House of Commons

Tuesday 24th June 2014 Commons Chamber

Tuesday 24 June 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 24th June 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 24th June 2014 Commons Chamber

The Chancellor of the Exchequer was asked—

[Mr Mark Harper (Forest of Dean) (Con)]

1. What recent assessment he has made of the effect on the economy of the level of employment.

[Chris White (Warwick and Leamington) (Con)]

12. What recent assessment he has made of the effect on the economy of the level of employment.

[The Chancellor of the Exchequer (Mr George Osborne)]

There are more people in work than ever before, with the latest figures showing the fastest increase in employment since records began. Today we have the very welcome news that Abu Dhabi will be investing £1 billion in building new houses in Manchester. That is a step towards it becoming the northern powerhouse I want to see, and it is a £1 billion vote of confidence in our long-term economic plan.

[Mr Harper]

Between 2003 and 2008 the Labour Government did create jobs, but unfortunately less than 10% of them benefited British citizens. Since this Government have come to power, through our skills, immigration and welfare policies over three-quarters of the 1.4 million new jobs have benefited British citizens. Is that not a long-term economic plan of which to be proud?

[Mr Osborne]

My hon. Friend is absolutely right, and I pay tribute to his contribution in making sure that the jobs that are being created in this recovery are jobs that British people have the skills and incentives to take. It is heartening that three-quarters of these jobs are going to UK citizens, as opposed to the truly staggering record of the last Government, when less than a quarter were taken by British citizens.

[Chris White]

Is my right hon. Friend aware that there has been a 59.5% fall in the number of jobseeker’s allowance claimants in Warwick and Leamington since April 2010? Also, recent figures show that a record number of companies were formed in Leamington Spa in the first quarter of this year. Will the Chancellor pay tribute to the local council, local chambers of trade and commerce and the local businesses that have made this possible, and will he outline what more can be done to further increase support for businesses in increasing employment?

[Mr Osborne]

I certainly pay tribute to the local council and local businesses who have worked with the excellent Member of Parliament, my colleague—[Interruption.] Yes, my hon. Friend has done remarkable work in bringing down the number of people claiming JSA by 60% since this Government came to office, and of course we will go on supporting businesses locally with important infrastructure, with the employment allowance and with awards. As I am sure my hon. Friend will be aware, Dennis Eagle, one of the companies in his constituency, has just been awarded a grant under our advanced manufacturing supply chain initiative, so we are backing manufacturing in the midlands, and backing his constituents all the way.

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

Sixty percent is a very interesting statistic. Does the Chancellor accept that the number of young people unemployed for more than 12 months has risen by 60% since he became Chancellor?

[Mr Osborne]

Youth unemployment is down 100,000 over the last year, and in the hon. Gentleman’s constituency the claimant count is down by 30%. I would have thought he would be welcoming that.

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

When a proud Kingstanding dad of a newborn baby son tells me he has been on zero-hours contracts for two years and cannot plan from one week to the next, and says “Do them up there”—the Government—“get what life is like down here?”, and when a proud Stockland Green mother caring for her disabled son says, “My husband’s been made redundant twice in the last three years, with each new job less secure and on a lower rate of pay,” and adds, “What planet does the Chancellor live on?”, what does the Chancellor have to say to them?

[Mr Osborne]

I would say that through our long-term economic plan we are creating jobs in the hon. Gentleman’s constituency, with the economic security that that brings. We are legislating to deal with the abuse of zero-hours contracts, which for 13 years the Labour party did nothing about, and we have discovered in the last couple of weeks that the shadow Chancellor, who from the Opposition Dispatch Box has criticised zero-hours contracts again and again, uses them in his own office.

[Mr Andrew Tyrie (Chichester) (Con)]

If economic growth turns out to be higher than currently estimated, as has been the case in several quarters over the past 18 months, does the Chancellor agree that that might provide part of the answer to the so-called productivity puzzle? Has the Treasury done any work on that question, and does he agree with the Governor of the Bank of England that we need to do a lot more to improve Office for National Statistics data?

[Mr Osborne]

I agree with my hon. Friend that one of the big challenges now is to improve productivity, which was clearly impaired by the financial crisis. Obviously, in doing that we need to make sure that the data we receive from our ONS is of the highest quality. People at the ONS work incredibly hard on that, but of course there is always room for improvement, as the Governor of the Bank of England pointed out today, and we will work with the Bank and the ONS to ensure that any improvements that can be made will be made.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Is it not the truth that people in employment have seen their living standards fall year on year under this Chancellor? So can he tell us, will working people be better off next year than they were in 2010—yes or no?

[Mr Osborne]

The many thousands of people who are getting jobs in the hon. Lady’s area are better off, and of course—[Interruption.] Let me explain to the shadow Chancellor: if you bring the British economy to its knees, if you have the deepest recession for 100 years, if you preside over the biggest banking crisis in our history, you make this country poorer. But it is by fixing those problems, by working through our long-term economic plan, that we are going to make the country richer again.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

2. What recent assessment he has made of the level of bank lending to businesses since May 2010.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

The Government have introduced several measures aimed at improving all types of lending to businesses, such as the funding for lending scheme, the British Business Bank and the SME appeals process. Against this backdrop, gross lending to businesses in Q1 2014 was almost 10% higher than in the same quarter a year earlier, and 32% of SMEs that have been through the appeals process have had their initial loan rejection overturned.

[Mr Thomas]

On the Government’s watch, net lending to business is down by some £57 billion since May 2010. Does that not underline the case for further banking reform, for an expansion of the use of community development financial institutions, and for consistent disclosure of bank lending data?

[Andrea Leadsom]

The hon. Gentleman will know that the great recession in 2008-09 that the previous Government presided over left banks in an absolute mess, and it takes a very long time to recover from such a devastating position. The banks are still trying to sort out their balance sheets, and net lending has been down. It will take time to recover, but this Government are putting measures in place to create new access to finance from all sorts of different lenders. I was delighted yesterday to support the credit union movement on its 50th anniversary with a call for evidence on how we can expand that area of activity for.

[Guy Opperman (Hexham) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests. Does the Minister agree with me that, as well as stabilising and reforming the banking system, one of the key aspects of the long-term economic plan is the creation since 2010 of many new local banks that provide alternative and expanded lending to retail and business customers?

[Andrea Leadsom]

Yes, I absolutely agree with my hon. Friend. The Government want more competition and diversity in the banking sector, which is why we asked the old Financial Services Authority to review the barriers to entry for banks, why we legislated to give the Financial Conduct Authority strong competition powers, and why we created the payment systems regulator to look at fair access to payment systems.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

In recent discussions with women entrepreneurs I have been struck by the number who have said they were surprised by the banks’ attitude towards them and their businesses. I spoke to one entrepreneur who said that only when she was featured in a TV programme did a bank phone her up and offer her a loan. What discussions has the Chancellor had with banks about women-led businesses, the demand for lending and how many they are lending to?

[Andrea Leadsom]

This Government have taken great steps to improve competition and I am delighted that, currently, the regulator is talking to 25 new applicants for new banks. We are also taking steps to ensure that those who get turned down for credit have the opportunity to go to other challenger banks to access other sources of finance. I am sure that the hon. Lady will welcome the steps that the Financial Secretary to the Treasury, my right hon. Friend the Member for Loughborough (Nicky Morgan), is taking to improve particularly the support the Government are giving to female entrepreneurs.

[Alun Cairns (Vale of Glamorgan) (Con)]

Increasing competition in the sector is key to improving lending. The Minister mentioned that the Prudential Regulation Authority is looking at 25 new applications for licensing to be banks. How does this compare with the decade before 2010?

[Andrea Leadsom]

My hon. Friend may know that in May 2010, when Metro bank was granted a full banking licence, that was the first new full banking licence for over 100 years, so the fact that the regulator is talking to potentially more than 25 new banks is very good news for competition and choice in the UK.

[Sir Richard Ottaway (Croydon South) (Con)]

3. What recent assessment he has made of the potential effect of increasing tax on businesses on public finances.

[The Chancellor of the Exchequer (Mr George Osborne)]

Government analysis has shown that high corporate taxes have a negative impact on investment, jobs and growth, so we have cut the corporation tax rate from 28% to 21%. Next year, it will fall to 20%, the joint lowest rate in the G20. Increasing corporation tax, as some propose, would damage the economy, cost jobs and drive away investment. It is anti-business and we will not do it.

[Sir Richard Ottaway]

I welcome that answer. There is growing evidence that, in a number of sectors where we have cut taxation, revenues are starting to rise. Does my right hon. Friend agree that those proposing increases in taxes are doing so for purely ideological reasons and because they are engaging in the politics of envy?

[Mr Osborne]

Whatever their motivations—I think my right hon. Friend is right—we are absolutely clear about the results. It will put people out of work and ensure that investment does not come to Britain. We are against plans to increase corporation tax. Indeed, I think that most people from around the world would look on in bemusement if Britain were to increase its business taxes, as the Opposition propose. To come to the point, the Treasury and Her Majesty’s Revenue and Customs are now providing more dynamic modelling of the effect of tax cuts on investment and growth, and cuts in corporation tax and fuel duty are shown to have positive impacts on the economy.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

High profile companies operate schemes that lead to the UK economy losing out, and not benefiting to the fullest extent. Is the Chancellor aware that Google AdWords is de-ranking small firms if they do not stump up substantial funds? It means not only that Google’s profits go up, helped by its tax arrangements, but that the profits of small firms, such as those in my constituency, go down, and the Exchequer is the net loser. Will he please discuss that with his colleague, the Secretary of State for Business, Innovation and Skills?

[Mr Osborne]

I will make a general point, which is that the internet has provided an enormous opportunity for many small businesses, because it has dramatically cut distribution and start-up costs and created all sorts of opportunities that did not previously exist for small businesses in Britain. If we believe in free markets and technological change, we should believe in the innovation that that brings. Specifically on the tax issue, we are working internationally—this cannot be done in one country—to ensure that the international corporate tax system reflects the digital economy and international business of today. We are helping to fund that OECD work, and we are expecting the first conclusions this autumn.

[Mr Marcus Jones (Nuneaton) (Con)]

Employment is up substantially in my constituency of Nuneaton, and unemployment has dropped 20% in the past year. Does my right hon. Friend agree that it would be absolute suicide to increase employers’ national insurance contributions, and can he rule that out as part of our long-term economic plan?

[Mr Osborne]

My hon. Friend has done some fantastic work with local businesses to increase jobs in Nuneaton and to ensure that small businesses expand. He is absolutely right that the Opposition’s plans for an increase in corporation tax, which they talk about openly, and for a jobs tax, which they talk about secretly, would be a double whammy that would put people out of work in his constituency.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is the Chancellor aware that most people do not mind paying tax if it is fair and transparent and if everyone pays their fair whack? When will he ensure that those people who avoid taxation actually pay it?

[Mr Osborne]

We have put a huge effort—I pay tribute to the Exchequer Secretary who has led this work—into ensuring that we collect the taxes that are due. As a result, many billions of pounds more in taxes are collected. We are eliminating abuse that existed before we arrived, such as that involving stamp duty, and we set our tax rates fairly. We do not have a situation, as we did under the previous Government, where people in the City were paying lower tax rates than the people who cleaned for them.

[Steve Baker (Wycombe) (Con)]

4. What steps he is taking to ensure future stability in the housing market.

[The Chancellor of the Exchequer (Mr George Osborne)]

Our economic plan is about stability and security, so we are taking two steps on housing. First, we are building more homes, so that supply better matches demand. The Government’s reforms mean that housing starts are now at a six-year high. Secondly, we have given the Bank of England the responsibility and the tools to deal with any financial risk associated with the housing market, and I am clear that the banks should not hesitate to use those new powers if they think it is necessary to protect financial stability.

[Steve Baker]

On 19 May, The Telegraph reported that house prices jumped £10,000 in five weeks when the Bank of England threatened to cap mortgages. Will my right hon. Friend take steps to ensure that the Bank does not inadvertently promote financial instability when it exercises those powers?

[Mr Osborne]

I do not think that the Bank is doing that. We have taken a big step forward in this Parliament to give the Bank of England macro-prudential tools to intervene in areas such as housing if it thinks that there is a financial risk. Clearly, these things did not exist before, which is one of the reasons why the economy was in the mess that it was in when we came to office. At the Mansion House, I offered the Bank of England new direct powers to impose limits on loan-to-value and loan-to-income ratios. It is, of course, entirely up to the Financial Policy Committee, acting independently of the Government, to deploy any of its tools if it sees risks developing.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The greatest threat to stability in the housing market is the mismatch between supply and demand. The House knows what the Chancellor has done to stoke up demand, but supply is at its lowest level since records began—fewer than 150,000 units. I heard what the Chancellor said in his initial reply. What more is he going to do to boost supply in the housing market?

[Mr Osborne]

Housing starts are now at their highest since 2007, and we have seen an increase in housing starts and planning permissions this year. I was with the hon. Gentleman in his constituency just the other day, talking about what we could do to get more housing going in his part of London on a brownfield site that he knows has been left derelict for many years. He was working very co-operatively with me then, but perhaps the Chamber of the House of Commons brings out a more adversarial encounter.

[Tim Farron (Westmorland and Lonsdale) (LD)]

My right hon. Friend the Chancellor is right to say that meeting demand with supply is absolutely critical. Given that meeting that demand means 3 million new homes over the next 10 years and that the private sector built only 180,000 houses a year, at best, during the height of the housing boom in the 1990s, does he agree that public investment is needed in social rented housing, in the private sector and in the public sector, if we are to meet the 3 million target?

[Mr Osborne]

I do agree with my hon. Friend. We need to ensure that planning is reformed, and we have done that. It was a controversial decision, but as a Government we have pushed that through, and planning permissions are up. We need to create incentives for the private sector to build homes, and Help to Buy has done that. But we also need to go on building social housing, and as he well knows, the coalition Government are delivering the largest programme of social housing for a generation.

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

Does the Chancellor seriously believe that taxpayers subsidising mortgages on properties worth £600,000 is really leading to stability in the housing market?

[Mr Osborne]

I find it extraordinary that the Labour party is against Help to Buy, which is assisting those who are on low and middle incomes to get into the housing market. The great majority of those homes are outside London and the south-east. Almost none of them has been bought at £500,000 or £600,000, as the hon. Gentleman says, and what we are actually seeing is that the homes that are being built and bought are below the national average. So instead of carping about Help to Buy, Labour should get behind it.

[Mark Garnier (Wyre Forest) (Con)]

A key component of the financial crisis was a debt-fuelled housing bubble. The Governor of the Bank of England confirmed to the Treasury Committee this morning that a failure of regulation and macro-prudential policy was instrumental in that crisis. Is my right hon. Friend confident that the measures that he has introduced, including the new regulatory framework as well as the Financial Policy Committee, will succeed in heading off any future housing bubble-inspired crisis?

[Mr Osborne]

The Bank of England now has very powerful tools to deal with the kind of risks that we saw develop in 2006 and 2007, with such catastrophic consequences for our banking system and for our economy. The new powers that it will receive—subject, of course, to parliamentary approval—on being able to limit loan-to-income ratios and loan-to-value ratios for every mortgage or, indeed, as a percentage of mortgage portfolios, are very powerful tools. It is up to the Bank of England to make independent judgments about when to deploy them, because, as we have learnt with such monetary and macro-prudential policies, it is better that the politicians stay out of it.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Under this Chancellor, we have had the lowest level of house building in peacetime since the 1920s. The Financial Times reported a few weeks ago that the Chancellor is “relaxed” about an early rise in interest rates to rein in our unbalanced housing market. Can he tell the House how much a 1% rise in interest rates would add to the average mortgage bill?

[Mr Osborne]

I am not going to comment on interest rates because, as the right hon. Gentleman should remember, the Bank of England is independent, and it is for the Bank to make its judgment. Let me pick him up on what he says about housing. I absolutely believe that we need to build more homes, and housing starts are now more than double what they were in the last year of the Labour Government, in whose Cabinet the right hon. Gentleman sat. If he supported our planning reforms rather than opposed them, if he supported our approach to spending, which has enabled us to pay for the new social housing, and if he backed Help to Buy, he would have a bit more credibility when he stood at the Dispatch Box. As it is, I prefer to listen to the Labour leader’s speechwriter, who said this week:

“I fell out with Ed Balls because Labour’s economic policy is nonsense.”

[Ed Balls]

The Chancellor used to boast that record low mortgage rates were a sign that his policy was working. Now, with the Governor warning of an early rise in interest rates as demand outstrips supply, the Chancellor is desperately trying to claim that higher interest rates would be a sign of success as well. Is not the truth that his failure to get house building moving in the last four years is the reason our housing market is so unbalanced and early interest rate rises are on the cards? As for the question about mortgages, let me answer by quoting the Chancellor, who said in the House of Commons that

“a 1% rise on the average mortgage bill would add £1,000.”—[Official Report, 6 December 2011; Vol. 537, c. 147.]

I can tell him that homeowners up and down the country will not be relaxed about that.

[Mr Osborne]

The shadow Chancellor has got into pretty desperate territory when he says that an exit from exceptionally loose monetary policy, implemented in the middle of a crisis, whenever that comes, is a catastrophe for the British economy. The truth is that under any Bank of England setting, if the right hon. Gentleman was in office, the fiscal policy would be out of control and interest rates would be higher than under this Government.

The Prime Minister and I paid an interesting visit yesterday to the right hon. Gentleman’s constituency, along with the next Conservative MP for Morley and Outwood, Andrea Jenkyns. I will tell him what we found: people who had been unemployed now in work; the number of apprenticeships in the constituency doubled; and the Coca-Cola plant, which we visited, putting more money into Britain. The recovery in Morley and Outwood and the rest of the country is the real thing.

[Dr Julian Huppert (Cambridge) (LD)]

5. What steps he is taking to ensure that people pay the taxes for which they are liable.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Since 2010, the Government have been determined to support HMRC in improving overall compliance levels, tackling tax avoidance, evasion and fraud, and punishing those who break the rules. Overall we are investing about £1 billion in HMRC’s compliance activities, and HMRC achieved record levels of compliance revenues last year, securing £23.9 billion.

[Dr Huppert]

It is a huge frustration to people to see wealthy individuals and large companies avoid paying the taxes that they ought to be paying. I thank the Minister for his comments, but will he go further to make sure that our rules are fit for purpose? Will he tackle, for example, transfer pricing, and ensure that there is an international agreement that benefits Britain and means that people pay the correct amount of tax in this country?

[Mr Gauke]

As the Chancellor made clear a moment ago, it is right that we address these issues, and that we do so at an international level. The Organisation for Economic Co-operation and Development’s important work on base erosion and profit shifting is a consequence of the leadership shown by the Prime Minister and the Chancellor, and we hope that we will see the fruits of that progress beginning this autumn.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

With the amount of uncollected tax rising, the Swiss deal raising less than a third of what the Chancellor predicted and Ministers refusing to close the eurobonds loophole, is not the truth that the Government are totally failing to tackle tax avoidance and to close the tax gap?

[Mr Gauke]

No, it is not the truth. The truth is that there are record levels of compliance yield, as I mentioned: £23.9 billion as a consequence of HMRC’s activity. The UK is leading the way in international reform. There has never been a Government so committed to, nor a revenue authority so successful in, closing loopholes, getting the tax in and making sure that people pay what is required under the law.

[Shabana Mahmood]

While the Minister fails to tackle tax avoidance, overseas buyers are snapping up property in London but not making a proper tax contribution in this country. Is it not time that the Government introduced a fair tax on properties worth more than £2 million, and used the money to cut taxes for 24 million working people, with a lower 10p starting rate of income tax?

[Mr Gauke]

If the hon. Lady wants to cut taxes for 24 million people, she might want to consider increasing a personal allowance to £10,500, which is exactly what the Government have done, rather than doubling the 10p rate of income tax as the previous Government did. As for taxes on property, it was this Government who introduced the annual tax on envelope dwellings, ensuring that there is a contribution to the Revenue from owners and occupiers of properties held in a corporate envelope. Again, I really do not think that on this issue the Labour party has a leg to stand on.

[Nick de Bois (Enfield North) (Con)]

6. What recent assessment he has made of the effectiveness of his long-term economic plan.

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Government’s long-term economic plan is working, and the UK is expected to grow faster than any other G7 country this year. Inflation is below target, the deficit has been reduced by more than a third since 2009-10, and employment is at record levels, but the job is not yet done, and the biggest risk now to the recovery would be abandoning the plan that is delivering a brighter economic future.

[Nick de Bois]

Evidence of the Government’s long-term economic plan was on display when the Chancellor visited Enfield to see the Meridian Water site, which is delivering jobs, houses and transport infrastructure. However, under this Government, will the Minister look at the opportunity for revisiting the northern gateway access road, which links the M25 with this vital economic area?

[Nicky Morgan]

My right hon. Friend the Chancellor has said that, yes, he is very happy to look at it. As he said when he visited, infrastructure investment is an important part of our long-term economic plan. I know that my hon. Friend has been working for many years on this scheme. He has built a coalition of partners locally and this is important for the Lee valley. The Government will always look at important infrastructure investment to bring jobs and growth to all parts of our economy.

[Helen Jones (Warrington North) (Lab)]

In my constituency, 20% of people in work earn less than the living wage and others are trapped in part-time jobs and on zero-hours contracts. Why do the Government keep trumpeting a supposed recovery that, for the first time ever, has left more people in poverty in work than out of work?

[Nicky Morgan]

I am sure that the hon. Lady will welcome the fact that there has been a 24% fall in her constituency in the number of young people on jobseeker’s allowance, and the long-term economic plan is for all people. My hon. Friend the Exchequer Secretary has always talked about the rise in the personal allowance, and it is this Government, as we have already heard, who are taking action on zero-hours contracts. The last Government had 13 years to tackle them and failed to do so.

[Mr Philip Hollobone (Kettering) (Con)]

The Minister will know that Kettering is very much middle England at its best. With a 2,500 increase in local jobs since the last election, does that not demonstrate that plan A is most definitely working, and there is absolutely no need for a plan B?

[Nicky Morgan]

I know Kettering very well as I pass it on the Midland main line up to my constituency twice a week. My hon. Friend is absolutely right to say that the increase in jobs shows that the Government’s long-term economic plan is working. As I said, the job is not yet done, there are always risks to our economy, and we need to build a sustainable, strong economic recovery that benefits everyone, including everyone living in Kettering.

[Jonathan Ashworth (Leicester South) (Lab)]

Does the right hon. Lady agree that the Chancellor promised to balance the books, but is going to fail; he promised to deal with debt, but is failing; he promised to maintain triple A ratings, but he failed; and when it comes to the jobs market, as my hon. Friend the Member for Warrington North (Helen Jones) said, it is increasingly characterised by low pay, squeezed wages and zero-hours contracts?

[Nicky Morgan]

My right hon. Friend the Chancellor promised to fix the British economy, which is what we are doing. The hon. Gentleman might remember that the last Chancellor promised to abandon boom and bust, and we know where that got us.

[Kerry McCarthy (Bristol East) (Lab)]

8. What recent assessment he has made of the effect of the Government's policies on its commitments under the Child Poverty Act 2010.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

10. What recent assessment he has made of the level of child poverty.

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Government are committed to our goal of ending child poverty in the UK by 2020. We are determined to tackle the root causes of poverty, not just the symptoms. Our draft child poverty strategy 2014-17 sets out our approaches, based on robust published evidence review. Work remains the best route out of poverty. We are making work pay and tackling low pay through our reforms to the welfare and tax systems. Universal credit, for example, will lift as many as 300,000 children out of poverty.

[Kerry McCarthy]

But this week the largest ever study of poverty in the UK, the Poverty and Social Exclusion project led by the university of Bristol, was published. It found that full-time work is not sufficient to keep families out of poverty and that the majority of children who suffer multiple deprivations live with both parents, at least one of whom is working, in small families, with only one or two siblings. When will the Government accept responsibility for the rising tide of in-work poverty and do something to help people who are trying their hardest but still struggling to get by, including the children who are living in those families?

[Nicky Morgan]

We have set out, as I have already said, a clear commitment by this Government to end child poverty by 2020. The hon. Lady’s question shows that there are a number of root causes of child poverty. Incomes, of course, are a very important part of that. We are working to raise the income of poor children’s families by helping them get into work and making work pay, and she will appreciate the rise in the national minimum wage. We are also raising educational outcomes for poor children, which is equally important.

[Luciana Berger]

But nearly 30% of children in my constituency, Liverpool Wavertree, are living in poverty, and many of those children have parents who are in work. This is the highest level in five years. Is the Minister embarrassed by her Government’s record on child poverty? What exactly is she going to do about it?

[Nicky Morgan]

Five years ago there was a Labour Government in power, and I am sure the hon. Lady will welcome the fact that there has been a 21% fall in jobseeker’s allowance claimants in her constituency. I am sure she will also welcome the rise in the national minimum wage that this Government have overseen.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

16. One of the key challenges to tackling child poverty in my constituency is the resilience of low income families to sudden financial shocks. The answer, surely, is to improve saving levels. What can the Minister do to improve the opportunities for families to save more?

[Nicky Morgan]

We have seen that the savings ratio has gone up under this Government, but my hon. Friend is right. The causes of poverty are many and various, but the important point is getting people into work. The troubled families programme, which this Government have introduced and overseen, has shown that getting an adult in a workless household into work has a transformative effect, alongside steps such as increasing savings. Getting people into work is the most important thing we can do.

[Charlie Elphicke (Dover) (Con)]

Is the Minister aware that child poverty, wider poverty and inequality rose in the previous Parliament and have been declining so far in this Parliament, as has the number of people who struggle to pay their food bill, according to OECD figures?

[Nicky Morgan]

My hon. Friend is right about the figures. We remain committed to continuing the fall and to eradicating child poverty by 2020. Our draft strategy sets out how we intend to achieve that. Children are three times more likely to be in poverty if they live in a workless household, which is why work remains the best route out of poverty.

[Ian Lucas (Wrexham) (Lab)]

9. What steps he is taking to promote private sector investment in the construction industry.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The Government published the Construction 2025 industrial strategy in July last year, setting out a clear vision of how the Government will work with the industry to maximise the opportunities for growth. The Construction Leadership Council, chaired by my right hon. Friend the Business Secretary and Sir David Higgins, is overseeing delivery of that strategy. In addition, efforts to drive improved delivery are being co-ordinated through Infrastructure UK’s cost review programme.

[Ian Lucas]

But Wrexham construction companies continue to tell me that banks fail to offer loans to support house building projects. Non-financial private sector investment has fallen from £43 billion in 2008 to £14 billion in 2013. Is this not just another aspect of the failure of the Chancellor’s short-term economic scam?

[Mr Gauke]

As a Government we are trying to do everything we can to help the construction industry, whether that is through the beneficial effect of Help to Buy, the local infrastructure fund, or the changes to planning. It is worth pointing out that construction output, according to the Office for National Statistics, is 4.6% up from where it was 12 months ago. The purchasing managers index also shows significant increases in construction. We are moving in the right direction.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The construction industry has benefited from the business-friendly policies of this Government. Does my hon. Friend agree with my constituent, the former Trade Minister, Lord Digby Jones, when he says that the Leader of the Opposition is the “least business-friendly” leader of any political party in years?

[Mr Speaker]

On the subject of private sector investment in the construction industry, rather than the characteristics of an individual, a brief reply, Minister Gauke. We are grateful.

[Mr Gauke]

If we want to see private sector investment in the infrastructure industry, or anywhere else, we must maintain business confidence. Anti-business policies do not help that.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

But 2025 is a long way away for a plan. Is the Minister not aware that on this Government’s watch infrastructure output in the whole economy, public and private, is 13% down? Is it not about time they got their finger out and did something about it?

[Mr Gauke]

I am not sure whether the hon. Gentleman is criticising the long-term approach of our economic plan, but it is important that we think about the long term. Infrastructure spending, both private and public, will on average be higher in this Parliament than it was in the previous Parliament.

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

Is the Exchequer Secretary aware that a partnership between the Government, Central Bedfordshire council and developers is leading to the construction of 5,200 houses north of Houghton Regis and the provision of a bypass, for which we have waited 60 years, as a result of a £45 million contribution from the developers? Is not that the way to get construction going?

[Mr Gauke]

My hon. Friend is absolutely right. It is as a result of this Government’s long-term approach to the economy that we will see significant increases in infrastructure over the years ahead.

[Nick Smith (Blaenau Gwent) (Lab)]

11. What recent assessment he has made of the difference between the rate of inflation and the rate of growth in average earnings since May 2010.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Times have been tough for hard-working people. As Paul Johnson of the Institute for Fiscal Studies said on 6 December:

“There have been very significant falls in real earnings as a direct but delayed result of the 2008 recession, essentially.”

As the Bank of England and the IFS have said, the best way to support living standards is to improve productivity and by sticking to the Government’s long-term plan to build a stronger economy.

[Nick Smith]

Real wages have fallen in Blaenau Gwent, partly due to poor access to labour markets. What progress is being made to speed up rail electrification for the valleys, which would boost earnings? The Chief Secretary said that he would look into the matter six months ago. What has happened?

[Mr Gauke]

There is an agreement with the Welsh Government on that, but as I said a moment ago, this Government have an infrastructure plan. Up and down the country progress is being made to improve our transport infrastructure. That is part of our long-term economic plan. The hon. Gentleman will also be aware that in his constituency the number of jobseeker’s allowance claimants is down 20% over the past year.

[George Freeman (Mid Norfolk) (Con)]

Does the Minister agree that all the evidence suggests that the biggest impact on the rate of earnings is the competitiveness and productivity of industry? Does he also agree that the single biggest threat to increases in average earnings is Labour’s plan for a stealth corporation tax and a jobs tax?

[Mr Gauke]

Absolutely. If we want to see jobs and investment in this country, we should be taxing jobs and investment less, not more.

[Sheila Gilmore (Edinburgh East) (Lab)]

13. What plans he has to review the effects of the Help to Buy scheme.

[Diana Johnson (Kingston upon Hull North) (Lab)]

14. What progress his Department has made on the Help to Buy scheme.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

Help to Buy is working. Since the Chancellor announced the scheme in the 2013 Budget, it has supported over 27,000 households on to the housing ladder, and the numbers show that it is helping the right people—but we will be vigilant. The Chancellor has asked the Financial Policy Committee to assess the ongoing impact of the Help to Buy mortgage guarantee scheme annually, and it will make its assessment in September.

[Sheila Gilmore]

I thank the Minister for that reply, but when in five London boroughs, for example, the value of properties sold under the scheme has been over £400,000, have we not reached the point at which we should be reviewing this urgently, because at the same time we are hearing increasing calls for the Financial Policy Committee to look at cooling the housing market? We could be cooling the mortgage market on the one hand and encouraging higher prices through Help to Buy on the other. It does not make sense.

[Andrea Leadsom]

The hon. Lady should be aware that the numbers just do not support what she is saying. In fact, 94% of all completions under Help to Buy are outside London, the average price of a home under the mortgage scheme is around £151,000, which is well below the UK average of £260,000, and only 1.3% of total mortgage lending is under the Help to Buy mortgage scheme.

[Diana Johnson]

The Minister will know that Hull North’s Kingswood area leads the table for the number of houses sold under Help to Buy, but is she aware that Ministers in the Department for Environment, Food and Rural Affairs have repeatedly told me in this House that those houses should not have been built because they are on a floodplain and will not get insurance under the Government’s new insurance scheme? Does one hand of Government know what the other hand is doing, because it does not look like it to me?

[Andrea Leadsom]

The Government know exactly what their policy is on Help to Buy—it is to support first-time buyers and, at the same time, to make a significant contribution to new housing starts. The supply of housing is absolutely essential for people to achieve their dream of getting on the housing ladder.

[Justin Tomlinson (North Swindon) (Con)]

A total of 119 households in my constituency have benefited from Help to Buy, of which 96% are first-time buyers. Will the Minister visit Swindon to meet these people and those in the construction industry who have benefited from this opportunity?

[Andrea Leadsom]

I am grateful to my hon. Friend for that invitation, and yes, I would love to take him up on it. As a new Minister, it would be a very exciting visit for me, so I thank him. The chief executive of Barratt Homes has said that its new housing starts are 20% up on two years ago owing to the Help to Buy scheme.

[Mr Speaker]

The Minister is in such a state of high excitement that we are pleased to see it.

[Jessica Lee (Erewash) (Con)]

Does my hon. Friend agree that Help to Buy is a key component in helping families and first-time buyers take the important step on the property ladder, as evidenced by my right hon. Friend the Prime Minister’s recent visit to Ilkeston in Erewash to see the very successful scheme at Briars Chase?

[Andrea Leadsom]

My hon. Friend, who represents Erewash so well, is absolutely right. Aspiring to one’s first new home is something that we all wish for, for ourselves, our children and our grandchildren. This Government are determined to do something about that while ensuring that we do not do anything that would enable an unsustainable housing boom.

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

15. One of the features of the UK housing market is that millions of houses are inefficient in their use of energy, and even much new housing is not as energy-efficient as it ought to be. The Help to Buy scheme could have been used as a way of providing a massive boost to more energy-efficient UK housing stock, but that opportunity has so far been lost. What will the Government do to remedy this deficiency?

[Andrea Leadsom]

The hon. Gentleman is right that house builders should be seizing the opportunity to make homes as energy-efficient as possible. That does not, however, detract from the very important point that the Help to Buy scheme was started to try to regenerate growth in the housing market, and that is an achievement that all Members should be proud of.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Stamp duty on homes is a major money-spinner for the Treasury, yet it is paid disproportionately by hard-working families in the south-east of England who have to pay at least twice as much for a family home and therefore twice as much stamp duty as they might for a home in the shadow Chancellor’s constituency, for example. Is it not time to consider regional stamp duty rates so as to be fairer to hard-working families?

[Andrea Leadsom]

I accept my hon. Friend’s suggestion as a lobby to my hon. Friend the Exchequer Secretary, to whom I shall chat in due course, no doubt, in the Members’ Tea Room.

[Julian Sturdy (York Outer) (Con)]

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

[The Chancellor of the Exchequer (Mr George Osborne)]

The core purpose of the Treasury is to ensure the stability and prosperity of the economy.

[Julian Sturdy]

As we strive to close the north-south divide and continue to deliver faster growth for the north, what further steps is my right hon. Friend proposing to promote the area as an economic powerhouse to rival London and our global competitors?

[Mr Osborne]

Yesterday I had a very good meeting in Manchester with civic leaders from all parties and with universities from the north of England to discuss how we could improve the transport links across the Pennines and through Yorkshire and Lancashire and ensure that we have strong civic governance as well. Today’s investment by Abu Dhabi in Manchester is a good example of the confidence in the northern economy.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The House and the Chancellor should know that the jury has just delivered its verdict and the Government’s former director of communications, Mr Coulson, has been found guilty of conspiracy to hack phones. Does the Chancellor now accept that it was a terrible error of judgment for—

[Mr Speaker]

Order. This may be a matter of great interest, but it does not relate to Treasury questions. [Interruption.] Well, it is not clear to me that it does, and if the question were to be judged to be in order, it would need to be clear by now. [Interruption.] I really think not. I cannot see what the relevance is to the responsibilities of the Chancellor of the Exchequer. The shadow Chancellor can try another sentence and we will see.

[Ed Balls]

Does the Chancellor accept that he has brought the office of the Chancellor and the Treasury into disrepute by urging the Prime Minister, for his own reasons, to bring Mr Coulson into government? Has the Chancellor not damaged his own reputation and that of the Government?

[Mr Osborne]

Obviously the verdict has been announced while we have been doing Treasury questions. I will go away and study it, and of course if a statement is appropriate from me and the Prime Minister, there will be one—not in Treasury questions, when we are talking about the economy. May I say to the right hon. Gentleman that the person who worked alongside Damian McBride is no person to give lectures on anything?

[Mr Philip Hollobone (Kettering) (Con)]

T2. According to the Department for Transport, for Kettering’s sustainable urban extension to be sustainable a new road junction on the A14, junction 10A, costing £39 million, needs to be provided. Despite the best efforts of local people with numerous Departments, this funding has not been forthcoming. Would the Chancellor be kind enough to set up a meeting for local people with the Commercial Secretary to the Treasury so that funding for this vital infrastructure can be secured?

[Mr Osborne]

I am certainly aware of the importance to local people of this project, and I know that my hon. Friend has been speaking to the Department for Transport. I am of course happy to arrange for him to meet the Commercial Secretary, and I know there is also a bid in to the single local growth fund, on which we will be making an announcement in the coming weeks. May I also say that my hon. Friend has been a doughty champion of his constituents and of businesses in his constituency?

[Kate Green (Stretford and Urmston) (Lab)]

T3. The rate of employment of disabled people is approximately 30% lower than that of non-disabled people, and 650,000 more disabled people are required to look for work as a result of welfare reforms since 2008. The Chancellor of the Exchequer has spoken of his ambition of achieving full employment. Is he confident that the Government have a strategy sufficient to close this gap, as that will be essential to achieving that goal?

[The Financial Secretary to the Treasury (Nicky Morgan)]

The Department for Work and Pensions, and the Ministers responsible for disabilities and for employment, launched a strategy last December to help those with disabilities to find work. What this Government have not done is what the previous Government did, which was to say to people, “We don’t think that you can work.” We want to empower people to work, and schemes such as Access to Work are all about doing that.

[John Pugh (Southport) (LD)]

T6. May I congratulate the Chancellor on his excellent HS3 proposal? It follows on from an equally visionary plan from the Deputy Prime Minister—in the previous Government. How does the Chancellor’s plan exceed Lord Prescott’s ambition?

[Mr George Osborne]

I am sorry, but when the hon. Gentleman was talking about an excellent Deputy Prime Minister I assumed he was talking about the leader of the Liberal Democrats rather than John Prescott—perhaps the hon. Gentleman was just being ironic about Lord Prescott. Lord Prescott was on the television yesterday boasting that he had set out a plan in 2004, and then someone pointed out that nothing had happened to his plan since. We are talking about improving the links from the Greater Merseyside region across Manchester and Leeds to Hull, and indeed across all parts of the north. High-speed rail is part of this, but it is only part of it: this is also about solving local bottlenecks, such as with the money we are putting into the M62, and about speeding up the commuter trains, which is what the northern hub is all about. This is a coherent plan to back a northern powerhouse.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T4. Despite the Chancellor’s boasts, the former Tory Chancellor admitted recently that people have “not yet felt any sense of recovery”.Does this Chancellor agree with him, yes or no?

[Mr Osborne]

I agree with the previous Deputy Prime Minister, John Prescott, who said that Labour gets “smashed on the economy”.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

T8. Many trains now take longer to go from Liverpool to Manchester to Leeds than they did in the 19th century, so I welcome the Chancellor’s comment on HS3, but may I ask him to look particularly at how we can improve wider transport connectivity, not just an HS3 line?

[Mr Osborne]

High-speed connectivity across the Pennines is of course an important component of having the northern powerhouse, but it is also important to improve transport links within Lancashire, to Blackpool and other such places. We are going to be introducing electric trains on some of these lines in Lancashire from December, which will improve the quality of travel as well as the speed. As I said yesterday, when we also put in the franchise for the Northern rail line, we will be seeking to try to get better and more modern carriages, because one of the experiences of people living in the north is a feeling that the carriages are not as good as those in the south of England, and we want to address that in the franchise.

[Dan Jarvis (Barnsley Central) (Lab)]

T5. Next year will mark 100 years since the execution of Edith Cavell, the brave nurse who saved countless lives during world war one. In this important year of remembrance, will the Chancellor join me and the 110,000 people who have signed an online petition and urge the Royal Mint to mark the anniversary by including Edith Cavell on its list of designs for the new £2 coin, so that we can honour all those who served and made sacrifices for our country in different ways a century ago?

[Mr Osborne]

As well as being Chancellor of the Exchequer, I am Master of the Royal Mint. I can therefore address the hon. Gentleman’s question directly. I am certainly aware of the campaign, and I of course honour the bravery and sacrifice of Edith Cavell. There will be a whole series of coins to commemorate the first world war, some of which will be in general circulation and some of which will be for collectors. Like previous Governments, we act on the advice of a Royal Mint advisory committee on these topics, but I will directly take up with it the suggestion of marking Edith Cavell’s sacrifice and make sure that it is honoured in an appropriate way.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

T9. Pembroke refinery, which employs 1,100 people in my constituency, is 50 years old this year. Will the Chancellor assure the operator, Valero, that it has the full support of the UK Government and that the UK is a good place for refining to remain?

[Mr Osborne]

I can absolutely give my hon. Friend and his refinery that assurance. Refineries such as the one at Pembroke play a key role in the UK’s energy security and provide many thousands of skilled jobs across the country. Our energy policy enables companies to know that investment is coming in, and therefore to make investment decisions for the future. I hope that Valero will look at the British economy and see that it is recovering and on the rise, and that that, with activity increasing, will mean more requirements for refining capacity.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

T7. May I remind the Chancellor that it was actually Daniel Adamson, who envisaged the Manchester ship canal in 1882, who talked about an economic powerhouse of the north from the banks of the Mersey estuary through to the North sea at Hull? That vision’s time has come, but it will take leadership, guts and gravitas locally and nationally, and on both sides of the House, to create a powerhouse that will rival any on the global stage.

[Mr Osborne]

I agree with the hon. Gentleman. One of the refreshing things about the discussions we had yesterday was that they took place on a genuinely cross-party basis. The Labour mayor of Liverpool, Joe Anderson, came to the speech I gave and met me and the Prime Minister to talk about what we could do, as did the civic leaders in Manchester. We are working across the political parties, as northern MPs, to bring this about, and of course the ship canal could be part of the exciting Atlantic gateway project, which would create regeneration and jobs along the course of that incredible waterway.

[Neil Carmichael (Stroud) (Con)]

T10. With manufacturing growing at an impressive rate, as I saw on my recent visit to ABB in my constituency, what steps is the Chancellor taking to ensure that manufacturing growth remains sustainable?

[Mr Osborne]

We are taking steps to reduce business taxes, when others would put them up. We are also taking steps to ensure that energy costs for manufacturers are lower; we set out a package in the Budget. Above all, we are creating a country in which people want to invest and create jobs because they have confidence in our long-term economic plan.

[John Cryer (Leyton and Wanstead) (Lab)]

The number of tax compliance inspections of companies by Her Majesty’s Revenue and Customs is falling, rather than rising. Why is that the case?

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

HMRC is increasingly successful in bringing in its yield. It has to develop the most effective ways of working, and if it can find more efficient ways of doing so, that is fine. The important point is that HMRC is bringing in more money than it has ever done before.

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

The Chancellor of the Exchequer will recall that we met a group of McDonald’s apprentices and an Ealing McDonald’s franchise owner, Atul Pathak, last week to celebrate the announcement by McDonald’s of 8,000 new apprenticeships across the UK. Does my right hon. Friend agree that the Government’s initiative on supporting apprenticeships has been one of our great success stories—good for the economy and good for youth unemployment?

[Mr Osborne]

We had a fantastic meeting with McDonald’s employees, at which my hon. Friend was present, and it was heartening to hear about their confidence in their economic future. It is remarkable that we have had an hour of Treasury questions, during which we have discussed youth unemployment, and there were Department for Work and Pensions questions yesterday, but not a single Labour MP has mentioned the welfare plan that their leader published last week. That shows why the Labour economic policy lacks credibility even with Labour MPs and why the Labour leadership is in crisis.

[Ms Margaret Ritchie (South Down) (SDLP)]

Unemployment is bringing despair to a generation of young people in Northern Ireland, where nearly one in four young people are unemployed and have to seek their prospects elsewhere. Has the Chancellor had any discussions with the Secretary of State for Northern Ireland? If so, what plans are in place to address this particular issue, as youth unemployment poses a risk to peace and the political process?

[Mr Osborne]

I certainly have regular discussions with the Secretary of State for Northern Ireland, who is very focused on Northern Ireland’s economic development. Of course, I also meet the Northern Ireland Executive. We have plans to increase investment through the enterprise zone, and I commend the work of people across Northern Ireland to bring new businesses to Northern Ireland. We have more work to do on fixing the banking system in Northern Ireland, which remains impaired by what happened a couple of years ago, but I assure the hon. Lady that we will work together to deliver an economic recovery of real strength in Northern Ireland.

[Mr Simon Burns (Chelmsford) (Con)]

Does my right hon. Friend accept that, as a result of the long-term economic plan, unemployment in Chelmsford over the past 12 months has fallen by just over 30% and, equally important, youth unemployment has fallen by just over 36%? Does he accept that any Opposition Member who thinks we should abandon that plan is a believer in voodoo economics?

[Mr Osborne]

I would suggest that it is not clear what Labour’s economic policy is. The shadow Chancellor wants to tax, borrow and spend more, but he is keeping his head down because he can see the car crash—he has experience of those—looming with the Labour leader, while the Labour leader is talking about prices and incomes policies and an anti-business agenda. It is totally muddled and means that if Labour ever got the chance again, it would put Britain back into crisis.

[Clive Efford (Eltham) (Lab)]

The Chancellor talks about credibility in economic policy, yet he consistently sets his face against having his economic policies, along with those of the other major parties—certainly those that would take part in television debates before the next general election—put before the Office for Budget Responsibility so that the electorate can understand what parties are saying about economic policy and be better informed when they vote.

[Mr Osborne]

As Robert Chote has set out, there would be very serious implications if the OBR, a new institution which, of course, the Labour party did not support when in government—[Interruption.] I remember proposing it time and again as shadow Chancellor and hearing Ministers say at this Dispatch Box that it was not a good idea. The proposal would make big changes to the role of the civil service as well as that of the OBR. Robert Chote is right to say that, while we can consider it in the next Parliament:

“To embark on this exercise in a rush, or with insufficient resources, could be…very damaging to the OBR.”

[Mr Speaker]

Very briefly, Greg Mulholland.

[Greg Mulholland (Leeds North West) (LD)]

It is very welcome that the Government are introducing a statutory code of conduct for pub companies, but it lacks the all-important market rent only option. There is concern about the direct lobbying of the Treasury by the British Beer and Pub Association and the pub companies. When will the Treasury accept the freedom of information request from the all-party save the pub group?

[Mr Speaker]

Put the long version in the Library.

[Mr Osborne]

I am happy to look into the freedom of information request, but we have been working very closely with the Business Secretary on these proposals, and I would hope that the hon. Gentleman would welcome the legislation we are introducing to make sure that local pubs and publicans get a good deal.

[Mr Speaker]

Last but not least, Lucy Powell.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

May I take this opportunity to welcome today’s announcement of the partnership between Manchester city council and the Abu Dhabi United Group to build 6,000 new homes in my constituency? Does the Chancellor agree that that shows that when we give freedoms, powers and budgets to good local authorities, they can increase housing supply in their areas and build the economy locally?

[Mr Osborne]

I certainly join the hon. Lady in commending the work that Manchester city council has done. One of the things I talked about yesterday was what we can do to make sure that cities such as Greater Manchester have more powers, perhaps through elected mayors. We should also pay tribute to Lord Deighton, who is in Abu Dhabi at the moment, for negotiating that deal. There was a good partnership between the city council and the Treasury, and it is fantastic news that Abu Dhabi United Group is making that big investment in the UK.

[Ed Balls]

On a point of order, Mr Speaker.

[Mr Speaker]

I apologise to the right hon. Gentleman, but points of order come after urgent questions and statements. [Interruption.] Well, that is the procedure, but I am always agog to hear the right hon. Gentleman. He can toddle back after the UQ and the statement, and I will be in the Chair to hear him. [Interruption.] I cannot have a conversation as we go along; we must have the urgent question.

Patient Safety

Tuesday 24th June 2014 Commons Chamber

12:35

[Andy Burnham (Leigh) (Lab)]

(Urgent Question): To ask the Secretary of State for Health if he will make a statement on his announcement on patient safety.

[The Secretary of State for Health (Mr Jeremy Hunt)]

Mr Speaker, I would like to make a statement to the House about a package of measures that I have announced today to boost safety, transparency and openness in our NHS. It follows my earlier written ministerial statement.

Just last week, the independent Commonwealth Fund said that under this Government the NHS has risen to be the top-rated health care system in the world. Despite many challenges in our NHS, it is therefore clear that we have much to be proud of. However, it is also clear that there is more to do. It is estimated that for 12,000 deaths a year in hospitals there was a 50% or greater chance of their being prevented. Figures released by NHS England today tell us that there were 32 never events in the past two months, including cases of a throat pack and a hypodermic needle being left inside patients post-surgery. These are shocking statistics.

In the Government’s response to Sir Robert Francis’s landmark public inquiry on the poor standards of care at Mid Staffordshire NHS Foundation Trust, I made clear our determination to make the NHS the safest and most open health care system in the world. Today, all hospital trusts around the country will therefore receive an invitation to the Sign up to Safety campaign, which is led by Sir David Dalton, the inspirational chief executive of Salford Royal. The campaign will help us to achieve our ambition of halving avoidable harm, thereby potentially saving 6,000 lives. Trusts will be asked to devise and deliver a safety plan, and may receive a financial incentive from the NHS Litigation Authority to support implementation.

We are fulfilling the pledge that we made in our response to Francis to create a hospital safety website for patients. As of today, the NHS Choices website will tell us how all hospital trusts are performing across a range of seven key safety indicators, including one for open and honest reporting. For the first time, the website will let patients and the public see whether a hospital has achieved its planned levels for nursing hours. Indeed, I am pleased to inform the House that the latest work force statistics, published today, show us that we have 5,900 more nurses in our hospital wards since our response to Francis just over a year ago.

Finally, I am pleased to announce today that Sir Robert Francis QC will chair an independent review on creating an open and honest reporting culture in the NHS. The review will provide advice and recommendations to ensure that NHS workers can speak up without fear of retribution. It will also look at how we can ensure that where NHS whistleblowers have been mistreated, there are appropriate remedies for staff and there is accountability for those who have mistreated them.

I am confident that the package of measures announced today will shine a light on poor care so that lessons can be learned, action can be taken and harm to patients can be prevented. In the process, we will support front-line staff to help the best health care system in the world blaze a trail on issues of safety, transparency and compassionate care.

[Andy Burnham]

The Health Secretary rightly calls for openness, transparency and accountability. It is a pity that that does not extend to his dealings with this House. He spent the morning touring TV studios, but could not find the time to come to the Chamber. Is that because he has signed away day-to-day control of the NHS, as his public health Minister—the Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison)—let slip, or is it because he did not want to face questions on the damning criticism of him from the outgoing president of the Royal College of Psychiatrists, who says that he is ignoring the “car crash” in mental health? Either way, it should not be left to us to drag the Secretary of State to the House.

An open, learning culture in all parts of the NHS is an ambition shared across this House and it builds on the work of the last Government following care scandals in the 1990s. More information is welcome, but how will the Secretary of State guard against the risk, as expressed this morning by Martin Bromiley, of creating a “naming, shaming and blaming” culture? He has just told the House that a fifth of hospitals are failing to report properly. Why is that and how will he correct it?

The Secretary of State mentions the Commonwealth Fund and I join him in celebrating the standing of the NHS. He implies that it has all been achieved in the past four years. That is pure spin. I remind him that the NHS first came top in 2007 and that this year’s report specifically traces the NHS’s recent success to reforms implemented by the last Labour Government and to the Darzi report, which it says led to

“an increased emphasis on improving the quality of care provided by the NHS.”

Perhaps the Secretary of State will reflect that analysis in any future statement on the previous Government’s record.

The Secretary of State promises new data on infection—one area where the Commonwealth Fund found cause for concern compared with 2010, with the NHS now ranked worst in the world for patients reporting infection in hospital or shortly after. What is he doing to turn that worrying trend around? On staffing, will he commit to publishing figures on how many of the nurses he mentioned are agency nurses? Is the NHS not now spending a fortune on agency staff—£1.4 billion, 162% higher than planned—because, in the first four years of this Parliament, the Government and the then Secretary of State, who is now the Leader of the House and sitting on the Front Bench, cut nurse training places by 10,000?

The Secretary of State talks about his new target to save 6,000 lives over three years. Can he explain how that will be achieved when people are now waiting longer to start treatment for cancer, when NHS waiting lists have hit a six-year high and when ambulance response times are getting longer? Is not that the real reason he was afraid to come here today? The NHS is getting worse on his watch and the Government have surrendered their power to do anything about it.

[Mr Hunt]

We talk about many things and there will always be political differences between Opposition and Government Members, but I would have thought that on patient safety, on saving patients’ lives, on dealing with the issue that once a week in the NHS we operate on the wrong part of someone’s body and on other terrible issues, there might be a degree of consensus. It is incredibly disappointing that, again, the right hon. Gentleman has chosen to make a political football out of something that should be above party politics.

Let me go through the right hon. Gentleman’s points. This morning in the radio studios, I talked about fulfilling a pledge that I made to the House in my response to Francis—that we would publish staffing data, something that he never did when he was in power. We have done that for 6,700 wards throughout the country, because we want to end the scandal of short staffing that happened on his watch and directly led to Mid Staffs.

I am delighted to come to the House. I have made a written ministerial statement. I often come to the House and I am delighted that the right hon. Gentleman has raised this issue. As he has raised some specific points, I need to address them. He quoted what the outgoing president of the Royal College of Psychiatrists said, but he failed to mention what the incoming president said this morning, which was to praise the remarkable work done by this Secretary of State and his Ministers to raise the issue of mental health.

The right hon. Gentleman talked about the Commonwealth Fund. Let us look at that. When he was Secretary of State, we fell from being top-rated in the world to being second. We are now back on top. He has spent the past four years saying that under the coalition Government the NHS is going to rack and ruin. Someone who is independent has now looked at it and said that we are the best in the world. The right hon. Gentleman should reflect on that before he starts to criticise and run down the NHS.

Let us talk about agency nurses. I am very proud of the fact that, in just over a year, we have 5,900 more nurses on our wards. That is an increase of 4,000 nurses across the system compared with when Labour was in power. Why is that? It is because we are doing something about the issue of safety and compassionate care—issues that the right hon. Gentleman repeatedly swept under the carpet when he was Health Secretary.

