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Buckinghamshire County Council (Filming on Highways) Bill (Lords)
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Oral Answers to Questions
(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Henry Smith (Crawley) (Con)
1. What progress he has made on his plans to bring down the level of reoffending.
Mr Mark Harper (Forest of Dean) (Con)
6. What progress he has made on reducing the level of reoffending.
Rehman Chishti (Gillingham and Rainham) (Con)
7. What progress he has made on his plans to bring down the level of reoffending.
Stephen Mosley (City of Chester) (Con)
9. What progress he has made on his plans to bring down the level of reoffending.
Fiona Bruce (Congleton) (Con)
17. What progress he has made on his plans to bring down the level of reoffending.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
We remain on track in delivering our reforms to transform rehabilitation and bring down reoffending rates. Since 1 June, the new national probation service and community rehabilitation companies have been working together to manage offenders. The competition for new owners of the 21 community rehabilitation companies will conclude later this year.
Henry Smith
I am grateful to my right hon. Friend for that answer. What progress has his Department made in establishing a network of resettlement prisons?
Chris Grayling
We are on track to establish the network of resettlement prisons later this year to coincide with the commencement of the mentoring and supervision of under-12-month offenders. This part of our reforms is enormously important. It will mean that offenders will spend the last few months of their sentence in or just outside the geographic area into which they will be released in order to ensure that we have a proper through-the-gate service to plan, prepare and implement arrangements for their release.
Chris Grayling
I can confirm that arrangements were put in place in the Offender Rehabilitation Act 2014 to ensure that there is a statutory obligation to make arrangements for women. We want to ensure that both men and women have full access to through-the-gate support and preparations for release. The Minister of State, Ministry of Justice, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes), is working on a number of innovative projects in the women’s estate to ensure that we do the best possible job of preparing women for release and deal with their particular circumstances, especially when they have young children and families.
Rehman Chishti
In a written answer, the Under-Secretary of State for Justice, my hon. Friend the Member for Kenilworth and Southam (Jeremy Wright),confirmed that the top five repeat offences include theft, assault, drink-driving, criminal damage and drug possession. What steps are the Government taking to address those repeat offences?
Chris Grayling
One of the key changes we are pushing through in the Criminal Justice and Courts Bill, which is currently in the other place, will ensure that repeat cautions are not used in the routine way they have been in the past. My view is that if somebody systematically commits a particular offence they should be brought quickly before the courts. Although a caution might initially be appropriate, it is certainly not a tool that should be used again and again.
Stephen Mosley
Has my right hon. Friend made any recent estimates of the cost of reoffending both in financial terms and in terms of the harm it does to society?
Chris Grayling
The official National Audit Office estimate is that about £13 billion a year is spent by our nation as a whole on dealing with the consequences of reoffending. Reoffending is now a particularly significant part of our national crime picture. We have seen crime rates and the number of first-time entrants to the criminal justice system fall, so more and more of our problem is with reoffending and that is why it is such a priority for us.
Fiona Bruce
What progress is being made on the provision of mentoring to help reduce reoffending?
Chris Grayling
I am very much of the view that mentoring is an important part of the way we support former offenders as they come through and leave the prison system. It is essential that we help them get their lives back together again, particularly given the fact that many of them come from the most difficult of backgrounds. I am encouraged by the number of voluntary sector organisations that have expressed an interest in and put their names forward for the transforming rehabilitation programme. The voluntary sector will play an extremely important part in the way things develop in the future.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
When did the Secretary of State last meet the Secretary of State for Health to discuss mental health services and drug services? They are under pressure in many areas and it is vital to follow that up in order to support people coming out of prison by ensuring that they have access to those services.
Chris Grayling
I completely agree with the hon. Lady. The last conversation I had with the Health Secretary about this was a week ago. We intend to do joint work on it and I see it as my Department’s next big priority. It is something we have to tackle and to tackle effectively.
Toby Perkins (Chesterfield) (Lab)
My constituent Gwen MacDonald has worked for more than 20 years in the probation service in Sheffield. When she asked why she had not been selected to move with the national probation service—she was to move to one of the new companies instead—when someone who had been in the service for only six months had been selected, she was told that it was because the selection was done by drawing names from a hat. Does that not show an utterly shambolic approach to probation? Does it not say everything about this Government’s approach, and what is the Secretary of State going to do about it?
Chris Grayling
What the hon. Gentleman says is absolute nonsense. Names were not drawn from a hat. There was a carefully constructed process of selection and a proper appeal mechanism for those who were unhappy with where they had been allocated.
John Mann (Bassetlaw) (Lab)
Recorded rates of reoffending are going to plummet in Bassetlaw because police cells have shut, there are fewer police, and now 800 years of local justice are to be ended by getting rid of the criminal court. Does the Secretary of State not worry that he will wake up one night with destroying local justice on his conscience? What is he going to do to ensure that we can have reoffenders prosecuted locally in Bassetlaw?
Chris Grayling
I am not aware of the individual circumstances of the hon. Gentleman’s local court, but I can tell him that any changes being made to the listing procedures in our courts in Bassetlaw are being made at the instigation of local committees, local magistrates and other representatives of the justice system, who are taking a decision in the best interests of the area.
Dan Jarvis (Barnsley Central) (Lab)
It is important that we reduce reoffending so that we have fewer victims of crime, but far too many victims are being failed by our criminal justice system. Yesterday, a serial victim of domestic abuse was almost forced to disclose her safe address during a court hearing; she was saved only when the local Member of Parliament intervened. Months have passed since the Government blocked our proposals to prevent such cases from happening. When is the Secretary of State going to protect victims with a proper victims law?
Chris Grayling
The Opposition always talk about laws. What we have is a victims code, which was put in place last year and was widely welcomed by victims’ groups. We are also following innovative new approaches, such as the scheme being trialled now to protect vulnerable witnesses by keeping them outside the cordon of the courtroom. I am always open to ideas about how we can improve the situation. Victims are a priority and will continue to be so.
Mr David Ward (Bradford East) (LD)
As an avid reader of the Bradford Telegraph & Argus the Secretary of State will know that 104 people are driving on the streets of Bradford who have amassed 12 or more points on their licence—some have as many as 20. Does he believe that that is an acceptable state of affairs? Is he worried about this rate of serial reoffending in Bradford?
Chris Grayling
It is of course utterly unacceptable that that is the case. We are in the process of both tightening up and looking at further ways to tighten up our driving laws. The Criminal Justice and Courts Bill now contains provisions to deal with disqualified drivers and we are reviewing other aspects of the motoring system, to ensure that it is acting appropriately and justice is being done. We shall certainly take account of the experience in Bradford in that review.
Helen Jones (Warrington North) (Lab)
How does the Secretary of State propose to reduce reoffending when, at the last count, workshops in HMP Risley in my constituency had been closed on 110 occasions because of a shortage of staff? He knows full well that one of the best ways to prevent reoffending is training and education, so when is he going to get a grip and make sure that there are enough prison officers available to deliver that?
Chris Grayling
We have increased the number of hours of work being done each year in our prisons by about 2.5 million, and we intend to continue to do that. We are in the process of doubling the amount of education available to young people in the youth estate, and the hon. Lady knows that Warrington has such a facility at Thorn Cross prison. We intend to continue to identify ways to deliver purposeful activity in prisons, so that people have the best chance of not reoffending.
Heather Wheeler (South Derbyshire) (Con)
2. What factors the Parole Board took into account in deciding to release on parole Keith Williams who was convicted of rape in 1999.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
As my hon. Friend knows, the Parole Board is independent of Government, but in all cases where the board has the power to direct release it issues guidance to its members on the range of factors to be taken into account in making an assessment of risk.
Heather Wheeler
Why was it that after his first Parole Board hearing, Keith Williams was denied parole, and after his second hearing, armed with the same facts, he was given it? Is it not worrying that two different groups of people can come to completely polar-opposite conclusions?
Jeremy Wright
I understand entirely my hon. Friend’s concerns about the case, and my sympathy and, I know, hers goes to the victim of Keith Williams who is her constituent. I understand the position in this case to be that a mistake was made in the first instance by those within the Ministry of Justice, for which I apologise, regarding the disclosure of the victim impact statement to the defendant and his solicitors; but the second time the matter was considered by the Parole Board, the board received different information, including a psychological report it had not seen before. My hon. Friend will understand that, because the board is independent and reaches its own conclusions, I cannot undo what it has decided. What I will do is make sure that the maximum reassurance over the licence conditions that were imposed is provided to her constituent.
Nia Griffith (Llanelli) (Lab)
3. What the Government’s strategy is for the future of the probation service.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
19. What progress he has made on changes to the provision of probation services.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Reoffending rates remain unacceptably high, particularly among short-sentenced offenders. By bringing in a diverse market of providers, paying by results for reductions in reoffending, and extending rehabilitation to all offenders leaving custody, we can bring down these reoffending rates. We are on track to deliver these essential reforms by 2015.
Nia Griffith
What reports has the Secretary of State received of cases going unsupervised since the 21 community rehabilitation companies were formed on 1 June? If he has received any such reports, what does he intend to do about them?
Chris Grayling
We have been bedding in the new system over the past month. I have been monitoring carefully what is happening. For example, the level of recalls has not changed significantly as a result of the changes. We are pushing ahead with the changes, and the organisational changes in particular, while the probation service is in the public sector to ensure that we can iron out the inevitable teething problems that accompany such a change. I am confident that good progress is being made, and public safety remains our No. 1 priority.
Mr Nicholas Brown
What is the Secretary of State’s latest estimate of the costs of his disastrous reorganisation of the probation service?
Chris Grayling
As a result of the reforms to the probation service, the criminal justice system will save money in the coming years as reoffending is brought down. It has for a long time been a travesty that those who go to jail for less than 12 months receive no supervision, support or mentoring at all when they leave. If we could just bring reoffending levels among that group down closer to the rates of those who do receive support and supervision, we would see a massive reduction in the costs of our justice system.
Crispin Blunt (Reigate) (Con)
Integrated offender management, working between the police and probation, is a proven way of helping to reduce reoffending and improving the work of the probation service. What is my right hon. Friend doing to bring the role of police and crime commissioners closer together with that of the probation service?
Chris Grayling
In the tendering process we required the bidders to take into account and demonstrate how they would reflect the local policing and police and crime commissioner priorities to ensure that we have a joined-up system. In a world of payment by results, if a local integrated offender management system is working well, it would be crazy for those involved in probation not to seek to take part in it if it would reduce crime levels, reduce reoffending and help them improve what they do.
Dr Julian Huppert (Cambridge) (LD)
What is the Secretary of State doing to retain expertise and local knowledge in the probation service during these changes?
Chris Grayling
We have been working very hard to ensure that we have a new strong leadership team. I am encouraged by the group of people who have come forward to take leadership roles in both the national probation service and the CRCs. Many of the existing chief executives have moved into those new positions. We also have a new generation of leaders who have emerged from the next rung down. From what I see on the ground, they are already delivering strong leadership and a sense of direction.
Jenny Chapman (Darlington) (Lab)
Listening to the Secretary of State, one would think there was nothing at all to worry about. Unfortunately, already we have seen lost files and staff unable to access information; charities are pulling out; and four of the mutuals intending to bid for services collapsed last week. Given all these problems, it seems pretty clear that even if he will not—I know he will not—abandon his plans altogether, a delay to the project would be the safest and perhaps the wisest thing to do. Will the Secretary of State please revise his timetable and resist the temptation to press ahead regardless of the risk to the public?
Chris Grayling
I keep hearing from the Opposition about the need to delay and to amend the timetable. We are spending most of the second half of this year, from the start of June through to the end of the year, making sure that the new system beds in properly, and we are dealing, in the public sector, with the teething problems that will inevitably arise. That is entirely consistent with what the hon. Lady is asking for; it is what we are doing.
Mr Rob Wilson (Reading East) (Con)
4. What steps he is taking to tackle the perception that people taking voluntary action for the public good can run the risk of being sued for negligence.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
We want people to feel able to take action for the public good without worrying about being sued if something goes wrong. We have therefore introduced the Social Action, Responsibility and Heroism Bill to provide reassurance that if that does happen the court will take full account of the context and the fact that they were acting for the benefit of society. [Interruption.] I hear the hon. Member for Hammersmith (Mr Slaughter) saying that it is rubbish, so he is opposed to clamping down on the health and safety culture and to backing our citizens. I would rather be where I stand than where he stands.
Mr Wilson
The Secretary of State is absolutely right. There is a growing perception that people risk being sued for things like clearing snow from their path, leading a school trip or helping in an emergency situation. I know he would agree that the Government should protect everyday heroes in our constituencies who get involved in such things. What further steps would help to address these important issues and the lack of common sense that people think takes place in the system at the moment?
Chris Grayling
As the Bill moves through the House and on to the statute book, I hope every hon. Member will make their constituents aware of the change that we are pushing through. But there is another important part of the Bill that my hon. Friend has not mentioned, which is the responsibility piece—the ability for us to provide a deterrent to an employee who tries it on in the face of a responsible employer who has done the right thing, when someone in their employment has done something stupid and still tries to sue. As part of our long-term economic plan, I want to see those responsible employers protected against spurious claims, and that is what the Bill will do.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Minister will know of my great interest in a proper system of citizenship training in this country and citizen service. Given the recent statement by a senior officer from Manchester that it was a dangerous place to be after a certain time of night at the weekends, surely the officer is not suggesting that volunteers should replace policemen.
Chris Grayling
I noted those comments with a little disappointment, because as far as I can see, incidents of crime and antisocial behaviour are falling not rising. If there is a particular problem in Manchester, that is clearly something that the police and crime commissioner there will have to deal with. However, I am encouraged that throughout the country our communities are becoming safer, not more dangerous.
Jason McCartney (Colne Valley) (Con)
5. What steps he is taking to ensure that there are sufficient prison places to accommodate people who receive custodial sentences.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
8. How many people are in prison in England and Wales.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
As of today, there are 85,542 prisoners in England and Wales, and capacity for 86,489, providing headroom of 947 spaces. We are changing the role of prisons that we do not need for their original purpose, bringing back into use capacity we did not need in the past, and building new accommodation at four existing prisons. As a result, 2,000 additional places will have been opened by April 2015, and we will have more adult male prison places at the end of this Parliament than we inherited. In the next Parliament, we will open a new prison in Wrexham, providing a further 2,000 places.
Jason McCartney
Nineteen-year-old Craig Hepburn from Scotland was visiting Marsden in my constituency in 2012 when he was killed. One of Craig’s killers, Anthony Driver, was out on licence at the time of the offence. Anthony Driver may be able to apply for early release in November 2019, which means that he will have served only six and a half years for Craig’s manslaughter. A sheriff commented at the trial that the community was safe only when Anthony Driver was behind bars. What consideration is there of the danger prisoners pose to their local community when they are considered for early release?
Jeremy Wright
I entirely understand my hon. Friend’s concern. Of course, from what he says, the individual in question was sentenced for manslaughter. That would be a determinate sentence. The courts will decide how long the sentence should be, and the release date comes automatically, as the law stands. He will know that this Government have legislated for extended determinate sentences, where people can spend the entirety of their sentence in custody. He will also know that we are keen to reduce the incidence of automatic early release. We have already done so for very serious violent offences—for child sex offenders, for instance—but we are keen to go further.
Tom Blenkinsop
Under this Government, the use of the emergency gold command has doubled in two years, and the riot squad has been called out 60% more times. Is this not an inefficient use of resources, which is dangerous for prisoners and prison staff?
Jeremy Wright
The hon. Gentleman needs to look carefully at the figures. He is right that there have been significant increases in the number of times that help has been asked for in prisons, but the majority of those incidents are not serious. When the Tornado team is called out to serious incidents, that too is registered. That is at half the level it was in 2007 when his party was in power.
Tim Farron (Westmorland and Lonsdale) (LD)
What is my hon. Friend doing to ensure that there are sufficient prison places to allow prisoners with families to be close to them, given the proven benefits for reintegration and the preservation of family life?
Jeremy Wright
My hon. Friend is right about that. That is why we are pursuing a model of resettlement prisons so that in the closing months of the custodial part of a prisoner’s sentence, which is when resettlement is uppermost in their mind, they are in a prison close to the area into which they will be released. That is a fundamental part of the reforms we are introducing to ensure that people have the support and supervision they ought to have when they go through the prison gate and into the community so that we can reduce reoffending.
Andrew Gwynne (Denton and Reddish) (Lab)
From the Minister’s earlier response, one might think that everything in the Prison Service is fine, so how many prison officers short is the system?
Jeremy Wright
We always try to provide the right number of prison officers at any given moment, and we are going through a process of what is called benchmarking to ensure that we have the right number to deliver the regime we need. It is true, of course, that there is a short-term problem following an increase in the prison population that nobody saw coming, including the hon. Gentleman and his colleagues. We are dealing with that problem by seeking to recruit prison officers who have recently left the service. That is the responsible thing to do, and we will carry on doing the responsible thing.
Philip Davies (Shipley) (Con)
Can the Minister tell us how many people are currently at large, having escaped or absconded from our prisons, and how many are currently sunbathing on the roofs of our prisons? On that point, will he give us an assurance that the next time prisoners escape on to the roofs, prison officers will not hand out sun lotion as they did last week?
Jeremy Wright
I will deal with my hon. Friend’s second point first. The answer is yes; that will not happen again. We have looked very carefully at that incident to ensure that there are no so-called health and safety policies that encourage such behaviour. As he knows, I made my views about it quite clear last week. On his first point, every incident of absconding is troubling and we need to crack down on it. That is why we are increasing the penalties for those who abscond and ensuring that only the right people find themselves in open conditions in the first place. He might be reassured to know that the level of absconding is 80% lower than it was under the previous Labour Government.
Sadiq Khan (Tooting) (Lab)
The Minister is a nice bloke, but he is giving the impression of being both complacent and out of touch. He will be aware that governors of overcrowded public prisons are being told to squeeze in more offenders without any additional resources or help. Can he confirm whether privately run prisons are taking on additional prisoners and, if so, how many, and what premium will they be charging the Government to get them out of their hole?
Jeremy Wright
Let me try to help the right hon. Gentleman with some facts. First, we certainly are asking private sector prisons to take some additional places. That is part of a contractual arrangement that is very similar to the one that was in place under his Government, which is perfectly standard business. Secondly, we are asking some prisons to take additional prisoners and asking some prisoners to share cells, which we do not think is unreasonable, in order to deal with the short-term spike that nobody anticipated. I suggest that the wrong thing would be to do as his Government did, which was to run out of prison places, then run out of police cell places, let thousands of people out early and then deal with the consequences. That is not a path we intend to take.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
When assessing the number of prison places, will my hon. Friend ensure that prison places in open prisons, such as Ford in my constituency, are filled only by prisoners who have been rigorously risk-assessed? Does he understand that when prisoners abscond from Ford prison and the police warn the public not to approach them because they are dangerous, that undermines confidence in that risk-assessment process?
Jeremy Wright
I do understand that, and of course it is important that we stand behind the principle of open prisons assisting in the rehabilitation of prisoners and making it less risky for the public when they are finally released, but my hon. Friend is right that only the right people should be in open prisons. We are tightening up the rules on how people move through the system into open prisons. We are sending the clearest possible message that prisoners who abscond from their sentence and abuse the trust they were given in an open prison will not get a second chance.
Andy McDonald (Middlesbrough) (Lab)
10. If he will take steps to ensure that mesothelioma victims do not have to pay legal costs from their damages. When the Government’s no win, no fee reforms apply to mesothelioma claims, it will be up to claimants’ lawyers whether they wish to charge their clients a success fee. There is no requirement for them to do so.
Andy McDonald
Given the revelation of the secret agreement between the Government and the Association of British Insurers to stitch up victims of mesothelioma, and the pathetic attempt to cover the tracks, will the Minister confirm his opposition to any non-transparent agreements or arrangements between the Government and commercial third parties that potentially negatively impact on mesothelioma sufferers’ compensation?
Mr Vara
First, I put on the record the hon. Gentleman’s deep interest in this issue; he secured an Adjournment debate about it earlier this year, to which I responded. As for the so-called secret deal with the insurance industry, may I just say that there was no secret deal?
Mr Robert Buckland (South Swindon) (Con)
One of the factors that drives up costs is the problem of discovering documents relating to medical and HMRC records. What discussions is my hon. Friend having with other Departments to make sure that we can speed up the process of disclosure?
Mr Stephen Hepburn (Jarrow) (Lab)
Does it not tell us everything we want to know about this nasty Government—doing a rotten deal with Tory funders in the City to the detriment of dying people?
Paul Flynn (Newport West) (Lab)
11. What assessment he has made of the potential effect on jobs in Newport of the privatisation of Ministry of Justice shared services.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The Ministry of Justice is entering into detailed discussions with Shared Services Connected Ltd regarding future delivery of its back office administration services. Subject to contract, the majority of Ministry of Justice shared services staff, including those at Newport, will transfer to SSCL under TUPE. Their jobs will be protected in their current location for at least 12 months from the date of transfer, expected to be in mid-October 2014.
Paul Flynn
Shared services in Newport have been a brilliant success, saving at least £10 million a year for the country. Steria has wasted £56 million without providing a report of any use. Are my constituents right to go on strike and feel anger against an ingrate Government who reward failure and punish success?
Chris Grayling
I very much regret the fact that the Government set about a path that led to that £56 million write-off—I mean the Government in office when the contract first started, before the 2010 general election.
Let me say to the hon. Gentleman and those staff in Newport, who have done a good job for us and will continue to do a good job for the services we provide across Government in the future: the reality is that we are having to take difficult decisions. The hon. Gentleman is part of a party that aspires to be in government in nine months’ time. That party needs to realise that if it is—God forbid—elected next year, it will have to take difficult decisions as well. It does not appear to have realised that.
David T. C. Davies (Monmouth) (Con)
Will the Minister confirm that there will be absolutely no offshoring of jobs as a result of the process, that jobs are safe for the next 12 months at the very least and that he and his senior officials, who have been very willing to discuss the issue with me in a calm fashion, will continue to be open to Members of Parliament with real concerns?
Chris Grayling
I give my hon. Friend that latter assurance absolutely categorically. Let me address the issue of offshoring. In my previous job, I said on the record that I did not want Departments that I ran to offshore UK jobs. My position on that has not changed.
John McDonnell (Hayes and Harlington) (Lab)
The question concerning the constituents of my hon. Friend the Member for Newport West (Paul Flynn) is not about which Government awarded the original contract to Steria; it is about whether, having wasted £56 million, a company should be rewarded with a contract double the size. Which Minister in their right mind would reward failure in that way?
Chris Grayling
The contract was awarded through the Cabinet Office as a result of a proper procurement process, and appropriate legal advice was taken.
Mr Andy Slaughter (Hammersmith) (Lab)
A total of £56 million has been wasted by this Government, rewarding failure, as my hon. Friend the hon. Member for Hayes and Harlington (John McDonnell) said, by one of the Secretary of State’s pet foreign private providers while offshoring hundreds of jobs to India. Why does he not face up to his responsibilities? He is right about one thing: as recently as February he told my hon. Friend the Member for North Ayrshire and Arran (Katy Clark):
“I have a track record of saying that I do not believe in offshoring UK jobs”.—[Official Report, 4 February 2014; Vol. 575, c. 131.]
He is saying one thing and doing another.
Chris Grayling
The hon. Gentleman clearly wrote that question before I answered the previous ones. Let me be clear again: the difficult decision that we had to take about the write-off was taken about a project launched by the previous Labour Government. As I said a moment ago, my position on offshoring has not changed.
Keith Vaz (Leicester East) (Lab)
12. What steps his Department is taking to return foreign national prisoners to their home countries to serve their sentences. 15. What steps he is taking to increase the number of convicted foreign prisoners returned to their home country.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
We are working hard to negotiate compulsory prisoner transfer arrangements with high-volume countries and have recently signed agreements with Albania and Nigeria and a memorandum of understanding with Somaliland.
Progress in transferring prisoners under the European Union prisoner transfer agreement is slower than I would like but we are starting to see the number of transfers increase as more countries implement the agreement. All foreign national offenders sentenced to custody are referred to the Home Office for it to consider deportation at the earliest possible opportunity.
Keith Vaz
Does the Minister share my concern that there are 10,695 foreign nationals in our prisoners, costing the taxpayer almost a third of a billion pounds a year? The top three countries are Poland, Jamaica and Ireland. Will he outline to the House what the difficulties are in convincing our allies to take back their own citizens? Would it help to speed up the process if nationality was declared at sentence?
Jeremy Wright
On the last point, we are in favour of all process improvements we can make, starting at sentence and working on through the system. The right hon. Gentleman is right that we face many difficulties. One of the most significant that we have discovered is that individual prisoners make legal challenges to deportation and transfer, many of which are based on human rights legislation. We therefore need to look again at that legislation to determine what we might be able to do to move things along more quickly.
The right hon. Gentleman will know that the Immigration Act 2014 gives us more opportunities to do that. It restricts the number of challenges individual foreign national offenders have and ensures that in some cases they can register their appeal and have it dealt with after being deported, not before. There are a number of measures that we can pursue.
Mr Nuttall
My constituents in Bury, Ramsbottom and Tottington will be pleased to hear of the action the Minister has taken, but with one in eight prisoners a convicted foreign criminal we still need to do a lot more, particularly about those prisoners who refuse to be returned because of human rights claims. What more can be done to get robbers, rapist and murderers, who have shown no respect for the rights of their victims, returned to their home country without claiming that their own human rights are being violated?
Jeremy Wright
I agree with my hon. Friend. It is important to look at what the Immigration Act will do. It will enable a better balance between the interests of the general public and the interests of the individual who is claiming, for example, that they have a right to a private and family life under article 8 of the European convention on human rights. As I said a moment ago, the Act will also restrict the number of appeals that individual has. But I think we can do more, and, as he knows, if the country has a Conservative Government after the next general election we will see further changes to our human rights legislation.
Mr Philip Hollobone (Kettering) (Con)
If these countries will not take their nationals back why can we not send them the bill?
Jeremy Wright
As my hon. Friend knows, I think that the best thing for us to do is to send them back, but inevitably the difficulties that we have spoken of this morning will get in the way. That is why we are doing what we are. He is well aware that this Government are utterly committed on this issue. We would certainly like there to be more removals under compulsory prisoner transfer agreements. He may know, as may the House, that the number achieved under those agreements by the previous Government was not high, although it was at least a round number.
Hugh Bayley (York Central) (Lab)
13. If he will meet hon. Members and civic and Church leaders from Leicester and York to discuss how the reburial of the mortal remains of King Richard III can be done in a way which acknowledges King Richard’s close association with Yorkshire.
The Minister of State, Ministry of Justice (Simon Hughes)
I recognise the hon. Gentleman’s interest in this matter, but I am afraid that I cannot encourage him by suggesting that there should be a meeting. The position is very clear. The university of Leicester applied for a licence to exhume the remains. That was challenged in the courts. The administrative court decided in May that the Secretary of State was entirely correct to grant the licence and it has been given to the university of Leicester. I understand that the intention is for King Richard III to be reburied in Leicester cathedral.
Hugh Bayley
I do not want to raise the matter of the licence, but I ask the Minister, in the interests of fairness, to reconsider. It is 16 and a half months since the Under-Secretary of State for Justice, the hon. Member for Kenilworth and Southam (Jeremy Wright) said in this House that many of the points that I had raised in the debate “deserve further consideration”. On 12 March 2013 in Westminster Hall—Vol. 560 of the Official Report, column 30WH—he said:
“We would be happy to facilitate a meeting between the people”
from York and Leicester to discuss the burial arrangements. Those arrangements need to be discussed.
A commitment was given by the Government. For the past 16 and a half months, they have said that they could not act on that commitment because the matter was before the courts. It is no longer before the courts. Will the Government therefore fulfil the commitment that they made, so that there is an inclusive funeral that does not exclude people from the north of England, who have strong feelings about the matter?
Mr Speaker
The question is too long. There will not be much left of the remains.
Simon Hughes
These remains have certainly occupied the attention of the House for a long time already. The hon. Gentleman is right that the offer of a meeting was made, but there was then a court challenge. The court challenge failed and the position is now absolutely clear: the licence was applied for properly and the university of Leicester can proceed. There will not be a meeting to facilitate that, but I am sure that the university and Leicester cathedral will ensure that other people’s interests are taken into consideration. King Richard III was the King of all England and did not just have particular interests in certain parts of the country.
Andrew Bridgen (North West Leicestershire) (Con)
Will the Minister join me in paying tribute to all those who have been involved in the recovery of the remains of Richard III? As the House will know, he was discovered under a car park in the city of Leicester. I am very pleased that, following the judicial review, he will remain, long stay, in that city.
Simon Hughes
My hon. Friend is quite right that it was a car park with an unusual interest. There was a belief that Richard III was buried in the grounds of the Greyfriars church. His body was found. The tradition is that bodies are buried in the nearest Christian church that is appropriate. As the MP for the area where the Rose theatre was discovered, I know that one can never underestimate the exciting things that can be discovered by good archaeologists.
Mr Speaker
We are all now better informed. We are grateful to the Minister.
Sir Tony Baldry (Banbury) (Con)
As the Minister said, Richard III was the King of all England, not just of York or Yorkshire. Is he aware that the Dean and Chapter of Leicester cathedral see it as their responsibility to rebury the remains of King Richard and to commemorate his memory on behalf of the whole nation, and not just for Leicester or York?
Simon Hughes
I have every confidence that the Dean and Chapter of Leicester cathedral will do that job for the nation. I understand that they intend to apply for an extension so that it may be done in the spring of next year. I believe that it will be a great credit to Leicester and will bring great joy to the people of Leicestershire that a King of England is buried in their county.
Valerie Vaz (Walsall South) (Lab)
14. What recent assessment he has made of the adequacy of provision of interpreters and translation services in court.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
There have been dramatic improvements in performance in the last two years and we continue to manage contracts to ensure that the improvements continue. We appointed independent assessors to carry out a review of interpreter quality standards earlier this year and look forward to receiving their recommendations shortly.
Valerie Vaz
The reality is that a constituent of mine who was sitting on a jury had to have the court adjourned for four days while it looked for a translator. Why have the payments to Capita Translation and Interpreting increased from £7 million to £15 million over the past two years?
Mr Vara
It is always regrettable when there are such individual circumstances, but the hon. Lady will appreciate that I cannot comment on specific cases. However, dramatic improvements in performance have occurred in the last two years and Capita routinely fills 95% of requests. On funding, I hope that she appreciates that in the first year of the contract, £15 million of British taxpayers’ money was saved.
Peter Aldous (Waveney) (Con)
18. What steps his Department is taking to encourage use of mediation so that going to court is a last resort.
The Minister of State, Ministry of Justice (Simon Hughes)
This April, a statutory obligation was introduced for separating couples to consider mediation when there are children or family implications. Obviously, they do not have to go through with mediation, but it must be considered, and is supported by legal aid. Last week Sir David Norgrove produced a report for me, which I commend to my hon. Friend. It suggests that we could significantly increase the number of disputes that go to mediation—currently, about 30% go to court—and that 30% could probably be resolved by mediation in the future.
Peter Aldous
Court orders for access arrangements for young children are a snapshot of the circumstances prevailing at a particular time, but such circumstances change rapidly as children grow up and their parents’ relationships and personal situations change. As a return to court to vary a court order can be harrowing, divisive and costly, will the Minister assure me that the Government will redouble their efforts to make mediation a meaningful alternative?
Simon Hughes
We are doing absolutely all we can to do that. We have consulted with the mediation industry and done publicity locally and regionally. The Government have an obligation to ensure that, whenever possible, disputes do not take place in public, as that exposes the private lives of families and children in particular. We believe that we can significantly reduce, down to 5%, the number of cases that go to court, and significantly increase—up to 30%, we hope—the number of cases resolved by mediation. We will do absolutely everything we can, and I am sure that we will see progress over the months ahead.
Sarah Champion (Rotherham) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
I wish to inform the House about the real progress that we are making on judicial diversity, and pay tribute to the work being done by the Judicial Appointments Commission on increasing the number of women in the judiciary. I am pleased that the latest statistics from the commission show that nearly half of all appointments are being taken up by women. There are now 21 women in the High Court—the highest figure ever—and following recent appointments, 26 women are being added to the circuit bench, and 29 to the district bench. A clear picture is emerging that the proportion of women in the judiciary is increasing year on year. That good work needs to continue, but I am pleased with the progress.
I am pleased that today the equal merit provision comes into force: where two or more candidates are of equal merit, selection can be based on gender or race for the purpose of increasing judicial diversity. I congratulate the commission on its work, and reiterate the commitment that I as Lord Chancellor, the Government, the Lord Chief Justice, and the chair of the Judicial Appointments Commission share in achieving a more diverse judiciary that reflects the society it serves.
Sarah Champion
It has come to light that Sodexo plans to bid for contracts to run 12 of the 21 probation areas. Does the Minister feel comfortable in trusting such vital work to a company that cut its staff budget so drastically that prisoners in Northumberland were able to riot?
Chris Grayling
First, I cannot comment on the nature of the organisations that have submitted bids. We have a good mix of organisations from a wide range of different circumstances across the country, I am pleased with the progress, and we will make further information available in due course. I have been to the prison in Northumberland since the trouble there, and I have no reason to believe that the event was connected to the public or private status of the prison—my understanding from staff is that it was started by a number of prisoners who were upset that their working day had been extended by an hour.
Greg Mulholland (Leeds North West) (LD)
T3. We have seen another celebrity convicted of a string of appalling child sex offences—someone who used and abused their position and their power. Is it not time that we had an overarching inquiry into the culture at that time and those historical sex offences, so that we can bring closure and learn lessons for the future?
Mr Speaker
Order. Of course, no sentencing has yet taken place—a fact of which I am sure the Minister is well aware, and will frame his response as he thinks fit.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
I am grateful to you, Mr Speaker; I was about to make that point. I would also make the general point that there is clearly a large number of important criminal investigations going on at the moment, so it would be sensible to let them take their course before we decide what it is best to do next in this important and sensitive area.
Sadiq Khan (Tooting) (Lab)
We have been saying for a while that Government policies would lead to a prison crisis, and they have. The wrong sort of offenders are being sent to the wrong sort of prison. That is not just our view but that of the hon. Member for Bognor Regis and Littlehampton (Mr Gibb). When Michael Wheatley absconded last month and allegedly committed further offences, the Justice Secretary said that he would bring in new rules to prevent such occurrences from happening again. Today, the media are reporting that two men—one a killer, the other serving an indeterminate sentence—have absconded from Spring Hill prison. The police have warned the public not to approach the pair. Why is the Justice Secretary finding it so difficult to keep the public safe?
Mr Speaker
This is a matter of particular interest to me as that prison is in my own constituency, as the Secretary of State might know.
Chris Grayling
Mr Speaker, I can reassure you that the proportion of offenders who are sent to open prisons and who subsequently abscond is 20% of what it was when Labour was in power a decade ago. My question to the right hon. Member for Tooting (Sadiq Khan)is—[Interruption.] Over the past few weeks, as this has become a more high-profile issue—[Interruption.] I do not believe that it is sensible for this country to scrap open prisons. I believe it is sensible to have tougher risk assessment procedures and not to transfer people to open conditions if they have previously absconded, and we have put those changes in place in the past couple of weeks. To listen to the right hon. Gentleman, anyone would think that he believed in scrapping open prisons altogether. Actually, they are helping to rehabilitate offenders. They need to be there; they are there for prisoners who are in the last few months of their sentence. Almost everyone who goes to an open prison behaves well and is able to be released safely at the end of their sentence. Is he actually saying that that should change?
Sadiq Khan
Nice soundbite, but people are absconding after the Secretary of State has made his changes. So much for keeping the public safe. Let me move on to the subject of temporary licence. Not only are the wrong sort of offenders being sent to open prisons, but the wrong sort are also being released on temporary licence. The use of these ROTL procedures has increased by 24% since 2010, with breaches of licence arrangements up by a staggering 57% in that period. Can the Secretary of State confirm that, in 2012, this Government relaxed the rules on temporary licence, and that PSI 21/2012 accepted that
“there will be an increase in the number of ROTL applications”?
Chris Grayling
The number of prisoners absconding from open prisons and while on temporary licence is a fraction of what it was a decade ago. I keep going back to that point. It is all well and good for Labour Members to rail against things when they are in opposition, but they now purport to be a potential party of government and yet they have nothing positive to say on how they would manage the system differently. I have tightened the regime and introduced tougher penalties for those who abscond. If the Opposition think that we should close down open prisons altogether, they should say so.
Jesse Norman (Hereford and South Herefordshire) (Con)
T5. Hereford county court is a highly effective and important local institution. However, there is a break clause in the lease for the court premises for this next year. If the court has to move, has the Secretary of State considered co-locating it with other public services in Hereford? Can he reassure local people that, whatever happens to the premises, Hereford will continue to have a county court?
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
I can tell my hon. Friend that Her Majesty’s Courts and Tribunals Service is aware of the break clause in the lease for Hereford county court’s premises for next year. The Courts and Tribunals Service continues to keep the use of its estate under review to ensure that it meets operational needs.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
T2. Judge Robert Martin has heavily criticised the Government’s welfare and justice changes, saying that the work capability assessment is in a state of “virtual collapse”, and that the loss of legal aid funding“has severely reduced the help and support available to claimants to pursue their legal rights”.Why does the Justice Secretary think that it is acceptable to deny access to justice to people who are sick, disabled or poor?
Mr Vara
I think we need to put things into perspective here. Before the reductions to legal aid were made, Britain had one of the most expensive legal aid systems in the world, costing the taxpayer £2 billion. After the reductions have gone through, £1.5 billion will still go towards the legal aid system. That is a lot of money; it is one of the largest amounts being paid into any legal aid system in the world, and I can assure the hon. Lady that £1.5 billion buys a lot of legal aid.
Mr Rob Wilson (Reading East) (Con)
T7. Will my hon. Friend the Prisons Minister update my constituents on his Department’s success or otherwise in regard to the sale of Reading prison?
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
As my hon. Friend knows, we do not decide what the future use of the site will be as that will be a matter for the local authority. I am always keen, however, to keep parliamentary colleagues updated at key points in the process, such as when a site goes on the market and when we have reached the point of negotiating successfully with a preferred bidder. I will of course do the same for him, and if I can give him any more information I will seek to do so.
Kate Green (Stretford and Urmston) (Lab)
T4. In a written answer on 6 May, the Minister of State, Ministry of Justice, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) listed several domestic violence programmes for women in prison. His answer included some programmes that I am told do not actually exist. Can he tell me how many women are waiting, or being transferred to other prisons, to get the programmes they need? If he does not know now, will he write to me with the answer?
The Minister of State, Ministry of Justice (Simon Hughes)
I do not have the figures with me and I will of course write to the hon. Lady with the answer. From my visits to women’s prisons, I know that that is an issue that is on the agenda of every single governor, is regularly discussed with the prisoners themselves and is regarded as an extremely high priority. I will supply the facts she needs and would be happy to meet her to discuss the matter.
Mr David Burrowes (Enfield, Southgate) (Con)
T8. I recall a time under the previous Government when few prisoners did meaningful work in prisons and the interests of victims were left at the prison gates. Can the Minister provide an update on how much money has been raised from the implementation of the Prisoners’ Earnings Act 1996 for the benefit of victims?
Jeremy Wright
I cannot do so off the top of my head, but of course I will write to my hon. Friend and give him that information. As he heard my right hon. Friend the Lord Chancellor say earlier, the number of hours worked by prisoners has increased considerably under this Government. We have made sure not just that they have more work to do, but that they are given every incentive to do that work. They will need to work or engage in other types of productive activity if they want to earn their privileges, and they will no longer be able to sit in their cells and watch television all day.
Jessica Morden (Newport East) (Lab)
T6. The director of Ministry of Justice Shared Services has said that any proposals to offshore MOJ work in the future would need specific agreement from the Ministry. Can the Minister confirm today, for the benefit of staff in Newport and Bootle, that he will give no such agreement?
Chris Grayling
To reiterate what I said earlier, my views on outsourcing UK jobs are on record. I made them clear when I was an Employment Minister, and my position has not changed.
Jeremy Lefroy (Stafford) (Con)
T9. Stafford prison has a very good record in securing paid work for prisoners to carry out, including reshoring work from the far east. What support is he providing to others across the estate to continue that good progress?
Jeremy Wright
My hon. Friend is right. Reshoring is an effective way to provide more commercial work for prisoners to do, giving them not just purposeful activity but some of the skills and training they will need to earn a law-abiding life outside prison. In terms of what more we can do, he may know that in 2012 we set up an organisation called ONE3ONE Solutions which assists us to negotiate more commercial contracts and provide more work in prisons.
Bill Esterson (Sefton Central) (Lab)
Staff at the Ministry of Justice Shared Services department in Bootle face privatisation, as do those in the constituencies of my hon. Friends the Members for Newport East (Jessica Morden) and for Newport West (Paul Flynn). Given the shambolic write-off of £56 million on a previous Steria contract and the job cuts that followed the last privatisation the minute the 12-month moratorium ran out, what confidence can my constituents and those of my hon. Friends have that the privatisation of Shared Services will not cost them not only their civil servant status, but their jobs?
Chris Grayling
We are going through a complex process of change to deliver these services across the Government, rather than Department by Department. I cannot give long-term guarantees for the future. I have explained what the situation will be for the next 12 months and I have explained my position on the offshoring issue.
Stephen Lloyd (Eastbourne) (LD)
In the area of unpaid employment tribunal awards, I welcome the commitment from the Department for Business, Innovation and Skills to creating a penalty for those who do not pay awards handed down. Does the Minister agree, and will he commit the MOJ to supporting the proposal?
Kevin Brennan (Cardiff West) (Lab)
I thank the Prisons Minister for meeting me and Billy Bragg recently to discuss the issue of guitars in prisoners’ cells. I welcome the fact that the Minister confirmed that his decision will be taken on the security advice that he receives. Has he had that advice, has it told him that this is a manageable risk, and when does he expect to be able to make an announcement?
Jeremy Wright
May I, in turn, thank the hon. Gentleman for the way in which he conducted that meeting and for the very helpful information he was able to provide to me on that occasion? I am doing what I said to him that I would do, which is to look carefully at the security advice to ensure that it is robust, and that we make a sensible decision on the point he has asked me to consider. I will do that as quickly as I can.
Maria Miller (Basingstoke) (Con)
Posting revenge pornography on the internet is an appalling crime. Does the Secretary of State agree that the law needs to change to ensure that perpetrators are properly punished, and that the Criminal Justice and Courts Bill, which is currently being considered in the other place, could provide the Government with an opportunity to do just that?
Chris Grayling
I thank my right hon. Friend both for her question and for the contribution she made in the debate last week. She has done a very important job in raising this issue, which is clearly becoming a bigger problem in our society. What I say to her today is that the Government are very open to having a serious discussion, with a view to taking appropriate action in autumn if we can identify the best way of doing so.
Mrs Emma Lewell-Buck (South Shields) (Lab)
Last month, Judge Rook argued that all advocates taking on sexual offence cases should be required to undertake specialist training, so that vulnerable witnesses are questioned in a fair and appropriate way. Does the Minister agree that this will protect witnesses, particularly children, from the distress of harsh cross-examination? Will he set out what discussions he has had with the Bar Standards Board on this issue?
Damian Green
There are a number of interesting ideas on the very important issue of how we protect vulnerable witnesses. As the hon. Lady will know and I am sure will welcome, we have now introduced a pilot scheme whereby young, vulnerable witnesses do not have to go through the whole courtroom ordeal. In three courts, they can now be interviewed beforehand and the interview recorded and played back to the jury. That is one of a number of ideas we are taking forward to ensure that young and vulnerable witnesses in particular are given better protection than they have ever had before.
Mr Stewart Jackson (Peterborough) (Con)
As was said by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), meaningful work and training has an important role to play in reducing recidivism and encouraging rehabilitation. In developing future policy, will the Minister consider the success of the social investment bond at Her Majesty’s prison Peterborough?
Jeremy Wright
The answer to that is yes. As my hon. Friend knows, the excellent work in Peterborough has formed a large part of our thinking in rolling out our transforming rehabilitation reforms across the country. What is being done there is a very good example of what can be achieved if rehabilitation is followed through out of the gate and into the community.
Roberta Blackman-Woods (City of Durham) (Lab)
The Minister will know I have grave concerns, which are shared by the chief inspector of prisons, about the negative impact of overcrowding in Durham and in other prisons in my constituency. What specific steps is the Minister taking to alleviate this problem?
Chris Grayling
It is worth putting on the record the fact that the most recent figures show that the level of overcrowding in our prisons has fallen, not risen. Of course, there are challenges in parts of the prison estate—
Chris Grayling
Go and look at the figures. I can assure the shadow Secretary of State that the most recent figures show a reduction in the level of overcrowding in prisons. We are not in the position, as the previous Government were, of having to let prisoners out early because we have run out of space in our prisons.
Robert Halfon (Harlow) (Con)
Essex has one of the highest rates of domestic violence in the country. My right hon. Friend will be aware of two tragic murders that occurred in Harlow. On speaking to the parents of one of the victims, I was told that they felt that the support they were given after their daughter’s horrific death was inadequate, with the Crown Prosecution Service and others appearing to be poorly trained, and with inconsistent service from Victim Support. What assurances can my right hon. Friend give those parents that families will, in future, receive proper support when they have been victims of crime?
Damian Green
I am, of course, aware of the tragic case to which my hon. Friend refers. He will know that the Home Secretary commissioned Her Majesty’s inspectorate of constabulary to look at how the police respond to domestic violence, and action will be taken on that. He is right that other parts of the criminal justice system, including the CPS and the courts, need to take great care in how they treat victims and bereaved families. I know he has been in correspondence with the Minister with responsibility for crime reduction at the Home Office, and he is taking a close personal interest in how to progress.
Mr Speaker
Order. I am sorry to disappoint remaining colleagues, but we must move on.
Rail Link from Penzance to Paddington
Andrew George (St Ives) (LD)
I rise to present a petition on behalf of more than 3,000 petitioners from west Cornwall, which calls for a resilience rail service between Penzance and Paddington. It was largely precipitated because of concern about inadequate investment in that service and also, of course, because of the disruption caused to the service by the February storms in both Penzance and Dawlish. It promotes major investment in the sleeper upgrade, improved signalling and a train care centre at Long Rock in my constituency—something for which we have campaigned for a very long time and on which we expect an announcement shortly.
The first petitioner is Janet Trudgeon of Rosehill, Marazion, and the petition reads as follows:
The Petition of residents of St Ives constituency and others,
Declares that the Petitioners believe that if the Government can spend up to £50 billion on high speed rail investment to the north (HS2), the people of Cornwall should not be denied the investment necessary for a resilient rail service to Paddington.
The Petitioners therefore request that the House of Commons urges the Government to do what is necessary to make sure that the rail link from Penzance to Paddington is one that passengers can rely on.
And the Petitioners remain, etc.
[P001362]
Israeli Teenagers (Abduction and Murder)
(10 years, 2 months ago)
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Mr Peter Bone (Wellingborough) (Con)
(Urgent Question): To ask the Minister of State, Foreign and Commonwealth Office, if he will make a statement on the effect that the murder of three Israeli teenagers abducted by Palestinians will have on the middle east peace process.
The Minister of State, Foreign and Commonwealth Office (Hugh Robertson)
I visited Israel and the west bank from 17 to 19 June last week, just after the kidnapping of the three Israeli teenagers. The whole House will share our sadness that last night the Israeli Government confirmed that they had recovered their bodies in the west bank. As my right hon. Friend the Prime Minister has said, this is an appalling act of terror. There is no reason, belief or cause that can justify the abduction and killing of innocent civilians. We send our deepest condolences to the families of Gilad Shaar, Naftali Frenkel and Eyal Yifrach.
The Government remain in close contact with both the Israeli and Palestinian authorities. The urgent priority is to hold those responsible to account under the rule of law, and we stand ready to do everything possible to help. The Home Secretary has been in Israel and the west bank this week and has had discussions with political leaders on both sides. I welcome President Abbas’s condemnations of the abduction. We are encouraging Israel and the Palestinian Authority to continue to work together to find the perpetrators. I saw evidence of that co-operation during my visit and it is vital that it continues in the days and weeks ahead. It is also vital that all parties avoid action that could escalate the situation further. All security operations must be handled with due care, restraint and a proportionate use of force.
It is too early to be clear about the full implications for the middle east peace process, but we will do our utmost, with our allies and partners, to keep open the prospects for a return to negotiations on a two-state solution, which is, and remains, the only way to resolve this conflict once and for all.
Mr Bone
I thank the Minister for that full answer. I am sure the whole House would endorse his comments about passing our sympathies and prayers to the families directly affected and also to the nation of Israel. I cannot help but reflect on what the feeling of this House would be if three teenagers from Wellingborough had been abducted and murdered by terrorists.
May I press my right hon. Friend on a few issues? It is true, I believe, that overseas aid to the Palestinian Authority has been used to provide salaries for the families of convicted Palestinian terrorists. Given the propaganda celebrating the abduction of the Israeli teenagers, should we review that? Will the Government support the Israeli Government not only in their actions to track down the perpetrators of this evil crime, but in dismantling the infrastructure of the Hamas organisation?
Does my right hon. Friend share my concern that part of the Palestinian Fatah-Hamas unity Government is a terrorist organisation that carries out such dreadful crimes? It seems completely illogical that it can be thought of as part of a democratic process. Will he also set out his concerns a little more about how this incident will affect the ongoing peace process? Unless such terrible acts of terror can be stopped, I do not see how we can move the peace process forward.
Hugh Robertson
I thank my hon. Friend for his questions and, indeed, for securing the urgent question.
On the question of salaries, as luck would have it, the Minister of State, Department for International Development, is sitting next to me, and he absolutely confirms that this is not true; it is an old rumour. The money is paid through a World Bank trust fund to vetted people, who are nominated civil servants.
As for the actions of the Israeli Government, we have had extensive consultations with the Israeli Government. We absolutely understand that this is an extraordinarily difficult time in the region and that tensions are running high. Indeed, for Members of all parties who have not been there recently, it is difficult to understand how this event has consumed Israeli society. While I was there, it was running on the tickertape 24 hours a day. It is crucial that any actions that the Israeli Government take are precisely targeted to find the perpetrators and that, in doing that, they avoid a more general escalation.
On the question of Fatah and Hamas, the technocratic Government are signed up to the Quartet principles. If anybody in that Government were an active member of Hamas, which remains a terrorist organisation, that would absolutely be the end of this Government’s dealing with them and would be a very serious matter indeed. That is not the case at the moment; they are fully signed up to the Quartet principles.
As to the effect on the peace process, it is an absolutely pivotal part of British Government policy at the moment to try to create the conditions under which the peace process can be restarted. Everything we are doing is to try to rebuild those conditions, which is absolutely to the benefit of both sides. If this situation goes on, with further settlement building on the one hand and applications to international organisations on the other, there will not be another chance. I urge all Members, with whichever side they sympathise, to do everything possible to de-escalate the situation and encourage both parties to return to the negotiating table.
Ian Lucas (Wrexham) (Lab)
I thank the Minister for his answer to the urgent question.
Today, Israel is united in grief at the appalling murders of Naftali Frenkel, Gilad Shaar and Eyal Yifrach. The whole House will unite in expressing the most profound sympathy to the families and loved ones of the murdered young men, whose photographs today convey to us the heinous crime that this is. Those of us who are parents can barely contemplate what those close to the young men are going through. It is imperative that those responsible for these crimes be brought to account, and I call on everyone to co-operate to achieve justice. This was an appalling act of terror, intended to increase the suffering, bloodshed and injustice that have too long scarred the region.
With every tragic casualty in this conflict, the prospects of peace seem ever further away, but now is the time for the international community to unite around those parties on all sides that are willing to take difficult steps to make progress towards peace. In the light of that, will the Minister set out what contact he has had with his Israeli and Palestinian counterparts in the past 24 hours? Will he set out his assessment of the impact these latest tensions are likely to have on the Palestinian unity Government and the Israeli Government’s policy towards them?
The Minister will be aware of the Israeli Government’s insistence that Hamas is responsible for the kidnapping and murder of these three innocent young men, but will he provide the British Government’s assessment of today’s claims of responsibility for the murders by the jihadist group, Supporters of the Islamic State in Jerusalem?
These are perilous times and the risk of further bloodshed is high. The US Under-Secretary-General Jeffrey Felton was right to say that both Israelis and Palestinians should exercise maximum restraint to prevent tensions from escalating further. I hope the Minister will assure us that the British Government will now seek to work with international allies to call for calm, to encourage dialogue and work towards peace in an effort to overcome this moment of great and grave danger.
Hugh Robertson
I thank the Opposition spokesman for his support and for the way in which he set out his case. We absolutely agree with him that this is a moment for exercising maximum restraint. Let me answer the hon. Gentleman’s three questions in order.
On contact with our Israeli counterparts, I have already communicated with Minister Livni, who is my direct counterpart, and I saw Minister Steinitz when I was in Israel a week ago, and he saw the Foreign Secretary when he was in this country at the end of last week. The Home Secretary has been in both Israel and the west bank for the past couple of days and has seen interlocutors on both sides. That contact is strong and ongoing.
On the impact on the Palestinian Government, this is a serious moment and I absolutely welcome President Abbas’s strong condemnation of the actions, both overnight and indeed in his speech in Riyadh a week ago. When I was in Israel, both sides acknowledged the security support that had been given by the Palestinians in the early stages of the incident.
As for who is responsible, it is too early to say. The British Government have no firm evidence, and nothing from the Islamic state in Jerusalem. It is fair to say to the hon. Gentleman, in the spirit of openness and honesty, that the Israeli Government are very clear about the fact that Hamas was responsible. When I was in Israel 10 days ago, there was some indication on the Palestinian side that that might be correct, but we have no hard evidence in London to back that up.
Alistair Burt (North East Bedfordshire) (Con)
I sometimes fear that the only thing that unites people in the region is grief for their children. Whatever may be the causes of conflict, children are never the perpetrators, and they never deserve to be the victims.
Does my right hon. Friend agree that men of violence know exactly what they are doing, and know exactly what to provoke in response? There is no justification for this wicked crime, and Israel is right to seek justice on behalf of the families, but will the Foreign and Commonwealth Office urge—even now, at such a critical time—that more effort be put into the peace process? Until this is settled, there will be another incident, and another, and another, until the men of violence get what they want, which is a conflagration that will add to the explosions in the area, and the men of peace will find that it is too late.
Hugh Robertson
I hope that, if I say that I could not have put it better myself, my right hon. Friend will take that in the right spirit, given that he did my job just before me. He is absolutely right to draw attention to the impact of this on children. As we see in conflicts across the world, they are so often the innocent victims.
My right hon. Friend has my absolute assurance that the Foreign Office will do everything possible to reinvigorate the middle east peace process. We may speculate on the many possible causes of what has happened, but the fact that renegade elements opposed to the peace process have used it to bring down that process is clearly a very likely explanation.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
I commend the Minister for his balanced response. May I ask him to send the heartfelt sympathy of, I am sure, every Member in the House—very much including myself—to the grief-stricken families of these abducted and murdered youths? What has been done to them has no conceivable justification of any kind.
Will the Minister also send our sympathy to the families of the five Palestinians whom Israeli troops murdered during their search for the missing youths in a collective punishment which has involved hundreds of arrests and the looting and ransacking of houses? Nothing whatsoever can justify the murder of these Israeli youths, but it is very important indeed to see it in the context of a conflict that will go on until there is a fair settlement.
Hugh Robertson
Absolutely. The sympathy of the Government, and indeed, I am sure, the sympathy of everyone in the House, will be with all those who have lost family members, friends and relatives in this conflict. It has often struck me, in the context of the middle east, that there cannot really be a hierarchy of victimhood, and our sympathy must be with all who have lost their lives. If this tells us anything, it is that we must renew and deepen our search for a peaceful settlement in the middle east, one that recognises the concerns of both sides. It was an absolute tragedy that, having put in so much work and effort personally, the United States Secretary of State was unable to conclude an agreement at the end of March, but that is not a reason for not trying any further, and we must deepen those efforts.
Martin Horwood (Cheltenham) (LD)
I join the Government in expressing sympathy for the parents of the teenagers and all the people of Israel in this moment of grief, in condemning the killings unreservedly, and in welcoming their condemnation by both Israeli and Palestinian authorities. Does the Minister agree that this underlines the importance of bringing together in a peace process all parties who are prepared to engage in that process, even when the conflict has involved the ultimate tragedy of the deaths of children on both sides?
Hugh Robertson
Yes. I welcome the hon. Gentleman’s contribution; he has made a point that has been made by any others. If this proves anything, it proves that the path of violence will lead only to further escalation and more deaths of children and others across both the west bank and Israel. It proves, if proof were needed, the importance of trying to get the middle east peace process back on track, and of delivering a solution for both sides in the conflict.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
These are cold terrorist murders of three teenagers on their way home from school. What does the Minister think should be done to address the unremitting messages of hate that come from Palestinian media? They are partly responsible for this situation and are a grave impediment to peace.
Hugh Robertson
I shall give the hon. Lady an answer that draws on my personal experience. As she may know, I was a soldier for 10 years, and took part in campaigns against terrorism, and when we lose people—civilians or soldiers—in these situations, that is precisely the time when we need to show leadership and show restraint. Absolutely all efforts should be directed at finding the perpetrators but it is very important that all those actions are directed at doing that, and nothing wider.
Sir Richard Ottaway (Croydon South) (Con)
One’s heart goes out to the parents of the murdered children and to the Israeli nation which mourns its dead. This has happened just two weeks after the Palestinian unity Government have come into effect. I believe the Minister has just said that if Hamas turns out to be the perpetrator, he will reconsider the British Government’s attitude to the unity Government. Will he clarify exactly what he means by that and the likely consequences if Hamas turns out to be the perpetrator?
Hugh Robertson
Yes I will, and may I thank my right hon. Friend for the work that he and his Committee do in this area? It is important to note that the technocratic Government have absolutely signed up to the Quartet principles and, as far as we can see, no member of Hamas is part of that Government. If members of Hamas are, indeed, proved to be part of this and responsible for these actions, that would clearly be a very serious moment indeed, and we would have to examine very precisely the link between it and the technocratic Government. At this stage it is too early to set that hare running, because we do not have the full facts in front of us, nor do we have any absolute evidence as to who was responsible, so I think that has to be a question for another day.
Richard Burden (Birmingham, Northfield) (Lab)
There was absolutely no excuse for the murder of the three Israeli teenagers in the west bank. It was an appalling crime and it is a tragedy for their families and friends. Does the Minister agree that Palestinian teenagers and children who also die, in Israeli strikes and military operations, have names, faces and families, for whom their deaths are equal tragedies? He rightly referred to the importance of the rule of law. Will he say to the House, in the appalling situation we are in at the moment, what he thinks are the responsibilities under international law of the Palestinian Authority and what are the responsibilities of the Israeli Government as an occupying power in the west bank, and will he confirm that collective punishment of the Palestinian people is a crime under international law?
Hugh Robertson
Yes, I absolutely understand why the hon. Gentleman asks that question, particularly given his role as the chairman of the all-party group on Britain-Palestine. The role of the technocratic Government is very clear. These youths were not abducted in an area that is inside their security control, but it is perfectly possible—but not yet confirmed—that the perpetrators of this crime did come from an area that was controlled by them. It is absolutely their job and responsibility to co-operate with the Israeli Government in bringing the perpetrators to justice, and it is absolutely the responsibility of the Israeli Government to ensure the action they take is precisely targeted at the perpetrators and no wider.
Robert Halfon (Harlow) (Con)
Thank you for granting the urgent question, Mr Speaker.
Hamas is Hamas is Hamas: it is a terrorist organisation whether it is part of the so-called unity Government or not, and Hamas has celebrated the kidnapping of these children and their murder. Surely it is now time to cut off relations with the Government given that they are co-opted with a terrorist organisation. Does my right hon. Friend agree that, far from showing restraint, the British Government should give Israel every possible assistance to take out the Hamas terrorist network so that that country can be sure that her children will be secure in the future?
Hugh Robertson
Let me answer those two questions in reverse order. The British Government will give the Israeli Government every possible assistance to find the perpetrators of this appalling crime. We have made that commitment to the Israeli Government, and I made that commitment when I was in the west bank 10 days ago. That remains the case. As far as Hamas is concerned, nobody should be under any illusions about this at all: Hamas is a terrorist organisation and remains a terrorist organisation, and one that is proscribed by the British Government. The key thing about the technocratic Government was that they signed up to the Quartet principles and renounced violence and no member of Hamas is a member of that Government.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I welcome the Minister’s commitment to doing everything he can to support the peace process in the light of this heinous act, but can he share with the House what recent reports he has received on statements made by the new Palestinian unity Government and President Abbas on the murder of the three Israeli students?
Hugh Robertson
I did not see President Abbas when I was there 10 days ago because he was in Riyadh, where he made a speech that was unequivocal in its condemnation of what had happened. He made another statement last night along the same lines, and Israeli interlocutors whom I saw in Israel were very clear that they had received full security co-operation from the technocratic Government.
Crispin Blunt (Reigate) (Con)
The anger and outrage of the people of Israel at the appalling murder of these three teenagers are wholly understandable and shared here because of our special links to Israel, but equally understandable are the anger and outrage of Palestinians at the death of 1,406 children in the conflict since 2000, including 270 in Gaza under air and ground attack in 2009 alone. Would adding to this awful toll by the threatened Israeli reaction be either legal or wise?
Hugh Robertson
In a sense my hon. Friend makes the case for the reconstitution of the peace process and for everybody in this House doing everything possible to avoid an escalation and to get both parties back to the negotiating table. The death toll on both sides throughout this conflict is appalling. This is merely the latest in a long line of incidents that has tried to derail the peace process, and it proves once and for all that there is no future in violence and underlines the importance of getting both parties back to the table.
Mr Andy Slaughter (Hammersmith) (Lab)
The Israeli ex-combatants organisation Breaking the Silence responded to these murders by saying:
“We all bow our heads in mourning for the victims from both sides in the past weeks, in the hope for an end to this cycle of bloodshed and occupation.”
Does the Minister agree that that is the right response—that we should send our condolences to Israeli and Palestinian dead and their families—and that, particularly given what the Prime Minister of Israel has said about retaliation, we should stress to all sides that retaliation and escalation are not the way forward?
Hugh Robertson
In a sense the hon. Gentleman makes a point that many others have made. As I have said, it is crucial that any reaction is targeted very precisely at the perpetrators, and further bloodshed is not the way to resolve this situation.
Andrew Selous (South West Bedfordshire) (Con)
Thank you, Mr Speaker. I utterly condemn these foul murders, and commend the Minister for his measured responses. What is his assessment of the viability of the two-state solution in terms of the availability of land?
Mr Speaker
My sigh was explicable, as the Whip on duty has helpfully pointed out, by the embarrassment of riches from which I had to choose.
Hugh Robertson
I thank my hon. Friend for that contribution. It is difficult at a time like this, when tensions are high on both sides and there is obviously the prospect of a further conflagration. Getting the middle east peace process back on track is more difficult now than it has been for a while, as everybody would admit if they were being honest, but the situation also demonstrates why that is so important. The two-state solution, within the parameters of which everybody is aware, remains the best basis to do that. It will require a very particular formulation of land swaps, which will be difficult, as everybody is aware, but the events of the past two weeks show just why it is so important.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
May I place on the record my condolences to the families involved in this tragedy? Having returned from a middle east investigation by the Select Committee on International Development, I have to say that I disagree profoundly with the Minister’s statement on DFID funding to the Palestinian Authority. We do provide funding to the PA and it is absurd to suggest that that money can be ring-fenced; the Palestinian Finance Minister confirmed to me that they do pay Palestinian prisoners in jail, depending on how long their sentences are. Will the Minister confirm that Her Majesty’s Government will support and assist the Israeli and Palestinian authorities in their search for the murderers of these three young boys?
Hugh Robertson
Let me deal with the easier part of that first. The answer to the hon. Gentleman’s second question is yes, we will do everything we can to assist both the Israeli and Palestinian authorities in the search for the murderers. I have followed the progress of the International Development Committee carefully across the region. I have not yet seen the report, but, clearly, if the Committee has evidence to support the allegations the hon. Gentleman has made, that would be a very serious matter, which I am sure the International Development Secretary will wish to take up.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
May I join hon. Members in utterly condemning these brutal murders? I can well understand that today those in charge in Israel would want to retaliate, but as a good friend of Israel may I ask that we encourage them and men of good will to exercise restraint? Could we use every possible avenue—after all, we have good channels of communication with both sides and with the Americans—to see whether we can row back from a bleak place towards a peace process?
Hugh Robertson
Let me give my hon. Friend some comfort on all this. If he looks at the international reaction to it, he will find that it has absolutely reflected the points he makes. President Obama’s statement last night contained enormous sympathies for the families of all those involved; one of the victims was a dual Israeli-American citizen and President Obama absolutely expressed that sympathy. He went on to make the point that any reaction must be targeted and proportionate. That is absolutely a line that our Prime Minister has followed up, and that is being followed up in all our ministerial contacts and by our embassy in Tel Aviv.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
May I, too, associate myself with the remarks made by the Minister, the shadow Minister and, in particular, my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman)? May I also place on record my sympathies to the families of the murdered young Israeli men? May I also press the Minister further about what specific measures the Government are taking to help to de-escalate tensions, which are rising quickly, and to restore some balance between the Israeli and Palestinian Governments, and in the region?
Hugh Robertson
That is a difficult question to answer briefly, as I am sure you would wish me to do, Mr Speaker. The British Government give long-term and short-term support. The long-term support relates to the work we are doing with the Palestinian Authority to build up capacity and to relieve poverty. I saw many of the schemes during my visit last week, including the training at the police academy and the schemes where we are helping Palestinians with planning issues. Our shorter-term support is about the work we are doing with our ministerial contacts, our embassy’s contacts and the consul-general’s contacts in east Jerusalem to work not only for de-escalation but, crucially, to find the perpetrators of this appalling crime.
Mr David Ward (Bradford East) (LD)
I very much welcome this urgent question on what I have described elsewhere as brutal and sickening murders. Does the Minister agree that if urgent questions were sought each time a Palestinian was treated brutally and murdered by the Israeli defence forces, we would, sadly, be here most weeks? Does he also agree that the violence perpetrated by both sides must be condemned equally, and that such violence is not and cannot be in the interests of the Palestinians or the Israelis if we are going to work towards a solution to this dreadful conflict?
Hugh Robertson
I doubt that anybody in the House, or anybody involved in the politics of the middle east, believes that a further escalation between the two sides in this conflict is in anybody’s interest—that way lie more deaths similar to the ones we have seen overnight. On whether a life is worth more or less one side of the line or the other, I say it absolutely is not; there is no hierarchy of victimhood, and people suffer equally.
Mr David Winnick (Walsall North) (Lab)
The Minister will not have been surprised that everyone in this House has condemned the cold-blooded murders of the three boys. Obviously, we send our sympathy to their parents, as we do to the parents of children on both sides of the conflict who have lost their lives. Does he not agree, however, that the Northern Ireland situation presents the way out, to a large extent? The killings took place over many years on both sides; many argued and fought for a settlement, which fortunately came about. If it has not entirely resolved the situation in Northern Ireland, it has certainly substantially reduced the number of people killed—children and adults alike.
Hugh Robertson
The hon. Gentleman makes an interesting point. I do not know whether he knows this, but I served as a soldier in Northern Ireland in 1987-88. I remember that when I left the Province at the end of my six-month tour, I thought it was utterly inconceivable that the problem would ever be solved, yet, through the good work of good people on both sides, a peace settlement has now been achieved. That probably reveals the central theme of this morning: when the situation seems bleakest is precisely when we need to strive hardest to try to find a solution.
Mr Lee Scott (Ilford North) (Con)
May I associate myself with all the words of condolence? If you will forgive me, Mr Speaker, may I also add, at the start of the mourning period for the families, a Jewish condolence and wish them long life and no more suffering? Does the Minister agree that one way to bring this current crisis to and end would be for the Palestinian Authority to turn in the people who committed this heinous crime, so that justice can be done through the legal process?
Hugh Robertson
May I start by associating myself with my hon. Friend’s expression of condolence? In answer to his question, I say yes, absolutely. Let me give him reassurance by saying that while I was there, it was abundantly clear to me that the technocratic Government were co-operating in security terms with the Israelis, as the Israelis acknowledged. If that Government have any information that they have not handed over that would help bring those responsible to justice, I urge them to hand it over now.
Mark Durkan (Foyle) (SDLP)
I commend both the weight and the balance of the Minister’s words. As well as condemning the dreadful murder of these three teenagers, in response to the terrible abduction I join other hon. Members in deploring the unjustified deaths of Palestinian youths in recent times. Does the Minister recognise that in any conflict there comes a point where both sides have to recognise that they cannot be secure against each other and that they can be truly secure only with each other? We hear about “both sides”, but does he accept that many people on both sides in the middle east do not see themselves in the violence of either side in the middle east? It is to those peace-minded people, Palestinians and Israelis alike, that we should offer solidarity today, as we offer sympathy to the mourning families?
Hugh Robertson
I thank the hon. Gentleman for his kind words. He makes a key point about the importance of the peace process and what is needed to achieve it. It has often struck me when dealing with the politics of this region—this is not something that is confined to Israel and the Occupied Palestinian Territories—that it is always easier for people to return to violence than it is to make the difficult compromises and decisions necessary to move the peace process forward. That is why, throughout history, those who have achieved peace processes are held in such high regard.
Mike Freer (Finchley and Golders Green) (Con)
Many of my constituents will be disappointed to hear from the Foreign and Commonwealth Office the rather well used and tired phrase “proportionate response”. Perhaps the Minister, who I know is a decent man, could advise me on what I say to my constituents about what the FCO regards as a proportionate response to three teenagers being murdered and missiles being fired at Israel on a daily basis.
Hugh Robertson
I am sorry that my hon. Friend feels that way. Let me be absolutely clear about this: it is utterly unacceptable that people in the Gaza strip fire missiles at Israeli citizens. As he knows, I attended a funeral in January on the edge of the Negev. Precautions had to be taken because we were under threat from missile attacks, which is utterly unacceptable in any way, shape or form. The correct response to the kidnapping and murder of three teenagers is to find the perpetrators and to bring them to justice. We expect exactly the same response in that part of the world as we would find here—no more and no less.
Mr Jim Cunningham (Coventry South) (Lab)
Like everyone else, we must condemn the terrible murder of these three teenagers, and the same must apply to Palestinian teenagers as well. I ask the Minister to urge restraint on the Israeli Government, because we have a volatile situation throughout the middle east, and we do not want to give to these terrorist organisations any cause to use the Palestinian-Israeli situation as an excuse for further violence.
Hugh Robertson
Absolutely, yes. Everything that we and leaders right the way across the world have done is about ensuring that the reaction to this is properly targeted and—to use that slightly woolly term—proportionate. The key thing is that all the resources are targeted at finding those responsible, but that will clearly not be the case if people are pursuing other agendas. Such a targeted campaign will, I have no doubt, be carried out by the Israeli Government. The Palestinian Authority must play a full part in helping them to achieve that. I can assure the hon. Gentleman that that was clearly the case when I was there 10 days ago.
Mr Philip Hollobone (Kettering) (Con)
I applaud the Minister for his response to these appalling murders, but with respect may I say that he did not answer as fully as he might the question from the hon. Member for Liverpool, Riverside (Mrs Ellman)? These murders take place against the background of the release of hundreds of Palestinian prisoners by the Israelis as a signal of good intent for the peace process, and of a constant stream of hate and abuse from state-sponsored TV and media in the Palestinian Authority. Surely this House and Her Majesty’s Government need to make it clear to the Palestinian Authority that this background of hate and contempt for Israel must stop if we are to have a meaningful peace process.
Hugh Robertson
I am very sorry if I have not given my hon. Friend the reassurance that he needs that the British Government are absolutely 100% committed to making that message clear to the Palestinian Government. We have made it absolutely clear to the Palestinian authorities that that sort of behaviour is unacceptable. As I have already said, I did not realise that there was any truth in these allegations. I have been specifically reassured that there is not. If the International Development Committee has evidence that that is not the case, we will be keen to see it. To be fair, when the technocratic Government were formed, they were very clear that they would sign up to the Quartet principles, which is an internationally agreed standard. They were absolutely clear and unequivocal on that, and they gave those undertakings to us, the Americans and the Israeli Government.
Andrew Gwynne (Denton and Reddish) (Lab)
The whole House is right to condemn these truly horrific murders, but we should not allow them to diminish the quest for peace in the middle east. What measures are the Palestinian unity Government taking to ensure accountable and effective governance to bring about that transformative change that the Minister talks about to renew the Palestinian economy, create jobs, bring about hope for the Palestinian people and ensure that funds are not diverted to terror activities?
Hugh Robertson
There is a whole bundle of questions there. The approach of the Palestinian Government on economic regeneration is led by Prime Minister Hamdallah, whom I met during my recent visit. He is English educated and extremely impressive. He is very fixed on what needs to be done to regenerate the Palestinian Authority. He is absolutely right to point to the need to eliminate corruption in the Palestinian Authority, because that has bedevilled the region and its prospects for economic growth for some time. The Palestinian Authority have given us a series of assurances that they understand the importance of that and that they are taking the necessary action.
Bob Blackman (Harrow East) (Con)
Our thoughts and prayers are with the families and friends of the murdered teenagers. A constant stream of evidence substantiates the fact that UK taxpayers’ money is finding its way to the evil terrorist organisation Hamas. Will my right hon. Friend undertake to look again at all the evidence—from the Select Committee on International Development, from Israel and from the Palestinian Authority areas—with the objective that not a single penny of UK taxpayers’ money should find its way to the evil terrorist organisation Hamas?
Hugh Robertson
Let me give my hon. Friend some comfort. It is absolutely the position of the Government that UK taxpayers’ money should not go to fund terrorists. That is 100% the case. If, following the International Development Committee’s visit to the region, evidence has emerged that points to the fact that that is not the case, it would be a very serious matter and I can give him an undertaking that that is something into which the Secretary of State will look as a matter of urgency.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I welcome the Minister’s words that the best way to resolve this issue is to ensure that the peace process moves forward and that a viable two-state solution is found. With that in mind, may I ask him what conversations he has had with the American Government on moving the peace process forward? At best, President Obama has been rather lacklustre in this area, but the process has moved forward under Secretary of State Kerry. What conversations has the Minister had with our American allies about these terrible events and about getting the peace process moving forward again?
Hugh Robertson
Like others, we should place it on the record—indeed one can never do it enough—how much we appreciate the work of the American Secretary of State. He has been tireless in his pursuit of this process in a way that no other American Secretary of State in my lifetime has been. Ultimately, he has become frustrated by the actions of both parties. He has called for a pause in the process for both parties to face up to the consequences of not pursuing the peace agreement, which, I believe, will be very profound for the whole region. I urge him to join us and everyone else to do everything we can not to escalate the situation further and to encourage both parties to get back to the negotiating table.
Mr Mark Harper (Forest of Dean) (Con)
I listened carefully to what the Minister said about the response of the Palestinian unity Government. Perhaps one of the things that they can do to demonstrate that they are committed to peace is to work closely with the Israeli authorities to bring to justice the people who perpetrated this crime. If it turns out that there is persuasive evidence that Hamas was indeed behind these evil murders, will the Minister return to the Dispatch Box to set out what implications that has for the British Government’s recognition of that Palestinian unity Government?
Hugh Robertson
Yes. In a sense it is a puzzle in two parts. The first thing is who was responsible for this crime. The Israelis are very clear about who they think is responsible. The Palestinian Authority have indicated that that view may be sensible. We need to find out who the perpetrators were, and then we need to find out what, if any, association they may have with the technocratic Government. At the moment, the technocratic Government are absolutely clear that they are fully signed up to the Quartet principles and that they are a non-violent Government and have no contact with Hamas. Indeed, talking to members of Fatah, it is clear that their relationship with Hamas has been desperate. They hate Hamas and regard it as being responsible for the splits that have occurred, so there is some small reason for hope.
Dr Matthew Offord (Hendon) (Con)
Very little shocks me about what occurs in the middle east, but the depravity of the murder of these young men is beyond comprehension for many of my constituents and for me. The Minister asserted that no money from British taxpayers goes to Hamas, but he has now accepted the position of the International Development Committee that that might be the case. Will he put his efforts into facilitating a meeting of a cross-party delegation of MPs so that we can speak to the DFID Minister and present the evidence we have been talking about for many years already?
Hugh Robertson
I gave the answer that I did to an earlier question because I was assured, as I have been in the past, that there were no grounds for believing that. If a Select Committee of this House has uncovered evidence that firmly proves that that is not the case, that is a very serious issue. I can offer my hon. Friend a cast-iron guarantee that we will take that up. Indeed, the very fact that it has been found by a Select Committee will ensure that the Department responsible has to answer those questions.
Barry Gardiner (Brent North) (Lab)
Would the Minister care to reflect that, in rightly praising Secretary of State Kerry, he might have been slightly unfair to Madeleine Albright? Will he, in the context of this situation, tell us not only what might be proportionate for either side but what signals either side might send to the other that would advance rather than regress the situation?
Hugh Robertson
In my remarks, I intended no slight to Madeleine Albright. I simply meant that the most recent iteration of all this has been led by John Kerry with extraordinary energy and vigour, which is why I pay tribute to what he has done. As for the second part of the hon. Gentleman’s question, we will of course look at that very closely.
Bob Stewart (Beckenham) (Con)
The purpose of terrorism is to terrorise. Does the Minister agree that the people who carried out these murders—a minor act of genocide, in a way—are no friends of the peace process and certainly no friends of the Palestinian cause?
Hugh Robertson
I absolutely agree with my hon. Friend. If someone wanted to derail the peace process and the prospects of peace, I could think of no better way to do it than to carry out such actions. One needs only to go there or to watch events from here to sense the angst that this has caused. That absolutely shows the importance of getting the peace process back on track.
John Glen (Salisbury) (Con)
My constituent, Rev. Pat Clegg, is a frequent visitor to the west bank and a frequent correspondent with me on Israeli-Palestinian matters. She wrote to me last week, deeply concerned about how universities, colleges and newspaper offices were being stormed, as she put it, by Israeli forces searching for the missing teenagers. Although I am mindful of the significant challenges in securing accurate information in the circumstances, is the Minister aware of those reports and can he comment on them?
Hugh Robertson
Yes. I am very aware of the impact that any form of military action has on life in the west bank, as are many others. My hon. Friend’s constituent and others have properly drawn the international community’s attention to that. On the other hand, we have to understand that Israel is the one liberal democracy in that part of the world and that it lies in an arc of countries where instability is everywhere. Security is Israel’s key concern, and we understand that, but it is important that the actions taken in this regard are precisely targeted to identify and deal with the perpetrators and not a wider objective.
Mr David Burrowes (Enfield, Southgate) (Con)
These appalling and heinous acts of terror have been equally condemned on both sides of the House and by all apart from Hamas. Further to the Minister’s response to my hon. Friend the Member for Finchley and Golders Green (Mike Freer), may I question how he can draw an equivalence between such an act taking place here and such an act taking place in Israel when it comes to a proportionate response to bring the perpetrators to justice? When Hamas and terrorists are throwing rockets over the border and on to innocent civilians and when Hamas itself sees Israeli teenagers as legitimate targets for terrorist attacks, how can we draw any equivalence when it comes to the response?
Hugh Robertson
The correct response as regards the war on terror, which we have faced in this country for many years through the threat from Irish republicans, is to target what we do very precisely, to avoid escalation and to abide by the rule of law. That is precisely how we relieve the underlying causes of conflict. If one goes further than that, the lessons of history show that that inevitably stokes the conflict and makes things worse.
James Morris (Halesowen and Rowley Regis) (Con)
Notwithstanding the Minister’s remarks about the need for restraint, does he not agree that Israel faces a toxic combination of brutal terrorism, as revealed in this particular incident, and of rocket attacks from Gaza and that as a sovereign country it has the absolute right to defend and protect its citizens against these threats?
Hugh Robertson
In a sense, I agree with both parts of my hon. Friend’s question. Israel absolutely faces a toxic combination of such factors and, as I have said, it is the one liberal democracy in that part of the world and is threatened by a sea of instability around it. We would absolutely expect the state of Israel to protect its citizens, but the point that I am making—do not get this wrong—is that it needs to do that in a way that precisely targets the response at those who are responsible for this action and not at a wider political aim.
Guto Bebb (Aberconwy) (Con)
In view of this sickening crime and the celebration of the kidnapping in state-sponsored Palestinian media, what assurances can the Minister give me that the words of condemnation given by President Abbas to an international audience will be repeated for his domestic audience?
Hugh Robertson
I think I can give my hon. Friend that assurance, because I was in the west bank when it happened and the domestic price that President Abbas was paying for taking that stance internationally was abundantly clear. He is absolutely doing what the international community wants to see him do and we expect the Palestinian technocratic Government to live up to their responsibility to co-operate fully in security terms with the Government of Israel.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the Minister’s statement today. He will know that Hamas is backed by Iran, as is Hezbollah in Lebanon. Iran also backs President Assad’s horrific regime in Syria as well as the Maliki Government in Iraq, with its sectarian violence. Will the Minister assure the House that Iran will not be involved in any further middle eastern issues without first giving up terrorism?
Hugh Robertson
Yes, I can give my hon. Friend that assurance. In a sense, his question sheds some light on precisely why the Israeli Government are concerned about security and are right to be concerned about security.
Michael Ellis (Northampton North) (Con)
Does the Minister agree that no moral equivalency can or should be drawn with other incidents? This was a deliberate and calculated abduction and murder of teenagers. Does he agree that such wickedness cannot go unpunished and will he and Her Majesty’s Government support the Israeli Government if they seek to dismantle the terrorist infrastructure of Hamas, which is, after all, an entity that destroys and seeks to destroy its own people when they disagree with it, as well as Israeli youths, children and other victims of strikes from the air and on land?
Hugh Robertson
In a sense, my hon. Friend makes the point that I was moving towards in my answers to some of the earlier questions: an escalation of the crisis in that part of the world will serve only the men and women of violence on both sides. If there were to be a further escalation, that would absolutely play into the hands of all those who seek to sabotage the peace process and to pursue their aims through violence and not through peace.
Point of Order
Mr Mark Harper (Forest of Dean) (Con)
On a point of order, Mr Speaker. In yesterday’s debate in this House on the performance of the Department for Work and Pensions, the Secretary of State for Work and Pensions suggested to the hon. Member for Leeds West (Rachel Reeves) that she had said that
“‘all the changes that the Government has introduced’ in welfare reform would be reversed ‘and all benefits’…should be ‘universal’.”—[Official Report, 30 July 2014; Vol. 583, c. 648.]
The hon. Lady, to whom I have given a notice of this point of order, suggested that what the Secretary of State had read out was untrue and denied that she had said such things. Today, a recording of the hon. Lady saying those words has been published on the Guido Fawkes website. It therefore appears that she has misled the House, albeit, I am sure, inadvertently. I know the premium that you, Mr Speaker, put on Members’ being honest in what they say, particularly when they speak from either Dispatch Box. What can we do to ensure that the hon. Lady comes to this House, apologises to it and corrects the record?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I am bound to say that, for my part, I do not spend any time browsing on websites; it is not something with which I am in any way preoccupied—[Interruption.] It probably is very wise. Such matters are of no interest to me, but I am grateful to the hon. Gentleman and note his nocturnal habits in these matters.
The answer to the hon. Gentleman is that every Member must take responsibility for what he or she says in the House. Whereas there is a formal procedure for the Minister to correct the record by making another statement to the House, no such procedure exists for those who are not members of the Government; but it is open to Members, if they think they have erred or accept the suggestion by others that they have done so, to acknowledge error and to comment as they think fit. However, although I respect the hon. Gentleman and realise that he has put the point on the record, it is not a matter of order for the Chair.
FINANCE BILL: PROCEDURE (THEATRE TAX CREDITS)
Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision for tax credits to be paid to production companies in respect of expenditure on activities in connection with theatrical productions.—(Mr Gauke.)
FINANCE BILL: WAYS AND MEANS (CO-OPERATIVE SOCIETIES ETC.)
Resolved,
That provision may be made about the tax treatment of co-operative, community benefit and industrial and provident societies and credit unions.—(Mr Gauke.)
FINANCE BILL: WAYS AND MEANS (CORPORATION TAX TREATMENT OF OIL CONTRACTORS ETC.)
Resolved,
That provision may be made in relation to the corporation tax treatment of companies that:
(1) provide, operate or use an asset in, or in connection with, the carrying on of activities in connection with the exploration or exploitation of the sea bed and subsoil and their natural resources, or
(2) make, or are to make, payments in respect of an asset that is, or is to be, so provided, operated or used.—(John Penrose.)
FINANCE BILL: WAYS AND MEANS (ENTERPRISE INVESTMENT SCHEME)
Resolved,
That provision may be made amending Part 5 of the Income Tax Act 2007.—(John Penrose.)
FINANCE BILL: WAYS AND MEANS (STAMP DUTY LAND TAX) (EXERCISE OF COLLECTIVE RIGHTS BY TENANTS OF FLATS)
Resolved,
That:
(1) In section 74 of the Finance Act 2003 (exercise of collective rights by tenants of flats), in subsection (1A) for “£2,000,000”, in each place it occurs, there is substituted “£500,000”.
(2) The amendments made by this Resolution have effect in relation to any chargeable transaction of which the effective date is on or after 1 July 2014.
(3) But the amendments do not have effect in relation to a transaction:
(a) effected in pursuance of a contract entered into and substantially performed before 20 March 2014, or
(b) effected in pursuance of a contract entered into before that date and not excluded by paragraph (4).
(4) A transaction effected in pursuance of a contract entered into before 20 March 2014 is excluded by this paragraph if:
(a) there is any variation of the contract, or assignment (or assignation) of rights under the contract, on or after 20 March 2014,
(b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or
(c) on or after that date there is an assignment (or assignation), subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. —(John Penrose.)
FINANCE BILL: PROGRAMME (NO. 2)
Ordered,
That the following provisions shall apply to the Finance Bill for the purpose of supplementing the Order of 1 April 2014 in the last Session of Parliament (Finance (No. 2) Bill (Programme)):
(1) Proceedings on consideration shall be taken on the days shown in the following Table and in the order so shown.
(2) Each part of the proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in relation to it in the second column of the Table.
Table
Proceedings | Time for conclusion of proceedings |
First day (1 July 2014) | |
New Clauses and new Schedules relating to the subject matter of Clause 1; amendments to Clause 1 | 3.00pm |
New Clauses and new Schedules relating to stamp duty land tax; amendments to Clauses 105 to 107 and Schedule 19 | 4.30pm |
New Clauses and New Schedules relating to employee shareholder shares | 6.00pm |
New Clauses and New Schedules relating to tax arrangements that are abusive | 7.30pm |
Second day (2 July 2014) | |
New Clauses and new Schedules relating to pensions; amendments to Clauses 39 to 43; amendments to Schedules 4 and 5 | 2.00pm |
New Clauses and new Schedules relating to the annual investment allowance; amendments to Clause 10 and Schedule 2 | 4.00pm |
Remaining new Clauses and new Schedules standing in the name of a Minister of the Crown; amendments standing in the name of a Minister of the Crown; remaining proceedings on Consideration | 6.00pm |
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at 7.00pm on the second day.—(John Penrose.)
Finance Bill
(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
14:59 - The House divided: - Ayes: 228 / Noes: 289 - Question accordingly negatived.
16:08 - The House divided: - Ayes: 231 / Noes: 296 - Question accordingly negatived.
17:59 - The House divided: - Ayes: 233 / Noes: 303 - Question accordingly negatived.
19:29 - The House divided: - Ayes: 228 / Noes: 296 - Question accordingly negatived.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I beg to move, That the clause be read a Second time.
It is a pleasure to start the Report stage of the Finance Bill, Mr Speaker. We had many good and long debates in the Bill Committee, and I am sure we will continue that trend over the next couple of days.
The new clause, which stands in my name and those of my right hon. and hon. Friends, would require the Chancellor of the Exchequer to publish within three months of the passing of this legislation a report on the additional rate of income tax—the top rate, which was 50p until last year, when it was cut by this Government to 45p. The report we envisage would set out the impact on Exchequer receipts of an additional rate, set at 50p, in the first year of the next Parliament. The Chancellor would also be required to set out the impact of reducing the additional rate for last year, 2013-14, and the amount of income tax paid by all additional rate payers, those with incomes over £250,000 a year and those with incomes over £1 million a year. Finally, the report would set out the impact of the reduction in the additional rate in 2013-14 on the level of bonuses awarded in April 2013 to employees in the financial sector.
Since the coalition Budget of 2012, we have had a number of debates on the Floor of the House and in Public Bill Committee on the Government’s decision to cut the additional rate from 50p to 45p. Indeed, the Minister has referred to such debates being an annual event during the passage of the Finance Bill. Why is it so important that we continue to press the Government on this one decision, made in 2012, after they have refused to listen to all and any attempts to get them to change course? It is because if there is one decision taken by the Government that tells us all we need to know about their priorities and who they stand for, this is it.
The Government who said, “We’re all in it together,” and the Chancellor who promised that he would not balance the books on the backs of the poor, saw fit to give, at a time when ordinary working people were seeing their living standards fall and when the combined impact of tax and benefits changes has left households on average more than £974 a year worse off, an absolutely huge tax cut to the wealthiest in our country. For millionaires, this tax cut is worth an average of £100,000—a vast sum, far out of reach for the majority of working people. So although this may appear to be simply an annual event and part of the House’s debates on the Finance Bill, it is much more than that. This Government made a bad choice—the wrong choice—when they prioritised a tax cut for millionaires while ordinary working people continued to struggle as a result of their decisions, and we will not let them forget it.
Mr John Redwood (Wokingham) (Con)
How does the hon. Lady explain the fact that income inequality rose under Labour and has fallen under the coalition?
Shabana Mahmood
I am pleased that the right hon. Gentleman is here. I recall in the debate in Committee of the whole House that he argued for a further cut in the rate to 40p, citing in evidence the increase in revenues resulting from the cut, but as he should know—I am sure he does—that is a result of bonuses being deferred. I shall return to that point, but I think it tells us all we know about where the Government stand on fairness.
Ian Murray (Edinburgh South) (Lab)
My hon. Friend talks about the amount that may be raised, but rather than having a regular debate across this Chamber about the 50p tax cut and the massive tax cut for millionaires, perhaps the Government could just accept the new clause and bring all the facts before the House?
Shabana Mahmood
My hon. Friend makes an excellent point. We do indeed have a regular debate about the facts and figures—I will come to the detailed data on the yield from the 50p rate later—but if the Government accepted our new clause, much of that debate could be put to bed, especially as Her Majesty’s Revenue and Customs now has much more data with which to produce an analysis that is less flawed than the one in 2012.
