of Europe. The noble Earl, Lord Dundee, the noble Baroness, Lady Eaton, and the noble Lord, Lord Anderson, are, of course, representatives to that council as delegates, as am I. Indeed, the Minister who will answer in a minute has also been a delegate there. To see this functioning any better than what we have now is going to take all the things that I do not want us to do: more diplomats, more civil servants, more talk, more meetings, more dinners, more cost and less free trade.
Baroness Scott of Needham Market (LD)
Exactly two weeks ago, I was in Denmark chairing a conference of local and regional authorities from around the North Sea. During my two days in Aalborg, I had an opportunity to reflect on the nature of international co-operation at a local level. I was considering how best to raise these points in your Lordships’ House, so I am very grateful that the noble Earl has given me a chance to do so so quickly.
The North Sea Commission was founded in 1989 as a way of allowing local and regional authorities with a North Sea border to come together to discuss areas of common interest and to see whether, by working together, we could arrive at better solutions. I was a councillor in Suffolk when we took the decision to join. I was involved until 2005 and spent much of that time as chair of the heritage, culture and tourism group. Membership was beneficial to Suffolk. It gave us a ready-made pool of the European partners that we needed to join in EU-funded programmes. These ranged from the promotion of local foods and the creation of local business to sustainable tourism and diversification of jobs in Lowestoft, which had been very badly hit by the decline in the fishing industry.
We went on to discover that there are issues and problems common to the North Sea region which cannot always be tackled by individual councils, regions or member states. The North Sea Commission used its influence to bring together fishermen, scientists, environmentalists and civil servants when previously they would not even sit in the same room. What we had then has now developed into an EU-wide regional organisation with legal powers over fisheries. We shared experience together on how to deal with many of the problems brought about by oil and gas exploration. Noble Lords will remember the Brent Spar. The North Sea Commission still does that work but it is now also heavily involved in renewable energy and the development of a North Sea energy grid. Coastal erosion, flooding and pollution are issues which all suggest that there is a need for a body which looks at the North Sea from a North Sea perspective rather than a local or national one.
Not very much has changed in the nine years since I stopped being involved, except for one big change which I did notice. In 2005, English local authorities from Newcastle down to Kent were members. Now, Southend is the only English representative on the North Sea Commission. Scottish councils are, thankfully, still very active. So what has happened? There is still a need for a body such as this. I saw no evidence that the NSC is less effective. Indeed, the presence of a number of very senior officials from the European Commission suggests that it is highly regarded, and the presence of members from all other countries, including Norway, which is not in the EU, suggests that it is still valued. So what has happened in England? I think that there are two factors and they are both relevant to this evening’s debate.
First, public services are increasingly required to demonstrate the outcomes of expenditure of public money. That is absolutely right, but it means that spending on areas where the outcomes are more intangible, such as partnerships, become harder to justify. Secondly, there is the irony that, as the world is becoming smaller and individuals travel more and communicate across the globe, outside, the notion that public servants and elected members might actually leave the country to meet colleagues is viewed with great suspicion and even hostility. To some extent, that is understandable. It is hard for elected members to justify foreign travel, even if it is to a wind farm in Germany, when cuts are being made in public services.
Returning to the narrower context of the North Sea Commission, it became clear to me at the conference that there will be an increased focus on the North Sea, especially in the context of energy. The EU is looking to the North Sea Commission to help to drive progress in these areas and, when that happens, there will be no English voices round the table. I think that that will be a serious omission. I should like the Government to consider what practical assistance can be given to ensure that that does not happen.
Baroness Eaton (Con)
My Lords, as others have done, I thank my noble friend Lord Dundee for initiating this debate, and I welcome the opportunity to make a minor contribution.
My interest in active co-operation with other European cities and organisations began when I was a student, before the time when it was fashionable to make studying abroad part of a course. As a student teacher, I was invited to attend a student exchange at the Pädagogische Hochschule in Osnabrück. Here, I made many friends but, very importantly, I learnt about and observed the different teaching methods in Germany. Our 1960s liberal teaching methods were very different from the German structured form of learning.
Later in life, as a family, we were very active in an organisation called the Junior Chamber of Commerce, now known as the Jaycees. The international activities of the Jaycees brought together from all over the world individuals and families who shared an interest in business and commerce. Our children grew up seeing friends from all parts of the world over the breakfast table and, as a consequence, they learnt much about life from many different perspectives.
Several noble Lords have spoken about twinning arrangements after the Second World War. In my experience, however, many of the cities involved in twinning have developed their twinning arrangements well beyond their beginnings and the desire to create good will. My own city of Bradford, where I am an elected member, has had a number of twinning arrangements which were active in developing commercial, cultural and sporting links. The cities were Skopje, Roubaix, Mönchengladbach and Hamm. These cities shared common activities in business, trade, culture, the textile industry and other commercial activities, as well as being home to a number of minority ethnic groups.
As the leader of the council, I was very pleased to encourage the mutual interest in art and culture with Hamm in Germany. Bradford is the home of David Hockney and the city is proud to have collections of his works. Bradford and Hamm had an exchange of the work of the artist Otmar Alt and some of David Hockney’s works. Our parks and public spaces proudly showed the colourful modern sculptures of Otmar Alt and the people of Hamm delighted in the Hockney exhibition.
All of the activities I have described, and many others, have had many benefits for all involved—business, trade, culture, improved local government, more citizen participation and improved national and political stability. It is clear that working synergies already exist.
EUROCITIES was an example of 23 European cities working together around information-sharing, exchanging ideas and employment programmes. Members of EUROCITIES were able to influence policy workers in Brussels to help develop the social agenda. The many positive experiences that I have had, and those that I have observed, taught me that already many cities in the 47 states of the Council of Europe have the ability and the will to work together for the common good. I hope that the Governments of the member states can recognise the role and the ability of the Council of Europe in encouraging city-to-city diplomacy. However, as the noble Baroness, Lady Wilcox, has said, this project should not create the need for more officials and paid bureaucrats. Diplomacy should no longer be solely the prerogative of officials from foreign ministries. City-to-city diplomacy can, I am sure, make a major contribution to enhanced stability and democracy if the citizens themselves develop such diplomacy.
Lord Dykes (LD)
My Lords, it gives me great pleasure to congratulate my noble friend Lord Dundee on his excellent speech which launched this brief debate and I am grateful to him for his suggestions. I echo the specific question put at the end of her remarks by my noble friend Lady Scott and I should be grateful if the Minister would include me in the answer to it. It is a very pertinent question.
In this period of austerity it will be very sad if twinning withers on the vine and the working synergies, which are even more important, profound and deep, are cut back by budget pressures. Their achievements can be made at the margin on modest amounts of money. Without sounding too boastful, I remind the Committee of what we did in Harrow when we twinned with the last significant untwinned town in northern France, Douai—the judicial centre of northern France many years ago—which was a great success. The figures we issued of how much that programme cost were very modest. That was when there was no austerity and we could do it.
Perhaps I may make one European point as my noble friend Lord Wallace is in his place as the duty Whip. I have always found it bizarre that the anti-Europeans on the right-wing side of British politics are happy if companies and corporations become international and global but they do not like countries in the European Union to join others and link up on all sorts of things. I find that strange because not only does each country then benefit from the collective strength of the whole Union but its own individual sovereignty goes up; it does not go down. There is no loss of sovereignty in net terms. Everyone gets stronger and so does the Union. That is an example which, on an administrative scale, can be done for cities, towns, villages and so on. We were very proud of its success.
I declare an interest: I live on the Normandy-Picardy border because I had to live in at least one country that was in the eurozone when we foolishly failed to join the euro many years ago. I notice that the town twinning is now mostly not with English towns but with German ones. I am sure that noble Lords will agree that probably one of the finest stories in post-war Europe has been Franco-German reconciliation, with really deep relationships developing now. There is no withering on the vine in the twinning that I can see in those areas. There is work and synergies of all kinds, from football teams to choirs to individuals getting married—an extraordinary development of very profound relationships that are European as well as in the sense of being proud of one’s own country. The two things go together.
In Harrow I had the great pleasure and privilege of having Bentley Priory, the RAF base, in my constituency, where the Battle of Britain was directed by Air Chief Marshal Dowding. Because of that, with our liaison function, we always had a USAF officer, an officer from l’Armée de l’Air in France and, indeed, visiting German officers from the German air force. One year I was particularly pleased when I persuaded the organisers of the September Battle of Britain cocktail party to play not just the marvellous Royal Air Force march but the Luftwaffe march as well. The whole gathering applauded when the Luftwaffe march was played. It could not have been done decades before then but it is done now because people want to get together and we must provide those examples and opportunities to them.
I do not think it is right to say that officials should not be involved. Budgets must be strictly controlled but you need intelligent, constructive officialdom, not excessive bureaucracy. You need private initiative. You need companies to be involved. You need intellectuals, students and teachers. Then you begin to make progress of understanding at the lower levels of human society—not lower in the sense of being low, literally, but the more modest levels of your own village, district, town or city—and then rising up through the political system as well, so that politicians are involved in espousing those things and not being suspicious of them or hostile to them, as is the rather sinister atmosphere developing among, I hope, a small number of people in this country, some of whom may be heard tonight in the exchanges that are coming between two significant political leaders.
Lord Bach (Lab)
My Lords, I start by congratulating the noble Earl, Lord Dundee, on securing this debate. I thank him for initiating such an interesting and expert discussion. It is impossible not to admire the noble Earl’s commitment to and enthusiasm for city diplomacy, and the Opposition Front Bench welcomes the debate he has started. I was slightly disappointed by the response to this debate by one or two noble Lords, which was slightly negative, I think. No one is saying that this scheme is fixed for all time. The plans are beginning and it is very important that we should be broad-minded in our approach.
I think that I understand the difference between city diplomacy and town twinning, and must confess to an abiding support for the latter, having been involved in it at both city and small-town level for a number of years. I will make a few quick points. The idea of city diplomacy seems to be yet another example of soft power in action. We hear a lot, rightly, about the World Service and the British Council. I declare my interest as chairman of the British Council All-Party Parliamentary Group. But soft power should go beyond those two brilliant institutions.
The idea that local government, particularly cities, should play a part in diplomacy or soft power—whatever you want to call it—is not new. It has happened in green affairs around the world for a long time now. The noble Baroness, Lady Eaton, has great experience of local government in this field. The Dundee-Zadar city diplomacy project is an interesting and timely development. The noble Earl outlined his intent in his speech, saying that the purpose and effect of city-to-city diplomacy is to augment democracy and economic stability at a local, national and European level.
That seems sensible. Who could object to that as a principle? Of course it needs a great deal more working out in practice—no doubt that is what the Dundee-Zadar experiment will show us. This is also a question for the Minister: is it not particularly relevant at a time when Foreign Offices, not just in this country but around Europe, are looking for funding—desperate, in fact, for resources to undertake diplomacy and fulfil their function?
My city is Leicester, and I intend to pass the Hansard of this debate to the executive mayor’s office. The city has a strong tradition of twinning and of working with other cities, so I will do that locally, but in my role as part of the Opposition Front-Bench team responding to the debate, I intend to take the noble Earl’s idea about city diplomacy forward to be considered as part of future proposals. For the moment, however, it is this Government who have to respond to his debate. As always, I look forward to hearing what the noble Lord has to say.
Lord Ahmad of Wimbledon (Con)
My Lords, first, I join all other noble Lords in thanking my noble friend Lord Dundee for giving us an opportunity to discuss this important subject. From listening to the contributions today, it is clear that this has generated a lot of interest across the Committee. The noble Lord, Lord Bach, and my noble friend Lady Eaton, raised the issue of soft power. That is important. Too often we are caught between what initiatives are being taken specifically and sometimes underrate soft power in terms of language, cultural exchanges and so on. That is an important part of city-to-city diplomacy.
I begin by reminding your Lordships of this Government’s commitment to localism. The Government have returned more powers to individuals, communities and local councils than many thought possible. Indeed, my noble friend has acknowledged this. We passed the Localism Act in 2011 to ensure that local people could come up with and implement the most effective solutions to local problems. As a former local councillor with responsibility for culture—in my own patch we had the All England Club—I had experience of the powerful messages that you could send through sport, a point made by my noble friend, and of extending that in city-to-city initiatives.
The Government’s view is that we need to give further control back to our cities and we are already seeing the success that this change has brought about. Only last week, Cambridge joined the ever-increasing number of British cities benefiting from a city deal. As noble Lords are of course aware, under this deal cities, including Cambridge, Manchester, Birmingham, Bristol, Leeds and many other successful cities, will now have greater responsibility for and control over decisions that affect them, and a greater chance to shape their own development.
My noble friend Lord Dundee talked about the importance of city-to-city initiatives, particularly in encouraging active citizenship and general well-being. Giving back power was the start of that process. We now want cities and regions to use the freedom they now have to strengthen their communities and economies. All places are unique. Some places will do that better than others. Some policies will work well; others may take time before they get going. So it is important that local policymakers have the opportunity to discuss among themselves, to share success stories and discuss possible risks and pitfalls.
The Local Government Association encourages this domestically. My noble friend Lady Eaton played an important role in this respect as a former chairman. Its Peer Challenge and Knowledge Hub programmes are good examples of developing better practice through engagement but, as my noble friend Lord Dundee pointed out, and as he knows well from his considerable experience with cities in the sterling work that he has done in the UK and in Croatia, there is much that can be gained from sharing experience internationally, and we have worked hard to develop spaces for cities to share best practice.
In answer to my noble friend’s question, we support fully the strengthening of such initiatives, and city-to-city diplomacy can play an extremely important role in developing local democracy. The UK Government will continue to support institutions facilitating this development. Indeed, my noble friend Lady Stowell of Beeston is currently in Strasbourg to address the Congress of Local and Regional Authorities.
The noble Lord, Lord Shipley, asked about trade. That is a valid issue to raise. UKTI encourages cities to focus directly on activities such as building their local foreign direct investment capacity, understanding their sector or other strengths and establishing inward investment propositions for their area. The noble Lord, Lord Bach, will recognise that many embassies around the world have a UKTI hub to encourage bilateral trade. I hope that point will be welcomed by my noble friend Lady Wilcox.
The Organisation for Economic Co-operation and Development is one of the organisations that provides such spaces for city-to-city diplomacy. It brings together experts to discuss policy challenges and solutions, in relation to both specific cities and wider urban policy. OECD analysis was used to good effect to support the introduction of the city deals that I have already mentioned. Another example of the value provided by OECD co-operation is the project in which Manchester is currently participating. Organised by the Directorate for Public Governance and Territorial Development of the OECD, this project brings together a small group of international cities with the aim of finding best practice for dealing with ageing populations, which is an increasingly relevant topic.
The OECD urban working party directs initiatives, such as the Manchester ageing project, and other OECD work on cities, such as the recent project on green growth in the Benelux. The UK recognises the value of OECD work in this area and plays an active role in the urban working party. The environment was also mentioned quite forcefully and rightfully by my noble friend Lord Dykes.
My noble friend Lady Wilcox mentioned the Council of Europe. It has a strong track record and has an important role to play in city-to-city diplomacy. With the Congress of Local and Regional Authorities and the European Committee on Democracy and Governance, the Council of Europe can facilitate direct exchanges between cities and local authorities and allow national Governments and local authorities to take a step back and address strategic challenges faced by cities and regions in Europe. As noble Lords will know, the UK sends a sizeable delegation of local and municipal officials to the congress. The delegation, with a mandate of four years, is made up of 18 full members and 18 substitute members from local authorities and the devolved Administrations.
The UK is also represented at the European Committee on Democracy and Governance, which we chaired until January 2014. During our chairmanship of the Council of Europe in 2011-12, the UK achieved wide consensus on our priority of streamlining the Council of Europe’s activities on local democracy to ensure the effective co-ordination of activities and the efficient use of resources. The creation of the Centre of Expertise for Local Government Reform marked another step forward in the Council of Europe’s capacity to help cities and regions develop best practice through co-operation.
Within the European Union there are many opportunities for city-to-city diplomacy. I assure noble Lords that the Government, through attending various EU meetings, seek to disseminate information from EU presidency meetings designed to spread good practice among cities.
Noble Lords will be aware of the Committee of the Regions, which provides further opportunities. It aims to shape future EU policy decisions by getting involved in policy-making at an early stage and has greater influence now than before the Lisbon treaty. The UK appreciates the importance of ensuring that the impact of EU legislation on local issues is understood. The UK delegation promotes UK local government and devolved Administration interests in EU law-making and decision-taking.
The ERD fund is another key tool in facilitating city-to-city contact. The ongoing negotiations on the new sustainable urban development programme illustrate how this Government are working hard in Brussels to make sure that UK cities can access this tool. When our cities and regions are able to work with the fund, it is clear that engagement is worth while.
Using funds from the EU and national Governments, Glasgow is yet another example of a city now working with 11 partner cities to promote the employability of young people in the labour market. Birmingham is leading a group of 10 cities as they develop links between creative industries across Europe. Manchester is one of six cities sharing work on how to use financial instruments better in municipal planning. Here in London, Westminster local authority is engaging with Barcelona, Dublin and five other cities to promote urban markets as key drivers of economic development, urban regeneration and sustainable living.
My noble friend Lady Scott and, I believe, my noble friend Lord Dykes talked of EU funding for regions and cities. I have already illustrated some of the instruments that are available. EU funding has been valuable in city-to-city diplomacy but we must continue to make sure that access to this funding is available for our cities. The co-operation seen in the frameworks for the Council of Europe and the OECD are examples of this. Specific mention was made of the North Sea Commission and that UK representation was declining in that respect. The Government have introduced measures allowing local authorities more and greater control over their budgets, and they can now appropriately prioritise their spending. If those local authorities see the value of the North Sea Commission, they can of course pursue that.
Baroness Scott of Needham Market
I apologise for interrupting the noble Lord but is he aware that when the Secretary of State in another place makes comments from the Floor of the Chamber criticising individual local authorities for participating in travel abroad, it really does not help the Government’s case?
Lord Ahmad of Wimbledon
I am sure that has been noted in Hansard and I will write specifically to my noble friend in that respect.
My noble friend Lady Eaton talked about sporting links and the noble Lord, Lord Bach, talked about soft power. I have already alluded to the fact that this is an important part of city-to-city diplomacy. The Olympic Games in London in 2012 were an excellent sporting spectacle from which all cities could learn—indeed, we are sharing experiences across the world. The noble Lord, Lord Anderson, and the noble Viscount, Lord Falkland, also raised concerns that twinning is declining, in part due to budget constraints. This Government have brought in a raft of measures intended to give local authorities more control over and responsibility for their budgets, and we allow them to decide on their spending priorities as they are directly accountable to their electorate. City-to-city diplomacy has provided twinning schemes and I fully acknowledge the worth of those that have been set up.
I am increasingly aware that we are running slightly short of time. The exchange of views between cities should, of course, lead to stronger communities, more effective policing and more proactive education for young people. However, as my noble friend Lady Wilcox said, these new initiatives should not lead to increased bureaucracy. We can see that when conditions are created that allow city and local authorities to interact and co-operate on areas close to them, best practice develops and our cities thrive.
My noble friend Lord Dundee has made a powerful and persuasive argument, which I know Ministers and officials across Whitehall will reflect on. I pay tribute to the leadership that he has shown on this issue and look forward to further efforts to strengthen the role of city-to-city diplomacy in the future.
UK Visas and Immigration
(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Steel of Aikwood
To ask Her Majesty’s Government what is their assessment of the operation and accountability of UK Visas and Immigration.
Lord Steel of Aikwood (LD)
My Lords, I do not intend to have a great debate on immigration. I put down this Question for Short Debate as a result of two recent experiences of dealing with individual cases, about which I would like to inform the Committee. Last August, I received a letter from a small charity, the Friends of Meisori School. This is a group of schools and churches that have got together to help sustain a primary school in Kenya with scholarships and that kind of thing. It had invited the headmaster of the school to come to Britain and conduct a programme of visits to schools in York, Hereford and Bristol. At the last minute, it found that he could not get a visa and his whole visit fell to the ground. The charity wrote to me angrily because it had seen my name on the foundation stone of a library, which I had laid some years before. I had no connection at all with the charity.
I wrote to Mark Harper, who was then the Minister for Immigration, to ask for reasons why the visa had been refused and I was completely dismayed by his reply, which simply told me about the visa requirements. I wrote to him on 30 October last year to say that I was dismayed. My last sentence was:
“I feel a parliamentary question coming on unless I can get a clear reason why the visa for Mr Lekae was refused”.
Well, 2013 came and went and I had no reply so I duly put down a Written Question which was replied to by our good and noble friend Lord Taylor of Holbeach. He simply said that:
“Due to its obligations under the Data Protection Act, the Home Office is unable to comment on an individual case”,—[Official Report, 16/1/14; col. WA68.]
without the permission of the applicant, so that did not get me anywhere.
I then wrote to Mr Samuel Lekae and asked for his permission to pursue the case. He sent me that permission and, eventually, having failed to get a response, I put down a Question and wrote to the Minister again. He replied on 10 January and, to be fair to Mr Harper, he wrote a very nice handwritten apology at the bottom of the letter. He gave the same argument about the Data Protection Act, so having got the authority from the headmaster to act on his behalf I wrote to the Minister again on 27 January. To date, I have had no reply. Of course, that Minister has disappeared and been replaced by another one, but that is not really an excuse. However, I visited the school last month and met the headmaster. The point I want to make is that it is in a remote area and he had made several visits to Nairobi to try to get the visa. That is four or five hours by car each way but, at the end of the day, the visa was refused.
The other case was just last month. I was taking part in a conference to commemorate the bicentenary of David Livingstone, organised by the Scotland Malawi Partnership. That body has government funding and the conference was co-sponsored by the Open University, which is also a body with public funding. A distinguished lady from Malawi was invited to be one of the speakers and, at the last minute, she was refused a visa. The charges that they have to pay—£400 a time—are of course lost but so is their airfare for which we, the taxpayer, had paid. The attempt to raise money by raising the fees is negated every time there is a refusal, while the public body which has invited and sponsored a visitor ends up paying for an abandoned airfare.
The timescale involved is ridiculous. It usually takes three weeks to get an answer, in the case of Malawi. In December last year, just three months ago, a new system was introduced by e-mail but it seems to be entirely dysfunctional. The website is an embarrassment. It routinely crashes and there are sections that simply have not been finished. For example, the user has to state which country they are applying from by using a drop-down menu, within which the only information is the starting letter of the country. If you are looking for Malawi, you look for the letter M and you then have to guess how far down the list it might be and what other countries there are whose name begins with M, and then you tick the right box. There seems to be an assumption that all applicants will have regular and easy access to a computer, to an internet connection with strong bandwidth and to a printer. That effectively rules out almost everybody in Africa except the urban elite.
It appears that the Government have outsourced their legal responsibilities on immigration to a private company which was the cheapest bidder. It is almost impossible for an applicant to contact the private company, because, in the case of Malawi, the private company is in Pretoria in South Africa, which handles all UK visa applications for the whole of southern Africa. Even if they could make contact, the company closes all its offices at midday on Fridays for an early weekend, irrespective of the workload or the urgency of applications. Being a private company, it is not governed by the same standards of delivery, service and transparency which one would expect from a government department.
There is a further complication in the case of Malawi. As all its visa applications are handled in South Africa, significant delays are caused, as passports, birth certificates, bank details and other documents are sent backwards and forwards across the continent. It also means that decisions are being made remotely by people who have do not necessarily have intimate knowledge of the country from which the application has been made.
In the case of Malawi, there is a further, peculiar difficulty. The applicant has to pay for a visa application using a credit card and pay in the currency of the country where the regional visa-issuing centre is based. That means paying in South African rand. The Scotland Malawi Partnership has been advised that it is illegal in Malawi to make online payments in a foreign currency unless you have specific permission from the Reserve Bank of Malawi. We are also informed that almost no Malawians have international credit cards that would be suitable for the purpose. My argument to the Committee is that the system is not conducive to visitors coming to this country, and I think that the reputation of the country is being damaged by the incompetence and cost of it.