Finally, let me make this point. We are doing something that is a world first today: we are publishing staffing data on a hospital-by-hospital, ward-by-ward basis. Yes, we are also publishing which hospitals do not have an open and transparent reporting culture. Creating transparency about failures has, I am afraid, become one of the biggest dividing lines in this House. I think it is a very great shame that every time I raise the issue of poor care in the NHS, the right hon. Gentleman accuses me of running down the NHS and softening it up for privatisation, when what I am actually doing is standing up for patients, which is what he should have done when he was Health Secretary.

[Dr Sarah Wollaston (Totnes) (Con)]

I welcome today’s announcements. Unsafe care in the NHS carries not only a terrible personal cost, but a terrible financial cost—£1.3 billion a year in litigation alone—and I welcome the announcement of Sir Robert Francis’s review. Will the Secretary of State use this opportunity to reassure NHS staff that they do not need to wait for the outcome of that review, and that if they raise concerns about unsafe practice, not only will they be protected, but they would be failing their patients if they failed to do so?

[Mr Hunt]

I start by welcoming my hon. Friend to her new position as Chair of the Health Select Committee, which I think she will do brilliantly well. I also thank her for the fact that she had been talking about this issue long before she took up that post, and as someone who has worked in the NHS, she has always recognised its importance.

My hon. Friend is absolutely right to say that NHS staff should not wait until the outcome of the new Francis review before speaking out. My view is that the atmosphere is beginning to change inside the NHS. We are getting trust boards that are now spending much more time talking with safety, but the reason I wanted to have this review is that there are problems and issues across the world with people in health care speaking out, and nowhere has really embraced the culture of safety that we have in the airline, nuclear and oil industries, where concerns about safety are on a completely different level. I know that I have the wholehearted support of NHS staff in this mission; I think it is a shame that we do not have the support of the Labour party.

[Kevin Barron (Rother Valley) (Lab)]

In response to the Francis report in relation to the duty of candour, the Government said that it should be on institutions and not on individuals. Given that the Government appear not to want to bring in new regulatory bodies in relation to individual action inside the national health service, does the Secretary of State have any faith in the regulatory bodies currently looking after health professionals, given the state that Mid Staffs hospital ended up in?

[Mr Hunt]

We looked carefully at whether the duty of candour should apply to individuals, and we decided against that because we were worried about creating a legalistic culture in trusts. However, we are working with the regulatory bodies. The right hon. Gentleman is absolutely right to raise concerns, as they were indeed raised in the Francis report. Following on from my earlier response, one of the lessons that we learned from the airline industry is that pilots are professionally protected if they speak out, so on balance it is to their advantage to speak out rather than to shut up. As a result of that reporting of safety incidents, near misses and so on, the industry has achieved a remarkable reduction in accidents. I would like to see whether we can do the same thing in the NHS.

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

One of my constituents spoke out against malpractice at the hospital where she worked and was subsequently vindicated at a tribunal, but she lost her job and has been unable to find work in the national health service ever since. Is it not time that we put an end to some kind of blacklist that stops people being re-employed when they have done the right thing?

[Mr Hunt]

I would like to thank my hon. Friend for the support that she has given to her constituent, whom I think I have also met. My hon. Friend is absolutely right: we have to stop this system of consequences for people who do the right thing and speak out. It is not right for me to comment on an individual case, because legal proceedings are often involved, but one hears of situations where people have spoken out and then been victimised by a trust, and that is wrong. We need to be better at looking after whistleblowers, but we need to go further and eliminate the need for whistleblowing by creating a culture where trusts are hungry to hear from their own staff about safety concerns because they want to put them right.

[Mr Ben Bradshaw (Exeter) (Lab)]

An Exeter psychiatric nurse of more than 20 years’ standing wrote to me in despair this week saying that

“mental health services are in collapse”,

and that patients are regularly placed in “life threatening” situations or sent as far away as Bradford because there are no beds locally. Vulnerable people are waiting a shocking three months for the co-ordination of their care. How dare the Secretary of State come to the House today and claim that our mental health services are not in crisis?

[Mr Hunt]

There are real pressures in our mental health services, but the right hon. Gentleman should recognise the progress that the Government have made. That includes doubling the money going into talking therapies, having global summits on dementia and putting a massive amount of money towards raising the profile of dementia in this country and across the globe, and legislating for parity of esteem as between mental and physical health—something that never happened under the previous Government. There is a lot of work to do, but I think he should give credit where it is due.

[David Morris (Morecambe and Lunesdale) (Con)]

On transparency of staffing levels, does my right hon. Friend know that the University Hospitals of Morecambe Bay NHS Health Trust vacancy level for nurses is now 4%, against a regional average of 10%? That is obviously an increase in nurses in my area, and I thank him for that.

[Mr Hunt]

I welcome the increase in nursing across the country, and I am surprised that Labour Members do not welcome it. When I started in this job they spoke constantly about nursing numbers, but I notice they have now stopped doing that. Although those numbers are an important first step, it is not possible to compare trust with trust at this stage because they are all self-reported numbers. Over the next months—certainly by next spring—we will go through all the figures ensuring that NICE-approved tools are used to fulfil them. We will then see how trusts are doing compared with each other, which will be useful to them.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

As a member of the Health Committee, I am disappointed that the Secretary of State does not understand that being dragged to the House to answer an urgent question is not the same as coming here to make a statement. I would prefer to hear first in this House what the Government are doing.

The Secretary of State mentions the leadership of David Dalton and Salford Royal NHS Foundation Trust, but that leadership led to safe staffing levels, which he has not supported. A recent Nursing Times survey found that the majority of nurses said that their wards were dangerously understaffed. I hear from nurses who are working with ratios of 2:22, 2:24 or 2:28—that is the reality. Does he think it is time he apologised for cutting the number of nurses?

[Mr Hunt]

Again, I am surprised that we do not have more agreement. If the hon. Lady looks at the figures, she will see that in the past year there have been 5,900 more nurses on our wards. Why does she not welcome that? We are using Salford Royal—a brilliant hospital that she knows well—to lead a safety campaign across the whole country to learn from the brilliant things that it is doing. I put a written statement before Parliament, and nothing I said this morning is not in the public domain. I would be delighted to come to the House any time to make an oral statement, and I notice that far more coalition MPs want to ask questions about safety and compassionate care than do Labour MPs.

[Steve Baker (Wycombe) (Con)]

My right hon. Friend will remember some of the issues that I raised in the House about patient safety, and the Francis report, the Keogh review, and the new Care Quality Commission regime have made a material improvement. On Friday last week, Buckingham Healthcare NHS Trust was the second trust to emerge—at last—from special measures. Will the Secretary of State join me in congratulating that trust, and express the hope that that marks a new beginning about which we can be optimistic?

[Mr Hunt]

I would be delighted to do that. Incredible hard work by doctors, nurses and health care assistants on the front line of my hon. Friend’s local hospital has meant that the trust has come out of special measures, which the whole House should celebrate. Indeed, it was helped in that by Salford Royal, and one of the most encouraging things about the new special measures regime is that we are pairing up hospitals in difficulty with other hospitals that have a better record, and we are getting tremendous results.

[Derek Twigg (Halton) (Lab)]

Clinical commissioning groups commission services in hospitals. What discussions has the Secretary of State had with CCGs to ensure that when they commission services they particularly look to ensure transparency and that patient safety is the highest priority in their discussions?

[Mr Hunt]

We have a lot of discussions, and the hon. Gentleman is right: the commissioning of care is vital and we need CCGs to play their part. We have many discussions with NHS England about how to do that, and we will be considering how we can make CCGs more publicly accountable for their record in those areas.

[Sir Tony Baldry (Banbury) (Con)]

Oxford University Hospitals NHS Trust has managed to make multi-million pound recurring savings over the past couple of years and is now in the black. At the same time it has managed to create 400 new jobs in the trust, almost all of which are new doctors and nurses. Does that not demonstrate that it is possible for the NHS both to meet the Nicholson challenge, and to recruit more doctors and nurses to improve and enhance patient safety?

[Mr Hunt]

It certainly does, and that is another area where it would be refreshing to have a bit more openness from the Labour party. We can afford 8,000 more doctors and 4,000 more nurses in our NHS than when Labour was in power because we got rid of primary care trusts and strategic health authorities, and 20,000 administrative jobs that were not on the front line—a change that Labour opposed bitterly every step of the way. Labour Members must say what would happen to those doctors and nurses if we repealed the Health and Social Care Act 2012, as they have publicly committed to do.

[Jenny Chapman (Darlington) (Lab)]

If the Secretary of States wants some kind of TripAdvisor-style scheme for the NHS that is fine; it may improve safety and it may help patient choice. However, a woman who has fallen to the bottom of her stairs and is waiting hours for an ambulance does not have a choice. That is happening now and it was not happening five or six years ago. What is he going to do about that?

[Mr Hunt]

First, I will ensure that throughout the system when we have failures in care we are completely transparent about them and do not seek to brush them under the carpet. That is a very important change. Secondly, yes there is pressure on ambulance services, just as there is pressure in most parts of the NHS now, but under this Government our ambulance service is taking 1,000 more people every day on emergency journeys. We should credit it with doing a very good job in difficult circumstances.

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

I commend my right hon. Friend for being determined to create a different and more effective safety culture in the NHS, just as in the airline or oil and gas industries. Does he accept that publishing more data is only part of the equation and will not necessarily change attitudes and behaviours, particularly if those data are then gamed at another target? We must tackle attitudes and behaviours at source—in the operating theatre, the GP’s surgery and throughout the whole service—to get that better safety culture.

[Mr Hunt]

As ever, my hon. Friend speaks wisely. The first step is to be open and transparent about where the problems are, and I hope today will be a step in that direction. In the end, however, if we are to change things we must create a learning culture in all our hospitals so that the word goes out from the top down that the management is interested in hearing from staff if they have concerns about safety, because it wants to learn from those concerns and put them right. One of the messages I have been trying to get across is that that does not cost money; it saves money. We spend £1.3 billion a year on litigation and £800 million on adverse events. If we are feeling, as everyone is, a tough climate financially, this is a positive thing to do for that reason as well.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

The House will be aware that the Health Secretary has refused to comply with the Information Commissioner’s ruling to publish the risk register for NHS reorganisation. Will he at least say whether that risk register warned the Government specifically that such reorganisation would hit A and E services?

[Mr Hunt]

That risk register is in the public domain, but I defend the right of my officials to give confidential advice to Ministers as that is an important part of government. I want my officials to be open and transparent with me if they think I am about to do the wrong thing, and all Ministers need a protected area where they can get frank advice. The hon. Gentleman is one of my constituents, so he will be pleased to know that the Royal Surrey county hospital in Guilford is embracing the safety campaign with vigour and completely renewing the way its wards are organised to improve patient care and safety.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I commend the Secretary of State for these practical and sensible reforms on patient safety, and I look forward to discussing them with staff at West Suffolk hospital—the biggest district general hospital in my area. Does he agree that the sensible and deliverable transparency reforms will ensure that the conspiracy of silence that we saw tragically in Mid Staffs is not repeated on his watch?

[Mr Hunt]

I am absolutely determined to make that the case. The biggest example—a number of them have been raised today—is the issue of hospitals put in special measures. Over the last year, we have put more than 10% of NHS acute trusts into special measures. That was a very difficult decision and was not welcomed at the time. The result, I am pleased to say, is that we are seeing real and significant change in all those hospitals. I hope as many of them as possible will get out of special measures quickly, but we can achieve that change only if we are honest about the problem in the first place.

[Julie Hilling (Bolton West) (Lab)]

Bolton hospital is having to go abroad to recruit qualified nurses this summer because there are no British-trained nurses available. Will the Secretary of State now take responsibility for cutting nurse training places by 10,000 since the last election and accept that the lack of qualified nurses is just making the problem of safety worse?

[Mr Hunt]

What I will take responsibility for is agreeing to a public inquiry into what happened at Mid Staffs—something rejected by the Labour party—that has woken up the whole NHS to the need for safe staffing in all our wards. We are implementing the report and that will indeed be reflected in the nurse training numbers going forward.

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

Basildon and Thurrock hospital was the first to exit the special measures regime after a number of years of failure. It did so because the leadership embraced what happened, was willing to learn the lessons from what went wrong and went out of its way to fix them. Far from being a naming, shaming and blaming culture, is it not the truth that my right hon. Friend is strengthening the culture of accountability in the NHS, which is as it should be?

[Mr Hunt]

Yes, and I would like to thank my hon. Friend for her superb work in supporting Basildon and Thurrock hospital through a very difficult period. I think that the chief executive there, Clare Panniker, is an exemplary one. She wrote an article in The Guardian pointing out that it is incredibly painful for trusts when they go into special measures, that it causes a lot of pressure in the local media, but that it also means that change can be made much more quickly when an urgency to solve these problems, many of which have been around for years and years, is created. I commend the staff of that hospital not just for coming out of special measures but for being rated “good” by the chief inspector of hospitals—a fantastic achievement.

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

Never mind the fact that this Government will not publish the risk register for a £3 billion top-down reorganisation; the Secretary of State and his Ministers will not meet me. If he wants to talk about accountability, why will he and his Ministers not meet me to talk about a minor injury unit in Guisborough being closed, a minor injuries unit in Brotton hospital being closed, a GP centre in Park End being closed and a walk-in and GP centre in Skelton being closed? All those units are in my constituency and they are all being closed, yet the Secretary of State and his Ministers will not meet me, which would represent genuine accountability.

[Mr Hunt]

Let me say to the hon. Gentleman that the accountability he talks about is precisely demonstrated by his ability to ask me questions right now as he has just done. He needs to be accountable and come clean with the House by saying that he has actually met my Ministers on a number of occasions on precisely the issues that he raised.

[Several hon. Members]

rose—

[Mr Speaker]

Order. For the benefit of the public—it is important that they find our proceedings intelligible—I should say that these exchanges are taking place because an urgent question was submitted and because I granted it. That is the beginning and the end of the matter.

[George Freeman (Mid Norfolk) (Con)]

After the shocking events at Mid Staffs under the last Government, I would like to congratulate the Secretary of State on his crusade for accountability and transparency as the best disinfectant, as shown by his support for whistleblowers and for 4,000 additional nurses. Does he agree that the collection, monitoring and day-to-day use of data on health outcomes is absolutely key? I welcome his Minister’s support for measures in my ten-minute rule Bill, now adopted and sponsored by me and my hon. Friend the Member for Stafford (Jeremy Lefroy).

[Mr Hunt]

I am happy to do that, and I would particularly like to congratulate my hon. Friend on the insight he has brought with regard to the power of data. In one example of why this is so important, the latest figures showed 43 or 44 people dying in the NHS because of medication errors, but if the person giving the medication had been able to see the patient’s entire prescription history, those horrific tragedies might have been avoided. That is why proper sharing of data is so important.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I want to ask about the safety of the 22,000 patients who use Hammersmith hospital A and E every year. There is no increased capacity in the acute primary or community care services locally, which the Secretary of State set as a prerequisite for any A and E closures in west London. Will he ask Imperial Healthcare Trust to review plans to close the A and E at Hammersmith on 10 September? Will he answer that question, as my constituents in Shepherd’s Bush and White City deserve an answer to it, not the spin and the game playing that I always get from the Secretary of State?

[Mr Hunt]

I am afraid I will take no lessons in spin and game playing after what the hon. Gentleman wrote in local election leaflets in Hammersmith and Fulham, failing to tell his own constituents about the brand new hospitals, the opening of a seven-day GP surgery and the 800 out-of-hospital professionals. I think he behaved absolutely disgracefully.

[Charlotte Leslie (Bristol North West) (Con)]

I very much welcome the Francis review into whistleblowing, which does indeed focus on transparency, and I am bemused and depressed that we cannot get universal welcome for it across the House. In addressing the name, shame and blame argument, does my right hon. Friend recognise that many front-line staff will be relieved at what he has announced because it will force management priorities to be the same as their priorities, which are overwhelmingly about patient safety?

[Mr Hunt]

My hon. Friend speaks wisely, and I commend her for her work in championing whistleblowers. In her relatively brief time here, she has made a big difference on that issue. Personally, I do not like to use the term “naming and shaming” because I think identifying problems should always be the first step to sorting them out. What we are doing today by identifying trusts that do not have a proper open and honest reporting culture is also helping them to change that reporting culture while at the same time identifying trusts that have a good culture. It is all about changing the culture, so this is a positive move, and I think that NHS staff will really welcome it.

[Nic Dakin (Scunthorpe) (Lab)]

Does the Secretary of State agree that the best way to deal with concerns about patient safety, such as those raised last week about Scunthorpe general hospital, is to have a proper independent investigation that respects patient confidentiality and reports objectively, clearly and transparently so that appropriate action can be taken when all the facts are known?

[Mr Hunt]

There are definitely times when an independent investigation is needed, and a number of them are going on in the NHS at the moment. The first thing, however, is to talk to the trust and get it to deal with the particular issues being raised and to create a culture in which trusts are willing, enthusiastic and keen to do that. Today is an attempt to deal not only with what happens when things go wrong with whistleblowers, but with how to create the right culture in the first place.

[John Stevenson (Carlisle) (Con)]

I commend the Secretary of State for his desire to put patients at the centre of the NHS. Does he agree that patient safety in places such as North Cumbria can be ensured not just by quality medical care, but by good-quality leadership and management? Would he therefore agree that we need quality management throughout the NHS that is confident about being open and transparent?

[Mr Hunt]

I would agree with that, and I am grateful to my hon. Friend for talking to me on many occasions about the issues at North Cumbria hospital and for sharing his determination to turn things around— [Interruption.] I find it extraordinary that Labour Members are making all this noise. My hon. Friend will know that that hospital had to give £3.6 million in compensation to just one person because of an appalling mistake when Labour was in power. They should be welcoming these changes, not criticising them.

[Diana Johnson (Kingston upon Hull North) (Lab)]

On 1 May I asked the care Minister why there had been a 60% drop in the number of people barred from working with vulnerable adults in the health and social care sector, and an even bigger drop of 75% in those barred from working with children. The Minister said that he was going to investigate, but I have heard nothing since. Does the Secretary of State share my concern that fewer unsuitable people are being barred from working in the social and health care sectors on his watch?

[Mr Hunt]

I do not know the answer to that question, so I will look further into the matter and get back to the hon. Lady.

[Andrew Percy (Brigg and Goole) (Con)]

As the hon. Member for Scunthorpe (Nic Dakin) mentioned, local GPs raised concerns last week about a cluster of cases at Scunthorpe and Grimsby hospitals—not at Goole hospital, which was also revealed last week never to have breached its four-hour waiting target. There is still a lot more to be done, so does the Secretary of State share my concern at the evidence received by the Health Select Committee last week from the Care Quality Commission, which stated that all too often, members of staff who raise concerns are dealt with by the human resources department rather than in a proper way that allows their complaints to be properly aired?

[Mr Hunt]

That is a very good point, and I thank my hon. Friend for welcoming me to Goole hospital; I had a very good visit. That hospital is in special measures but it is making real progress. It was interesting to talk to staff at the front line. I do not know when the hospital will be ready to leave special measures, but the staff on the front line felt that things were changing, and they welcomed that. My hon. Friend is absolutely right that if someone raises a safety concern, it should not be viewed as an HR issue; it is a patient safety issue, and trusts need to treat it as such.

[Jim Shannon (Strangford) (DUP)]

In his reply to the right hon. Member for Leigh (Andy Burnham), the Secretary of State referred to avoiding avoidable harm. Given that Combat Stress has reported the referral of some 358 additional troops for urgent treatment—a rise of some 57%—will he give us some idea of the discussions in which he has engaged with service charities to ensure that that harm can be avoided?

[Mr Hunt]

We have ongoing discussions with the Ministry of Defence about the care and support that we offer to our combat troops, but I can assure the hon. Gentleman that we give them the highest priority.

[Henry Smith (Crawley) (Con)]

I welcome the action taken by my right hon. Friend to extend transparency for the purpose of safety in the NHS, but could it be extended to the social care sector, especially in the light of the January 2010 Care Quality Commission report on Orchid View care home in Copthorne, near my constituency? The report rated the home as good, but 19 patients subsequently died.

[Mr Hunt]

I thank my hon. Friend for raising that very harrowing issue. I hope I can reassure him by saying that we are progressively extending the changes we introduced to hospital inspections to inspections of general practice and adult social care settings. The new inspection regime is designed to be much tougher when it comes to identifying problems. It is never possible to identify all abuse in an inspection, which is why what I have announced today is so important: it is about the creation of a culture that tries to prevent such problems from arising in the first place.

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

I welcome the statement and the work that the Secretary of State is doing. Mr Mufti, who was the medical director of Medway hospital under the last Government, raised serious concerns about the bullying of staff, which he feared was affecting the quality of care and patient safety. Will the new provisions address that problem?

[Mr Hunt]

That is exactly the intention. Following my conversation last week with Nigel Beverley, the chief executive of Medway, I think that the hospital is making good progress after going into special measures. However, it is important to recognise that while it is possible to change things externally, real culture change must come from inside. This is not a day on which we are announcing new targets or top-down initiatives. The Sign up to Safety campaign to be led by Sir David Dalton will be voluntary: hospitals must choose whether to sign up to it. I think that that will enable us to make more progress than we would make if we tried to do things in the old way.

[Several hon. Members]

rose—

[Mr Speaker]

Ah! I keep my eye on the hon. Member for Reading East (Mr Wilson), because he does bob up and down, but he tends to do so only intermittently. It is a good thing that I have noticed him. Let us hear from the fellow.

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

I was saving my energy, Mr Speaker.

I welcome my right hon. Friend the Secretary of State’s changes, which have made improving patient care and raising standards such a central part of the NHS mission. It is important to shine a light on poor performance, which is why I also welcome today’s CQC report on Royal Berkshire hospital, which highlights a number of important challenges that confront my local hospital. Does he agree that only by being open and transparent about problems can we tackle them and fix them for the long term?

[Mr Hunt]

I absolutely agree with my hon. Friend. I have had many discussions with him as he has campaigned in the House for his local hospital. The creation of a culture of openness and transparency should have support in all parts of the House, but that will not happen if every time we are honest about a problem, we are told that we are somehow running down the NHS. I urge Labour Members to think carefully about the way in which they approach this issue.

[Margot James (Stourbridge) (Con)]

I applaud the cultural change that my right hon. Friend is leading in the NHS and the social care sector. As he may know, three former members of staff at Granary care home, owned by Shaw Healthcare, were last week found guilty of appalling violence and abuse of frail elderly patients. The sentences handed down to those three individuals were utterly derisory, the longest being four months in prison. Will my right hon. Friend meet the Secretary of State for Justice to review sentencing in this crucial area?

[Mr Hunt]

I shall be happy to raise that issue with the Justice Secretary, and I thank my hon. Friend for raising it. I think it reminds us that whatever changes we may make in the House, it will take time for them to filter through. I am afraid that, even now, some terrible things are happening. One of the things that worries me most is that abuse of this kind often involves people who have dementia and cannot speak up for themselves. That is why it is so important for us to raise the profile of dementia, and to improve the training of those who care for people with the condition.

[Martin Vickers (Cleethorpes) (Con)]

May I take up what was said by my hon. Friend the Member for Brigg and Goole (Andrew Percy)? My right hon. Friend the Secretary of State will appreciate the concern felt by my constituents at a time when the local media are full of a dispute between the clinical commissioning group and the hospital trust about an ongoing investigation of patient safety. Can he assure patients that every support will be given to the CCG and the trust when the recommendations following the inquiry become known?

[Mr Hunt]

Yes, I can. My hon. Friend’s local trust is in special measures, and the decision on whether a trust should come out of special measures is no longer one for the Secretary of State; it is made independently by the chief inspector of hospitals. I hope that we have created incentives for system leaders to solve these problems, because if they do not, the chief inspector will simply not decide that the trust can be taken out of special measures.

[John Howell (Henley) (Con)]

I join my hon. Friend the Member for Wycombe (Steve Baker) in praising the improvements that have taken place in Buckinghamshire Healthcare NHS Trust, which has come out of special measures, and which affects part of my constituency. Are not those improvements a very good example of the way in which we are summoning up the political courage to tackle such trusts, particularly when they have experienced high death rates in the past?

[Mr Hunt]

I hope that they are. I think that in the end we shall be judged on how successful we are in turning around hospitals in special measures. Last week I met Anne Eden, the chief executive of Buckinghamshire Healthcare. I think she has done an excellent job in extremely difficult circumstances, but I know she would agree that there is still much work to be done. Taking hospitals out of special measures is the first step, but ultimately we must reassure the public that when there are problems, we shall be on their side and try to sort those problems out.

[John Glen (Salisbury) (Con)]

I welcome today’s announcement, and I assure the Secretary of State that Salisbury district hospital, which is in Odstock in my constituency, will be keen to sign up to the campaign. However, will he acknowledge that it and several other hospitals have been alive to issues of patient safety for a long time, and have recently been involved in a new patient safety initiative launched by Wessex academic health science network? Is it not important for existing arrangements to be acknowledged, so that there is no duplication of effort?

[Mr Hunt]

That is absolutely true. A number of initiatives are taking place, and I welcome them. The involvement of universities can help us to understand some of these very difficult issues. This is uncharted territory for the NHS, because nowhere else in the world are we seeing the rigour with which we are going about our task. I think that we should be open about anyone who can contribute to the debate.

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

I welcome the Secretary of State’s focus on transparency and accountability. He is right to draw attention to the positive steps that the Government have taken in regard to mental health services in the last four years, but given our aspiration to secure parity of esteem between mental and physical health in the NHS, and our need to drive up mental health care standards throughout the country, should we not extend the transparency and accountability measures that he has announced to those services?

[Mr Hunt]

I pay tribute to my hon. Friend’s campaigning on mental health issues, which has done a huge amount to raise the profile of the subject. Let me reassure him that the information that we are publishing on the website today includes staffing data for all the mental health trusts. We completely recognise the parity issue, at least in what we are doing today.

[Guy Opperman (Hexham) (Con)]

In my previous job, before I entered the House, I conducted dozens of clinical negligence cases. Almost every defending trust was obstructive, defensive and reluctant to admit blame, even when patently culpable. I strongly welcome the changes that are being brought about. Does my right hon. Friend agree that greater transparency and whistleblowing will bring about the safety changes that we all want to see?

[Mr Hunt]

I very much agree with my hon. Friend, and he will know that one of the things we have introduced this year is the duty of candour, which makes it a legal requirement for trusts to be honest with patients and their families when harm or avoidable death has occurred. He is absolutely right that we have to tackle this, and he will also know that when trusts are open and transparent, relatives are less likely to sue, because they recognise the good will and spirit involved.

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

Will the Secretary of State join me in commending the initiative of Bedfordshire clinical commissioning group, under the excellent leadership of Dunstable GP Dr Paul Hassan, which has instituted unannounced checks on the wards of local hospitals by local GPs?

[Mr Hunt]

I do commend that, and it is excellent to see CCGs taking responsibility, because they control the NHS budgets. I think that is an excellent initiative, and I hope that other CCGs follow suit.

[Jeremy Lefroy (Stafford) (Con)]

May I commend my right hon. Friend on the work he has done on patient safety, while gently suggesting that perhaps the long-term, or even medium-term, aim should be to eliminate avoidable harm, rather than just halve it? In my case, in Stafford, we have seen huge improvements in patient safety since the very difficult times a few years ago, but I ask my right hon. Friend to bear in mind the hospital’s current situation, which is fragile, and to ensure that it is not left to its own devices, but that all the support necessary to maintain patient services during this difficult transition is given.

[Mr Hunt]

No Member of this House has done more for their local hospital than my hon. Friend, and I commend him on what he has done. We certainly will not leave that hospital to its own devices; we are following very closely what is happening. I want to pay tribute to him, too, on the issue of safety, because when the Francis report came out, he was one of the earliest voices saying, “Yes, this is about compassionate care, but it is also about safety.” I do not at all rule out the aspiration of zero harm and zero avoidable deaths, but that is a point we will have to get to step by step, and I am very proud that we are taking the steps that we are today.

[Mr Philip Hollobone (Kettering) (Con)]

A few years ago, Kettering general hospital had some of the very worst hospital infection rates in the whole country; now it has some of the very best. Last year, it had some of the very worst rates for attendance at A and E within the four-hour target; now it has some of the very best. Does this not demonstrate that determined local hospital leadership, plus dedicated and committed nursing staff, can transform the patient experience in our hospitals?

[Mr Hunt]

It absolutely does, and I think that is very important. There are huge pressures on NHS hospitals. I have been to Kettering hospital at my hon. Friend’s invitation, and it is a very busy hospital. There is a lot of pressure in the system, but with the right leadership it is absolutely possible to deal with these challenges, and I know that my hon. Friend has had a huge impact in Kettering, supporting the hospital through a difficult period.

Student Visas

Tuesday 24th June 2014 Commons Chamber

13:23

[The Minister for Security and Immigration (James Brokenshire)]

With permission, Mr Speaker, I should like to make a statement on student visas.

Since the last election, the Government have taken action across the board to reduce and control immigration. We have introduced a cap on economic migration from outside the European Union, we have reformed the family visa system, and we have eliminated much of the abuse of the student visa system we saw under the last Government. The result is that net migration from outside the EU is close to its lowest levels since the late 1990s, while net migration is down by a third since its peak under Labour.

The Government have always said that, even in the light of the reforms we have introduced, we need to keep each of the main immigration routes to Britain under review, we need to remain vigilant against abuse of the student visa system, and education providers need to meet their responsibilities. That is why I can tell the House that since the start of February immigration enforcement officers, with the support of the National Crime Agency together with officials from UK Visas and Immigration, have been conducting a detailed and wide-ranging investigation into actions by organised criminals to falsify English language tests for student visa applicants. They have also investigated a number of colleges and universities for their failure to make sure that the foreign students they have sponsored meet the standards set out in the immigration rules.

Since the reforms we introduced in 2011, it has been a requirement for all student visa applicants to prove they can speak English at an appropriate level. All students in further education or at a university that relies on English language testing who want to extend their stay by applying for a new student visa have to be tested by one of five companies licensed by the Government. One of those companies, the European subsidiary of an American firm called Educational Testing Service, was exposed by the BBC’s “Panorama” programme earlier this year following systematic cheating at a number of its UK test centres. Facilitated by organised criminals, this typically involved invigilators supplying, even reading out, answers to whole exam rooms, or gangs of impostors being allowed to step into the exam candidates’ places to sit the test. Evidently, this could happen only with considerable collusion by the test centres concerned. Having been provided with analysis from the American arm of ETS for a number of ETS test centres in the UK operating in 2012 and 2013, it has identified more than 29,000 invalid results and more than 19,000 questionable results. As it still has to receive test analyses from ETS for other testing centres it operated in the UK, it is likely that the true totals will be higher.

Officials from immigration enforcement and UK Visas and Immigration have not found evidence to suggest there is systematic cheating taking place in the tests carried out by the other providers.

As soon as the allegations of systematic cheating were first made, we suspended ETS testing in the UK, put a hold on all immigration applications from those in the UK using an ETS test certificate, and made all applications from overseas subject to interview by UK Visas and Immigration staff. In April ETS’s licence to conduct tests for immigration purposes ended, and two weeks ago we formally removed the company as a test provider in the immigration rules.

Because of the organised criminality that lies behind the falsified tests, the National Crime Agency has been brought in to work alongside immigration enforcement officers to pursue criminal action against the perpetrators. Immigration enforcement has begun work to identify anybody who is in the country illegally as a result of the falsified tests so that they can be removed. Her Majesty’s Revenue and Customs is also helping the investigation by scrutinising pay and tax records. A criminal investigation has been launched into the role of ETS Global Ltd. More generally, immigration enforcement is working to identify, pursue, and prosecute those involved in facilitating this activity, and to investigate links to wider organised crime. Arrests have been made, and I expect more will follow.

I should make it clear that proof that a visa applicant can speak English is only one test for somebody seeking to study in Britain. Other requirements include proof of academic qualifications, attendance at college or university, and compliance with the immigration rules, and if these student visa applicants had to cheat to pass an English language test, it is highly doubtful that many of the colleges, and some universities, that sponsored them in numbers were fulfilling their duties as “highly trusted sponsors”.

As I said earlier in my statement, UKVI and immigration enforcement officers have been investigating many of these colleges and universities because of wider concerns about their conduct. The evidence they have provided of what is going on in these institutions is cause for serious concern. The work undertaken by HMRC has identified a number of overseas university students earning more than £20,000 a year, despite the rule that they must not work more than 20 hours per week during term time. Overseas students at privately funded further education colleges are not allowed to work at all, yet one college—the London School of Business and Finance—has 290 foreign students who worked and paid tax last year.[Official Report, 7 July 2014, Vol. 584, c. 2MC.] One university student identified by HMRC had been working a 60-hour week for six months.

UKVI identified people allegedly studying in London, while their home addresses were registered as restaurants as far away as Ipswich and Chichester. Students sponsored by Glyndwr university so far identified with invalid test results provided by ETS number more than 230, rising to more than 350 if the scores counted as questionable are added. The comparable figures for the university of West London are over 210 sponsored students with invalid scores, rising to over 290 when questionable scores are included.

At certain private further education colleges, as many as three quarters of the file checks completed by UKVI officers were a cause for concern. At one college, a staff member told UKVI officers that they were not encouraged to report students’ absence or failure because doing so would reduce the college’s income and jeopardise its right to sponsor foreign students. The Government are not prepared to tolerate this abuse, so I can tell the House that this morning the Home Office suspended the highly trusted sponsor status—that is, the right to sponsor foreign students—of Glyndwr university. In addition, we have suspended the licences of 57 private further education colleges, a list of which I will place in the Library of the House. We have told a further two universities—the universities of Bedfordshire and of West London—that they are no longer allowed to sponsor new students pending further investigations, which will decide whether they too should be suspended.

Other universities are involved in the continuing investigation, and further action may follow, although because of the steps they have already taken to improve their processes, including voluntarily ceasing overseas recruitment to London sub-campuses, we will not at this stage remove their right to sponsor foreign students. Because much of the worst abuse we have uncovered seems to be taking place at London sub-campuses of universities based in other parts of the country, the Quality Assurance Agency for Higher Education will examine these London campuses to see whether further action should be taken against their parent universities.

The Government do not take such action lightly, but we are clear that this kind of irresponsibility cannot go without serious sanction. We have already removed some 750 bogus colleges from the list of those entitled to bring foreign students to Britain, and of these, almost 400, we now know, were linked to those who obtained invalid ETS certificates. We have tightened up the rules for individual students. We have reduced the level of immigration to Britain in part by cutting out abuse in the student visa system. But we have always said we must remain vigilant against abuse. The steps I have outlined today show that we will not hesitate to take firm action against those—students, colleges and universities—who do not abide by their legal responsibilities, and we will resolutely pursue organised criminality to bring those responsible to justice. I commend this statement to the House.

13:33

[Mr David Hanson (Delyn) (Lab)]

I thank the Minister for his usual courtesy in giving me advance notice of the statement, which is an astounding statement of systematic abuse on this Government’s watch. They said, no more bogus colleges; instead, we now have the major abuse of bogus certificates again being issued. As the Minister said, in February 2014 the Home Office announced that it had acted by suspending language tests run by ETS following an investigation by “Panorama”. The scale of the abuse—involving a minimum of some 48,000 students —is truly shocking and leaves open the question why it took the BBC, rather than the Minister’s own Department, to find the problem. Did the Minister or the Home Office know of this problem prior to the BBC reporting it, if not why not, and what checks did the Minister or his Department undertake?

It is clearly an abuse for language tests set by ETS to be taken by fake sitters, one that damages the integrity of the whole system. It is clearly right that the Minister has, finally, taken action today, and that criminal investigations are being pursued. Controlled migration and tackling bogus colleges are vital in protecting UK borders and stopping this exploitation. Indeed, that is why the previous Labour Government closed 140 colleges between April 2009 and January 2010.

However, my constituents and those of other Members will be outraged, and rightly so, by the news today that 48,000 people have fraudulently obtained language certificates, despite being unable to speak English, on this Government’s watch. There are a number of unanswered questions the Minister has not touched on that need further explanation. How many of these students are still in the United Kingdom? Does the Minister know where these 48,000 students are? Does he have addresses for them, and will he co-operate with the university sector and other sectors to ensure that we know where these individuals are, and take action? What steps is he taking to meet universities and colleges such as Glyndwr university, close to my own patch, to ensure that we rectify this problem as a matter of urgency?

Let us be clear: this Government’s failings are of their own making. They have been in office for four years. This is a scheme they established themselves, and this is a border crisis on the Home Secretary and the Minister’s watch. This is a Conservative-led coalition failure on immigration. The Government were warned about student visitor visas, which have increased from 38,000 under the last Government to 77,000 in the last 12 months. There are fewer checks and there is more scope for abuse.

This issue has been flagged up by John Vine, the independent chief inspector of borders and immigration. In November 2012, he said that the Government were clearly failing to follow up on notifications of potential bogus students and that at the time of his inspection there was a backlog—or should we now, following the passport crisis, call it “work in progress”?—of some 153,000 such notifications without action being taken. What action is the Minister taking today to meet the obligations set out by Mr Vine in his November 2012 report regarding the backlog of notifications of bogus students? What steps is he taking to rescind the certificates, and on the fake students and their surrogates?

The UK remains a key destination for international students. The UK market in international students is worth £8 billion, and has the potential to rise to £25 billion by 2025. However, the Government are failing to follow up with sufficient energy the notifications of bogus students, they did not take action on this issue when they knew about it, and they are now putting in place measures to slow down visa applications. At a time when the Minister is missing the net migration target that he himself set, he is now failing on the integrity of the system. He needs to restore that integrity today as a matter of urgency.

[James Brokenshire]

Listening to the shadow Immigration Minister, one might be forgiven for thinking that Labour believed in controlled immigration, but let us remember some of the facts about Labour’s record: record net migration of 2.5 million; hundreds of bogus colleges selling immigration, not education; students turning up at Heathrow unable to answer questions in English or even to explain what their course was about; and supposedly highly skilled immigrants working as security guards.

I hear what the shadow Immigration Minister has said, but Labour did nothing to tighten up the system, and it has fallen to this Government to introduce further stringent measures. It appears that, despite all that—despite the serious issues highlighted in my statement today— Labour now want to introduce blunt targets to increase international student numbers. Indeed, I think the shadow Immigration Minister wants to take students out of the net migration numbers altogether. We will take no lectures from the Labour party about immigration and controlling the issuing of student visas.

The shadow Immigration Minister managed to ask some serious questions, and I will address them now. On the investigations that have taken place, I can say that we have taken significant steps to follow through on identifying, locating and removing those responsible. Hundreds of visits have already been conducted and removals have begun. The criminal investigation is ongoing, and he will understand that I cannot comment further on those cases.

We are taking steps in relation to Glyndwr, and have suspended its highly trusted sponsor status. We are keen to provide support for genuine students whose institutions are affected by this. From today, there is a designated student helpline available specifically for all students at the affected institutions. Dedicated staff will take calls on the helpline to ensure that students have an avenue for their questions to be answered and their concerns alleviated.

We are also setting up a working group with relevant education establishments, including Universities UK—[Interruption.] I am sorry, but the Opposition do not seem to care about what is happening to the students who are involved in this. They might want to listen. We are setting up a working group with Universities UK, the UK Council for International Student Affairs, the Higher Education Funding Council for England, the Higher Education Funding Council for Wales, the Scottish Funding Council and the National Union of Students to enable the sector to support those genuine students who may eventually need to find a sponsor.

The right hon. Gentleman tried to make his general point about university applications, but the truth is that, while we have cut out much of the abuse in the student visa system, the number of overseas applications to study at British universities is up by 17% since the election, and that figure is based on genuine students. We are attracting the brightest and the best while, at the same time, resolutely focusing on ensuring that those who should not be here are stopped.

I was struck by what the right hon. Gentleman said about the immigration system not working, but I have to tell him—as we have done many times before—that it will take years to fix fully the system that we inherited from his party. We are making the difference. As the former UK Border Agency chief executive, Rob Whiteman, said last week, the agency that Labour set up was never going to work and it was right of this Government to break it into smaller pieces, because staff and managers can now get on with trying to put it right. If the right hon. Gentleman does not want to listen to Rob Whiteman, he could listen to the shadow Business Secretary who said that when he used to work in his predecessor’s surgeries, he could see how chaotic the UKBA was. “Hands up,” he said, “That was under my Government.”

All the facts I have outlined today are a direct legacy of the Labour party. A significant proportion of the students who have been caught cheating came to this country through a student visa system created by Labour. Under the previous Government, bogus colleges flourished, student visas were used for economic immigration and students did not even need to prove that they could speak English. The Government are focused on controlling immigration. Sadly, the Opposition still do not get it; it is as simple as that.

[Mr Mark Harper (Forest of Dean) (Con)]

I normally have great respect for the shadow Immigration Minister, but his tone today was not right. When this Government came to power, they had to deal with a legacy of hundreds of thousands of bogus students coming to this country. I commend my hon. Friend for the firm steps he has taken to root out abuse and to work with the sector to protect the genuine universities, higher education institutions and the genuine students and this valuable industry. He should carry on that work and not listen to the Opposition party.

[James Brokenshire]

I am grateful to my hon. Friend for his support. He is right that we are focused on a system that attracts the brightest and the best to this country while rooting out abuse. The step that this Government have already taken in closing down 750 bogus colleges is striking, and there is more work to do. That is what we are focused on delivering.

[Keith Vaz (Leicester East) (Lab)]

This is a shocking report. I welcome all the steps taken by the Minister to try to get to the root of what has happened. We are of course grateful to the BBC for the investigation it conducted. However, the Home Affairs Committee has been saying for years to successive Governments that there should be 100% unannounced inspections of these colleges, some of which have been fostering a climate of deceit. At the moment, the last report suggests that only 37% were unannounced. Secondly, we must have face-to-face interviews with people abroad before they come to the United Kingdom. If that was done, the bogus students would never get here in the first place.

[James Brokenshire]

I am grateful to the Chair of the Home Affairs Committee for his comments. He is right about the issue of interviewing those who are intending to come to this country to take up student positions through the student visa system. In the past year, we have conducted 100,000 interviews to root out abuse, identify those who do not necessarily have the language skills and provide that extra check. In respect of the continuing providers, we have stepped up announced and unannounced visits to check what services they are providing, and we are considering further what steps may need to be taken in relation to any re-procurement of the services to place safety and security right at the heart of the system.

[Dr Julian Huppert (Cambridge) (LD)]

Abuse is clearly unacceptable, and the Minister is right to be firm on those who cheat their way in, and on those organisations that actively help people to defraud the system. But we must not forget that around the world people are listening to the tenor of the debate here and the rhetoric that is used. Will the Minister make it clear, both now and in the future, that we still welcome bona fide students and that we are still open for business and will not take action against universities unless there is evidence that they are complicit in some of this fraud?

[James Brokenshire]

As I said in my statement, we have not taken this action lightly, and it has been based on visits to the various institutions and a detailed examination of the evidence before us. We seek to attract the brightest and the best, but my hon. Friend should be aware that applications from students sponsored by universities rose by 7% in the year to March 2014 and applications from students going to Russell Group universities by 11%. It is right that we focus on preventing abuse and that we have a rigorous system that seeks to attract genuine students to this country while ensuring that those who should not be here are rooted out.

[Mr Frank Field (Birkenhead) (Lab)]

I thank the Minister for his statement and ask him to share his thoughts on abuse that is occurring by those graduates who break their visa conditions by staying here after they should have left. Is he aware that a number of universities have difficulties over some students—presumably they can speak English—who do not pay their bills at the end of their courses? Those universities do not now award their degrees until the bills are paid. Might he not enter negotiations with the universities to consider that they should also have the responsibility of seeing that students go back home, according to their visa conditions, that degrees will not be awarded until those students are back home, and that the number of visas they can have, which could then be unlimited, will be linked to the numbers who actually return home?

[James Brokenshire]

The right hon. Gentleman makes an important point about the responsibilities of the academic institutions as part of the immigration system. They should ensure that students are attending and that they hold the right information in respect of them. We are seeking to work with the university of Portsmouth and others on the process that we need to put in place to ensure that students leave at the end of their course. It is right to underscore the role that the institutions have and the responsibilities that they hold in accommodating foreign students.

[Alistair Burt (North East Bedfordshire) (Con)]

I share the view of colleagues that the Opposition’s failure either to understand their role in what has happened or even to acknowledge it is one of the things likely to weigh heavily in the minds of the public as we run towards next May. In particular, on attracting the brightest and the best, will my hon. Friend look carefully at some of the problems raised by Gulf states that are looking for more sponsorship for specialist applications in science, engineering and medicine and at the fact that the visa restriction is quite heavy in relation to them? Will he also look carefully at any evidence presented, because those students represent an advantage to this country and to the states that they come from?

[James Brokenshire]

My right hon. Friend underlines again the need for the Government to continue to focus on the problems that we were left by the previous Government. Their lack of appreciation of the scale of what they handed on is striking. He makes some important points about the some of the detailed applications and courses. I will, of course, look at any representations that he may wish to make on the nature of the points that he has raised, particularly in medicine.

[Mr David Lammy (Tottenham) (Lab)]

UK universities contribute 2.8% to our GDP. The last time we had concerns about student visas, just one university in London was involved. This involves many colleges and universities. How long will this continue? As it continues, students from countries around the world who are contemplating coming to England will decide to go elsewhere. The Minister mentions hundreds of visits: 48,000 people are out there who should not be. Can he give us some time scales, please?

[James Brokenshire]

I appreciate the right hon. Gentleman’s knowledge of the university sector. This will take time to work through on the evidence and information available. It is right that meticulous work is conducted by our immigration enforcement officers to pursue their leads and lines of inquiry, where students who have relied on bogus certificates have sought to go on to university or college studies. I should like to reassure him of the Government’s commitment to supporting the whole universities sector. Indeed, I have had conversations with Universities UK and the Russell Group more generally on the excellent work that many of our universities do. They are world leading, and we should be proud of what they achieve and their ability to attract genuine students from overseas. We support that, but clearly we will rigorously focus on the abuse. I will certainly provide regular updates to the House on progress with the work to remove students and on further information that we may receive from ETS, as it continues to analyse its results from other centres.

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

I totally support this statement. Of course, all colleges and universities must fulfil all their legal responsibilities when they sponsor students from abroad. The university of West London plays an important role in the local community in Ealing, as well as in the wider world of higher education, so can my hon. Friend provide some reassurance that, where investigations have to continue, they will be conducted speedily, so that we can get a speedy resolution and, we hope, get that university back on track?

[James Brokenshire]

I assure my hon. Friend that discussions are ongoing with each institution that has been affected by my announcement. I recognise the desire to gain certainty and, indeed, for the measures and steps that those institutions are taking to put right abuses and to put their systems in place. This is something for those institutions, for the community and for genuine students who may be affected. That is why I made the points about the support that is being provided to them. I am conscious of the impact on them, too.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I share the concern expressed across the House about the abuse and about the fact that the Home Office seems to be relying on the BBC to undercover it. May I raise a case with the hon. Gentleman that I have raised with his boss? I have yet to receive the courtesy of a reply. St Mary Magdalene academy is a very ambitious school, with a big sixth-form centre. It teaches Mandarin. It wants to run an exchange programme with Chinese students from Peking. It has applied to have 10 students come over. It will not charge them. It hopes to have a reciprocal arrangement. It expects these kids to bring language skills and an attitude that will really help inner-city children. The opportunity that those inner-city children will have to go to Peking will be extraordinary. The fly in the ointment is the Home Office, which has not allowed them to have the visa. Will the hon. Gentleman please deal with this matter now?

[James Brokenshire]

There is the student visitor route, which is separate from the normal student visa route that applies for universities and further education colleges. I am, of course, happy to look into the specific case that the hon. Lady highlights. I am not familiar with the detail, as I hope she appreciates, but I am happy to look into the matter, if she can give me some more information, and to consider what might be appropriate.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

Is not ETS the same company that grossly mismanaged the standard assessment tests in primary schools in 2008? If so, why was it originally given the contract in 2008 to test English language competencies? Will the Minister initiate a check across Whitehall to review any other ETS contracts with Departments?

[James Brokenshire]

ETS was a supplier and provider of services to the last Government and checks were undertaken in respect of the award of the contract, but I can give my hon. Friend a further assurance about work that we have commissioned to review all the suppliers of English language testing services. A review is being undertaken by the independent auditor Moore Stephens LLP, which is due to report next month. Additionally, it has been asked to undertake a wider review of other contractual or licence arrangements, including those relating to language testing services on which immigration, citizenship or other entitlements rely. We are focused on ensuring that there is such testing and audit across the board to give assurance internally and externally about the processes in operation and, indeed, to enable us to reflect further about contracts that might be awarded.

[Ian Lucas (Wrexham) (Lab)]

This is a very grave statement for Glyndwr university and for Wrexham. Will the Minister please clarify whether the withdrawal of status that he refers to applies to the whole university or only to its London campus? What discussions has he had with the Welsh Government, who are, of course, responsible for that devolved institution?

[James Brokenshire]

The suspension applies to Glyndwr as a whole. It is a suspension, not a revocation, but its ability to take on new foreign students is stopped. There is the potential to move to revocation if it is unable to demonstrate that it has put in place systems and processes to guard the immigration system as a whole. We have had discussions with Glyndwr for some time about the investigations and the audit of its records. We will continue to do so, and we will engage with other relevant partners, including the Welsh Government, as necessary.

[Alok Sharma (Reading West) (Con)]

I of course welcome all that the Government are doing to clamp down on bogus colleges and bogus students. Certainly, we do not need to take any lecture from the Labour party on controlling our borders. I welcome the Minister’s confirmation that the UK is open to genuine students and that there are no limits. Will he ensure that that message is delivered in some of the key markets from which students travel to the UK, because this is an important industry for us and one that is clearly growing?

[James Brokenshire]

Absolutely. I can certainly confirm that to my hon. Friend. He makes a number of important points about presentation and how others seek to present a false picture of our immigration system and the important requirements that we have. We can puncture some of the myths that are perpetrated overseas. Ministers visiting those key countries seek to underline that, but we have firm processes and procedures in the visa system for a purpose—to prevent abuse—and that is why steps such as interviews are important safeguards against those who are not legitimate, who are not genuine and who seek to abuse our hospitality.

[Paul Blomfield (Sheffield Central) (Lab)]

We clearly all welcome the action against bogus colleges taken by this Government and their predecessor, but is the Minister concerned that, contrary to the Prime Minister’s declared objective to increase international student numbers, for the first time in 29 years bona fide international student numbers are falling and our competitors are benefiting? When will the Minister listen to the recommendations of seven Select Committees of this House and the other place on the action needed to restore our competitive advantage?

[James Brokenshire]

The latest report from the Higher Education Funding Council for England, published on 10 April, shows a 3% increase in the number of undergraduate entrants between 2012-13 and 2013-14, a 1% increase in postgraduate course entrants and a 5% increase in postgraduate research entrants. We are focusing on ensuring that genuine students are attracted to the UK for study and that we continue to attract the brightest and the best, but it is important also to focus on the substance of what I have said—on ensuring that we are rigorous in our approach to those who seek to exploit our system. I know of the hon. Gentleman’s personal interest in the matter, and I respect his point, but his party appears to want to set an arbitrary growth target, which only risks further abuse.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I congratulate the Minister on an excellent and robust statement that will not spoil the export market for higher education but will ensure its integrity. What additional sanctions, other than suspension or revocation of the special sponsor status, can be deployed against the minority of higher education institutions that have behaved wrongfully?

[James Brokenshire]

As I have indicated to the House, we have taken firm and decisive action in relation to a number of the institutions involved. I want to underline the point about responsibility. Many, many universities and academic institutions take their responsibility incredibly seriously. They do the work; they perform the checks, and they keep their records appropriately. The issue is those that do not, and it is right for the Government to take appropriate action in those cases, including referral to regulators, which will also help to ensure that academic standards at those institutions are raised.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I know that for this Government it is all about numbers, and about tracking down all these bogus students, but will they not listen to bodies such as Universities Scotland which are telling them, month after month, about the damage being done to universities in Scotland and the perception that it creates for overseas students, who have options and are using them? What is the point of educating overseas students to such a high standard in our Scottish universities, only to kick them out when they could make such a valuable contribution to our economy and they are welcome in our nation?

[James Brokenshire]

I say very clearly to the hon. Gentleman that the point of having a student visa is to study, not automatically to work. The problem is that, too often, people were abusing the student visa system simply to work, not to study, gain an education and make the contribution that he desires. There are postgraduate routes to remain here and study. We need a robust measure to ensure that our systems are not abused. It is the conflation of university education with an automatic right to work that lies behind the mistakes of the Labour Government and the abuses that we are dealing with.

[Chloe Smith (Norwich North) (Con)]

I welcome the balance that my hon. Friend showed in his statement. The number of colleges whose licence is being suspended appears to me to be a small proportion of the overall total. Will the QAA examine all London sub-campuses of universities, such as that of UEA London, to see whether further action should be taken, or does my hon. Friend have specific ones in his sights?

[James Brokenshire]

We are speaking to the QAA, as I said in my statement. London campuses have been highlighted, so we have asked the QAA to look at the matter in broad terms to give reassurance. It is important that we do so.

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

With 48,000 students and scores of institutions affected, this is criminality on a truly industrial scale. I was not clear about the Minister’s response to my right hon. Friend the Member for Delyn (Mr Hanson), so although we welcome the package of stringent measures that he has announced today, can I ask him at what point he and his Department were aware of the issue, bearing in mind the earlier warning signs, and whether the measures have been taken as a response to what we saw in the programme or whether they were already under consideration by his Department? I saw the programme, and I was appalled by the blatant and widespread criminality that was going on.

[James Brokenshire]

Action has been taken against colleges that were not meeting their standards. I referred to a number of 400. It has become clear that there was a link to the ETS tests, and we are now able to see the issue from a different perspective. The abuse that was uncovered by the “Panorama” programme provided a different angle, on another route of abuse, which is why we have carefully and rigorously been pursuing all lines of inquiry arising from that—with ETS on validating its data and by looking at the colleges themselves, where further issues had been highlighted. It is right and proper that we have done so, and we will continue to do so in the weeks and months ahead, as further information comes to light and we pursue outstanding lines of inquiry, including the criminal investigation.