David Wright (Telford) (Lab)
Our hon. Friend the Member for Edinburgh South (Ian Murray) makes a good point. When the Government abolished the 50p rate, they made great play of studies they said they had done on the revenue raised. Would it not be perfectly acceptable for them to accept the amendment, so that we could see exactly the impact of their unfair tax changes, because they are clearly showing their colours in terms of supporting the wealthiest in our country?
Shabana Mahmood
I am grateful to my hon. Friend for that powerful point. As I said, I will explore the details in relation to data and the argument over the yield from the 50p rate, but he is right: we cannot continue to rely on a report produced when the rate had been in place for only one year. The Government should accept the new clause and produce a much more comprehensive analysis.
It was the Labour Government who introduced the 50p rate, which came into effect in 2010-11, a decision made after the financial crisis, as we sought to get the deficit down. When this Government came to power they did not say anything in the coalition agreement about abolishing the 50p rate, but in 2011 the Chancellor said that he would ask HMRC to look at the yields from the 50p rate, which was the warning signal that he was looking to cut it. In 2012, with HMRC’s report “The Exchequer effect of the 50 per cent additional rate of income tax” to back him up, the Chancellor cut the rate to 45p.
Why go through the process of looking at yield and getting HMRC to produce a report? Everyone knew that there were not enough data to come to an accurate view about yield because the rate had not been in place for long enough—a point about which I shall say more later. Well, the Chancellor knew that he needed cover for that deeply ideological decision so he was desperate to claim that a 50p rate raised very little money. If he could stand before the House and say that it raised hardly any money at all, never mind the uncertainty and the incompleteness of the data, he calculated that he could justify giving a tax cut to the richest in our country, knowing that on his watch ordinary people—those on middle and lower incomes—would pay the price for his economic plan, which has failed on the terms that he set for himself when he came to power in 2010.
Bill Esterson (Sefton Central) (Lab)
There are 15,300 people in work in my constituency who earn less than the living wage. They have lost out, as have many others, by £1,600 a year since this Government came to power. To them, accepting the new clause would indicate that the Government recognise that tax changes should be to the benefit of everybody in our society, not just a few. Does my hon. Friend think the Government appreciate that, or can she think of another reason why they will not accept it?
Shabana Mahmood
I fear that on previous form the Government will not listen today and accept our new clause. Nothing that has been said in previous debates gives me any confidence that they understand the message that they have sent to my hon. Friend’s constituents, mine and those of Members across the House that a tax cut for the wealthiest is prioritised, while ordinary working people at the lower end of the income scale are worse off.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does my hon. Friend share my worry that people will think the Government have something to hide, as they are unwilling both to let us see what a 50p rate would raise and to audit party manifestos? Rather than “We’re all in it together,” does it not sound like they are all at it together?
Shabana Mahmood
My hon. Friend makes a powerful point. What do the Government have to hide? The data that we seek would not be difficult for HMRC to provide. It has already conducted one analysis and it is not unfeasible for it to conduct a further analysis, this time based on more comprehensive data, which would clear up some of the issues once and for all.
Mr Iain McKenzie (Inverclyde) (Lab)
Does my hon. Friend agree that by accepting the new clause, the Government would give weight to their often recited argument that the broadest shoulders should bear the greatest burden? The new clause would put the burden on the shoulders best able to bear it.
Shabana Mahmood
My hon. Friend makes a good contribution, which I agree with.
Mr Redwood
The Government have published all the figures and they show that after the tax cut the better-off are paying more, not less.
Shabana Mahmood
The right hon. Gentleman is wrong. The Government have published one set of figures from only one year’s data. Much more data are now available for a further, more comprehensive review to be carried out, and the Government should do so. If they have nothing to hide, and if they are confident that they have made the right decision, they should submit that to scrutiny.
Returning to data and yield from the 50p rate, we know from the Government’s own assessment that the cost of cutting the rate from 50p to 45p was more than £3 billion, excluding all behavioural changes. In Treasury terms, £3 billion is a big deal, so how could the tax cut be justified? Well, the Government say that most of that potential £3 billion revenue would effectively be lost as a result of tax avoidance, the so-called behavioural change effect. Having assessed revenue lost as a result of tax avoidance and other behavioural change, the Government go on to say that the cost to the Exchequer of cutting the rate to 45p is only £100 million. So, on the Government’s figures, an additional rate of tax set at 50p would raise only £100 million.
Frank Dobson (Holborn and St Pancras) (Lab)
Is it not the case that the very well paid people who got the benefit are a collection of tax swindlers swindling the rest of the taxpayers, and should not everybody in the House be attending to changing the law so that such tax swindling cannot happen in the future?
Shabana Mahmood
I am grateful to my right hon. Friend for his intervention. I was about to come to the topic of tax avoidance, which I hope will answer his question.
Another weakness in the Government’s argument is the proposition that behavioural change, or tax avoidance, means it is not worth while maintaining the rate at 50p. This must be the only example of tax avoidance resulting in a huge tax cut, rather than in Government crackdowns to tackle and fight tax avoidance, which they are normally so quick to say they are doing. The Chancellor is on record as saying that he considers tax avoidance to be “morally repugnant”, but in the case of the 50p rate he rewarded a particular form of avoidance with a tax cut. I wonder if that has ever happened for people on middle and lower incomes. I think not.
The message that this Government have sent out is that if people are sufficiently well off to pay for advisers who can tell them how to avoid paying the 50p rate, and are organised enough and can lobby the Government, they are up for a tax cut, but everyone else, sorry, is simply worse off.
Bill Esterson
Does my hon. Friend agree that the Government also send the message that a tax cut incentivises the wealthy to work harder, but that if everybody else is given benefits that does not work?
Shabana Mahmood
My hon. Friend is right.
The Government always tell us how proud they are of their record on tax avoidance, but how much effort did they put into thinking of ways in which they could protect revenue from the 50p rate? The Government have introduced the general anti-abuse rule, the so-called GAAR, which may have helped. They could have thought about a targeted anti-avoidance rule, a so-called TAAR. They could also have looked to HMRC to do more. I understand that no specific resources are allocated within HMRC to protect revenue from the 50p rate. A range of measures could have been taken to protect revenue. Before rushing to abolish the rate, the Government could and should have looked at protecting that revenue first. They were quick enough to publish an analysis saying that on their evidence it was not raising much money because of behavioural change, but their instinct was not to say, “Let’s look at how we might see off that behavioural change.” They did not commission a report or publish anything on that; they jumped straight to cutting it at the earliest opportunity: more evidence that this is an ideological and political choice made because they wanted to prioritise the tax cuts for the richest, while ordinary working people are worse off.
Steve McCabe
Far from trying to curb tax avoidance, is not the problem that the Govt constantly open up fresh opportunities, such as the shares for rights, which the Institute for Fiscal Studies has called another billion-pound lollipop on the table?
Shabana Mahmood
My hon. Friend is absolutely right. We will debate later the issues in relation to tax avoidance and shares for rights.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The hon. Lady accuses the Government of being ideological here. For the avoidance of doubt, were there to be yet another study that showed that the 50p rate failed to raise any substantial sums of money, would the Labour party still go ahead with an increase in the additional rate of income tax from 45p to 50p?
Shabana Mahmood
Let us see the report. The Minister has had many opportunities in Finance Bill debates where the Opposition have tabled amendments and new clauses calling for such a report. He has not produced one. I have no confidence that he will go away today and ask his officials at HMRC suddenly to produce a report. If he has such a report in mind, he should accept our new clause, and we can then have that debate. We have said that we will increase the rate to 50p. We believe that that can raise money and will be a good part of a much fairer deficit reduction policy.
The truth is that there was no justification for giving a huge tax cut to the richest in our country. We now know that bonuses are up by 83% for those in the financial sector, while ordinary working people are worse off now and will be worse off in 2015 compared with 2010. Wages will be 5.6% down at the end of this Parliament from what they were at the beginning.
The Government have not ruled out cutting the additional rate back down to 40p. We know that this is the ardent desire of many of their Back Benchers. Perhaps when the Minister replies he could tell the House whether the Government are planning any further cuts. They have ducked the opportunity on previous occasions to confirm that they will not go down from 45p to 40p. It will be good to hear from the Minister whether that is the case. The Government’s priorities are all wrong. Ordinary working people continue to struggle with their finances, and the link between the wealth of the nation and the money in people’s pockets and in their household budgets is broken. This Finance Bill does nothing to change the reality of the lives of millions in our country, yet Government Members want to cut taxes for the richest.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The Labour party now proposes a 50p rate for the additional rate. Is that a permanent measure or a temporary measure to deal with the deficit?
Shabana Mahmood
The hon. Gentleman has made that point in previous debates, and I repeat the answer that I gave then. We have said that we would increase the rate to 50p in the next Parliament as we get the deficit down. I could not be clearer than that.
It is the richest in our country who are benefiting the most from the recovery delivered by the Government. The return of economic growth has overwhelmingly benefited the top 1%, as shown by analysis of HMRC figures by the House of Commons Library, which covered the year when GDP growth returned and the top rate of income tax on earnings over £150,000 was reduced. The share of post-tax income of the top 1% of taxpayers—300,000 people—rose from 8.2% in 2012-13 to 9.8% in 2013-14. Yet during the same period, the bottom 90%— 27 million taxpayers—have seen their share of post-tax income fall.
This cut to the 50p rate cannot be justified when the deficit is high and will not be eliminated towards the end of the next Parliament. Labour in government will increase the rate back to 50p to help us to get the deficit down in a fairer way. Just as we have said that we want the Office for Budget Responsibility to have powers to audit manifestos ahead of the next general election, because we believe that that scrutiny will add to public understanding about the choices that are being made—a call the Government only last week rejected—so too we think that a report as envisaged by the new clause would help the public to understand the impact of the top rate of tax so that they can make up their own minds about who is standing up for them and other working people like them.
Mr Redwood
Let me deal first with an old canard from the Labour Benches that is simply untrue and unfair: the idea that Conservatives welcome tax cuts for the rich, but do not think that tax cuts are appropriate for anybody else. Government Members believe strongly that tax cuts work for everybody, and that is why the Government have given back a lot of tax revenue to people on low pay by taking them out of tax altogether. We have supported and welcomed that, and that is where the missing revenue that Labour worries about is concentrated.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The right hon. Gentleman says that the Government are taking many low-income people out of tax. But he must recognise that by raising value added tax, the least progressive of taxes, which everyone purchasing goods has to pay, regardless of their income, they are increasing the burden on the lowest paid.
Mr Redwood
VAT is not as regressive as the hon. Lady suggests, because I am pleased to say that important items, such as food and children’s clothes, are VAT exempt, which makes it a little less unpalatable. I agree with her that all tax rises are bad news, but they are a necessity given the large deficit that we inherited, and when some important public services need financing. I also entirely agree with Labour that, given that we have a large deficit and need to spend money on important benefits and public services, we need to get that money from the rich and the better off. They are the people with money, and we have to find the best way to get the money off them.
David Wright
Why is the right hon. Gentleman so scared of the new clause? All it does is request a report. Surely he supports the idea of having a report on these issues so that we can get to the bottom of the matter.
Mr Redwood
If I am given a chance to develop my argument, I hope I will satisfy any independent-minded people on the Labour Benches that we already have the evidence. We have had a long-term experiment on this very subject, which satisfies some Conservative Members that the way to get more money off the rich is to set a rate that they are prepared to pay and will stay and pay. If the rate is set too high, they leave. If the rate is set too high, their clever lawyers and accountants find entirely legal ways to pay rather less tax than we would like.
The hon. Member for Birmingham, Ladywood (Shabana Mahmood) did not answer my intervention when I asked her to confirm that the Red Book has made it clear that after the cut in the rate, the amount that the better off and the rich paid went up—of course it did. That is the experience we would expect. The hon. Lady is left trying to say that there are special reasons. I will give her this point: it is probably best to judge these things over a longer period than a year or two. One can get odd variations, which is why I want to give the evidence to the House that it has clearly forgotten, which relates to the big reductions in top rate tax that were put through in the 1980s. The Conservative Government reduced the top rate of tax in two stages, from 83% to 60% and then from 60% to 40%, and the Labour Government kept that rate right up until they knew that they would lose office. They were wise to do so, because over those years the amount of cash paid by the rich went up, the real-terms amount of tax paid by the rich went up and the proportion of total income tax revenue paid by the rich went up. What is not to like about that treble win?
Graeme Morrice (Livingston) (Lab)
The right hon. Gentleman said earlier that if the top rate of tax was too high people would leave—I presume he meant that they would leave the country. How many rich people have returned to the country as a result of the top rate being reduced from 50p to 45p?
Mr Redwood
We will be able to answer that question in due course, because these are still early days, but there are encouraging signs that more revenue is coming in from the rich. We will know the results of the latest experiment later, but we know fully the results of the 1980s tax cuts. They were clear enough to convince not only all sensible Conservative MPs at the time, who were happy to vote for the tax cuts and kept them throughout their period in office, but, more importantly, the long-running Chancellor of the Exchequer who took office in 1997 and held it for a decade before becoming Prime Minister. He is not an easy man to convince to be nice to the rich. I think that he decided to run with that tax rate because he was entirely convinced that he would get more money out of the rich at 40% than he would at 83% or 60%.
Steve McCabe
Does not the evidence show that any increase in the tax paid by the rich is the result of their share of income rising at the same time as everyone else’s living standards are falling?
Mr Redwood
The main reason they pay more tax, of course, is that they generate and declare more income here, which is surely what we want them to do. If the Labour party is with me so far in wanting decent public services, and if it is with me in accepting that the money for those services has to come from the better-off, because by definition we do not want to tax the poor, then surely it is with me in wanting to have more rich people here to venture, save, put their money at risk and to make more money with their money so that there is more of it to tax. This country is now very dependent on income tax from the top group of earners, who produce 30% of income tax, and on the capital gains tax, stamp duty and other taxes that apply mainly to rich people with big assets. That is sustaining public services. It is very important that Members of this House, who might not like those people—clearly the Labour party dislikes them intensely—recognise that they are very useful members of society and that their revenue is crucial to being able to redistribute money across the country. If Labour Members wish to have more equality, they must think about the optimising rate. Surely it is best to try to find the rate that maximises revenue, rather than a penal rate that satisfies people’s sense of jealousy—or whatever it is—about those who have or make a lot of money.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The right hon. Gentleman is wrong about the Labour party disliking rich people intensely and should retract that statement. If he is not prepared to do so, perhaps he will explain why many people feel that his party dislikes ordinary families and poor families intensely, as highlighted by their policies.
Mr Redwood
That is simply not true. I am delighted to hear that the hon. Lady likes rich people—there are quite a few in her party, so let us hope she gets on well with them—but it is absolutely false to suggest that Conservatives have no interest in people who are out of tax altogether or who are on low incomes; we are desperately concerned that they should get better educational standards and have more opportunities so that they can get a job and then go on to get a better job. We wish them well, and we are very keen to work with all those in our constituencies so that they can take advantage of opportunities. We would like them to be on higher incomes. In the meantime, unlike the Government she supported, we have taken many more of those people out of tax altogether, because we think that those on an income of less than £10,000 a year should not have to pay tax. They will probably be receiving some benefit assistance.
Another point that the hon. Member for Birmingham, Ladywood did not respond to was the fact that the latest figures show that inequality rose under the Labour Government but has actually fallen a bit under the coalition, mainly because we have taken an awful lot of people at the lower end of the income scale out of tax. We have a very progressive system: the income tax system now exempts anybody on less than £10,000 and has a 47% rate, if we take national insurance as well on the highest incomes; and the benefit system rightly gives a lot of money to people at the low end of the scale and should not give any money to people at the top end.
John McDonnell (Hayes and Harlington) (Lab)
The right hon. Gentleman has made a number of assertions in his last few sentences. I wonder whether he has seen the report published this week by the Joseph Rowntree Foundation, which states that the cuts in child benefit and tax credits
“have typically created losses double the amount of tax allowance gain for working couples, and nearly four times the amount for working lone parents.”
I wonder whether he has seen the latest HMRC report, which states that the Gini coefficient started to rise significantly in 2012-13.
Mr Redwood
The figures I have been using refer to the whole coalition period and show a reduction in inequality, which I hope the hon. Gentleman will welcome. I do not recognise his figures on the child tax changes. The overall effect of taking a lot of people out of tax has been a very positive impact on their net incomes, as we would hope.
Ian Murray
If the right hon. Gentleman disputes whether an increase in the additional rate of tax would bring in more money, does he agree with the new clause’s call for a report? If it shows that the 50p tax rate brings in more money, will he and his Conservative colleagues advocate increasing it again?
Mr Redwood
I thought that I had dealt with that point. As far as I am concerned, it was proven conclusively in the ’80s that taking the rate down from 83% to 40% increased the revenue very substantially and on a sustainable basis. That was sufficient to persuade the official Labour party—perhaps not some Labour colleagues here today—not to increase the tax rate from 40% throughout its long years in government until the very end.
Bill Esterson
Does the right hon. Gentleman not recognise that the economic circumstances are now rather different from those he is talking about. Surely we need a study, as the new clause proposes, to enable us to look at what is happening now.
Mr Redwood
I do not think that the economic circumstances were as different as the hon. Gentleman thinks. In the early ’80s the Conservative Government inherited an economic crisis from Labour, just as this Government did. There was a lot of unemployment and a big task in getting people back to work and getting the economy growing again, rather like today. The Government at the time managed to do that, just as this Government are, so I do not accept his point.
However, I find the fact that Labour is going backwards on these issues rather perturbing. Why can the modern Labour party not understand the basic points that the Labour party that was victorious between 1997 and 2010 understood fully? Why can it not understand that it is possible to take the tax rate too high and get less revenue? The Treasury has now accepted the doctrine of the Laffer curve and understands that putting the tax rate above the optimising rate would surely be a very foolish thing to do. It knows that that applies to capital gains tax, as it clearly does to income tax. I submit that 50% was well above the optimum rate, because we collected rather less revenue than many people would have liked. I welcome the fact that the Government have started to put that right.
I do not think that we need the study that the Labour party is recommending today, and I advise it to think again about what it learnt in the ’80s and ’90s but appears now to have forgotten. It shows that the former Labour Chancellor was clearly not crowd-pleasing when he refused to increase the rate from 40%—he was clearly antagonising many of his Back-Bench colleagues by not doing so—so there must have been a good reason for it. I think that reason was a sensible one: it would have raised less revenue, rather than more. I urge the Government to reject new clause 14.
Rushanara Ali
It is worth considering some of the context of our debate today on the Finance Bill. Almost 15 years ago, the then Labour Government introduced the national minimum wage. That historic measure increased the value of work for around 2 million people across the UK. At its heart was fairness and dignity for all at work. Yet today we are debating the impact of a substantial tax cut for 13,000 millionaires introduced by this Government. At a time when more than four out of five people surveyed in a recent Ipsos MORI poll said that they faced a cost of living crisis, the contrast cannot be overstated. It would be almost impossible to find so clear a contrast between the ambitions and motivations of two Governments. The bottom line in this debate is that the Government’s proposals in the Finance Bill do almost nothing to address the cost of living crisis.
David Wright
My hon. Friend mentioned Ipsos MORI. If we look at public attitude surveys, we see that one of the reasons why there is a breakdown of trust in politics is the very approach that she is discussing. People on low incomes—indeed, those on middle incomes—are facing a cost of living crisis, while the wealthiest are getting a tax cut. That is why people switch off from politics; they see the double standards being pursued by the Government.
Rushanara Ali
I could not agree more. I heard the speech of the right hon. Member for Wokingham (Mr Redwood), but it is clear that there are major divisions in our society. We should all be concerned about that. Tax breaks are given to those who do not need them—to millionaires; responsible millionaires will admit that the stance being adopted is divisive. We should protect those who are struggling the most as well as ordinary middle-income families in this cost of living crisis. I hope that the Government will take on board some of the points made about the social consequences of the tax inequalities that the Government are introducing and making worse.
Let us take my constituency of Bethnal Green and Bow as an example. Families there are significantly worse off than they have ever been. Child poverty is at 42% and there is still high unemployment. There are still major problems of worklessness and young people who are not in training or education. That is a major problem around the country: 870,000 young people remain unemployed.
Changes in taxes and benefits made since 2010 make one-parent families working to support children an average of £3,720 a year poorer. That staggering fall in living standards will affect the most vulnerable. The issue is not envy, but the fact that my constituents are struggling. They will rightly continue to ask why millionaires in the City are receiving a tax cut from the Government of about £100,000 a year. My constituents are working hard to make ends meet and their children are living in poverty. While they continue the battle to survive, they ask why the Chancellor is giving £3 billion a year in tax breaks to millionaires. How is that fair? How are we all in this together if that is the Government’s priority?
Jonathan Edwards
Given what the hon. Lady is saying, would she support a 50% rate on earnings above £100,000?
Rushanara Ali
I am here to debate the new clause. I am focused on what the Government are doing. I support the new clause because it is not fair that £3 billion a year should be going to millionaires. On top of that, as my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) mentioned, bonuses in the financial sector are up by 83%. My constituents are living between the City of London and Canary Wharf; they see the inequities and want a fair chance. They are not complaining about people earning a decent living, but they want the Government to be fair in how they tax.
Mark Field (Cities of London and Westminster) (Con)
The hon. Lady represents a seat next door to mine. We both have significant numbers of constituents living, as she would put it, in poverty—although poverty levels today are very different from those certainly in the first half of the last century and before—and significant numbers who are relatively well off. Does she not recognise that by reducing tax rates we are bringing more money into the Exchequer? She says that the issue is not about the politics of envy, but does she not recognise that higher rates of tax would bring less into the Exchequer to pay for the very services that our more poverty-stricken constituents so desperately need? She is undermining the very case she tries to make.
Rushanara Ali
I have great respect for the hon. Gentleman, but I do not agree. My hon. Friend the Member for Birmingham, Ladywood set out the facts in her speech, so I will not reiterate them; others want to speak. The hon. Gentleman will know about the disparities all too well. The Government have a responsibility to make sure that the tax system is fair, and fairness is at the heart of a progressive tax system admired by people in other countries. The changes that the Government have introduced—prioritising tax breaks for those who least need them while ordinary families continue to struggle—are deeply disturbing and unfair.
Mr Iain McKenzie (Inverclyde) (Lab)
We are hearing people say, “Tax them less and they will pay more.” Why does that not work all the way down the tax scales? We are seeing middle-income families being sucked into higher tax brackets to pay for the lifting of the less well paid out of tax altogether.
Rushanara Ali
The Government have made a great deal of their efforts to support middle-income families, but frankly their words have been empty. They have prioritised those at the top. Will the Minister say whether his Government will rule out reducing tax further for high earners to 40%? I give him the opportunity to say so now. The revenue that the Government are forgoing could be used to support others—to get young people back to work, for instance.
Rushanara Ali
I will not give way again as I am conscious that others wish to speak. I will conclude.
The Government’s so-called long-term plan should not be pursued at the expense of those in lower and middle-income families. That is why the new clause would rightly force the Chancellor to publish how much extra tax would be paid by high earners under the 50p rate. That would establish how much those earning more than £1 million per year would contribute. That would go a long way towards giving us the clarity we need.
Our vision is to work towards cutting taxes for the 24 million people on middle and lower incomes through the introduction of a 10p starting rate of tax. That is not only the way to a fairer system of taxation but the only way to nurture sustainable growth for all. After three years of flatlining, the growth that we are beginning to see is welcome, although it is still coming much slower than it is to countries such as the US and Germany.
Opposition Members have a vision for a broad-based recovery forged through the efforts of all people from all backgrounds. We must remember that average wages will have fallen by 5.6% by the end of this Parliament. How does that make our society one in which we are all in it together? I do not hear members of the Government or Government Back Benchers use that phrase any more. I challenge them to use it today if they still believe that it is not a joke as far as most people in this country are concerned. Only Labour’s plans for a fairer and more progressive taxation system will support the return of wages to a level seen before 2010.
In conclusion, I return to the basic premise of Labour’s argument. It is simply not acceptable or fair for millions of people to pay more in tax while millionaires pay less. Since 2010, tax rises and cuts to benefit have left average households worse off. Real-terms decreases in wages across this Parliament have made the financial plight of ordinary people across the UK tougher. People have become dependent on food banks as they have never been and there is rising homelessness in cities such as London. There is rising poverty—child poverty in particular—not only in my constituency, but up and down the country, but this Government still find the energy and will to reward the top 1% of earners while everyone else suffers.
The Government have pandered to the worst suggestions of their critics, namely that they are out of touch, have failed to spread any meaningful recovery to those who desperately need it and are out for the few and not for the many. For those reasons I support Labour’s proposals on the tax cut and support the new clause.
Ian Swales (Redcar) (LD)
It is a pleasure to follow the hon. Member for Bethnal Green and Bow (Rushanara Ali). I agree that we should be aiming for a tax system that is as fair as possible and accept that the timing of the top rate cut was not good for public relations or for feelings throughout the country. But let us examine the genesis of this situation.
In 2010, 6 April was an important day. It was the day that the top rate of tax was raised from 40p to 50p. It was also the day that Parliament was dissolved—the very last day that Labour Members sat on the Government Benches. They were sat on these Benches for one day with the top rate of tax at 50p. Clearly, as the right hon. Member for Wokingham (Mr Redwood) said, the rate was raised in the full knowledge that Labour was likely to lose the general election. It was the then Chancellor’s leaving present, which he knew would keep leading to headlines and would be the gift that kept on giving. Listening to the speeches made by Opposition Members today one would imagine that there had been a 50p tax rate throughout their time in government, and not simply on the last day on which they sat on the Government Benches.
Frank Dobson
Does the hon. Gentleman, as a Lib Dem, not recall that that date was significant in another way, as it was the day that the leader of the Liberal Democrats signed a pledge to get rid of tuition fees?
Ian Swales
Mr Deputy Speaker, I am sure you would call me out of order if I responded to that point.
Labour’s Chancellors were not slow to raise taxes—in fact, there is a long list of almost 100 taxes that they raised in 13 years—but strangely enough, they did not raise this one. Again, as the right hon. Member for Wokingham eloquently said, they knew that it was dubious that raising the top rate of income tax would lead to actual benefits. He mentioned the experiments of the 1980s in this country; François Hollande is conducting a live experiment right now across the channel and is getting very much the same results, with one prominent French citizen, Gérard Depardieu, moving all the way to Russia to avoid penal tax rates.
The hon. Member for Birmingham, Ladywood (Shabana Mahmood)talked about the need for analysis. I make two suggestions. First, I presume that during the 13 years of the previous Labour Government a great deal of analysis was carried out on whether raising the top rate was the right thing to do—as I said, they were not slow to look at new ways of raising money and clearly kept on rejecting it as an option. The Institute for Fiscal Studies has now studied Labour’s proposal to raise the top rate back to 50p and has said that it is of dubious benefit. In fact, I think the hon. Lady herself said that it could cost money and would not be drawn on whether that would make her change the policy.
We ought to take what the Labour party says with a pinch of salt. It cut taxes every single year for millionaires.
David Wright
The hon. Gentleman is making an interesting speech. Is he making the commitment today that the Liberal Democrats will not have this proposal in their manifesto for the next election?
Ian Swales
I am not sure which proposal the hon. Gentleman is referring to.
Ian Swales
I am not committing anything for our next manifesto, just as the hon. Gentleman’s party is not as yet. Our manifesto is being discussed now.
Ian Murray
I will check Hansard to make sure that this is accurate, but I think the hon. Gentleman said that some of the figures were dubious. If he genuinely believes that, why does he not vote for the new clause so that we get figures that are not dubious? Perhaps we can then assess whether a 50p tax rate is correct. Indeed, while he is going on about tax rises, will he confirm to the House whether he thinks a VAT increase is a Tory tax bombshell?
Ian Swales
I do not see VAT mentioned in the new clause. I was pointing out that, as the hon. Gentleman’s own Front Benchers say, the analysis of the benefits of the policy comes out as plus or minus zero: it could have a large cost or be a significant benefit. If we are in that sort of ballpark, we are clearly not talking about huge measures that will cut the deficit.
Under this Government, the wealthy have been paying a lot more every year in income tax than they ever did in any year under Labour. They are paying more in many other ways as well. The Labour Government thought it was okay for the wealthy to pay £250,000 in pension contributions and get full tax relief; the coalition Government have reduced that to £40,000, making £95,000 a year of tax benefits that the Labour Government were happy to give but this Government are not. Capital gains tax was at the derisory level of 18%, and is now 28%. The level the Labour Government charged on capital gains was lower than the rate of income tax, so hedge fund managers could be paying a lower rate of tax than the people who cleaned their offices, a truly shameful record.
If anyone is lucky enough to be spending £1 million a year, they will be paying £25,000 more in VAT. To answer a point made by the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) earlier, people on low pay spend very little on standard rate VAT items. Once again, the right hon. Member for Wokingham mentioned this: most of the day-to-day living costs of most people—housing, energy, food and many other costs—do not carry standard rate VAT, so the wealthy are paying more there.
The thresholds for inheritance tax were going up under Labour but have been frozen under this Government through the efforts of the Liberal Democrats. We know that the party with which we are in coalition would like to return the level to £1 million, as it campaigned on that during the last election and I believe it will do so again next time. We are pleased that the threshold for inheritance tax has been frozen throughout our time in Government, because we feel it is the right thing to do at this time. We also saw industrial-scale tax avoidance under the previous Government, and many cases now arriving in court go back to the days when they were in power. The idea that this Government are not taxing the wealthy does not stand up to examination.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I don’t think we use that language, either.
Mark Field
I am sure that the right hon. Member for Birkenhead (Mr Field) would agree.
The hon. Member for Redcar (Ian Swales) is making an important and courageous speech from the Liberal Democrat Benches. It is one that many of us on the Conservative Benches could have made, and I thank him for putting some of the issues that have been raised today into perspective. There has been a lot of outrage on the Opposition Benches but it is important that the history of precisely what went on during the previous Labour Government is put on the record.
Ian Swales
I thank the hon. Gentleman for that. I agree that it is important: the narrative that Labour taxes the rich until the pips squeak and that we do not does not stand up to examination.
Sir Andrew Stunell (Hazel Grove) (LD)
May I add some grist to my hon. Friend’s mill by asking whether he agrees that it is astonishing that during 13 years in government the Labour party never found the time to impose VAT on the purchase of private jets? The coalition Government have introduced that.
Ian Swales
My right hon. Friend’s remarks stand on the record. Perhaps what he has said can tell us something about the travel movements of a previous Business Secretary, whom I will come back to in a moment.
The new clause also refers to levels of bank bonuses. As I understand it, the Opposition want in future to tax bank bonuses at 100%, with 50% on the individual and 50% through the bank. What assessment have they done of what that policy will do to the level of bank bonuses? It seems like another example in which the headline comes first and the policy follows behind.
The Opposition had 13 years to deliver their vision for the country. If we look at all the various levels of tax that they presided over, they carried out the wish of the former Secretary of State for Business to whom I have just referred, the former right hon. Member for Hartlepool, who said that he was
“intensely relaxed about people getting filthy rich”.
Frank Dobson
Uncharacteristically, I will come to the aid of the former right hon. Member for Hartlepool, because his sentence went on to say—and it was the same sentence—
“providing they pay their fair share of tax”.
Ian Swales
The right hon. Gentleman makes a fair point. Throughout the last Parliament, that fair share was deemed to be 40% on the top rate until the very last day. We should judge the Labour party on what it did, not on what it now says.
On the new clause, I am not sure that we state in Bills that there should be reports. It betrays a desperation that we should all reject.
Mr Deputy Speaker (Mr Lindsay Hoyle)
The Minister will respond just before 2.50 and we have four more speakers.
John McDonnell
I will be fairly brief.
Under the last Government, I moved amendments like the new clause on virtually every Finance Bill. It has always made me anxious when Governments resist the requirement to provide information. That is all that is sought in the new clause. It simply looks to ensure that the House is properly informed about the impact of a differential tax rate. For the life of me, I could not understand why such amendments were resisted by the last Government, and I cannot understand why the new clause is being resisted now.
Richard Fuller (Bedford) (Con)
On the point about being informed, does the hon. Gentleman think it unwise that the Leader of the Opposition has already stated that he will increase the rate to 50p?
John McDonnell
I want openness and transparency. I would prefer people to put their cards on the table in the run-up to the general election, so that the electorate know where everyone stands. It would be invaluable for all parties in the House to have the information that is requested in the new clause, so that they could test it and see whether the hypothesis that has been put forward by the right hon. Member for Wokingham (Mr Redwood) and others is accurate. I do not believe that it is.
This debate goes much wider than the 50p rate of income tax. Members need to wake up to that. A few months ago, the Mayor of London ordered water cannon in case there are more demonstrations and riots. There is a deep feeling of unease and a building anger in our community about inequality. People do not usually mobilise and go out on the streets in the depths of a recession. Let us look at what has happened elsewhere: people get angry, mobilise and go out on the streets when they feel that the country is coming out of recession, but they are not sharing in the benefits from the sacrifices that have been made. We have asked people in this country to make immense sacrifices.
We should look at the various reports that have come out. A few months ago the Oxfam report exposed the fact that for the first time more of the people who are in poverty are in work than out of work. More children are therefore growing up in poverty in working families than in non-working families. I think that that is a first in the history of this country. A survey by Save the Children showed that, as a result of poverty, a staggering number of parents are going without food so that their children can eat. It showed the number of children who have never had a winter coat because their parents are unable to afford one. All that is building up into a significant anger about the inequality in our society.
Taxation rates are therefore not just about the income that they raise; they are about tackling inequality. The right hon. Member for Wokingham said that this has been happening over a long period. We now live in a society that is more unequal than it has been since Victorian times. It is true that for a short period in this recession, the Gini coefficient went down for two years. However, according to HMRC figures, it started rising again in 2012-13. I think that that will provoke anger in our community. Politicians need to be aware of that anger. Unless we do something about it, it will be difficult to contain.
That is why Governments need to be seen to be addressing the appalling inequality in our society. One way of doing that is to redistribute wealth, as Governments ought to do. The new clause does not talk about the vast maldistribution of wealth in our society. One publication from the Treasury revealed:
“The top 10% of earners in Britain have salaries which are equal to more than the bottom 40% of earners”.
That is absolutely staggering, and that is just about earnings: in some FTSE 100 companies, the chief executive and the directors earn 166 times the average wage of the workers.
Taxation is about addressing inequality. The new clause simply looks at one element of taxation and asks for an accurate report on whether it helps in the redistribution of wealth and in tackling inequality.
Richard Fuller
The hon. Gentleman has expressed his concerns about rising inequality. Why does he think the Opposition have been so timid in proposing remedies? Are they afraid of something? Are they worried what the media might say?
John McDonnell
I will give the Labour party the benefit of the doubt. It has the national policy forum at the weekend, where there is the discussion and development of policy. That is the healthiest level of democracy we have had in the party for a number of years. I hope that it is bubbling up into a comprehensive programme that we can put before the electorate and that addresses the central issue of inequality. One way of doing that is to have accurate information before us, which is what the new clause seeks.
I will finish there because I know that other Members want to speak. I just warn the House that unless we address inequality, we will reap a whirlwind in our society. We saw riots only a few years ago. I think that the injustices in the distribution of wealth will provoke even greater conflict in our society unless it is addressed.
Chi Onwurah
I shall be brief. The new clause would force the Chancellor to publish a report that made it clear how the Government were balancing the books on the backs of the poor. [Interruption.] Ministers may laugh, but that is why they are afraid to make the information available. The benefits of rising prosperity and productivity are increasingly concentrated on a small group at the top.
At the same time, there is growing evidence that economic inequality is a drag on the economy. Business profits, literally, from being part of a better functioning and more equal society. Businesses can function only when people form a society that is structured around the principles of trust, responsibility and fairness.
Chi Onwurah
I will not give way because other Members want to speak.
From the “The Spirit Level” by Wilkinson and Pickett through “Capital in the Twenty-First Century” by the current economic rock star Thomas Piketty to “The Entrepreneurial State” by Mariana Mazzucato, economists and social scientists are raising their voices against the claims from Government Members that inequality is good for growth. Recent analysis concluded that
“inequality is bad for both the magnitude and sustainability of growth”.
Before Government Members jump in, that is the view not of some left-leaning sociologist but of the International Monetary Fund.
Equally, President Obama’s chief economic adviser has said that reducing inequality is good for growth. In other words, we must not balance the efforts to reduce the deficit unfairly on the poor, as they are less likely to be in a position to reap the benefits of any growth that follows. None the less, that is exactly what the Government are seeking to do.
The new clause would make the impact of the Government’s policies absolutely clear. I know what the impact of their policies is from my Newcastle surgeries. One constituent who is on a low income uses his so-called second bedroom to store his wheelchair and oxygen bottles. The result is rent arrears and constant anxiety. The threat of eviction hangs over his head. He is only hanging on because he believes that the next Labour Government will abolish the hated bedroom tax. And yet, at the other end of the income scale, taxes are being cut. If the rest of the House does not join Labour in voting for the new clause, people will know what to think.
The next Labour Government will reverse the £3 billion tax cut for the top 1% of earners to ensure that the books are balanced in a fairer way. We will cut taxes for 24 million working people on middle and low incomes with a lower 10p starting rate of income tax. At the next election, the Labour party will put an alternative vision to this Government’s classic 1980s trickle-down economics to the British people. Our vision is to build a new kind of economy that works for communities and ordinary people, and that does not put a premium on social and economic inequality.
Ian Murray
It is a great pleasure, as always, to follow my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah). New clause 14 is simple, and I cannot understand why the Government would not want to produce figures showing whether the 50p tax rate raises more or less money. When the Budget was announced, the Red Book stated that the tax cut would cost £3 billion. If politics is the art of the possible, it is also about priorities, and if we consider the priorities of this Government, we see clearly why that cut was unfair and should be reversed, and why the Government should accept new clause 14 and state why they think that lowering taxes for millionaires is the right thing to do.
We have already heard from my hon. Friend the Member for Newcastle upon Tyne Central about the bedroom tax—that was a priority introduced by this Government. The bedroom tax raises only 10%, if not less, of the £3 billion that the 50p tax rate cost. The use of food banks has exploded across the country in all our constituencies, which is a disgrace in a modern society, and people on welfare are waiting for their personal independence payment applications to be processed—at the current rate it will take perhaps 42 years. Tuition fees have trebled, which is hitting young people and aspiration in this country, and we have seen the NHS privatised, with money spent on a top-down reorganisation that nobody voted for. Those are the priorities that the Government have introduced, which is why it is important to get from them in black and white as part of the Finance Bill the implications of what a tax rate does, what it raises, what it does not raise, and how much other levels of tax could raise. It may be that some of the pernicious policies introduced by the Government could be reversed if they realised that they could raise more money from different levels of taxation.
Ian Murray
I am afraid we do not have much time, but if there is time at the end I will take an intervention.
Many hon. Members have mentioned the wages crisis in this country, which is of course connected to taxation. We also have a cost of living crisis: people will be £1,600 a year worse off by 2015. We have a youth unemployment crisis, and we are in danger of writing off another generation of young people, as happened in the 1980s when all those wonderful top rate reductions in tax were being made; and we have the lowest rate of house building since the 1920s. All these are priorities that the Government could put to the top of their policy agenda instead of concentrating on a tax cut for the wealthiest.
On the back of all this, we have a Chancellor who has set golden rules for the economic cycle but who has failed on pretty much all of them, while taking £3 billion from the Treasury’s coffers with this tax cut. The UK has lost its triple A rating, and not only will the Government not balance the books by the end of this Parliament, but they will borrow £75 billion this year alone— £190 billion more than planned. They have missed their targets for the deficit and for debt, and they broke every fiscal rule that they set themselves. What is their answer to the conundrum? It is to cut the top rate of income tax for the very richest in the country. Everyone has seen an increase in VAT, which is the most regressive tax; and we have had the granny tax—the list is endless. If politics is about priorities, the Government should come forward with a report, as suggested in new clause 14, and say how much the tax would raise or not raise. We can then decide whether it was the right idea and priority to lower that tax, alongside the long list of this Government’s failures, including social policy failures.
I was interested to hear the intervention from the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is no longer in his place. He wanted to talk about the 50p tax rate. I am very surprised that our Scottish nationalists have not mentioned it—they refuse to confirm whether or not an independent Scotland would back a 50p tax rate because the answer is no.
Ian Murray
I am being told to wrap up, so I shall do so by saying that a tax cut for this country costs £3 billion, according to the Treasury’s figures. The Government are standing up for the wrong people, they have the wrong policies, and new clause 14 needs to be approved by the House.
Stewart Hosie
On a point of order, Mr Deputy Speaker. Can you confirm that if an hon. Member is mentioned in the Chamber, the Member who mentioned them is obliged to accept the intervention?
Mr Deputy Speaker (Mr Lindsay Hoyle)
We both know that the hon. Member for Edinburgh South (Ian Murray) is not obliged to give way. The hon. Member for Dundee East (Stewart Hosie) has made the point well, and I am sure the hon. Member for Edinburgh South will finish now because Frank Dobson is waiting.
Ian Murray
I meant no discourtesy to the hon. Member for Dundee East (Stewart Hosie), but you were indicating that I should wrap up my speech, Mr Deputy Speaker; otherwise, I would have allowed the hon. Gentleman to intervene. Perhaps he will speak later and tell us his views on the Scottish Government’s refusal to back a 50p tax rate.
Mr Deputy Speaker
I assure the hon. Gentleman that the Chair is not going to take a decision or be blamed for anybody.
Frank Dobson
I strongly support new clause 14. It would appear that the Treasury’s Orwellian motto is “Ignorance is strength”. It is not just that the Treasury will not have this study done, but it has not had it done and does not know the answer. The Government are clearly afraid of the answer; what have they got to hide? That is typical of the current Treasury position. On a number of occasions I have asked the Treasury what estimate it has made of the income that would come to it from the implementation of a Tobin tax or Robin Hood tax—a tax on financial transactions such as that being sensibly suggested by Mrs Merkel for the rest of Europe. The answer I get is that the Treasury has never made any such estimates. Having never made any estimate of the possible income—and apparently never estimating what it would cost the City of London—the Treasury nevertheless states that it would be fatal for the City to impose a tax of 0.05% on financial transactions, when every other business in the country pays a 20% tax on transactions known as VAT. It appears that the Treasury is into “Ignorance is strength”.
We constantly hear from those on the Tory Benches about the wonders of Mrs Thatcher and how we should follow her example, so I remind them that for nine of the 11 years that she was Prime Minister, the top rate of income tax was 60p in the pound. Apparently, people managed to pay it. Apparently the money came in, and even rich people did not need a greater incentive to turn up at work.
Frank Dobson
No, I will not give way—[Interruption.] Well, I have sat here throughout the whole debate and listened to what other people had to say, so I am going to get a little further in.
One thing that is particularly irksome for badly off people in this country is hearing apologists for the City talking about bankers’ compensation packages—compensation apparently for the horrid requirement that they turn up at work. The dictionary definition of compensation is,
“recompense for loss, suffering or injury”.
Those bankers—how they suffer when they are helping people to swindle their tax liabilities; laundering money for gun runners or drug runners; or fiddling money to help people evade sanctions and then having to pay up. We clearly need to ensure that those rich people pay more tax, and the only way to do that is by increasing the rate to at least 50p.
Mr Gauke
It is always a great pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson). He suggested that the motto of the Treasury was “Ignorance is strength”. If that is the case, let me say that his was a very strong speech.
New clause 14 calls for the Chancellor to—
Frank Dobson
Can the Minister identify anything I said that was factually incorrect? [Interruption.]
Mr Gauke
Someone says most of it, but in the time available, I ought to turn to the new clause.
The new clause calls for the Chancellor to publish a report within three months of passing the Act to set out the impact of setting the additional rate at 50% for the tax year 2015-16. In addition, it asks for an assessment of the impact of reducing the additional rate to 45% for 2013-14 on the amount of income tax paid by those with a taxable income of more than £250,000 a year and those with a taxable income of more than £1 million a year, as well as on all those who are liable for the additional rate. It also proposes that the report set out the impact of reducing the additional rate on the level of bonuses awarded in April 2013 to employees in the financial sector. I hope that there will be no controversy when I say that, in order to be credible, any such analysis would need to take into account behavioural impacts, as did the HMRC report on the additional rate that was published at Budget 2012. It is clearly inadequate to look simply at theoretical income tax liabilities when increasing taxes.
Let me use this opportunity to assure hon. Members once more that the Government already consider the impact of any policy decisions taken. The HMRC report on the additional rate concluded that the underlying yield from the introduction of the 50p rate was much lower than originally forecast, due to large behavioural effects.
Mr Gauke
I want to make this point, then I will give way.
Let me address the matter of behavioural effects. The hon. Member for Birmingham, Ladywood (Shabana Mahmood) conflated the issue of behavioural effects with tax avoidance, and seemed to suggest that the two were synonymous. That is simply not the case. What does the term “behavioural effects” include? If someone decides to retire earlier than they would otherwise do, that is a behavioural effect. If someone decides to leave the country and go to work elsewhere, that is a behavioural effect. If a multinational company, when deciding where to locate a new team, decides to go to another country rather than the UK, that too is a behavioural effect. If someone decides to put more money into their pension—making use of pension tax relief as Parliament has intended—that is also a behavioural effect.
In the eyes of the Opposition, all of that constitutes tax avoidance, and we have been asked why we do nothing about it. I do not know whether they are suggesting that we should take away people’s passports so that they cannot emigrate, or that we should somehow force companies to locate their staff here. Those decisions are behavioural effects over which we have no control, and we have to respond to the reality of the world as it is, rather than as some people might like it to be.
David Wright
Does the Minister accept that the Office for National Statistics and the Office for Budget Responsibility have said that, after the Chancellor made his Budget announcement about the tax rate, people delayed and deferred bonuses and shuffled their cash around to avoid the system? Is this not actually about very rich people shuffling their money around in order to avoid tax? We need a simple system with a 50p rate, and we need to study it over a long time to determine its impact.
Mr Gauke
The important point here is that the HMRC analysis explicitly dealt with that issue. Yes, there will be instances in which sums are shifted from one year to another, just as happened when the previous Government announced the introduction of the 50p rate. People brought forward income at that point. The analysis took those behavioural changes into account and excluded them, and still concluded that the 50p rate was ineffective in raising money. Given that HMRC has already carried out that analysis and reached that conclusion, which is consistent with the academic research in this area, and given that the IFS has said that no substantial sums were involved, would the Opposition be determined to go ahead with a 50p rate even though the evidence suggested that it would not raise money? That seems to be their ideological position. It would be illogical and unfair to reintroduce a tax rate that was ineffective at raising revenue from high earners, that made ordinary taxpayers pay more and that risked damaging growth.
Shabana Mahmood
The Minister will acknowledge that the IFS has said that this whole area would benefit from greater research. Now that HMRC has more data, that research would perhaps produce more accurate results. Will he take that point on board and support our new clause?
Mr Gauke
There is no evidence that HMRC’s original analysis was wrong. When the Opposition announced earlier this year that Labour would introduce a 50p rate, they claimed that a new £10 billion had emerged that had previously not been taken into account. That turned out not to be the case, however; they got that completely wrong. The data still point in the direction that HMRC’s conclusions are as I have suggested, and there is no reason to believe that the analysis was wrong. The fact is that the 50p rate is an ineffective way of raising money from the wealthiest.
Richard Fuller
Is the Minister as concerned as I am that Labour Members are not simply calling for a 50p rate? We have also heard calls for a 60p and a 70p rate. Are they not trying to set the tone for what has already been introduced in France—namely, a rate that is much higher than 50%?
Mr Gauke
I note the fact that the right hon. Member for Holborn and St Pancras referred to a rate of “at least 50p”, and I suspect that he speaks for many of his colleagues in that regard. The fact is that there is an ideological divide involved here, in that the Opposition want the higher rate, regardless of the practicalities.
The reality is that, if we want to raise money from the wealthiest, a high rate of income tax is ineffective. My right hon. Friend the Member for Wokingham (Mr Redwood) made it clear that the changes in the 1980s resulted in more income being raised from the wealthiest. If we want to raise money from the wealthiest, there are much better ways of doing it, as my hon. Friend the Member for Redcar (Ian Swales) said. For example, we have taken a number of steps to deal with avoidance and disguised remuneration—those measures were opposed by Labour, by the way—and to deal with stamp duty avoidance. We have increased stamp duty rates. We have also introduced measures relating to capital gains tax and restricted the cost of the pensions tax relief. Those measures have raised far more than the revenue forgone from the 50p rate.
We talk about priorities. Let me set out one fact for the House. Even if we put aside the additional sums raised from the wealthiest, and even if we put aside the damage to competitiveness from the 50p rate, for every £1 forgone as a result of our measures on the 50p rate, we have forgone £160 as a consequence of the increase in the personal allowance. That is where our priorities lie, and I am proud of that record.
Mr Redwood
Will my hon. Friend confirm that the Treasury publishes figures every month on tax collection, and that they show that the rich are paying more?
Shabana Mahmood
We have had a good debate on our new clause. As I expected, the tone of the Minister’s remarks suggests that he will not take the opportunity to support it, despite accepting the fact that the Institute for Fiscal Studies has joined us in saying that more research, data and analysis are necessary if we are to get a complete answer on the issues of data and yield relating to a 50p top rate of tax. I note that he did not answer my earlier question about that. If he wants to say to the country that his Government have cut the 50p rate with justification, he should not have shown himself to be afraid of such data. The Government should have agreed to the new clause, as its proposals would have settled the matter once and for all. I ask again, what does the Minister have to be afraid of? We will be pressing the new clause to a vote.
John McDonnell
Let us get the figures clear. On the percentage of gross income that goes on taxes, for the bottom quintile it is 37.4% and for the top quintile it is 35%. The poorest pay more.
Shabana Mahmood
I am glad that my hon. Friend has put that point on the record—
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss amendment 67, in clause 107, page 90, line 33, at end insert—
‘(5A) The Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, publish and lay before the House of Commons a report setting out the impact of changes made to Schedule 19 of the Finance Act 1999 by this section.
(5B) The report referred to in subsection (5A) must in particular consider—
(a) the impact on tax revenues;
(b) the expected beneficiaries; and
(c) a distributional analysis of the beneficiaries.”
Mr Gauke
New clause 7 rectifies a minor omission from clause 105 by applying the reduction of the threshold to £500,000 for the 15% stamp duty land tax higher rate charge to the SDLT relief for the exercise of collective rights by tenants of flats.
Clause 105 reduces the starting threshold for the 15% higher rate SDLT charge from £2 million to £500,000 for transactions where the effective date is on, or after, 20 March 2014. This is part of a package of measures including changes to the annual tax on envelope dwellings and the ATED-related capital gains tax charge. The purpose of these measures is to tackle tax avoidance and to ensure that those who wrap residential property in corporate and other envelopes, and do not use them for a genuine commercial purpose, pay a fair share of tax. However, clause 105 omitted to apply the reduction to the SDLT relief in section 74 of the Finance Act 2003.
This relief benefits lessees of flats who collectively acquire freehold of their block under rights afforded by the Landlord and Tenant Act 1987 and the Leasehold, Reform, Housing and Urban Development Act 1993. The relief sets the rate of SDLT according to the consideration given for the freehold divided by the number of flats. This brings the amount of SDLT paid by lessees more into line with what they might have paid had they been able to acquire the freehold of their flat separately. These acquisitions are commonly undertaken by a company in which the lessees are shareholders. In these circumstances, the 15% higher rate of SDLT will apply if the average consideration exceeds the higher rate threshold.
The changes made by new clause 7 mean that where lessees of flats purchase the freehold of their block through a company and claim relief, SDLT will be charged on the purchase price at 15% if that price divided by the number of flats comes to more than £500,000. The new £500,000 threshold applies to the relief where the effective date of the purchase, usually the date of completion, is on or after 1 July 2014. Transitional provisions will, in the great majority of cases, preserve the existing £2 million threshold where contracts were entered into before 20 March 2014. We estimate that the impact of this minor change will be negligible. In practice, very few transactions of this kind are likely to attract SDLT at 15%. I understand that no tax has been put at risk by delaying the implementation of this change.
On stamp duty reserve tax, amendment 67, tabled by Opposition Members, asks for the Government to lay before Parliament, within six months of the Bill receiving Royal Assent, a report setting out the impact of clause 107 on tax revenues and who benefits from it. The Government announced at Budget 2013 that they would abolish the schedule 19 charge as part of their investment management strategy to improve the UK’s competitiveness as a domicile for collective investment schemes.
Schedule 19 is a special stamp duty reserve tax charge levied on UK collective investment schemes, or “funds”. A charge arises when investors surrender back to the fund manager firm either their units in UK unit trust schemes, or shares in UK open-ended investment companies. It is paid by the fund management firm, but the cost is ultimately borne by the investors in schemes. The investors are largely pension schemes, life companies and individual savers. It is worth stressing that this charge is payable only by UK schemes. An identical scheme established outside the UK would not be subject to the charge, placing the UK at a competitive disadvantage as a domicile for collective investment schemes. Investors who do not wish to pay the schedule 19 charge already have the option of investing in funds domiciled offshore.
The schedule 19 regime is regarded as complex and burdensome, requiring frequent tax calculations and returns to be sent to HMRC. Additionally, because of how the tax operates, its headline rate implies a much greater tax burden than the annual cost actually suffered. This is difficult to explain to investors and gives rise to presentational complications when trying to market UK funds, especially overseas. It is for these reasons that schedule 19 was identified as a major deterrent to domiciling funds in the UK, with a particularly damaging effect on the ability of UK funds to attract non-UK investors. Clause 107 repeals part 2 of schedule 19 to the Finance Act 1999, thereby abolishing the schedule 19 charge. This levels the playing field between the UK and other countries as domiciles for collective investment schemes. The abolition has effect from 30 March 2014.
The Government rightly keep all tax policy under review, but there would be little merit in producing a report in the way suggested by the amendment. We have already had the impact of this measure independently assessed by the Government Actuary’s Department. It has calculated that a typical 22-year-old currently earning average weekly earnings and investing the equivalent of 10% of gross income each year over a 45-year period would see a fund value £11,200 greater at retirement as a result of this change—equivalent to approximately 1.3% uplift in total fund at retirement. In current money terms, that is equivalent to an additional £4,600.
I stress again that the schedule 19 charge is borne by investors and not by fund managers. Data from the Investment Management Association suggest about 85% of the charge is borne by pension and insurance companies together with retail and public-sector investors. Therefore, these underlying investors are beneficiaries of the change. Furthermore, as the new auto-enrolment of workers into pension schemes changes the pensions landscape, even more ordinary hard-working people will benefit from the change in future. Further detail on the distributional impact of the measure has already been included in the tax information and impact note produced in December alongside the draft legislation.
As for the benefits due to the improved competitiveness of the UK as a fund domicile location, the time taken to authorise and launch new funds means that any positive effects of the change would not have had time to become established. Therefore, such a report would be premature. For the avoidance of doubt, let me also reiterate the point—which the Government have made on many occasions—that abolishing schedule 19 to the Finance Act 1999 is not a tax cut for hedge fund managers or hedge funds, which have in fact never paid tax under the schedule 19 charge. I noticed that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) was very careful in Committee not to say that it was a tax cut for hedge funds or hedge fund managers, and I would be grateful if she confirmed that that is the case.
James Duddridge (Rochford and Southend East) (Con)
I sense from the mood of the House that the Opposition are thinking of opposing new clause 7. If they are, will my hon. Friend make it clear how many hard-working savers will be hit by not receiving this benefit?
Mr Gauke
My hon. Friend makes an important point. It is investors in pension schemes who will bear the cost. The UK investment management industry, which exists up and down the country—we had a debate about the regional nature of that industry—will also be damaged. The cost makes it hard for UK-domiciled funds to compete. We want UK-domiciled funds to compete. [Interruption.] Maybe that is not Labour’s position, although I note that the shadow Chief Secretary seems to be accepting from a sedentary position that this is not a tax cut for hedge funds.
Mr Gauke
Again—I hope the record will pick that up—this is for investment managers, not hedge fund managers. That is the argument the hon. Gentleman is making, which is different from the argument we have heard from the Opposition on occasions. For example, in July last year, the Leader of the Opposition accused us of making a tax cut for hedge funds. In the shadow Chancellor’s response to the autumn statement in December last year—he gave a speech that many of us will remember for a long time—he called on the Government to reverse the tax cut for hedge funds. It appears that the Labour Front-Bench position is to accept that there is no tax cut for hedge funds. That, I suppose, is progress. [Interruption.] As the hon. Member for Kilmarnock and Loudoun says, it is for investment managers, not hedge funds. She is still wrong, but she is perhaps less awry than she was. That is progress, and I hope that the Leader of the Opposition and the shadow Chancellor will withdraw any suggestion of a tax cut for hedge funds. We will be looking out to see whether that features in any Labour party promotional material over the months ahead, but I am glad we have made progress on that front at least.
In conclusion, clause 107 supports the Government’s objective to create a more competitive tax system and will increase the attractiveness of the UK as a location for fund domicile. Amendment 67 would serve no useful purpose, given the information already made available about this measure. New clause 7 rectifies a minor omission from clause 105 and ensures that the reduction in the SDLT higher rate threshold to £500,000 operates as intended. I therefore move that new clause 7 be accepted and request that amendment 67 not be pressed.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Let me begin where the Minister left off, on new clause 7. It is worth noting that section 74 of the Finance Act 2003 provides SDLT relief for lessees of flats who collectively acquire the freehold of their block under rights afforded by the Landlord and Tenant Act 1987 and the Leasehold Reform, Housing and Urban Development Act 1993. The relief sets the rate of SDLT according to the consideration for the freehold divided by the number of flats, which brings the amount of SDLT paid by lessees more into line with what they might have paid had they been able to acquire the freehold of their flats separately. As the Minister said, such acquisitions are commonly undertaken by a company in which the lessees are shareholders. Under such circumstances, the 15%, higher rate SDLT charge in schedule 4A to the Finance Act 2003 will apply if the main consideration exceeds the higher rate threshold.
The Minister pointed out that clause 105 reduces the higher rate threshold from £2 million to £500,000 for transactions where the effective date is on or after 20 March 2014. However, clause 105 omitted to apply the reduction to the relief in schedule 74 to the Finance Act 2003, an omission that new clause 7 rectifies. It is welcome that the Minister has brought forward something to deal with that earlier omission and I will therefore not take issue with him on that at present.
Let me turn to amendment 67 and stamp duty reserve tax. I hope hon. Members will forgive me if I confess to having a sense of déjà vu, because it is not the first time we have debated this issue. Not only did we debate it in Committee, as the Minister acknowledged; we also debated it in last year’s Finance Bill. In fact, it is almost a year ago to the day that my esteemed colleague the hon. Member for Nottingham East (Chris Leslie) was standing at this Dispatch Box trying, as I will be, to make the Government see sense and accept our call for a report to be published. [Interruption.] I think my hon. Friend is indicating that he failed on that occasion.
Cathy Jamieson
The hon. Gentleman says I am a better woman, but I have to confess that I was not able to persuade the Minister in Committee. However, as always, I am an optimist by nature, so I will venture forth today in the hope, even at this late stage, that the Government can be made to see the light and accept our call for a report to be published.
As I mentioned, it is almost a year ago to the day that my colleague the hon. Member for Nottingham East was standing at this Dispatch Box. It would be remiss of me not to remark briefly that, some 15 years ago to the day, I was in the Scottish Parliament for the formal opening of that august institution. If anyone had suggested to me then that 15 years later I would be standing at this Dispatch Box discussing stamp duty reserve tax, I might have fled and looked for something else to do. Who knows? It certainly was not something that was on my agenda at that point.
However, to return to the amendment, for the benefit of anyone who may have forgotten, amidst all the excitement of the last year, exactly what we were speaking about on that occasion, I want briefly to recap some of the key points from the debate. It is worth noting what our amendment 67 proposes. For those who are following this debate with avid interest, it asks the Government to insert at the end of clause 107, page 90, line 33 a new section 5A, stating:
“The Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, publish and lay before the House of Commons a report setting out the impact of changes made to Schedule 19 of the Finance Act 1999 by this section.”
A new section 5B is then proposed:‘
“The report referred to in subsection (5A) must in particular consider…the impact on tax revenues;…the expected beneficiaries; and…a distributional analysis of the beneficiaries.”
I shall return to those issues in responding to the Minister’s points.
Mr McKenzie
Why does my hon. Friend think that the Government are so reluctant to produce this report if, indeed, they see the change as beneficial to all? We see this £160 million giveaway as being beneficial to only one particular group, and not our constituents.
Cathy Jamieson
I thank my hon. Friend for that intervention. I can only hazard a guess as to why the Government consistently refuse to look at producing any report or to accept any of the requests—quite reasonable requests—that we have brought forward, seeking further information, further transparency and these particular pieces of information. I am forced to conclude either that the work has not been done or that the Government, for whatever reason, do not wish to share those facts and figures with us. That is a pity because it would help hon. Members of all parties if this information were put forward. I shall come on to deal in a few moments with some of my hon. Friend’s other points, particularly regarding how his and my constituents will be affected.
As the Minister said, the Government new clause removes the stamp duty reserve tax charge for which fund managers are liable when investors sell or surrender their units in UK unit trust schemes or shares in UK open-ended investment companies. Some people have argued that SDRT could essentially be considered as some form of transaction tax—not a term that everybody would use, but it has certainly been argued in that context—currently levied at what seems to be a not unreasonable rate of 0.5%. This is the element that the Government propose to remove.
As I have indicated, our amendment would require the Chancellor to publish a report—I always try to be reasonable, fair minded and mild mannered in my requests to the Minister, as he knows from our many discussions in Committee—to show exactly who benefits and who would be left worse off through the abolition of SDRT on investments in those units trusts and OEICs. As I said in Committee, in these straitened times, hon. Members—as my hon. Friend the Member for Inverclyde (Mr McKenzie) suggested—could be forgiven for assuming that such a generous tax break would fall to those who really need it, such as the millions of hard-working taxpayers who are £1,600 a year worse off under this Government than they were in 2010.
Cathy Jamieson
I will give way to the Minister, who I am sure will want to tell me what he is doing for those hard-working taxpayers.
Cathy Jamieson
As I said in Committee and as we have seen in some of the to-ing and fro-ing this afternoon, this tax cut relates to investment fund managers. I hope the Minister will listen very carefully to my points. As my hon. Friend the Member for Inverclyde and I have said, the families that, according to the Institute for Fiscal Studies, will be £978 a year worse off by the next election thanks to the Government’s tax and benefits changes will want to know exactly who benefits from this particular tax cut. I am sure that the Minister is now going to tell us how giving investment fund managers that tax cut will provide support and assistance for the hard-working families in my and my hon. Friend’s constituencies.
Mr Gauke
I have already set out how this tax cut will benefit those contributing towards their pension. I take it from the hon. Lady’s earlier answer to my intervention that she accepts that this is not a tax cut for hedge funds. Will she explain precisely what the Leader of the Opposition was on about when on 10 July 2013 he told the Prime Minister in Prime Minister’s Question Time that there was a £145 million tax cut for “hedge funds”? The Leader of the Opposition was wrong, was he not?
Cathy Jamieson
I am going to come on to the issue of who benefits, but I noticed that, once again, the Minister was not able to say how this particular tax cut proposed by the Government is going to benefit our constituents.
Let me deal with the Government’s tax impact note, which provides some information, saying that the chief beneficiaries of this particular initiative will be the 100 UK fund managers who control 2,500 investment schemes. Hon. Members would doubtless be very concerned if they thought that the overall health of the UK’s investment industry was somehow at risk, which is why the initiative was brought forward. One might think that it was somewhat ailing if it was deserving of a tax cut amounting to, as my hon. Friend the Member for Inverclyde said, £160 million a year. However, if we look at the reality of the industry, we could readily say that it is in pretty good health, raising the question of whether the industry really needs the Government’s help, which could more usefully be put to assisting those hard-working families feeling the squeeze as a result of Government policy.
According to the Investment Management Association, as of January 2014, its members managed over £4.8 billion in the UK on the basis of OEIC funds alone and around £4.5 trillion overall. The association also tells us:
“UK assets under management and funds under management are at record levels, and the UK retains its position as the second largest asset management centre in the world after the US.”
It could well be argued, therefore, that the UK’s investment industry is doing okay— without the intervention or assistance of the Government.
Cathy Jamieson
I will give way to the hon. Gentleman if he will tell me how this particular tax cut benefits my constituents and those of my hon. Friend the Member for Inverclyde.
Simon Kirby
I have been listening carefully to the points the hon. Lady is attempting to make. I still do not understand, however, whether hedge fund managers will benefit from this change; it seems quite clear that they will not.
Cathy Jamieson
If the Government, of course, were to produce the report requested in this mild-mannered, sensible and reasonable amendment, we would perhaps have more information on who would benefit—exactly what amendment 67 calls for.
Mr Gauke
The hon. Lady always puts forward her proposals very reasonably, but I have to tell her that there is no need for a report on this issue. Schedule 19 stamp duty reserve tax is not paid by hedge funds, so abolishing schedule 19 SDRT does not benefit hedge funds. Does she accept the point that this has nothing to do with hedge funds?
Cathy Jamieson
I want to move on to discuss further who exactly it does benefit, which is the crucial point. We sometimes hear from the industry that there is some kind of existential threat presented by people moving to Luxembourg, Switzerland or wherever else, but it seems that despite all that, the industry is, as I said, in pretty good health.
One of the things that worry Opposition Members is that the only people about whom the Government seem to be genuinely concerned are those who are already wealthy and privileged. They have cut the top rate of income tax for those earning more than £150,000 per annum—we discussed that earlier, so I shall not say more about it at this stage—and, as bank bonuses rise again, they continue to oppose our proposal for a bank bonus tax to help young people back into work. They have failed to balance the books, as they promised to do, yet it seems that they can still find £160 million a year for those who may not need it as much as others.
Mr McKenzie
Is it not typical of the Government that they can find that £160 million while telling our constituents that times are still hard and they must tighten their belts? The cost of living is driving many of them to despair.
Cathy Jamieson
Once again, my hon. Friend has made a very valid point. As he says, many of our constituents in the real world are at the point of despair. VAT has risen, tax credits have been cut, and wages have not kept pace. As my hon. Friend knows very well from his own area, many people are on zero-hours contracts, or are working fewer hours than they would like. Furthermore, the bedroom tax—which we have debated on numerous occasions, and which has been mentioned earlier today—is still having an impact on many people throughout the country.
While all that is happening—and while our constituents are continually coming to our surgeries and contacting us in other ways to tell us about the problems in their lives and how difficult it is to make ends meet—the Government still cling to the notion that the much vaunted recovery is benefiting everyone. I must tell the Minister—I am sure that he has heard similar comments even from Members on his own Benches—that those benefits are not being felt by most of my constituents, and I suspect that they are not being felt by most of the constituents of my hon. Friend the Member for Inverclyde, whose seat is not far from mine.
I could not swear to this, but I strongly suspect that if I asked my constituents what one policy would really improve their quality of life and living standards, they would not be queuing up to tell me that the answer was tax cuts for investment funds. I may be wrong, and I have no doubt that the Government would advance a different argument. Perhaps they would argue that the removal of SDRT for unit trusts and OEICs will produce a fair and proportionate tax rate which will create jobs, revitalise communities and rejuvenate local economies, for that certainly seems to be what they are trying to claim. During last year’s debate, the then Financial Secretary to the Treasury implied that it would create more jobs in regional economies by encouraging investment funds to move to the United Kingdom. What concerned us at the time was the fact that there was scant evidence to back up any of that, and, I cannot, try as I may, find any additional supporting evidence in the tax information impact note attached to this year’s Bill.
In Committee, the Minister told us a wonderfully heart-warming story—to which he has referred again today—about a 22-year-old investor who would benefit from the Government’s changes to the tune of some £4,600. At that time, I questioned whether this was a real 22-year-old who had been found by the Government Actuary’s Department—where from, I do not know. Perhaps the Minister now knows whether it was a real live 22-year-old. In any event, I was interested in the notion.
Mr McKenzie
My hon. Friend has described a number of desperate scenarios with which the Government could help to deal, but they have chosen the desperate scenario of a fund that has grown by 6.5% for the last four years and is worth trillions of pounds, and have decided to give this particular desperate fund an extra £160 million.
Cathy Jamieson
As I said earlier, one thing that the Government could do and have consistently refused to do would help thousands of people throughout the country: they could abolish the hated bedroom tax. They could also accept our proposal for a tax on bankers’ bonuses, and adopt our properly designed programme to get young people back into work and give them the start that they want. Until we get young people into work, ensure that they have adequate housing and ensure that they can have a decent quality of life, the majority will not have an opportunity to think about saving from one year to the next, let alone trying to invest for the longer term. In Committee, I asked whether it was only me—or only Opposition Members—who held this view. My hon. Friend the Member for Gateshead (Ian Mearns) made a powerful speech in which, like my hon. Friend the Member for Inverclyde, he described the reality of what was happening to young people in his constituency.
I have looked at the tax information impact note again, in search of further details of that 22-year-old’s story, but I can find nothing that explains how such people will benefit. The only reference to benefits for investors was this rather disappointing revelation:
“This measure could improve returns on investments (including pensions) but would otherwise have no impacts on individuals or households.”
I do not yet see how the measure can benefit the people we are trying to represent.
I am sure that we would all like to hear the next chapter in the 22-year-old’s life story, and if the Minister has any more information to illustrate the fact that he is just the kind of person who stands to benefit from this measure, I am genuinely willing to hear it. However, in the absence of any such information, I shall return to the subject of amendment 67.
Our amendment invites the Government to lay out clearly and transparently exactly who will benefit from this policy and by how much. In Committee my hon. Friends expressed on a number of occasions the view that this is just another tax break for the Government’s friends in the City. While it does look like that, we are open to giving the Government the chance to prove otherwise. That is why our amendment asks the Treasury to publish the costs to the Exchequer in order to ensure that a list of beneficiaries and a distributional analysis for the abolition of stamp duty reserve tax are put into the public domain. That way we will be able to see all the facts as to who the Government are really concerned about.
Of course, if the Government do not agree to our amendment, we will be forced to conclude that this is just another tax cut for the wealthy, just as we suspected all along. We would also have to conclude, in the absence of any information to the contrary, that any claims of jobs created in regional economies are about as robust as the Prime Minister’s stance on Europe has been, and we would have to look a lot harder to try and find something in this which would create jobs, as seems to have been suggested on previous occasions, because I cannot for the life of me see how that stacks up. If we really want to tackle some of the regional imbalances, let us look at some of the announcements that have been made today, in terms of the reports put forward by the Opposition, about how we can create more wealth and look to ensure that power and resources are devolved to some of our cities and we tackle the issues around infrastructure in the regions.
In the light of the response when we tabled this amendment in Committee, I have to say that I am not at all confident that the Government are going to agree to provide us with the transparency we so urgently need. Again, if we look back to what was said in Committee, we find that the Government were not particularly transparent in terms of the information we were given, because, along with the story of the 22-year-old, speakers on the Government side were keen to stress that, because it is fund investors as opposed to fund managers who will benefit from the removal of SDRT, it would greatly boost investment. Again we have to question whether any increased investment would directly benefit those investment fund managers. Hon. Members were also very helpful in trying to enumerate how many people are currently employed by the industry, but try as they might, they failed, as did the tax information and impact note, to detail that important point about how many jobs would be created by the abolition of SDRT.
We also heard that the tax as it currently operates is
“an uncompetitive charge that puts UK-domiciled funds at a disadvantage to funds domiciled elsewhere”.––[Official Report, Finance Public Bill Committee, 10 June 2014; c. 412.]
That does not square with the idea that the UK investment management industry is doing so well that it is the second largest in the world, beaten only by the US.
I want to draw to a conclusion soon because I put quite a number of questions to the Minister in Committee and it would be useful for us to give him some time to respond to them, as he was not necessarily able to do so in Committee. It is important that we give him the chance again today, therefore. Unsurprisingly perhaps, the Minister is continuing to steadfastly—albeit politely—refuse to countenance our amendment for two reasons. First, he seems to be suggesting that the information requested has already been covered by the tax information and impact note, which, as I hope I have outlined, it does not seem to me to do in any clear and transparent way. The other argument that came up in Committee is that it would be difficult and it would perhaps take longer than six months to do. I am sure—and I am sure the Minister will understand this—that should he wish it to be so, he would be able to utilise all the capacity of the Government to overcome any difficulties, and indeed to ensure more information and a report were brought forward, and I am sure he would also be able to use his good offices to have his Government provide us with considerably more information than is currently contained in the tax information and impact note. It would also be helpful if the Minister could give us more information in his winding-up speech as to why he thinks it would not be possible to do this within a six-month deadline, as we have asked in our amendment.
In conclusion, this is all about priorities. The Government’s measures will reduce Exchequer revenues by more than £800 million over the course of the next five years if this particular measure goes ahead. That funding could be used in a variety of ways, and the Government have to be held responsible for the choices they make. Our amendment simply asks them to undertake that assessment and put the information in the public domain, so that we can see who benefits from this initiative and how it would benefit the wider public. The Government have not made that case; they have not shown how the measure would have an impact on our constituents—for the most part they seem to suggest it would not have any impact on them—and they have not answered the questions put previously about job creation and the impact on the regional economies.
Let me therefore remind the Minister of some of the questions we posed in Committee—I am sure other Members will wish to contribute, but he will also want to answer these in his summing up. The Investment Management Association is saying that the industry is doing very well, so why are the Government handing this tax break to the industry? What evidence can the Minister provide to us, even at this late stage, to suggest that the measure will have a positive impact on the UK economy and, in particular, the jobs market? Unless my memory fails me, he has not so far been able to give me a concrete number on the jobs he expects to be created or any more information about the regional benefits that have been referred to. Can he do that now? It would be helpful if he could do that and if he could set out all that information today. In those circumstances, perhaps I would consider whether our amendment was necessary. I suspect that he will not be able to give that information and will not be able to provide the clarity and transparency we seek, so I strongly suspect that when the time comes, I will seek to press my amendment to a vote.
Mr Gauke
It is a pleasure to respond to this short debate. The hon. Lady has an admirable ability to make unreasonable requests in a very reasonable way, and it falls to me once again to decline her offer, as Treasury Ministers have done in the past when a review or report is sought from them during a Finance Bill debate.
Let me quickly try to address some of the points raised, the first of which relates to the impact on the industry, the competitiveness argument and what we can do to assess that. It is worth pointing out that this measure came into effect only on 30 March, and it will take longer than six months for evidence of how the benefits of the change are accruing to investors to become available. So the report requested in amendment 67 will not adequately be able to do justice to that question.
Another area we have debated on a number of occasions is who benefits from this measure, and I will return to our little engagement on hedge funds. It is worth pointing out that the National Association of Pension Funds, the Association of British Insurers and the Investment Management Association stated their disagreement with the Labour party’s position and its policy proposal last year to reintroduce the schedule 19 charge. They say it would
“impose a £145 million annual cost on the ordinary savers, investors and pensioners, who are the beneficiaries of its abolition.”
That would weaken the UK’s competitiveness as a place for funds to be domiciled. If we are competitive in this sector, we will have more growth and more jobs. Let us be clear that this is not about jobs in the City of London—not that there is anything wrong with jobs in the City of London. The fund management industry directly employs 30,000 people throughout the United Kingdom, and about a half of those jobs are linked to fund domiciles. The jobs are located in many, if not all, the regions and nations of the United Kingdom.
Cathy Jamieson
Of course I recognise the value and the range of those jobs. Will the Minister tell us exactly what assessment the Government have done on the risk of reintroducing the measure, or indeed on the risk associated with producing a report? Surely he will want to investigate fully the number of jobs that he seems to think might be lost if our measure went ahead.
Mr Gauke
The hon. Lady puts her finger on an important word, which is “risk”. Yes, a number of jobs are involved. Some 30,000 people are employed in this industry in the UK. About 10,000 jobs are located in regions and nations such as Scotland, the north-west of England and the west midlands. If we have an uncompetitive tax system in the UK, that sector will suffer. There will be a threat to those jobs. We want to see an expanding and thriving sector, but there is a lot of competition from other jurisdictions in which funds can be domiciled. If we do not compete in the sector, we run the risk of losing those jobs.
There is not only the issue of the industry itself and the jobs that can be encouraged and protected in this country if we have a competitive tax regime, but the underlying point that it is the investors who indirectly bear the burden of this tax. That means that contributors to pension schemes—people in auto-enrolment schemes—will receive less in their pension if this tax remains in place. That is something that we should all seek to address. If we want policies that will be good for jobs and good for savers, then abolishing schedule 19 is a good policy. But what do we get from Labour? We get it embarking on a process to reinstate the policy because it misunderstands it. It thought that it was something to do with hedge funds. After it was explained to Labour Members—I have to say that it has been explained to them time and again—they refused to abandon it. I do not know whether it is still their policy to reverse this, or whether they are calling for a report. As I understand it, it is still the policy of the Opposition to reintroduce this tax.
Simon Kirby
Does the Minister agree that it seems incredibly naive to give away these jobs and reduce these pensions for nothing? Surely the Opposition should better understand the proposed legislation.
Mr Gauke
It is striking that time and again senior figures in the Labour party went around describing this as a tax cut for hedge funds. It is to the credit of the hon. Member for Kilmarnock and Loudoun that she refused to repeat that accusation. Although she did not quite go as far as she might have done towards putting the record straight, at least she did not repeat the accusation despite being given multiple opportunities to do so. I do worry about the understanding of some issues within the Labour party. Just today, we have seen the example of the confusion about how many jobs have been created inside and outside London. I understand that the Leader of the Opposition is standing by his position this morning, although he did not quote that in his speech—but there we go. I am afraid that this is an example of somewhat shoddy thinking from the Opposition.
Ian Swales
On the same theme, did the Minister share my concern about the number of speeches made in Committee by Opposition Members that appeared to suggest that the benefits of the policy would accrue to the managers of the funds rather than the funds themselves?
Mr Gauke
Yes, I did. There was a complete absence of any understanding of tax incidence and of who ultimately bears a tax, but that, I am afraid, is all too typical.
The removal of schedule 19 is a welcome measure that will ensure that we have a competitive investment funds management set-up in the UK. It will help savers and those investing in their pensions and remove a distortive and uncompetitive tax. It is a great pity, although not a great surprise, that this further measure to improve our competitiveness and to help savers is opposed by the Opposition, and I certainly urge my colleagues to vote against amendment 67, assuming that it is pressed to a vote.
Question put and agreed to.
New clause 7 accordingly read a Second time, and added to the Bill.
Clause 107
Abolition of SDRT on certain dealings in collective investment schemes
Amendment proposed: 67, page 90, line 33, at end insert—
‘(5A) The Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, publish and lay before the House of Commons a report setting out the impact of changes made to Schedule 19 of the Finance Act 1999 by this section.
(5B) The report referred to in subsection (5A) must in particular consider—
(a) the impact on tax revenues;
(b) the expected beneficiaries; and
(c) a distributional analysis of the beneficiaries.”—(Cathy Jamieson.)
Question put, That the amendment be made.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I beg to move, That the clause be read a Second time.
New clause 11 relates to the Government’s employee shareholder scheme, more commonly known as “shares for rights”. It seeks to probe the Government on the scheme’s performance to date and the costs to the Exchequer in the form of capital gains tax exemptions. We have debated the subject at some length, so I thought that it would be helpful to give some background to jog hon. Members’ memories before setting out the reasons why the Opposition tabled the new clause.
The concept of employee shareholders was introduced under section 31 of the Growth and Infrastructure Act 2013, which was part of the Chancellor’s desperate attempt to kick-start growth after three years of a flatlining economy and rising unemployment, particularly youth unemployment. To get more businesses hiring, he created a status of employee known as employee shareholders. They are expected to give up several fundamental employment rights in return for tax advantaged shares in the employer’s company or parent company, issued under an employee shareholder agreement. Those shares would be tax advantageous to employees because up to £50,000 of the shares would be exempt from capital gains tax on disposal.
In exchange for those tax advantageous shares, employees would be expected to waive some of their fundamental employment rights, including the right not to be unfairly dismissed, the right to a redundancy payment, the right to request leave for study or training and the right to request flexible working, and they will have to give 16 weeks’ notice, rather than the usual eight weeks, before returning to work.
Of course, the right to request flexible working and the ability to give just eight weeks’ notice after maternity or adoption leave have been assessed by the Government themselves, in their tax information and impact note, to affect women disproportionately. They acknowledged that when they legislated for this last year. These reduced rights for female employees, in particular, are in addition to the Government’s real-terms cuts to statutory maternity pay—the mummy tax—the scrapping of the health in pregnancy grant and the significant restrictions on the Sure Start maternity grant. That begs the question that many of us are asking ourselves: just what do this Government have against women and families?
The shares for rights scheme has been widely criticised from across the political spectrum—particularly by the business world because of its impact on employment rights and grave concerns about the opportunities that it presents for tax avoidance.
Mark Tami (Alyn and Deeside) (Lab)
Does my hon. Friend agree that rights are rights—not something to be bought and sold? If we give people rights, they should not be able to be sold to whoever.
Catherine McKinnell
My hon. Friend hits on a key point. Rights are rights and should not be up for sale. I will go into some of the concerns expressed about the policy. The TUC, for example, has said:
“We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact, as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.”
Not only do the proposals send out completely the wrong signals about employment rights—I have focused on women’s employment rights, but those rights are affected across the board—but they have been so badly thought through that the general feeling is that they will not have much impact, as most people would not want to enter into the arrangements.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
My hon. Friend is making incredibly important points. She mentioned businesses. Does she share my concern that the scheme has not had the support from businesses that we might have expected, for some of the practical reasons that she has raised?
Catherine McKinnell
I agree with my hon. Friend’s concern. The lack of transparency from the Government about the interest in the scheme is why we tabled the new clause. It has been difficult to get information about the scheme’s potential take-up—how many businesses have expressed an interest? It has taken a freedom of information request to get even the most basic information, which I will outline a little later.
I should like to quote Justin King, chief executive of Sainsbury’s. What he says relates poignantly to the interventions made by my hon. Friends the Members for Alyn and Deeside (Mark Tami) and for Feltham and Heston (Seema Malhotra):
“This is not something for our business. The population at large don’t trust business. What do you think the population at large will think of businesses that want to trade employment rights for money?”
I could not have expressed it better myself.
Mike Kane (Wythenshawe and Sale East) (Lab)
Does my hon. Friend agree that the measure lacks basic human dignity, which should be at the forefront of all public policy legislation? Does she agree with Lord O’Donnell, the former head of the civil service, who said that it was a form of modern slavery?
Catherine McKinnell
The proposition risks ringing of that. It lacks an ethical approach, given that it trades people’s rights for £2,000 of shares. More than that, it flies in the face of what we know to be true about productivity and engagement. We know that engaging a work force and building their trust makes businesses more successful. Sarah Jackson, chief executive of Working Families, says:
“It also flies in the face of everything we know about productivity and employee engagement. Treat your employees well, give them the flexibility they need, and you will be rewarded by highly motivated and high performing employees.”
The proposal we are discussing goes in completely the opposite direction, undermining the rights of employees and buying them off with shares that could carry a lot of risk for them. It is no wonder that so few businesses have taken up the offer.
Stewart Hosie
That is the key point, is it not? Share schemes and share option schemes are fantastic incentives in their own right. That is what should be promoted, not the link with the withdrawal of rights, which is absurd and preposterous.
Catherine McKinnell
I agree with the hon. Gentleman. He sums up the point at stake. The scheme seems to confuse and conflate two different issues: employee ownership of shares in a company—something we fully support—and employment rights. There seems to be a belief that one can be traded for the other and that that will create an entrepreneurial work force, when in fact it undermines productivity and performance and is so unattractive that few businesses have taken up the offer, we believe. But that is the reason for the new clause: we want to get to the truth of exactly how many businesses are interested in taking up the scheme.
Seema Malhotra
To build on that important exchange, Labour supports employee ownership, but coupling it with slashing employment rights is not only contradictory but counter-productive. Do we not need a way in which we can support employee ownership alongside employment rights? That is how we will get a motivated and engaged work force. Partnership between management and staff is the right way to get the focus on high productivity and long-term incentives.
Catherine McKinnell
My hon. Friend speaks passionately and I absolutely agree. Employee ownership is something we should be talking about and finding ways to support. That is why it is so disappointing that the Government wasted the opportunity to boost the cause of employee ownership and shareholding, and have undermined it by framing the argument so unfairly. It smacks of the Adrian Beecroft fire-at-will proposals and does not ring true for most businesses, which do not want to conduct their affairs in that way. They want an equal partnership with their employees to build the business together, knowing that in most circumstances their work force are their key asset. Undermining and cutting employment rights will potentially undermine the trust in a business between employers and employees. That is not the way to build a successful, strong business for the future.
The policy was the centrepiece of the Chancellor’s speech to the 2012 Conservative party conference. He suggested at the time that his grand idea would herald a new three-way deal between employer, employee and the Government, in which employees give up their employment rights, the company gives shares and the Government grant tax exemptions on those shares. In his words, it is swapping “old rights”—as if they are no longer required—
“with new rights of ownership.”
I want to be absolutely clear that we do not oppose the concept of employee ownership. We are aware of its benefits for both employees and employers alike, but we strongly object to its being linked to the removal of employment rights, which serves to undermine the whole concept. Ministers need to make it easier to hire people, not to fire them, but the Chancellor is kidding absolutely nobody by trying to claim that the scheme does anything other than encourage that.
The Chancellor talks about new types of ownership rights, but the Employee Owner Association, which describes itself as the voice of co-owned business, has pointed out that the scheme serves only to discredit and undermine genuine employee ownership schemes—schemes that we fully support. The chief executive of the Employee Ownership Association has said:
“There is absolutely no need to dilute the rights of workers in order to grow employee ownership and no data to suggest that doing so would significantly boost employee ownership.
Indeed all of the evidence is that employee ownership in the UK is growing and the businesses concerned thriving, because they enhance not dilute the working conditions and entitlements of the workforce.”
We need only look at the comments of our colleagues in the other place, including a number of former Tory Cabinet Ministers, before they voted down these measures to see that that view is shared by pretty much everyone outside the Government. Lord O’Donnell said:
“If an employer is offering this, they are probably the kind of employer that you do not want to go near. If an employee accepts it, it is probably because they do not really understand what they are doing. On those grounds, it is bad.”
He went on to ask a question:
“we know that in the old days the price of slavery was 20 or 30 pieces of silver. Is it now £2,000?” —[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 617.]
I could not discuss shares for rights without reminding right hon. and hon. Members of the view of the former Conservative Cabinet Minister, Lord Forsyth of Drumlean. He described the scheme as having
“all the trappings of something that was thought up by someone in the bath”—[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 614.]
Perhaps the Minister will respond to those comments today.
In new clause 11, the Opposition are trying to probe the Government on the take-up that the scheme has achieved so far. A cursory search for “shares for rights” on an internet search engine suggests that things have not been a roaring success. It turns up the following headlines. The FT.com website states, “Chancellor’s ‘shares for rights’ plan flops”. The Guardian says, “George Osborne’s shares-for-rights scheme doesn’t add up”. The Telegraph says, “No take-up on ‘rights for shares’”, as well as, “George Osborne’s flagship rights for shares scheme risks falling flat”. The specialist human resources website, XpertHR, sums it up well with, “Shares for rights: 1.7% of UK employers plan to use employee shareholder contracts, XpertHR research finds”. Even the Deputy Prime Minister has contributed to the headlines, with FT.com reporting in January that “Nick Clegg urges end of ‘shares for rights’”.
I am quoting headlines from internet searches because it is incredibly difficult to get any information out of the Government on the take-up and impact of the policy. The purpose of the new clause is to get to the truth. [Interruption.] I see that the hon. Member for Rochford and Southend East (James Duddridge) is frantically searching on his hand-held device. Perhaps he has found some alternative headlines that he would like to share with the House. Would he like to intervene?
James Duddridge
I assure the hon. Lady that I do not do anything frantically. I have been searching. I think that it was on Google, but I am not very good at using this little hand-held box. HR magazine says, “Osborne’s shares for rights scheme could help SMEs”. I do not know whether she needs to update her search engine or whether she is using an internal Labour party search engine that filters out good news stories.
Catherine McKinnell
I would be interested to hear more details of that story once the hon. Gentleman has had time to read the entry on his search engine. I am sure that it will help him to provide a robust response to my comments when he speaks in this debate. I look forward to hearing the positive story that he has to tell about the shares for rights scheme. I think that he might be a lone voice in this debate, but good luck to him.
Seema Malhotra
My hon. Friend has quoted some significant voices in this debate and I want to add one more quotation. Justin King, the chief executive of Sainsbury’s, said:
“This is not something for our business… The population at large don’t trust business. What do you think the population at large will think of businesses that want to trade employment rights for money?”
Does she agree that businesses are concerned that the way in which this scheme is being used is not helpful to them? They want to build long-term relationships with their employees, invest in them and find ways to build employee engagement in the profits of the company. Does she also share my concern that this is another way in which the Government are trying to reduce employment rights?
Catherine McKinnell
My hon. Friend raises an important point, and that concern has been expressed by a range of voices in response to the proposals—when I say voices, I mean businesses, but also those who represent employees, employee ownership and recruitment agencies. They are all concerned about the proposals ultimately creating a two-tier work force: those who have rights and those who do not.
The Opposition would like to see many problems addressed in relation to some of the insecure working practices that many workers up and down the country are subject to. We know the impact that such working practices have, particularly on those with families and their ability to plan for child care and to know whether they can afford to pay the rent at the end of the week.
People come to my constituency surgery in awful confusion about whether they need to claim housing benefit from one week to the next, because one week they get enough hours to pay the rent, and the next week they do not. That creates a two-tier work force of those who know how much they will be paid and what hours they will work, and those who are left with insecure zero-hour contracts. That potentially creates yet another tier of worker—one who does not have redundancy rights, cannot request flexible working, does not have the right to take time off to train, and one who, if they take maternity leave, has to give four months’ notice instead of two as to when they might return. There is a worrying trend of eroding employment rights that does no good for the workers involved or for businesses, and that strong message has come from businesses in response to the proposals.
Let me return to the criticisms of this policy made by the Deputy Prime Minister in the Financial Times report that I mentioned. That report was telling because it contained the only official piece of information in the public domain about the take-up of the scheme. A freedom of information request from the FT revealed that the Department for Business, Innovation and Skills had received just 19 inquiries about the scheme in the six months to the end of December. That followed a report in The Daily Telegraph last November which found that of 500 businesses surveyed, a mere 0.1%—virtually none—said they were planning to introduce the scheme. The survey also showed that 72% of businesses believed that encouraging employees to relinquish rights would make recruitment far more difficult, in complete contrast to the Chancellor’s claims.