I raise with the Minister one particular query about rule 41(vii) of the Immigration Rules, which insists that visitors to the UK have evidence of sufficient funds to cover the cost of their visit and their return to their country of origin. That is apparently UK policy, but a recent conference in Cardiff was told that that was not the case and that it would be sufficient if the sponsor had enough money to cover the costs of the applicant. So there seems to be an element of confusion even about what the policy is.
I end by making three suggestions to the Government. First, before the Commonwealth Games start in Glasgow in a few months’ time, the agency must make it clear that people attending from Africa—in this case, athletes, their trainers and so on—will require visas. The Commonwealth Games will be disrupted if many of the applicants are not able to get there because of visa restrictions. How many short-term applications have been turned down? How many applications have been received and what percentage of them were rejected?
Secondly, it should be an instruction to the agency that, when visitors are being sponsored by reputable bodies in this country, there should be an obligation on it to contact the sponsors and double-check. It can do that quite easily by e-mail quite and check the bona fides of the applicant, rather than go on demanding more and more visits to a remote centre and more and more fees. I would not object even if we were to introduce a system of bonds, whereby sponsors could give—let us say—£1,000 as an assurance that the person concerned would return. That is a suggestion which the Minister might like to pass on to his colleagues in the Home Office.
I mention in my QSD the question of accountability. I do not think it is good enough to hide behind the Data Protection Act and I think that any MP or Peer who raises a question about a visa application is automatically doing so on behalf of the applicant and should not be put off by being told that the Data Protection Act is in the way. When I was an MP, it was possible in visa cases to write to or even phone a high commissioner and ask them to examine a particular case. Sometimes the visa was refused for good reasons, which would be explained, and other times the decision would be overruled. There is a total lack of accountability now and it is that that I am really complaining about.
Baroness Neville-Jones (Con)
I thank my noble friend for enabling us to bring some of those cases to the attention of the Minister. I have a case to raise that has many characteristics in common with what we have just heard. It also concerns immigration, or at least visitors, from Africa.
I have the impression that it is becoming very hard to visit this country unless one is well off. I know that we want to attract the well heeled but I wonder whether it is right that we should get into a position where only the well-off can come here. In Hereford—it is Hereford again—there is a linking charity that, since 1985, has with other linking charities sponsored short visits, typically of four to six weeks, of more than 100 mid- career health professionals from Tanzania to come to see how we do things here and then, with that knowledge, go back to improve the functioning of their own institutions. These people are obviously not students in the formal sense. They come on ordinary visas, fully sponsored, with all costs paid by the British organisers. They are therefore of no burden to the British taxpayer. On the other hand, without that sponsorship, they most certainly would not be able to come because they could not afford to.
What has happened to this little programme? Beginning about three years ago—in other words, I fear, under the present Government—the already onerous and intrusive visa paperwork became even more so. My noble friend set out the costs involved for those who have to go a distance, and in this case I think it was to Nairobi. In 2012 and 2013, two of the four applications relating to the Hereford-Muheza link—Muheza is in Tanzania—were turned down. In relation to other link programmes over the past four years, there have been 15 rejections, which is a pretty high rate considering the overall annual numbers coming in. That has a pretty destructive effect on the link programmes and involves a great deal of wasted effort because these refusals come through only after a number of tractations and a lot of effort on the part of those who are then turned down.
Rather like the cases raised by my noble friend Lord Steel, this has also led to correspondence with the Home Office. One of the organisers, Dr John Wood, wrote to Mark Harper in February 2013. He did not, however, get a letter back from the Minister. He had one from a Ms Ioannou in May 2013, explaining that it was only right that the UK welfare system should be protected from non-genuine visitors, that visitors should be able to show that they could maintain and accommodate themselves while in the country and indicate, with a return ticket, that they intended to return to the country with which they had demonstrably genuine ties—the same reasoning that we have heard. These stipulations are, I agree, reasonable. They are tough but they are certainly reasonable and defensible. However, the link programme, in all its years of operation—now 13—has never had an absconder and there is no reason to believe that it would have one now or that the conditions would not have been met. Also, in shades of what was said by my noble friend, Ms Ioannou said, “flexibility in the Immigration Rules for visitors exists, if they can be maintained and accommodated by relatives or friends where they do have the financial means to support their visit”. Is that not exactly the same thing as being told that there is a way through? That is precisely what the link programme provides: maintenance and accommodation while in the country.
Subsequent to this correspondence, the link programme’s postbag is still full of rejections on the grounds of the inability to guarantee return, which appears, in turn, to be related to suspicion about the consequences of the inability to self-fund. Of course, if those visitors could fund themselves, they would not need sponsorship. It is a Catch-22. The fact of costs being fully covered and sponsorship by an impeccable organisation—which I think it is—appears to be irrelevant to the refusals. They have sponsors, but the fact that they could not pay for themselves were they not being sponsored, although they are, means that they get turned down. As regards the inability to guarantee return, what guarantees beyond having your costs being covered, your return ticket and your ties to your homeland are good enough for the Home Office? Does it want an armed guard throughout the visit and to the airport? That is what it begins to amount to. What has happened to the flexibility in the rules alluded to at the conference and in correspondence with Dr John Wood? Is it ever exercised and what does an applicant or the sponsoring organisation have to do to bring it into operation?
The Government have managed to devise a list of reputable colleges to which overseas students may apply without the vires of the application immediately being brought into question. The penalty is, of course, loss of status for the college if the students do not leave at the end of their study period. Is it beyond the wit of our immigration system to devise a similar list of sponsoring organisations in good standing which the local immigration office can hold and with which there can, if necessary, be dialogue in individual cases by e-mail, as my noble friend suggested?
The system as presently operated frustrates charitable activity, which cannot be good, and, in my view, it also fails the test of proportionality. Unsurprisingly, it has now got to the stage where it has given rise to an application under the Freedom of Information Act by angry sponsors who want to know how many invited visitors of this type have actually absconded. The application has not been answered on the grounds that the cost of collating the information exceeded the cost limit specified in the regulations. My last point is: what about this cost limit? Is it so low that even the collation of extensive and readily available evidence is precluded by it or, as is perhaps more likely, is it that the evidence is too scanty to provide convincing support for refusal decisions? I hope that in reply the Minister will be able to give an undertaking that the operation of the Immigration Rules in relation to these charitably sponsored visits will be looked at in a fresh light with a view to devising a solution which will enable them to continue to operate under rules which are reasonable in principle—
Lord Gardiner of Kimble (Con)
My Lords, I apologise, but we are risking not having a full quota for the Minister at the end. There is no slack in the timing.
Baroness Neville-Jones
I apologise. I will finish my sentence. I am sure that the intention behind our legislation was that it should be reasonable.
Lord Berkeley (Lab)
My Lords, I am grateful to the noble Lord, Lord Steel, for obtaining this debate. I am afraid I have to agree with both speakers that this is a shambles and probably just the tip of the iceberg.
I shall talk about UK immigration problems on the cross-channel rail services. It is worth recalling that the Channel Tunnel was built—I played a small part in it—to create seamless travel to the continent. We have somehow substituted for a physical barrier an administrative blockage which is an absurd obstruction to travel to and from the continent.
Starting 25 years ago, you had the juxtaposition of French or Belgian and British immigration at London, Paris, Lille or Brussels. Sometimes immigration checked passengers on the train coming back into this country. That may be fine for those cities with quite big volumes, but now that the operators want to move to the south of France, Amsterdam, Frankfurt and many stations in between, it just does not work. The latest situation is that if Eurostar is running a train from the south of France, going out it is fine—you can get out of this country all right, for the moment anyway—but coming back the train stops at Lille and everybody has to get out with their suitcases, go upstairs, through security and immigration and back down again. The train leaves an hour later. So many more passengers go out than come in by train, which is no great surprise.
The same will apply to Frankfurt, Amsterdam, Cologne, Aachen, Schiphol or wherever we want to go. DB, the German railway, has said that it would like to come to London but it is not going to because it just does not work. That is because, in addition to what I have explained, immigration will not allow you to mix domestic passengers with international passengers. Therefore, if the train is coming from Frankfurt, it cannot carry passengers from Frankfurt to Brussels because they might leave a bomb on the train or have the wrong passport. It is also expected that on every station at which the train stops there should be an immigration officer checking people’s passports, followed by security. What operator is going to fund that? It is totally uneconomic.
The same will apply with HS2. There are supposed to be international services going from places north of London—such as Manchester, Birmingham, Glasgow and Leeds—to Paris perhaps. This will not happen because we will not be allowed to carry domestic and international passengers on the same trains. I can assure noble Lords that there will not be enough people travelling from Birmingham to Paris to fill a complete train—it will need London passengers as well—and I suppose that they will all have to get out at London and go through security and immigration again. This is killing international rail travel. I do not see any way at the moment in which things can change.
I have had several meetings with Ministers. They have been very helpful but they cannot offer any solutions. I have three solutions. The first is very tongue in cheek but it is made on the basis that we will have to be checked going out of the country. I am told that it will be like using an Oyster card, which takes half a second to get through a barrier. A passport check going out will take 12 seconds. Imagine taking 12 seconds to get into Holborn station in the rush hour. The queues will go all the way round the block. We put chips in dogs to make sure that they are rabies-free. Would it not be better if we all had chips and could walk straight through? The Government know everything about us—they spy on our e-mails and so on—so it would not make much difference. So that is my first suggestion. I am not sure that the Minister will accept it but it is always worth a try.
My second suggestion is that we could join Schengen, but, with this Government, that is pie in the sky. The third suggestion is that we check passports on the train. It used to be done, as I have said. I have been told, “Oh, it takes much too long and we cannot get the latest signal that Mr al-Qaeda suddenly might be coming. Five minutes from getting into the tunnel he will get in and claim asylum”. There should be the technology to do this online and on the move reasonably quickly. It is the only thing that will work when coming in and going out. It behoves the Government to develop a system and make it work.
Something needs to be done. The immigration and security services are not achieving anything. Parts of the Conservative Party seem to want total physical as well as economic separation from the continent but, as I have said, it is bad for business and for Britain’s reputation. We must do something about it.
Lord Phillips of Sudbury (LD)
My Lords, I, too, thank my noble friend Lord Steel of Aikwood for this debate. It is couched in extremely wide terms and I may introduce two subjects that no one else may consider come within its purview, but I think they do.
The first thing I wish to say in this short space of time concerns universities and overseas students which, as everyone knows, is a vexed subject at the moment. It is of huge importance for this country in that we have, for our size, the most successful university sector in the world in attracting overseas students, particularly non-EU students. It has quite extraordinary benefits for us, and not only the obvious financial and economic ones. One cannot put a finger on the cultural value of having in our midst these amazing overseas students who bring to us all their particular knowledge, culture, language, arts and so on. Most important are the friendships created by this mingling of British students with overseas students. That has value for the future in terms of one’s personal development, in terms of knowledge and understanding between different cultures and countries, and in terms of affection and friendship, which spills over into all sorts of economic outlets and manifestations.
I put it to the Minister, as it has been put to many other Ministers, that bundling up overseas students at our universities with other economic migrants who are here permanently and equating the temporary, three-year undergraduate to a permanent economic migrant for the purposes of our immigration figures is wrong. It gives a wrong impression and creates unnecessary tensions within this country. I know that the UN has a definition of students that would pull in the temporary, learning immigrant coming to university, but we do not have to use that UN definition for our own internal purposes. Indeed, it is different from the OECD definition. It is a simple but important point. We have not got through the Immigration Bill and I hope that the Government will be moved to exclude university students from its purview in terms of immigration figures.
The other thing that I want to talk about in the three minutes that I have left is the report that came out in February called Tier 1 (Investor Route): Investment Thresholds and Economic Benefits, produced, as it was, by the Migration Advisory Committee under the chairmanship of Professor Sir David Metcalf. It had a brief to look at the economic benefits of these tier 1 immigrants. Most here will know that, under that arrangement, if one invests £1 million, one can have an unlimited right to remain in this country—in effect, becoming a permanent migrant resident in the UK. There is a residence test and you have to spend at least 180 out of 365 days here, but that, as it stands, is the rule.
I put it to the Minister that I think the Migration Advisory Committee did its very best. In its final report it expressed all sorts of reservations about some of the assumptions underlying this scheme, but one thing that it was not asked to do but which I think it is absolutely essential is done before the outcome of its consideration is finalised in any change to the tier 1 scheme is to consider the serious damage to our reputation as a financial centre from the fact that this scheme encourages some of the biggest rogues on earth to come to this country. Black money in tens of billions has flooded into the UK because this scheme gives the so-called owner of this black money the right to permanent residency here. One thing is clear from the report: people bring their money here for non-pecuniary reasons. They do so because this is a safe and stable country, it has relatively incorrupt markets and, interestingly enough—this comes on everybody’s list of factors—there is an excellent private education system to which they can send their children.
I have not got long anyhow, but I do not think that one needs to labour the point that the reputation of this country, through all the awful things that have happened in the City in the past six or eight years, is already seriously damaged. In looking at the report of the Migration Advisory Committee, the Government should look at the whole issue of due diligence to make sure that money that comes in is good money and not corrupt money, and is properly owned by the people who invest it here.
The Earl of Clancarty (CB)
My Lords, I, too, thank the noble Lord, Lord Steel, for the opportunity to participate in this debate. I want to talk about a single, shocking and very recent case of the American organist, Cameron Carpenter, a musician with a global reputation, whose performances include one at the Proms here in London in 2012. According to his testimony, which he put on his Facebook page, he arrived at Birmingham Airport at 10.30 at night on Monday last week to prepare for a concert on Wednesday 19 March at Birmingham Symphony Hall. Tuesday was to be his rehearsal time. He intended to come in on the permitted paid engagement scheme. My understanding is that UK Visas and Immigration officials at Birmingham did not know about the PPE scheme. He was held for seven hours by the security firm Tascor in a brightly lit room with interviews and fingerprinting during the night, and at 7.05 in the morning was escorted by armed guard on to the first plane back to Berlin.
At this stage, I think, most people would have given up. However, Cameron Carpenter is a resourceful man, who was—and I quote from his blog—
“consulting all the way”,
through his flight,
“with some of the best management the world has to offer”.
He goes on to say:
“What would become of artists not so fortunate as I am to have such representation, I fearfully wonder”.
Yes, what indeed?
What happened next was that, after landing in Berlin, he had a shower and caught the next plane to Heathrow. At Heathrow he was also detained for a shorter period but finally allowed in on PPE, as, of course, he should have been in the first place.
To my mind, there are three issues here, which are also of more general relevance. The first and most serious is that this is more than the heavy-handed treatment which we know occurs and has indeed been meted out to other artists visiting the UK. This is quite simply abuse. Cameron Carpenter arrived late at night, and was subsequently subjected to all-night sleep deprivation. The question has to be asked why a security force, Tascor, is involved in such circumstances at all. This person is clearly not a terrorist—and indeed it should not matter whether he was in the right or not. This is abuse that should not be happening to anyone who has been detained. Has this become a part of Britain where we have thrown away the principle of innocent until proven guilty, where, as long as you remain detained and beyond, you are treated as a criminal? Well, the answer is, of course, yes.
In my estimation this is unacceptable, and it raises questions about accountability. The Minister may not be able to give me the answer now, but I would request a Written Answer, placed in the Library about who is precisely responsible for what and accountable to whom, including Tascor’s relationship to the new immigration bodies at each stage of such a process as I have described. This is an important matter that needs to be sorted out urgently.
Secondly, there is the question of competence—or rather incompetence. The Minister may recall the debate we had just over three years ago, which he answered, where a real concern was expressed about the repeated poor treatment of artists visiting or trying to visit this country. The Manifesto Club, English PEN and others worked hard to have a change in the system, and we were pleased that the Government responded to these concerns with the introduction of PPE outside the points-based system in 2012. But this was two years ago. By April 2012, UKBA officials at every single port of entry should have been fully apprised of the scheme. I ask the Minister when border officials will be properly informed about PPE.
Finally, there is the matter of our reputation on the world stage. That a world-renowned artist has been subjected to this form of treatment is an absolute scandal in itself, although Cameron Carpenter’s experience, unfortunately, does not exist in isolation. As we know, there have been numerous incidents in recent years, including the case of the Sachal Jazz Ensemble, which the noble Baroness, Lady Smith of Basildon, raised in an Oral Question in December. But there is also a basic, bureaucratic stupidity about this, which UK Visas and Immigration must address. A couple of minutes on Google will tell anyone who Cameron Carpenter is and what his status is.
In the Government’s favour—and I am very grateful in this respect for the conversations I have had with the noble Lord, Lord Taylor of Holbeach, and those conversations that I and others have had with the Home Office—I appreciate that we are in a period of transition. I hope very much that the Government can promise that there will be significant change for the better, and that this kind of unacceptable treatment will be consigned to history.
The Lord Bishop of Chester
My Lords, I associate myself very closely with all that has been said, although the second half of the contribution from the noble Lord, Lord Phillips, focused a bit too much on mammon for my level of expertise. However, I take him as an authority on that aspect. The introduction the noble Lord, Lord Steel, gave, was powerful and shocking in equal measure, and made the case on its own. I can say to the noble Baroness, Lady Neville-Jones, that I am aware of the Hereford situation; indeed, clergy are among those who are able to come under the scheme she mentioned.
I have been looking at the painting up there; we often have it above us in this Room without realising that it portrays an innocent and rather vulnerable girl there who is being misused by the authorities of the day—a rank case of injustice. I have never sat here debating a subject more relevant to “The Judgement of Daniel”, the painting we have had above us all these years.
As the noble Lord, Lord Phillips, says, we could talk about a whole range of things, but I will talk about how this impacts upon the church in particular. The church is an international body, and intrinsically so: Christianity spread through missionaries travelling to other countries. A great deal of interchange has ensued over the years in both directions, which has caused no difficulties but has been a source of mutual enrichment in all sorts of ways. New rules, as well as the inefficiencies and delays in the system, are now making things very problematic.
I will take an example, not from the Church of England but from the Salvation Army. Last year a British Salvation Army minister, if I may call him that, married someone from outside the EU, but could not return with her from his honeymoon because while he was abroad the rules had changed, and the salary—or stipend—he had from the Salvation Army did not meet the £18,000 threshold. The fact that he was given a house and a car was not apparently taken into account, so he was allowed back in but his wife was not. It was an awkward choice; they simply ended up going somewhere else, abroad, to work with the Salvation Army where they were welcome.
Another area of growing difficulty is exactly that of obtaining visas for people who are of relatively poor means themselves to visit the UK under the various partnership arrangements that exist. Most of the 43 English dioceses have active partnership arrangements with churches abroad, often in Africa because of the links between the church in this country and Africa. Again, that provides huge mutual enrichment, and Africa needs that more than anything, not least at present.
In Africa, the level of documentation we take for granted just is not there. People do not always have birth or marriage certificates, or bank accounts so that they can demonstrate that they have the money we expect them to have. It is a different culture—a different world. A visit from someone who comes from one of those overseas churches will typically be paid for in advance, and underwritten and guaranteed by a perfectly reputable body—I hope that the Church of England can still count as a perfectly reputable body—which will pay its debts if necessary. I put the question to the Minister: why should there be any difficulty? What has happened to cause all those difficulties? There should not be a problem. Can the Home Office give us a single example of somebody who has come on one of these short-term visits and who has not gone back when they have been sponsored by one of the mainstream churches? That is the question, exactly in the spirit of the introduction the noble Lord, Lord Steel, made to this debate.
I will finish with an example in a slightly different form, from my own diocese, relating to someone from Zambia. He came to the UK—I think he may have been in the UK beforehand, perfectly legally, but was then sponsored for ordination and studied that here at one of our theological colleges. He and his wife wished him to be ordained and to serve a title of curacy in this country, and I was delighted to offer that to him. He has had a splendid two and a half years’ curacy in one of our parishes. In the mean time, his wife has been training as a nurse, paying overseas fees; the money has been got together and they are paying every penny they can out of his stipend towards his wife’s fees for the nursing course. I hope that, in due course, they go back to Zambia. In many ways, it would be a good thing if they took back the skills that they have learnt here. But, equally, if he wants to spend more time working in this country, that to me is a thoroughly good thing that should also be possible.
However, when we try to get the visa and immigration authorities to tell us what we have to do as a diocese and what the conditions are, we find that letters get lost. My colleague who deals with this is in despair. We write letters but nothing comes back. Time is ticking away and the training curacy of the chap I am talking about is coming to an end. I want to know the conditions under which I can offer him a post. I need some advice on that from the immigration authorities. Even if the advice is that the rules say he cannot stay here under any circumstances, at least that would be an improvement in that we would know where we were. I think that it should be possible for him to be offered the post, providing there are no other applicants, but getting to the starting gate with the authorities is extremely difficult. Part of the problem is that the church does not “tick the boxes”. Clergy are treated as if they are just factory workers or employees of any sort. We need a lot more flexibility, sensitivity and common sense in the system.
Baroness Smith of Basildon (Lab)
My Lords, I commend the noble Lord, Lord Steel, for raising this issue today and for his introduction to the debate. He highlighted the danger of losing sight of the personal or wider impacts that policies may have, particularly when they are ineffective or inefficient or, as he said, impractical or dysfunctional.
This has been a wide-ranging debate in which we have benefited from noble Lords’ expertise. The noble Lord, Lord Berkeley, spoke modestly of his involvement with Eurotunnel, and the noble Lord, Lord Phillips, spoke of his experience of dealing with overseas students. I would like to pick up on a few of the points that were made.
As regards overseas students, I have never understood the reasons for a net migration figure. The fact that many professional people are leaving the UK and there is a big reduction in the number of overseas students coming here and paying fees constitutes a success in the Government’s mind because it reduces the net migration figure. That is a nonsense.
It is good that we are discussing this Question today against the background of the Immigration Bill that is going through your Lordships’ House. One of the issues that concerns me, and which has been brought home in this debate, is the Government’s proposal to abolish the right of appeal against visa decisions and to rely instead on administrative review. The Minister is aware of our opposition to that stance and he understands the reasons for it. It is clear from the reports of the Chief Inspector of Borders and Immigration and from other reports that the Home Office is struggling to deliver a quality service and that there are huge casework backlogs, as we have heard today. Therefore, a system which allows for appeals, and for mistakes to be addressed, is even more important when we recognise the problems in the current system.
I have gone through the relevant figures before and do not want to do so again. However, more than 12,500 asylum cases are still awaiting an initial decision. That is a 17% increase on the previous quarter. The Home Affairs Select Committee revealed a previously undisclosed backlog in permanent and temporary migration decisions of 190,000. I understand that the total immigration backlog at the end of 2012 was some 502,000. The Independent newspaper has calculated that it will take 40 years to clear that backlog.
However, more important than the backlog is the quality of decision-making. The latest statistics reveal that 32% of deportation decisions, 49% of, managed migration appeals—that is, work and students appeals—and 49% of entry clearance applications were successfully appealed last year. We have heard that for some people appeals are impossible—the opportunity to appeal is just not there. Given that most of the appeals allowed are due to simple casework errors in the initial decision-making, to remove the right of appeal and go for administrative review seems to us totally wrong. The Government’s priority should be to improve the efficiency of these initial decisions, make sure that there is no need for appeals and try to ensure that we have a fair and effective system. As we have heard, we are judged on how our visa system operates for people across the world. Mistakes can have serious implications for the individuals concerned.
The cases mentioned by noble Lords raise a number of issues. The noble Lord, Lord Steel, referred to a particularly pertinent issue concerning a private company undertaking such checks—the same issue raised in the case referred to by the noble Earl, Lord Clancarty. I am curious as to the standards that the Government expect private companies to adhere to, and whether they are open to the same checks and monitoring that they would have been had they remained government agencies.