[Mr Philip Hollobone (Kettering) (Con)]

I welcome the Minister’s clampdown on the scandal of student visa abuse. Will he name the six countries from which most of the students have come, and will he call the ambassadors from those countries into his office to make it clear to those countries how seriously Her Majesty’s Government takes this issue and ask them what they will do to help the Government combat the problem?

[James Brokenshire]

The primary issue is to ensure that there are rigorous measures in place for new applicants coming to this country, with interviews supporting the testing regime, so that we have an additional step to give a sense of reassurance. The point at issue is the student visa system created by the previous Labour Government, and the fact that a number of people who have been identified as being caught up in that sit on the Labour Benches means that a great deal of the responsibility lies there.

[Jim Shannon (Strangford) (DUP)]

I welcome the Minister’s statement. Education visas are worth £10 billion to the economy, and we need to retain that contribution. However, Migration Watch UK says that up to 60% of students do not return to their own country when their visa expires. In 2012 the number was 50,000. What action is the Department taking to deal with those students who seem, at least on paper, to go missing? What contact does he have with the devolved Assemblies, particularly the Northern Ireland Assembly, to address the issue?

[James Brokenshire]

One step that we have taken is to create Immigration Enforcement as a separate command within the Home Office, to have that rigorous focus on pursuing those who should not be here. We are also working with the university sector to see how it can continue to play its part in ensuring that students leave at the end of their studies. We will, as part of that, have discussions with the devolved Administrations and others to ensure that we continue the work and have the rigorous system that we all want.

[Mr Julian Brazier (Canterbury) (Con)]

I am proud to represent the university of Kent, Christchurch university and the university for the Creative Arts, with more than 30,000 students in my constituency. I strongly welcome the firm action that my hon. Friend is taking, and I commend to him the point made by the right hon. Member for Birkenhead (Mr Field). It would be helpful if, in our longer term deliberations, we could have detailed figures as to the proportion of students coming to this country to study who return to their own country at the end of that study.

[James Brokenshire]

My hon. Friend makes an important point about the responsibilities that universities and other academic institutions have within the immigration system. Many of them take those responsibilities very seriously indeed and I commend them for their work. My hon. Friend highlights the need for rigour within the system and the need to ensure that people rightly play their part, and that is what the Government are committed to achieving.

[Simon Kirby (Brighton, Kemptown) (Con)]

Foreign students are important to the economy of Brighton and Hove. Will my hon. Friend join me in thanking those universities and colleges that have done the right thing, put their house in order and are working with the Government, not against them?

[James Brokenshire]

Absolutely; I commend those bodies that take these issues seriously, and there are many that do so. We want a thriving, flourishing sector, and the Government are committed to that. The Home Office is working with the Department for Business, Innovation and Skills in telegraphing that clear message so that educational institutions are doing their best in representing this country and showing it at its best.

[Henry Smith (Crawley) (Con)]

I commend the decisive action that my hon. Friend and his Department are taking in closing down the abuse of the student visa route, which is already significantly reducing overall immigration. Is it not right that we also extend the closing down of abuse to some foreign nationals who are wrongly using the NHS?

[James Brokenshire]

I hope that my hon. Friend will recognise the steps that have been put in place through the Immigration Act 2014, and welcome the financial contribution that students and others who will be in this country for a period of time will need to make as part of the visa process. We are focused now on ensuring that that is effectively implemented to deliver what I think my hon. Friends and others across the House will want to see, recognising the contribution that should be made to our NHS from those who are coming to stay here for a period of time.

[Roger Williams (Brecon and Radnorshire) (LD)]

I am sure that everyone will welcome the identification of the abuse and the plans to eliminate it. The Minister has already said that some genuine students following genuine courses will be caught up in the process. Does he agree that the reputation of this country and our universities and their ability to recruit in the future depend on how genuine students are supported at this very difficult time for them?

[James Brokenshire]

I recognise my hon. Friend’s point, which is why in my statement and in some of the answers to questions I have underlined the support that is being provided to students who, through no fault of their own, may have concerns or be affected. We will certainly keep information on gov.uk up to date. The new hotline has opened this afternoon, so students will be able to contact that. As I have said, we will be working with the sector more generally to ensure that support is provided appropriately.

[Richard Fuller (Bedford) (Con)]

The Minister has suspended the right of the university of Bedfordshire, which has a campus in my constituency, to sponsor foreign students. Will he clarify whether that is because of its involvement with ETS, or because of broader aspects of abuse of student visas? Has he had an opportunity to speak to the vice-chancellor so that he may reassure students throughout the university on valid foreign visas that their studies will not be affected?

[James Brokenshire]

We are in regular contact with the university of Bedfordshire. There has been a conversation with the vice-chancellor this morning and a meeting has been arranged either for later today or within the next few days for the precise purpose of assessing the next steps and to see what may be required in relation to reassurance for students. The action taken by the Government has been linked to ETS in terms of the certificates provided that were questionable or incorrectly issued. It is as a result of looking at the records and the way in which that academic institution has been fulfilling its responsibilities as a highly trusted sponsor that we have taken the action today in respect of its inability to take on new students. We will clearly be working with each of the institutions that I have identified in my statement.

[Dr Matthew Offord (Hendon) (Con)]

I strongly welcome the Minister’s statement today and the action that he has taken, but I echo the words of my hon. Friends the Members for Forest of Dean (Mr Harper) and for Reading East (Mr Wilson) in that there is a vibrant community of language colleges in this country that provide great opportunities for many people. I have several in my constituency that I have visited, which have been sidelined and disadvantaged by some of the so-called bogus colleges. Will my hon. Friend consider introducing a hotline to resolve some of the minor administrative errors that occur during genuine applications, so that the main focus can be on bogus colleges and applications?

[James Brokenshire]

My hon. Friend makes an interesting point about the many institutions that are working hard, meeting their responsibilities and ensuring that they rigorously apply the set standards. It is on those that are not meeting such requirements that additional focus is required. We are considering broader work around the tier 4 student visa system, but I will reflect further on my hon. Friend’s point.

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

I welcome what the Minister had to say and the work that he is doing. Under the previous Government’s shocking administration of the student visa system, individuals were able to come to this country as a student, register as a student, but never attend an institution while being marked present by that institution. What steps are being taken to address the issue of absence and the failure of records, so that they correctly reflect what has been going on?

[James Brokenshire]

Again, my hon. Friend highlights the need for those academic institutions to fulfil their responsibilities and to know that students are attending their courses. It is precisely such measures that our inspectors investigate when they check whether those institutions are meeting their responsibilities. Ultimately, as a highly trusted sponsor, they should know where students are residing and whether they are attending their courses. That is precisely the purpose of the system and why we monitor it in the way that we do.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last but certainly not least, I call John Glen.

[John Glen (Salisbury) (Con)]

To what extent are London campuses opened by universities based many miles from London simply devices to harbour bogus students, and how can we be sure that we will not see many more bogus students siphoned through those campuses in future?

[James Brokenshire]

As my hon. Friend will know from my statement, we have, with the specific universities that I have identified, highlighted the use of campuses. It is why we have brought it to the attention of the QAA, and it is important that it does its work to analyse the situation further and assess the position of those host academic institutions to ensure that appropriate standards are being met.

Point of Order

Tuesday 24th June 2014 Commons Chamber

14:17

[Wayne David (Caerphilly) (Lab)]

On a point of order, Mr Deputy Speaker. During yesterday’s Work and Pensions questions, I asked:

“How many people are now employed on zero-hours contracts?”,

to which the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), replied:

“Roughly the same number who were employed on zero-hours contracts under the Labour Government in 2000.”—[Official Report, 23 June 2014; Vol. 583, c. 14.]

According to the Office for National Statistics, 225,000 people were on zero-hours contracts in 2000. Today, according to the latest figures, 583,000 are employed on zero-hours contracts. Would it be appropriate for you to call the Minister of State back to the Chamber to correct her misleading statement?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

It would not be, but the hon. Gentleman has put that on the record, and I know that, tenacious as the hon. Gentleman is, further questions will now be tabled, and everyone will have heard the point that has been made.

Wales Bill

Tuesday 24th June 2014 Commons Chamber

Consideration of Bill, as amended in the Committee.

New Clause 1

welsh taxpayers for social security or child support purposes

After section 155 of GOWA 2006 insert—

“155A Welsh taxpayers for social security or child support purposes

(1) The Secretary of State may by order provide for individuals of any specified description to be treated as if they were, or were not, Welsh taxpayers for all or specified purposes of—

(a) social security, or

(b) child support.

(2) The Secretary of State may by order provide in relation to any year of assessment that the Welsh basic rate, Welsh higher rate or Welsh additional rate in relation to the income of Welsh taxpayers is to be treated as being a specified rate for all or specified purposes of—

(a) social security, or

(b) child support.

(3) An order under subsection (1) or (2) may apply in respect of any individuals whether or not they have a close connection with Wales.

(4) An order under subsection (1) or (2) may make such modifications of any enactment, or any other instrument or document, as the Secretary of State considers appropriate in connection with the provision made by the order.

(5) No order is to be made under subsection (1) unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

(6) No order under subsection (2) which contains a provision making modifications of an enactment contained in an Act is to be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.

(7) A statutory instrument containing an order under subsection (2) is (unless a draft of the statutory instrument has been approved by a resolution of each House of Parliament) subject to annulment in pursuance of a resolution of either House of Parliament.

(8) In this section—

“specified” means specified in the order;

“Welsh basic rate”, “Welsh higher rate” and “Welsh additional rate” have the same meaning as in the Income Tax Acts;

“Welsh taxpayer” has the same meaning as in Chapter 2 of Part 4A of this Act.””—(Mr Gauke.)

An individual’s tax liability may be relevant to entitlement to social security benefits or to the level of child support payable. This amendment enables the Secretary of State, for social security or child support purposes, to treat someone as being (or not being) a Welsh taxpayer and the Welsh rates of income tax as being specified rates.

Brought up, and read the First time.

14:18

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

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

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Government amendment 1.

Amendment 9, in clause 9, page 13, line 33, leave out “10” and insert “100”.

This amendment would make the Welsh Government responsible for 100 per cent of income tax revenue gathered in Wales.

Amendment 10, in line 33, leave out “10” and insert “15”.

Government amendments 2, 3 and 4.

Amendment 11, in clause 28, page 30, line 20, after “except”, insert “sections 8 and 9”.

Amendment 12, in line 22, at end insert—

‘(2A) Sections 8 and 9 shall not come into force until a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the Statement of Funding Policy, is content with the fairness of the arrangements for allocating funding from the UK Government to Wales.

(2B) Sections 8 and 9 shall be suspended following any substantive reform, amendment or other alteration of the arrangements mentioned in subsection (2A), until the process under subsection (2A) has been repeated.”

Government amendment 5.

[Mr Gauke]

It is a pleasure to return to the Bill. I will start with new clause 1 and amendments 2 to 5. These are principally technical changes that, taken together, are intended to address two possible scenarios that could occur if a portion of income tax is devolved to the National Assembly for Wales following a referendum. The first issue relates to the tax status of an individual. This is directly relevant to the calculation of certain social security benefits, state pensions and child maintenance payments, and could be affected by the introduction of a Welsh rate of income tax.

An issue could arise where information regarding the tax status of an individual has not yet been established or is not available—for example, if a person has newly become self-employed and it is not yet clear what rate of tax will apply. The new clause resolves the issue by allowing the Secretary of State by order, subject to an affirmative resolution, to deem a person a Welsh taxpayer for the purposes of calculating their benefits.

The second issue relates to a situation where the Welsh rate of income tax has not been set for the coming year at the time when certain social security benefits need to be calculated. New section 116D of the Government of Wales Act 2006 requires the National Assembly to pass a Welsh rate resolution before the start of the tax year, but this could be set late in the preceding tax year, thus not allowing the Government sufficient time to make the calculations that need to be made. In such cases it would be important for the Secretary of State to be able to deem a Welsh rate. This mirrors the position in the Scotland Act 1998, which includes a similar power in respect of the Scottish rate of income tax. The Bill needs to provide for the same contingencies in respect of the Welsh rate.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

In Committee, there was some confusion as to whether Kay Swinburne, the Conservative Member of the European Parliament who represents Wales but lives in England, would be eligible for the Welsh tax rate. Can the Minister clarify that?

[Mr Gauke]

I fear that the hon. Gentleman may not recall that debate correctly. There is no confusion about the definition of a Welsh taxpayer. A Welsh taxpayer includes anybody who represents Wales or a Welsh constituency. I hope that repetition will provide some clarity for him, but the position was already clear.

[Owen Smith (Pontypridd) (Lab)]

The Minister is right: there is no confusion. He clarified the position in Committee. Does he agree, though, that the people of Wales might think it slightly peculiar that a Tory Member of the European Parliament who lives in England should be deemed a Welsh taxpayer?

[Mr Gauke]

All I can say is that Wales has a very good MEP in Kay Swinburne and I am delighted that she has been re-elected—[Interruption.] Indeed: by the people of Wales.

I return to the new clauses and amendments before us. However rare the circumstances that I set out a moment ago might be, the potential hardship that a delay in the calculation of entitlements would cause to individuals makes it essential that we make these amendments to cater for such circumstances.

Amendments 2 to 5 are consequential and relate primarily to the commencement of the new clause. As I said, these amendments are minor and technical, but they address an important set of circumstances that could have a serious impact on some of the most vulnerable in society. I urge all hon. Members to support them.

On Government amendment 1, clause 6 gives effect to the Silk Commission’s recommendation that the Welsh Government should be funded from a combination of a block grant and some devolved taxes, with the clause conferring the required competence on the Assembly to legislate for these devolved taxes. Amendment 1 slightly alters new section 116A of GOWA, inserted by clause 6, to correct the possibly misleading impression that those taxes listed in chapters 3 and 4 of part 4A are the only taxes for which the Assembly has competence. The Assembly already has competence for local taxation, which includes council tax and business rates, and this minor amendment clarifies the position.

On amendments 11 and 12, we have been working closely with the Welsh Government in relation to Welsh funding. In particular, the Government recognise that there has been convergence between the levels of funding in Wales and England since devolution, and that this is a significant concern in Wales. As a result, in October 2012 we agreed to implement a joint process to review the levels of funding in Wales and England in advance of each spending review. If convergence is forecast to occur during a spending review period, options will be discussed to address the issue in a fair and affordable manner, based on a shared understanding of all the available evidence.

In advance of the 2013 spending round, a joint review was therefore undertaken by the two Governments and the outcome set out in a written ministerial statement. The review determined that funding levels are not expected to converge during the period to 2015-16. In fact, an element of divergence is forecast to occur. The review also determined that relative funding levels in Wales are within the range recommended by the Holtham Commission. These arrangements ensure that we have a shared understanding of funding levels in Wales, and that a process is in place to consider options if convergence is forecast to resume. There is therefore a firm basis for proceeding with the new financial powers in the Bill, and I hope that when the opportunity arises, hon. Members will withdraw amendments 11 and 12, but I look forward to hearing them make their case.

I turn now to amendments 9 and 10. When it comes to the extent of income tax devolution in Wales, there is a careful judgment to make. Devolving an element of income tax would increase the financial accountability of the Assembly and the Welsh Government in three important ways. First, it would enable the Assembly to fund more of the spending for which it is responsible. Secondly, the Welsh Government’s budget would be directly linked to their economic decisions in areas such as education, skills, housing and planning. Thirdly, the Welsh Government would be able to vary the levels of tax and spending in Wales. However, creating the link between the Welsh Government’s decisions and their budget involves transferring some risk to the Welsh Government. Specifically, the Welsh Government’s budget would benefit if the income tax base grew faster in Wales than the UK average, but would be adversely affected if growth in Wales was slower.

The larger the proportion of income tax we devolve, the greater the potential impact on the Welsh Government’s budget. Devolving 15p of income tax would increase the size of these impacts by 50%, compared to devolving 10p. Devolving all income tax to Wales, which is the stated aim of amendment 9, would increase the potential impacts even further.

[Jonathan Edwards]

In the light of what the Minister has just said, why has the Prime Minister made a manifesto pledge, should there be a no vote in Scotland, to devolve 100% in the case of Scotland?

[Mr Gauke]

No, my right hon. Friend the Prime Minister has not made a manifesto pledge. The Strathclyde Commission has put forward recommendations, which will be considered in due course by my party for the next Parliament. I should point out with regard to the amendment tabled by the hon. Gentleman and his colleagues, which suggests replacing 10 percentage points with 100, that the effect would be to produce negative tax rates—a minus 60% tax, a minus 55% tax and a minus 80% tax. I am not sure that that was quite what the hon. Gentleman sought to do, but I appreciate that he was trying to devolve all income tax to Wales. I take the opportunity to point out that there is a technical problem with amendment 9.

There is a balance to be struck between risks and rewards. At this stage we see no evidence that suggests we should move away from the Silk Commission’s recommendation to devolve l0p of income tax.

[Wayne David (Caerphilly) (Lab)]

Will the Minister give the House an assurance that what the Government propose today has the full support of all the Conservative Members of the Welsh Assembly?

[Mr Gauke]

It is for this Parliament to determine what we should put in place in the Bill. We believe that our proposals strike the right balance. We support the powers. In the time that I have been involved with the Bill, it has not yet been made clear to me whether the hon. Gentleman’s party supports or opposes these measures, but perhaps we will find out today. This Government believe that the powers should be in place and that there should be an option, following a referendum, for devolution of an element of income tax to the Welsh Government. I hope, therefore, that hon. Members will accept the balance contained in the Bill and recommended by the Silk Commission, and that they will withdraw amendments 9 and 10.

14:29

[Owen Smith]

It is a pleasure to serve under your chairmanship, Mr Deputy Speaker, and to do battle once more with the Exchequer Secretary, who seems to have been permanently seconded to the Wales Office—he is like a ringer, to use football parlance. We welcome him and the opportunity he now has to clarify some of the things that he was unable to clarify when we last debated the Bill.

On income tax, the Opposition’s priority is very clear: we believe that we ought to have a fair and progressive tax system across the whole UK. For us that means reinstating the 50p rate and having a starting rate of 10p. That will be far fairer for the people of Wales, and indeed the people of every other part of the UK, than the tax cuts for millionaires that the Exchequer Secretary has overseen at the Treasury.

In the context of the Bill, we have three further priorities. Our first priority—this is why we will support the Bill this evening—is to ensure that Wales has access to borrowing powers in order to offset the £1.6 billion that the Conservatives have cut from the budget for Wales. That is linked to the taxation powers set out in the Bill.

Our second priority is to ensure that Wales is not further disadvantaged by potential additional cuts to the block grant that might be associated with the transfer of tax powers, as we heard a moment ago from the Exchequer Secretary, and as I will test in a moment.

Our third priority is to test properly the costs and benefits to Wales of the transfer of additional powers, particularly in respect of tax, because one of the truths about the Bill thus far is that the Government cannot really be taking this seriously. If they took it seriously and thought that it would really benefit Wales, they would have done a bit of the work to determine what the net costs and benefits would be for Wales. They have undertaken no such analysis, which I think calls into question the seriousness with which they address it.

[Hywel Williams (Arfon) (PC)]

The hon. Gentleman has outlined three priorities. May I ask him, perhaps a little cheekily, which of those priorities is his priority?

[Owen Smith]

If I understand the hon. Gentleman’s question correctly, the answer is borrowing powers for Wales, because we have seen £1.6 billion cut from the budget for Wales, which is money that could usefully be made up by borrowing. Of course, all the tax powers set out in the Bill—income tax and, more immediately, stamp duty and landfill tax and other minor taxes—are directly associated with those borrowing powers. We are keen to see those borrowing powers afforded to Wales, and therefore to see the Bill passed.

However, we have never said that income tax-varying powers are a Labour priority for Wales. We remain sceptical about the benefits they would afford to Wales. Our scepticism is entirely factually based. The Silk commission’s report looks extensively at the revenues Wales receives from taxes and compares them with expenditure in Wales. It determines, to put it in blunt terms, that Wales currently spends around £35 billion in public moneys and nets in revenues from tax receipts of around £17 billion. That leaves a significant deficit that would need to be made up by a Welsh Government, were they to be reliant to a greater extent on their own tax receipts.

The Minister explained a moment ago that, under the terms of the formula outlined in the Bill and in some of the explanatory material, Wales would of course benefit if the growth of GDP in Wales outstripped that of England, but he also said that it

“would be adversely affected if growth in Wales was slower.”

Although in recent years the rate of GDP growth has been faster in Wales than in England, he will know that historically—if we look at the past 20 years, for example, and certainly over any longer period—the rate has been lower in Wales than in England, for all the obvious demographic and industrial reasons. We need to be certain that Wales would not be worse off, in both the short and the long term. We remain suspicious that tax competition, which seems to be the Government’s driving ideological imperative on the matter, will not benefit Wales, for the reasons I have given.

[Mark Tami (Alyn and Deeside) (Lab)]

As someone who represents a border constituency, I think that my hon. Friend touches on a very important area. Tax competition, which might mean people moving their office across the border to take advantage of where the rate was better, will not do the overall economy in England or Wales any good.

[Owen Smith]

Absolutely. On previous occasions in the House I have outlined the difference between Wales and Scotland, in terms of the populous nature of our border, as well as the far greater problems that we will experience in Wales. I will touch on that later.

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

I agree with my hon. Friend on the Front Bench. There is an ideological difference between the idea that tax competition will inspire a race to prosperity and to the top, from which everyone benefits, and the opposite, in which nations and regions compete with each other in a race to the bottom. We do not want that for our constituents.

[Owen Smith]

I entirely agree. I have been at pains throughout our deliberations to make it clear that, in this Bill, we are being accommodating with regard to borrowing that we understand, but there are real concerns—they are not frivolous—about the benefit for our constituents of Wales having powers that could be misused, particularly by the Conservative party, to cut taxes in Wales in order to engender tax competition across the UK. We think that would bring little benefit but many risks.

[Alun Cairns (Vale of Glamorgan) (Con)]

Is the hon. Gentleman telling us that he is absolutely against lower taxes in Wales, and is he therefore ruling out any Labour Administration using these powers to reduce taxes in Wales at all?

[Owen Smith]

The latter part of that question would of course be a matter for the First Minister, were those taxes to be devolved to Wales, but I think that I have been absolutely clear that we are not in favour of Wales undercutting the rest of Britain to afford benefits to itself. We do not think that would be beneficial to Wales in the long term. Let me be clear: were that to happen, we do not imagine that Wales would continue to enjoy the same degree of welcome support that we receive from the rest of the UK.

[Mr Mark Harper (Forest of Dean) (Con)]

I am now thoroughly confused about the hon. Gentleman’s position. If he is in favour, as I think he is, of devolving these tax powers, but not of their being used to reduce taxes, he can only be in favour of them being used to put taxes up. Is he really saying that he wants Wales to have tax powers, but only so that people living in Wales can pay higher taxes than those living anywhere else in the United Kingdom?

[Owen Smith]

That is a misrepresentation of my position, but I have come to expect little else from the hon. Gentleman or, as he is also known, the shadow shadow Welsh Secretary—well, shadow shadow Foreign Secretary. [Interruption.] Maybe, but he seems to be auditioning these days for the Welsh Secretary’s job. Perhaps he will move on to the Foreign Secretary’s position at a later stage.

[The Secretary of State for Wales (Mr David Jones)]

Can the hon. Gentleman clarify whether the Labour party in the Assembly will be pushing for an early referendum on tax-varying powers?

[Owen Smith]

It was well worth waiting for the Secretary of State to intervene, but I think that the answer is no. Had he been paying attention, he would know that the First Minister has been very clear—[Interruption.] He says “Ah!”, but I think that there is no surprise in hearing that the First Minister has said that income tax-varying powers for Wales are not a priority, for all the reasons I have enumerated many times in this Chamber. If the Secretary of State was to debate some of these issues with me, rather than standing behind the Exchequer Secretary when it comes to all these detailed parts of his brief, perhaps we would have a clearer idea of his understanding of these issues.

[Jonathan Edwards]

Is the hon. Gentleman therefore concerned that the 22 local authorities in Wales can all put forward different levels of business rates?

[Owen Smith]

That is a tendentious and off-piste point, and I do not intend to busy the Chamber by bothering to respond to it.

We are still suspicious of the Government’s motives, not least because the leader of the Conservative party in Wales, Andrew R.T. Davies, has said explicitly that he wants to cut taxes for the wealthiest people in Wales. That is what we suspect that the Tory party would do if, heaven forfend, it were ever to assume power in Wales. We also still have suspicions that the Government are not really serious about doing this for Wales; in truth, we feel that it is more evidence that Wales is of interest to them only as a stick with which to try to beat the wider Labour party. We have heard this on health, on housing, and on education. Again, their perspective is to try to drive wedges into gaps that do not exist.

If the Government were serious about this, they would have undertaken some of the work that they have done in Scotland. When we last met here to debate this Bill on 6 May, we were anticipating a report by the Government—in fact, it was late by then—on the costs of implementing a similar scheme in Scotland. It did not come out on 30 March, as promised, but on 6 May—on the day, slightly unfortunately, of our debate. The report is entitled “Second Annual Report on the Implementation and Operation of Part 3 (Financial Provisions) of the Scotland Act 2012”. It contains welcome news, because it concludes that the total cost for Scotland will not be the £40 million to £45 million originally anticipated, but a mere £35 million to £40 million. That is what it will cost not Her Majesty’s Government but the Scottish Government to implement a separate Scottish tax regime.

One would have thought that if the Government were serious about implementing this, the cost to Wales should be measured, but the Treasury and the Wales Office have undertaken no such analysis. That is particularly troubling because of the point made by my hon. Friend the Member for Alyn and Deeside (Mark Tami), who is no longer in his seat. There is more complexity in implementing this scheme in Wales because of the greater population density on the border between England and Wales—on either side of Offa’s Dyke, or the line between life and death, as the Prime Minister refers to it. Just 4% of the Scottish population and 0.5% of the English population live within 25 miles of the Scottish border, whereas 48% of the Welsh population and fully 10% of the English population live within 25 miles of the Welsh border.

In Scotland, such measures would potentially affect just 450,000 people who travel back and forth across the border, whereas in Wales the number is likely to be closer to 6.5 million. The implementation costs for Wales are therefore likely to be greater, if not the volume of communication that the Government will have to undertake. Were they serious about this, we might have heard some analysis from them today, but we have heard not a jot.

[Glyn Davies (Montgomeryshire) (Con)]

I would like some clarity about the Opposition’s position. We are being told that they will vote in favour of the Bill, which is very good news, but the whole discussion on income tax devolution to Wales suggests that they are completely against it. There will inevitably be differences—we know that the border areas are more difficult in Wales than in Scotland—but the Opposition’s entire rhetoric suggests that they are against the devolution of financial accountability to Wales.

[Owen Smith]

I say again that we will support these measures. We will not press amendments 10 and 11 to a vote because we see value in greater accountability and, in particular, in the borrowing powers that are associated with income tax and other taxes. Nevertheless, there are all sorts of reasonable questions to be asked about the impact on the hon. Gentleman’s constituents and mine. The Government are being remiss, if not incompetent, in failing to deal with those questions and failing to come to this House with a proper explanation of what they think the impact will be, as opposed to using the issue merely as a stick with which to beat Labour.

14:45

[Mr David Jones]

I think that everyone in the House is now even more confused as a consequence of what the hon. Gentleman has said. He said that he sees the value of borrowing powers associated with income tax, but given that Labour will never hold a referendum on income tax powers, how does he hope to access those borrowing powers?

[Owen Smith]

I suspect that that reveals why the Secretary of State cannot speak to his own Bill and instead relies on the Exchequer Secretary. The Secretary of State will know, of course, that irrespective of whether there is a referendum in future, the volume of income tax powers to be extended to Wales has a direct link to the amount of borrowing, because the Government have chosen to introduce a different rationale for affording Wales borrowing powers from that which they used for Scotland. The Scotland Act 1998 draws a connection between the amount of capital expenditure—the budget for capital—and the amount of borrowing. In this Bill, for some reason, the Government have chosen to pursue a different rationale, whereby the ratio of borrowing is to be equal to the ratio of income tax devolution. It is very important that the Government consider amendment 10, because it would increase the volume of income tax that could potentially be exercised by the Welsh Government, and should therefore, under the logic employed by the Government, increase the amount of borrowing above the £500 million that is currently envisaged.

[Mr Gauke]

In moving on to borrowing, the shadow Secretary of State is finding whole new areas in which he is confusing the House. Does he not appreciate that there is a link between the revenue streams that the Welsh Government will have independently, including income tax, and the maximum borrowing levels that they will have? If an element of income tax is devolved, the borrowing cap will be higher than if it is not devolved. Does he understand that, and, if so, will he attempt to reconcile it with his earlier comments?

[Owen Smith]

I will forgive the Exchequer Secretary’s slightly patronising tone and simply say that I absolutely understand it. Perhaps he has not understood my point. Why does this Bill draw a causal connection between the quantum of income tax and other taxes to be devolved to Wales on the one hand, and the amount of borrowing that can be afforded to the Welsh Government on the other, when that rationale was not employed explicitly in the Scotland Act? Would he like to come to the Dispatch Box and tell us why that is different? Obviously there is no explanation—none whatsoever. Clearly, the Government have chosen to employ a totally different rationale in order to justify the lower level of borrowing that they will give to the Welsh.

The shift from 10p to 15p would not only increase the amount of borrowing that Carwyn Jones’ Government could undertake to fill the £1.6 billion gap left by this Government, but afford greater symmetry between what Labour is proposing in Scotland and what we are proposing in Wales. That shift is another positive thing about the Bill, although it will be superseded by the next Labour Government introducing even greater tax devolution in Scotland.

[Mr David Jones]

rose—

[Owen Smith]

I can see that the Secretary of State is champing at the bit. Why he did not simply do this in the first place is beyond me.

[Mr Jones]

The hon. Gentleman does not seem to understand that if there is never a referendum on income tax powers, the Welsh Government will not be able to access an income stream of either 10p or 15p. Does he not understand that point?

[Owen Smith]

Absolutely, so perhaps the Secretary of State could come back to the Dispatch Box to explain why that connection was never made in Scotland, and why, in Scotland, the powers relating to the amount of borrowing were a function of the capital expenditure budget. Can he explain why that difference occurred? Obviously, he cannot, so once again, we know that the Government have simply made it up as they went along.

My last point deals with our fair funding amendments. We remain convinced that the Government do not intend to provide fair funding for Wales, and that any extension of devolution of taxation to Wales ought to be subject to a clear understanding, and agreement by the Welsh Government that the fair funding issue has been dealt with. The Exchequer Secretary acknowledged earlier that the issue of convergence has been accepted by the Government in the floor that has been put beneath the Barnett formula. The Holtham commission said that there was a shortfall of about £300 million—perhaps it is now as little as £150 million—in Wales, but we are convinced that the Welsh Government ought to be the arbiter of whether that fair funding test has been met. That is why we would encourage the Government to adopt our proposal of a back-stop power for the Welsh Government to determine whether fair funding is afforded to Wales.

[Jonathan Edwards]

Diolch yn fawr, Mr Deputy Speaker. It is a pleasure to serve under your guidance as we discuss this vital Bill, which will empower the Welsh Government with an element of fiscal responsibility for the first time. I would have hoped that all MPs representing Welsh constituencies were united in the view that one of our major roles as elected Members is to ensure that the Welsh economy is able to perform far better than it has in the recent past. Considering the incredible wealth inequalities that exist within the UK, with Welsh communities all too often at the bottom of the wealth league, I would have hoped that every political party was united in a mission to turn around the decades of neglect served upon Wales by successive UK Governments.

Far too many politicians in Wales rejoice at the underperformance of the Welsh economy, as it enables them to preach that Wales is far too poor, too small and too weak to succeed as an independent country. Their assertions are plainly ridiculous; Wales has all the ingredients to be a successful nation. We are a country that is rich in natural resources. Our people are highly talented, producing global leaders in science, academia, sport, culture and economics. The real question we should ask ourselves in Wales is: how do we find ourselves in such a predicament? Are we, as a people, content to languish at the bottom of every performance table and at the top of all poverty measurements?

If I was a unionist, I would be ashamed of the fact that gross value added per head in inner London is 12 times larger than that in west Wales and the valleys—the communities I represent. Westminster is not working for Wales, which is why my party believes that the potential of the people of Wales can be achieved only if our own democratic institution has the tools to move our country forward. History shows that changing the colour of the Government in Westminster will make no difference: the Westminster parties are all signed up to the same economic agenda that has failed Wales for far too long, and the people of Wales increasingly understand that. All polling indicates that they want the National Assembly empowered with more political responsibility. A poll by the Silk commission found that 64% believed that income tax should be devolved to the Welsh Government, so it is disappointing, to say the least, that the efforts of Plaid Cymru to improve and strengthen the Bill in Committee hit the infamous Westminster wall. In Committee, we endeavoured to preserve the integrity of the proposals of the Silk commission, which of course were the foundation for this Bill. Disappointingly, all the Westminster parties reneged on the cross-party agreement that had been made during the commission. The Bill undermines what was agreed in the Silk commission, cherry-picking from a comprehensive package. On more powers for Wales, the three Westminster parties are three peas in a pod, despite the protestations of their representatives in the National Assembly.

In Committee, Plaid Cymru put forward sensible and reasonable amendments that would have improved the Bill. Those included removing the damaging lockstep on the proposed income tax-sharing arrangement between the UK and Welsh Governments; inflation-proofing the borrowing powers included in the Bill; and empowering the Welsh Government to issue bonds and tax credits, as has been done in Scotland. We also tabled a series of constitutional amendments on matters as simple as enabling the National Assembly to determine its own name; to set its own number of elected Members; and to determine its own electoral system. Needless to say, none of the amendments was accepted by the UK Government and neither would Labour offer its support, preferring instead to table wrecking amendments that would further dilute the effectiveness of this Bill. I suspect that has something to do with the anti-devolution cabal currently ruling the roost in the Labour Westminster shadow Wales Office.

[Wayne David]

Can the hon. Gentleman answer this simple question: are he and his party in favour of tax competition and the race to the bottom among the nations and regions of the United Kingdom?

[Jonathan Edwards]

Enabling the Welsh Government with tax-raising powers would incentivise the Welsh Government to improve the Welsh economy. At the moment, they are a spending body, in essence; there is no incentive for them to improve the economy. That is why these fiscal powers are so important.

[Mr Harper]

It might help the House if we thought for a moment about what Opposition Members mean when they talk about a “race to the bottom”. They mean that we allow hard-working families and other people to keep more of their own money so that they can make decisions about spending it, rather than having it taken off them and spent by the Welsh Government. That is what Opposition Members mean and it indicates all too clearly what they are about.

[Jonathan Edwards]

Well, that is the hon. Gentleman’s position. But if the Labour party’s position were to hold true in Wales, there would be a uniform business rate across the 22 Welsh local authorities. There seems to be a slight misunderstanding in Labour’s position.

[Alun Cairns]

Extending that logic beyond business rates, the same would apply to council tax rates. We have seen a 12% increase in council taxes in Wales since 2010, whereas there has been a broad freeze here in England.

[Jonathan Edwards]

The hon. Gentleman makes my point for me. He says that there are 22 local authorities in Wales, all with fiscal powers to change council tax rates and non-domestic rates. The Labour party does not seem to think that is a problem in Wales in terms of tax competition.

In my opening remarks in Committee, I also said that events in Scotland would supersede the second part of the Silk commission’s work and probably this Bill. Although it might appear that I have fortune-telling abilities, I reassure you, Mr Deputy Speaker, that I have yet to acquire such powers. Earlier this month, the Tory Strathclyde commission recommended that in the increasingly unlikely event of a no vote in Scotland in September, the Scottish Government should be given full income tax powers, and powers over VAT and the welfare system. The proposed new powers would make the Scottish Government responsible for gathering 40% of the money they spend. Crucially for this Secretary of State and this Bill, the Prime Minister has fully backed the commission’s proposals and promised to include them in the Conservative manifesto for next year’s general election. Contrary to the Minister’s remarks, the Prime Minister said that there was no reason why these powers should not be transferred to Scotland after the general election. Ruth Davidson, the leader of the Conservative party in Scotland, has said that this was going to be in its 2015 manifesto. Therefore, Treasury Ministers’ revelations might be revealing in terms of the debate in Scotland over the next few weeks.

The Secretary of State finds himself in an uncomfortable position, as this Bill represents the Tory offer for Wales. The people of our country can easily compare and contrast what is on offer for Wales with what is on offer for Scotland. Furthermore, the BBC is reporting that all three Westminster parties are pledging an agreement of joint travel, promising more powers for Scotland. Yet, this Bill does not even take us in Wales to where Scotland is now. Wales is not a second-class nation and there is no more powerful message in Welsh politics than equality with Scotland. This Bill is far from being a settlement that will last a generation; if the Tories want to survive in Wales next year, this Bill is unlikely to make it past the Lords in the autumn.

Only last week, none other than the Financial Times stated in its editorial that the UK should move to a federal model, noting that

“the status quo is not an option.”

It added that Wales should be included in proposals for full fiscal and policy autonomy. Today, we will endeavour to put forward amendments that will strengthen the Bill considerably. As the Westminster parties have decided to torpedo the Silk commission, we will also put forward amendments that go beyond its recommendations and reflect the rapid change of the constitutional debate within these isles. We will seek to divide the House on our later amendments in the next group, so that the people of Wales can contrast Plaid Cymru’s ambition for Wales with the apathy of the Westminster parties.

First, however, I will speak to our amendment 9, which is a straightforward, probing amendment. It would make the Welsh Government responsible for 100% of the income tax revenue gathered in Wales, rather than having the meagre 10%-90% split income tax-sharing arrangement on offer in this Bill. My Plaid Cymru colleagues and I have already tried to maintain the integrity of the original cross-party Silk commission recommendations. We tabled relevant amendments to the Bill in Committee, but they were either voted down or abstained on by Labour MPs who would not support what their colleagues in the National Assembly had been saying.

I mentioned the fact that the Tory Strathclyde commission has reported its conclusions. It recommended 100% devolution of income tax to Scotland. The report was fully endorsed at the highest levels of the Conservative party, with the Prime Minister himself giving it his full backing and saying that its recommendations would be included in the Conservative manifesto at the next UK general election. I need not point out to the Secretary of State, therefore, that what his party is offering to Scotland reveals what is on offer here to be completely behind the times.

15:00

As I said earlier, equality with Scotland is one of the most powerful messages in Welsh politics. Why should we not have the same powers as Scotland? Are the other parties content for Wales to have inferior powers to those of the other nations of the UK? The Labour party states, through its First Minister, that it wants the same powers for Wales as for Scotland, yet it does precious little about getting them. Only now is Labour meekly saying that it is standing up for Wales to get the powers that were given to Scotland a generation ago.

[Wayne David]

Is there not a contradiction between what the hon. Gentleman is now arguing for and his total support for the Silk recommendations? Surely he must choose one or the other.

[Jonathan Edwards]

I appreciate the hon. Gentleman’s intervention. As I have said, we endeavoured to preserve Silk during the Committee stage, but our attempts were completely torpedoed by the Government and by Labour. We are therefore saying that we are going to go beyond Silk in the remaining stages of the Bill.

Even the Financial Times says that the UK should move to a fully federal constitution. As I said earlier, it stated in its editorial on Monday last week:

“A shift to far greater fiscal devolution north of the border would have to be mirrored across the rest of the union. It would require a whole new constitutional settlement whose purpose would be to create a more federalised Britain...First, Wales and Northern Ireland would need to gain similar powers to those in Scotland to raise, and vary, tax rates.”

Crucially, it ended by saying that

“the creation of a new constitutional settlement...is not something that can be left on hold”.

Last week we also learned not only that 55% of the peoples of the UK want greater fiscal and policy powers for Scotland, but that 54% want Wales to have those same greater freedoms, according to an ICM poll commissioned by the Evening Standard.

We are moving towards a far looser Union, and that is why this Wales Bill is a major missed opportunity. I have always said that the powers on offer in the Bill would be completely overtaken by events in Scotland and I have been vindicated, not least by the fact that there is an increasing likelihood of Scotland voting yes in September, thereby making the Bill look like a sticking plaster put over a burst dam.

All the Unionist parties are now falling over themselves to offer increased devolution in Scotland, despite having previously said that that should not be an option in the referendum. They must be kicking themselves that they did not include it as a third option on the ballot paper. Who will believe a word they say when they promise jam tomorrow? I would say, based on past evidence—and on what the Exchequer Secretary to the Treasury has said today—that the only way for the people of Scotland to guarantee more powers for Scotland is to vote for independence.

I would draw the people of Scotland’s attention to the Wales Bill. Here we have a Government who set up a cross-party commission to bring forward a consensus which carefully put together a fully endorsed package of reforms. The Conservatives and the Liberal Democrats then reneged on their word by cherry-picking and watering down the recommendations of the cross-party commission. They added restrictions and caveats further to render the powers unusable via mechanisms such as the lockstep. The UK Government’s attempt to strangle the cross-party Silk commission’s original recommendations by adding caveats, restrictions and locksteps should be a salutary reminder to the Scottish people of the sincerity of Westminster’s promises regarding further devolution. If the Wales Bill is anything to go by, the Government here will make a big headline-grabbing announcement promising more devolution, only to reveal a paltry offer when the surface is scratched away.

[Wayne David]

I take the hon. Gentleman back to his comments a moment ago, when he said he was supporting Silk. He is now saying that he is not supporting Silk. Is he behind Silk or not? Does he want to see those proposals taken much further? He cannot have his cake and eat it; he must decide one way or another.

[Jonathan Edwards]

I am grateful to the hon. Gentleman for that second attempt, but I think I answered his question when he first intervened on me.

It is interesting that Labour Front Benchers have only now tabled amendments to the Bill to give Wales control over 15% of income tax revenue gathered in Wales. That proposal is in amendment 10. Admittedly it is better than the 10% on offer in the Bill as it stands, but it is still meagre and shows a lack of ambition and vision for Wales. That is symptomatic of the Labour Government in Cardiff and their puppet-masters here in Westminster. Of course, 15% is better than 10% and we shall be supporting the amendment if it is pressed to a vote, especially as it does not include the lockstep-plus mechanism I referred to in Committee. However, it still reflects Labour’s lack of dynamism. Why only 15%? That figure seems to have been chosen simply because it is ever so slightly better than the Tory and Lib Dem offering.

I see that Labour’s other amendments are more concerned with delay, obfuscation and preserving its own positions than with trying to get the best deal for Wales and its economy. On the vote in Committee to remove the lockstep restriction, Labour abstained, despite the Labour First Minister and Finance Minister having said that it should be removed. Where is Labour’s consistency? Again Labour Members say one thing in Wales and do another at Westminster. They are now saying that Wales should have control over 15% of income tax revenue, yet their amendment says nothing about the removal of the lockstep.

When the Westminster Government announced in November last year that Wales would be getting new powers, they stated that the powers would make Wales an “equal partner” in the UK. Nothing could be further from the truth. The Secretary of State for Wales has previously argued that Wales must be given “equal respect with Scotland”, yet his actions run completely against that. His party is effectively offering Scotland full income tax devolution, yet he is maintaining the lockstep in the Bill for Wales and proposing that we should have control of only 10% of the income tax revenues raised in our country.

In conclusion, I want the same powers for Wales as the other nations of the British state either have or are being offered. If the main party of Government here at Westminster has full income tax devolution for Scotland as its party policy, why on earth should Wales not have those same powers? The changing context of the Scottish independence referendum debate vindicates what I have said all along—namely, that its rapid development will ensure that the powers on offer in the Bill will not be the settlement for a generation that the Government are suggesting.

The Welsh economy needs those powers now, never mind in three years’ time—the earliest point at which they would come on stream. Ultimately, the powers on offer in the Bill pale into insignificance in the context of how the constitution of the British state will alter in the coming years. That should be noted by this Government and all the parties, and we should begin with full devolution of income tax, so that the Welsh Government can determine their own bands and rates.

[Mr Gauke]

I shall briefly respond to a number of the points raised in the debate. The first related to the cost of implementing the Welsh rate of income tax. HMRC is looking to develop a specific estimate for that cost but, because the timing of the introduction of a Welsh rate is uncertain and because it would depend on the outcome of a referendum in Wales, it is difficult to do so at this time.

I want to make two comments in regard to the comparisons with Scotland. First, the Scottish population is obviously larger than the Welsh population, so that will reduce some of the costs. Secondly, however, a counteracting element is that the number of people living close to the border might result in an increase in the number of people contacting HMRC to seek clarification. The hon. Member for Pontypridd (Owen Smith) mentioned the concern about the number of people working in Wales but living in England, and vice versa. We must remember that the definition of a Welsh taxpayer is based on where they live, not where they work. For the vast majority of people, it will be clear where they are, so we should not overstate those costs. As I have said, however, it is difficult to come up with a precise number at this point.

On the Strathclyde commission, I have made it clear that that will relate to what happens in the next Parliament. We certainly welcome Lord Strathclyde’s recommendations; there is much to take from them.

[Jonathan Edwards]

Given the comments of the Prime Minister and, especially, of the leader of the Conservative party in Scotland, does the Minister think that Ruth Davidson was being rather exuberant—for want of a better word—in proclaiming that those measures would definitely be in the manifesto?

[Mr Gauke]

I would say to the hon. Gentleman that what the Prime Minister says will be in the manifesto tends to be in the manifesto. That is a fairly wise approach.

The Opposition have set out their views and I think we have finally got some clarity. I think that Labour’s position is that we should not devolve any element of income tax to Wales, but that devolving 10p is not high enough and it should be 15p. In other words, it is saying that 15p is better than 10p, but nothing is better than anything. Labour also supports the Bill because it wants the Welsh Government to have access to borrowing powers that come as a consequence of having independent revenue streams, but it does not support the Welsh Government having access to the biggest independent revenue stream that might be available, which is income tax. I hope I have characterised Labour’s position correctly. It is simultaneously both for and against, on at least two different grounds.

With those points of clarification, I hope that the Government new clause and amendments will be accepted and that the Opposition amendments will not be pressed to a Division.

Question put and agreed to.

New clause 1 accordingly read a Second time, and added to the Bill.



New Clause 2

Infrastructure guarantees in Wales

‘Her Majesty may by Order in Council provide for the transfer of responsibility for providing infrastructure guarantees in Wales to the Welsh Ministers.’—(Jonathan Edwards.)

Brought up, and read the First time.

[Jonathan Edwards]

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

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 3—National Assembly ability to hold binding referenda—

‘Her Majesty may by Order in Council provide for the transfer of responsibility for holding binding referenda to the National Assembly for Wales.’

New clause 4—National Assembly for Wales: reserved powers—

‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.

(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).’

Amendment 8, in clause 19, page 22, line 8, at end insert—

‘(1B) Welsh Ministers may set their own capital expenditure priorities.”

This amendment and amendment 5 enable the new clause inserted by new clause NC1 to come into force by order of the Secretary of State if the majority of voters in a referendum held under clause 11 vote in favour of clauses 8 and 9 (the income tax provisions) coming into force.

[Jonathan Edwards]

We should be using this Bill to empower the Welsh Government—with an arsenal of powers to enable them to intervene in the Welsh economy. During our discussions on the Bill, we have debated fiscal powers and different elements of borrowing powers. However, we have not debated one lever that could be of enormous use to the Welsh Government and that might not necessarily cost a penny, but that would allow them to provide security to various infrastructure projects that might not take place without such backing.

New clause 2 would allow the Welsh Government to issue financial guarantees for private projects that they choose to support in such a manner. Government guarantees are useful for companies that are then able to draw down private investment to fund their projects. As I have said, these guarantees would cost the Government nothing, unless the project fails.

Effectively, guarantees mean that the Government financially underwrite a project. In many cases, guarantees are more useful for helping projects get off the ground than borrowing powers. It is a simple measure that would help the Welsh Government kick-start infrastructure development in Wales, boosting jobs and growth.

I need only quote what the Chief Secretary to the Treasury had to say about the importance of guarantees when he launched the most recent outline of UK Government-backed projects:

“The offer of a guarantee is helping to get projects going…There is a lot of infrastructure happening in this country because of this programme.”

The Institute of Civil Engineers said that the guarantee scheme had enabled

“viable projects to secure finance in difficult market conditions…It is an excellent example of government making creative use of its resources to get projects moving,”

Last October, the UK Government announced their £40 billion guarantee scheme. Projects earmarked for support included a £300 million biomass energy generation plant in Avonmouth in Bristol; a £400 million gas-storage facility in Islandmagee in County Antrim; two gas-fired power plants in Lincolnshire and Essex; mixed-use development of homes, offices and shops in Aberdeen; a wind farm on the Forth estuary; a renewable energy port facility in north Lincolnshire; a low-carbon fuel plant for commercial vehicles; development of the university of Roehampton campus in Surrey; a wood-fired generation plant in Tilbury in Essex; relocation of Northampton university; a Five-Quarter Energy gas plant in the north-east of England; and ethane storage facilities at the Ineos Grangemouth plant near Falkirk in Stirlingshire.

If we look at the UK Government’s list of prequalified projects, which was updated on 16 June, we will see that none of those projects is in Wales. Despite heady announcements from the UK Government about “co-operation agreements” and the inclusion in the national infrastructure plan of projects in Wales, not one has even reached the prequalified stage, according to the publicly available list.

The UK Government guarantee scheme should not be confused with the national infrastructure plan, which is a wish list of future projects. The plan does include the proposed Wylfa B, with a promise of UK Government financing help following planning approval. The national infrastructure plan of December 2013 mentions

“a new cooperation agreement with Hitachi and Horizon with the aim of being able to agree an in-principle guarantee by the end of 2016 to support the financing of a new nuclear power plant at Wylfa, subject to final due diligence and ministerial approval.”

It has, therefore, still not reached the prequalified stage.

Returning to the UK Government guarantee scheme, the eagle-eyed will notice that none of the prequalified projects is located in Wales. Therefore, the Treasury is using Welsh taxpayers’ money to underwrite projects in other parts of the UK, and Wales has so far seen precious little, despite being desperately in need of better infrastructure to drive forward the Welsh economy. Driving forward the Welsh economy would be a real effort to rebalance the UK economy geographically, yet this Government have no real interest in doing so. They should either bring more infrastructure projects to Wales, or give the Welsh Government more tools to do so. I and my Plaid Cymru colleagues believe that it is for the people of Wales, through their democratic institutions, to decide which infrastructure projects to underwrite and where.

15:15

The UK Government have pledged to underwrite the £4 billion Thames super-sewer here in London. Some might regard that project as especially high-risk, considering the widely recognised indebtedness of Thames Water, a company that failed to pay any corporation tax last year, despite its profits increasing 79% to £259 million.

A few months ago, Welsh Members were invited to a meeting by the £280 million Circuit of Wales developers in Blaenau Gwent. They informed MPs and peers that one of the measures they needed above all else to get the project going was a Government guarantee. Hardly a week goes by without some Labour MP, Assembly Member or Lord saying that the circuit could be the saviour of the Welsh valleys. Today, Labour MPs will have their opportunity to give the Welsh Government the power to issue the guarantee required to get the project going. As ever, I do not hold out much hope that Labour MPs will put the communities they represent first, but the way they vote will be a matter of public record.

Our new clause 2 proposes that the Welsh Government should have the ability to issue guarantees—ultimately guaranteed by the Treasury—worth 5% of the UK Government scheme. That would enable the Welsh Government to underwrite £2 billion-worth of infrastructure projects, which would inevitably provide a significant boost to the Welsh economy.

Technically speaking, a guarantee gives rise to a contingent liability for the Government. In other words, it is a potential liability depending on something happening that will trigger the guarantee and require funds to be paid in full or in part to satisfy the guarantee. Given the uncertain nature of such liabilities, the Government do not score them against departmental expenditure limits, unless and until they result in payments being made.

The major infrastructure projects announced, or semi-announced, for Wales by the UK Government—the M4 relief road and rail electrification—will not come through infrastructure guarantees, but via puppet-master strings. The UK Government are seeking to force a future Welsh Government to use their borrowing capacity for the first, and the second is a complete shambles because neither Government can agree on who said what they would pay for.

Ultimately, Wales should get its fair share of economy-boosting infrastructure projects and the Welsh Government should be empowered to provide guarantees, without the constraints placed on them by Westminster as with the other cases I have just mentioned. If used prudently, the guarantees need not cost the Welsh taxpayer a single penny. It is a simple and effective mechanism.

The UK Government’s proposals in the Bill effectively handcuff the Welsh Government. They are saying, “You can have tax powers, which can’t be used because of the lockstep, and you can have borrowing powers as long as you spend them on our preferred projects.” They are treating the Welsh Government and the people of Wales with contempt.

In these remaining stages, the Secretary of State needs to rethink his position. The leader of the Conservatives in Scotland has described the current Scottish fiscal arrangements as those of a “pocket money Parliament”. Surely there should be a better deal on offer for the people of Wales. A Bill genuinely aimed at helping the Welsh Government to drive economic growth would at the very least include this new clause.

My Plaid Cymru colleagues and I also tabled amendment 8. We remain concerned that the UK Government will seek to shackle the ability of a future Welsh Government to use the borrowing-for-investment powers as they see fit. The case in point is the plan to use the new borrowing capacity for a new M4 road. Plaid Cymru has long advocated infrastructure investment as a means of creating jobs and developing the Welsh economy, which still languishes at the bottom of the UK economic league table. However, it would be a dereliction of duty by any future Welsh Government if they agreed to use their borrowing capacity solely to fund a new M4 road, because, first, there are far better ways of relieving congestion on the existing M4 in south-east Wales; secondly, any future Government of Wales will have a duty to the whole of Wales, not just the south-east; and thirdly, if the powers are to be devolved, surely it should be a matter for the democratically elected Government of Wales to determine their own priorities, not a matter of command and control from the Treasury.