I find that response from the business community incredibly heartening because it shows that businesses in Britain know what makes for a good, strong work force, and for trust between employer and employee. It also shows, however, how completely out of touch the Government are if they think by offering this scheme, they are giving business what it needs. The results of the survey correlate closely with the Department’s own consultation responses, which found that the policy had the full support of fewer than five of the 209 businesses asked to respond. It conceded that only a “very small number” of respondents welcomed the scheme or were interested in taking it up.
To return to the FT report, it is perhaps no wonder that Treasury officials are not particularly optimistic about the scheme’s take-up. Responding to the FT’s FOI figures, an unnamed official admitted:
“This was never going to fly off the shelf.”
Of course it was not—it is divisive, ill thought through, and has proved unpopular among former Tory Cabinet members, not to mention the overwhelming majority of the business community. I gather, however, that those FT figures are the latest information available for the scheme. Will the Minister comment on why that is the case, and explain why Ministers are so reluctant—for whatever reason—to update Members of the House on the scheme’s progress? That is why we have tabled new clause 11. We think that the House deserves to have available the information associated with this scheme.
Seema Malhotra
One could conceive that this policy may have had a well-intentioned goal, but does my hon. Friend agree that, given the feedback on the consultations, the low take-up and now the claims that it could lead to a tax loophole and large amounts of tax avoidance, it could end up being a real own goal for the Government? If the policy is not reversed, it needs to be under active review at the very least—hence the importance of new clause 11.
Catherine McKinnell
I thank my hon. Friend for that intervention as it takes me neatly to my next point, which is the issue of tax avoidance. Several people share our concern that the employee rights scheme is potentially vulnerable to significant abuse. I raised that concern during consideration of last year’s Finance Bill, when we tabled an amendment calling on the Government to review the impact of this scheme on tax avoidance activity. That helpful amendment was not accepted by the Government, but I hope that this year—knowing that the Government profess to be keen to clamp down on all forms of tax avoidance—they will accept the need to have the right information available to prove that this policy will not create just another massive loophole.
Buried in the annexes to the OBR’s policy costing document from December 2012 was an admission that the cost of the scheme could rise to £1 billion by 2018—depending on take-up, obviously, and we are looking forward to the figures for that. A quarter of that cost was specifically attributed to tax avoidance—or tax planning, as it is termed in the report. In certifying the figures, the OBR stated that
“there are a number of uncertainties in this costing. The static cost is uncertain in part because of a lack of information about the current Capital Gains Tax arising from gains on shares through their employer. The behavioural element of the costing is also uncertain for two reasons. First, it is difficult to estimate how quickly the relief will be taken up; this could make a significant difference as the cost is expected to rise towards £1 billion beyond the end of the forecast horizon. Second, it is hard to predict how quickly the increased scope for tax planning will be exploited; again this could be quantitatively significant as a quarter of the costing already arises from tax planning.”
Perhaps the director of the Institute for Fiscal Studies, Paul Johnson, characterised the issue best when he wrote, in a Financial Times article aptly entitled, “Shares for rights will foster tax avoidance”:
“There may be a case for more flexible approaches to employment legislation. But as a tax policy, ‘shares for rights’ always looks pretty questionable. At a time of increasing scrutiny of tax avoidance schemes, it has all the hallmarks of another avoidance opportunity. So, just as concern over tax avoidance is at its highest in living memory, just as government ministers are falling over themselves to condemn such behaviour, the same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry. Its own fiscal watchdog seems to suggest that the policy could cost a staggering £1bn a year, and that a large portion of that could arise from ‘tax planning’.”
It is bad enough that the policy is unnecessary, divisive, damaging and counter-productive. Those of us on the Opposition Benches pretty much all agree on that, and I have not heard any voices from the Government Benches argue the opposite. I look forward to the Minister’s contribution, once he has managed to find that article that is, apparently, supportive of the scheme. The fact that the scheme could cost the Exchequer up to £1 billion, and that one quarter of that cost could arise from tax avoidance, simply beggars belief. The Minister has previously stated that there are sufficient anti-avoidance provisions to mitigate such activities, but what are the Government actually doing to monitor capital gains receipts and reliefs, and ensure we have evidence of avoidance?
Recent reports from the National Audit Office and the Public Accounts Committee have been highly critical of the Government’s continued creation of complexities and loopholes that open the door to more tax avoidance. If Ministers fail to monitor such avoidance activity properly, I fear that this will be just one more tax relief to add to the 948 on the NAO’s list of unmonitored tax expenditures, to use the Treasury’s own phraseology. Considering that the scheme came into being last September, can the Minister produce any more up-to-date estimates, based on Treasury data, to build on the OBR’s original forecast? If he is not able to do that today, hon. Members will want to vote for new clause 11 to ensure that that information is available to the House, that monitoring is taking place and that we can all see the potential implications of the Government proposal.
The Chancellor’s flagship shares for rights scheme has been rejected by businesses. It may have opened up a tax loophole that, according to the OBR, will cost the Exchequer £1 billion. For what gain? That is what people are asking. That is what the Government need to demonstrate in their response today, or certainly in the report that we are calling for. We have said that we will reverse the shares for rights scheme and use the money to contribute to the repeal of the bedroom tax. The bedroom tax is a cost-inefficient policy and we would like to see it reversed. We want the money saved from the damaging shares for rights scheme to be used to ensure that that can be achieved without any extra borrowing. We have urged the Government to abandon their ill-thought-through shares for rights policy, which the director of the IFS aptly described as having all the hallmarks of another tax avoidance opportunity, never mind the former Conservative employment Minister, Lord Forsyth, accusing it of having the trappings of something thought up in the bath. So far, Ministers have failed to listen; or at least, they may be listening but they are not hearing.
We have tabled new clause 11 to try to provide much-needed clarity. Officials and Ministers dismiss out of hand as unrepresentative take-up figures disclosed in FOI requests. OBR forecasts are dismissed as not taking account of all the facts. Indeed, the Government’s own measures are dismissed as being unreliable or uncertain. Why will Ministers not step up to the mark and disclose exactly how many employees have signed up to employee shareholder contracts and have been awarded the £2,000 in return for shares? Why will Ministers not disclose the value of shares that have been issued under the shares for rights scheme to date? Instead of labelling Opposition amendments as unnecessary and as an administrative burden, which I anticipate the Minister will, why will the Minister not instead today tell us exactly how much the scheme is costing the Exchequer as a result of the capital gains tax exemptions? How much of that cost is as a result of tax planning arrangements; people capitalising on a poorly thought through policy that could quite easily act as a tax avoidance mechanism, rather than the great stimulus to entrepreneurship and employment that the Government claimed it would achieve?
It is bad enough that this divisive policy totally undermines the concept of employee ownership and workplace rights, not to mention the potential millions lost in tax avoidance activity; but worst of all, Ministers are plainly refusing to disclose the information that would enable Members properly to assess and scrutinise what the scheme has done to achieve the Chancellor’s clearly stated aim of helping businesses to recruit more people.
For all those reasons and given the concerns set out by my hon. Friends, I urge hon. Members to support our new clause 11, so that we can get the facts straight on shares for rights.
Chris Evans (Islwyn) (Lab/Co-op)
Before the soothsayers and the sketch writers say again that Labour is anti-something or other, I want to make something quite clear. [Interruption.] The sketch writer is in the Gallery, although perhaps I am being a little arrogant to think that anyone would want to report on one of my speeches. Before the press releases go out from Tory central office saying that Labour is anti-share save schemes all of a sudden, I want to make it clear that this party has always been in favour of shares to reward people for the work they do.
The best and most successful companies offer shares to their most successful employees. Indeed, I would like to draw the Minister’s attention to how successful a share save scheme can be by using the example—a Welsh example—of Admiral Insurance. In March 2013, it recorded a 15% increase in profits. In all, 6,500 members of staff at the Cardiff-based Admiral Group will get £3,000 in an employee share save scheme. Alastair Lyons, the chair, said at the time:
“I want to thank everyone who has helped us to create such a robust business”
in the past 20 years. People are more productive, happier and more contented when they are valued and, above all, when they feel valued. That is why the Admiral Group of companies are among the top 100 best places in the UK to work, which I am sure did not come about by trading in employee rights for shares.
Sometimes it seems that this Government are so intent on presenting some sort of radical, compassionate conservatism that they fumble around for an idea, before coming back to ideas that have failed time and again. Very often, it seems that this Government, like previous Tory-led Administrations, are fearful of employment rights, and I am not the only one saying that. According to even the independent Office for Budget Responsibility—if I may digress, Madam Deputy Speaker, the Government are resisting requiring that very body to audit all parties’ manifestos at the next general election—the flagship shares for rights scheme has been rejected by businesses, opened up a tax loophole and will lead to £1 billion being lost by the Exchequer. In the face of such criticism, it seems eminently sensible to support our amendment for it would compel the Treasury to report on the take-up of shares for rights, collect data on the scheme and publish further reports on shares for rights every year.
James Duddridge
Is there not a contradiction between the argument that the scheme will lose billions and saying that it is being taken up by nobody?
Chris Evans
I have the utmost respect for the hon. Gentleman, but he should allow me to develop the argument a bit further. As he knows very well, this is a Finance Bill, and the Opposition cannot move any amendments that relate to spending. A report is the only thing we can propose, and it would be eminently sensible. If we had the data, we would know what the uptake was. I would argue that the Government have to abandon their ill thought out “shares for rights” policy, which even the director of the Institute for Fiscal Studies described as having
“all the hallmarks of another avoidance opportunity”.
My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) alluded to the Conservative employment Minister Lord Forsyth who described it as having
“the trappings of something that was thought up in the bath”—
by the Government on their own, I hope, although we don’t know with Tory sleaze! It is bad enough that this divisive policy undermines the concept of employee ownership and workers’ rights, but it could also cost the Exchequer up to £1 billion, a quarter of that arising from tax planning activity—the very tax planning activity that the Chancellor said he had clamped down on since he took office.
Fundamentally, the problem that employees have faced over the last 40 years with the end of heavy industry—it is a problem that comes with Governments of all stripes—is that most feel insecure in their jobs anyway. People do not have a job for life any more; they move around seven or eight types of jobs, but slashing employment rights at work is wrong in principle. It will not help create jobs and growth. It seems to me that this is a policy made up on the fly.
If anybody wants to know how ill-conceived this policy is, they need only look at some statistics. The scheme has not won the support of the business community. A 33-week consultation on the scheme—two thirds of the year, or nine months—had more than 200 responses. Of those, only five businesses said they would be interested in taking up the scheme.
I sometimes think I admire the Chancellor. He is an economist—of the highest rank, I have no doubt—but I wish he were here to explain how he came up with the line:
“Owners, workers and the taxman are all in it together”.
Where was the sense in that? It is just not fully worked out. Has he not asked the employer? If an employer has a bad employee, why would he want to give them shares and make them owners of the company? That does not make sense to me. The employee would then have voting rights over what the employer wanted to do. Why would an employee want shares in a company that had just dismissed him? It should be easier to hire than fire.
We need tax breaks for small businesses so that they can hire extra employees rather than throw away their employment rights. As a proud Labour and Co-op MP, I support employee ownership, but coupling it with slashing employment rights is contradictory and counter-productive. As the Employee Ownership Association has pointed out, boosting employee ownership
“does not require a dilution of rights”.
Even a city on the hill, the United States of America, where employee rights are certainly not in fashion, has criticised the scheme. The proposal reflects the “fire at will” recommendations of the controversial Beecroft report, authored by the Prime Minister’s employment tsar and Tory donor, Adrian Beecroft. Mr Beecroft admitted to MPs that his proposals were based not on any statistical or empirical evidence but on a “valid sample of people”. Who has he spoken to? No doubt the same Tories who have problems with the employment rights of anybody anywhere.
The scheme could also present considerable costs to business and create new administrative burdens. I believe that people are already being deterred from taking up the scheme. Alan Higham told The Guardian:
“I worry it would create suspicion among employees that I might sack them unfairly. Employees wouldn’t easily be able to see the value in the shares today…If I employ 10 staff and decided to give them £2,000 each of shares, then I would need to spend £10,000 in getting a professional valuation done. Under current tax rules I would also have paid them £2,000 each to change their contract, on which PAYE and national insurance would be charged. As this is a gift I would also have to pay tax on this. On this basis it could cost me £10,000 and a further £9,400 to give away £20,000 of shares. There will probably also be some sort of ongoing admin and HMRC compliance to do, which will also cost.”
Fundamental questions must be asked about this entire scheme. If the company goes bankrupt—if the employer is so bad that he runs his company into the ground—does the employee he has just sacked become responsible for any of the company’s losses? If the employee has shares in the company, of course he will.
Ministers are seeking to introduce this scheme without proper consultation and discussion. They have proceeded in a shambolic and chaotic way. That is reflected by the fact that the Second Reading of the Bill that became the Growth and Infrastructure Act 2013 took place before the consultation had closed.
Given that £10,600 of capital gains tax is already exempt, exemption from CGT in the scheme is only likely to benefit employee shareholders in a small minority of companies which achieve unusually high growth. There is also concern about the full cost of the scheme. Ministers originally claimed that it would be £100 in 2017-18, but according to the Office for Budget Responsibility’s contribution to the Treasury’s policy costing document, which was released along with the 2012 autumn statement 2012,
“the cost is expected to rise towards £1 billion”,
and the OBR concluded that
“uncertainties are around assumptions on take up rates, the average value of shares that are entered into the scheme, the extent of tax planning and the timing of disposals.”
What really concerns me is that a person could throw away all his employment rights in return for shares that could already be tumbling. There is no win-win situation for such people.
According to the Office for Budget Responsibility, a quarter of that £1 billion additional cost—£250 million—is expected to arise from tax avoidance as a result of the scheme. A Government who have been obsessive about tax avoidance seem to be creating another vehicle for people to avoid taxation. Following the publication of the Government’s response to the consultation scheme, a Government source was quoted as saying:
“The proposals are on life support.”
However, Ministers went ahead with them. I wonder whether this Minister knows who that person was, and whether he can enlighten us.
It seems to me that the scheme is unworkable. When “shares for rights” were discussed during the Committee stage of the Growth and Infrastructure Bill, the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), admitted that employees taking part in the scheme could be liable to pay income tax and national insurance on any shares received from employers over and above £2,000. That would impose a significant up-front cost on employees.
It is feared that there are other ways in which the scheme could have an adverse impact on employees. For example, will jobs be advertised as available only with employee shareholder status? In practice, will employers be able to impose the scheme on individual employees or groups of employees? What safeguards will there be to ensure that the scheme is voluntary for existing employees, as Ministers claim that it will be?
On behalf of the members of the Employee Ownership Association, chief executive lain Hasdell sent an open letter to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), who is responsible for employment relations, consumer and postal affairs, expressing concern about recent developments in the Government’s approach to growing the number of employee owners in the economy. He said:
“'Our Members have three main concerns on this matter.
Firstly, proposed legislation has appeared in a Bill before the Government consultation on the possibility of deploying this model of employee ownership has finished. Indeed it has only just started.
Secondly, our Members are very aware that there is no need to reduce the rights of workers in order to grow employee ownership and no data to suggest that doing so would significantly boost the number of employee owners. Indeed all of the evidence is that employee ownership in the UK is growing and the businesses concerned thriving, because they enhance not dilute the working conditions and entitlements of employee owners.”
In that context, I remind the House of what I said about Admiral Insurance in Cardiff at the beginning of my speech. Iain Hasdell continued:
“Thirdly, the appearance of this measure in the Growth and Infrastructure Bill appears to our Members to be completely disconnected to the recommendations in the Nuttall Review. That Review contained a series of recommendations on how to grow employee ownership and none of those recommendations suggested the dilution of worker rights.”
I am not the only person who is saying these things, and that is why I believe that we should have a report. The criticism of this measure has been immense, from the business community and employment organisations to trade unions—some Members on the Government Benches will probably think I have sworn there. The Employee Ownership Association says:
“whilst growing employee ownership should be part of the UK’s Industrial Policy, such growth does not require a dilution of the rights and working conditions of employees.”
Brendan Barber, TUC general secretary, said:
“We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact, as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.”
There, in a nutshell, is the problem: there is low take-up; it is very complicated; people are not interested. As my hon. Friend the Member for Newcastle upon Tyne North said, we see maternity provision, a hard-fought right that many people argued and fought for and in some cases gave their lives for, being given up for the whim of a few shares in a company that could be either taken over or finished in a couple of years.
Mike Emmett, employee relations adviser at the Chartered Institute of Personnel and Development, says:
“The UK has one of the least regulated labour markets in the world and there is little evidence to suggest that employment regulation is preventing small businesses from taking people on. In fact, according to the Government’s own research, unfair dismissal doesn’t even figure in the list of top ten regulations discouraging them from recruiting staff. Employees have little to gain by substituting their fundamental rights for uncertain financial gain and employers have little to gain by creating a two tier labour market.”
Geraint Davies (Swansea West) (Lab/Co-op)
My hon. Friend is making a very eloquent and provocative speech. Does he agree with me that it is intrinsically wrong for someone to sell their rights, just as it would be intrinsically wrong of me to sell myself into slavery? Is this not going down that absurd and immoral path?
Chris Evans
I do not know how much my hon. Friend thinks he would get if he sold himself into slavery—[Interruption.]
Mr Speaker
Order. Thankfully, that matter would be out of order to discuss. Therefore, any embarrassment that the hon. Member for Swansea West (Geraint Davies) might feel is spared.
Chris Evans
Thank you for that interjection, Mr Speaker, and I am sorry that I treated such a serious topic as slavery in a light-hearted manner.
I agree with my hon. Friend: these are hard-fought employment rights. I do not want to hark back to the past, but although the Conservatives like to say theirs is a progressive party, every piece of social legislation in this country, from votes for women to increased maternity and paternity rights to the minimum wage and even the state pension, has been brought about by Labour and by people having to fight for them. To me, it seems frivolous for those rights to be given away. As a former trade union official working in financial services, I do not believe that people were deterred from employing staff because of the rights they had. Maternity rights are accepted across the board. If someone goes on maternity leave, people believe they have that right, and it is shocking that the Government think this can be sold off for 30 pieces of silver.
John Cridland, director general of the CBI, said:
“I think this is a niche idea and not relevant to all businesses,”
again backing up my argument that this is policy made on the fly. It has not been thought out. It seems to me that the share schemes and share save schemes work very well without people having to trade their employment rights. Employers who have introduced a share save scheme or given shares to their employees do so as a reward for good business practices, not to buy off potentially bad employees.
There is a little thing that we should learn in this House: it is called trust. If an employer asks me to sell my rights, I will straight away be suspicious; I will always work hard, but I will not be industrious in the way I should, and I am going to ask myself questions such as, “Is there a question mark over my competence if he is willing to trade my hard-fought employment rights for shares in his company?”
Stephen Lloyd (Eastbourne) (LD)
I have sympathy with some of the Labour party’s concerns on this issue, but having listened for an hour or so one thing occurs to me. Does the hon. Gentleman agree that no employee will be forced to do this—they will voluntarily choose to do so or not? That is important.
Chris Evans
The hon. Gentleman is taking a very liberal position, but I refer again to the evidence given during the Committee stage of the Bill that became the Growth and Infrastructure Act 2013, which introduced the measure. It was said there that employees who took up the scheme would have to pay income tax and national insurance on any share received from employers over and above £2,000. The scheme would impose significant up-front costs, so I do not know whether it would be so voluntary. I have criticised Adrian Beecroft about his anecdotal evidence, but I wonder what would really happen in the workplace. We know of so many tribunal cases where people have been harassed or been under severe strain from an employer and then gone on long-term sick leave. What is to prevent the employer from forcing them to sell those rights?
Catherine McKinnell
My hon. Friend raises an important point, but the intervention by the hon. Member for Eastbourne (Stephen Lloyd) does not take account of the fact that many employees are in a very vulnerable position with their employers. If they are approached by their employer to take this up and they turn it down, what happens? What situation are they left in? There are an awful lot of question marks over how the scheme works in practice and where the equality of arms is for the employees potentially affected by the scheme.
Chris Evans
My hon. Friend advances the argument eloquently. We debate these issues and talk about employment rights, but if someone is in a poor workplace, is struggling to pay the rent or the mortgage and the bills, and faces a severe threat that they might lose their job, they might be forced into doing this. In many non-unionised businesses there will be nobody to police this, so those people might be forced into it. She powerfully made the point about how women, in particular, are in that type of situation.
I should have made my next point before the hon. Member for Eastbourne (Stephen Lloyd) intervened on me, but I will do so now. Paul Callaghan, partner in the employment team at Taylor Wessing, has said:
“Osborne is potentially forcing all new employees to waive the main employment rights including unfair dismissal and redundancy rights in exchange for £2,000 of shares. This makes Adrian Beecroft’s fire at will proposals look moderate.
From April it may become the norm for job offers to require this waiver which will also involve the loss of flexible working rights and stricter maternity rights. This is likely to have a disproportionate effect on women.”
Henry Stewart, founder and chief executive of the training company Happy Ltd, has said:
“I welcome anything which makes it cheaper and simpler to give employees shares, but coupling it with taking away employment rights is ridiculous. If as an employer you have a problem with unfair dismissals, you need to improve management—that’s what the government should be giving incentives for. I don't think it's been thought through.”
In a nutshell that sums up what I think of this proposal. Bad employers who are afraid of unfair dismissal cases, reprisals, recrimination and grievances from employees should think about how they are managing their staff and look hard at their human resources department.
Corey Rosen, founder of the National Centre for Employee Ownership, one of the world’s leading groups promoting share ownership, has said:
“There is a lot of employee ownership in our country, but not one of these employees and not one of these plans asks employees to give up any employment rights to get any of the various tax benefits associated with employee ownership.”
That is a voice from the United States, not somewhere known for being particularly friendly to those in trade unions or on employment rights.
Simon Caulkin, writer on management and business, has said:
“In effect, Osborne's cobbled-together scheme is a back-door re-run of the agenda of…Beecroft”.
Rebecca Briam, partner at Gannons Solicitors, said:
“It is unlikely to get off the ground.”
With only five businesses out of 200 wanting to take up the scheme, I think she is right. She goes on to say:
“The proposals will be unpopular with employees because the chances of benefitting are so slim.”
She said that it was
“unpopular with employers, especially privately controlled companies, because of the risks imposed to the share structure. Far from saving on payroll expenses, the total costs for an employer may well increase.”
Manufacturers’ organisation EEF said:
“Our members have indicated they would not implement the new status.”
The Federation of Small Businesses said:
“The scheme is unlikely to be appropriate for many small businesses.”
The Chartered Institute of Personnel and Development said:
“There is very little evidence as to why this policy is needed or what impact it will have.”
Such views support the new clause that is before us.
Earlier, I talked about the vehicles that are created for the purpose of tax avoidance. Matthew Findley, partner at law firm Pinsent Masons, addressed that matter quite eloquently. He noted that the income tax positions of those receiving the shares is still unclear:
“There is nothing in what the Government has said so far that would stop senior executives or substantial shareholders from participating in the arrangement. This may mean that an opportunity still exists for such individuals, even if they may be viewed by some as the ‘wrong’ people politically to benefit.”
Paul Johnson from the Institute for Fiscal Studies talked about the potential for tax avoidance as the scheme
“prepares to put another billion pound lollipop on the table.”
He says:
“Just as Government Ministers are falling over themselves to condemn such behaviour, that same Government is trumpeting a new tax policy which looks like it will foster a whole new avoidance industry.”
An avoidance industry is something of which a Government who want to create jobs cannot be proud.
I support new clause 11. As there has been such a low take-up of the scheme—only five in 200 companies have said that they would consider it—a report needs to be produced. Numerous commentators from the business community have expressed the fear that a new tax avoidance scheme is being set up, which suggests that this is a pertinent and sensible new clause, and I urge the Government to accept it.
Richard Fuller
I am pleased to follow the hon. Member for Islwyn (Chris Evans), who spoke with great authority, drawing as he did on his experiences as a trade union official before he was a Member of Parliament. I will, if I may, draw on some of my own experiences of working with small businesses. In that regard, I draw Members’ attention to my entry in the Register of Members’ Interests.
I apologise to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for missing the beginning of her comments. I thought that she spoke persuasively and eloquently about some of the issues and about the policy that the Government have introduced. She had me persuaded all the way, until she referred to the spare room subsidy as a tax. It is just not a tax, and it is such a shame when bad slogans happen to good people because all the persuasion power of their speeches is lost. The rest of her speech raised some important points.
We should put the new clause into context. The Government have an extraordinary long-term economic plan that is delivering improvements to the economic lives of my constituents in Bedford and Kempston. It impacts on their ability to find work and get into work. It also raises their average weekly earnings, which is a major concern for many people. It is good to see the plan starting to bear fruit.
Perhaps now is not a good time for an ordinary Tory Back-Bench Member to criticise the Government, but if my hon. Friend the Minister will forgive me, I will do so. We are looking here at a policy in search of a problem; we are not really looking at something that will have a dramatic impact on the well-being of our businesses or our employees. I am open to being persuaded by the Minister. He usually persuades me and I am sure that he will do so today, but perhaps I could go through some of my experiences from when I was in business relating to two parts of our debate.
On the one hand, we have employee and workers’ rights and, on the other, we have employee shareholdings. The approach seems to be to conflate those two issues into one policy and I am not sure whether that will ultimately prove to be wise. In my experience as an employer, although employees’ issues in employment sometimes concerned the extent of employee rights, red tape and regulation often led to far more concerns about the impact of government on the business. In addition, the problem was not necessarily the rights per se but the complexity of the regulations. For a small business, just understanding the regulations to comply with them causes problems. I am not sure that the problem was specifically the rights that were given to employees. Is the objective in this case to reduce the complexity of regulation for businesses through the use of the combination of employee shareholdings, or is there some other objective?
The hon. Member for Islwyn mentioned some of the issues when companies give shares to employees. For a large part of my life, I have worked with technology businesses and the provision of shares was a norm for business. It was a way in which many companies could afford to start, to grow and to prosper. In those circumstances, people were given shares not because of their employee rights but as an incentive either to reward effort or to encourage effort to promote the success of the company. It was also a matter of the trade-off of rewards. Many small companies did not want to use the cash they got from investors to pay high or market rates to their employees and wished to defer that by providing people with the opportunity to have shares to share in the ultimate long-term success of the business. That is a tremendously powerful model for many sectors, not just the technology sector but other sectors of our economy, in that people are willing to trade off immediate returns for long-term rewards.
When we consider other ways to think about compensation, which will, I think, be a growing issue over the next five years, we must consider how to encourage people to defer some of their compensation until later in their lives. I can understand how the promotion of employee shareholding helps with short and long-term rewards, but my concern is that combining that with employee rights means that clarity might be lost. Rather than being given a positive impression about why we are encouraging employees to become shareholders, people will instead ask whether there is a catch. It should be absolutely clear that there is no catch when people are being offered shares. This is clearly an issue of deferring compensation from period x to period y.
I am concerned that, as I have said, this is perhaps a policy in search of a problem. As with so much that Government do, we will see unintended consequences. If the new clause is targeted at small businesses, we must remember that the Government have other options at their disposal. Just a week or two ago, the Centre for Policy Studies produced some very positive policies about abolishing corporation tax for very small businesses and abolishing capital gains tax for investors. To my mind, that would have more of an impact on encouraging more entrepreneurial businesses. We have recently seen news about the merger of national insurance and income tax, which would alleviate some of the burdens and complexity for business in managing employees.
Bob Stewart (Beckenham) (Con)
When I visit small businesses in my constituency, I am sometimes quite shocked that, say, one person out of 10—a large proportion of the staff—has to spend all his or her time dealing with regulations and sorting out the problems they cause rather than getting on with making money.
Richard Fuller
My hon. Friend speaks from great experience and is, as usual, exactly on the point. For many small business people, the biggest constraint is time: they have to be the sales person, the accountant, the HR person and the form filler. The policy that has given rise to new clause 11 is supposed to be helping those people, but I think there are many other ways we can support our small businesses that would have a greater impact.
One of those is that the Department for Business, Innovation and Skills should lose its great focus on a grand industrial policy, centred on our large corporations, and start to show a bit of passion about our small businesses. I know that the Secretary of State is a good friend of the Treasury Bench—obviously, he is a member of it—but somehow we are not getting the focus and heart for our small businesses that we should be getting, and it would be good to hear that voice coming through louder and clearer.
I am drawn by Opposition Members’ eloquence on the questions they are raising about this policy. It did not occur to me at the start of our support for the policy that it was going to be a big policy that would have an impact on many businesses. I would be interested to hear an update from the Minister on where the policy is taking us and what our goals are when it comes to promoting employee shareholding. What are his concerns? Does he share my concern that, in trying to put together promotion of employee shareholding and reductions in employee rights, we may be failing to make progress on two issues, rather than making progress on both?
Mike Kane
It is a delight to follow the hon. Member for Bedford (Richard Fuller), who spoke with such authority about his work now and previously with small businesses. It was a pleasure to serve with him on the Finance Bill Committee, where generally he spoke loyally from the Government Benches on his party’s agenda, even though he disagrees slightly with the policy before the House now. It is also a pleasure to follow my hon. Friend the Member for Islwyn (Chris Evans), who spoke articulately and ably, using his experience as a former trade union official.
I believe that shares for rights as it has been proposed lacks common human dignity. We know that the main purpose of Government is to protect individuals, communities and their property from exploitation and harm; Government must also provide a stable economic, social and legal framework for businesses and economies to thrive. The proposal does not do that. As I mentioned earlier, Lord O’Donnell described shares for rights as a form of modern-day slavery. It creates a two-tier market and a two-tier work force—one part having sold its rights and the other retaining them. I think that that is wrong for our economy.
The policy was announced with great fanfare in 2013, but the shares for rights scheme cannot be described as anything other than a massive flop. It is also proving to be another bone of contention in our fractured coalition. The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), and the Secretary of State are nowhere to be seen near the proposal. The real problem, though, as the Chancellor has found, is that it has been impossible to get employer organisations to back the scheme. As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said, according to the most recent information we have—hopefully, the Minister will update us—there were 19 expressions of interest by December last year. The Office for Budget Responsibility says it could be used as a tax dodge, costing us—the Treasury—nearly £1 billion a year. In this age of austerity, that is the last type of policy we need to be introducing.
Ministers seek to introduce the scheme without proper discussion, and without proper consultation, as my hon. Friend the Member for Islwyn said, and have proceeded in what can only be described as a very chaotic way. Following the publication of the details of the scheme, a Government source was quoted as saying that the scheme was on “life support”, but Ministers still went ahead. As was mentioned earlier, John Cridland, director-general of the CBI, said that this was a niche idea that businesses really do not want. There is unanimity among people who really care about employers and their rights and those Opposition Members who believe that employees should also be shareholders and work hard in their small and medium-sized enterprises, where most employees now reside.
Chris Evans
Does my hon. Friend think it is just a coincidence that the vast majority of the FTSE 100 companies also find themselves in the list of the top 100 best places to work in the UK, and they have not rolled back employment rights in any way and have successful share save schemes, as I mentioned earlier?
Mike Kane
The best organisations offer benefits in kind, which can be shares to their employees. I and many in the House have no problem with that.
This measure is wrong for business and wrong for employee-business relations, and I urge all hon. Members to support the new clause.
Ian Murray
I apologise to the House for not being present at the beginning of the debate. The previous debate finished slightly earlier so there was a clash with something else that I had in my diary. However, I want to make a few comments on this because it harks back to new clause 14, which we debated earlier. All we are looking for in new clause 11 is some transparency on this policy. We know it was introduced with great fanfare by the Chancellor at the Conservative party conference last October when he said:
“Workers of the world unite.”
The conclusion to the workers of the world uniting was that everyone united against this policy.
This is incredibly relevant to the Finance Bill because it has created a significant tax loophole. On new clause 14 on the 50p tax rate and the need for transparency on how much tax that takes, the Government said clearly that 45p brings in more tax at the top rate than 50p, which brings in less because of tax avoidance. In this case, we are looking at the biggest tax avoidance measure we can get. It has been described by the Institute of Fiscal Studies as a billion-pound tax lollipop on the table. If we are serious about tackling such tax avoidance, it would be great for transparency, not just for the House but for the country, if a report were produced showing take up and the consequences of that.
Because it is such an important prospect, we need to look at what the Chancellor tried to do in his conference speech. We will end up in the situation where people are able to sell their rights for a few pounds that might be worth nothing. That is not the kind of working society that we want. It is not the kind of partnership that we want between employers and employees and trade unions, whereby people can sell their rights for maternity pay, unfair dismissal, and all those rights referred to by Beecroft in his report for the Prime Minister. We now have a fire-at-will culture, which does nothing to dispel the Government’s move towards a hire-and-fire culture with this proposal. There are the hallmarks of another tax avoidance scheme. Why on earth would we want to produce a scheme that not only allows people to sell their rights and not be covered by any employment rights, but to be in a situation whereby those at the top end of businesses can use these mechanisms to avoid paying tax? I hope that the Minister can address some of those serious concerns when he replies.
I cannot understand why the Government would not accept new clause 11 if they are so confident that this measure will be well used, resulting in a transformation in entrepreneurship, with people hiring more and more employees because they do not have what the Government would call the burden of employee relations. Why would they not want to produce a report showing how many people are using the measure? I do not understand why they do not want to produce a report showing the impact on the Treasury coffers, through capital gains tax and any other tax receipts that might be lost.
It is important for the Government to have confidence in their proposals. The Chancellor was confident when he announced it with great fanfare. I am not sure whether it will have any take-up, because of the way it has been presented and the message it sends out. Justin King, the former chief executive of Sainsbury’s, said that it sends out a poor message. Many chief executives and business owners say that it sends out such a poor message on the partnership we want in the workplace.
Therefore, if the Government wish to have confidence in their own policies, it is only right that they agree to new clause 11, bring forward the report setting out the take-up and the data collected on the scheme and publish further reports every year. If the scheme is denying people their rights at work at the same time as denying the Treasury valuable income, this House should know about it and be able to debate it so that it can hold the Government properly to account.
Mr Gauke
As we have heard, new clause 11 would require the Chancellor to review the impact of the new employee shareholder status on tax revenues and to publish a report setting out the impact on capital gains tax receipts, the estimated value of shares owned by employees with employee shareholder agreements and the number of such employees. Let me set out why I believe the new clause is unnecessary—a word the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) rightly predicted would come up, although, to be fair, we have had this debate before.
It is far too early for any detailed information on the employee shareholder status to be available. It has been available only since 1 September 2013, and we have not yet reached the deadline by which companies must submit their annual share scheme returns covering that period. Therefore, the Government do not yet have full information about the use of the new employment status. Once received, it will take time to process and analyse those data. The Government set out the potential impact on tax revenues in our tax information and impact note for the employee shareholder tax reliefs, and there are currently no additional data available that would allow that to be updated.
In addition, it is not necessary for a requirement to publish information to be placed in legislation. HMRC publishes a wide range of information about employee share schemes with no such statutory obligation. For example, only last week it published a wealth of data on the use of the tax advantaged employee share schemes during the year ending 2012-13.
We will consider whether that type of publication is appropriate for employee shareholder status or whether a different approach might better enable an evaluation of the employee shareholder status. As the Government have made clear, the employee shareholder scheme is different from the existing tax advantaged employee share schemes. It is primarily designed as an employment measure to encourage choice, growth and flexibility over the long term, rather than being focused on tax advantages. We will want to take those broader factors into account when evaluating the policy. However, given that employee shareholder legislation has been in operation for less than a year, it is simply too early to be finalising any details in that area.
Ian Swales
I certainly accept the Minister’s point about the timing for reporting back on the scheme. However, we are starting to see examples of the very few companies that are taking it up, and they seem to be focused on high earners in industries such as private equity, who arguably are not very worried about their employee rights anyway. For example, eight managers at European Capital each received the maximum £50,000 recently when they sold one of their businesses. Can the Minister say what kinds of companies are registering and how the scheme is working so far?
Mr Gauke
We have been consistent throughout. No one argues that the arrangement is right for everybody; it will be suitable only in particular circumstances. It is more likely to be relevant for fast-growing areas involving a relatively small number of highly valued individuals who benefit from arrangements that incentivise performance but who are not necessarily looking for extensive employment rights.
It has been said before in the context of this debate that there are employees who benefit in full from employment rights; there are the self-employed, who have essentially no rights in this area; and there is a gap in the middle. Part of the thinking behind the arrangement is about ensuring that something appropriate falls in between—something useful for fast-growing small and medium-sized companies that want to create a flexible work force.
Ian Murray
I appreciate the intervention just made by the hon. Member for Redcar (Ian Swales). The issue is surely not one of employment flexibility; it is about maximising tax advantages. The policy has been announced on the basis of allowing companies—particularly high-growth technology companies—to employ people on a more flexible basis, but the example just given by the hon. Gentleman goes completely against that. That shows that the scheme is being used for tax-avoidance purposes.
Mr Gauke
I do not accept that. As far as avoidance is concerned, the tax reliefs are intended to encourage the take-up of employee shareholder status by individuals when that is offered to them. However, those reliefs are not an end in themselves. A number of rules in the legislation will prevent abuse of the new status while keeping it as simple as possible for employers and employees to use. For example, there are rules that will stop people with a material interest in the relevant business exploiting the tax reliefs for their or their families’ benefit. We will always keep the matter under review. As I said, if we see any abuse, we will act. However, we believe that we have put in place rules that protect the Exchequer from such tax avoidance.
I want to say a little more about take-up. My hon. Friend the Member for Rochford and Southend East (James Duddridge) made a good point: the argument is simultaneously that no one is making use of the scheme and that the scheme will cost a lot in tax avoidance. There is something of a tension between those two positions.
We decided not to introduce a pre-registration or pre-approval system for those wishing to make an employee shareholder agreement. The Office of Tax Simplification has told us that HMRC pre-approval of share schemes is outdated and time consuming for businesses. Data on employee shareholder status will therefore be picked up from companies’ annual share scheme returns to HMRC. As I said, the scheme has been in place only since the beginning of September 2013, so we have not even reached the deadline by which companies must submit their returns to HMRC for that period. It is far too early to finalise any details of publication.
Catherine McKinnell
Given the widespread concern expressed about the scheme, is the Minister’s position—that the Government will just wait and see—not incredibly complacent? When the returns come in, the scheme may prove to have been one big tax avoidance opportunity, but the Government seem perfectly relaxed about that.
Mr Gauke
No, that is not the case. As I said, when the original legislation was passed, protections were put in place; a moment ago, I gave an example of one designed to prevent abuse. We will continue to monitor the issue. As with all activities, if evidence of avoidance emerges, the Government will be determined to act, as we have time and again.
On the data on employee shareholders and on take-up, a question raised by a number of hon. Members, I am simply seeking to explain that I am not in a position to give the information that the hon. Lady and others have asked for because we have not required pre-approval or pre-registration for the scheme. That point is also relevant to the FT figures on take-up that have been mentioned. As there is no need for companies making use of the employee shareholding scheme to contact BIS in advance and there is no registration or approval system, we do not expect BIS to have a definitive list of all those companies that have made use of the scheme. That is why I am not in a position to give that information to the House and why the figures that were used by the Financial Times should not necessarily attract a huge amount of excitement.
The scheme is a new facet of our employment practices. It is probably unfair to judge a scheme such as this in its first few months because it will need time to bed in before there is wider knowledge about it and it is more widely used. As I have said, I am not in a position to provide information at this point.
Ian Murray
I am grateful to my favourite Treasury Minister for allowing me to intervene again. What the Minister is missing is that, according to his Government’s own figures in the Red Book, £1 billion has been allocated to this proposal. Why will he not agree to the new clause, which would allow the House to scrutinise what that £1 billion of public money is being used for? That way we could avoid the situation raised by the hon. Member for Redcar in which people use the scheme to avoid tax rather than as a proposal to create growth and to get more people into employment by denying them their workers’ rights.
Mr Gauke
It is always a great pleasure to give way to my favourite Member of Parliament for Edinburgh South. In quoting the figure of £1 billion he is somewhat conflating two things. One is the OBR’s estimate of the potential cost of the scheme some years into the future, if a whole set of circumstances apply and we do not take action to deal with any concerns that might emerge. As far as the Red Book is concerned, the published estimates of the annual cost of the measures are £10 million in 2016-17 and £45 million in 2017-18. Those are the numbers and we have no reason to believe that they will prove inaccurate, so to correct the hon. Gentleman for the record, we are not talking about a cost of £1 billion.
New clause 11 would impose an obligation on the Government that is not only unnecessary but, as I have set out in some detail, could not be met given the current availability of data on take-up of the employee shareholder status. Given that the new clause is unnecessary and would be unworkable, I ask the Opposition not to press it.
Catherine McKinnell
It will be no surprise that I find the Minister’s response extremely disappointing and a little concerning in its complacency towards a policy about which widespread concern has been expressed. Taking away the rights of working people across the UK is no substitute for a proper strategy for economic growth. The policy makes it easier to reduce rights at work and fire people, rather than making it easier to hire people. That shows just how out of touch the Government are.
I commend the hon. Member for Bedford (Richard Fuller) on his thoughtful speech. I also commend my hon. Friend the Member for Islwyn (Chris Evans) on his mammoth and excellent speech, and my hon. Friends the Members for Wythenshawe and Sale East (Mike Kane) and for Edinburgh South (Ian Murray). Opposition Members have put forward a powerful argument for the reasonable new clause that we have tabled. It simply asks the Government to make a proper assessment of who is taking up the shares for rights offer and what the cost to the Exchequer will be, including any loss from tax avoidance or abuse. As far as we can see, this is just another way in which the Government are trying to water down the rights of people at work.
Frankly, to Opposition Members and the many business organisations that have expressed their concerns, this policy stinks. The House and members of the public deserve to know exactly what the implications of the policy will be before the horse has bolted. The Government say that they will only shut the gate once that has happened. [Interruption.] I hear hon. Members groan at that, but I quote Lord Deben:
“I cannot imagine any circumstances whatever in which this would be of any use to any business that I have ever come across in my entire life.”—[Official Report, House of Lords, 6 February 2013; Vol. 743, c. 293.]
I think that he puts it very well.
Ian Murray
The Minister tried to respond to my two interventions about tax evasion by reading figures from the Red Book. However, the accompanying document to the autumn statement of 2012, at which this policy was announced, states that the policy could cost upwards of £1 billion because there are uncertainties around
“the extent of tax planning”.
That sounds to me like tax avoidance.
Catherine McKinnell
I, too, took great interest in what the Minister said, because he seemed to disown the figures that were published by the Office for Budget Responsibility on this policy, as though they were in some unknown ether in the future. He appeared to be saying, “It’s nothing to do with me, guv.” The figures that the OBR predicts are very clear. It will cost £1 billion and a quarter of that can be attributed to tax planning and, if the concerns of the hon. Member for Redcar (Ian Swales) are borne out, tax avoidance.
Ian Swales
I am sorry to have missed some of the erudite contributions to this debate, especially that of the hon. Member for Islwyn (Chris Evans), whom I always enjoy hearing. I do not know whether these points have been mentioned. Is the hon. Lady concerned about the effect on competition between businesses if one business uses this process and another does not? Secondly, is she aware that the Office for Budget Responsibility thinks that existing share schemes may be shoehorned into the new process, meaning that people who are already in share schemes and who have employee rights might suddenly find themselves forced into the new arrangements?
Catherine McKinnell
I share all those concerns and many more. Ultimately, it is for the Government to take on board what is being said to them so clearly, but they seem to be ignoring it. The hon. Gentleman will know that he has the opportunity to vote with the Opposition on new clause 11 and to get the Government to sit up and listen to the concerns that are being expressed. Perhaps the data will show that the scheme has had a fantastic take-up, that it is entirely fair and that it has created many new jobs. Perhaps it is the boost for growth and job creation that the Chancellor proclaimed it would be. Alternatively, they might show that it is just a tax avoidance opportunity that is unfair to the employees who are forced into it against their will.
The Conservative, Baroness Wheatcroft, said:
“Let us imagine a group of employees who have sold their rights—for a mess of pottage, as we have heard—and another group who have not. The company falls on hard times and has to declare redundancies. Who will be first in the line for redundancy? I would hazard a guess that it will be those who have shown the most commitment to the business by becoming employee shareholders under the new scheme. That is the sort of perverse effect that we are likely to see if the clause goes through.”—[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 618.]
That is the sort of perverse effect that we want the Government to take action on by producing the data that will enable Members of this House to know the true impact of this employee shares for rights scheme.
I urge all hon. Members to vote for new clause 11.
Question put, That the clause be read a Second time.
Shabana Mahmood
I beg to move, That the clause be read a Second time.
We now come to the last of our debates on the Finance Bill today. New clause 12 would require a report by the Chancellor within six months of Royal Assent, setting out further proposals to reduce the tax advantages arising from tax arrangements that are abusive. It makes particular reference to the quoted eurobonds exemption, disguised employment in the construction sector, and the use of dormant companies as a means of tax avoidance. The new clause would require an assessment of the impact of all three on total receipts paid to the Exchequer.
Charlie Elphicke (Dover) (Con)
In relation to eurobonds, I read a report that the shadow Chancellor has suggested that there is £500 million at stake. Will the hon. Lady confirm her understanding of the costings?
Shabana Mahmood
I will turn at length to costings of the abuse of the quoted eurobonds exemption, but it is certainly true that many of the estimates of how much it might be costing the Exchequer have placed the figure at around £500 million.
Let me start with the context and explain the thinking behind our new clause. Public concern about tax avoidance is high, and this is a problem not only for the Government but for parties across the House. The setting of tax rates, decisions about tax reliefs, and the collection of tax are among the most important functions of government. If the system is not working as well as it could be, that needs to be addressed. Over the past couple of years, there have been a number of high-profile media stories focused on the tax arrangements of particular companies and individuals, as a result of which, it is fair to say, public trust in the tax system has been eroded.
The deficit, as we know, is high and will not now be cleared by 2015, as the Government promised when they came to office in 2010. It will not, in fact, be eliminated until well into the next Parliament.
Sir Gerald Howarth (Aldershot) (Con)
As the hon. Lady has mentioned the deficit, would she now like to apologise on behalf of the Labour party for the catastrophic destruction of the public finances in the last Parliament?
Shabana Mahmood
I think the hon. Gentleman and other Government Members should apologise for the fact that their Government have delivered a huge tax cut for millionaires while households are on average £974 a year worse off. That is a deplorable record and the Government should apologise for it.
We have already discussed at length today the fact that ordinary working people in our country are worse off as a result of this Government’s economic plan. As I have said, households are £974 a year worse off as a result of tax and benefit changes, and wages will be 5.6% lower in 2015 than they were in 2010. We also know that it is the richest 1% of the country who have benefited most from the recovery. With working people facing a cost of living crisis, it is vital that everyone pays their fair share and that we restore public trust. When ordinary people are struggling with their household budgets, which are stretched ever thinner, it is understandable that there will be increasing anger if they feel that others are successfully avoiding tax and the Government are failing to do enough about it.
The same goes for businesses, too. We know that small and medium-sized enterprises are struggling with business rates, for example, which have gone up since 2010. Many businesses are now paying more in rates than they do in rent. Businesses that do the right thing when it comes to tax are understandably frustrated and angry when they see others that do not play by the rules, and they are right to think that there should be a level playing field, so that those who do the right thing are not penalised because others get away with not paying their fair share. High-profile cases of tax avoidances have therefore undermined public trust in company taxation and hit businesses that play by the rules.
Our best measure of how well the system is working is the tax gap—which is effectively the amount of uncollected tax in the economy—which has risen under this Government by £1 billion to a total of £35 billion.
Shabana Mahmood
I know the Minister will say that it has gone down in percentage terms, but only by 0.1%. I assume that that was the intention behind the intervention he was about to make.
Shabana Mahmood
Focusing on the actual figure is important. It concentrates the mind when assessing the scale of the task both for this Government and the successor Government in 2015. By anyone’s analysis, £35 billion is a huge sum, which, if collected, would make a very significant difference to the nation’s finances.
Kelvin Hopkins (Luton North) (Lab)
My hon. Friend is making an excellent speech and she is right that this is a large sum of money. It is equivalent to 9p on the standard rate of income tax.
Shabana Mahmood
My hon. Friend makes an excellent point. He is of course right that this is a huge sum of money and that people are rightly concerned that £35 billion-worth of tax is potentially going uncollected in our country.
Ian Swales
I am certainly no defender of the tax gap, and I am on record as having challenged the whole system of tax avoidance many times. However, does the hon. Lady know what the tax gap was in 2010 when the previous Government left office?
Shabana Mahmood
The truth is that any tax gap, however big or small, is unacceptable to the public, and strong action should always be taken to tackle it. I was about to say that I am grateful to the hon. Gentleman and that it was £32 billion. As I say, that is too high, and it has gone up to £35 billion under this Government. These large sums of money shake the public’s confidence when it comes to believing that the Government are doing everything they can to tackle tax avoidance.
Shabana Mahmood
I will take further interventions later, but I want to make some progress.
What else has been happening on this Government’s watch? The Government have raised expectations in respect of some aspects of their tax avoidance policy, but they have not been met. In particular—we have put this point to the Minister on many occasions—the Swiss deal, which was supposed to bring in £3.12 billion, a sum that would have gone some way towards making a dent in the tax gap, has in fact brought in only £818 million. I know the Minister will say that the figures were okayed by the independent Office for Budget Responsibility when the costings were put in the Red Book, but that does not mean that the Minister can simply get away with it. At the end of the day, there is an unexplained and substantial difference between what was meant to happen as a result of that deal and what did in fact happen, raising questions about the substance of the deal.
Another feature of public debate as the issue of tax avoidance has shot up the public agenda relates to Her Majesty’s Revenue and Customs. If we are to close the tax gap, we need HMRC to be as effective as possible. Last year’s Public Accounts Committee report “Tax avoidance: tackling marketed avoidance schemes” found that HMRC did not know how much it spent on its anti-avoidance work and had not evaluated the effectiveness of its efforts. It calls for HMRC to improve its recording and monitoring of the cost of its anti-avoidance work and to set out clearly how it will evaluate its anti-avoidance strategy. This is a substantial gap in knowledge; again, it has a direct impact on the Government’s ability to tackle tax avoidance effectively and thereby close the tax gap.
Charlie Elphicke
It is worth noting that last year tax inspectors collected a record £23.9 billion, about £4 billion of which was from criminals and tax avoiders, so HMRC has been quite effective in collecting that record amount.
Shabana Mahmood
I am grateful to the hon. Gentleman for his intervention, but as I just said, the tax gap has widened: despite those efforts, it has gone up by £1 billion or more.
The Public Accounts Committee also raised concerns about the monitoring of tax relief at HMRC and the Treasury. In 2013, there were 1,128 tax reliefs in the UK taxation system—a number that continues to grow. Tax reliefs can range from fundamental components of the tax system, such as the level of the personal allowance, to tax expenditures with more specific objectives to change behaviour, such as film tax relief. They play an important role in the tax system, but can be abused. Indeed, even in this Finance Bill the Government have had to take steps to close down the abuse of tax reliefs. It is therefore very worrying that the Public Accounts Committee has concluded:
“There is a lack of transparency and accountability for tax reliefs and no adequate system of control, following their introduction. HMRC and HM Treasury share responsibility for tax reliefs, but there is no accounting officer with responsibility for the stewardship of tax reliefs, as there would be for”
other elements of
“public spending. In 2010, HM Treasury committed to developing a framework for the introduction of new reliefs”.
However, no measures have been implemented so far.
In December 2013—this is relevant to what the hon. Member for Dover (Charlie Elphicke) said a moment ago—there were just four full-time officers in the fugitive unit, trying to catch 124 HMRC fugitives. The Government launched a “most wanted” campaign in August 2012, but earlier this year it was found that just four fugitives had been caught since the publication of the list. Moreover, it was admitted that of the 32 “most wanted”, 11 could not be located. If the Government are to support their claim that they are succeeding in the fight against tax avoidance and evasion, they must be able to demonstrate that they will catch those who break and abuse the rules, and will prosecute them to the full extent of the law.
Kelvin Hopkins
Does not what my hon. Friend is saying suggest that there is a cosy relationship between the Conservative party and the very rich? The Conservatives do not want to chase those people, because they do not want to upset their friends.
Shabana Mahmood
My hon. Friend has made his point powerfully, and in his characteristic way.
As we can see, despite the Government’s claims, their record of tackling tax avoidance is simply not good enough in a number of areas. They will say that the avoidance measures in this Bill are radical and bold, and are evidence of a commitment to tackling avoidance. We have supported the measures relating to follower notices, accelerated payment notices and the need to tackle promoters of tax avoidance schemes, although we have questioned the Minister about some of the deeply felt concerns of those who will be affected by the follower notices regime and by accelerated payment notices, which have caused a great deal of debate outside the House. However, although those measures have received the Opposition’s support, the fact is that they are not revenue raisers. They will simply bring in money that the Government were expecting to collect, but which had been clogging up the various back channels and alleyways of the legal system.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The hon. Lady has mentioned a number of measures, and has made some good points. Should not the Government be pursuing large multinationals such as Microsoft and Google, which are not paying a penny in corporation tax?
Shabana Mahmood
I think the Government should adopt an across-the-board strategy. I think they should deal with companies of all sizes, as well as individuals who engage in the various types of tax avoidance and evasion. I have mentioned a number of areas where there is concern about the Government’s action to date, and about their record of being able to narrow the tax gap.
The Government’s other flagship policy, introduced last year, is the general anti-abuse rule. Of course, it will take some time for the GAAR to settle in, as it is a new measure, and it is not yet clear how it will operate in practice, because it has not yet been the subject of a court case. It is, however, striking that no penalties regime associated with abuse falls within its remit. One would have thought that such a regime was a deterrent, and that the Government would want to make it clear that the type of abuse caught by the GAAR—abuse of the most egregious nature—would not be tolerated. However, it seems that an individual who fell foul of the GAAR, having engaged in the most egregious form of tax abuse, would incur no penalty but would merely be required to pay the amount that had been disputed. That strikes me as an interesting omission from the GAAR and the Government’s arsenal of measures to tackle tax avoidance.
Nigel Mills (Amber Valley) (Con)
I think we went through this in the Finance Bill Committee last year. It would be somewhat iniquitous to have a higher penalty for a scheme that complied with the letter of the law but was subsequently ruled out of order by the GAAR than for one that was blatantly outside the law in the first place. I think we should stick to the standard penalties that apply for under-declaring tax on a tax return.
Shabana Mahmood
That may be the hon. Gentleman’s view, but I am simply pointing out that in order to fall foul of the GAAR someone has to have engaged in the most egregious form of abuse. It seems odd to me that falling foul of the GAAR will not therefore attract any additional penalty on top of the tax that is in dispute.
Shabana Mahmood
No, I am going to make some more progress.
Tax avoidance and how to tackle it effectively and thereby close the tax gap remains a real problem for this Government, hence our new clause. We need more action from this Government, and where they fail the next Labour Government will step in. We are pushing the Government for greater action in three specific areas. Let me take each in turn.
Ian Swales
The hon. Lady talks about the next Labour Government. Does she wish to apologise for the slashing of the number of compliance and investigation staff by the previous Labour Government, to the point where this Government have had to add large numbers of people to carry out the work she so much wants?
Shabana Mahmood
Given the cuts at HMRC, this Government’s record on HMRC resources, which is a topic I regularly debate with the Minister, is not one for Members on the Government Benches to show off about.
First, let me take the issue of the quoted eurobonds exemption. That was originally implemented to make it easier for companies to obtain finance from the international bond markets by excluding corporate debt listed on recognised stock exchanges from UK withholding tax. Making it easier for companies to obtain finance on the international bond markets is a legitimate objective that we support. However, as covered in a spate of high-profile media stories last year, the exemption can also be used for tax avoidance purposes, allowing companies to shift profits out of the UK in the form of interest payments, without making any tax payment. As HMRC has noted:
“In recent years a number of groups have issued Eurobonds between companies in the same group, and listed them on stock exchanges in territories such as the Channel Islands and Cayman Islands, where they are not actually traded. In effect, the conversion of existing inter-company debt into quoted Eurobonds enables a company to make gross payments of interest out of the UK to a fellow group company, where otherwise deduction of tax would be required.”
The Government consulted on the issue in 2012, with HMRC proposing to amend the eurobond exemption so it would not apply where the eurobond is issued to a fellow group company and listed on a stock exchange on which there is no substantial or regular trading in the eurobond. HMRC stated:
“The effect of the amended rule would be to leave untouched the quoted Eurobond exemption for the overwhelming majority of Eurobond issues. It would deny the exemption only in the case of intra-group Eurobond issues that appear to be undertaken for the purpose of circumventing the requirement to deduct tax at source rather than being directed at the raising of third party finance.”
Despite HMRC estimating that the proposed restriction could have an extra impact of £200 million a year, in their response, the Government stated that they did not intend to proceed with it. Why not? Well, the Government said they made that decision in the “light of the responses” they received around a number of technical issues and after respondents questioned the positive Exchequer effect set out in the impact assessment.
That is simply not good enough. We say that abuse of the exemption can be shut down and must be shut down. Our proposals will explore removing the exemption where bonds are issued to connected persons, such as where a subsidiary issues a bond to a corporate parent or its private equity fund owners. To minimise disruption to private equity funds using the mechanism to simplify investor rebate claims under double taxation treaties, we would explore either offering an exemption for private equity partnerships where all, or the vast majority of, the ultimate beneficiaries would qualify for double taxation relief, or streamlining the withholding tax rebate process in consultation with the industry. So there is a mechanism to shut down the abuse of the exemption. It could and should have been taken up by the Government.
The estimates of the Exchequer impact of closing the loophole range from £1 billion to the Government’s estimate of about £200 million, with many more commentators saying that they would place it at about £500 million. In a letter to me dated 4 March 2014, the Minister said:
“Some newspapers quoted a figure of £500m for the tax at risk. This appears to be based on the unrealistic assumption that the interest paid out of the UK had not been restricted for tax purposes and that the beneficial recipient would not be entitled to gross payment. You will appreciate that I cannot discuss individual cases, but HMRC has confirmed to me that computational adjustments are frequently made. Consequently, the £500m sum is very wide of the mark. Any change here will not raise any significant yield.”
I was interested in that response, for which I was grateful and which I received after I had tabled a number of questions about the quoted eurobond exemption, because it displayed a concerning lack of clarity. The Minister says that the numbers quoted are “wide of the mark” but he does not say where the mark actually is. That is surprising, given that HRMC and the Minister have examined this in detail and have consulted on it, and given that they tell us that “computational adjustments” are regularly made for it. Despite that, still no figure has been given.
Mr Gauke
In my letter, I also offered the hon. Lady a meeting, attended by officials, to discuss the matter and explain some of these points to her further. I will try not to be personally slighted, but she has not responded to that offer. Why has she not done so? Is it because of the fear that when confronted with some of the challenges in this area she might find that this is all slightly more complicated than she has been led to believe by one or two newspaper articles?
Shabana Mahmood
I am grateful to the Minister for his intervention and I hope he does not take it as a personal slight that I did not, on that occasion, take him up on the offer of a meeting. I will try not to be patronised by the suggestion that these matters are far too complicated for me to understand and that I am getting my information only from newspaper articles.
Mr Gauke
It is quite the opposite: I have absolute confidence that the hon. Lady would have the capacity to understand that this matter is somewhat difficult, but it is often advantageous to speak to the officials who deal with it on a day-to-day basis in order to have a better understanding of it. It would be of benefit to her, and to the House as a whole, to ensure that this debate could take place on the basis of as good an understanding of the matter as possible. By the way, the invitation still stands.
Shabana Mahmood
I may yet take the Minister up on it. But it would be a mistake for him to think that our proposal has been made without consulting experts who are very much engaged on the issue of eurobonds. I am confident that the information we have put out as a result of our business taxation paper, launched yesterday, is accurate and that we have considered the different legal and other ramifications of limiting the abuse of the exemption as it currently stands.
Shabana Mahmood
I am going to make a bit more progress.
Let us say for the sake of argument that the figure is close to the £200 million or so set out in the original HMRC consultation. I was surprised that the Minister did not think that sum would merit action. The tone of his comments to me suggested that he considered that to be a small sum and so it was not worth going ahead with the attempt to close down the abuse of the exemption. I am afraid that, as an argument, that is not something that I am prepared to buy. Why? Well, in this year’s Finance Bill Committee, we have debated and supported a measure in clause 61 on business premises renovation allowances.
Mr Gauke
I would hate it if the hon. Lady inadvertently gave the impression that it was my view that the £200 million was not something that we would seek to address; we certainly would. In my letter to her of 4 March, I said:
“In the small number of cases in which a restriction might be considered appropriate, it was also clear from the consultation responses that the proposal would not be effective in addressing the concerns.”
In other words, the proposal that was consulted on would not have got the £200 million. That is why we did not proceed with it. I want to make that clear, and I am sure that she would not want to give a misleading impression.
Shabana Mahmood
I am grateful to the Minister for that intervention. I was talking about the overall yield. On the difference between the Government and the Opposition in relation to the technical way in which to seek to close down the exemption, the Government consultation looked at situations in which the bonds are not being actively traded. We agreed that that was not an appropriate way in which to close the exemption but, as I have said, we would explore removing the exemption where the bonds are issued to connected persons and, in doing so, we would look at mechanisms to simplify rebate claims under the double taxation treaties and consider, in consultation with industry, streamlining the withholding tax rebate process.
Charlie Elphicke
On these particular provisions, the hon. Lady said that she consulted experts. Will she confirm which particular experts she consulted?
Shabana Mahmood
I would be happy to have a long conversation with the hon. Gentleman about all the different experts, but let me just say that our experts were drawn from across the business and legal worlds. They gave advice and assisted us in thinking through many of the issues related to the abuse of the quoted eurobonds exemption. I will not take this opportunity to put that advice on the record, because I have not sought the permission of those experts to make public some of the assistance and advice that they have given to us. However, our paper is thorough on the issue of how we would seek to close down abuse of the exemption. That tells the House that we have considered these issues deeply, and have thought through all of the problems that might arise from the different attempts to close down the exemption.
I was talking about yield, and how far a potential yield should dictate the Government’s policy in deciding whether to close down an abuse of the system. I referred to the business premises renovation allowance in clause 61. The Government have taken action to close down some of the abuse associated with that allowance, but the impact on the Exchequer was, we were told, negligible. So we see the Government proactively closing down a loophole in which the Exchequer impact is expected to be minimal, but where a loophole exists that is estimated to cost the Exchequer upwards of £200 million a year, they do nothing. How can they justify their decision not to take action to prevent the abusive use of the eurobonds exemption when there are hundreds of millions of pounds at stake?
The potential complexity of the change that would be required is no justification for the failure to act. It has not stopped this Government on other measures, including on the business premises renovation allowance. There seems to be no reason—not money, complexity or anything else—that could stop the Government from acting other than intense lobbying from the affected parties seeking to protect their own interests.
The Government have failed to act, but our new clause gives them the opportunity to do so. If they do not act, the next Labour Government will.
Shabana Mahmood
I want to make some more progress.
Secondly, we want to push the Government to take action on disguised employment in the construction industry. Employers falsely declaring their workers to be self-employed is a long-standing and well-documented issue in the sector. Although there is of course some necessary and genuine self-employment in the sector, employers are currently able to declare someone to be self-employed when they exhibit all of the characteristics of an employee.
That results in three problems. The first is a cost to the Exchequer. The Treasury has estimated that that entailed a static cost of £350 million in 2009 and the House of Commons Library recently produced an estimate of about £500 million. The second problem is that those falsely classified as self-employed are denied their employment rights. That means that workers might work for the same company for several years, effectively as an employee, while not receiving any of the resulting employment rights, such as sick pay, holiday pay and maternity and paternity leave.
Shabana Mahmood
My hon. Friend is absolutely right about the findings of that report and we know that this is a real problem, particularly for people in the construction industry.
Kelvin Hopkins
My hon. Friend is making a very fine speech and I agree with what she is saying. In 1970, I serviced on the TUC construction committee, and a major item on the agenda at the time was bogus self-employment and the loss to the taxpayer. Another point is important, too. They do not pay their national insurance, so they will suffer when their pensions come to be paid.
Shabana Mahmood
I am grateful to my hon. Friend, who is right that this is a long-standing problem for Governments of all colours and persuasions who have for too long been unable to deal with these very serious issues which result in people not being entitled to sick pay, holiday pay, maternity and paternity leave and other employee rights.
The third problem associated with disguised self-employment is that the unhealthy level of self-employment in the construction industry—40% compared with an average of 14% across all other industries—does not offer a sustainable skill supply for emerging growth opportunities or a change in the economic weather. Employers who want to invest in their staff and employ directly are losing out to companies that use payroll companies which, because they are paying less tax, can sometimes offer slightly higher pay to poach skilled staff.
In July 2009, we published proposals to tackle the problems of false self-employment in the construction industry, but it was not until last year’s Budget that the Government took an interest in the problem when they announced that they would consult on proposals to tackle tax avoidance by intermediaries based offshore who provided labour services to UK companies. We are still waiting for the Government’s response to their consultation on onshore intermediaries, which closed, I think, in March.
Last year, the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), reviewed the issue and, based on an investigation of the available evidence and widespread consultation with the industry, we have proposed that workers should automatically be deemed to be treated as employees for tax purposes if they meet criteria that most people would regard as obvious signs that they were employees rather than self-employed subcontractors. It is important to note that the measure would not only close a costly tax loophole but remove a perverse financial incentive for those workers whom most would regard as being in an employment relationship to be classified as self-employed. Such a shift would be good for the construction sector and its work force, too. We want the Government to take further action today to consider the issue and prepare the report envisaged in our new clause.
The third area in which we seek greater action is that of dormant companies. It has been estimated that 30% of all UK companies are not asked to submit tax returns. One explanation that has been given is that those companies are either dormant or are not liable to pay tax in the UK as they trade exclusively overseas. Once companies have declared themselves dormant, they are exempted from filing a corporation tax return for five years. For some companies, that window could be used as an opportunity to trade with tax impunity and yesterday we set out our proposals whereby we will require annual confirmation of dormancy and will further explore the possibility of banks’ automatically informing HMRC when there is activity in supposedly dormant accounts. That would deal with an issue of tax evasion, rather than tax avoidance, but it is important that the tax lost as a result of weaknesses in the rules of dormancy is firmly on the Government’s radar and it has not been to date.
As I have set out, tackling tax avoidance and closing the tax gap effectively remains a top priority for the public. This Government’s record is not good enough. Our new clause pushes for greater action on three important issues and practical measures that can help to close the tax gap. We hope that it will have the support of the House this evening.
Sir Gerald Howarth
I am pleased to take part in this debate—it is the first time I have participated in a Finance Bill debate for quite a long time. I rise to take issue with the hon. Member for Birmingham, Ladywood (Shabana Mahmood), who made a long and interesting speech, about her definition of tax abuse. Indeed, there was no definition of what is considered to be abusive tax arrangements. I think that we have all become lax in our use of language in a matter which is of huge concern to our fellow citizens, for the powers of the Inland Revenue—HMRC—to take money earned by our fellow citizens is an important power and one that should be used very carefully indeed. This House has a responsibility to ensure that these matters are properly debated.
I have to tell my hon. Friends that I am increasingly alarmed by the Government’s rhetoric on what they refer to as “aggressive tax avoidance”. I was brought up to understand that tax avoidance is not only legitimate but, indeed, the duty of the head of every household. It is not their duty to maximise their tax; it is their duty to minimise it. It is our money, which is taken from us by the Government.
Sir Gerald Howarth
Quite a lot of people want to speak, but the hon. Gentleman is a good man, so I will give way to him briefly.
Kelvin Hopkins
It is a simple point: the great majority of wage earners and salary earners can never escape, avoid or evade tax because they pay through PAYE. They have to pay every penny of their tax every week, every month, every year.
Sir Gerald Howarth
The hon. Gentleman is entirely right, but overwhelmingly it is the entrepreneurs of this country who drive our economy. Ensuring not only that our entrepreneurs are encouraged to invest in providing jobs for people but that this country is a good place in which people from overseas wish to invest their enterprise must be a major consideration.
As I say, I was brought up to understand that tax avoidance is entirely legitimate, and if a scheme is found to be outwith that which the Government intend, it is for Parliament to close any loopholes; tax evasion, on the other hand, is illegal. However, we have become consumed by the idea that because some high-profile companies do not pay tax in this country, tax avoidance as a whole is somehow immoral. I think that some of the companies that do not pay tax here ought to and I strongly support endeavours by the Government to ensure that they pay their fair share, but when, 10 days ago, I was approached by a constituent who told me about the accelerated payment scheme, I became very concerned indeed.
My constituent, a pharmacist, together with a local GP practice and a dentist, wishes to set up an enterprising, innovative scheme in Aldershot to provide a new, modern facility, but if he is told to pay the thick end of £100,000 when he understood the scheme to be perfectly lawful, where is that money to come from and what happens then to his investment in his proposed business? I think this measure will lead to great uncertainty. I pay tribute to my hon. Friend the Member for Cities of London and Westminster (Mark Field) for the clear way he has drawn attention to the potential repercussions of the Government’s proposal.
The Government are proposing to confer massive powers on state officials. Clause 213(3) provides that
“The payment required to be made under section 216 is an amount equal to the amount which a designated HMRC officer determines, to the best of that officer’s information and belief, as the understated tax.”
There we have it—huge power residing in the hands of unelected officials. We, as right hon. and hon. Members, all know from our constituency experience the number of cases where HMRC gets it wrong. We are invoked to try to recover the money that constituents in many cases have been unable, by direct contact with HMRC, to secure for themselves. Very often, it is only after our intervention that the matter is put right. A dangerous precedent is being set here for a rapacious future Government, perhaps a Labour Government. Perhaps that is what the hon. Lady was threatening; I am not sure that I would yet be in a position to accuse her of being rapacious, but perhaps she will let us know her intention.
We should be careful about giving these extensive powers to HMRC. Interestingly, my noble Friend, Lord Howard of Rising, asked Her Majesty’s Government
“how much money was repaid to taxpayers as a result of overcharging by HM Revenue and Customs in each of 2009-10, 2010-11, 2011-12 and 2012-13.”
The noble Lord Deighton responded:
“The information is not available as HM Revenue and Customs does not collect information on amounts underpaid or overpaid.”—[Official Report, House of Lords, 23 June 2014; Vol. 754, c. WA135.]
Therein lies a severe problem. If HMRC is incapable of giving us that information, what confidence can we have that it will exercise these powers carefully?
I quite understand the challenge faced by my hon. Friend the Exchequer Secretary, who is a very splendid Minister indeed, in trying to restore the public finances to order after they were destroyed by the former Prime Minister and Chancellor of the Exchequer. It is a massive challenge that we face. But we could make a start by looking at some of the money owed to Departments. I understand that the Ministry of Justice, for example, has quite a lot of money outstanding. In November 2011, the National Audit Office reported that the Ministry of Justice was owed £2 billion in outstanding fines and uncollected criminal assets. Last year, it wrote off £76 million in uncollected court fines, which was a 50% increase on 2010-11.
I also understand when my hon. Friend says that the Government want to address the issue of taxpayers dragging out contested cases in the courts. It is a fair point. But if the measure goes through, what incentive will there be on state officials, never knowingly understanding the importance of time, to expedite contested claims themselves? The president of the Chartered Institute of Taxation made a good observation. He said:
“We have sympathy with the Government’s need to accelerate dealing with some tens of thousands of outstanding mass marketed avoidance cases which are jamming up the courts…However, handing HMRC almost unprecedented executive powers to decide who falls within the mischief they intend to deal with, without the usual safeguards and appeal rights, is not something which should be done lightly”.
I strongly endorse that.
I remind my hon. Friends that when we came into office 35 years ago, and the noble Lord Howe, then Sir Geoffrey Howe, as Chancellor of the Exchequer, delivered his first Budget on 12 June 1979, he and his successor, my noble Friend Lord Lawson, set about reducing tax, because they believed that by reducing the burden of taxation, they would reduce the incentive for taxpayers to incur costs in seeking tax avoidance schemes. I urge the Government to look more carefully at how we might increase our drive to reduce taxation itself as a more efficient way, a more Conservative way, to reduce the incentive for taxpayers to seek avoidance schemes.
I will not support new clause 12 and do not think that the House should do so, but I do think that it needs to look much more carefully at the powers that the Bill proposes to confer on HMRC officials.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
On the question of tax avoidance, if the Government do not design the tax system properly and people who should pay tax can avoid it if they do so legally, that might be correct legally, but it is not necessarily correct morally. Having said that, if the Government design the tax system in that way and someone takes advantage of it, particularly an entrepreneur, who might take the money they save in tax and reinvest it in further jobs and enterprises, that person can defend that on the basis that if the Government were really skilful they would not be able to avoid it. On the question of tax evasion, people should go to prison if they evade tax. It is very simple in my view.
I have written to the Minister on behalf of a constituent who is an entrepreneur. He is about to retire and will probably dispose of his company in the process, because he is not talking about another income stream coming from continuing contact with the company. He accuses the Government of bringing in retrospective legislation in this Finance Bill, because from clause 192—I have read this part of the Bill right the way through to chapter 3, which is on accelerated payments—it is quite clear that the Government intend these retrospective investigations to go back to 2004. It gives HMRC power to declare in the arrangements for follower notices the ability to claim the tax based on other cases that might be similar to the case it is investigating or discussing. If it does so, it can claim the payment from the individual based on that follower notice.
Ian Swales
On a quick point of clarification, the retrospective application that most people are concerned about is that which was applied in the Finance Act 2008, which was enacted by the previous Government.
Michael Connarty
I understand that the advice given to my constituent, who is a business person, came from one of the best financial advisers in Scotland. In fact, it was the financial adviser who wrote to Equitable Life long before anyone realised that it was defrauding people by enhancing assets falsely, and who was the first person called to give evidence to the Treasury Committee. They have advised my constituent that the problem is, in fact, in this Bill and the performance under its terms. It might be based on a previous ability to do so, but the concept of follower notices and accelerated payment notices are, in fact, in this Bill and did not exist before.
The question is whether the provision is retrospective, because I believe that the Minister is on record—I think that it might be in writing—as saying that he does not agree with retrospective tax powers. I also understand that the Treasury Committee confirmed in a recent report that this is indeed retrospective and the Government are yet to explain what is wholly exceptional about the performance they have put in this Bill—the follower notices and the accelerated payment notices—that will justify the use of retrospective claims for taxation.
It seems to me that when someone is doing their tax planning, particularly when coming to that later period in life—quite a few Members of this House are in that age group—they look at the law at the time, take tax advice from advisers, make arrangements and do their tax planning accordingly, and that is what they think will be their future income. Those people tend not to be receiving a pension paid by someone else; they are earning their pension by their own efforts and enterprises. If that advice is taken and their tax planning goes ahead, I want the Government to assure me that they will not then be told after this Bill is passed, “You made that arrangement in 2000, but we have decided that from 2004 that that tax planning, although legal then, is not legal, so we want you to pay a substantial amount of tax back that was not in the tax arrangements then.” I think that it is only just that the Government give people an assurance that they will not come seeking to turn what was a legal tax arrangement into an illegal one and cost them a substantial amount of money.
David Rutley (Macclesfield) (Con)
The hon. Gentleman is making a powerful argument. However, he should consider whether his model of an individual looking at tax approaches is the right one; many businesses look to tax advisers for advice. It is those tax advisers, who have given what is at least imperfect advice to businesses, who need to be examined more carefully.
Michael Connarty
I hope that the hon. Gentleman thinks I am a bit smarter than his question implies. If someone does something that is tax-efficient but not legal or justifiable, it is clear that the Government can say that it is illegal and they want the money back. People pay financial advisers quite a bit for good, legal, tax-efficient plans—to find ways not of cheating the system, but using it efficiently.
I might think it wrong for people to avoid tax and I might say that they should put it all in the bucket, like those in the PAYE system. The reality is, however, that tax efficiency is about people seeking to minimise their tax; that advantages people employed by their enterprise or seeking a just reward for their efforts throughout their life as an entrepreneur. I am not against that. If we want to close an avoidance loophole, we should close it. If the loophole is open and used, the Government should not be able to come back 10 years later and say, “We’ve changed our mind. Yes, it was efficient and legal, but we want money from you.”
Under this legislation, once the decision has been made, there is no appeal; someone would have to go to private litigation to fight the taxman. That is the problem. The system will not be fair, but completely and utterly repressive—designed to give all power to HMRC and the Government and none to the private individual. My constituent is 65. He has worked for a long time and employed lots of people in my constituency. He has done things legally, but on retirement he could face the prospect of being chased by HMRC under this law, the only way to fight it being to have enough money in the bank to bring private litigation.
The proposals give all power to the taxman, and that is not a correct, just or moral way to run the country. I hope the Minister will assure us that the law will not be used in such a way and that, if required, amendments will be tabled to ensure that.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I assume that Members taking part in the Finance Bill debate are arithmetically astute, so will be able to work out as quickly as I can that, if the Minister is to have any chance of answering the many points put to him, particularly by Opposition Front Benchers, the four people wishing to speak have little more than 10 minutes left. If they take less than three minutes each, everyone will get to speak; if they take more, they will be being discourteous to each other.
Charlie Elphicke
I will endeavour to be as brief as possible, Madam Deputy Speaker.
I have often made the case against tax avoidance—international and national—in the House. I have often mentioned the behaviour of the water companies, which used the quoted eurobond exemption to further their strategies. Yet I cannot support the new clause, which is, in the words of the Labour party’s head of policy, the hon. Member for Dagenham and Rainham (Jon Cruddas), nothing less than an “instrumentalised, cynical” nugget
“of policy to chime with…focus groups and…press strategies”.
The shadow Chancellor showed that at the weekend.
The new clause would not raise £500 million. I will be interested to hear the Minister say exactly how much it would raise, as in many cases double taxation treaties could be used. When I raised the loophole in question, my case was about the debt-equity gearing ratio—a far more effective way of looking at the issue. I would be surprised if the Labour party had consulted experts beyond its own advisers. Indeed, there was a consultation on this issue in 2012. I stand to be corrected, but I do not believe the Labour party gave a response to that consultation. It simply thought, “What wheeze can we table as a new clause to plonk out there for our press strategy as our instrumentalised policy nugget?”
The new clause is highly cynical. It has been devised purely to make a case and to say, “Yes, we are on the pitch in the tax avoidance debate.” In fact, when the Labour party was in power receipts from income tax doubled but receipts from corporation tax went up by 6%. Again, we heard cynicism in the debate today with remarks about the tax gap going up by £1 billion to £35 billion. That is because the economy is growing. In reality, the percentage has fallen from 7.1% to 7%, so the tax gap has been heading in the right direction.
The Government have done a lot to make the case on this issue and to take the battle to the tax avoiders. I support the accelerated payments regime—I differ from my hon. Friend the Member for Aldershot (Sir Gerald Howarth) on this—because people who are subject to it know that they are engaging in a tax avoidance arrangement that is going to be under attack, and so should be prudent and keep the money to one side. If they are not doing so, they should be thinking about things rather more carefully, because they know they have entered into an arrangement that is likely to be under attack from the Revenue.
Kelvin Hopkins
It is a disgrace that while millions of ordinary people suffer the privations of wage cuts, unemployment and poverty, a rich minority is avoiding and evading taxes. I am talking about corporates and billionaires. There is indeed one law for the rich and one for the poor, the poor being the great majority of wage and salary earners. They are not necessarily poor in the specific sense, but they pay their taxes—I pay PAYE myself.
The Government’s concerns about the deficit seem hypocritical given that they have failed to collect the taxes that are owed. The estimate of the amount of uncollected tax made by HMRC and the Government is of the order of £40 billion. But estimates by others—including the Public and Commercial Services Union, the trade union that represents the workers in the tax collecting industry, the TUC and Richard Murphy, a noted tax expert I have seen speak on many occasions—put the amount at £120 billion or even more.
Even if we take the £40 billion figure, if the Government collected half of it, that would be an extra £20 billion a year, equivalent to 5p on the standard rate of income tax. I suggest that that would not just bring down the deficit but would give us plenty more to spend on the health service and on decent pay rises for public servants, who have suffered so much for so long.
As for staffing in HMRC, I have spoken out about that under previous Governments as well, not just this one, because that has been a weakness for Government efforts to challenge tax avoidance and evasion for a long period. I will tell a little anecdote. In 1997, when I first came into Parliament, I went to visit my local VAT office. The people there said that if they had more staff, they could collect more taxes. In VAT from local businesses alone, every individual tax inspector collected five times their own salary. Naturally I wrote to the then Chancellor of the Exchequer. I got an answer back from a civil servant, not from the Chancellor, which said that the Treasury wanted to make savings by cutting staff. That is utterly irrational when staff collect many times their own salary.
As I said, with VAT from local firms the amount collected is five times a staff member’s salary. When it comes to the big corporates, extra staff collect many, many times their own salary, and we should have many more tax staff. Perhaps if HMRC did not have such difficulties with staffing, it would be able to work more accurately and would not make the mistakes that have been mentioned.
We have recently seen Vodafone, which apparently owed something like £7 billion in tax, do a cosy little deal with Dave Hartnett, the then boss of HMRC, and pay £1 billion. The rest was siphoned through Luxembourg, I think—wherever it was, large amounts of money were lost from the corporates. Interestingly, Dave Hartnett, who was a public servant and should have been committed to the public interest, retired and finished up as an adviser to corporates on tax avoidance. That is unacceptable. Civil servants should be motivated by the public service ethos and be determined to collect taxes. They should not be cosying up to the corporate world.
Finally, as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) has pointed out, the 1,000 richest people in this country have seen their wealth double in the past five years from a quarter of a trillion pounds to half a trillion pounds. That is a staggering amount of money. Much of that must be to do with tax avoidance and tax evasion. If we were to collect just some of that, we would have no deficit and plenty more to spend on the health service.
Nigel Mills
I will not vote for new clause 12, and I will briefly explain why.
A year ago, we enacted the general anti-abuse rule. One argument that Mr Aaronson made when he reviewed that idea was that it would allow us to have fewer of these complicated, focused anti-avoidance rules in Finance Bills and to avoid cluttering up the tax regime with more complexity because we would be able to rely on the general rule. I look forward to seeing that, rather than another huge, thick Finance Bill next year.
Subsection (1) of new clause 12 speaks of
“tax arrangements that are abusive.”
Surely those come within the general anti-abuse rule and can therefore be challenged, even if they are technically legal. Given that, we will not need to come back and assess the three items that are set out, because they will already have been tackled and there will be no further revenue to raise.
I racked my brains and did a bit of googling to try to find methods of tax avoidance using dormant companies. I struggled to think of one, because once a dormant company does something, it ceases to be dormant and therefore cannot be used to avoid tax. If what is meant is that companies are pretending to be dormant, but are actually active and are not filing returns that they know full well are due, that is tax evasion and should be clobbered severely using the existing rules. We probably do not need to create a huge compliance burden for every innocent dormant company out there. There might be sensible reasons for maintaining those companies, such as to protect a name or previous transactions, or simply that the cost and hassle of striking them off are greater than they ought to be. That would be an unreasonable compliance burden to impose.
We should be a bit careful about the language that we use about eurobonds. I have some sympathy with the view that when they were created 40 or 50 years ago and the exemption was passed, Parliament probably did not intend for intra-group loans to be traded randomly on Channel Island stock exchanges but never actually traded, just held by the same third party throughout the period. I see the temptation to remove the exemption and it was right that the Government proposed some sensible ways of doing so two years ago. However, if the Government consult on something and look into the detail, but then decide that it would not raise as much money as they thought and that it would act as a big disincentive to investment, it is unwise to come back to it so quickly. We should learn the lessons from that and just accept that if we want the UK to be attractive to investment and the hub of the private equity industry, which many small businesses in all our constituencies benefit from, it is foolish to risk putting up the cost of borrowing for that industry and adding complexity for it by revising the rules again.
I think that the new clause is superfluous and I will not vote for it.
Mike Kane
In the few moments that I have, I want to point out that self-employment is being used by far too many employers to engage workers in the construction industry, as my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) pointed out. According to the Union of Construction, Allied Trades and Technicians report “The Evasion Economy”, 400,000 workers are being engaged in that way. Those workers miss out on the rights that normal workers get. According to another UCATT report, “The Great Payroll Scandal”, this practice is costing the Exchequer up to £1.9 billion per annum.
When I talked to construction workers on Friday night, they spoke of the scandal of payroll companies making millions of pounds. This is a legitimised dodgy practice. The companies get workers to sign a contract to say that they are self-employed, but they work for a single employer. In any legal sense, their status would be defined as a direct employee, yet they lose all the rights that we have spoken about. It should no longer be possible for companies to instruct such construction workers to turn up on site when they want them. Construction workers need the security of employment rights and full national insurance contributions should be paid.
Mr Gauke
We have had a lively debate, and I will try to address as many of the points raised as possible in the time available.
New clause 12 seeks to have the Government produce a report on how to reduce the tax advantages arising from tax arrangements that are abusive. I agree that tax avoidance is a key issue, and the Government have made it abundantly clear that we will not stand for a minority of taxpayers continuing to seek unacceptable ways to reduce the amount of tax they pay through contrived and artificial means. That increases the tax burden on the rest of society and creates an unfair playing field for businesses.
Let me explain why I do not think that a report would be beneficial. The Government have taken strong and robust action to tackle avoidance. Since 2010 we have introduced 42 changes to tax law to close avoidance loopholes and make strategic changes to prevent and deter tax avoidance. Those measures include the introduction of a general anti-abuse rule, strengthening the disclosure of tax avoidance schemes regime, clamping down on stamp duty land tax avoidance with a new range of measures —including an annual tax on envelope dwellings—and numerous changes to business tax rules and reliefs to tackle bad behaviour, including misuse of the partnership structure and corporate loss buying.
We are going further. In the Finance Bill we are introducing new measures to put in place tougher monitoring regimes and penalties for high-risk promoters of tax avoidance schemes, and we are introducing accelerated payments and follower notice measures that will give HMRC the power to collect disputed tax bills up front, putting those who try to avoid tax on the same footing as the vast majority who pay all their tax up front.
Let me address the concerns raised by my hon. Friend the Member for Aldershot (Sir Gerald Howarth) and the hon. Member for Linlithgow and East Falkirk (Michael Connarty). The vast majority of people pay their tax up front, but it is possible for people working through self-assessment to make use of a tax avoidance scheme and hold on to the money during the—often lengthy—period where there is a dispute. The law is the law, however, and it is the law that existed when the arrangements were made that continues to apply. We are making a change, however, to say that while there is a dispute, the money should be held by the Exchequer and not the taxpayer, just as happens in many other circumstances where there is a dispute in our tax system. This is money that the individual would have already paid if they had not entered into an avoidance scheme. When completing their self-assessment return, they would have notified HMRC that they were taking part in a tax avoidance scheme under the disclosure of tax avoidance schemes regime, and as I said, the taxpayer can continue to dispute the case and will be paid interest should they win. The rights of the individual are therefore not being restricted. Prudent taxpayers should recognise that tax avoidance carries a significant risk of not working and the tax becoming payable, and they should make plans for such an outcome.
In addition to changes in law, we have invested £1 billion in increasing HMRC’s compliance resource, which has reaped huge benefits. HMRC is ever more successful at tackling the avoidance it sees, and it has an excellent record in litigating the avoidance schemes that taxpayers choose to take to tribunal. It wins about 80% of cases, and persuades many more taxpayers to settle before the case gets that far. Between April 2010 and March 2014, it won 94 avoidances cases in tribunals and courts, and in 2013-14 alone, its 30 wins protected £2.7 billion of tax.
The Government will continue to close loopholes in tax law and introduce strategic responses to tax avoidance across the tax system. We will act robustly to respond to abuses that we see. We consult on those measures where we can, although hon. Members will understand that in certain circumstances we must act quickly to close down abuse, so consultation is not possible. A report will add nothing to the progress that we have made and continue to make. Action is more important. We have proved we are taking action to tackle tax avoidance across the board, and we will continue to do so.
In the time available I do not think I can do justice to the fairly lengthy speech on eurobonds by the hon. Member for Birmingham, Ladywood (Shabana Mahmood), but the £500 million figure that she quoted, which is somehow supposed to be at risk, seems to be based on an article in a newspaper. It is not a figure we recognise. It wrongly assumes that the recipient of the interest would not be entitled to gross payment of interest and fails to take into account the fact that under the UK’s double tax treaties the tax would often be repaid anyway.
I extend again the offer that I made in March to the hon. Lady. I have been a shadow Treasury Minister and I recognise the challenges in developing policy in these areas without access to officials. I would be more than happy to meet her, with officials, to talk through some of the practical points of this issue. I think she will find that that £500 million is something of an illusion. In terms of the practical points that she raised about changing the withholding tax system, I ask her to bear in mind the double taxation treaties. Her proposals might not be as easy as she believes.
The alleged abuse of disguised employment in the construction sector is an important point. Some labour providers have created structures specifically designed to avoid tax and national insurance and gain a commercial advantage over those who play by the rules. The Government aim to put a stop to those practices in the construction sector and elsewhere through the new measures introduced in this Bill to tackle false self-employment intermediaries. They will provide a level playing field for compliant labour providers who help to facilitate the UK’s flexible labour market.
The new measures that we are introducing target structures set up to present workers as self-employed when they are really employees. This has been a growing problem in recent years and has spread from the construction industry to other sectors. That is not acceptable. Workers lose out on their rights, it creates competitive disadvantages for compliant businesses, and ultimately the taxpayer foots the bill. That is why we are acting now to stop the abuse. Intermediaries are the biggest mechanism for delivering false self-employment within the construction industry, and as I have said, the practice is spreading. Tackling employment intermediaries used to facilitate false self-employment will not only more effectively target a sizeable section of the false self-employment in construction—a point raised by the hon. Member for Wythenshawe and Sale East (Mike Kane)—but will stop the spread of the problem to the wider economy.
We believe our proposals are the best way to tackle avoidance in that area. The previous Government consulted on proposals to tackle false self-employment in construction in 2009, which deemed all construction workers to be employed unless they fulfilled one of three criteria. In practice, that would have meant that bricklayers would need to provide their own bricks and roofers would have had to supply their own tiles to be categorised as self-employed. As set out in the consultation response document, analysis suggested that the proposals could undermine legitimate commercial practice and run the risk of capturing genuinely self-employed individuals.
A dormant company is one that is not within the charge to corporation tax at all, whereas the new clause appears to relate to companies that are within the charge but fail to file returns. That is not avoidance but evasion. HMRC uses risk-based procedures and extensive data-matching analysis to identify companies that should have filed returns but have not done so. All such companies are risk-assessed to establish whether they come within the charge to tax. Research suggests that the risk of tax loss is small. HMRC’s activity is carefully targeted, ensuring administrative burdens for compliant customers are minimised while focusing on the non-compliant.
I draw the House’s attention once more to the Government’s strong response to the threat of tax avoidance, including our unprecedented action to close loopholes and provide new tools for HMRC to tackle avoidance. The report proposed by the Opposition is unnecessary and would distract HMRC from delivering on its important work tackling avoidance. I call on the hon. Lady to withdraw the new clause.
