House of Commons

Wednesday 16th July 2014 Commons Chamber

Wednesday 16 July 2014

The House met at half-past Eleven o’clock

Prayers

Wednesday 16th July 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 16th July 2014 Commons Chamber

The Secretary of State was asked—

[David Mowat (Warrington South) (Con)]

1. What assessment she has made of the value for money of the Saville inquiry.

[The Parliamentary Under-Secretary of State for Northern Ireland (Dr Andrew Murrison)]

When the previous Government set up the tribunal in 1998 to investigate the tragic events of 30 January 1972, no one could have anticipated that it would take 12 years to complete and cost more than £191 million. The inquiry produced the definitive account of the tragic events of that day, the value of which is very clear.

[David Mowat]

I thank the Minister for that answer. One hundred and ninety-one million pounds would have paid for 10,000 nurses for a year or, indeed, transformed a large part of the economy of Northern Ireland. It is clear that the Government completely failed to control the costs. Can the Minister confirm that never again will an inquiry be set up with no attempt whatever to control costs and that the relevant civil servants understand that as well?

[Dr Murrison]

Notwithstanding my remarks about the value of the inquiry, the Government have been clear that although each case will be considered on its merits, we should indeed resist further costly, open-ended inquiries. I note that the Inquiries Act 2005 will help in that regard.

[Mr Gregory Campbell (East Londonderry) (DUP)]

May I welcome the Minister to his new position? Does he agree that the taxpayer is still paying for the ongoing costs of the Saville inquiry—as a reply I received from the Secretary of State in the past few weeks made clear—10 years after the last witness left the stand and after the £191 million was expended?

[Dr Murrison]

Yes, I can only say that the Saville inquiry was set up under the previous Administration, under rules that existed at that time, and that Lord Saville was given free rein—rightly—in his independent inquiry. The hon. Gentleman is right to say that, so many years after this began, the costs are still coming in. Nevertheless, the value of the Saville inquiry is clear, and we need to understand that.

[Naomi Long (Belfast East) (Alliance)]

May I welcome the Minister to his new role? In order to deal with the issues of the past in a more comprehensive way, we obviously require some momentum to take the discussions between the parties in Northern Ireland forward. What role will the Northern Ireland Office play in trying to bring parties back together, when some have walked away from the challenge of dealing with the past in a comprehensive manner?

[Dr Murrison]

The hon. Lady is absolutely right that a long-term peaceful settlement relies entirely on co-operation between the parties. The Northern Ireland Office has done, and will continue to do, everything in its power to bring the parties together so that we can ensure a peaceful and prosperous future for the people of Northern Ireland.

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

2. What recent assessment she has made of the outlook for the Northern Ireland economy.

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

Figures released this morning show that the claimant count fell by 900 in June, the 18th consecutive month it has fallen in Northern Ireland. Economic commentators have forecast growth of 2.8% this year—more than many major economies around the world. The Government’s long-term economic plan is working in Northern Ireland.

[Andrew Selous]

Does the Secretary of State agree that in order to attract further inward investment to Northern Ireland, we need to project an image to the world of peace and stability? In that vein, does she further agree that the recent peaceful passing of the twelfth of July celebrations gives us hope for the future and is something we can build on?

[Mrs Villiers]

I agree with my hon. Friend. The fact that there was a peaceful twelfth of July is an important step forward for Northern Ireland. It has been rare over recent decades that one can say that the twelfth of July weekend has been entirely peaceful. I commend the efforts made by Unionist leaders from a range of parties and the Orange Order—and, indeed, by nationalists as well—to keep the situation calm, despite the distress and upset caused by the Parades Commission determination.

[David Simpson (Upper Bann) (DUP)]

Will the Secretary of State join me in congratulating companies in Northern Ireland that have recently announced major investment? The Moy Park organisation, the Almac corporation and Thompson Aero Seating have invested tens of millions of pounds in the economy, creating hundreds of new jobs?

[Mrs Villiers]

I will join the hon. Gentleman in that. We have had a hugely successful month for inward investment over June and July. I am sure that everyone who watched the World cup saw the Moy Park adverts, demonstrating that Moy Park is a world beater. That company alone announced 628 jobs in Dungannon, Craigavon and Ballymena. We have had further good news, with jobs announcements from Alexander Mann Solutions, HeartSine Technologies, Wrightbus, Thales, First Derivatives and, of course, Thompson Aero Seating.