The Bill as drafted says that the Treasury will have the final say on any infrastructure projects in Wales paid for via the borrowing powers. Our amendment 8 would enshrine the right of a future Welsh Government to choose as they see fit. Ultimately, as in other areas of the Bill, the Westminster Government are saying, “You can have the power to do x, y and z, but we still retain the right to overrule you or to attach conditions and caveats so that the power cannot be used freely.” We have seen that with the Government’s addition of the lockstep, the cherry-picking and the complete failure to give to Wales any devolved powers that match those for Scotland and Northern Ireland.

When the UK Government announced that they would make money available for investment in a new M4 relief road, it was unclear which funds would be allocated. As the Bill’s contents were gradually revealed, it became apparent that the Westminster Government intended to bind a future Welsh Government’s hands on the borrowing powers available by funnelling the new power into the project that they saw as the one worthy of investment—namely, the priority from a Treasury perspective. It is highly telling that the Government here want the money to be spent on the M4, as they see Wales through a colonial lens. For Westminster, Wales is worthy only of mineral and natural resource extraction and as a source of labour, which means that its only interest is in maintaining east-west links and that it has no interest in developing infrastructure internally in Wales.

In a close parallel, the UK Government stated that they would electrify the great western line to Swansea and the valley lines, but then reneged on their word. That also revealed the incompetence of the Labour Government in Wales, who completely failed to nail down the Westminster Government on the precise terms of the agreement. All along, the people of Wales are being let down by unionist parties who squabble among themselves and who deliver only mealy-mouthed promises and an economy in Wales that is still languishing.

[Mark Tami]

Will the hon. Gentleman please explain or elaborate on the imperialist nature of the M4, because I am slightly at a loss?

[Jonathan Edwards]

The point I am making is that all the investment seems to be on an east-west basis, rather than on a north-south basis.

[Hywel Williams]

Apropos of that intervention, I would have thought that the hon. Member for Alyn and Deeside (Mark Tami) was rather more interested in developing the A55 than the M4.

[Jonathan Edwards]

I am sure that that very useful intervention will be noted by the constituents of the hon. Member for Alyn and Deeside (Mark Tami).

Plaid Cymru recognises the issue of congestion on the M4 corridor around Newport and wants investment to take place. However, the current Labour Welsh Government’s preference for a new M4 to the south of Newport at a cost of £1 billion is a disproportionate solution to the amount of congestion. According to Friends of the Earth and Professor Stuart Cole, the Welsh Government consultation documentation overestimated traffic growth in 2012 and 2013. The flows were lower than the Welsh Government predicted, so they do not have a strong enough statistical base on which to justify such a huge financial and environmental cost. As the Federation of Small Businesses has pointed out, committing the vast majority of Welsh borrowing capacity and money from outside the borrowing limit in the Bill to one single project is misguided and does not serve the whole of Wales or the whole of the Welsh economy.

[Paul Murphy (Torfaen) (Lab)]

I am listening with extreme interest to the hon. Gentleman’s points. It seems to me that Plaid Cymru is therefore actively opposing the development of the relief road around the M4, which he will have to explain to those who vote for Plaid Cymru in Gwent and Glamorgan.

[Jonathan Edwards]

I have huge respect for the right hon. Gentleman. I will outline two alternative proposals that would be a better use of the borrowing capacity of the Welsh Government than blindly following what the Treasury wants.

The new M4 will not be a quick and decisive solution, despite what its supporters say. It will not be completed until 2031, according to the Welsh Government. The £380 million blue route, an upgrade of the A48 corridor that includes flyovers, would represent better value for money and would avoid the environmental damage caused by building on the Gwent levels to the south of Newport. The road upgrade would be accompanied by modern traffic management methods, such as signage to direct traffic flows between the A48 and the existing M4, depending on congestion levels. The blue route is future-proofed until 2035 and, if needed, it could be developed further beyond 2035. Money saved by developing the blue route could be invested elsewhere in Wales. In our previous transport consultation, Plaid Cymru identified transport needs in north, mid, west and south Wales. Above all, Plaid Cymru’s proposal to support the blue route is more innovative and balanced than the proposal with which the Labour and Conservative parties are trying to push ahead. Wales must not get tied into the UK Government’s deal on the M4.

Ultimately, although a new route is needed to relieve the pressure on the M4, what is really needed is the development of a metro system for south-east Wales and the valleys. Early estimations have put the costs at about £1 billion. The reality is that the M4 is used as a local road in south Wales, as the right hon. Member for Torfaen (Paul Murphy) well knows: 40% of journeys made on the M4 in that area are local ones of less than 15 miles. This means that—in one act—commuter journeys could be transferred to a metro system to relieve the pressure on the M4. The great thing about a metro system is of course that, after the initial outlay, a ready stream of revenue is provided through ticket sales that could be used in part to repay the initial expense and reinvest in services and upkeep. The success of the Newcastle and Tyneside metro could be repeated in south Wales if we had the necessary vision.

In conclusion, it appears that the Westminster Government are intent on binding the Welsh Government’s hands on how they utilise the borrowing capacity. The M4 relief road is a case in point. Unfortunately, the current Labour Welsh Government lack the ambition and vision to do something different, and are blindly following the UK Government’s lead. Amendment 8 would make sure that a future Plaid Cymru-led Welsh Government were not bound in the same way but could prescribe more intelligent solutions to infrastructure problems and provide a boost for the whole of the Welsh economy, rather than just the primary corridor routes in and out of Wales that concern the Westminster Government. With your permission, Mr Deputy Speaker, I will therefore definitely push amendment 8 to a vote at the appropriate time.

[Paul Murphy]

It was interesting to hear the points made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), but I want to concentrate on my party’s new clause 4 on reserved powers. I very much welcome the new clause, which relates to the laying of

“a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales”.

[Interruption.] Perhaps I should give up for a second while negotiations are going on behind the Speaker’s Chair.

I repeat that I support new clause 4 on reserved powers for Wales. I remind the House that the Leader of the Opposition, who was in north Wales for the Labour party conference some months ago, said that the next Labour Government would introduce a

“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”

I do not see why the Government, and particularly the Secretary of State for Wales, should reject such a proposal. In an earlier incarnation, I was probably more sceptical about devolution than even he is now, but the world changes. As the hon. Member for Carmarthen East and Dinefwr mentioned several times, the world has changed with regard to what might or might not happen in Scotland in a few months’ time. Let us assume, as I hope will be the case, that the voters of Scotland vote no. If that happens, we know that the Government—not the Opposition—will make far-ranging changes to Scotland’s constitution, with its Government being given extra powers as a consequence of his Government’s commitments. The Secretary of State also knows that it is quite likely that a future Labour Government would agree to such proposals. I therefore cannot understand why he is opposed to reserved powers for Wales only a matter of weeks before the possible introduction of a new Bill for Scotland that would give extra powers.

That argument is simple enough, but in a sense it goes back to our previous debate about borrowing. The Treasury Minister tried to make the point, rather heavily I thought, that borrowing could not be greater in Wales because we did not have sufficient streams of income. However, the shadow Secretary of State pointed out that Scotland and Northern Ireland were given borrowing powers for different reasons. Therefore, it is strange that, within Government, Wales is going that way and Scotland is going another way. There is no reason why that should be the case.

15:30

This is a modest measure. The new clause calls for a report to come to Parliament looking at the issue of reserved powers. It will avoid the need for the Secretary of State to keep going to the Supreme Court when there are disputes on, for example, the Agricultural Wages Board and other issues. This measure seems a simple solution to the problem. What happens in Scotland will have an effect. The Silk commission recommended this. Granting reserved powers to Wales—in other words, it would have all the powers it needed except those that are reserved to Westminster—is a way in which we can overcome the differences between Wales and Scotland.

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

I am following the right hon. Gentleman’s argument and I fully accept what he says about the benefits of a reserved powers model. However, it seems to us that the problem with the new clause is that it relies on a report some time in the future to bring that in. Accepting what he says and the obvious benefits of a reserved powers model, why do we need that report?

[Paul Murphy]

I hope that my hon. Friends on the Front Bench will elaborate a bit more on the matter, but my guess is that they discussed the issue of reserved powers at earlier stages and a new clause is necessary to revive the debate on that on Report. I agree that this measure is relatively modest in asking that a report be laid, but I am sure that my hon. Friend the Member for Llanelli (Nia Griffith) will clarify that we are in favour of reserved powers, as described by the Leader of the Opposition in north Wales. There is no equivocation at all about whether we want reserved powers. We do. The new clause is framed in this way so that the House can debate what is an important issue.

[Hywel Williams]

From my reading of new clause 4, it does propose a reserved powers model, but that is contingent on a report not on the reserved powers model, but on borrowing by Welsh Ministers. The Opposition seem to be yoking two different things together. I suspect that it is a delaying, or even a wrecking tactic.

[Paul Murphy]

It certainly is not a wrecking tactic. I have made the position clear. I am just a Back Bencher, but Labour Front Benchers will also make it clear that the Labour party is committed to reserved powers for Wales. In the light of what is likely to happen in Scotland, that becomes much more important.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

I am grateful to the former Secretary of State for giving way. He is definitely not just a Back Bencher, but does he genuinely believe that moving to a reserved powers model is a panacea for all the difficulties and challenges of a devolution settlement between England and Wales—issues such as water, transport, and the populous border, which the shadow Secretary of State described earlier? Does he genuinely believe that moving to a different starting point is a panacea to overcome the challenges in the current devolution settlement?

[Paul Murphy]

I do not think for one second that the model is a panacea for all the issues and problems that we face, but I think that it will give tools to the National Assembly and the Welsh Government that they currently may not have and make it easier for them to resolve various issues. I do not suggest for one second that the model means that we will have to end the important cross-border co-operation that exists, or that there will be no need for the Governments to discuss matters. Of course that will have to happen, because of points Members made earlier; large swathes of the population live on the border in Wales, in contrast to Scotland. I agree with the Minister that this model is not the complete answer but it is an answer. It is also an answer in the light of what both parties are thinking with regard to Scotland. Whatever happens in Scotland—like me, the Minister will argue for a no vote—it will undoubtedly change the political and constitutional landscape of our country and so Wales must be in a position to take part in that. Otherwise, we will be seen as an adjunct to a very large England, with Northern Ireland, with its own special issues, on one side.

Therefore, I agree with the new clause. I am sure that my hon. Friend the Member for Llanelli will be able to make the points that I have not made and that have been discussed by Members.

[Nia Griffith (Llanelli) (Lab)]

The new clause calls on the Secretary of State to issue a report on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales. It seeks to prepare the way for Wales to enjoy the reserved model of powers, so that legislation should set out the areas that are reserved for the UK Parliament, rather than trying to define all the areas that Wales can legislate on.

The current situation is that the model of devolution in operation for Wales is the conferred powers model. Following the referendum in March 2011, the National Assembly for Wales was empowered to make primary legislation in the 20 broad policy areas. Therefore, the areas where the National Assembly can legislate are conferred upon it and listed in the statute. However, Scotland and Northern Ireland enjoy the reserved powers model, which means that the legislation sets out the areas where the devolved legislature cannot legislate—areas that are reserved to the UK Parliament.

[Mr Mark Williams (Ceredigion) (LD)]

At least three parties in the House support the reserved powers model, but can the hon. Lady explain what is meant by subsection (2) of the new clause? The hon. Member for Arfon (Hywel Williams) made this point. It says:

“Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”

What is that caveat? What is the hold up in moving towards a reserved powers model in the new clause?

[Nia Griffith]

That provision is to ensure that the report is actually laid. That is the point of it. It says, “Let us make sure that this is a genuine part of what happens during the passage of the Bill, rather than the issue being kicked into the long grass.” Otherwise, the danger is that the new clause, which asks for further progress on reserved powers, would just be kicked into the long grass. That would be the problem. It is integrally linked now with the progress of the Bill.

[Mr Williams]

Is there any link with the point made by the hon. Member for Arfon about the financial provisions of the Bill?

[Nia Griffith]

The whole point is that this is what we want to see. We are committed to a reserved powers model and that is what we would like to see progress on. It seems a missed opportunity not to have that in the Bill, so we want to put it in.

[Mr Williams]

I share the passion for the reserved powers model. The point the hon. Lady is making about the contrast with Scotland and Northern Ireland is an admirable one. My party leader has said that. So has Plaid Cymru and elements of her party, but why do we need subsection (2) of the new clause? I do not understand. Why can we not proceed with the reserved powers model anyway?

[Nia Griffith]

The important thing is that we are firmly committed to the reserved powers model and we wanted to find a way to put that in the Bill. We have put it in the new clause in this way because that is what we have been advised.

The Silk commission part 2 makes the recommendation that Wales would be better served by the reserved powers model, and it therefore seems to us that the Bill provides an ideal opportunity to pave the way for that change. Not to do so would be a missed opportunity, which is why we are proposing the new clause. The model is already there for Scotland and Northern Ireland.

My right hon. Friend the Leader of the Opposition confirmed our commitment to a reserved powers model when he announced at Welsh Labour conference that Labour has a manifesto commitment for next year’s general election to introduce a

“new Government of Wales Act, with powers assumed as devolved to Wales, unless specifically reserved. Bringing Wales into line with Scotland—modernising and advancing the devolution settlement for generations to come.”

Labour is the party that brought devolution to Wales and Scotland. It remains the only party that is committed to and can deliver devolution in the UK and get the best deal for Wales. Therefore, let us look at why we believe that the reserved powers model would serve Wales better than the current model.

As the Welsh Government told the Silk commission:

“The reservation model is a technically superior method of devolving legislative competence on a devolved legislature. In our view, the conferral model is incapable of prescribing with any degree of certainty exactly what the Assembly can legislate about…The Welsh model therefore lacks…clarity and certainty, and much time is spent addressing potential arguments about whether provisions of a Bill relate to such undefined subject-matter.”

Indeed, the submission from the Hywel Dda institute of the Swansea university school of law also concluded that

“the reserved powers model is, in principle, superior in terms of accessibility, clarity, stability, sustainability, effectiveness and consistency with the principle of subsidiarity”.

[Mr Llwyd]

I am listening intently to the hon. Lady’s arguments about the benefits of a reserved powers model, and I fully agree with her. I was here when the original Wales Bill was drafted some years ago. Why was it not put in as it was for Scotland at that stage, rather than the conferred model?

[Nia Griffith]

I very much hope that the right hon. Gentleman will welcome the move forward that we are making in light of the referendum that showed that the people of Wales wanted to go that step further. I think it reflects the mood and the present situation in Wales.

I am very pleased to hear that the hon. Member for Ceredigion (Mr Williams) is offering his support, particularly as his hon. Friend the Member for Brecon and Radnorshire (Roger Williams) stressed his wholehearted support for a move towards the reserved powers model only a few weeks ago here in this Chamber. His thoughts were, of course, echoed on 16 June by the Deputy Prime Minister:

“So, what you will find in our manifesto is a commitment to implement Silk 2 in full.”

I hope today that we will see that support demonstrated in full by his party.

As for the Secretary of State for Wales, I think I will have a rather more difficult time persuading him to even contemplate moving to a reserved powers model for Wales. Indeed, he is on record as preferring the current settlement and I suppose even that is a big step forward for him from our days together on the Welsh Affairs Committee, when he wanted a referendum to make provision for turning the clock back and reversing the devolution settlement.

That brings me on to further evidence for wanting to move to a reserved powers model. As hon. Members will know, since the Welsh Assembly received its full law-making powers in May 2011, there have already been three referrals to the Supreme Court seeking clarification as to whether proposed legislation is within the competence of the Assembly. Two of those referrals have been made by the Attorney-General. The first of those was the Local Government Byelaws (Wales) Act 2012, which was passed by the Assembly in July 2012. The Supreme Court delivered a unanimous judgment in November 2012 that it was within the competence of the Assembly. That process both delays the legislation and comes with a cost.

In this case, the legal cost of the Treasury Solicitor’s Department for representing the Attorney-General in relation to the Bill was £59,000. The legal cost incurred by the Welsh Government was £30,000 and about £15,000 was spent on civil service time in the Wales Office. The First Minister’s spokesman called it a

“ridiculous situation that has arisen on what is a totally uncontroversial piece of legislation…The primary policy objective of the Bill is to simplify and rationalise how local authorities make byelaws to deal with nuisances in their areas…So why the UK government has decided to take this to the Supreme Court, at the last minute, is inexplicable.”

You really do have to ask yourself, Madam Deputy Speaker, why the Secretary of State even thought it necessary to ask the Attorney-General to refer it in the first place. It is difficult not to conclude that it had something to do with his general antipathy to any new steps in devolution.

The second referral by the Attorney-General was the Agricultural Sector (Wales) Bill, passed by the National Assembly for Wales in 2013, and we are still awaiting the outcome. That Bill seeks to retain in Wales an equivalent of the Agricultural Wages Board, which has been abolished by this Government in England. It therefore represents a difference in policy between the UK Government and the National Assembly for Wales.

Yet again, we saw it referred by the Attorney-General. You might almost suspect, Madam Deputy Speaker, that that was a referral made by the UK Government because they disagreed with the legislation and were unwilling for the Welsh Assembly to do things differently. But to most people, it just looks like wasting public money, fighting an expensive legal battle to try and stop the Labour Welsh Government retaining an equivalent board in Wales to protect Welsh farm workers—a move that has the support of the Farmers Union of Wales and people in Wales.

Furthermore, as my right hon. Friend the Member for Torfaen (Paul Murphy), who has direct experience of these matters, said in a previous debate, when he was Secretary of State for Wales, disputes between the devolved Administrations and the United Kingdom Government were resolved at a governmental and political level and they should never get to the stage where they are resolved by the courts. He stressed that there is machinery within Government for resolving disputes between the devolved Administrations and their Parliaments and the UK Government.

15:45

The third referral was of the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill by the Counsel General. The Bill was introduced by a Back-Bench Assembly Member and passed by the National Assembly in November 2013, and again, we are still awaiting the outcome of that referral.

If we moved to a reserved powers model of devolution for Wales, that would help address any such issues in the future and afford the Assembly the respect it and the Welsh people deserve. That is why we are anxious to see the new clause included in the Bill.

[Hywel Williams]

With all due respect to right hon. and hon. Members who have spoken today, I would like to begin with a quote that, for me, exceeds anything that has been heard today for eloquence:

“The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.”

I quote that in support of our new clause 3, which stands in the name of my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd). The quote comes from Thomas Jefferson, third President of the United States, primary author of the declaration of independence and, as I am sure the Western Mail would remind us, one of 16 of the 56 signatories to the declaration who were of Welsh extraction. Jefferson’s argument is that the validity of any Government is bound up with their purpose of representing the will of the people. That could also claim to be the primary motive behind our new clause 3.

In Committee, we in Plaid Cymru tabled amendments, as my hon. Friend the Member for Carmarthen East and Dinefwr said earlier, that would grant further powers to the National Assembly, including the power for it to decide on the number of Assembly Members, change its name should it wish to do so, and make amendments to secure further financial powers. We were disappointed that more Members from other parties did not support those amendments, but this new clause encompasses them all.

We believe that decisions of this nature are better made when elected representatives have the backing of the people, and the most straightforward means of determining the will of the people on any particular subject is, of course, a referendum. New clause 3 would therefore give the National Assembly the power to hold binding referendums on issues already in its competence, and on questions relating to further transfers of constitutional or financial powers, such as those that have been proposed in respect of changes to income tax.

The National Assembly could ask the people of Wales questions such as how many Assembly Members they believe should sit in the Assembly, what the voting system should be, and whether new fields should be devolved if we do not get to the reserved powers model. That would give our people a clearer say in the Assembly’s decision-making process.

The Wales Bill allows for a referendum on the question of transferring to the Welsh Government power over 10% of income tax receipts, but the notion that there should be a new Bill in this place each time a referendum is needed on a reserved matter is convoluted, to say the least, and convoluted is not good: witness the wretched legislative competence order process. Plaid Cymru is not in favour of holding a referendum for the sake of it. For example, the transfer of minor taxes to Wales—as recommended by the Silk commission—without recourse to a referendum has set a precedent. We have argued that the planned referendum on income tax powers is not necessary, but circumstances will certainly arise in the future when holding a referendum will be the proper and practical way forward.

Unlike in other countries with written, codified constitutions, the transfer of such a power to Wales would require no official constitutional change; it could be done by an Order in Council. A recent precedent for that was signed into being by the Edinburgh agreement in 2012:

“The United Kingdom Government and the Scottish Government have agreed to work together to ensure that a referendum on Scottish independence can take place…the referendum should: have a clear legal base, be legislated for by the Scottish Parliament, be conducted so as to command the confidence of parliaments, governments and people, deliver a fair test and a decisive expression of the views of people in Scotland and a result that everyone will respect”—

an excellent set of principles. The agreement goes on:

“The governments have agreed to promote an Order in Council under Section 30 of the Scotland Act 1998 in the United Kingdom and Scottish Parliaments to allow a single-question referendum on Scottish independence to be held before the end of 2014.”

There we have the basis for a referendum for Scotland and, I would argue, the basis for a power of referendum for the Assembly. That Scottish agreement is valid for that one referendum, and no other referendum can be held under those specific terms unless they are renewed. Our new clause, however, would confer a continuing power to the Assembly.

According to a recent study published by the Political Studies Association, there have been 49 independence referendums worldwide, both official and unofficial, with an average turnout of 79%—far higher than the average turnout in UK general elections over past years. I point out that in democratic countries after 1945, the average yes vote in such referendums has been 62%. Not all those referendums have been recognised by national or state Governments; for example, in 1946 the Danish Government refused to recognise the result of an independence referendum in the Faroe Islands. After negotiation, however, the islands were granted what we would now call devo-max: all powers except foreign affairs and defence were devolved.

The independence referendum due to be held in Catalonia on 9 November this year is highly likely to produce a yes vote. I suspect, however, that it will be ignored by the Spanish Government on their current form, as that has been Madrid’s response to the rolling programme of non-binding local community referendums on that subject, which have been held in hundreds of towns and villages across Catalonia from September 2009, and in which a large majority voted for independence. Madrid has ignored those developments to its cost: witness the enormous pro-independence demonstration by 1.5 million people out of a population of 7.5 million in Barcelona in September 2012. That was a huge show of public opinion, interest and support—we are talking about 20% of the entire population—and it perhaps would not have been quite so huge but for Madrid’s intransigence. That is why the Edinburgh agreement is so significant, and why I believe that, precedents having been set, Wales should have that same power. My discussions with Catalonian friends, and the attitude of the Spanish Government, bear out the superiority of the situation in the UK and the Edinburgh agreement. At least it is clear, and all sides are to be congratulated on that.

[Guto Bebb (Aberconwy) (Con)]

I am slightly confused about the argument. As the hon. Gentleman rightly points out, the situation in Madrid is one of Madrid refusing to recognise the right of the Catalonian Government to hold a referendum. The situation in Edinburgh is of an agreement between the UK and Scottish Governments, which showed that the two Governments could work positively together. The argument in favour of the new clause seems to be based on the failure of another Government in another country.

[Hywel Williams]

My remarks, which will appear in print tomorrow, will repay close reading, as that was precisely the argument I made. The position in Catalonia and the rest of Spain is far inferior to that in the UK, and I am pointing out the superiority of that Edinburgh agreement as the basis of my arguments for a legally binding system of referendums to be established for Wales.

In the UK, the important referendums and constitutional changes have occurred over the last 10 to 20 years, including the devolution referendum in 1979, the one in 1997, and the more recent referendum on our electoral system. In 2011, the people of Wales were asked in a referendum whether they wanted the Welsh Assembly to be given full and primary law-making powers; 63.5% of those polled voted yes. That stood in stark contrast to the results of earlier referendums that right hon. and hon. Members will remember. In 1979, for example, 79.7% voted against devolution; in 1999, there was a narrow majority of 50.3%, secured on a small turnout of 50.1%. That is how it was, but since then, I would argue that the people of Wales have grown to favour devolution, as have some right hon. and hon. Members in this place. The Assembly has grown in confidence, and as it gains further powers, it should surely have the power to ask the people of Wales what they think. That would be in the interest of legitimacy and accountability.

I referred to the Edinburgh agreement, and I suggest that a similar agreement in Wales should be called not “the Cardiff agreement” but “the Celyn clause”. This refers to Capel Celyn, which, Members will recall, was the village drowned in 1965 against the express wishes of elected and representative bodies throughout Wales—and, I understand, the wishes of every Welsh MP bar one. That was a transformational event in Welsh politics, and we have seen the effect of it over many decades. That effect is clear and provides a firm reminder of what can happen when the will of the people is so resolutely ignored. That is why we tabled new clause 3, giving the Assembly the right to hold legally binding referendums. I certainly commend it, but I assume that the matter will be discussed, possibly in greater detail, at some point in the future.

Let me make a few brief points about new clause 4. My Plaid Cymru colleagues and I have supported the reserved powers model for the National Assembly for a very long time. We are glad to see the Damascene conversion of the Labour Front-Bench team—better late than never! We certainly believe that this is the next step for our country; it would certainly clear up much of the confusion, not least in the minds of the public and others, as to the split of powers between the National Assembly and Westminster. I say to the Welsh public and others that I too often see people from the media refer to Assembly matters as if they were Westminster responsibilities, and vice-versa.

We in Plaid Cymru were, as I mentioned, against the LCO—legislative competence order—model, which so blighted the lives of those on the Welsh Affairs Committee and held up the pragmatic and practical transfer of the most innocuous of powers to the Welsh Government, as well as some rather more controversial powers. We wanted the boldest arrangements, but that was not forthcoming under the Government of Wales Act 2006—until the referendum. Circumstances have changed again, and the need for a move to a reserved powers model is even more pressing than before.

No one in this place or in the Assembly can be sanguine, given a recent survey showing how far we have failed as politicians to inform our constituents of the reality of the split in power. As I said, the media are far from blameless. Having said all that, it is disappointing that in the second part of their new clause 4, the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) have chosen to predicate any developments in relation to this matter on delaying the minor taxes. I must therefore view the new clause, I am afraid, as a delaying tactic at best, and as aimed at wrecking this part of the Bill at worst.

[Wayne David]

I support granting and extending borrowing powers to the Welsh Government. It is important that the Welsh Assembly has at least some facility to borrow what it deems necessary, as local government does. I also share the concerns expressed about the possibility of eventual tax competition, and I deeply regret that the Government have proposed no modification of the Barnett formula to address the shortfall in what Wales receives.

It also causes me concern that the Government do not appear to accept the need to address what we consider to be a fundamental shortcoming in the current devolution settlement. I believe that we need to move from a conferred powers to a reserved powers model, which would allow the Welsh Government to make law in any area unless it was clearly stated that they were unable to do so. That is why I support new clause 4.

16:00

I should make it clear that I am not one of those people who believe that a transformation of the model would solve all the problems of devolution. Devolution inevitably throws up issues that our constitutional arrangements in this country have not confronted in the past, and there will be new challenges to meet. Nevertheless, I think that if we made that fairly significant change, the problems would be fewer and far easier to get to grips with.

Members have heard me refer in the past to the difficulties experienced in Scotland in connection with what is known as the Antarctica issue. When Antarctica was not mentioned in the list of reserved powers, it was assumed that Scotland had devolved powers in relation to it. That was not the intention, and it was not what the Scottish Parliament wanted. However, the issue was resolved, although there have been other problems as well. Those difficulties do not alter my belief that there is a strong, objective and balanced argument in favour of a move to the reserved powers model. As we know from debates held in Wales and in the House of Commons, that was one of the key recommendations of the Richard commission, and was also mentioned by the Silk commission.

For me, there are three fundamentally important arguments in favour of the shift. First, it would undoubtedly clarify the current devolution settlement and make it more understandable. I have read a number of academic papers that support that contention. The Hywel Dda Institute at Swansea university has argued strongly that it would make the settlement “conceptually simpler” . I agree. As the institute says, it would deal with many of the so-called “jagged edges”.

Housing is an example of that. Schedule 7 of the Government of Wales Act 2006 lists housing as being eligible for legislation by the Welsh Government, but there is a complication. It lists a number of exceptions: for instance, it excludes

“Coal, including mining and subsidence”.

As we know, subsidence plagues the south Wales valleys, and there is inevitably a relationship between it and the plight of many houses in valley communities. That prompts the question: is housing that is affected by subsidence within the scope of potential legislation? The answer is yes, but a strict reading of the 2006 Act as it stands does not make that very clear, because of the different ways in which the various exceptions are listed. I believe that a reserved powers model would make such instances much more intelligible, and much less fraught with difficulties of, in particular, a legal nature.

[Mr Mark Williams]

Some parts of the Act contain even more obvious problems. No doubt the hon. Gentleman will be as alarmed as I was to read in the Western Mail about a survey that suggested that 40% of people thought that the national health service in Wales was directly administered from this place. There is an issue about the clarity of our democracy and our systems, even when it comes to core issues such as that.

[Wayne David]

That is a fair point, and I will touch on it a little later. We have asymmetrical devolution in the United Kingdom; we have different forms of devolution in different parts of the UK. While there are good reasons for that, it does not help the general public’s understanding of what is devolved and what is not devolved. If we had greater consistency in the bedrock of devolution between Northern Ireland, Scotland and Wales, that would help that public understanding. Some may say that strictly speaking the Northern Ireland settlement is not quite akin to the Scottish settlement, but nevertheless in effect we have a reserved powers model in place and it would be advantageous if Wales were to follow their examples.

As Members, and in particular my hon. Friend the Member for Llanelli (Nia Griffith), have said, there has been an unfortunate conflict between central Government and the Welsh Government through the Supreme Court. There have been three referrals of legislation to the Supreme Court. We have heard about the then Local Government Byelaws (Wales) Bill, which the Government here in London questioned. They asked for the Supreme Court to make an adjudication, and the position of the Welsh Government was upheld, but we must consider the amount of time and effort that went into questioning such a relatively small measure and whether that meant there was better government.

I feel I must quote the Counsel General for Wales, Theodore Huckle QC, who has said that

“it took five Supreme Court Justices…several of the UK’s leading constitutional lawyers and a great many officials across three Governments to decide it was lawful to make minor changes to the way Welsh local councils deal with things like dog-fouling and loitering in public lavatories.”

That raises this question: what sense is there in that? How on earth can that be defended as good government? It cannot be.

[Stephen Crabb]

I genuinely wonder whether the hon. Gentleman is suffering from amnesia, as he was a part of a Government who created that exact system. If he does not think the Supreme Court is the relevant mechanism for resolving disputes between two Governments over legislative competence, then what is, under the reserved model he supports?

[Wayne David]

I just think it is very important to learn. I know that is anathema to the current Government, but if we recognise that devolution is a developing process, it is vital that we learn and make things better and, when things are clearly not as they should be, make improvements. That is a good way to approach government.

[Paul Murphy]

I remind my hon. Friend and the House that there are highly developed mechanisms in these islands to resolve disputes of any nature through the Joint Ministerial Committee, or simply between ministerial committees, without having to go to courts of law. There are better means of proceeding, and we should use them rather than go to the Supreme Court.

[Wayne David]

My right hon. Friend makes an extremely good point. He has tremendous experience in these matters—far greater than I have—and I would certainly bear out what he has said. A common sense way to approach disputes between different legislatures in the United Kingdom is to sit down and talk, and use the established structures, and not resort to expensive, time-consuming legal processes that are very obtuse to most people. That is one lesson to be learned.

We must also learn the lesson that we need a different model. We need a reserved powers model to form the bedrock of our developing devolution settlement in the United Kingdom.

[Guto Bebb]

I have listened carefully to the hon. Gentleman’s comments, and to those of the right hon. Member for Torfaen (Paul Murphy) and the hon. Member for Llanelli (Nia Griffith), who is on the Opposition Front Bench. If the Labour proposal is to move to a reserved powers model, which is clearly the case judging from the arguments presented today, do Opposition Members believe that the report they envisage should look at the consequences for the largest part of the United Kingdom, which is England, because not once has any Opposition Member talked about any potential impact on the English electorate?

[Wayne David]

I have no qualms at all about talking about England, because we are a United Kingdom, but if I deviated from my notes and spoke at length about England, you would take me to task pretty quickly Madam Deputy Speaker.

It is important to recognise that the Local Government Byelaws (Wales) Act was not a one-off. We have seen an attempt—perhaps most significantly, politically—to prevent the Welsh Government from carrying through their legislative plans for the agriculture sector. That is a far more emotive issue, particularly for workers who are directly affected by this Bill—or, as may happen, the lack of it. However, that reinforces the constitutional point that the current situation is unsatisfactory, facing as we do ongoing legal challenges on the basis of politics, rather than, as my right hon. Friend the Member for Torfaen (Paul Murphy) said, Members sitting down together where there is a genuine dispute between the two legislatures and working things out.

The conclusion I come to is that we need a system that transcends party politics: a constitutional arrangement that is seen to be fair to everybody, and that respects the integrity of the United Kingdom but also the development of devolution in Wales; a settlement based on a reserved powers model that is far more intelligible to people in Wales, and that will help them to understand far more easily the basis of our devolution arrangements in Wales and the United Kingdom as a whole.

[Stephen Crabb]

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said that the purpose of amendment 8 is to ensure that the Welsh Government can use their new borrowing powers to invest in projects that they, rather than Her Majesty’s Treasury, want to take forward. I should point out that the Bill already provides Welsh Ministers with complete flexibility to decide how to use their borrowing powers, in much the same way that they have complete flexibility regarding their resource and capital budgets. I wonder whether the hon. Gentleman was confusing the requirements for the early borrowing powers with the wider borrowing powers the Bill sets out. Regarding the former, he is right that there is a specific agreement between the Welsh Government in Cardiff and the UK Government—specifically the Treasury—to facilitate early movement on a strategic project of importance to the Welsh nation and economy: namely, the M4 upgrade. So, rather than it being a project imposed from above by the UK, it is very much demand-led from within Wales.

[Jonathan Edwards]

The Bill as I read it states that the Treasury has the final say on what the Welsh Government will be able to use those borrowing powers for, and the UK Government have made it crystal clear that their priority is the M4 relief road.

[Stephen Crabb]

There is a line in the Bill that refers to Welsh Ministers being able to borrow with the approval of the Treasury. That merely refers to the overall borrowing limit, which the Treasury will agree with the Welsh Government. It is not about the Treasury signing off on individual projects. We want to give the maximum possible freedom to Welsh Ministers to use their borrowing powers to decide on exactly the infrastructure projects they want to take forward. I am very happy to continue this discussion with the hon. Gentleman another time, but that is the situation.

On new clause 2, the Welsh Government already have the power to provide guarantees in relation to their devolved responsibilities. Section 70 of the Government of Wales Act 2006 states that

“Welsh Ministers may give financial assistance (whether by way of grant, loan or guarantee) to any person engaged in any activity which the Welsh Ministers consider will secure, or help to secure, the attainment of any objective which they aim to attain in the exercise of any of their functions.”

So there are no handcuffs or binds on Welsh Ministers. For example, they already have the powers to support the Circuit of Wales with a guarantee, should they choose to do so. Conversely, the UK Government would not be able to provide a guarantee under the terms of the Infrastructure (Financial Assistance) Act 2012 as the Circuit of Wales project does not meet the infrastructure criteria set out in the legislation.

Furthermore, it is the size of the UK Exchequer that enables the UK Government to guarantee substantial infrastructure projects, such the Wylfa Newydd nuclear plant that has been guaranteed with Hitachi. Wales, therefore, benefits from UK Government guarantees in relation to energy and other infrastructure, while the Welsh Government can decide how to provide financial support to help deliver their own devolved responsibilities.

16:15

The hon. Member for Carmarthen East and Dinefwr also made the point that he did not believe that there were any current Welsh infrastructure projects that were at the prequalification stage for an infrastructure guarantee. The information that I have received from the Treasury is that there are indeed projects based in Wales. They are at the prequalification stage for an infrastructure guarantee, but the project sponsors have chosen not to reveal their identities for commercial and other good reasons. The Wales Office is keen to promote the infrastructure guarantee programme. My right hon. Friend the Secretary of State for Wales held a successful event in north Wales, promoting the programme to the business community. I, through the Wales Office infrastructure working group and alongside Treasury officials, have been promoting it to other businesses in Wales. We want to see more Welsh projects come forward and benefit from the infrastructure guarantee scheme.

[Jonathan Edwards]

I can base my position only on the list of prequalified projects, which was last updated by the Government on 16 June. I have a list here of a page and a bit, which has not a single Welsh project on it.

[Stephen Crabb]

All I can do is reiterate the information that I have received from the Treasury that there are indeed Welsh projects at the prequalification stage. We are currently talking about infrastructure guarantees to Welsh businesses and other companies that want to invest in Wales. I will happily write to the hon. Gentleman with further information to clarify the situation. On that note, I hope that Members agree that the existing arrangements and the Bill before us are therefore optimal and will withdraw amendment 8 and new clause 2.

I turn now to new clause 3, which would allow the transfer of responsibility for referendums to the National Assembly for Wales. I am afraid that with this new clause, we once again find Plaid Cymru trying to shoehorn far-reaching and fundamental changes to the wider devolution settlement for Wales into this specific Bill, which takes forward the recommendations of part 1 of the Silk commission.

Referendums, such as the one this Bill provides for, are intended to allow the electorate to decide on key constitutional issues. Competence for the conduct of referendums, except in very exceptional circumstances, such as those around the Scottish independence referendum, rests at a UK level. I have seen no evidence yet to suggest that there should be any change to the existing devolution settlement.

It is also worth noting that the Silk commission made no recommendations about that issue when it examined the devolution settlement in its second report. Furthermore, there have been no calls from the Welsh Government or the Assembly for this competence to be transferred.

This Bill is focused on delivering new fiscal powers to Wales that were recommended by the Silk commission in its first report, and new clause 3 forms no part of that. I therefore ask Opposition Members to withdraw this amendment as well.

Finally, I turn to new clause 4, which bares a striking resemblance to an amendment tabled by Opposition Members in Committee. The new clause seeks to postpone the commencement of part 2 of the Bill, apart from the referendum provisions and clauses 19 and 20 in relation to borrowing powers, until the Secretary of State has laid a report before both Houses of Parliament setting out the steps needed to move to a reserved powers model of devolution. That report would need to be laid within nine months of the Bill’s enactment, generously giving the Government three months longer than the Opposition permitted in their Committee stage amendment.

With these new clauses, Labour Members once again seek to connect directly the commencement of the parts of the Bill that will devolve tax-raising powers to the Assembly with one of the most far-reaching of the Silk commission’s part 2 recommendations. Other hon. Members have described that as a delaying tactic; some have even described it this afternoon as a wrecking tactic. It reveals yet again the Welsh Labour party’s opposition to the proposals in the first Silk commission report to devolve income tax powers to Wales. It is merely a smokescreen for Labour Members’ deep and widely held scepticism and suspicion—they have used those words this afternoon—and they fundamentally oppose fiscal devolution, which is the next important stage of devolution for Wales.

As this Government have made clear on a number of occasions, a move to a reserved powers model would be a fundamental change to the devolution settlement in Wales. We have also made it clear, as did the Silk commission, that this should be a matter for party manifestos at the next election. Therefore, there is nothing to be gained by requiring the Government to report to Parliament on the legislative steps needed to move to a reserved powers model.

Once again, the Labour party seems to be mired in confusion about its position in relation to the Silk commission’s recommendations in the part 1 and part 2 reports. As is typical of the Labour party, it wants borrowing powers, but it does not want the means to pay back the money borrowed. It does not want true accountability for the devolved Government in Wales; it just wants public spending on the never-never. Just such a reckless attitude by the Labour party got this country’s finances into such a mess in the last Parliament.

This coalition Government have no intention of returning to that sorry state of affairs. We are committed to devolving the tax and borrowing powers in the Bill as soon as possible, so that the Welsh Government can become accountable for raising the money that they spend and for repaying the money that they borrow. I therefore invite Opposition Members to consider the full implications of new clause 4 and not to press it.

[Jonathan Edwards]

We have had an interesting debate on this group of new clauses and amendment 8, three of which Plaid Cymru tabled: first, to allow the Welsh Government to issue a guarantee to enable them to boost economic development; secondly, to release the handcuffs on borrowing powers to enable them to choose their own priorities—the borrowing capacity in the Bill will be more or less completely consumed by the M4 project that the Treasury favours; and, thirdly, to hold binding referendums based on the Edinburgh agreement.

Labour tabled new clause 4. Obviously, as a party, we fully support the move to a reserved powers model for Wales. It is a pity that the Labour party decided to spoil the new clause with a second element, which is obviously a delaying tactic. The Welsh economy needs these powers now, rather than waiting for a report. It is obviously a wrecking new clause, typical of Labour’s attitude during progress on the Bill in all its various stages. Plaid Cymru is not a tribal party—we vote as we see fit—but we cannot support new clause 4 because of the wrecking element in its second part.

With your permission, Madam Deputy Speaker, I intend to press amendment 8 to a vote at the appropriate time, but I will not press new clause 3 and ask leave to withdraw new clause 2.

Clause, by leave, withdrawn.

New Clause 4

National Assembly for Wales: reserved powers

‘(1) The Secretary of State will lay a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales and shall lay the report before each House of Parliament within nine months of this Act receiving Royal Assent.

(2) Part 2, except the referendum-related provisions and sections 19 and 20 shall not come into force until the report has been laid in accordance with subsection (1).”—(Nia Griffith.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:23

Division 18

Ayes: 202

---

Labour: 198
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 276

---

Conservative: 230
Liberal Democrat: 45
Democratic Unionist Party: 1

Clause 2

Removal of restriction on standing for election for both constituency and electoral region

[Nia Griffith]

I beg to move amendment 13, page 1, line 9, leave out clause 2.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

With this it will be convenient to discuss the following:

Amendment 14, in clause 28, page 30, line 19, at end insert “except section 2”.

Amendment 15, in page 30, line 37, at end insert—

‘(8) Part 1, section 2, comes into force when a Welsh Government Minister has laid a report before the National Assembly for Wales containing a statement to the effect that the Welsh Government, with regard to the electoral arrangements of the National Assembly for Wales, is content with fairness of those arrangements.’.

Government amendments 6 and 7.

[Nia Griffith]

Amendment 13 would remove a clause which would make it possible for people to stand both on the regional list and in the constituency. A bizarre argument is put forward in favour of dual candidacy—if dual candidacy is not allowed, the smaller parties in Wales may struggle to find sufficient candidates of any quality—but if such parties expect the electorate to take them seriously as parties that could help form a Government in Wales, they need to demonstrate that they can find enough additional candidates to field on each of the five regional lists.

Could this problem of finding candidates be something to do with which parties we are talking about and what they believe in? Could it be that young people in Wales are not rushing to put themselves forward as Conservative candidates because they know that the Conservative party in Westminster abolished the education maintenance allowance, while the Labour Welsh Government have retained it, or because the Conservative Government here did away with Labour’s future jobs fund, whereas the Labour Welsh Government have launched a similar programme, Jobs Growth Wales, focusing on the private sector? There is also the issue of university tuition fees.

Could it be that people are not coming forward as candidates for Plaid Cymru because they do not want an independent Wales, or because they do not want to support cutting tax for the better off, as Plaid Cymru’s economic adviser, Adam Price, has confirmed is its policy? People have realised that Plaid Cymru is not the progressive party it pretends to be, but a reactionary party.

Perhaps people do not want to put themselves forward as Lib Dem candidates as they are somewhat confused. One minute we hear that the Lib Dems are in favour of a reserved powers model, yet we struggled to see any of them in the Lobby with us, supporting our amendment. I am not sure where they are now.

People simply do not like to think that they have bothered to go out to vote, only to find that although their preferred candidate won, the candidate or candidates they rejected also got in. We all remember the Clwyd West scenario where the Labour candidate won the constituency—

[Pete Wishart (Perth and North Perthshire) (SNP)]

What advice has the hon. Lady had from her colleagues in Scotland on this issue, given that they are now almost totally dependent on the list for their membership in the Scottish Parliament and have reviewed their whole attitude towards dual candidacy? It is a democratic good, according to Scottish Labour.

[Nia Griffith]

I am not casting aspersions on any individual list candidates. We have two excellent Labour list Assembly Members in west Wales—Rebecca Evans, who champions disability issues, and Joyce Watson, who champions human trafficking issues. They are doing an excellent job, because they are focusing on topics, not sitting like some great cuckoo on one constituency out of eight and making that their sole focus of attention, ignoring what is happening in important aspects of the other seven constituencies that they represent.

We have seen such abuse in Wales before. I am sure my right hon. Friend the Member for Neath (Mr Hain) will remind us again, as he has done many times, of the blatant abuse of the list system. He has quoted frequently from the leaked memorandum from Leanne Wood, the leader of Plaid Cymru, in which she gives explicit instructions to her party’s list Assembly Members to direct their time and resources, paid for by the taxpayer, to Plaid Cymru’s target seats.

Some people say that putting into the 2006 Act the clause that prevents an individual from standing for both the constituency and the list was a partisan move by the Labour Government, but we knew full well that it would also prevent our candidates from standing for both. We had at least four sitting constituency AMs who we knew were likely to be vulnerable to electoral change in the 2007 Assembly election and who could have hedged their bets by standing for both. That might have been very cosy for them, but as a matter of principle we knew how much the electorate hated it. On the doorsteps we heard people ask, “What difference will it make if we go out and vote?” It was extremely difficult to convince people after the Clwyd West scenario, because whoever the constituents voted for, all four parties were elected.

It was extremely important to us to stand by our principle, rather than making some sort of cosy situation for our AMs. In fact, I would go so far as to say that in some circumstances, depending on the specific arithmetic for the region, a candidate who could stand for both the constituency and the list could be pretty much guaranteed to be elected on one or other of them. That could breed a certain complacency, which would not serve the electorate well at all. We take issue with the accusation that this is a partisan point, because it is a point of principle. We strongly oppose clause 2, which seeks to turn the clocks back and allow dual candidacy. Our amendment therefore seeks to remove that clause from the Bill.

Our view is that the Assembly’s electoral arrangements should be decided in Wales, so we have also tabled an amendment proposing that an order should be laid in the Assembly by the Welsh Government before any change on dual candidacy can be implemented. I hope that Members will vote for our amendments.

[Mr Peter Hain (Neath) (Lab)]

I, too, wish to speak in favour of amendment 13 and against clause 2 remaining in the Bill. The Secretary of State and other Members who have taken part in our proceedings on the Bill might recognise some of my comments from my single transferable vote speech on dual candidature, because I remain firmly opposed to that abuse of democracy. However, I will be brief, because my favourite premiership player, Frank Lampard, is captaining England at 5 o’clock, and I know that even Members from Welsh constituencies, with the possible exception of our Plaid Cymru friends, will want to cheer them on in their final game.

I repeat my basic argument, which I have expressed throughout the Bill’s proceedings, and the rationale for my ban on dual candidature in the 2006 Act: it cannot be right for losers to become winners through the back door, despite having been rejected by the voters. That is an abuse of democracy. People who stand for a single-Member seat and then lose can end up being elected anyway, in defiance of the electorate’s wishes, because at the same time they are in a list category, and that is an abuse of democracy. There is no real argument against losers becoming winners in that way.

There was a widespread abuse practised by 15 of the 20 list AMs prior to the 2006 ban. They used taxpayers’ money to open constituency offices in the very single-Member seats in which they were defeated. They then targeted those seats at the following election by cherry-picking local issues against the constituency AMs who had beaten them. Why are they so afraid of taking their choice to the people, and why are the Government so afraid of democracy? Why are they so afraid of losing constituency elections that they need the lifebelt of standing for the lists as well? That is what the leader of Plaid Cymru, Leanne Wood, for whom I have considerable admiration despite all that, is doing in Rhondda. In a leaked memorandum written in August 2003, she was refreshingly honest about promoting abuse of the dual candidature system by list Members using taxpayers’ money.

16:45

With the 2006 Act ban having been removed by the Government, there is nothing to stop such abuse being practised again. I suspect that Leanne Wood may need to reissue her guidance. Perhaps she could pass it round to all the political parties in Wales so that Labour, the Conservatives, the Lib Dems and the UK Independence party can exploit the system together instead of leaving it to Plaid Cymru. Indeed, perhaps the Secretary of State could issue the document from the Wales Office so that it has the official approval he presumably wants in changing the law as he now intends, despite the strength of the arguments against it, because it is really a bible for the dual candidature that he and the Government are so enthusiastically preaching and want to restore following the 2006 ban in the wake of these serial abuses. I remind him, and the House, of just how valuable that guide could be for all the political parties. If the political system is to be brought into disrepute by the restoration of dual candidature and the ending of the ban following the serial abuses, why cannot all parties take part and make sure that the decline in respect of Assembly elections is endemic in the system, given that that is what he is encouraging?

Leanne Wood urged Plaid Cymru list Assembly Members to concentrate tens of thousands of pounds of their local office budgets, paid for by taxpayers, on their party’s target seats. She urged them to do casework only where it might benefit Plaid Cymru in those target seats, and to attend civic and other events in the constituency only if they thought that there were votes in it.

There has been a deafening silence from Ministers about this bible for dual candidature, so I will repeat its essential contents in case they have not memorised my two previous speeches on the subject. Leanne Wood’s memorandum, “What should be the role of a Regional AM?”, perfectly illustrates the problem that we faced before the 2006 Act banned dual candidature in Wales. She should be praised for her honesty—indeed, her transparency. She wrote:

“Each regional AM has an office budget and a staff budget of some considerable size. Consideration should be given to the location of their office—where would it be best for the region? Are there any target seats...within the region?”

She meant, of course, single Member target seats.

[Pete Wishart]

I am genuinely interested in the right hon. Gentleman’s view on this issue. What advice does he have for Scottish Labour, which has just done a total U-turn on dual candidacy and is now allowing the practice to go on? Will he disparage Scottish Labour as much as he seems to be disparaging Plaid Cymru for carrying out this appalling act?

[Mr Hain]

rose—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. Before you answer, Mr Hain, let me make it absolutely clear that we are talking about dual candidacy in Wales, as I think you probably appreciate. This is a tightly drawn debate and that is the subject of the amendment.

[Mr Hain]

I am grateful for your guidance, Madam Deputy Speaker, which directly answers the hon. Gentleman’s point. I am speaking about Wales. I am not aware of serial abuses of the kind practised in Wales prior to the 2006 ban occurring in Scotland. Indeed, I think that the codes that apply in Scotland may be different. I note that the then Presiding Officer of the Scottish Parliament, Lord Steel, attacked dual candidature in terms very similar to mine.

Leanne Wood’s bible for dual candidature went on:

“We need to be thinking much more creatively as to how we better use staff budgets for furthering the aims of the party.”

She finished with a refreshing burst of honesty that, in an era of political spin, can only be commended:

“Regional AMs are in a unique position. They are paid to work full-time in politics and have considerable budgets at their disposal. They need not be constrained by constituency casework and events, and can be more choosy about their engagements, only attending events which further the party’s cause. This can be achieved by following one simple golden rule: On receipt of every invitation, ask ‘How can my attendance at this event further the aims of Plaid Cymru?’ If the answer is ‘very little’ or ‘not at all’, then a pro forma letter of decline should be in order.”

All the arguments and evidence I have cited in the past few minutes, in Committee and on Second Reading, demonstrate that the 2006 ban was not partisan but instead enhanced the democratic standards of all Welsh Assembly Members.

Indeed, I reminded the House at the time of the ban that six Labour Assembly Members, including three Ministers, would be defeated in the 2007 Assembly elections by a very small swing of 3% against them. They would not have the lifebelt of dual candidature, which I had removed; they would no longer enjoy the safety net of the regional list. Two of them subsequently did lose, as I said could happen. The reform affected Labour candidates and candidates of other parties alike, a point that my hon. Friend the Member for Llanelli (Nia Griffith) made so eloquently.

In conclusion, the Government have now officially blessed this practice—presumably, they will marshal the votes shortly to try to defeat our amendment—and it appears that they are, sadly, doing so with the blessing of the Electoral Commission. I therefore look forward to Labour being welcomed into the fold of running dual candidates again. After all, why should we lose out while everybody else takes advantage? Never mind the voters, let us put our own self-interest as political parties first. I trust that the Government will be proud of bringing politicians in Wales into even greater disrepute than the political class right across the United Kingdom. Tellingly, the Electoral Commission is endorsing that disrepute and the Secretary of State is now smiling in anticipation of that happening. That is the consequence of his reversal of this ban; he is opening the door again to the serial abuses which have been documented and proved beyond doubt. He is going to invite that very abuse of democracy in Wales by removing the ban and installing clause 2, which is the reason for supporting amendment 13.

[Mrs Siân C. James (Swansea East) (Lab)]

I wish to speak briefly in support of amendment 13 and against the removal of clause 2. I oppose dual candidacy simply because if a candidate is not elected by a constituency under the first-past-the-post system, it cannot be right for them to be elected under the list system. If the electorate have rejected someone once as their first-choice candidate, it is not acceptable for them to have the opportunity to re-enter the game through the back door. In mainstream society people get one chance at a job; if they are not successful at an interview, they have to accept the decision and they do not go back squealing to the prospective employers saying, “Can we change the rules now? Can I possibly be appointed under different criteria or under a different set of interview processes?” Things should be no different for politicians. There should be no swapping or alternatives; it should be the same for everybody.

Let us examine the attitudes towards dual candidacy. We have heard a lot of pooh-poohing of the Bevan Foundation’s inquiry and report, but my constituency took part in that inquiry and I did not see any party members participating; those who participated all came from local community groups and pensioners groups, were not affiliated to any particular party and were not aligned to any political point of view. Some of them were sceptical about devolution and the political process, whereas others were very supportive of it. Those who participated sent a clear message saying, “We are really concerned about the way politicians are behaving on the dual list system and about what is happening.”

The report found that more respondents said that

“dual candidacy was unfair compared with those who felt candidates should be free to stand in both.”

Someone who was interviewed said:

“I think it is unfair…It’s like people can sneak in the back door.”

Another said:

“It seems unfair in a way, surely if they weren’t popular enough they shouldn’t be able to get in.”