Shabana Mahmood
I am disappointed that the Minister will not engage with the practical measures envisaged in the new clause. We have had an interesting debate, but I wish to press the new clause to a Division.
Question put, That the clause be read a Second time.
Business without Debate
Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we shall take motions 8 to 14 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Financial Services and Markets
That the draft Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014, which was laid before this House on 4 June, be approved.
Social Security
That the draft Jobseeker’s Allowance (Supervised Jobsearch Pilot Scheme) Regulations 2014, which were laid before this House on 4 June, be approved.
Capital Gains Tax
That the draft Double Taxation Relief and International Tax Enforcement (Japan) Order 2014, which was laid before this House on 10 June, be approved.
That the draft Double Taxation Relief (Federal Republic of Germany) Order 2014, which was laid before this House on 10 June, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Belgium) Order 2014, which was laid before this House on 10 June, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Zambia) Order 2014, which was laid before this House on 10 June, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Iceland) Order 2014, which was laid before this House on 10 June, be approved.—(Mark Lancaster.)
Question agreed to.
delegated legislation (committees)
petition
Andrew George (St Ives) (LD)
I rise to present a petition on behalf of more than 3,000 petitioners from west Cornwall, which calls for a resilience rail service between Penzance and Paddington. It was largely precipitated because of concern about inadequate investment in that service and also, of course, because of the disruption caused to the service by the February storms in both Penzance and Dawlish. It promotes major investment in the sleeper upgrade, improved signalling and a train care centre at Long Rock in my constituency—something for which we have campaigned for a very long time and on which we expect an announcement shortly.
The first petitioner is Janet Trudgeon of Rosehill, Marazion, and the petition reads as follows:
The Petition of residents of St Ives constituency and others,
Declares that the Petitioners believe that if the Government can spend up to £50 billion on high speed rail investment to the north (HS2), the people of Cornwall should not be denied the investment necessary for a resilient rail service to Paddington.
The Petitioners therefore request that the House of Commons urges the Government to do what is necessary to make sure that the rail link from Penzance to Paddington is one that passengers can rely on.
And the Petitioners remain, etc.
[P001362]
Head and Neck Cancer
(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir Paul Beresford (Mole Valley) (Con)
I thank my hon. Friend the Minister for coming. She is smiling slightly, because we have had this discussion on a number of occasions and it will continue, at least until I get my way, if that is at all possible over the coming years.
I must begin by declaring a short list of potential interests. I am still a part-time practising dentist—very part-time. I am also chairman of the all-party parliamentary group on dentistry and the APPG on skin, which has a link to this debate.
In an earlier debate, I focused on oral cancer and, in particular, on the causative role of the human papillomavirus. I have been trying to persuade the Minister to encourage the Joint Committee on Vaccination and Immunisation, or JCVI for short—don’t the medicos always do that?—to broaden its horizons beyond the inoculation of teenage girls against cervical cancer. The results in relation to cervical cancer are very encouraging, but the virus is key to the cause of many other cancers, and that applies predominantly to two variations of it.
In a previous debate, the Minister was very nice, and explained sweetly that I must rely on the advice of the JCVI—or, at least, that she must do so. She explained that the committee was expanding its sights. Although it was enlightening to hear that it would be examining the HPV-related effects of men having sex with men, it did not help me very much because I am looking beyond that. I think that the committee should be looking above the waist, and, more specifically, looking at the trauma of pain, suffering and death—a very horrible death—as well as at the financial costs to the NHS of the existence of the virus elsewhere in the human body. I am aware that the virus plays a part in skin cancer, but I have decided to concentrate on the head and neck.
A quick cruise through the latest papers on head and neck cancer makes for frightening reading. Despite the reduction in smoking, the number of head and neck cancer cases is rising steadily and rapidly. The stark reality is that the number of new cases is growing year on year, at a much higher rate than the experts expected. Some are talking of an epidemic. The problem is now so acute that one form of cancer which falls into the “head and neck” category, oropharyngeal cancer, is the fastest-growing cancer in Scotland, and is a significant and growing problem in the rest of the United Kingdom.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on raising this subject. In the past year in Northern Ireland, 1,218 people have been diagnosed with head and neck cancers, and 64 people die of such cancers every year. Does he think that that is because this is seen as a lesser cancer—if that is the right way in which to put it—than others which seem to catch the eye of the public? If so, does more need to be done to increase the focus on head and neck cancer?
Sir Paul Beresford
I am focusing on it, because worldwide it constitutes about 5% of cancers and causes 6% of the deaths, and because, as I think is generally accepted, in a large proportion of cases HPV is a causative agent, or the root cause. There is a way of dealing with that and I think that we ought to adopt it.
In the United Kingdom, the latest findings put the incidence of HPV at 23.5% for oral cancer, 35.6% for oropharyngeal cancer, and 24% for laryngeal squamous cell carcinomas. I have no data for skin cancer, but obviously it applies to head and neck skin. On a personal note, my brother-in-law recently died from a squamous cell carcinoma on his head, which was undiagnosed and untreated, and when it was found it was too late. Head and neck cancers are fifth in the global rankings of cancer incidence, and sixth in the global rankings of cancer deaths.
The cost of oropharyngeal cancer to our health services is enormous. A new report is due to be published following extensive research on the economic cost of head and neck cancer. The findings of the research suggest that the official estimate of the burden placed on the national health service is significantly less than the actual total. The data I have seen of the report that is coming out soon conclude that the cost of oropharyngeal cancer was approximately £115 million at 2011 prices, laryngeal cancer £96 million and oral cavity cancer £98 million. The total at 2011 costs is just under £310 million. We must add that that is almost certainly low because of under-reporting, that we have three years of inflation and, worst of all, three years of increasing numbers of cases. I am not sure, but I suspect that that does not include peripheral rehabilitation costs such as physiotherapy and speech therapy and some cosmetic dentistry in appropriate cases, nor does it cover the unquantifiable cost to quality of life, with the pain and disfigurement that much head and neck cancers produce, and the treatment that is required peripherally for patients.
Perhaps what is most surprising—I have only just discovered this—is that these cancers are more prevalent in men than women at a ratio of approximately two to one. It is common knowledge that the NHS is under immense financial pressure. In fact, demand for access to the NHS is at unprecedented levels. The Government have taken commendable steps towards ensuring that the health service is protected from spending cuts, which have been necessary in so many other areas, but that does not mean budgets have not come under pressure and resources have not been stretched. It is therefore a matter of the very gravest concern that the full economic burden of head and neck cancer, and by extension HPV, is not taken into account. It should be. The whole of the problem of HPV and the way it infects different parts of the body should be addressed by the Joint Committee on Vaccination and Immunisation.
Australia has a policy of vaccination of both males and females. That is producing what is called a herd immunity. Although I am specifically looking at head and neck, with the role of the HPV virus, it is quite clear that there could be a dramatic reduction in a number of cancers, including head and neck cancer, over time with gender-neutral vaccination. Clearly, men currently face a significantly greater, and rising, risk of HPV-associated head and neck cancers.
I therefore again put it to the Minister that it is not fair, ethical or socially responsible to have a public health policy that leaves 50% of the population vulnerable to infection. Such vaccination, combined with early detection and action on smoking and heavy drinking of alcohol, could save a huge number of lives just as we are facing a dramatic increase in head and neck cancer. I hope that the Minister will be able to persuade the JCVI to broaden its horizons and to look at the human suffering, as well as the total costs of HPV to our national health service.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this debate on this important issue and on continuing to champion it. It shows Parliament at its best when Members bring to bear here the expertise and insight they have acquired outside this place, and that is certainly what my hon. Friend is doing and I commend him on it.
Let me set the scene before dealing with some of my hon. Friend’s specific concerns. As he said, we have debated this issue before and I am anxious to try to keep him up to date with any developments as well as to make sure the House has a general picture of what we are doing in this area.
The Government want England to lead the world in tackling cancer. That is why our 2011 cancer outcomes strategy set the ambition to save a further 5,000 lives a year from cancer by 2014-15, including head and neck cancer. As my hon. Friend rightly said, the incidence of head and neck cancer has been increasing since the 1970s, with over 6,500 people in England diagnosed with oral cancer alone in 2012. That is due to the prevalence of the major risk factors for oral cancer, such as heavy alcohol consumption and smoking. Chewing betel quid, which is more common among south-east Asian communities, is also a risk factor for oral cancer and that may have contributed to the trend. As the House knows, we have major programmes of work in place to tackle smoking and excessive alcohol consumption —and it is heartening that, although there is a long way to go yet, we did see smoking prevalence rates dip below 20% for the first time in England in the most recent figures.
There is now growing evidence that HPV, already linked to the development of nearly all cervical cancer in women, is also a major risk factor for oral cancer. That is not disputed. The types of HPV that are found in the mouth are almost entirely sexually transmitted, and they have been associated with about a quarter of head and neck cancers. So if we can reduce the incidence of HPV in females through a high uptake of the national vaccination programme, a reduction of other HPV-associated cancers in females and males is likely to follow. I note, however, that my hon. Friend feels that that herd immunity is not going far enough and there is further to go. It is worth restating that the aim of the current HPV vaccination programme is to prevent cervical cancer related to HPV infection—that is where it started. When introducing the vaccine in 2008 the Joint Committee on Vaccination and Immunisation, which advises the Government on all immunisation matters, did not recommend HPV vaccination for boys because the reasoning was that once 80% coverage among girls had been achieved there would be little benefit in vaccinating boys to prevent cervical cancer in girls.
Judged by any standard, the HPV immunisation programme has been very successful. More than 7.8 million doses have been given so far in the UK since 2008, and we have among the highest rates of HPV vaccine coverage achieved in the world. I encourage hon. Members to look at their own local statistics, because although we achieve a very high average vaccination rate, there is some local variation. That matter is worth pursuing, particularly with schools, as this vaccine is delivered in schools almost universally. Some 86% of girls who are eligible for routine vaccination in England in the 2012-13 academic year have completed the three-dose course and 90% have received at least two doses, but in some schools the rates are lower and we want to get those up.
There is an increasing evidence base on the association between the HPV infection and oral, throat, anal and penile cancers, and on the impact of HPV vaccination on those infections. As a result, the JCVI issued a call for evidence in August 2012 to inform a review of HPV vaccination. The JCVI is very much aware of the issues concerning HPV vaccination for men who have sex with men, and at its October 2013 meeting recognised that the current immunisation programme may be of little benefit to those men and agreed to create an HPV sub-committee to consider the evidence for extending that vaccination programme. The sub-committee will aim to identify and evaluate the full range of options.
Sir Paul Beresford
The Minister has just talked about extending the programme, but to what or to whom?
Jane Ellison
On to my next paragraph. The sub-committee will look to identify and evaluate the full range of options for extending the protection from HPV infection to men who have sex with men, including by vaccinating them, and the potential extension of the programme to include adolescent boys. That deals with the point my hon. Friend was making. The JCVI HPV sub-committee—I apologise for all the acronyms but they are inevitable in a health debate—met for the first time on 20 January 2014 to review the available evidence on the impact and cost-effectiveness of potential extensions to the HPV programme. Any recommendation by the JCVI must be based on cost-effectiveness; there is a particular formula it uses to look at that within our health economy. The sub-committee will report its findings to the JCVI following consideration of a yet to be completed study by Public Health England into the cost-effectiveness of extending the HPV vaccination in both those directions. I hope I can give my hon. Friend some reassurance by confirming that the study will consider the impact of vaccination against penile, anal and oropharyngeal—head and neck—cancers and genital warts. Those things definitely form part of the studies that will be made and of the calculation about cost-effectiveness. There is no evidence to suggest that the current HPV vaccines will offer protection against skin cancer—I do not know whether he wishes to develop things further in that area, but we are aware of no evidence that makes that link.
The decision on the vaccination of adolescent boys requires the development of complex models to determine whether or not it would be cost-effective. Obviously, this would mean extending an already big programme to a much larger group. These models may identify a need to generate additional evidence, and therefore a decision on vaccination of adolescent males is not likely before 2015 at the earliest.
Sir Paul Beresford
One difficulty with models is that they take absolutely no account of the unpleasantness of the disease and the damage it does. Head and neck cancer is one of the most frightful conditions to deal with and to live with.
Jane Ellison
My hon. Friend makes a good point, but I will have to come back to him on it. I will not speculate at the Dispatch Box. Many factors go into these calculations, but I will make inquiries with regard to other JCVI decisions. I think that the severity of effect is taken into account and is part of the calculation, but I will clarify that and come back to the hon. Gentleman. None the less, he is right to remind the House of that matter.
The evidence to support a decision on a selective programme to target men who have sex with men may become available at the end of this year, which is earlier than expected. Obviously, the Department will consider carefully the advice from JCVI once the Committee has completed its assessment. As that is all in the future, it is worth talking about some of the things that we have at our disposal now in terms of early diagnosis. In addition to taking steps to tackle unhealthy lifestyle factors and the virus linked to head and neck cancer, we have also set out, through the mandate to NHS England, a clear ambition for the NHS to improve outcomes for all people with cancer.
One of the most common symptoms of oral cancer is a persistent sore or lump on the lip or in the mouth, so there is an opportunity for both doctors and dentists to play a role in supporting earlier diagnosis.
Since 2005, the referral guidelines for suspected cancer, published by the National Institute for Health and Care Excellence, has supported GPs to identify symptoms of oral cancer and urgently refer patients. The National Institute for Health and Care Excellence is currently updating that guidance to ensure that it reflects the latest available evidence.
Sir Paul Beresford
With great respect, on the question of the sore or the ulcer, the problem with cancer is that it is not sore until it is too late.
Jane Ellison
I will reflect on that point. I do not pretend to have the hon. Gentleman’s professional expertise. He has corrected the record, if he feels that it needs correcting. I hope that he will not disagree with me when I say that dentists have a key role to play in the early detection of oral cancer.
Jane Ellison
All dentists are trained as undergraduates to look for such signs during routine check-ups and to pay close attention to patients’ self-reported history of smoking and drinking—both key risk factors. A new patient pathway, currently being piloted in 94 practices, includes an oral health assessment, which requires dentists to examine the soft tissue of the mouth; assess a patient’s risk in relation to oral cancer; and offer advice on lifestyle changes.
I am also pleased to say that the General Dental Council has confirmed that improving early detection of oral cancer is to be included as a recommended topic in its continuing professional development scheme.
The hon. Gentleman will also be aware that the Department has run a series of “Be Clear on Cancer” campaigns, and we keep all forms of cancer under review to see whether they might be considered within that campaign. As he made the case that oral cancers and head and neck cancer are becoming more common, they too will be kept under review.
As I have mentioned in previous debates, the NICE improving outcomes guidance in head and neck cancer, which was published in 2004, provides advice on the organisation of health care for adults with those cancers. Head and neck cancer has also been referred to NICE as a topic for quality standard development.
The NICE guidance has informed the development of NHS England's service specification for head and neck cancer, which was published last summer. This clearly sets out what NHS England expects to be in place for providers to offer evidence-based, safe and effective services.
Of particular relevance to patients with oral cancer is the £23 million radiotherapy innovation fund, which supports the radiotherapy centres across England to deliver increased levels of intensity-modulated radiotherapy. That is a more precise form of radiotherapy, which reduces the risk of patients with oral cancers suffering from a permanent dryness of the mouth as a result of treatment.
Tessa Munt (Wells) (LD)
The hon. Lady refers to innovative radiotherapy and I wonder whether she is aware of how much work is being done on the indications suggested by my hon. Friend the Member for Mole Valley (Sir Paul Beresford)—I congratulate him on this debate. I also wonder whether NHS England does not recognise that this type of radiotherapy can be used for anything except lung cancer.
Jane Ellison
I know that my hon. Friend has ongoing concerns in some of these areas and I will certainly draw her comments to the attention of NHS England and respond to her after the debate, if that is acceptable.
Since October 2010, the cancer drugs fund has helped more than 50,000 cancer patients in England and cetuximab is available through the fund for the first-line treatment of advanced head and neck cancer when certain clinical criteria are met.
I would like to reassure my hon. Friend the Member for Mole Valley that the National Institute for Health Research clinical research network is recruiting patients to 34 studies of head and neck cancer, of which three are focused on HPV-associated cancer. The NIHR also funds 14 experimental cancer medicine centres across England with joint funding from Cancer Research UK. Two of those centres have a disease focus on oral cancer.
I should make it clear, as I like to in every debate that we have on any health condition, that the NIHR welcomes funding applications for research into any aspect of human health, including head and neck cancer. I would certainly encourage my hon. Friend to encourage those that he knows in research circles to come forward with projects for which they might like to seek funding.
I thank my hon. Friend once again for securing today’s debate. I hope that the discussion, although it has covered some familiar ground for him, has been helpful in providing reassurance of our commitment to reduce the incidence of head and neck cancer and to improve the outcomes for those diagnosed with the disease. In particular, I thank him for championing the cause as these cancers are less well-known and for that reason they particularly benefit from parliamentary attention of this sort. I will undertake to keep him fully informed, as I hope that I have to date, as the matter and the JCVI’s considerations progress. I will also undertake to draw the attention of the JCVI to the debate and to my hon. Friend’s speech in particular.
Question put and agreed to.
Petitions
NHS Health Services in Guisborough, Skelton, Brotton and Park End (Middlesbrough)
UK Hunger and the Use of Food Banks
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Humber Flood Risk Management Strategy
(10 years, 2 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr David Davis (Haltemprice and Howden) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. Although I have been fortunate enough to secure the debate, the interests of other Members in the Chamber are at least as great as mine, so I will be as brief as I can. I will try to limit my contribution on this important matter to 15 minutes.
On 5 December last year, news around the world was dominated by the death of Nelson Mandela. The death of the greatest statesman in modern history rightly dominated all news coverage, as his achievements and legacy were celebrated. An unfortunate side effect of that was that it almost totally eclipsed one of the most serious tidal flooding events to hit the United Kingdom for more than half a century.
The tidal surge that hit the east coast of England that night was devastating. The floodwater overtopped more than 40 km of flood defences, and the Hull tidal barrier was inches away from being defeated. Had that happened, a significant part of the city would have been flooded, and thousands upon thousands of homes would have been rendered uninhabitable, causing misery for tens of thousands of people. In the event, although that did not happen, more than 1,100 properties in the area were flooded, which was still a miserable consequence for the families and businesses involved. The event was devastating, with the highest water levels ever recorded in the Humber, and we were fortunate that no one was seriously hurt or killed. When there was a similar but lesser tidal surge in 1953, more than 300 people in the east of England died.
For the people most closely affected, the flood has been a living nightmare. Warnings were not given in time, and in some cases alarms sounded only after the floodwater had inundated people’s homes. Across the Humber, most warnings were received only an hour before the waters rose. Those who were affected had no time to prepare and were forced to abandon their homes and their dearest possessions to the elements. They subsequently faced a living hell of temporary accommodation, not knowing when they would be able to move back into their own homes.
In the East Riding alone, 200 homes and nearly 50 business properties were flooded, and 15 miles of roads were submerged, which led to communities in my constituency being completely cut off. Blacktoft, Yokefleet, Saltmarsh and Faxfleet became virtual islands, and residents unsurprisingly felt abandoned and isolated. People in those remote villages were either evacuated while there was time or forced to abandon the ground floor of their own houses. They gathered what they could upstairs, but they were powerless to prevent the torrent of floodwater and debris from entering. For much of the time they were in complete darkness, because the power went as well. Some of them are pensioners, who moved to the area for a quiet and happy retirement only to see everything that they have worked for destroyed.
One respondent to a survey conducted by the local council had been informed that “Blacktoft never floods”, because of the defences, but in this case the defences simply were not good enough. Of course, defences that were perfectly adequate 25 years ago are not necessarily adequate today. In 2012, I asked the then Minister responsible, my hon. Friend the Member for Newbury (Richard Benyon), how many homes in my constituency were at risk of flooding, and he replied that from 2008 to 2012 the number of properties at risk had increased by 1,000. That illustrates the fact that with sea levels rising, if defences are not improved, that figure is certain to grow.
Mr Graham Stuart (Beverley and Holderness) (Con)
My right hon. Friend rightly paints a picture of the devastation that occurred in December last year. Does he recognise that if the timing had been different by a couple of hours and if the wind direction had been different, the devastating event that we are talking about could have been catastrophic and caused major loss of human life?
Mr Davis
I think my hon. Friend has read the next page of my speech, as happens so often. He is absolutely right, and there were a number of coincidences that could be described as fortunate, although it may seem odd to describe the events of December last year as such. Had the tidal surge coincided with the astronomical tide—he is right to say that the difference was two hours—the event would have been much bigger. Had there been the levels of rainfall that we saw in 2007, the Aire, Calder, Ouse, Derwent and Trent rivers, which all feed the Humber, would have been fuller. The Humber would have started from a higher level, and I suspect that the Hull tidal defences would have been overtopped and defeated. If that had happened, we would have seen a similar picture to that in the Somerset levels, where the land was flooded for weeks, if not months afterwards. My hon. Friend is absolutely right to say that had we not been fortunate with the other events besides the tidal surge, we would have faced a much bigger catastrophe, and the events of 5 December could have included fatal incidents. The situation would have been at least as bad as it was in the Somerset levels, but with the difference that there would have been three international ports and a city of 256,000 people in the middle of it all.
The danger is real. As all hon. Members present know, we have had serious flooding in the region twice in less than a decade—in 2007 and 2013—with other serious localised flooding in 2011. The Humber represents the second highest flood risk in the country, behind only the Thames estuary. The national risk register considers tidal flood, which is what we face, to be second in severity only to an influenza pandemic. That is the scale of the threat facing the region.
The economic case for action is clear, given the strategic importance of the region to the rest of the country. Local authorities have worked incredibly well together on the matter, completely ignoring party, regional or geographic differences. Using the Treasury guidelines for such calculations, they have identified £32 billion of potential damage, which includes straightforward damage, lost productivity, increased insurance costs and deterred investment.
The economic value that is at risk includes several industries of significant strategic importance. The Humber is vital to the UK power industry, and the pressure put on the UK power network by a major flood event of the type that is predicted to occur in the next 50 years would be colossal. In addition, 28% of the UK’s oil refining capacity is situated in the Humber floodplain, and the loss of such capacity could not be made up by shifting demand to other plants. That is an important point, because it underpins one of the criteria that the Treasury uses to assess such things. It is often assumed that if an industry is at risk, it can go somewhere else, but that is not the case in the Humber.
Oil and gas terminals in the region process 30% of the country’s gas demands. More than 30% of the UK’s coal and an increasing amount of biomass fuel lands at Humber ports and is transferred to power stations such as Drax, Eggborough and Ferrybridge on road and rail routes that are also at risk from flooding. The chemicals industry in the region is enormous, amounting to more than £6 billion. Altogether, more than 20,000 businesses in the Humber are at risk from flooding, and the area contributes some £15 billion to the nation’s economy.
That all makes the Humber a national strategic asset, and rising sea levels mean that the next flood risk to that asset is not merely some distant probability. It is not something that just might happen. In the next 50 years, if we do not enhance our defences, there will be a costly and probably fatal catastrophe. Given the region’s vulnerability and the number of people under threat, it is past time for action to be taken to deal with the flood risk. By comparison, London, where the Thames floodplain has the highest flood risk in the country, is protected from events on a one-in-1,000-year basis. To achieve that, the Thames flood barrier was built between 1974 and 1982 at a cost of about £534 million, with an additional £100 million of investment around it to make it work. It is hard to assess accurately, but in today’s money that would be equivalent to more than £3 billion.
What we are discussing today would cost a lot of money. For the Humber, we are talking about £888 million, but that would still be significantly less than a third—perhaps less than a quarter—of the spend on the Thames barrier, which I do not think anyone disputes was an absolute necessity and an act of serious foresight by the Government of the day. With those figures in mind, the people of the East Riding, north Lincolnshire and Hull will rightly ask questions if the Government do not take action to improve the region’s defences.
Once it is understood that the Humber represents a national strategic asset, it becomes clear that any system of flood defences must address all risk across the entire estuary. On both banks of the river, the floodplain is very flat, and some of it is even reclaimed land—using for the first time in Britain what were then innovative Dutch techniques, Vermuyden drained Hatfield Chase, which is now in the constituency of my hon. Friend the Member for Brigg and Goole (Andrew Percy). Because the land is so flat and low-lying, it is impossible to separate any part of the defences from another. We cannot ring-fence the major population centres of Hull, Grimsby or Scunthorpe; we must deal with the problem as a single entity.
As Vermuyden’s involvement demonstrates, our area is in many ways as close to Holland as it gets in England. The Dutch do not do flood defences by halves, and neither should we. Perhaps we should reapply the lessons we learned from Vermuyden some centuries ago. To that end, the Environment Agency prepared the Humber flood risk management strategy in 2008 with the aim of improving the defences in the Humber, most of which dated back to the 1950s following the previous flood surge. The surge of last winter showed that the defences were inadequate and gave the agency new information that it is using to inform a comprehensive update to the strategy, with the aim of bringing defences up to such a standard that they could survive not a one-in-1,000-year event, like London, but a one-in-200-year event—that is the colloquialism, but it really means an event the probability of which occurring is 0.5% per annum.
The scheme is ambitious and will require co-operation across local and national Government, across party lines and across the north and south banks of the Humber. Much of that consensus has already been achieved: the agencies, local government, the local enterprise partnership and Members of Parliament have all acted completely without attention to narrow self-interest and with serious concern about the overall interest.
In the next 50 years it is highly likely that we will see a tidal surge event similar in magnitude to the one we experienced last winter, but worse in consequence. Factoring in the possibility of even less favourable conditions and rising sea levels, it is clear that the next major flood event could be devastating. There could be a serious threat to life and more than £32 billion of economic impact. It is not a doomsday event with an outside chance of happening; it is likely to happen at some point in the next half century. We were lucky to escape that outcome last year. If we do not act by implementing the Humber flood risk strategy, there is a serious risk of such a catastrophe being repeated.
Governments of all colours—Tory, Labour, coalition or whatever—find it difficult to take more than a five-year view, for obvious reasons; when it comes to flood defences, it is necessary to take at least a 50-year view, if not a multi-century one. We must start work on a programme that will take at least 10 years to complete. Yes, the numbers are enormous and run into billions of pounds, but the cost of doing nothing would be far greater in the long run. On 5 December 2013 we were given a timely warning—one might say God-given—of the consequences of inaction. We would do well to pay attention to it.
I will not be shocked if the Minister has not turned up with £900 million for us in his back pocket—I will be disappointed, but not shocked. Nevertheless, we must recognise that we are faced with a conjunction of several things: a major risk that we know is going to get worse; a historic demonstration of the harm of that risk if it is ever realised; and a clear strategic asset that is at risk in terms of industry, economy, links to the outside world and, most importantly, the hundreds of thousands of people of the area. Because it will take so long to carry out the necessary improvements and enhancements to the defences, it is vital that the Government take a strategic view in both direction and money.
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
It is a pleasure to serve under your distinguished chairmanship, Sir Roger, and a pleasure to follow the right hon. Member for Haltemprice and Howden (Mr Davis).
Floods do not recognise constituency boundaries. We Members of Parliament from across Hull, the East Riding and north and north-east Lincolnshire have come together because we are united with the local authorities, the local enterprise partnership and the Environment Agency in our diagnosis of the problem and our analysis of the solution.
The floods of 5 December 2013 were not unfamiliar to Hull. We were hit by devastating rainfall, along with the whole of the East Riding, in June 2007, when the problem came from the sky, not the sea. All the flood defences held and no rivers overflowed. A month’s rainfall fell in a couple of days, affecting 8,600 properties, 20,000 people and 1,300 businesses. What unites the two events? Various figures are thrown about as to whether the probability is one in 100, one in 200 or one in 1,000, but let us take a conservative view. The two events are united by the fact that in both 2007 and 2013 we were told that the chance was one in 100, so in Hull we had two one-in-100 events in seven years. That leads the population, as well as their political representatives, to question the whole basis of what constitutes sufficient flood defences. In 2007, one man died in Hessle in my constituency: he was trapped in a drain while trying to clear a blockage. Thankfully, such a tragedy did not happen again in 2013.
The term “above ordnance datum” is new to me—I hope that I pronounced it correctly—but one thing we discovered in December 2013 was that the defence at Albert dock was for a surge of 5.04 metres above ordnance datum, but it was hit by a surge of 5.8 metres above ordnance datum. The first issue on which I would welcome the Minister’s reassurance is the need to raise the Albert dock defence. None of us disagrees on that. It will be an absolute priority by the end of the year, and it would be good to hear the Minister’s reassurance because it is the most important issue in my constituency.
The right hon. Member for Haltemprice and Howden is right: the Environment Agency says that it got it wrong on 5 December 2013, in terms of the scale and the timing. It was amazing to see what happened. In my constituency, in the industrial area of Hull, Porter street went from completely dry to absolute deluge in four minutes. The severity of the flood was frightening. It hit a diverse range of businesses. It hit Smith & Nephew, a big, global, international company, which, incidentally, could base its manufacturing sites in other places, including China, if it believes that its business will be affected more regularly. The Indian restaurant on Hessle road was also affected and never reopened. The floods affected all those businesses across the centre of town.
The right hon. Gentleman emphasised this point, and I need to emphasise it, too: the floods were a warning. As the hon. Member for Beverley and Holderness (Mr Stuart) pointed out, if the wind direction had been different, or if the floods had come two hours later at high tide, it would have been a devastating event because that was the highest water level ever seen in Hull—higher than 1953.
The Government publish the national risk register every year, and the last time—the only time since the war—a national emergency was declared in this country was the water surge in 1953. The surge on 5 December 2013 was bigger. The national risk register is of course updated every year, and the 2013 register makes coastal flooding the second biggest risk after a pandemic, which I will address in a second. The register states that 1953 was the only time that a national emergency has been declared anywhere in the UK, and it then states:
“A less serious storm surge of this nature happened in November 2007 without causing damage on the scale of the 1953 emergency.”
We now need to update the register, because a much bigger surge occurred on 5 December 2013. Thankfully, the surge did not cause the death and devastation that was caused in 1953, but it was a close-run thing.
I was Secretary of State for Health when a pandemic hit in 2009, which is not a comfortable place to be because the No. 1 risk on the risk register is—this is a horrendous thought for Government—people being confined to their homes and children being affected in schools. We thought that H1N1 was going to be such a pandemic. As things turned out, it was not, and now we look at that event as a dry run. We know things about Tamiflu and other issues that we did not know before. My message to the Government is that they have to view the tidal surge of 5 December 2013 in a similar way—as a dry run for what could happen if we do not address this issue effectively.
If we are to address the issue effectively, as the right hon. Member for Haltemprice and Howden said, we need to consider the whole area, which is very diverse. Investment is coming into Hull from various quarters, including from Siemens, and Hull will be the city of culture in 2017. Incidentally, Hull is the biggest urban area in Yorkshire—it is the biggest city in Yorkshire if we just take the urban area of 311,000 people—but as I am sure the hon. Member for Brigg and Goole (Andrew Percy) will point out, we have places such as the Isle of Axholme, which has 20,000 people living on 21,000 hectares. The Isle of Axholme is one of the most under-populated areas, but in a sense the scale of the threat is like having something that could affect the Somerset levels and Bristol at the same time.
The document we are preparing to put to the Government is headed “Flood defences cost money, no flood defences cost more.” I hope that today’s debate, together with the meeting we are due to have with the Prime Minister next week, will record that the scale of the problem has been shown to be far greater than the defences allow. I am pleased to see my hon. Friend the Member for Brent North (Barry Gardiner) on the Opposition Front Bench, because this is not just a Government issue; it is a long-term issue that affects any party that is likely to be in government. All three parties are represented here, and the issue has to be considered on that basis.
The right hon. Member for Haltemprice and Howden cited a figure of £888 million, which is of course £88 million a year over 10 years. He rightly said that Hull is closer to Rotterdam than to London—Hull may well have been a suburb of Rotterdam a couple of million years ago—so we look to the kinds of defences that we see across in Holland, and we believe that we are nowhere near having defences on such a scale. We are not throwing in requests for billions of pounds, and £88 million a year to bring us up to a one-in-200 defence, given the circumstances, given the national risk register and given what happened on 5 December 2013, must surely be a prudent amount of money for any responsible Government to spend.
Sir Greg Knight (East Yorkshire) (Con)
It is always a pleasure to serve under your chairmanship, Sir Roger. I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) on securing this debate on a subject that, to different extents, touches all of us in the Chamber today. I do not intend to repeat the arguments that he adduced to the Chamber. He made an excellent speech and made the case very well, but I will reiterate a number of points.
Included in the area at risk of flooding in the Humber and east Yorkshire area are 30,280 hectares of agricultural land and the UK’s largest storm water pumping station. Those problems need to be addressed. One of my biggest concerns about the present situation is the flood defence grant in aid system, which determines who receives help. The system largely favours urban areas because it dictates that residential properties have the highest risk ratings. That means that rural areas have little weighting, meaning they have less chance of securing funding, which could have a serious negative effect on food production and the sustainability of agribusinesses in this country. With a significant proportion of the UK’s high-grade agricultural land in low-lying areas such as east Yorkshire and Lincolnshire, there is likely to be a danger to the UK’s food security and independence unless something is done.
Furthermore, smaller residential settlements in rural areas find it difficult to attract flood defence grant in aid funding because of the formula, which means that if flood risk cannot be addressed or mitigated, there is a danger that rural communities will not only remain at risk but may become less viable over the longer term. As east Yorkshire is comparatively remote, there are significant co-dependencies between work forces and businesses in rural areas and the East Riding urban areas. That should be taken into account in any adjustment of the formula by the Government.
One of my constituents contacted me a few days ago and said, “We have a climate change levy in this country. When assessing what to do with the money raised by that levy, surely there cannot be anything more important, in expenditure terms, than flood prevention. Why is the climate change levy revenue, among other measures, not being ring-fenced for flood defences?” Perhaps the Minister will give us his thoughts on that.
I hope the Minister will agree to look again at the formula and agree that we need not only a properly funded flood defence system across the country but an integrated approach to flood risk management, which the current level of expenditure and the current formula do not deliver.
The right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) mentioned the devastation across the whole eastern part of the country in 1953, and indeed there was widespread flooding and devastation then. After that disaster a fireman, Andy Devine, who was called on to help, said:
“Where we had to pump out, there was the sea one side and water the other side…we might just as well have tried to pump the sea dry.”
Such a hopeless situation must never be allowed to happen again. Being invaded by floodwater, from whatever source, is just as devastating to a thatched cottage as to a terraced house. I hope the Minister will now deliver effective action that will help east Yorkshire to face future flood risks with more confidence.
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. I, too, congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) on securing the debate, which is vital to all of us here and to the whole Humberside region.
It seems to have been forgotten—as my right hon. Friend pointed out, it was certainly forgotten by the national media at the time—that the tidal surge in December was larger than the one in 1953. Thankfully, as has also been said, it was not as disastrous in terms of loss of life. Clearly, investment in flood defences has been effective, but, due to the weather conditions, we came within a whisker of a major catastrophe, so obviously more needs to be done.
The recent surge did a great deal of damage to the Immingham and Grimsby port complex, which is the largest in the UK: about a quarter of all rail freight moved here starts or ends in Immingham. Much of that freight—coal for power stations, oil and other essential products—is strategically vital. To be precise, the port handles about 55 million tonnes per annum, and approaching 20 million tonnes of oil and 10 million tonnes of coal. The country’s strategic supply of road salt is also stored in Immingham.
Members here are in danger of repeating the same statistics, because we all have the excellent document produced by our local authorities, which lists the seriousness of what could have been. The port director, John Fitzgerald, said that we might have faced major power cuts and food rationing. I invite the Minister to contemplate what the consequences would have been if action had not been taken. The cost to the national economy would have been immense. John Fitzgerald was referring to the fact that although the port was up and running again in just two days, a third, fourth or fifth day could have been extremely serious.
The impact on essential infrastructure, the supplies that pass through the port and the national and local economy could have been major. The port was left without electricity and extensive areas were flooded. The Environment Secretary visited Immingham on the afternoon of Saturday 7 December. With him, we heard at first hand from Associated British Ports and Environment Agency staff about the incidence of flooding, not just in Immingham and Grimsby, but in the villages of Barrow Haven, Goxhill and New Holland. We heard from the dockmaster for Immingham and Grimsby, and it is clear that he made exactly the right decision in opening the Grimsby lock gates at exactly the right moment, which prevented a large area of Grimsby and the north end of Cleethorpes, where thousands of terraced houses are situated, from being overcome.
The Humber flood risk management strategy identifies up to 400,000 people at risk from flooding, and just short of 200,000 of them live in the most deprived 20% of areas in the UK, according to the Government’s own statistics. It is also important to point out, as did my right hon. Friend the Member for East Yorkshire (Sir Greg Knight), that agriculture is a significant industry in the area: there are more than 500,000 hectares of productive land in the Humber estuary, 97% of which is high-grade land. I reiterate the view that I expressed in my Adjournment debate in January, which has been repeated by many others: the experience of the farming community, including the work that they do on local drainage boards and the like, is invaluable in matters of flooding. Although a forum exists for farmers, there is a feeling in the agricultural community that their expertise is not used to best advantage. I urge the Minister to do all he can to put that collective knowledge to the best possible use.
It is not just existing industrial facilities that need protection; the estuary has been described by Ministers as having enormous potential, particularly for the renewables sector. The Government have supported that potential and we have had the investment from Siemens, the creation of the pan-Humber enterprise zone and the reduction of Humber bridge tolls. Only yesterday in Parliament, a special Committee began considering the final stages of the proposed development by Able UK on the south bank, which could bring a further 4,000 jobs to the area.
After the visit by my right hon. Friend the Environment Secretary, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Camborne and Redruth (George Eustice), and the Prime Minister’s flood envoy for the region, the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), also visited the area. The Government certainly have plenty of information and expertise available from the local authority and the Environment Agency. It is clear that the whole estuary needs greater protection.
If we are to provide greater protection, as we must, the Environment Agency must be allowed to consider how best to improve the protection given to strategically important facilities such as the port, as well as to residential properties. In sparsely populated areas, the cost-benefit ratio will always be low, but if one’s house is flooded, that is no comfort whatever. If the Environment Agency or the Government constantly reel out the statistics, it can sound callous and uncaring to people whose homes have been flooded.
The focus of my short contribution has been industry, but my colleagues and I have all had the rather miserable experience of visiting people whose homes have been flooded. It is not just about the immediate impact; many months of misery are involved, and many people forced out of their homes in Barrow Haven and other areas, such as South Ferriby in the constituency of my hon. Friend the Member for Brigg and Goole (Andrew Percy), will remain in temporary accommodation until next year, and perhaps even beyond. That is simply not satisfactory.
Alan Johnson
On that point, the hon. Gentleman might like to know that some of the people affected in Hull in 2007 have only recently moved back into their houses. Flooding was followed by secondary flooding. I am sure that that also applies to people on Hessle foreshore in my constituency and in areas all around the patch. Such misery is almost unimaginable.
Martin Vickers
The right hon. Gentleman is absolutely correct. It is frightening to consider that people are still suffering in that way after six or seven years. As he also pointed out in his speech, floodwaters do not follow constituency boundaries.
We have been united in our approach to the issue. My right hon. Friend the Member for Haltemprice and Howden spoke about the united approach taken by local authorities. As those of us who live locally know well, the Humber can often divide communities, particularly political communities, but on this occasion we are absolutely united. The Government are putting together longer-term plans, and the figures—between £800 million and £900 million—have been quoted during the debate. I recognise that the Minister is not going to write us a cheque later today—
Martin Vickers
As my hon. Friend points out, that is extremely disappointing, but our constituents deserve nothing less than a serious plan, in the very near future, that will guarantee them the security and safety they need in their homes. If industry in northern Lincolnshire and the Humberside area is to go forward as we all want it to, it needs, as the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) pointed out, to know that the Government are behind it and that the Environment Agency and every Government agency involved will produce a long-term plan that provides the necessary security.
Mr Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger, and to follow the excellent speeches made by Members across the Chamber, which have given the Minister and the rest of the Front-Bench team a clear message about the unity of feeling around the Humber. As has been said—it is worth reiterating—that goes across party lines and includes local authorities working together under the industrial leadership of the local enterprise partnership. We are all united in this, alongside the technical input and understanding of the Environment Agency and other agencies.
I take the Minister back to December, when I visited residents of Kilnsea in my constituency, just above Spurn point, and met the chairman of the parish council there in his house, which had recently been refurbished. I saw his devastation and that of his wife, as their brand-new kitchen and recently installed facilities had been wrecked by the overtopping of the nearby bank. To his credit, he was not primarily concerned with his own interests, but was going out to meet other residents. He took me to meet them and their homes had similarly been devastated. Some of those people were less resilient than that couple, because of their age or infirmity. As the Minister will know, the personal impact on people whose homes have been flooded is utterly devastating.
The recent flooding comes just a few years after the 2007 floods. Last Wednesday—25 June—was the anniversary of those floods. They devastated Hull and the East Riding, led to Hornsea in my constituency being cut off, and led to flooding in every area of my constituency and in Hull, with many people being driven out of their homes—not just for months, but in some cases for years. Flooding is personally devastating, and that will always be at the forefront of my mind when I consider this issue.
If I may, I shall echo the point made by my hon. Friend the Member for Cleethorpes (Martin Vickers) around opportunity. We have a fantastic and phenomenal positive opportunity around the Humber. I pay tribute to Lord Haskins, the chairman of the LEP, and others, who are working together to take the area forward. We have lower than average incomes in Yorkshire and the Humber—in fact, they are among the lowest average incomes in England—so we start from a position of having great deprivation and some history of economic failure, relatively speaking, yet a massive opportunity is opening up. We are working on taking that opportunity, cross-party and across authorities.
The Government should take enormous credit for the steps they have taken to help. The halving of the Humber bridge tolls has meant that instead of that bridge acting as a barrier between the two banks of the river—stopping them working together for the economic betterment of the whole area—it is a catalyst. Cross-party, we made representations to the Secretary of State for Transport. He has agreed to the electrification of the line to Hull, which will make a significant difference. Of course, the previous Culture Secretary, my right hon. Friend the Member for Basingstoke (Maria Miller), announced that Hull had been made city of culture 2017, and that announcement, too, is having a galvanising effect. From the Prime Minister down and throughout Government, efforts were made to encourage Siemens to sign up to come to Hull and for the supply chain to come to Paull in my constituency, which is immediately east of Hull. That work was also successful.
It was my great pleasure to lead the members of the Education Committee to Hull last Monday and Tuesday, for them to visit schools there and see a real sense of renewal, energy and drive to raise standards. There is a massive opportunity for the area and it is waiting to be grasped.
If I look at clouds on the horizon, I see remarkably few. However, what I do see is the prospect of the chilling impact of the risk of flooding. If manufacturers such as Smith & Nephew, which the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) mentioned, see that their investment is at risk from a failure to provide suitable protection, they can so easily take that investment elsewhere. That is true of so many of the companies that we have made such an effort to attract to the Humber area, reinforcing the presence of industry there. We have that enormous opportunity and we cannot afford to have it chilled by a failure to take the long-term view of the need for flood protection.
The Government rightly recognise the challenges of climate change. Anyone involved with climate change will know that the risks around it are twofold, or in two areas: the need to mitigate and the need to adapt. It is not enough simply to mitigate; we also need to adapt. I have in front of me the excellent latest science briefing from the Royal Society and the US National Academy of Sciences. It shows the sea level rise record since the beginning of the 20th century, including the acceleration of sea level rise in the last few decades, which is expected to carry on accelerating to the end of this century. Given that, how can we allow the short-term political time frames in which we operate—four or five years to a general election, or between local government elections—to inform our attitude to this subject? The danger is that we will and that we will not take the long-term view, which is so important if we are to get this right.
My message to the Minister is to look at how Government can create the frameworks to ensure that the resource that is required is invested in time to meet the long-term threat, because we recognise that the dynamics of the politics in which we operate on a daily basis are not very good for dealing with long-term threats. Therefore, we need to look hard at how we get a framework in place to ensure that there is an incentive to deal with those long-term threats, and that we deal with them, because although we will strongly make the case today, as we are doing, for the Humber area, the truth is that, nationally, we need to take the risk of flood damage more seriously. That fits entirely with the analysis that the Government have themselves made of the risks around climate change and rising sea levels, yet we do not see a co-ordinated, well thought through, long-term plan to ensure that the correct protections are put in place.
I want to make sure that the Minister is aware that, separately from the Humber efforts, the River Hull advisory board is studying the factors that contribute to flooding in the River Hull valley, which will have a strategic impact on the Humber, too. Across the piece, we are all working as hard as we can to ensure that we have a joined-up approach.
One criticism of the 2008 strategy was that, perhaps because of its funding and the brief it was given, it failed to understand the interconnectedness of city and rural areas, including how rural areas often act as a sponge for the urban areas. As I think my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) said in his opening speech, we cannot view areas of the Humber in isolation. There is no way to ring-fence them, have just a limited spend here or there and somehow protect a particular place. We have to view the area as one joined-up whole.
To return to the issue affecting Kilnsea, the replacement of the bank that was overtopped in December will cost £450,000. The Environment Agency has promised £300,000 and £50,000 has been raised locally, but that leaves the project £100,000 short. The bank is important to defend the residential and business properties of the village, such as that fine purveyor of great ales, the Crown and Anchor pub, and it also plays a vital role in defending the road to Spurn point, which is a popular tourist destination of national significance. Spurn point also plays a phenomenally important role in protecting the Hull ports area. It provides a natural barrier that deflects the longshore drift away from the estuary, thus allowing the estuary to self-clean to an extent.
I must pay tribute to the local internal drainage boards, which do such an excellent job of maintaining inland watercourses. However, I have a point to make about them, which I hope the Minister might take up with the Marine Management Organisation, if he has not done so already: that new, fresh quango no sooner came into being than it slapped a £10,000 bill on my local IDB for carrying out work that, had it been carried out by the Environment Agency, with the same contractors, would have attracted no such bill, which represented more than 10% of the project cost. If we are to have local areas taking responsibility, investing money and making things happen, we need to ensure that large quangos do not come along to give an initial estimate of £3,000, which I think is outrageous, before finally charging £10,000, which truly is outrageous.
One final local point is the Welwick realignment scheme, which is ongoing, although delays are causing increased flood risk. The bank involved needs to be restored, but investment is being held back until the overall realignment scheme is confirmed. Decisions need to be made more quickly and action must be taken so that we have ongoing, sustained and sensible protection from the risk of flood for industry and for residential properties.
Minister, those of us here today will maintain our joint efforts in this regard—not only when we meet the Prime Minister next week, but thereafter. I will finish by referring to an issue that I touched on earlier, which is trying to get a framework in place that means that the MPs for a particular area do not have to make a united effort to get people to see the long-term risk when the technical evidence for that risk already exists. With rising sea levels and the risks of climate change, we need a strategic overview by Government of the risks around flooding. Without that, we are putting our constituents at risk of devastating flooding of their homes, and we are also risking investment in and commercial success for this country. Having made that plea, I shall sit down.
Sir Roger Gale (in the Chair)
I intend to start to call the Front Benchers at about 10.35 am. Two hon. Members are waiting to speak, so I would be grateful if they would bear that in mind.
Diana Johnson (Kingston upon Hull North) (Lab)
I did not intend to contribute to the debate, because the contributions that we have heard already have been of a high standard and have made the case well. I hope that the Minister will respond to the points that have been raised. However, I want to highlight one issue.
There is a knock-on effect from the investment that needs to go into the Humber area, and that relates to flood insurance. The Minister and I have had long debates about that issue in the past, but I want to highlight how important it is for the insurance industry to know that investment is going into the Humber area. That will mean that there is access to affordable flood insurance for domestic residential and business properties. I know that the Government have introduced the Flood Re scheme, which I think is to come into operation quite soon, for properties built before 2010, but I have raised with the Minister before the issue of properties built after 2010.
In my constituency, there is a large development called Kingswood, where houses are being built now. The Minister may also like to know that one of the most successful Help to Buy schemes in the country is operating on that estate. However, those properties will not be covered by the Flood Re scheme, so owner-occupiers there will be looking to the open market to get flood insurance in the future. Schemes to protect the Humber area are important in ensuring that they will be able to access affordable flood insurance.
My other point is about businesses. They will not be covered by the Flood Re scheme, either, so they, too, will be out in the open market looking for flood insurance. I am aware that in the constituency of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), one business has already seen a hike of 490% in its insurance premiums because of the flooding last December. I therefore urge the Minister to think again about the problems that will arise in the insurance market if the Government do not make the right noises about providing investment over the coming years for the Humber region. It is devastating for home owners when their homes are flooded, and if they do not have flood insurance it is much worse.
Andrew Percy (Brigg and Goole) (Con)
It is a pleasure to follow the hon. Member for Kingston upon Hull North (Diana Johnson), whose points on flood insurance are well rehearsed. I supported her on the matter during proceedings on the Water Act 2014. I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) on securing the debate. Coming on last means that unfortunately I will be repeating not only what he has said but what many other right hon. and hon. Members have said, but as we have 10 or 11 minutes until the Front Benchers start to be called, I am sure that you will indulge me in that endeavour, Sir Roger.
The Minister will, sadly, hear again many things that I have previously said, not least because at the time of the tidal surge we were considering the Water Bill and I was serving on the Committee. I used that opportunity on more than one occasion to regale the Minister with accounts of what was happening in my area, but just for the record I want to talk about my constituency again now, with specific reference to what happened in December.
My constituency was hit most of all in December and, as any flood extent map will show, it remains the constituency with the most land at risk of flooding. Unfortunately, we were hit from three sources. We saw the Humber coming over at South Ferriby and Winteringham, the Trent coming over at Burton-upon-Stather, Burringham, Keadby and Amcotts and the Ouse coming over at Reedness, so in total about 11 communities and 300 to 400 properties were flooded. As right hon. and hon. Members have said, we were lucky, although we do not feel particularly lucky, that the impact was not a lot greater.
I live right on the bank of the River Aire, and I was standing by the river at the time of the surge that evening. The water was within inches of coming over, even though we enjoy very high levels of protection there—the highest that the Environment Agency offers. I was also standing on the banks the next morning for the high tide of the River Ouse at Goole, which also had a near miss and where there are 18,000 residents. Had the circumstances come together in the way that other right hon. and hon. Members have said we were lucky to avoid, our area would have been devastated.
Unfortunately, such events are not new to our area or, in particular, to my constituency. We had flooding in Goole in 2011, 2012, 2007 and 2008, and in Crowle in 2012. It is a recurring theme in our area, not least because of the geography. The flood risk extent maps explain why. My right hon. Friend the Member for Haltemprice and Howden gave a potted history of the draining undertaken by Vermuyden in our area. That was hundreds of years ago. People have been living happily in our area since then, and it is of concern to people, as my hon. Friend the Member for Beverley and Holderness (Mr Stuart) said, that previous regimes and previous flood plans seem to operate on the premise that the rural areas can operate as a sponge, or be sacrificed, for the benefit of other areas. I want to explain why that is particularly dangerous in my constituency.
In 2007 we were faced with the first draft of the River Trent flood catchment management plan. Had it not been for the IDBs and several farmers who were well educated on the issue of flooding, that could well have been the policy that the Environment Agency adopted. It was only by arguing—we got up petitions and all the rest of it—that the Environment Agency was made to think again and to reassess the matter. It concluded that had it adopted the policy that it originally wanted to adopt, which was one of withdrawal, retreat and sacrifice, the entirety of the Isle of Axholme, apart from two high spots at Epworth, would have been underwater within a decade or two.
Sir Greg Knight
If the Government of the day, as a matter of policy, decide that it is all right to allow agricultural land to be flooded, is there not an argument to say that farmers should be paid for storing water just as they are for growing crops?
Andrew Percy
That is an interesting idea. I think that we would all prefer it if farmers were allowed to continue producing food, but my right hon. Friend raises one of the biggest criticisms of the current funding regime: the value placed on agricultural land is not sufficient. I am not against flood alleviation projects—of course not—and that includes the sacrificing of land at Alkborough flats in my constituency. That operated very well and possibly lowered water levels in the Trent to such an extent that it prevented a couple of communities from flooding. We do not have a problem with some of these schemes, in appropriate areas. What we have a problem with is the value placed on agricultural land and rural communities generally under the current system. In the original drafts of the various flood catchment plans for our area, there seemed to be a policy of retreat and sacrifice of rural areas. That has abated somewhat through various processes, for which we are very grateful.
My right hon. Friend the Member for Haltemprice and Howden and others, including the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), have highlighted the nationally important infrastructure in our area and the national risk register. In my constituency, to add to the list of nationally important infrastructure that we all seem to be trotting out today, there is of course the port of Goole, which is England’s busiest and biggest inland port. We also have the power station at Keadby, which of course was one of the communities flooded in December. There is the Drax power station just across the way, and biomass imports come through my constituency via the railway lines. My hon. Friend the Member for Cleethorpes (Martin Vickers) talked about petrochemicals, and of course we have the motorway and rail infrastructure and agricultural land. I believe that 55% to 60% of our land is grade A agricultural land, so it is some of the most productive land in the country.
We have mentioned the Isle of Axholme, but of course the defences along the Trent and the Ouse do not just protect the 50,000 acres and 20,000 residents there. They are also major defences for Doncaster and Thorne. A catastrophic breach of those defences would have a significant impact on Doncaster, but although that is sometimes taken into account, it is not always accounted for in funding decisions.
Mr David Davis
May I draw my hon. Friend’s attention to something that has not been mentioned so far? Even though residential accommodation is given the highest score in the ranking, that is based on property value. One thing that works against the north of England is that properties there tend to be of lower value, which leads to a cyclical effect: the house is cheaper, so it gets less defence and therefore gets cheaper. It feeds on its own poverty. Does my hon. Friend agree that that has a distorting impact on flood defence funding?
Andrew Percy
Absolutely. I want to talk about the problems and failings in the current system, but before I do—I do not want to be entirely negative—I will praise the Government. The response in my area after the December surge was welcome. We appreciated the flood repair and renewal grants, and the support for business has been well received. Also, additional Government funding since December has been of particular benefit to my area: a £5 million scheme to raise the banks at Reedness has been approved, as has £3 million to shore up the banks at Snaith, and work will begin in a month’s time to shore up the banks at Burringham, which were not breached but were severely damaged.
Nic Dakin (Scunthorpe) (Lab)
I congratulate the right hon. Member for Haltemprice and Howden (Mr Davis) on his leadership on this matter, from which the whole region will hopefully benefit.
The hon. Member for Brigg and Goole (Andrew Percy) referred to the response to the floods. The local agencies responded well, but for future learning I draw attention to the Humberside fire and rescue service’s plans to develop the Ark flood preparation and response centre, which would be of major benefit not only to the region but nationally. What does he think about that?
Andrew Percy
I thank the hon. Gentleman for reminding me of that excellent bid, which aims for transition funds from the Department for Communities and Local Government and will be decided on towards the end of the year. He recently met the Humberside fire and rescue service to discuss the bid, which would create a national flood training centre. We do not currently have such a centre and firefighters must undertake training in fresh water, which is not always as clean as it could be. Events cannot be modelled in such water, but, more importantly, many firefighters come back with stomach bugs, which makes the practice expensive. Where better could a training centre that can model flood events be placed than in the Humber, which has the second highest flood risk after London? The bid has support from both sides of the Humber and from MPs of both parties, so if there is anything that the Minister can do to push it along with his friends at DCLG, it would be greatly appreciated.
I praise the Government for acting swiftly with the surveying work and for providing additional funding, which will benefit my constituency in the short term, but it is only a short-term fix. Although we are grateful for additional funding, today’s debate has been about the long-term strategy that is desperately required. Our region—the Humber, east Yorkshire and north Lincolnshire—is on the edge of an economic renewal. The Siemens investment has been talked about, and there is the potential Able site, so a lot is happening. The greatest risk to economic renewal must be the potential failure properly and adequately to deal with the massive flood risk. £888 million does sound like a lot of money, but it is not that significant when spread over 10 or 15 years. The potential return tells us all we need to know about the value of that money.
I do not have time to go on about the problems with the current funding system, such as building in future development and the value of agricultural land—the Minister has heard those arguments before—but I urge the Minister, who is gracious in all debates and knowledgeable about the flooding that hit our area, to do all that he can to support our proposal for a long-term solution to the problems. Although I said that it was outrageous that he would not write us a cheque for £888 million today, it is not actually all that outrageous—
Andrew Percy
As my hon. Friend says, tomorrow will do. We simply need to build support within the Department for Environment, Food and Rural Affairs and across Government for a long-term solution to a unique problem. Everybody claims that their area is unique, but the Humber really is, for all the reasons that have been expressed today. There is a massive flood risk to infrastructure there.
I congratulate my right hon. Friend the Member for Haltemprice and Howden on securing the debate. We will move forward as a united group to meet the Prime Minister next week, which will not be the end of it. We will continue to push the matter to ensure not only that businesses get the required investment to encourage them to create jobs in the area, but also that the homes of the people whom we represent are better protected in future.
Barry Gardiner (Brent North) (Lab)
This has been a quite extraordinary debate in many ways. Not only have some eminent Members of this House spoken, but the debate has been cross-party and good-natured. I never thought that I would live to see the day when certain Members from different parts of the House would call each other “Friends”. Someone less risk-averse than I am might have referred to Members present as the Yorkshire mafia. I would never dream of doing such a thing, but they have certainly made a powerful case, and I am sure that the Minister has taken note of it. I am also sure that the Prime Minister will have taken note of it before he meets them next week.
I pay tribute to the right hon. Member for Haltemprice and Howden (Mr Davis), in particular because the topic is not something that he has simply taken up for this debate. His parliamentary questions and previous contributions have focused clearly and repeatedly on moving the debate about flood risk away from rhetoric and on to the simple facts, and that set the debate off on exactly the right tone. I want to pick up on some of those facts: the Government’s capital spending plans up to 2020-21, which will result in a significant increase in the number of properties at risk of flooding; the fact that flood risk is increasing due to climate change; and the fact that the Government’s maintenance spending plans for tidal defences will result in the deterioration of existing flood assets. The issues are serious and it is right that they have been debated so thoroughly this morning. I want to focus primarily on the first two points: increased flood risk and capital investment.
The Government have set out their forward projections for capital investment in flood defences, which say that they will spend £370 million a year in 2015-16 and in every year through to 2020-21. What percentage of that money will be for new-build flood defences, and what will be for major capital repairs and maintenance? The truth is that we do not know. The Government have chosen to use capital spend as a proxy for spending on new flood defences. As a result, many people will think that they are building more defences and defending more properties when in fact, because of climate change and storm damage, they will simply be spending more on major repairs to existing defences. In other words, there may be no increase in the number of defences, or indeed the number of properties and homes defended.
The Select Committee on Energy and Climate Change has analysed the claim made by the Secretary of State for Environment, Food and Rural Affairs, in evidence to the Environment, Food and Rural Affairs Committee, that 165,000 properties would be “better protected” in the current spending period. It warns that only a proportion of the 165,000 will actually see their flood risk reduce. Many capital schemes are simply replacing or refurbishing existing defences on a like-for-like basis, and to the same crest height. That is not good enough, for all the reasons that hon. Members have outlined this morning. With climate change, many of the houses will be less well protected than they were when the defences were built. Defences may have been repaired, but the risk that they will be overtopped as a result of changing climate has now increased. Too many homes and properties are still at risk, because the defences that we have are less effective than they once were as a result of the increased frequency and severity of extreme weather.
That is one of the reasons why the UK Statistics Authority is still not satisfied with the Government’s flood spending statistics. The UK Statistics Authority has yet to be satisfied that the Government are telling what it calls the truth about flood defence spending. Needless to say, that makes the job of planning for everyone involved in flood risk management incredibly difficult. The Government’s failure to provide a straight answer to the question of how they plan to reduce flood risk has made effective scrutiny of their policy difficult. The right hon. Member for Haltemprice and Howden has on previous occasions called for the Government to be more strategic in their interventions, and to stop being
“penny wise and pound foolish”—[Official Report, 10 February 2014; Vol. 575, c. 570.]
He is exactly right.
The Humber flood risk management strategy produced in 2008 seems to strike the right balance on the basis of the best evidence available at the time. However, we must be clear that the evidence on flood risk has changed rapidly and significantly over the past six years. Let me give an important example: the 2008 strategy states that the Environment Agency considered that it would be necessary to withdraw from 11 of the 33 flood management areas in the Humber plan; those 11 areas contained 1,961 homes in 2008. Significantly, in his opening remarks, the right hon. Gentleman said that he has been told by the Government that the 2008 numbers in his constituency have increased by more than 1,000 already.
Since 2008 our understanding of how flood risk is changing has increased significantly. The Met Office has stated that what was a one-in-125-days extreme rainfall event is now to be considered as a one-in-85-days event, and that trend is expected to continue. It is also chastening to consider that sea levels in England are rising by around 6 mm per year. The evidence is clear that the risk to the people of the Humber has increased. The simple message is that since 2010, while the assessment of the risks has continued to rise, the Government have chosen to cut investment in flood defences. We need to run simply to hold flood risk at existing levels. The Humber risk assessment must be redone to reflect new evidence on flood risk and the backlog of work that has not been delivered because of the cuts.
The Environment Agency carried out an updated Humber flood risk management strategy in 2011, which makes it clear that more new defences and the improvement of existing defences will be needed, and that more managed realignment of the coast, as well as increased flood storage, will be essential. My right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson) rightly quantified that at £880 million over the next 10 years. The Minister, however, must be clear about who exactly he expects to deliver the strategic approach to flood risk reduction required in the Humber.
Since 2010 the number of Environment Agency staff working to fulfil the statutory consultation role on flood risk has reduced by 40%. The Government have made adapting to future flood risk voluntary for all local authorities. That is not the co-ordinated, long-term, well thought through plan that the hon. Member for Beverley and Holderness (Mr Stuart) spoke of—he is now, I trust, the toast of the Crown and Anchor pub, to which he referred so liberally. Furthermore, the Government have decided not to implement sustainable urban drainage, which would have required developers and water companies to meet some of the cost. No wonder the right hon. Member for Haltemprice and Howden has called for the Government to be more strategic.
Barry Gardiner
I am conscious that the Minister needs to speak, so if the hon. Gentleman will forgive me, I will not give way.
Last week, the outgoing head of the Environment Agency used a speech at the RSA—the Royal Society for the encouragement of Arts, Manufactures and Commerce—to call for cross-party consensus of the kind that we have seen this morning. That is what we had with the Pitt review: an approach that focused on building the capacity for strategic intervention. There were 92 recommendations, but only 46 were implemented. That approach, however, saw improvements implemented at Brough, Swinefleet, Burringham, Gunness, Stallingborough and Halton Marshes.
Since 2010 many of the projects named in the Humber flood risk management strategy have become stuck in the pipeline, because Government cuts have closed off, and in some cases indefinitely delayed, the available funding for essential projects. Examples include the Sutton Ings flood alleviation scheme, a sustainable drainage retrofit that would have protected an area of central Hull in which there are 2,982 homes at significant risk of flooding. The Ulceby flood alleviation scheme would have protected an area of Grimsby in which 2,164 homes are at significant risk of flooding. We urgently need to get back to an evidence-based flood management policy that all parties in the House can support. Nothing else will deliver the risk management strategy required for the Humber.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)
It is a pleasure to serve under your chairmanship, Sir Roger. As is conventional—but I say this in a heartfelt way—I thank the right hon. Member for Haltemprice and Howden (Mr Davis) for securing the debate, which has given hon. Members across the region and across parties the opportunity to add their voices to a collective strategy at the political level, and to work with the technical expertise and the communities involved to move forward in addressing flood risk in the area.
As the right hon. Gentleman set out, and as others have reminded us, on 5 December 2013 the east coast experienced a very serious tidal surge, causing flooding to communities along the banks of the Humber, and indeed upstream. The defences were overtopped, and there was flooding to more than 1,100 homes and businesses, and 700 hectares of land around the Humber. A number of right hon. and hon. Members have talked about the importance of some of that land. The Government and I very much appreciate the impact that had, and the distress caused to the communities and businesses affected. I sympathise deeply with those whose homes and businesses were flooded. I have seen at first hand the effects of flooding around the country. The hon. Member for Cleethorpes (Martin Vickers) mentioned that a number of Ministers have visited his constituency and the surrounding area to look at the impact.
I am grateful to the Environment Agency and all the other risk management authorities in the area, and to the emergency responders, for their excellent work in preparing for—that is important—and managing such events, without which the damage would have been much worse. When the flooding happened, they responded quickly and efficiently, so I particularly thank, as I have done in previous debates, all the professionals and volunteers for the way in which they responded to the exceptional weather.
Twelve thousand warnings were sent directly to homes and businesses, allowing people to prepare. We should not forget that our defences protected 156,000 properties in the area during the surge. The hon. Member for Cleethorpes said that it was difficult for people who have been flooded to hear the Government talking about what has been achieved, but as the hon. Member for Kingston upon Hull North (Diana Johnson) pointed out, it is important to send a message to those considering investing, or those who take decisions about levels of insurance premiums, excesses and so on, that defences do protect communities, and that many such defences operated successfully in this instance, as in others.
The 2013 event was of a similar magnitude to—it was slightly greater—the disastrous surge of 1953, in which 24,000 properties flooded and more than 300 people died. Surges such as the ones we saw in 1953 and in December last year will occur again, and it is possible that climate change could make such events more common and more severe. We cannot stop those events from happening, but we can ensure that our planning, preparation and investment in defences protect communities when they do happen. That is an ongoing process that right hon. and hon. Members present are at the heart of, on behalf of their communities.
Dan Rogerson
I will, although I will not be able to do so often, because I want to get through all the issues.
Mr Stuart
I am grateful to the Minister. On the point about putting a strategic framework in place, will he reflect on whether we need to establish, as in Holland, flood protection standards that trigger the resource to deliver the standard, rather than having a certain amount of resource and doing the best possible with that?
Dan Rogerson
I will come on to resourcing. The hon. Gentleman has made a point about the approach in another jurisdiction; a number of people referred to Holland—or the Netherlands, as I should properly say.
One example of the ongoing investment I referred to is the £20 million defence improvement project that is under construction to provide better protection in Grimsby. That will be completed in autumn 2015.
I will say a little more in a moment about what is being done in the Humber area, but let me first put this issue in the national context, following on from the comments of the hon. Member for Brent North (Barry Gardiner). I have worked with him in Select Committee, and I now face him in debates—he is one of the two Opposition Front-Bench Members his party leader has thoughtfully provided to shadow me, and I am obviously grateful to both of them for the way in which they do that.
Let me reiterate that flood management is a Government priority. We are spending £3.2 billion on flood and coastal erosion management over this Parliament. For the future, we have made a record six-year capital commitment of at least £370 million a year, as the hon. Gentleman said, to improve flood defences, and that will rise to more than £400 million in 2020-21.
With the 2014 autumn statement, we will publish a pipeline—to use the jargon—for flood defence improvement projects for the next six years. That will provide protection for at least 300,000 further households throughout the country, meaning that, by the end of the decade, we will have provided a better level of protection to at least 465,000 households. That is on top of our achievements over this Parliament.
Despite taking a terrible battering this winter, our defences have protected a significant number of properties. About 1.3 million properties and 950 square miles of farmland were protected during that period. In response to the exceptional events of the winter, the Government acted quickly. We not only made an extra £270 million available to repair, restore and maintain critical defences, but made available recovery money for those most seriously affected.
The £270 million of additional funding is being used on the ground now to help the Environment Agency and other risk-management authorities to ensure that important defences are repaired before the coming winter, and are returned to target condition as soon as possible. From time to time, it has been implied that some of these defences will not be there to do the job for which they were originally designed; that is why it is crucial that the money is spent to ensure that they are back up to target condition.
In 2007, the then Government approved the Humber flood risk management strategy, providing the Environment Agency with a strategic business case to invest up to £323 million over a 25-year period up to 2032 on works to manage and reduce tidal flood risk in the area. Although the strategy was led by the Environment Agency, it was developed with, and supported by, other risk-management authorities and key stakeholders in the area. The first programme of improvement schemes started to be delivered in 2009, including schemes at Brough, Swinefleet, Halton Marshes, Stallingborough and Donna Nook. Schemes have since been delivered at Burringham, Gunness, Tetney and Grimsby, and the scheme at Cleethorpes is under construction. Defence improvements are also being planned for Hull.
The right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) set out the importance of the protection at the Albert dock. The temporary defences are there, so they are in place to increase the level of defence. The work he was concerned about, which will make those defences permanent, will be completed during this financial year. Even if the defences are not made permanent by this winter, the temporary defences are in place, and they will be made permanent. It is important that the right hon. Gentleman raised the issue, given the level of risk. In the time remaining, I want to pick up on a few points.
Dan Rogerson
May I respond to the points that have already been made? I apologise to the hon. Gentleman, but there is a great deal to get through.
The right hon. Member for Haltemprice and Howden mentioned the importance not only of new defences, but of assessing existing defences to see where improvements need to be made. That very much has to be part of the strategy, and he is right to mention the issue. Hull is an example of that process.
The right hon. Gentleman mentioned the effects over the entire estuary. It is possible to ring-fence some of the major population centres. Other Members have referred to the times when farmland can be used as part of a short-term measure to absorb water. Although I accept the point the right hon. Member for East Yorkshire (Sir Greg Knight) made about the importance of farmland to the local economy and to the country’s food security, there are schemes—there is one in Kent—in which farmers have been paid to take flood water as part of a local strategy. Where a case can be made for doing that, it can certainly be part of the solution.
We have put in place the flood recovery fund for farmers, so that they can apply for funds to restore land that has been affected. A number of farmers in the west country have done that, but the money has also been made available to people who were affected by the early December flooding in the region we are talking about. It is important to put on record that that funding was available to help people deal with the shorter-term effects.
I am grateful to the right hon. Member for Haltemprice and Howden and other Members for their recognition of the fact that I do not have a cheque book with me and cannot sign over up to £1 billion of investment today.
Dan Rogerson
Although I accept that hon. Members are disappointed to hear that, it is important to note that the work they are doing, along with the technical advice that is being received and the work that all the local authorities are involved in, will make a strong case for a long-term investment plan. The Government will then be able to consider that, along with the most up-to-date information.
The right hon. Member for Kingston upon Hull West and Hessle set out events that took place under the Labour Government, which were of huge concern and had a great impact particularly in Hull, although also in the surrounding area. We must always be aware of the severity and the likelihood of such impacts.
On the flood risk to smaller communities, one strength of the Government’s partnership approach is that it has allowed some of the smaller schemes in rural areas to go ahead. We think that up to 25% more schemes will go ahead because of that approach, which has provided an opportunity to raise money locally to partner with Government investment. Some more rural schemes would not necessarily have been scored as highly as some of the bigger schemes, but partnership funding means that they are taking place, and I am aware of many that are going ahead as a result.
The right hon. Gentleman mentioned hypothecation and using the climate change levy and other things. Clearly, it is for Her Majesty’s Treasury to decide how the taxes it receives are spent. The position of successive Governments has been not to focus on hypothecation, but to look at investing in things that are necessary. Members have made the case today for investment in flood defences, and we have heard that very clearly. That is why we are spending more than previous Governments have.
The hon. Member for Cleethorpes set out, as he has done consistently since the flooding took place, the impact on the local economy and the importance of the port in the area he represents. It is crucial that colleagues in all Departments and agencies are involved in our plans and strategies as we move forward—the flood envoy covering the area is a Minister in the Department for Transport—and that we take account of what they can do to secure critical assets and infrastructure.
The hon. Gentleman mentioned local knowledge and what local land managers, farmers and internal drainage boards can offer. The Environment Agency is keen to work with them to make sure it constantly improves provision. Of course, many of the people who work for it also live in the areas affected and have worked there for many years, so the agency has great expertise when looking at local areas.
The hon. Member for Beverley and Holderness (Mr Stuart) talked movingly about the personal impacts and about how some of the responders—he mentioned a parish council chairman—took action on behalf of their community, even though they themselves were affected. It is important to recognise that. He talked about climate change and the national picture. While the Members gathered here will want to focus on what they want for their area, it is important to ensure that everybody can make their case, because there are many vulnerable areas, including further down the east coast, for example, where people will be looking to take forward schemes. He also mentioned a number of local schemes and described the impacts and the repairs that are under way, and I would be happy to write to him about some of them to make sure that we maintain progress.
The hon. Member for Kingston upon Hull North rightly mentioned, as she has done consistently, the importance of making sure there is room for development in areas prone to flood risk. The Government and local authorities want to send a strong message that we want to make these areas resilient and as well-protected as possible. We do not want just to add to flood risk. The Flood Re scheme builds on what was there before, which was set up for properties flooded in 2008. While 2009 remains the cut-off, we are investing in flood defences to protect other areas. That is why it is important we are talking today about protecting areas affected more recently.
The debate has given local Members the opportunity to show that they are working together, working with local communities and local authorities and using the Environment Agency’s expertise to make a case for investment in their area. I am delighted that they have secured a meeting with my right hon. Friend the Prime Minister to take that forward, and that there is an opportunity to work with Departments on community resilience and the resilience of critical infrastructure.
Skills and Training Facilities
(10 years, 2 months ago)
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Stephen McPartland (Stevenage) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. This is an important debate about improving skills and training facilities in small cities and towns, and the subject is close to my heart. In my maiden speech four years ago I said that
“here in the UK, it is possible to help a child out of poverty and improve their chances in life if they receive a good education. However, we are not doing enough; we are not lifting enough people out of poverty. In my constituency, like in so many others across the UK, there are children who have tried so hard in school. There is a cadre of dedicated and professional staff who have helped them along the way and invested so much of themselves in helping those children try to improve their life chances, but the system does not seem to work. Those children are being forced through an education system that pushes them out the other end with little chance of getting a job, as they do not have the skills that local employers want.
We need to encourage employers to work with local schools and colleges, to get fully involved in education, to highlight the skills that are missing and even perhaps to take preventive action, possibly by designing some of the more vocational courses. Perhaps the prize at the end of the course should be a job or an apprenticeship with the employer. We need to be innovative and flexible, so that courses can reflect the skills gap locally and more local people can get local jobs.” —[Official Report, 1 July 2010; Vol. 512, c. 1063.]
When I said that four years ago I set myself a target—to help 1,000 young people into apprenticeships.
Karen Lumley (Redditch) (Con)
Does my hon. Friend agree that Members of Parliament can help by holding apprenticeship fairs, such as the one that I will be holding on Friday in my constituency? Companies such as Jaguar Land Rover will be taking part.
Stephen McPartland
I could not agree more. Apprenticeship fairs are powerful tools. I held a jobs fair recently in my constituency at which a large number of people—employers, people from educational institutions and young people—came together. That led to a number of people getting apprenticeships.
Gareth Johnson (Dartford) (Con)
I pay tribute to the work that my hon. Friend does for the people of Stevenage, and I congratulate him on securing the debate. Does he agree that apprenticeships have value in combining training and work? In Dartford we have doubled the number of apprenticeship places since 2010. Does he agree that the Department for Work and Pensions should continue its policy of supporting them?
Stephen McPartland
I completely agree. That is an important point.
The target I set myself was to help 1,000 young people into apprenticeships in my first term in Parliament. I am delighted with the progress that has been made in Stevenage in the past four years. Six weeks ago in Prime Minister’s questions I asked whether the Prime Minister would
“join me in congratulating the educational institutions and businesses in my constituency that have increased…apprenticeship starts from just over 200 in 2010 to over 800 a year now”.—[Official Report, 14 May 2014; Vol. 580, c. 747.]
That is a fantastic figure, and I am incredibly proud of it. The progress that has been made is amazing, and I congratulate the Minister for working to ensure that an apprenticeship means training for a real skill, with a real job and a real future at the end of it. I had the pleasure of meeting the Minister’s parliamentary apprentice last week. She is an enthusiastic young lady and committed to learning. I hope that he will tell us a little more about her experience when he responds to the debate.
There is much more to be done, however, nationally and locally. In my constituency we have smashed the 1,000 apprenticeship starts target for the present Parliament. I now want 1,000 apprenticeships to start this year alone—that would be 1,000 young people choosing skills and training for their future. What a statement of support that would be for young people in my constituency from employers and educational institutions that have skills and facilities.
Some hon. Members may have old-fashioned ideas about the quality of apprenticeships and the roles and careers that they offer. They may, at the mention of apprenticeships, think of a time-served traditional skill set such as plumbing, bricklaying or working as car mechanic—and what is wrong with that? Those are great jobs, offering a great future with skills that can be transferred all over the world. I promise hon. Members that there is more demand around the world for plumbers, brickies and mechanics than for Members of Parliament. They are far more likely to get a visa for the United States or Australia than we are. However, there are also a range of other apprenticeship opportunities in my constituency that will surprise some hon. Members. There are apprentice accountants, apprentice missile builders and apprentice rocket scientists.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I wholly agree with my hon. Friend that the quality and range of the apprenticeships that are available is extraordinary. In my constituency an engineering company is expanding its apprenticeship programme to bridge the skills gap that has, unfortunately, grown up in the past 15 years. Does he agree that apprenticeships of that quality are a way of bridging the skills gap, and that they will help us to deliver our long-term economic plan?
Stephen McPartland
I agree completely. My hon. Friend makes a valuable point. More than 10,000 scientists and engineers work in my constituency. The skills gap is a huge issue for companies in the area, which need people who can deliver such skills; they need investment in the future work force, so that they can continue to compete.
John Stevenson (Carlisle) (Con)
Does my hon. Friend agree that it is important for central Government to help support training organisations and employers in smaller places such as Carlisle and Stevenage, if we are to create the quality jobs we want?
Stephen McPartland
I agree with that valuable point. My hon. Friend stands up for Carlisle in his usual robust way. It is important for large towns and small cities to have those skills and training facilities; they should not just be attached to large employers.
In my constituency there are 4,000 research scientists employed at GlaxoSmithKline; there are 1,500 people employed at MBDA, which has a range of missiles in development; and another 1,500 are employed at Airbus Defence and Space, as it has just been rebranded, which builds 25% of the world’s telecommunications satellites. However, 90% of apprentices in the area are employed by small and medium-sized enterprises, and that happens only because they have access to training facilities and skills.
Andrew Bingham (High Peak) (Con)
It is important to address this issue. A company in my constituency called Astral Training runs a training package that is attuned to the things that employers want, which will bring their employees’ skills on. Does my hon. Friend agree that we should focus on what employers and trainers want? The focus should be not on what we think is right, but on what employers think. They will employ the people, so we should make sure that they are trained to their needs.
Stephen McPartland
I completely agree. The juxtaposition between employers and education is important. Top-down centralised targets do not work, because places such as High Peak, Stevenage and Carlisle have different employment needs. There is a need for local skills and training facilities that can deliver to those areas.
People sometimes say that what we are talking about is not rocket science; well, in Stevenage it actually is—we have apprentice rocket scientists. Why have we been so lucky in Stevenage? The simple answer is that we have always had a great respect for apprentices in particular, and I have managed to persuade many SMEs that taking on an apprentice is a way of investing in their work force and future turnover. I will visit any company I can that takes on an apprentice, and meet them personally. Perhaps if I did not make those visits we would already have reached my target of 1,000 apprenticeship starts for this year—that is something for me to think about.
I have also worked with a local bank, which was close to agreeing to complete any apprenticeship-based paperwork for its SME business customers that took on a new apprentice. Unfortunately the individual that I was working with has moved on, so I need to revisit the matter and try to rebuild the approach. That would have released a whole range of new, smaller companies that are concerned about paperwork to move forward and employ an apprentice. The Minister has simplified the system, but fear of paperwork remains a barrier for many SMEs. I urge him to continue to reduce it as much as possible.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I congratulate my hon. Friend on securing this debate on small towns and cities. Does he think that one of the psychological barriers in small towns and cities is that they rarely rate a mention? In the north-west, Lancaster and Fleetwood are rarely mentioned in articles and speeches. It is always Manchester, usually meaning Greater Manchester, and Liverpool, usually meaning Greater Merseyside, that are referred to.
Stephen McPartland
I am happy to agree with my hon. Friend about Manchester, but with my accent I cannot agree about Liverpool. Lancaster is close to my heart—my sister-in-law went to Lancaster university, which is a great institution. Many people are interested in Lancaster and Fleetwood, where there are good companies employing apprentices. My hon. Friend is doing a great job to ensure that they are pressing ahead with that.
Another reason why we are lucky in Stevenage is that we are so close to London—only 26 minutes from King’s Cross on the fast trains. For many employees that means that it is easy to move jobs and to get a pay rise of £3,000 or £4,000 just for going into London. It is easy to obtain quick career progression by popping into London. Many of my local companies recognise that by employing young people with strong roots in the area, they tend to stay with the company and build a career with that company. The retention rate among apprentices locally is incredibly high, and I am sure the Minister will be able to inform us of the average retention rate of apprentices and time served with a company. In some of my local companies, people who were apprentices many years ago now serve on the board, and some of those are multinational companies.
Schools and local colleges accept that they have a role and responsibility to help their pupils into work and to develop the skills they will need to enable them to compete in the workplace.
Stuart Andrew (Pudsey) (Con)
I congratulate my hon. Friend on securing the debate. What is important about apprenticeships is that we are moving away from the obsession with everyone going to university, and creating a work force that people need. Winder Power in Pudsey has a young apprentice who designed a new power supply that will save that business billions of pounds over the next 10 years. Is that not the sort of thing we should be encouraging, instead of telling people to go off and get a degree from some university?
Stephen McPartland
I could not agree more with my hon. Friend. I am about to come to the fact that nationally, there is a lot of pressure on young people from parents and teachers to go to university. If that is right for the person and they want to pursue that option, that is their decision, but they should be given a choice. I have had some issues in my constituency with parents pushing their children towards university. Those 18-year-olds, who are old enough to fight for their country, are pushed into university because their parents feel that that is what is best for them, but it is often not best for them.
Stephen Metcalfe
When my hon. Friend comes across parents who are keen for their children to go to university rather than to take on an apprenticeship, will he use the example of Case New Holland in my constituency, which manufactures one in 10 of the world’s tractors? The current managing director started as an apprentice, building tractors on the shop floor, and now runs a £7 billion export company.
Stephen McPartland
My hon. Friend gives a classic example of the importance of apprentices to the local economy and local community. I would be delighted to meet that individual and to see some of his tractors in action, because—this may surprise hon. Members—we have a range of farms in Stevenage.
The Minister has done a huge amount of work on level 5 and 6 apprenticeships. A level 5 apprenticeship is equivalent to an old higher national diploma and a level 6 apprenticeship is equivalent to a bachelor’s degree. Some companies in my constituency already have level 5 apprenticeships and are working towards level 6 apprenticeships. Other companies provide their apprentices with day release and pay for them to go to university to secure a degree. Pursuing an apprenticeship is a huge opportunity in my constituency.
On the whole we are lucky, because we have created a culture locally whereby apprenticeships are highly sought after and the local community is engaged in helping our young people into work. During national apprenticeship week, I visited a local company in Stevenage, Solveway, at its training centre in Barnwell school to launch its IT apprenticeship programme. A local company has a training centre for apprentices in a secondary school in Stevenage—that is a fantastic example of the great partnership work we are promoting in Stevenage between the business, education and training communities.
Solveway is working in partnership with Barnwell school, which now has two IT apprentices and has already placed several other apprentices since the programme started in 2014. The aim is to provide an alternative career path for students who are interested in IT that should lead to permanent employment. Barnwell school’s head teacher, Tony Fitzpatrick, said:
“We have been very fortunate to be approached by Solveway to work in partnership with them. It makes perfect sense to have Solveway based at Barnwell School, there are many benefits for both parties and in particular for our students’ future career opportunities.”
Solveway director, Keith Swain, said:
“We have been overwhelmed by the support received from Barnwell School, local business and the community in support for this venture.”
That is a classic example of how people can come together in a local community and focus on giving young local people jobs and opportunities.
We spend a lot of time talking about what qualifications young people will get. I got my GCSEs, my A-levels, my first degree and then my master of science degree. I cannot remember what my GCSE results were. The point is that as we get each set of qualifications, the previous ones are no longer relevant, but if we had the opportunity to pursue apprenticeships, those skills would have been skill sets for life. It is important that people can go to university, but it is also important that they have the opportunity to pursue an apprenticeship if they want to.
The progress we have made is truly amazing, especially in such a short time and under such difficult economic circumstances. With our long-term economic plan working and unemployment continuing to fall in many of our constituencies, it is incredibly important that we push harder and faster to increase the number of apprenticeships and to improve skills and training facilities in our constituencies. Investing in our young people is investing in our future. I want to see more ventures like the one at Barnwell school, but the reality is that that requires a dynamic company working with receptive school leadership who want to see their pupils make progress. There is no reward mechanism for schools and companies that come together in this way, and the costs are taken on board. I would like the Minister to incentivise that type of initiative and to help more schools to help more of their pupils into work in more of our constituencies.
Matthew Hancock (West Suffolk) (Con)
After that tour de force, I am not sure I can respond other than with trepidation. It is great to see such a strong turnout from hon. Members in support of skills in towns and cities across the country, and particularly in support of apprenticeships. I pay tribute to my hon. Friend the Member for Stevenage (Stephen McPartland), not least for his heartfelt and enthusiastic support for the long-term economic plan, but also for securing this debate and allowing the issues to be aired and discussed so that we can consider where we need to go next. It is undoubtedly true that we have made a lot of progress, but we must always look to the future.
We know that skills are directly responsible for growth, and I am sure that my hon. Friend’s constituents would want me to pay tribute to his work in increasing the prevalence and knowledge of apprenticeships in his area. As he said, there were 830 in the last year for which full figures are available, and I give my wholehearted support to the target of more than 1,000 apprenticeships next year. I am sure that with his energy, he will reach that. In Stevenage, youth unemployment on the claimant count has fallen by 34% over the past year, due in part to the great employers of Stevenage, but also in part to his efforts.
Many important points have been raised in the debate. The doubling of apprenticeships in Dartford is an important element of reducing youth unemployment there; it has been reduced by over 30% in the last year. Many hon. Members, including my hon. Friend the Member for Redditch (Karen Lumley), have had apprenticeship fairs, and I wish her every success with the one that is coming up.
My hon. Friend the Member for Pudsey (Stuart Andrew) correctly identified the false target that was set in the past, which was that 50% of people ought to go to university. Like many hon. Members, I went to university, and it works for some people, but the fact that people felt that they were pushed in one way when it may not have been right for them was a mistake. It also led to a policy focus on those who went to university, rather than on ensuring that all young people, whatever their circumstances, can reach their potential. We have a vision that it should become the norm that as people leave school or college, they go either to university or into an apprenticeship. Our job is to ensure that there are high-quality options for both and that the choice is theirs, according to their circumstances, so I strongly agree with what my hon. Friend said.
Likewise, in order to ensure that those high-quality options are available, it is important that we have high-quality apprenticeships. I pay tribute to the work that my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) has done in supporting that direction of travel. It was a pleasure to go to Lancaster recently with my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) and see the work that is being done there, not least in the local college, on driving up the quality and provision of apprenticeships.
Similarly, there has been a big expansion of apprenticeships in Carlisle. I learned lessons in Carlisle and brought them back to try to improve, in particular, the access of small businesses to apprenticeships. That is an issue across the country, but it was really highlighted to me by the discussions that we had in Carlisle.
None of this is possible without the support of employers. My hon. Friend the Member for High Peak (Andrew Bingham) made the point that the focus on the needs of employers must be front and centre, as did my hon. Friend the Member for Stevenage in his maiden speech. That thread goes through the heart of our skills reforms to ensure that training is both rigorous and responsive to the needs of employers. My hon. Friend the Member for High Peak made a very important point about that. Stafford, for instance, has seen the biggest fall in the youth claimant count over the last year—it has gone down by more than 40% in just one year. We should all congratulate Stafford on that and learn from what it has done—more than most places—to improve the job prospects of young people.
We are making a lot of progress, but we need to do much more. The expansion of higher apprenticeships has mentioned, and it is important. Ensuring that we fill the gap between lower-level training and academic, university-level study is close to my heart. Some of the biggest skills shortages that we have as a country are among higher-level technicians. Higher apprenticeships are a big part of the answer to that, supported by the new national colleges that we are bringing in. We will announce very shortly the location of the first national college—the national college for rail, to support the development of HS2.
I was asked what I thought about retention among apprentices. The statistics are very interesting; they show not only that retention is higher among apprentices, but that retention and morale are higher in workplaces that have apprentices, even among the non-apprentices. I think that is because if employers are putting something into their staff, it increases the morale of the whole work force. People feel that they are building something for the future and have a stronger relationship with their employer. That is something that any employer, whether or not they have apprentices yet, can heed. It is certainly true in my parliamentary office, where we went out to hire an apprentice and came back with two, because the quality of the applicants was so high. They are both brilliant. They are working on casework and constituency issues and learning about the House of Commons and the democratic process, and they are doing a brilliant job for me. I am delighted to put on the record publicly the support they have given me, and I would encourage any hon. Member who is thinking about it to take on an apprentice—in fact, I would encourage an hon. Member who is not thinking about it to think about it and take on an apprentice.
My hon. Friend the Member for Stevenage also mentioned the importance of ensuring that we get the best quality training, and I want to dwell on that for the final couple of minutes. We have to ensure that we make the best use of technology to spread opportunity. Every learner should have the chance to gain from increasingly prevalent and cutting-edge technological solutions for learning. In the same way that in the past, most of the rest of our lives has been changed by technology, so learning can be improved by the use of technology.
We set up a group, the so-called FELTAG—the further education learning technology action group—to investigate the barriers to the use of technology in further education, and we are now looking across the board at the whole of education. We found, for instance, that as many as 80% of colleges were relying on a single broadband connection. Bandwidth is vital, as more and more people bring their own devices and use them while they are learning. We are now helping colleges to install more bandwidth. Some 73 colleges, including Hertford regional college, which serves Stevenage, are being upgraded in the first tranche, and we are stimulating innovation in education technology through the Technology Strategy Board.
I want to put on the record that apprenticeships, in the past, have been in traditional industries, but they increasingly cover the whole range of occupations in the modern British economy. We must be on the front foot in looking at how technology can support the provision of education, especially within the workplace, where it can have the biggest impact, not least by keeping people engaged in learning when they may otherwise have been disengaged. Ensuring that we can bring that to bear on increasing the number of apprenticeships is very important.
Companies in Stevenage have taken an active part in what is called our trailblazer programme for rejuvenating apprenticeships and making sure that the training that is delivered is the training that employers need. Companies such as BAE Systems, which I know has a big presence in Stevenage, have played a vital role, because it is not we politicians who know what training is necessary in any occupation; it is the companies themselves. I am very grateful to the companies that have put in time and effort to get this right. We need to come up with a product that works across the whole sector that the apprenticeship is designed for, but companies large and small that get involved right at the start in designing what the apprenticeship should look like play a particularly important role. They come from all over the country, including from Stevenage, and I want to thank them for their help.