We have had some powerful examples of what seem to be incredible and unreasonable decisions that have been hard for noble Lords to understand. The Minister could take away from today how many of these cases are known to noble Lords personally and how many other noble Lords and members of the public can give similar examples. I have dealt with two similar cases which I find incredible. One is a small business man known to me personally. His wife has been applying for leave to remain for some time. I have confirmed that I know it to be a genuine existing relationship. They have a child. He has been back and forward to get a decision made. The latest news is that they have given her indefinite leave to remain because they have lost the documents, but she has not heard anything about it yet, so that poor family is living in limbo.
A friend of mine who has businesses in this country and in India wanted to bring the man who cared for his father when his father was dying over for a holiday to thank him. Immigration did not understand why he did not have enough money in the bank. He had a job, a home and family to go back to, but he did not have enough money in the bank. Every time he appealed against the decision, he had to make a journey of several hundred miles. There has to be some humanity, some practicality and some common sense in our decision-making.
To come back to the point made by the noble Earl, Lord Clancarty, I am also aware of the case of Cameron Carpenter. It worries me enormously that people acting as immigration officials on behalf of the Government do not seem to know what permitted paid engagement is. An important point raised by the noble Lord, Lord Steel, was that our reputation could be damaged by incompetence and the cost to the system. That is the message that we should take from today: we want a fair, efficient system and one that works in our interest. There are some wise decisions and some wacky ones, such as chipping us all as we leave the country, but I hope that the Minister will assure your Lordships today that he will give all those matters his full consideration.
Earl Attlee (Con)
My Lords, I start by thanking my noble friend Lord Steel for initiating this Question for Short Debate. It is vital for the security and prosperity of this country that we have a visa operation which is effective and transparent.
The subject for this debate is quite wide-ranging but I have very good advice. As we have heard, it will take some time completely to fix the system but I think it is important that we acknowledge the progress that has been made since we took the decision to scrap the UK Border Agency almost exactly one year ago. The international visa operation, as many, including the chairman of the Home Affairs Select Committee, have recognised, is working well. Our standard service compares favourably with those of competitor countries but I accept that the system is not error-free. Last year, we processed almost 2.5 million applications overseas. The average processing time was seven and a half days—well within the service standard. This is despite significant rises in demand from some of our key growth markets. For example, last year in China applications rose by almost 40% on the year before.
We are also increasingly leading the world in the provision of high-quality tailored visa services. For example, we now offer priority three-to-five-day services in 70 countries, which will be expanded to more than 90 by the end of the year. We have also introduced a same day, super-priority service in India, which will be rolled out to China this summer and other countries later this year.
The Committee should be aware that none of this is at the expense of security. In the past year, we have interviewed more than 100,000 people applying to come to the UK as students to check that they are genuine and have the required language skills. I will say more about the speech of my noble friend Lord Phillips in a moment. We are also doing more detailed checks, including sharing details with other government departments, such as HMRC, to deal with those applicants who seek to abuse the immigration system.
This is not only overseas. We are also increasing interviewing and the checks that we do in our in-country operations. This is the part of the business where we have had the biggest problems in the past. Under the UK Border Agency, sadly, a lack of proper planning meant that there simply was not enough resource in place to deal with the level of work coming in. A lack of proper performance management arrangements in business areas meant that this was not spotted until it was too late, leading to the build-up of backlogs. The UK Border Agency’s closed, secretive and defensive culture then meant that Ministers and Parliament were not told the full extent of these problems early enough.
All of this, I am pleased to tell the Committee, is changing. The Government’s decision to scrap the UK Border Agency’s agency status means that UKVI sits in the Home Office and reports directly to Ministers. We have also brought in a completely new leadership team, led by Sarah Rapson, who was previously the chief executive of the successful passport service. It is instilling a much greater grip throughout the business and is committed to creating a culture which is consistently competent, high performing and customer-focused. We are seeing the results of this in performance improvements. Backlogs in temporary and permanent migration are down significantly and we are on track to completely clear workable cases by the end of this month. We have brought in new service standards that are much clearer about what customers can expect. If one was to apply today and complied with the rules one could expect to get a decision within the service standard.
We have also focused on clearing smaller backlogs that previously were not given enough priority. These include MPs’ correspondence, complaints and FoIs where poor performance contributed to a sense that the organisation was neither open nor transparent. We are clearly not yet perfect in the way we respond to these but the situation is improving. At the same time we have made significant service improvements. We have overhauled our same-day premium service centres by extending opening hours and tackling appointment harvesting. As a result, availability has increased and customer satisfaction with the service here is regularly at more than 90%. We have also launched new services such as premium postal and taken steps to tackle issues that customers have complained about, such as the fact that we hold on to their passports while we make a decision, when we do not need to.
There are, of course, still challenges. As we said when we abolished UKBA, it will take many years to completely fix the system. Some of our big challenges are in asylum, appeals and litigation, where we are seeing big rises in volumes. This is driven by world events and the work we are doing to clear backlogs and tackle abuse. Dealing with this will be a priority next year and we are bringing in extra staff to do so. We will also be continuing to focus on making sure that we are making consistent and quality decisions about people’s right to come and stay in this country. It is important to recognise that this is not always straightforward and that when making decisions on applications, case workers must carefully consider whether, on the balance of probabilities, the applicant is likely to leave the UK when they are required to do so. I suspect that that may be relevant to the case referred to by my noble friend Lord Steel. It is a matter of judgment. That is why many appeals are successful, because it is a matter of judgment. The caseworker, on his appreciation of the evidence before him, makes a balanced judgment that the applicant is likely not to return home, but when appealed the tribunal decides that it should be granted.
Baroness Smith of Basildon
I apologise for interrupting the Minister but he appears to be saying that the judgment of the caseworker is wrong in so many cases.
Earl Attlee
I am absolutely not saying that it is wrong. I am saying that the caseworker has made a judgment and the tribunal has come to a different one. The judgment they have to make is whether the applicant will return home at the end of their stay, bearing in mind the circumstances. That has to be a judgment call.
Lord Steel of Aikwood
On that very same point, what about my suggestion that the caseworker should make contact with the sponsors to double-check the veracity of their application?
Earl Attlee
I do not think I am able to respond to that question this evening but I will, of course, be writing to all noble Lords, and I will respond on that point. However, this is an issue on which I have been in discussion with officials—fairly vigorously, on my part.
My noble friend Lady Neville-Jones referred to correspondence. We need to ensure that Peers’ correspondence is being dealt with correctly and to look at the specific issues raised. I will write to her, which I am sure is what my noble friend expects. From my noble friend’s experience, she will understand that only Peers and MPs can expect to receive a reply from Ministers.
The decisions made by officials will sometimes lead to situations that people do not like but we have safeguards in place to make sure that they work properly. While there is room for improvement in both the operation and transparency of UK Visas and Immigration, this should not overshadow the fact that we are making real progress. One year on, UK Visas and Immigration is both better performing and more open than what came before.
In the remaining time, I will try to answer as many questions as I can. My noble friends Lord Steel and Lady Neville-Jones raised the issue of bonds and sponsorship. The Government considered during 2013 whether to pilot a bond scheme that would deter people from overstaying their visas. We decided not to proceed. Various considerations must be factored in when considering any such new scheme. These range from administrative complexities through to issues around fairness and whether it would be open to abuse.
Baroness Neville-Jones
I do not particularly favour the bond scheme but I think that the fact of the sponsorship is extremely relevant to an application. My anxiety is that when applications are made, only the financial circumstances of the applicant seem to be taken into account. The facts that all their costs are going to be covered and that they fulfil all the other criteria do not seem to be taken into account adequately so as to let them in. That is my worry: why is sponsorship from a reputable organisation not a sufficient guarantee, and can we not set up a system so enabling it to be?
Earl Attlee
As I said, I will be responding in detail to my noble friend but those are precisely the issues that I took up vigorously with officials.
In respect of the applicant to whom my noble friend Lord Steel referred, the applicant is welcome to make a fresh application at any time and, should he choose to make a further application, I would encourage him to address all the points made in his previous refusal. My noble friend also referred to Malawi. Our overall service overseas is good but we need to look in detail at the points that he raised. I understand his point about the loss of the visa fee but the work in assessing the application has already been undertaken and, if we were to return the fee for failed applications, we would then have to increase the fee for successful applications.
The noble Lord, Lord Berkeley, made important points about international train services and HS2. Perhaps the best way of dealing with this would be if the noble Lord and I seek a meeting with my noble friend Lady Kramer, with me wearing a Home Office hat rather than a DfT hat.
In response to my noble friend Lord Phillips of Sudbury, the Committee will know that we are in the middle of the Immigration Bill. I am personally fully seized of the benefits of students for all the reasons that he gave, not least that of soft power. However, whatever the benefits of students, my noble friend cannot deny that when they are here they require accommodation and public services.
The noble Baroness, Lady Smith, raised appeals with regard to the Immigration Bill. I think we should leave that until the Report stage of that Bill. I am sure that the noble Baroness is looking forward to that stage.
I need to remind my noble friend Lord Phillips that the aim of the policy is to attract the brightest and best students. We continue to review our rules to ensure that we do this while discouraging abuse of all kinds. I am out of time but I will write to noble Lords where I have not properly answered their questions.
House of Lords
Middle East: Syrian Refugees
(10 years, 1 month ago)
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Lord Selkirk of Douglas
To ask Her Majesty’s Government what steps they are taking to co-ordinate with the Governments of Jordan, Lebanon, Turkey, Iraq and Egypt the arrangements for the long-term resettlement in the region of refugees from Syria.
Baroness Northover (LD)
My Lords, the UK has allocated £292 million to support refugees in neighbouring countries. We are working closely with Governments and partners in the region to make sure that the needs of host communities are incorporated into our programmes. We will now complement this aid to the most vulnerable and at-risk refugees by providing sanctuary in the UK, where this is the only realistic option.
Lord Selkirk of Douglas (Con)
I thank the Minister for her reply. Will she accept that there are now more than 1,311,000 children among the refugees in countries next to Syria and that their families are very anxious that their children should not become part of a lost generation? In view of this, will the Minister give support to policies such as the Jordanian Government’s national resilience plan, which involves focusing on areas with a high number of refugees to provide better access to education and healthcare, and to improved water supplies, sanitation and other basic services?
Baroness Northover
My noble friend is right. An estimated 1.3 million Syrian children are now refugees in the region. Under the No Lost Generation initiative, the UK has allocated £30 million to provide protection, trauma care and education for children affected by the crisis. We are working with Jordan to support the host communities and we welcome the Jordanian Government’s national resilience plan as part of an ongoing process of prioritising needs.
Lord Judd (Lab)
Does the Minister agree that the scale of this refugee problem is having profound implications for the populations of the countries concerned, where people see a great concentration on the refugee community, while the deprivations from which they suffer are consequently accentuated? Does she further agree that this presents a very considerable threat to stability in the Middle East and has implications for the durability of any peace settlement between Israel and Palestine? In that context, is it not essential to have a regional approach to policy as well as pragmatic work with countries one by one?
Baroness Northover
The noble Lord speaks from a great deal of experience and he is absolutely right. This is indeed creating a huge amount of instability right across the region, which is why we are looking at it in that light. That is why we are channelling so much support to the neighbouring countries in the region that are hosting so many Syrian refugees. We are acutely aware of the effect on their populations.
Lord Chidgey (LD)
My Lords, more than 2.5 million refugees have registered in neighbouring countries, and the number of internally displaced persons in Syria now exceeds 6.5 million. Taken together, that is a total of more than 40% of Syria’s pre-conflict population. More than half the refugees are children, as noble Lords have mentioned. In the absence of progress towards a political solution, the UNHCR predicts that this refugee population is set to become the world’s largest. Yet, is my noble friend aware that, so far, less than 4% of the refugees have sought safety in Europe? How do the Government therefore intend to respond to the UNHCR’s call for “much stronger international support”, clearly well in excess of the vulnerable persons scheme that began yesterday?
Baroness Northover
My noble friend is right about the scale of the challenge here and about the fact that most refugees have stayed in the region. Many of them, of course, wish to return home when it is safe to do so. That is why pursuing the peace process is the most important element here and why, in the mean time, we have to make sure that we provide as much humanitarian aid as possible. He will know that we have taken in, as of yesterday, refugees from the most vulnerable categories but, clearly, trying to tackle the crisis as a whole has to be our main strategy.
Lord Wright of Richmond (CB)
My Lords, now that it appears that the Syrian Government are increasing their control over much of the country, have we or our partners had any discussions with the Government in Damascus exploring the scope for refugees to return to their homes?
Baroness Northover
It seems to me that a few steps will be needed before we reach such a situation. The first thing is to try to get the Syrian Government to allow humanitarian access and to respect the UN Security Council resolution on humanitarian access. There are many steps that the Government of Syria can take to try to ensure that security in their country is greater and therefore that refugees would be keener to return.
Lord Collins of Highbury (Lab)
My Lords, the refugee crisis is now in its third year, and certainly we are in it for the long term. The impact on host countries is severe, as my noble friend mentioned, and in particular on the political stability of countries such as Lebanon. Does the Minister agree that longer-term funding for host Governments’ authorities is necessary to ensure that their national infrastructure and indigenous populations do not suffer further?
Baroness Northover
The noble Lord is right. As I mentioned earlier, that is why we have a programme for supporting those countries; we recognise the instability caused by hosting all these refugees.
Baroness Uddin (Non-Afl)
My Lords, given the large-scale dispersion, how easy or difficult is it to support those who have been victims of rape as a weapon of war?
Baroness Northover
The noble Baroness will know that my right honourable friend the Foreign Secretary has emphasised this in terms of how we are approaching the Syrian crisis. We are doing a considerable amount—and it is new work—in trying to support those who have suffered sexual violence in this conflict. That is so often the case in such conflicts, and this is one of the first times we are seeing whether we can gather evidence systematically so that cases can be taken and, in the mean time, supporting those who have suffered in this way.
Lord Avebury (LD)
My Lords, is it true that when choosing the refugees who are to come to this country, priority is given to those who are at present located in Egypt and Lebanon, and that Jordan will perhaps not have a share of the numbers? Can my noble friend say any more about the mechanism for selecting candidates to be brought to this country?
Baroness Northover
I am not going to comment on where the refugees are coming from. It is extremely important that they are accorded privacy and that their recovery is aided. My noble friend will know that we are prioritising women and children, particularly those who have suffered sexual violence. I am happy to supply further details of the categories. Therefore, we are looking at the cases on their merit and we will not reveal where these people have come from or where they are going at the moment.
Disabled People: Blue Badges
(10 years, 1 month ago)
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Lord Touhig
To ask Her Majesty’s Government how they plan to ensure that people whose mobility is not impaired solely by physical disability, and their carers, will continue to have access to blue badges for their vehicles when they need them following the introduction of the Personal Independence Payment to replace Disability Living Allowance.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, people who receive a personal independence payment because they cannot walk further than 50 metres will automatically be eligible for a blue badge. However, people who do not meet this criterion may still apply directly to their local authority to see whether they meet any of the other eligibility criteria. Whatever their disability, they may be eligible if it causes very considerable difficulty in walking.
Lord Touhig (Lab)
My Lords, I declare an interest as vice-president of the National Autistic Society. People with autism are having great difficulties in obtaining blue badges as a result of changes to the eligibility criteria associated with the personal independence payment. Will the Minister look at the guidance given to local councils on blue badges, so that we can ensure that people with cognitive impairments can park near the services that they need? Will she also agree to meet representatives of the National Autistic Society, other noble Lords and me, so that we can further this discussion?
Baroness Kramer
My Lords, I say to the noble Lord, Lord Touhig, that I would be very pleased to meet, so we will make sure that that goes into the diary. Your Lordships will be aware that, as the DWP is reassessing DLA claimants for the new PIP benefit, those who do not qualify under the relevant PIP can retain their existing blue badge until it expires so that there is a time period to get into the new programme by applying to the local authority. The department is clarifying its guidance, which is being written at the moment, to make it clear to local authorities that any permanent disability can be physical or otherwise. In other words, it need not be physical. The test is that it causes very considerable difficulty in walking; that is the qualification for a blue badge.
Baroness Seccombe (Con)
My Lords, blue badges are a very precious privilege. For my husband, they were a life changer. Does the Minister agree that there is nothing so irritating as seeing a young, fit person using a blue badge to park illegally, and is there any more that can be done to stop that illegal practice?
Baroness Kramer
My noble friend is absolutely right that abuse of the blue badge system is thoroughly despicable, and we are determined to stamp down on it very hard. This House has played an important role, as my noble friend Lady Thomas of Winchester brought through the House the Disabled Persons’ Parking Badges Act 2013, which enables enforcement officers to operate in plain clothes and to seize badges that are being misused by any person. That is a very significant difference. We have introduced a nationwide database so that enforcement officers can check all UK blue badge details and download a photograph of the holder at the roadside on handheld devices. There have also been a number of other regulatory and administrative changes, all of which strengthen enforcement. At this point in time they are sufficiently new that I do not have figures to indicate how effective the scheme has been, but anecdotally local authorities are informing us that it has greatly strengthened their hand.
Lord Wigley (PC)
Does the Minister realise that the person who is walking away from a car may be the parent or carer of a disabled person who has that need, and should not be subject to that judgment? Does she agree that parents and carers of children with autism or a learning difficulty, who in some cases lack awareness of the dangers of a road, should also benefit from the blue badge scheme?
Baroness Kramer
I have to confess to being slightly confused by the noble Lord’s comment if he is suggesting that carers can use the blue badge when they are not with the person who has the need. The relevant test would be that the person who is in need of the blue badge is indeed there. That is possible thanks to the new mechanisms which have been provided. I am sure that the noble Lord will join me in saying that misuse cheats everyone who needs and deserves a blue badge.
Lord Davies of Oldham (Lab)
My Lords, I am sure that the Minister will agree that the introduction of the PIP has been carried out somewhat chaotically, with people waiting for ages for a decision on their application. Have the Government yet found time to identify the possible number of those who were eligible for a blue badge but who are unlikely to qualify under the new scheme?
Baroness Kramer
I do not have those numbers yet because this is sufficiently new. Currently, more than 2.5 million people hold blue badges and the vast majority of them will qualify under PIP. I should say again that local authorities will make determinations on a case-by-case basis of those people who apply for a blue badge under other eligibility criteria. We will have the information eventually, but the answer is not available at this point in time.
Baroness Hollins (CB)
My Lords, is the Minister aware of the difficulties that the carers of autistic adults face when trying to access regular facilities like shops and doctors’ surgeries if they cannot park anywhere near them? It may be that their son or daughter looks just like any other fit adult.
Baroness Kramer
The guidance that has been provided to local authorities, which will be looking at the applications, makes it clear that eligibility is not limited to physical constraints but can be broadened to include mental health or learning difficulties as the justification. The test will be someone’s ability to walk, and that is a fairly broad terminology.
Baroness Browning (Con)
My Lords, I refer to my interests in autism charities as set out in the register. I was encouraged by the reply given by my noble friend to the noble Lord, Lord Touhig, but can she confirm that the legislative link between the higher rate of DLA and the blue badge has now been broken as far as autistic people are concerned? In renewing or revising the guidance to local authorities, can she confirm that no autistic person will be put at a disadvantage under the new scheme as compared with the old one?
Baroness Kramer
I have to say to my noble friend that the scheme is different, because the test is now related to walking rather than to the benefit that underpins it, except for the, frankly, fairly substantial category of people who are eligible for PIP and who cannot walk for the relevant 50 metres. It is different in character, but it will be for local authorities to identify where the difficulty in walking exists. As she will know, there are some autistic people for whom this is not an issue, while there are others for whom it is. Making the distinction will fall to local authorities.
Energy: Green Deal
Lord Greaves
To ask Her Majesty’s Government what progress is being made with the Green Deal.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, more than half a million homes so far have received energy efficiency improvements as a result of the coalition’s pioneering Green Deal and the energy company obligation programmes. We expect this figure to grow substantially as the programme progresses and the Green Deal market continues to expand.
Lord Greaves (LD)
My Lords, most of those improvements have come from the ECO scheme. By the end of February, some 163,000 Green Deal assessments had been made, but only 1,754 Green Deal work plans were either in progress or had been completed. That is a take-up rate which my right honourable friend Ed Davey has described as “disappointing”. Do the Government agree that the Green Deal is too complicated, is being poorly promoted, and is beset by the number of cowboy operators who are hovering around it pretending to carry out government schemes? What are the Government doing to get this scheme off the launch pad?
Baroness Verma
My Lords, I disagree with my noble friend that the scheme is not working. He will be aware that this is a 20-year programme and that we are learning more as it rolls out. We have listened carefully to industry and consumers, and as a result we have streamlined the Green Deal. We have brought in some online home energy tools to better guide consumers and we are providing advice through the Energy Saving Advice Service to help people find local offers. Further, we have supported the Green Deal Finance Company in its work on simplifying the financing process. There is a lot going on, so I disagree with my noble friend that the scheme is not working. It is just taking a little time to ensure that people understand the benefits of the Green Deal.
Lord Forsyth of Drumlean (Con)
My Lords, has my noble friend seen the announcement this morning by SSE, one of the major utilities, which has decided to implement the declared policy of the Opposition and freeze electricity prices to 2016? Would she like to comment on the consequences, which are the loss of 500 jobs and the cancelling of a number of investment projects? Is that not a glimpse of the future were we to get a Labour Government: lost jobs, lost green projects and lost investment in our country?
Baroness Verma
My noble friend makes some important points. He raises the fact that energy companies, if we work with them, will recognise that competition in the marketplace is driving them to adjust the way they price. If we listened to the party opposite I think we would have even fewer than six companies.
Lord O'Neill of Clackmannan (Lab)
How much have the Government spent on promoting the Green Deal, to the satisfaction of 1,754 people as of the end of last month?
Baroness Verma
My Lords, more than 500,000 measures have taken place. The noble Lord, Lord O’Neill, expects a 20-year programme to produce an overnight success. This Government have decided to adopt long-term plans. Unlike the party opposite, which for 13 years refused to invest in the energy sector, this Government have a plan and have introduced the Energy Act, which has put renewables and low-carbon fuels on an equal footing alongside fossil fuels.
Lord Teverson (LD)
My Lords, does my noble friend agree that energy efficiency, particularly in households, is the best and most cost-effective way forward for reducing carbon emissions and lowering energy bills in the longer term, and that it is therefore important that the Government stick with the Green Deal, make it work, learn and make it happen?
Baroness Verma
Absolutely. My noble friend is right to raise that issue. Energy efficiency measures are there to ensure that we reduce costs to the consumers. I come back to the point that this Government have taken some major steps to ensure that there is investment within the sector and in energy efficiency measures. I would like to know what the party opposite would do. Would it put back the £50 that this Government have taken off?
Baroness Worthington (Lab)
My Lords, it is clear that, even in opposition, we are setting energy policy. Government statistics show that in February only 33 new finance deals were taken out. The problems with the Green Deal are getting worse, not better. Does the Minister agree that it would be helpful if the Prime Minister, rather than using instability in Ukraine to talk up shale gas, were to put more effort into promoting energy efficiency via the Green Deal, which can immediately reduce our demand for gas?
Baroness Verma
My Lords, the party opposite really does not get long-term investment in the energy sector. To bring Ukraine into a Green Deal question is a little far-fetched.
The Countess of Mar (CB)
My Lords, does the noble Baroness agree that the homes that would benefit most from the Green Deal are largely owned by elderly people who do not have a long-term view because they are probably not going to live long enough to make the repayments? How are they going to deal with that problem?
Viscount Ridley (Con)
My Lords, has my noble friend shared the same experience as me at the weekend: the telephone ringing at lunch time and an automated message telling me that the Government want to give me money to prevent climate change through the Green Deal?
Baroness Verma
My Lords, wherever information is coming from, it is a really good deal and I suggest that my noble friend take it up.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister accept some gently given advice that Question Time is for questioning Ministers, not for Ministers to question the Opposition?