There has also been international criticism of the dual candidacy idea. Moves have been made to improve things in New Zealand and in Canada, and Canadian research states:

“Voters are displeased with the case where a candidate is not successful in a single member constituency, but is elected anyway by virtue of being placed on the top of a party’s list.”

In further support of my argument, I give the example of the unfairness—this has already been mentioned by colleagues—in the Clwyd West constituency. It puzzles most people in Wales that it was possible for all four candidates on the first-past-the post list to end up being elected. When I got into politics, a very wise old bird told me, “Siân, don’t get into politics if you’re not prepared to lose, because there’s only one winner.” We have totally turned that on its head with devolution and now anyone can be a winner, as long as they are at the top of their party’s list. I think the public find that difficult to understand and they are puzzled by it.

[Mr Harper]

We debated this issue at length in Committee. What the hon. Lady is really doing is criticising a closed-list system whereby voters can vote only for parties and have no choice of candidates. She is not really offering a critique of the Bill’s proposals. If she does not like that system, she should remind herself that it was her party that put it in place.

[Mrs James]

I thank the hon. Gentleman for his intervention, but it is not true that I am opposed to the list system. I think it is excellent and that it gives an opportunity to all parties. It is fair and gives a voice to parties that may not otherwise have had a voice in the Assembly. What I oppose is placing candidates at the top of the list so that if they lose in one system they have the chance to win in another. I am not criticising the system; all I am saying is that dual candidacy is not acceptable.

For an individual who is already standing as a candidate on a constituency list to have an opportunity for a second bite of the cherry is political carpetbagging—that’s all it is, pure and simple—and therefore unacceptable.

[Bob Stewart (Beckenham) (Con)]

Does that mean that the hon. Lady is in favour of a complete list system or an individual candidacy system? What she really seems to be against is mixing them up, so which of them does she support?

[Mrs James]

I support having both first-past-the-post and regional Assembly Members. They add a great deal to the Assembly and, as I have already said, the system is fairer and proves that people who stand for smaller parties get a voice. That cannot be opposed, but I am opposed to people standing on both lists.

[Jonathan Edwards]

Will the hon. Lady give way?

[Mrs James]

I want to finish, because I promised to be brief and I want to keep my speech tight.

It is no wonder that the public see us politicians as a bit devious and above and beyond the basic rules, because we always apply rules that suit us. That is what the public see this as, purely and simply: politicians having a second bite of the cherry when they do not. I ask the Secretary of State to reconsider the amendment and to consider our proposals seriously.

[Mr David Jones]

With your permission, Madam Deputy Speaker, I will first address the Government amendments in this group. The Bill provides for a referendum to be triggered by the Assembly on whether a portion of income tax should be devolved. If the Assembly triggers that referendum, as I very much hope it will, it will be the third referendum on devolution to take place in the past two decades. It is vital that we as a Government learn lessons from the previous referendums, particularly the referendum on law-making powers that took place in 2011, to ensure that the framework for holding an income tax referendum is as robust as possible.

Hon. Members will recall a key issue in 2011 that led some to question the system that was then in place, namely that, because no credible organisation applied to the Electoral Commission to become the designated no campaign, no yes campaign could be designated either. Any future referendum on the devolution of a portion of income tax would pose a crucial question to the electorate in Wales that would affect generations to come, so it is highly important that the credibility of that poll should not be questioned in any way.

Amendment 6 therefore provides more flexibility in the designation process so that, should the Government of the time wish to, they could, by Order in Council, enable the Electoral Commission to designate an organisation under the Political Parties, Elections and Referendums Act 2000 for only one possible outcome of the referendum rather than only both. That will ensure that where a credible organisation seeks designation for one outcome, it can be designated even if no credible application for designation for the other outcome is made. We would of course want credible campaigns for both outcomes in a future referendum so that a full and vibrant debate about the issues could take place, but amendment 6 will help to ensure that there is no repeat of the situation that arose in 2011, when no organisation was designated for either outcome.

17:04

Amendment 7 makes further provision for when an organisation is designated for only one outcome or no organisation is designated for either outcome. Under the amendment, an Order in Council can allow the Electoral Commission to take action to promote public awareness of the referendum in Wales, including about the referendum itself, the question on the ballot paper and the importance of voting in the referendum. It will enable the Order in Council to require the chief counting officer to take action to encourage participation in the referendum and, to give full effect to that, the chief counting officer can give directions to local counting officers in Wales about how they should encourage voting in the referendum in their locality. That will ensure that if an organisation were designated for only one outcome or if no organisation were designated for either outcome, the Electoral Commission could take action to ensure that the electorate in Wales were adequately informed about the important issue on which they were asked to decide.

Taken together, amendments 6 and 7 provide for flexibility in the powers to make an Order in Council for the conduct of a future income tax referendum to enable the Government to ensure that such a referendum is conducted using as robust a process as possible. The Government have consulted the Electoral Commission in preparing them. The amendments show that we have learned from previous referendums, and I ask hon. Members to support them.

Turning to the Opposition amendments, amendment 13 seeks to remove clause 2 from the Bill and to continue to prohibit candidates from standing in both a constituency and a region in an Assembly election, while amendments 14 and 15 seek to delay the commencement of the provision. Once again, it is disappointing but not at all surprising that the Labour party continues to plough its lonely furrow in opposing clause 2. Indeed, this is very much groundhog day. I must pay tribute to the hon. Member for Llanelli (Nia Griffith) and the right hon. Member for Neath (Mr Hain) for their persistence in putting their heads above the parapet to be shot at again.

Hon. Members will no doubt know that this issue was debated at great length in a Committee of the whole House, which then voted by 265 votes to 191 that clause 2 stand part of the Bill. Rather than seek to debate aspects of the Bill that might have a real impact on the prosperity of businesses and individuals in Wales, the Labour party is focusing on a partisan electoral issue of appeal only to Labour party members. That is underlined by the extraordinary arrogance of amendments 14 and 15, which, if clause 2 remains part of the Bill, would provide for the Labour Welsh Government in Cardiff to decide whether the dual candidacy provisions come into force. Interestingly, the amendments would not even allow the Assembly to have a vote on the decision. Clearly, the Labour party is not even bothering to hide the partisan agenda that it is pursuing.

To repeat—this is very much a repetition, because it has previously been aired at great length—Wales is the only country in the world where dual candidacy is banned under this type of electoral system. As was discussed at great length in debates on Second Reading and in Committee, when the Labour party introduced the ban in 2006, it did not make the same provisions for elections to the Scottish Parliament or the London Assembly.

[Mr Hain]

Is the Secretary of State aware of the evidence that Professor Roger Scully has brought forward? A number of Asian countries have a similar ban, including Taiwan and South Korea, in similar circumstances. Does the Secretary of State think that he should withdraw the statement that he has just made?

[Mr Jones]

I clearly referred to a particular type of system, which is the majoritarian type. That is where the votes in the constituencies count towards the list elections. In Asia and Ukraine, there is something similar, but not under that type of system. I am pleased that the right hon. Gentleman refers to Professor Scully. In his evidence to the Welsh Affairs Committee during pre-legislative scrutiny of the draft Bill, he clearly said:

“If parties that are defeated at constituency level can still win representation through the list, then it is difficult to see why that should not also apply to individuals.”

In other words, what is the difference for this purpose between a party and an individual? That is Professor Scully’s view. To pray him in aid goes against the advice that he gave during pre-legislative scrutiny of the draft Bill.

[Mr Hain]

Notwithstanding that advice, Professor Scully was simply correcting the Secretary of State on his basic proposition. The point is this, and no one has disputed it: neither the Secretary of State nor the Minister have challenged one bit of evidence that we have brought forward, and which I have repeatedly cited, about the serial abuses in Wales under the dual candidacy system, which the Secretary of State is about to reintroduce. He offers no protection or guarantee that that serial abuse will not happen; it went on prior to the ban in 2006. In fact, his Bill is a charter for reopening that abuse.

[Mr Jones]

I have to take issue with the right hon. Gentleman. The reason for the abuse was that a particular individual, whom the right hon. Gentleman constantly quotes and cites in this context, behaved extremely badly, and people will continue to behave extremely badly. Let us go back to Professor Scully. He said in his evidence to the Committee:

“No substantial independent evidence was produced at the time of the GOWA (or, to my knowledge, has been produced subsequently) of significant public concern about dual candidacy. The claims made about dual candidacy ‘devaluing the integrity of the electoral system’, and ‘acting as a disincentive to vote’ therefore remain wholly unsupported by solid evidence.”

Those were the comments of the academic Professor Scully, whom the right hon. Gentleman prays in aid. That same professor demolishes the right hon. Gentleman’s argument.

The prohibition was introduced against the advice of leading academics such as Professor Scully, organisations such as the Electoral Reform Society and independent bodies such as the Electoral Commission. I was very surprised by the right hon. Gentleman’s criticism of the Electoral Commission. We are now legislating to correct this anomaly and I hope that the hon. Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) will not press their amendments, although I am not holding my breath.

Question put, That the amendment be made.

17:08

Division 19

Ayes: 196

---

Labour: 192
Conservative: 1
Independent: 1
Democratic Unionist Party: 1

Noes: 278

---

Conservative: 225
Liberal Democrat: 46
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Green Party: 1
Democratic Unionist Party: 1

Clause 6

Taxation: introductory

Amendment made: 1, page 5, line 12, leave out “the taxes” and insert

“particular taxes as devolved taxes”—(Mr David Jones.)

This amendment clarifies that Chapters 3 and 4 of Part 4A of GOWA 2006 deal with devolved taxes. This distinguishes devolved taxes from the local taxes (such as council tax and non-domestic rates) over which the Assembly already has legislative competence under paragraph 12 of Part 1 of Schedule 7 to that Act.

Clause 13

Commencement of the income tax provisions etc if majority in favour

Amendment made: 2, page 18, line 23, at end insert—

‘( ) The Secretary of State may bring section (Welsh taxpayers for social security or child support purposes) into force by order.”—(Mr David Jones.)

This amendment and amendment 5 enable the new clause inserted by new clause NC1 to come into force by order of the Secretary of State if the majority of voters in a referendum held under clause 11 vote in favour of clauses 8 and 9 (the income tax provisions) coming into force.

Clause 19

Borrowing by the Welsh Ministers

Amendment proposed: 8, page 22, line 8, at end insert—

‘(1B) Welsh Ministers may set their own capital expenditure priorities.”—(Jonathan Edwards.)

This amendment would ensure that a future Welsh Government can utilise the borrowing capacity in order to invest in infrastructure projects that it deems a priority, and not be constricted or forced to invest in a project that the Treasury deems a priority.

Question put: That the amendment be made.

17:21

Division 20

Ayes: 8

---

Plaid Cymru: 3
Social Democratic & Labour Party: 2
Democratic Unionist Party: 2
Green Party: 1

Noes: 278

---

Conservative: 232
Liberal Democrat: 46

Clause 22

Reports on the implementation and operation of this Part

Amendment made: 3, page 25, line 43, at end insert—

“() section (Welsh taxpayers for social security or child support purposes) (Welsh taxpayers for social security or child support purposes),”—(Mr David Jones.)

This amendment ensures that a report under clause 22 (reports on the implementation and operation of Part 2 of the Bill) is not required to cover the new clause inserted by new clause NC1.

Clause 27

Power to make supplementary, consequential, etc provision

Amendment made: 4, page 30, line 14, at end insert—

‘( ) In this section, references to the provisions of Part 2 do not include section (Welsh taxpayers for social security or child support purposes) (Welsh taxpayers for social security or child support purposes).”—(Mr David Jones.)

This amendment ensures that the power to make supplementary etc provision in clause 27 does not extend to making provision in connection with the new clause inserted by new clause NC1.

Clause 28

Commencement

Amendment made: 5, page 30, line 27, after “9” insert

“, (Welsh taxpayers for social security or child support purposes)”—(Mr David Jones.)

Schedule 1

Referendum about commencement of income tax provisions

Amendments made: 6, page 32, line 40, at end insert—

“Assistance for designated organisations

6A (1) An Order under section 11(1) may make provision for the provisions of PPERA 2000 listed in sub-paragraph (2) to apply with specified modifications in relation to a referendum held by virtue of section 11(1).

(2) The provisions are—

(a) sections 108 and 109 of PPERA 2000 (designation of organisations to whom assistance is available);

(b) section 110 of, and Schedule 12 to, that Act (assistance available to designated organisations).

(3) The modifications specified may include allowing a permitted participant to be designated by the Electoral Commission under section 108(1) of PPERA 2000 in relation to one of the possible outcomes at the referendum whether or not a permitted participant is designated in relation to the other possible outcome.”

This amendment enables an Order in Council under clause 11 to modify the provisions of PPERA 2000 about designation of organisations by the Electoral Commission, and the kinds of assistance available to designated organisations. For example, the Commission could designate an organisation under section 108 of PPERA 2000 in relation to one (rather than both) of the possible outcomes of a referendum. Amendment 6 is in amended form from the text originally submitted.

Amendment 7, page 33, leave out lines 1 to 29 and insert—

“Information and encouraging participation

7 (1) An Order under section 11(1) may authorise or require the Electoral Commission to do things for the purpose of promoting public awareness and understanding in Wales about one or more of the following—

(a) the referendum which the Order causes to be held;

(b) the question to be included on the ballot paper at that referendum;

(c) voting in that referendum.

(2) An Order under section 11(1) may authorise or require the Chief Counting Officer to do things for the purpose of encouraging participation in the referendum which the Order causes to be held.

(3) The things which the Commission or the Chief Counting Officer may be authorised or required to do under sub-paragraph (1) or (2) include imposing obligations, or conferring powers, on counting officers or other persons.”—(Mr David Jones.)

This amendment enables an Order in Council under clause 11 to authorise or require the Electoral Commission or the Chief Counting Officer to do things for the purpose of promoting public awareness and understanding of, and encouraging participation in, the referendum. Those things may include the issuing of directions to counting officers.

Third Reading

17:31

[Mr David Jones]

I beg to move, That the Bill be now read the Third time.

We have had a number of productive debates on this Bill, and I would like to thank all right hon. and hon. Members for their contributions. It was in November 2012 that the Silk commission recommended a package of measures to devolve fiscal powers to the National Assembly and the Welsh Government. We have had a number of debates in this House since then on giving the Welsh Government increased borrowing powers; on the devolution of a portion of income tax, subject to a referendum; and on the devolution of taxation on land transactions and landfill. Our debates on the Bill have enabled us to fine-tune those proposals further, and I appreciate the broad support that the Bill has received from all parts of the House. I would again like to thank Paul Silk and his commissioners for their work on their two reports, and also my hon. Friend the Member for Monmouth (David T. C. Davies) and the other members of the Select Committee on Welsh Affairs for their excellent pre-legislative scrutiny of the Bill.

This Bill is a major milestone for Wales, and it demonstrates the Government’s commitment to strengthening Welsh devolution and Wales’s role in the United Kingdom.

[Mr Harper]

In the debate in Committee on 6 May, at column 109, the Secretary of State committed to updating the House, either on Report or on Third Reading, on the conversations he was going to have with the Secretary of State for Health about the health service. Is he able to do that today?

[Mr Jones]

Yes, and I am grateful to my hon. Friend for reminding me about that important point. I can tell the House that I have engaged with the Department of Health, and that NHS England is continuing its efforts to work constructively with the Welsh Government to find a solution to the problems faced by English patients, such as my hon. Friend’s constituents, who access NHS services in Wales. Work on resolving the issues raised by the cross-border protocol is continuing, and it is hoped that this work will conclude by the end of this year.

[Owen Smith]

Can the Secretary of State also inform the House on the relative performance of the NHS on either side of that border? What is the difference between, for example, the Wye Valley NHS Trust and the Aneurin Bevan health board on cancer waiting times? My understanding is that in Wales the targets are rather more stringent, and are being met.

[Mr Jones]

I could rehearse the remarks that were made on the last occasion we discussed this issue, but the point that my hon. Friend the Member for Forest of Dean (Mr Harper) was making was that his constituents access the health service in Wales. They wish to access the English health service, but at the moment they have difficulty doing so. I would have thought that the hon. Gentleman would want to facilitate my hon. Friend’s constituents’ access to the English health service, rather than continuing to snipe.

[Alun Cairns]

The shadow Welsh Secretary mentioned cancer waiting times, but does my right hon. Friend the Secretary of State agree that that is a very narrow element of this? The patient experience involves diagnosis, and the waiting times for diagnosis are much longer in Wales. If we take into account the total waiting times in Wales for cancer treatment, the picture is very different from what was suggested.

[Mr Jones]

My hon. Friend makes an important point. The shadow Welsh Secretary ought to understand that there is huge public dissatisfaction with the Welsh Government’s performance on health in Wales. I suggest that, rather than trying to engage in guerrilla warfare on individual points, he has a word with his Assembly colleagues and urges them to do more to deliver a decent health service for the people of Wales.

Despite Labour’s focus on dual candidacy, at its heart the Bill is about driving forward economic growth in Wales, and it illustrates the centrality of economic recovery to everything this Government do. The Bill provides the Welsh Government with additional levers and incentives to deliver economic growth. As well as providing opportunities for the Welsh Government, it increases scrutiny of them. Since devolution, the Assembly and the Welsh Government have been accountable only for how they spend taxpayers’ money; now, they will become more accountable for how they raise it. The challenge for the Assembly and the Welsh Government will be to use the tools we have given them effectively and efficiently. Part of that challenge will be deciding if and when to seek the agreement of the Welsh electorate, in a referendum, to devolving an element of income tax. I urge the shadow Secretary of State and his colleagues in Cardiff Bay to abandon their opposition to a referendum, and the Assembly to trigger a referendum sooner rather than later.

We are 87 days away from probably the most momentous decision in the 300-year history of our Union. The referendum in Scotland has significant implications for devolution in Wales. The majority of us in this House sincerely hope that the people of Scotland will vote to remain part of the Union. A no vote will allow those of us who believe in the Union to consider how best to strengthen it and to enable all parts of our United Kingdom to prosper.

In Wales, the recommendations made by the Silk commission in its second report provide opportunities to consider further devolution. As the commission acknowledged, the key legislative recommendations should be matters for the next Parliament, and it will be for political parties to set out their proposals at the 2015 general election. That will provide a mandate for the next Government to implement the changes they have committed to, and will enable Parliament to consider changes to the Welsh devolution settlement in the context of strengthening our Union.

As well as its financial reforms, the Bill makes some highly welcome improvements to the Assembly’s electoral arrangements, making them fairer and more equitable. Assembly terms will be changed from four to five years to make it less likely that Assembly and parliamentary elections occur on the same day. Members will no longer be able to sit simultaneously in both the Assembly and the House of Commons, enabling Assembly Members to concentrate on representing their constituents in the Assembly. The Bill overturns the clearly unfair ban on dual candidacy introduced by the Labour party, which is seen by constitutional experts and the public alike as partisan and anomalous.

This Bill marks a significant strengthening of the Welsh devolution settlement. It bolsters the democratic institutions in Wales, and ensures that the Assembly and the Welsh Government are more accountable to those who elected them. It provides the tools for the Assembly and the Welsh Government better to support stronger economic growth. I commend this Bill to the House, and I trust that the House will support its Third Reading.

17:40

[Owen Smith]

I echo the Secretary of State’s thanks to colleagues from all parts of the House who have engaged in debate and scrutiny of this Bill on the Floor of the House over what feels like quite a long period of time. We have had a constructive set of discussions, which have revealed some of the divisions between Ministers and their Conservative colleagues in the Welsh Assembly and exposed the clarity of the Opposition’s support for devolution.

I join the Secretary of State in thanking Paul Silk and the members of his commission for preparing the groundwork for this Bill, and also for reflecting on the future of Welsh devolution, not just in respect of fiscal powers but beyond that. I am sure that we will debate the measures in the second part of the Silk report at some future stage.

Labour supports much of this Bill, and will not oppose it on Third Reading. In particular, we support the Government’s decision to afford Wales borrowing powers. I have said on many occasions in this House that, in not being able to borrow, Wales has been at a disadvantage compared with other parts of the UK. We have acknowledged that that was a mistake of previous devolution legislation. Wales is a legislature that should be able to borrow in order to invest in vital infrastructure. It is welcome that the Government have recognised that, and are moving to afford Wales those borrowing powers. It is a shame that the borrowing powers are not the same as those that will be enjoyed in Scotland, but, overall, we are supportive of the measure.

We are supportive, too, of the proposal to devolve stamp duty, land tax, landfill tax and other minor taxes. Business rates are also to be fully devolved to Wales. We look forward to the Welsh Government, with their progressive values, using those powers in a fair and progressive manner to deliver, hopefully, innovative and progressive solutions for Welsh people in respect of land and businesses taxes.

I also welcome the move towards a more symmetrical position between Wales and Scotland. Wales is not Scotland, and the history of our two countries is very different. The way in which we came to support devolution is very different, and I have often said that. That asymmetry can be explained by our different histories and the different degrees of support for devolution in Wales and Scotland at the point of the initial referendum. However, that position has changed, which could be due in part to the impending referendum in Scotland. The Secretary of State rightly referred to it as a momentous moment for British democracy and for our country. It is right that we consider how things have moved, and why people’s support for Welsh devolution has strengthened. It seems increasingly clear to us, and also to the Government, that a more symmetrical system of devolution might add to the stability of the devolution settlement and diminish the cause of separatism.

We are disappointed that the Government have failed in this Bill to undertake any serious analysis of how the costs and benefits of tax devolution will be weighed for Wales. Any Government who were truly serious about affording these powers to another Parliament and Assembly should have undertaken that sort of analysis. Indeed, this Government did undertake that sort of analysis in respect of the Scottish proposals to take on taxation powers. I cannot therefore understand why the Government and the Secretary of State for Wales in particular have refused to insist that colleagues in the Treasury undertake a similar measure for Wales.

The argument has been made that a considerable gap is now expected between the passing of the Bill and the adoption of these powers, but there was a considerable gap—three years or so—between the passing of the Scotland Act 1998 and the uptake of its powers, and that did not prevent the Government from seeing the necessity of undertaking the work in advance.

It is also disappointing that the Government have failed to offer any real guarantee about whether Wales will be better or worse off under these provisions. We still do not know whether the block grant will be eroded over time. Initially, it will be protected, but the Exchequer Secretary told us again here today that if Welsh gross domestic product and revenues grew more slowly than those of England, Wales would have less money over time to spend on vital public services. Given the problems of meeting the demand for public services in Wales because of our specific demographics and history, and of a £1.6 billion cut to the Welsh budget since the Conservatives came to power, it would be better for the Government to give some sort of guarantee to the Welsh people that they would not be worse off.

[Jonathan Edwards]

Does not that point indicate that the hon. Gentleman has no faith in the Labour party’s abilities to improve the Welsh economy while in control of the Welsh Government ?

[Owen Smith]

No, it does not indicate that at all. It indicates that we are not fantasists. We understand the fiscal reality of Wales, which expends £35 billion a year in public expenditure and raises £17 billion a year in tax revenues, leaving a very large shortfall. We understand that that shortfall is made up by virtue of our being part of a generous Union that shares risks and pools rewards across the UK. Our fear is, of course, that Plaid Cymru Members wish to use this—honourably, from their perspective, as they believe in a separate, independent Wales—to fuel their cause of separatism. We are not interested in fuelling their separatist cause. That is why we have asked questions about the Bill.

We are concerned that the Government have failed to take this opportunity today to use the Bill to take forward the reserved powers model. For the reasons that I mentioned earlier, we think that it would be beneficial for Wales to be placed on a similar footing to Scotland in respect of the devolution model, and the Government could have taken that step in the Bill.

The biggest failing relates to the measuring of benefits and costs to Wales. We will now need to rely on noble Members of another place to undertake further scrutiny of the long-term impact on Wales of the volatility of tax revenues and of the costs of establishing an Exchequer function for Wales. The reason why the Government have not undertaken such scrutiny is that, I fear, they are not terribly interested in Wales. If they were more interested in Wales, they would not have implemented £1.6 billion-worth of cuts. If they were interested in Wales, they would not constantly mislead the public, as we have heard this evening, and seek to divide and rule in Britain when it comes to the respective merits of our health care systems, housing, education and all manner of other things where the Secretary of State chooses to bad-mouth Wales. If they were genuinely interested in assisting Wales, he would have demanded that the Exchequer Secretary undertake a similar analysis to the one that he undertook with Scotland.

The bit of the Bill in which the Government are most interested—as I suspect are nationalist hon. Members—is the bit on dual candidacy. We have heard eloquent and compelling arguments from Labour Members as to why it is right that we banned dual candidacy. It is not right for losers to be turned into winners, as was the case in Clwyd West, in the Secretary of State’s seat. The public do not understand how political alchemy is used to transform people who have been rejected under first past the post, and to put them back into office via the back door. The Secretary of State and his colleagues have wholly failed to explain why they are doing that, other than for narrow party political advantage.

It is fair to say that we have not had many laughs here in the last couple of days, debating this rather dry and dusty devolution Bill. One thing that has amused me is the attempt to paint my party, and indeed me, as somehow anti-devolution. That is as amusing as it is risible because, of course, the Labour party is the party of devolution. We campaigned for it for 100 years; we delivered it, and we will continue to deliver it. We have concerns about tax-varying powers because we do not want them turned to what we think would be malign intent—to fuel the separation of Wales from England. The Secretary of State is right to say that we face a very important choice in Britain; the Scottish people face an important choice. We do not want to fuel separation by encouraging tax competition, with one part of Britain undercutting another in a race to the bottom. That is anathema to Labour values and anathema to the values of the people of Wales.

17:51

[Glyn Davies]

I am grateful for being called to speak on an issue that is of great personal interest. As well as being the Member of Parliament for the Welsh seat of Montgomeryshire, I served for eight years representing Mid and West Wales as a regional Member of the National Assembly for Wales. My dominant interests since becoming a Member of Parliament have been Welsh politics, the Welsh economy, Welsh public services and, indeed, the relationship between Cardiff Bay and Westminster as they deal with the devolution process, which will continue for many more years. The nature of such a process is that one does not reach an end stage, a point to which I shall return.

I do not think this a dry debate at all. Constitutional debates tend not to be ones about which we joke and laugh, but as someone who is deeply embedded in Welsh politics, I find a debate about a Bill concerning the future governance of my country hugely interesting, and I have enjoyed the various aspects of it.

I declare my enthusiastic support for the Bill, which is a significant step forward in the devolution process, although there are aspects with which I do not agree. Perhaps I am in a very small minority, but I should refer to those differences alongside my general support for the Bill, to put my opinions on the record for the benefit of anyone in my constituency and indeed the rest of Wales who might want to know what they are.

I have listened to some of the debate; I missed some of it owing to meetings. My general impression is that Labour’s position in particular is confused. Clearly, Members on this side of the House are pleased that Labour will be supporting the Bill—that is a positive move—but the contributions of many Labour Members suggest that they just do not accept the principle underlying the devolution of tax to the Welsh Assembly. Some of their language has sounded more as though they oppose the Bill than support of it.

The Plaid Cymru contributions have been churlish—that is the word that I would use. During this Parliament it was a Conservative Secretary of State who introduced, with very great determination, the Bill that created law-making powers in Wales. I do not believe that it would have been introduced if it had not been a Conservative Secretary of State; I think that a Labour Secretary of State would probably have chickened out. It was a Conservative Secretary of State who established the Silk commission. It has done very good work and, like several other Members, I commend it for that work. It is a Conservative Secretary of State who has introduced this Bill. I perfectly accept that it does not go as far as Plaid Cymru Members may want—one would not expect that—and, indeed, there are differing views on the detail of the Bill in all parties, but nobody can disagree that granting tax-raising powers to the National Assembly for Wales, and the borrowing powers that go with them, is anything but a huge constitutional step forward. On that basis, it might have been at least fair of Plaid Cymru to congratulate the Conservative party on taking us down the road, not as far as it would want, but certainly in a positive direction.

[Mr Llwyd]

The hon. Gentleman said that he had been in and out of the debate, and I accept that—so have I. My colleagues were generous about various parts of the Bill, but nevertheless there are parts about which we are concerned, and that is the nature of politics. Do not call us churlish because we find fault in some way with the Bill. That is just politics, is it not?

[Glyn Davies]

I thank my friend for that; he has been a friend for a long time. It is reassuring that he has decided to intervene and say how supportive he is of what the Conservative Government have delivered in the past few years. I shall read today’s debate in Hansard to pick out all those individual bits that he speaks so enthusiastically about.

There are several elements to the Bill, the most important one by a long way being the tax-raising powers and the commensurate borrowing powers that go with them. There will be continuing debate on that. It may well feature in the manifestos of the various parties leading up to the next general election, and I think it will be revisited in the next Parliament. That is natural in constitutional issues when there is a process. I think there will be a next step to this process, which I look forward to being a part of after the next general election.

Another issue that has caused a lot of excitement is dual candidacy. If there was any political intent to gerrymander, it was on the part of the Labour party when it introduced the ban. No independent body in Wales, including the Electoral Commission, thinks that it is any way partisan to scrap the ban on dual candidacy. It was brought in by the Labour Government in this place with the support of Labour in Cardiff, with the view that it would benefit the Labour party in Wales, and it is truly ironic that it did not. The Opposition should welcome what is a right and proper constitutional change brought in by this Government.

I am not in favour of a referendum; generally speaking, I do not like them. Political parties should tell the people what they intend to do and if the people vote for them at a general election, they can carry that out without a referendum. I accept that I am in a minority in relation to a referendum on tax-raising powers in Wales. The Silk commission recommended it and there was a referendum in Scotland. Apart from this one contribution on this issue, I will have to sneak back into my box rather quietly on that one.

I am also not in favour of a five-year term, and again I might be in a minority. I generally think that four-year terms are right for Parliaments. We have a five-year term here, and I realise that there is a lot of support for a five-year term for the National Assembly. Again, that is another little box that I will have to crawl back into, because that might be a minority view.

But let us not forget what the Bill will do if, as I hope it will, it receives its Third Reading today. This Westminster Parliament is granting to the National Assembly for Wales the power to raise taxes—financial accountability, so that in future a Welsh Government will be accountable to the people whom they represent. There is further to go, but there is an important principle: that a Bill put forward by a Conservative Secretary of State is making a significant contribution to the process of devolution in Wales.

17:58

[Paul Murphy]

It is a great privilege to speak on Third Reading of a Bill that my hon. Friend the Member for Pontypridd (Owen Smith) indicated we will not oppose, for a variety of reasons. The Secretary of State referred to this as a milestone Bill. I have sat through 26 years of Welsh Bills, and I have to say that I do not think this is a milestone. There are some good parts to it, but a real milestone was the Bill introduced by the Labour Government after the 1997 general elections, which set up the Welsh Assembly.

The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) suggested in a previous debate that the Westminster parties, by which I assume he meant the Conservatives, Labour and the Liberal Democrats—he is actually a member of a Westminster party, as we meet here in Westminster, rather than Dudley or anywhere else—were obstructive when dealing with devolution matters. Had he said that in 1978, he would have been absolutely right. I was treasurer of the “No Assembly” campaign in Wales and deeply opposed devolution in the late ’70s, but I changed my mind, and for a variety of reasons, including all those years of Conservative government. He and his Plaid Cymru colleagues must reflect on this: no Labour Government would have meant no Assembly and no Welsh Government. Obviously we were helped by the pro-devolution parties—the Liberal Democrats and his party.

The hon. Member for Montgomeryshire (Glyn Davies) suggested that a Labour Secretary of State might have “chickened out” of extending the Assembly’s powers. I see no evidence for that, having been a Secretary of State for Wales twice. I certainly would not have chickened out. Indeed, when this Bill was introduced I enthusiastically supported the previous Secretary of State, who I thought showed great courage in introducing it as a Conservative, and I agreed with her.

[Glyn Davies]

I would like to reassure the right hon. Gentleman that I do not think the Labour party would have chickened out had he been Secretary of State.

[Paul Murphy]

I am grateful to the hon. Gentleman for that.

The devolution of extra powers was supported overwhelmingly by the people of Wales in the referendum, including in my constituency, which, having been one of the most sceptical and anti-devolution constituencies in the whole of Wales, changed its mind. I think that there has been a sea shift in how people perceive devolution. People understand it more, although not completely. We heard earlier about the Welsh television surveys indicating that many people did not know who ran the health service, for example. There will still be some of that, but there has been a change none the less.

To that extent, I welcome aspects of the Bill. The change to the name “Welsh Government” might seem trivial to many people, but it is significant. I think that the fixed terms, the ban on dual membership and other aspects of the Bill are greatly to be welcomed. Even though we disagree on how the business of taxation should be introduced in Wales, the fact that the Government have introduced the idea that we should deal with it is significant. All parties now agree on that, even if we disagree on the method and mechanism by which it will be introduced. However, there are parts of the Bill, including dual candidacy, on which we fundamentally disagree with the Government. There are substantial disagreements, but there are also agreements.

The Bill will now go to the other place, and I think that there is an opportunity for their lordships to improve it. I will refer to just two issues. One relates to reserved powers, which I spoke about earlier. I think that the Scottish referendum—I hope that there will be a no vote—will be followed by extra powers for the Scottish Parliament and that that will be replicated in our Assembly in Cardiff. I hope that the Government will rethink that.

More immediately significant is the issue of borrowing. I think that we are being short-changed in Wales as a result of this Bill. I agree wholeheartedly with the Government that the Welsh Government should be able to borrow, as the Northern Ireland Executive and the Scottish Government can, but I have still heard no reasonable answer to the question that all of us on the Opposition Benches have posed. The borrowing principle was introduced in Edinburgh and Belfast without necessarily any reference to streams of income, even though Scotland theoretically has a stream of income and the Northern Ireland Assembly has dealt with rates for many years. There is a gaping hole there. I think that their lordships would be well advised to examine that issue in the Bill.

[Mr Llwyd]

There is one further problem with the borrowing situation in the Bill. Why should the Westminster Government allow borrowing powers and then direct where the money should be spent? That undermines the whole principle of devolution, subsidiarity and any other principle of democratic accountability in sharing out responsibility. Their lordships will undoubtedly address that issue.

[Paul Murphy]

I think they will be right so to do. There is a lot of work to be done by their lordships, particularly the Welsh Members, in dealing with these issues, including borrowing.

[Mr David Jones]

I am reluctant to interrupt the right hon. Gentleman, but the intervention by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) is completely misconceived. There is no question of the Westminster Government directing the Welsh Government as to how to exercise their borrowing powers.

[Paul Murphy]

In that case, we are all right, are we not, and we can see what happens next?

These detailed issues are very important for us. Whatever divides us in this Chamber—the nature of politics is that we do divide on issues—there is a general consensus among us all that this Bill is another step in the right direction, and a step that makes sure that we remain members of the United Kingdom. By strengthening devolution, we strengthen the United Kingdom. However, the situation is changing. We must all accept—even I, coming from south-east Wales and Monmouthshire, with all my early scepticism, accept it, and not reluctantly but with some enthusiasm—that the landscape of our constitution and the way in which we govern ourselves in the United Kingdom is changing. Inevitably, the referendum in 87 days’ time will change us all, but I hope that in so doing it will unite us in ensuring not only that the United Kingdom remains as it is but that we devolve, sensibly, more and more powers—including, indeed, taxation—to the people of Wales.

18:04

[Mr Mark Williams]

It is a privilege to say a few words in support of the Bill on its Third Reading.

The Silk commission made a serious attempt to tackle the deficiencies in the devolution settlement, notably the lack of responsibility and accountability at Cardiff Bay. Those principles have been carried forward in the Bill. In assessing the funding system, Silk properly identified what was required—not just accountability but economic incentivisation, empowerment, efficiency, equity and, above all, responsibility.

I applaud the Bill and thank my right hon. Friend the Secretary of State and his team in the Wales Office.

[Roger Williams (Brecon and Radnorshire) (LD)]

Many tributes have been paid to my constituent, Mr Paul Silk. It is extraordinary that because of the quality of the work that he and his fellow commissioners did, the Bill has gone through relatively easily, even with a few minor amendments.

[Mr Mark Williams]

I very much agree with my hon. Friend. Paul Silk has done the politics of consensus a great service. The commissioners, from all four parties, sometimes had to make compromises but arrived at an agreed report on two occasions. That is a mark of Paul Silk’s chairmanship and the quality of those commissioners.

Of course, my right hon. Friend is a Conservative Secretary of State—

[Bob Stewart]

A very good one.

[Mr Mark Williams]

Indeed—he is a very good Secretary of State on many issues.

I remind my hon. Friend the Member for Montgomeryshire (Glyn Davies) that this is a coalition Government and it is a Liberal Democrat achievement that we have got this far with this Bill. Last week I was at a book launch, as was the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), to celebrate the life of the late Emlyn Hooson—one of my hon. Friend’s illustrious predecessors—who on St David’s day in 1968 put forward a Parliament for Wales Bill that did not get very far. It is a mark of his work and that of many others from other political parties that we have reached this point today, albeit crystallised by my right hon. Friend the Secretary of State.

[Mr Llwyd]

Is it possible that the hon. Member for Montgomeryshire (Glyn Davies) is being churlish?

[Mr Mark Williams]

I could not possibly comment, but I will give way to him.

[Glyn Davies]

I would just like to say that the late, great Baron Hooson was a wonderful Member of Parliament who served Montgomeryshire and Wales with distinction for many, many decades; I do not want to be accused of being churlish.

[Mr Mark Williams]

My hon. Friend says that with great sincerity, and I know him to be a sincere man. I just wish to place on the record the fact that the process of devolution has been an achievement of politicians of all parties—Liberals, Conservatives, and friends from the nationalists and from the Labour party—over the years. That process of consensus has to continue if the process of devolution marches on.

[Susan Elan Jones (Clwyd South) (Lab)]

I would not wish the hon. Gentleman to continue without mentioning one of his predecessors, Lord Elystan-Morgan, who made an interesting point in his autobiography, saying that when he started his political career—many of us know that he did not spend his life in just one political party—he would not have dreamt that the process of self-government and devolution would have gone on to the extent that it has.

[Mr Mark Williams]

I thank the hon. Lady for that intervention, and I agree with that. I can promise her, very much in the spirit of what the right hon. Member for Torfaen (Paul Murphy) said, that Lord Elystan-Morgan and others of our respective Welsh teams will be working very hard on this Bill to make necessary amendments to make it all the more workable and successful.

I wish to talk about one regret I have about this Bill, which is the lockstep, an ideal that, as a devolutionist, still confounds me. I agree with my hon. Friend the Member for Montgomeryshire on that matter. I recently read a military definition of the lockstep—I am alarmed that the hon. Member for Beckenham (Bob Stewart) is here, because he may correct me on this—which talked about how, when marching, all the marchers’ legs should be moving in the same way at the same time. Of course the Silk commission suggested something different, recommending that income tax rates should be capable of variation independently to create better economic conditions in Wales.

We have heard from the Secretary of State and from the Opposition about giving the Assembly Government the tools to do the job, and that is what I want this Bill to do. We should, however, be mindful of what Paul Silk said in his report, which was that the availability of capacity borrowing powers is contingent on the level of income tax devolution available to the Welsh Government following a successful referendum. He said that the lockstep model is less attractive and would therefore discourage the Welsh Government from pursuing devolution and the additional capital borrowing powers that would accompany it. He was right, and I regret the fact that he had to say that. I regret the response of the Labour party to the Bill and what Paul Silk said. I am clear that we have not heard the last of this, and I encourage Conservative Members to examine what their colleagues in Scotland have said about the lockstep and act accordingly, because those tax-varying powers really would enhance the tools available to Government.

I agree with Professor Dylan Jones-Evans who said that the important thing is to give the Government, of whichever colour, the powers to do the job. That is about grown-up government, and about respecting other Governments and other jurisdictions’ capacity to do the job; it is not about “nanny knows best”. Our friends from Plaid Cymru will agree with that characteristic, as much as Liberals and Conservatives will. That is a principle behind the Bill and I hope we can take it further. Welsh Liberal Democrats want to see flexibility of income tax powers without the Scottish lockstep model. Nevertheless, the Bill represents a huge step forward—although it does not provide the strides that some of us would have hoped for.

That brings me to the reserved powers model for the future, which I support. I could not support the Labour amendment on Report, as it struck me as a fudge, although outside the Chamber I was assured by the shadow Secretary of State that it was anything but. I wish to reiterate what Liberal Democrats, including the Deputy Prime Minister, have said, which is that we support the reserved powers model. The challenge Paul Silk set was for every party in this House to sign up to the reserved powers model at next year’s general election. The debate about devolution and the progress made have been a journey of stops and starts, but I believe the reserved powers model is the way forward and I endorse what Paul Silk has said.

Finally, there is an old adage that time and tide wait for no man. I believe that the tide of devolution in Wales is flowing fast and no Government, including this one and, indeed, future ones should be left behind.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Business without Debate

Tuesday 24th June 2014 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

European Union

That the draft European Union (Definition of Treaties) (Convention on International Interests in Mobile Equipment and Protocol thereto on matters specific to Aircraft Equipment) Order 2014, which was laid before this House on 31 March 2014, in the last Session of Parliament, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6) and Order, 16 June),

Financial Assistance to Industry

That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £10 million and up to a cumulative total of £100 million in respect of early stage venture capital funds investing in small and medium-sized enterprises.—(Mr Evennett.)

Question agreed to.

Sharia Law Student Loans

Tuesday 24th June 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Evennett.)

18:16

[Simon Danczuk (Rochdale) (Lab)]

I am pleased to have secured this debate on an issue that has been raised with me by my constituents. A few months ago, I was visited at my constituency office by Fatima Riaz and her two daughters, Saffiyah and Helima, who lobbied me on the issue of loans for Muslim students. I have to admit that I was not up to speed on the issue, but that was quickly cured by the girls, who explained their frustrations with the system. Saffiyah and Helima did not stop there; they organised a letter-writing campaign to show me how many people in Rochdale are affected by the issue.

It was inspiring to see young people engaged with a political issue and lobbying their MP, and the huge pile of letters on my desk is a testament to their success. It is on behalf of these young activists and the many constituents who have written to me that I have secured this debate today.

The Office for National Statistics describes British Muslims as

“a young, tightly clustered, but often disadvantaged community”.

Although that may be true for Rochdale, I would add that it is also a highly ambitious community. Most are ambitious for themselves and are highly entrepreneurial, setting up many new businesses that are helping to move the town forward. Many are also ambitious for their families and care deeply about the education of their children. They are determined that their children should have better lives than them and see education as the route to success in the future.

A university degree is now essential to unlock the door to many professions in this country. Whether that is a good thing or not is open to question—I remain of the view that we should be doing more for young people who do not go to university—but that is the reality of the situation in this country today, so it is no surprise that young Muslim people in my constituency are desperate to go to university and get the qualifications they need to get on in life. They want to improve their own employment prospects and to continue a great tradition of Muslim scholarship at the same time.

Members can imagine their dismay when they find that the student loans on offer to help with astronomical university fees are not compatible with their religious beliefs. Essentially, they are being asked to choose between the future they want for themselves and their own religious convictions. That is not a choice we should be asking anyone to make. It is an unacceptable situation. I understand that not all Muslims feel that way and that there is a degree of theological argument about the issue. I would not dream of wading into that particular debate, but I will briefly set out the issue as I see it, for the benefit of the House.

In Islamic teaching and in some other religions, there are rules about the charging and receiving of interest. Under the old student finance arrangements, that was not much of an issue because interest rates on student loans were tied to the retail prices index, so they were not considered commercial loans. The vast majority of Muslim students felt that as long as the interest was in line with inflation the loans were compatible with their beliefs.

The issue came to a head with this Government’s decision to overhaul the student loans system when they came into office. It is fair to say that that decision was not their most popular one among certain coalition Members, and it was certainly not popular with the public. The new loans have a real interest rate that operates on a sliding scale, depending on the graduate’s income once they have left university. According to the National Union of Students, many Muslim students feel that the new arrangements are not compatible with Islamic teaching because of the real interest rate.

That means that many Muslim students are left to rely on their parents to fund their education. That was sometimes possible under the old system, which had lower fees, because parents could save up the money for years in advance of their children going to university. The fees were about £3,000 per year, so it was not easy, but it was possible. Under the new system, with fees of up to £9,000, that option is now out of reach for the vast majority of Muslim families.

In fact, Muslim students who are unable to get loans are actively discouraged from going to the best universities, because they have the highest fees. That forces agonising choices on parents, who have to explain to their children that they cannot afford to send them to the best universities, even if they get the required grades. That has created an unfair playing field in higher education and discriminates against Muslim students, especially those from poor families. Of course, the Government know that, because it was identified as an issue in their equality impact assessment when they announced the new student loans system in 2010. They have now had at least four years to sort it out.

[Bob Stewart (Beckenham) (Con)]

Forgive me for intervening, Mr Speaker. I am just anxious to learn whether there are not Muslim banks or sharia law banks to cater for Muslims who cannot pay what contradicts their religious beliefs, because I thought that there were such banks.

[Simon Danczuk]

The hon. Gentleman makes a good point, which I will come on to. The United Kingdom is very good on sharia-compliant financial services, but because the system is Government-run, the process for paying tuition fees for going to university needs to be matched by a sharia-compliant system. The same issue applies to advanced learner loans and business start-up loans, which are often overlooked in debate about this matter.

Thanks to some great lobbying work by the National Union of Students, the Federation of Student Islamic Societies and others, the Government agreed to take action. In a debate on the then Education Bill in another place, Baroness Verma said the Government would “seriously consider” changes and would seek to

“address the doubts that members of some faiths might have”.—[Official Report, House of Lords, 1 November 2011; Vol. 731, c. 1204.]

That was in 2011; we are now in 2014, and there is still nothing on the statute book to address this inequality. I find that staggering, given that the Government—to their credit—have taken action on the similar issue of Islamic mortgages and on Government bonds. There is now a thriving Islamic finance sector in the UK, with 22 banks offering services that comply with sharia law, so why the delay with student loans?

As far back as October 2012, the Minister for Universities and Science—he is now in his place—said that the Government had

“identified an alternative Shariah compliant system”.—[Official Report, 24 October 2012; Vol. 551, c. 934W.]

The system works using a murabaha scheme, which is interest-free but still costs the students the same amount overall. That point is important. Muslim students are not seeking to pay less than other students. They are simply asking for a loan system that fits their religious views. It is also important to say that any new scheme should be open to all students, not just to Muslims.

I understand that the Government are consulting widely on this matter, and I am pleased that they are doing so, but I question why it has taken so long to start the consultation, given that the issue was identified back in 2010. In the Government’s own equality assessment published in 2012, they said that changes would require primary legislation, but we have just seen the Government’s final Queen’s Speech of this Parliament and I could not see anything about this issue or any other Bill in which it could be addressed. I hope that the Minister will explain why that was the case and confirm that that means that there will be no real action on the issue in this Parliament. If that is the case, it is extremely disappointing. My constituents will feel that the Government simply do not see their education as a priority. It is difficult to escape the conclusion that they are right.

Getting more British Muslims into higher education in this country should be a priority for the Government. There are 2.7 million Muslims in England and Wales, but according to the Office for National Statistics, a third of those of working age have no formal qualifications. British Muslims are also the least likely of any religious group to have a degree and the most likely to be unemployed.

This inequality has wider social and economic consequences. It leads to the under-representation of British Muslims in public life and the professions. That can be seen clearly in Parliament. Out of 650 Members, only eight are Muslim. If Muslims were represented proportionately, the number would be closer to 30. That means that there are fewer people to speak up for Muslims in Parliament.

The Prime Minister has recently decided to talk about “British values” in schools. I agree with him that that is important but I say to the Minister that I think that “British values” include the right to a good education for all, regardless of religious views. Given that his Government have failed to deliver that, I suggest that the Government be more careful when lecturing British Muslims about “British values”.

Under-representation of British Muslims is not confined to politics but stretches across society to the media, academia and the law. That fuels segregation and ignorance, which hold us back as a country. There is also an economic dimension. By denying Muslim students equal access to higher education and business loans, we are wasting the potential of thousands of our citizens.

These young people could go on to found successful businesses, cure diseases or go into teaching and inspire new generations of students, but they are being deterred by the current policies of this Government. That is a tragedy for them, but it is also a tragedy for the country. The best resource we have is our people and we must not let their potential go to waste.

I am sure that the Minister agrees, but I make this point to impress upon him the urgency of rapid action on the issue. It now appears that we will have to wait until 2016 for any new system to be implemented. That means that at least five cohorts of students will have been let down by the system. That is an unacceptable waste of young talent.

I want to finish by reminding the House of the words of the Prime Minister at the World Islamic Economic Forum in October last year. He said:

“Never again should a Muslim in Britain feel unable to go to university because they cannot get a Student Loan—simply because of their religion”.

I could not agree more with the Prime Minister, but he should remember that it was his Government who created this situation. Unless he acts quickly, it will be his Government who failed to resolve it.

18:29

[The Minister for Universities and Science (Mr David Willetts)]

May I begin by apologising to the hon. Member for Rochdale (Simon Danczuk) and to you, Mr Speaker, for not being able to be present for the start of the debate? I have just returned from a visit to the US and my flight was delayed, but I apologise to the hon. Gentleman and to the House. I have had a report of the remarks he made in the first minutes of his speech and I have, of course, listened very carefully to what he said in the latter part of it.

Let me begin by showing the hon. Gentleman that we are committed to ensuring that young people can access all the opportunities available to them. Our higher education reforms introduced in 2012, following Lord Browne’s independent review, are, we believe, contributing to maintaining the quality of education and bringing more money into universities by contributing more to the costs of education. That is because graduates gain a range of benefits from a university education, most notably the higher salaries they earn.

Lord Browne’s report also highlighted the importance of ensuring that students get a fair deal. Given the current fiscal environment, the alternatives to asking graduates to contribute more are a reduction in student numbers or a cut in per-student funding, which would undermine the sustainability of our HE sector. We agreed with his recommendations, and, of course, no first-time undergraduate student has to pay upfront fees. Students from lower-income households continue to receive support through the student loans and grant system.

I very much agree with the points the hon. Gentleman made about the Muslim students he is familiar with from his own constituency and more widely. He referred to their aspiration to go to university, which we absolutely promote, and to their entrepreneurial instincts, which are admirable. It would be a tragedy if any student, particularly a Muslim student, were put off going to university by concerns about so-called interest rates.

Perhaps I can report to the hon. Gentleman and to the House the evidence we have from the longitudinal study of young people in England and the youth cohort study. It suggests that many Muslim students take up Government student loans. The findings so far are that 74% of Muslim young people who attended higher education at 18 took out a student loan, compared with 80% of Christian students, 81% of Hindu students, 73% of Sikh students and 80% of students with no stated religion.

It is a small study and we will continue to monitor this very closely, but at the moment we do not believe that there is evidence of a disproportionate exclusion of Muslim students from university because of anxieties about the fees and loan system. Nevertheless, there is an understandable and legitimate concern about this whole issue, and we have been trying, wherever possible, to design loan schemes that are consistent with the principles of Islamic finance. We have already announced the creation of a type of start-up loan that is consistent with those principles while being equitable for other participants in the scheme. That is why we are now examining a sharia-compliant alternative to conventional student loans.

We are clear that we want a single student loan system that can meet the needs of the majority of students where possible. We are proposing a Takaful, which would be administered by the Student Loans Company and run alongside the conventional system. Collections would be made in the same way as conventional loans, and application would be open to anyone and done through the same channels as conventional loans.

Any alternative finance product would not result in a student being in any way disadvantaged or advantaged over a student who took out a more conventional student loan. Both the size of the finance and the repayment amounts would be equivalent under the two systems, but the Takaful model does have a different underlying principle, which is one of communal interest and transparent sharing of benefit and obligation, with the repayments of students participating in the fund being used to provide finance to future students who elect to join the fund. This ensures that all members of the fund benefit equally from it.

Let me take the hon. Gentleman and the House in a little more detail through how the proposed Takaful would work. Students participating in the fund would not be borrowing money and paying it back with interest to a third party, which would not be compliant with sharia law. Instead, the Takaful fund will be established with an initial amount of money that can be donated to the fund from government or on the basis of Qard Hasan—interest-free loan—and based on a concept of mutual participation and guarantee.

Students will obtain finance from the fund by applying in a similar manner as for a conventional loan. The contract will be based on a unilateral promise guaranteeing that they will pay a Takaful contribution, which is perceived as a charitable contribution from a sharia perspective for the benefit of members of the fund. Moneys will be released once the contract is signed. Repayment will be made to the fund once the student is in employment and earning above the repayment threshold, which will be set at the same level as for traditional student loans.

The contribution that the student repays to the fund would help to ensure that future students benefit from the fund, allowing them to complete their studies as the original student did. The mutual basis of that structure, with members of the fund helping each other attend higher education, makes that model acceptable under sharia law: the lending-borrowing relationship does not exist in that model. The student finance fund—the Takaful fund—is managed by a fund manager under the Islamic finance principle of Wakala, or agency, for a specified fee. The fund is completely segregated from traditional student loans to ensure full compliance with sharia in the whole cycle of the fund.

It has taken us time to develop and consult on that model, but it was proposed and developed by experts in Islamic finance, and the concept has been provisionally approved by the Sharia Supervisory Committee of the Islamic Bank of Britain. Were that alternative finance product to be made available, the Sharia Supervisory Committee would oversee the operation of the fund and ensure that it was operating in a sharia-compliant manner, with an annual report on the operation of the fund.

The hon. Gentleman did not raise this point, but because of concerns coming from a different perspective I make it clear that this measure does not mean we are introducing sharia law in the UK. Sharia principles are the code of personal religious law governing the conduct of Muslims. They can extend into all aspects of people’s lives, but provided that an activity prescribed by sharia principles does not contravene the law of England and Wales, there is nothing that prevents people from living by them.

I understand the hon. Gentleman’s frustration about the timetable, so I will briefly take him through that. Any alternative finance product would not be available before 2016 at the earliest. We will require legislation to allow the Secretary of State to issue an alternative finance product, because currently only loans and grants can be issued, and HMRC may also need to update its regulations. I am afraid it has not been possible in the time available to bring before the House a higher education finance Bill that would include such provisions, and there is more work to be done.