Finally, in the coming weeks, we will be delivering on local growth deals, many of which involve strong skills elements. I hope that I have the support of hon. Members as we roll out those growth deals, so that we can ensure that the training is what is necessary in local labour markets and fits local need, rather than being at the direction of a Minister. It should respond to demand on the ground from employers to make sure that we can truly do what is necessary to build economies and make them stronger right across the country.
Perhaps more important than that being an economic exercise, vital though restoring the economy is, is that it is also an exercise in promoting equality of opportunity, social justice and social mobility. It is ultimately about doing what we can to make sure that everybody in our society has the opportunity to transcend the circumstances of their birth, to make the most of their talents, to have their expectations raised, and to build for themselves a career—and the stability of finances that comes with it—that is rewarding and valuable to them and their families. In that way we can build not only a stronger economy, which so many crave, but a stronger society and sense of purpose. The apprenticeship programme that we in this Chamber all support plays a important role in doing that.
Legal Highs
(10 years, 2 months ago)
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Toby Perkins (Chesterfield) (Lab)
It is a pleasure, as always, to serve under your chairmanship, Mr Chope. I have had rather a lot of experience of that recently, and long may it continue.
I want to offer some definition and context to the discussion about legal highs, spell out some of the problems that they are causing for my constituents in Chesterfield and push the Government to act on this appalling blight. Legal highs are a growing menace in our communities, endangering the health of young people in particular, breaking the hearts of their families, leading to crime as users steal to fund their habit and terrifying shoppers and shopkeepers in the surrounding areas. The truth is that some retailers are mocking the law, laughing at powerless regulators while visiting misery and mayhem on our communities, and the time has come for us to decide whether we are willing to have that happen or whether we are seriously and finally going to act.
I will start by defining legal highs. They are often referred to as “new psychoactive substances”. They are chemicals that have been synthesised to mimic the effects of conventional illegal drugs. People often think that because they are legal, they are safe. That is a dangerous myth and a message that the Government must be much stronger at combating. People selling these substances on the high street next to respectable chemists, photography and chocolate shops only underlines the impression that they must be okay. Legal highs are called “legal” only because they have not been banned yet. People need to be aware that the name in no way indicates that they are safe to use.
Legal highs are being developed at a speed never before seen in the drugs market. They are now widely available from a range of shops, takeaways and petrol stations. Legal highs are often even more dangerous than currently illegal substances. That has been clearly demonstrated by the spate of deaths from fake ecstasy, which is the name for various kinds of new psychoactive substances that are extremely dangerous.
Deaths are not caused just by overdoses. Legal highs can also cause accidental deaths and suicides, which is why it took several years to reveal the true death statistics for mephedrone. Only in 2012, following a review of all the different causes, did we get the true figure for mephedrone deaths in 2010, which was 43—43 lives pointlessly wasted as a result of something that was legal at the time.
The number of drug-related deaths in Britain is more than double the average across Europe, according to a report from the European Union drugs agency. The European Monitoring Centre for Drugs and Drug Addiction warned that so-called legal highs are involved in a growing number of deaths.
We know that there are more than 100 legal highs on the UK market. We have found out that these drugs are now available from more than 200 head shops on UK high streets. Today, we can see that they are also available from a range of other local shops and takeaways. It is estimated that 670,000 young Britons aged between 16 and 24 have taken legal highs. In the “European Drug Report” of 2013, the European Monitoring Centre for Drugs and Drug Addiction said that the average mortality rate in Britain due to overdoses of all drugs was 38.3 per million of population—more than twice the average for Europe. The agency found 73 new synthetic drugs in 2012. It surveys the number of internet sellers in the UK, which rose from 170 in 2010 to 690 in 2012. Just in those two years, the number went up by more than 500. The UK’s market is now the biggest in the EU and the second biggest in the world. There are also estimated to be hundreds of high street legal high sellers.
Legal highs are a relatively new challenge in drugs policy and are difficult to control under traditional drugs legislation such as the Misuse of Drugs Act 1971, because new versions of substances are developed at a swift rate to avoid the current controls. I would like now to talk about what the situation means to us in Chesterfield.
Chesterfield is a town that is performing well. Our town centre famously has fewer empty retail units than Windsor, and we outperform the local and national averages considerably. We have retained an old-style cobbled market feel with one of the UK’s largest outdoor markets, and we have an award-winning new indoor market. We have a successful fusion between the new retail offer and the traditional high street.
However, for retailers and traders on Packers row and Knifesmithgate, the existence of the Reefer store and the antisocial behaviour that surrounds its sale of products such as Clockwork Orange is turning trade, which is difficult enough in the present climate, into a total nightmare. No one should be frightened to go to work or to support shops on our local high street, but that is the reality for many retailers and shoppers in that area. Local cafés have had to deal with users falling asleep on their floor. Retailers have had the experience of terrified friends of users rushing in demanding that they call an ambulance. Market traders have been abused. Police have arrested those causing trouble only to find that the miscreants were back on the streets before the police had even finished their paperwork. Teenagers at the bus stop have been urged to buy legal highs for users who have previously been banned and have been asked for money to support the drug habit of those users. Shoppers have heard appalling language and witnessed much worse levels of antisocial behaviour. Shopkeepers have now branded Packers row a no-go zone, saying that it has become overrun with antisocial behaviour and drug use.
Chesterfield borough council and the community safety partnership have endeavoured to get the tenant’s landlord to take action using the immoral use clause in their tenancy agreement, but the landlord does not feel sufficiently empowered to do so. I feel that the landlord is wrong, but we need to do much more to support commercial landlords who want to get rid of antisocial retailers but do not feel able to do so.
I place on the record my thanks to Councillor Keith Miles, who is here witnessing the debate, and Councillor Sharon Blank. They continue to work on the issue with me. They, the community safety partnership and the police are rightly looking to us, as legislators, to back them up. I hope that we will not continue to disappoint them.
To give a sense of the impact that the problem has on the retail sector, let me read the words of Bridget Jones from Chocolate by Design, a retailer in Chesterfield:
“It’s absolutely horrendous, the shop”—
Reefer—
“is attracting an unsavoury group of teenagers that are hanging around here day in day out, their language is absolutely appalling and they are abusing old and young people…Just recently an ambulance had to be called out to somebody who had collapsed from taking these substances, somebody was actually treated in the shop next door too, after taking some sort of powder.
People won’t come up to this part of the town because they are ruining it, this behaviour isn’t just a one off, it happens all the time, we have just had enough.
My business is being affected tremendously, somebody is going to get killed out here from the stuff, that’s a definite.”
Bridget runs a store that holds parties for children who want to make chocolate and other confectionery. People come in to buy chocolate for their family and friends. Let us imagine someone trying to run a business in which they are trying to encourage young people to come from right across the east midlands to have an exciting birthday experience, and being greeted with that sort of conduct outside the store.
David Hilton-Turner, whose 14-year-old son almost died in Chesterfield as a result of legal highs, wrote to me to say:
“My son has been a victim of a legal high drug which he was lucky he survived. The shop in Chesterfield ‘Reefers’ sold it to a 17 year old who made an inhaler (bong) and gave it to my 14 year old son. He had never done this before but he ended up with a crowd of people who had. What I want is the shop closing down and somebody in government to ban this drug. It is sold as an herbal essence to over 18s but the shop does know what happens. Because of a legal loophole they get away with it. The police cannot do anything because of the loophole and I’m hoping you can before it causes fatalities. The substance in question is known as Clockwork Orange.”
In addition to the impact on the community, the police say that the problem around Packers row and Knifesmithgate is draining officers’ time and taking them away from solving other crimes. Nick Booth, police sergeant for the town centre, said that a lot of time was being spent in that troublesome area. He said:
“This is an area we are having to target for anti-social behaviour and perceived drug use. Kids are buying legal highs from Reefer and using them there.
Members of the public believe it is a big drug problem and it is still causing people harassment, alarm and distress.
Some of these young people are actually turning to criminality to fund this drug habit.”
Retailers are under siege from people who have taken legal highs or are involved in their distribution. This is a blight on our town centre, is frightening for the vast majority and brings shame on all those involved in it. Sergeant Booth said that the police had “their hands tied”, as the issue is difficult to manage. He said:
“Ideally we could do with a change in the law at government level that enables us to tackle them effectively.
Although the drugs are legal, they are similar to illegal drugs in the effects they have.”
The police are busy trying to educate people about the dangers of legal highs, and have made it one of the local policing priorities for Chesterfield, but they face an uphill battle. The Derbyshire constabulary sent out a warning about legal highs in May 2014 following the admission of two teenagers to hospital, but the Government’s current approach of attempting to ban them individually, substance by substance, which means that they are always one step behind the vagabonds who market these products, is clearly not working.
I understand that the Minister has appealed to the Chinese and Indian authorities for help in preventing the production of such products. Although I wish him well in that endeavour, surely we need to do more to target the retailers of the substances. On 27 February, he was reported to be within two or three months of publishing a review on legal highs, but four months on there is no sign of that review. I am informed—I hope that he can assure us that this is not correct—that he is considering the option of regulating rather than taking action to try to get rid of such substances. I think we need a much more robust approach.
Dan Jarvis (Barnsley Central) (Lab)
I congratulate my hon. Friend on securing this important debate. He is making an excellent contribution. He has described the situation in Chesterfield, and it is one that I absolutely recognise in Barnsley. He has spoken about what Government can do to resolve the issue. Does he agree that part of the way to tackle legal highs nationally is through cross-departmental co-operation? We are not just talking about the Home Office, although it clearly has an important role to play; we are talking about the Home Office working in partnership with the Department of Health, the Department for Education and the Department for Communities and Local Government to tackle the challenge. Does he agree that cross-Government working is important in resolving the problem?
Toby Perkins
That is an important point, and the problem has an impact on all those Departments, as my hon. Friend says. We must get cross-Government and cross-party work on it. I pay tribute to him for the work that he is doing in Barnsley to try to rid his constituents of this nightmare, and we will look at that and learn from it.
The owner of Reefers, the store in question in Chesterfield, apparently told the Derbyshire Times that the packets of Clockwork Orange that he sold made it clear that the product was not for human consumption. However, his store has a provocative name, graphics of spliff designs were originally painted on the side and it sells products that are used in the consumption of drugs. It mocks the law by claiming that it does not encourage drug use.
The Minister is on record as saying that we are ahead of other countries in our response, but Ireland, through the Criminal Justice (Psychoactive Substances) Act 2010, has already sought to ban legal highs. I would like councils to be given much greater powers to stand up for their local communities. I would also like us to take a lead and say that we are not willing to try to pursue the problem on a substance by substance basis, because the people involved are always one step ahead of us. They change the compound marginally, change its name and say, “You have not banned this.” I want us to get on the front foot and say that the producers of psychoactive substances know what they are doing and we know what they are doing, and that we will work collectively to get such substances off our streets.
We have rightly, over many years, taken the approach of refusing to legalise illicit and illegal drugs, despite the call from some quarters to do so. It is absolutely right that we treat legal highs, which are just as dangerous in many cases, in the same way. It is no good saying that products such as cannabis are illegal, but allowing producers of legal highs effectively to mock the law by creating new substances that have the same effects while we attempt to chase them item by item. It is time for us all to work together to develop a more constructive approach.
Mr Robert Buckland (South Swindon) (Con)
I congratulate the hon. Gentleman on securing this important debate on an issue that affects the constituencies of all Members, regardless of party. Does he agree that the approach taken by the US in the Federal Analogue Act, which banned substances that are similar to certain chemical compounds, could be a way of dealing with the whack-a-mole approach that he has correctly identified when it comes to proscribing so-called legal highs?
Toby Perkins
There is a lot of potential in that, and I think it is well worth investigating. My hon. Friend the Member for Kingston upon Hull North (Diana Johnson) has more expertise in that area.
When our communities feel under siege, we must not simply wring our hands and say, “There is nothing we can do. We know that there is a problem, but it is up to you to deal with it.” Our colleagues in local government and in the business world, and those in the police and the health service who are left to deal with the problems caused by legal highs, are looking at us and asking what action we will take. The time has come for us to act, and the steps that have been taken in America and Ireland offer us a potential way forward. There has to be a real sense of urgency. We should not seek to legislate in haste, but the situation is a national emergency. The scale of the response I have received since I secured the debate suggests that legal highs are a problem in communities up and down the land and that communities want action to be taken.
Alongside the potential for legislation, which I hope the Minister will confirm the Government are considering, I would like councils to be given greater powers to stand up for their local community. In the same way as they can deal with antisocial tenants, they should be able to curb the activities of antisocial retailers. We are facing a growing epidemic, and we must stand here impotent no more. It is long past the time for action. We must work together to cleanse our streets of this blight, and to protect our young people and communities. To do anything less would be a dereliction of our duty to our constituencies. The time for hand-wringing is over. The Government need to get back into the driving seat. Let us clean up Chesterfield and Britain, and rid our streets of legal highs once and for all.
Sheryll Murray (South East Cornwall) (Con)
I congratulate the hon. Member for Chesterfield (Toby Perkins) on securing this important debate. I am seriously concerned about so-called legal highs—as the hon. Gentleman said, their proper title is new psychoactive substances—which are not covered by the Misuse of Drugs Act 1971 because, according to some, they have not been well enough researched to legislate over. That does not allay my fears that those substances are at best dangerous and at worst fatal.
At a town in my constituency on Sunday 22 June, four teenagers aged between 17 and 19 had to be treated by the emergency services for the effects of a legal high. One boy became so violent towards paramedics who were trying to help him that the police had no choice but to taser him. The emergency services considered the situation to be so critical that the four boys were rushed to Derriford hospital in Plymouth under police escort so that they could get the treatment they needed. At least one of the boys was reportedly classed as being in a life-threatening condition and would have died had he not received the treatment he was given at the hospital. Because of the expert care given at Derriford hospital, all four boys made a recovery, but the outcome could have been so very different and tragic.
The products we are discussing are marketed as bath salts or plant food because they cannot be sold for human consumption, but people who seek to get high on such products know which are actually plant foods and which are merely sold as such. If that information is in the public domain, surely we can identify such products and restrict or ban them. When they are tested, it is not uncommon to find that they contain substances that are banned under the 1971 Act, which are not always listed in the contents. I appreciate that the Government cannot stop individuals using substances in a manner for which they are not necessarily marketed, but surely it is within our ability to legislate to restrict or even ban the sale of such products. I urge the Minister to seek ways to end the ready availability of legal-high substances to prevent any more people from being killed or injured, as so nearly happened in my constituency on 22 June.
John Woodcock (Barrow and Furness) (Lab/Co-op)
I congratulate my hon. Friend the Member for Chesterfield (Toby Perkins) on securing such an important debate at such a critical time, as the Government consider their future approach to the issue.
I start by making the Minister and the House aware of the results of an investigation conducted by the North-West Evening Mail last year as part of its “Ban Them Now” campaign. It sent an undercover investigative reporter to Living World, a pet shop on Duke street in Barrow where legal highs were widely known to have been on sale. The reporter picked up two substances, Sparkle E and Psyclone, and took them to the counter—there was of course the usual disclaimer that they were not for human consumption. The reporter asked the shop assistant what he was supposed to do with them and was told that he should “neck” them, or he could mix them together if he wanted. He was told that one was like ecstasy and the other like cocaine. There was only the merest veneer of legality over a common, out-and-out illegal drugs trade.
The Minister’s predecessor, the hon. Member for Taunton Deane (Mr Browne), rejected my amendments to the Anti-social Behaviour, Crime and Policing Bill in Committee, but promised to look further at the issue, rather than rule out action altogether. I plead with the Government to take more effective action to deal with this scourge, which is making young people so vulnerable. We all know that it is almost impossible to drive out the illegal drugs trade completely, but it is horribly complacent to say that because we cannot hope to eradicate something completely, we might as well put up with these head shops. They are making substances available far more easily and attracting many more young people, many of them school pupils, into taking these substances, and those young people simply would not do it if it was made more difficult and such shops were driven out of our high streets.
Toby Perkins
I am grateful to my hon. Friend for his contribution. Does he agree that people who have called for the legalisation of drugs on a much broader scale are wrong because, although they say we are criminalising young people who use drugs, the very fact that to use them is a criminal activity prevents many people from going down that route? People can buy those products without any fear of the law, knowing that what they are doing is entirely legal.
John Woodcock
That is a great worry. I recognise that the issue is difficult for all our communities, as well as for policy makers, but look at Amsterdam, which has gone down the legalisation route for some drugs. Legalising or semi-legalising cannabis—or whatever its status is—has brought with it hard drug problems, making them far more available in that city. The Minister has said that he is considering regulating head shops. Surely the overwhelming majority of our constituents would be horrified by the idea that we might end up with mini-Amsterdams on high streets throughout the United Kingdom. I guess his review is ongoing, and we would appreciate an update on it, but I hope he will make it clear that he has categorically ruled out that idea. If his coalition partners want to intervene to give him some moral support while he does so, I am sure that that would be welcome across the House.
Have the Government had the chance to consider a suggestion by local police officers that more be done at ports to restrict the chemicals coming into the country from abroad? Rather than waiting until those substances are in the shops on our high streets, we should cut them out before they get there. I hope that the Minister has had the chance to consider my rejected amendment—how have we ended up with a legal system in which our trading standards officers and police officers, who fervently want to take action, are effectively fighting with one or two hands tied behind their backs? They have an overwhelming suspicion that every new substance is neither plant food nor bath salts, but just another repackaging of substances that are either illegal now or will be made so as soon as the law catches up.
Why not give the authorities the opportunity to confiscate the products when they find them and then let legal due process take place? If the owners of head shops really want to try to convince the authorities that these products genuinely are there to feed plants or make bathrooms smell more pleasant, let them do so. However, we are giving every new substance that comes along a three to six-month head start—perhaps the Minister will provide information on how long it takes to ban each substance—before it can be banned and the next one comes along. If every week the authorities can come and clear the shelves and say, “Come and start a new legal process if you want,” that will make it much easier to tackle this scourge on our high streets. There is an opportunity to do something about that, and if the Minister does the right thing, I am sure that the Opposition will want to back him.
Iain Stewart (Milton Keynes South) (Con)
It is a pleasure to serve under your chairmanship, Mr Chope. I, too, congratulate the hon. Member for Chesterfield (Toby Perkins) on securing such an important debate on an issue that has not had enough publicity and comment. He is absolutely right to have put his arguments on the record and he gave a good summary of the problem nationally and how it affects his constituency. We have also heard about the problems in other places around the country.
My interest in the subject stems from constituency casework. A couple came to my surgery a year or so ago to tell me the story of their 16-year-old son. They were a perfectly normal family—fairly affluent, with good education and strong bonds—and their son was an A*-student at school with a bright future. Everything seemed normal, but he got hooked on legal highs. They were pushed by drug dealers in the area as an entry drug, and his life quickly deteriorated. He got into a vicious downward spiral, and the legal highs led him on to much harder illegal drugs. His education fell by the wayside. His family went through a living hell trying to get him off those and confronting the dealers. They tried everything at their disposal, but were not succeeding, until he went to an excellent local charity in Milton Keynes called Compass, which deals with substance abuse for people under 18.
I will say a little more about Compass shortly, but before I move on I want to say that when I spoke to the staff there they told me they are finding that young people using legal highs are becoming more addicted at an earlier point than would be the case with illegal drugs. There is a real problem in our schools and communities. The family of the 16-year-old told me that the knowledge of legal highs among school-age pupils is widespread; I think it would shock most of us to discover just how prevalent they are and how easy it is to get hold of them. They told me that getting hold of legal highs is easier than ordering a pizza—it is that easy. The hon. Gentleman and the hon. Member for Barrow and Furness (John Woodcock) have highlighted how easy it is to buy such substances on the high street.
Locally, in my constituency and across Milton Keynes, we have seen a worrying increase in the number of deaths from legal highs, from 10 in 2009 to 68 in 2012. In the past couple of weeks, Public Health England has published statistics illustrating that there is a particular problem in Milton Keynes. Nationally, 1% of people included in the survey—
Iain Stewart
Before the Division in the House, I was making the point that recent figures from Public Health England indicate that the problem in Milton Keynes might be greater than it is nationally. Some 1% of those surveyed nationally said legal highs were their drug of choice, but the figure in Milton Keynes was 6%, and I am sure that is replicated in other towns and cities across the country.
As we have heard, legal highs are dangerous, principally because there is a lack of evidence about their short, medium and long-term effects—people really do not know what they are taking. As we have also heard, the composition can be changed so that suppliers are one step ahead of the law at all times.
The police and other agencies do as good a job as they can to keep a lid on things. Compass, the charity I referred to, has done a huge amount of work locally to try to get to young people before their problem becomes too great and to turn their lives around. I am happy to say that the constituent whose parents came to me was sorted out in time, before his life spiralled out of control, but that was only after a living hell for him and his family.
Before the debate, I spoke to Compass about the steps it thinks need to be taken. One point it made was that voluntary organisations pick up the majority of casework. As good as their work is, it is not sufficiently comprehensive to catch all the people in this situation. Compass wants other organisations to do much more—particularly local authorities, given their new public health obligations.
Principally, however, Compass’s point was that much more needs to be done in schools to educate people about the dangers of legal highs. Drug education already goes on, but specific enough advice is not given to young people. Clearly, prevention and education are key. The hon. Members for Chesterfield and for Barrow and Furness made perfectly valid points about the need to look at the regulation of shops. Indeed, I very much support what the hon. Member for Barrow and Furness said about providing some sort of decriminalised or regulated environment not being the answer. However, as important as it is to look at the effect of those drugs on trade in our towns and cities, doing so deals only with the symptoms of the problem, not the cause. The primary focus must be on educating people about the dangers of legal highs and what they can lead to. Anything else must follow from that.
The Government are reviewing policy and legislation on this issue, and I simply urge them to get on with it—I mean that in the kindest way possible. It is easy to spend ages looking at all the evidence and at other countries, but while that is going on, more young people are being sucked into a sinister world. The duty that falls on our shoulders is not to rush into new legislation, but not to dither either. We must quickly grapple with a problem that, as we have heard from Members on both sides of the House, is afflicting many of our communities. If we do not take action soon, it will become far worse.
Mark Pawsey (Rugby) (Con)
It is a great pleasure to serve under your chairmanship, Mr Chope. May I, too, congratulate the hon. Member for Chesterfield (Toby Perkins) on introducing this important debate? He set out very effectively the nature of the problem, the size of the market, the number of deaths and the policy challenges.
The debate has been a rather rare one for this place. Many of us have learned a great deal about an issue we were not very familiar with—I was certainly pretty much unaware of it. Much like my hon. Friend the Member for Milton Keynes South (Iain Stewart), I had the issue drawn to my attention at a meeting with a constituent. Richard Smith came to talk to me a couple of months ago about his son, who had started using legal highs. He talked about the disruption to his life, the cost to the family in terms of relationship breakdown, and the money his son was spending. He drew my attention to the fact that, in the early days, these products were readily available over the internet, and were also available on market stalls. However, like the hon. Member for Chesterfield, he pointed out that these products have become mainstream and are now drifting into the high street.
My constituent drew my attention to a shop in Leamington Spa, a leafy town in Warwickshire that is very pleasant. It is in the main high street—the Parade—with Laura Ashley and Austin Reed nearby. It is called Planet Bong and has an entry in the business improvement district company directory. It is described as
“a funky ethical Fairtrade store specialising in alternative…Fairtrade fashion…All influenced by Fairtrade practices”.
Yet that is where legal highs are readily and easily available. It shows how the issue has moved on.
My constituent also drew my attention to the way in which chemists who manufacture the product stay one step ahead of legislators. The Minister has I think described this as a “race with chemists”, and I am sure that he will discuss how society can start to win that race. After becoming aware of the situation their son was in, my constituents looked for support in the usual places. They went to the health service and looked at what was available through education. Much as my hon. Friend the Member for Milton Keynes South found, support was lacking, absent or inadequate.
My constituent believes that much of the problem is that the people who use the products do not see themselves as victims in the way that the users of more conventional illegal drugs do. They are enjoying what they see as a recreational product and are often completely unaware of the dangers, or of deaths such as those we have heard about. They do not understand where use of the products may take them, and as a consequence they do not present themselves at more conventional drug treatment centres.
Anne Marie Morris (Newton Abbot) (Con)
Is my hon. Friend concerned to hear that a constituent of mine who wrote to me on this issue said that it says on product labels, “not fit for human consumption”? No one seems to read that. People who are not users who go into the shop in Newton Abbot are horrified at the risk to their children.
Mark Pawsey
It is part of youth’s belief in its invincibility. People take those products, believing that because they are young, their bodies are resistant, and they can deal with those things without a massively detrimental effect. How wrong can they be?
Another issue is the use of the term “legal high”, and the conclusions that it leads people to. If something is legal, they think it will perhaps do them no harm. If it is legal, why should they not do it? What should prevent them? The long and the short of it is that my constituent, frustrated at the lack of support available to his son, and concerned about others who might be dragged into using those products, identified a gap. He answered the question “What can be done about it?” by doing something himself: he set up his own company offering education and harm reduction advice. He set up five programmes, the first of which is called Legal Highs Game Over. It is a national awareness and harm reduction campaign targeting social media. It has a YouTube video and Facebook page, it is on Twitter, and there are posters. It addresses exactly the point that my hon. Friend the Member for Milton Keynes South made about where young people now get advice and information.
Rehman Chishti (Gillingham and Rainham) (Con)
My hon. Friend makes a powerful point about education and the role of the media. Does he agree that the media have a key role in making people aware of the dangers of such substances? My local paper, the Medway Messenger, ran a campaign on the effect and consequences of such highs, and other papers should do the same, to make people aware.
Mark Pawsey
My hon. Friend is right—we need to raise awareness; but we should not use the term “legal high” when we do so. In this place, and in all work that is done on the matter, we need to start using the term “new psychoactive substances” rather than an expression that includes the word “legal”.
Mr Buckland
I appreciate my hon. Friend’s valiant attempt, but I worry that that is a bit of a mouthful. I prefer the term “chemical high”, which sums up where we are and does not place undue emphasis on the word “legal”.
Mark Pawsey
I am more than happy to adopt the expression used by my hon. Friend. The issue that I am raising is the use of the word “legal”; we must get away from using it when we talk about the issue.
Toby Perkins
I do not want to engage in a debate entirely about semantics, but would the hon. Gentleman consider that the very fact that we allow products to continue to be legal when they kill people is shaming to us all? Should not that prick our consciences, because we have failed to take the action we should to make them illegal?
Mark Pawsey
That is a matter for the Minister, and it will be interesting to hear what steps the Government will take.
The second of my constituent’s projects is Street Aware, a programme of targeted drugs education in schools that draws attention to the danger of substance misuse. The third is called Times Up and it is about issues to do with substance misuse in criminal justice settings such as police custody suites, probation hostels and custodial institutions. My constituent draws attention to the use of such products in the night-time economy, with a project called Last Orders, dealing with their use in conjunction with alcohol. I think that there is a sense among young people that it is fairly normal to use them while out drinking, particularly given that the products in question are not illegal. Finally, Health Call is a health-based drug and alcohol education and awareness programme, designed for health services, so that health professionals who come across people who exhibit behavioural difficulties can identify whether the products we are concerned with have been used. I hope that the work of my constituent will improve understanding, and that the Minister will support his initiatives.
Jim Shannon (Strangford) (DUP)
I appreciate having had the opportunity to go the Backbench Business Committee, Mr Chope, to put my request for a debate on another subject, and the opportunity to participate in this debate as well.
I congratulate the hon. Member for Chesterfield (Toby Perkins) on bringing the matter forward for debate. He said something that we can all support, which is that the issue exists in all our constituencies. My position on drugs and substances has always been clear and the issue of legal highs gravely concerns me. Urgent action needs to be taken and legislation is needed to stop young people being sold those dangerous substances from corner shops. It is outrageous that such harmful substances are so easily accessible to the vulnerable. Deaths from legal highs, which can be sold freely as long as they are labelled “not suitable for human consumption”, have jumped from 10 in 2009 to at least 68 in 2012, according to Britain’s national programme on substance abuse deaths. If any argument is needed, surely those figures are testament enough to how urgently action needs to be taken by the Government.
In fact, just a few days ago, on 27 June, two addicts passed out in a public toilet in Somerset after injecting themselves with legal highs. As if that was not bad enough, the toilets were close to a park that is full of children and adults during busy lunch times. I believe that the hon. Member for South East Cornwall (Sheryll Murray) mentioned examples of such incidents happening in the day time. That has a detrimental effect on shopping, and on the activities of children and families. No arrests were made because the substances were not illegal. Where, then, are the deterrents? Perhaps the Minister can tell us what they are. Those are not the kind of scenes that we want our children to be subjected to; we do not want them to grow up thinking that such behaviour is normal and, furthermore, that it is okay to take such substances because they are not illegal. Clearly, although they are not illegal, they are still having harmful effects, and can lead to death.
I was pleased to hear that Glastonbury festival, which has been much in the news in the past week, has, along with several other festivals this year, taken steps to ban legal highs. That was done through the Association of Independent Festivals, which co-ordinates the campaign “Don’t be in the Dark About Legal Highs”. There is concern at every level about what legal highs do. If festivals are campaigning and showing their concern, the Government and the Minister’s response should reflect that.
Two or three months ago, I was on a Delegated Legislation Committee on legal highs. I supported Government policy at the time, as did the Labour party, but unfortunately it was not supported by the Lib Dems on the Committee. However, the majority of Members of Parliament supported the legislative change that was coming in.
It is fantastic to see such influential festivals getting involved in the campaign to rid our country of these potentially fatal substances, but more is required. Ian Rodin, a consultant psychiatrist and part of Glastonbury’s medical team, has pointed out:
“The problem with legal highs is people had assumed that if they were harmful they would be illegal, so people haven’t exercised the same caution as they would with an illegal drug.”
That is a clear policy direction from those involved in that and other festivals. They recognise the problem and are doing what they can to address it where they have responsibility. I understand that it is difficult for the Government to legislate against legal highs, given the nature of the substances and their ability to change quickly as new ones appear, but we must encourage and support community groups and police officers in tackling the problem.
I was delighted to see that mephedrone, once a legal high that was widely available and that caused grave concerns to parents in my constituency, has been made illegal. Unfortunately, whenever a substance is made illegal, other legal highs come in to take their place. There must be a policy like the one in the States to which the hon. Member for South Swindon (Mr Buckland) referred, which seems to take all that in. Maybe that is what we need to consider. We must be able to adapt to any other legal highs that suddenly come on the market.
The decision on mephedrone is certainly a step in the right direction. I hope that a similar decision will be made on AMT, a drug that appeared in the 1960s but that has been on the rise as a legal high across the United Kingdom in the past year or so. AMT can make users feel upbeat and excited. However, like all drugs, legal or illegal, it can cause hallucinations that can lead to paranoia, reduced inhibitions and, in turn, serious injury or even death. My greatest concern is that AMT is active in very small doses, meaning that it is all too easy to overdose. How can we allow that legal high to remain on the market? Again, perhaps the Minister will give us some indication of what is happening. A teenager from Southampton, Adam Hunt, died last year after taking AMT at his home, yet the drug is still available across the United Kingdom, even though it has been shown to have detrimental effects. Surely the loss of that young man’s life should be evidence enough that the drug needs to be banned.
According to the Advisory Council on the Misuse of Drugs, AMT acts in the same way as LSD, and the council has called for it to be made a class A substance. Given the increasing number of young people having serious and, in some cases, fatal responses to such substances, that request must be met urgently. The ACMD agrees that along with AMT, another group of chemicals known as tryptamines, which includes 5-MeO-DALT, known as “rock star” or “green beans”, must be banned as well, as they are highly potent drugs that have become increasingly available over the past few months.
Just this morning, as I was on my way to Westminster to participate in business here today and tomorrow, I saw that my local paper, the Belfast Telegraph, carried a story, which I showed to the hon. Member for Chesterfield before this debate, with the headline, “Legal drug is linked to 19 deaths, inquest told”. The article reads:
“A drug involved in the deaths of 19 people in Northern Ireland is still unregulated, meaning it is legal to buy, sell and use…Forensic scientist Simon Cosby told Coroner James Kitson that there was very little known about 4,4”—
I will not say the next word, because I will probably get it all wrong, but it has about 20 letters—
“because it was a relatively new drug, and it is still not covered by legislation, therefore it is not illegal, and had been linked to 18 other deaths”
in the Province. Again, given that there have been so many deaths and there is so great an impact on communities not only across Northern Ireland but across the whole United Kingdom, we must do something fairly drastic to address the issue of legal highs.
We must be aware that although such substances might be considered legal, they often contain one or more chemicals that it is illegal to possess. Furthermore, the majority of legal highs have not been used in drugs for human consumption, so they have not been tested to ensure that they are in fact safe. Unfortunately, due to the lack of drug testing, the long-term health effects of the drugs are virtually unknown, as is the case with many other legal highs, but given what we know about the potential short-term dangers, the overall effect cannot be good.
What worries me even more is the fact that children can buy such drugs easily and cheaply. Before mephedrone was made illegal, children in my constituency could buy it for just £5, which was well within the buying power of almost any young child in my constituency. It was of great concern to me at the time, and it still is. Not only can teenagers buy some of those substances from local shops, they can purchase them easily online, often without anyone knowing. That gives rise to the question of whether there is a greater role for parents as well, and I am sure that the Minister will say that there is. Parents have a role in being aware of what their children are doing and keeping them safe. I appreciate, as always, that it is very difficult to watch everything that children do, particularly as they get older, but I urge parents to be aware of where their kids go and what they do after school or in the evenings, and to monitor their activities online.
As legal highs become increasingly available, more young people experiment with them, which leads to peer pressure, causing even more young people to feel obliged to fit in by doing what everyone else is doing. It is important that young people have somewhere safe to hang out with their friends, whether it is a local youth centre or a sports club. At least such places give parents peace of mind, and it means that they can monitor their children’s activities to some degree.
In conclusion, I urge the Government to ensure that AMT, the legal high that I mentioned earlier, is made illegal immediately, and that the various other legal highs currently on the market, including tryptamines, are also banned. We need to rid our society of these vile substances to prevent any other illnesses or deaths of the kind described in the newspaper article I read from destroying the lives of our young people, and ultimately those of their families as well.
Mr Robert Buckland (South Swindon) (Con)
It is a pleasure to serve under your chairmanship, Mr Chope. I have already paid tribute to the hon. Member for Chesterfield (Toby Perkins) for securing the debate. I echo the comments made by the hon. Member for Strangford (Jim Shannon) about the need for my hon. Friend the Minister to act on the recommendations of the Advisory Council on the Misuse of Drugs on tryptamines. I know that he has had the report for a few weeks now; I think it was issued in the middle of June.
My hon. Friend knows of my continuing concern about AMT as a result of the tragic death of 23-year-old Christopher Scott in my constituency last year. Since that tragedy, Christopher Scott’s parents have been campaigning assiduously for the drug to be banned, and I have been working closely with them to achieve that. More than that, they, I and everybody in this room and beyond want a change of approach and culture. We want phrases such as “legal highs” consigned to the dustbin. We should be talking about “chemical highs” and reminding people that often, such drugs are mixed with already illegal substances, so they are not legal. Above all, we must emphasise that “legal” certainly does not mean “safe”.
My involvement with this issue spans my many years as a barrister prosecuting and defending in drugs cases and dealing with the Misuse of Drugs Act 1971 and its limitations. More latterly, as the Member of Parliament for South Swindon, I worked closely with Swindon police on an issue relating to mexxy, or methoxetamine, a so-called legal high causing severe problems to users in my community back in 2011. I thank the Government for changing the law to create temporary drug banning orders, which have now been used hundreds of times to ban such chemical substances. Mexxy was one of those substances, but as a result of the early warning system and police intelligence provided to the Home Office, the Government took action to ban it within the short period of 28 days. The supply of that drug was made unlawful, and it is now a controlled drug under the Misuse of Drugs Act 1971.
The Government have therefore already taken action to keep step with the rapidly changing scenario of chemical highs, but as is clear from this debate, more needs to be done, which is why the review that my hon. Friend the Minister is conducting is so important. I echo and adopt all hon. Members’ concerns about the situation, and I commend to my hon. Friend the work of charities such as the Angelus Foundation, which have done much to highlight the issues involved with legal highs and campaign hard to influence policy makers. Here are a few ideas for the review that I commend to him. They are the product not just of my thinking and representations but of organisations such as the Angelus Foundation.
I have mentioned the US Federal Analogue Act, which I commend to my hon. Friend. The Act bans chemicals that are “substantially similar” to any controlled drug listed in the schedules if they are for human consumption. At a stroke, it deals with the problems of definitional limitation inherent in including anything in classes A, B or C under the Misuse of Drugs Act 1971. We clearly need a massive public awareness campaign that is national and reaches out into our schools and colleges.
We need to reverse the legal presumption on synthetic psychoactive substances. Instead of playing whack-a-mole, we now need to make illegal the supply of such substances. That could be done by making it a civil offence to sell them, with clear exemptions for alcohol, tobacco, medicines and some specified consumer products. Any establishment selling banned substances could be issued with an order, and any breach would be a criminal offence with penalties attached. That is one idea.
Another idea is to make the misrepresentation and mislabelling of substances an offence. The sale of products that are clearly for human consumption but are labelled the opposite should be treated as a criminal offence. Let us use civil orders to target head shops both online and offline—I must make the point that 80% of chemical high sales take place online. We must acknowledge that the internet is a real problem and a real challenge when it comes to this issue.
We could allow injunctions to be issued to head shops and websites that seek to sell chemical highs, and then we could treat breaches as a criminal offence. The attraction of using a civil approach, of course, would be that the balance of probability test would apply, as opposed to the higher criminal standard. To draw an analogy with consumer law and trading standards law, we could then apply a series of presumptions, meaning that defences would be limited. That is already done under legislation such as the Food Safety Act 1990 and the Consumer Protection Acts of the 1990s. I myself have cited those Acts in prosecutions, and they are entirely human rights compatible if anybody is worried about burdens and standards of proof. We could boost the penalties for regulatory offences, because we are dealing with products that kill people—plain and simple.
We also need to look at some of the existing legislation that is underused. There is section 222 of the Local Government Act 1972, which allows local government to take any proceedings
“for the promotion or protection of the interests of the inhabitants of their area”.
I know that there are pressures on trading standards authorities. They have limited resources; local government is under the cosh, as we all know. However, that approach should be part of my hon. Friend the Minister’s review. We should also have a look at part III of the Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2003, which provides that a breach of one or two of the general rules of law contained in it will be a domestic infringement. Those laws are:
“An act done or omission made in breach of contract for the supply of goods or services to a consumer”
and:
“An act done or omission made in breach of a duty of care owed to a consumer under the law of tort or delict of negligence”.
In other words, there is a general power that could deal with the sale of dangerous substances such as the ones we are discussing. I urge my hon. Friend the Minister to review those existing pieces of legislation, to see whether they could be used as a basis for stronger concerted action.
The National Crime Agency should assist in tackling websites that sell legal highs. There is some important work going on with extreme pornography; the NCA could take a similar approach in relation to legal highs. Leadership from local authorities is, as I have already alluded to, also absolutely essential.
We have done enough hand-wringing on this issue; we now need action. I know that my hon. Friend the Minister is absolutely committed to seeing the sort of changes that we all want, and I look to him for leadership and the sense of purpose that I know he shares with me.
Diana Johnson (Kingston upon Hull North) (Lab)
Thank you, Mr Chope, for calling me to speak. It is a pleasure to serve under your chairmanship this afternoon.
I congratulate my hon. Friend the Member for Chesterfield (Toby Perkins) on securing this debate on a very important issue. In his opening remarks, he set out the situation that we find ourselves in today and the specific problems that he has identified in his own constituency. I listened to his account of what is going on in and around the Reefer store, and it sounds absolutely dreadful. Also, his account of the effects of the substance called Clockwork Orange was particularly concerning. I had a quick look in my own local paper, the Hull Daily Mail, which recently ran a story about Clockwork Orange. The headline was:
“How £10 clockwork orange ‘legal high’ turned caring mum into deranged Longhill attacker.”
Clearly, that kind of substance is available all around the country and are causing problems for all sorts of communities.
I was also very pleased that my hon. Friend the Member for Barnsley Central (Dan Jarvis), who is not in his place at the moment, was able to contribute to the debate, because I know that he is particularly interested in the issue. He hit the nail on the head about the importance of cross-Government working. My hon. Friend the Member for Barrow and Furness (John Woodcock) spoke with great passion about the action that is needed now. He made two interesting suggestions: one was about the seizures that could take place at the ports, and the other was about putting the onus on sellers to show that what they are purporting to be bath salts really are bath salts and are not to be consumed.
Many Members across the country have seen a proliferation in the number of head shops opening in the high streets in their constituencies, and we know that those shops are selling dangerous drugs. Obviously, the correct term is “new psychoactive substances”. However, I take the point that the hon. Member for South Swindon (Mr Buckland) made that that term is a bit of a mouthful. His idea of calling them “chemical highs” has some merit, because the problem with them being called “legal highs” is that it causes young people, in particular, to view them as being absolutely fine and safe to take.
We know that there is widespread concern among parents and communities about legal highs. Many Members have spoken today about particular cases in their own constituencies. The hon. Member for South East Cornwall (Sheryll Murray) spoke about what was happening in her area, and the hon. Members for Milton Keynes South (Iain Stewart) and for Rugby (Mark Pawsey) talked about their areas. The hon. Member for Strangford (Jim Shannon) raised the important issue of legal highs being used at festivals, which at this time of year is quite an important issue to try to address.
All this activity has been going on for some time, but the Government have been very slow in coming to the table to sort it out. There is now genuinely a call for action from all parties in the House, and the Government need to do something. It was not until December last year that the Minister accepted that the situation was no longer under control, and he instigated the review that has been mentioned. The Opposition have been raising the matter with the former Minister with responsibility for drugs, the hon. Member for Taunton Deane (Mr Browne), and the current Minister for the past three years. During that time, the UK has become Europe’s largest market for legal highs. We now have more than 500 internet sellers and at least 100 high street shops selling hundreds of substances. We have also heard that more than 650,000 young people in the UK are thought to have taken these substances, on some occasions with tragic consequences.
We know that the problem has been growing exponentially since 2009. In that year, 24 new psychoactive substances were identified in the UK and were linked with 10 deaths, but by 2012 73 drugs had emerged, which were linked to 68 deaths. We know that last year 81 new drugs emerged. I am glad that the Government have now recognised that they can no longer ignore the problem, and although the review is three years too late, I still welcome it. I hope that the Minister will be able to tell us when it will be published, so that we can see what the Government’s plans are.
There are four issues about legal highs that I want to raise with the Minister. I want to highlight them and seek assurances from him that they will be addressed in the review and its findings.
The first issue is about information. It is difficult to address a problem when we do not understand or know the full scale of it, but at present we do not have a clear recording system to identify the spread of legal highs. There is no record of those presenting at A and E with complications resulting from legal highs. We do not know how often legal highs are implicated in mental health referrals or in adolescent mental health figures. There is even confusion about the drugs that have been identified as being available in the UK, with the European Monitoring Centre for Drugs and Drug Addiction, which is informed by the NHS’s National Poisons Information Service, consistently publishing a much more comprehensive list of substances than the list that the Home Office has on its forensic early warning system. There is a discrepancy in the numbers. Why does the Home Office not use the National Poisons Information Service as its source of information, since its list is more comprehensive? We need a co-ordinated Government strategy. It appears that at the moment one half of Government does not know what information the other half is publishing online. That would be the first step in establishing the baseline of the problem.
Secondly, the Opposition supported the Government in introducing temporary banning orders for new psychoactive substances, but in three years that power has been used just five times, while hundreds of drugs have emerged on the market. The ACMD has been clear that it is not able to assess more than three or four drugs a year. The Minister will say that he has used generic bans to outlaw whole classes—families—of drugs, but I am not convinced that that has worked, as hon. Members have highlighted. We need a new approach to tackling these substances.
Thirdly, it is not just about banning the substances; we now need to tackle an entire industry that has grown up to distribute them. We have heard how head shops behave, particularly the bad example in Chesterfield. Many are deliberately targeting young people, and drugs may be marketed as bath salts or plant food, but that is a thin veneer. As my hon. Friend the Member for Barrow and Furness indicated, people will soon recognise that mislabelling when they seek a description of the drug and information about it from those selling it.
Jim Shannon
Perhaps the hon. Lady will comment on online purchasing of legal drugs, which I mentioned. Although they are available in shops, as we all know, they are also available online and people can buy them without anyone—their parents or their family— knowing. I regard that as a matter of greater concern.
Diana Johnson
The hon. Gentleman is right. Online sale of these substances is worrying. Just this morning I read a description of a drug on pills4party.com:
“DEX powder–new generation of legal high”
produces a
“pure dose of euphoric energy and keeps you charged for all night long. DEX powder is perfect alternative to cocaine that gives you more than the Snowman Experience without any hassles.”
I am sure, Mr Chope, that you are fully aware of what the snowman experience is, although many of us find that rather baffling. That shows how these substances are being marketed for consumption by young people. Nobody can be under any illusion that they are not being marketed as recreational drugs. I have heard of internet sellers sending out free samples of new drugs that have emerged on the market. It seems to me that they are treating our children as guinea pigs.
Until a little while ago, Amazon was selling legal highs on its site, but due to work by the Angelus Foundation I think that it has removed them. Many local authorities have attempted to use trading standards legislation to close head shops down where there is a problem, but such attempts are rarely successful. Indeed, last year a prosecution was thrown out by the judge, who, although sympathetic to the need to close such shops down, said that the legislation simply was not fit for purpose.
One idea, which was used in Leeds, involved solvent legislation, but of course that applies only to selling solvents to someone who is under 18. By extending the solvents legislation, as has been done successfully in Ireland, we could give local authorities the powers they need to close head shops down. I should be grateful if the Minister said what he thought of that idea, which was proposed in an amendment tabled by the Opposition to the Anti-social Behaviour, Crime and Policing Bill. The Government saw fit not to support that amendment.
I was struck by the menu of ways to tackle the problem that the hon. Member for South Swindon proposed. I hope that the Minister will respond to some of those ideas.
My final point, which I have raised in many debates, is that there should be a proper drugs prevention strategy. The lack of one is the Government’s biggest failure. Legal highs have emerged as a new phenomenon, and the Government have done little to tackle the myths that have allowed those substances to take hold in the past few years. Even after a number of deaths, and the horror stories that we have read about and heard about today, some people still think that “legal” means “safe”. That misconception needs to be tackled head-on.
The Minister will claim to have invested in relaunching the Frank website and even to have launched a public awareness campaign last year, but it was too little, too late. In four years, just £67,000 has been spent on a one-off, limited campaign that generated just 75,000 web page views. That is feeble, when we consider that more than 650,000 young people have tried these substances.
Mr Chope, can I just check that the time for this debate has been extended to 4.15 pm?
Mr Christopher Chope (in the Chair)
For the avoidance of doubt, it continues until 4.14 pm.
Diana Johnson
I am grateful, Mr Chope. I did not want to eat into the time available to the Minister.
I pay tribute to the Angelus Foundation, which has done its best to get educational materials into schools and communities. It feels frustrated that the Government have not taken up the mantle on education in schools, in particular, which I think most hon. Members would think is important. Will the Minister talk to Public Health England, which also has a job to do in getting a message out?
A two-pronged approach is needed on prevention and education in schools, giving children the life skills they need. I know that it has been a long-standing commitment of the Liberal Democrats to have compulsory personal, social and health education in schools and, as a Liberal Democrat Minister in the coalition, I hope the Minister might be able to persuade the Education Secretary that that is a good idea.
Those are the four points that I want the Minister to address. I look forward to the review being published shortly, so that we can finally have a policy that gets to grips with this dreadful problem, which is growing and developing in all our constituencies.
The Minister for Crime Prevention (Norman Baker)
I congratulate the hon. Member for Chesterfield (Toby Perkins) on securing this important debate. I recognise that hon. Members in all parts of the House feel genuine concerns about these matters and, in particular, we have all had constituents contacting us with their concerns about what has happened to their families, so the hon. Gentleman is right to bring the debate before the House.
I agree with hon. Members who have expressed concern about the term “legal highs”. That is not an abstract matter; it is quite important, because, as hon. Members have said, using the word “legal” implies safety, and that is a misconception. Therefore, I am keen to get away from the term “legal highs”, and I try not to use it myself, except to disparage it. I am particularly attracted to “chemical highs”, which I have been peddling recently, but there are other options, such as “untested highs” or “danger highs”. We need to find an alternative phrase that conveys accurately the fact that these substances are not tested and not approved, and are probably not safe. I want to get some consensus on that, although the newspapers are attracted to the phrase “legal highs” and it is difficult to move them.
This is a global problem and no country has solved it—it is important to say that. The review process, which is under way, considered experiences in other countries to find out what works and what does not work, and why it was right to do those things. It is not fair to characterise the Government as not having done much on this matter. We have been pretty active on it, but I stress that there is no obvious silver bullet that cures all the problems that hon. Members have correctly identified.
We recognised the emergence of new psychoactive substances and the trade as serious threats from the beginning and have taken multiple and decisive actions to address them. We consulted the Advisory Council on the Misuse of Drugs to inform the action plan published in 2012 to tackle the trade from all angles. We have improved the UK’s drugs early warning system to enable real-time information sharing on emerging drugs between health and law enforcement, the advisory committee and the European Monitoring Centre for Drugs and Drug Addiction. We also created the Home Office forensic early warning system to detect and monitor the emergence of those substances in the UK, inform our response in legislation and provide support to the advisory committee and UK law enforcement. We have introduced temporary drug control legislation so that, together with the advisory council, we have been able to take swift action to protect the public from emerging new substances that we know have the potential to cause serious harm.
As one colleague said today, we are in a race against the chemist. The reality is, as in the rest of the world, we are chasing behind what appears on our streets, almost on a weekly basis, from chemical laboratories that are outside our jurisdiction and outside our control. We have tried to be swift in identifying substances as having appeared. More than 350 new psychoactive substances and their derivatives are now banned in the UK, mainly through our use of generic definitions banning entire families of drugs and related compounds under the Misuse of Drugs Act 1971. Bizarrely, we have even banned substances that do not exist, because we have anticipated where the chemist will go next.
As a result, the majority—about 80%—of new psychoactive substances seen in the EU for the first time are already controlled drugs in the UK. Working with UK law enforcement, including trading standards, to support the use of existing powers to disrupt supply in our communities and online, we have seen some successes. For example, a week of concerted action last November resulted in 44 arrests and, I think, 73 seizures, including large amounts of those substances.
We have issued guidance to local authorities on the use of existing powers. I will not pretend that those powers are comprehensive and that everything that is available is all that we need, but there are powers that have been used successfully by local authorities. The General Product Safety Regulations 2005, which should not be underestimated, have been successfully deployed in Northern Ireland. There is also trading standards legislation in relation to misdescriptions. If somebody markets something as bath salts or plant food, that is a misdescription and trading standards can take action on that basis. That might be more difficult if something is called “research chemicals”, but if it is wilfully misdescribed action can be taken.
John Woodcock
Is the Minister still actively considering our suggestion to allow the police and trading standards officers to confiscate first and then have the legal process? If he is not, will he explain why that is not a good route to go down?
Norman Baker
I will come to the steps that are being taken, but I want to stress at this point, since the hon. Gentleman has raised it, that a process is in place. We have appointed an expert panel based on the best brains in the country from various disciplines: law enforcement, those who have knowledge of drugs, those from the health regimes, those who understand the psychiatry of those who might use drugs and so on. The panel has been charged by me with finding the best way forward to minimise harms from those substances. That is its objective. It is therefore not for me to second-guess what the panel will come up with. The clear objective is to minimise harm, and I look to the panel for recommendations. I will come to the process in a moment. It would be wrong for me to rule anything in or out until the panel has had an opportunity to reflect and take professional advice as it is doing so. No doubt the hon. Gentleman’s points will be considered by the panel, along with everything else.
Diana Johnson
Will the Minister give us a time scale for when the review will report, because time is pressing in this Parliament?
Norman Baker
Time is pressing. I have been in post since October or thereabouts. The review panel was appointed in December and has almost concluded its work. I expect to have its final report on my desk in a couple of weeks’ time. The Government will reflect on the conclusions and we will publish our intentions shortly thereafter. That is our intention. I want to get a move on. There is no intention to delay matters. However, there is also no wish to end up with bad legislation that is rushed and might have unforeseen consequences. I stress that no country in the world has cracked the issue successfully. We have to look across the world at different practices to see what might apply best to our own situation.
Norman Baker
I want to make progress, because a lot of points have been raised, then I will try to take one or two interventions.
I want to correct a point made by the hon. Member for Chesterfield. He said that the UK is the biggest market in the EU for these substances. I believe the shadow Minister said that as well. The advice I have received from officials is that the recently published preliminary results of the 2014 Eurobarometer study show that the UK was not the biggest market. There are three countries ahead of us: Ireland, interestingly; Spain; and France. It does not give me great satisfaction to say that we are fourth, but, for the record, that is what the latest survey shows.
Anne Marie Morris
My question concerns labelling. There might be mechanisms to deal with incorrect labelling, but if a label states, “Not fit for human consumption”, that is almost a “get out of jail” card. How will we deal with that?
Norman Baker
As I said, the expert panel is looking at a range of matters, including descriptions and how substances are promoted and sold. If they are wilfully misdescribed—if the label states “bath salts” and the substance is not bath salts—action can be taken. If the label states, “Not fit for human consumption”, that is no doubt accurate and therefore more difficult. I assure my hon. Friend that that is not the only way into the issue.
The hon. Member for Strangford (Jim Shannon) referred in complimentary terms to the action of festival organisers. I want to say for the record that I wrote to festival organisers to ask them to take that action, so if he was implying that the Government was not taking action that would not be accurate. The festival organisers responded positively to the efforts that we made in writing to them. Indeed, my predecessor, my hon. Friend the Member for Taunton Deane (Mr Browne), wrote last year—successfully—and they took action as a consequence of his letter. We are taking action where we can on those important fronts.
Border Force has enhanced its capability to detect those substances—the hon. Member for Barrow and Furness made a point about ports—coming into the country with the introduction of new portable FirstDefender devices.
I absolutely take the point made by Members about prevention and education. I have given a strong steer to the expert panel that it should consider very carefully what can be done on education and prevention. I look forward to the panel’s recommendations on that particular front. Even so, in the meantime, our prevention message, especially to young people, that the products cannot be assumed to be safe has been consistent and clear. Our FRANK website messaging continues to be updated with information on the risks, consequences and harms of those substances, using the best and latest available information and advice.
We have researched user trends to inform further work on reducing demand, including online. In summer 2013, the Home Office ran targeted communications activity over the festival period to help to prevent the use of those substances and to raise awareness of their risks and harms. That was aimed at particularly 15 to 18-year-olds. With the media involved, we think that more than half of that age group got the message that we sent out last year.
There were 74,000-plus unique visitors to the campaign page on our website, and we saw an 84% increase in website traffic as a consequence. A survey of visitors to the website showed that our social marketing campaign has been effective in shifting attitudes and that a new campaign could achieve similar results, so we are planning to run similar activity again this summer.
We have worked with the Department for Education and UK law enforcement on guidance issued to schools so that drug education includes those substances, along with other harmful drug use, but I want to see what more we can do on that front.
John Woodcock
I thank the Minister for giving way a second time. To go back to the review, when he says nothing is ruled in or out and that he is looking abroad, does that mean he has not ruled out the option of licensing head shops, which I asked him about in my speech?
Norman Baker
I want to make it plain that I am not taking the decision to rule things in or out. I have given the panel a challenge to come up with what it believes to be the best way to minimise harms. It would be an odd remit if we started telling the panel in advance what it should conclude. It has looked at the various options; none is without problems. I think the hon. Gentleman refers to the New Zealand position, where having a regulated market has caused problems. There are problems in the US with the analogue system, which is potentially becoming a lawyers’ paradise, and there are problems in Ireland, where the trade has largely gone underground.
Norman Baker
I have one more general point to make, then I want to pick up on some of the points made by Members. For the record, it is unfair and inaccurate to say that the Government has not been active in this area; we have been very active, including at the international level, with the adoption of new UN resolutions on the early identification of emerging substances, and with concerted action across our agencies. More recently, we have led the call for the international control of mephedrone. In fact, we are recognised as a world leader in dealing with that particular threat, and we have used our presidency of the G7 to deliver international action, and to promote successful engagement with source countries such as China and India on the challenges that we continue to face.
Steve Brine (Winchester) (Con)
I support the Minister on that point. It is unfair and inaccurate to say that the Government have been doing little in this area. However, the young person who died at Glastonbury this weekend, and the one who died at the Boomtown festival in my constituency last summer, had taken ketamine, which the Government have banned. Banning things is important, but it does not necessarily protect young people.
Norman Baker
Sadly, that is true, and it is a well made point. I was horrified by the description from the hon. Member for Chesterfield of what was happening in his town. He listed some of the problems; one of the options that his council might look at is using the Government’s antisocial behaviour legislation, which has potential to deal with the consequences outside the shop. That is not the full answer, but it provides potential for the police and the council to come together to use existing powers.
Toby Perkins
I am happy to make that suggestion to the council. I am joined here by one of our councillors who has taken a leading role in this debate. I was going to respond to the Minister’s point about the council having a role under general product safety, and his suggestion that the enfeebled trading standards might use misdescriptions legislation. I hope that when he has finished his review—I appreciate that we have to be a bit more patient on that—we will be able to give local authorities a little more for their armoury, so that they can tackle this important issue.
Norman Baker
I hope that that is the case. My hon. Friend the Member for Milton Keynes South (Iain Stewart) was absolutely right to refer to the uncertainty about long-term consequences. The need to ensure that they are properly evaluated means that we should not rush into what might be the wrong answer, but should nevertheless try to ensure that we get the right answer as soon as possible. He was absolutely right to say that much more needs to be done on prevention—he said education was key, and I entirely agree. I also agree that there is a strong argument for having compulsory personal, social, health and economic education in our schools.
My hon. Friend the Member for Rugby (Mark Pawsey) listed some helpful initiatives taken in his constituency. I pay tribute to those who took that action, which was public-spirited and helpful. My hon. Friend the Member for South Swindon (Mr Buckland) made some helpful suggestions, which I will pass on to the review panel. It has almost concluded its work, but those suggestions remain useful. I share the shadow Minister’s endorsement of and thanks to the Angelus Foundation for its superb work in the area; I am pleased to have been able to meet with people from the foundation on a number of occasions to discuss their work.
The shadow Minister referred to a number of issues, including information. I assure her that the expert panel that I have appointed has had a working group on the sharing of information and has also been identifying the need to ensure that it is shared with the health environment. We are therefore looking at information available from accident and emergency, to which she referred, and wider health service treatment. I expect recommendations in that area as part of the expert panel’s work. The hon. Lady also mentioned the National Poisons Information Service, which I assure her that the Home Office uses. The service is particularly important when we are gathering evidence for the Advisory Council on the Misuse of Drugs; it informs ACMD’s advice and, subsequently, our decision on drug control. The service is used by and valuable to the Home Office.
On the figures for deaths, Members are right to draw attention to the increase to 68. For the record, that is 4% of drug-related deaths. Sixty-eight too many have died, but we must not take our eye off the ball: a lot more deaths from drugs have to be dealt with as well, whether they involve heroin, crack cocaine or other substances. I hope that that has been a helpful response to the debate. If there are any outstanding questions, I am happy to answer them individually.
Personal Independence Payments (Liverpool Wavertree)
(10 years, 2 months ago)
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Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
It is a pleasure to serve under your chairmanship this afternoon, Mr Chope. I am grateful to have been granted this debate on the time taken to process personal independence payments in Liverpool, Wavertree. Concern in my constituency is significant. The cases that have been brought to my attention are appalling in their number and their nature. I am in the Chamber today to represent constituents who have come to me, some in real despair, and to ensure that their stories are heard. I am also grateful to the organisations that have contacted me to share their national experience on the issue: Macmillan Cancer Support, Citizens Advice and Mencap, to name but a few.
As the House heard yesterday, delays to personal independence payments are a problem not only for the people of Liverpool, Wavertree, but for people the length and breadth of the country, who are facing unacceptable waits before receiving money that they are entitled to and that they desperately need. PIP is a non-means-tested, non-taxable benefit available to people suffering from ill health or with a disability. It is intended to help the recipients cover the additional costs arising from their condition, whether in or out of work. Additional costs can include a taxi to the hospital, higher utility bills and equipment that is essential for independence.
PIP is replacing disability living allowance for people of working age. In February last year I opposed the Social Security (Personal Independence Payment) Regulations 2013, which legislated for the introduction of PIP, and I opposed what is now the Welfare Reform Act 2012 on Third Reading, but I am not in the Chamber to debate the ins and outs of PIP itself. I am here to highlight the ways in which the appalling handling of its introduction has brought distress, hardship and unnecessary pain to too many of my most vulnerable constituents. The debate is about individuals waiting months and months for a decision; terminally ill people being passed from pillar to post; and the sick and vulnerable being forced to use food banks, because the money that they are entitled to has not appeared. The debate is about common human decency, treating people with dignity and respect, and how the Government have failed to protect such fundamental principles.
In the limited time available, I would like to share with hon. Members some of my constituents’ appalling stories. We know that the phased introduction of PIP began back in April 2013, but six months later, in October 2013, the Department had made only 16% of the decisions it had expected to make by that time. The decision on my constituent, Mohammad Shafieian, should have been made, but was not. He originally made his claim in September 2013 and had to survive without the help he needed for eight months.
My constituent Thomas O’Donnell suffers from serious epilepsy, depression, arthritis and memory loss. He originally made his claim for PIP in August 2013. The months went on without him having an assessment, and he fell into financial difficulty. He was struggling to pay his rent and he could not afford his bills. By the time he came to me in March this year, Thomas was suicidal. Eight months on, he was still waiting for a decision. His epilepsy was causing him to have daily violent fits and he was surviving on just £30 a week. He did not have cooking or washing facilities in his home and he did not have any food. After months of my helping Mr O’Donnell navigate an impossible system and raising his case on the Floor of the House, he was eventually awarded the money he was entitled to, but eight months of waiting and the hardship and strain had taken a toll. His doctor confirmed that he was suffering from malnutrition. I am appalled that my constituent was suffering from malnutrition here in the United Kingdom in 2014.
Another constituent, Trudie Ann Birchall, made her claim for PIP on 20 November 2013, just after she had been diagnosed with cervical cancer. The Department for Work and Pensions was aware of her diagnosis, but it took Atos five months, until 7 April, to get around to assessing her. She was told after her assessment that her claim would be decided by 5 June, but that came and went, and she had to wait almost another fortnight to be informed of her entitlement.
The Minister’s Department has said that people with terminal illness should have their applications fast-tracked and a decision made within 28 days. What concerns me is that Ms Birchall’s case is not exceptional. Since the introduction of PIP, thousands of cancer patients have been left in the dark, with at least 4,500 of them waiting six months or more to find out even whether they will be awarded the benefit.
Steve Rotheram (Liverpool, Walton) (Lab)
Does my hon. Friend agree with my hon. Friend the Member for Stretford and Urmston (Kate Green), who said in yesterday’s debate something along the lines that the debate is not about the philosophy of welfare reforms, but about the way it is delivered? We have all seen in our advice surgeries examples similar to those my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) is outlining. Does she agree that it is simply wrong for our constituents to pay the price of this Government’s incompetence?
Luciana Berger
I thank my hon. Friend for his emotional contribution, which highlights the challenge facing too many of our constituents who come to our constituency surgeries to highlight the process they have had to go through and the weeks and often months of waiting. That is not acceptable.
I was talking about the impact specifically on cancer patients. It is appalling that we should treat them in this way, which is why I am delighted to have secured this debate to ask the Minister to explain what he and his Department will do about it.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I congratulate my hon. Friend on securing this debate. Earlier this year on the Floor of the House, I raised the cases of two young women whose cases were brought to me by CLIC Sargent. They both have cancer and had been waiting seven months. One secured her PIP after my intervention. The other secured it because the Minister intervened when I raised the matter at DWP questions. The reality is that most people do not know that they can go to their MP, or that their MP can raise it with the Minister. Do we not need to sort out the system?
Luciana Berger
I thank my hon. Friend for his contribution. I am sharing with the Chamber a handful of cases on behalf of constituents who have given me permission to raise those cases. Other constituents have not given that permission because they are worried about the consequences and the impact it might have on their wait. He touches on an issue that was highlighted in a report by IFF Research, which was commissioned by Macmillan in late 2013. It investigated the impact of PIP on the financial status, standard of living and well-being of people living with cancer. It found that the majority of claimants had yet to reach an outcome and that they waited an average of just under four and a half months. A quarter of respondents in that study had been waiting at least six months.
Those delays are having a real and shattering impact on cancer patients. They mean that more than half of respondents had increased financial worries and 51% thought that the process had caused emotional strain. Two fifths were unable adequately to heat their homes and one in three thought that the delays had resulted in mental health problems, such as anxiety or depression. We are talking about some of the most seriously ill people in our communities, and I do not believe that people battling cancer should have to battle their own Government to obtain the financial support they need.
What about those who are too ill to fight for what is rightfully theirs? My constituent Tracey Lewis suffers from mental health problems and severe anxiety. She registered her claim for PIP in August 2013. She sent off her information in September and Atos confirmed receipt of it on 27 September 2013. She then heard nothing for six months—not a word. Tracey was too ill to battle against the system on her own, and only after an official complaint was made by the citizens advice bureau and I intervened was an appointment set up for her on 2 April 2014. Months down the line, Tracey is still waiting for a decision, and she is not alone.
My constituent Gillian Henderson submitted her claim in January 2014. Seven months later, she has still not had an Atos medical and still does not have a decision. Gillian suffers from severe sleep apnoea. Her disability is incurable and without the aid of her machine, which she must be hooked up to every night, she would stop breathing an average of 78 times an hour. Gillian was told by DWP a couple of months back that she would definitely be contacted for an assessment in June. It is now July, and she has still not heard anything.
Those are just some of the horrifying cases I have encountered from constituents who have given me permission to use their names and to raise their cases, but I am worried about those who have not given me that permission because they are too afraid. That is replicated in constituencies throughout the country, and it is unacceptable. Only a quarter of disabled people who have applied for PIP have had a decision. Statistics published early this month found that in the first 12 months of operation, DWP made decisions on 84,900 people who were seeking PIP. That is just under 7,000 decisions a month. DWP expects to assess 3.6 million people for PIP by 2018, but to reach that target at the current rate of 7,000 a month would take more than 42 years.
The situation does not seem to be getting better, and may be getting worse. We are now seeing delays of more than seven months for a decision, which is up from more than five months in December. People are facing major delays with both Atos and Capita to secure face-to-face meetings, and it is taking much too long for Atos and Capita to report back after assessments—sometimes three to five months.
The Department itself admitted in its annual report, which was published last week:
“The volume of assessments undertaken by providers on both contracts has fallen consistently below demand, with a detrimental impact on customer service and implications for forecast expenditure on sickness and disability benefits.”
The Public Accounts Committee inquiry, which reported earlier this month, also found:
“The unacceptable level of service provided has created uncertainty, stress and financial costs for claimants, and put additional financial and other pressures on disability organisations, and on other public services, that support claimants.”
The response from the Government to the distress that they have caused has been less than satisfactory. I wrote to the Secretary of State for Work and Pensions back in April highlighting my serious concerns about what appears to me to be a growing trend in long delays for PIP in Liverpool, Wavertree. The response I received did not commit to the action that I would have expected—in fact, it was pitiful, and it was the reason why I sought today’s debate.
I have some questions that I hope the Minister will respond to. What action is he taking to speed up all stages of the PIP process to ensure that benefit decisions are made on a timely basis? How does he plan to tackle the backlog of PIP applications that has arisen? What is he doing to ensure that his Department’s contractors provide an acceptable level of service to claimants? How does he intend to make the system easier for claimants going forward?
On behalf of Thomas, Mohammad, Trudie, Gillian and Tracey, and those who did not want their names shared with the House today, I have to say that the appalling delays that my constituents have faced, and the devastating impact that it has had on them, their families and their carers, echo a grim picture of what is going on right across the county. The chaotic handling of the PIP leaves serious questions about ministerial competence at the Department for Work and Pensions. I say that because anyone in the Chamber could need PIP in the future. I am ashamed to live in a country that is treating our most sick and vulnerable in this way. The state should be supporting people in their time of need, not making them feel worse, and I look forward to hearing from the Minister how he is going to put it right.
The Minister of State, Department for Work and Pensions (Mike Penning)
It is a pleasure to serve under your chairmanship this afternoon, Mr Chope, even if we have been somewhat delayed by proceedings in the House; I fully understand why that was. I congratulate the hon. Member for Liverpool, Wavertree (Luciana Berger) on securing the debate. She is joined in the Chamber by her colleagues from Liverpool, a city I have a great empathy with. I was there only a week or two ago with the mayor. He was very pleased to see me, simply because, I think, I created the cruise terminal in Liverpool, even if I did not save the coastguard station, but we cannot have everything and I did try very hard.
I have been in this job some eight or nine months and my officials will confirm, probably by not nodding, that I am brutally honest about the problems we have with PIP. I have said time and again that the time it is taking the contractors to do the work we are asking them to do, and the time it is taking my Department to do things, is fundamentally unacceptable. I have put a series of measures in place, which I will discuss during the short time I have. If I cannot answer the specific points that the hon. Lady made, or if I forget—I am naughty in that way sometimes—I will certainly write to her with a more fulfilling set of answers.
I say at the outset that if any Member of the House has constituents who are waiting for PIP for an unacceptable length of time, then, like many colleagues in this House, they should write to me. The hon. Lady has done so, as has the hon. Member for Liverpool, West Derby (Stephen Twigg), who is by her side. I cannot promise that that will resolve the situation instantaneously. I am not even certain at times that my intervention will give them the result that they want, but at least I will be aware of the situation, and we can look carefully into the detail of what has gone on. The point I want to make is that people should not be afraid. Nothing that they say to their MP, and nothing in the correspondence that comes to me, would have any effect on the speed or the decision, and that is absolutely crucial. If I put nothing else on the record today, that is very important.
I will touch on a couple of points that the hon. Lady raised, and then on the proposals. In the debate in the House yesterday, we announced how we intend to speed up PIP, and we have set specific targets for that. Thank goodness we live in a country where cancer is not, frankly, the death knell that it perhaps was when I was a young man. The fear of cancer is still there, but for so many people, cancer is curable, and they can go on to live fulfilling lives. When I am looking at decisions to be made on terminal illness, I rely enormously on the consultants and the fantastic work that Macmillan does.
I gave evidence to the Select Committee on Work and Pensions very soon after I came to this job, and it was put to me that it was taking 28 days to make a decision on PIPs for terminally ill people. I said to the Committee that that was unacceptable, and that I would like to get it under 10 days on average. I have done so. It is not the Department’s view that it should take 28 days. That is what it was taking, wrongly; it is inside 10 days now. I think we can drive that down more, particularly with the help of Macmillan and the work I have been doing with it. I do not agree with everything that Macmillan says, but on this particular issue, we work very closely together. We are working now on more technology and particularly on secure PDFs, which in the 21st century, you would think we would use much more widely in government than we do. However, secure PDFs will be used and we will get rid of some of the paper.
Someone having cancer does not, thank goodness, mean that they are terminally ill, though I fully understand the real concerns of someone who has had that diagnosis; but if the consultant or Macmillan tells us that information, under exactly the criteria that were there under the previous Administration, we click into a completely different different system so that we can get the payments out as fast as we can. The length of time that has been taken for a PIP is unacceptable. I am working very closely with providers and my officials at each end of the process to make sure that it is sped up, and to make sure that the contractors—both Atos and Capita—fulfil our requirements as regards quality and have enough capacity in their systems to ensure that they do that. That is something that we are working on. As I have said before, this means that I will be paying the contractors more to deliver the services that we are asking from them quicker. That has an effect on my departmental expenditure limit—I fully accept that—but the most important thing is that we get the payments to the people who deserve them and need them so much, and that people who do not need them do not get them.
Mike Penning
I will not, if the hon. Gentleman does not mind. I did not intervene on the hon. Member for Liverpool, Wavertree, so that I would have enough time, because this is a very short debate. I have to finish soon and there are some really important points I want to make. If I get towards the latter part of my comments and I have made the points I want to make, I will naturally give way to the hon. Gentleman.
We said in the Chamber yesterday that we expect that by the autumn, no one will be waiting for an assessment for more than 26 weeks and by the end of the year, we expect that to be no longer than 16 weeks. The previous Administration did not have a disability living allowance target, but we have set out that by the end of the year we expect that the waiting time for assessments will not be longer than that. That means that we are investing. We are putting people alongside the contractors from my Department, so we are shortening the journey time. Perhaps they are concerned about certain methods, or whether we can do as many paper-based assessments.
One of the biggest issues that has occurred with the PIP is that under DLA, only about 7% of people applying would ever have had a face-to-face assessment. I think we all accept that that was too low. If there is anybody in this Chamber who does not accept that, I do not understand why. What was wrong is that we went to 97% face-to-face assessments—excluding, obviously, terminal cases—and I think that was unacceptable, and we will drive that down. Within the contract agreements, we would like it to have been 75% to 25%. That was what was set by Ministers in the previous Government. I would actually like to see it much lower—I think 60% to 40% is probably about where we should be. Interestingly enough, the face-to-face assessments that were done under DLA were done by Atos; it was doing the job before, and it is doing part of the job for us now.
I did make a decision, in parts of the country, to turn off natural reassessments for DLA. Let me give the reason why. Capita is doing natural reassessments, but in the other parts of the system that are dealt with by Atos, I was very conscious of people who had no money coming in from this sort of benefit—in other words, they did not have DLA previously and were not getting PIP—and I felt that we should ensure that new claimants were dealt with quicker. I will not turn on natural reassessment of DLA payments that are being converted into PIP—unless a person’s condition deteriorates—until we have got the backlog under control and we are getting the figures that we are talking about now. That is very important. I do not want people with DLA to think that that will suddenly happen tomorrow, and we will be talking to them. We will not. Their payments will stay—I repeat—unless their condition deteriorates.
It is enormously important that we work as fast as we can to ensure that the assessments are done correctly and that lots of people are not worrying about appeals. That is why the decision makers look at the decisions again—natural reconsideration, as it is called. Of course, individuals have the right to appeal, but although these are the early stages, it appears that we are making decisions correctly—not in every case; some still go to appeal, but certainly nowhere near as many are going to appeal as we expected, and there are more people getting more from the PIP decision than they did under DLA.
I can give an example of that. The hon. Member for Liverpool, Wavertree, alluded to some of her constituents’ conditions, particularly in relation to mental health. It was ever so difficult, if not impossible, to get the highest rate of DLA with a mental health condition; people will do so under PIP. There are people getting that now, and that is right and proper. I will move on to another issue, but I did promise to give way to the hon. Member for Liverpool, Walton (Steve Rotheram) if I thought there was time. There is time, so I will give way.
Steve Rotheram
The right hon. Gentleman prides himself on being from an ordinary working-class background, unlike many of his colleagues. Does he not understand, then, that the fundamental issue is the hardship being caused to constituents, as has been outlined by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger)? It is no good just outlining what has happened to date. The Government need to do something to tackle the issue and to alleviate the problems that people are having. These are some of the most vulnerable people that any of us will ever come across in our lives.
Mike Penning
I am not talking about what has happened. I have said that what happened in the past was unacceptable. I repeat that we expect that by the autumn no one will be waiting for assessments longer than 26 weeks, and that by the end of the year no one will be waiting longer than 16 weeks. That is not the past; that is going forward. A whole series of measures, including contract negotiations, are being dealt with to ensure that we can do that. The hon. Gentleman knows me well enough; I would not stand up and say that unless I believed that it could actually happen. I am absolutely determined, perhaps because of my background, although this is not a means-tested benefit. Everyone who is entitled to it gets it, no matter what, but I also fully accept that if someone’s income is low, this is such a desperately needed amount of money.
There is other help that can be given. The hon. Member for Liverpool, Wavertree, touched on the cost of taxis to the hospital and things like that. There are financial schemes whereby we can help with that, but what really should happen is that we should get the benefits sorted as fast as possible, and the measures that we are taking now—not what we did in the past—will allow us to do what we expect to do by the autumn, and to go beyond the 26 weeks and get down to 16.
With regard to terminal cases, we know anecdotally of some cases that are taking three to four days. On average, it is about 10 days. That means that there are still some, sadly, that take more than that. We will drive that down with technology. We can drive it down by ensuring that part 2 of the form comes back in much quicker than it did. The benefit starts from when the person makes the phone call, or someone makes the phone call on their behalf. That is unlike the old DLA, which started only when the forms arrived. However, we are still struggling to get claimants to get the forms back in as soon as possible.
There is the question of whether we can work more closely—I hope that we can—with the relevant charities and groups that are often advising claimants. There is the question of whether we can work more closely with colleagues across the House to ensure that we get the forms and the information back. That does not mean that we need tons and tons of information. Very often, we get a large amount of information in weight and size terms, when what we really need is a consultant’s letter, a GP’s letter and an explanation of the condition. The assessment is not in any way, shape or form a diagnosis; that has to be done by experts elsewhere. This is a capacity decision as to what their needs would be. I think that we can do a lot more work on that.
One area that we are looking at, for instance, is whether we can share information across different benefits. I know that the previous Administration looked at that. It is quite a complicated area, but we would think it would be common sense. If someone has the higher rate of PIP, we could see where that would link across to what their employment and support allowance would be and perhaps vice versa. It may not give us all the information, but often it would give us more information than we had before.
No Minister, of any colour or persuasion, can say that mistakes will not happen. However, I am determined that we have as few mistakes as possible. Of course, anyone, when we get the decision wrong, has the right to go to appeal, to go to the tribunals. I sat in on some of those tribunals, and one of the things I found was that we just did not have the information, sometimes, that was being presented to the tribunal. If we can deal with that, we can explain things to people much better, and not only because of our reconsideration of the claim.
With PIP, we now make phone calls directly to the claimant to explain why the decision has been made and why it is within the rules. We have found that very helpful. I have sat in on and listened to those conversations. I was in Liverpool, where those calls are made; one of the PIP centres is in Liverpool. Any of the hon. Members here today are welcome to go in and talk to the staff and listen to the calls that are being made. I think that that would be very useful to colleagues, particularly as the centre is on their doorstep. I am not saying that every claimant they would listen to would be from the same part of the world as the hon. Member for Liverpool, Wavertree, or the hon. Member for Liverpool, Walton, but it would be useful to go there. We have made that offer to the Front-Bench team in relation to not only this benefit but others, and I hope that it will be taken up.
I am ever so aware of the concern and the unacceptable lengths of time that the claims are taking. I am doing everything I possibly can to shorten that process, and to get more people having paper-based assessments. That will speed up the process. When people have a face-to-face assessment, that should be done in an environment that is helpful to them, so that we can get the decision made quicker. We have committed ourselves: we expect the length of time to be 26 weeks by the autumn and 16 weeks by Christmas. That is a position that I think we would all be very happy to be in.
Transport Infrastructure (Essex)
(10 years, 2 months ago)
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Priti Patel (Witham) (Con)
It is a pleasure to serve under your chairmanship, Mr Chope. I am grateful to Mr Speaker for granting the debate.
This Government have a strong track record on infrastructure investment to support economic growth. Despite the difficult economic circumstances inherited from Labour, record amounts of funding are being spent on crucial infrastructure projects. Our railways are receiving the biggest investment since they were built in Victorian times. Superfast broadband is receiving investment so that it can be rolled out in rural areas. The Davies commission is examining options for our long-term aviation strategy. Importantly, and specific to this debate, our road network is being upgraded. I particularly welcome the recent investment from the Government in roads to address potholes. That includes the £4.4 million of new money for Essex announced last month.
That shows that this Government, with their commitment to economic growth, understand that infrastructure is not just something that public money is routinely spent on, but that it is important that available funds are spent strategically to maximise the benefits of every penny spent. That is the purpose of today’s debate, because for me, it is about making the case for strategic economic investment in infrastructure in Essex. In my view, modest infrastructure investment will yield enormous economic returns.
By way of background, Essex is a dynamic and innovative county of entrepreneurs, as the House has heard me say on several occasions. We have some 52,000 businesses, the overwhelming majority of which are small and medium-sized enterprises, which add some £30 billion in value to the UK economy. Those firms are relentless in supporting economic growth. Last year alone, they helped to create new jobs that took more than 10,000 people off benefits and returned them to work. We have world-famous brands ranging from Wilkin and Sons, Crittall Windows and Hayman, all of which export internationally. Supported by the outstanding Essex chamber of commerce, firms in Essex have added more than £300 million in export orders alone. All our businesses are desperate to export more and to do more business, but to do that, they need the right infrastructure improvements to be made. Those improvements will enable our businesses to support more jobs, growth and prosperity not only in the county, but across the country.
Those companies can lead the charge when it comes to the export-led recovery that we all speak about. I am sure, Mr Chope, you heard the Prime Minister say in the Commons Chamber a fortnight ago that
“where Essex leads, the rest of the country follows.”—[Official Report, 18 June 2014; Vol. 582, c. 1113.]
For us, despite the fact that we are experiencing tremendous population growth, those demands will always be there. Our population is among the fastest growing of any area in the east of England. We must be much more strategic about our infrastructure plans, how we work with our local authorities, upgrade our housing estimates and, importantly, plan to ensure that economic investment in our roads is strategic and in the right place.
The excellent Essex chamber of commerce, through the Essex business, transport and infrastructure forum, at which my hon. Friend the Minister has spoken, has been at the forefront of driving forward the campaign and economic arguments in favour of investment in our roads and infrastructure in Essex. The forum’s research and surveys of members have highlighted the economic costs of our outdated highways and, significantly, the cost of delays and congestion. Comments from businesses noted that some firms are losing £2,500 to £5,000 a week as a result of aggregated delays of one to two hours a week. Other firms have reported losing £50,000 a year because each employee loses an average of two hours a week as a result of congestion. One firm has summed up how much poor infrastructure is holding it back:
“Road congestion is the fundamental barrier to future growth for my business—in particular key junctions and the last mile to my premises.”
Put simply, congestion costs money, jobs and growth, so improving road infrastructure is important to our economic future because key road links provide access to important economic hubs. In Essex, those hubs are Stansted airport, Southend airport, the brilliant new DP World London Gateway port and logistics park, and other ports including Tilbury, Felixstowe and Harwich.
The infamous A120 is a vital economic corridor, and the 12-mile single carriageway stretch that runs through the north of my constituency between Marks Tey and Braintree is in need of investment. Not only has the road been identified as one of the 10 most dangerous in the country, but it is congested daily because of the single-carriageway sections. Such congestion, or gridlock, has caused several accidents, and there is a history of road fatalities. The road connects ports such as Harwich with Stansted airport and is used daily by more than 50% of the companies across Essex, particularly by freight trucks, but it is virtually at a standstill.
The previous Labour Government abandoned a proposed scheme to upgrade the A120, but I believe that we must work towards securing a new investment package to carry out the crucial upgrade works and dualling that are desperately needed. The Highways Agency route-based strategy, the South East local enterprise partnership “Growth Deal and Strategic Economic Plan” and Essex county council all support the dualling of the A120 as one of the county’s most pressing infrastructure priorities. That is because we all recognise that upgrading the A120 could add more than £1 billion to the UK economy. I hope that the Minister will give a commitment to working with the relevant public authorities, the local authorities and the Highways Agency to place the A120 in the national infrastructure plan and to develop a suitable scheme along with an investment package that will deliver the most appropriate and relevant upgrade to the A120. Ours is a country that manages to deliver major infrastructure projects such as Crossrail, on which work is still taking place, the Olympic games and many other schemes. It is time we undertook not only to dual the A120, but to look more strategically in our counties—including, of course, Essex—at our roads to ensure that the necessary improvements fast become a reality.
Other roads that need investment include the A12, which runs through the heart of my constituency and links my part of Essex to the M25 and London. The road is used by 80% of the county’s businesses, and the problems on it are insurmountable. They include poor road surfacing, the impact of diversions caused by shut-downs—those diversions come straight through Witham town and cause congestion and misery in my villages—and access to and from the A12 using single-carriageway roads. In my constituency, there are serious problems with traffic and congestion in Kelvedon, which is the main access from Tiptree to the A12 and the B1023. That has not been fully addressed by the route-based strategy, and I would like the Highways Agency to look again at options for the area.
In recent weeks, we have had accidents in Hatfield Peverel, and their impact on traffic and congestion on the A12 led the county council to suggest that new road markings and signage be installed. I hope that the Minister and the Highways Agency give those proposals some consideration, along with the many other proposals that have been suggested. I have written to the Minister, and he has been helpful in responding, on the question of improving road safety and reducing congestion.
Another road in the county, which is not in my constituency but is an important strategic link for businesses, is the A127. As the Southend arterial road, it connects the M25 to Basildon into Southend airport, which is experiencing tremendous growth in passenger numbers as a result of the private investment made by Southend airport. The road is being used, quite rightly, by the county’s businesses, and it is particularly useful to great exporters such as CNH UK. Essex county council and chamber of commerce have shown great initiative, and the Minister will be pleased to know that they have set up a taskforce to look at the A127. I am sure that recommendations will follow, which the Minister will be interested in considering.
The bête noire for businesses in Essex is the Dartford crossing. The Minister is well aware of my sentiments about the Dartford crossing and the daily congestion from which it suffers. I sat there on Friday night for two hours while three lanes were closed and nothing moved. That is a typical experience of the sort that many users endure daily. Delays at the crossing are causing economic chaos, which has a knock-on impact on our economy because of the business time that is lost. Congestion and the average performance reliability of the crossing are the worst of any major trunk road in the county. Regular users of the crossing experience seemingly endless delays—not of 20 or 30 minutes, but of more than an hour—and we all want action to be taken to reduce those delays. We are optimists, and we look positively towards the introduction of free flow, which we can only hope will transform the experience and get things moving. I would welcome an update from the Minister on free flow.
I would also welcome an update on the decision making timeline for the new Thames crossing, which is another important network road for my constituents and a big piece of work. Last December, option B was eliminated, and businesses are eager to know when the Government will decide whether to choose option A, which is to develop a new crossing on the existing site, or option C, which is to link the M2 near Rochester with the A13.
Gareth Johnson (Dartford) (Con)
I congratulate my hon. Friend on securing the debate and pay tribute to the work she is putting into Witham and the whole county. She has mentioned the congestion at the Dartford crossing. Does she understand my objections to option A, which is to have a crossing next to the existing Dartford crossing into Thurrock, because it would not provide an alternative for the motorist? We are expecting a garden city to be built in my constituency, with some 15,000 new homes; a proposal for a new Paramount theme park; and the expansion of the Bluewater shopping centre. Does she agree that an alternative for the motorist is essential, rather than simply extra capacity next to the existing crossing, which is all option A would offer?
Priti Patel
My hon. Friend makes some relevant points. We need a strategic network and we must ensure that the strategic work and planning are done in the right way so as to address the problems. We must also future-proof those routes so that they can meet future capacity needs and ease the constraints in relation to congestion. The Minister will recognise what we are saying, because improvements to the Essex-Kent road links are so vital. Of course, such improvements would act as a turbo charger for the economy in the east and south-east as a whole, but the roads are also vital links that are currently gridlocked. The lack of future-proofing of our infrastructure has caused a lot of the problems.
In addition to the roads issues that affect the county, which I could go on about, I would like to touch on some rail issues. The Minister knows that last autumn the Chancellor of the Exchequer established a rail taskforce for the great eastern main line. The taskforce, of which I am a member representing Essex, is examining the strategic improvements to infrastructure and services required to unlock the economic benefits for the east of England—estimated to be close to £4 billion—by delivering faster and more reliable rail services. Progress is being made. The new direct award franchise to 2016 will lead to the deep clean and refurbishment of rolling stock—things for which passengers have been crying out for years.
The new post-2016 long-term franchise offers a great opportunity to get a better deal for commuters. I get correspondence from railway commuters every day, and they are desperate for the upgrade and for improvements to their commuting experience. I would welcome a brief update from the Minister about the progress on that. Rail users in my constituency are deeply unhappy. We have one opportunity to get things right, so we really must do so.
I want to make two final points. The first is on aviation. We have two incredible airports in Essex, both with ambitious plans to deliver new services to access new destinations. We obviously welcome the private investment going into those airports, which are creating new jobs and new growth. I encourage the Minister to look at ways to support those hubs, because they are economic gateways for trade, exports and investment. Of course, the road links to the airports must also be fit for purpose. My plea is for the Minister to look not just at Heathrow and Gatwick, but at Essex.
My final point is about how we can work at a local level to deliver investment and take a strategic approach to infrastructure. I am not sure whether this idea has been brought to the Minister’s attention and he does not have to respond here—he could perhaps take it away and consider it—but I would like him to look at county-based infrastructure delivery units that could help to map out developments. That way, all infrastructure developments—not just road and rail, but broadband and access to public services—would be planned in relation to where development was taking place or housing was earmarked. Ebbsfleet is a classic example of where extensive planning and work for new homes is going to take place.
We must ensure that our local authorities have an overview and think about the wider infrastructure needs—not just of communities, but of the county—and that they look at things from an economic point of view. I wonder whether those civil servants and Ministers who work on the development of the national infrastructure plan should have some kind of oversight too. Perhaps county infrastructure requirements could be looked at in conjunction with the local enterprise partnerships so that we could effectively future-proof infrastructure for coming generations. That way, every penny spent would give us greater bang for our buck, as well as greater leverage.
I am grateful for the opportunity to introduce the debate and look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
I congratulate my hon. Friend the Member for Witham (Priti Patel) on securing this debate on transport infrastructure in Essex. I was in Essex only this morning visiting the Ford Motor Company’s engineering research plant, where 3,500 engineers work at the very cutting edge of technology in Essex.
Today’s debate is the second on the subject since 2012, and I praise my hon. Friend for her tenacity in continuing to highlight the importance of good transport infrastructure in building strong and sustainable local communities and a successful local economy. I am also well aware of the excellent work that she does in her role as chair of the Essex business, transport and infrastructure forum. Indeed, I remember her addressing a meeting of the forum with the Minister without Portfolio, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke). I heard some interesting points, many of which related to issues she has raised today.
The county of Essex has a resident population of just over 1.7 million and includes the unitary authorities of Southend and Thurrock. The county is rather fortunate to have a number of key transport connections. The nationally important M11, M25, A12 and A120 run through the county, as do major regional local roads, including the A13, A127, A130 and A414. Three main rail lines radiate from London, supplemented by a number of branch lines, serving more than 55 railway stations and, of course, the London underground extends to Upminster in the south of the county. The county also contains a number of international gateways, including Stansted and Southend airports—I have visited the former—and, of course, Harwich international sea port, which provides nationally important connections to Holland and Denmark. In addition, the port of Tilbury and the new London Gateway port development fall within the area. The port of Felixstowe is also nearby in neighbouring Suffolk.