Baroness Verma
My Lords, I know what Question Time is for, which is why I come very prepared to answer the questions.
Higher Education: Student Loans
Lord Foulkes of Cumnock
To ask Her Majesty’s Government what action they propose to take over the potential impact on university funding arising from lower than expected repayment of student loans.
Lord Ahmad of Wimbledon (Con)
My Lords, government reforms mean our universities are now well funded, and this has been sustained through the recession. Overall, university income continues to increase, with a high-quality student experience. As has always been the case, estimates of loan repayments will continue to take account of the latest macroeconomic forecasts. It is noteworthy that application rates for 18 year-olds and, in particular, those applying from disadvantaged backgrounds in 2014 are at an all-time high.
Lord Foulkes of Cumnock (Lab)
My Lords, I do not think that the Minister has answered my Question. Will he not accept that university funding is now in some disarray? We have a former special adviser to David Willetts, the Universities Minister, confirming that there is a huge funding gap—just as we warned the Government, when they increased the fees, that they had overestimated the repayments that they would get. On the one hand we have David Willetts, who will not rule out a further increases in fees, and on the other we have Nick Clegg, who said yesterday that there is,
“no need for a further increase”.—[Official Report, Commons, 25/3/14; col. 142.]
We understand that this may be yet another example of the coalition’s conscious uncoupling but will the Minister, for whom we have great respect, take the bull by the horns and make it absolutely clear that the Government rule out any further increase in university fees?
Lord Ahmad of Wimbledon
The noble Lord always adds colour to Question Time. The principle behind our reforms, as I have said already, was to put higher education on a sustainable footing for the long term, coupled with a rebalancing. This was of course, as the noble Lord will know, in response to and following the recommendations made by the noble Lord, Lord Browne. I believe it was the noble Lord, Lord Mandelson, who set up that particular review. As for his question on decoupling and coalition, in coalition, sometimes you agree, sometimes you disagree and sometimes you agree to disagree. That is called healthy coalition government.
Baroness Perry of Southwark (Con)
My Lords, does my noble friend agree with me that, in the days when universities were funded through grant and not student loans, the Government could recoup none of the money that was given in grant? Even if we do not now recoup the whole 100%, we and the universities are still much better off all the time.
Lord Ahmad of Wimbledon
As ever, my noble friend speaks with great experience in this area, and she is of course correct. If we look at the previous quarter, in which the overall university funding pot for this year has now risen to more than £29 billion, and compare it to just a few years ago, when the funding was £12 billion, that shows once again, as I have said already, that our universities can now benefit from sustainable long-term funding.
Lord Morgan (Lab)
My Lords, is not the Government’s policy on university finance a total shambles? First, it costs taxpayers more than the system that preceded it. It also imposes extreme burdens on young students, does not guarantee—contrary to what has been said—a stable level of funding for universities and offends against both social justice and managerial efficiency. Should not the Government, including their unhappy Liberal Democrat component, think again?
Lord Ahmad of Wimbledon
First, I assure the noble Lord that we are all happy here on the Front Bench. I disagree with the noble Lord and he is, in fact, incorrect. The reforms we have brought forward are not returning less, as he suggests, than had we not made them. He should check his facts there. They say that the proof is in the pudding; let me share some facts here. According to the Association of Graduate Recruiters, in February 2014, graduate jobs were up by 10%. BT, for example, announced 1,000 new apprenticeships, including graduate jobs. Employment rates for young people holding first degrees are now at their highest level since the second quarter of 2008. That is a success story.
The Lord Bishop of Chester
My Lords, I share the Government’s view that the higher education sector is in remarkably good health given the recession. However, does not setting fees at £9,000, which is far higher than fees in any other European country, imply a loans system that has its own element of generosity, including a repayment starting point of £21,000, rather than the original £16,000?
Lord Ahmad of Wimbledon
The right reverend Prelate raises an important point. I am sure he is aware that the Government have ensured that those universities that have chosen to raise their fees to the £9,000 limit have suitable access agreements so that those who come from disadvantaged backgrounds are given the opportunity to go to university. The Government’s policy remains that access to a university education should be based not on someone’s ability to pay but on their ability.
Baroness Brinton (LD)
My Lords, will my noble friend the Minister please confirm that no current student has to pay anything under the present scheme and that repayment starts only after they start to earn £21,000 a year? If there is concern about the repayment rates, would it not be more sensible to review these after three years of the scheme running, in 2016, rather than after just one?
Lord Ahmad of Wimbledon
My noble friend is spot on. She mentioned the threshold figure of £21,000. To reiterate, no graduate who earns less than £21,000 is required to repay their loan. She also makes a very sensible suggestion about allowing this new scheme to bed in to allow for a suitable review. This is about people’s futures. I have looked at some of the policies of the party opposite and, at the moment, there seems to be a real vacuum there.
Lord Barnett (Lab)
My Lords, are the Government planning to sell off the debts? If so, what terms are they looking for? Would the amounts be much higher than those written off at the moment, and would there be any weakening or strengthening of the terms?
Lord Ahmad of Wimbledon
As the noble Lord may well know, in terms of the student loan book, we previously had mortgage-style loans, and they were sold off for £160 million. It will, again, be ensured that any future sell-offs always provide value for money for the taxpayer.
Lord Stevenson of Balmacara (Lab)
HEFCE informed institutions last week that it was reducing its grants by almost 6% next year. Will the Minister confirm that, as a result of new Treasury guidance, BIS will have to provide some £50 million a year as a hedge against the currently inflated RAB charge going forward?
Lord Ahmad of Wimbledon
In terms of specific support for research, the noble Lord will recall from the latest Autumn Statement an additional ring-fencing until 2016. This is supported through an extra capital spend of £200 million. Taken together, over four years, we are looking at £1.6 billion in the science and research sector. Once again, I emphasise that the model that was questioned by several noble Lords on the Benches opposite would have been the same had we retained the £6,000 fee, and universities would have been in a far worse place than they are.
Immigration and Nationality (Fees) Regulations 2014
(10 years, 1 month ago)
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Lord Taylor of Holbeach
That the draft order and regulations laid before the House on 24 February be approved.
Relevant document: 22nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 24 March
Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2014
(10 years, 1 month ago)
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Baroness Randerson
That the draft order laid before the House on 24 February be approved.
Relevant document: 22nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 24 March
European Council and Nuclear Security Summit
(10 years, 1 month ago)
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The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“With permission, Mr Speaker, I should like to make a Statement on last week’s European Council and this week’s summit in The Hague, which included the first meeting of G7 leaders—without Russia—in almost two decades.
Before I turn to Ukraine, let me briefly update the House on discussions on the economy, on energy and climate change, on the situation in Sri Lanka and on efforts to combat nuclear terrorism.
Our long-term economic plan is supporting the growth of a new trend, reshoring, in which jobs are starting to come back to the UK. A recent report from the EEF, the manufacturers’ organisation, found that one in six firms had brought all or part of their production to UK suppliers over the past three years. That reshoring of jobs is vital because it means that more of the benefits of globalisation can be felt by the British people, so, with the support of the CBI and Business Europe, I argued at the European Council that we could do more to develop reshoring in Britain and across Europe. The Council agreed to encourage that by doing more to cut red tape, attract investment, stimulate innovation and pioneer more work on reducing energy costs, including shale gas.
Secondly, businesses need affordable energy prices to keep pace with their competitors, so we agreed to accelerate efforts to complete the internal energy market and we agreed to improve the energy flow across the continent with more interconnections. On climate change, we want the EU to play a strong leadership role in efforts to secure a global climate deal next year in Paris. That means swift agreement on a target for reducing greenhouse gas emissions in the European Union, and I fully support the 40% target proposed. At the European Council meeting we did not reach full agreement in the EU and further attempts will be made on that later in the year.
Thirdly, on reconciliation in Sri Lanka, President Rajapaksa has failed to address the issue of the past properly, so in the coming hours the United Nations will vote on a UK-sponsored resolution for an international and independent investigation into alleged war crimes. At the Council, I secured the full backing of all EU member states for this approach and it is reflected in the conclusions of the Council. At The Hague I urged leaders from countries as diverse as South Korea, Kazakhstan, Gabon and Japan to support this crucial resolution.
On combating nuclear terrorism, which was the subject of The Hague summit, the meeting reaffirmed our determination to push through reforms of global security systems to ensure that vulnerable nuclear material does not fall into the wrong hands. This initiative, launched by President Obama back in 2010, has led to a remarkable amount of nuclear material being secured and reduced across the world, which should be commended.
On Russia’s actions in Ukraine, I had four clear objectives at these meetings: to secure an increase in the number of people subject to travel bans and asset freezes; to agree specific measures in response to what has happened in Crimea; to develop more clarity on what would happen if Russia were to take further steps to destabilise the situation in Ukraine; and to join efforts to build support for a democratic, successful and independent Ukraine. I want to say a word about each.
As I made clear in this House two weeks ago, if Russia did not engage in dialogue with the Ukrainian Government, or if those talks did not start producing results, there must be clear consequences. As a result, travel bans and asset freezes have been imposed, and last week the European Council agreed to extend these measures to another 12 individuals, bringing the total to 33—broadly the same number as has been imposed in the United States. We have cancelled the EU-Russia summit, agreed not to hold bilateral summits, and decided to block Russian membership of the OECD and the International Energy Agency. In The Hague, G7 leaders agreed that there would be no G8 summit in Sochi and no further participation in any G8 activities until Russia changed course. We agreed that there would instead be a G7 meeting in Brussels in place of the Sochi summit on the same day.
I also pushed hard on the need to reduce Europe’s dependency on energy from Russia. The G7 agreed that Energy Ministers would meet ahead of the Brussels summit, and the European Council tasked the Commission to produce a comprehensive plan for reducing Europe’s dependency on Russia by June. This work is long-term but vital. It requires new gas pipelines, new LNG terminals, more shale gas, more sources from outside Russia and greater connectivity. Above all, it requires political will and I am determined that, although the UK has almost no reliance on Russian gas, we should play our part in this important work.
Secondly, it was important to take specific measures in response to what has happened in Crimea. This was a sham and illegal referendum conducted at the barrel of a Kalashnikov. Both the European Council and the G7 leaders made very strong statements condemning the illegal referendum and condemning Russia’s illegal attempt to annex Crimea in contravention of international law and specific international obligations. Both meetings were clear: the international community will not recognise either. The European Council also agreed rapidly to implement economic, trade and financial restrictions on occupied Crimea, accepting Crimean goods only if they came from Ukraine, not Russia.
Thirdly, both the G7 and the European Council sent a very clear message to President Putin that it would be totally unacceptable to go further into Ukraine. The international community remains ready to intensify sanctions if Russia continues to escalate this situation, and I pushed hard at both meetings to secure greater clarity on what this should mean. The G7 agreed that this could include co-ordinated sectoral sanctions that would have an increasingly significant impact on the Russian economy; and for the first time, the EU Council tasked the European Commission to prepare measures that would have far-reaching economic consequences. Russia has a clear choice to make. It does not have to continue on this path. Diplomatic avenues remain open, and we encourage the Russian Government to take them.
Finally, both meetings reaffirmed the strength and breadth of international support for the Ukrainian Government and their people. It is clear what needs to happen. We need a broad and generous International Monetary Fund package of financial assistance to help the Ukrainian Government stabilise and repair their economy. We need a Ukrainian Government who reach out to the regions and respect the rights of Russian-speaking minorities. We need an association agreement between the EU and Ukraine; that is now signed, but it needs to be backed by reduced tariffs on Ukrainian goods. We need international support for free elections, which enable all Ukrainians to choose their leaders fairly. Britain will support all of these things.
Russia’s violation of international law is a challenge to the rule of law around the world and should be a concern for all nations. We have to be clear how unacceptable it is and to see through these economic sanctions and consequences. Otherwise, we will face similar situations in similar countries with a similar sort of unacceptable behaviour. Britain must continue to play its part in standing up to Russia’s actions, pressing for Russia to change course and helping the Ukrainian people in their hour of need. I commend this Statement to the House”.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful to the noble Lord the Leader of the House for repeating the Statement made in the House of Commons by the Prime Minister. In relation to the formal substance of the EU summit and conclusions, I welcome the steps that were agreed on efforts to complete the internal energy market, to improve the energy flow across the continent and to strengthen EU tax rules on the exchange of information.
On climate change, I further urge the Government, given their previous leadership on the issue, to push the EU to set out its climate priorities before the UN Climate Summit in September.
On discussions regarding the vote of the UN Human Rights Council on Sri Lanka today, could the noble Lord set out what action the Government have taken in recent weeks—and, indeed, in these final days and hours—to secure the support of other states’ council members for this resolution? This matter requires urgency. I would be grateful if the noble Lord gave some idea of the timescale for the international and independent investigation into alleged war crimes.
The main substance of the Statement is on Ukraine. This House is united in outrage at Russia’s annexation of Crimea, an action in direct violation of Ukraine’s territorial integrity and a breach of international law. Russia’s actions have created the most significant security threat on the European continent in decades. This fear has been fuelled by the ever more aggressive rhetoric of Russia in the past few weeks. Like my right honourable friend the leader of the Opposition, I praise the measured response shown so far by the Ukrainian authorities to this act of aggression. I also want to express support for the shared goals set out at last week’s EU Council meeting of isolating Russia for its actions and reassuring our allies and partners in that region.
I shall take the specific outcomes in turn: first, I welcome the signing of the political chapters of the association agreement between the EU and the Ukrainian Government. It was this strengthening of co-operation with the EU, spurned by former President Victor Yanukovych in November, which sparked the current crisis. So it is of course right that the EU should continue to make clear that these agreements are not a zero-sum game between the EU and Russia. It is essential that this agreement, which potentially opens up nearly €500 million-worth of trade benefits to Ukraine, is taken forward. It is also right that the EU now pushes ahead with similar pacts for Moldova and Georgia.
Secondly, it is vital that the international community imposes real costs on President Putin and his key supporters. For this reason, we welcome the agreement at the EU summit on extending the list of individuals targeted by visa bans and asset freezes. Yet, unlike Washington, the EU list avoided sanctions being placed on senior Kremlin figures. Can I therefore ask the Leader to explain the reasons behind this and whether the names of any senior Kremlin figures were put forward for consideration before the final agreement and publication of the EU list?
Thirdly, given that the United States has added sanctions on the bank Rossiya and indicated the economic sectors that may be targeted as part of its stage 3 approach, can the Leader provide details of what any EU measures could involve and to which sectors they would apply?
On the meeting of the G7 and the EU, Labour urged stronger action by the G8. These Benches therefore welcome the decision taken by members of the G7 to suspend their 16-year collaboration with Russia in the G8 group and the decision not to attend the planned G8 summit in Sochi in June. It is also welcome that, this week, the Russian Foreign Minister held talks with his Ukrainian counterpart for the first time since Russia’s move into Crimea. What steps are being taken to ensure that such dialogue continues between Ukraine and Russia in the weeks ahead?
Finally, given that the Prime Minister said this week that Britain and its NATO allies would help bolster the defences of the alliance’s Baltic members which have Russian minorities, can the Leader tell the House what the nature of any such UK contribution would be?
The actions of the whole international community should be designed to strengthen Ukraine’s sovereignty and democratic transition, to impose real costs on the Government of President Vladimir Putin, and to bring all sides together in a meaningful dialogue to de-escalate the situation and find a political solution. As we have said throughout this crisis, in taking this action the Government will have our full support.
Lord Hill of Oareford
My Lords, I am very grateful for the overall tone of the comments made by the noble Baroness the Leader of the Opposition and for the substantive support that she offered. I think that it is important that the Government and the Opposition are completely aligned in our response to this crisis.
I am glad that the noble Baroness mentioned in passing work done on tax transparency. Although the Statement glossed over it, it is in the conclusions of the European Council meeting. There were some concrete steps taken at the Council by Luxembourg and Austria. It is a long-term grind to make further progress, but work is being taken forward in the Council and in the OECD. The European Council represented further substantial progress on that.
On the steps taken by the Government in respect of Sri Lanka, I know that my right honourable friend the Prime Minister has worked extremely hard with a whole range of countries, both at the European Council meeting and at the summit in The Hague, to build support for Britain’s position and backing for the UN resolution. That vote is due to be held shortly and, if it is carried, as we very much hope, it is mandatory that the review to which the noble Baroness referred goes ahead. I do not have the precise timetable yet, but I am sure that it will become clear after the UN Security Council has met. I agree with what the noble Baroness said about the restraint shown by the Ukrainian Government and about the importance of pressing ahead with signing association agreements with Moldova and Georgia. Alongside the work we are doing with Ukraine on this, it is important to do the same with Moldova and Georgia and on an accelerated timescale.
The difference between the names on the EU and the US lists of travel bans and asset freezes boils down to the EU approach, which is that the individual named on the list has to have a direct, demonstrable link with the action taken in Crimea. The EU has to act under that legal process and that is why we have specifically targeted Russian politicians and those with a direct role in Crimea. The noble Baroness asked about the reference to EU sectoral sanctions and what kinds of sectors are being looked at as part of the EU discussions. The EU Council statement talks about there being a wide range of sectors, but the Prime Minister made it clear earlier that these would have to include energy, financial services, trade and arms. The important point is that the Council agreed that the Commission should start work on it straightaway, which was a good step forward. I note and agree with her welcome for the suspension of Russia from the G8.
On her final question, we also welcome, as a positive step, the recent meeting between the Ukrainian and Russian Foreign Ministers. When the Prime Minister met Ban Ki-moon yesterday he urged that further such contacts be encouraged and that the UN should do whatever it can to bring Russian and Ukrainian Ministers together.
Britain is increasing its help to the Baltic states. We are making aircraft available to them for air policing. More generally, we are striving to reassure our partners in Latvia, Lithuania, Estonia and Poland that Britain, like other countries, believes in their membership of NATO and the guarantees we have given them as part of that. We will work with them to secure the future of Europe, as we have done in the past.
Baroness Falkner of Margravine (LD)
My Lords, does my noble friend share my concern about the new Russian nationality law that will give Russian citizenship to all ethnic Russians everywhere in the world? This will have profound implications for not only the Baltic states, which he has mentioned, but the central Asian republics. Although he has touched on the role of NATO, will he assure the House that the Government will now look at very concrete measures to reinforce NATO’s operational and military capabilities across the board?
Lord Hill of Oareford
I take the first point that my noble friend made. I can certainly say that, as part of the whole range of conversations that we are having and the pressure that we are seeking to apply through our involvement in NATO, we will certainly work to keep that pressure up and build as strong an alliance as we can to send the Russians the kind of message that my noble friend refers to.
Lord Stirrup (CB)
My Lords, is it not clear that the worst outcome for Russia would be for it to realise, as the years progress, that it has gained Crimea by losing Ukraine? However, the development of a viable and vibrant Ukraine will be a massive challenge going well beyond issues of funding, important though they are. Did any discussions take place in the EU Council about the development of potential mechanisms to help Ukraine address issues such as corruption, constitutional development and economic development? Have Her Majesty’s Government given any thought to such mechanisms?
Lord Hill of Oareford
The noble Lord made two extremely important points. The first, on the short-term gain of Crimea and the long-term loss of Ukraine and what that means, is what lies behind a lot of Russia’s reaction.
On tackling corruption and the support one can give Ukraine to help it build a more viable future, it is absolutely right that at the European Council and in other meetings the importance of tackling corruption and giving practical help to the Ukrainians to address that problem has been towards of the top of the list of priorities. There is also the question of financial help. We have agreed to the immediate unilateral lifting of tariffs, which should lead to €500 million-worth of trade benefit flowing into Ukraine. Those concrete trade and anti-corruption measures are very much part of our overall response.
Lord Howell of Guildford (Con)
Turning to energy issues, does my noble friend accept that while it makes obvious good sense to build a better infrastructure for energy connectors throughout Europe so that oil and gas can flow and markets can work, we need to be rather careful about allowing too much centralisation and dictation of energy policy at national level by the EU? Is he aware that the net effect of EU policy at the moment is vastly to increase coal burning throughout Europe—including a lot of lignite, which is the dirtiest coal of all—and to raise energy costs for industry to levels that are seriously impacting on jobs and investment? Should we not distinguish between the areas where we need more Europe for physical infrastructure and those where we need rather less Europe to manage a flexible energy policy that does not crucify our industries and create more fuel poverty?
Lord Hill of Oareford
I agree very strongly with my noble friend on that and with the distinction he draws. It is one of the reasons that, when the European Council was looking towards targets for 2030, Britain made very clear its case that any such target does not bind the behaviour of individual member states or constrain their flexibility in how they go about doing so.
The other point that emerged from the discussions, of which I hope my noble friend will approve, is the emphasis on seeking to develop other sources of energy—whether that is shale gas or other developments—which will reduce our dependency, and the EU’s dependency, on Russia, which is clearly very much to be desired.
Lord Soley (Lab)
Can we remind the Russians that they have a duty to protect the rights of those people in Crimea who do not want to accept Russian citizenship, particularly those in the former Ukrainian forces who have been forced either to leave Crimea or to accept Russian citizenship, and also to offer compensation if they are going to make them move? It is an important right which the Russians have accepted in other areas. Can we also remind some members of the UN, particularly China, that no other country will sign up to give up its nuclear weapons if there is a breach of the 1994 agreement that the territory of Ukraine would be respected if it gave up its nuclear weapons?
Lord Hill of Oareford
The noble Lord makes two very important points. The consequence of Russia’s actions is that, in any international relationship of that sort, why would anyone believe its word, given that in 1994 it freely entered into the negotiations that the noble Lord mentioned, which guaranteed the integrity of Ukraine and the future of its nuclear weapons?
Lord Lawson of Blaby (Con)
My Lords, I welcome the Prime Minister’s recognition that it is necessary and desirable to press ahead as fast as possible with the development of the UK’s indigenous shale gas resources, not merely because it will be good for the economy, but on geopolitical grounds because it will lessen the West’s reliance on Russian gas. However, is it not shameful that so far there has been only one exploratory well drilled in this country and that the industry is clear that the reason for the snail’s pace of progress is the mind-boggling bureaucratic complexity of the regulatory system in this country? Is it not time that the Government put their money where their mouth is and sorted this out?
Lord Hill of Oareford
I agree with my noble friend’s point on the contribution that shale gas can make to the geopolitical balance of power and to increasing our collective independence, which I think is absolutely right. I also agree with him about the other benefits that it could bring to the economy, and the sooner we can crack on with it, the better.
Lord McConnell of Glenscorrodale (Lab)
In addition to the issues of government capacity mentioned earlier, there are also long-standing issues here about the relationship between the majority and the minority in Ukraine that were not resolved and are at least partly behind what has happened over recent weeks. Those issues exist also in Moldova and a number of other places in that part of the world. I wonder what the Government are doing in the EU, and perhaps through the OSCE as well, to try and get more urgency into discussions about those conflicts that are in abeyance but are still there under the surface, in order to avoid a similar situation happening elsewhere.
Lord Hill of Oareford
I accept the force of what the noble Lord says, and as I said in my reply to the noble Baroness, Lady Royall, so far as Georgia and Moldova are concerned, one of the ways in which we are seeking to take that forward and accelerate it is by bringing forward the signing of the accession agreements. I very much take the noble Lord’s point and we need to address that in every way we can.
Baroness Williams of Crosby (LD)
May I ask the Minister two quick questions? First, with regard to the Nuclear Security Summit, can he say whether there is any movement forward whatever in the negotiations on the Fissile Material Cut-off Treaty? Clearly that is a crucial part of controlling nuclear materials—where they go and so forth. Secondly, on the issue of the rather more generous procedure that we have adopted towards giving visas—particularly for people who are interested in doing business in this country—will the Home Office take a very careful look at those visas if they are being offered to Russians, to make sure that they are not Russians who have supported the things that the Russian Government have recently done?