Full feasibility is required before we can implement any alternative finance product. That will include working with HMRC to determine any changes to its systems and forms, and engagement with employers over collections as well as implementation by the Student Loans Company. There looks to be minimal additional cost to the taxpayer, but that will require more detailed study.

The Government accept the importance of the concerns raised by the hon. Gentleman and representatives of the Muslim community, and we are determined to ensure that the student finance system is accessible to as many people as possible. A consultation that closed earlier this month provided the UK population as a whole with an opportunity to voice their opinions. Findings will be published later this year, but early indications suggest that the majority of respondents are in favour of an alternative finance product, and that as long as we provide evidence that it is sharia compliant they would find Takaful acceptable. It also highlighted concerns from potential students about having to choose between their religious beliefs and their education.

In conclusion, I assure the hon. Gentleman and the House that we understand the importance of ensuring a form of student finance that is consistent with sharia law, and we do not believe that our conventional model is one of commercial loans—that may be why the scheme already has high levels of participation by Muslim students.

[Bob Stewart]

Is my understanding correct that, until 2016, no system whatever will be in place—Government-sponsored or otherwise—to help students who wish to go to university but cannot afford it without parental support?

[Mr Willetts]

As I said a moment ago, it will not be possible, sadly, to legislate in the time available, but I hope that my hon. Friend will take some comfort from the evidence showing that a substantial proportion of Muslim students are taking up our conventional fees and loans, and I believe they are doing so because our fees and loans are not actually commercial loans in any recognised sense of the term. There is an important issue here, however, and we understand it and have consulted on it. I very much hope that it will be possible to introduce this as a matter of urgency in the new Parliament, and I am sure that continued pressure from the hon. Member for Rochdale—and our sense of obligation to the Islamic community—will mean that, after the latest round of consultation, we will be able to bring it to a successful conclusion. I conclude the debate on that basis.

Question put and agreed to.

18:40

House adjourned.

Petition

Tuesday 24th June 2014 Petitions

Tuesday 24 June 2014

Humberstone Heights Golf Course (Leicester)

Tuesday 24th June 2014 Petitions

The Petition of residents of the UK,

Declares that Humberstone Heights Golf Course is a popular leisure facility in Leicester and further that the Petitioners believe that the planned closure of the Golf Course will have a detrimental impact on the local community.

The Petitioners therefore request that the House of Commons urges the Government to encourage Leicester City Council to reconsider their decision to close Humberstone Heights Gold Course, which is an important community facility.

And the Petitioners remain, etc.—[Presented by Keith Vaz, Official Report, 9 April 2014; Vol. 578, c. 384.]

[P001342]

Observations from the Secretary of State for Communities and Local Government:

The Government will not interfere in this issue as this is a matter for local discretion and should be based on local needs. Local councils have to play their part in making savings to return public spending to sustainable levels and the Government are shifting power from central Government back to local areas.

The Government are committed to supporting communities that want to take over facilities to run themselves. We have put in place a £19 million support programme to help communities to take on the ownership and management of assets that are important to them. The support includes a free advice service and grant funding (http://mycommunityrights.org.uk/ or call 0300 020 1864).

Westminster Hall

Tuesday 24th June 2014 Westminster Hall

Tuesday 24 June 2014

[Mr James Gray in the Chair]

Human Rights: Saudi Arabia

Tuesday 24th June 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Gavin Barwell.)

09:30

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to see you in the Chair, Mr Gray, and to have the opportunity to open this Adjournment debate on human rights in Saudi Arabia. I am very grateful to have been allocated this slot. I am not quite sure how Adjournment debates are chosen, but this is an important subject that requires scrutiny and therefore I am very grateful for this opportunity today.

The UK Government accept that Saudi Arabia has a poor record on democracy and human rights, particularly in relation to women. The country is deemed a “country of concern” by the Foreign and Commonwealth Office. Indeed, Saudi Arabia has one of the worst records in the world for executions. More than 2,000 people were executed between 1985 and 2013. The most recent Economist Intelligence Unit democracy index listed Saudi Arabia as the fifth most authoritarian Government in the world. Saudi Arabia is ranked equal to Burma and even lower than Iran in that index. However, although other countries with appalling human rights records are criticised and, indeed, action is taken against them, Saudi Arabia is often courted.

The Saudi Arabian authorities react to those pressing for democratic rights or political change with repressive measures. Protesters are held without charge and without access to the outside world for days and, indeed, weeks on end. Some are reported to have been tortured or otherwise badly treated. Many people have been taken to trial simply for taking part in demonstrations. Independent human rights organisations are banned. There are protests in the eastern region by members of the minority Shi’a community who allege long-term discrimination on grounds of faith. The security services are alleged to have used excessive force against those protesters.

Migrant workers comprise about one third of the population and are inadequately protected against exploitation and abuse by their employers. We regularly hear of examples of migrant workers being badly treated and, in particular, women being abused sexually and treated badly in other ways.

Let me give some examples of the treatment of those who take a different view from the Saudi Arabian state. Zakaria Al Safwan, a writer, was sentenced to 10 years in prison last November for writing an article entitled “In Defence of Peaceful Protest”. Waleed Abu al-Khair, who set up the Monitor of Human Rights in Saudi Arabia, has been imprisoned, harassed and banned from travelling outside the country. Similarly, Raif Badawi was imprisoned and sentenced to 1,000 lashes and 10 years in prison on 7 May for setting up a peaceful liberal website. Charges against him included breaking allegiance with the King. New terrorism laws were used against him and have increasingly been used against human rights activists. Another human rights activist, Fadhel al-Manasif, received a 15-year sentence and a 15-year travel ban under the new terrorism laws. That was for charges such as breaking allegiance with the King and being in contact with foreign news agencies in order to exaggerate news and harm the reputation of the Kingdom of Saudi Arabia and its people. New terrorism regulations include such offences as calling, participating in, promoting or inciting sit-ins and protests.

Other recent convictions include those of Wajeha al-Huwaider and Fawzia al-Oyouni, who founded the Association for the Protection and Defence of Women’s Rights in Saudi Arabia and were sentenced to 10 months in prison and a two-year travel ban after giving food to a Canadian woman who had been left in her house without food supplies by her Saudi-born husband.

[David Simpson (Upper Bann) (DUP)]

Will the hon. Lady give way?

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Will the hon. Lady give way?

[Katy Clark]

I will give way to the hon. Member for Upper Bann (David Simpson), as I heard him first.

[David Simpson]

We all know that Saudi Arabia is a very advanced country in many ways, but the persecution of Christians is rife in that country. It allows Christians to enter the country for temporary work, but does not allow them to practise their faith openly, even with Bibles or any Christian symbols. Surely more can be done by the Foreign Office or whatever in London, because we do a lot of business with Saudi Arabia. Surely more pressure can be brought to bear for the defence of Christians and their beliefs.

[Katy Clark]

The hon. Gentleman makes an incredibly important point and one that has been raised by a number of Members of the House on many occasions. Indeed there is persecution in relation to the Christian community and a number of other religious communities. We need to have a consistent position in relation to the defence of the rights of people to hold religious views and practise their religion and, indeed, to hold no religious views and practise no religion.

[Daniel Kawczynski]

Will the hon. Lady give way?

[Katy Clark]

I would be delighted to give way to the hon. Gentleman.

[Daniel Kawczynski]

I am speaking as the chairman of the all-party group on Saudi Arabia. The hon. Lady is making all these allegations about human rights abuses. May I ask her this in the first instance: has she ever visited Saudi Arabia?

[Katy Clark]

The hon. Gentleman has asked me that question before. I am aware that he has visited Saudi Arabia and has suggested that I do so. However, the trips that are being suggested are funded by the Saudi royal family and I personally do not think that that is an appropriate way to take part in a visit. I therefore have not visited Saudi Arabia and frankly, from what I have heard, have no particular wish to travel to Saudi Arabia, particularly for pleasure purposes.

[Daniel Kawczynski]

Will the hon. Lady give way?

[Katy Clark]

I will give way one more time. The hon. Gentleman is chair of the all-party group. He has made these points to me before in debates, but I would be happy to hear them again.

[Daniel Kawczynski]

The hon. Lady says that she does not wish to visit Saudi Arabia. I think that it is very important for her to take the opportunity of visiting that country before she makes all these allegations. Let me tell her that there is a growing list of Labour Members of Parliament who have been with me to Saudi Arabia and seen the situation for themselves by interacting with human rights organisations and women’s rights organisations and who have a very different perspective from the hon. Lady.

[Katy Clark]

I suggest to the hon. Gentleman that it would have been appropriate for him to make reference to the Register of Members’ Financial Interests. The trips to which he is referring are funded by the Saudi Arabian royal family and, as I have indicated, I have no wish to take part in a trip that is funded in that way. If a trip is funded in a different way, that may be a different issue, but as I have said, from what I have heard, it would not be my top holiday destination to go to for pleasure purposes. He has made these points to me before. He may have the opportunity to speak later in the debate and expand on what he wishes to say, but we have debated these issues on the radio previously and I suggest that the focus in this debate should perhaps be on what is happening in Saudi Arabia, rather than on whether I personally should go on a trip organised by his all-party group.

There are many more examples of human rights abuses that are narrated by organisations such as Human Rights Watch and Amnesty International and, indeed, many people who have travelled to Saudi Arabia and have reported back on what is happening there.

The court system in Saudi Arabia falls far short of international standards for fair trial. Defendants are rarely allowed formal representation by lawyers and in many cases are not informed of the progress of legal proceedings against them. Torture allegations are widespread.

Saudi Arabia has a guardianship system for women and girls that means that they are forbidden from travelling, conducting official business or undergoing certain medical procedures without the permission of their male relatives. Likewise, under uncodified rules, women are not allowed to marry without the permission of their guardian. Unlike men, they do not have a unilateral right to divorce. Also, they often face discrimination in relation to custody of their children. There are reports of women being unable to be provided with essential medical treatment because of the lack of consent from a male guardian.

I wish to use this opportunity to raise a specific case that I have raised previously with the Government—with the Prime Minister at Prime Minister’s questions on 30 April and in his statement to the House on 11 June, and with the Minister and the Foreign and Commonwealth Office in correspondence, when I have specifically asked that the Government make representations in relation to this case. Despite that, the Government do not seem to have taken any action.

I first became aware of the case in March, when I was contacted by a journalist who was covering the story. I was advised that Princess Alanoud Al Fayez, who lived in London, was raising concerns about the condition of her daughters, who had been kept in a compound in Jeddah, Saudi Arabia, for the past 13 years. I later learned that as a result of her speaking with the international media, food supplies for two of her daughters, Princesses Sahar and Jawaher, had been stopped and no new food supplies were being allowed into the compound.

I met Princess Alanoud, who advised me that she was concerned that her daughters were being starved. Since then, their situation has become more desperate. The compound apparently has sea access, so although they have no access to fresh water, they are able to desalinate water to an extent because they have some primitive equipment that can be used to desalinate about 1.5 litres per day, but I am told that that is inadequate in the heat. The compound is large and their food stocks have quickly been exhausted. This is the 100th day for which they have not had access to new food. They have lost a considerable amount of weight, their health has been affected and time is running out. Princess Alanoud’s other two daughters are being held separately and she has no contact with them. All her daughters are in their late 30s or early 40s.

When I met Princess Alanoud, she asked for our help. She advised me that she had an arranged marriage to King Abdullah of Saudi Arabia when she was 15, and he divorced her for the final time when she was 26. In Saudi Arabia, a man is allowed to have four wives at a time, and he can divorce one wife in order to take another. During the time she was married to him, she had four daughters but no sons. After her divorce, around 1983 or 1984, she maintained a reasonable relationship with her husband, but her daughters were put under house arrest in 2001 and she came to the UK in 2003. Since that time, private representations have been made to try to enable the daughters to leave the compounds in which they are kept, but without success.

The case is a sensitive one, because it involves close family members of the leader of Saudi Arabia. It also illustrates the poor state of women’s rights—indeed, those of all people—in Saudi Arabia, where most women are granted freedoms only at the whim of their male guardian. As Princess Alanoud described, however, legal guardianship laws do not normally affect women in the royal family, who usually have free movement. She said that when she and her daughters were in favour they had a wonderful life, but when they fell out of favour that changed.

I asked for this debate because of the poor standard of the Government’s answers to questions about that case and others that I have raised. Each time the Government are asked about it, they simply state that the case of the Saudi princesses is a matter for the Saudi Arabian authorities and for the family concerned, not for Her Majesty’s Government. Of course, there are millions of women in Saudi Arabia who have never had a wonderful life, but if that is how female members of the Saudi royal family are treated, it takes little imagination to work out the horrific situations that many other women in Saudi Arabia must suffer if their guardians do not hold enlightened views, given that women do not have independent legal rights.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing that matter to the Chamber for our consideration. In relation to the case of the Saudi Arabian princesses, has she been able to obtain opinions from all parties in the House? What have other parties done to help the campaign that she has spearheaded?

[Katy Clark]

The Opposition spokesperson, my hon. Friend the Member for Wrexham (Ian Lucas), is here, and I expect that he will outline the position of the official Opposition. I say to the hon. Member for Strangford (Jim Shannon), who has been extremely helpful in this case—he has attended a meeting with the mother, as well as signing an early-day motion and letters to representatives—that a number of Members from all political parties have been extremely supportive. I could not extend such a description to Government spokespeople, however. I believe that there is a great deal of sympathy in all parts of the House, but unfortunately those who hold the power have not indicated that they share such a view.

Saudi Arabia was Britain’s biggest arms market last year. The Committees on Arms Export Controls report from 2013—the most recent available to the House—states that the value of arms exports licences amounted to more than £1.8 billion. That includes weapons that are likely to be used for internal repression, such as tear gas and other irritant ammunition, components of water cannon and CS hand grenades. The Prime Minister has visited Saudi Arabia several times, and the Saudi Government has had extensive contact with the UK Government. The Prime Minister has defended arms sales to the region, saying that they are “entirely legitimate”. The UK Government deny that the commercial relationship between the kingdom and the UK prevents the UK Government from speaking openly about the problems. Saudi Arabia clearly has a pivotal role in the region, but that is no excuse for the Government’s failure to take up human rights cases; indeed, that undermines our position in relation to other matters. The Government take up human rights cases in other countries, but they are reluctant to do so with Saudi Arabia.

I call on the Minister, in summing up, to outline in detail the Government’s position on human rights in Saudi Arabia, the action that the Government have taken on the case of the Saudi princesses, and the action that they have taken regarding the other human rights abuses that I have mentioned. Given what is happening in the world, the question of human rights in Saudi Arabia is important and requires a great deal more scrutiny. I look forward to hearing contributions from all parts of the House.

09:46

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

I speak as chairman of the all-party group on Saudi Arabia. The hon. Member for North Ayrshire and Arran (Katy Clark) suggested that the all-party group’s trips to the kingdom were paid for by the Saudi royal family, but they are actually paid for by the Saudi Government. They are, of course, registered appropriately with the Register of Members’ Financial Interests.

We have to accept the hospitality of the Saudi Government when we take British parliamentary delegations to the kingdom, because there are insufficient funds for the House of Commons to pay for such trips. The most that one can apply for is a small amount of money from the inter-parliamentary group, which does not cover the costs of a large delegation. It is possible to apply, I think, only once in each Parliament. If we want to engage with a country such as Saudi Arabia and to take large numbers of parliamentarians from all political parties, under the current system of funding from the House of Commons we have to rely on the hospitality of our foreign hosts. If we are not to do that, funding will have to be made available, but I do not think that to push for such a measure would be particularly popular.

The hon. Lady seemed to say that accepting such hospitality was somehow inappropriate and that pressure was brought to bear on us. She suggested that because we are there thanks to the largesse of our hosts, the situation and the meetings we attend were managed and controlled. That is not the case, and I strongly urge her to listen not to me but to the large number of Labour Members of Parliament who have joined me on such delegations—not least the hon. Member for Bassetlaw (John Mann)—who have been to the kingdom and interacted with human rights organisations rather than simply listening to media coverage in this country. The BBC is adept at putting forward negative aspects of Saudi society, but it is not interested in disseminating information about positive aspects of the reforms that are taking place in the kingdom.

[Katy Clark]

A wide range of human rights organisations—particularly Amnesty and Human Rights Watch—have been to Saudi Arabia and produced reports on the situation. Does the hon. Gentleman not accept their conclusions?

[Daniel Kawczynski]

The hon. Lady will have to interact with those organisations and ask for their perspective. I can only give her my perspective as someone who has been to the kingdom on a number of occasions and interacted with those organisations—and by the way, not with chaperones or under their auspices, but by actually selecting organisations off our own bat, going to see them and interacting with them and with ordinary men and women in the street.

[Jeremy Corbyn (Islington North) (Lab)]

On his visits to Saudi Arabia, has the hon. Gentleman been able to engage with the 1.5 million enslaved domestic workers, who have no rights beyond staying in their employer’s house? Has he raised any of the very serious concerns about the treatment of migrant workers in Saudi Arabia with the Saudi Arabian Government? What was their response?

[Daniel Kawczynski]

Later in my speech I will address how we raise human rights issues with our hosts. Yes, of course we have met a wide range of Saudi Arabian citizens—both ordinary men and women in the streets, and through various industries—and we get a perspective from those people.

I have been chairman of the all-party group on Saudi Arabia for the past eight years, since 2006. Unlike many MPs, who join a lot of all-party groups, I am a member of only two: the all-party groups on Saudi Arabia and Libya. I feel passionately about the importance of our strategic alliance with the Kingdom of Saudi Arabia, which is an extremely important country of the most profound strategic importance to the United Kingdom, globally and, in particular, to the middle east. Our two countries co-operate on counter-terrorism and on trying to bring peace and stability to the middle east—at another stage I hope to share with the House the extraordinary work and effort that Saudi Arabia gives us in helping to fight terrorism and the extraordinary efforts and investments that it puts into de-radicalisation programmes, but of course this debate is specifically on human rights.

I have stated that the delegations that go to Saudi Arabia are cross-party, but we also welcome delegations from the Shura council to the House of Commons. Those delegations visit us on a regular basis. Many members of the Shura council are keen to come to the House of Commons, and they spend considerable time here trying to understand the procedures of our House and learning about the Select Committee process. They are keen to understand the Westminster model—which, as we all know, is highly respected across the world—so that they can learn from how Parliament works and take some of that information, expertise and experience back to the Shura council. Fundamental changes to accountability and transparency are taking place in the Shura council, and we are very pleased to be able to interact with our Saudi counterparts to give our perspective.

One of the most recent delegations even asked to come to visit my constituency of Shrewsbury and spend a day in our beautiful county town trying to understand how a parliamentarian interacts with his constituents and the local council, how a parliamentarian deals with people’s problems and what rights citizens have. Every time they come on these delegations, they give us a real sense that they are interested in learning from our experience.

I say to the hon. Member for North Ayrshire and Arran that the Saudis are trying to pursue a system of evolution, rather than revolution. As the King has said to me in the past, there are conservative elements in Saudi society who are reticent about big-scale, radical, fast changes to the structure of society. The King is desperately trying to modernise and improve various aspects of society, but he has to move at a pace that the most conservative elements will allow. I think he wants to take the whole society with him in the transition that he and the country are trying to make.

[Katy Clark]

I have also met Saudi delegations over here; indeed, I have met a number of members of the royal family. When I raise human rights cases, members of the royal family often ask to meet me to try to persuade me that I simply do not understand what is going on in Saudi Arabia. Has the hon. Gentleman looked at the independent human rights assessments from organisations such as Human Rights Watch, which make it clear that, in their view, the human rights situation and the repression have become greater since 2011?

[Daniel Kawczynski]

The hon. Lady made that point a moment ago. My view is different from some of the conclusions that those organisations have come up with. I think they are perfectly entitled to those views, which we will debate. We always ensure that we take a large group of female MPs on all our delegations to the kingdom, which is extremely important. I am delighted by the interaction that many female British Members of Parliament have had with their Saudi counterparts during the course of our deliberations with the Shura council.

I have to tell the hon. Lady that there has been a major change in the number of women appointed to the Shura council. Women now account for 30 of the 150 members of the Shura council, which is 20%. She will know that women comprise 22.6% of the House of Commons, so Saudi Arabia has only two percentage points fewer women on the Shura council than we have in the House of Commons. Let us not forget that we have an awful lot more to do in our own country to empower women and ensure that they play their full role in the process of parliamentary democracy before we start castigating Saudi Arabia on certain women’s rights issues.

The hon. Lady will also know that recently not only have there been significant appointments of females to the Shura council, but women have been appointed as Ministers, which is an important new development. She will also be pleased that there has recently been a significant increase in Government jobs for women. Last year there was an 8% increase, and the Saudi Government are pursuing affirmative action deliberately to ensure that more women are employed in every aspect of Government Departments and Government operations.

The hon. Lady—and, I am sure, you too, Mr Gray—will also be interested that 473,000 women were in higher education last year, which compares with 429,000 men, so far more females are going to universities in the kingdom. What really pleases me is that the 473,000 women going to university compares with just four women who went to university in 1961. I am sure the hon. Lady will be pleased with that trajectory—from four females going to university in 1961 to 473,000 now. Even she will be pleased with the way in which those figures are coming about. Our Olympic games here in London welcomed the Saudi Olympic team, which for the first time had women representatives. Now, of course, there are major changes to the way in which girls are allowed to play and watch sports.

I asked the hon. Lady whether she had visited Saudi Arabia, and I know that she has been invited in the past. I am not saying this to her because I want somehow to trip her up, but I genuinely believe that if we are going to talk about a country, and if we are to get a good feel for what is going on in a country, it is helpful and beneficial to go there. I might have to take her with me somehow, without the funding of the Saudi Government. I am not quite offering to pay for her out of my own pocket, but if we can find some way for her to visit the kingdom without the Saudis paying, I will have to give that due consideration. It is extremely important to interact with Saudis themselves.

I will give one brief example of something that the delegation experienced on our last visit to Riyadh. We left all the official meetings and went to one of the parks in downtown Riyadh. All the children in the park were wearing English football T-shirts—Arsenal, Manchester United and others—because they are all passionate about English football. None of them was wearing a Shrewsbury Town football club T-shirt, which was rather disappointing, but they were all there, and they were keen to interact with us and talk to us as parliamentarians. We talked to them and their parents, and as a result of those interactions, we went to see organisations in which they were involved, without our chaperones or official Ministers. That is important, because it gives a perspective on what the Saudis themselves are feeling and how women feel about women’s rights in the kingdom. It is a very effective process to engage in.

I say to the hon. Lady that I am not here to defend Saudi Arabia in the sense of saying that there are no issues. Of course there are—it would be ludicrous for me to say that everything in that country is going well and that no more needs to be done—but which country does not have its share of social ills? If the Saudis and the Saudi media were to start looking at this country and evaluating and continuously pondering some of the problems we have as a society, they would find many problems that are different from the ones they have. I will not go into all the social problems that we have in this country—she is perfectly aware of the wide range of human rights issues and other problems that we face.

Of course the Saudis have their own issues, and we raise those with them at every opportunity, even in front of the King. British officials were petrified at the prospect that I might raise issues involving Christian rights in front of the King. They do not like British Members of Parliament raising such issues—I think that they think we will undo and destroy a whole year of their work in a five-minute conversation—but we do raise them. We talk to the King about the rights of Christians, and we talk to Ministers. I say quite openly that, as a practising Christian, I am not happy about the restrictions put on Christians working in the kingdom—the fact that they find it impossible to celebrate Christmas is regrettable—but we take the opportunity to go there and meet them, because we are good friends. Good friends can be open with one another and critical. They challenge us on other things involving the United Kingdom, but I assure the hon. Lady that we raise the rights of Christians and women with officials and even with the King.

Again, I urge the hon. Lady to join me, without her expenses being paid by the Saudis. We will find a way for her to come to Saudi Arabia without the Saudi Government paying for it.

[Katy Clark]

I am grateful to the hon. Gentleman; he is being most generous. I raised a number of human rights cases in my speech, including the case of the four princesses currently being detained. Would the all-party parliamentary group be willing to take up those cases with the Saudi authorities?

[Daniel Kawczynski]

It is very much for the Minister to respond on the case of the princesses, but I will say that if the hon. Lady would like me to raise the matter with officials at the Saudi embassy, I would be delighted to go with her to do so. We can make representations together. I would be delighted to afford that to her.

Sir John Jenkins, as the hon. Lady will know, is our ambassador to Riyadh. On our last visit to the kingdom in February, we had very good deliberations with him. He is writing an important report at the moment on the Muslim Brotherhood. I take a strong interest in that, and I await the outcome of the report. I know that he is also very good at raising issues involving human rights with Government officials. I hope that the hon. Lady will have a chance to meet him when he next comes to see me at the House of Commons. I will, of course, inform her of that visit.

10:05

[Jeremy Corbyn (Islington North) (Lab)]

I am pleased that we are having this debate on UK relations with Saudi Arabia. I was fascinated by the contribution of the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who seemed to manage, towards the end, to draw an equivalence between the social and economic problems and human rights issues that we face in Britain and those in Saudi Arabia.

I remind the hon. Gentleman that more than almost any other country in the world, Saudi Arabia has virtually incalculable financial wealth and that, unusually for the rest of the world, it has a large number of public executions. The death penalty is rife, discrimination against women is systemic, migrant workers are denied any access to representation and frequently face deportation if they protest in any way, and the legal reforms that have been introduced do not apply to 1.5 million domestic workers.

I hope that in his visits to Saudi Arabia as a guest of its Government, the hon. Gentleman is able to raise those issues robustly. I hope that he reminds them that since Saudi Arabia has become a member of the United Nations Human Rights Council, it has had a responsibility to accept the universal declaration of human rights, which includes the rights to free speech, representation, freedom from discrimination against women, religious freedoms, trade union freedoms and press freedoms. A large number of responsibilities go with that, and I hope that the hon. Gentleman’s group will make representations to that effect.

The hon. Gentleman also raised the canard of visits to Saudi Arabia. I freely admit that I have not been to the country. I would be happy to visit on an independent basis. It is possible for parliamentarians to go on an independent basis through the Inter-Parliamentary Union, as he is fully aware. I find it odd that he says that the only way for MPs to visit is as guests of the Saudi Government, but no doubt he, my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) and I will form a delegation, and we can robustly engage on matters of human rights. I am sure that he will be utterly convinced by the arguments put forward by my hon. Friend and me about the need for serious engagement on human rights abuses.

The background to the issue lies in what the hon. Gentleman mentioned at the beginning of his speech: the strategic and economic role that Saudi Arabia plays in the rest of the world. It is the biggest purchaser of arms from this country, and one of the biggest purchasers of arms from the United States, of any country in the world. It has a dubious economic relationship with BAE Systems and others, to the extent that the Serious Fraud Office went to enormous lengths to investigate the al-Yamamah arms contract. Apparently, the investigation was on the point of revealing a lot of corruption, and possibly prosecutions, when the then Prime Minister, Tony Blair—[Interruption.] The then Prime Minister, Tony Blair, intervened, as he had the prime ministerial power to do, and stopped the investigation. Those are extremely serious issues.

These matters have been raised many times in Parliament. On 23 January this year, in a debate in this very Chamber, my right hon. Friend the Member for Cynon Valley (Ann Clwyd), who chairs the all-party parliamentary group on human rights, of which I am a vice-chair, pointed out that although the Foreign Office human rights report was slightly stronger than in previous years, it still remained weak, and that she wished there would be something rather stronger.

The papers and reports produced by the Campaign Against Arms Trade point out that arms sales to Saudi Arabia seem to colour all issues affecting relations with that country; I suspect that the Foreign Office’s “softly softly” approach on human rights and the interference in the SFO inquiry and many others are heavily influenced by the prospect of Typhoon aircraft and other materials being sold. The revolving door of lobbyists from the armed forces, including retired armed forces officers, and of course the influence of our own royal family on exports seem to override everything related to concerns about human rights abuses.

Any other country in the world that did not have the economic clout of Saudi Arabia would be strongly condemned by the hon. Member for Shrewsbury and Atcham and many others, but it is the economic relationship between Saudi Arabia and the rest of the world that heavily influences views on human rights.

[Daniel Kawczynski]

The hon. Gentleman seems to imply that somehow selling Typhoon jets to Saudi Arabia, which obviously provides very important jobs in the United Kingdom, is somehow inappropriate. As a sovereign nation, Saudi Arabia needs to protect herself. She is in an extremely unstable and difficult region, and is potentially threatened by Iran. Are we to leave this very important country defenceless?

[Jeremy Corbyn]

The position of Saudi Arabia in the region is interesting, and I am pleased that the hon. Gentleman has raised the issue. I am sure he would have been concerned, as I was, by Saudi Arabia’s military incursions into Yemen, and perhaps even more concerned by the role that Saudi Arabia played in Bahrain, supporting the King against protesters through the use of Gulf Co-operation Council forces that went into Bahrain—indeed, those forces continue to support the Bahrain royal family. I am pleased that relations with Iran are improving. I hope that the human rights situation in Iran will improve in parallel with those relations, and that any negotiations with Iran are as strong on human rights as they are on nuclear processing or any other issues.

However, the hon. Gentleman must be aware of the very deep concern expressed by many about the volume of funding—some, apparently, from Saudi sources—that has become available to the Islamic State in Iraq and the Levant forces. Again, those forces have incalculable levels of funding compared with many other groups; I am sure that the hon. Gentleman has raised the involvement of Saudi Arabia in the war in Syria on a strategic level with the Saudi Government during his visits there. There is a desperately dangerous situation in the whole region and Saudi Arabia is a very important part of that entire calculation, so surely we need a coming together rather than the funding of more military actions in other countries.

[Daniel Kawczynski]

The hon. Gentleman will know that Saudi Arabia warned Tony Blair repeatedly against intervention in Iraq; he also knows perfectly well that Mr Blair, despite all the Saudi misgivings, chose to intervene in that country—

[Mr James Gray (in the Chair)]

Order. I think that we are drifting rather wide of the topic under consideration, which is human rights in Saudi Arabia.

[Jeremy Corbyn]

Thank you, Mr Gray. I think the question is really about the relationship that we choose to have with Saudi Arabia. Is it to be one whereby we see Saudi Arabia simply as a purchaser from Britain and an exporter of oil, or are we going to have a constructive relationship in which, hopefully, there will be improvements—

[Mr James Gray (in the Chair)]

Order. Having asked one hon. Member to stick to the subject, I wonder whether the hon. Gentleman could now return to the very specific issue of human rights in Saudi Arabia, leaving other matters of international concern to one side.

[Jeremy Corbyn]

Mr Gray, my next sentence was about the question of human rights in Saudi Arabia.

In conclusion, I want to draw attention to the problems facing migrant workers in Saudi Arabia. Saudi Arabia is not alone in its region in having vast numbers of migrant workers who have very limited rights; the economies of most Gulf countries rely almost entirely on migrant workers. I have been involved in UN discussions on migrant workers’ rights, and in the various charters on migrant workers and the International Labour Organisation standards. The number of migrant workers in Saudi Arabia is absolutely enormous and they come from many different countries. Altogether there are 9 million migrant workers in Saudi Arabia.

The 2005 labour law in Saudi Arabia changed the relationship of some migrant workers through the alteration of the kafala sponsorship system, which ties migrant workers’ permits of residency to their employer, but it specifically excluded the 1.5 million domestic workers who are the most vulnerable migrant workers and suffer the highest levels of abuse.

I hope that in this debate we have been able to draw attention to the issues of concern. My hon. Friend the Member for North Ayrshire and Arran made very strong points, and quite rightly so, about the discrimination against and ill treatment of women in Saudi Arabia. She drew attention to the princesses’ situation as an example of how women are treated in Saudi Arabia and I absolutely support her on that. I also draw attention to the plight of migrant workers, the motor of the economy of Saudi Arabia. They clean the dishes, clean the floors, operate in the offices, work in the factories, deliver the oil and do all the other things, and yet they are denied any rights. If at any point they protest about their conditions, they find themselves on a plane home. It is not surprising that the Governments of the Philippines, Thailand and many other countries have protested about the treatment of their citizens in Saudi Arabia, and we should do the same, on behalf of the people who provide such a great service and who work so hard for such little reward in a country that is incredibly wealthy.

I am pleased that I have been able to contribute to this debate. I hope that we will continue to return to these issues and that the Foreign Office will have a much more robust attitude on human rights in relation to every country of the world, irrespective of its wealth.

10:16

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on bringing this matter to Westminster Hall. I put on the record my full support for the view that she has put forward. I, too, want to speak about human rights abuses, including abuses of Christians.

I thank the hon. Lady for her tireless work in drawing our attention to the abuse of human rights in Saudi Arabia. I have followed her dialogue with interest and we have had meetings as well. I have done some research; some may not be aware of the hon. Lady’s pointed question to the Prime Minister on 11 June:

“The Government are willing to take up human rights issues in relation to other countries; why are we not willing to take up cases in relation to Saudi Arabia?”

In his reply, the Prime Minister stated that,

“we give proper priority to human rights and the rule of law, and we raise those issues with all countries, including Saudi Arabia. Our expectation of all states is that they uphold their international human rights obligations.” —[Official Report, 11 June 2014; Vol. 560, c. 582.]

That is certainly a commitment, but there was no real substance with respect to what the hon. Lady was putting forward.

The question that I want to put to the Government today, in particular to the Minister, is this: are the Government really taking up cases relating to human rights abuses in Saudi Arabia to their greatest ability and with the zest that we would wish them to have? Is the British Government’s

“expectation of all states…that they uphold their international human rights obligations”

really felt by the Government of Saudi Arabia? Are we, as a nation, really showing our abhorrence of human rights abuses in the way we deal with the state of Saudi Arabia? Those are my questions, which are about the theme of this debate and what we are trying to pursue.

I want to look specifically at the persecution of Christians in Saudi Arabia; as most Members will know, the persecution of Christians is an issue very close to my heart. I wish to put some concerns on the record. Sadly, it is all too easy to find information about the abuse of Christians in Saudi Arabia. In its list of countries where persecution of Christians is most extreme, the charity Open Doors placed Saudi Arabia at No. 6 in the world; countries do not want to be near the top of that league table, but down near the bottom. Open Doors tells how the open practice of any religion other than Islam is strictly forbidden in Saudi Arabia, and how conversion to another faith is punishable by death. That is the reality of being a Christian in Saudi Arabia.

Saudi Arabia has a population of 29.9 million and there are an estimated 1.25 million Christians, most of them ex-pats from Asia and Africa. Christian fellowships constantly run the risk of being raided and arrested by police, because although the Government recognise the rights of non-Muslims to worship privately, the religious police often do not. That is the reality at a social level and that is the reality of human rights abuse.

Christian migrants suffer added pressure, fearing deportation at any time if they are caught worshipping God in their own houses. Despite there being 1.25 million Christians in Saudi Arabia, the director of the Saudi national Human Rights Commission, Bandar al-Aiban, says:

“Not a single church or other non-Muslim house of worship exists in the country”.

That is because the entire country is a sacred mosque for Islam’s holiest shrines in Mecca and Medina, so all other forms of worship are outlawed. Reality—facts of life. Those who are of Muslim background and convert to Christianity face honour killing if their faith is discovered by their family. Those are the realities of being of a different faith in Saudi Arabia. Let me give a few specific examples.

On 21 January 2011, Yohan Nese, 31, and Vasantha Sekhar Vara were arrested for attending a prayer meeting with other Indian nationals and accused of converting Muslims to Christianity. Religious police interrogated and beat them and they were kept in horrible conditions in prison. On 30 May, Vasantha was released and on 12 July Yohan was released. Both returned to India.

In December 2012, Saudi religious police detained more than 41 individuals after storming a house in the Saudi Arabian province of al-Jouf. A police statement issued on 26 December recorded that they were accused of “plotting to celebrate Christmas”. How ridiculous to accuse people of plotting to celebrate Christmas, when the world celebrates Christmas on 25 December.

On December 15 2011, Saudi security forces arrested 35 Ethiopian Christians in Jeddah who were praying in a home. They were beaten and threatened with death. When the Ethiopian workers’ employers asked security forces why the workers had been arrested, they said “for practising Christianity”. Later, under mounting international pressure, the charge was changed to

“mixing with the opposite sex”.

The hon. Member for Islington North (Jeremy Corbyn) commented on migrant workers. Many of these people have a Christian belief and are being persecuted directly and indirectly for that.

These are only a few of the many instances of human rights abuses against Christians in Saudi Arabia. I want to make it clear that I find it repugnant that such overt cases are prominent in the 21st century. Many charities, such as the Barnabas Fund, Release International, Christian Solidarity Worldwide and Open Doors, as well as NGOs, strive to help and protect those persecuted around the world, including in Saudi Arabia.

What steps are the Government taking to work alongside those organisations and what action have they taken themselves to ensure the safety of Christians? I have had many discussions with the Minister and he has given me a personal commitment on these issues, but today, when human rights abuse in Saudi Arabia is being considered in this Chamber, we need some reassurance. I look forward to his reply.

Freedom of religion, including the freedom to assemble to worship and pray, is a basic right recognised under international human rights law. Yet the Government of Saudi Arabia are ostentatiously flouting that law and it appears that all our Government are doing is sitting back and watching it happen. Will the Minister inform us what further steps the Government will be taking to put pressure on the Saudi Government to prevent continuing abuses? The action currently being taken is clearly not working and clearly not enough. What punitive measures are in place that could be used if Saudi Arabia continues to refuse to comply?

At the third UN millennium summit, King Abdullah bin Abdulaziz defended Saudi Arabia’s position on human rights, saying:

“It is absurd to impose on an individual or a society rights that are alien to its beliefs or principles.”

That is what someone in authority says and it shows that Saudi Arabia is totally unapologetic for its track record of human rights abuses. It feels as though the authorities there do not think that international law applies to them and that they are saying, “Who cares? We don’t have to adhere to it.” But they do and they need to know that they do, because it applies to us all across the whole world.

I hope that our country, in tandem with the UN, is doing enough to emphasise to the Saudis that such actions are out of order, and that it is certainly not absurd to try to protect minority groups in a country. The minority groups that I am talking about are Christian minorities and ethnic minorities—those who wish to practise their religion by worshipping their God, reading their Bible and witnessing to others. That is upheld in international law and it should be upheld in Saudi Arabia. What will the Minister do to change Saudi Arabia’s view of international law? Saudi Arabia has made its stance on human rights very clear.

On 9 March 2013, a Saudi court sentenced two of the leaders of the Saudi Civil and Political Rights Association to at least 10 years in prison. They were charged with

“offences that included sedition and giving inaccurate information to foreign media”.

Such was its commitment to human rights, the Saudi Government then dissolved that human rights group and brushed it aside after jailing those people. What steps were taken by the British Government in response and what are they currently doing to help Saudi human rights groups?

I was pleased to hear the Prime Minister say at an Easter event in April:

“It is the case that Christians are now the most persecuted religion around the world. We should stand up against persecution of Christians and other faith groups wherever and whenever we can”.

I wholeheartedly support and agree with the Prime Minister’s comments, but are the Government standing up against the persecution of Christians and other faith groups wherever and whenever they can?

10:25

[Martin Horwood (Cheltenham) (LD)]

I commend the hon. Member for North Ayrshire and Arran (Katy Clark) on securing this debate and particularly on her work highlighting the case of the Saudi princesses. She is right to do that. She is also right to say that that is just the tip of the iceberg; it is a high-profile case, but other hon. Members have many distressing reports about the denial of human rights in Saudi Arabia.

The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) always puts the strong case that we have an important strategic alliance with Saudi Arabia, that it is important to our energy interests and that, in some respects, it has a positive influence in the region, including supporting peace processes. However, none of this should blind us to the fact that it is in many ways an extremist state itself, for example, in its systematic denial of women’s rights. A large proportion of the population are being denied rights simply on the basis of how they were born. In that regard it might be compared to apartheid South Africa in its denial of rights to black people.

The level of public executions is extraordinary. There are dozens each year, including a few that appear to have involved not just a public beheading but, in the case of some Yemeni convicts, a kind of crucifixion of the dead body after public execution.

There are very limited rights, not only for women, but for political and human rights defenders and for ethnic and religious minorities. There is no penal code, so there is almost encouragement for arbitrary or at least inconsistent dissemination of justice.

The hon. Member for Strangford (Jim Shannon) mentioned the issue of Christians in Saudi Arabia, but there is evidence for discrimination against other religious minorities, including Ismaili and Shi’a Muslims and Hindus, and against atheists as well. Although the hon. Member for Shrewsbury and Atcham said that the kingdom was in a process of reform, only in April a law was passed that categorised those who called for atheist thought in any form—thoughtcrime, as George Orwell might have called it—or called into question the fundamentals of the Islamic religion in any way, even entirely peacefully or even in an academic way, as facing 20 years’ imprisonment and placed them in the same category as violent extremist groups, such as al-Qaeda. That is not a reform process as I understand it.

[Daniel Kawczynski]

One delegate on our recent trip was the former leader of the hon. Gentleman’s party, the right hon. and learned Member for North East Fife (Sir Menzies Campbell), who said that since his last visit to the kingdom in 1980 the country had completely changed beyond his recollection. He was pleased with some of the changes regarding human rights that were taking place. I urge the hon. Gentleman to talk to his former leader about this. Does he not agree that there have been changes and that the Saudi Government are moving towards greater human rights?

[Martin Horwood]

I can accept that there are changes. I will certainly talk to my right hon. and learned Friend, who is a fine advocate for and defender of human rights. I should imagine that he would be as disappointed as I am about the changes in the other direction, such as the new laws promulgated in April.

I am afraid that the very conservative form of Wahhabi Islam that is prevalent in Saudi Arabia leads the country down some of these paths. The very strict interpretation of the Hadith—saying that

“there can be no two religions in the Arabian Peninsula”—

leads it into an intolerant attitude towards other religions and beliefs that is not typical of Islam in general and is certainly not historically true of Islam. The fundamentalist trend in Saudi Arabia is disappointing and makes it an unlikely ally in some ways in the battle against radicalisation and extremism.

The madrassahs in Saudi Arabia, for example, might have been responsible for nurturing some of the theological ideas that lie behind the violent Salafist movements. I am not suggesting that the Saudi Arabian Government in any way supports those movements, but it is clear that that religious environment has been one of the breeding grounds for that very extreme and conservative form of Islam. Various private individuals and some Governments in the Gulf are undoubtedly not as discriminatory as this Government in their support for, for instance, the rebel groups in Syria. We are clear that we support the democratic opposition in Syria and those who advocate a moderate and democratic state. Some of our apparent allies in the Gulf are not quite as discriminating. Even in terms of its influence in the region, it is not as clear as it was once that Saudi Arabia is an entirely positive influence.

We have to be careful. We have allies and strategic interests all over the world, and although it is right to be as diplomatic as we can be with those who have some questionable human rights records, we have to be clear that the Government stand up for human rights and have an ethical foreign policy. We also have to think carefully about what it means to be an ally. At some level, there has to be some basis in shared values and, in the case of Saudi Arabia, it is sometimes difficult to see what those values are.

Before I sit down, there are a couple of cases I will mention, which relate to particular human rights defenders. The hon. Member for Shrewsbury and Atcham implored us not to listen only to Human Rights Watch, Amnesty International and foreign organisations. We should listen to the Adala centre for human rights. It is a Saudi organisation and has reported beatings, arbitrary arrests and the torture of peaceful protesters. It accused the general intelligence agency of violating international, domestic and moral laws and one of its founders, Fadhel Maki al-Manasif, was convicted of breaking allegiance with the King and contact with foreign news agencies, which is not a crime in many countries. The Foreign and Commonwealth Office should take up his case with urgency, along with the cases of Mohammed al-Qahtani and Abdullah al-Hamid, who were also imprisoned simply for advocating the kind of human rights that we in this country take for granted.

The FCO has been good, despite the political and economic inconvenience of reporting on human rights, at continuing to include Saudi Arabia among its countries of concern in its annual human rights report. I am proud to support a Government who raise those issues, but it seems to me that the Kingdom of Saudi Arabia has many, many questions to answer. We should be asking those questions.

10:33

[Ian Lucas (Wrexham) (Lab)]

First, I congratulate my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) on securing this important debate. Its importance has come through this morning. She works consistently hard to raise the profile of human rights broadly, across different countries. As we have heard, human rights is a major issue in Saudi Arabia. She takes a balanced and indiscriminate approach to human rights, regardless of where the issues arise. It is important that that consistency characterises our general approach to human rights. While governance should always pay respect to different cultures and different Governments run countries in different ways and have different backgrounds, the rule of law must be a fundamental pillar of proper government, and respect for human rights must be an essential part of that.

As we are discussing Saudi Arabia, I refer briefly to the tragic death of Nahid Almanea, a Saudi student who Members may know was studying for a PhD at the university of Essex and was killed last week. Our thoughts are with her friends and family at this dreadful time, and we all hope that the perpetrator is brought to justice very soon.

It is right to promote a principled approach to foreign policy, firm in its support for the rule of law, individual rights and freedom of expression. That agenda is about promoting the UK’s standing on the global stage, so that the views of our Government are respected abroad, and achieving a fairer and more prosperous UK, where our citizens know that individual rights are valued and respected. Importantly, our approach to those important issues should extend to and guide our foreign policy and our leadership on international matters.

A key and difficult challenge for every Government is on striking the correct balance between the UK’s commercial interests and human rights overseas. During the debate I was reminded how, shortly after assuming office, the Prime Minister asserted his commitment to

“a more commercial foreign policy”

and to

“placing our commercial interests at the heart of our foreign policy.”

Meanwhile, the Foreign Secretary claimed that the

“promotion and protection of human rights is at the heart of the UK’s foreign policy objectives.”

Will the Minister clarify the major principles guiding UK foreign policy? I would also like to know, given the apparent differing in departmental priorities, how any tensions that arise are managed.

Saudi Arabia is an extremely relevant example of the important balance that must be achieved in the approach to foreign policy. The country is of huge strategic importance to the UK and the middle east. The UK and Saudi Arabia share a close economic and diplomatic relationship at a very difficult time. The country has long been a key strategic ally in the middle east, and the current Government have continued that relationship and prioritised the promotion of exports to Saudi Arabia and other Gulf countries. Under the previous Labour Government I served as a business Minister, so I know the business importance of Saudi Arabia to the United Kingdom. I am fully aware of the importance to British industry of the commercial relationship between the two countries. It is important, however, that we continue to engage with Saudi Arabia not only in business, but on the political situation in the area and human rights.

At a time of profound change in the Gulf countries and, indeed, the whole region, Saudi Arabia is influential and has a key role to play. There is also much scope for engagement on issues relating to global security, technology and climate change. We must ensure, however, that in our relationship due precedence is given, as the Foreign Secretary said, to the key principle that the

“promotion and protection of human rights is at the heart of the UK’s foreign policy objectives.”

The hon. Member for Strangford (Jim Shannon) referred to religious persecution and the treatment of Christians, although other religions in Saudi Arabia are persecuted in a similar way. It is terrible that people were arrested for attending a prayer meeting—what a dreadful thing to hear. The Saudi Arabian Government should know the impact that that has on people in the United Kingdom and how it colours the perceptions of our constituents when we talk about the middle east. The Christian charity Open Doors currently ranks Saudi Arabia sixth on its world watch list. Members will know that conversion to a religion other than Islam is punishable by death in Saudi Arabia.

There is real concern about the treatment of women in Saudi Arabia. I have spoken to women from other countries in the Gulf who are profoundly frustrated that the world sees the region through the prism of the treatment of women in Saudi Arabia. They are frustrated and say that it is a huge barrier to progress for women across the middle east. They believe that the Saudi Arabian approach distorts the perception of the role of women in the region. I was pleased to hear the figures on university attendance to which the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) referred, but it is difficult to get past the idea that graduates are not allowed to drive a car. Until that is addressed, the perception of Saudi Arabia and its treatment of women will remain as it is today: disappointing.

[Daniel Kawczynski]

If the hon. Gentleman does not know about it already—I am sure that he does—I hope that he will read up about the multi-faith dialogue conference being promoted by the King that will bring together leaders from all religions for discussions to examine how different religions can work together in the region.

[Ian Lucas]

I am pleased to hear that. I am a strong advocate of engagement and am glad that groups and individuals in Saudi Arabia are looking to promote a more diverse approach to different views, opinions, faiths and beliefs. However, we want more to happen and we want faster progress. The arrest of individuals for attending prayer meetings and the treatment of migrant workers shows that progress is not fast enough.

[Jeremy Corbyn]

I thank my hon. Friend for making that point. One way of achieving that might be through a constructive presentation of the need to sign up to migrant workers’ charters and International Labour Organisation conditions, which could form the basis for the treatment of workers in the country.

[Ian Lucas]

In an increasingly globalised world, international recognition of workers’ rights, wherever they work, is an important step that needs to be taken. International progress is lagging in a world in which more and more people are moving around and working in different places. Recognition of international charters would be a good step.

[Jim Shannon]

Picking up on the point made by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) in his intervention about the Saudi Government holding a conference, it is important that what they say at the top filters right down to the bottom, and that the police and local authorities ensure that people have freedom of expression and of religion, which they clearly do not have at the moment.

[Ian Lucas]

It is important that there is cultural change to ensure that views other than the prevailing are respected and that due precedence is given to minorities at all levels in society.

We have heard already that Saudi Arabia has been designated a country of concern in the Foreign and Commonwealth Office’s “Human Rights and Democracy Report 2013”. The Foreign Affairs Committee has published a report into UK relations with Saudi Arabia and Bahrain, and I share its concern about the human rights situation in those countries and agree with many of the questions that it asks about the Government’s approach. It would be helpful for the Government to clarify what recent assessment they have made of Saudi Arabia’s compliance with the UN convention against torture. More generally, what is the Government’s policy on ministerial and prime ministerial visits to countries of concern? What is the FCO’s guidance on arms exports to countries of concern?

I want to discuss the case of the princesses, which was ably set out by my hon. Friend the Member for North Ayrshire and Arran. I have met Princess Alanoud and have raised the issue privately with the Minister, for whom I have a great deal of respect, but I have been dissatisfied with the responses that I have received about how to resolve this upsetting case. The Government seem reluctant to make any representations to the Saudi Arabian Government about the matter. Will the Minister clarify whether he has made any such representations? I am delighted that the hon. Member for Shrewsbury and Atcham would form part of a delegation on the matter and I would be happy to join such a delegation. The particulars of this case are upsetting and are causing great damage to how Saudi Arabia is viewed. The matter needs immediate attention.

During the United Nations Human Rights Council session in Geneva in March, Saudi Arabia accepted recommendations to improve its human rights record. Progress is being made and the hon. Member for Shrewsbury and Atcham referred to the steps that he thinks are being taken. A profound problem still remains, however, and the Government seem reluctant to raise such issues directly with Saudi Arabia. That reluctance does not extend to incidents in other countries, such as the recent tragic case in South Sudan and cases in Iran. If the United Kingdom is to speak with authority on human rights issues, it is important that it is consistent across the middle east and the world. From my travels in the middle east, I know that what we say is undermined if we apply different standards in different situations. Our approach to human rights in Saudi Arabia must be consistent and authoritative and we must be clear that human rights are central to our relationship with the kingdom and that matters must improve substantially.

10:46

[The Minister of State, Foreign and Commonwealth Office (Hugh Robertson)]

I thank the hon. Member for North Ayrshire and Arran (Katy Clark) for securing this debate. I join the shadow Minister, the hon. Member for Wrexham (Ian Lucas), in offering sincere condolences to the family and friends of Nahid Almanea, the Saudi Arabian student who was tragically killed in Colchester last Tuesday. I am sure I speak for everyone in saying that our thoughts are with her family.

Before I address the individual contributions made in the debate, it may be helpful to set out some of the current political dynamics that influence our relationship with Saudi Arabia. The UK’s relationship with Saudi Arabia is a long one, and this debate is timely, as the kingdom prepares for the holy month of Ramadan, Saudi Arabia of course being the worldwide centre of the Islamic faith for the UK’s near 3 million Muslim citizens. Many thousands of Britons will visit Saudi Arabia this month during the Hajj period. Some 16,000 Saudi students are currently studying in the UK. As others have mentioned, the UK also has a strong bilateral trade relationship with Saudi Arabia. I am not sure whether the hon. Member for Wrexham will believe me, but I can reassure him that that is not the only thing that guides our relationship. Saudi Arabia is a key strategic partner in the region and our relationship is not simply about selling military hardware. Both the UK and Saudi Arabia have seats on the UN Human Rights Council, which is one of the many areas in which we work with the Saudi Government on issues of mutual interest.

All that said, today’s debate has shown some of the fault lines and judgments involved in the relationship. We have a frank and robust relationship with Saudi Arabia and the breadth and depth of the relationship matters to both sides. The relationship is at its most acute where we have shared priorities in foreign policy, defence, energy and counter-terrorism, and is underpinned by close personal and institutional ties. That does not mean that any particular issue is off limits, however. When we have concerns, we make them clear to the Saudi Arabian authorities, just as the Saudi Arabian Government are frank with us when they disagree. The review of the Muslim Brotherhood, as mentioned by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), is one such area.

To make it clear and put it on the record, we regularly make our views on human rights known through the UN’s universal periodic review process and the Foreign and Commonwealth Office’s annual human rights and democracy report, which many hon. Members mentioned. Saudi Arabia continues to be a country of concern and we represent those concerns to Saudi Arabia at the very highest level. However, we have to balance that with the point my hon. Friend made: this is a country with widely held conservative social values. In a sense, the judgment we always have to make in trying to make progress is whether it is best to highlight a case publicly and make a fuss or to try to effect change through private diplomacy. We will come to the princesses in a minute, but the hon. Member for North Ayrshire and Arran made the point that highlighting the case in public actually made their conditions worse, so standing up and shouting at people is not always the best way to effect change.

Let me go through the various contributions and try to address some of the points that were made. I have touched on the issue of the Saudi princesses, and the Government line will not, I am afraid, move from the one I have set out, but that does not mean these issues are not raised. I would absolutely encourage the hon. Lady to make use of the offer to go to speak to the Saudi embassy. As I say, however, there is always a real judgment over whether change is best effected by public or private diplomacy. Where we need to conduct private diplomacy, we are not shy about doing so.