Essex has a successful economy with an entrepreneurial work force, which makes the county an attractive place to live and do business. As my hon. Friend has highlighted this afternoon, the Essex transport network is critical to the performance of the local economy. Reliable connectivity enables Essex residents to have good access to jobs and allows local businesses access to the marketplace. The Government recognise that, which is why transport forms part of our long-term economic plan to ensure that our country’s infrastructure is improved and reliable.
On the Government’s commitment to infrastructure investment, we have already announced increased Government funding to deliver improvements to the strategic road network, targeted at supporting economic growth. Our commitment to deliver a step change in future investment in transport infrastructure was made clear by the Chancellor in his spending review statement last year. The Treasury’s Command Paper, “Investing in Britain’s future”, set out that the Government will invest more than £28 billion in enhancements and the maintenance of national and local roads. That includes £10.7 billion for major national road projects and £6 billion for the maintenance of strategic roads, including the resurfacing of 80% of the network.
In May 2012, the widening of 16 miles of the M25 between junctions 27 and 30 was completed. Junction 30 is a busy intersection of the M25 motorway with the A13 trunk road, and congestion is experienced during key parts of the day. The improvement of junction 30 of the M25 is key to the development of the wider Thames Gateway area, to facilitate future growth in housing and employment. The Prime Minister therefore announced in November 2012 that work would commence on improvements to the M25 at junction 30 in March 2015. The scheme will be able to accommodate whichever option is selected as the location of the lower Thames crossing.
To ease congestion and improve journey times at the Dartford-Thurrock river crossing, the Highways Agency is introducing Dart Charge, as we heard. Dart Charge makes greater use of technology and introduces new ways to pay the charge to use the crossing. From October 2014, the introduction of Dart Charge will remove the need for drivers to stop and pay at a barrier, helping to speed up journeys for everyone. Instead, several new ways to pay the charge will be available to customers using the crossing, including online, by phone, at certain retail outlets and by post. The introduction of Dart Charge requires significant changes to the existing road layout and infrastructure, including the removal of the plaza and payment booths to provide four open traffic lanes in each direction. The main construction works will start following the introduction of Dart Charge and are due to be completed in spring 2015. The works have been carefully planned to minimise disruption, and I plan to visit to see how the work is delivered.
The Dartford-Thurrock river crossing is a vital transport link, and the Government are committed to improving the crossing experience for the millions of people who use it every year. However, we all recognise that congestion on the crossing not only causes frustration for those who use it but has an impact on the economy. That is why the Government have made it clear that a new lower Thames crossing continues to be one of our top 40 priority projects. The Secretary of State for Transport stated last December that further advice is being obtained to assist in weighing up the relative merits of alternative location options, which are referred to as options A and C. Any decision must not be taken lightly, as we need to consider all the issues. That said, we hope to make a further announcement on the consideration of options A and C, and on the impact that Dart Charge may have on the existing crossing, in the very near future.
My hon. Friend the Member for Witham continues to make the case for the Government to commit funding for improvements to the Highways Agency network in Essex, and she and I met on 2 April to discuss the case for improvements to the A120.
Gareth Johnson
Before the Minister moves away from the lower Thames crossing, I welcome the planned introduction of a free-flow system, which is the most efficient and effective way to address the congestion that we have seen on the Dartford crossing since the bridge was built in 1991. I impress upon him the folly of building another Thames crossing next to the existing crossing, which is the so-called option A. If there were any difficulties on the M25, either in Essex or in Kent, they would simply lead to the same amount of congestion and possibly more congestion. Building a crossing further down the Thames estuary surely has to be the best alternative for motorists.
Mr Goodwill
My hon. Friend makes a point that my officials and I will continue to consider before a decision is made.
The Government’s national infrastructure plan sets out the details of the specific projects that the Department has committed to deliver. As part of that plan more than £28 billion is for road enhancements and maintenance. The specific schemes identified in the plan are able to be completed, or to begin construction, in the next Parliament. Proposals for improvements to the A120 east of Braintree, however, are not yet sufficiently developed to be included in the Highways Agency’s pipeline of future projects.
On future investment planning processes, my hon. Friend the Member for Witham will be aware that the Highways Agency is currently carrying out its route strategy process. Route strategies will provide a smarter approach to investment planning across the network and see greater collaboration with local stakeholders to determine the nature, need and timing of future investment that might be required on the network. I will be visiting the A47 in East Anglia on Friday.
A set of strategies are being developed for the entire national road network, with the A120 being considered in the east of England route strategy. The route strategies will be delivered in two stages. The first stage identified performance issues on routes, future challenges and growth opportunities, taking full account of local priorities and aspirations. Using that evidence base, the agency established and outlined operational and investment priorities for all routes on the strategic road network. The first stage is now complete and finalised evidence reports were published on 23 April.
The second stage will use that evidence to prioritise and take forward a programme of work to identify indicative solutions that will cover operational issues, maintenance and, if appropriate, road improvement schemes to inform future investment plans. I encourage my hon. Friend and relevant local stakeholders to engage with the Highways Agency’s route strategy process. The Highways Agency has also committed to starting work on a number of pinch point schemes to help reduce incident-related congestion on the A12 later this year.
Investment in transport infrastructure is important not only to strategic roads but to local transport. The Department has provided £63.5 million towards the A13-A130 Sadlers Farm junction improvements, which is a local major scheme promoted by Essex county council. The scheme is helping to reduce congestion and to facilitate the delivery of planned housing and job growth envisaged for the area. The main junction works, and works to the A13, were opened to traffic in time for the Olympics in July 2012, with the remaining works being completed in January 2013.
As part of that ongoing investment, the Government also announced plans to create a local growth fund from 2015 to 2016 that will be devolved to local enterprise partnerships and will incorporate all funding for local major transport schemes, including road schemes and schemes to enhance sustainable local transport. The fund has more than £6 billion of transport funding up to 2021. To secure part of that funding, the South East local enterprise partnership, which includes Essex, Thurrock and Southend as well as Kent, Medway and East Sussex, set out its growth priorities for the area in its strategic economic plan.
The plan includes the transport infrastructure that the LEP sees as necessary to deliver that growth, such as capacity improvements to the A127 and improvements to transport in towns such as Colchester and Chelmsford. The plan was submitted to the Government at the end of March and will be used to determine the funding that the LEP will receive. The plan and its transport interventions are currently being assessed by the Government.
No funding decisions have yet been made, but we expect to announce the outcomes before the summer recess. Government funding is not just about big schemes on strategic networks. In fact, smaller-scale investment can often make a big difference to our local communities. That is why this year we have granted Essex county council, Thurrock council and Southend-on-Sea borough council more than £37.9 million through highways maintenance and integrated transport block grant funding to allow them to maintain their local roads and invest in local transport improvements. Since March this year, we have also provided Essex county council with a further £3.1 million to help repair roads damaged by the wet winter, and two weeks ago, we announced that the councils will receive more than £4.8 million from the pothole fund announced in this year’s Budget, which is enough to repair more than 92,000 potholes.
I have a few brief comments on rail. From 2019, passengers from as far afield as Shenfield will benefit from the £15 billion Crossrail project, which will include brand new high-capacity trains, but Essex rail passengers can also expect shorter-term improvements. As part of its recently announced direct award, Abellio Greater Anglia has committed to a range of improvements to its network. Of significant interest to my hon. Friend and the people of Essex will be the commitment to undertake an internal refresh of the mark 3 rolling stock, which includes improvements to the internal look and feel of the coaches and the installation of at-seat power points, and so on. Abellio Greater Anglia hopes to make an announcement in the near future on the timing of those improvements.
I am also delighted to highlight the Department’s recent announcement of the awarding of the new Essex Thameside franchise to National Express. Key customer benefits of the new franchise include an additional fleet of 17 brand-new trains, which will provide an additional 4,800 seats—more than 25,000 additional seats every week for morning peak-time passengers—by the end of the contract.
I will draw to a close, as we are approaching the end of our time. I once again congratulate my hon. Friend on securing this debate. I have made it clear that the Government are committed and have set out plans to improve transport infrastructure in Essex as part of our long-term economic plan.
Question put and agreed to.
Written Statement
(10 years, 2 months ago)
Written StatementsRead Full debate Read Hansard Text
Italian EU Presidency Priorities
(10 years, 2 months ago)
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The Minister for Europe (Mr David Lidington)
I am keen to keep Members fully informed of developments in the European Union, their implications for the United Kingdom and our priorities. I would, therefore, like to draw Members’ attention to a paper on the priorities of the Italian presidency of the Council of the European Union, which has been placed in the Library of the House. I have also deposited a copy of the calendar of ministerial meetings for the duration of their presidency.
Grand Committee
Openness of Local Government Bodies Regulations 2014
Baroness Stowell of Beeston
That the Grand Committee do consider the Openness of Local Government Bodies Regulations 2014.
Relevant document: 1st Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, the regulations were laid before this House on 3 April. They are part of a series of measures, founded on the Localism Act 2011 and the Local Audit and Accountability Act 2014, which this coalition Government have taken to protect local democracy, enhance local scrutiny, and create 21st-century local accountability. Specifically, these regulations enhance the rights of the press and public to report council meetings in digital and social media. They also enhance the rights of people to know what decisions are being taken by council officers on behalf of elected members.
That the public can readily know what those they have elected to represent them are doing is the very lifeblood of democracy. This is fundamental and has long been recognised. It was my late friend Lady Thatcher who introduced the right for the press and public to attend and report council meetings back in 1960 through a successful Private Member’s Bill, which she first mentioned in her maiden speech in the other place. A well functioning democracy, however, is not something set in stone. It must keep pace with the way people live their lives, and the way they communicate and share and discuss information.
Use of digital and social media now runs through daily life. The rights which were given to people in 1960 to report and access council meetings now need to be updated to encompass the digital world of today. I know that when we debated the provisions of what is now the Local Audit and Accountability Act 2014 there was a general welcome across the House for the kind of changes I have just outlined. I also know that a number of noble Lords had concerns about how precisely we could implement these changes, and at the same time avoid creating circumstances in which the good conduct of business in a council could be put at risk, or where those using the digital media might inadvertently put themselves at risk through breaching laws on defamation.
We believe it is possible to give the public modern 21st-century rights of access and of reporting, and equally to address the concerns such as those that have been raised. The principal means of doing this will be through our plain-English guide that we are developing with local government. I will say more on this in a moment, but through it we envisage dealing specifically with issues such as defamation, disrupting a meeting, or inhibiting the free exchange of views among the council members.
When we sought views about these regulations, the Local Government Association stated that it does,
“not believe that further central government regulations are needed in this area”.
We agree that many councils are already opening their meetings to digital reporting. But sadly there have been occasions where councils have sought to prevent this, even in a few cases ejecting members of the public from meetings for trying to report them using the digital media of today. I am sure that if this can happen, it is not the modern democracy we all want. The regulations before us today will ensure that this cannot happen in future. They will ensure that local democracy everywhere in the country is on a modern footing. We want ordinary people to be clear about their rights.
Turning to specifics, the regulations will amend existing legislation to put beyond doubt the rights of the public to film, audio-record and use social media to report public meetings of their council or other local government bodies, their committees, sub-committees and joint committees. To be clear, these regulations apply to all principal councils—county councils, London borough councils, district councils, unitary councils, the City of London and the Isles of Scilly. They apply also to local government bodies such as fire and rescue authorities, Transport for London and the Greater London Authority.
The regulations apply equally to parish and town councils. I know that there was some concern about how this will work in practice, particularly for small parish councils, or indeed the parish meeting. The practicalities will be covered in the plain-English guide. It will specify, for example, that while the public can film, they can do so only from the area that the public normally use and that none of this requires the council to make equipment available or to provide special electronics or lighting.
In essence, where today a council has to provide access to the public, in future, those exercising that right of access will in addition be able, from that same public area, to use their own equipment to film, or to tweet from their own devices, such as an iPhone or iPad. In the interests of impartiality and to demonstrate that I am digitally savvy, I should say that they could also use tablets or Androids.
In every case these regulations give people the right to film, blog or tweet at meetings of the council or body and at meetings of any of the council or body’s committees or sub-committees. These same rights apply to meetings of a council’s executive and any committee or sub-committee of the executive.
Nearly two years ago we made the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012, which for the first time opened up the meetings of an executive to filming and reporting by social media. The regulations before us today now extend what we have achieved for council executives in 2012 to all the meetings of a council.
The 2012 regulations also gave the public rights to see a written record of decisions officers take on behalf of the council’s executive. The regulations we are considering today likewise extend these rights to decisions that officers take on behalf of the council or any of its committees or sub-committees.
Specifically, where a council or one of its committees delegates to officers decisions that affect the rights of individuals, grant a permission or licence, or that relate to incurring expenditure or awarding a contract that would have a material impact on the financial position of the council or local government body, there must be a record of the decision the officer takes. The record of the decision will include the reason for the decision, any alternative options considered and rejected and any other background documents. That will mean that there is transparency and openness in the way these bodies make the decisions that significantly affect the lives of those in their communities.
As I have explained, these are important rights which will ensure that our local democracy is fit for purpose in the world of today. To ensure that these rights are smoothly and effectively introduced and recognised everywhere, my department is working with the local government sector on publishing, if Parliament approves these regulations and they are made, a plain-English guide about what these rights mean for the public, for members and for officers. This will incorporate and extend the plain-English guide we published in 2013, Your Council’s Cabinet—Going to its Meetings, Seeing How it Works, following the 2012 regulations.
As I mentioned, a draft version of the plain-English guide has been published and deals with such issues as defamation and disruption. It contains guidance for the public on libel and the responsibility they must take for the comments they tweet or the videos they publish.
Regarding disruption, the guide will make clear that nothing in these regulations will impact on the chairman’s power to exclude members of the public in cases of genuine disruption, while explaining the clear legal position that the act of filming and using social media in itself cannot be considered as disruptive.
Turning to the timing of the coming into force of the regulations, the regulations provide that they will come into force on the day after which they are made. The Joint Committee on Statutory Instruments did not find a compelling justification for this timing of coming into force, and accordingly reported that the provision appeared to make an unusual use of the power conferred by Section 40 of the Local Audit and Accountability Act 2014.
The Government accept that it is important that there is a smooth introduction of the new rights which the regulations will give the press and public, and accordingly they have undertaken not to make the statutory instrument until at least 28 days after the day on which any parliamentary approval for the statutory instrument is given. In taking this approach the Government have had careful regard to the report of the Joint Committee.
In conclusion, these regulations will mean that in future local government everywhere is more open, more transparent and more accountable. People will more readily be able to see and know what those who they elected are doing. That is good for democracy, it is good for elected members, it is good for our communities and it is good for local government and the vital services that councils provide.
I commend the regulations to the committee.
Lord Smith of Leigh (Lab)
My Lords, before I start, I need to declare my interest as leader of a council, chairman of the Greater Manchester Combined Authority and a vice-president of LGA. I commend the Minister for the competent way in which she introduced the regulations today. I am sure we all agree that openness and transparency are as important in local government as anywhere else in public service.
I am grateful to my noble friend Lord McKenzie for pointing out that I am mentioned in dispatches today. I am mentioned in the appendix of the first report of the 2014 session by the Joint Committee on Statutory Instruments in evidence provided by the Department for Communities and Local Government. I hope that the rest of the evidence is more accurate than the bit that quotes me. The very famous news source is the Daily Mail. How reliable does anybody think the Daily Mail is in providing stories about Labour in local government? What it says is entirely untrue. It says that a member of Wigan council was ejected by the police for tweeting. He was ejected because he would not obey the order of the mayor. It was to do with me as leader of the council. The mayor asked him to behave. He refused to do so. What does one do? He just would not follow instruction. That is the basic rule in any form of organisation. If the Deputy Chairman of Committees were to instruct us, we would obey. That is a basic law.
The fundamental question about these regulations is: why? Why are we spending today debating these regulations? There are more crucial issues in local government that we ought to be talking about. Yesterday, the LGA produced a report stating that local government spending is probably underfunded by just short of £6 billion, caused by cuts to government services and increasing demand. Sir Merrick Cockell, the Conservative leader of the LGA, said that local government funding is on a knife-edge, yet all we are doing is passing regulations that increase unnecessary spending in local government, even if only in a small way. Councils should be left to determine how to tackle these issues.
Whatever happened to localism? In 2011, we passed the Localism Act with grand claims about what it would mean for local government. The Secretary of State who introduced the Bill said:
“The Bill will reverse the centralist creep of decades and replace it with local control. It is a triumph for democracy over bureaucracy. It will fundamentally shake up the balance of power in this country, revitalising local democracy and putting power back where it belongs … they managed to fulfil the wildest dreams of both Sir Humphrey Appleby and Mr Joseph Stalin. That strangled the life out of local government, so councils can barely get themselves a cup of tea without asking permission”.—[Official Report, Commons 17/1/11; col. 558.]
Those were strong words from the Secretary of State. I supported them then, and I still support them, but here we are introducing legislation about openness in every council.
Councils will have different ways of solving this problem because, as anyone who goes to different town halls knows, different town halls will need different solutions. There is no issue about whether members of the public should be allowed to do it. I am very pleased that people want to come and record me and film me. I would be very flattered if that were to happen as a regular thing, but I am sure it will not be after the first couple of meetings. We are stretching the point when we go into such detail about what each local authority will need to do to solve the problem about where people can and cannot film meetings effectively.
It is right that local government publishes what decisions are made, but to make non-compliance with some of this a criminal offence is perhaps going a little bit over the top. This is unnecessary legislation. We are back to the old days when anything that local government does is being determined not in each and every town hall but in Whitehall. I am sorry that we have reached that pass again. I hoped that we had gone beyond it, but, unfortunately, these regulations demonstrate that we have not.
Lord McKenzie of Luton (Lab)
My Lords, I start by thanking the Minister for her explanation of these regulations, and I am delighted to have heard from my noble friend Lord Smith, the experienced voice of local government, who put the Department for Communities and Local Government correct in some of its submissions and reminded us just how precarious the financial position is of local government.
We do not oppose these regulations, although they are not without controversy. Of course, the principle of ensuring that local authority decision-making is accessible to the public so that they can better engage with it and encourage the delivery of value for money is not controversial. We are on the record—or the shadow Secretary of State Hilary Benn certainly is—about supporting the use of modern technology in the course of doing this. There is controversy about bringing the regulations into force the day after they are made. The Minister referred to the Joint Committee on Statutory Instruments, which was clear that it did not find compelling the justification that the department offered for the provision. I was going to ask the Minister to have another go at convincing us, but I understand from what she said in her introduction that the regulations will not be made for 28 days in any event—so in a sense that would give some breathing space.
The Minister could perhaps tell us why the Government eschewed a consultation on these regulations and opted for a short, focused, informal soundings exercise with partners. How transparent is that? We understand that all comments were carefully considered before finalising the regulations but, of course, we are not privy to all these comments. In the interests of transparency, could they be made available? We are told that the LGA did not support the regulations, believing that guidance would have sufficed. The National Association of Local Councils raised concerns over the practical implications of the proposals, and we all had the benefit of the submission of Transport for London, which set out its concerns and those of the GLA.
Will the Minister comment on the points raised on the vague and broadly based category of decisions that will need a written public record? There is a risk that lack of clarity will cause a wider interpretation of what is required with unintended and disproportionate burdens, and the suggestion, for example, that TfL would have to record and publish in the region of several thousands of decisions, including in relation to taxi and private hire licensing. There are concerns, too, over contracts whose terms and conditions include granting a permission or a licence, adding burdens with very little impact on transparency, given DCLG’s local government transparency code of 2014. There are also concerns about provisions on background papers. I do not assert that Transport for London is correct in its concerns, but we are entitled to hear a response from the Minister to what seem to be the very real issues that were raised with us.
On what is perhaps a minor matter, we note that written records must be retained and made available for inspection for six years, but background papers for only four years. Perhaps somebody could explain the difference between those arrangements.
The Minister said in her introduction that it was agreed during the passage of the Local Audit and Accountability Act 2014 that the Government would bring forward new powers to ensure that the public can film, blog or tweet at all meetings of the council, its committees and sub-committees, that they can attend. This is about bringing local democracy up to speed with today’s fast-moving digital age.
These new communication channels enable local authorities to speak quickly and directly to their local communities. As my honourable friend Roberta Blackman-Woods said in another place, the local media industry is sadly in decline. The internet and social media mean that people are accessing news and information online. The circulation of local newspapers has declined and staff and resources have been cut. Today, more and more council meetings are taking place without a reporter in the public gallery.
Over recent years, we have seen local authorities experiment with new ways of broadcasting council meetings such as live streaming video or audio, using Twitter to post updates and uploading transcripts online. Although the number of people watching these webcasts may be small, the online audience is significantly higher than in the meeting room itself, and has the power to grow exponentially. A retweet or a shared Facebook post grows the potential reach of that piece of information by tens or hundreds of people with just one click. We know that many local authorities are struggling to deliver their statutory services so it is right that we give powers to the public to film and record council meetings rather than make it mandatory for councils to do it themselves.
We are used to having our proceedings televised but rules govern how this is done. It seems to me that these rules will not necessarily exist at the town hall, so will the Minister offer her thoughts on circumstances where filming or recording is focused on one member in particular, and done in such a way as to intentionally seek to damage his or her reputation, perhaps by capturing an unguarded and unflattering moment? My honourable friend Roberta Blackman-Woods also referred in another place to the extent to which accommodation must be made for big equipment such as spotlights, but I think the Minister dealt with that in her opening remarks.
We note that there are no formal plans to monitor and review these regulations, which is a pity, but we look forward to the plain-English guide and hope that it will clarify some of the uncertainties around the drafting of these regulations—which, as I said, we nevertheless support.
Baroness Stowell of Beeston
My Lords, I am grateful to noble Lords for their contributions. The noble Lord, Lord Smith of Leigh, talked about the need for these regulations and said that there was a reference to him in one of the documents that my department provided to the JCSI.
As I said at the start of the debate, we all believe in openness and transparency. We think that is a good thing and want people to have access to meetings. However, people’s expectations of what that means are changing because of the onset of social media. People no longer want to go to meetings and listen; they want to provide a commentary through tweeting or make a recording so that they can have an element of control in the way that they use the information they have gathered. That is the modern way in which democracy works in terms of public access.
Although the noble Lord is absolutely right to say that there is already widespread use of these forms of access on the part of local authorities, there is, however, evidence of some local authorities not allowing them. I do not think it is right that in this country in 2014 we should be put in a situation where it is possible for some people not to be able to tweet or record a public meeting just because a council thinks that they should not do so.
I can refer to few examples in addition to those to which the noble Lord referred, which I will not repeat. Tower Hamlets, for instance, barred a 71 year-old resident for filming, due to the risk of reputational damage to the authority. In November 2013, it was stated at a meeting of East Riding of Yorkshire Council that it would not allow filming or blogging of any meeting until forced to do so by law. In Middlesbrough, an AGM was suspended because an internet blogger refused to stop filming proceedings; people were told to leave the building after the meeting was suspended while the police were called.
I understand that they may be limited in number, but earlier this year I was in Strasbourg at a Council of Europe meeting, responding to a report of one of the committees there about local democracy in England. There were people in that committee from Turkey and other countries. I wanted to be able to demonstrate that, in our country, we have the kind of freedoms that people believe in and that we will, if those freedoms cannot be accessed, change the law where necessary to make it possible. We have done it in a simple and straightforward way.
The issue of expense has been raised. There is nothing in these regulations that should incur any cost to local authorities, because they are not required to provide any kind of additional facility whatever. I am aware that some local authorities record or even stream their meetings live as they are happening. That is a good thing, but they are not obliged to do so, and we certainly would not make that mandatory. The fact that there is some evidence of restrictions on the public means that we are now making absolutely clear what is possible, which local authorities are in most cases already doing. It should be quite a simple change for people to be able to cope with and implement.
That said—as I said in my opening remarks and as the noble Lord, Lord McKenzie, asked me to confirm—we will not bring the regulations into force until at least 28 days after they have hopefully been approved by Parliament. We have produced a plain-English language guide, a draft of which is available on my department’s website. It addresses the sorts of concerns that are legitimate, such as making sure that this access does not lead to inappropriate disruption. If noble Lords have not yet had a chance to look at it, I encourage them to do so.
I turn to some of the specific points raised by the noble Lords, Lord Smith and Lord McKenzie, which I have not already addressed in my remarks. The noble Lord, Lord Smith, asked about criminal sanctions. It is worth me being clear that the criminal sanction applies only to a situation in which a person without reasonable excuse prevents someone from accessing an existing document. It does not apply to the decision as to whether such a document should be produced; it is a question of there being evidence of somebody obstructing somebody from accessing a document.
On the categories of decisions made by officers on behalf of elected representatives, the regulations do not require the recording of day-to-day administrative decisions taken by officers. Rather, they require the recording of two categories of delegated decisions: those taken by officers under a specific delegation, and certain decisions taken under general delegation, as I mentioned. To the noble Lord’s point that most local authorities are already following good practice in this area, we believe that the work necessary in preparation for these regulations coming into force is quite minimal.
The noble Lord, Lord McKenzie, asked what steps we have taken to consult others about these changes and about our informal soundings. The comments that we received from our soundings are described materially in the Explanatory Memorandum. The plain-English guide will make clear that decisions such as operational ones about, say, tickets, which the noble Lord referred to, do not need to be recorded.
Noble Lords raised the issue of whether access to the chamber for the recording of proceedings might lead to intimidation of councillors. Although it is important to be considerate of members of the public who do not wish to be filmed, we believe that an elected representative should not shy away from being held accountable for their words and actions in council meetings. In cases of actual intimidation, there are of course existing laws that prevent any kind of intimidation that would be threatening in nature.
On the recording of decisions, the noble Lord, Lord McKenzie, asked why background papers need to be kept for four years and decision records for six. This is consistent with existing rules contained in the Local Government Act 1972 for decisions taken by members in council or committees. It is also consistent with the 2012 regulations about the openness of council executives.
The noble Lord, Lord McKenzie, also asked about recording the granting of licences. It is right that, where a licence is granted, there needs to be a written record of the decision taken by the officer concerned. It is right that there should be transparency about the granting of such benefits to private individuals. Indeed, such decisions today will invariably be in writing.
I think I have covered all the points that were raised during the debate. I think that I should thank the noble Lord, Lord McKenzie, for the Official Opposition’s support for the regulations, although I was not entirely sure whether he was supporting them or not. However, there is a certain spirit of support for ensuring that we are as open and transparent as possible.
Housing (Right to Buy) (Maximum Percentage Discount) (England) Order 2014
Baroness Stowell of Beeston
That the Grand Committee do consider the Housing (Right to Buy) (Maximum Percentage Discount) (England) Order 2014.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, this order was laid before the House on 5 June. As the Prime Minister and the Chancellor of the Exchequer both recently reiterated, helping people buy their own home will always be part of this Government’s policy for housing, so I am delighted that the reinvigorated right to buy has already helped over 19,500 households achieve their home ownership aspirations since April 2012.
It is not just about buying but about building. Over £419 million from these right-to-buy sales has been ring-fenced to help local authorities fund new homes for affordable rent. Already, 3,000 new homes for affordable rent have been started on site or acquired by local authorities through additional right-to-buy receipts since April 2012. This includes authorities from across England such as Camden, Birmingham and Cornwall, to name but a few.
When we reinvigorated the right to buy in April 2012 by increasing the maximum cap to £75,000, we committed to keeping the discounts under review to ensure that they remain effective in helping people turn their home ownership dreams into reality. That is why we increased the maximum cash cap for social tenants in London to £100,000 in March 2013 in recognition of the unique nature of the housing market in London. It is why we are proposing, through a separate order, to increase the maximum cash caps annually in line with the consumer prices index rate of inflation, and it is also why we propose, through this draft order, to increase the maximum percentage discount available for houses across England from 60% to 70%.
This change, if it is approved, will provide tenants with a clear message about the discount levels available for all eligible tenants. It will ensure that those living in houses will be able to accrue the same maximum percentage discount as that available to those living in flats. Long-term tenants of houses will benefit from this policy—often those who have committed to the area for 30 years or more. Affording them the same opportunity to access up to the maximum percentage discount of 70%, just as their peers living in flats can, gives them every opportunity possible to achieve their home ownership aspirations and leave a legacy for their families. The revenue from additional sales will be ploughed back into delivering new affordable homes for rent.
The draft order also includes important transitional provisions, which will apply for this year only, to ensure that no eligible tenant currently in the right-to-buy application process misses out. Equally, however, we are mindful that some people who are near to completing the purchase of their property may not want to take up the new discounts, and the draft order will allow them to opt out if they wish.
We have listened to representations from social tenants who have asked to be allocated the same equality of opportunity as their friends and neighbours who are able to buy flats. My officials have also spoken to the Local Government Association and the National Housing Federation, as well as to social landlords.
Bringing parity between the maximum percentage discounts for all properties, combined with the changes we are making to increase the maximum cash caps, is the right thing to do to help more social tenants exercise their right to buy. I commend the order to the Committee.
Lord McKenzie of Luton (Lab)
I again thank the noble Baroness, Lady Stowell, for her clear introduction of this order, which deals with the maximum percentage discount. There are separate arrangements dealing with the change to the cap. The Labour Party supports those who want to buy their own home, which is why we support the right of tenants to buy their council home, including the preserved right to buy. However, at a time of national housing crisis, we do not want to see the stock of council homes diminished.
The Government have claimed that homes sold through the right to buy will be replaced one for one. Indeed, in March 2012, Reinvigorating Right to Buy and One for One Replacement stated:
“For the first time, every additional home sold under Right to Buy will be replaced by a new home for affordable rent”.
I shall probe that proposition a little.
The Government’s figures appear to show that currently for six homes sold, only one has started to be built. The evidence of the LGA during the passage of the Deregulation Bill was that in many local areas one-for-one replacement simply is not possible. As the LGA also made clear, replacement homes are not necessarily like for like. The rents in replacement homes will be higher, meaning the rents are unaffordable to many tenants and will increase the housing benefit bill. The houses are not necessarily the same size and may not even be in the same area. The LGA also expressed concern about the impact of these arrangements on councils’ business plans.
I shall ask the Minister a few questions. For a start, can she clarify the position of those who are deemed to underoccupy their social housing and who would, if they are on benefits, currently be subject to the bedroom tax—or, in the Government’s terms, have their spare room subsidy withdrawn? Should somebody exercising the right to buy and underoccupying their property be eligible for the full discount? Can the Minister confirm that, although the information we have before us for this order refers to the need to have at least five years as a public sector tenant, the Deregulation Bill reduces this qualifying period to at least three years? Assuming that the Bill is secured by the Government, it will provide that the qualifying period is to operate from a date determined by the Secretary of State. Can the Minister let us know what the Government’s intention is in respect of the starting date of those provisions? If this provision takes effect, will the starting discount rate still be 35%, with the additional 1% accruing after three years rather than after five years?
The assumption about the ability to replace one for one is that it would be at an affordable rent. Can we have an update on the definition of affordable rent in these circumstances? How does this replacement work where the sale is through preserved right-to-buy arrangements or previous stock transfers? Can we understand how many of the current sales are under preserved right to buy rather than the normal routine arrangements?
As for the changes that have taken place, there are changes to the cap: there will be CPI uprating of the cap—the qualifying period is going to be reduced to three years—and there is this change to the maximum discount. What are the estimates of the take-up that each of these changes has generated, and the estimates of the number of replacement homes? More specifically, I am trying to understand the financial model that drives the replacement arrangements—and, in a sense, who makes the decision. Is it always the council?
If we are talking here about a council that has sold the house and is in the driving seat in determining the nature of the replacement, in what circumstances is there wider provision by and engagement of government in the process? Having had one read of the documentation that was produced, it is less than clear to me. It is one of those issues that requires quite a lot of study. If the Government’s contention is that there is going to be one-for-one replacement, who is driving that? Who makes the decision about the nature of the replacement—the nature of the property that is going to replace the one that is sold—or its specific location? Is that primarily always the local council? At what stage is there a national or central input to that decision-making?
As I said, we will not oppose this order but we are seeking to understand how real the commitment is to one-for-one replacement, which we think is a very important part of the right to buy.
Baroness Stowell of Beeston
My Lords, I am grateful to the noble Lord, Lord McKenzie, for clarifying that his party supports the right of people living in council homes to buy them. This is something that we feel very strongly about. It is an important right that we want to see more people have the opportunity to exercise than has been possible over the past few years, because the reduction in discounts had rather diminished the number of houses that were being sold to people. We wanted to change that, because we believe that owning your own home is an important aspiration for people and we wanted to make sure the opportunity was widely available to as many people as possible.
Lord McKenzie of Luton
Before the Minister sits down, may I return to the issue of numbers? I thought I heard her say that the issue of one-in one-out applied to additional housing sales. Is that right or are we talking about the total sales here, minus perhaps the preserved right-to-buy disposals?
Baroness Stowell of Beeston
We have always been very clear that the right-to-buy scheme is about generating money that is used to construct replacement homes. The money comes from the sale of houses under the reinvigorated scheme. We are committed to that. As the noble Lord acknowledged, both his Government and my Government previously did not make that commitment to take steps formally to use receipts from housing sales to build new social housing. This Government have made that commitment but we said specifically that we would do so on the basis of the additional homes resulting from sales under the reinvigorated scheme.
Lord McKenzie of Luton
I am not sure that that was clear. It was certainly not clear to me that it applied only to additional sales. I took the replacement arrangements to be that every council house that was sold would lead to another one being provided at an affordable rent. If I understand the noble Baroness, she is now saying that that is not the case and that it is a question only of housing under the reinvigorated arrangements. I am not sure how that sits with the additional housing which is above and beyond that which was assumed in business plans and reflected in local authorities’ housing revenue accounts. Which is it? Does the commitment apply only to those additional sales, or additional sales minus the preserved right-to-buy ones?
Baroness Stowell of Beeston
All sales of council houses clearly generate income that returns to the Exchequer. That has been the case since right to buy was first introduced. That money will be used for a range of purposes. When this Government came to power, we introduced a reinvigorated scheme to encourage more people to buy their council homes than had done so over the preceding years. We wanted to make it possible for more people to purchase homes. When we did that, and because we knew that it would lead to an increase in purchases of council housing, we said that the money received from the sales of houses that were made available under the reinvigorated right to buy would, for the first time, go right back in full to the local authorities that had sold those properties, and they would have to use that money to build replacement social housing. That had never happened before; that is what is new, and that has been the policy since it was introduced.
Lord McKenzie of Luton
Could the Minister explain which houses are deemed to be sold under the reinvigorated right-to-buy arrangements and which are otherwise?
Baroness Stowell of Beeston
I think that I will need to follow up this debate with a specific letter that covers some of the specific detail. What has happened in terms of business planning is that, clearly, local authorities were preparing for sales on the basis of the previous scheme. On the introduction of the new scheme, sales have increased; when sales have increased in the light of us reinvigorating the scheme, and there is an increase above and beyond their estimates, the money goes straight back to local authorities. It has never happened before. That money must be used for the construction of new homes.
Lord Deben (Con)
May I say how pleased many of us are that we have at least moved to this stage? It means that at least some of the money that goes from selling council houses goes back to building new ones. The trouble is that the Minister is saying, rightly, that this is the first time that this has happened, which is true—but both sides of the House should be pretty ashamed of what has happened before.
The truth is that the sale of council houses, for it to be sensible, should mean that you sell a house to somebody who lives in it and it is therefore not vacant for anyone else to live in, then use the money towards building houses that are not lived in and which new people can move into. At long last, we are doing this. But let us not kid ourselves—neither the Labour nor the Conservative Party has done this before, and that is what was wrong about the whole system. It was supposed to be circular and, as usual, the Treasury pinched the money, under both Labour and Conservative, because the Treasury never changes. So congratulations—and I hope that the Minister will press for all the money to go to local councils for this purpose.
Lord McKenzie of Luton
To be fair, I think that, in the past, not all the money was snaffled by the Treasury—I think that 25% went to local authorities. I was not pressing the point to be pedantic, but because it is a very bold statement about replacement to say that you will sell one house and another will replace it. That will be a very important policy, but as we pick away at it we see that it is not quite like that; it does not seem to be every house that is sold that will give rise to this replacement.
I am not sure that we can take the discussion much further, as I think that we need some facts and clarification on this. I would be very grateful if the Minister would write on this and share the answer, because my understanding is that the Government’s position is not as strong as I had understood it to be from the pronouncements that they had made on this.
Baroness Stowell of Beeston
I am grateful to my noble friend for his intervention. I am absolutely clear, and I know that the Government have been very clear, in introducing the policy that they did—and as my noble friend has reinforced, this is the first time that it has ever happened; it has not happened before—the change in policy was about ensuring that the money raised through the sales of homes in addition to those that were forecast would go straight back to local authorities for building new homes.
I understand my noble friend’s point about whether there is scope to do more. There is always, of course, scope to do more, but I remind him that we have done more to increase affordable and social housing through a range of different measures than happened under the previous Government. I do not think that I can be any clearer than I have been, but I will none the less commit to review the noble Lord’s specific points and, of course, to follow up this debate in writing with supplementary information.
Jobseeker’s Allowance (Supervised Jobsearch Pilot Scheme) Regulations 2014
(10 years, 2 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bates
That the Grand Committee do consider the Jobseeker’s Allowance (Supervised Jobsearch Pilot Scheme) Regulations 2014.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments, 2nd Report from the Secondary Legislation Scrutiny Committee
Lord Bates (Con)
My Lords, these regulations were debated in the other place on 30 June 2014, and I am satisfied that they are fully compatible with our obligations under the European Convention on Human Rights.
With the labour market growing stronger and increasing numbers of companies able to hire workers, everybody who is able to should be able to share in this recovery by being supported to find, and stay in, work. Over the last four years, the Government have extensively altered the landscape of our employment support services, both in Jobcentre Plus and throughout contracted employment provision.
With the introduction of universal credit and the claimant commitment, there has been a cultural change in the expectations of claimants and a conscious shift towards full-time work search. It is right that we expect claimants to do all they reasonably can to find work, and this can be a full-time activity. At the same time, we are committed to doing what is best to support harder-to-help claimants to prepare for and find work. The Work Programme has been able to transform the lives of those furthest from the labour market. Performance is continually improving, and more than a quarter of jobseeker’s allowance claimants with sufficient time on the programme have spent at least three or six months in employment.
As part of our continuing commitment to supporting people off benefits and into work, the department is committed to continue testing what works best to assist jobseekers who are the hardest to help. This is why the Secretary of State for Work and Pensions announced the supervised jobsearch pilots in October 2013. These pilot schemes will test what works and what does not. We will ask providers to deliver the pilots in five areas across England from autumn 2014 until spring 2015 and will be testing how best to deliver extra support to those claimants who need it. The aim of the pilots is to explore the impact on claimants of daily attendance, supervision and support for job searching. In terms of outcomes, we will look at how different interventions affect jobseeker motivation and confidence, as well as measuring the impact on claimants leaving benefits and moving into employment.
Participants will be referred to a supervised jobsearch for 13 weeks. We expect participants to move off the scheme within this period as they find work, but it is important to consider that these are claimants for whom finding work may take significantly longer than for others, and 13 weeks will give providers a reasonable amount of time to work with them to ensure that the support is effective. This approach will have a positive impact on moving claimants closer to, or into, employment. It will also give us the opportunity to add to our evidence base of what works for those who are among the most difficult to help.
Currently, claimants not yet referred to the Work Programme receive the Jobcentre Plus offer: a flexible and tailored menu of support led by work coaches who can, among other interventions, refer claimants to outside training and provision to address barriers. Claimants at risk of becoming long-term unemployed are supported by contracted providers through the Work Programme. These providers provide support to claimants, making use of local provision and services, and using a “black box” approach, with payment by results for getting people into sustained employment.
We always knew that some people would be returning from the Work Programme. Those who have participated in it and remain on benefits afterwards then receive a period of more intensive support from Jobcentre Plus. Since June 2013, claimants have been referred to the mandatory intervention regime, where advisers have more time to spend with claimants with complex needs. From April 2014, we have rolled out the help-to-work package, which added two other elements of support, on top of the mandatory intervention regime, for Work Programme returners. These were daily work search reviews, which take place over a period of up to three months, and community work placements, where claimants undertake work of community benefit for up to six months. These additional measures have given the clear message that we will not write anyone off and will continue to provide increasingly intensive support the longer that someone is out of the labour market.
The supervised jobsearch pilots will complement these measures we have taken in the current journey by maintaining momentum and motivation at a critical point in the claim. Pre-Work Programme claimants will be referred when they are three months away from a two-year mandatory referral to the Work Programme. This will apply to post-Work Programme claimants following six months of intensive support.
These regulations will allow the department to select and refer certain suitable claimants to participate in the pilots. Claimants will then attend the pilots for 35 hours each week for a 13-week period. Claimants will have to attend for fewer than 35 hours per week if they have any restrictions agreed in their claimant commitment. During this time, they will receive expert support and supervision from providers. This might include help with jobsearch, job goals, covering letters, job application skills and interview techniques. However, the exact provision will vary depending on the claimant’s needs and the individual provider running each pilot scheme.
We already expect claimants to do everything they reasonably can each week to give themselves the best prospects of securing employment. This covers not just work search but a whole range of activity to improve employability. The pilots are in line with this but, of course, if an individual cannot work full time—for example, because of agreed caring responsibilities—then we would expect them to participate in supervised jobsearch only on a part-time basis. Those selected for these pilots will at all times have access to facilities and staff to encourage and guide them along their journey.
None of the claimants eligible for these pilots will be new to the benefits system and will have spent the months prior to referral having their jobsearch monitored and skills levels gauged by Jobcentre Plus work coaches before reaching the point of being considered suitable for this extra support. Everyone goes into a new activity with different skill levels and learning styles, and looking for work is no different. Some individuals will have just emerged from jobs feeling confident in what they need to do and having contacts in the right places. Others may need more comprehensive help, support and guidance in order to seek out opportunities and prepare to present themselves again to prospective employers. This is what we are looking to provide through the supervised jobsearch pilots.
In order to inform the design of the pilots, we ran a supervised jobsearch test bed in Wolverhampton Jobcentre from December 2013 to February 2014. The test bed explored some aspects to inform these pilots, including confirmation that Jobcentre Plus is able to support this system. As a result of what we learnt from Wolverhampton, we have incorporated several elements into the pilots’ design, including: induction sessions to set clear expectations and assess individuals’ abilities; basic IT training; integrating group sessions and one-on-one support to retain claimants’ concentration and engagement; and supporting participants to focus on tailored, quality job applications.
It is right to expect people who are able to work to do all they can to find a job. This Government are committed to supporting people in this ambition. We know that our programme of support works well for most people. Two-thirds of people leave jobseeker’s allowance within the first 12 months, which is the most common work programme referral point. The claimant count has fallen for 19 consecutive months. We know there was support for the very long-term unemployed trailblazer, which ran from November 2011 to July 2012, but for those who reach long-term unemployment and are among the hardest to help, increasing the intensity of support improves their chances of moving into work. We know that jobseekers see the switch to the claimant commitment, with its focus on full-time job search, as something that will genuinely increase their chances of finding employment, while at the same time taking into account their personal circumstances. These pilots will test what can be achieved if we bring this knowledge of what works—tailored support, intensity and full-time activity—together in a way that is sensitive to individual needs.
I conclude by saying that we believe these pilots have potential to improve the employment prospects of those who are struggling in their search for work. That can be done through increased jobsearching ability, heightened confidence, more effective interaction with others and improved punctuality and time-keeping. The scheme has the potential to help people into sustained work, enabling them to increase their independence and build better lives for themselves, their families and communities. I beg to move.
Lord Kirkwood of Kirkhope (LD)
My Lords, I am grateful to my noble friend for the lucid way in which he introduced these important regulations. I declare an interest as a non-executive director of the Wise Group in Glasgow, which works in JSA service provision.
I am grateful also to the Secondary Legislation Scrutiny Committee, which looked at these regulations. It does excellent work; it is hard to overestimate the value it brings to some of these very complicated schemes. The committee came to the conclusion that it was not impressed. There are two issues here: the policy behind the pilot and the structure of the pilot—whether that is worth the candle. I want to rehearse some of its concerns, because they are self-evident to anybody who has studied these things. Pilots are very useful; they have played an important role in the past in developing policy and I am sure the Scrutiny Committee accepts that. But how do we expect to get real value out of something that starts on 6 October and ends on 15 April, when we are dealing with the possibility and the opportunity that these regulations provide, as the Minister rightly described, in helping people into sustainable work? In my book, sustainable work is a 12-month contract, with support that a jobseeker can take advantage of from being on benefits into that sustained job outcome. I have severe doubts, as does the Scrutiny Committee, that we will get anything of value in what I think is insufficient time. Why are we stopping on 15 April? Obviously, there is an election. I can see that coming—I am not that stupid. However, it is more important to get this policy right than to have niceties about purdah or any other technicality of that kind. I have serious doubts about what value we will get from the shortness of the period of the pilot. Indeed, client groups of 3,000 are not that useful, either. Before the debate started the Minister helpfully handed us a long list of exclusions of clients who cannot be included.
We have a very limited pilot here, and I think we could have had a much more useful opportunity to test some of these things. We have very minimal information about what will actually happen. Jobsearch is something that, if people have been in the Work Programme, should have been deployed for two years—and intensively, I would like to have thought. Now we have supervised jobsearch, which comes six months after two years so it will be really intense. The new system of Universal Jobmatch—which I have seen; it is very good—takes only about half an hour to prospect for jobs across the United Kingdom, because it is so efficient. This is a full-time commitment. People are being mandated to come in for 35 hours a week. How many hours will they spend over a Universal Jobmatch machine? They can get the full value out of it in half an hour, in my experience. It would help me to understand the value of these pilots better if the Minister could flesh out what would be done over this extended period of 13 weeks at 35 hours a week. What on earth are they going to do? We are told at paragraph 7.19 that:
“On day one, the provider must: assess the claimant’s skills and experience”,
et cetera. Then we are told:
“In week one, the provider must: carry out a number of activities with the claimant … On an ongoing basis, providers must: review and update the claimant’s portfolio, CV and action plan”.
These are things that I always assumed would be taken account of in the Work Programme anyway. Now they are doing it full time, for 35 hours a week for 13 weeks. I am in favour of providing support for people, but I do not know how that intense job-searching activity will look different from what they are supposed to have been doing for the previous two years.
I am interested in the pre-Work Programme group, because I do not understand where it came from. There is a logic to involving people who have been in the Work Programme. In any commonsense view, if someone has been unemployed for two years despite being in the Work Programme, in which they get a lot of help, it would suggest that more than their CV needs fixing. I do not know if it is possible to translate those people into the Troubled Families Programme; I hate that term, but the programme is interesting. It takes a holistic view, going beyond the front door of the family home, looking not just at the CV but at everything that is going on. Somebody who has been unemployed for two years despite the Work Programme’s assistance has got some serious issues behind the front door of the family home. It would be much more sensible for some of these people to at least be offered the option of taking a different route from that of looking at a Universal Jobsearch machine for 35 hours every week. That would drive me crazy.
The Scrutiny Committee says that there is scant information about the cost-benefit ratio for this. We have been told that there is a cap of £5,000 per head. I understand that if this is to be competitively tendered for, the department has got to be a bit canny in determining costs for contracts which will be bid for. However, Parliament requires a little more information, particularly given the department’s straitened circumstances, with departmental expenditure being squeezed so ruthlessly.
In passing, the whole-time staff equivalent costs are being substantially reduced. I looked at the annual report which came out a couple of days ago. In 2012, there were over 100,000 whole-time equivalent staff in the DWP. It fell to 98,000 in 2013. It is now 88,000. We are laying extra layers of responsibility on to a smaller cadre of hard-pressed staff. These job coaches will have their work cut out to do the work they already do on top of this pilot. The Minister was helpful in his introductory remarks, but any more information we can have about what will actually be done during this intensive period of job searching would certainly help me a lot.
I am looking at the Autumn Statement 2013, where the Chancellor said that,
“the Government will invest £700 million over 4 years in a new Help to Work scheme”.
He went on set out what that would do. He said it would,
“require all JSA claimants who are still unemployed after 2 years on the Work Programme to undertake intensive, often daily, activity to improve their employment prospects”
Is this part of that? Is this part of the £700 million four-year programme that the Chancellor set out in the Autumn Statement? I would like to know about that because, if it is, it would make it possible to place this pilot in a wider context. I must sit down. I have just realised how long I have been talking for.
My view about conditionality and support for getting people off welfare into work is captured accurately in the study that Paul Gregg did in 2008 for the previous Government. If the Minister will promise to read it at the weekend, I will say no more about it. That is a deal that he had better accept because, otherwise, it will take me another 20 minutes to explain its detail.
There are some opportunities here. I understand that. I am not against sanctions. I think sanctions should be restricted to a much smaller band of people than the 800,000 or 900,000 that we are headed towards. I am prepared to look at this. I know the Explanatory Memorandum states that the results of the evaluation will be published. I hope the Minister will confirm that on the record because that would give it some solidity and be an assurance. I hope this pilot produces something useful. I have great doubts that it will, but I understand why the Government are taking the powers they are taking. I wish the pilot well and I hope it works.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for his introduction to this order and the noble Lord, Lord Kirkwood, who should not have worried about going on too long. I should apologise because I intend to go on for a great deal longer than that, I fear. My speech will be composed mostly of questions to which—like the noble Lord—I struggled to find the answers. The Secondary Legislation Scrutiny Committee, the noble Lord, Lord Kirkwood, and I have been together wandering around the Palace hunting. I was so much driven by desperation that I even went to watch the House of Commons Delegated Legislation Committee debate these regulations yesterday. I have to admit that that the exercise was slightly more entertaining than it was informative—and it was not actually that entertaining, in truth. It was an attempt to try to find out what was behind it. Yesterday, the Minister did not manage to answer many of the questions, but I have confidence in our Minister who I know will answer them. If he cannot, I ask him to write on any questions that may be outstanding at the end.
The noble Lord, Lord Kirkwood, mentioned the report by the Secondary Legislation Scrutiny Committee. It was interesting reading. It might be worth reading a bit into the record. It commented rather drily:
“While the Committee has in the past commended well-structured pilot exercises as a means of informing policy development, it is unable to do so on this occasion due to a lack of information on how the scheme will work in practice. The Explanatory Memorandum provides minimal information on the pilot scheme and none at all on the cost of the exercise. We found virtually no material in the public domain about this proposal. No evidence is offered on why DWP expects the format and 13 week duration to be more successful than the existing interventions or why a shorter intervention might not be more cost-effective. We understand that the pilots will cost more than the existing programmes to run but not how they are expected to provide value for money, particularly when the candidates selected will be those who have failed to engage with the Work Programme”.
Apart from that, it loved it. It goes on:
“We therefore suggest that, before the House is asked to approve these Regulations, DWP offers … a revised Explanatory Memorandum”.
I discovered this morning that DWP had produced a revised Explanatory Memorandum which was put on the website last Thursday. Will the Minister take back a thought, which is one for all sides to consider? In circumstances such as this, where a department revises an Explanatory Memorandum very late in the day, he might reflect on the best way to bring that matter to the attention of Members of the House who might be interested—which I say, for the purposes of the avoidance of any doubt, would include Her Majesty’s Opposition on occasions such as this. I wonder whether he might consider whether there is any way we could make the communication process work better.
The noble Lord, Lord Kirkwood, asked about context. These pilots were first announced by the Secretary of State for Work and Pensions, Iain Duncan Smith, at the 2013 Conservative Party conference. Their aim was made clear when he said that,
“alongside the Mandatory Work Programme and our tough sanctions regime, this marks the end of the something for nothing culture”.
That is the context. To understand what this is about, it is worth looking at those two other bits of the package because what is happening here is connected directly to the Work Programme.
Its record, as noble Lords will know, is not hugely encouraging. Its performance is inconsistent and it has helped primarily those who are already closest to the Labour market. In another place the Minister of State, Esther McVey, responded on this point by talking about unemployment levels. Thankfully, I know that we have in the noble Lord a Minister who is better able to distinguish between the level of employment and the contribution made to it by the Work Programme, which is carefully evaluated.
While it is good news when anyone gets a job, there are significant gaps in the Work Programme. Over 1.5 million referrals have been made to it but fewer than 300,000 job outcome payments have been made. The success among disabled people is particularly bad, and not much more than one in 20 people on ESA are getting a sustained job outcome. However, the key point is that that means that 477,480 people have gone back to Jobcentre Plus after two years on the scheme. This is over two-thirds of participants who have completed their allotted time. Can the Minister tell the Committee if it is the intention to roll out this scheme, should it be deemed successful, to all of those 477,000 people?
It may be the case—given the piece of paper he handed to us at the start—that once those 11 categories of people who will be excluded are taken out, the number is smaller. If so, by how much? What is the size of the population who would potentially experience this, should it be rolled out? If so, what would that cost? My back-of-envelope maths suggests that at £5,000 a head, the cost will be about £2.4 billion. Are the Government really considering spending that on rolling out this programme to 477,000 people? If not, why are they piloting it?
I am sure that the noble Lord, Lord Kirkwood, is of a more generous spirit than me—which I confess is not always hard—but I am ever so slightly suspicious that it was announced that the Work Programme was not doing well but there was nothing to say what you do to people who get to the end of it. Labour had suggested all kinds of things such as compulsory job guarantees. This scheme is not a good thing, but it is a thing. I will wait for the Minister to correct me, as he often does.
In relation to sanctions, the other part of the package, we have heard a lot of complaints repeatedly from people concerned that jobcentres are being pushed to sanction too many people, or inappropriately. As regards communication, the Minister has a job to do in reassuring the Committee about how the Government will make sure that anyone who is sanctioned is sanctioned appropriately.
There is, however, a serious issue behind this, as the noble Lord, Lord Kirkwood, pointed out. We need to do something to redress the position of those who are still struggling, even after having received considerable amounts of help. The Government could usefully look at a more effective process of assessing jobseekers right at the beginning. Also, the Government’s proposals are not ambitious enough for the long-term unemployed. The Minister knows the Labour approach. We would offer a compulsory job guarantee to any young person out of work for a year, and to anyone else who was out of work for more than two years; basic skills tests; a more devolved model of commissioning; and different support for young people. However, these regulations are what the Government have produced, so I should be grateful if the Minister would tell us why their proposal will make a difference that our kind of schemes will not.
I have some specific questions, and I apologise for their number. As the noble Lord, Lord Kirkwood, asked, can the Minister tell us what people will do for 35 hours a week for three months? Will they all be doing the same thing as one another? Yesterday in the House of Commons, Esther McVey said that the Government were refining and tailor-making support for individuals. How individualised will the programme be? Will all the participants from any one provider be doing the same thing or different things? What range of things will they be doing?
The Minister there also suggested that they would vary according to client need and provider inclination. How then will the Government ensure that provision and supervision will be of good quality? If a provider bids low and does only what the noble Lord, Lord Kirkwood, suggested and keeps claimants in a room with a computer screen and Universal Jobmatch for 35 hours a week, will that pass? It might be value for money because it would not be very expensive, but would it pass the quality threshold? The noble Lord is wrong to think that he would go completely mad; he could probably read the adverts for careers at CosaNostra Holdings several times to amuse himself before he became too bored with Universal Jobmatch; so he need not do it down too much.
Regulation 3(a) states that the scheme is to provide support,
“for up to 35 hours per week over a period of up to 13 weeks”.
Is it the intention to test varying periods and durations, or will everyone be expected to be there for 35 hours a week for 13 weeks?
Lord Bates
I begin by thanking my noble friend Lord Kirkwood and the noble Baroness, Lady Sherlock, for their scrutiny, which compared and contrasted interestingly to the sparks flying and a lot of heat and not much light that took place in the other place when it considered these regulations. I totally accept their spirit of genuine inquiry and the need to flesh out the important issues and details, which we need to get on to the record. At the same time, I ask them to recognise the fact that what we are bringing forward here is a pilot, which in its nature is going to have areas of ambiguity that will be resolved as it takes effect and is rolled out. So a tolerance of that would seem fair.
Another thing should be said and needs to be put on the record. I accept that there is criticism of the Work Programme—but the noble Baroness will accept that there was criticism of the New Deal and even of the Flexible New Deal. The IPPR report came out just last week; it is not normally a champion of government social policy, but it actually said some very positive things about the way in which the Work Programme is going. Of course, 294,000 outcome payments have been paid to providers on the scheme, which suggests that something is happening in the labour market. In addition, at the risk of slightly straying into the territory of the other place, we need to put it on record that there is a changing employment environment. We have employment at record levels in this country and we seeing the number of vacancies increase quite dramatically; it is up 100,000 at 600,000. We are seeing a lot of people getting off benefits and into work; unemployment is down 27%, while youth unemployment is down 33% and long-term youth unemployment is down 39%. So in the interests of balance, one ought to put that record out there, to say that what Her Majesty's Government are doing in trying to help people is not without effect. Therefore, it is progressing.
I turn to the specific points. First, I recognise the sterling work of the Secondary Legislation Scrutiny Committee, which looked at these regulations and commented in a fairly detailed way. It asked that the Explanatory Memorandum be enhanced and updated with a lot more detail, and the department did that. That Explanatory Memorandum was published last week ahead of the scrutiny which is now taking place in Parliament.
The noble Baroness raises a very interesting point about whether there ought to be a mechanism. Whether it is for the House or the Secondary Legislation Select Committee, there should be something that says that when a report makes a recommendation there should be some mechanism for ensuring that people who have a close interest in this—certainly, perhaps, the spokesmen of the respective parties or groups—are systematically made aware. I will take that back to the department, and we will certainly try to respond to it.
Many points were raised. My noble friend Lord Kirkwood and the noble Baroness, Lady Sherlock, referred to many of the same issues, and I will work my way down them. On why the power is for 13 weeks and whether that is too long or too short, this is a new initiative and that is why we are testing it. The evaluation will help inform us about whether it is the right length of time to refer claimants to this more intensive activity. The length of the programme gives sufficient time for claimants to adapt and benefit from the enhanced jobsearcher’s routine. It also gives providers a reasonable amount of time to work with claimants to ensure that the support is effective.
I was asked why claimants will be on the programme for a maximum of 13 weeks. We will track them for as long as it takes after they have left the programme, typically for at least six months, to establish the impact of the pilot. I confirm that the pilot is being run on a randomised control basis, which is regarded as the gold-standard methodology for evaluation. I confirm that we will publish the results of the evaluation.
At this point, I turn to my colleagues behind me because the noble Baroness made a very interesting point when she focused on selection and randomised control and asked about the predominant methodology. The pilot we are talking about is a randomised control trial. The type, category and number of individuals will be the overriding methodology that will be used.
Baroness Sherlock
Something is either a randomised control trial or it is not. I am going to try to help the Minister here. It is not impossible that what the department is trying to do is select people to go into the pool, and then people from that pool of those deemed to be eligible will randomly be chosen to go into the programme or a control group. If that is what the department intends to do, will the Minister explain how people get to be in the selection pool in the first place? If I have got that wrong, he will of course correct me.
Lord Bates
The normally impassive officials behind me are nodding sagely to say that that is indeed the methodology that has been adopted. Advisers will have discretion on those who are eligible for the pool. Let me make a little further progress and perhaps some further inspiration will be on its way.
I was asked how claimants can possibly look for work for seven hours a day and what a typical day will look like. The Select Committee, the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Sherlock, all asked this. A typical day will be tailored to meet the needs of each individual participant. While there are generic skills that underpin jobsearch activity, participants will have tailored work plans that address their specific needs. They may include work on IT skills, interview techniques and job application skills, which do not just involve visiting the jobsearch website, looking at this person who has been on the Work Programme and has applied for up to 100 jobs without success for two years, and asking what are they lacking that would ensure that they get off benefits and into work, which is the outcome that we all seek. The Government have introduced the principle that looking for work is a full-time job, as has been said.
Lord Kirkwood of Kirkhope
One of the experiences driven into my brain while working with the Wise Group is that there is a huge amount of ignorance about what is happening to some of these claimants. Some of that is because the letters sent to them are couched in language that is difficult to comprehend. Will the noble Lord pay special attention to making sure that the Queen’s English is used and that people understand exactly what they are being invited or required to do, and the consequences? The group that the Wise Group works with in Glasgow is often completely at sea about what is happening to them.
Lord Bates
We can certainly look at that. One of the reasons why it needs to be tailored, rather than just having a letter generated, is that a lot of those people will have literacy or numeracy problems. They cannot comprehend it, whatever form of English it happens to be delivered in. Therefore the ability to talk that through with someone in person, so that they can explain it at the meeting while giving claimants the formality of the letter, would seem to be the right way to do that.
In terms of how we will ensure quality of service throughout the contract, the majority of the payment made to providers will be based on service delivery. The standards of service delivery will be monitored throughout the contract and payment will be related to providers consistently meeting the required minimum service levels outlined in the specifications. In terms of what will happen if the work coach ignores the claimant’s view that they are not suitable, at the point of referral claimants will be able to make representations if they feel that a pilot will not be appropriate for them. The work coach would take this into account before making a referral. Where the work coach decides that a referral should nevertheless be made, the normal appeal route will be open to the claimant who refuses to attend and is sanctioned as a result.
In terms of varying periods and whether they will all be 35 hours, everyone will be attending for 35 hours unless they are not able to do so because of restrictions. That is the point that was made earlier. We acknowledge that people are caring for other people; for instance, there are parents caring for young children and they might have other responsibilities that are entirely legitimate and need to be built around. Again, that is the reason why it is a tailored and individual approach.
Baroness Sherlock
I thank the Minister for answering a great many of my questions. I shall flag up one or two that I think he may have missed. One is the question of childcare and travel costs. Can he confirm that those will be available up front—that people will not have to find the money to pay for childcare and then reclaim it from the provider? On the same point, will the Minister clarify the answer he has just given to the noble Lord, Lord Kirkwood? Is he saying that an individual judgment will be made about whether somebody does not need to do 35 hours because they have other needs or responsibilities, or is he—as I suspect—saying that if somebody is not required to be available full time for work, in a comparable manner they will not be required to be available full time for this programme? Perhaps the Minister can clarify that for the record.
I do not think that he answered the point about whether somebody was engaged in doing something at the suggestion of the Child Poverty Action Group, or if somebody is already engaged in doing something that in fact makes it more likely that they will get a job. With that, can he clarify that anyone doing voluntary work will therefore not be covered by the programme, because that is what the list seems to say?
Finally, will he clarify his answer about the randomised control trial? One of the biggest problems that can befall a randomised control trial is if the selection pool from which people are chosen is itself biased. One of the difficulties in having what is essentially a subjective judgment made by coaches about referring people into the pool is that it does not matter how rigorous the randomisation is from the pool if entry into the pool itself is not biased. Can the Minister say whether the Government have been thinking that through? Do they have any concerns in that direction?
Lord Bates
I am grateful to the noble Baroness for saying that there are only one or two issues to cover, which suggests that I have worked my way through the list. I feel as though I am doing well, or, rather, the wonderful officials behind me are doing well.
The point about childcare is a serious one and I want to get my reply on the record. As regards childcare travel guidance, extra costs incurred by claimants will be provided. This is not currently published but has been stipulated in the terms and conditions. The provider is encouraged to consider claimants’ circumstances when awarding this and, if possible, to do this in advance. Good reasons are always considered before applying any sanction, and whether travel costs had been issued would be taken into account.
As regards how the randomised control trial will work, for the pre-Work Programme strand of the pilot, the Jobcentre Plus adviser will first identify suitable claimants, after which they will be randomly allocated to a treatment or control group. I think that I have mentioned that already. The 35-hour period is currently part of the claimant commitment, so that would apply.
As regards the Child Poverty Action Group’s view on charitable or voluntary work, perhaps the noble Baroness would be good enough to send us more information on that group’s recommendation on that.
Baroness Sherlock
That group simply asked whether, if somebody was already doing something that made it more likely that they would get a job than by going on the programme, that would do. I am sure that it was not thinking about work experience at a high-level cultural institution, for instance, but I give that by way of example.
Lord Bates
I thank the noble Baroness for that very helpful further intervention, which enables me to confirm that those engaged in voluntary work will not need to participate. A work coach will consider any other activity in which the claimant is engaged before deciding what action is taken. I again thank my noble friend Lord Kirkwood of Kirkhope and the noble Baroness, Lady Sherlock, for their scrutiny. I hope that this debate has been helpful. I believe that it will make a positive contribution to understanding how we can help some of the hardest to reach people in our society and give them employment, hope and a future.
Political Parties, Elections and Referendums (Civil Sanctions) (Amendment) (No. 2) Order 2014
(10 years, 2 months ago)
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Lord Wallace of Saltaire
That the Grand Committee do consider the Political Parties, Elections and Referendums (Civil Sanctions) (Amendment) (No. 2) Order 2014.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments
Lord Wallace of Saltaire (LD)
My Lords, the Political Parties, Elections and Referendums Act 2000—PPERA, as we all love to call it—was amended in 2009 to give the Electoral Commission certain investigatory and civil sanctioning powers. Those powers were given effect by the Political Parties, Elections and Referendums (Civil Sanctions) Order 2010, as a result of which the Electoral Commission is able to apply civil sanctions against the criminal offences established in PPERA. The full list of criminal offences that have been so prescribed is available at Schedule 2 of the order, but includes offences such as incurring election expenses without authority, exceeding campaign expenditure limits and failing to record donations appropriately.
The draft order before the Committee for consideration seeks to extend the list of offences prescribed in the 2010 order to reflect changes recently made by the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014. I am sure that noble Lords are already aware that Part 2 of that Act amends the non-party campaigning provisions of PPERA. The 2014 Act introduced certain entirely new controls that non-parties must comply with if they wish to campaign during election periods. A non-party’s failure to comply with these new controls currently constitutes a criminal offence. The new controls are limits on targeted expenditure and requirements for weekly donations reports and a statement of accounts.
However, the Act did not provide that the Electoral Commission could impose civil sanctions for breaches of these new rules. Under the Act, a breach of these rules would be considered a criminal offence only. However, the Government believe that a civil sanctioning power in respect of the new offences created by the 2014 Act should be made available to the Electoral Commission. This would be in line with the existing approach to the other offences in PPERA. To enable the Electoral Commission to apply civil sanctions to the new offences created by the 2014 Act, an amendment to the original 2010 order is required, which is what this draft order does.
I will make one further point, which is that it is not proposed that civil sanctions should apply to all the new offences created by the transparency of lobbying Act. Those offences known as “false declaration” offences are not prescribed by the 2010 order, and the order under consideration today does not amend this. False declaration offences are those where a person knowingly or recklessly acts in a way that contravenes the legislation. It is appropriate that such offences remain liable only to criminal prosecution, and the Government do not therefore intend to prescribe the new false declaration offences created by the 2014 Act either.
I assure noble Lords that the regulator, the Electoral Commission, has of course been consulted on the order. The commission supported the policy intention of making civil sanctions available for these offences. If the Motion is agreed, then the order will be made and come into force on 19 September. That is the start of the regulated period for non-parties campaigning in the 2015 parliamentary general election. I beg to move.
Lord Kennedy of Southwark (Lab)
My Lords, I thank the noble Lord, Lord Wallace of Saltaire, for introducing the order. I say at the outset that we fully support it and I shall not detain the Grand Committee for long. Civil sanctions are a good way of dealing with breaches such as those listed in the order. I was until recently a member of the Electoral Commission, and saw at first hand how civil sanction powers helped make sure that breaches by the parties were dealt with more effectively.
The only thing I would say to the noble Lord is that these powers must be applied proportionately. In some cases, there may be mitigating or aggravating circumstances when dealing with issues. So far, the commission has been good at dealing with them proportionately. I have heard of many cases in which parties gave good reasons for what had happened and were dealt with fairly. I remember one party—which has no representation whatever in either House—that would not comply in respect of its accounts. An official dealt with that party very skilfully, and the powers of sanction were helpful in getting it to comply and file its accounts properly.
I shall leave it there. I am very happy to support these measures. All I would say is that proportionality is important, and the Government should always keep that under review when dealing with the commission.
Lord Wallace of Saltaire
I thank the noble Lord for that. I remind him and anyone else who may read this that the legislation was aimed at the non-party campaigners that have registered in the past two elections. This order gives greater flexibility to the Electoral Commission, which we entirely agree is a well organised and well functioning organisation.
European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Iraq) Order 2014
(10 years, 2 months ago)
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Baroness Warsi
That the Grand Committee do consider the European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Iraq) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, we are today considering the draft orders for partnership and co-operation agreements—PCAs—between the European Union and its member states and four countries; namely, the Republic of the Philippines, the Socialist Republic of Vietnam, Mongolia and the Republic of Iraq.
The purpose of these draft orders is to declare the PCAs to be EU treaties as defined in Section 1(2) of the European Communities Act 1972. They provide a framework for political dialogue and further engagement between the EU, EU member states and each of these four countries in areas including: trade and investment; education, culture and environment; health, science and technology; justice, migration and human rights; and counterterrorism and counterproliferation. Respect for democratic principles, transparency and development are all essential elements of the agreements.
The draft orders that we debate today are a necessary step towards the UK’s ratification of these PCAs and, indeed, the treaties themselves are a necessary precursor to future EU free trade agreements with any of these countries. We have a strategic interest in developing our and the EU’s relationship with Vietnam, the Philippines, Mongolia and Iraq. While we recognise that progress in some areas is slow and challenges remain, we also believe that it is right to recognise the advances made in many areas in these countries including, for example, in the Philippines, which is the fastest growing economy in south-east Asia and too important to be ignored.
HSBC estimates that the Philippines could grow to be the 16th largest economy in the world by 2050. It is a vibrant, stable democracy with a leading role to play in ASEAN and, as the Administration of President Aquino has shown, in bringing peace and stability to the region. The UK is the largest investor in the Philippines, but there is potential for more, and now is the right time to deepen engagement. It is an emerging power, both economically and politically, with which we are keen to work more closely in order to make the most of the promising opportunities for both countries.
Vietnam is also a fast growing economy, an increasingly strong regional force and an important trading partner. The Vietnam PCA supports our bilateral strategic partnership signed in 2010 with Vietnam. It will provide a solid basis upon which we can strengthen ties between the EU and Vietnam, and will also provide the UK with an additional diplomatic tool with which to pursue complex and politically sensitive objectives, including on human rights, which continues to be of concern in Vietnam.
The UK has a strong and long-standing relationship with Mongolia. We celebrated 50 years of diplomatic relations last year. Mongolia shares our values in many areas. It is a member of the Organisation for Security and Co-operation in Europe and a valued contributor to peacekeeping forces in Afghanistan and South Sudan. Mongolia’s “third neighbour” foreign policy seeks to build friendly relations with countries such as the UK in its desire to diversify beyond its two heavyweight neighbours, China and Russia. The PCA would encourage the removal of restrictions to trade and promote measures to improve transparency, thereby helping to build British businesses. It will also support our ongoing work with third parties to embed democratic practice, good governance and respect for human rights.
Finally, I turn to Iraq. Despite the current violence, our hope remains that it will become a stable, prosperous country which plays a constructive role in the region. Greater engagement by both the UK and EU will allow it fully to realise that potential. Iraq successfully held parliamentary elections on 30 April, the third under the 2005 constitution, which demonstrates the commitment of its people to choosing their Government, despite the serious challenges the country faces. Increased co-operation through the framework of the PCA will also help to address many of the underlying causes of the current crisis, such as lack of jobs and access to education and basic services, as well as ensuring confidence in the security and justice systems and respect for human rights.
There is more that the Philippines, Vietnam, Mongolia and Iraq still want to do, and much that we want to encourage them to do. It is important that we continue to seize opportunities, through frameworks such as these agreements, to enable stable, sustainable and democratic states to flourish.
Although all these treaties have been signed, they will enter into force only once all 28 member states of the European Union and the Republic of the Philippines, the Socialist Republic of Vietnam, Mongolia and the Republic of Iraq have ratified them and the EU itself concludes the agreements.
Noble Lords will be aware of the recent European Court of Justice case regarding the Philippines PCA. In some ways, the judgment changes little: the UK will still be bound by the entire agreement once it is concluded either in its own right or as part of the EU, as was always going to be the case. However, the case raises some broader questions as to exactly how the UK is bound and the question of the opt-in. I take this opportunity to assure noble Lords that we are urgently considering these issues.
In conclusion, with specific regard to these PCAs, other countries’ ratification and parliamentary processes are in train. The agreements serve the interests of the UK, as well as the EU, other member states and the four countries concerned. They lay the foundation for stronger, mutually beneficial ties for the future. I commend them to the Committee and I beg to move.
Baroness Morgan of Ely (Lab)
I thank the Minister for that introduction. Developing co-ordinated agreements between the EU and other individual countries is just one of the many benefits of EU membership. Rather than the UK Civil Service spending hours on end developing bilateral relationships with countries around the globe, the EU uses all its combined political clout to negotiate more favourable terms using the political weight of 28 member states. That bargaining power is so much stronger than a bilateral dialogue.
The purposes of partnership and co-operation agreements are to provide a framework for political dialogue, to help strengthen democracies, to encourage the transition to a market economy and to encourage trade and investment. It is often a precursor to a closer trade agreement, which may or may not develop in the longer term.
Free trade is generally considered to be a good thing, and benefits both parties. Under these agreements, countries will accord to one another most-favoured-nation treatment. Nevertheless, it is important that, where possible, we ensure that those benefits are fairly distributed within those countries and that wider questions of human rights and democracy are respected.
Today, here in Parliament, we have an opportunity to determine whether we agree with the negotiation which has been thrashed out on our behalf by the European Commission: a demonstration that this is not a fait accompli until Parliaments across the EU have given their blessing. It is therefore not being imposed upon us in any shape or form. That is a message that we need to ensure that the public hear, loud and clear.
The orders in relation to the countries today and the kinds of areas that are covered were outlined by the Minister. Crucially, in these extremely testing times for Iraq and its authorities, the partnership agreement with Iraq refers to help in facilitating and supporting its stability and regional integration. That is much easier said than done. Al-Maliki’s pronouncement last week has done nothing to give us confidence that he believes in regional integration, despite the pronounced threat by ISIS forces to the stability of his country. What remained of the economy was largely shattered by the 2003 invasion and the subsequent violence. Attacks by insurgents on Iraq’s oil infrastructure have cost the country billions of dollars in lost revenues. Can the Minister therefore explain how the proposed agreement could be implemented in the light of the current security situation?
Since 1990, there has been a transformation in the way that Mongolia has been run, with the introduction of elections and privatisation. However, the withdrawal of Soviet support triggered widespread poverty and unemployment. Nevertheless, there is great hope for the country as it is now one of the world’s fastest growing economies. Its economy increased by 17% in 2011, driven in large part by investment, particularly from its Chinese and Russian neighbours, who are, of course, anxious to get their hands on the vast quantities of untapped mineral wealth.
There is, however, real concern about corruption in the country and it is surprising, perhaps, that this is not a more notable feature of this agreement, as European investors will need to be assured that their investments are secure. Will the Minister explain how this agreement will ensure that the benefits of strong economic growth will be shared more fairly by the whole of the Mongolian population? What pressure can we bring to bear on that?
We all remember the devastating pictures which appeared on our screens in 2013, when Typhoon Haiyan hit the Philippines. The EU was only just establishing and still recruiting for its European External Action Service and was slightly criticised for being slow in its response despite not having much in terms of infrastructure or staff in place at the time. Will the Minister explain how this agreement will help to develop and support the reconstruction efforts following the typhoon? The Philippines also has its own internal political threats. Terrorism attacks by the radical Islamist Abu Sayyaf group, which is linked to al-Qaeda, are frequent in some places. Guerrilla campaigns by the communist New People’s Army were commonplace in certain parts of the country.
The Philippines is perceived as one of the most promising newly industrialised countries, with its export economy moving away from agriculture into electronics, petroleum and other goods. The Philippines has a population of about 96 million people. It has one of the highest birth rates in Asia, and forecasters say the population could double within three decades. However, many leave the country and much of the economy, in the south in particular, is held afloat by remittances sent by people based overseas.
Finally, I turn to Vietnam. It has a population of about 89 million people and remains a one-party communist state. It has one of south-east Asia’s fastest growing economies. Private enterprise is allowed and investment, in particular from the US, has increased, while the country joined the World Trade Organisation in 2007. Of all the countries we are discussing today, Vietnam is the one I have most concerns about in terms of ensuring that any economic benefits of this agreement are felt by the whole population and are fairly distributed. My understanding is that, despite pursuing economic reform, the ruling Communist Party shows little willingness to give up its monopoly on political power.
I am extremely concerned about the situation in relation to human rights in the country, in particular about the treatment by the Government of the ethnic minority hill tribe people, the Montagnards. Amnesty International has voiced concerns in relation to fair trials, so how we can ensure that abuses are monitored and reported upon? What sanctions will occur if this aspect of the agreement is not respected?
Will the Minister also explain whether we can do anything in this agreement to ensure that firms with suspected links to slavery in these countries are rooted out? If the Minister can answer these questions satisfactorily, then my party will support all the proposed partnership and co-operation agreements.
Baroness Warsi
My Lords, I thank the noble Baroness for this interesting debate. She has raised a number of interesting questions in relation to the specific countries. I will deal with them in turn, starting with Vietnam.
The PCA contains a commitment by Vietnam to respect human rights as well as obligations in other areas such as counterterrorism and weapons of mass destruction. Vietnam is a country of concern in the FCO’s annual human rights report, and the PCA will provide an additional channel through which we can pursue UK objectives on human rights. We will continue to raise our concerns with the Vietnamese Government through the biannual EU-Vietnam human rights dialogue and also bilaterally, but this agreement provides us with a further opportunity to do that and raise the very issues to which the noble Baroness has referred.
Our relationship with the Philippines will focus on three key areas: prosperity, including trade and investment; continuing engagement on the Mindanao peace process; and a foreign policy that continues to be closely aligned to the UK’s. We will of course encourage the Philippines, as an emerging power, to become a responsible global player and to use its influence within ASEAN. The PCA will enrich our political engagement with the Philippines, including by consolidating co-operation on democracy, governance and human rights. As the Foreign Secretary has said, human rights and the rule of law are essential tools and indivisible from our national foreign policy objectives. The work in relation to the disputes within the Philippines could again form part of the discussions under the PCA.
The noble Baroness made an incredibly important point in relation to Iraq. Despite the recent instability and the current security crisis, we still believe that Iraq has considerable resource and potential which the international community should help it to realise for both for Iraq’s own interests and for the interests of stability and security in the region. The PCA is the centrepiece for EU and member state involvement with Iraq, and it underlines the EU’s determination to play a significant role in Iraq’s transition. The crisis in Iraq should not prevent us proceeding with ratification of the PCA. Rather, increased co-operation through the framework of the PCA will help us to address many of the underlying causes of the current crisis.
We welcome the PCA relating to market access in Mongolia, in particular through the removal of restrictions to trade and through measures to improve transparency, which was a specific issue raised by the noble Baroness. The PCA also includes provisions for the protection of the EU’s financial interests, which is of particular interest to the UK. The PCA will also help our current work with NGOs and government agencies to embed democratic practice, good governance and respect for human rights, and it will encourage action on climate change.
In conclusion, these draft orders provide us with an opportunity to enhance engagement between EU member states and the Republic of the Philippines, the Socialist Republic of Vietnam, Mongolia and the Republic of Iraq across a broad range of areas. They are testimony to the growing importance of EU links with these countries, and they have the potential to raise relations to a new level. These agreements give us the opportunity further to develop stronger ties and common approaches to global challenges. Further engagement with the Philippines, Vietnam, Mongolia and Iraq can help to make the most of the wealth of opportunities that lie in greater trade and investment links. It is also important to continue to strengthen our ties with these countries in response to emerging and constantly evolving security challenges while also remaining true to our core values.
As I mentioned previously, wide-ranging engagement with Iraq will enable us to assist the new Government, once formed, in addressing many of the political causes of the current instability and building, it is hoped, a more stable country in the future. The PCAs will all help to support our efforts to improve the human rights situation and to promote the principles of democracy and the rule of law in each of these countries.
I thank the noble Baroness for her support, and I commend the draft orders to the Committee.
European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Mongolia) Order 2014
(10 years, 2 months ago)
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Baroness Warsi
That the Grand Committee do consider the European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Mongolia) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Philippines) Order 2014
(10 years, 2 months ago)
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Baroness Warsi
That the Grand Committee do consider the European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Philippines) Order 2014
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Vietnam) Order 2014
(10 years, 2 months ago)
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Baroness Warsi
That the Grand Committee do consider the European Union (Definition of Treaties) (Partnership and Cooperation Agreement) (Vietnam) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014
(10 years, 2 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Chartered Institute of Patent Attorneys and Institute of Trade Mark Attorneys) Order 2014.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, first, on the designation order, the purpose of the order is to designate the Institute of Chartered Accountants in England and Wales—ICAEW—as an approved regulator under the Legal Services Act 2007 for the reserved legal activity of probate activities. I should also say that, if this is approved, a further order will be laid in the near future to designate the institute as a licensing authority for probate activities, which will mean that it will be able to license alternative business structures. This should help to promote increased competition and innovation in the legal services market.
The Legal Services Act 2007 established a new regulatory framework for legal services. Among the key aims of the Act was to deliver a more effective and competitive market. The Act contains eight regulatory objectives which include protecting and promoting the public interest; protecting and promoting the interests of consumers; and improving access to justice. The Institute of Chartered Accountants in England and Wales is a regulator and professional membership body for the accountancy profession in England and Wales. It provides leadership and practical support to its UK and international members and professional standards are maintained through working closely with Governments, regulators and the industry. It also undertakes education and training to support students studying to become chartered accountants.
The institute applied to the Legal Services Board in December 2012 to be designated as an approved regulator for probate activities. It also applied simultaneously to be designated as a licensing authority for probate activities. During 2013, the Legal Services Board very carefully and rigorously tested the institute’s proposals against the criteria in the 2007 Act. The Legal Services Board has also taken care to assess that the institute has both the capacity and the capability to undertake a regulatory role in the legal services sector. The board took advice from the mandatory consultees, as required by the 2007 Act. These are the Lord Chief Justice, the Legal Services Consumer Panel and the Office of Fair Trading—now the Competition and Markets Authority. The board additionally consulted the Financial Reporting Council and the Insolvency Service.
The Legal Services Board took care to ensure that the governance arrangements proposed by the institute are suitably robust in ensuring that its regulatory arrangements are independent from its representative functions, which is a key element of the 2007 Act. This is an important point, on which concerns were raised during the consultation, but the board has tested this issue and is fully satisfied that the arrangements that the institute has set out for its new probate committee will allow it to exercise the regulatory functions in a way that is not prejudiced by the institute’s representative functions. The Legal Services Board is fully satisfied that the institute has in place the safeguards required to regulate authorised bodies and protect the providers and users of such bodies. The Government accept that assessment.
The Government recognise the importance of the legal services market and want to encourage its growth. We believe that designating a new regulator, which has the appropriate safeguards for consumer protection, will help to achieve this. As for consultation, some issues were raised when the proposals were consulted on. The then Lord Chief Justice had long-standing general concerns that regulatory competition would have a detrimental effect on standards. The Legal Services Board was aware of these concerns and addressed them by setting out how the 2007 Act aims to achieve a more effective and competitive market, thereby improving standards. The Legal Services Consumer Panel strongly welcomed the application by the institute but was concerned that the institute was initially not proposing to have a majority of lay members on the probate committee or disciplinary committee. In response to the panel, the institute redrafted its regulations so that the probate committee was made up of a majority of lay members. The Office of Fair Trading had no objections. The Law Society wrote to the Legal Services Board to express concerns, in particular, as I have already noted, about the governance arrangements being proposed by the institute. The Legal Services Board copied this letter to the institute, which responded in detail to all the concerns that the Law Society had raised. The LSB was content with the response and the governance arrangements.
As I have also already mentioned, the Legal Services Board consulted the Financial Reporting Council and the Insolvency Service. Both the Financial Reporting Council and the Insolvency Service noted that the institute takes its regulatory responsibilities very seriously and supported the applications.
I appreciate that some might argue that the Government should not be pressing ahead with this and that an accountancy regulator should not be permitted to regulate legal services. Some may even suggest that there will be a lowering of standards, or a diminution of consumer protection. We do not accept these arguments. The Legal Services Board is satisfied that there will be no lowering of standards or lessening of consumer protection, and the Government agree. I am satisfied that the Institute of Chartered Accountants in England and Wales will be a highly capable and effective regulator in the legal services market. Its entry to this field will help contribute to the growth of the legal services market and bring further innovations, leading to benefits to consumers of legal services.
I turn now to the appeals orders. Noble Lords may be aware that the licensing regime for alternative business structures, as contained in the 2007 Act, became operational on 6 October 2011. In brief, alternative business structures are bodies that carry on reserved legal activities and are partly or wholly owned or controlled by non-lawyers.
In relation to that regime, as I have said previously, the ICAEW has applied to the Legal Services Board to be designated as a licensing authority. The Chartered Institute of Patent Attorneys—CIPA—and the Institute of Trade Mark Attorneys—ITMA—also made a joint application to the Legal Services Board to be designated as licensing authorities. Members of the Committee may be aware that the Legal Services Board made recommendations on 6 December, and earlier this year the Minister responsible for legal services agreed to make the following orders designating the Chartered Institute of Patent Attorneys, the Institute of Trade Mark Attorneys and the Institute of Chartered Accountants in England and Wales as licensing authorities under the Legal Services Act 2007.
In accordance with that Act, before CIPA, ITMA and ICAEW can be designated as licensing authorities by order of the Lord Chancellor, it is necessary for there to be an appellate body with the power to hear appeals against its decisions made in relation to alternative business structures.
The purpose of these orders is to make provision for the First-tier Tribunal to act as the appellate body for the purpose of appeals from those three bodies in their capacity as licensing authorities. As required by the 2007 Act, these orders are made on the recommendation of the Legal Services Board, following public consultation.
In summary, the two appeals orders make provision: for the First-tier Tribunal to have the power to hear appeals from the decisions of ICAEW under Part 5 of the 2007 Act and its licensing rules and to hear appeals from the decisions of CIPA and ITMA, acting jointly or separately, under Part 5 of the 2007 Act and their licensing rules; for the orders that the First-tier Tribunal may make on appeals from decisions made by those bodies under their licensing rules; and for modifying the Legal Services Act 2007 so that these appeals fit into the existing structure of onward appeals from the First-tier Tribunal to the Upper Tribunal.
These orders have been brought before the House at the earliest opportunity, following recommendations from the Legal Services Board on 2 May. If approved, the orders will provide individuals and businesses that are subject to licensing decisions of the Chartered Institute of Patent Attorneys, the Institute of Trade Mark Attorneys and the ICAEW with an opportunity to appeal those decisions through an independent and impartial appellate body. I beg to move.
Lord Beecham (Lab)
My Lords, having safely navigated the rather stormy waters of the Second Reading of the Criminal Justice and Courts Bill yesterday, it is a pleasure to renew acquaintance with the Minister over these crucially important statutory instruments. One or two questions occur to me about them.
The first is that we are talking effectively about alternative business structures, which are clearly well regulated. I do not know whether this is possible, but supposing that within a single alternative business structure you had both lawyers and accountants, what would be the appropriate framework? Would the professional body of which an individual within such a structure might be a member have a jurisdiction? Or is there an overarching mechanism for the structure as a whole as opposed to the individuals who work within it?
Secondly, grants of probate are issued to executors. My understanding is that if the executors chose to employ someone who is not part of a regulated profession, of course none of these safeguards would apply. Is it the intention of either the Government or the relevant bodies—I presume it would certainly be that of the latter, but it would also be sensible for the Government—to promote the use of properly regulated structures for these purposes? Having said that, I mentioned to the Minister before we began this Committee that I know of a solicitor who many years ago charged something like £90,000 in fees on an estate that was valued at just over £100,000. The regulatory body disposed of him in due course, but he was nevertheless guilty of an offence and seriously defrauding his client. The existence of a regulatory body itself does not necessarily mean that everything will be well.
There is one other matter, which may be slightly tangential. I am assuming that other accountancy bodies may be in a position to apply to be recognised for the same purposes as the chartered institute. In that connection, I have some involvement with an organisation called the Association of International Accountants. It is a non-commercial relationship; I just happen to know some of the people involved and I was recently asked to host a dinner in this House in lieu of my noble friend Lord Sawyer, which I did. The organisation is having some difficulties, not in this particular context, but in the more general context of being recognised for certain other purposes. It may not be possible for him to give me one at the moment, but I would like an assurance from the Minister that, if such a body were to apply to be recognised for the same purposes as the chartered institute, the same process that the chartered institute has successfully undergone would be available to it.
There is a feeling on the part of the Association of International Accountants that the two main accountancy bodies in this country—the chartered institute and whatever the appropriate body is for certified accountants—are, in one particular area, effectively operating a duopoly from which this association is excluded. I asked a Written Question about this some time ago, to which I received a not terribly helpful reply from the point of view of the association. An assurance that they would be treated on an equal footing in terms of passing whatever tests are necessary to be included in this would perhaps be of some comfort to them. Having said that, I cannot see anything to object to in these orders and we are perfectly content to see them go through.
Lord Faulks
My Lords, I am grateful for the questions that I have been asked by the noble Lord, Lord Beecham, who rightly says that regulation and discipline are no absolute guarantee against unprofessional, to put it mildly, practice on the part of a professional in whatever their particular role is. The Legal Services Board has been given by Parliament the task of approving as a regulator these various bodies. As your Lordships will be aware, the scope of their activities is limited. In terms of protection of the consumer, it was important that the effective arrangements were in place to ensure that members co-operated with the legal ombudsman. The Government also had to be satisfied that appropriate client protection arrangements were in place for any body designated as an approved regulator. The Legal Services Board undertook a detailed analysis and was satisfied with the arrangements of the probate compensation scheme, and the requirement for all authorised firms and accredited probate firms to hold professional indemnity insurance. That should protect someone in whatever particular professional role they perform within an alternative business structure.
In terms of these now multidisciplinary practices, there may well be lawyers working with what one used to regard as an accountancy firm. As I understand it, their work within the accountancy firm would be regulated in the way of the accountancy firm licensed to perform these particular activities, but if they were solicitors, for example, their activities would also be regulated by the Solicitors Regulation Authority as the disciplinary body. In so far as there can be protection for the individual, that will be ensured by these new arrangements.
Lord Beecham
In view of what the Minister has said, it is right that there should be professional indemnity insurance but that is basically for professional negligence. Certainly, the Law Society—as I know from the experience of having to contribute to these things—has occasionally to step in, not just in cases of professional negligence but also in cases of dishonesty, to compensate the clients of solicitors. Is it a condition of these bodies being recognised as regulatory bodies that they should assume responsibilities in that context of compensating those who have been defrauded of their entitlement as opposed to in claims for professional negligence? Again, it may not be possible to answer that question now but it would be interesting to find out.