[Mr Philip Hollobone (Kettering) (Con)]

In balancing the Northern Ireland economy away from its over-reliance on the public sector, what are the prospects for rapid growth in the digital information services sector in the Province?

[Mrs Villiers]

I think there is great scope for growth in this area. The Digital Derry initiative is one that immediately springs to mind, but I believe that the strength of Northern Ireland’s creative industries also opens up great opportunities for success in the digital media world. A number of software companies have had great success in Northern Ireland, which is now ranked by the Financial Times as one of the best places in the world for financial services technology investment.

[Mark Durkan (Foyle) (SDLP)]

11. Some four years into this Government, we had the announcement this year of the first pilot enterprise zone in Northern Ireland. When does the Secretary of State believe that we might be able to have further enterprise zones, and is she open to the idea of working with the Irish Government and the Executive to have a cross-border enterprise zone in the north-west?

[Mrs Villiers]

We are certainly open to discussions with the Irish Government about cross-border initiatives to boost the economy, which could well include enterprise zones. Our report back on the Government’s economic pact with the Northern Ireland Executive made it clear that the Treasury is prepared to discuss the possibility, subject to affordability, of additional enterprise zones in Northern Ireland, and I think it would be great if those discussions went forward.

[Mr Ivan Lewis (Bury South) (Lab)]

I welcome the Under-Secretary of State for Northern Ireland, the hon. Member for South West Wiltshire (Dr Murrison) to his new role and thank the right hon. Member for South Leicestershire (Mr Robathan) for his contribution during his period as a Northern Ireland Minister.

The Secretary of State will be aware of the economic impact that parade-related disorder has had in the past on local shops and businesses in Northern Ireland. Does she therefore agree with me that the leadership shown over the weekend, both by political leaders in all communities and the Orange Order, demonstrates what can be achieved if local leadership is shown at its best in Northern Ireland?

[Mrs Villiers]

I agree, and I think the hon. Gentleman puts the point very well. Sadly over recent years, we have seen a number of instances of public disorder in Northern Ireland, but the weekend shows that that is not inevitable and that if leadership is demonstrated, people on the streets will hear it. As hon. Members have said, it is crucial for Parades Commission determinations to be respected and that we do not have public disorder because those kinds of incidents cause great damage to Northern Ireland’s reputation abroad and make it harder to attract the inward investment we are discussing.

[Mr Lewis]

The Secretary of State is also aware that unresolved issues around parades will continue to have an economic as well as social cost. Will she therefore indicate how she intends to respond to the First Minister’s request for a commission on Ardoyne and wider associated issues, and what she is going to do to strengthen confidence in the downgraded Parades Commission, which she established with undue haste and with fewer resources than its predecessor?

[Mrs Villiers]

I can assure the shadow Secretary of State that the Parades Commission has not been downgraded. In response to his question about Unionist leaders’ proposal for a commission on the situation relating to the Crumlin road in north Belfast, I will meet those leaders in a few days’ time to discuss those proposals. I will listen carefully to what they have in mind. It is, of course, important for any way forward to take account of the position of the Parades Commission and to do nothing to undermine its responsibilities.

[Mr David Hanson (Delyn) (Lab)]

3. What recent discussions she has had about the security situation in Northern Ireland; and if she will make a statement.

[Mrs Mary Glindon (North Tyneside) (Lab)]

4. What recent discussions she has had about the security situation in Northern Ireland; and if she will make a statement.

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

The threat level in Northern Ireland remains severe, with persistent planning and targeting by terrorist groupings. However, action by the Police Service of Northern Ireland and its partners continues to keep the pressure on these terrorist groups, with significant arrests and charges over recent months.

[Mr Hanson]

Instability in the Northern Ireland security system continues to be fuelled by organised crime and criminal activity. I therefore ask the Secretary of State this question again. Royal Assent for the National Crime Agency was achieved on 13 April 2013, so what steps has she taken since the last Northern Ireland questions to ensure that the NCA operates in Northern Ireland?

[Mrs Villiers]

I can assure the right hon. Gentleman that I have raised this repeatedly with political parties in Northern Ireland. If we are to give the people of Northern Ireland the same protection against organised crime as is currently the case in Great Britain, I believe it essential that the National Crime Agency is given its full powers of operation in Northern Ireland. I am working with Keith Bristow, the Home Secretary and Justice Ministers to do all we can to build a consensus for the introduction of full powers for the National Crime Agency.