[Katy Clark]

I would just advise the Minister that private representations have been made for more than a decade, but they do not seem to have been successful. Obviously I encourage the Government to use any avenues available to them to continue to raise this case.

[Hugh Robertson]

It is a point well made and one that I have clearly taken on board.

I thank my hon. Friend the Member for Shrewsbury and Atcham for his work with the all-party group, and I wish him good fortune in expanding the number of people on his visit next time round. However, there is a serious point here. He is absolutely right that although Saudi Arabia is a deeply conservative country, powerful elements in Saudi society are trying to change the way it approaches these things. By far the best way for people in this House to help to effect change in Saudi Arabia is to engage constructively with the system to see what we can do to help, but that does not mean that we have slavishly to agree with everything that is said or to accept every single explanation. Going there and questioning things is absolutely the right approach.

My hon. Friend helpfully highlighted some of the improvements in women’s rights. He mentioned the appointment of female Shura council members. There is also the right to vote and run in the municipal elections in 2015, which is the first time that option has been open to women. In 2013—the last reporting year—more women than men were in tertiary education, which is an extraordinary statistic. Many had enrolled via the King’s scholarship programme. In terms of effecting change over the longer period, that is an extraordinarily encouraging statistic.

It is always a pleasure to hear the hon. Member for Islington North (Jeremy Corbyn) speak. He asked specifically about migrant workers, and I absolutely acknowledge that there is some way to go. In a sense, however, as with other issues we have touched on, there is some progress, albeit not enough. He will be aware that the recent legal reforms have tried to improve migrant workers’ most basic rights. Such workers are now paid at least monthly and they have access to their own identity documents.

The hon. Gentleman also highlighted the issue of domestic workers, and they must now have at least nine hours’ rest a day and a day off a week. Those are small, incremental steps and they are not enough, but at least some progress is being made. In addition, Saudi Arabia finally became a member of the International Association of Labour Inspection on 12 June. I therefore take the hon. Gentleman’s point that not enough has been done and he is right to highlight that; again, however, there is some progress.

At the risk of annoying you, Mr Gray, let me touch on the issue of ISIL. I think it is clear that the ISIL we thought we were dealing with two weeks ago is not the one we are dealing with now. There are terrorist elements in it, but there are also a considerable number of Ba’athists, ex-Saddamists and tribal members—it is a very different body from the one we originally thought we were dealing with. However, let me move swiftly back to the subject of the debate.

On many occasions, the hon. Member for Strangford (Jim Shannon) and I have discussed Christians’ role in the middle east and what they are subjected to. As I have told him, I have made it a mission of mine to make contact with Christian communities when I am in the middle east. Indeed, I took time out during a meeting of the international contact group on Libya to visit the Holy See to co-ordinate our activities in the region. So far, I have managed to make contact with the Coptic Christians in Egypt and Christians in Jordan, and I am going to see members of the Christian community in Lebanon next week. I give the hon. Gentleman an undertaking that I will continue to raise the plight of Christians in the area. I have enormous sympathy with his point of view.

I thank the hon. Member for Cheltenham (Martin Horwood) for his very balanced contribution, which, in a sense, showed the dilemma that underpins the whole debate. He raised a number of cases, which I will be happy to take up if he wants to write to me. I will look into them personally and get him a proper answer.

The hon. Member for Wrexham returned to a theme that many people have touched on. The difficulty is not only striking the right balance, but finding the right way to pursue our foreign policy objectives. Having spent a year in the Foreign Office, I am not necessarily sure I have spotted a contradiction between the desire to promote Britain’s commercial interests around the world and a values-based foreign policy. Where the issue is most acute—to be completely honest with him—is over arms exports, and we rigorously follow the guidelines. The Foreign Affairs Committee hauls the Foreign Secretary in front of it at least once a year to go over the issue, and the Committees on Arms Export Controls—CAEC, as they are known colloquially—do a similar job. As a Foreign Office Minister, I am very conscious—I deal with them regularly—of the legal advice and rules that underpin our decisions, and I can promise the hon. Gentleman that we follow them scrupulously.

The hon. Gentleman asked about the Foreign Office policy on ministerial visits to countries of concern. As I said, in a sense, in my answer to my hon. Friend the Member for Shrewsbury and Atcham, the Government would encourage people to engage with countries of concern. I really believe—this is a self-fulfilling element of being a Foreign Office Minister—that, through contact with countries, we give ourselves the best chance of effecting change.

I have talked about arms export licences. As I say, we abide by the rules. I appreciate that the assurances I have given about the princesses will not be enough, but there is a judgment as to whether to pursue the issue publicly or privately. Unless there are any other issues, I will return to where I started: I thank the hon. Member for North Ayrshire and Arran for bringing about this important debate, and I thank all Members who have taken part in it.

Government Child Protection Policy

Tuesday 24th June 2014 Westminster Hall

10:57

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

Child protection scandals of recent years have generated a lot of media coverage, putting the sexual abuse of children in the spotlight. However, as we know, the issue is not confined to history, and nor does it involve only celebrities as perpetrators. Children are still being abused by family members, by their peers and in institutions that are meant to care for them. The focus for professionals, politicians, the media and the public must be on the children who are suffering now. We must shine a light on what sexual abuse is, where it takes place, what can be done to prevent it and how we can support abused children.

We know that 90% of children who have suffered sexual abuse have been abused by someone they know, with the vast majority of abuse taking place in the home. In 2012-13, the ChildLine service run by the National Society for the Prevention of Cruelty to Children found that nearly half the young people who rang about sexual abuse said the perpetrator was a family member. One teenage boy said:

“I often think about killing myself because of what my brother does to me. He has been physically and sexually abusing me for years. It makes me wish my life would end. I’ve told my parents about what my brother does to me but they’ve done nothing—I don’t understand. I feel so depressed.”

Social workers, teachers and other practitioners must be trained to recognise the indicators of intra-familial sexual abuse, know how to communicate with the child, and give them space and time to explain what has happened.

Abuse in young people’s romantic relationships appears also to be increasing, as does sexual coercion within gangs and groups of young people. The number of reported sex offences by those under 18 has risen by 38% since 2009-10 and two thirds of sexual abuse is perpetrated by under-18s.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on obtaining the debate. Can she clarify something? There is no single piece of legislation on child protection, but numerous laws and items of guidance; so should things remain that way, or should we change them? It is a horrendous situation when children are abused.

[Meg Munn]

That is a complicated area and I was not going to address it specifically today. Probably, rather than throwing everything up in the air again, we need very clear guidance. I know that the Government have been seeking to provide that, but there is always a need to keep it under review and seek ever greater clarity.

To return to the question of sexual abuse within relationships, one young girl said:

“My boyfriend was really abusive to me and we used to get into massive fights and stuff. The other week it went a bit further and he forced me to do sexual things to him that I didn’t want to do. I’m terrified of him and I don’t want to see him again. I don’t want to tell the police about it because I’m scared of what might happen. I talked to my teacher about it and she just told me she would catch up with me later about it but never did.”

The Jimmy Savile scandal about the extent of abuse in institutions shocked the nation. It highlighted the importance of adults being able to report concerns they have about children to the relevant authorities. Research has shown that even when individuals have a concern they often take no action, fearing that they will not be believed or taken seriously. The dynamics of power and secrecy so often present in incidents of abuse are magnified within an institutional setting. Those factors, combined with the often hierarchical nature of institutions, make it even more important that there should be strong safeguarding policies alongside a clear culture of communicating with and listening to children.

One child said:

“I really struggle to talk to anyone about being sexually abused. It happened for a few years so I feel like it took my childhood away. I feel really ashamed that it happened to me—I’m unable to cope. I want some support but I don’t know what kind of support I need or what will even help. I just can’t carry on like this.”

That boy was aged 17.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend will recall the case of Baby Daniel, in Coventry, about 18 months ago. Something struck me, to do with not only child abuse but child health matters; I have always thought that perhaps someone from outside the school setting, with a medical background, could look at a cluster of schools and look for the signs of abuse going on, whether physical or medical. What does my hon. Friend think about that?

[Meg Munn]

The heart of the issue is for there to be a greater number of people with an understanding of child abuse and what to look for. A particular aspect of that is not immediately thinking that something is wrong with the child. Daniel, obviously, was very young, but sometimes older children are treated as naughty or difficult. The distress and the issues that come up can be indicators that all might not be well within the family.

In autumn 2013, the all-party group on child protection launched a seminar series on the three areas I have just outlined: intra-familial abuse; peer-to-peer sexual abuse, including young people’s harmful sexual behaviour; and prevention of child sexual abuse within institutions. We invited experts and front-line practitioners to share their knowledge with parliamentarians so that we could better understand what needs to be done to improve support to children who have experienced sexual abuse and to prevent it from happening in the future. However, the most powerful testimony was listening to the experiences of children who had been sexually abused.

We recognise that there has been welcome progress in recent years, but we are concerned that the Government are not addressing the issue holistically. Our findings show that the complicated relationship between different forms of abuse necessitates a unified response. That is not currently happening. The all-party group fears that without a clear, coherent approach that links work across Departments, children will not receive the support they require, and that opportunities to prevent problems are being missed.

I am grateful to the Children’s Minister for the recent meeting to discuss the report and for his commitment to consider our concern. Our report outlined six key recommendations that would, I believe, bring the focus back to all aspects of child sexual abuse, and promote a clear and consistent approach to protecting children and young people.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

My hon. Friend knows as well as I do that ChildLine, which has been going for some years, has been a good influence. Does she believe that a neutral child line in every local authority would help to bridge the gap for children who are terrified of talking to anyone?

[Meg Munn]

ChildLine certainly makes it much easier for children to raise the issue. The work it does in providing an ear for children is the right way forward. I am not sure whether it would be appropriate for every local authority to have a child line. Some local authorities have in the past considered a phone number providing a complaints system for children being cared for within the authority. I agree that it is an enormously important area. We did not consider it this time in our report but it would be good to examine best practice and what happens in local authorities that investigate complaints they receive from children. Perhaps the Minister will comment on that.

The report and recommendations are available in hard copy and also, thanks to the NSPCC, on its website. The recommendations must be set in the context of greater interministerial working, with action plans for all areas to ensure that every child who has experienced sexual abuse gets the support they need. It is only in that context of a joined-up action plan that a truly preventive model can be developed. The recommendations are for a review of the information-sharing guidelines issued in 2009; for the Home Office national working group on sexual violence against children and vulnerable people to prioritise the issue of harmful sexual behaviour—defined as abuse by children and young people against other children and young people; for the Department for Education to work with education providers and local safeguarding children boards to make sure that priority is given to specialised sexual abuse training for social workers and teachers; for better and more consistent support for victims of child sexual abuse to be available, from disclosure through the entire court process and beyond into therapeutic support; for the Government to improve whistleblowing processes by promoting the whistleblowing code of practice and improving training and support for professionals; and for the Government to work with professional disciplinary bodies and other expert bodies to consider forms of institutional duty on leaders of institutions to report allegations of abuse. I know that the Minister is committed to developing an effective service and therefore I ask for his response to the recommendations.

Finally, I want to talk briefly about the Government’s recent consultation on allowing greater outsourcing or delegation of children’s services. The all-party group did not consider that, so I am giving my personal views. Most of the responses to the consultation raised the issue of privatisation and seeking profit out of child protection services. I welcome the Government’s speedy response that the range of functions in question can be delegated only to non-profit-making organisations. I recognise that many services are already provided by such organisations, and that that can be beneficial. However, there is a big difference between providing therapeutic services to children and being responsible for the investigation of suspected child abuse. The Minister has been clear in parliamentary answers to me that local authorities will continue to be responsible for child protection investigations even if they delegate them to someone else, and will therefore remain responsible for quality.

I caution about going down that route, however. Reviews into the deaths of children over the past four decades identify the same key contributors: poor communication and sharing of information. Even more problematic is the point at which a case is referred from one local authority to another—a danger point for children and for continuity of service. Surely delegation of that responsibility would exacerbate the risks, building in another layer of accountability, monitoring and checking. I ask the Minister to consider the special nature of child protection investigations.

[Mr Sheerman]

On that point, does my hon. Friend agree that in child protection we want the best service possible? That is usually delivered by a locally and democratically accountable children’s service, maintained by highly skilled and highly trained professionals who are rewarded, led and managed well. It is about having a culture of excellence. Does she agree that the designs to introduce outsourcing could destroy that culture?

[Meg Munn]

I entirely agree with my hon. Friend, who makes an important point. I know that the Minister is concerned when local authorities do not deliver that high standard. I believe strongly that this sector is the responsibility of local authorities, and that if they are failing, that should be dealt with not by delegation but by the kind of action the Government have taken in various situations. I am not judging those particular situations—it is not for me to do so—but I believe that if there is an issue with local authority services in child protection investigations it should be dealt with through the offices of the Children’s Minister and not through delegation.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

My hon. Friend mentioned that in the Minister’s response to her he stated that non-profit organisations would be involved. Was he explicit about which organisations those would be? I have worked in a lot of local authority child protection teams, and know the level of expertise that is there. I am struggling to see what expertise there would be in non-profit organisations.

[Meg Munn]

I was referring at that point to the Government’s response to the consultation, which as I understand it relates to the whole range of services that could be delegated. I am sure my hon. Friend will know of good examples of therapeutic services, for example, being run well by charities and third-party organisations. But responsibility for child protection investigations is an entirely different thing. I put it to the Minister that that should be exempted from further delegation.

I suggest that the Government avoid regulating in haste and ensure that there is fuller consultation on the draft regulations. The consultation itself was only six weeks long. The opportunity for thorough consideration must not be lost. I also suggest to the Minister that the regulations should be subject to the affirmative procedure to ensure that Parliament has the opportunity to scrutinise this important area of work properly.

11:13

[The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)]

It is a pleasure to serve under your chairmanship, Mr Gray. I thank the hon. Member for Sheffield, Heeley (Meg Munn) not only for calling this important debate but for her assiduous work in preparing for it and for the work that she has carried out in her own constituency and Parliament on child protection. Her speech was measured; it was also moving in parts, with recollections of some of the horrific abuse that children have suffered at the hands of adults and, in some cases, other minors. She has put forward a strong and coherent argument for keeping our gaze firmly fixed on the children who are the victims in all this.

Following on from our meeting last week, I hope I can reassure the hon. Lady that I share absolutely her passion for protecting children from the appalling form of abuse she raised, as well as other kinds of abuse and neglect. That is why we are taking action not just within my own Department but right across Government to learn the lessons from past mistakes, to see how we can improve the services that are there to protect children, and to make sure that professionals have the capability and the space to spot the signs of abuse and that they know how to act on those signs.

I will try to address the points the hon. Lady raised, in particular the key recommendations of the report by the all-party group. If I do not cover a point in sufficient detail to satisfy her, I will of course write to her. Many of the report’s recommendations are directed at other Government Departments and I will endeavour to ensure that they play their full part in providing a full and proper reply.

[Mr Sheerman]

Before the Minister moves on to the specific points raised in the report, I should say that in this very room only a month or so ago there was a harrowing session on children’s access to pornography, involving some very good campaigners. Does he think that that problem might be partly responsible for some of the early sexualisation of children and the behaviour that my hon. Friend the Member for Sheffield, Heeley (Meg Munn) described?

[Mr Timpson]

I sit as one of the co-chairs of the board of the UK Council for Child Internet Safety, an organisation that has done some excellent work in grappling with precisely the issues the hon. Gentleman raises, as well as pushing internet service providers, and others who are there to protect children online, to do more to make sure that they are protected.

As a result, there is clearly more enriched research into the causal link between exposure to pornography and possible impacts on behaviour, attitudes and boundaries among children. We are learning more about how one affects the other and it would be remiss of us not to look more carefully at what more we can do to try to prevent some of the appalling consequences of exposure to online pornography and other forms of abuse that children, unfortunately, find more readily accessible now than was the case in the past.

[Mr Sheerman]

Will the Minister give way?

[Mr Timpson]

Very briefly—I want to address the hon. Lady’s points.

[Mr Sheerman]

Just to push the Minister on that, my constituents are appalled not only about online pornography but about what is available on their television screens through Freeview. What will he do about that?

[Mr Timpson]

That is another area of advanced technology where we cannot simply maintain the status quo in our response, especially as smart TVs are becoming more prevalent on the market. A strand within the UKCCIS board is working specifically on how we can better ensure that anything broadcast through that medium is controlled more readily than it has been in the past. Of course, we need to do much more work to keep up with fast-moving changes in technology. I will happily write to the hon. Gentleman with more details if that would be helpful.

The all-party group’s report recommends a whole host of important considerations for various parts of Government to take forward. The hon. Member for Sheffield, Heeley touched on a number and I will address a few in the time I have available. One was about information sharing—an issue that goes to the heart of the problems that underlie the failure that too often occurs in child protection. Anyone who sits down and reads a serious case review will see a common theme, as information sharing is often at the heart of why things have gone horribly wrong in the particular case.

The report recommends that guidelines on information sharing should be reviewed to ensure that professionals are clear about when data should be shared in the interests of children. I entirely agree that early sharing of information is key to providing effective early help to vulnerable children and adults. Of course, changing structures alone will not make children, or indeed adults, safe, and it is not enough simply to improve IT systems. It will be skilled professionals, who can identify problems early, working together under locally agreed and enforced arrangements, who will bring about effective information sharing.

In a number of initiatives, local partners are working in innovative ways to share information and knowledge about a child and their family, resulting in the better delivery of co-ordinated services. One such model, which I know the hon. Lady will know of, is the multi-agency safeguarding hub, or MASH, which can draw on information across all agencies, enabling them to provide a better informed referral process. Local authorities such Staffordshire, which was recently rated good by Ofsted, have made effective use of the MASH model to strengthen local partnership working and to provide better safeguarding services for children.

An independent report into the effectiveness of MASH was commissioned by the London safeguarding children board, and found that turnaround times for child protection cases involving children with high or complex needs had almost halved in some areas since the London MASH programme began in 2011. However, that is just one model, which allows services to work together in a co-ordinated way.

The hon. Lady referred to the statutory guidance published last year—the “Working Together to Safeguard Children 2013” guidance. That was revised to try to make the legislation and its requirements as clear as possible so that all organisations know what the law says they and others must do. The guidance provides the essentials to enable and encourage good cross-agency working so that all organisations understand what they should do to provide a co-ordinated approach to child protection.

The all-party group notes that different Departments lead on different aspects of the work to protect children from abuse. I understand the point; if responsibilities are not clear, whether in local or national Government, I will be happy to explain from the national perspective how my role fits with those of my colleagues. When I met the hon. Lady last week, I gave her what I hope was a clear read-out of where that responsibility lies. My Department has overall responsibility for reforms to the child protection system, professionalising children’s social care services and making life better for children in care and leaving care.

Bringing about the sort of changes we want in tackling sexual abuse of children requires a much broader programme of work involving several Departments, and that is reflected in the recommendations in the all-party group’s report. That is why the Government set up the cross-Government national group on sexual violence against children and vulnerable people, its purpose being to take forward much of the urgent work needed to address the missed opportunities to protect children and vulnerable adults. That national group is a board of leading experts from relevant agencies: the inspectorates, the police, voluntary and community organisations and senior colleagues from across government. Through the group, the Government are committing resources and important energy to meet significant safeguarding challenges, including child abuse, trafficking, missing people and child sexual exploitation, as well as managing sex offenders and tackling online pornography and paedophile literature.

[Meg Munn]

I am grateful to the Minister for explaining some of the detail to me last week. One of the driving forces behind the report is the need to understand that a child who has perhaps been abused at home is much more vulnerable to abuse by peers and the likelihood of being exploited. I seek reassurance that the work of the Minister’s Department, which is welcome, in the more mainstream areas of social work is not divorced from what is happening in the cross-Government group.

[Mr Timpson]

The hon. Lady is absolutely right. In my previous job as a family barrister, all too often I came across the whole issue of intrafamilial sexual abuse that she spoke about. There is an opportunity through the group’s action plan to raise the matter more readily within it and to consider harmful sexual behaviour among young people where it is more likely to occur, and what our response is on the ground. I am happy to give her an undertaking to raise the matter in that group so that it is much more at the forefront of the thinking not just of the action plan, but the following action. Although the issue does not receive the same level of interest as some more high-profile cases, it is more embedded in society and we must find better ways to talk about it and ways to tackle it.

The hon. Lady alluded to the all-party group’s recommendation for my Department to ensure that higher priority is given to specialised training for social workers and teachers in spotting the signs of sexual abuse, including through the work of local safeguarding children boards. This is an area on which several LSCBs have made good progress. For example, last year I visited Oxfordshire county council, which has delivered specialist training for staff across agencies on child sexual exploitation, on the back of some horrific cases in the city of Oxford, as well as producing a professional handbook and a screening tool to help staff to spot the early signs of grooming and to take action.

More broadly, the Department for Education is taking forward a broad range of work to improve the skills and knowledge of front-line professionals. Isabelle Trowler, the first chief social worker for children and families, is leading work to define what a child and family social worker needs to know to practise effectively. That includes being able to identify and respond to sexual abuse and specific forms of child sexual abuse. If the hon. Lady would like to talk to the chief social worker about that area of her work, I will do what I can to make that arrangement. A final draft of the knowledge and skills document will be completed in the summer, following which we will consult widely to ensure that it accords with other people’s views.

Higher education institutions that deliver social work degree courses are required to ensure that newly qualified social workers are able to analyse and evaluate information, assess risks and intervene appropriately, so that they can give effective support to children and young people who have experienced sexual abuse. Following Sir Martin Narey’s review, we are overhauling the training and education of social workers to give trainees the expertise they need and employers more confidence in newly qualified recruits.

We have also launched the new fast track front-line training programme to attract the brightest and best to social work. We have spent more than £400 million on the social work bursary and our Step Up to Social Work programme—I have just announced the fourth cohort—is to ensure that we have enough highly skilled staff to meet demand.

[Mr Sheerman]

I remember when all three of us—the Minister, my hon. Friend the Member for Sheffield, Heeley and I—were on the same Committee, and one thing that we were really worried about when we looked at the training of social workers was their experience on the job. So many of them did not have relevant experience in a demanding local authority team. Is the Minister doing anything about that work experience?

[Mr Timpson]

Part of the issue is recruitment and part is retention and keeping experienced social workers on the front line not just managing cases, but being involved in the daily work required to ensure that families keep children safe and make progress. The assessed and supported year in employment programme—the ASYE—enables newly qualified social workers to feel supported enough to gain that experience and not drift out of social work because of the pressure they are under.

We also now have principal family social workers moving into all local authorities so that there is a lead social worker, who may previously have moved up into management all too readily. One advantage of some of the flexibilities of delegated functions is, as in Staffordshire with the Evolve YP social work practice scheme, a much flatter management arrangement so that senior social workers are active in the expertise and professionalism that brought them into social work in the first place.

The all-party group also recommended that the Government should lead on providing better and more consistent support for victims of child sexual abuse. It must be right that every victim of sexual violence has access to adequate service provision that meets their individual needs and supports them in coping and recovering, particularly in relation to children. To help children who have been trafficked, the Home Office has announced proposals to trial specialist independent advocates, and I am sure that the hon. Lady is aware of that. A new code of practice for victims of crime came into force in December 2013 and will give victims of crime clear entitlement from criminal justice agencies and will better tailor services to individual need. It contains a section dedicated to the needs of children and young people.

The Government’s review of ways to reduce the distress to victims in sexual violence trials was published on 31 March and recognises the benefits of specialisation of those involved in sexual violence cases. It proposes that the bodies responsible for professional conduct and practitioners should be encouraged to develop an accreditation system for defence advocates that is open and transparent. I will write to the hon. Lady with more details of that.

The hon. Lady touched on sexual abuse in institutions and rightly highlighted the importance of preventing sexual abuse in those environments, ensuring that those who have concerns about children can raise them. As she will know, my Department, like all Departments, takes historical abuse very seriously indeed. That is why Lucy Scott-Moncrieff is providing quality assurance independently on all the investigations that derive from schools and children’s homes. She will report to the Secretary of State later this year about the lessons she learns from those investigations. That will be very helpful in informing the Government’s next steps in tackling sexual abuse in institutions.

The all-party group made recommendations on the whistleblowing process, on which local authorities should have a strong policy. Time prevents me from going into more detail about that.

I thank the hon. Lady for her continued interest in this vital area of our work in this place. I am happy to continue to work with her to try to improve things in future.

11:30

Sitting suspended.

Job Creation: Developing Countries

Tuesday 24th June 2014 Westminster Hall

[Mr Philip Hollobone in the Chair]

14:34

[Mr Philip Hollobone (in the Chair)]

Before we start, let me make it clear to all those assembled here that I am not late; I am the emergency replacement in the Chair. It is an honour to be here this afternoon for the debate in the name of Mr Jeremy Lefroy.

[Jeremy Lefroy (Stafford) (Con)]

Thank you, Mr Hollobone. It is an honour to serve under your chairmanship. I would like to draw attention to my various entries in the Register of Members’ Financial Interests. The debate is about supporting job creation in developing countries and much of my working life has been spent in that area, so it is inevitable that I have some interests to declare.

Last week, the Select Committee on International Development visited Sierra Leone and Liberia. In both countries, we had the honour of meeting the President. Both, without prompting, listed unemployment, particularly among young people, as something they needed to tackle, and tackle quickly. They see the need particularly clearly because of their recent experience of terrible civil wars that were fuelled by the resentment of people who had no real income, felt divorced from any development taking place in the country and saw an elite disconnected from the needs of the population. As a result, they are both determined to do whatever they can to avoid that situation arising again. As the UN says in another context: create more jobs or risk unrest.

[Fiona Bruce (Congleton) (Con)]

I commend my hon. Friend and colleague on the International Development Committee for his dedication to this subject and for bringing forward this debate. Does he agree that in Rwanda we now see a genuine example of job creation, growth and stability, which has come out of a very traumatic period for that country, proving that that can indeed happen?

[Jeremy Lefroy]

I am most grateful to my hon. Friend for that intervention. She is absolutely right. Of course, in Rwanda people would say that they have much further to go. They want to concentrate on developing the skills of their population, and in particular young people. They are looking at, for instance, the IT sector, because Rwanda is a landlocked country without large natural resources, apart from its own people and the beauty of its landscape. As I said, my hon. Friend is absolutely right.

High levels of unemployment or underemployment, especially among young people, are a problem in most countries in the world. When we ourselves have a youth unemployment rate approaching 20%, we recognise that this is a shared problem and there may well be—in fact, there should be—shared solutions. It is estimated that 1 billion additional jobs will be needed in the next decade for those who are currently out of work and those who will be coming into work over that time. Throughout my remarks, I shall use the word “job” to include self-employment and work in the informal sector, particularly in agriculture.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. Does he agree that although it is vital that jobs are created—that is what this debate is all about—in order to achieve that for small and large businesses, it is important that the infrastructure of those countries needs to be improved dramatically? Would it be an idea for moneys donated from the United Kingdom to these countries to be focused on certain areas to help to create jobs for young people?

[Jeremy Lefroy]

I am most grateful to the hon. Gentleman for his wise intervention. Later I shall come to the issue of infrastructure—he is absolutely right about that—and give one or two examples of where it has made a huge difference.

To return to the point about the word “jobs” including the informal sector and self-employment, we have to remember that if we define “jobs” too narrowly as those where people enter into paid employment, we will be missing the point. That is a fairly small percentage of the total amount of work available in the world at the moment.

[Alok Sharma (Reading West) (Con)]

I, too, commend my hon. Friend for the enormous amount of work he does, not only on the Select Committee but elsewhere. Of course, he has huge knowledge of this subject and many developing countries. He talks about jobs in a wider sense. Does he agree that another key issue for many of these economies is access to finance? Of course, access to finance for businesses is a big issue in this country, but it is a particular issue in this context, too. Perhaps he will talk later in his speech about some of the issues—or some of the solutions that have been found—with improving access to finance for individuals who want to start businesses.

[Jeremy Lefroy]

My hon. Friend and the hon. Member for Upper Bann (David Simpson) have obviously read my notes in advance—either that or they are most prophetic—because I will come on to that subject in a moment.

Jobs, in the widest possible sense, will need to bring in more than merely an income on which people can barely survive. The World Bank has set two goals for 2030: to eliminate absolute poverty, which is vital, and to promote inclusive growth by concentrating on the lowest-income 40% in each country. I commend the World Bank president, Dr Jim Yong Kim, on his relentless focus on that. He sees that we must not only eliminate absolute poverty, vital though that is, but raise the living standards of everybody, particularly those at the lowest end of the income scale.

[Fiona Bruce]

My hon. Friend is being generous in giving way so much. Does he agree that one way to raise the living standards of the poorest is to ensure that women in some of the poorest communities in Africa have the opportunity to develop businesses and access finance, even if only small amounts of finance? All the evidence shows that when women are given such an opportunity, the benefits of their businesses are returned to their local communities and are exponential.

[Jeremy Lefroy]

My hon. Friend is absolutely right, and I will say a little more about that. It is vital that those benefits are spread throughout the community. Let us not forget that since the International Development (Gender Equality) Bill, which was introduced by my hon. Friend the Member for Stone (Sir William Cash), received Royal Assent a couple of months ago, Britain’s international development work must now show equality towards men and women, boys and girls.

Work at subsistence level may take someone out of destitution, but it will not bring inclusive growth. That is not to say that subsistence work is pointless, but we must aim higher. As the head of the International Monetary Fund, Madame Christine Lagarde, has said, in far too many countries the benefits of growth are being enjoyed by far too few people. There are ways in which we can help to counteract that, and the Department for International Development does so. One way is to promote fair trade, which began in agriculture but has spread through a number of industries, most recently the garment industry. DFID has done some excellent work in Bangladesh on labour standards among garment workers, together with the British companies that those companies supply. As my hon. Friend the Member for Congleton (Fiona Bruce) has said, it is vital that such work extends throughout the community, particularly to women. As she rightly says, they will probably reinvest the most back into their communities, because they see that as the best safeguard for their children and families.

Let me set out briefly how I believe we can support developing countries to create the jobs that they and we need—our economies are increasingly interrelated. The UK continues to run a large trade deficit, and one of our best hopes for dealing with that lies in trading with developing countries as they grow. I will start by setting out something that I take for granted: a stable and secure state and an economy that is relatively open to the private sector are essential, given that 90% of jobs in the developing world are created in the private sector. Work to improve security and economic governance helps to develop an environment in which jobs can be created. DFID is doing a tremendous amount of work in that area, and I commend it on that. However, I will not dwell on that, because it is the subject of another debate.

A large number of the 1 billion jobs that are needed will, at least initially, be in the informal and agricultural sectors. In 2018, 63% of jobs in developing countries are forecast to be in agriculture still, which will represent a fall of only 8% since 2000. Industry will account for 10% and services for 27%. That is why I believe that one of the most important ways of supporting job creation in developing countries is to teach business skills at school. If most students will be earning their living in some form of self-employment, whether in agriculture or informal sector services, it makes sense to give them the right tools.

Last week in Liberia I met graduates and teachers of the Be the Change academy from Paynesville. Along with David Woollcombe, one of the founders of the organisation, I met Zuo Taylor, who runs the academy’s operation in Liberia, and some young British volunteers who were there as mentors and supporters on the programme, which was exclusively for young business women. I met two young women who had just finished the course, Manjee Williams and Mattee Freeman, who both had businesses already, one as a hairdresser and the other as a caterer. Both said not only that the training and support they had received would help them to organise and run their businesses in a more professional way, but that it had enabled them to consider giving work to others. The caterer already employed several other people—six, I believe—and planned to employ many more.

I believe it is vital to teach self-employment skills not only in schools in the developing world, but right here in the UK. That is done, and it is often done well, but it is supplementary to the curriculum rather than an integral part of it.

[Fiona Bruce]

My hon. Friend and I have experience of teaching business skills, in Rwanda and Burundi. Does he agree that there is an enormous hunger on the part of those who are in business or starting up a business in Africa to learn such skills? Does he also agree that there is a real opportunity, which we need to highlight, for those who have been in business in this country to help to mentor and support growing businesses in Africa, whether by travelling there or by using electronic communication? We must focus on that and encourage it much more.

[Jeremy Lefroy]

My hon. Friend is absolutely right, and it has been a great privilege and pleasure to share that work with her over the past few years. I reiterate that I believe such work to be essential for the UK as well. It is not simply a matter for developing countries. As I have said, we must learn from some of the work going on elsewhere in the world, and I believe we must integrate that sort of business education into our schools. We are not talking about sophisticated business education; we are talking about basic skills that are relevant to the self-employed or those in the informal sector. Many of our young people who are at school will end up being self-employed or working in the informal sector; that is true more than ever in the modern economy. We need to give them those skills, not just through excellent programmes such as Young Enterprise—I am proud to support that programme in my constituency, and I have no doubt that several colleagues do likewise—but as a core part of our curriculum.

One might argue that such training has little relevance to someone involved in small-scale agriculture, but I absolutely disagree. I have seen many examples of how farmers who have just a small amount of land can, using business acumen, create vibrant businesses that are based on agriculture, but go beyond it into activities such as food processing, retail and feed manufacture.

[Alok Sharma]

My hon. Friend has a huge amount of experience of working in Africa, and in some ways the continent is an untapped resource for business links. I will be speaking at the Afro Business Expo, which is taking place in the Thames valley in a few weeks and which I believe UK Trade and Investment is supporting. Does he agree that, as individual Members of Parliament, one of the things we can do is to encourage such events that enable businesses from African countries to come and meet businesses here? Such events will provide an opportunity for creating jobs not only in the UK but in developing nations.

[Jeremy Lefroy]

I absolutely agree with my hon. Friend. Such events are vital. The more connection we have with markets in the developing world, the more we can trade and invest—both ways, these days—and the closer our relationship, the better. That is why I welcome DFID’s focus on livelihoods and on bringing in British business. My right hon. Friend the Secretary of State took British businesses to Tanzania to help with development work in that country through enterprise. That is absolutely vital.

My hon. Friend the Member for Reading West (Alok Sharma) has already mentioned finance. Once someone wishes to start a business, or take a business on to the next stage, they soon find that the next obstacle is finance. Banks provide very little credit to businesses other than those that are well established and fairly large. One might think that that is a familiar refrain even in this country, but what is true of this country is far truer of developing countries, where it is almost impossible for anyone other than a fairly well established, medium to large-sized business to obtain much credit from banks. There are various reasons for that. Bank overheads are high, which means that minimum loans are often far greater than the loan required by a business because the banks need to generate enough income from the loan to sustain their overheads. Bank salaries in some developing countries are not far short of bank salaries in this country, certainly at branch level.

In my experience, banks are also reluctant to lend without substantial security, which is often worth far more than the value of the loan—perhaps 200% of its value. Indeed, central bank rules in some countries may make that compulsory, so any business that does not have a lot of additional security to offer against a particular loan is almost shut out of the market.

Additionally, in countries where the Government run a substantial deficit and dominate bank borrowing, it is often safest and simplest for banks to buy Government bonds. As we learned last week, until recently that was the case in Sierra Leone, where Government bonds were offering something like 30%, well above the rate of depreciation, so it was easiest and simplest for the banks to sit back, buy Government bonds and watch the money come in. There was no need to take the risk of lending to small or even medium-sized businesses.

Of course, there are many good initiatives that assist the provision of finance to businesses in developing countries, although at the moment those initiatives provide just a fraction of what is necessary. Microfinance has been around for some time; although people tend to think of it as more about lending for consumption, microfinance has increasingly been involved in lending to micro and small enterprises—MSEs—as well as for personal consumption, which I am glad to see. This morning I was speaking to the chief executive of a microfinance bank based in Botswana that has operations all over sub-Saharan Africa and is now entering the MSE market.

[Fiona Bruce]

My hon. Friend may remember that we visited the Women’s Initiative for Self Empowerment, the establishment for microfinance in Bujumbura. The initiative informed us that, because of the personal relationship between the women who borrow small amounts of money and the administrators of the lending, the default rate is very low. Should that not encourage us to look further at such microfinance organisations, and perhaps to encourage them through DFID?

[Jeremy Lefroy]

My hon. Friend is absolutely right. The default rate is often lower in such organisations, which rely on a substantial element of trust, as well as on prudent lending and investigation of borrowers. We have seen that default rates of less than 5%, considerably lower than some banks take, are common. Default rates are sometimes as low as 2% in such organisations.

There is also internet-based lending, which is increasing substantially. We see that in this country with peer-to-peer lending, but there are also organisations such as Kiva and Lend with Care, which is run by the charity CARE International. Such lenders typically provide very small loans in which donors from across the world can invest as little as £20 or £30 in loans to MSEs. Such is the power of technology these days that they are able to run such schemes without extremely large overheads.

Furthermore, there are initiatives such as DFID’s programme in Pakistan in which local banks, as we saw, were given a guarantee by DFID so that they could lend to businesses. That means that DFID does not have to do the lending itself, but, as the risk is taken out of the lending, a local bank is able to lend to businesses to which it would not otherwise have lent.

In this case, I believe the guarantee of some £10 million, if I remember rightly, was not drawn on at all, which shows it was an excellent example of lending at no cost to the British taxpayer, with the British taxpayer giving a guarantee. Banks will still carry out the same degree of due diligence, but the guarantee gives them a bit of extra confidence to go and lend to businesses to which they would not otherwise have lent. The key in all those areas is to find cost-effective ways of reducing risk so that financial institutions are prepared to lend, or investors are prepared to commit equity, to a project.

I will mention one particular fund because I have personal experience of being an investor in a company that took advantage of it some years ago. The Africa Enterprise Challenge Fund was set up under the previous Government, with substantial funding from DFID—I believe that DFID currently funds more than 50% of the entire fund. The fund focuses on investments of which the primary beneficiaries are people earning less than $2 a day. Those people may be suppliers to a business or consumers who now have access to a reliable source of seeds or fertiliser, for instance. The fund matches the entrepreneur’s investment up to a certain amount. In Sierra Leone, we visited a chicken farm that is expanding production through support from the AECF. One of the new investments was a modern feed mill that will not only improve the quality of feed, and hence chickens, which have hitherto been imported, but provide a regular customer for many small farmers from whom maize and other crops are purchased.

The AECF effectively acts as a catalyst, and its various funds now total more than $200 million. I have said in the past in the House that I believe that the AECF should provide less in the form of outright grants and more as returnable capital, loans or equity, which can be reused to help other businesses. I am glad to see in the latest figures that just over half the funds advanced by the AECF have been loans, and I encourage it further to increase that proportion because the more it does, the more that can be recycled in to other businesses. If a business is successful, it is right that those who have helped it—in this case, the British taxpayer and taxpayers from other countries that contribute to the fund—should share in that success.

I now come to the point well made by the hon. Member for Upper Bann. Without adequate infrastructure, it is almost impossible for businesses to grow and reach their potential. I recall visiting a road project in the Democratic Republic of Congo near Bukavu with the International Development Committee. The project was substantially funded by DFID, and the road was connecting Bukavu with a town several hundred kilometres away that had been cut off from the rest of the world for some 20 years. That town is not small, and people travelled from there to Bukavu, one of the major population centres of the Democratic Republic of Congo, with great difficulty.

We travelled on the first 60 km to be completed, and people told us that it now takes just two hours for people, generally women, to bring their produce to market in Bukavu, whereas previously it had been a five-day walk carrying produce, in which time a lot of the produce probably would have gone off and become unsalable. The road project is a clear example of rural infrastructure that directly benefits farmers and the rural poor and creates jobs in the widest possible sense. There are many other examples, but that is the clearest example I have seen in which so much difference has been made in such a short space of time.

We heard that Sierra Leone and Liberia have some of the highest electricity prices in the world. That is extraordinary in countries where income is so low. Capacity is another issue. There are many countries in which the entire generating capacity is a fraction of the 900 MW output of Rugeley power station in my county of Staffordshire. As far as I know, Rwanda has less than 500 MW of output, and we were told that Sierra Leone has less than 100 MW of output, although it is currently building more capacity. Those substantial countries have electricity supplies on which a medium-sized town in the UK would not be able to survive. Without electricity, business clearly cannot flourish, and jobs cannot be created. Of course people can buy generators, but as anyone who has ever run a generator will know, the cost is prohibitive and adds enormously to the cost of doing business.

One final infrastructure issue is ports, which are a hindrance in many countries instead of an asset. We can see how, for countries that have invested in ports and run excellent ones, they become an entire competitive advantage in themselves; I think of Singapore, which has become a hub of trade in the far east and globally. Almost anything going in that direction transits through Singapore. I think of one or two ports in the middle east that have been developed into enormous entrepôts. Earlier still, the classic example in Europe is Rotterdam, through which effectively everything transited. We lost a lot of trade to Rotterdam because we were not fast enough in developing our own ports here in the UK, although that has been reversed to some extent since.

There are a number of problems with ports, not least corruption. I have personally experienced the problems with theft and corruption in ports, but it is clear that many ports are simply too small: they need more quays and they need dredging. The difference that better ports can make to job creation and business is enormous, particularly for landlocked countries. Many countries in sub-Saharan Africa are landlocked. In order to give them access to markets, the countries that house ports have a business opportunity, but also a responsibility, to make those ports as efficient as possible. It is estimated that sub-Saharan Africa needs a minimum of $100 billion a year for its infrastructure, and that the whole of Asia needs perhaps $1 trillion. Given that total overseas development assistance is less than $150 billion a year, it is clear that such investment can be done only through Government and private financing.

That is where initiatives such as the Private Infrastructure Development Group come in. Today I checked the results of that initiative, which was set up by the previous Government and continues under this one. The 2012 report stated that 39 projects were operational at the time, employing about 200,000 men and women in their construction and operation and providing services to 97.6 million people. Every $1 contributed by members through the PIDG facility—I am proud to say that the UK is by far the biggest donor—mobilises $39 in finance from other sources for projects. That is a tremendously effective use of money. Even if we take some of the figures with a little scepticism, as I always do, we would have to be extremely sceptical not to acknowledge that that is good value for taxpayers’ money in terms of the return created and the jobs generated.

I will come to the end of my remarks fairly shortly, but I will touch on a few areas that I believe are extremely important to supporting job creation in developing countries. The first is agriculture. We have already heard how many people are employed in agriculture in developing countries, but what must we do to make it work for them so that it is much more than just a subsistence livelihood? We need to help them invest in productivity. I have spoken about productivity before, as have others in other debates, so I will not go into it in great detail, but the issue is about processing, both on-farm—much is lost through poor processing—and post-farm, when raw food is made into finished products that can be sold. Post-farm processing creates a tremendous number of jobs. When we were in Afghanistan, we noted that many raw products from Afghanistan were going to Pakistan for processing and then coming back to Afghanistan in processed form, so we encouraged Afghanistan to invest in its food processing facilities.

Marketing is also important, as are land rights, which come up time and again. Land rights are essential to developing an economy. We have mentioned on a number of occasions the excellent DFID programme in Rwanda in which some 10 million plots of land were given titles, meaning that people have security over their land and can invest in it. They are therefore able not only to borrow against it but to gain additional productivity from it.

Green jobs are also relevant, and not only to the UK and developed countries; they are important in developing countries, because they link sustainability and growth. I was pleased to see that one of the more recent infrastructure projects funded through PIDG was a solar farm in Rwanda. Sometimes one wonders whether solar farms built in the UK are of much use, although I am glad to say that, over the weekend, I was able to have a couple of baths from the hot water solar panel on the roof of my house, even in Staffordshire. However, in countries such as Rwanda that have the benefit of the sun, it is great to see projects such as solar farms being developed to provide low-cost electricity for tens of thousands of homes.

Another way of encouraging job creation that might seem slightly difficult, particularly to those of us on this side of the House, is tax creation. You might share with me, Mr Hollobone, a scepticism about whether collecting taxes can create jobs, but I believe that it does, as long as it is done fairly and rationally. There are a number of reasons why. First, it creates a level playing field. Many countries that I have seen have an arbitrary way of collecting taxes. For various reasons that I will not discuss, some businesses are let off paying the whole amount and others are penalised, perhaps because they are more honest. A proper tax collection system should be neutral. It should enable everybody to flourish in the right way, paying what one would hope is a fairly low rate of tax while contributing to the benefit of everybody.

Secondly, taxes fund security and good governance. As we said at the beginning of this debate, without good governance and good security, business cannot be conducted. Finally, taxes fund public services. To refer again to the remarks made at the beginning, education is absolutely critical to the success of business, as is a health system in which people are looked after so they do not get sick with malaria every other week and go missing from work or, if they are self-employed, end up destitute because they simply cannot get out into the fields.

I have not attempted to do more than provide a brief overview of what I see as the most important areas in which job creation in developing countries can be supported. I have spent most of my working life trying to support it; I remember that when I first went to Tanzania, the business that employed me had about 20 employees. My ambition was that it should have 100 employees after four years, and we succeeded. We had some ups and downs afterwards, but by and large, that was my biggest source of satisfaction: not necessarily the bottom line, but the fact that more and more people—hundreds and hundreds—could get a livelihood from the kind of work in which we were involved.

The stakes could not be higher. If we solve this, we will solve so much else in terms of peace, security, development, the elimination of poverty, and shared prosperity for both developing countries and, as I have said, for ourselves. It is not beyond us, with committed and visionary leadership.

[Mr Philip Hollobone (in the Chair)]

If the House was not aware previously of how much the hon. Gentleman knows about international aid, it will certainly be now.

15:08

[Alison McGovern (Wirral South) (Lab)]

Mr Hollobone, I think I express the views of everybody in this debate in offering my thanks to you for stepping into the breach and chairing so ably. I also congratulate the hon. Member for Stafford (Jeremy Lefroy) on securing the debate and on his contribution. It was my pleasure to serve with him for a time on the Select Committee on International Development; his contributions then were always thoughtful, considered and expert. I have learned even more about the subject by listening to him just now.

Harold Wilson, who went to school in my constituency—in fact, he went to the boys’ school near the girls’ school I went to—said:

“Unemployment more than anything else made me politically conscious.”

In that regard, I want to make a few remarks to take forward the comments the hon. Gentleman concluded with.

The hon. Gentleman talked about economic development in its broadest sense and about the interconnected nature of what makes an economy work. It did my Merseyside heart good to hear him talk about the vital importance of ports to our infrastructure. That is not a glamorous thing to say—when we talk about infrastructure, people often think of big bits of railway—but ports are vital, in this country and others. However, I want to restrict my remarks to aspects of job creation that relate to the work DFID does and to the work I think it should do more of. In that regard, I have a few comments to make and some questions to put to the Minister.

I think we all start from the assumption that private sector growth is a good thing. It is especially good if it represents a structural shift in a country’s ability to feed its population and to take care of itself. In that regard, the hon. Gentleman’s comments about infrastructure capital expenditure are vital. However, although private sector growth is necessary, it is not sufficient in itself for development to occur. People in a poor country will have greater freedom only if other conditions are fulfilled.

Does growth help the poorest? For those in work that is vulnerable, there is a clear link between the insecurity and threats a country faces and the extent to which economic growth helps those closest to the bottom. It stands to reason that those who do not have much to live for would risk their lives by engaging in military combat. The more we can do to give people the possibility to develop themselves and their families, the safer the world will be.

Does growth reduce inequality? Not necessarily. However, we must surely seek to ensure it does, if we are to have a fairer and more just world. In that regard, it is important that we see no return to aid conditionality—to the old days of aid as a byword for helping so-called British companies do business in other countries. I am afraid there has been a slightly worrying return to language referring to the UK as an aid superpower, as if our international development work with other countries is purely about self-interest, rather than an enlightened self-interest that reflects the virtues of being on a more even playing field with others.

Does growth involve the diaspora? Okay, DFID has done some work with FTSE 100 companies, but what about businesses in this country owned by people from poor countries in Africa and elsewhere?

My final condition in terms of determining whether private sector growth is good enough to bring about true development relates to environmental sustainability. If infrastructure investment is done in the right way, it can be absolutely crucial—solar farms have been mentioned. The world can choose whether to grow in a way that is healthy; some of the mood music from parts of the Government has been less than positive about the green agenda. I would not dream of using the kind of words that have been used about it, but I am sure the Minister knows what I am referring to.

To conclude, I have some specific questions. On job creation, the Minister will realise there is a serious risk of deadweight loss if projects that work with the private sector create jobs that would have been created anyway. What research is DFID undertaking to ensure that any investment in or for the private sector is genuinely additional and does not simply move jobs geographically or recreate ones that would have been created anyway?

Secondly, what policies is DFID pursuing to help meet the decent work indicators in the millennium development goals? It is clear that we need to reduce the number of people who are working and in poverty and, specifically, that we need to help young people and women. Half the world’s labour force is in vulnerable employment, so the agenda could not be bigger. Leading on from that, in how many DFID projects with the private sector does the Department monitor the quality, quantity and precariousness of the work created?

The Dutch Government require private sector use of their development funds to adhere to OECD guidelines for multinationals, including on industrial rights and workers’ rights. I would be grateful if the Minister commented on whether we intend to adopt the same standards as the Netherlands.

I would be grateful if the Minister told us whether there is any move in DFID to reconsider the short-sighted decision taken earlier in this Parliament to de-fund the International Labour Organisation. In some of the work I have done on the situation of garment workers in Bangladesh, the contribution made by the ILO’s advice and work has been irreplaceable, but the Government have decided on behalf of the nation to de-fund that organisation. Of course, the Minister may respond by saying that DFID Bangladesh has worked with the ILO, but that is not the same as the contribution we used to make to it. Will the Government reverse that short-sighted decision?

To conclude, I congratulate the hon. Gentleman again on raising this issue, which is vital to poor people who work hard and earn little, wherever they may be, as well as to the broader security of the world.

15:17

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

What a pleasure it is to serve under your unexpected chairmanship this afternoon, Mr Hollobone. You are a very welcome replacement. Thank you for enabling us to continue with the debate.

I thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for securing such an important debate. In his opening remarks, he said he had just returned from Liberia and Sierra Leone, which listed unemployment as their biggest challenge, and DFID also believes that is the case. Jobs are at the core of international development, and I very much welcome the opportunity to discuss the issue. I am aware of my hon. Friend’s vast experience and great knowledge in this field—it is much greater than my own—which comes from his personal experience of living in Africa and being involved in business for many years.

I hope many of the points in my speech will address some of the issues that have been raised. If we have time, I will try to address some of the more specific points that have been raised. When we ask people in the UK or in a developing country what they want, the desire for a good job is normally one of the top things on their list—that is not rocket science. A job will allow them to work their way out of poverty, to provide opportunities for their families and to build for a better future. I always think that having something to do and somewhere to go every day is also good for keeping a person whole in mind and body.

Since I became a DFID Minister, there is something that has struck me about virtually all the African countries I have visited—and I have been to Africa perhaps 20 times now. Driving up the road—if there is one—at certain times of day, one can see that many young men are sitting at the roadside without anything to do. That is a reminder of something that has already been raised in the debate: how important and necessary work is and how much work is missing.

I want to highlight the scale of the challenge in developing countries. Most of the 600 million new jobs needed globally by 2020 for the growing working-age population are needed in developing countries, but at the moment only 15% of people in low-income countries in Africa have what we would call a proper job. There are 900 million people in developing countries who are working but who, as my hon. Friend the Member for Stafford said, are doing vulnerable self-employed work and living in poverty. They engage in subsistence farming and so on. Most people in developing countries have a job of some sort, but it is mostly in unproductive subsistence work that may even be unsafe.

To address those issues in the terms in which DFID thinks about jobs, we need modern, formal sectors to grow and to create better jobs. We need people who work in subsistence agriculture or unproductive household businesses to be able to earn a better living. I have visited some impressive projects to intensify and maximise the produce of small agricultural plots. Avoiding the loss of produce in getting it to market is one way to do that, but I also remember a market in Zambia where we had arranged for people selling seeds and market produce to meet small subsistence farmers to exchange knowledge of the best seeds and how to plant. There was a product to make cows grow, so that people could get them to market in two and a half years instead of seven. I did not ask what was in it; nevertheless, someone with one cow could triple their income with that product. Many of these people are in marginalised rural areas or cities, poorly connected to markets for their labour. They lack the right mix of skills, finance, land and information to enable them to find a job. My hon. Friend the Member for Stafford also talked about getting goods to market, the skills needed to get a job, access to finance, surety of land tenure and information about how to maximise produce.

We also need to address serious inequality in who gets job opportunities. Women are less likely to participate in the labour force and are more likely to be in unpaid or vulnerable work. Young people—and there are many in developing countries—also fare badly, which often poses a risk to social cohesion. That is not just unfair and dangerous; it is inefficient and represents a huge potential loss to developing economies. Changing this jobs picture requires economic development and transformation, much of which will be led by the private sector. People need the opportunity to earn more. For many, that will mean getting better incomes in agriculture, but over time—indeed, already and increasingly— the bulk of new jobs will come from higher-income opportunities in services and manufacturing, as has happened in every country that has successfully developed.

DFID’s work on economic development and jobs involves, first, getting the international system right; secondly, getting private sector growth going; and, thirdly—an absolute priority for me—ensuring that growth is broad-based and inclusive, in particular for girls and women. One example is the recent trade facilitation agreement reached in Bali, which will be instrumental in reducing the barriers to trade, helping to integrate developing countries into global trade flows and promoting jobs and investment. We are also pushing for productive jobs to feature prominently in the goals and targets of the post-2015 agenda, which is essential if we are to reach zero poverty by 2030. Our multilateral partners are also well placed to deliver on the jobs agenda and are upping their game. The UK-backed International Finance Corporation global SME finance initiative aims to provide at least 1 million new jobs and financing to 200,000 small and medium-sized enterprises. Access to finance is crucial, and I have just been in Mozambique, where I launched access to finance for women in SMEs. It is a crucial stage.

The World Bank Group has put job creation and economic development at the centre of its plans to achieve its goal of increasing shared prosperity and the income that accrues to the poorest 40% in each country. We are engaging closely with the bank on that. Across Government, the UK is also working to improve economic and trade relations. Our recently launched high-level partnerships for prosperity will improve trade between the UK and Angola, Côte d’Ivoire, Ghana, Mozambique and Tanzania—indeed, my hon. Friend the Member for Stafford mentioned the recent trip there by the Secretary of State.