Lord Faulks
I think that it would. I would be happy to write further with details about the arrangements. As I understand it, the Legal Services Board needed to be satisfied of the capacity for individuals to be compensated if mistakes were made in non-contentious probate. For historical reasons, probate is a reserved activity; hence the need for this whole process. The Legal Services Board was satisfied about professional indemnity insurance.
If I sound somewhat hesitant, the noble Lord will appreciate that Parliament has designated the Legal Services Board as the regulator. This is not directly the Government’s approval; it is the Legal Services Board’s approval. They have created this body, and the body has gone through the process. The Government have to be satisfied that the Legal Services Board has gone through the necessary process of consultation and satisfied itself of the adequacy of protection, for example, for consumers, and all the other aspects to which I referred in opening, but they do not have a separate governmental role. We do not think that there has been any inadequacy in the process of this approval. Essentially, the Legal Services Board, having been given that task, has satisfied itself. If an individual chooses a regulated person to undertake their probate, they naturally have protection and redress. As the noble Lord says, individuals have the choice of whether to undertake their own probate, in which case they do not, which is a matter of consumer choice. Further to what I said about lawyers and accountants within a single ABS, that will, of course, depend on which regulator licensed the alternative business structure. However, I understand that entity regulation applies over individual regulation, although, as I say, the individual may have some additional professional obligations of the sort that I described.
I do not think that I can answer from the Dispatch Box the other question that the noble Lord asked in relation to international firms. However, I will try to write him a more helpful letter than the one that apparently he received on a previous occasion.
Lord Beecham
I am grateful to the Minister for that. However, to be clear, the Association of International Accountants is not just a body of international accountants; it is a body with many UK members and some overseas members as well. It is therefore not operating solely in the international sphere. However, as I say, I am grateful to the noble Lord for his offer.
Lord Faulks
I hope that, subject to my providing further information by letter, I have satisfied the noble Lord. The debate has enabled me to put on record the importance of the alternative business structure and of the Government encouraging growth and innovation in the legal services market generally through these means. The order designated the ICAEW as a new approved regulator, which demonstrates our commitment to it. I hope that the debate has demonstrated the importance of the appeals order, which naturally needs to exist to support the effective operation of the ABS scheme. The appeals orders form a key component of the licensing arrangements. I commend these orders to the Committee.
Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Institute of Chartered Accountants in England and Wales) Order 2014
(10 years, 2 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) (Institute of Chartered Accountants in England and Wales) Order 2014.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments
Legal Services Act 2007 (Approved Regulator) Order 2014
(10 years, 2 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (Approved Regulator) Order 2014.
Relevant document: 3rd Report from the Joint Committee on Statutory Instruments
House of Lords
Children: Television
(10 years, 2 months ago)
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Baroness Benjamin
To ask Her Majesty’s Government whether they have given any consideration to the introduction of a tax credit for live action children’s television productions.
Baroness Benjamin (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a children’s television practitioner.
Lord Newby (LD)
My Lords, the Government are committed to supporting the creative industries and have introduced three new tax reliefs for animation, video games and high-end television. A fourth relief for theatre production is due to be implemented in September. Any proposal for a new relief must be assessed for its effectiveness, wider economic impact, ability to stand up against abuse and the cost to the Exchequer.
Baroness Benjamin
I thank my noble friend for his Answer. Children’s television is not part of the success story of the creative industries because, despite the fact that there are about 30 dedicated children’s channels, only 1% of new children’s programmes are made here in the UK; the rest come from abroad. Producers cannot fully fund their UK productions. Children’s television is in terrible need of assistance; it is struggling. Does my noble friend not think that to have a tax credit for children’s live action productions would boost the economy, boost the industry, help with exports and encourage international investment, as it has done successfully for film, drama and animation?
Lord Newby
My Lords, I am sure that all those arguments will be deployed forcefully by my noble friend and the industry body, which is about to begin discussions with the Treasury to make its case. The reliefs that we have introduced have led to at least one children’s TV programme—an animation in Wales called “Llan-ar-goll-en”—being granted relief, so the beginnings of relief are already in place.
Viscount Colville of Culross (CB)
I declare an interest as a producer at the BBC. Investment by commercial public service broadcasters in original British children’s television has collapsed by 97% in the past decade to a mere £2 million. Is the Minister not concerned by the lack of competition in the market that this is producing and the dilatory effect that it is having on our exports?
Lord Newby
My Lords, obviously there has been a considerable reduction in original children’s television production in the UK. There are a number of reasons for this: for instance, the ability of the independent television companies to generate income from children’s television has reduced as a result of restrictions on advertising during children’s television programmes. However, these issues will be put by the industry and considered by the Treasury.
Baroness Howe of Idlicote (CB)
My Lords, do the Government think that it is appropriate that the BBC, a public service broadcaster, is the largest buyer of children’s live action TV?
Lord Newby
When I look back to my own childhood—it was a long time ago, although I am not that old—the BBC had a pre-eminent role in terms of children's television. It has continued in that capacity and in that role for many decades.
Lord Davies of Oldham (Lab)
My Lords, the Minister was in self-congratulatory mood in response to the first Question. Does he accept that the Government’s television tax relief scheme is based on the hugely successful film tax relief introduced by the previous Labour Government? We would now like to know what is the impact so far of the measures that he is commenting on?
Lord Newby
My Lords, the noble Lord will know that we changed the basis of film tax relief. But as far as last year is concerned, some £868 million was generated by 37 major international firms making the UK their production base. As far as TV is concerned, the reliefs that we introduced last year—we have figures for only nine months—show that some £276 million worth of production has benefited from the reliefs, of which some 58% is from inward investment.
Baroness Bonham-Carter of Yarnbury (LD)
My Lords, my noble friend said a moment ago that animation tax breaks had already seen benefits in children’s TV, so is it not self-evident that this should be extended to live children’s TV?
Lord Newby
My Lords, the slight problem with that line of argument is that it would open the way to tax breaks on virtually every kind of expenditure. At the moment, as noble Lords will be aware, the Government’s ability to make tax cuts is severely constrained by the overall financial situation.
Baroness McIntosh of Hudnall (Lab)
My Lords, does the Minister not agree that that is a counsel of despair? The children’s television that is produced in this country is, generally speaking, of a very high quality. He mentioned earlier that the problem for that sector of the industry is in finding a market. If there were more of it, there might be a bigger market for it overseas as well as in the UK. Some encouragement to what is a widely respected part of the industry might not come amiss and would certainly help to encourage our exports.
Lord Newby
My Lords, the noble Baroness makes a strong point. Again, this is the point that the industry is making and that the Treasury will listen to and consider over the coming months.
Lord Christopher (Lab)
My Lords, nobody so far has mentioned the regulator. To assist the Minister in the matter of age, I would like to cast noble Lords’ minds back to 1981, which certainly the noble Lord, Lord Grade, will recall, when the Independent Broadcasting Authority was interviewing candidates for franchises in independent television. The chairperson, Lady Plowden, always reserved to herself the question of children’s programmes. The regulator has, of late, fallen behind in addressing a number of issues, certainly children’s programmes appearing on television. Will the Minister approach the regulator to see whether some studies should not be made about what children today would like to see?
Lord Newby
My Lords, that is an extremely interesting point and I will definitely take it back. One of the key points to make about the difference between now and the period the noble Lord was talking about is that, paradoxically, there are now a lot more children’s TV channels and routes by which children get their entertainment.
National Voter Registration Day
(10 years, 2 months ago)
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Lord Storey
To ask Her Majesty’s Government what plans they have to encourage educational establishments to take part in National Voter Registration Day 2015.
Lord Wallace of Saltaire (LD)
My Lords, the Government welcome all initiatives that promote democratic engagement and increase electoral registration, such as National Voter Registration Day. The Government are keen to work with organisations that encourage young people to register to vote and look forward to hearing further details of next year’s event in due course.
Lord Storey (LD)
I thank my noble friend for that standardised reply. I wonder if he might not consider actually giving a bit more substance to what he said. Given that we had a debate last week about British values, one of which is democracy, would it not be a good idea to do what has happened in Northern Ireland with the school initiative, where electoral registration officers go into schools, talk about democracy and its importance, and encourage young people to register to vote? Could we not consider a pilot scheme in the rest of the UK?
Lord Wallace of Saltaire
My Lords, with the approach of the general election next year, it is a bit late for pilot schemes. The Government have given £4 million to local authorities to promote registration among vulnerable groups. I am aware of three local authorities, Dumfries and Galloway, Ceredigion, and Redcar and Cleveland, that have specifically allocated some of this to looking at how to register young voters. In Ceredigion’s case, it has an explicit partnership with Bite the Ballot while doing this. We encourage all those activities. I remind the noble Lord that electoral registration is managed at the local level, which as a former local councillor he will well know.
Baroness Hanham (Con)
What progress has been made on individual electoral registration? It is very important for young people to know about the democratic process, but as part of that they must also know that they have to register in order to vote.
Lord Wallace of Saltaire
My Lords, online electoral registration was introduced four weeks ago. I have the figures only for the first week and we were extremely encouraged by how many people had registered. We hope that we will have the figures for the first month by next week. That is part of why we think that we have moved on from the Northern Ireland experience, in which electoral registration officers took paper forms into schools. We think that young people are much more likely to register online. The experience of 2010 suggests that the registration rate rises rapidly in the few months before a general election. It rose by 700,000 in early 2010. We expect that to happen again.
Lord Campbell-Savours (Lab)
My Lords, is it not a simple truth that electoral registration is a waste of public and taxpayers’ money, and that we should have dedicated expenditure to the areas where there was an abuse of the electoral system?
Lord Wallace of Saltaire
My Lords, I am not entirely sure that I understand that. There are a number of problems with electoral registration. We have various categories of voters, including the substantial number of people in London who are citizens of the European Union but not of the UK. I have been very impressed by the sheer difficulty of getting access to some of the dwellings that are now behind gated communities, so we must spread our effort into them. Of course we are focusing on the vulnerable categories, with which we are well familiar.
Lord Roberts of Llandudno (LD)
My Lords, is the Minister aware that organisations such as Bite the Ballot, of which I am honorary president, can register an elector for 25p, while the figure for the Electoral Commission has gone up to £25 per individual registration? Can we somehow encourage more work in the voluntary organisations, which are going into schools already and doing things to this end, and can we as a Parliament say that we want the highest number of new youngsters possible on the register, even before the coming general election?
Lord Wallace of Saltaire
My Lords, we need a range of activities by a range of different organisations, including political parties, of course. We touched on citizenship education yesterday. The activities in schools—I hope that Peers and others will help in that by going into schools—are all part of the effort we need to make to engage young people in the registration process.
Lord Wills (Lab)
My Lords, why do the Government not send registration forms with every student loan?
Lord Wallace of Saltaire
It is partly because we want people to register to vote online. It is more efficient and cheaper. A number of efforts are going on with universities to ensure that students are also encouraged to vote. There will be various activities during Freshers’ Week. I will take that back as a suggestion but we feel that we are covering this in another, more effective way.
The Lord Bishop of St Albans
My Lords, the Question is about encouraging educational establishments to encourage a whole new generation of people to engage in the electoral process. Of course, next year is a hugely significant year, with the 800th anniversary of Magna Carta. Can we not only encourage our schools to use this as an opportunity to really inspire people to think about civil participation, citizenship and so on but find some imaginative ways to give people the information in the educational packs that will be used next year?
Lord Wallace of Saltaire
My Lords, certainly. We trust that the churches will play their own role, and perhaps we will have mentions in sermons of civic duty and what one should render unto Caesar as well as unto God.
Lord Cormack (Con)
My Lords, why do we not require young people to register?
Lord Wallace of Saltaire
My Lords, in this country, it has not been compulsory to vote or to register to vote. That would raise all sorts of questions about civil or criminal penalties, and some fundamental questions about the relationship between the citizen and the state. This country has not wanted to use compulsion where it can possibly avoid it.
Baroness Jones of Whitchurch (Lab)
My Lords, might I take the noble Lord back to the original point raised by the noble Lord, Lord Storey, which is the Northern Ireland experience? When individual voting was introduced there, there was an alarming drop-off in the number of young people registering, so we already know that that is a threat on the horizon. Northern Ireland came up with a good solution—the schools initiative—which effectively dealt with the point that the noble Lord, Lord Cormack, raised about formally registering all pupils. Surely, on the basis of the experience we already have from Northern Ireland, we should embrace that initiative and get schools to register all pupils when they come up to the age of 18.
Lord Wallace of Saltaire
My Lords, the Government’s mechanism encouraging schools to use Rock Enrol!, a slightly different package, has so far received a fairly good take-up from schools. We very much want schools to encourage their pupils to register online, but we are having a dialogue about it with schools and teachers.
Elections: Weekend Voting
(10 years, 2 months ago)
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Baroness Neville-Rolfe
To ask Her Majesty’s Government whether moving United Kingdom elections from Thursday to Sunday has been considered in order to minimise disruption, especially for parents and schools.
Lord Wallace of Saltaire (LD)
My Lords, the Government have no current plans to change polling day from Thursday to Sunday.
Baroness Neville-Rolfe (Con)
My Lords, I thank my noble friend for that brief reply, and welcome the news about the success of online registration that he has already referred to. I wonder if more thought can be given to this important issue. The biggest single thing that has not been covered in debates on electoral issues is the cost of days lost for millions of schoolchildren—and often, no doubt, their working parents—on election days. Does the Minister agree that this adds an extra dimension to the argument that should be considered in the interests of our education system?
Lord Wallace of Saltaire
My Lords, the previous Government conducted a consultation exercise in 2008 on whether or not to move the day of voting to the weekend. The majority of responses to that consultation were against such a move. Of course, there are additional costs of transferring voting to a Sunday. If one were to have voting on two days over the weekend, it is likely that those costs would be in the order of £100 million-plus. I know that the Department for Education has suggested that schools that have to close for voting should use that day for staff training as a means of minimising the loss of teaching time.
Baroness Howarth of Breckland (CB)
My Lords, is not the fact that elections take place on a Thursday and children are not in school a good way of ensuring that they know that something is happening? Would it not be a very good thing if teachers had to ensure that the day before an election they explained about elections? At least then we would have one day when democracy was discussed.
Lord Wallace of Saltaire
My Lords, my first ever awareness of politics was during an election in the early 1950s when we had a fight in my primary school playground about which side one should be on in the election. I have no memory of why we fought and which side we were on, but we did know that something important was going on.
Lord Rooker (Lab)
Is not the cost for pupils potentially the loss of 10 days schooling over a school life? Can the Minister tell us how many fee-paying schools are required to close on a Thursday so that the pupils lose that educational opportunity?
Lord Wallace of Saltaire
My Lords, that is a very fair question. We will clearly have to investigate which public schools we can use for polling stations in the future.
Lord Deben (Con)
Will my noble friend accept that, although I have the greatest of devotion to my noble friend who asked this Question and am a firm supporter of the European Union, this is one continental habit that we do not need to take on board? It is important for schools to take seriously their part in the community, and children learn considerably if the teachers are sensible enough, as the noble Baroness suggested, to use this time to explain to children what happens. I do not believe that they would do that were it on a Sunday.
Lord Wallace of Saltaire
My Lords, the table I have seen of the days on which other industrial democracies vote covers every day from Monday through to Sunday. The majority of Roman Catholic countries vote on a Sunday. Almost all Protestant countries vote on other days of the week.
Lord Tyler (LD)
My Lords, is my noble friend aware that one of the original objections to voting on a Sunday was that there might be rather too much advice or direction from the pulpit as to how people should vote? Does he recall that our party suggested that there should be two-day voting at weekends—Saturday and Sunday—but with reduced hours so that there would not be any conflict with religious observance? However, he has not answered the specific Question with which this discussion started: what is the actual impact on business, on the economy and on families from the disruption on Thursdays? We need to know and there seem to be no hard facts.
Lord Wallace of Saltaire
My Lords, elections cause a certain amount of disruption on whatever day of the week one holds them. That is unavoidable. The question of where the disruption falls depends on what day is chosen. On the question of the role of churches, I am reminded of the occasion when I took a young Liberal called Elizabeth Barker, now the noble Baroness, Lady Barker, whose father had been the Minister at Saltaire Methodist church, to Saltaire Methodist church one day when I was about to stand as parliamentary candidate in Shipley, and the sermon was wonderful. It did not quite go so far as to say that people should vote for the candidate who was there but it got very close. I would like to hope that the church will do things like that in the future.
Lord Kennedy of Southwark (Lab)
My Lords, I think that the noble Baroness, Lady Neville-Rolfe, has a point. Does the noble Lord agree that it is time for a root-and-branch review of polling day and that using schools should be a last resort for the community? We should look at other options and dismiss them from the whole process of voting.
Lord Wallace of Saltaire
My Lords, it is only six years since the previous Government looked at this. I am not aware of any strong pressure for change and there are disadvantages with all other days of the week. If we were to move to weekend voting there would be a strong argument for having two-day voting and that would be a much more complicated exercise in other ways.
The Countess of Mar (CB)
My Lords, we are getting the conception that all schools close on voting days. In my locality we vote in the village hall. In the next ward to us they vote in the village hall. Are there not enough community centres and village halls for people to be able to vote in them and for schools to remain open?
Lord Wallace of Saltaire
A whole range of places, including church halls, are indeed used for polling stations. It often happens, however, that the primary school is the most convenient place in a village or town district for people to get to and for disabled people in particular to be able to go into.
Lord Low of Dalston (CB)
Does the Minister agree that whether an activity is disruptive or not depends on the value of the activity? I do not find many people agreeing with me about how disruptive football matches are.
Lord Wallace of Saltaire
I merely reiterate that not all schools that are used as polling stations have to close entirely for the day of polling. There is some disruption, so it is a problem, but it is not a universal problem.
Baroness Heyhoe Flint (Con)
My Lords, if one is looking for a two-day voting system, perhaps all sports venues could open on a Sunday. It would increase attendances; the venues could offer free tickets to youngsters; and people would discover the joy of voting and the joy of sport—at the risk, of course, of offending my right reverend friends on my left.
Lord Wallace of Saltaire
My Lords, all sorts of suggestions have been made about where people might vote, including at supermarkets. One objection to choosing a particular chain of supermarkets in which people might vote is that, as we all know, there are certain gradations of supermarket. Depending on which supermarket one chose, one might possibly bias voting in one direction or another.
Payday Loans: Debt Collection
(10 years, 2 months ago)
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Lord Kennedy of Southwark
To ask Her Majesty’s Government what action they propose to take in respect of Wonga.com and other financial sector companies which have employed misleading debt collection practices.
Lord Kennedy of Southwark (Lab)
I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a director of London Mutual Credit Union.
Lord Newby (LD)
My Lords, the Government are determined that abuse in the payday lending market should be tackled wherever it occurs. That is why we gave the Financial Conduct Authority strong powers to regulate the payday lending industry and legislated to require the FCA to introduce a cap on the cost of payday loans. The FCA asked Wonga to make redress to customers, which Wonga has agreed to. Wonga will pay compensation totalling more than £2.6 million to around 45,000 customers.
Lord Kennedy of Southwark
Will the Minister join me today in condemning the disgusting activities of Wonga.com? Will he arrange for me, faith groups and other campaigners to meet a Treasury Minister to look at the idea of putting the fines imposed on companies in the financial services sector into a separate fund and using them to support the credit union movement, financial charities that work with adults and children, and similar organisations? Enabling people to make better-informed financial choices and to understand their options is a much better way forward.
Lord Newby
My Lords, I agree with the noble Lord on his first point and I am happy to arrange a meeting. I remind the House that the Government are putting £38 million into the credit union expansion plan and we strongly support the expansion of credit unions.
Lord Elystan-Morgan (CB)
The watchdog’s report shows that deceit on a massive scale has been perpetrated, but there are two questions that I wish to ask the Minister. First, with regard to the possible criminality involved, is it possible, if not likely, that offences have been committed under Sections 1 and 2 of the Fraud Act 2006 and Section 26—the blackmail section—of the Theft Act 1968? Secondly, is it not the case that such bodies hold statutory licences? Should there not be a rigorous examination to see whether they are fit to hold such licences?
Lord Newby
My Lords, the noble Lord is right that there is a question over whether Wonga in this case might have infringed both the Fraud Act and the Theft Act. The Law Society has asked the Solicitors Regulation Authority to investigate whether Wonga might also have breached Section 21 of the Solicitors Act 1974 and the Legal Services Act 2007. There is plenty of scope for legal action. On the fit-and-proper test, payday loan companies have been regulated by the FCA only since April. A full fit-and-proper test of each company will be undertaken in the autumn.
Lord Razzall (LD)
My Lords, is the Minister aware that the debt collection practice with which we are concerned has also been introduced by the Student Loans Company? Will he confirm that no other government agency follows the same practice and agree that it is difficult to complain about Wonga when a government agency is involved in similar activities?
Lord Newby
My Lords, there have been recent reports about the Student Loans Company. My right honourable friend David Willetts is in the process of establishing the facts of the practice. The offending letters that the SLC sent out are no longer being sent. Certainly, if it is found that the SLC or any other arm of government has adopted unsatisfactory practices, appropriate and firm action will be taken.
Lord McFall of Alcluith (Lab)
My Lords, it is important to note that no fine whatever has been imposed on Wonga. It has been asked only to redress customers at a rate of 8% interest, compared with the 5,853% that it charged its distressed customers. Despite the potential criminality in at least four areas here, Wonga has been allowed to continue as though nothing has happened, portraying itself as the good guy in a bad industry when it is the bad guy in what should be a good industry.
Lord Newby
My Lords, I think Wonga is finding it increasingly difficult to portray itself as the good guy. That has been demonstrated by this episode. The key thing to point out is that the action of the FCA has resulted in prompt redress and that 45,000 consumers will be getting a payment from Wonga. Until the FCA had the powers that it assumed in April, there was no provision under the previous regime for the OFT to secure redress for customers in that way. If, under the old regime, the OFT had initiated a criminal process, it is quite likely that it would have taken the best part of three years to reach a conclusion; whereas, under this process, consumers have got money back from Wonga very quickly.
Baroness Wheatcroft (Con)
My Lords, we hear much in this Chamber about how credit unions are a preferable alternative to the Sue, Grabbit and Run tactics of some of the payday loan companies, but many people working in Parliament would probably benefit from the presence of a credit union. Has my noble friend given any consideration to the establishment of a parliamentary credit union?
Lord Newby
My Lords, I think there may be one but, sad to say, I have not become a member of it. I will write to my noble friend explaining how she might join and put the letter in the Library of the House so that other Members may do the same.
Lord Alton of Liverpool (CB)
My Lords, will the Minister confirm that personal debt in Britain now stands at a staggering £1.4 trillion, and that in one recent year, payday loans were advertised in more than 400,000 spots on television? This included advertising, some of it by Wonga, that was targeted at young people and used puppets. Surely it cannot be in our national interest to promote indebtedness on that scale and to have a new rising generation encouraged to take out personal debts as well.
Lord Newby
My Lords, I agree with that, but the fact that we are now regulating the industry in a way that has never been done before is likely to have a significant impact on both the number of firms—firms are exiting the sector very quickly at the moment—and public perception of the industry. If we go back a year or two, the Wongas of this world were seen to be soft and cuddly institutions; nobody believes that any more.
Middle East Peace Process
(10 years, 2 months ago)
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The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, with the leave of the House, I should like to repeat as a Statement the Answer given to an Urgent Question in the other place by my right honourable friend the Minister of State for the Foreign and Commonwealth Office on the death of three Israeli teenagers and the effect on the Middle East peace process. The Statement is as follows.
“I visited Israel and the West Bank from 17 to 19 June, just after the kidnapping of three Israeli teenagers. The whole House will share our sadness that last night the Israeli Government confirmed that they had recovered their bodies in the West Bank.
As my right honourable friend the Prime Minister has said, this is an appalling act of terror. There is no reason, belief or cause that can justify the abduction and killing of innocent civilians. We send our deepest condolences to the families of Gilad Shaar, Naftali Frenkel and Eyal Yifrach.
We are in close contact with the Israeli and Palestinian authorities. The urgent priority must be to hold those responsible to account, under the rule of law, and we stand ready to offer any help we can in that objective. The Home Secretary has been in Israel and the West Bank this week and has had discussions with political leaders on both sides.
I welcome President Abbas’s condemnation of the abduction. We are encouraging Israel and Palestinians to continue to work together in order to find the perpetrators. I saw evidence of that co-operation during my visit and it is vital it continues in the weeks ahead. It is vital that all parties avoid action that could escalate the situation further. All security operations must be handled with due care, restraint and the proportionate use of force.
It is too early to be clear about the full implications for the Middle East peace process. We will do our utmost with our allies and partners to keep open the prospects for a return to negotiations on a two-state solution, which is the only way to resolve this conflict once and for all”.
My Lords, that concludes the Statement.
Lord Bach (Lab)
My Lords, I thank the Minister for repeating the reply from another place. Every Member of your Lordships’ House will be saddened by this awful news. The suffering of the families will, of course, be unbearable and the nation of Israel and millions more around the world will be in mourning. I ask the noble Baroness three short questions. First, will she set out in a little more detail what contacts there have been with the Israeli and Palestinian Governments in the past 24 hours? Secondly, what assessment have our Government made of the impact these latest tensions are likely to have on the Palestinian unity Government and the Israeli Government’s policy towards them? Lastly, do the Government agree—I am sure that they do—with the United Nations Under-Secretary-General Jeffrey Feltman that both Israelis and Palestinians should exercise maximum restraint to prevent tensions escalating further?
Baroness Warsi
I thank the Benches opposite for their support in these matters, as always. I can confirm that the Minister with responsibility for the Middle East, Hugh Robertson, spoke to Minister Livni earlier today. The Home Secretary has been there this week and contact was planned today for the Foreign Minister to speak to his opposite number and a potential Prime Ministers’ call as well. The Foreign Secretary met the Security Minister recently. As for the impact on the unity Government, noble Lords will be aware that the unity Government were formed last month and that Government, who do not include members of Hamas, made very clear their commitment to the quartet principles. I agree with United Nations Under-Secretary-General Feltman. It is important that both sides exercise maximum restraint in their response to this matter.
Baroness Falkner of Margravine (LD)
My Lords, we on these Benches deeply commiserate with the families and friends of Naftali Frenkel, Gilad Shaar and Eyal Yifrach. We join their families and the whole Israeli nation in feeling their loss and in sharing their unity at this time of great suffering. The noble Lord, Lord Bach, asked about contacts. I wonder whether, in those contacts, her colleague the Minister has discussed with both sides the importance of proportionality. Find the murderers, the perpetrators of this act, and bring them to justice, yes; but it is hugely important that the unity Government and the peace process should not be imperilled at this time of justifiable anger on the part of the Israelis. Will she take away the idea that, at the end of this, both nations will have to live together?
Baroness Warsi
We have to accept that this kidnapping has consumed Israeli society over the past 18 days and therefore our thoughts are, of course, with the families and the friends of the young men who have lost their lives. However, it is important that all efforts should be directed at finding the perpetrators and nothing wider. That is the message that we are emphasising in our discussions.
Lord Wright of Richmond (CB)
My Lords, there can be no justification for kidnapping or murder, but can the noble Baroness assure the House that the European Union, as a member of the quartet, is urging the Israelis to avoid any retaliation, which will only increase the suffering, humiliation and deprivation of the populations of Gaza and the West Bank and can only reduce the already very slender chances of achieving a peace process?
Baroness Warsi
The noble Lord makes an important point and he will be aware, as others are, that in the operation in response to the kidnapping of these teenagers, 400 Palestinians have been arrested, seven Palestinians have lost their lives and more than 1,000 homes have been searched. For that reason, we are making it clear that it is important that the response to this matter is specifically targeted and done in a way that avoids escalation.
Lord Campbell-Savours (Lab)
Do the Government equally condemn the actions of the Israeli troops who recently killed two young Palestinian boys who were peacefully demonstrating in the West Bank of the Jordan?
Baroness Warsi
My Lords, the Government equally condemn the deaths on the Palestinian side. We can probably say that the one thing that unites both sides is the way in which families grieve for their young ones. We must make it clear that there can be no hierarchy of victimhood in this dispute and that whichever side loses a child, it is equally condemnable.
Lord Palmer of Childs Hill (LD)
My Lords, more than two weeks ago, when the three non-combatant young men were kidnapped, the result on the streets of Gaza City was celebrations and jubilation at the kidnapping and a call from Hamas for more kidnapping. Can the Minister tell me how we can try to stop this horrendous escalation of kidnapping, which is of no benefit to anybody in that area?
Baroness Warsi
The Government are rightly concerned about some of the responses to these kidnappings. However, we have been quite heartened by President Abbas’s approach to this matter, including his speech in Riyadh 10 days ago, the full security co-operation of the technocratic Government—the Minister had an opportunity to see that for himself on his visit—and the statement last night. We can take great comfort from the fact that President Abbas has responded in a positive way and one that has de-escalated the situation.
The Lord Bishop of Derby
On behalf of these Benches, we associate ourselves with the condolences to the families and the widespread grief on all sides. We welcome the statement by the unity Government but an inevitable reaction to grief, especially with the death of the young, is anger. Yet grief is something that is never handled by anger; it requires time for reflection, engagement and a deeper kind of approach to the issue at stake. Can the Minister assure us that, in our work to seek peace, we will do everything we can to mitigate the knee-jerk reaction of anger and invite people to think more deeply about the human content of grief and how to deal with it?
Baroness Warsi
We will of course do that. The right reverend Prelate makes important points, but I think he would also say—and on a very personal basis, I acknowledge this as a mother—that it must be incredibly difficult to reach that second phase when you have just lost your children.
Baroness Symons of Vernham Dean (Lab)
My Lords, the Minister is quite right to refer to this as an appalling act of terror. However, she has also pointed out on recent occasions that the window is closing on the viability of the Middle East peace process. I wonder whether the Minister could come back to the point of the Question, which is about the impact on the Middle East peace process, and what she and the Government see as the next positive step that might be taken in that process.
Baroness Warsi
The noble Baroness is right. I have answered a number of questions on this over the past two years but there is no doubt that the events of the last two or three weeks have made it much harder to reopen negotiations and, indeed, to start some meaningful conversations. However, I go back to what I have said on many occasions at this Dispatch Box: the two-state solution is the only long-term solution that will bring a safe and secure Israel alongside a viable, flourishing Palestinian state.
Baroness Hayman (CB)
Does the Minister agree that it is a tragedy for both peoples, whom it has been shown over the years support a peaceful two-state solution, that they have been let down by their leaderships being incapable of taking their countries to that point? In terms of the people concerned, the Minister mentioned the grief of parents, which is the same whether you are Israeli or Palestinian. Will she take this opportunity to pay tribute to the bereaved parents on both sides who have been active in the peace process?
Baroness Warsi
I of course pay tribute to the bereaved parents on both sides, Palestinian and Israeli, who have lost their children. The natural order is for children to bury their parents, not for parents to bury their children.
Consumer Rights Bill
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, let me begin this debate by setting out how important the Government’s consumer law reforms are for consumers, for businesses and for growth.
Consumer spending accounts for nearly two-thirds of the UK's economic activity. According to the British Retail Consortium, UK retail sales in 2013 were over £321 billion and the Office for National Statistics estimates that in quarter 1 of 2014 alone, household spending, when adjusted for inflation, grew by 0.8%—that is a growth of £2 billion just in that quarter.
Our aim is to foster high levels of consumer confidence so that people try new products and services and also shop around. This encourages businesses to enter the market and drives innovation, boosting competition and creating growth. However, in order for consumers to be confident, they need to know what their rights are and what they are entitled to if something goes wrong. Having clearer rights and remedies is also important for businesses because it means that they can more readily understand how they can best meet their responsibilities. Helping consumers to become more confident and businesses to become more responsive is the challenge that we face.
We have already taken action to reform the landscape of bodies which support efficient and competitive markets. Reforms announced in April 2012 have transformed the institutional landscape through, for example, the creation of the Competition and Markets Authority and the formation of the National Trading Standards Board. These reforms have made responsibilities clearer where previously they overlapped and have enabled consumer bodies and enforcers to be better co-ordinated, to identify and act on the real priorities affecting consumers.
We now have to get the legal framework right to make consumers more confident about the protection that they have and to reduce the costs to businesses of applying consumer law in practice—hence, the Consumer Rights Bill. The Bill sets out in one place key consumer rights and what consumers are entitled to if something goes wrong. It covers goods, services and, for the first time ever, digital content such as apps and film streaming.
The overall package of reform is estimated to be worth over £4 billion to the UK economy over 10 years. The Bill reduces costs for businesses and consumers by making it easier and clearer for people to understand what should happen when a problem arises. It will help to resolve complaints at an earlier stage and stop issues from unduly escalating into disputes, which are costly for all parties. It will also help create a fairer and more level playing field for businesses and enhance redress for consumers where problems emerge.
The provisions in the Bill have been carefully developed following extensive consultation, reviews and independent reports, including by the Law Commissions. The Bill was also published in draft last summer and received scrutiny by the Business, Innovation and Skills Select Committee. We are very grateful for the committee’s detailed consideration and we have accepted a good many of its recommendations. The Bill was then further improved following its introduction in the other place and I am confident that the Bill now before your Lordships’ House is stronger and better as a result.
I now turn to the main measures in the Bill. First, on goods, there are estimated to be over 350,000 retail businesses in the UK, making goods a critical part of the UK economy, yet much of the law on goods is over 30 years old. That is why the first part of the Bill sets out a simple legal framework to regulate the sale of goods in order to replace the current complexity that is, quite frankly, bewildering for consumers and which makes compliance so onerous for business.
We are setting out in one place the standards that goods must meet—for example, specifying that consumers have 30 days in which to reject substandard goods and receive a refund, to replace the current vague law that they have a “reasonable” time in which to return such goods; and making clear that, where the consumer prefers to have a faulty item repaired or replaced, this repair or replacement must remedy the problem the first time around or the consumer can insist on some money back. Currently it is unclear how many repairs or replacements of faulty goods a trader can give before the consumer can get some back.
Secondly, on digital content, because most consumer law has been in place for a long time, since long before the advent of digital content, there is significant legal uncertainty about what rights apply here. This uncertainty harms consumers and business, first, because consumers do not know how to go about resolving problems with digital content and, secondly, in contrast, some consumers may think that they are entitled to a remedy that the business does not think it is obliged to provide under the current law. This situation is unacceptable in a market that is both of a substantial size—around £200 billion—and still developing.
We are introducing a set of quality rights tailored specifically to digital content. For example, where a trader provides an update to digital content previously supplied, this update must not lower the quality of the original digital content. If it does, the trader must provide appropriate remedies to the consumer. Note that the onus in this example is on the trader because that is the person the consumer paid for the digital content. This in turn will raise consumer confidence to try new products, because consumers will be clearer about what they are entitled to if something goes wrong. This is good for businesses, too, because it makes it easier for new firms and innovative businesses to compete successfully for a share of the market.
I turn to the services sector. There are no statutory remedies to ensure that matters are put right if there is a problem with a service contract. That is unacceptable in a sector that is worth over 75% of UK GDP. We are addressing this in the Bill by setting out new statutory rights and remedies. Our key new remedy is for consumers to have the right to request the reperformance of a service. Alternatively, reperfomance might just be the element of it that is just not delivered in accordance with the contract, but we recognise that there are circumstances where that simply is not possible, or where it could not be done within a reasonable time and without significant inconvenience to the consumer, and in those cases the consumer is entitled to a reduction in the price of the service.
I focus now on unfair contract terms. The law on unfair terms in consumer contracts is particularly complicated. We need to tackle the complexity and ambiguity in this area of law, which has led to costly disputes that have even been taken to the Supreme Court. These court cases have still not established sufficient clarity about what a court may or may not consider for fairness in a contract. Some protection in law is necessary because consumers understandably focus on the product or service that they are purchasing rather than the contract. They often cannot, or do not wish to, investigate the detail of every contract term before they sign up to an agreement. They need protection where the small print could trip them up. However, this protection needs to be balanced against businesses’ need to be able to trade without the prospect of every single term being open to challenge. Contracts are a necessary part of providing products and services, and should enable rather than hinder consumers and businesses in that market.
Therefore, these reforms will make clear what the courts can and cannot consider for fairness. In particular, we are making a key test that price and subject matter terms in a contract need to be transparent and prominent to ensure that it cannot be challenged for fairness in court. That will give important protection for consumers against the small print and will give more certainty for businesses about what they need to do to avoid a term being assessable for fairness by a court.
On Part 3 of the Bill and consumer law enforcement powers, investigatory powers of consumer law enforcers are currently scattered across some 60 different pieces of legislation. That makes it difficult for enforcers and businesses to understand what the consumer powers are and in what circumstances they can be used, which is why we are consolidating them into one generic set in the Bill. We also want to make it very clear in the Bill that trading standards can work across local authority boundaries to tackle rogue traders efficiently and effectively, which will help to get rid of the red tape that currently stands in its way and prevents it from getting on with its important role. These important reforms will save businesses and enforcers time and money. We estimate a net benefit of approaching £50 million over 10 years.
Part 3 also contains enhanced consumer measures. If a business breaks consumer law, it is right that action is taken, and trading standards does bring criminal prosecutions. However, while that punishes the miscreants, it does little to help those who lose out as a result of the breach. We are therefore giving enforcers more flexibility to deal with such breaches so that they have additional ways to achieve better outcomes for consumers and create a level playing field for compliant businesses where consumer law is breached. Those tools include new powers to seek redress for consumers, which will help people get some money back where they have lost out as a result of a business not abiding by consumer law. However, they also comprise powers to help prevent future breaches. That may involve, for example, a business putting in place a better complaint handling system or putting details of the breach on its website together with what action it has taken to put matters right.
However, the Bill is not prescriptive. Instead, it provides flexibility to enable the response to be tailored to specific circumstances. More than that, we want to encourage businesses to work with enforcers to propose and agree appropriate measures, although ultimately the enforcer can seek a court order. As a balance—and the Bill is all about providing an appropriate balance—we are including safeguards for businesses that any such redress or other remedy is proportionate, just and reasonable.
On lettings, the vast majority of letting agents provide a good service to tenants and landlords. However, we are determined to tackle the minority of rogue agents who offer a poor service. We will require all letting agents and property managers to belong to an approved redress scheme, which will give tenants an effective way to address complaints. However, I believe we should go further, which is why the Bill has provisions to ensure full transparency of lettings charges. That is effectively a ban on hidden fees, giving consumers the information they want and supporting good letting agents.
Lastly, the Bill reforms the regime for private actions in competition law. Anti-competitive behaviour can harm consumers by lowering output, increasing prices, and reducing choice and innovation. It is estimated that cartels can raise prices by between 20% and 35%. Despite the strong competition framework that the Government are putting in place, research by the Office of Fair Trading shows that businesses believe the current regime for private actions is too slow and too costly. As a result, businesses and consumers rarely get redress where they have been harmed by anti-competitive practice. It is particularly telling that in 10 years there has been only one collective action case, and only 0.1% of those eligible signed up to the action.
To address that, first, the Bill will make it easier for settlements to be reached without costly court proceedings, by facilitating alternative dispute resolution. Secondly, it will create a more efficient and quicker process for private actions through allowing a fast-track regime for appropriate cases aimed at SMEs. Thirdly, it will introduce a limited opt-out regime to facilitate more effective collective actions for consumers and businesses where they have been harmed by an anti-competitive practice, with safeguards, to ensure the cases are appropriate and merit this approach.
This is the most fundamental reform of UK consumer law for more than a generation. It will streamline the law, and make it clearer and more accessible. It will enhance consumer rights and deregulate for business where appropriate. It will empower consumers and stimulate competition and growth. I beg to move.
Baroness Hayter of Kentish Town (Lab)
My Lords, I thank the Minister for the clarity of his introduction and, indeed, for his willingness to discuss the Bill with us. We look forward to working with him in Committee. I think he knows that our disappointment is about not what is in the Bill, but what is lacking. With only small exceptions, we like what is there, but that is because it is largely a consolidation Bill.
Our regret is that the Bill, with its wonderful title, is rather a wasted opportunity, which could have strengthened, rather than just clarified, consumer rights. We of course welcome the simplification and the improvements in the Bill, such as the right of returns and refunds, clarity on repairs, the reperformance of service and protection against small print. We very much welcome the possible redress for breaches of competition law, and, at least in theory, some possible collective redress for breaches of consumer law. However, as that depends on trading standards, and as it is being reduced to Lilliputian proportions, we worry this will be a measure in need of enforcement.
We will want to discuss why, despite the very good advice of the BIS Select Committee that the services definition,
“should apply an additional outcome-based liability standard”,
for services, the Government require only the exercise of “reasonable care and skill”, regardless of the actual quality of the outcome of the service provided. We will also want to debate how the Bill will cover public services where there is some payment or copayment by the recipient. Indeed, as that was acknowledged by the Minister only during the Bill’s passage through the Commons, the issue of the effect on the public sector is missing from the original impact assessment. It is slightly regrettable that we saw the extra 240 pages of the revised impact assessment only this morning. Noble Lords will not be surprised that I have not had time to digest that since then. Could I therefore shortcut that and ask the Minister to outline the scope, cost and benefits of the major, and welcome, advance of the consumer rights that apply to public goods and services where there is an element of payment or copayment?
Our approach to consumer rights is to put empowered consumers at the heart of the economy and society; to drive markets that work; to ensure that consumers get the benefit of any advances; and to have an economy that works for all. The generally accepted consumer principles promoted by representatives of consumers, across both goods and services, are access, choice, quality or safety, information, fairness, representation or advocacy, and redress.
On redress, we regret that the implementation of the EU directive on alternative dispute resolution is not part and parcel of the Bill, despite the Minister having just referred to the importance of redress, and despite that directive having sat on the Government’s desk for a couple of years. Rather oddly, it is running in parallel with the Bill, rather than as a part of it. We have been promised a response to the consultation by some unknown date. We have also been promised a response to the Public Administration Committee’s report on ombudsmen “by the summer”. It is 1 July, so we may have got there. Perhaps the Minister can enlighten the House on when we will have the details on that.
Despite the welcome that I have given to most of the Bill, we have one major difficulty with it—the, I have to say, preposterous idea that trading standards officers will have to give 48 hours’ written notice of inspections. That would seem to be a perfect time in which to dispose of counterfeit or mislabelled goods, and it will also add extra red tape for those hard-pressed local government trading standards officers. It is also in stark contrast to the new unannounced visits from Ofsted or indeed food standards inspections. Moreover, as the Minister has just said, the Bill will require letting agents to display their fees, but of course if trading standards officers have to give 48 hours’ notice rather than being able to pop into a letting agent as they walk past on the high street, there will surely be 47 hours in which the fees will go up.
My noble friend Lord Stevenson will raise our concerns over digital content later in the debate. For the moment, I want to draw the House’s attention to our regret at what is not in the Bill. There is nothing on secondary ticketing, on the rights of tenants or on double-charging by letting or estate agents. We have plenty of examples of charging both the tenant and the landlord or the seller and the buyer. There is nothing to strengthen point-of-sale information, nothing on the rip-off logbook loans, nothing to stop unreasonable charges on booking fees, nothing to help consumers to get a fair deal on car insurance, nothing to ensure that every regulator has the consumer interest at heart, nothing to help prevent micro-businesses being ripped off, and no guaranteed advocacy to assist consumers to challenge poor service or shoddy goods. There is nothing to ensure—something that I know to be of interest to this House—that people can continue to receive their invoices or pay bills by post, despite 7 million adults, some of them very vulnerable, still never having used the internet. Surely they should not have to accept online-only communication. There is nothing to tackle that scourge of consumer complaints, which we in this House have also had—nuisance calls.
Those are the sorts of problems facing today’s consumers, but the general demand for a better deal for consumers is not new. In 1962, President Kennedy laid out what we might use to test whether this Bill is fit for purpose. He wrote that all of us deserve to be protected against fraudulent or misleading advertisements and against unsafe products, and that we deserve the right to choose from a variety of products at competitive prices. He went on to outline steps to increase inspections of foods and cut back on deceptive trade practices and high utility bills, while recommending,
“a law to require consumers to know how much they are being charged in interest”,
and,
“laws to tighten safeguards against monopolies and mergers which injure the consumer interest”.
He saw such rights as being,
“immensely important to the well-being of every American family”.
I think that much the same applies in our own country today.
In 1975, that great campaigner and parliamentarian, Barbara Castle, sought a “society in which every producer remembers he is a consumer too”. The Labour leader, my right honourable friend Ed Miliband, has said:
“Unaccountable concentrations of power ... don’t serve the public interest and need to be held to account”.
However, all too often, whether with goods or services, it is the consumer who is weak and the provider who can take advantage of this. The Bill should be the tool to balance this unequal relationship where providers have all the knowledge and where the purchaser, for some reason, is unable to shop around, whether through lack of time, money, know-how and expertise, disadvantage or location.
Whether they are after credit, buying tickets online, going to a letting agent or a bank, needing electricity, or trying to catch a bus, surely there are times when consumers’ buying power is not enough for them to get a square deal or redress when something goes wrong. They are the issues on which we will test this Bill. We know that the Conservatives resisted plain packaging in the interests of tobacco companies. They abandoned minimum unit pricing in the interests of the drinks industry, refused to adopt a code of conduct for banking and insurance and abolished the National Consumer Council. We wonder whose side the Government are on.
The Government had to be forced to regulate letting agents—welcome though it is that they have got there—but they then accepted only that they had to belong to an ombudsman rather than empowering the OFT to ban unscrupulous agents. This Government have produced a regulators’ code that requires regulators to work ever more closely with the businesses they are meant to oversee, with no mention whatever of the interests of those the regulators are meant to be protecting—consumers and citizens.
We see an energy market effectively rigged, at great cost to consumers, with energy companies making £100 profit a year from every family, a doubling from last year, despite a fall of up to 38% in wholesale prices and with millions struggling to cope with spiralling bills. The coalition has done nothing to reform our broken energy market, which is one of the most basic disadvantages for consumers. Even with the new inquiry, customers will have to wait until the end of 2015 to discover whether they are being ripped off. Yesterday we heard that there is worse to come, with consumers being expected to fund two-thirds of the cost—some £250 billion—to modernise infrastructure that is built, owned and operated by private companies. The PAC has asked the Government to assess whether households can afford years of higher energy, water and transport bills to pay for updating our ageing infrastructure. Those questions still remain.
On nuisance calls which, as I said, are of great interest to this House, despite lots of promises there has been a lack of action. We are waiting for the Government to implement their promise to lower the hurdle of “substantial damage” or “substantial distress” required under PECR, the relevant legislation. That is a hurdle that First-tier and Upper Chamber Tribunal decisions acknowledge is set too high for the Information Commissioner to be able to protect consumers. Despite his best endeavours, the Information Commissioner is hampered. A £300,000 fine he had imposed was overturned on the grounds of “inadequate distress caused”, yet the relevant consultation and subsequent action from the Government have not yet appeared and consumers may have to endure another year of this on their phones.
That is a catalogue of problems that has not been addressed, so while we welcome what is in this Bill, with the exception of the 48 hours’ notice of inspections, we wish it had gone further to tackle today’s detriment. Every consumer should be able to demand “the quality I pay for, at a price I understand, delivered on the date agreed, and a remedy when things go wrong”. That is what we will seek to get from this Bill, to make it truly a Consumer Rights Bill.
Lord Stoneham of Droxford (LD)
My Lords, I am pleased to support this Bill, which has been led by my colleagues Vince Cable, Jenny Willott and Jo Swinson through the Commons. I have been asking myself in the past few days whether this is the first Bill that is the product of a formal ministerial job-share. I am glad Which? in its briefing fairly recognises this Bill as providing,
“a firm foundation for empowering consumers”,
and that it will,
“benefit businesses that treat their consumers fairly”.
Among my colleagues on this side of the House we see this ongoing commitment to strengthening consumer rights in the fine tradition of Liberal Democrat—and indeed Social Democrat—campaigners, on behalf of the rights of consumers. This is not simply a regulatory Bill. It aims also to encourage competition and to simplify, through consolidation, 12 pieces of legislation on consumer rights and 60 pieces of legislation on the investigatory powers of consumer law enforcement. It also aims to simplify the language of legislation by making it easier to understand. I think we will have to wait to appreciate that until the end of the passage of the Bill through this House. Time will tell.
I am sad that my colleague, my noble friend Lord Phillips of Sudbury, is not in his place. He has been a champion of simplifying legislation: he was a renowned consumer campaigner when he broke new ground as Jimmy Young’s champion on consumer rights—the legal eagle—on Radio 2 in the 1970s and 1980s.
This Bill combines a commitment to consumer rights with the Government’s strong commitment to greater competition to ensure fair and competitive pricing, and to ensure that competition encourages innovation and cost reduction, all of which are central to ongoing recovery and to developing the country’s competitive advantage. Vince Cable has highlighted these reforms as lying at the heart of a crusade towards trusted business and trusted capitalism. He sees the Bill as part of the overreaching overhaul of UK competition and consumer legislation which the coalition has been undertaking in the past few years. We fully support that work on this side of the House. This Bill complements the reforms of competition policy and the new Competition and Markets Authority, which came into force in April, with particular attention to dealing with price cartels.
There is also a European dimension to both consumer rights and competition policy: many issues have to be addressed at an EU level to open up markets, and to deregulate and increase competition. Increasingly, consumers make internet purchases on the web, regardless of national boundaries. With the EU so much out of favour it is perhaps appropriate to remember that free trade, regulatory competition and wider consumer rights are interlinked. The recent consumer rights directive, which came into force on 13 June 2014, produced a number of real benefits for UK consumers. Customer helplines must now be charged at only the basic rate. There is a ban on excessive card payment surcharges and on pre-tick boxes for additional purchases such as travel insurance. Consumers now have 14 days in which to return unwanted goods.
Competition has to be worked at. It is not necessarily a natural state of affairs. Given the opportunity, businesses normally prefer to eliminate competition if they can. It is also essential that consumers are able to make purchasing decisions with better information and with the confidence that, if they are misled or product quality lets them down, it will be put right quickly and cheaply. It is also important to business that clarity of what is expected of them and their responsibilities will reduce burdens on them and avoid costly problem resolution procedures. Standards that have to be met are now in one place, a 30-day period is set for inspecting goods, and procedures for repair and compensation are clear. The legislation applies to goods and services, and digital content. There will need to be further debate on how quality of service is defined for services and how in digital content “inherent buys” are dealt with.
We welcome the attempt to tighten up the prominence of small print and the measures to allow enforcers to have greater flexibility to get the best outcome for consumers. In the Bill received from the other place, we also welcome Clauses 81 to 86 to require letting agent fees to be more transparent. We also welcome Part 1, which requires any refund of goods, services or digital content due to be repaid to a consumer to be paid within 14 days, without any deduction by the business to cover fees and charges.
We will be following up on the detail as the legislation goes through the House. I agree with the previous speaker that we need to look again at the satisfactory quality test for service. It has to be reconsidered during the Bill’s passage through the Lords, which I think that the Government accept. Rather than the satisfactory quality test, we have set different standards at the moment calling on reasonable skill and care. However, it is more difficult for the consumer to judge that, which may leave consumers unprotected if things go wrong. Services are different from goods, but we need also to look at the exception where a repeat performance to put the work right cannot be contemplated. I hope that the Government will say more about their intentions as the legislation goes through.
My colleague the noble Lord, Lord Clement-Jones, who is much more of an expert than I am in this area, will comment on digital content, but we need to be aware that bugs are endemic to software and we need to be clear about whether this infringes quality and when, and about what the customer expects. We must not endanger innovative and necessary improvement work in this sector.
It is regrettable that the alternative dispute resolution directive is on a different timetable and cannot be included in this Bill, but we should have a discussion on how it will be implemented. We need to simplify the complex alternative dispute resolution landscape in the UK and create a strong, simple, competent ADR authority. I hope that the Minister will outline how the Government intend to respond to the alternative dispute resolution directive.
During the course of the legislation, I hope that there will also be some discussion of consumer and business education required to implement it successfully. Businesses can benefit if managers educate their staff that it is always cheaper and better for customer good will to put something right quickly rather than to argue over it. Customer service is more important to our economy as services become more exportable. There is huge potential with this and we cannot always rely on the price competitiveness of the pound to pursue British exports. Customers need to know how to put wrongs right speedily, which starts with providing proper guidance at the point of sale.
The Bill will help consumers reduce the time and cost of dealing with their consumer problems. It will provide more safeguards about small print in contracts and increase the means of redress. Through simplification and greater clarity, it will reduce legal complexity and costs for business and protect legitimate businesses from anti-competitive practices. Creating greater confidence among consumers will encourage them to buy new and innovative products and services. It will help encourage a vibrant, creative economy as we go forward from the foundations of economic recovery to one of sustainable economic growth.
Baroness Heyhoe Flint (Con)
My Lords, I fully support the general principles of the Bill. It will improve the rights of consumers, which will make for a fairer and more effective economy. Good progress has already been made on many issues in the other place.
Today I wish to raise an issue that is important to consumers whom I and many other noble Lords would more usually describe as fans or supporters, and the issue specifically concerns the occasions when those consumers have problems trying to buy tickets for sporting events. I thank the noble Baroness, Lady Hayter, for opening the door on this issue by pointing out that the Bill currently makes no mention of secondary selling. The issue is also of great concern to the major governing bodies of sport. We need to create absolute transparency for the purchaser about the seller so that every purchaser has full information about secondary sellers, thus providing much needed protection to the consumer.
I declare an interest in that I am on the board of the England and Wales Cricket Board, which is deeply concerned about this lack of transparency. I have also had representations from the Rugby Football Union, the Football Association and the Lawn Tennis Association. It is a concern of huge importance to those who stage major national and international sporting events.
Government regulations and law currently do not provide adequate protection for the consumer. We need to stress the importance of those fans getting access to sporting events. Britain probably has more people who attend sporting events than any other country in the world. Take just this summer as an example: we have Wimbledon tennis, Open golf, the Ryder Cup, the cricket series with England against Sri Lanka and India—although we might not mention the first in glowing terms—and, of course, the Commonwealth Games. Last year the Rugby Football League held a successful World Cup, and we all look forward to the RFU staging the Rugby World Cup next year. And how can we forget the millions of legitimate ticket holders who flocked from all over the world to the 2012 Olympics here in London? Increasingly, however, this desire of the general public and fans wishing to see the very best in sport is leading to a multimillion-pound business with secondary sellers seeking to rip off—I hope that is not too strong a phrase—and take huge advantage of those buyers when they try to purchase those much sought-after tickets.
There is a worthy debate to be had about the need to actually ban ticket touting by making it a criminal offence, and I know that my noble friend Lord Moynihan is currently giving thought to that approach. The Government banned ticket touting for the London Olympics and it helped a great deal. It meant that the Metropolitan Police was able to take action against the criminal element which infiltrates major events, and consequently there were no touts loitering on the pavements outside venues to menace consumers and spoil the ambience on the way to the events. However, that is a debate for another day.
Today I am raising the issue of using the Bill to strengthen the protection given to consumers who buy tickets, particularly from secondary sellers. How can we strengthen the regulations? There is a widespread feeling among the major sports governing bodies which host international events that we need to strengthen all the regulations that apply to the resale of tickets. This subject was raised in the other place, and I know that the Minister has had the matter raised with him too.
The sports world would like to see more rigorous regulation applied to that market and to those who act as intermediaries in selling tickets to fans. We must ensure—surely this is at the heart of effective protection—that we give the consumer more information at the point of purchase. For example, we should let them know at the point of sale the actual location of the seat they are buying and its face-value price. That would enable them to determine whether the seat was of the correct value and to ensure that it was not a concession seat to be sold to children or people with disabilities—sadly, that does occur. Perhaps noble Lords read in yesterday’s newspapers the story about tickets for centre court for the Andy Murray match being sold for £2,000 on one well known online selling site. That hardly seems fair, in my eyes, to those very keen fans who would like to support such an event.
Even more importantly, the consumer buying the ticket must be told what are the terms and conditions of the transfer of that ticket to them. Many sporting events do not allow seats to be transferred above face value or without their prior approval. It is patently not fair to allow someone to buy a product that is rendered worthless when doing so because it is not allowed to be transferred by the original terms and conditions. Indeed, we should consider whether it is appropriate to allow such a sale to take place at all.
I seek to show why the existing regulations are weak and do not work efficiently. I know that Ministers have already done some good work. Last year they introduced the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, and recently they published updated guidance to those regulations which refer to ticket sales. However, legal experts in the sporting world who administer national and global events advise us that these regulations will not work due to lack of information and transparency to the buyer. This is because those regulations apply only to sales by a trader, which is defined as being:
“A trader means a person acting for purposes relating to that person’s trade, business, craft or profession whether acting personally or through another person acting in the trader’s name or on the trader’s behalf”.
Therefore, that regulation does not apply to every sale. Indeed, it will probably not apply to the majority of sales on sites such as viagogo and Seatwave, where the claim is made that most sales are being conducted by individuals.
Furthermore, the guidance that the Government have issued is just that—merely guidance—and its definitions are weak. It talks of the seller providing key characteristics. My expectation is that sellers will not deem exact seat locations as key requirements. We need to spell out the exact requirements that are needed.
At this early stage of the Bill, several of my noble friends, from all parties, have expressed a wish to bring forward an amendment. Having met with the Minister, I hope that the Government will seek to make progress here and share the spirit of what other Peers and I are looking to achieve. I believe that we can build on what has already been done with a small and tidy amendment to the Bill. I therefore hope that we can debate the matter in more detail and review the exact form of such an amendment that will work best to make sure that sports consumers—the fans—are protected and given true and honest details about their ticket purchases.
There is a worldwide philosophy created by the MCC called “the spirit of cricket”. I would like to see a similar creation stated in a proportional amendment entitled “the spirit of secondary selling”.
Lord Wills (Lab)
My Lords, like other speakers, I welcome much of this Bill and I congratulate the Minister on his masterly exposition of its merits. As my noble friend on the Front Bench has already said, in many ways the Bill is a missed opportunity. Legislative time is scarce and precious, and I regret that the Government have not used this unusual opportunity to address some long-standing problems for consumers.
I want to focus on the issue of exploitative marketing calls. When I was a Member of Parliament, this was a recurring problem for my constituents. Vulnerable people, often elderly, were rung up and, without understanding all the implications of their decision, were persuaded to sign up for goods and services that they did not need and could not afford. The measures that offer protection against this are clearly inadequate, as the problem continues to grow and cause distress. The debt charity StepChange, for example, has estimated that 26 million people in this country have been contacted by companies selling high-cost credit. Although much attention has focused on notorious cases, such as this and the peddling of payment protection insurance and accident claims services, the problem goes far wider even than this.
Significant measures to tackle the problem have been proposed in the other place and by non-governmental organisations and such measures would significantly improve protections against abusive practices. For example, the threshold for firms breaking the ban on unsolicited promotional electronic messages should be lowered so that the Information Commissioner would not have to demonstrate damage or distress before issuing an enforcement notice. The requirements for consent to have personal data passed on to other companies should be toughened to make them more explicit. There could be a time limit of, say, a year on such consent. There is even a case for a ban on all such contacts. But the Government have shown no inclination to tackle such abusive marketing practices, despite the widespread demand from consumers and consumer organisations for them to do so.
In March the DCMS said:
“We will be consulting on making a change to the Privacy and Electronic Communications Regulations … to lower the threshold to remove the need to prove substantial damage or substantial distress. Following the consultation we will look to implement reforms as soon as parliamentary time allows”.
These are long-standing problems and the issues are well understood. There will have been time for that consultation to take place and be digested within Whitehall and for amendments to be produced before the Report stage, if not before the Committee stage. Parliamentary time will allow for it but will the Government? Do they have the political will effectively to tackle this abusive nuisance now and not leave it until the next time we have such a landmark consumer protection Bill?
It is time to put an end to any business model that relies on the exploitation of the vulnerable. This Bill offers a rare opportunity to help to do this. Even at this late stage, I hope that the Government will seize it.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, this is a good Bill. It covers many issues that have previously been of concern to consumers and offers them reassurance and protection for the future. It is easily understood by the layman, without too much jargon. I welcome the clarity the Bill brings and look forward to the Committee stage.
I would just like to comment on the issue that has arisen in the Bill around unannounced inspections. As a vice-president of the Local Government Association, I am well aware of the concerns that councils have about the initial proposals to restrict their ability to perform such inspections. I understand, as do local councils, the stress that such inspections can put on businesses and their employees. However, sometimes, in order to preserve the safety of the general public, and often the most vulnerable members of the public, the ability of councils to inspect a business without warning needs to be protected. In my own council of South Somerset, the power is used extremely sparingly and generally only in conjunction with other agencies, such as the police and the county council.
In the south-west, the “Smokefree” campaign is focusing on the sale of illegal tobacco and the effects it has on encouraging young people into smoking. Recent research has shown that 89% of adults in Somerset believe that illegal tobacco is a danger to children because it can be bought easily and cheaply at pocket money prices. Cheap, illegal tobacco is easily accessible in communities across Somerset. It sells for less than half the tax-paid price of legally sold tobacco. Illegal tobacco therefore impacts on the business of legitimate traders in Somerset.
The south-west, unfortunately, already has the highest number of young smokers in the UK. Illegal tobacco sellers do not ask for proof of age or care if they are selling to children. Apart from advertising and raising awareness of illegal tobacco sales, a main plank of the campaign is enforcement alongside HMRC, the police and trading standards. Giving notice of enforcement visits and action is counterproductive to reducing the number of sellers in the marketplace.
Outside of illegal tobacco sales, the vast majority of local businesses abide by the rules, but there will always be some which do not. Where inspections are not necessary, the Local Government Association, through its local regulation initiative “Open for Business”, is promoting the advance notification of business inspections wherever possible. It is also key for best practice to be shared from councils where trading standards teams work closely with businesses to ensure that their practices are within the rules, while reducing their burden as much as possible. Therefore, I urge the Government to accept the recommendation of the Business, Innovation and Skills Committee in another place for an exemption from the requirement for 48 hours’ advance notification where an enforcement officer reasonably considers that to give advance notice would defeat the purpose of the visit.
Turning to letting agency fees, like many in the House before me, when I was introduced I began to look at possible accommodation in London. I found the various estate agent adverts confusing in the extreme. I could not tell whether the real rent was being charged or whether utilities and council tax were included or extra, and there was certainly no mention of fees to be paid by the renter. I welcome the greater transparency proposed in the Bill on letting agent fees. This is a great step forward. With rents in London on the increase, it is essential that we can all see what the actual cost of entering into the rented market is and how much it will cost us to change accommodation. At a time when household budgets are stretched to the limit, transparency is vital.
Lastly, I turn to children’s exposure to payday loan advertisements on television. We covered payday loans during Questions. Like others, I am sure, I have received a brief from the Children’s Society. Being a great supporter of that organisation and having received many important briefings from it over the years, I took particular notice of this one. Back in Somerset I chair a task group looking at the impact of the welfare reform programme on residents and families. The huge detrimental effect of the industry which has grown up around payday loan companies, both licensed and unlicensed, forms a key part of our deliberations. The statistics are stark. Ofcom research showed that in 2008 there were 17,000 payday loan television adverts. By 2012 this had risen to 397,000—an increase of 2,300% in just four years. In 2012 children aged four to five saw an average of 70 adverts for payday lenders during the course of the year. Children are exposed to payday loan adverts on a daily basis. These adverts do not flag up the penalties for non-repayment and give the impression that money is readily available, just for the asking. Anyone who has children will have suffered at some stage from the “I want” syndrome, especially in the weeks running up to Christmas. This can cause enormous stress to families struggling to make ends meet. By allowing children to think it is easy for their parents to get access to cash, the adverts are encouraging children to pester their parents to take out high levels of debt. It is exploiting children to reach parents, and this manipulative tactic must be discouraged. Finally, I should like to ask the Minister whether the Government will consider using this Consumer Rights Bill better to protect children from advertisements for payday loans.
Lord Alton of Liverpool (CB)
My Lords, like other noble Lords, I too support and welcome this Bill on consumer rights. It introduces a much needed single framework that clearly sets out in one place the rights and obligations of consumers and traders. The Bill succeeds in ensuring that consumers will be better informed about their rights and what they are buying. Simplifying and clarifying consumer law, as the Bill does, will mean that consumers spend less time trying to understand their rights and working out how to apply them. It also provides a firm foundation for empowering consumers. Where businesses treat their customers fairly, those enterprises will benefit and they have nothing to fear from this legislation. As the ombudsman services policy adviser, Simon Darby, has remarked:
“The Consumer Rights Bill represents an excellent opportunity to deliver an improved, enhanced and simplified rights and redress landscape that would tangibly improve the support and outcomes available to consumers”.
There is also, however, a widely held view that the efficacy of the Bill will rest entirely on the extent to which the legislation is enforced, both privately and publicly. Mechanisms such as the alternative dispute resolution referred to earlier by the noble Baroness, Lady Hayter, and the noble Lord, Lord Stoneham of Droxford, could significantly add to the Bill’s effectiveness. I was struck that a briefing from Which? stated:
“The powers on redress and enforcement could be improved in the Bill”.
I hope that the Government will, as the Bill goes through its further stages, give that further thought.
When considering Bills such as this, which, as the noble Baroness, Lady Hayter of Kentish Town, and the noble Lord, Lord Wills, correctly remarked, have a consolidating function, it is important that we do not limit our ambitions simply to consolidating but introduce new provisions where they are desirable or necessary. I have three issues that I should like to see addressed in the Bill. The first is one that the noble Baroness, Lady Bakewell, referred to in her remarks and which I raised during Question Time today. It was also flagged up earlier this year by the Business, Innovation and Skills Committee, which recommended banning payday loan adverts from programming aimed at children. The committee said:
“We do not believe that these are appropriate channels for payday loans. We recommend that payday loan adverts are banned from programming aimed at children … We are concerned that payday loans increase the pressure on families already struggling with unmanageable debt and believe that payday loan adverts should not be shown on children’s television”.
This Bill provides a timely and welcome legislative opportunity to implement that recommendation and to protect vulnerable children and families from advertising for high-cost loans.
The need to do so was underlined by the Children’s Society in a joint report with the StepChange debt charity, entitled The Debt Trap: Exposing the Impact of Problem Debt on Children. Certainly, this was an issue that I encountered during my time as a Member of the House of Commons representing a constituency in the heart of Liverpool. I saw it regularly even before this massive increase in advertising and the use of payday loans. Debt can have an incredibly corrosive effect on families and communities.
The report found that problem debt can have a severe impact on every aspect of children’s lives, from missing out on the essentials, to problems with family relationships, and even bullying in schools. It states that more than half of children in families with problem debt say that they worry about their family’s financial situation. It argues that the Government should use the Consumer Rights Bill to,
“review the case for tighter restrictions on loan advertising seen by children”.
Legislation in this area would undoubtedly help in preventing children being bombarded with advertising from moneylenders, usurers and loan sharks, but children should also learn from their parents and schools about money management and the dangers of debt, not least in a country where outstanding personal debt stood at £1.443 trillion at the end of April 2014. Put another way, £161 million was the daily amount of interest paid on personal debt in April this year, while 6,519 debt problems were dealt with by the CAB each working day last year.
Ministers should also reflect that a petition calling on Ofcom to ban short-term, high-interest lenders from advertising on programming aimed at children gathered almost 10,000 signatures. But in their official response to the report of the Business, Innovation and Skills Committee, the Government rejected the demand and played down the scale of the problem, saying:
“The increase reported by Ofcom in the number of payday lending ads seen by children is concerning, but it is also important to note that they comprise a relatively small 0.6% of TV ads seen by children aged 4-15”.
This is complacent and disturbing. A recent survey by the Children’s Society, already alluded to, suggests that 56% of children aged 10 to 17 are seeing advertising for loans “often” or “all the time”. Conversely, only 21% said that their school taught them about debt and money management. Research published by Ofcom last December showed that there were 17,000 payday loan advertisement spots on TV in 2008. That increased to 243,000 in 2011 and reached a staggering 397,000 in 2012. Put slightly differently from the way in which the noble Baroness, Lady Bakewell, who gave the percentage increase, expressed it, that is a year-on-year increase of 64%. According to Ofcom, the average child aged four to 15 saw 70 payday loan adverts just last year.
At a hearing of the committee last year, Martin Lewis, founder of the MoneySavingExpert.com website, called for a blanket ban on advertising designed to “normalise” the idea of short-term loans among children. He accused the firms of,
“grooming a new generation towards this type of borrowing. If you think we have got problems now, you wait until 10 years’ time. Grooming is the right term. We are talking about a market that did not exist five years ago”.
He condemned the adverts as “deliberately contrived and controlled”, singling out Wonga’s adverts featuring puppets to appeal to children. These concerns appear to be well founded. A survey on MoneySavingExpert.com found that a third of parents reported their under-10s repeating payday lenders’ slogans, while 14% said that, when they had refused to buy a toy, their child had nagged them to take out a payday loan.
It is completely unacceptable that payday loan companies should be allowed to target parents through their children. We should consider whether it is acceptable to allow payday loan advertising to continue to mushroom generally, but there is no doubt that immediate action should be taken with respect to the targeting of children.
I appreciate that the Government have suggested that the Advertising Standards Authority and Financial Conduct Authority could ban irresponsible and misleading adverts which breach their rules. However I firmly believe that, rather than regulatory bodies banning particular adverts, the Government should use this Bill to make it explicit that all adverts targeted at children should cease. If the Government are not prepared to act, we as a House should do so. When the noble Viscount replies, I would be grateful if he would tell us what discussions the Government have had with Ofcom about banning payday lenders from advertising on children’s TV; whether the Government will consider using the Bill better to protect children from the advertising of payday loans; and how the Government will ensure that young people get financial education from schools, not from advertising of high-cost credit.
I now want to refer briefly to two points. In particular, I support the point made about local authority trading standards officers providing 48 hours’ notice of routine business inspections. As originally drafted, that requirement would have restricted the ability of trading standards officers to undertake unannounced inspections where they have reasonable grounds to do so—for example, because of a known risk relating to a business or type of activity. Maintaining the freedom of trading standards officers to turn up unannounced in those contexts, where they have reasonable grounds to do so, is vital. During pre-legislative scrutiny, the Trading Standards Institute, along with the Local Government Association, of which I am also a vice-president, made it plain that although it welcomes the overall direction of the Bill, it felt that that provision required urgent revision. I am happy to say that the Government have, to some extent, responded positively, but additional clarity is required. Specifically, there remains doubt about whether the exemption can be applied in respect of unannounced inspections relating to a known risk in an area, rather than to specific premises. I will listen with interest when the noble Viscount comes to reply on that.
I turn to my third and final point. Right at the heart of any credible concern for consumer rights must be concern for the safety of consumers. With the Eldorado tendency within the biotech industry, which sees vast profits to be made from genetic engineering and streets paved with biotech gold, we need much clearer safeguards, tempering the desire to make breakthroughs with proper concern for the safety of the public.
One example is the growing public concern about the Government’s proposal to introduce regulations permitting pro-nuclear and maternal spindle transfer in the hope of creating children who do not inherit mitochondrial disease. That issue was raised during debate on the Bill in the other place. Regrettably, a bipartisan amendment tabled by the admirable Mrs Fiona Bruce, the Conservative Member for Congleton, and the equally admirable Mr Jim Dobbin, the Labour Member for Heywood and Middleton, was not reached or properly debated in another place.
In Committee here, there will be a further opportunity to discuss this important subject. For today, I shall not go into great detail, but, in short, the Government have asked the Human Fertilisation and Embryology Authority on three separate occasions to produce a report on the safety of the proposed procedures. In its report, the HFEA has concluded that there is no evidence to demonstrate that the procedures are unsafe, but it has recommended a series of pre-clinical research experiments, some of which it describes as critical.
In March this year, the head of the United States Food and Drug Administration warned that there are not enough data on animals or in humans to move to those new techniques, and it is unclear whether the procedures would be effective. The noble Lord, Lord Winston, who is of course a leading expert in fertility treatments, has expressed his deep concern, stating that,
“the problem is that I do not believe there has been enough work done to make sure mitochondrial replacement is truly safe”.
Like the head of the Food and Drug Administration, the noble Lord warns that not enough research has been done on animal models and that more tests should be done to assess the risks to the child.
In addition, only earlier this week, two leading bioethicists said that the United Kingdom is rushing to introduce mitochondrial transfer despite the profound safety risks. Donna Dickenson, emeritus professor of medical ethics at the University of London, and Marcy Darnovsky, executive director of the US Center for Genetics and Society, pointed to America, where there are “no plans” to allow those techniques. In an article for New Scientist magazine, the bioethicists highlighted concerns raised by an advisory panel to the US Food and Drug Administration that there is no evidence to support the use of GM techniques in humans. Despite the desire of the biotech industry to stampede us into giving a green light, the risks and safety concerns of those techniques are therefore considerable. Given the importance of public safety, it would be quite wrong to rush into those procedures.
In the context of a Bill that puts the safety and protection of people at the heart of its consideration, it is right to ask Ministers how they intend to provide the necessary scaffold of public protection when such developments occur. Clearly, unamendable regulations will not provide for safety thresholds but, as Members of the House of Commons argued, the Bill could do so.
The public need to know that Parliament has properly considered these matters and not been rushed pell-mell into signing them off while pre-clinical research remains unfinished. This is an issue I raised directly with the Secretary of State for Health only yesterday, and in correspondence and in questions to the noble Lord’s department and to the noble Earl, Lord Howe. At the very minimum, I hope that the Minister will reassure the House that no regulations will be laid before Parliament until all the pre-clinical research recommended by the HFEA has been conducted and written up in peer-reviewed journals that are in the public domain, where they can be scrutinised by Members of Parliament and concerned members of the public.
There is much more that could be said, but that can wait until another day and until later stages. For now, I welcome the Bill and hope that it makes good progress on to the statute book. I look forward to the reply of the noble Viscount at the conclusion of our debate.
Lord Borwick (Con)
My Lords, this is an important piece of legislation. The way that consumers buy products, the vendors they buy them from and the way that consumers receive them has all changed immeasurably in the last five years, let alone the last decade. The internet has given consumers unprecedented choice, and that is a wonderful thing. We now have access to an unimaginable number of products, we can buy and exchange goods at any time of the day or night and we can do the weekly food shop on our phones.
I know that the Minister’s intention in bringing the Bill through the House is to improve transparency and clarity for consumers—quite right, too. Anyone who has bought anything online, from airline tickets to sofa cushions, will know that not all websites offer the same information as clearly as others. However, there are certain things that are striking about the global nature of online sales. Purchases are usually very impersonal, with the buyer having no personal contact with the seller—usually to the extent that the buyer does not even know what country the seller is in. Last week, I took the opportunity to purchase a Kindle edition of one of my noble friend Lord Dobbs’s excellent novels, featuring a Conservative MP as the hero. I commend it to other Members of this House. The location of the seller was not abundantly clear until I received an e-mail containing this information. I presumed, therefore, that I had purchased it from Luxembourg. Surely this information should be made clearer to the buyer. I am aware that the consumer contracts regulations 2013, which came into force on 13 June this year, already stipulate that consumers should be made aware from where they are buying their products. The name of the seller is available on the product detail page, but you have to put in a bit of work to find it. I feel that in the spirit of greater transparency and clarity for the consumer, it is perhaps not clear enough.
The Bill will help to improve competition. If consumers are safe in the knowledge that they are protected while shopping online, then they may switch between sites more readily if they spot a good deal elsewhere. Choice and competition are wonderful things that we are right to encourage. In that respect, I believe that it would be beneficial to make clear to shoppers of all products, at all values, by all means, from where they buy their products. Furthermore, it should surely be possible for consumers to choose from where they buy their products—perhaps through a check box, when I was buying my noble friend Lord Dobbs’s book, asking, “Would you prefer to buy this product from Luxembourg or from the UK?”. This would give Governments all the more reason to drop their tax rates in order to compete. This would be a way for the average consumer to express his or her opinion about where they want to do business.
I share the concerns of the noble Baroness, Lady Crawley, and others about the proposed changes to powers of entry for bodies such as trading standards. I sympathise with the Minister, in that investigatory powers are currently scattered in around 60 different pieces of legislation. That surely makes it extremely difficult for businesses and investigators to know their rights. Bringing them all together in one Bill seems sensible, but a 48-hour notice period before trading standards raids does not seem particularly sensible. It merely gives rogue traders the time to cover up whatever it is they are up to. There will be significant costs in serving these notices, too. But overall the Bill is a good indication that the Government understand the need to keep up with the changing nature of the market.
Things are moving on so quickly that existing laws are looking increasingly dated. Consider the Sunday trading laws: most shops have to close their doors on Sundays, whether shoppers and traders like it or not. This is obviously not the case on the internet. In fact, you could browse in a supermarket on a Sunday morning, before they are legally open to sell you the products, and make the purchases with your iPad instead—a ludicrous state of affairs. This is not the legislation to deal with this particular anomaly but it shows the extent to which laws on the high street have not kept up with the digital age. To that end, regulations protecting consumers have to keep up.
As the internet has offered more choice, this Bill does a good job of protecting the consumer as they make those choices. It also helps ensure that there is reasonable redress for those who have been mistreated. For that, the Minister and his team are to be commended.
Baroness Crawley (Lab)
My Lords, from time to time a Bill comes along which gets the pulse racing and the heart thumping, and fills us with sheer elation. This may not be quite that Bill. That is not to say that we on this side of the Chamber do not welcome many of its aspects; we will not oppose them in principle, as my noble friend Lady Hayter has confirmed. We, too, thank the Minister for clearly setting out the Bill from the Dispatch Box. However, we believe that there is some way to go before the Bill is strengthened to meet the needs of modern British consumers.
As the gracious Speech of 2013 set out, there is a need for,
“a simple set of consumer rights to promote competitive markets and growth”.
As noble Lords are aware, the main elements of the Bill aim to consolidate legislation in one place. We welcome such consolidation. As the advice from eminent academic studies has shown to both the previous Government and this Government, the UK’s consumer protection has two key weaknesses: uneven enforcement and excessively complex law. If the Bill goes any way to properly addressing those weaknesses and that complexity, it can only be a good thing.
However, many important opportunities were missed to improve the Bill in its passage through the other place, as noble Lords have said. There were opportunities presented by amendments from Her Majesty’s Opposition, such as those to ban double charging or the outmoded and unfair logbook loans regime. There was the opportunity to legally assist consumers who have signed up to unfair contracts that are now sinking them into debt. As president of the Trading Standards Institute, there was also my own particular interest: the opportunity to restore the powers which trading standards officers currently have to investigate counterfeit or potentially dangerous goods. There were also several other amendments. Those were lost opportunities because of being voted down or lack of time in another place. However, I am sure that the Minister will not be surprised to learn that that is not the last he will have heard of such amendments.
We are debating the Bill at a time when people’s living standards are still under great pressure. Even those households still in employment are very often on low wages and unable to keep up with cost-of-living rises. The years of austerity have, yes, made many consumers cannier and more aware of where to get the best deal or find out more about their rights. Yet those years have also seen mounting debt, as the noble Lord, Lord Alton, has just set out. Those years have been a time when food bank use has increased dramatically and they have seen school breakfast clubs feeding many more children. So it is important that this Bill meets the actual and diverse needs of consumers today. The fact that the consumer landscape currently is more disparate and less statutory than it was four years ago does not help. We continue on this side of the House to raise questions about oversight and accountability in that consumer landscape.
In preparing for this Bill I have spoken to many in the advisory and enforcement community. The trading standards community welcomes the Bill and, like the Government, sees the crucial link between confident, informed consumers and a growing vibrant economy. That is why, like so many of us, it wants to ensure that the Bill is in the best possible shape to assist consumers to help themselves whenever possible, but to have the right powers and tools in place to be able to deal effectively with serious cases when consumers fall into dispute.
A number of key amendments to the Bill would both empower consumers and realise the Government’s intended ambitions. One would be to increase transparency and trust for consumers online. Many noble Lords have spoken about the increase of business online. Buying goods and services from the internet is growing at a phenomenal pace and, with access to information never having been so freely available, this in turn starts to shape how consumers make decisions about who to buy from. The most trusted recommendations for buying come from people we know or from other consumers online. The growth of this third party endorsement and information brings new problems, such as fake reviews, undisclosed competitor blogs and reviews, and a plethora of confusing accreditation schemes.
With information of varying kinds being such an important factor in allowing consumers to make an informed choice, surely the opening up of public data would serve as a valuable tool for consumers. Data from the Citizens Advice consumer service or the complaint data held by local authority trading standards officers about local traders could serve as an invaluable source of information and would give consumers a trusted steer with which to make decisions.
There is nothing to stop public enforcers publishing this kind of data and material, subject to there being an express right to do so. A powerful step forward for consumers would be for this Bill to make provision for such an express power. Such a power already exists for the Office of Fair Trading in the Enterprise Act 2002. Will the Minister look at that possibility in this Bill?
Other key issues that could strengthen the Bill include the removal of disincentives to action when it comes to enhanced consumer measures. Yes, we welcome the provisions in the Bill to give consumers redress, which are potentially quite powerful. However, our concern would be the possible modest take-up of such provision. The new measures are an extension of existing provisions within the Enterprise Act 2002 which allow enforcers to take legal action in the event of unfair trading. Use of these measures has, in the past, been modest at best, through a combination of complexity of process, cost and risk to enforcers. It would be a pity to have well intentioned legislation ignored or underused because of those disincentives. No doubt, again, we will return to this in Committee. Up to now, plans for the implementation of the Bill and education for consumers and businesses about it have been undercooked. I know that there is now an implementation document—my noble friend on the Front Bench has referred to it—but it has only just been received. We will be looking at it to see if there are any firm proposals to invest in a specific campaign to raise awareness of the Bill, as the Bill will bring an instant gap in understanding for many consumers and businesses.
My penultimate point looks at the section of the Bill that deals with powers of entry—or “48 hours”, as the Minister’s shorthand would have it. Several noble Lords have already raised this issue in the debate. We have yet to see any substantial evidence that should lead the Bill to alter the present investigatory regime undertaken by trading standards officers when it comes to visits to traders’ premises. I believe, as does trading standards, that the new provision to serve notice 48 hours before an inspection can be carried out, except where an exception can be made, is a real step backwards in consumer protection. Yes, the Government have made some changes to this area since the first draft of the Bill, but many of us do not believe that those changes have struck the right balance between the right to carry on a business unimpeded by officials and the right to protect consumers and honest businesses, which of course are the vast majority of businesses.
This relaxing of the focus on potentially fraudulent traders goes against the whole trend in another part of consumer protection; I am of course talking of food safety. Quite the opposite is happening there. Since the horsemeat scandal, successive government reviews, the European Commission and consumers alike are proposing more unannounced inspections and sampling as a solution. Indeed, the Government’s own review of food safety powers concluded that the use of unannounced inspections is proportionate to the risks involved and has left the current powers of entry available to trading standards officers untouched for the purposes of food safety enforcement.
I have to ask the Minister: what makes consumer fraud through adulterated food any different from any other kind of consumer fraud? The Government’s proposals on powers of entry create risks and a lack of clarity; bring unnecessary costs, as the noble Lord, Lord Borwick, said; add very little value; and could very well act as a disincentive to enforcers to take action. We will without doubt be returning to this point in Committee, which I am sure will be about as welcome to the Minister as Jean-Claude Juncker appearing at the Conservative Party conference.
Lastly, it is not possible to talk about the impact of the Bill on our regulatory system without raising once again the parlous state of trading standards budgets, which, according to the TSI’s recent workforce survey, have fallen by approximately 40% in real terms from 2010-11 to 2015-16. The number of staff employed in trading standards has fallen by 45% in England and Wales between 2009 and 2014, and by 52% in Scotland between 2009 and 2012. These results show that in some areas of the country trading standards services have become unsustainable. It is time for the Government to get a grip and find strategies to at least stem the decline of a UK enforcement service that has been one of the best internationally for over a century.
I am sure that the Minister is a good listener, and I look forward to the many debates that we will have in the coming months to strengthen the Bill as it moves through its stages in this House.
Lord Clement-Jones (LD)
My Lords, I very much welcome the Bill and pay tribute to the work of my honourable friends Jenny Willott and Jo Swinson in particular. I hope that the Bill eventually gains the same stature for digital content as the landmark Sale of Goods Act 1893 achieved in its time in consumer protection on the sale of physical goods. In this context, I am absolutely delighted to see the noble Lord, Lord Borrie, in his place. As the author of The Consumer, Society and the Law, with Professor Aubrey Diamond, he was required reading for ignorant law students, and many subsequent law students, like me.
The Bill achieves the feat of being both pro-business and pro-consumer by giving greater clarity about rights redress and enforcement to all concerned. As we have heard, the Bill has of course undergone extensive pre-legislative scrutiny, and the Government have responded comprehensively to many of the recommendations made by the BIS Select Committee. However, there are still quite a number of outstanding issues. There is the general question of whether software should be treated as content. Software has its own directive in copyright law—the software directive. The question is therefore whether software should have special provisions in consumer law, and whether those should be reflected in Chapter 3 of Part 1 of the Bill.
As the impact assessment makes clear, software is special. It states:
“Bugs are considered standard in digital content on issue”.
The Explanatory Notes also recognise that, but the legislation does not. As Professor Bradgate said in his report for BIS:
“Even with extensive testing, it is quite common, and an experienced computer user will be aware of the fact, that the complexity of modern programs is such that bugs in the program are likely to manifest themselves throughout the program’s lifetime. Modern complex programs therefore need regular updating and patching to correct bugs and/or other potential weaknesses in the program as they arise”.
There is therefore a strong area of concern in the software industry which relates to the implied terms as regards “satisfactory quality” in Clause 34, “fitness for purpose” in Clause 35 and correspondence to description in Clause 36. For example, in Clause 34—as techUK, one of the bodies representing the industry, says—the term “minor defects” is too broad. What is the distinction between a bug and a minor defect? Likewise, Clause 36 does not recognise the evolving nature of software, where functionality may change over time.
Plainly, breach of any of those requirements gives rise to a right of repair or replacement; the right to a price reduction or a refund; and a potential right to the measures referred to in Clause 46, which itself does not recognise the particular context in which software is often supplied. In addition, and very significantly, the effect of Clause 47 is that liability under most of these provisions cannot be excluded or restricted. The Federation Against Software Theft suggests that a more equitable approach would be to permit the exclusion or restriction of liability to the extent that it is reasonable to do so, taking into account factors analogous to those under the Unfair Terms in Consumer Contracts Regulations. That would enable the courts to develop a fair and equitable system on a case-by-case basis.
In summary, the overall difficulty with all the new implied terms as drafted is that they do not appear to cater explicitly for the presence of bugs. There is a real danger that an ordinary reader of these provisions may well be led to conclude that digital content containing bugs is not of satisfactory quality, fit for purpose or as described. Clearly, other forms of digital content are not expected to contain bugs, but that brings into question again whether software should be treated differently under the Bill. It is disappointing, too, that we can introduce these digital quality provisions only for the UK. It is absolutely crucial that we build a European single digital market with a common consumer regime.
I welcome the greater role envisaged in the Bill for trading standards officers, but like many other noble Lords, I have concerns about whether these powers are adequate for the digital age, particularly in terms of powers of entry. Not just trading standards officers but many suppliers of software believe that new requirements to serve advance notice of an inspection will act against the interests of consumers and businesses. Trading standards officers use their powers under the Trade Marks Act 1994 and the Copyright, Designs and Patents Act 1988 to enforce the criminal provisions of these Acts for counterfeit and pirated software. If notice routinely has to be given, then infringing software will be much more difficult to track down and identify.
The current power to inspect without notice has resulted in illicit copies of software being removed from possible purchase by unsuspecting consumers. Digital evidence can be destroyed easily; these changes may deter trading standards officers from carrying out checks and certain illicit activity may slip through the net unnoticed. By contrast, as we heard from the noble Baroness, Lady Crawley, and as the Trading Standards Institute says, reviews of food-safety powers have left powers of entry for trading standards officers untouched in this area, after concluding that the use of unannounced inspections is proportionate to the risks involved.
There are also some omissions from the Bill, some of which were debated in the Commons and about which we have heard today. I will also attempt to test the Government’s intentions in a number of areas. Look-alikes or misleadingly similar packaging is unfinished business from the Intellectual Property Act and is clearly a consumer issue. So-called parasitic copies are potentially unlawful under the existing consumer protection regulations as they mislead consumers. As I said when we debated the then IP Bill, the lack of enforcement of the CPRs appears to be at odds with the unfair commercial practices directive’s requirement for member states to provide adequate effective remedies against unfair practices. Earlier this year BIS launched a consultation on the enforcement of the CPRs for these issues. Is it not time for a new clause to be inserted in the Bill that would give brand owners the right to take private civil action under the consumer protection regulations?
There is then the whole question of ticketing abuse, which was dealt with so ably by my noble friend Lady Heyhoe Flint. Increasingly—as Channel 4’s “Dispatches” investigation and the BBC’s “Watchdog” have shown—professional secondary ticketing touts buy tickets solely with the intention of denying them to real fans, to whom they then resell their tickets at inflated prices. With internet ticket selling becoming more streamlined, touts are able to use sophisticated computer systems to buy large volumes of tickets automatically, seconds after they go on sale. That often means that it is practically impossible for genuine fans to access the event. An artificial shortage of tickets and an inflated secondary market are created. Content providers gain no share whatever of the inflated prices charged.
As the All-Party Group on Ticket Abuse—of which I am a member—noted, that market does not adhere to the same principles of transparency and consumer protection as other markets. Members of the group believe, as I do, that the large-scale, unauthorised resale of event tickets is against the interests of both consumers and content creators. We believe that the solution is greater transparency in the secondary market and a greater ability for event holders to control who can resell their tickets. The Metropolitan Police report drawn up by Operation Podium after the Olympic Games stressed the need for an open and transparent system for ticket reselling, with clear and appropriate regulations. Secondary websites should be required to publish full details of the ticket being offered, including the original face value, seat number and location. They should identify the seller, state whether or not the seller has the permission of the originator to resell the ticket, and declare where the tickets are being listed by the event organisers.
I welcome the revised guidance on consumer contracts referred to by my noble friend, but for all the reasons she adumbrated, they are not adequate. They should be reflected in statute.
There are two final further aspects. There is a need to examine further whether we have the balance correct between writers and performers and those with whom they contract. We looked at those issues during the passage of the Enterprise and Regulatory Reform Act. Is now not the time to revisit the question of whether the Unfair Contract Terms Act 1977 should continue to exclude contracts that relate to intellectual property?
Finally, why cannot the Bill include provisions to enable supplier-switching for mobile consumers? I look forward to my noble friend’s response.
Baroness Oppenheim-Barnes (Con)
My Lords, I have no doubt in saying that the Bill before your Lordships today is the most important piece of legislation, and certainly the most welcome, since the early 1970s, when the Office of Fair Trading was set up. I am really moved to see on the Front Bench to my right the person who was the original and first Secretary of State for Consumer Affairs in the House of Commons in our history. I am very grateful that he is attending the debate this afternoon.