Lord Hill of Oareford
On the second point, I am sure I can give that undertaking in the sense that clearly the Government want to make sure that whoever ends up being on their list of those proscribed under the travel bans or has their visa turned down, that is an appropriate list and we will consider all the people who might potentially be on it. I do not think that the last word on this subject has yet been spoken, so I take that point.
On my noble friend’s first point about the detail and progress the Bill has made in the Hague on nuclear matters, I will need to talk to brainier people than me to find out whether the specific point she raised was indeed covered and whether any progress was made there. As I understand it, the main focus of the discussions was on seeking to take further steps in tackling potential terrorism threats. I will follow up that point and perhaps we can have a word once I have written to the noble Baroness.
Lord Elton (Con)
My Lords, the summit has rightly concentrated on containment at this stage, but clearly prevention would have been very much better. Should we not learn very quickly the lessons that have brought this to pass before Russia exploits the protection of new-citizen ethnic minorities in other neighbouring states? Can my noble friend therefore tell me and the House when Her Majesty’s Government were first aware of the threat that this takeover was going to take place? Secondly, what steps did Europe and this country take during the vigorous courtship of the Ukraine in trade and economic terms to discuss the terms of this with the Russians and reassure them as to the extent of our intentions? Finally, the whole of history shows that the only way to prevent the use of military force by an aggressor is to have an equivalent or nearly equivalent force oneself and to be seen to be ready to use it. The way to prevent a war—to not have to fight a war—is to be evidently ready to do so. Are these lessons being taken on board?
Lord Hill of Oareford
I can tell my noble friend that those lessons are being taken on board, which is why the range of measures that has been taken has been taken. The Government have sought a balanced and phased response to the situation as it has developed, ratcheting up the pressure over time as necessary. On the build-up to the current situation—what happened at which point—the truth is that it developed extremely quickly, and the EU and others have had to respond equally quickly as it has developed. However, I understand the burden of my noble friend’s points; that is why NATO and the security that it can offer are so important in this context.
Lord Pearson of Rannoch (UKIP)
My Lords, further to the answer that the noble Lord has just given, is it not true that Russia had made clear for years that it could not and would not tolerate Crimea coming under the sphere of influence of the European Union? Was Brussels therefore wise to offer Ukraine an eastern association agreement, complete with defence aspects? Surely the EU has thus caused the present crisis, and not Russia.
Lord Hill of Oareford
I know that the noble Lord is often ready to blame the EU for a whole range of matters. However, it is hard to argue in this case that the situation that has developed, with the aggression shown by Russia and its breaking of international treaties freely entered into in the past, can be laid at the door of the EU.
Baroness Royall of Blaisdon
My Lords, the noble Lord, Lord Pearson, was not in the Chamber for the Statement that was given by the Minister at the beginning. It is therefore a bit rich that he should come in.
Lord Jopling (Con)
My Lords, on the importance of making available non-Russian sources of hydrocarbons, what thought was given to and what proposals made about the importance of Georgia? If we wish Kazakh, Azeri or Caspian hydrocarbons to be available to Europe, it is essential, bearing in mind the impasse between Azerbaijan and Armenia, that new pipelines through Georgia are made available so that those hydrocarbons can flow without going through Russian territory.
Lord Hill of Oareford
My Lords, there were certainly a lot of discussions about how to address the kind of issue to which my noble friend refers—how to improve the flow and tackle some of the problems by increasing interconnections. On the specific examples that my noble friend gave, I would be very keen to talk to him. Perhaps we can discuss that further.
Lord Goodhart (LD)
My Lords, as I said to Members of your Lordships’ House some days ago, Russia should be allowed to support Crimea. Crimea is a body that has been separate from Ukraine for more than 200 years, and Ukraine has dealt with it in a careless and unsatisfactory way as a part of that country. Ukraine took over patronage of Crimea from Russia only in the 1950s. In all reality, Crimea has been entitled to take part in what has happened in the past few days, and it should be allowed to continue to do that.
Lord Hill of Oareford
I have to say to my noble friend that that is not the view of Her Majesty’s Government or of most people in this House. Whatever the history—and I accept my noble friend’s point about the history of the region—the fact is that agreements entered into freely under international law have been flouted. The basis for the so-called referendum was illegal and illegitimate, so I am afraid I cannot accept the point that we can allow these things to stand.
Lord Stoddart of Swindon (Ind Lab)
My Lords, instead of expelling Russia by calling a special meeting of the G7, would it not have been wiser to call a special meeting of the G8 and allow the Russian President, Mr Putin, to give his point of view and be challenged on it? Secondly, was it wise for the European Union to intervene in the uprising or demonstration—call it what you will—handing out goodies and European flags? Was that not likely to frighten the Russians, who believe that the European Union has expansionist policies to the east? Finally, will the EU prevail on its friends in Ukraine not to threaten to reactivate its nuclear weapons and ask Ms Tymoshenko not to threaten to obliterate Russia?
Lord Hill of Oareford
The Ukrainian Government have generally behaved with remarkable restraint during the situation and I think the boot is on the other foot. On the noble Lord’s point about the G8—or the G7—inviting Mr Putin along, asking him to give us the benefit of his views and trying to talk him out of them, would not have been a very productive exercise. It is not the case that the EU and the US bilaterally, and countries individually, have not been seeking discussions with the Russians. Throughout this process, while seeking to apply pressure, we have also sought to provide as many routes as possible towards de-escalation, which is why we have been very keen that talks should take place. However, given what has happened, the idea that the way forward is to send out messages that we consider the behaviour of President Putin and Russia acceptable, and will sit down and talk to him as though nothing has happened, is not a realistic option.
Defence Reform Bill
(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
16:55 - Division on Amendment 8 - Ayes: 179 / Noes: 281 - Amendment 8 disagreed.
Lord Rosser
“Annual report to Parliament on Army’s fighting power
(1) The Secretary of State shall lay before Parliament on an annual basis a detailed report on the Army’s fighting power and shall include an assessment of progress made and any setbacks incurred in implementation of the Army 2020 plan.
(2) The first of such reports shall be laid before Parliament in January 2015, no later than 31 January 2015.”
Lord Rosser (Lab)
My Lords, the parents of this amendment are the members of the House of Commons Defence Committee, the majority of whom are government MPs. At the beginning of this month the Defence Committee published a report, Future Army 2020, and its conclusions were hardly a ringing endorsement of either government policy or government competence on this issue. Referring to the Government’s Army 2020 plan, the report pointed out quite fairly that it departed significantly from the announcements made in the 2010 strategic defence and security review. It went on to say that the Defence Committee had,
“considerable doubts about how the plan was developed and tested, and whether it will meet the needs of the UK’s national security”.
It expressed surprise that such a radical change to the Army’s structure, reflecting a reduction of 12,000 personnel from that announced in the 2010 SDSR, had not been discussed at the National Security Council and added:
“Even if the overall strategic vision had not changed, as the Government claims, the military ways and means of that strategy were considerably altered under Army 2020”.
The committee said that its principal concerns were twofold. The first was that the Ministry of Defence,
“has failed to communicate the rationale and strategy behind the plan to the Army, the wider Armed Forces, Parliament or the public”.
The second concern was that,
“the financially driven reduction in the numbers of Regulars has the potential to leave the Army short of personnel particularly in key supporting capabilities until sufficient additional Reserves are recruited and trained”.
The committee pointed out in its report that the Secretary of State for Defence accepted that,
“Army 2020 was designed to fit a financial envelope”,
and expressed its concern,
“that this consideration took primacy over the country’s abilities to respond to the threats, risks and uncertainties contained in the National Security Strategy”.
It expressed concern, too, at being told 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”,
and called for an explanation of the,
“apparent lack of consultation and involvement of the Chief of the General Staff in the decision-making process that has affected his Service so fundamentally”.
Such was the committee’s concern, including over lack of,
“evidence of an active experimentation programme in the development and implementation of Army 2020”,
that it has called for the Ministry of Defence to provide,
“an assessment of how the Army 2020 plans will affect the ‘Fighting Power’ of the Army providing comparable assessments of both current fighting power and projected fighting power following the completion of the Army 2020 plans”.
On top of that, the committee came out with this conclusion:
“We remain to be convinced that the Army 2020 plan represents a fully thought-through and tested concept which will allow the Army to counter emerging and uncertain threats and develop a contingent capability to deal with unforeseen circumstances. The MoD needs to justify how the conclusion was reached that the Army 2020 plan of 82,000 Regulars and 30,000 Reserves represented the best way of countering these threats”.
The Defence Committee has said other things, also stating in its report that it remains,
“to be convinced by, the Secretary of State’s explanation as to why the reduction in the Regular Army should not be dependent on the recruitment of the necessary number of Reservists. The financially driven reduction in the number of Regulars has the potential to leave the Army short of personnel in key supporting capabilities until sufficient Reserves are recruited and trained”.
That concern is borne out by the trained strength and recruitment targets for the reserves contained in the report.
Continuing, the committee expressed concern,
“that the Army 2020 plan would unravel in the face of any further MoD budget reductions or further reductions in Army personnel”,
and concern that,
“the Defence Planning Assumptions are adequate to ensure the UK’s national security”.
It went on to express,
“little confidence in the Government’s capacity to rapidly expand Army numbers should the need arise”.
Since the Government said that Army 2020 had to work and that there was no plan B, the committee continued by saying that the Government,
“owe it to the Army to ensure it does work, but, crucially, if the situation changes, then the Government must be prepared to respond decisively by providing additional resources in order to guarantee the nation’s security”.
The committee was still not finished, but went on to comment on the Government’s amendment taken in Committee in this House:
“While we welcome the Government’s commitment to publish more data on the Reserves and to put into statute a requirement on the Reserves Forces and Cadets Association to produce an annual report on the state of the Reserve Forces, we believe the Government should go further and give a commitment to provide regular updates to Parliament on progress on all aspects of the Army 2020 plan. Oral and written statements while helpful are not sufficient; a detailed annual report on the Army’s Fighting Power should be laid before Parliament setting out progress and setbacks in implementing the Army 2020 plan. The first of these reports should be laid before Parliament in January 2015 … before the 2015 General Election and to inform the 2015 SDSR”.
The purpose of this amendment is to give effect to this conclusion reached by the House of Commons Defence Committee.
There can be no doubt about the magnitude of the changes under the Army 2020 plan. The Army 2020 document itself described the Army 2020 construct as representing,
“a fundamental and imaginative break from the way in which the British Army is currently structured”,
and said that the change was,
“as significant as any seen over the last fifty years”.
Neither did General Wall, Chief of the General Staff, dispute that the plans were radical: indeed, he agreed that they were when he appeared before the Defence Committee.
The government amendment which was introduced in Committee is now Clause 47 of this Bill. The Government had no problems agreeing to annual reports by each reserves force and cadets association on the capabilities of the volunteer Reserve Forces in relation to the enhanced duties that are being placed on the members of those forces being prepared and sent to the Secretary of State and for the Secretary of State to be required by law to place a copy of each report before Parliament.
Therefore, there ought to be no reason why the Government, as now called for by the Defence Select Committee following careful scrutiny of the future Army 2020 plan, should not also agree to provide Parliament with a similar annual report on progress on all aspects of the Army 2020 plan, with its significant changes in the future role and structure of the British Army. The report, of course, would be about the Regular Army as well as the integration of the Reserves with the Regular Army. It seems rather odd that Parliament should be provided with annual reports about the Reserve Forces and their capabilities but not receive an annual report covering the position and progress of the Regular Army which, under Army 2020, is undergoing significant change, about which the Defence Select Committee has expressed real concerns and doubts in respect both of its implementation and its implications. I beg to move.
Lord King of Bridgwater (Con)
I have some sympathy with the amendment moved by the noble Lord. I think it is very important indeed. We know that the recruitment of reservists did not get off to a magnificent start and we hope that further steps are going to be more effective. We have to watch it extremely carefully. I noticed that one proposal is to encourage those leaving the Armed Forces—the regulars—to become reservists in this case. There are some difficulties for regular serving people moving into civilian street and trying to get jobs if they say, “I am liable to go away for six months at any time”. It is not the best way to encourage a prospective new employer to offer you an opportunity. The Government have in a sense created their own problem. If the economy is improving, as we hope it is, and if employment opportunities are improving, as we hope they are, that might not make it easier to attract more reservists or to recruit people for the Armed Forces on a regular basis. Therefore, whatever one may have thought about this, recent developments in eastern Europe do not encourage one to think that this is the time to slim down on defences any further than we have done. I support the idea that we should keep a close eye on the matter and I think that the points made by the noble Lord were fair. We should pay attention to what may have been a valedictory dispatch from James Arbuthnot as chairman of the Defence Committee. I may be wrong, but I think he is proposing to stand down from that position. He has done excellent work and this may be his last report.
Lord Palmer of Childs Hill (LD)
My Lords, the amendment moved by the noble Lord, Lord Rosser, raises an important point. Despite a lengthy explanation, the point is whether an annual 2020 plan would help. I have some questions for my noble friend the Minister. What sort of manpower on an annual basis would be needed to prepare such an annual report and would that have any effect on the use of our fighting manpower? Will he also comment on how much information is already in the public domain? That point was mentioned by the noble Lord, Lord Rosser, who said that the information is available but not in a complete format. Perhaps my noble friend can say whether such an annual report, if it showed deficiencies, would aid our enemies rather than the country. I am all for transparency but we are talking about the defence of the realm.
Lord Craig of Radley (CB)
My Lords, I have one very small comment. It would seem to be quite wrong to restrict such an annual report to the Army. It would be necessary, if such an approach were to be adopted, for the report to cover all three services in full.
Lord Ramsbotham (CB)
I absolutely agree with my noble and gallant friend Lord Craig on that point. On reading the Defence Committee report, Future Army 2020, I was concerned to note two statements:
“We are surprised that such a radical change to the Army’s structure … was not discussed at the National Security Council”,
and,
“We note that the Secretary of State for Defence accepts that Army 2020 was designed to fit a financial envelope”.
The financial envelope includes not just the Army but the other two services. If we look at history, an annual debate was held in both Houses on the estimates for the Navy and the Army. We are therefore putting back history, as it were, if we have an annual estimate. Particularly in this case, I note the suggestion that the first discussion should be in January 2015 because, of course, when the strategic defence review 2010 was introduced it was clear that its achievement was dependent on the money that would be available in 2015. Looking around, it seems pretty obvious that that amount of money may not be available—in which case, all three services will have to face a review of the current plans.
Lord Hamilton of Epsom (Con)
My Lords, I very much echo the sentiments of my noble friend Lord King. I think there is a general feeling that in the latest cutbacks in the forces the Army seems to have taken a rather greater cut than the other two services. Considering that the Army has been deployed almost continuously since the Troubles began in Northern Ireland in 1969, one has slightly to question the wisdom of the Army seemingly taking rather more punishment than the other two services.
However, I do think that the Opposition have a bit of nerve in tabling this amendment, which somewhat echoes the amendment withdrawn by the noble Lord, Lord Dannatt, because, at the end of the day, we are paying now for the legacy that this Government inherited when they took power at the beginning of this Parliament. If you have £40 billion of procurement that has not been funded, you obviously at that stage have a serious problem. Something went badly wrong. When the aircraft carriers were ordered by the previous Government the roof had fallen in on the economy and there was clearly no money to pay for them. It does not matter whether they were a good idea, the money was not there and the Defence Council went ahead and ordered them. For some extraordinary reason, there was no ministerial override from the Permanent Secretary saying that the money was not there. That strikes me as a very serious shortcoming in the way in which our affairs are being run. Let us face it, there is always a temptation for politicians to order things that they cannot afford. On the other hand, we look to our civil servants to preserve the integrity of the finances of the department, and that did not seem to happen. I consider that the Army is suffering from some very bad decisions that were taken in the previous Parliament and the legacy of an overhang of unfunded procurement. Savings had to be found somewhere; and it is the Army. It is extremely regrettable that the Army has to take the punishment in this way.
Lord Davies of Stamford (Lab)
My Lords, I was not intending to intervene in this debate but feel that I must, in order to correct some of the myths—which is a polite way of putting it—just purveyed by the noble Lord, Lord Hamilton. I was of course the Minister responsible for defence reform in the last three years of the last Government and, indeed, possibly the Minister to whom the noble Lord was referring when he talked about ministerial responsibility. I must tell him that during that time we always stayed within our annual cash limits. So far as the longer-term financing programme was concerned, we were fully and adequately funded on the basis of a 1.5% real terms increase in the defence budget, which was our policy at the time. It was a correct policy and I wish that it had been continued. It was very regrettable that this Government came in and made excessive cuts in public spending, which drove the economy down. The economy was reviving before we left office. The House will recall that in the first half of 2010 the economy grew, at first, by 0.3% and then by 0.7%. When this Government came in with their excessive spending cuts, the growth fell away again. The economy has been in the doldrums, more or less, ever since. That was a mistake made entirely by this Government.
In my view, the decisions of the previous Government on defence procurement were thoroughly responsible. It was very necessary to provide for two carriers; it is an essential arm in our ability to intervene around the world, irrespective of whether we have friendly powers that are willing to provide us with airfields a suitably close distance to where our troops might be deployed or where we need to bring influence or physical power—kinetic power, if necessary—to bear. That was a right decision.
It was a crazy decision to cancel those aircraft carriers—or, at least, to cancel the carrier strike capability of the nation for 10 years. Of course we need two aircraft carriers, because otherwise we cannot be absolutely certain that when we need an aircraft carrier it will be available and will not be in refit. The decisions of the last Government on defence procurement were thoroughly responsible. They were certainly funded. I am sorry to see that, after all the denials that have been made over the last few years by everybody who actually knows the facts, the noble Lord, Lord Hamilton, should still be purveying a completely untrue account of events.
Lord Stirrup (CB)
My Lords, let me add very briefly my weight to the comments of my noble friend Lord Ramsbotham and my noble and gallant friend Lord Craig, with whom I agree. It may be worth the House reflecting, first, on the fact that the current Chief of the Defence Staff has given his view that his top concern in terms of personnel pressures actually lies with the Navy. Secondly, a few moments ago we were debating the consequences of Russia’s action in Ukraine and the importance of NATO preparedness in the face of that. NATO’s greatest weakness—and, indeed, our own—and Russia’s most likely avenue of attack, should anything go awry, is likely to be in cyberspace. Noble Lords might like to reflect on whether this country is investing enough in that area.
It is clear that this country was previously not investing enough in the defence of the realm and that, in the light of the current situation, it is not investing enough now. As my noble friend Lord Ramsbotham has said, if the Government—whoever forms the Government in 2015 and beyond—do not live up to the requirement to increase defence expenditure in real terms in that year and in each year beyond, our situation will only get worse.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, Part 3 of the Bill makes important changes that have been broadly welcomed by noble Lords. They will help revitalise our Reserve Forces and, along with the other measures in the White Paper, make them feel valued and valuable and, crucially, more usable.
The changes we are making to our Reserve Forces are part of what is known as Future Force 2020, which will provide military capability in a different way from the past to deliver the range and scale of military forces and skills required. The whole of the Armed Forces, not just the Army, is being transformed to meet the likely future demands on defence. There is often a narrow focus on numbers when concerning changes to the Armed Forces. I am therefore pleased that this amendment focuses more on capability.
The changes we are making to our Armed Forces are guided by the defence planning assumptions, the unclassified version of which is published in the SDSR. Detailed assessments of our force structure’s capabilities are undertaken against a range of scenarios, but they are not put into the public domain for very good reasons of national security. In capability terms, the unclassified defence planning assumptions outline that Future Force 2020 will still enable us to conduct an enduring stabilisation operation of up to 6,500 personnel, one non-enduring complex intervention of up to 2,000 personnel, and one non-enduring simple intervention of up to 1,000 personnel at the same time.
The Army will be structured around the reaction force and the adaptable force. The former are high readiness forces that will provide the Army’s conventional deterrence for defence and will be trained and equipped to undertake the full spectrum of intervention tasks. The latter will be geared more towards defence engagement and homeland resilience, but with the ability to conduct combat operations, particularly enduring stabilisation operations. So we have designed a flexible, adaptable and capable force structure that enables the Army to meet likely future threats.
Noble Lords will recognise that there has been considerable debate about Future Force 2020. To focus narrowly on the Army is, I believe, not helpful and misleading, as the noble and gallant Lord, Lord Craig, said. The other two services are vital to the UK’s defence capability. The Army cannot and does not operate in isolation, even in landlocked countries such as Afghanistan. If we are to consider the capability of our Armed Forces, we must do so in the round, collectively. The noble and gallant Lord, Lord Stirrup, made the point very well about the recent comments of the Chief of the Defence Staff and the Royal Navy. We expect the changes we are making under Future Force 2020 to take effect by 2020. We have acknowledged that between coming out of Afghanistan and fully implementing the Future Force 2020 changes, there is some risk attached, but asking for an annual report on the capability of the Army now would be premature and rather misleading. It is only fair to judge the effectiveness of Future Force 2020 from that year onwards.
Recognising the importance of routinely assessing the capabilities of our Armed Forces against the threats and challenges they may face, this Government instigated the five-yearly strategic defence and security review process. It allows for detailed consideration of changes in the strategic environment and the force structure required to counter the threats and issues identified. If we were to increase the frequency of those reviews to a yearly report on the Army’s fighting power, as this amendment suggests, we could reduce defence to a series of knee-jerk reactions, concentrating on only a small timescale and not allowing any kind of strategic decision-making and long-term planning.
The second reason for rejecting this amendment is that while one crucial role for the Armed Forces will be conventional deterrence, including intervention tasks should they be required, the range of tasks we ask of our Armed Forces is much broader. The armed services make a unique and valuable contribution to the security of the UK, her citizens and those around the world, through activities contributing to conflict prevention, defence engagement, involvement in international defence diplomacy and defence alliances, as well as contributing to peacekeeping, security operations such as counterpiracy off the coast of Somalia, and homeland resilience such as assisting with the recent UK flood relief work. The future force has been designed to be able to respond effectively to these international commitments and align them with national priorities. It therefore seems unhelpful to focus a report on the narrow concept of fighting power. A report focused solely on fighting power would not best reflect the development of the whole range of these capabilities.
Also, as the British Defence Doctrine points out, fighting power will always be considered relative to that of other parties. The notion of effectiveness itself will also change over time, as the strategic context and our national objectives change, making comparisons challenging. An assessment of fighting power would also represent a statement of the relative strengths of defence and could play into the hands of those who wish to reduce the security and relevance of the Armed Forces. We would therefore be unwilling to release a public assessment.
Lord Lee of Trafford (LD)
In terms of being open and honest, how is reserve recruitment going at present?
Lord Astor of Hever
I was coming on to that point in response to the point that my noble friend Lord King made.
The final issue that I need to address is the point that was raised by the noble Lord, Lord Rosser: if we are having an annual report on the reserves, why should we not have such a report on the Regular Army? The reserves are a unique set-up: part-time volunteers who juggle work, family and military commitments. In recognising the importance of the reserves and in seeking to revitalise them through the Future Reserves 2020 programme, it was considered important to have an external independent view of how we were doing because the changes impact on reservists, employers, families and communities.
The reserve associations are community-facing organisations which provide an essential bridge between our Armed Forces and the civilian population. An association exists for each of 13 administrative areas of the United Kingdom. They provide advice and support on behalf of our volunteer reserve forces and cadets, work with the chains of command of the Royal Navy, the Army and the Royal Air Force and establish and maintain links with the community. They therefore have the knowledge, skills and experience to report effectively and independently on the Future Reserves 2020 programme. Clause 47 puts that into statute. The reserve associations would not be able to fulfil that same role for the Regular Army, as that is not where their expertise lies.