Driving economic development and jobs is not only the most effective way to reduce poverty in developing countries; it is also in the interest of the UK. The hon. Member for Wirral South (Alison McGovern) raised the question of tied aid, and I assure her that there is no question of that. It is against the law and not appropriate. However, when we let contracts in open competition, a UK business will often win. That, however, can only be a compliment to British business and its ability to make the successful bid. There is no favouritism: the process happens on the open market and such contracts are always let competitively.

It is in the interest of the UK to build our future trading partners. Africa has a growth rate that we in the UK can only envy and there is phenomenal wealth lying beneath its ground. The challenge with extractive industries is to spread the benefits widely, as my hon. Friend the Member for Stafford said. One reason for the work we do on value chains and supply chains in extractives, and in the surrounding geographical area, is to try to link the economic benefit to the country. We also give technical support and assistance with the original contract negotiations, so that the country benefits from its own wealth, rather than other countries or the elites of that country.

Improving job prospects in developing countries, particularly for young people, reduces the chance of conflict. The recent awful case of the abduction of girls in northern Nigeria seems to have gone from the media pages, but it has not stopped being on our mind at DFID or the Foreign and Commonwealth Office. Part of the issue in the area where Boko Haram flourishes is that young men have nothing to do. I am looking at programmes to develop skills and jobs in that area, as possible diversionary tactics, which would also be very beneficial.

Many businesses in the UK are looking to Africa and Asia and seeing the markets of the future. Businesses see value in engaging with DFID and the rest of Government and they in turn have much to offer the countries that they choose to invest in. Interestingly enough, the business advisers to DFID’s advisory board have strongly called for exactly what my hon. Friend the Member for Stafford was talking about: the development of appropriate skills and education. There is a willingness to invest in countries and create jobs where the climate is stable enough, but there is also a need for skills, so that businesses do not have to import their own staff. A company that wants to open in many parts of a country needs to be able to use staff from the country in question to run branches, co-ordinate things and see to the logistics.

Our spending programmes create jobs in developing countries in a number of ways. The Commonwealth Development Corporation, the UK’s development finance institution, is having a huge impact on job creation in Africa and Asia. It is remarkable. In 2013, CDC’s 1,300 investee companies directly employed over 1 million people. That is a hugely successful rate.

[Jeremy Lefroy]

The Minister is absolutely right to point that out. I would further like to congratulate CDC; I understand that last year saw the highest level of investment by CDC in its history. That is a welcome sign of the success of the Government’s opening of CDC’s mandate, to include direct investment in businesses again, as well as investment in funds, and concentrating on low-income countries rather than spreading out through middle-income countries.

[Lynne Featherstone]

My hon. Friend makes an excellent intervention. CDC has gone from strength to strength. Not that long ago there were some question marks over it, but it has moved well away from that. As he says, because it works in the most fragile, conflict-affected and poorest of countries, its success is all the more remarkable. It has created more than 68,000 new jobs.

[Alison McGovern]

On that point, would the Minister be so good as to respond to my question about deadweight loss and what research DFID is undertaking to ensure that none of those new jobs represents such loss?

[Lynne Featherstone]

I will respond to the hon. Lady in a moment on the issue of deadweight loss.

Moving on from CDC, in the long term, the key to mass job creation is improving the environment for domestic and other businesses to invest and grow. DFID is focused on these long-term determinants of job growth.

[David Simpson]

As we believe that these projects and job creation are very important, does the Minister agree that we cannot overestimate the number of jobs that need to be created? I believe the figure is 95 million over the remainder of this decade, so time is of the essence. We need to move on this issue.

[Lynne Featherstone]

The hon. Gentleman is obviously right. We work in that direction and we are working as fast as we can to enable job creation to happen. I have covered a number of things, but part of what DFID does is on the enabling environment for investment and therefore job creation, whether that means cutting the time it takes to get goods across a border from four weeks to one day, or help with filling in forms or how long it takes to start a business—all the things that are very off-putting to investors. We are working on all fronts.

I do not know whether those hon. Members present have ever eaten in Nando’s, for example, but I was in Mozambique, where Nando’s exclusively grows its peri-peri peppers. It is a labour-intensive process, with massive work for smallholdings, done to a very high standard—because the standards, both of the product and how people work, are very important to DFID and the British Government—which means huge job creation. It is a win-win for the country, the company and the individuals who are being taught and looked after while they grow peri-peri peppers—and I can highly recommend peri-peri chicken.

DFID currently supports more than 60 programmes with specific targets to provide economic assets to girls and women in developing countries. We have set ourselves a target of helping 18 million women to access financial services and 4.5 million women to strengthen their property rights by 2015. Both will have a fundamental impact on the job prospects of the women involved by improving their control over assets and finance.

For some women in work, the conditions remain unacceptable. The UK is supporting the International Trade Centre to work with Governments and customs authorities in east Africa to improve conditions for female informal traders, who face harassment and extortion at borders—the example often given is someone who starts with 12 eggs and, by the time they pay off all the people who have to be paid off, has about three eggs left to sell. That is a common, everyday kind of factor.

The Department is also scaling up its work on education and skills—an important point that my hon. Friend the Member for Stafford raised—to make sure that skills are relevant to people’s changing opportunities and that the private sector is involved in designing, delivering and financing them. We are also increasing our work on infrastructure—my hon. Friend talked about power and transport—and thinking afresh about urbanisation, in order to create more and more productive jobs.

[Jeremy Lefroy]

My hon. Friend is making some extremely important points. One issue that I did not refer to directly in my speech—but which relates specifically to skills—is the great need for additional skills in, for instance, the health and education sectors, which are themselves financed through the development of the economy, the payment of taxes and so on. The hon. Member for Wirral South, who speaks for the Opposition, and I were both keen to see the International Development Committee look into health system strengthening. I am glad to see that that inquiry has now taken place. One of the things that I think will emerge from it is the enormous number of job opportunities for people at all skill levels in the health and education sectors, but of course those sectors have to be financed and the finance comes from the growth of the private sector.

[Lynne Featherstone]

That is absolutely the case. There are some benign circles that we need to get going in, for example, higher education in developing countries, because skills in health and education need to be supplied locally. We need to up the quality of teaching and professionals in the health service. Indeed, that is how we are moving forward, and I believe I will be giving evidence to the IDC on health system strengthening. The need is great, because the numbers are enormous and those jobs must be filled by training individuals within countries and not “borrowing” them, as has happened in the past.

As for monitoring and evaluating DFID’s work, we are scaling up efforts to monitor and evaluate the impact of our work on economic development. Some areas of this agenda, such as job creation, investment and trade, are quite complex to measure. The International Finance Corporation’s “Let’s Work” initiative, which DFID, CDC and the Private Infrastructure Development Group engage with, is working to develop an agreed approach to estimating the impact of private sector infrastructure interventions on job creation. DFID funded the IFC’s study in 2013 of the private sector and jobs, and a whole chapter is devoted to the difficult issue of measuring net additional job creation. Measuring it exactly is one of the challenges, but it is our ambition both to measure it and to ensure that the jobs being created are additional and would not have been created in any case.

Under the economic development scale-up, we are looking to increase the relevance of education and skills for the changing job market, as I have said. That goes for foundational skills and technical skills, so that skills taught in school and technical training institutes have to be right and join up what is needed for industry in the country with the skills that are available. New interventions for marginalised groups in rural and urban areas provide combinations of interventions, such as entrepreneurship skills and finance and innovative business models—we are trying to create another benign circle. I have visited some of the larger pilot entrepreneur skills awareness training projects, where an inspirational speaker talks to 700 or 800 young people at a time, who all seem absolutely fired up and up for going out and becoming entrepreneurs in their own right. It is very exciting work.

My hon. Friend the Member for Stafford mentioned power. The Public-Private Infrastructure Advisory Facility is delivering technical assistance to unlock private investment in developing countries and the EU is investing in the EU-Africa Infrastructure Trust Fund.

As for ports, in Mombasa in Kenya we are helping to tackle problems with port management to improve trade and regional integration. Most importantly, of course, as Mozambique’s ports develop, the corridors that will open up to neighbouring landlocked countries will be incredibly valuable, both to those countries and the ports themselves.

As for work, I hear what the hon. Member for Wirral South, my opposite number, was saying. I can assure her that I go to the International Labour Organisation every three months and I work closely with the unions. They have raised the issue of our stopping their funding many times with me. However, as I have explained, we work in different ways. We are working with them on a project on trafficking in Asia and we have given £4.8 million to an ILO programme to improve working conditions in the readymade garment sector in Bangladesh. That was launched in October to help to conduct safety inspections of the 1,500 factories that are not covered by existing initiatives and to help the victims of the disaster.

In a similar field, the trade and global value chains initiative encourages buyers, factories and workers to work together to improve productivity and working conditions. Our overarching message and narrative on working conditions—in all businesses and in all ways, and with Governments—is that they should be good and professional. It is no good a Department such as DFID not caring about standards; we care very much about standards and responsible business. We encourage companies to respect voluntary global standards, which improve labour standards and reduce harmful working practices. We provide funding and support that strengthens mechanisms that ensure that companies comply with their commitments on labour standards and working practices, such as the ethical trading initiative. We have also funded and supported the extension to the global fair trade system and are building evidence about its impact on wages and working conditions.

As for ensuring that poor people are not being excluded from any newly developed markets, which obviously is important, we support inclusive growth, benefiting women and girls in particular. That is an essential pillar of DFID’s economic development strategic framework. Although occasionally one sees “economic development” written in a report, it is always meant to read “inclusive economic development”. There is no point developing a country if the process is not inclusive, because if it leaves people behind, it will simply repeat the worst mistakes that have been made in other parts of the world. I am pleased that the overarching principle of the high-level panel report on the post-2015 agenda is exactly that. “Leave no one behind” is the most important message.

In conclusion, I thank my hon. Friend the Member for Stafford, who covered the issues and subjects in better detail, perhaps, even than myself. I think all hon. Members would say that we are all committed to the creation of useful employment and work and the improvement of subsistence work and agriculture. That is important, right across the developing world, because if we do not do it right, we will be guilty of leaving many people behind. Ultimately, it is in our own interests—in the country’s and everyone’s interests—that we get this right and support the developing world in the creation of the right sort of jobs, the right environment and the right economy.

[Mr Philip Hollobone (in the Chair)]

I thank all hon. Members who contributed to this important debate. I now suspend the sitting until 4 pm, or earlier if both the Member whose debate it is and the Minister responding arrive earlier.

15:42

Sitting suspended.

Out of Town Supermarkets

Tuesday 24th June 2014 Westminster Hall

15:57

[Mr Philip Hollobone (in the Chair)]

This topic is very important in the constituency of Kettering, and I am sure it is very important in Southport. We are about to find out why.

[John Pugh (Southport) (LD)]

I thought this debate might be of particular interest to you, Mr Hollobone, and I am delighted to see you in the Chair, as I am sure that quietly, at least, you will make your presence felt. The hon. Member for Rochdale (Simon Danczuk), a fellow member of the Communities and Local Government Committee, is here as well and he probably has concerns similar to mine. There are other Members who, recognising that this is a half-hour debate, have not deigned to turn up. None the less, they have precisely the same sort of issues in their constituencies as we do in Southport. These are not just Southport issues, but issues that affect people in general.

Town centres are a big political issue for the Government—DCLG Ministers have a lot of programmes afoot to revitalise and re-energise them—and for MPs, because nearly every Member has a substantial town centre in their constituency that they wish to see preserved, and full of life and vitality. Constituents routinely bring up the issue of town centres when they observe empty shops and some of the current dereliction.

Essentially, therefore, we are all on the same page. The Government want a revitalised high street, and we all, whether we are MPs, the Government or constituents, want to see community life pursued via the high street and the range of activities that take place there. That might involve some activities that are problematic, such as betting, but it usually involves shops, retail, businesses, cafés, restaurants and an awful lot of nail bars. It is extraordinary; I am not sure why they have grown up in such abundance, but it is all part of the way and purpose of ordinary British life, if I can put it like that.

We are also keen to see independent retail thrive, because there is a danger, even if retail were at its most vibrant, that every town centre will end up looking similar, with the same shops and offers but without any of the interesting and intriguing breakthrough companies that one can see when visiting a new place. I think we all acknowledge that such desires imply some form of restraint on out of town development—the characteristic sheds and tarmac that exist on the edge of pretty much every substantial town and elsewhere. If that is our ambition, the reality seems to indicate that we are far from achieving it.

My speech relies extensively on the Association of Convenience Stores report, “Retail Planning Decisions under the NPPF”. In that document and others, the association demonstrates that some of the prime retail movers—the supermarkets—are expanding more rapidly than ever in out of town developments, despite the various noises made by the Government and the apparent planning restraints.

If we actually believe that town centres are vital and that out of town development should be restrained, why does planning policy not deliver on those aims? After all, planning policy in that direction is well established. One has to go back to 1996, which, looking around the room, I think was before any of us were actually in Parliament, to find the advent of the “town centre first” policy. If we examine how it is panning out at the moment, we see that its effect is arguably weakening, supermarkets are becoming ever better at getting their own way and out of town retail is proceeding pretty well unabated despite everyone’s efforts.

How is that happening? A case must now always be made for out of town development, but the big retail movers, by which I largely mean the supermarkets, are pretty good at stating their case in a variety of clever ways. One is to minimise the impact of what they are doing. They typically say that their plans will have a limited effect on the town centre or that a new project will have an impact largely on the existing sheds in an out of town development. Such a case often carries weight in front of the planning committees of the land. However, the claims are not borne out by the figures. Monitoring of the post-hoc effects of various developments shows that the effect is greater and more significant on town centres than was initially claimed and that out of town developments experience a lesser effect.

When arguing for out of town development, big retail movers also tend to exaggerate the jobs benefit. A planning application for a project launch will often talk about the huge number of jobs, often in the hundreds, that will be created. However, that number is not a net figure and does not analyse the quality of jobs provided. The number does not state whether the jobs are part-time or casual or whether they will ultimately be replaced by automatic checkouts as systems become ever more mechanised. The manner in which such cases are put forward is extraordinarily effective and plausible, but they should not be taken as credible in the long run if the after-effects are monitored against the projections, which is rare.

[Simon Danczuk (Rochdale) (Lab)]

Does the hon. Gentleman agree that the Association of Convenience Stores research suggests that the situation has worsened since the introduction of the national planning policy framework, which calls into question the effectiveness of the “town centre first” policy?

[John Pugh]

That case is extraordinarily well argued in the document. The ACS is obviously an interested lobbyer, but it has undertaken effective monitoring, which the Government have not done, of what happens after the event compared with what applicants say when planning permission is applied for.

When applying for such permission, supermarkets go armed with persuasive, expert consultants, planners and researchers and can offer a view of the whole retail environment that the council hearing the application cannot really judge for itself, because planning departments are, by and large, severely under-resourced. The lack of resources is due to local authority cuts, but planning departments have never been particularly well resourced and are often short of independent data, which costs money. They are also unable to face up to the costs of refusal, leading to an expensive appeal process. Planning departments across the land are hurrying to get housing figures in place, but they are not doing much work, number-crunching or thinking about the retail environments that they often strive to protect.

Ultimately, planning departments are also vulnerable to what I was going to call “bribery”, although I do not want to use that word because individual bribery is not involved. However, a supermarket wanting to get its way, whatever the effect on the town centre, will normally present its case by suggesting that, due to some attractive agreement under section 106 of the Town and Country Planning Act 1990, something that the council wants, such as a traffic development, can be delivered as part and parcel of a new development. On one side is the threat of an expensive appeal and on the other is the bribe that granting permission may lead to some benefit that the council may not be able to accommodate through its own resources. That is generally what the monitoring of such developments shows.

I ask the Government to undertake some of their own monitoring, because two Government policies are not sitting together well at the moment. The national planning policy framework is leading to a weakening of the “town centre first” policy, but Ministers in the Department for Communities and Local Government are emphatic that that is their policy and are putting lots of energy into it, suggesting how it can be improved, engaging Mary Portas and so on.

A key element in the process is the mechanism that is supposed to be used to decide whether an out of town development should go ahead: the sequential test. Essentially, it is a question put to the supermarket or other developer that asks whether there could be a better in-town development that would have the same effect. Why should they go out of town when in town offers the same opportunity?

In the hands of developers, however, the question becomes rather trickier than it might first seem. Developers tend to say that there may be sites worth considering in the town centre, but that it is most unlikely that those sites will allow the replication of the format that they intend for out of town developments—town centre sites may be a possibility, but are not what they want. When that argument is pursued, a planning committee will often become nervous and find itself on unsteady ground.

As an illustration, I will describe the situation in Southport, about which hon. Members may or may not know. Southport’s attraction as a town that visitors come to and enjoy themselves in is probably based on two things. First, there is a leisure offer from the seaside environment and all that comes with it. Secondly—this is part of its enduring appeal—Southport has a distinctive retail environment. We have a long main street called Lord street, which is uncharacteristically stocked with shops along one side only. It is known widely in the north-west, if not further afield. Some even say that it inspired Napoleon III to construct the Champs-Elysées in Paris, which may be slightly exaggerated, but it is a distinctive retail environment none the less. In many retail environments, malls and town centres, one could be knocked unconscious and brought round in another and not notice the difference, but the distinctive smaller shop units of Lord street, with their canopies and Victorian charm, are part of what gets people to Southport in the first place.

In the downturn, the retail offer in Southport has, frankly, worsened. There is less retail and more shops are empty—13% of all shops in the town centre are now vacant. There is also less quality retail; some of the shops are not of the quality of years gone by. There are charity shops in Lord street now; they simply would not have got through the planning committee years ago. We have seen, as every town has, the withdrawal of the big chains, which have folded up and moved elsewhere, and there has been a general loss of independent shops, whether because of the economic environment, rates or high rent. We also have a series of absentee shop owners in Southport, who are not aware that the economic climate has worsened and are charging unrealistic rents.

Like every town centre, we have responded to that situation. Every town centre needs to get smarter. We need to look hard at click and collect, and we are reviewing parking. Recently, we set up a business improvement district. If possible, would the Minister take a message about that away from the debate? At the moment, the business improvement district is awaiting proper authorisation by the Minister’s colleagues in the DCLG. The council tells me it has not received a prompt response that would enable it to go ahead and develop the bid or allow the bid to go live. If the Minister would address that in passing or make inquiries about the correspondence with Sefton council on that issue, I would be grateful.

The actions I mentioned are things that we can all do and that Southport has done. What we definitely do not need in the town centre is reduced footfall. That is the prospect at the moment, however, because of a large application on the part of Sainsbury’s. If I detain Members a little longer to tell them more about the specific environment, they will understand the burden of my complaint. We have supermarkets in our town centre. We have a Morrison’s, a smaller Sainsbury’s, an Asda on the edge of the town centre, which was forced to be in that place—Asda wished to go elsewhere—a Food at M&S in the Marks and Spencer, and a big out of town Tesco.

Our problem at the moment is characteristic of the problems aired in the ACS report: Sainsbury’s wants to follow Tesco out of town. Retail studies have shown that there is unmet need, based on figures of overtrading—we can argue about those one way or the other, but let us accept them for the moment—and that we could do with another 4,000 square metres of retail food space. Sainsbury’s is proposing to build an establishment of 10,000 square metres, knocking down an existing Homebase to build a superstore.

There is a town centre plan that favours protecting the town centre, but to me it does not look robust or strong enough to prevent the demand for a very large superstore right on the edge of town. That development, in my view, would be detrimental to the life and vitality of the town centre, and ultimately to Lord street and the economy of Southport as a whole.

At this point, a planner would ask Sainsbury’s—or whichever company it might be—whether there was a site nearer to hand. This particular case illustrates perfectly my earlier point about how supermarkets react, because in fact there is: there is an old Morrison’s store vacated when Morrison’s merged with Safeway. There is a big council car park opposite it and a multi-storey car park above it, so there is no issue with parking. It has desperate owners, who want to rent it, and short-term tenants who will not stay there for long. It has been vacant for the bulk of the past 10 years, and is an attractive site for anybody who wants another supermarket in town. It is ripe for development, but presumably, in its infinite wisdom, Sainsbury’s thought that it would prefer to go outside and that it had a case for doing so.

In a case like that one, there is a vacant supermarket that the applicant will not use and a proposed out of town development that could be corrosive for the town centre. If such a case can get through a planning committee, we have what is almost a classic illustration of the techniques that, according to the ACS, are used right across the land.

[Julian Sturdy (York Outer) (Con)]

The hon. Gentleman is making a strong argument, and the case he is making about his own constituency reminds me of an issue in mine. Does he agree that we need local authorities to have detailed retail impact assessments in place, so that the impact of supermarket developments can be properly assessed, threshold levels can be defined and future sites identified? That way, local authorities would have at their disposal tools that they could use to refuse applications if appropriate and to defend appeals against what can be quite strong opposition from supermarkets, which have a lot of financial capability at their disposal.

[John Pugh]

The hon. Gentleman is absolutely right. The onus is on local town planners and councils to have a positive view of where their town is going, which aligns with what is commercially possible. I thoroughly endorse what he has said. To some extent, the problem for councils at the moment is that they are concerned—and the Minister is pleased about this—about finding forward-looking plans apropos housing, but are sometimes leaving retail and the commercial community to sort themselves out. They will not do so to everybody’s satisfaction.

Going back to the situation that I am confronting, I am certain that Sainsbury’s has thought about the sequential test—it is not so stupid as to put in an application and not think about whether that test will apply. But it must be fairly confident that if the test does apply, and even if there is a site available nearby in the centre of the town with adjoining car parking, which has previously been a supermarket and is bigger than the site it currently has, the sequential test will still not be an obstacle. Supermarkets do not waste their time when putting in applications. If that is the case, the sequential test is very weak indeed.

I have no grudge against Sainsbury’s—I am a Sainsbury’s shopper myself—but on a negative note, from where I am standing, it seems happy to destroy the Lord street environment; it must know it will have a severe impact there. That ultimately means that it is happy to destroy part of the town’s visitor base to get its own way. I do not blame Sainsbury’s for wanting to get its own way. In an article on the PoliticsHome website today, I compared supermarkets to the mafia. Now, they are clearly not as bad as the mafia—nobody gets killed—but the analogy works in a way, because they do the same sort of things. They make a promise, sometimes, of a development that the council will like alongside a development that the council is less happy about. They have the threat of the appeal. They do all sorts of community-minded things, such as having charity collections and so on. They carve up territory between themselves, bully their suppliers and have huge and deep-rooted political connections.

Supermarkets are pretty good at getting their own way and are pretty single-minded, but the outcomes they want are connected purely to their bottom lines. Now, I am not judging that; I do not expect commercial organisations to be automatically or naturally philanthropic. They do some good things, such as having recycling centres, making good environmental noises and all that sort of stuff. However, the one thing they will not do if they do not have to is care about town centres. I am not judging that—it is the way they are—but I think it is the Government’s job to manage that issue. We cannot have thriving town centres and gung-ho out of town developments. Even if the public think that is the optimum outcome, it is not possible.

[Simon Danczuk]

I have had many happy times in Southport over the years and I commend the town to others. What would the people of Southport conclude if they were consulted? What would be their preference?

[John Pugh]

That would depend on how the choice was offered. Sainsbury’s and other supermarkets carry out consultation among nearby residents. If people are asked whether they want a large supermarket nearby with every conceivable object they could ever wish to buy, they will say yes. If they are then asked whether they would like to walk round a town full of shops that are empty because no one goes there any more, or told that if they do not have a car they could not do any shopping, they will say no. The public may not always be as aware as we should be about the knock-on consequences of one development on another. I hope that the Government are, and that the Minister is, and I hope that he can give me some comfort that there is a rational solution to the problem.

16:19

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

It is a great pleasure to serve under your chairmanship in this important debate, Mr Hollobone. I congratulate my hon. Friend the Member for Southport (John Pugh) on securing it, on a subject that is obviously and evidently of great personal interest to him.

You will understand, Mr Hollobone, my anguish and dismay at having to admit that I do not agree with much of what my hon. Friend said. Coalition is strange and curious and I suspect that many of us—not least, I suspect, my hon. Friend—have at times found it trying, but it works best when we admit to some differences in starting points while nevertheless hopefully being able to reach consensus on how to move forward. It is with what I believe is my hon. Friend’s starting point that I am in greatest disagreement.

I am firmly of the view that supermarkets have been a powerful force for social and economic good in this country for the past 50 years. I am firmly of the view that people on modest incomes around the country, in his constituency of Southport and in mine of Grantham and Stamford, have the opportunity to buy a range of quality food and other items that were unaffordable or unavailable to all but the very rich when I was growing up, and probably when my hon. Friend was growing up.

[John Pugh]

I think the supermarkets, like coal mines, have been extraordinarily good for the country as a whole and an excellent development. My argument is not for or against supermarkets, but about their placing in a commercial environment. Just as a coal mine is a good thing, one does not necessarily want one nearby. A supermarket may be an excellent thing, but one wants it in the centre of town.

[Nick Boles]

I wish I could accept that that is what my hon. Friend was saying. He accused supermarkets of behaving like the mafia, and talked of them bribing and threatening. When he said supermarkets may do good, he then mentioned recycling as if the provision of high-quality, low-cost products to people on low incomes is not in itself a good thing, and employing thousands of people on flexible time scales that fit in with family life is not a good thing. I profoundly disagree with that characterisation of supermarkets.

Nevertheless, I am in agreement with my hon. Friend, as is Government policy, that it is important to find a way to encourage and promote development of new supermarkets to fulfil a vital and much appreciated need and the equally strong desire to preserve the range, vitality and diversity of retail uses in thriving town centres. That is the difficult balance that Government policy, as he observed, throughout the last Government and the present one—

16:23

Sitting suspended for a Division in the House.

16:36

On resuming—

[Mr Philip Hollobone (in the Chair)]

We all got back rather more quickly than I thought, so I will ask the Minister to resume his remarks.

[Nick Boles]

Mr Hollobone, I feel that the Almighty perhaps felt that I was becoming a little too intemperate in my comments. I am sure that coalition harmony will now break out and that we can work out where we agree.

Although my hon. Friend the Member for Southport and I seem to have a different general attitude to the role that supermarkets have played in our society, we do not, nevertheless, disagree on other things, not least because I represent the three market towns of Grantham, Stamford and Bourne, which face similar challenges in their town centres. I want to make sure that independent retailers in their town centres can thrive, that new ventures can come in, set up and be successful, and that we do not end up with hollowed-out town centres, with thriving supermarkets outside.

I am grateful to my hon. Friend for acknowledging that the “town centre first” policy is a long-standing one. I believe the previous Conservative Government brought it in towards the end of their time in office, and the Labour Government maintained it through their long period in office. It is maintained in the national planning policy framework, having simply been translated from the much greater bulk of previous planning policies, but with no dilution of its content—certainly in terms of policy intent, words or their legal import.

My hon. Friend suggests that, despite the inclusion of the “town centre first” policy, the sequential test and the requirement for an impact assessment on any proposed out of town development, more such developments seem to get through first, than is intended by the Government under the policy, and secondly, than was the case before. That is an interesting claim, and he referred to the report commissioned by the Association of Convenience Stores. He is right to acknowledge that the association—this is entirely proper—is a lobby group that represents its members and that commissions and publishes reports that advance their cause, but he is also right to say that it has taken the trouble to see what has in fact happened.

It is a reasonable challenge to the Government to look closely at that report and to ask ourselves whether it looks in a complete way at all the evidence. In addition, does it judge what the counterfactual would be? I say that because, without wanting to comment on the proposal that has been made in my hon. Friend’s town or on any other particular proposal, I can imagine that, in the teeth of a deep and long recession, planning authorities may well have been more swayed by arguments highlighting the number of jobs created by new supermarket developments than they might have been inclined to be during the boom times towards the middle and end of the last decade or, indeed, before. It is entirely proper for planning authorities to weigh up the relative worth of very different impacts, but that balance of judgment may shift back as, hopefully, the economy continues to improve and conditions within the retail sector gradually improve.

Although I accept my hon. Friend’s point on the level of vacancies in his town centre, it is not bad compared with some other places. I have high vacancies in one of my town centres, in Grantham, but in the past few months the figure has fallen significantly. All the landlords of small retail units in my town centres are saying that things have been picking up in the past few months, so I hope that is a sign that things are beginning to return, which may shift the balance of thinking in local authorities.

[Simon Danczuk]

rose—

[Nick Boles]

I am, of course, very happy to give way to a member of the Select Committee who owns an important local convenience shop.

[Simon Danczuk]

I declare my interest. I get the impression that the Minister agrees that approvals for out of town supermarkets appear to be accelerating, but does he not share my concern that approvals are being given but supermarkets are not necessarily being built? That is leaving some town centres in limbo because developers will not go in after approvals have been granted.

[Nick Boles]

No one is wilier than the hon. Gentleman at putting words in my mouth that I did not say. For the record, I make it clear that I do not accept that the rate of approvals for out of town developments has gone up. We will look at the evidence that has been presented, and he is perfectly right to suggest that we should draw our own conclusions. I was not aware of the problem to which he refers, but we would all be interested to look at any evidence he has—systematic evidence, rather than episodic cases.

The three parties represented in this debate agree on the “town centre first” policy, and we all agree it is important that the sequential test is properly done and maintained, and that planning authorities should feel confident in making decisions on particular applications in accordance with what the sequential test and the impact assessment tell them about the effect of a potential out of town development on the vitality of a town centre. We hope and believe that planning authorities will have that confidence in the future.

I offer a small olive branch to my hon. Friend the Member for Southport by saying that I would be delighted to find out from the Minister in the responsible Department what is holding up the response to Southport’s businesses improvement district application and do anything I can to urge a swifter response than has been received to date.

[John Pugh]

I thank the Minister. I assure him that, despite my forensic character of expression from time to time, there is little that divides us on the main principle.

[Nick Boles]

On that note, I have nothing further to add. Coalition harmony has broken out once again.

[Mr Philip Hollobone (in the Chair)]

Thank you very much to all those who took part in that important debate for Southport.

Trade and Investment in Scotland

Tuesday 24th June 2014 Westminster Hall

16:43

[Mr William Bain (Glasgow North East) (Lab)]

It is a pleasure to serve under your chairmanship once again, Mr Hollobone.

I begin by praising the contribution that exporters of services and manufactured goods in Scotland make to our economy and the jobs that they sustain and support. Scotland, as part of the United Kingdom, is an open economy that is welcoming to investment from overseas, but it is also self-confident in expanding its role as a source of exports. When I speak to manufacturers in my constituency, whether Promat, engaged in exporting construction materials to the US and the rest of the EU, or Gaia-Wind, the fastest growing small or medium-sized enterprise in Scotland and the eighth-fastest growing SME in the UK, I see for myself the potential that exists in our country to rebalance our economy as a trading powerhouse and to rebuild our jobs market to grow the construction and skilled manufacturing sectors that suffered hugely in the global downturn from 2008.

I pay tribute to the continuing role that the Scottish Food and Drink Federation plays in growing our export markets. The industry has an annual export turnover exceeding £5.4 billion, employs nearly one in four of the Scottish work force and sustains 1,200 businesses. Four fifths of that contribution was made by whisky exports, which generated £4.3 billion for the Scottish economy last year, with 140 million cases of whisky exported to 200 markets across the globe. There is a good story to tell about how, against the odds in recent years, Scottish manufacturing exports have been an economic success story, growing by 1.9% last year.

Notwithstanding that, whether it is in Piketty symposia in the Houses of Parliament or on the doorsteps of Blackhill, Springburn, Robroyston or Roystonhill in my constituency last weekend, the message is the same: something is wrong in our economy. It is not working as it should, as is shown by its failure to return the effort that people put in at work to their pay cheques at the end of the week or month, and the insecure nature of the jobs that are being generated.

The UK’s balance of trade position, when compared with key EU and non-EU trading partners, has worsened in the past year, with strong performance in financial and other services offset by a weakening in the position on goods. There are important lessons to learn on improving the support that the Government provide to exporters, as well as on the need for certainty about Britain’s place in the world, principally through the pivotal role we play as a member state of the European Union, but also in the decision that people in Scotland will make in just over 90 days’ time: whether or not to remain part of the United Kingdom. I will address each of those in turn.

The most recent economic commentary released by the Fraser of Allander Institute identifies an unbalanced recovery as one of the key threats to the recovery being sustained in Scotland. It confirms that household consumption, through a decline in the savings ratio and the bundling on of more private debt, is driving a large portion of GDP growth. Business investment remains patchy and the prospects for export growth are mixed. Even allowing for the summer’s disruption at Grangemouth, net trade made a negative contribution to Scottish GDP last year in comparison with 2012. With the pound appreciating in value and demand in the eurozone remaining weak, it is clear that the Government, through UK Trade & Investment, should be doing more and working more proactively with small and medium-sized companies to help expand their export markets.

The Fraser of Allander Institute also finds that investment spending stagnated in Scotland in 2012 and 2013. Although confidence among small businesses in Scotland is rising, and the intent to invest more is evident, that is not yet translating into actual higher investment by firms in new plant machinery, research or technology, which are all required if we are to end a low productivity crisis in the Scottish economy. Many exporting manufacturers find access to finance remains among the biggest impediments to expanding their businesses. In a recent round table on finance, to which I contributed, Professor John Kay put forward the argument that since 2008 the pipelines in the financial system by which capital can be invested for productive economic purposes have not been functioning as they should.

We have seen one rabbit after another pulled out of the hat by the Chancellor, but we do not see investment actually rising. If we are to match the record on long-term investment enjoyed by countries like South Korea and Germany, we need to adopt some of their thinking about the pipelines needed to boost investment. The Government should be reforming our banking sector to create a proper infrastructure investment bank, modelled on the successful KfW in Germany, or similar institutions in South Korea and the US, and capable of financing long-term productive business investment. It should draw on the example of the Sparkassen in Germany to create regional banks focused on lending to small and medium-sized enterprises. It is only by constructing proper pipelines for capital that we will we see a long-term expansion in private sector business investment for Scotland and the United Kingdom.

Scotland is second only to London within the UK in its attractiveness for inward investment, but Ernst & Young’s latest survey found that the number of jobs created in the past year was lower than the year before, principally in manufacturing. There is more that this Government and the Scottish Government should be doing together to improve Scotland’s position, particularly in relation to inward investment from emerging economies.

As well as the skills of our work force, among the most important reasons for our strong position on inward investment is our membership of two connected, successful single markets: the United Kingdom and the European Union. Our membership of the EU sustains nearly 4 million jobs in the UK, according to the latest assessment by the CBI, and provides access to and influence over a single market of 500 million people. Our exporters would benefit from a successfully negotiated transatlantic trade and investment partnership because of our position at the heart of Europe. When the Prime Minister launches his increasingly unsuccessful short-term forays into EU diplomacy, for all the short-term defeats that he suffers, he puts at jeopardy long-term investment into this country because of weak leadership on Britain’s opportunities and our destiny within Europe.

Similarly, Scotland at the heart of a reformed United Kingdom is good for our exporters and best for investment. Nearly 340,000 people in Scotland are employed by companies based outside Scotland. Exporters benefit from an unrivalled network of diplomatic and trade links with the United Kingdom, with 270 diplomatic outlets and 169 for trade, compared with only 70 to 90 envisaged by the Scottish Government in their White Paper for independence.

We also enjoy the strength of 29 votes on the Council of the EU, required to drive the changes in fisheries policy that will benefit the fishing industry in Scotland, and we are able to shape decisions on international institutions from the G7 to the World Trade Organisation. WTO membership matters hugely to our exporters, because it guarantees low or no-tariff trade with 170 countries—no ifs, no buts and no need to negotiate individual bilateral trade agreements.

Just imagine if there were a yes vote in September. What would the practical consequences be? If it wanted to be in the EU, Scotland would have to adopt a different currency, creating an immediate barrier to trade and investment from the United Kingdom. The potential loss of hard-won VAT exemptions and zero ratings on food, children’s clothing and books, as part of the conditions for joining the EU as a new member state, would create further barriers for Scottish exporters and investors from elsewhere in these islands. A 1% fall in exports by Scotland to the rest of the UK equates to £450 million in reduced sales.

Scotland would have to replicate, at great cost, institutions that we currently share with people across these islands, adding costs for businesses protecting intellectual property, to provide just one example. Scotland would have to reapply for membership of the World Trade Organisation. The shortest recorded period for entry was Kyrgyzstan, at just under three years to conclude its chapters of agreement. An independent Scottish Government would have to negotiate its way back into the WTO, while our competitors used that period of uncertainty to promote their own domestic products against ours. What would tariffs applied by some of our major non-EU markets to Scottish goods in the period we were outside the WTO mean for jobs in our exporting industries in Scotland?

If we want the best future for exports and investment in Scotland, we are strongest within the United Kingdom and the European Union. If we make the right decision in September and follow long-term policies to boost exports, Scotland can have a prosperous future that will bring the fruits of economic growth to all its people.

[Mr Philip Hollobone (in the Chair)]

I understand that the Minister has flown back from Scotland especially for the debate. He will be delighted to know that he has 20 minutes for his response and the debate will finish no later than 5.15.

16:55

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I know from your frequent appearances at Scottish questions that you take a keen interest in Scotland. I congratulate the hon. Member for Glasgow North East (Mr Bain) on securing the debate, on an important subject. The Government’s policy on trade and investment is a key building block of our growth strategy, and that holds as true for Scotland as it does for the whole UK. I noted the hon. Gentleman’s comments on access to finance and will convey them to my colleagues in the Department for Business, Innovation and Skills and the Treasury. I share his concerns about what a yes vote would mean for our membership of the EU and will touch on that later.

When it comes to international trade and investment, as part of the United Kingdom Scottish businesses currently enjoy the best of both worlds—the local expertise of the Scottish Government’s trade and investment agency Scottish Development International, plus the international reach and reputation of the UK and UK Trade & Investment. In Scotland, UKTI works closely with Scottish Development International, which delivers trade services on the ground to local Scottish businesses and organisations. Scottish companies have access to both UKTI services and those provided by SDI. As part of our commitment to ensure that that close working relationship continues to deliver the best for Scottish exporters, in autumn 2012 the then Secretary of State for Scotland asked Brian Wilson, the former Scotland Office Minister, to conduct an independent review of support for Scottish exporting. His report was published last month.

The Wilson report identified many of the positives for business that come from Scotland’s being part of the UK, including the value that Scottish businesses place on the work of SDI and UKTI as a whole. The report suggests, however, that all agencies offering support to exporters need to work together better to deliver a seamless service to businesses, if they are to maximise success. The Government will study the recommendations to help us consider how best to do that. That is part of the UK Government’s continuous work to get the best from the services that they provide to business.

Of course, within the UK we currently benefit from a fully integrated open market. As the Wilson report says,

“it is critical to Scotland’s exporters—including those who currently sell to the rest of the United Kingdom—that their interests, such as having a fully integrated regulatory system and being border-free, are at the forefront of that debate.”

The UK Government have this week delivered to every household in Scotland a booklet entitled, “What staying in the United Kingdom means for Scotland”. There are sections headed, “By staying in the United Kingdom, Scotland’s public services are more affordable” and “By staying in the United Kingdom, your money is safe and goes further.” In the section entitled, “By staying in the United Kingdom, Scotland has a strong voice in the world”, we summarise something highlighted in the Wilson report:

“Companies based in Scotland have access to UKTI’s network of more than 1,200 staff”—

in 169 offices—

“in over 100 overseas markets working to support UK businesses. This is part of the UK’s wider diplomatic and consular network of over 220 locations, which also is able to help UK businesses, including those from Scotland”.

The Scottish Government propose a much smaller network, a third of the size that the UK currently has. That would be a major decrease in the presence and impact overseas that Scotland exerts as part of the UK. Yet they suggest that independence will be good for Scotland’s voice in the world. In their passion for independence, SNP leaders will say anything to make it sound easy, but as I am sure the Scottish people know, if it sounds too good to be true, it usually turns out to be so.

Last year, UKTI helped almost 2,000 firms in Scotland to export. Let us take one example. Exports are vital to the success of Scotland’s impressive food and drink sector, which the hon. Gentleman rightly highlighted. Cutting overseas support on this great scale would be a backward step for that industry. Together we can sell our products and services to the world more effectively against international competition. UKTI also works closely with UK Export Finance, which makes doing business overseas both more accessible and safer for Scottish firms by offering trade finance and insurance in case an overseas partner defaults. The Scottish Government have no plans to match that service, despite the fact that it can help to reduce the risk for Scottish firms as they do business overseas by spreading the risk across the broad shoulders of the United Kingdom.

On inward investment, UKTI promotes the whole of the UK overseas to potential foreign investors. That is another example of Scotland getting the best of both worlds, because, in addition, the Scottish Government and SDI promote the individual benefits of Scotland. UKTI helped to land three quarters of the inward investment projects that generated 13,500 jobs in Scotland last year. Our GREAT campaign has contributed to that, promoting businesses, tourism and education in Scotland, Wales, England and Northern Ireland. We are looking to make that work even more successful by making the most of the international focus that will be on the hon. Gentleman’s city for the Commonwealth games this summer.

The UK Government are working both with the Scottish Government on a joint international business conference to be held during the games period and through the British business house, to be based in Glasgow city chambers. As the hon. Gentleman knows, that is a very impressive venue, and we are most grateful to the leader and members of Glasgow city council for their support of that venture. UKTI will be using those events to promote and support British businesses, both in Scotland and across the whole UK.

Looking at trade policy more widely, in the spirit of Adam Smith, we can use our influence to push for free trade in the wider world. I noted carefully the hon. Gentleman’s comments about the WTO. I did not know about the minimum period that it had taken a new member to enter that organisation and I am very glad that he got that on the record, because, as he knows, those of us taking part in debates in Scotland about separation are often told that everything will happen seamlessly and automatically. To have a tangible example is most helpful.

The UK is using its global reach to lower market barriers and promote Scottish produce overseas. Whisky is a prime example. The UK is working to open markets and reduce tariffs on Scotch all around the world. Last year, we worked with the whisky industry to bring down barriers in 12 countries. As the chief executive of the Scotch Whisky Association said in its annual review,

“we rely on effective support from government in our overseas markets...The Scottish Government White Paper envisages a network of 70 to 90 overseas missions, but we export to around 200 markets. A diplomatic network with the necessary geographic footprint, expertise, and influence...will continue to be essential.”

As the hon. Gentleman said, a particular concern of the Scotch whisky industry is the status of the agreements currently in place, particularly with countries such as India and China. What would the status of those agreements be in the hiatus period between Scottish independence and Scotland’s full membership of the EU, or would they have to be negotiated from scratch? That is of significant concern to the industry and, as with so many aspects of the independence debate, no answers are forthcoming from those who propose separation.

An independent Scottish state would face tough choices about its international priorities. It would be a lengthy, expensive process for Scotland to set up its own diplomatic, consular, trade and other international services— a support structure the UK already has in place—to work for its businesses and nationals all over the world. The argument is not whether Scotland could do so in due course; no doubt it could. The argument at the heart of our referendum campaign is whether it would be better for Scotland to do so or to continue to work in the effective way provided by the UK’s diplomatic, consular and trading arrangements.

The most recent economic analysis shows that Scotland’s economic recovery as part of the UK is going strong. The Fraser of Allander Institute notes that the Scottish economy has been growing for seven consecutive quarters and that the growth rate rose at 1.6% throughout 2013, while the Scottish ITEM Club has revised its forecast for Scottish economic growth upwards by 0.7 percentage points and now expects the Scottish economy to grow by 2.4% this year.

As the hon. Gentleman will know, in the past the Scottish Government have placed a lot of weight on exporting to China and on the views of the Chinese Government. Recently, however, they do not seem to be so much in agreement with the Chinese Government, perhaps because the Chinese Premier, when asked about the referendum on his visit to the United Kingdom, said that he wanted a “united United Kingdom”. I think that that sums it up well. He is the latest in an ever-growing list of world leaders who have made it clear how much rests on the referendum.

We want the best for Scotland. The Government and the people of England, Wales and Northern Ireland believe that Scotland is better off in the UK and that the UK is better off with Scotland in it. We do not need to go through a painful separation. As a United Kingdom, we have the best of both worlds, working together to help international trade and investment in Scotland to thrive. For many of the reasons that the hon. Gentleman has set out in this important debate, we wish and need to remain together. That is why, for reasons of international trade as well as a host of others, I will be urging my fellow Scots to say “No thanks” on 18 September.

Question put and agreed to.

17:08

Sitting adjourned.

Written Statements

Tuesday 24th June 2014 Written Statements

Tuesday 24 June 2014

Education, Youth, Culture and Sport Council

Tuesday 24th June 2014 Written Statements

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

A meeting of the Education, Youth, Culture and Sport Council was held in Brussels on 20 and 21 May. I represented the UK for the cultural and audiovisual section of the Council and Shan Morgan, the UK’s Deputy Permanent Representative, represented the UK for the sport section of the Council.

Culture and audiovisual

The Council was invited to adopt two Council decisions relating to the European capitals of culture action.

The first decision formally designated Leeuwarden in the Netherlands as European Capital of Culture for 2018. Leeuwarden was selected by a European panel of experts following a competitive selection process, and will hold the title in 2018 alongside Valletta, Malta, which was formally designated by the Council last year.

The second decision established a procedure for the Council to appoint three experts to the European selection and monitoring panel for the European Capitals of Culture 2020-33, as established by decision 445/2014/EU. According to that decision, the Council will be entitled to appoint three experts to the panel every three years. The procedure adopted provides for three member states whose cities are not subject to selection or monitoring during the relevant three-year period to be selected by ballot.

Those member states will then nominate one expert each, selected from a pool of suitable candidates maintained by the Commission, to be appointed by the Council.

The UK supported the adoption of both of these Council decisions.

The Council was also invited to adopt conclusions on cultural heritage as a strategic resource for a sustainable Europe. The proposed conclusions show that cultural heritage is well placed to deliver a wide range of benefits for society as a whole. These benefits are associated not only with economic growth but also with good quality environment, social well-being, intercultural dialogue, promotion of a sense of belonging to a community, and ultimately, with the building of a more cohesive Europe. The UK supported the adoption of these conclusions.

The Council held a policy debate on the future EU work plan for culture. The debate was based on a discussion paper circulated by the Greek presidency which invited member states to identify their priorities for the next work plan. In the debate France called for an EU cultural strategy to guide the adaptation of EU policies to the digital environment, including in competition, trade and taxation policies. This was supported by several member states who saw challenges for culture arising from digitisation and globalisation. Germany proposed a new working group to monitor and evaluate the impact on culture of policies and proposals in other areas, while Portugal and Spain called for greater co-operation and co-ordination between member states and at transnational level. Other key issues raised by member states included cultural diversity, cultural heritage, the role of culture in education, support for the creative industries, cultural statistics and access to culture. For the UK, I argued for further work on new sources of funding for culture and on data collection and evaluation to establish the added value of culture. Italy noted that it will take forward work on the new Work Plan for Culture during its forthcoming Presidency of the Council.

The Commission presented an update on the state of play in the negotiations for the transatlantic trade and investment partnership (TTIP) between the European Union and the United States of America.

The Commission regretted that audiovisual services had been excluded from the negotiating mandate but assured the Council that this exclusion had been respected during the negotiations. In the exchange of views which followed, a number of member states, including France, Germany and Belgium, underlined their support for the exclusion of audiovisual services from the mandate and pressed the Commission to ensure greater transparency in the negotiating process. I restated our position that the UK would have preferred to include audiovisual services in the mandate; and I expressed our support for the Commission in seeking to negotiate an agreement which will benefit the EU and its member states, contributing to economic growth and job creation.

Sport

The Council was invited to adopt conclusions on gender equality in sport. These conclusions recognise the important role that sport can play in terms of promoting equal opportunities and social inclusion. The UK supported the adoption of these conclusions.

The Council also adopted a resolution on an EU work plan for sport. The work plan sets out a programme of activity for the 2014-17 period and follows on from the current work plan for 2011-14 which is drawing to a close. The resolution identifies three priority areas for action: integrity of sport, in particular anti-doping, the fight against match-fixing, protection of minors, good governance and gender equality; the economic dimension of sport, in particular sustainable financing of sport, the legacy of major sport events, economic benefits of sport and innovation; and sport and society, in particular health-enhancing physical activity (HEPA), volunteering, employment in sport as well as education and training in sport. The UK supported the adoption of the resolution.

The Council held a policy debate on the economic, social and environmental sustainability of major sports events. The debate was introduced by a joint presentation by David Grevemberg, CEO, and Gordon Arthur, director of communications, of the Glasgow Commonwealth games 2014, who provided an overview of the key challenges and opportunities presented by the games. They highlighted the importance of ensuring that such events are inclusive and create social, economic and environmental benefits for local areas and communities.

In the debate several member states highlighted the difficulty of competing with larger economies for major sporting events and some proposed joint bids between European countries both to share costs and as a way of matching bids from larger countries. Several member states noted that the economic, social and environmental aspects had to be factored into the planning of major events from the outset in order to ensure a lasting legacy. The UK used the example of the London 2012 Olympic and Paralympic games to demonstrate the significant impact and transformative effect which major sports events can have on local communities and on levels of participation in sport. The Commission noted that all major events should be certified as “green”; and that through co-operation with the sports movement, human rights abuses around such events needed to be addressed.

Other Business

The Commission presented its communication on European film in the digital era; and the presidency informed the Council about the World Anti-Doping Agency meeting which took place in Montreal on 17 and 18 May.

Finally, Italy informed the Council of the work programme and priorities for its forthcoming Presidency of the Council. For culture and audiovisual, this will focus on the preparation of the next work plan for culture, as well as on the role of cultural heritage and digitisation. For sport it will focus on the role of sport in promoting economic growth.

Conflict Resources

Tuesday 24th June 2014 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Together with my right hon. Friends the Secretary of State for International Development and the Secretary of State for Defence, I wish to update the House about our plans for funding conflict prevention, stabilisation and peacekeeping activities through the conflict resources settlement for the financial year 2014-15. Our written ministerial statement of 13 June 2013, Official Report, column 14WS, provided details of indicative planned allocations for financial year 2014-15, covering both the conflict pool and the peacekeeping budget. This statement updates the House on adjustments made to these planned allocations.

We have now reviewed conflict pool allocations for financial year 2014-15. This funding will continue to be spent within the strategic direction set by the building stability overseas strategy (BSOS) and remains an important priority for the Government. It is central to our national interests to enhance stability by supporting the development of societies with strong and legitimate institutions which can manage tensions peacefully.

The size of the overall settlement increases to £683 million in financial year 2014-15, with the peacekeeping budget continuing to have first call on available resources. Taking into account trends in peacekeeping demands and the recent significant savings we secured at the UN, in particular in the tri-annual negotiations on the scale of contributions, £444 million has been set aside for the peacekeeping budget, comprising £70 million of official development assistance (ODA) drawn from the conflict pool and £374 million non-ODA funding from the Treasury reserve. We have therefore been able to allocate £239 million to the conflict pool. This represents an increase of £10 million over last year’s allocation.

Safety, Transparency and Openness in the NHS

Tuesday 24th June 2014 Written Statements

[The Secretary of State for Health (Mr Jeremy Hunt)]

Today I am announcing a package of measures to boost safety, transparency and openness in the NHS.

In March, I announced a new ambition to reduce avoidable harm in health care by half, thereby saving 6,000 lives. A new campaign—“Sign Up to Safety”—will be launched today to help achieve this ambition. The campaign will call for everyone working in the NHS to listen to patients, carers and staff, learn from what they say when things go wrong and take action to improve patient safety. Every health care organisation will be formally invited to sign up to the campaign and commit to delivering a safety plan that will contribute to the new ambition. The safety plans will be reviewed by the NHS Litigation Authority, and if the plans are robust and will reduce claims, trusts will receive a financial incentive from the NHS Litigation Authority to support implementation of their plans. This is just one way that we can tackle some of the financial costs of poor care.

In the Government’s response to Sir Robert Francis QC’s “Public Inquiry into Mid Staffordshire NHS Foundation Trust”, we pledged to create a hospital safety website for the public. As of today, NHS Choices will provide key hospital-level patient safety data in one place which means the public can see how hospitals compare in terms of safety across seven key indicators—including reporting culture, hospital infections and cleanliness, response to patient safety alerts and health care staff recommendations to their friends and families about the organisation they work in. In our response, the Government also said that hospitals needed to be more transparent about staffing levels, and for the first time the new hospital safety website will tell the public whether a hospital has achieved its planned levels for nursing hours.

Finally, I am announcing an independent review into creating an open and honest reporting culture in the NHS chaired by Sir Robert Francis QC, who chaired the landmark inquiry into the poor standards of care in Mid Staffordshire NHS Foundation Trust. The review is being established to provide independent advice and recommendations on measures to ensure that NHS workers can raise concerns with confidence that they will be acted upon, that they will not suffer detriment as a result and to ensure that where NHS whistleblowers are mistreated there are appropriate remedies for staff and accountability for those mistreating them. The review will consider the merits and practicalities of independent mediation and appeal mechanisms to resolve disputes on whistleblowing fairly. It will do this by listening to and learning the lessons from historic cases where NHS whistleblowers say they have been mistreated after raising their concerns and by seeking out best practice.

The safety campaign that we are launching today, together with what is now an unprecedented and world-leading level of transparency and openness, will help to create the right conditions needed to harness the commitment of everyone in the NHS to deliver the best and safest possible care.

IPSA's Estimate (2014-15)

Tuesday 24th June 2014 Written Statements

[Mr Charles Walker (Broxbourne)]

(Representing the Speaker’s Committee for the IPSA): The Speaker’s Committee for the IPSA is established under the Parliamentary Standards Act 2009. Under statute it must review IPSA’s estimate before it is laid before the House and decide whether it is satisfied that the estimate is consistent with the efficient and cost-effective discharge by the IPSA of its functions.

The Committee has approved IPSA’s draft estimate for 2014-15 without modification, in line with the advice provided to it under statute by HM Treasury.