The Government are to be very warmly congratulated not only on the production of the Bill but on their generosity in terms of the time that has been given to the proceedings in other places—I have read the reports of them all. In particular, the introduction of expert witnesses into the Committee proceedings in the other place and the presence of legislative screening and monitoring were of very great benefit and will continue to be so.
The Bill has been warmly welcomed by all consumer organisations, some of whose comments I will refer to in a few moments. Certainly none of the Bills that I was responsible for introducing in the late 1970s and early 1980s is alive today. They are as dead as dodos. That is because today a majority of consumers still do not know their rights or how to pursue those rights. That became very clear when the expert witnesses contributed to the Committee stage in the other place. From their very wide experience, they said that approximately 75% of all consumers still have no idea of their rights, and if we are not very careful indeed, that will be the case when this Bill is enacted.
I knew that that was a problem but I failed completely. I introduced consumer information packs into schools. I managed to get the money from our then Government to do so, although that was not easy. I taught some of the information in various schools and found that the children were very interested—they got the point immediately. They said things such as, “My mother has bought a knife that says it’s very sharp but it doesn’t cut anything”. I was able to ask them, “Do you think that it was fit for purpose?”. That was a perfect example, but it is not as easy as that. I am afraid that getting into people’s minds exactly what they may be able to do is much more complicated.
I know of all the consultations that have taken place about what remedies will be best. My view is that a clear presentation of the new rights in the Bill and of the responsibilities involved must be shown at the point of sale—not after the sale, not in later contracts and not in anything else. That must be the principal object throughout the Bill or the success that I believe it richly deserves will be greatly diluted. Just as important will be easy access to advice and support when things have gone wrong and people know they have gone wrong. My noble friend must have been as disturbed as I was to read that some local authorities are now cutting funding to trading standards in their areas. The workforce which is being asked to do more and more work will be reduced in number at a time when it will be expected to do more as a result of this Bill. I was shocked to find out that already in some areas trading standards offices can be approached only online. You can imagine where that would have left me. This cannot be allowed to happen and would clearly undermine the success of the Bill.
I hope I have established that a key factor is very thorough infrastructure in all areas from the beginning to ensure that the benefits that consumers deserve are delivered. We are very blessed in this country with a large number of very highly respected consumer organisations whose opinions have been expressed widely. In particular there is our excellent National Consumer Federation, which represents the views of all the other consumer bodies in the country and therefore is possibly one of the most important witnesses to the Bill. One aspect of its charter, which I particularly welcome, is crucial and overdue. It is the need to define much more clearly the role of the regulators. The regulators are powerful and are one of the most fundamental bodies representing the interests of consumers due to the nature of the markets we are talking about.
However, sometimes one gets the impression that when regulators have delivered their ruling involving perhaps a huge £1 million fine to the delinquent company they are interested in all the things they have found out—and want above all else to punish the firm so that it should be a lesson—but they do not really look at the consumer role in these situations. For example, with the billions in fines, surely there is a case to be made for consumers being given a rebate of their fees so that they are the recipients of the benefits that should be coming from the regulators. I think the National Consumer Federation has put this very clearly and has said among other things that it does not think that regulators always ask the right questions and that if they consulted consumers more about their experiences it might alter the balance and be more attractive. Certainly I hope it would result in some cases of refunds being made to the customers who have been so badly hurt.
What I welcome very much in the Bill is rather unusual. My friends will be surprised to hear me say that I welcome the new EU directive which seeks to cover, for the first time, consumers who make purchases online. I did not know that they were not covered. If I did not know that, I think I would be shocked and horrified if I tried to calculate how many other consumers in the country are unaware that they are not covered. It is very good that the directive will be implemented earlier, which I hope my noble friend will confirm, and that eventually it will be incorporated into the Bill.
The noble Lord, Lord Borrie, will be aware of another crucial EU directive. The last that he and I heard about it was in a debate on the financial industries. The Minister said that the Government were actively pursuing negotiations on the directive, which, at last, half-heartedly agrees that the cost of a loan can be displayed below the AER, which no one understands. I challenge anyone who understands it to stand up and explain what it is. I would be delighted to give them the time. It will allow the money cost to be displayed but only if it is in smaller print than the AER. I hope that the Government will hasten to conclude their negotiations on that matter, which will at least bring a small help to consumers.
Clearly, a good deal is to be done in Committee. I am not yet a “professional oldie” but I am well on the way. I therefore hope that I will be forgiven if I say that I do not propose to play an active part in those proceedings—that may be welcomed by many—as I realise how out of date I am. Towards the conclusion of the deliberations in the other place and after a request from a Member, the Minister, the excellent Jenny Willott, who did so well throughout, said:
“The Human Fertilisation and Embryology Authority set up an expert panel, which has conducted three reviews”.—[Official Report, Commons, 16/6/14; col. 922.]
The Member wanted reassurance that the HFEA would be covered. When we got to that, I knew the time had come for me to assume a back seat. Things have obviously gone too fast for me in this area. As I recall, there was a friendly reply. I warmly welcome the Bill and I congratulate the Government. I wish the Bill the speedy and successful outcome that it deserves.
Baroness Drake (Lab)
My Lords, the focus on updating and strengthening consumer law certainly is to be welcomed. I agree with the Government’s rationale for the Bill—that empowered consumers will make markets work more effectively and drive economic growth. However, there are provisions with regard to services which leave me with some concern. I hope that these matters will be considered further in Committee. As my noble friend Lady Hayter identified, under the Bill the statutory rights of the consumer that are implied in a contract between consumer and supplier are not fully aligned as between the sale of goods and the sale of services. Goods supplied must be “of a satisfactory quality”, whereas services must be provided,
“with reasonable care and skill”.
The liability standard for services is based on fault rather than on liability for satisfactory quality, which is an outcome measure, and I am concerned that it may not sufficiently support consumer protection and market effectiveness in the provision of services. It may prove more difficult for consumers to prove that a service has not been provided with reasonable care and skill. It focuses on the way in which a service is carried out rather than on the quality of the end result. It could fall short of reasonable consumer expectations on quality of outcome. A “reasonable care and skill” standard places greater emphasis on compliance with rules rather than on outcome for consumers.
In certain service sectors and markets, the asymmetry of knowledge and understanding between trader and consumer is extensive. In financial services, evidence frequently demonstrates that while provision of services may comply with the regulatory requirements, the product supplied often falls short of delivering a desirable quality for the consumer. A reliance on reasonable care and skill would not address the mis-selling or product design problems that have persisted in the sector. It is not the absence of skill that causes these problems. Something else goes wrong, such as a conflict of interest, complexity or lack of transparency, any one of which leads to consumer detriment.
A Bill that sets a statutory liability standard in the provision of goods on quality, with its focus on outcomes, and in the provision of services on reasonable care and skill, with its focus on compliance, risks a two-tier outcome to consumer protection. An argument frequently mobilised against an outcomes-based quality standard for services is the risk to traders of being held to unrealistic expectations by consumers, but this can be qualified by reference to reasonable expectations by a consumer. It should be remembered that the scale number of complaints from consumers comes from sectors such as energy, broadband, mobile phones and financial services.
I am also concerned by the possible continuing ambiguities in how the Bill addresses unfair contract terms. The court may assess a contract term for fairness unless it falls into a certain exempt category, such as terms that relate to the main subject matter of the contract or the adequacy of the price. The 2009 Supreme Court decision in the case of the OFT v Abbey National, which held that charges for unauthorised overdrafts were exempt from assessment for fairness because they were price terms, gave rise to uncertainties about whether ancillary charges could be assessed for fairness. This created a situation where, to use the Government’s own words:
“Some protection in law is necessary because consumers often cannot, or do not wish to, investigate the detail of every contract term before they sign-up to an agreement”.
This Bill introduces a requirement for “prominence”. For the core terms in a contract to be exempt from assessment for fairness by the courts, a term must be prominent and,
“brought to the consumer’s attention in such a way that an average consumer would be aware of the term”.
The emphasis on prominence is to be welcomed. However, any deficiencies in what the prominence requirement embraces could give rise to new uncertainties and disadvantage for both the consumer and the goods companies. I share the concern of the BIS Select Committee that bringing something to the consumer’s attention is not the same as a consumer appreciating its significance. The current wording of the Bill is unclear as to what would be sufficient to meet the prominence test for core contract terms. If it is too weak, the consumer’s level of understanding or behavioural bias may leave them not appreciating that the terms are unfair but the court could not intervene as to their fairness. Which? and the Law Commission have both stressed the importance of getting the definition of “prominence” right, and the OFT commented:
“Transparency alone cannot turn a substantially unfair term into a fair one”.
I also note that the Association of British Insurers and the Building Societies Association have stressed the importance of achieving clarity on what is needed to meet the prominence test, particularly given the increasing regulatory requirements on consumer disengagement and key information. Consumer products and markets are becoming more complex, which increases the risk that consumers do not understand the significance of certain information; asymmetries of knowledge and understanding between trader and consumer can create incentives for traders to frame information in certain ways. Consumers’ behavioural bias is very powerful. Consumers focus on the main element of a contract. If the most important goal is, for example, buying a house, they will focus less on the detail of the insurance policy for that house. The closer the consumer gets to signing, the less likely they are to walk away.
Prominence is very important and welcome, but its efficiency in providing a remedy both for unfairness and for a weak and ineffective market depends on how a consumer’s attention is drawn to a term and their understanding of its significance. What is required in the prominence test is something to be explored further in Committee.
Finally, echoing concerns articulated by my noble friend Lady Crawley, in order to deliver competitive markets there is a need to increase the range of measures available to enforcers under the civil law enforcement regime, as the Government have acknowledged. It is to be welcomed that the Government have increased and extended the range of measures available not only to the public enforcers but to private enforcement bodies. Good businesses need safeguards as to how these powers will be used and the Bill sets obligations and conditions that enforcement bodies have to meet to be allowed to use these civil law enforcement powers.
However, concerns have been expressed that the detail of the safeguards built into the Bill, particularly those in Schedule 7, may not provide the right incentives for enforcement bodies to utilise the extended civil law enforcement measures. Private enforcement bodies may be deterred by the costs regime, for example. Public enforcement bodies may consider that they face less organisational risk if they stick to the criminal law route, particularly if the trading standards bodies feel they have insufficient resources to take the potential risk around a cost regime. It would be unfortunate if some of the detailed provisions in the business safeguards as drafted actually became deterrents to enforcers utilising the otherwise positive changes in the civil law enforcement regime contained in the Bill. That is something to be explored in Committee.
Baroness Howe of Idlicote (CB)
My Lords, I am very pleased to be speaking in this important debate. Like other noble Lords, I firmly support the general principles underlying the Bill. It is crucial that consumers have greater choice, transparency and rights in the public services that they receive, and the Bill provides that.
The current approach, which involves setting out consumer rights across various pieces of legislation, between which there is on some occasions overlap and on other occasions tension, does not make for clarity. A call for evidence in the consumer law review in 2008 revealed strong support across the board for consolidating consumer legislation to make it clearer and more accessible. Respondents highlighted a number of benefits that a rewrite would bring, such as: removing discrepancies and inconsistencies; greater use of plain English; greater awareness of rights, remedies and obligations; greater flexibility; future-proofing and the aiding of business growth. The Bill provides these, too. As the Government have made plain, consumers who are well informed about their rights and what they are buying are more confident, and are more likely to spend money well, getting better deals or buying new goods and services.
There are of course aspects that consumer groups and voluntary organisations that have been in touch with us would like to improve even further. As the noble Baroness, Lady Bakewell, and my noble friend Lord Alton of Liverpool have rightly said, they would like the Government to use the Consumer Rights Bill better to protect children by banning payday lenders from advertising on children’s TV.
I am disappointed that the Government have not yet introduced a financial blocking measure in relation to transactions between people in the UK and online providers based outside the UK that do not possess a Gambling Commission licence. The Gambling (Licensing and Advertising) Act that we considered in the previous Session introduced important legal changes in relation to online gambling. The Government presented the Bill as a piece of legislation motivated very much by concerns for consumer protection. The Act requires that any online gambling provider wishing to access the UK market from another country must obtain a UK Gambling Commission licence, which of course sounds excellent, but there is a problem. The provision of this new licensing regime can enhance consumer protection only if it is harnessed to another provision that securely prevents online providers without a licence from accessing the UK market.
A second provision, however, was absent from the Bill. This problem was raised repeatedly in this House and in the other place. On Report, I moved an amendment to prevent unlicensed gambling providers selling to consumers in the UK. This has been termed “financial transaction blocking”. The amendment had the effect of requiring financial transaction providers not to service transactions between people in the UK and online gambling providers based outside the UK without a Gambling Commission licence.
The Government responded by announcing that the Gambling Commission had spoken to three financial transaction providers who had agreed to introduce financial transaction blocking on a voluntary basis. This was welcome news. At the meeting that I had with the Minister on that occasion, I was told that although the Government did not want a financial transaction blocking clause in the gambling Bill they would be open to making such a provision in a consumer protection Bill. Well, it so happens that we have a consumer protection Bill before us, but as I say no financial transaction blocking measure is proposed in it.
It is clear to me that while a voluntary agreement with three financial transaction providers is very welcome, what we need is a statutory approach covering all providers of financial transaction services. I am advised by online gambling providers that, if financial transaction blocking is not provided universally through law, financial transaction provision will simply migrate to providers that are beyond the voluntary agreement. I would like to ask the Minister whether he would update us on any developments in relation to the voluntary agreement. Are the Government willing to introduce an amendment to this Bill to make provision for financial transaction blocking in order to protect British consumers from unlicensed online gambling operators?
I turn to child protection from adult material and the system of age verification for 18 and R18 content online. In March this year, the online video watchdog ATVOD produced a report on children’s access to pornography. It reported that a staggering 200,000 under-16s viewed internet pornography in a single month in 2013. The study showed that one in five of all UK males aged 12 to 17 who went online looked at an adult website; the same age group was responsible for more than 110,000 visits to one pornographic website alone. The report went on to say that,
“it is very likely that the scale of use remains under-stated”,
because mobile phones and tablet computers were excluded from the research for technical reasons; only desktops and laptops were considered. ATVOD commented that the videos people looked at were similar to R18 videos that can be sold only to adults who visit sex shops.
ATVOD called on the Government to make it clear that adult websites must have a system of age verification in place to guarantee that only internet users aged 18 or over should be able to access material rated R18 by the British Board of Film Classification. But if we are serious about child protection, the system of age verification should block not just R18-rated video on-demand material but 18-rated video on demand material. I understand that the Government have suggested that they will aim to tighten up the Communications Act 2003 to make it plain that the providers of R18 video on-demand material must do so under a system of age verification. What steps have the Government taken so far, and does the Minister not agree that it would make no sense to require age verification in relation to only R18-rated material and not 18-rated material?
Finally, I turn to financial transaction blocking for adult online content. This will ensure that financial transaction providers do not process transactions between internet users in the UK and websites based outside the UK that provide 18 or R18 content without a system of age verification in place. This is a fundamental measure, which will cut the flow of money to such websites, ensuring that they act responsibly and introduce a system of age verification. Beyond filtering, what steps are the Government taking to protect British children from tube sites based outside the UK that show R18 material without any system of age verification? Does the Minister not agree that action must be taken and that financial transaction blocking presents the best way forward?
Like other noble Lords, I am looking forward to a lively discussion—and, I hope, some changes—during the next stages of this important Bill.
Baroness King of Bow (Lab)
My Lords, I welcome the Bill but I must repeat what several noble Lords have said, notably my noble friends Lady Hayter and Lord Wills, that it seems to represent something of a missed opportunity. It was described by the shadow Minister for Competition and Consumer Affairs, Stella Creasy, as,
“a once-in-a-Parliament opportunity”,—[Official Report, Commons, 28/1/14; col. 780.]
but it seems that we might be at risk of squandering it. As the noble Lord, Lord Alton, said to the Minister, we should not limit the ambitions of the Bill to consolidating previous law. It really should not be just a compendium of consumer law; it should be an extension of consumer power.
Many areas of the Bill are of great interest and I look forward to deliberations in Committee, particularly on digital goods and the huge changes under way as Britain becomes a digital nation. We are already the country that buys more goods over the internet than any other except the United States. That means there are massive societal changes across the board and those changes will also be felt very keenly in the area of consumer rights.
I want to focus on an area that was touched on by my noble friend Lady Hayter but which we have not dwelt on in this debate so far—the public sector. The Government have belatedly said that the public sector will be included in this Bill and so some of the rights in the Bill will extend to tuition fees, childcare vouchers and personal care budgets. So from now on in these areas, if a service is substandard, parents, patients or students can get a price reduction, a refund or “a repeat performance”. The mind boggles at the prospect of university lecturers providing repeat performances of substandard lectures on, say, Aristotle. Aristotle’s students would have heard him say:
“In a democracy the poor will have more power than the rich, because there are more of them, and the will of the majority is supreme”.
I guess Aristotle just could not imagine Wonga. And if he was teaching today, his students might ask for a refund, because in our democracy the poor clearly do not have more power than the rich. On the contrary, Aristotle would find it really surprising, as I do, that in our democracy the poor often pay more than the rich for the same product. This counterintuitive fact was demonstrated by Consumer Futures and the Joseph Rowntree Foundation, whose research shows that low-income families spend 10 pence in every pound on a poverty premium. Another way of looking at it is that they spend £19 a week extra on average because they pay a higher price for the same product.
Someone who has done more than anyone to expose this poverty premium is my honourable friend Stella Creasy, and I pay fulsome tribute to her groundbreaking work defending consumer rights. However, after following the progress of the Bill in great detail in the other place, she tells me that she still has not received any clear indication from the Government on how this Bill’s provisions will apply to public services. Of course we welcome the Bill’s aims but we need to understand how it will work. Can the Minister let us know which service contracts it will cover? For example, can the Minister let us know if it will cover the licence fee? I would also love to know whether it will cover prescription charges. Even just a hint from the Minister in these areas would be welcome.
I have a very useful briefing note from Unison, which states that it believes in principle that people should have the choice to exercise their consumer rights in public services, but that it must be done in the right way in a collaborative framework. I am sure we would all agree with that, not least because there are already many complaints mechanisms within public services and we will need to be careful that these are not inadvertently undermined or bypassed by the new set of rights. If you read the Unison brief, it becomes readily apparent that this is a vastly complex area. The key point that shines through is that we want to prevent a two-tier complaints system where richer, paying citizens can bring individual litigation that might secure them more favourable rights than others without those means. Can the Minister give us any indication of any impact assessment that might have been carried out in this area?
My noble friend Lady Crawley was right: the Bill has not yet got our pulses racing—we live in hope. However, a lot of the issues it deals with make our blood boil. We are talking about premium charges on telephone helplines that leave you stranded for what feels like hours at a time; nuisance phone calls, which in certain areas have blighted lives; people making profits out of the misery of payday loans; and ticket touts profiting at the expense of genuine fans. Basically, we are talking about being ripped off, either to a small degree or to a degree that ruins your life.
As my noble friend Lady Hayter said, this Bill should balance the current, unequal situation, which too often puts consumers in a weak position. Too often, consumers find themselves powerless on the end of sharp practices. For the last time today—I know that I have quoted her quite extensively—I shall quote the shadow Consumer Affairs Minister, who said:
“The fact that nothing in the Bill is of particular concern tells us everything we need to know about its narrow ambitions”.—[Official Report, Commons, 28/1/14; col. 780.]
I hope that the Minister and the Government will be more ambitious. As Aristotle also said, “Hope is a waking dream”. We all live in hope that the Government will take this once-in-a-Parliament opportunity to end the unfair nightmare that too many consumers face.
Lord Whitty (Lab)
My Lords, I apologise to the House for speaking in the gap. I thought that I had put my name down, but there was obviously a failure to complete a digital transaction.
I congratulate the Government on the main themes of the Bill, which brings together, clarifies, consolidates and makes more transparent a lot of those rights that exist for consumers. That was a very useful job; they took a long time to get there but they are to be congratulated on it.
My main point relates to what to my noble friend Lady King just said. A Consumer Rights Bill should also alter the balance of power between providers and consumers. In a number of respects, it does not do that. I shall be as quick as I can in listing them.
Other things that the Government are doing have undermined the ability to monitor consumer detriment. The information that the Minister gave me during the passage of the Public Bodies Bill and the Enterprise and Regulatory Reform Bill indicated a cut of 20% to Citizens Advice’s resources for dealing with precisely this area of general consumer law. We have heard that trading standards have been cut significantly across the country, in some areas by 40%. That greatly undermines their ability as enforcers.
We have also reduced the degree of national co-ordination. What used to be the OFT’s responsibility for major scams has now been devolved on to those already hard-pressed trading standards. There is no national oversight of it. Likewise, the role of consumer education and consumer information—which the noble Baroness, Lady Oppenheim-Barnes, rightly underlined—used to be with the OFT; it is now virtually nowhere except the little bits that Citizens Advice can do. The noble Baroness also referred to the inadequacies of the individual sector regulators in engaging with consumers about their rights.
My noble friend Lady King also referred to the need to set up or use the right machinery to ensure that we do not undermine what is already good about the relationships between users and providers within the public services.
The Bill provides for collective redress by consumers in one particular area: breaches of competition law. I have never understood why that cannot be extended, except by trading standards taking up the case, right across the board. A lot of these issues are collective. I have pressed successive Governments to write collective processes and collective redress into all Bills that deal with consumer matters, but we still do not have it here.
There is then the issue of alternative dispute resolution. I appreciate that the EU directive on this has yet to pass through its processes—that will be an important point—but we now have a situation where alternative dispute resolution is the main recourse. It is so difficult and expensive for many people to access the courts that the ombudsman system and parallel systems are the main way in which consumers can resolve unresolved disputes, yet we do not have an overall strategy on ADR. I should like to hear from the Minister not only how the Government propose to transpose the directive and in what timescale, but what the general direction of government thinking is. There should surely be a comprehensive system of ADR in all markets and for all consumers.
There is much that is positive in the Bill, but unless we have proper monitoring and enforcement, the fact that people may be better able to access and understand their rights will go for nothing.
Lord Howe of Aberavon (Con)
My Lords, I am glad to take this opportunity to say something that I said quite recently and identify an important aspect of consumer rights. The debate on this subject gives me great excuse to return to something I referred to the other day: namely, our total failure to change our system of measurements to a system which we had for a period, when we took account of the metric possibility. That is where we have to go.
There is no doubt now that we have a double shambles in the absence of any competent, comprehensive system of weights and measures. One can give endless examples of it. We have metres and kilometres for athletics but miles per gallon for cars. More important still, the metric system is used in schools—it is what pupils are taught—but, all too often, pounds and ounces are used in the market. Manifestly, that destroys consumer relations. It increases costs, confuses shoppers and managers, leads to serious misunderstandings, causes accidents, wastes our children’s education and, frankly, puts us all to shame.
Almost 800 years ago, Britain’s first charter of human rights, Magna Carta, proclaimed that there should be one measure of wine throughout the whole realm, one measure of corn and one unit of cloth. That was the principle that we should have established. In fact, we have been dithering for almost 150 years. As long ago as 1862, a Commons Select Committee unanimously recommended that we adopt the metric system. A century later, in 1965, the decision was finally taken to go metric over the next 10 years. The noble Baroness, Lady Oppenheim-Barnes, kindly referred to my presence on her right shoulder. We were among the first two consumer Ministers and therefore sing a common song, if she will allow me to say so.
For a very long time, we had shambles. We then did go metric for 10 years but unfortunately, the Metrication Board, when I was Chancellor of the Exchequer, greedy to find ways to save money, produced its final report saying that it had completed its task, so I readily abolished the Metrication Board, so I am not only clear in my sights of the problem and solution here but clear of my guilty responsibility for having allowed it to happen. Plainly, we cannot go on as we are with two confused, competing systems. It would be madness to go backwards, but also madness to disregard what the rest of the world has done.
The United States has talked about this a lot, but not taken any measure to move in the right direction. It sent one remarkable missile towards the moon. One mistake was made in the design of that missile. I think that the cost was something of the order of $500 million. That was because one crucial measurement in the wrong system was injected into the construction of the missile. We have not yet achieved that scale of disaster, but we have been foolish in having disregarded the fact that our Commonwealth has, almost completely, done the right thing. Australia, Kenya, New Zealand, South Africa, India and Jamaica have long completed the entire change, and even Ireland, our lovable neighbour, completed the process as quickly as the other countries.
This is not too much of an interjection or injection that would be unjustified in this debate; it relates wholly to consumer rights and to all other rights, rightnesses and common sense. When I mentioned this only a few days ago in this House, the noble Lord, Lord Desai, responded rather cautiously. He said:
“The first is to try out a somewhat novel idea, and maybe it will be one for the Government to take away and work on, and the second”—[Official Report, 10/6/14; col. 303.]—
Baroness Jolly
I remind the noble and learned Lord that, in speaking in the gap, he is restricted to four minutes.
Lord Howe of Aberavon
Four minutes? I have five seconds left. Disregard the Government’s rejection of my argument in the last debate; listen to it again, this time more effectively; and this time agree with me, not disagree with me.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank all speakers for contributing to the debate this afternoon. It has been a very well informed one and one that has helped to pick out and distil for us some of the main issues which we face as we go forward with the Consumer Rights Bill. It is very appropriate that we should have with us the first Consumer Affairs Minister, whose comments we listened to with interest, particularly as he was able to point us back to Magna Carta and the ideas in that about the need for fair trading, on fair coinage and with fair measurement, which are, of course, still very relevant and important issues for us today.
My noble friend Lady Hayter explained, when she introduced the Bill, our general approach to and support for the Bill, limited mainly to its consolidation measures, but nevertheless sincere in that. Although we will be scrutinising with some vigour some of the points in the Bill, we do not want to give the impression in any sense to the Government that we are not in support of what is being said here, because it is a good thing. On the other hand, my noble friend Lady King made a very important point, which is that there are a number of missed opportunities here, since there will probably not be another Bill of this nature for some time. It can be regarded as a once-in-a-Parliament opportunity missed.
My responsibilities are limited to supporting my noble friend Lady Hayter across the Bill, and in particular to picking up on the digital points. I shall not go into detail on them, but the general point we will be making is that the Government are wrong to have ignored the advice of the Select Committee on this matter, which was, in scrutinising the Bill in its earlier stages, that the right approach to be taken for the sales of digital content—some of the largest in the known world and increasing significantly, as many noble Lords picked up on—is that it should be the same as for physical goods. The Government have not chosen that route and we want to check very hard with them why that is the case and how we might improve the Bill in order to get closer to that. There should be parity between rights in the physical exchange of goods and the e-commerce worlds.
A number of noble Lords mentioned our general concern that the Bill is a missed opportunity in that it does not seek to create more trust in the virtual world, where people are increasingly acquiring goods and services, as the noble Lord, Lord Borwick, said, from unknown parts of the world. We do not quite know sometimes where they are coming from, but more importantly, and more relevant to the tenor of the Bill, we need to think harder about what information should be available to all consumers, particularly those in the digital world, at the point of sale. That seems to be a key point at which we must bring together the information required for people to understand what it is they are purchasing, to understand their rights at the time of purchase and what their redress options are. Unless we do that, we are missing a very important trick here.
As has been picked up, the Bill takes a bold step towards the provision of services in relation to consumer rights. It would be good if the Minister could be very clear on this when he comes to respond. This is a really interesting and important point. If, as seems to be the case, the Government are set on going to a stage whereby services provided for a value, including those from public authorities, are subject to the same concerns within the Bill, it is important that we get the tests under which these will be looked at right.
The noble Lord, Lord Stoneham, and my noble friend Lady Drake made good points about the need to think harder about the question of a satisfactory quality test. This was discussed in another place and we think that the test that should be applied is that the goods and services supplied should be “of satisfactory quality”. The Government however, have adopted a different standard, that they must be performed,
“with reasonable skill and care”.
As has already been said this evening, and I think that it is important, that seems to be more to do with how the service has been performed, rather than whether or not the outcomes have been satisfactory. This is something we must return to.
Several noble Lords touched on the question of consumer advice and the need for business education, in the sense of making sure that businesses understood their responsibilities and their need to ensure that they have fulfilled all requirements in relation to consumers who purchase their goods. There is a case for the Bill to be more specific about consumer and business education. We have touched on point-of-sale information, for instance. I hope that the Minister will spend some time explaining what the implementation group is supposed to be doing in this area. A lot of the responsibilities that might have been in the Bill appear to have been offered to that group. What format is it taking? Is it working to a particular timetable and what outcomes should we expect to receive from it? To have further consideration of the Bill in Committee, it would be helpful if we had better information and an understanding of that work.
My noble friend Lord Whitty alluded to the changes that have been made and are ongoing in the Government’s consumer landscape. I think reviews are still needed in some areas but most of this seems to have emerged from review and is now in the implementation phase. One important thing is that many responsibilities which used to lie with the Government are now to be undertaken by independent charities such as Citizens Advice and the Trading Standards Institute, a body whose legal form I am still not quite sure about. However, it seems to have increasing powers and money to do work across the trading standards area. Some of those statutory responsibilities that used to lie with the Government are now with those bodies, to educate consumers and businesses. We will need to spend some time on this as we go through Committee because it is important to understand not only what power but what responsibilities are there, and how they relate to the Government’s responsibilities. At the moment, this is not clear.
When my noble friend Lady Hayter was giving her speech, she ran through a list of specific omissions which she felt could have improved and enhanced the Bill. A number of noble Lords came back to some of those omissions. I will touch on one or two points which still need to be brought through on that. On the question of how consumer rights will be applied in the public sector, if it is true that these rights are now available to those public service users who have acquired services at a reasonable price, how are these rights to be applied? How, for instance, will individual consumers be able to take up responsibilities for challenging university tuition fees that may not represent value for money, for personal health budgets, for the BBC licence fee, for controlled parking zones, for bus fares or for the provision of water and sanitation services? Is this now the world we are in? Can the noble Viscount run through some of that to make sure that we understand, as my noble friend Lady King was saying, exactly what is available as the subject of consumer redress on these matters?
The individual issues may well have been alluded to in debate and discussion but, when the Minister responds, perhaps he could also explain whether he is hoping for a single response from the government departments which are now responsible for responding to consumer interests in these matters or whether there will be variable responses and, if so, how that will be exercised across the piece.
My noble friend Lady Crawley raised the need for data to be more available across the consumer landscape. The issues here are largely to do with the information collected by those who, under the Bill, are responsible for carrying out investigations, such as trading standards officers. It is also important to recognise that much information lies with ombudsmen and with the courts, which have been responsible for implementing many of the measures for which protection is provided. How are we doing on access to data? We went through quite a lot of this in the exchanges over Midata, which was meant to open up this area. We have not seen much of that recently and I think that the Minister was responsible for it at one point, so perhaps he could enlighten us further. Clearly, the anticipation was that this sense in which data would be available to people so that they could exercise their own choices through, say, price comparison sites would be important to better consumer information. I think we broadly support that but we have not had much detail on it. It would be useful to have more information, as well as on the wider question of whether the data held in areas such as trading standards can be circulated and made available to consumers more widely.
My noble friend Lord Wills picked up on the question of nuisance calls and marketing problems which are still very prevalent across the country. We understand that the Information Commissioner, having set up an online reporting tool in March 2012, has had more than 240,000 complaints about unsolicited calls and texts, and Ofcom has also carried out research into this. This is obviously a major problem. It is a pest to the modern world, where the phone calls you receive are never the ones you expect. They are always the ones which offer you things that you could not possibly want or wish for and you have no reason to understand why these people were ringing you in the first place. My response to that is to leave the phone open so that they at least rack up the cost of the call. However, that means that I cannot ring my friends at the same time, so it is a bit irritating. We need to get hold of this issue. It is a modern-day problem which affects vulnerable people in particular, who have difficulties in dealing with it. I hope we will deal with it in the Bill.
Several noble Lords, including the noble Lord, Lord Borwick, and the noble Baroness, Lady Bakewell, raised a question about how we will operate proper scrutiny measures if the trading standards officers are not able to go into premises without giving 48 hours’ notice. The position is changing and several noble Lords have asked the Minister to respond on this. It is obviously crucial to understanding how a redress will happen.
The noble Baroness, Lady Bakewell, also mentioned, as did a number of other noble Lords, letting fees and agencies. This is an area on which we touched in previous Bills but this Bill seems an appropriate area in which to get more action on that.
I was involved in the Olympics Bill and I am therefore aware of the measures that were taken to make sure that ticket touting was eliminated from the process. Indeed, I think it was the Minister who took the Bill through the House on his first run as a Minister here. He will therefore be aware, as I was, about the doubts and reservations that we shared around the House on how this would happen. We resolved it on the day by a slick and effective system brought in by the Olympic authorities, which meant that ticket touting, effectively, did not exist across the whole range of the Games in 2012.
However, on a number of occasions we have had opportunities to think again about this. The Government have not taken up those opportunities despite the fact that police operations in this area seem to suggest that there are criminal actions at work, as the noble Lord, Lord Clement-Jones, mentioned, and that significant amounts of money—either through direct corruption or money-laundering—are passing through a system which now needs the attention of the Government. I hope that we can spend some time on this matter in Committee and get a resolution to it because it has reached a point where it needs to be looked at.
Several noble Lords referred to the need for the Bill to think more closely about the rights of children in relation to consumer activity. Payday lending is particularly worth looking at. There is also the wider question raised by the noble Baroness, Lady Howe, about whether or not we should use the opportunity of the Bill to consider gambling and the opportunities that were not taken up in the gambling Bill to deal with IP blocking and financial transaction blocking. Age verification in relation to child protection could also fit within the Bill. Perhaps the Minister will respond on this point when he comes to it.
Those are a number of points which we will go into in some detail in Committee, where I hope we will have a chance to firmly test the Government’s interests in these matters. If we can make progress together around the House, so much the better for the Bill.
As my noble friend Lady Hayter said, we welcome the Bill in principle. We think it is a contribution towards updating UK consumer law, which it is necessary to do. However, there are real concerns about the underpinning of the Bill. The success of the Bill will be heavily dependent on how consumer rights are upheld through public enforcement at a time when, as we have heard, trading standards departments up and down the country are being significantly cut back and, at the same time, being asked to take on new responsibilities.
As we have heard, a new private redress system will be coming through in relation to mechanisms such as ADR. It is not clear why the Bill does not deal with that—except that it is probably not in the right timeframe—but it is obviously an issue. There is a new link to the Competition and Markets Authority, which has only just established itself. It is not clear yet—although it may be by the time we get to Committee—how and in what way it will work with consumer interests at its heart. We also have to think harder about how the courts will be able to support private and group complaints. We think that one of the important themes that we need to address in Committee is the powers of redress and enforcement that need to be improved if the Bill is to make the sort of difference that it ought to.
As we have heard, the framework of consumer rights is complicated enough, so much so that it is a pity that one of the speakers today felt that she was unable to play a part in the later stages of the Bill; we regret that. The landscape needs to be clearly identified. We know that there is a Competition and Markets Authority and that the transfer of powers and responsibility to Citizens Advice is happening. We know that work is going on somewhere in the Government between now and July 2015 when they are required to implement the ADR directive. As well as the Bill, we have an update coming through regarding the EU consumer rights directive, which has been mentioned, and a number of welcome pro-consumer measures that have come through from the Law Commission recommendations on misleading and aggressive practices, so it is a very complicated area to keep in frame. It might be necessary to spend a bit of time in Committee on being clear about which parts the Bill addresses and which parts it cannot and will not, as well as understanding where the issues that some of us have raised today are being picked up and taken forward.
At the heart of all this work, we have to think harder, as a number of noble Lords have done, about the consumers who are currently overpaying for many basic goods and services and being short-changed by service providers, resulting in excessive costs, because they are not aware of their rights or able to exercise them effectively. We believe that healthy, fair and competitive markets are vital to building an economy that works for both consumers and businesses. In a modern, progressive society, consumer powers are the missing piece of the jigsaw for preventing problems from besetting the public and for opening up creativity and innovation in goods and services. We believe that savvy consumers make better customers for businesses, and that better informed citizens get better outcomes in dealing with the public and private sectors, both for themselves and for each other.
We need a three-pronged approach, which should underlie the discussions. First, there has to be better access to information, to ensure that consumers are able to make decisions themselves that are as accurate and efficient as possible. Secondly, there has to be advice or advocacy—that is, proper support that helps to guide consumers and businesses through what can be a complex and changing landscape of rights and responsibilities must be available and easy to access. Thirdly, there must be effective and speedy redress, which needs to be clear and as close to the consumer/trader interaction as possible. The Bill will not take us all the way down those three prongs, but nevertheless we look forward to scrutinising it in Committee.
Viscount Younger of Leckie
My Lords, I believe that there is still time to get hearts racing. We have an excellent opportunity before us to ensure that we have the best possible legal framework to empower consumers, drive competition and encourage growth. I am therefore very grateful to noble Lords for their wide-ranging contributions to the debate today on this important Bill. I appreciate the general support for its core elements that have come from so many Peers: from my noble friends Lady Oppenheim-Barnes, Lord Clement- Jones, Lord Stoneham and Lord Borwick, from the noble Lords, Lord Wills and Lord Alton, and even from the noble Baroness, Lady Hayter, although that was before she read out a full list of issues that means that I have much ground to cover. I also pay tribute to my noble and learned friend Lord Howe and my noble friend Lady Oppenheim-Barnes for their long contribution to consumer issues over many years.
I shall pick up on the specific points that have been raised today. The noble Baroness, Lady Hayter, and my noble friend Lady Oppenheim-Barnes, as well as the noble Baroness, Lady Drake, and the noble Lord, Lord Stevenson, talked about the importance of consumers knowing what their new rights are. I agree with that. Empowering consumers is a key objective of the Bill, and we have set up a group of consumer and business organisations that is working with us to develop a strong implementation programme to ensure that consumers and businesses are well aware of consumer rights. The group is considering the role of consumer rights information at point of sale, a point that my noble friend Lord Stoneham raised. I undertake to write to noble Lords before Committee to provide an update.
My noble friends Lord Clement-Jones and Lady Heyhoe Flint and the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, raised the issue of regulating ticket sales. I sympathise with cases in which consumers are misled about the nature of what they are buying. We have seen many excellent examples of event organisers controlling how tickets move from the primary to the secondary market, some of which were discussed in the other place at length. That good practice needs to be extended where event organisers have concerns. I reassure noble Lords that legislation is in place to protect consumers. It is already an offence for a trader to mislead a consumer. It is also a requirement that the main characteristics of goods and services, as well as the name and address of the trader, must be given to a consumer before they buy. For ticketing, I stress that the main characteristics should include the seat number, if one exists.
The Government are committed to ensuring that the law is enforced. In 2013 alone, the Advertising Standards Authority looked at 130 websites to ensure that pricing was accurate and not misleading, and this year it is reviewing 650 more. In addition, further legislation will come into force in October to give consumers who are misled better access to compensation. Therefore we are tightening consumer protections. However, industry best practice also needs to be extended. My noble friend Lady Heyhoe Flint, at least, recognises that particular point.
I very much appreciate and agree with the sentiments expressed by the noble Baroness, Lady Hayter, and the noble Lords, Lord Wills and Lord Stevenson, on the important point about unsolicited nuisance calls—or as the noble Lord, Lord Wills, put it, marketing calls—which can cause inconvenience, stress and anxiety for many consumers, in particular the elderly and the housebound. I am sure that we are all only too aware of situations when we could do without having to answer such calls. A phone ringing when you are making supper is very distracting even when you know who is calling, but when the call is unwanted and of no interest then it can be an unacceptable intrusion. However, I firmly believe that banning unsolicited calls will not solve the problem.
That is not only my view but the view of the Culture, Media and Sport Select Committee. In its report of 5 December 2013, the committee said that a ban on cold calling should not be introduced because there were many legitimate reasons why such calls might be made, such as by the emergency services, medical practitioners, pharmacists, even elected politicians, charities, and companies with which the recipient has a genuine relationship. For example, in its report the committee says:
“The National Autistic Society told us that the telephone is ‘the single most successful way that—as a charity reliant on public donations—we raise money from individuals’. The Society’s evidence ends with an appeal: ‘Please do not curtail our use of this marketing channel—I would implore you to fully consider the implications for society before making any changes’”.
We also have the example of other jurisdictions as further evidence that a ban does not actually work in practice. For example, Germany has a system that prohibits direct marketing calls unless an individual positively opts in to receiving such calls. Yet according to a study undertaken by trueCall Ltd in 2011, the level of complaints about nuisance calls was found to be broadly similar to the UK.
Despite what the noble Baroness, Lady Hayter, says, we need to focus our efforts on catching those that break the law—I believe that she did say that—which is why the Government’s action plan, published in March, focuses very firmly on improving enforcement. For example, we will shortly be consulting on lowering the legal threshold to allow more enforcement action, including penalties, to be taken. I make the point that some action is taking place.
The noble Lord, Lord Wills, spoke about consultation —a point which was well made. As I said, we will shortly be consulting on lowering the legal threshold to allow more enforcement action, including penalties, to be taken. Only last week this House approved an order that enables Ofcom to disclose information to the Information Commissioner’s Office about organisations that break the rules.
Lord Wills
I am grateful to the Minister for giving way. On the specific point about consultation, can he undertake that the consultation will take no longer than three months and that his officials will process the results of it as quickly as possible? I am not quite sure what the timetable for the rest of the Bill is, but can he make sure that, if at all possible, the Government will bring forward amendments to deal with this, as a result of the consultation, while there is still this precious legislative opportunity to do so?
Viscount Younger of Leckie
I am very happy indeed to write to the noble Lord to provide some precise timetable information on that point. We would wish for this to be taken forward as soon as possible as well, but I will furnish him with some more information. There are regulations in place that offer protection for consumers. I would very much encourage consumers to report such calls to the relevant regulator so that action can be taken.
At this point I would like to address a point raised by the noble Baroness, Lady Hayter, on energy bills. We know that rising energy prices are hitting many households hard at a difficult time. We expect energy companies to justify commercial decisions on price changes openly and transparently. We have delivered a £50 reduction in energy bills by driving down the cost of the green levies on consumer bills. We are reforming the retail energy market by making it simpler for consumers to understand. We are ensuring that everyone is on the cheapest tariff their supplier offers that meets their preference. Our policies are keeping bills lower—by an average of £65 for a typical household—than if we did nothing.
The noble Baroness, together with the noble Lord, Lord Stevenson, and the noble Baroness, Lady Drake, asked why the Bill does not contain an outcome-focused test for services. We are strengthening consumer rights for consumers of services where a trader promises something about the service. If the consumer relies on that promise they can hold that trader to account; if not, they are entitled to statutory remedies, which are also introduced for the first time in the Bill.
My noble friend Lord Stoneham and the noble Lords, Lord Whitty and Lord Alton, raised the issue of the alternative dispute resolution, as did the noble Baroness, Lady Hayter. As the noble Baroness knows, the consultation seeking evidence about whether any kind of simplification of the ADR landscape is necessary or viable in the future recently closed. Although it focused on immediate action to implement the ADR directive, we understand that stakeholders from many quarters have views on how the current ADR landscape might be improved. Some have suggested creating a consumer ombudsman. We have therefore used the consultation as a call for evidence about whether any kind of simplification of the ADR landscape is necessary or viable in the future.
The noble Baroness, Lady Hayter, asked about giving consumer rights to small businesses, and particularly to the smallest micro-businesses. The Government are committed to helping SMEs, of which there are 4.9 million in this country, to grow. However, we are not convinced that it is in the best interests of small or micro-businesses to be defined as consumers in the Bill. To take a step back, the Bill is about consumers. As soon as we start including rights for other parties in the Bill, we believe that that core purpose will be diluted and we will risk losing valuable clarity.
Baroness Hayter of Kentish Town
The Commons made a welcome amendment to the Bill to make letting agents put up their table of fees. Those fees will apply also to landlords, and landlords are a business. Does the Minister mean that landlords do not also have the right to see those fees displayed simply because they are a business?
Viscount Younger of Leckie
We still want to make a distinction between consumers and businesses. We think that if we were to cherry pick and bring certain groups in to allow businesses to be included as consumers, that would cause confusion. However, I am very happy to talk to the noble Baroness again about letting agents and the specific point, as I know that she is much exercised by the issue.
The noble Baronesses, Lady Hayter and Lady Howe, my noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the important issue of the effect that advertising has on children as regards payday loans. First, let me be very clear that consumers will be far better protected under the new FCA regime. Logbook loan providers and other high-risk lenders are required to meet the standards that the FCA expects of them, including making affordability checks. The FCA rules are binding on lenders and the FCA has a wide enforcement tool-kit to take action.
My noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the issue of advertisements. The FCA will not hesitate to ban irresponsible adverts, and it has a strong record of doing so. The Broadcast Committee of Advertising Practice is reviewing the extent to which payday loan adverts feature on children’s TV. Separately, the Financial Conduct Authority has set out new rules for consumer credit adverts and it has powers to ban misleading adverts which breach its rules.
The noble Lord, Lord Wills, asked about payday loan firms and cold calling. The FCA is committed to ensuring that cold calling by phone or e-mail makes clear the identity of the firm and the purpose of the communication so that the consumer can decide whether to proceed.
I thank my noble friend Lord Borwick, who raised an important point about consumers being made aware of the country in which a seller is based. Under the consumer contracts regulations 2013, traders in distance contracts, such as online sales, must make available information on their geographical address before a consumer buys from them. I have been in correspondence with my noble friend concerning his recent purchases with Amazon. I cannot comment on the experience of the particular transaction that has been raised but I can confirm that obligation, which I hope goes some way to answering his questions.
My noble friend Lord Clement-Jones asked about exempting intellectual property contracts from the Unfair Contract Terms Act 1977. I sympathise with the situation in which some creators find themselves, but we have not yet seen evidence that amending that Act would address the issue. First, we would need substantial quantitative evidence of a problem and, secondly, we would need to be sure that any such amendment would solve that problem without unintended negative consequences.
My noble friend Lord Clement-Jones also asked about brand owners protecting themselves against misleading look-alike packaging—an issue that I know we have spoken about in the past—on the grounds of intellectual property infringement and the common law tort of passing off. As he will be aware, my department, BIS, is reviewing the case for granting brand owners a civil right of action against copycat packaging and it is aiming to report in the autumn.
There has been some discussion today about the vital role that trading standards officers have in protecting the public. Issues were raised in this respect by the noble Lord, Lord Whitty, and the noble Baroness, Lady King. The Government strongly support the work that trading standards does to protect consumers from rogue traders and scammers. We have better equipped trading standards to take greater responsibility for consumer law enforcement by transferring central government funding to the National Trading Standards Board and Trading Standards in Scotland. Last year, we invested £14.5 million in these bodies to fund co-ordinated enforcement action across the UK.
We also want to develop a better understanding of the impact that trading standards services have on our economy at both the local and national level. Therefore, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake a piece of research on which to build an evidence base on the economic, social and environmental impact of trading standards work, the impact that budget cuts have had on enforcement activity, and the efficiency of trading standards services across England, Scotland and Wales. The project will conclude in the autumn and the outputs will inform future policy considerations.
The noble Baroness, Lady Crawley, raised the question of trading standards publishing data. Trading standards will be able to name and shame a business, giving consumers more information to make better purchasing decisions. That is a key element of the new enhanced measures.
The requirement in the Bill for trading standards to provide 48 hours’ notice of a routine inspection was raised by the noble Baronesses, Lady Hayter and Lady Crawley, among others. I emphasise that this is about routine inspections; it is not about situations where there is any concern or suspicion that a trader is breaking the law. Other powers in the Bill can be used to check letting agents’ compliance with the duty to display fees. I also want to reassure the House that the powers and safeguards are designed to strike a balance—and it is a balance—between protecting civil liberties, reducing burdens on business and enabling enforcers to tackle rogue traders. Businesses, and particularly small businesses, welcome the requirement for notice. The Federation of Small Businesses has said that,
“booking inspections in advance … will allow the business to make the necessary arrangements … so that everyone gets the most possible from the inspection”.
However, I underline again that we have no intention of weakening the powers of consumer law enforcers to investigate rogue activities. That is why the Bill contains a number of clear exemptions from giving notice, such as where doing so would defeat the purpose of the visit—for example, when investigating the sale of illegal tobacco or the production or transit of fake food. Consumer law enforcers will still have more powers to enter premises than the police.
I turn now to an issue I know exercises a number of noble Lords, which is the right to receive bills in paper format. It has been raised today by the noble Baroness, Lady Hayter, and I know it certainly exercises my noble friend Lady Oppenheim-Barnes. I have heard the views expressed in this debate, and empowering consumers is a key objective of the Bill. My department is in the process of commissioning research regarding the issues that help and hinder the empowerment of consumers. We aim to use this research to identify the key target groups of consumers in need of greater assistance and the best ways to reach out to them. I can reassure the House that we will consider the comments made today alongside the conclusions from the research and act accordingly if this suggests the need for further thinking. Let me make one thing clear. There is no penalty for choosing paper—instead, people simply do not receive a discount. Choosing paper bills retains an additional service for those who wish not to take a paperless bill discount.
Baroness Oppenheim-Barnes
I apologise but I must interrupt my noble friend. That is not true. Clearly, at the end of a BT bill there is an item called, I think, charges for processing this bill. That means sending a piece of paper.
Viscount Younger of Leckie
I know that this is probably going to lead to some more discussions offline about this issue. My answer is that my noble friend then has the right to change supplier if she is not happy with that particular supplier.
Viscount Younger of Leckie
It sounds to me as if she has done so. We must also remember that many hard-pressed households welcome the opportunity to save money that paperless bills offer them—which is the other side of the coin—and the Government want this option to be available to consumers.
My noble friend Lord Clement-Jones, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Howe, spoke eloquently about the important new statutory rights for consumers buying digital content. As has been shown, there are competing arguments and a balance to be struck. The digital content provisions are reasonable and principles based. They require that traders put right faults free of charge or, failing that, give some money back. That is what reputable digital content businesses already do. Not all bugs would automatically render digital content faulty, as the magazine Which? recognised:
“consumers are very accepting of updates and patches”,
and,
“would be able to tell the difference between a faulty piece of software and one that is just evolving”.
The noble Baronesses, Lady Hayter and Lady King, and the noble Lord, Lord Stevenson, asked about the impact of the services provisions, especially on public services. This point was quite strongly made. As Peers will know, this issue was discussed at length in the other place. My colleague Jenny Willott has written to set out the position, which is that where a public service is provided by a trader to a consumer under a contract, the services chapter of this Bill applies. That is why our impact assessment of this part of the Bill was comprehensive and covered all sectors. That assessment shows significant benefits—of £33 million per annum—to consumers.
The noble Lord, Lord Alton, raised an interesting point—and at this point I hope my noble friend Lady Oppenheim-Barnes can be persuaded to listen carefully—about the safety of embryos, if I can paraphrase the points the noble Lord raised. We are considering the report mentioned and we will announce our plans as soon as possible. My honourable friend in the other place, Jenny Willott, has already assured the other place and I can assure noble Lords that any proposed regulations on this matter will be subject to debates in both Houses under the affirmative procedure.
The noble Baroness, Lady Howe, asked about an update on the voluntary agreement on preventing unlicensed gambling providers. I will ask my noble friend the Minister for Culture, Media and Sport to reply directly to the noble Baroness.
The noble Baroness, Lady Drake, said that prominence is not sufficient to ensure that consumers understand the terms. We agree that terms should be written in language that consumers understand and that is why all terms must be written in plain and intelligible language. We will be giving guidance on what prominence requires and how it is defined. Business prefers this guidance to detail on the face of the Bill.
The noble Lord, Lord Whitty, who spoke in the gap, raised the issue whether consumers have access to collective redress for breaches of consumer law. Our proposals on enhanced consumer measures offer a more flexible, balanced and proportionate approach with a wider range of remedies.
I am fast running out of time. I will write to noble Lords whose questions I have not managed to answer. I conclude by underlining once again how vital this Bill is for empowering consumers, promoting competition and encouraging growth, which so many Peers have emphasised today.
Chilcot Inquiry
(10 years, 2 months ago)
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Lord Dykes
To ask Her Majesty’s Government what date they expect to agree with the Chilcot Inquiry for the publication of the Inquiry report.
Lord Dykes (LD)
My Lords, I am grateful for the opportunity, through the usual channels, to contribute today in a Question for Short Debate on the disturbing delays that appear to be building up in the publication of the much and long-awaited Chilcot inquiry report. The long-distance background to this goes back to the illegal war in Iraq in 2003 and the subsequent inquiry by Sir John Chilcot and his colleagues. At least one political party in this country—I am proud to say that it was the Liberal Democrat party—marched officially as a party to protest against the war. The estimated million to 1.5 million marchers going along Piccadilly were subsequently all disappointed that the then Prime Minister, Tony Blair, completely ignored their representations on the biggest march that had taken place in Britain in recent times.
I pay tribute to the newspapers and the press in Britain who followed this, especially the Guardian. I assure noble Lords that there is no consortation in any way in this respect. It is just another way to thank the Guardian for its relentless pursuit of the hacking scandal in this country. Its pursuit was much more than that of any other newspaper. Sometimes the Independent managed to keep up, for which we are grateful. The way in which the press generally dealt with it was much less thorough than in the Guardian. The same thing has applied on an unrelenting basis to the delays to Chilcot. It is with deliberate intent that I quote mostly from the Guardian.
On 29 October, I put down a Question to the then Leader of the House, the Chancellor of the Duchy of Lancaster, the noble Lord, Lord Strathclyde. I asked,
“Her Majesty’s Government what representations they have made to the chairman and secretariat of the Iraq Inquiry about possible delays in publication of its report due to responses from officials of the government of the United States”.
I was most grateful to the noble Lord for his reply. He said:
“The drafting of the inquiry’s report and the contents are entirely a matter for the inquiry, which is independent of government”.
I made a supplementary point and I said:
“We remember, of course, the many thousands of Iraqi civilians, including women and children, who were killed after this illegal invasion. Will my noble friend the Leader of the House reassure the House that the Government will attach every meticulous attention to the contents of the report when eventually it is published? It is a very long process and the sooner it is published the better, but there is still a considerable delay. The particular implications of eventual submissions to the ICC should also be borne in mind”.
I was most grateful when the Leader of the House added that,
“my noble friend is correct to draw attention to the report. I can confirm the seriousness with which the Government will accept the report. It perhaps is worth pointing out that Sir John Chilcot, the chairman of the inquiry, has advised that the inquiry will be able to submit its report to the Prime Minister once it has given those who may be subject to criticism in the report the opportunity to make representations to the inquiry before the report is finalised”.—[Official Report, 29/10/12; col. 406.]
I hope that noble Lords will forgive me for going into detail on this but that is the very serious background to it.
I fast-forward to 23 November 2013 and, once again, the excellent details in the Guardian, which stated:
“The Chilcot inquiry into the 2003 invasion of Iraq has been locked in dispute with top Whitehall officials over their refusal to release crucial records of conversations between Tony Blair and George W Bush”.
I quote further from the same article:
“Sir John Chilcot and his panel have seen the documents but have been told they cannot disclose them. He has told Cameron that without a decision on what he has described as documents central to the inquiry, he cannot go ahead with the … ‘Maxwellisation’ process”.
The article goes on:
“Blair is one of those most likely to be criticised for his handling of the crisis that led to the Iraq invasion”.
I am delighted to see the former Foreign Secretary, the noble Lord, Lord Owen, in his place today and I thank him for coming to speak in this debate—as I thank the other speakers. Going back a week to 15 November, again in an article in the Guardian, there was his call—which he gave me permission to mention—to get this report published as soon as possible. The first paragraph of this piece by Richard Norton-Taylor states:
“The former Labour foreign secretary, Lord Owen, has criticised Tony Blair and the coalition over the refusal to release key evidence about what Blair told George Bush in the runup to the invasion of Iraq. Blair's position was an ‘intolerable affront to democratic accountability’, Owen told the Guardian”.
Several paragraphs later, the article states:
“Owen said the whole dispute should be arbitrated by the lord chancellor, who is responsible for the release of official records, rather than any cabinet secretary … ‘Chilcot and his colleagues should stand firm and not be bullied,’ Owen said”.
I was grateful indeed for the noble Lord’s remarks and I look forward with great interest to his further remarks in this debate.
I am also grateful to the noble Lord, Lord Campbell-Savours, for being here. He is a doughty fighter for justice and morality in politics, in social matters and in the kind of emergency that arose from Iraq. I know he has somewhat different views so I shall be careful not to add any further comments.
I am equally grateful to the noble Lord, Lord Berkeley of Knighton, for his attendance today. Many of us are fans of his famous programme on BBC Radio 3, “Private Passions”. He will not mind me sounding corny when I say that we in this debate today have a public passion collectively for getting at the truth of the delays to Chilcot. To make matters worse, with all these delays and no proper explanations coming from government circles or anybody else, and allowing for the fact that Cabinet Secretaries are inhibited in anything that they might do or say—that is a serious problem in the public sector, which we have to admit and understand—I and others were quite appalled that last Friday, 27 June, an article in the Guardian said that there is now a further delay in the publication of this report. The main paragraph in that article states:
“Sir John Chilcot announced last month”—
that is, in May, as the article was written at the end of June—
“that after years of heated disputes with successive cabinet secretaries, and discussions with Washington, he had agreed to a settlement whereby summaries, and ‘the gist’, of more than a hundred records of conversations between Blair and George Bush in the runup to the invasion, and of records of 200 cabinet discussions, would be published, but not the documents themselves. Chilcot has described the content of the documents as ‘vital to the public understanding of the inquiry’s conclusions’. In a letter to Sir Jeremy Heywood, the cabinet secretary, last month, Chilcot said ‘detailed consideration’ of the information he has requested had begun, adding ‘it is not yet clear how long that will take’”.
With regard to this delay, I think “disgrace” is the right word to use, and I use it sadly. I do not wish to, but I think that is the essence of the matter.
The same article states:
“Philippe Sands QC, professor of law at University College London, said: ‘How painfully ironic that Britain used force in 2003 when it was manifestly illegal, but will … not do so now in response to a request from the government of Iraq, when it would more arguably be lawful’”.
It continues:
“Sands, a close follower of Chilcot and earlier inquiries into the invasion of Iraq, added: ‘The situation in Iraq today is terrible and tragic, but it’s a futile exercise to speculate as to the exact connection with decisions taken in 2003 … It would be more sensible to reflect on what might be learnt from the mistakes of the past.’ He continued”—
I support this question—
“‘Who exactly is responsible for the delay [in the Chilcot report] is unclear, but it is hard to avoid the suspicion that political considerations might have come into play’”.
This House and the whole of this Parliament need information on this. I am most grateful to the noble Lord, Lord Wallace of Saltaire, for attending this debate and replying to us today. I hope that we will have some good answers from him in so far as he can deal with these delicate and sensitive matters.
Lord Campbell-Savours (Lab)
My Lords, we are all indebted to the noble Lord, Lord Dykes, and welcome this opportunity to debate the timing of publication of the Chilcot report. It provides us with an opportunity to plead the case for a report that is comprehensive in content and fully exploits the inquiry’s original remit as set out by the Government.
Last week, on 25 June, I spoke on Iraq. I understand that my contribution was followed by an avalanche on the internet of vitriol, venom, accusation and language bordering on threat. It all followed an article in the Mail Online which, accompanied by a picture of me suitably clad in a provocative Peer’s robe, accurately reported half my contribution in which I had set out the position of those of us who had supported intervention in Iraq. What, sadly, the article did not reveal was that the thrust of my speech was to oppose further intervention and also to set out a strategy for us to pursue at the United Nations to deal with militant Islam.
I make no complaint. Indeed, in today's debate, I intend to go further and give those self-same critics a further dose of my thoughts in the context of Chilcot and further cause for them to express their anger by setting out another truth over the debate on Iraq—a truth that they conveniently ignore. It is a truth that I hope Chilcot draws on during the course of his inquiry.
In my view, the whole debate on Iraq has been dominated by ignorance of the background, misrepresentation of the facts and public attitudes to the conflict determined by totally inadequate reporting in the media. There are men and women today walking the streets of London, Paris, Washington, Amman and Istanbul who are the real criminals in the story of Iraq. There are hundreds if not thousands of them. They have built their fortunes on the back of sanctions-busting in breach of international law, but because they represented business and financial institutions, they have been left untouched. They have almost never been prosecuted because it was deemed not to be in the public interest in various countries concerned, while they have laughed all the way to their banks as politicians have taken the rap. It is they who are responsible for the war in Iraq and only they.
Blair and the nonsense of WMD divert us from the truth and if Chilcot fails to deal with their criminal activity he will, in my view, have failed. To establish the truth, we need to consider the Volcker report, a UN-sponsored report of 2005, which followed a detailed investigation over 18 months into allegations of bribery, corruption, illegal commission taking and the complete undermining of the Iraqi sanctions regime established under international law. Paul A Volcker, a former chairman of the Board of Governors of the United States Federal Reserve, led the inquiry that identified more than 2,000 cases of abuse and criminal activity. That report offers us a real insight into the scale of international criminal operations, which completely undermined the sanctions regime set in place to bring the Saddam Hussein regime to heel. But the western media gave the whole report a wide berth and scant attention as the story told was simply not sexy enough. The media needed someone to blame for what has turned out to be a qualified failure. I believe that Blair’s unfortunate and, in my view, wrong use of WMD in justification for the war gave them that person to blame.
As I explained last week, I, along with others, had repeatedly appealed to the powers that be in our visits to Washington for action on sanctions-busting. The Americans were just not interested and we could do nothing as they were calling the shots. I remember telling them that unless they acted military intervention to bring Saddam’s brutality to an end was inevitable. On one occasion I led an Anglo-American parliamentary group delegation to Washington and recall discussing sanctions-breaching with State Department officials. The noble Lord, Lord Howard of Rising, was there and he will remember what happened. In the critical years prior to the invasion I repeatedly raised in Parliament the issue of sanctions-busting and I understand that British civil servants had no more luck with the Americans than I did. I repeat: it was the failure to stop that criminal activity that made war inevitable. If the sanctions regime had been enforced, Saddam would have been contained.
In the many forums in which we made our case on the need to enforce the sanctions policy, particularly in the case of oil exports, we were able to draw on the extensive work that we had done in the early years of Saddam’s revenue-raising from illegal oil sales. In the 1990s, at a time when I was very closely following events in Iraq on an almost daily basis, I sent my former Commons researcher Jim Mahon to Iraq to investigate the scale of illicit oil trading with Turkey. He replied back at the time in the following words: “Trucks, bumper to bumper, in a line as far back as the eye could see, thousands of them, crossing the border into Turkey; some trucks just converted with large containers carrying oil on their backs”. It was the lack of monitoring of humanitarian imports under the UN sanctions regime, with the rake-off of commissions and Saddam’s oil revenues, that funded the whole machinery of Iraqi government and kept the upper echelons of Saddam’s murderous regime and republican guard in place.
With the failure to act on the sanctions-busters, I saw no alternatives to war, although I now believe that the war option failed for the reasons that I set out last week. I now look to Chilcot to establish the truth. At the time I challenged the Chilcot inquiry remit as being too limited. Nevertheless, they tell me that Chilcot is a wise old owl and if he deploys his wisdom, he should find a way of addressing the important issues that I am raising. Believe me, if Saddam’s revenues had been cut off, that regime would never have survived. There would have been no war in Iraq. Those who insist on attacking those of us who supported intervention as a last resort to end Saddam’s brutality would do well to consider the facts and ignore the media-generated stories that even some politicians have swallowed. I hope that Chilcot will do just that.
The irony in all this is that many of us who supported intervention in Iraq were totally opposed to intervention both in Afghanistan and Syria—unlike the Liberal Democrats. The noble Lord, Lord Dykes, mentioned the position of his party. His party supported the intervention in Afghanistan. I opposed it in Afghanistan and Syria. Perhaps on the next occasion it will be us who are on the streets of London, demonstrating for the enforcement of sanctions against the rogue regimes in an attempt to avoid some war in the future.
Lord Berkeley of Knighton (CB)
My Lords, I am most grateful to the noble Lord, Lord Dykes, for raising this pertinent Question. Before I make the very brief points I would like to make, perhaps I might, by way of a small tribute, say how sad it is that Sir Martin Gilbert, a member of the Chilcot inquiry, has been taken so gravely ill that he is unlikely to return to that kind of work.
We have recently been commemorating—if I may say so, very movingly—the fallen of the First World War. The noble Lord, Lord Dykes, very kindly mentioned “Private Passions”, and one of the pieces we most often get asked to play on that programme is part of the “War Requiem” by Benjamin Britten, setting to music, as it does, the poems of Wilfred Owen.
That is germane to what we are talking about because we owe it to the many people who gave their lives so bravely and to the many families that lost relatives to always look with microscopic attention at the reasons for going to war. We know now that many mistakes were made and we really should be trying to use the example of those errors to never make them again. That is why this inquiry is so terribly important. Then we have the families of those representing us who were bereaved in Iraq and—because of our actions there, arguably—the people who are still losing their lives.
This is an incredibly serious Question and the point that I put to the Minister is that in recent debates about other matters—for example, the police and, indeed, the conduct of Members of this House—the Government reassured us about the importance of the public having confidence in public inquiries, not just inquiries where people are investigating themselves, about which they are all very genuinely worried, but particularly inquiries that concern decisions that cost many people their lives.
I very much look forward to the Minister’s answers because this is a very pressing Question. The point that I put to him is that the public are mystified by what they fear are people covering their backs—by tins of whitewash possibly being opened. Perhaps this is not the case—I would like to think that it is not—but the public need that reassurance and one thing that will reassure them is to stop the shilly-shallying and get this report published.
Lord Owen (Ind SD)
My Lords, I will raise some of the issues that are going to face Parliament when this report is published, but first I will deal with the question of if this report gets delayed until next year, which now looks very likely, the appropriate way of determining when it should be published in relation to a general election. It would be naive to believe that in the immediate run-up to a general election there will be the sort of objective evaluation of the report that we have every right to do and the inquiry has every right to expect.
I have written to the chairman of the Electoral Commission, which is in my view the only real body that could objectively have a look at this, take the views of the different parties and come to a conclusion, and let the inquiry committee know before Christmas what its feeling is. Obviously, if it is published this year, that is fine, but since, because of fixed-term Parliaments, we know the election date, it would be very ill advised for it to go beyond January or the middle of February. It would be better, after we have waited all this time, to wait until after the general election.
I approach this from the viewpoint of the Suez crisis, which was one of the most emotional experiences that I went through as an 18 year-old. I have always believed that it was a terrible mistake not to have an inquiry into the Suez crisis. We would have learnt things from the handling of that crisis which would have been given greater weight in the counsels of government during the Iraq war. Then there is the question of how you treat the Cabinet in a time of war as distinct from Parliament. We know it is not possible to say everything to the general public in the run-up to a war, but I believe it is essential, if the authority of the Prime Minister is such that they have the prerogative to declare war, to understand that, provided they speak for the Cabinet, there is no way any Prime Minister can go to war in a minority in their own Cabinet. Therefore, the Cabinet discussions are extremely important.
The other thing which is troubling most of us is the fact that the Commission stopped taking evidence over three years ago. This is the real issue and if it is postponed into next year it will be close to four years. This is an intolerable delay and we have to determine how this matter can be resolved in future. It is very difficult for the Prime Minister of a different party to make a determination about a document which basically relates to another Administration. So it has been decided to involve the Cabinet Secretary, but if you are the Prime Minister’s Private Secretary during all this crucial time from 9/11 until 2003, you ought to recuse yourself from making these decisions, or at least when it becomes a matter of such controversy you should bow out and find another person to deal with the issue. This is particularly important since this Cabinet Secretary is almost a new creation. Normally Cabinet Secretaries come to this position having been senior civil servants in major departments. Although they are often Private Secretaries to a Prime Minister as part of their overall experience, which is very helpful to them, they are not in the rough and tumble of party politics. The present Cabinet Secretary has been Parliamentary Private Secretary to the Prime Minister for Tony Blair, Gordon Brown and now David Cameron. He has been almost constantly involved, both in government and outside government, in the party-political battle. This is not ideal. Since the job has been split, the present Cabinet Secretary having declined to act as head of the Civil Service, it would have been better for the head of the Civil Service to be the arbiter of this, or even the Lord Chancellor, as has been done on official secrets issues. I know the role of Lord Chancellor has changed, but some mechanism is necessary.
The other most troubling aspect about Sir John Chilcot’s letter to the Prime Minister was that it revealed that new information has been given to the committee only this summer—information that fills in gaps. What is the role of Parliament? It seems to me that one of the Select Committees, probably the House of Commons Administration Committee, should now look at why there has been this delay and come to some conclusions. It is no use leaving it until afterwards. But now that there is obviously a gap of four or five months, it should take a look at the administrative aspects, find out whether in future it is tolerable for a Cabinet Secretary to be the sole arbiter of this, and have some idea as to how much a Government, a civil servant and a Cabinet Secretary are obligated to follow the terms of reference and the explanation given by the Prime Minister.
When he was Prime Minister, Gordon Brown made it quite clear that all British documents would be made available to this committee. The record made by British civil servants of a British Prime Minister talking to the President of the United States is a British document. There should be no argument about that. Of course, if the exchange is taking place on the telephone, it is not reasonable to expect that an American President’s words in this conversation would be reported. It would be inappropriate and I do not believe anybody has asked for that. The Cabinet Secretary said that former Prime Minister Tony Blair has had no involvement in this delay. We are then told that the delay has come from America. Who is the person in America who is going to delay it other than former President Bush? It is not a matter for President Obama—again, it is difficult for him to comment. It beggars belief that former President Bush in his decision-making is not totally uninterested in, or unaware of, the views of former Prime Minister Blair.
This whole arrangement has been shown to be so damaging that it has already gravely damaged the credibility of the inquiry report. We need then to look again as a Parliament at how these public inquiries will be held in the future. They are a safety valve. The way in which the Cabinet Secretary has handled it, and the comments that seem have to been made, suggest that there is no understanding that a very serious situation has occurred that is far worse than was the case with Suez. This Iraq inquiry is probing into many things. I happen to agree that it would be a very good idea to probe economic sanctions. Economic sanctions ought to have brought the Saddam Hussein regime to account. After all, it was the intervention in 1991 that stopped the so-called turkey shoot, when an immense number of casualties were being made from firing on the troops as Saddam Hussein came back from Kuwait. A ceasefire was done under the authority of the United Nations. It was the breaches of those resolutions that were passed in the immediate aftermath that had been so serious. I shall not go into the merits or otherwise of the issue—we can discuss that.
There are aspects of this report which are bound to be parliamentary. The first of those will be: was Parliament told the truth? I happened to be in this Chamber in 2007 when the noble Lord, Lord Butler, who was in charge of the review of intelligence, stood up and read out a document, so these were calculated words, in which he accused the former Prime Minister of being “disingenuous”—we know what that word means outside this Chamber; it is the furthest that you can go to accuse the Prime Minister of lying—over the interpretation of the intelligence. I do not care whether the Prime Minister thought something—they were entirely his views—but, once he quotes the intelligence to Parliament, then that quotation has got to be accurate.
The Chilcot inquiry has already looked very carefully at this in terms of the foreword to the document on which much of the debate in Parliament was held, and one can take one’s own conclusions from those reports. Therefore, Parliament needs to have a procedure. We all know what happens with these reports. They are looked at 24 hours beforehand by the people who are criticised; there is great press briefing and distortion of the document; and most people find it very difficult to form a judgment on day one. I suggest that Parliament decides now that it will not have an immediate debate—letting the report be read for a fortnight or three weeks—but that it will ask a committee of the House to look at those aspects which relate to Parliament. Was Parliament misled? Was there a “disingenuous” interpretation of the intelligence? Did we know the full facts in Parliament before that debate? One draws on the report, but it is a parliamentary matter of great importance.
We rightly take very seriously perjury before a court, and many of us who have been in both Houses of Parliament take seriously a lie to the House of Commons. People forget that, in December 1956, it was because Sir Anthony Eden misled the House that it was inevitable that he would have to resign. When he said that there had been no prior sharing of knowledge with Israel and France over the so-called interposition of the British and other forces, that was known by then to be untruthful and it made it inevitable that he would have to resign very soon. In fact, he never came back to Parliament and resigned. I happen to believe that there were medical reasons why one needs to rather charitable in looking at Anthony Eden’s conduct over this whole thing; he was a sick man through most of it. However, that does not in any way diminish the fact that probity before Parliament is an essential question and one that we must face up to. In my view, contempt of Parliament is every bit as important as contempt of court.
Lord Pearson of Rannoch (UKIP)
My Lords, I rise not to make a speech in the gap but simply to ask the Minister whether he would care to comment on rumours that I have heard from friends in the Washington community to the effect that, before action started on the ground, we knew that the famous weapons of mass destruction were in fact in bottles and already in Syria. Would the Minister care to comment on that as part of the information to which the noble Lord, Lord Owen, and others have referred?
Lord Morgan (Lab)
My Lords, I think that the Chilcot inquiry is of such a nature that too much should not be expected of it. Many of the main issues confronting the inquiry were legal; the resignation of Elizabeth Wilmshurst from the Foreign Office was, I recall, on the legality of the Iraq operation. The Netherlands inquiry consisted entirely of lawyers and dealt very thoroughly with the issues. The Chilcot inquiry does not have a single lawyer. It has a couple of historians, which is a good thing, but not a single lawyer. We have been told—among others, by the late Lord Bingham—that the invasion was in clear breach of international law.
Why is the delay so crucial and worrying? First, because the inquiry explores the operation of government—indeed, the operation of government is a major reason for the delay. How could government so malfunction? How could the Cabinet be kept in almost total ignorance? How could the advice of the Attorney-General be so ambiguous and change from week to week? How could the security committee operate in such a way and briefly be chaired, incredibly, by Alastair Campbell? How could the Prime Minister arrogate such overwhelming power? How could he get away with such astonishing mis-statements, including the fact that it had all been agreed with Bush in Crawford a year before yet he pretended that it had not? Those things are very dangerous and should be explored. All serious students of the constitution—of whom I consider myself to be one—should consider them.
Secondly, how could perceptions of policy in the Middle East be so utterly wrong? How could the internal politics and history of Iraq be so misread? How could anyone seriously believe that the British and American invaders would be greeted as democratic saviours, not as brutal invaders killing hundreds of thousands of civilians in their wake? How contemptible a line of logic is that? How could so few preparations be made for the aftermath of the war? We are now seeing the effect in the ISIS militias operating in Iraq. How could people seriously believe that Iraq had its own integrity and that the Government of al-Maliki could be credible? The country of Iraq is now fragmenting into at least three parts. My noble friend rightly said that journalists should be well informed, and I rely heavily on my good friend—I think, the best journalist in Iraq—Patrick Cockburn of the Independent, who has shredded so many of the arguments in this area.
Iraq is a shameful episode. The moral was learnt by some in Syria. It was perhaps learnt the second time around in Iraq. It generated enormous popular protest, as the noble Lord, Lord Dykes, observed. I took part in the march, the greatest statement of popular opposition, popular protest, since the time of the chartists. I also wrote in the Guardian, which I heard get some praise in the opening speech. It was a debacle comparable to Suez, as we have heard. Suez marked the end of empire; Iraq, I think, marked the end of British foreign policy. Our legacy has been shredded in Syria, Libya, and Iraq as well, and there is nothing left.
It raises, finally, the problem of democratic control and, indeed, the role of Parliament, of which the noble Lord, Lord Owen, spoke. The issue of democratic control of foreign policy was first raised during the First World War—we will not hear much of that in the commemorations. We now need democratic control by Parliament to be explored in order to make sure that it never happens again. Michael Foot, of whom I once wrote, talked about the Guilty Men in relation to Munich and appeasement. This time we need to expose and bring to justice these latest guilty men.
Baroness Morgan of Ely (Lab)
I thank the noble Lord, Lord Dykes, for securing this debate. This is not the first time this year that we in this House have discussed the delay to the Chilcot report. We had a comprehensive and detailed discussion in this Chamber in February, initiated by my noble and learned friend Lord Morris, who is very sorry that he could not be with us today. Since then there has been an agreement, in May this year, whether right or wrong, about what the inquiry is able to publish in terms of correspondence between No. 10 and the White House.
At the outset it is worth recalling that we are not here today to debate the substantive issues that the Chilcot inquiry is addressing. We will, I am sure, have an opportunity to do that when it is published and it is probably worth pondering the proposal of the noble Lord, Lord Owen, that we need some time to digest it before we look at it in detail. Whatever the rights and wrongs of the Iraq invasion, it is worth recalling that it was a Labour Government under Gordon Brown that initiated the Chilcot inquiry in 2009—a public inquiry into the nation’s role in the Iraq war. The report will cover the run-up to the conflict, and it will be interesting to see if it picks up on some of the issues that my noble friend Lord Campbell-Savours talked about. It will look at the subsequent military action and its aftermath, and establish the ways in which decisions were made. It will examine what happened and try to identify lessons to ensure that, in a similar situation in future, the British Government are equipped to respond in the most effective manner in the best interests of the country.
It is important to make clear that the Labour Party continues to support publication at the earliest opportunity. Four and a half years on—it has already been four years—it is difficult to explain or understand the prolonged amount of time it has taken to complete. It is worth noting that the previous Labour Government made it clear that the inquiry would begin only once all combat troops had left Iraq, so as not to undermine their role there. As soon as the troops were home, in July 2009, the Labour Government allowed the inquiry to begin and we still believe, particularly in the light of recent developments in the region, that we need to identify the lessons that can be learnt from the conflict.
The delays in the publication of the inquiry’s findings have caused a lot of concern. It is worth taking into account the comments of the noble Lord, Lord Owen, about the need to consider carefully the possible delay of publication until after an election if it is not published this year. However, we also appreciate the vast scope of the report, both in terms of the period it covers and the range of issues that it seeks to address. The committee has faced a huge task and we hope that it will therefore be able to finish its work without undue delay and to submit the final report to the Prime Minister at the earliest opportunity, ideally before the end of this year. Tony Blair himself said in May this year:
“I have got as much interest as anyone in seeing the inquiry publish its findings”.
My understanding is that the blockage has been caused by discussions over certain classified documents, particularly those relating to correspondence with the US President. Members of the inquiry team have had access to and sight of this information; they are all privy counsellors and have had access to thousands of documents that have been declassified from a number of government departments, including the most sensitive intelligence documents. My understanding, therefore, is that Gordon Brown’s promise at the start of this inquiry that:
“No British document and no British witness will be beyond the scope of the inquiry”.—[Official Report, Commons, 15/6/09; col. 23.]
has been honoured. The question, therefore, is how much of this can be published and quoted in the final report to give evidential support to the inquiry’s conclusions.
It is also relevant in terms of the so-called Maxwellisation principle. That principle allows those named in the report to have the right to reply, which means that they will be allowed to see those elements of the report but only the evidence that is allowed to be published. I would be grateful if the Minister could let us know whether the final Maxwellisation letters have been sent and how much time people will be given to respond.
On 28 May this year, Sir John Chilcot wrote to Sir Jeremy Heywood, confirming that the inquiry has judged that the disclosure of quotes of gists from the content of communications between the Prime Minister and the President of the United States will be sufficient to explain the inquiry’s conclusions. We will be asked to take on trust that the inquiry members have read this information and that its conclusions will be based on what they have read. We need to be sensitive to the fact that the USA, one of our closest allies, may deal with us differently in future if it believes that any future correspondence or conversations can be put into the public domain at a later date. We are party to certain confidences and have been trusted to protect those confidences. There are therefore questions about what is a reasonable timeframe for us to disclose things which affect our closest allies. Apart from this, if anyone looks at the Chilcot website they will see reams of documents that can be analysed and digested. There has been quite an open process, apart from that one aspect.
It is essential that we get to the bottom of how and why we went to war in order to learn from our mistakes. Even the most cursory glance at the region today leads us to conclude that post-war preparation was ill conceived and ill prepared. We need to consider whether we can learn anything in terms of the conditions prior to any future intervention. How and to what extent should we take a lead or work with coalition partners in future, and how much influence do we have with them? Can the Minister therefore give an assurance that the Chilcot report will be published, at the very latest, by the end of this year?
Lord Wallace of Saltaire (LD)
My Lords, I thank noble Lords for their various contributions to this debate. The Government are also disappointed and frustrated that it has taken a good deal longer than we—or the Labour Government, which set up the inquiry—had originally hoped to complete the exercise. However, let me stress the exceptional nature of this inquiry.
I entirely welcome and agree with the emphasis of the noble Baroness, Lady Morgan of Ely, on this not being a matter of partisan debate between the parties. We need to get at what went wrong and the constitutional implications of what happened. We therefore want to keep this out of the election campaign, so far as we can. The sort of timings which the noble Lord, Lord Owen, suggested are well understood in government, in terms of not getting too caught up in the pre-election atmosphere.
Let me remind all noble Lords of where we started. The Chilcot inquiry was announced in June 2009 to identify the lessons that can be learnt from the Iraq conflict and the occupation which followed. It has looked at the UK’s involvement in Iraq in the period from the summer of 2001—at the time that the Prime Minister, Gordon Brown, announced the inquiry, that was some eight years previously and it is still less than 13 years away—to the end of July 2009, which is now some five years past. The inquiry embraces the run-up to conflict, the military action and its aftermath and the way that decisions were taken and it aims to establish as accurately as possible what happened to identify lessons to be learnt.
We have not previously published documents less than 30 years ahead, except in the most exceptional circumstances. Part of the delay and part of what has been going on is the product of having agreed that we will publish documents relating to recent events and referring to people who are still in active political life. That is part of the exceptional circumstances in which we are working.
Since 2009, the inquiry has taken evidence from more than 150 witnesses; it has travelled to Baghdad and Arbil for discussions with Iraqi politicians; to Washington to meet officials from the United States Government; to France to talk to French officials; it has met the families of British personnel killed in Iraq; and has read more than 100,000 UK Government documents. When Gordon Brown announced the inquiry in the House of Commons, he said that the committee would have access to the fullest range of papers, including secret information, and, as the noble Baroness has quoted, that,
“No British document and no British witness will be beyond the scope of the inquiry”.—[Official Report, Commons, 15/6/09; col. 23.]
It takes a long time to work through 100,000 documents, to consider where there are sensitive issues remaining and, in the process, incidentally, to consider a number of other documents which had not been provided to the inquiry. These are the supplementary ones which were discovered and have been provided in recent months. The inquiry is examining difficult and complex issues. The inquiry has estimated, it has told us, that its final report will be more than 1 million words.
The Sunday Telegraph remarked that the rate of spending had increased over the past two to three months. That is partly because the website has been revamped and expanded in order to cope with the amount of information which will be downloaded on to the website as it is published. It is a part of the preparation for publication.
As part of the process of drafting the report, the inquiry has sought the declassification of material from many thousands of documents from the Government. It says in my brief that this is absolutely unprecedented. If there is any comparison it would be the Saville inquiry in Northern Ireland, which also took a great deal longer than had been hoped, partly because the complexities it raised were much more difficult than had been understood fully at the beginning. As Sir John Chilcot has acknowledged, the process is labour intensive for both the Government and the inquiry. He said in November last year that he was grateful for the work done by departmental teams to deal with the disclosure of documents.
I hope that noble Lords have seen the letter of 28 May from Sir John Chilcot to Sir Jeremy Heywood as Cabinet Secretary, published on the website the following day, that agreement had been reached on the principles underpinning disclosure of material from Cabinet level discussions and communications between the UK Prime Minister and the President of the United States which the inquiry has asked to use in its report. My understanding is that most of the work on the 200 UK Cabinet meetings from which extracts will be provided has now been completed and that the inquiry is now working on the UK-US documents.
Again I have to stress that we regret that it has taken so much time, but we also recognise the sheer complexity of what the inquiry is working on. I have talked to a number of the Cabinet Office people assisting the inquiry and I am impressed by the pace at which they are now working and the hopes that they have that we are now within sight of the end.
The answer on the Maxwellisation process, which comes next, is that the second letters have not yet gone out but we hope to send them out within the near future. The Maxwellisation process will then take, we hope, a matter of weeks rather than months. The Prime Minister has stated clearly that it is his hope that the inquiry will be able to provide a report before the end of the year.
Lord Tyler (LD)
Will my noble friend specifically address the important point made by the noble Lord, Lord Owen? I recall very well, as a Member of the other place during the time—I am not sure whether any of my colleagues are here—the very specific information given to the House of Commons in preparation for that vital debate and vote. Will my noble friend give the House an explicit assurance that there will be careful consideration by the Government of precisely how we as a Parliament are going to look at the parliamentary implications of the Chilcot report? In that connection, it would be intolerable for the end of this Parliament to come before we yet had sight of the Chilcot report and its recommendations.
Lord Wallace of Saltaire
I understand fully what the noble Lord says and indeed what the noble Lord, Lord Owen, has said. I stress that this is an independent inquiry that the Government have stood back from, so the Government do not control what is happening in it. However, I entirely understand that when it is published it will be for Parliament, and a number of parliamentary committees, to take on board how much information was given and what the implications are for further information from the agencies and other aspects of government. That will be part of the follow-on to publication.
Lord Dykes
The noble Baroness was rightly concerned about the delay in Maxwellisation. My noble friend has just said that there is now a further delay in the letters going out. That seems to be excessive, bearing in mind all the delays that there have been so far. Could he explain to the House why there is this further delay?
Lord Wallace of Saltaire
The Maxwellisation process, in which those who are named in various aspects of the report are given a chance to look at those areas where they are named, depends of course on the prior decision being complete about exactly what will be used in the report. The most sensitive areas will be those that involve the minutes of Cabinet meetings and discussions with the United States. That is why you cannot go on to the Maxwellisation process until you have finalised the question of how far you are able to publish. I reassure noble Lords that my understanding is that the inquiry is trying extremely hard to publish as much as possible. This is an unprecedented expansion, lifting the traditional veil of secrecy that has covered Cabinet meetings and other such things in the past.
A number of noble Lords raised other questions. I entirely agree with the noble Lord, Lord Owen, that it was a historic mistake not to have a Suez inquiry. I would say that his remarks on the Cabinet Secretary were ungenerous. The Cabinet Secretary who was originally put in this position was of course the noble Lord, Lord O’Donnell; it was the institution of Cabinet Secretary, not the person, and “the Cabinet Secretary” includes those who assist him in the Cabinet Office. From my limited interactions with them, I have to say that they are a first-class team; it is not simply one individual.
The noble Lord, Lord Pearson, talked about rumours that he has heard in Washington. We have all heard many rumours in Washington. Since I am not privy to what is in the inquiry at present, I cannot comment on them; no doubt that will come out when the report is published.
Lord Pearson of Rannoch
Does the Minister agree that if the British and American Governments knew, before action started on the ground in Iraq, that the famous weapons of mass destruction had in fact been in bottles—they were that kind of weapon—and that they were already in Syria, that is not a fact that should be kept from the public in consideration of this matter?
Lord Wallace of Saltaire
My Lords, that is precisely the sort of thing that the inquiry will be looking at. I do not know how far it will go into the question of the evasion of sanctions in the period running up to war. Neither do I know whether the noble Lord, Lord Campbell-Savours, gave evidence to the inquiry; that is something else that might be covered.
The noble Lord, Lord Morgan, raised some large constitutional questions, which of course will be there. When the report is published, we will dive into it and draw what conclusions we can. The parliamentary vote on Syria was itself partly a reflection of the sense in Parliament that the Government were not entirely to be trusted on some of these issues.
Lord Campbell-Savours
My Lords, evidence was given on the question of sanctions. It was given by Ann Clwyd MP.
Lord Wallace of Saltaire
I thank the noble Lord for that. I hope that the inquiry may have touched in some detail on that issue.
The noble Lord, Lord Morgan, said in a very strong way that we need to expose and bring to justice the guilty men. This—as Sir John Chilcot has said on a number of occasions—is not a judicial inquiry; it is a historical inquiry intended to get at the evidence as far as possible. The question of guilt is one which perhaps a number of other people, such as the noble Lord, may wish to push once they have the evidence in front of them.
I hope that I have covered most of the issues. It is ungenerous to say that Sir John Chilcot could have been bullied by the Cabinet Secretary. He and his team have been remarkably robust on this.
Lord Berkeley of Knighton
I wish to say, not as a politician but as a member of the public, that the explanations that the Minister is giving are extraordinarily helpful—which is why this debate in the name of the noble Lord, Lord Dykes, is very useful. The more that that can be got across to the public—the complexity involved, and the secret documents—the better it will be. I still feel very strongly that we need to get there, but we all think that. It is very helpful that those matters are explained to a wider public. After all, we have a responsibility to the wider public, and we are sometimes out of touch with what they think.
Lord Wallace of Saltaire
My Lords, I should also have acknowledged the important point that the noble Lord, Lord Berkeley, made—that it is vital that we maintain and re-establish public confidence in public inquiries and in our political institutions as such. One of the biggest problems, which we all share, is the extent of public and media cynicism about the political process in this country. This inquiry is working with great care. Again, I stress that this is an independent inquiry—the Government are not in charge. The four active members of the Chilcot inquiry group are those who are responsible for what emerges, although of course a great deal of negotiation has gone on about the extent of publication. That is a very important part of ensuring that this is not in any sense a whitewashing inquiry.
On a previous occasion I was criticised by one or two noble Lords for suggesting that the Franks inquiry on the Falklands War was not entirely thorough or rigorous. I went back to the review that I had written in International Affairs on the publication of the Franks inquiry to demonstrate why I still hold that opinion. This inquiry is very thoroughgoing. It is being conducted by a number of people whom I personally trust and respect, and who are unlikely to be defenders of the “secret establishment”, so to speak. We very much hope that the report will appear before the end of the year; the Prime Minister has said that publicly. We are doing all we can—with a number of very hard-working officials, who are themselves doing all they can—to complete the final stages of the process of clearing these very difficult and delicate documents so that we can send out the second stages of the Maxwellisation process to those who will be named in the report. We will then move on from that to the presentation of the report to the Prime Minister and, we hope, to publication as soon as possible.
Lord Desai (Lab)
My Lords, given the complexity of the process and the point that the noble Lord, Lord Owen, made, that we should not publish it in the new year, would it not be best to wait until after the election, when a Labour Government are in power?
Lord Wallace of Saltaire
My Lords, we want to publish as soon as we can, and before we descend into the election campaign.
Lord Judd (Lab)
My Lords, the Minister is, above all, an honourable man—of that I am totally convinced. Will he give the House an unequivocal assurance that no Government of whom he is a part will allow the publication date to become part of political tactics in the run-up to the general election?
Lord Wallace of Saltaire
My Lords, we have already agreed that the Government are well aware that it is highly undesirable that publication should run into the election campaign. I stated clearly that I share the views of the noble Lord, Lord Owen, on what that means as regards publication. That is part of the context in which we are operating.