My noble friend Lord King mentioned the reserves, and that recruiting got off to a bad start. My noble friend Lord Lee also asked about this. In the Ministry of Defence, we have given a lot of time to this issue. We are working hard on it. We have recently increased the bounty to encourage regulars to join the reserves, which was a point which my noble friend also made. Over the past three or four weekends, I have been out to see reserves training in Scotland and different parts of England. I can report that morale is high. The senior officers to whom I have spoken are optimistic that we shall reach the numbers that we have set out, so I am confident. I had organised for the noble Lord, Lord Rosser, and two or three other Peers to visit the recruiting centre in Upavon. We had to cancel that because we had a Statement in the House, but I think that it is in the grid to have another visit there.
My noble friend Lord Palmer asked what manpower would be needed to prepare the report. The answer is a small number. My noble friend also asked what information is already in the public domain. The answer is plenty—the annual report and accounts and the Army 2020 update both cover progress in detail. He asked whether revealing deficiencies might help our enemies. We would not wish to reveal any weakness that may help our enemies, which will and does limit what we can release.
The noble Lord, Lord Ramsbotham, referred to “radical change” that had not been discussed by the National Security Council. I had better write to the noble Lord as I have quite a lot of information here that I am not going to be able to read out.
The noble and gallant Lord, Lord Stirrup, asked whether we were spending enough on cyber. The Government have recognised the importance of addressing the cyber threat to the UK and we have established a joint cyber unit of regulars and reserves.
I hope that I have answered most of the questions, but if I have not I will certainly write. I have set out why I do not believe the amendment should be accepted and I ask the noble Lord to withdraw it.
Lord Rosser
My Lords, first, I thank the Minister for his reply and all noble Lords who have participated in this debate. I am grateful to my noble friend Lord Davies of Stamford for responding to the point made by the noble Lord, Lord Hamilton of Epsom, and do not intend to pursue it any further in the light of the response that my noble friend gave on that point.
A number of concerns have been raised. One is about the potential security implications of producing the report called for in the amendment and, indeed, the report called for by the Defence Select Committee. Since the report would be prepared by the Government and by the Secretary of State for Defence, one would assume that that in itself was a safeguard against anything being revealed that would put at risk our national security.
The issue was also raised that the report refers only to the Army and not to the other services. Obviously, that was in the light of the fact that this has come from a Defence Committee report which was geared to looking at the Army and Army 2020. Of course, if that is felt to be a major stumbling block, there is no reason at all why the Government—if that is their objection—could not come back at Third Reading with an amendment that included the other two forces. The alternative, of seeing this amendment not go through because it does not refer to the other forces, would simply mean that we end up with no report at all.
It is also worth stressing that the key element of the Defence Select Committee’s concerns was actually on the progress being made on the implementation of the Army 2020 plan. I went through the comments that it had to make at some length, because the comments were geared to real concerns about whether the plan would or could be implemented as intended and what the implications would be if it were. It was in that context in particular that the committee called for reports on the progress of all aspects of the Army 2020 plan.
I feel that I have addressed some of the concerns that have been raised. There can be no security implications when the report will be produced by the Government and the Secretary of State for Defence—they are not going to start revealing things that will be of use to those who are hostile to us. The concerns that have been expressed over the implementation of the Army 2020 plan are over how it is going to be implemented, whether it will be implemented as intended and what the implications will be. Primarily what is being sought are reports updating us on the progress that is being made and, as the Defence Select Committee said, detailing any setbacks there have been.
There are reports about what is happening with the reserves. I do not accept the Government’s argument that that is totally different from what is being asked in respect of the Army 2020 plan. They are both reports on progress being made towards implementing objectives set out for our future Army strength. In view of that, I wish to test the opinion of the House.
Lord Craig of Radley
“( ) An order under subsection (1) to commence Part 1 may not be made before the Secretary of State has published a White Paper and an impact statement on any proposed Government-owned contractor-operated options compared with DE&S as modified by the Secretary of State commencing in 2014.”
Lord Craig of Radley
My Lords, the amendment relates to the commencement of Part 1. During earlier consideration of the Bill, both at Second Reading and in Committee, I and other noble Lords questioned why Part 1 should be enacted now. The Government had made it clear just before Second Reading that they did not intend to proceed with the GOCO model; instead, they would seek to strengthen DE&S—described as DE&S-plus—for the next three years, and maybe more, before reconsidering a GOCO solution.
It was explained that getting parliamentary time for a GOCO Bill at a later date might be difficult. The option of using the quinquennial Armed Forces legislation, due not later than November 2016, as a vehicle for Part 1 of the Bill might be adopted, but it could well be too early. Moreover, few would claim that a GOCO part would be a particularly comfortable companion to the Armed Forces Bill. This must be enacted before the five-year life of its 2011 predecessor runs out. Any delays in its progress through Parliament because of differences over the GOCO part would be best avoided. For these reasons, I now accept that the Armed Forces Bill would not be a suitable vehicle and that the inclusion of Part 1 in this Defence Reform Bill should stand.
However, because a GOCO model would be such a major step change in defence procurement arrangements and the timing of its introduction so undetermined, the Government agreed that both Houses should be given a legislative opportunity to reconsider Part 1 prior to its commencement. The Minister therefore added in Grand Committee the amendment that now forms Clause 50(3). This is a step in the right direction, but it does not go far enough.
Part 1 sets out a range of issues covering the arrangements and responsibilities of a GOCO. It contains a considerable amount of important detail; for example, on transfer of employees, financial provisions and protection of intellectual property rights. These and the rest of Part 1 are clearly essential information for any consortia that might wish to formulate a bid for a GOCO contract. In short, Part 1 is about process; it is not about principle. The principle is whether to replace DE&S-plus—not the current DE&S—with a GOCO. An affirmative resolution, the Government’s present position in the Bill, approves only Part 1 commencement and agrees the technical and administrative processes to be followed by a GOCO. This is surely not sufficient.
Ahead of passing the affirmative resolution, Parliament needs to consider as well the relative merits and risks of proceeding with a GOCO compared to those of what will be an up-and-functioning DE&S-plus. This is sometimes strangely characterised as being match fit. Would that equate to how prepared Chelsea were before thrashing Arsenal 6-0 last week, or to a joiner’s well crafted dovetail joint in a carpenter’s shop? It is not clear to me quite how MoD interprets such a vague phrase.
I turn to the amendment. The Government have acknowledged, in particular in a letter dated 19 March 2014 circulated last week among many of your Lordships by Mr Philip Dunne, Minister for Defence Equipment, Support and Technology, the need for a White Paper and an impact assessment prior to the statutory instrument. Mr Dunne says that the Government recognise that comparison between a putative GOCO and the contemporary performance of DE&S-plus is an essential prerequisite before formally approving commencement of Part 1. However, the Secretary of State has the power to set up a GOCO without the formalities of enabling legislation.
Lord Astor of Hever
My Lords, before the noble and gallant Lord sits down, it may assist him and other noble Lords to know that the Government are prepared to support the amendment in principle and that we intend to bring forward a government amendment, achieving these aims, at Third Reading. I will, of course, respond fully to the issues raised at the end of the debate, in the usual way, but I want to make our intentions clear now.
Lord Craig of Radley
My Lords, that is obviously most welcome news and I thank the Minister and the Government for making it clear at this stage. On that basis, I will be prepared to withdraw my amendment. However, for the purposes of the debate, I beg to move.
Lord Rosser
My Lords, I speak to Amendments 10 and 11. In Committee, we argued that Part 1 of the Bill should be withdrawn, following the Government’s decision not to proceed with their proposal for handing over defence procurement to a company under contract to the Secretary of State. That decision was made following a lack of bidders. Instead, the Government announced their intention to go down the road of further developing the DE&S organisation in the Ministry of Defence by setting it up as a bespoke central government trading entity with effect from next month.
Lord Trefgarne (Con)
I hesitate to interrupt the noble Lord, but I was expecting there to be a separate debate on Amendment 11 in his name. I am a little confused by the procedure that he is now proposing.
Lord Rosser
I understand that I am in order in speaking to the amendments in the group. The two amendments in my name are Amendments 10 and 11, but I will refer later to Amendment 9, which has already been moved. I have been advised that I am not out of order in making the contribution I am making, so I intend to continue.
Lord Trefgarne
In fact, it is open to any noble Lord to ask to have a particular amendment debated separately. I do not propose to do so on this occasion, but it is open to any noble Lord to do so if he wants.
Lord Rosser
I was talking about our view that Part 1 should be withdrawn and about what happened in Committee. The Government declined to withdraw Part 1. We felt, and still feel, that it should be deleted because it provides for an untested and untried major change in defence procurement which the Government do not now intend to introduce and for which they cannot and will not be able to produce any evidence that it will provide a better alternative at some time in the future than either the existing arrangements or, significantly, the further developed DE&S model, which is not even yet up and running. That will now be a matter for a future Government, if that future Government decide to proceed with the GOCO option.
In Committee, we also moved an amendment, which we regarded as very much second-best behind the withdrawal of Part 1, for a super-affirmative order which would be required to be passed by both Houses before Part 1 could be brought into force. We have included a similar amendment in the group that we are discussing. I do not intend to go through in detail the arguments that we put forward in Committee in support of the super-affirmative. They are recorded in the Hansard of the Committee stage. They set out in detail what the super-affirmative would provide for as set out in these amendments.
The super-affirmative order is not something novel. It has been used by this Government. They added the super-affirmative procedure to the recent Crime and Courts Act in respect of any future order made by the relevant Secretary of State to modify the functions of the National Crime Agency. That super-affirmative provision in the Crime and Courts Act requires the Secretary of State to consult the persons who would be affected by an order to modify the functions of the National Crime Agency and lays down minimum periods for consultation and subsequent scrutiny. It also requires the Secretary of State to have regard to any recommendations or representations made by Parliament during the scrutiny period with the subsequent option of laying a revised draft order. I again simply make the point that we are not talking about a minor change that might be made in the future on the basis of affirmative orders but about an untested and untried major change in defence procurement involving more than £10 billion of taxpayer expenditure each year.
The amendment that has been moved by the noble and gallant Lord, Lord Craig of Radley, is an improvement on the current provision in the Bill, and we heard from the Minister—if I understood him correctly—that he will come back with an amendment at Third Reading which will be in line with that moved by the noble and gallant Lord. However, while that amendment provides for a White Paper and an impact assessment, it does not provide for an independent assessment or the involvement of the Defence Select Committee prior to an affirmative order being considered. It thus appears not to provide any minimum timescale between the production of the White Paper and the impact statement for consultation and scrutiny before any vote in Parliament.
It is worth pointing out that government departments do not always produce adequate and appropriate information to support orders they place before Parliament. We had yet another example of this only last night in this Chamber in respect of a Home Office order. Your Lordships’ Secondary Legislation Scrutiny Committee had criticised the poor quality of documentation produced by the Home Office accompanying the order and had written to the Minister of State concerned to voice its detailed concerns. When the committee received the Minister of State’s reply, it found that letter equally disappointing and wrote in its report on the order being considered last night that,
“we found the letter to be no more convincing on the merits of the policy than the Explanatory Memorandum”.
Our super-affirmative would address those potential concerns about the quality of documentation as there is provision for independent assessment and the involvement of the Defence Select Committee.
I take note of the intervention by the Minister to indicate—if I can use the expression—the Government’s acceptance of the amendment in the sense that the Minister intends to come back with a government amendment which, as I understand it, will say either the same thing or much the same thing as the amendment tabled by the noble and gallant Lord, Lord Craig of Radley. Obviously we will want to look at the amendment that the Government table at Third Reading and determine whether to support it or whether to seek to amend it.
Lord Roper (LD)
My Lords, in view of the remarks made by my noble friend the Minister in his intervention in the speech of the noble and gallant Lord, Lord Craig, saying that he intends to accept the principle of Amendment 9, I can be a good deal briefer than I would otherwise have been. Broadly, I felt after the discussion in Committee and subsequent consideration—particularly after the discussions with Mr Dunne—that it would be very important to get in the Bill the assurances about the material that the Government would produce before a decision was made on the affirmative order. That, of course, was a government amendment that was introduced in Committee after representation from a number of us that a decision should be made by affirmative order and that one could not just use Part 1 of the Bill without any further parliamentary consideration.
I believe that the situation here is the right way for us to proceed. The super-affirmative procedure to which the noble Lord, Lord Rosser, has just referred was discussed in some detail in Committee, and I initially saw some advantage in having a mechanism whereby one could look at this more carefully. On further examination, I took to heart the Minister’s view that this was rather a heavy way of tackling the problem, and that it would be possible for Parliament to be properly informed so that the debate on the affirmative order could be effective and efficient with the sort of procedures that are in Amendment 9. I therefore believe that Amendments 10 and 11 are too elaborate and that the lighter proposal in Amendment 9 is the one that the House, in principle, ought to accept, although of course we will be doing that at Third Reading rather than today.
Lord Stirrup
My Lords, I, too, have my name attached to Amendment 9. I do not wish to make the mistake of failing to accept yes for an answer, so I will merely say that I am extremely grateful to the Minister for agreeing to take this away. I look forward to seeing the amendment as drafted by my noble and gallant friend Lord Craig at Third Reading.
Lord Trefgarne
My Lords, like other noble Lords I have had some reservations about the GOCO proposal but I am bound to say that my noble friend the Minister has gone a long way to meet those concerns. His observations this afternoon and his acceptance in principle of the amendment proposed by the noble and gallant Lord, Lord Craig, has further assisted me in this matter. That said, Amendment 11—I understand that the noble Lord, Lord Rosser, was anxious that we should discuss it at the same time—goes much too far. The GOCO proposal, which we have already discussed, is adequately protected by the steps which my noble friend has made. Therefore, the call from the noble Lord, Lord Rosser, for a super-affirmative resolution is very much over the top in this particular circumstance and I hope he will not press it. The amendment will achieve nothing, save a further significant delay to a measure which all sides of the House agree has considerable merit and the potential to save the taxpayer a considerable sum in the future. I believe this super-affirmative resolution amendment was tabled only last night and I suggest that it therefore bears all the hallmarks of rather hurried drafting.
Lord Astor of Hever
My Lords, the amendments in this group deal with the issue of parliamentary oversight and scrutiny of a future decision to proceed with a GOCO. The question of what information should be available to Parliament has been discussed extensively during the passage of the Bill, and that debate has been carried on this afternoon. As I have already indicated, the Government support Amendment 9 in principle and intend to bring forward a government amendment at Third Reading. We think that Amendment 9 strikes the right balance between ensuring Parliament has sufficient information to consider a GOCO proposal and not setting undue constraints on a future Government, the Defence Select Committee or the commercial process.
Amendment 9 requires the Government to publish an impact statement and White Paper before proceeding with a GOCO. The Government have always been clear that Parliament should be able to debate and consider in detail a decision to proceed with a GOCO in future. We agree that that would be a major decision and that it is right that Parliament should have the opportunity to hold the Government of the day to account for such a decision, should they decide to proceed with Part 1 of the Bill. We have also been clear that we expect any future Government to publish an impact assessment on the options before proceeding with a GOCO and to issue a White Paper setting out those options in detail.
We have discussed the issue of parliamentary oversight and scrutiny of a future decision to proceed with a GOCO in great detail, both in Committee and with interested colleagues, and I am grateful to all noble Lords for their contributions to that debate.
The requirements set by Amendment 9 seem reasonable, as they would impose two statutory requirements on the Secretary of State before an affirmative order to commence Part 1 could be laid before both Houses of Parliament. That would ensure that Parliament had sufficient information to properly debate the GOCO proposal under consideration before Part 1 could be brought into force.
We acknowledge the merit of some form of statutory requirement to provide detailed information on the GOCO proposals in future and that it is reasonable to put such a requirement into the Bill. We did not initially think that a statutory requirement was necessary, but we have been convinced otherwise by noble Lords from all sides of the House. That is an example of what the Members of this House do best—ensuring that legislation is properly scrutinised, and amended where necessary. We will therefore bring forward a government amendment at Third Reading that will make it a legal requirement for a future Government to publish appropriate information on the GOCO options before the order commencing Part 1 is brought forward.
We think that Amendments 10 and 11 go too far. They would do two things. First, they would place in statute the need for a future Government to publish a number of documents before proceeding with a GOCO. Secondly, they would make the affirmative commencement order that brings Part 1 into force subject to the super-affirmative procedure.
I will deal with those two things separately. On the publication of documents, the requirement would be for an impact assessment that covers specific options. This in itself does not present any difficulties; as I said earlier, we are prepared to accept a statutory requirement to produce an impact assessment.
However, proposed subsection (2B)(a)(iii) in Amendment 10 goes too far in that it requires the impact assessment to include any options that may be recommended following consultation with the Defence Select Committee. That is a very unusual provision. It effectively sets a statutory requirement for a future Government to consult the Defence Select Committee on the way forward. Although the Ministry of Defence would, of course, welcome any report that the Select Committee produced on the department’s proposals, we need to be very careful in this House about setting out statutory requirements on a House of Commons Select Committee. The Defence Select Committee already has the power—if it wishes—to look at any aspect of MoD business and I do not think it would be right for us to tell it what it must do. It is for the committee, not us, to decide what its programme of work should be.
On the other parts of Amendment 10—which would require an independent report on the options and the Defence Select Committee to review and report on that report—again I think this is too much. I really do not see what an independent report would add to the impact assessment set out earlier in the amendment, which would already set out the issues and analysis objectively. I do not think it is right to make it a legal requirement for the Defence Select Committee to review such a report. This raises fundamental questions about fettering the ability of a Select Committee to decide its own programme of work and it would be wrong for this House to direct what a Commons Select Committee must do.
Amendment 11 would also make the commencement order for Part 1 subject to the super-affirmative procedure. This would require the Secretary of State to consult on the order, including with anybody recommended by the Defence Select Committee. This would seem completely unnecessary given the requirement to publish an impact assessment and totally inappropriate in relation to a commencement order. Super-affirmative procedures may be appropriate where secondary legislation covers significant policy matters but not in relation to commencement orders. It is not clear what we would consult on given that the order will simply say when the provisions should come into force. Amendment 11 confuses the issues. I accept that there is a need for Parliament to consider any GOCO proposals but I fail to see what would be achieved by the requirements in Amendment 11. It would not provide the House with any more scrutiny of the proposals in question and introduces an unnecessary and overly complex procedure where none is required. I must therefore strongly resist Amendment 11, which I think is both unprecedented and wholly inappropriate.
The noble Lord, Lord Rosser, said that the super-affirmative procedure would be unprecedented for a commencement order. The other circumstances in which super-affirmative procedures are used are very different. There is no precedent for using a super-affirmative procedure for a commencement order. A super-affirmative procedure is relevant only where an order covers significant changes in policy or has significant legal effect. A commencement order does neither.
I thank my noble friend Lord Roper for his support and wise advice during the passage of the Bill. I also thank my noble friend Lord Trefgarne for his support. Given that the Government have made it clear that they support Amendment 9 in principle and that we intend to bring forward a government amendment at Third Reading, I ask the noble and gallant Lord and other noble Lords not to press their amendments in this group.
Lord Craig of Radley
My Lords, I thank the Government and the Minister once again for deciding to take away Amendment 9. I also thank very much the noble Lord, Lord Roper, the noble and gallant Lord, Lord Stirrup, and the noble Lord, Lord Levene—who regrettably was not able to be present—for their support and I beg leave to withdraw my amendment.
Apprenticeships
(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Young of Norwood Green
To ask Her Majesty’s Government what action they are taking to increase the number and quality of apprenticeships for 16 to 18 year-olds.
Lord Tunnicliffe (Lab)
My Lords, by our normal conventions, we would start the QSD but there was wide expectation in the House that there would be a vote now and at least half of our speakers are not present. Perhaps I may put it to the government Whip that she adjourns the House during pleasure for 10 minutes so we can all assemble for the next debate.
Baroness Jolly (LD)
I beg to move that the House do now adjourn until 5.49 pm.
Lord Bates (Con)
I beg to move that the House do now adjourn for a further five minutes.
Lord Young of Norwood Green (Lab)
My Lords, now that we are all sitting comfortably, we can begin. In a recent debate about apprenticeships I was accused of being churlish, so I will endeavour today to keep my criticism constructive and reasonably positive.
The beginning of March was National Apprenticeship Week. Should we be celebrating? I will give the Government one cheer. They definitely recognise the importance of apprenticeships and vocational training. There is more investment in training and I was pleased to see the announcement in the Budget. However, announcing expenditure is one thing; driving up the number of apprenticeships is the real task that we face. Surely, the major question that we need to address is the nearly 1 million NEETs in the 16 to 24 age category—those who are not in employment, education or training. I took those statistics from the Library briefing.
We can muck around with statistics, but at the end of the day that is the problem we face. Even if we look at different groups, eventually we will be faced with people looking for jobs and apprenticeships. Of course, the situation with graduate recruitment is not particularly rosy, either. However, I want to focus on the 16 to 18 year-olds because they are the most important group. If we do not find a way of motivating and incentivising them, we know their capacity to lose hope in ever gaining meaningful employment and all the bad things that can flow from that.
When the Government quote figures on apprenticeships, I have complained time and time again because they always include the over-25s. I have said that I am not going to be churlish and so I hesitate to use the word “disingenuous”. However, the figures are certainly misleading. My fear is that it could lead to complacency. Although the government statistics have shown significant growth in the number of apprenticeship starts between 2008 and 2012-13, the recent trend for numbers of apprenticeship starts for 16 to 19 year-olds has actually shown a decline in both 2011-12 and an alarming 12% decline in 2012-13 from the previous year. Those are figures from the Skills Funding Agency. In the period reported, apprenticeship starts as a whole increased by 113%, which makes you think, “Good”, until you disaggregate it. The growth in apprenticeships for the 16 to 19 year-old age group during the period was only 12%, while apprenticeships for those aged 24-plus grew by an astonishing 293%. I will come back to the question of apprenticeships for those aged 25 and over.
One of the good results of calling a debate—I am grateful to all noble Lords who have agreed to participate in it—is the briefing you are sent. I received a really interesting briefing from the City & Guilds Group. It points out that apprenticeships are still seen as being “just for the boys”. For instance, the difference between the advice received by men and women is particularly notable in the construction industry, where only 0.6% of women are encouraged to make it their career compared with 12% of men. The same worrying statistics can be seen throughout apprenticeships in relation to the advice that young women are given as opposed to that given to young men. We need to work a lot harder if we are going to encourage more young women to take up apprenticeships.
The area I want to focus on now is the construction industry. I recently received a letter from the noble Viscount, Lord Younger of Leckie, giving a breakdown of construction apprenticeships. The figures set out in his letter suggest that things are looking reasonably rosy. However, perhaps I may suggest to the Minister that he looks at a report on construction apprenticeships issued just yesterday by a cross-party group of parliamentarians. It states that some 182,000 construction jobs will need to be filled by 2018, but last year only 7,280 construction apprenticeships were completed. The report includes some recommendations that were made in the 2011 review by Doug Richard:
“Apprenticeships should be redefined. They should be clearly targeted at those who are new to a job or role that requires sustained and substantial training … There should be recognised industry standards at the heart of every apprenticeship”,
which should be linked to professional registration. The report also recommends that all apprentices should achieve NVQ level 2 in English and maths. Doug Richard thinks that apprentices aged over 25 should not actually be called apprentices. I would be interested to hear the Minister’s response to those recommendations. The Chartered Institute of Building has talked about a 33% decline in apprenticeship starts in construction. Surely that is another worrying statistic.
The Minister should take a look at the briefing provided by the Local Government Association. I shall start with the positive. It states:
“We welcome the measure in the Budget 2014 to extend subsidies to create youth apprenticeships. However, it will not resolve the structural issue facing young people. This requires ambitious reform, bringing skills and employment services together around local labour markets”.
The briefing says that the current system is not working for 16 to 19 year-olds. The number of under-19 apprenticeship starts rose for a bit, but then declined over the past couple of years. It goes on to say that the increase in apprenticeships can largely be seen in only a small number of sectors that are generally associated with low skills. It also talks about instances of large employers using apprenticeship funding to subsidise training for existing employees, and issues with leading apprenticeship contractors effectively exploiting their workforce.
The Government are seeking to improve the qualifications and the skills requirement for apprenticeships. I am not arguing about that, but where I think that the Government do need to be careful is with regard to the new GCSE requirements in both English and maths. These are demanding requirements. It is interesting to look at the briefing from the Oxford Cambridge and RSA organisation, which says that the really important thing about getting qualifications for young people and improving their ability in English and maths, which we know is an employer requirement, is to ensure that learning is contextualised. We can see that feedback coming. The noble Lord, Lord Baker, is not present today but if you look at the success in university technical colleges, you know that that is good advice.
As I have said before, the quality of careers advice in most schools is still appalling, with very few examples of young people being encouraged to go for apprenticeships. The drive is still to push people towards A-levels even though we know that there is real need and demand for apprenticeships. What more could the Government do? Time and time again I have made the point that if the Government really want to send a positive signal to employers—boy do we need to do that as the best statistic I have found on how many employers recruit apprentices is 13%—surely it is time that they made it clear that bidders for public procurement contracts will be required to indicate the number of apprentices they are going to employ. To drive up the number of apprenticeships, as we should be doing, and to win the battle against youth unemployment, we ought in a way to be putting the country on a war footing. We ought to be determined not to have another lost generation of young people.
In the Local Government Association briefing there are some good examples of authorities such as Lincoln which has appointed apprenticeship champions and driven up the numbers of apprenticeships for those aged 16 to 18. We need to ensure that all schools, colleges and universities are themselves recruiting apprentices. We ought to drive up the number of group training associations and apprenticeship training agencies. I look forward to the Minister’s response and I thank those who are going to participate in the debate.
Lord Monks (Lab)
I thank my noble friend Lord Young for initiating this important debate. Unlike him and certain others here, I was never an apprentice but I went to a boys’ technical school and most of my contemporaries went into apprenticeships in manufacturing or in construction. A decade later I was working on the training brief in the TUC in early 1970s, and the apprenticeship system started to collapse—I do not think that there was any direct relationship between my presence in the TUC and what was happening in the country. The apprenticeship system had covered 44% of boys leaving school at the minimum age and about 4% to 5% of girls, but those numbers plummeted, particularly for boys.
Why was that? First, there was a feeling among employers that those who were doing the training were losing staff to those who were not—that poaching was rife—and the lack of a collective approach was a factor. Industrial training boards, instead of being strengthened, were weakened. I must acknowledge too that there was a growth of a youth culture of having money. If you could earn more money at the age of 16 in a labouring job than you could in an apprenticeship, the lure of the youth culture was a major factor that turned many young people away from apprenticeships. Later, other factors clicked in as universities expanded. The attractions of higher education—“uni”, as became the common phrase—became overwhelming to many young people, and was supported by parents. The privatisation of a lot of the utilities in particular, which trained more people than they needed themselves, contributed to this collapse in apprenticeships outside of some blue-chip companies and one or two exceptional industries.
We have come a long way from the apprenticeship model which has survived, albeit not without problems and pressures, on the other side of the North Sea and of the channel. I well remember a visit I made to an apprentice school for motor mechanics in Vienna, where I took part in a discussion in English with the students. I told them their English was excellent and they said, “All our drawings are in English; we have to work in English”. Their apprenticeships were done in a foreign language, which was extremely impressive and showed the high quality of the apprenticeships and the veneration of the concept which existed there. Where we have 11 apprentices for every 1,000 employees, Germany, Switzerland and, I think, Austria—as well as, interestingly, Australia, which is a different culture and more like ours in some ways—have round about 40 per 1,000 workers. Switzerland has a lot of apprentices and not so many young people going into higher education. The university route there has not got the same cachet as it seems to have here. However, we know that even in those countries apprenticeships are under pressure: a lot of young people are aiming for higher education and some employers are looking to substitute much cheaper and shorter training courses, linked to specific jobs, for more expensive ones. It is not a paradise over there, but we succumbed to these pressures to a greater degree and earlier than others.
I am also in the camp welcoming the resurrection of apprenticeships which was started under the previous Government and has been continued under this one. There is a lot to be proud of. There is a lot of agreement in this area, although from our side, as my noble friend indicated in his opening speech, we would like things to go more quickly and more purposefully on this issue. The point he made about procurement was very important—we should know what employers are doing. Looking at what training is going on and the apprenticeship model in particular should be part of the purchasing process of public authorities. Investors in People may be a very useful initiative for this purpose.
I know the Government have started to think about this, but we need to do more to make sure that the minimum wage is properly paid. At the moment, the estimate from the latest apprentice pay survey is that 30% are being paid illegally, which is a very high figure: three out of 10 kids, and in some cases adults, are not getting what they are entitled to. We also know that the whole scheme in most sectors is still geared towards white boys—if I can put it like that—rather than girls or ethnic minorities, who do not feature too strongly in quite a lot of sectors.
The other point to make is about the importance of employer and union co-operation in this area. I was very proud when I was at the TUC of being one of the instigators of Unionlearn, and of the idea that unions could use their influence to get people to have a go at learning who did not have the experience of getting glittering prizes at school and for whom learning was frightening. We could reach parts that employers on their own could not, and that relationship was very important. Although welcoming the Government’s commitment to supporting Unionlearn, I ask the Minister whether they intend to continue that commitment into the future and to give that very worthwhile and big-scale scheme the support it really deserves.
Lord Addington (LD)
My Lords, my involvement with apprenticeships started with the noble Lord, Lord Young, a good few years ago when the Bill went through. At that time it was pointed out to me that everybody had to pass an English and maths test, and the language was, “Give the employers what they want. They want good English and maths”. I stood up and said, “What about dyslexics?”. Noble Lords said, “Of course, we do not want to remove anybody from employment here”, and I went away. I made a huge mistake that day because initially the Act stated that everybody needed English and maths, and that was seen to be the priority. It was decided that this overrode the Equality Act—wrongly and illegally—and we got ourselves into a horrible mess, which was resolved only three and a half years later during the course of a Bill. I just point out that anything, no matter how well intentioned, can go wrong, and apprenticeships are right there with everything else. Nobody intended it to happen, but then officials decided, “This is what we had said and we defended it”. Most politicians saw the mistake and said, “That cannot be right”, and then we had to fight our way—more or less machete our way—through the levels of resistance. I take a big slice of the blame pie for not coming back to the noble Lord, Lord Young, at a later stage in that Bill to demand an explanation of what should happen, but I could not quite believe that anybody would do anything that dumb. My naivety, after nearly three decades here, still surprises me.
Where are we now? We have the apprenticeship system, which takes over most of the further education training in this country. Everything is being drawn towards the apprenticeship system. Yet how are hidden disabilities and disabilities generally being dealt with in this system? People with dyslexia are the biggest group; I do not think anyone has argued about that. It is reckoned to be about 10% to 20% in certain parts of the state, but we use 10%. We still have a problem in that we have only just got the examination system to take on board that reasonable adjustments should be made to the online test to use technology that is well established in higher education. We have only just got that in. There are increasingly worrying signs that the trainers and providers within the colleges do not know what they are doing with the dyslexic in the classroom. Therefore, neither do colleges and their support work. Can my noble friend give me some idea of how this has developed over time and what pressure will be exerted to make sure that colleges, employers and trainers all understand this vast array of difficulties that they will encounter?
Why is it important here? It is because dyslexics should be overrepresented in something that uses practical skills. At the moment, in higher education you are fine; we have a very well established system there with the DSA. I declare an interest in that from one of my outside activities. However, in the further education sector we do not have that culture. It is there to an extent in schools but it is still hit and miss. If you are to get into that tough-to-reach 20%—the 20% who were not getting five GCSEs—you must be prepared to deal with these groups. You must have a very well established SEN structure that knows how to deal with young adults. If we are talking particularly about the young, we are talking about somebody who has already failed within the classroom and for whom this is a bad experience and a bad place to be. If you do more of the same, you will fail again.
What are we going to do about this? We have to try to get in here. I never wanted to become the person who has to stand up and make the same speech, or a variation on the same speech, every time we talk about apprenticeships. I am sure I could bore your Lordships’ House on other subjects with equal vigour. But we need a structure here that goes on. We have established for colleges, trainers and employers an incentive to go on, because they can get them, finally, through the exam. I deliberately concentrate on that because that was the model we went through in schools for getting through O-levels when they started and now for GCSEs, A-levels and degrees. If you have a reason to get the person through and they can pass, or stand a realistic chance of passing, suddenly everybody can buy in. That process will be quicker and easier if we insist on having decent training in that process.
We are starting on a process. The entrance-level qualifications are probably very important to this group I am talking about, so I think that level 2 has a place for getting people at least involved in their training. However, unless you can ensure that the experience of receiving training is there, you will not maximise it and get the people involved. I look forward to hearing what progress will be made, because we cannot ignore this, and dyslexics are only one group within a very large group.
Lord Martin of Springburn (CB)
My Lords, I congratulate the noble Lord, Lord Young, on obtaining this debate. I was gently reminded by the noble Lord, Lord Macdonald of Tradeston, that three of us taking part in this debate were all born within a mile and a half of one another: himself, the noble Lord, Lord Haughey, and I was on the north side of the river. Glasgow is also well represented by the noble Lord, Lord Macfarlane, who is a good friend and was an employer in my constituency through Diageo and employed many good apprentices.
When I had the privilege of being Speaker, I was shocked that this Palace of Westminster did not employ any apprentices. I called together the heads of the craft departments, including catering and banqueting, and asked them if they would co-operate in an apprenticeship scheme. All of them agreed to do so. The apprenticeship scheme has been very successful. I was stopped by a young person recently who told me he had applied for the Speaker’s apprenticeship scheme and had now qualified as an electrician. I asked him whether his mum and dad were proud. He said, “They were so proud on the day that I completed my apprenticeship”.
That is the important thing about an apprenticeship: it not only gives dignity to the young person, it gives dignity to parents and grandparents—everyone in the family. When you look round this very Chamber, Pugin himself was an apprentice. It was not through university that he did the marvellous things that he did here, but was because he was an apprentice. We have upholstery, carpet-laying, the beautiful Throne with the gilt decoration, the ornate brasswork—all of that can be passed on to apprentices. If they are not able to continue their employment in the Palace of Westminster, we have given them a skill that they can go anywhere in the world with, and they are able to use their hands.
I congratulate the Government on ensuring that the £1,500 can go not only to those aged between 16 and 18 but those aged up to 24. It should be remembered that some young men and women, because of circumstances—perhaps because they were not paying attention or because they could not get employment in the area they were living in—have to come into apprenticeships late. It is good that the Government have made a facility to give grants to employers that are willing to give adults apprenticeships. Why should it be only school leavers who get training in apprenticeships? It should be the case that anyone who wants to learn is never refused.
As we know, the £1,500 gives protective clothing to the young person who is employed. It is not about an employer getting something extra. Whenever they get that £1,500, it is handed over to the apprentice by giving them tools and protective clothing. I say to the Minister: I hope that the good work has continued. I hope that the House authorities remember that it would be a sad day if we were encouraging private employers to take up apprenticeships but did not do so within the confines of our own building.
I have mentioned before in supplementary questions that there are areas—in Scotland, Ireland and parts of England, such as the north-east—which are remote and rural. They may be lovely places to spend your childhood but, when it comes to getting an apprenticeship, there are not many employers around. If a trainee goes to university, there is a hall of residence. If, however, a youngster wants to get into, say, the aero-engine division of the aircraft industry, it may be that there is no accommodation for them. They may have to go perhaps 30, 40 or 100 miles away from home with no relative to put them up. I hope that we will be able to accommodate our apprenticeships and our craft apprentices the same as we do students. I do not see any reason we cannot do that. In fact, it would be a sad day if we could not.
I know that the Government and employers have a lot on their plate. In the old days, however, when you had big employers—the shipyards and Rolls-Royce, which I worked in—no one gave a great deal of thought to being self-employed because you went from one big employer to another. Nowadays, young craftsmen have to think in terms of being self-employed. I hope that, in an apprenticeship, there is some education given to youngsters to say, “Look, don’t be frightened of becoming self-employed”.
Baroness Prosser (Lab)
My Lords, I, too, would like to thank my noble friend Lord Young for securing this debate. In last week’s debate in this Chamber on the future of employment, among others the noble Lord, Lord Giddens, addressed your Lordships’ House and suggested a slightly scary scenario relating to the growth in the influence of technology and the use of robots. He set out what this would mean for the future job prospects of today’s and tomorrow’s youth. I am not going to concentrate on that particular dilemma, although I hope someone in Government or in a think tank is doing so. Suffice it to say the world of work has already been turned upside down with the help of technological innovation and the influence of globalisation. Without looking at the changes yet to come, we know that the range of skills and the areas of knowledge required by today’s labour market are very different from those needed 20 or 25 years ago. The question of how we increase the number and quality of apprenticeships is, therefore, welcome indeed.
First, let us consider how we think young people are being prepared to take up an apprenticeship. We need trained and able people in various sectors of the economy, but none more so than in science and engineering. It is agreed and understood that the country has a severe shortage of people qualified in these fields and that, of those who are, too many are concentrated within the older age range. If this problem is to be dealt with by the new, young blood, why are we paying so little attention to the importance of good-quality careers advice? We are the only country in the developed world which spends more on careers advice for older people than it does for the young. The Department for Education spends just 0.04 % of its budget in this area.
Why is not more effort being made to encourage, enable and reward schools and colleges for engaging with employers and for widening their horizons to get more girls into the traditional STEM areas of study? This is not beyond the wit of man—or, for that matter, woman. For example, girls could be taught in separate classes for maths, science and computer studies, allowing concepts to be presented in ways more appealing to girls. This does not have to be a permanent arrangement but a “separate to integrate” approach. Work recently done by the TUC shows very serious stereotyping within the take-up of apprenticeships. The statistics read as though it were 1914 rather than 2014: health and social care—83% female; vehicle maintenance and repair—98% male; children’s and young people’s workforce—93% female; electrotechnical—98% male. The salary returns for these particular choices also tell us why the gender pay gap is so alive and well. I know that many of the better employers are trying hard to break down these stereotypical barriers, but government can play a part as well. How about fiscal incentives for companies to give girls more taster days and more opportunities for work experience?
Secondly, what are the Government and the public sector in general doing to play their part in improving the number of opportunities for apprenticeships? Greater participation by government departments would send a very important message. In addition, the leverage of procurement is a powerful tool, as has already been mentioned. Government and public contracts over a certain value should carry with them the absolute requirement for the contractor to engage with the apprenticeship programme, and to ensure that opportunities are available in equal measure to both male and female applicants and to applicants from the black and minority ethnic community.
I have just a couple of final thoughts. In 2011-12, almost 84% of the growth in the number of apprenticeships was in just 10 sectors of the economy, and those mostly in low-paying areas. We are not keeping pace in engineering and construction, where we need to up the game. We also need to keep a watchful eye on standards within apprenticeships. A one-year training course is not an apprenticeship. Ensuring that the skill level reaches level 3 and above will be important to support and monitor. The role of sector skills councils is important here. They can help employers find their way around funding options and can help to ensure that training programmes are bought into and understood by the workforce as a whole.
I hope that the Minister will bring this debate to the attention of his counterparts in the Department for Education, because this is an interdepartmental responsibility and the policy will be successful only if there is an interdepartmental response.
Baroness Sharp of Guildford (LD)
My Lords, I join others in thanking the noble Lord, Lord Young, for bringing this important debate to the House. It is about the number and the quality of apprenticeships that government has been able to establish. Like the noble Lord, I started by looking at the statistics. As he pointed out, starts in apprenticeships are up. Between 2009-10 and 2012-13, they increased from 270,000 to 495,000. I pay tribute to the previous Labour Government for laying the foundations for this increase. Equally, the coalition Government have done much to build on the foundations that were laid then and we see it in this figure of 495,000, which is almost the half a million that has been cited.
However, like the noble Lord, Lord Young, I noticed that the increase was not evenly distributed. The numbers for the 16 to 18 year-old group were down by 4%. The number of 19 to 24 year-old apprenticeships was up by 42%, but the big increase, as the noble Lord pointed out, was in the over-25 group, which saw a rise of 350%. In terms of numbers, therefore, there is undoubtedly an increase. The noble Lord, Lord Monks, mentioned that the nadir point for recruiting apprentices was in the early 1990s, when the number of apprentice starts was below 100,000. It has been building up since then.
On quality, the noble Baroness, Lady Prosser, talked about looking at where the increases in the number of apprenticeships have taken place. In health and social care, they were up by 197% between 2009-10 and 2012-13; in business, administration and law, they were up by 84%; and in retail and commercial enterprise, they were up by 64%. This compares with construction, planning and built environment, in which they are down by 7%. In engineering and manufacturing technology—vital to rebalancing the economy—they are up 24%, which is still well below some other areas. In information and communications technology, they are up by 2%. Looking at those figures, I reflected on the fact that we frequently praise the German system of apprenticeship but we should recognise that this applies to 15 to 19 year-olds and provides them with a foundation of skills for life. This compares with the United Kingdom where our young people are not going into apprenticeships, in spite of the fact that the Government pay all the costs for 16 to 19 year-olds. It is rumoured that the Government may well ask employers to contribute rather more than they do at the moment. I fear that, if that happens, it will kill apprenticeships for 16 to 19 year-olds although they are a vital part of our raising of participation.
What is holding it up? First, I agree with the noble Baroness, Lady Prosser, and others that careers education has a major influence. There are still far too many schools where apprenticeships and vocational training are seen as second best to university. Most teachers know very little indeed about vocational routes to work. We need to make sure that schools are getting proper careers advice from properly trained and experienced careers advisers and that young people get the face-to-face advice that many of them need.
Secondly, the Government are putting a great deal of emphasis on employer ownership of apprentice training. I confess to some reservations about this because there remains a huge dearth of apprenticeships. My figures show that 9% of UK firms take on apprentices, though the noble Lord, Lord Young, mentioned 13%. This is a very small proportion. There are a huge number of applications to Rolls-Royce and BAE Systems, whose apprenticeships are the cream. However, the average apprenticeship advertised by the National Apprenticeship Service gets six applications. We do not have enough of them and we must encourage firms to provide more. The answer probably lies in encouraging our small and medium-sized businesses to take them on. The £1,500 per apprentice that came in the Budget already applies to small and medium-sized businesses. Many of these SMEs are put off by the bureaucracy attached to apprenticeships and we need to encourage the expansion of group training systems and apprentice training agencies who take on the organisation of apprenticeships.
In a report published in 2007, your Lordships’ Committee on Economic Affairs concluded that apprenticeships were the most satisfactory route to skills below the graduate level and should be the standard method for providing education and training for young people in the 16 to 18 age group not going to university. We are still a very long way away from that.
Lord Best (CB)
My Lords, I am grateful to the noble Lord, Lord Young of Norwood Green, for instigating this debate and for stealing half my thunder by drawing attention to a report on construction industry apprenticeships which was released recently from a cross-party group of parliamentarians from both Houses, chaired jointly by the right honourable Nick Raynsford and myself. It was entitled No More Lost Generations: Creating Construction Jobs for Young People. If I only manage to impart one suggestion tonight to this House and to those outside who are following our debate, it is that everyone with an interest in the subject of apprenticeships should google “no more lost generations” and look at our report. It was written by Denise Chevin, supported by the Chartered Institute of Building and the Construction Industry Training Board, with input from the excellent charities doing great work—albeit on a small scale—to get young people into fulfilling construction jobs.
Our report highlights three stark facts. First, there are still well over 950,000 NEETs—young people between 16 and 24 years old not in employment, education or training. That figure was quoted by the noble Lord, Lord Young. Secondly, the construction industry is now expanding once again and will be creating 182,000 extra jobs alongside the need to recruit 400,000 building workers to replace those retiring over the next four years. Thirdly, despite these big numbers, there were only 7,280 completed apprenticeships in the sector last year, which was half the number of the year before. So we have 7,000 apprentices for a £100 billion-a-year industry that needs to draw in nearly 600,000 new workers by 2018.
In the absence of sufficient numbers of home-grown employees, the contractors—as they did for the construction of so many of the Olympic Games facilities—will import their labour from other countries, particularly from eastern Europe. I bow to no one in my admiration of building workers from Poland and the other A8 countries—the globalised labour market of the 21st century means that the skills of overseas workers can provide the construction industry with a labour force that provides quality at relatively low cost—but turning our backs on our own young people has huge financial and social costs. At the launch of our report, the deputy chair of the Construction Industry Training Board, Judy Lowe, quoted the extra cost to society of a NEET who never obtains a qualification or acquires the skills to hold down a proper job: £165,000. For young people who need the self-respect and sense of purpose that comes from being in employment, failure to acquire the necessary skills can lead to pretty miserable lives.
With the economy now recovering and the nation investing in construction in infrastructure—for example, Crossrail, HS2, power stations and, most labour-intensive of all, housing—we can get a double benefit by also creating the jobs that the young of this country need. Government support is vital. Training objectives need to be incorporated into public contracts. Moreover, the Chancellor has extended government support for housebuilding through the Help to Buy scheme, resulting in big jumps since the Budget of the share price of Persimmon, Bovis Homes, Taylor Wimpey and others. Perhaps the tit-for-tat should be a commitment from the housebuilders to skills training for home-grown talent.
Local authorities and housing associations can insist that companies bidding for their work must employ more apprentices. The use of planning requirements can support this. Local authorities also have the local contacts and local knowledge, crossing boundaries through the local enterprise partnerships, to be a focal point for initiatives that are tailored to the particular employers’ requirements in their locality.
To bring all this together and take forward the recommendations from the No More Lost Generations report, we called for a summit of construction leaders, convened by the Construction Industry Training Board and the Department for Business, Innovation and Skills. This could do for training what the 2001 construction summit did for safety. That summit led to a sea-change in attitudes to accidents and fatalities on building sites, to very great effect. A construction training summit would agree a new apprenticeship strategy, bringing together industry leaders, specialist contractors, housebuilders, local authorities, social landlords and central government. The response Nick Raynsford and I have received from the Construction Industry Training Board’s chairman, James Wates, has been very positive. The CITB is setting up an apprenticeship commission to take forward this plan and report to a construction training summit.
We have also had a positive response from BIS Secretary of State Vince Cable. His sympathy for these aims is well known and I hope he will agree to jointly sponsor the construction leaders summit later this year. What is certain is that it would be the height of folly not to use the revival of construction in the UK to provide fulfilling careers for tens of thousands of our young people who must not be another “lost generation”.
Lord Lucas (Con)
My Lords, I must declare an interest because I am running a social enterprise in this patch, the Good Careers Guide, which you can bing if you do not want to google. We have been having a wonderful time with companies. There is such a spirit of collaboration abroad—with them, with their organisations and with schools organisations, too—and there is a real determination to get together and solve the problems of how kids comprehend careers, of how businesses get on with schools and of how apprenticeships become valued as a decent alternative to academic education. I say to the noble Lord, Lord Best, that the construction industry is as enthusiastic as any other, and I shall look forward to his conference and hope that we may end up as part of it.
To return to the subject in hand, which is on how to increase the number and quality of apprenticeships for 16 to 18 year-olds, I think the answers are about information, appreciation and support. It is very hard within the context of a school to find that out what 16-to-18 apprenticeships are out there. We need a place where people can go to find out—but not, as the Deputy Prime Minister said, a UCAS, which is a horrible, inward-facing and unco-operative organisation. What we need is something that is facing outward and that sees its business as running an API, not a fortress, so that all sorts of institutions that have contacts with young people can easily get at the information on apprenticeships which they need to advise them. I think that would be a great way forward and I very much hope, if Mr Clegg has anything to do with it, that is the direction that he eventually takes.
Second is appreciation. There is a general feeling that apprenticeships are of mixed quality. That is not good. That is how we came into the business of the Good Careers Guide, taking the genetics of the Good Schools Guide and seeing what we could do for apprenticeships. It is proving immensely popular with companies, I am delighted to say. They really see the need to be seen as quality providers. It is important to parents particularly, and to others who are advising young people, that they understand where an apprenticeship leads to. How will it be rated by other employers once it is completed? Where will it lead to in terms of a career? The progression is immensely important, as the noble Lord, Lord Young, commented.
In that context, it is important to say to the Government that they are on the wrong track when they say that,
“once the reformed GCSEs are implemented, all apprentices will use GCSEs … to meet the English and maths requirements”.
What is important is context. If you are in an apprenticeship, what is motivating you is the context. The mathematics and English you use must fit in with that context. English and maths GCSEs are designed to move people on to A-levels; they are not designed for the whole variety of employments and apprenticeships that are out there. What is important is that the English and maths that one learns in an apprenticeship is part of a progression which leads—as, again, the noble Lord, Lord Young, said—to recognised professional qualifications. The English and maths should be sufficient for that, but there should be no barriers on the progression of apprentices. They should be able to move on to degrees and what they have achieved as an apprentice should be recognised as sufficient for that. I hope that the NHS will wake up to the idea that you can start as an apprentice and end up as a nurse, which does not seem too hard to ask when you can start with Barclays as a NEET who has just come from jail and end up as a bank manager. There are companies out there which take progression seriously, and it is time that our public sector did so, too. We must pay apprentices properly; they should not be seen as a source of cheap labour but should receive proper remuneration.
We should also concentrate on support. Most of our employment comes from small and medium-sized enterprises, but it is difficult for them to take on the bureaucracy and the responsibility of an apprenticeship. The big companies can manage it—they have big HR departments, which can do what is required. We need to build up for smaller companies a structure of training providers which not only provide the training but do the pastoral care, too, looking after every aspect of the apprentice’s needs. The SME will then be able to concentrate on giving them a job and will not be asked to do things which go beyond its capacity. That is happening: PricewaterhouseCoopers organises it for the smaller companies and the financial industry; several of the sector skills councils have similar schemes; and QA, which is one of the training providers, is in that business. We are beginning to see that happening, and it needs to happen much more widely.
To quote one of the senior executives of a company whose training provision we were reviewing: “Apprentices are a total delight. They are quickly very productive, excited, eager, and bring new life to the business”. If tired old people like us can be cheered up by taking on apprentices, let us do more of that.
Lord Macdonald of Tradeston (Lab)
My Lords, in his Budget Statement the Chancellor said,
“we have doubled the number of apprenticeships, and I will extend the grants for smaller businesses to support over 100,000 more”.—[Official Report, Commons, 19/4/14; col. 789.]
That is, of course, welcome news. It builds on the progress made by previous Labour Governments and strengthens the cross-party consensus on the importance of vocational training.
As other noble Lords have already argued, more needs to be done, but we have surely come a long way since the 1990s, when apprenticeships were in danger of dying of neglect. By the time Labour left office in 2010, apprenticeships had increased significantly to almost 500,000. The forecast for this year is 931,000, for apprentices of all ages. While respecting the caveats of my noble friend Lord Young regarding the statistics, under Labour and now the coalition, apprenticeships are again being given the priority that they deserve.
I thank my noble friend and fellow engineer Lord Young for initiating this debate. I speak on the subject fondly, having served a five-year engineering apprenticeship after leaving school at 15. It is a rare pleasure, as my noble friend Lord Martin said, to speak in the company of two other time-served Glasgow craftsmen.
The focus tonight is on 16 to 18 year-olds and how best to improve the number and quality of the apprenticeship opportunities on offer. That concern is understandable. While those of my generation started their apprenticeships at 16, most of our recent successes have been in placements for those aged 19 and over. Remarkably, as has been mentioned, many of the new apprentices are over the age of 24, as my noble friend Lord Young highlighted.
The time served has gone down from five years to perhaps just one year, a minimum length introduced in 2012 to strengthen the quality and standard of training. On the positive side, while apprenticeships were once largely in manufacturing and almost exclusively male, today I am told that half the new apprenticeships are won by women. I say “won” because I read that the demand for places is 12 times the number of jobs on offer.
Other major changes are in the range of the jobs on offer. The top sector now for new apprentices is business, administration and law, which makes up 31% of the total. Next comes the health, public services and care sector with 24%, then retail and commercial enterprise with 20%. The traditional apprenticeship sector, engineering and manufacturing technologies, is in fourth place with 13%. However, that equates to 66,000 new apprentices, which is not negligible.
The breadth of these sectors, across both public services and private companies, offers job opportunities to applicants from very diverse backgrounds and with different attributes and educational qualifications. In our rapidly changing economy, this change in the nature of apprenticeships is both inevitable and largely positive. However, the particular problems of 16 to 18 year-olds remain a concern. In 2012-13 the number of apprentices from this age group was marginally lower than it was back in 2009-10. This may be explained in part by the requirement introduced last year for young people to be in education or training until they are 17—that age will be raised to 18 next year. On the plus side, the youth contract for 16 to 17 year-olds, launched in 2012, offers employers an enhanced grant of £2,200 per annum per head for each new recruit not in education, employment or training—the NEETs. The Government also forecast a boost in apprenticeships for 16 to 18 year-olds this year, up from 179,000 to 257,000. That is quite a jump so I hope that they hit that target.
Your Lordships will be aware that many 16 to 18 year-olds would like nothing more than a job in our creative industries, where talent, drive and creativity often trump academic qualifications. The appeal is even greater when the commercial creative industries have a growth rate much higher than the rest of the UK economy. These creative industries are now estimated to make up almost 5% of all UK employment. The subset of arts and culture inside the creative industries employs more than 100,000 people directly and another 150,000 indirectly. However, at a meeting of the Performers’ Alliance here in Parliament yesterday, actors, musicians and writers complained that the recent changes to the curriculum in English schools meant that the teaching of arts and cultural subjects was suffering from the Department for Education’s emphasis on science, technology and engineering—the so-called STEM subjects. In a debate in your Lordships’ House last week, the accusation was made that music and drama classes were being cut back severely and that the number taking art GCSE had fallen by 14% between 2010 and 2013.
The fear is that pupils who might not aspire to university could be denied the creative input that might help them into an arts-related job on leaving school. Looking at the figures produced by the Government, apprenticeships for arts and culture jobs seem surprisingly limited—just 1,000 out of a total of 500,000. I know that there are many excellent skills programmes in the creative sector but they are often skewed towards highly qualified graduates and well connected interns. The initiatives of the Arts Council, UK Music and the BBC to offer more accessible apprenticeships are welcome but still number only in the hundreds. Does the Minister think there is a particular problem with availability of apprenticeships in the creative industries, and what measures might be taken to ensure that they increase in number and are made more accessible to those from less privileged backgrounds, especially for 16 to 19 year-olds?
Lord Stoneham of Droxford (LD)
My Lords, I declare my interest as chair of Housing 21, which benefits from funds for apprenticeship training in care and housing management services. I ought to begin by apologising for being churlish in calling the noble Lord, Lord Young, churlish the last time we had a debate on this subject. I think it was an initial reaction but it was also disrespectful given his deep commitment to this subject and, indeed, what he said today.
Maybe I should go on to say that the doubling of apprenticeships by this Government is one of their major achievements but it was built on the foundations laid by the previous Labour Government. All of us—such as the noble Lord, Lord Macdonald, and I—who were in the newspaper industry will remember, as the noble Lord, Lord Monks, told us, the devastation of apprenticeships in the 1980s and 1990s. One of the great achievements of the past five years is that we have recovered from that devastation. This is against the background of a 7% fall in output; in many previous recessions, we would have seen a doubling of unemployment. Youth employment was high at the time of the recession, but it could have grown even more. Undoubtedly, the growth of apprenticeships has helped in the greater flexibility of the labour market in countering some of those trends. As a country, however, we still have a lot to understand as to why that flexibility has been so successful in countering the employment trends of the recession.
Getting the number of apprenticeships up has been a major achievement for the Government, but they have also been trying to address quality issues and to ensure that we are improving the quality of the training on the ground. We have heard today in the debate about the various efforts of the Government to improve the qualification standards, the Richard committee and the initiative to drive aspirations by including a route to university standards through the apprenticeship system. It is a remarkably popular initiative, and the problem for us is that supply is still not meeting demand.
Productivity and competitiveness in the economy can be addressed only through greater skills development and business development. As we go forward, the debate has shown us today that there cannot be any complacency in the sector. It is so important to us, as the economy starts to recover; we are already aware of significant skills shortages, which often take five to six years even to address, let alone to overcome.
What areas should our debate conclude need most attention? Many have been raised already. First, there is a continuing initiative to improve the standards of qualifications and training. We have to be careful that we do not get involved in excessive regulation, but we also have to make sure that, when we allow employers to have a greater say in the training requirements, they also make sure that those requirements are wide enough to deal with the wider needs of industry and not just their own companies.
This debate is meant to concentrate on the 16 to 18 year-olds, where we have heard that there is still disappointment on the training figures. The Government have estimates of what they expect to do this year. Perhaps the Minister could tell us whether we will see an improvement. That shift is important because the major beneficiaries of the expansion have been the over-25s, which may not be a bad thing. It may be that we have not dealt with that age group well before due to the problems that I mentioned earlier, such as the destruction of that sort of training in the 1990s. However, we must certainly address the 16 to 18 year-olds.
We have heard that the figures are still very disappointing in construction and engineering. I shall read the report of the noble Lord, Lord Best—I am glad for that prompt—but, although construction is a cyclical industry, we know that there are huge skills shortages that need to be addressed.
I welcome the suggestion in the Budget that there is to be further help for small employers. However, as the noble Lord, Lord Young, told us, there is huge capacity there; with the small number of firms taking up this initiative, there is a great potential to publicise and extend what we are doing.
Finally, we have heard about the importance of raising aspirations in our schools and the standing of apprenticeships. The noble Baroness, Lady Prosser, said that we need to give more attention to careers guidance. I hope that the progression to university-level qualifications through the apprenticeship system will provide an alternative route to self-improvement and career progression. The Government have made major inroads, but they must keep up the pressure to do much more.
Lord Haughey (Lab)
I begin by thanking my noble friend Lord Young for posing this Question today. The key word in the Question is “quality”. Some of the statistics that have been mentioned tonight may not relate to apprenticeships as we know them. My noble friend said earlier that some of these courses may be for only one year, and judging by some of the things that I have read in the past few weeks, some of the courses are for only six or 12 weeks, so I do not know how they can be billed as apprenticeships. A lot of people think that many apprenticeships have been watered down.
As someone who benefited from an engineering apprenticeship and is very proud to speak as the third member of the Glasgow apprenticeship union, the achievement of which I am most proud is that, over the past 20 years, I have managed through my own business to create 350 apprenticeship placements. Most of these people still work in the business today.
Some of these short-term training programmes presented as apprenticeships are very misleading. We will probably find that the 480,000 apprenticeships created over the past five years will not reflect the quality of the 480,000 or 500,000 in the previous five years. It is nothing short of tragic that 900,000 young people find themselves unemployed today. We have to create hope for these young people. It is due to the lack of opportunities that so many still find themselves out of work.
The biggest concern for me has already been mentioned: the decline in apprenticeships in the construction industry. The building of houses used to be a barometer of how the economy was doing—as my noble friend Lord Best mentioned. I read with interest in the last few days of the huge increase in the profits of builders and developers due to the Government’s guarantee scheme. Surely, we must be able to use this as a lever to guarantee apprenticeships in that industry.
Today, I sat through a debate on the Green Deal. I have to declare an interest here: I am involved in that sector. This initiative should absolutely have guaranteed thousands of new jobs in the central heating and cavity wall insulation industries. Unfortunately, that scheme is falling apart; day by day, it is becoming unworkable. I urge the Minister to revisit and have a look at what the Green Deal and the ECO deal were supposed to do in relation to apprenticeships.
Rather than having a go at the Minister, I would like to propose a suggestion to him. The Green Deal and the ECO deal have not worked, and there are more than 200,000 buildings in the UK that are more than 50,000 square feet. We have carried out a scientific test in our own building in Glasgow. If we created a position for a young apprentice energy champion in every building throughout the UK, the Government could award carbon credits or tax credits to the companies and we could create hundreds of thousands of jobs overnight—cost neutral. We have had a young energy champion in place in our building in Glasgow for the past nine months, working with Strathclyde University. We have done tests and we are saving between £8,000 and £12,000 a year. We pay the young person £15,000 a year. This is only by going about, turning off computers and switching off switches. He has also done something absolutely amazing: there are 900 people in my building who now think about energy efficiency every day. I urge the Government to have a look at this. This is a way in which we can generate jobs and give hope to 900,000 young people.
The great thing about this scheme is that it is an equal opportunities scheme. We have heard today about the lack of girls taking up apprenticeships. This scheme also could lead, through training, to that young person progressing from an energy champion to a fully qualified facilities manager earning perhaps £25,000 a year.
Lord Layard (Lab)
My Lords, I apologise for having missed the deadline, but I would like to ask one simple question. In 2009, the previous Government’s apprenticeship Act guaranteed that, by 2015, there would be an apprenticeship for almost every 16 to 18 year-old who wanted one. That was a clear statement of priorities and a marching order to the National Apprenticeship Service. Unfortunately, the present Government repealed the guarantee and focused the biggest development in apprenticeships, as many noble Lords have said, on the older age group. Was that not a massive error and will the Government now revert to the priority for 16 to 18 year-olds that was embodied in the previous strategy?
There are many Cassandras, probably on both sides, who say that we will not get employers to be interested in young people under 19. Suppose we accepted that argument: what would follow? It would be catastrophic because there would be permanently high youth unemployment and millions of people who would probably never get a real skill. The top priority has to be getting people off to a good start at the very beginning of their working lives. The best evidence for that was mentioned by the noble Baroness, Lady Sharp: a number of OECD studies show that the countries with the lowest youth unemployment and the best level of skills in the lower-skilled parts of the workforce are those countries with the largest number of apprenticeships for school leavers.
What is the problem? In spite of some things that have been said this evening, the problem is not mainly with the aspirations of young people; it is with our employers and the way in which they are approached by the apprenticeship service. More than half of all large employers still have no apprentices. By contrast, in 2012-13, 800,000 young people aged between 16 and 18 registered as applicants for apprenticeships. How many got an apprenticeship? It was one in seven. That is the problem—the supply of apprenticeships is not there and that is a terrible reflection on the record of the National Apprenticeship Service as a generator of apprenticeships. It has simply failed, I suspect partly because it has not been told that that is what the service is meant to be doing for that age group.
What is the Government’s priority? Is it 16 to 18 years-olds or not? If it is, will the Government tell the National Apprenticeship Service very clearly that that is the top priority?
Lord Popat (Con)
My Lords, I welcome the opportunity to set out what the Government are doing to increase the quality and availability of apprenticeships for 16 to 18 year-olds. I am grateful to the noble Lord, Lord Young of Norwood Green, for tabling this important and timely debate on a topic that, given his apprenticeship background, is obviously dear to him.
It was a pleasure to listen to the informative contributions of so many Peers. I refer, in particular, to the noble Lord, Lord Haughey, who has come a long way from being an air conditioning and refrigeration apprentice engineer. His success in now running a company with 11,000 employees worldwide shows what an apprentice can do. I hope that his story inspires a new generation of apprentices. We appreciate the number of jobs that the noble Lord’s group creates for young people, who are often given number one priority.
This topic is close to my heart. I had no formal education before joining a company as a trainee accountant. That opportunity to learn on the job enabled me to qualify as an accountant. Life is all about learning, irrespective of age. Now I am doing a new apprenticeship at the Dispatch Box.
I commend my honourable friend the Skills Minister, Matthew Hancock, for his tireless enthusiasm and energy. He has delivered real improvements on apprenticeships and helped to give better life choices to countless numbers of young people across the country. From listening to the debate, it seems that we are on the right path but there is a lot more to do. As the noble Lord, Lord Young, said earlier, we should not get complacent about what we are doing with apprenticeships.
Apprenticeships benefit employers, apprentices and the economy. We need to ensure that world-class apprenticeships are in place for years to come. We have seen a record 1.6 million people start an apprenticeship since 2010. Yes, we have made enormous progress, and apprenticeships are very important to the futures of our young people, but there is so much more that we need to do. We are not complacent about what apprenticeships deliver, or how accessible they are to different people. We have made a commitment to deliver 2 million apprenticeship starts in this Parliament.
Apprenticeships have always been about quality, as the noble Lord, Lord Lucas, said earlier. We have removed poor training provision and introduced a rule that every apprenticeship has to be for a minimum of one year. Over the past two years we have removed more than 54,000 short duration apprenticeships. Despite that, the number of apprenticeships for those aged 16 to 19 lasting a year or more went up by 30% between 2011-12 and 2012-13. Our aim is to raise the bar even further.
Apprenticeships are open to all. Because they are real jobs that lead to nationally recognised qualifications, recruitment decisions must rest with employers for apprenticeships as much as for other jobs. Our priority is to work with employers to increase the number of apprenticeship jobs for our young people. Apprenticeships must be high-quality, rigorous and focused on what employers need. We are using the apprenticeship reforms to address some of the barriers that employers say they face in recruiting apprentices. The reforms we are making will put employers in the driving seat of developing high-quality apprenticeship standards that deliver exactly the skills they need. Routing funding to employers will put them in charge of securing the most appropriate quality training and making providers more responsive to their needs.
Trailblazers led by employers and professional bodies are leading the way by collaborating and designing world-class standards for their sector. In the past, apprenticeships have been based on frameworks that run into hundreds of pages, often written in complex and technical language. The new standards are short, concise and written in a language that employers really understand. That will make apprenticeships very attractive to a large number of 16 to 18 year-olds.
We have already made great progress. The first 11 new apprenticeship standards have been published in occupations from aircraft fitter to software engineer. Phase 2 Trailblazers are already under way, covering an impressive 29 sectors and involving more than 340 leading employers.
In the future every apprentice will train towards the achievement of an employer-designed standard. The demand for higher standards will also stretch apprentices by setting higher expectations for achievement in English and maths and the introduction of a grading system will ensure that excellence is seen and widely recognised.
My noble friend Lady Sharp and the noble Baroness, Lady Prosser, mentioned the duty of schools to secure access to independent careers guidance for all pupils in years 8 to 13. That is exactly what we are doing. The guidance also will include information on apprenticeships.
We want it to become the norm for our young people to go into an apprenticeship or to university—or both, in the case of some higher apprenticeships. We are striving for apprenticeships to be held in the same high regard as university degrees. Giving young people the choice of routes to the skills and knowledge they need by providing careers advice and guidance at the right time has never been so important.
We want our schools, colleges and universities, together with the National Careers Service, to engage, inspire and help young people to make the right choices. The noble Lord, Lord Young, and the noble Baroness, Lady Prosser, pointed that out. Apprenticeships deliver and offer the ideal opportunity for ambitious young people to learn while earning a wage and also, of course, for employers to recruit the brightest and the best.
Higher apprenticeships are the key to providing able young people with the opportunity to undertake apprenticeship training at a level equivalent to a degree. The Budget announced £10 million in each of the next two years to support employer investment in apprenticeships up to postgraduate level. This will complement the additional £40 million announced in the autumn Statement for a further 20,000 higher apprenticeships, more than doubling current volumes.
We know that some people have the potential to benefit from an apprenticeship but cannot secure a place with an employer immediately. Our traineeships programme is helping 16 to 23 year-olds to develop the skills and experience they need for apprenticeships and other sustainable employment. We recognise that some of our younger apprentices require a greater level of supervision, guidance, education and introduction to the workplace. To address this under the new funding system, a simple one-off additional payment will be made to the employer once any 16 or 17 year-old is settled in their learning and workplace, having completed the first three months of their training.
A number of noble Lords mentioned the position of small and medium-sized enterprises. We are offering the apprenticeship grant for employers, which is a payment of £1,500 to smaller businesses offering a young person an apprenticeship. To date, the scheme has already helped 49,300 new apprenticeship starts. The additional £170 million over the next two years that was announced in the Budget will enable us to support the current very high demand for the grant by funding 100,000 additional incentive payments to employers. That represents a major boost to the job prospects of young people, in particular those aged between 16 and 18. However, this is just part of the success story of today’s apprenticeship programme. Figures show that 181,300 people aged 16 to 18 participated in an apprenticeship in the 2012-13 academic year, with an impressive total of 868,700 people overall participating in that academic year. That is a record number.
Apprenticeship starts for those aged 16 to 18 have broadly remained stable despite youth employment rates dropping by 39% over the past 10 years. This is the subject of today’s debate. It is a concern for us and for the department, and I am glad that the noble Lord, Lord Young, has raised the subject. I will ensure that I take it back to the department to make sure that progress continues to be made at all times.
Despite all this success, too many small businesses are still not engaged with apprenticeships. We are working with the Federation of Small Businesses and other stakeholders to ensure that our reforms are small- business and micro-business friendly. That is why all new apprenticeship standards will be approved only where they meet the needs of small businesses across the sectors.
I am grateful to the noble Lord, Lord Best, for sending me a copy of the report of the parliamentary inquiry entitled No More Lost Generations, also mentioned by the noble Lord, Lord Young. It headlines that we have 1 million NEETs aged 16 to 24. We are looking at a forecast of around 182,000 new construction jobs by 2018, but so far only just over 7,000 young people have completed an apprenticeship in the industry. We have to do better than that. The report arrived only this afternoon so I have taken just a brief look at it. However, the noble Lord can be assured that I will go through it and take it up with the department. It is interesting because it points out that one way of creating jobs for young people and giving them the skills they need is by training them for the construction industry. It is a sector that is going to grow further. If we do not do that, I am afraid that we will end up importing construction workers from the European Union, and that is something we want to avoid.
Several noble Lords, including the noble Lords, Lord Young and Lord Macdonald, talked about support for 16 to 18 year-olds. On 4 March, we announced the second phase of the Trailblazer apprenticeship standards in 29 industry sectors, including the STEM professions, services and others. Apprenticeship training for 16 to 18 year-olds is fully funded by the Government to provide incentives to employers. The National Apprenticeship Service has been tasked with redoubling its efforts to support more 16 to 18 year-olds into apprenticeships.
The noble Lords, Lord Stoneham, Lord Monks and Lord Young, all mentioned the role of public procurement in terms of the use of government procurement to grow apprenticeships. Public procurement is a key means of upskilling local workforces and reducing youth unemployment. Including a requirement to take on apprentices can play a valuable part. The Government support the appropriate use of apprenticeships in procurement, as they can contribute to encouraging growth in the economy.
The noble Lord, Lord Monks, raised the issue of how apprenticeships can be seen as being “just for the boys”. Girls are being encouraged into apprenticeships as part of the broader push on the STEM subjects, but the noble Lord was correct when he said that the percentage of girls taking up apprenticeships is low. We need to encourage more young women to come forward. He also mentioned the minimum wage. From the information I have, an apprentice earns on average around £200 a week, although the minimum wage is only £2.68, which is due to rise to £2.73 in October.
My noble friend Lord Addington referred to the difficulties that those suffering with dyslexia have in undertaking apprenticeships. As a vice-president of the British Dyslexia Association, he speaks from great experience. Final data from 2011-12 show that 21,110 dyslexic learners participated in an apprenticeship programme. Dyslexia should not present a barrier. We shall continue to monitor this and to do more about it.
My noble friend Lady Sharp touched on a number of issues that I know she has championed. She is right to highlight the historical emphasis on pursuing academic routes over vocational routes. This Government have taken considerable steps to even this playing field and have given every young person a choice, but we continue to look for other ways of furthering this agenda.
I have not covered all the areas that noble Lords have raised this evening but I promise to write to them. I shall follow up with the department as well to ensure that it takes action. A lot is happening, but we need to do a lot more. I thank the noble Lord, Lord Young, for initiating this important and timely debate.