[Mrs Glindon]

Question 4, Mr Speaker.

[Mr Speaker]

The question is grouped, so the hon. Lady need not hold her fire; let us hear it.

[Mrs Glindon]

I apologise, Mr Speaker.

While this year’s parade season has been relatively peaceful, the PSNI is experiencing a budgetary shortfall and does not have the requisite number of officers. What can the Secretary of State do to enable it to fund sufficient police numbers to ensure that there is continued peace and security?

[Mrs Villiers]

The Government have stepped in, providing an additional £231 million to support the PSNI’s efforts in regard to national security matters. That will help across the board, assisting community policing as well. It is, however, of grave concern that the failure of Sinn Féin and the SDLP to agree on welfare reform is having an impact on the budgets of other Departments in the Northern Ireland Executive, and, sadly, that includes the PSNI.

[Mr Andrew Robathan (South Leicestershire) (Con)]

With your indulgence, Mr Speaker, let me first commend my right hon. Friend for her excellent work to secure peace and prosperity for all the people of Northern Ireland.

My right hon. Friend may recall that about three weeks ago I visited south Armagh, where is little security and where criminality runs rife despite the PSNI’s best efforts. We need the National Crime Agency in south Armagh, and in Northern Ireland as a whole. Will my right hon. Friend please put pressure on the good people of the SDLP, who are opposing that, and on Sinn Féin, which has been subsidised in the past by the very terrorists who are still running the criminality in Northern Ireland?

[Mrs Villiers]

I warmly commend my hon. Friend for all the brilliant work that he did in Northern Ireland. I also warmly welcome his successor as Under-Secretary of State for Northern Ireland, my hon. Friend the Member for South West Wiltshire (Dr Murrison).

I agree that NCA capability in Northern Ireland is crucial. Only recently I had a conversation with Keith Bristow, the head of the NCA, who commented that a major child protection operation had been inhibited in Northern Ireland. The NCA had had to ask the PSNI to carry out work that was being carried out by the NCA everywhere else in the United Kingdom. That put further pressure on PSNI resources, which need not happen.

[Mr Henry Bellingham (North West Norfolk) (Con)]

12. Does the Secretary of State agree that close co-operation between the PSNI and the Garda Síochána is essential? Does she share my optimism that the leadership of the guards is now more proactive and imaginative when it comes to closer working with its opposite number in the north?

[Mrs Villiers]

My hon. Friend is right. The working relationship between the Garda and the PSNI is crucial to the combating of both terrorism and cross-border organised crime. As recently as May, the Garda made major arrests in relation to terrorism offences, and in a number of instances plots have been frustrated and arrests have been made as a result of a working relationship between the Garda and the PSNI that is better than it has ever been before.

[Mr Nigel Dodds (Belfast North) (DUP)]

Will the Secretary of State reiterate her commendation of leaders of the north Belfast community, political leaders at all levels, and the Orange institution for having devoted many hours of work to ensuring that the twelfth of July passed peacefully, despite provocation and republican threats of violence? Will she now recognise that this issue is not going to go away, and that she and the Minister need to make every effort to ensure that a solution is found?

[Mrs Villiers]

I agree with the right hon. Gentleman, and I repeat my commendation of the efforts that have been made. I know that those efforts were assiduous, and that they involved many conversations with people on the ground. I think that had it not been for the efforts made by the leaders of Unionist political parties, by Members of Parliament such as the right hon. Gentleman, and by the Orange Order itself, the situation on the twelfth of July would have been very different. The determinations of the Parades Commission must always be obeyed, and those who disagree with them must find a peaceful and lawful way in which to express their concern.

[Mr Dodds]

I warmly welcome the Secretary of State’s undertaking to look carefully at the Unionist leaders’ proposal for a commission of inquiry, and to consider all practical options to resolve the situation in north Belfast. Does she accept that respect for, and tolerance of, both traditions is at the heart of that? If a shared future is to be meaningful in Northern Ireland, it must mean sharing space as well.

[Mrs Villiers]

I agree. I believe that what is happening in Northern Ireland illustrates that it is possible to enable loyal order parades to take place peacefully and without problems, often in areas with a predominantly nationalist population. There are many examples of that, but Derry/Londonderry is frequently cited. It is possible to enable people to express their culture in an atmosphere of mutual respect and understanding, and I recognise that that is an important goal in north Belfast.

[Andrew Rosindell (Romford) (Con)]

13. In the light of the recent incident involving two petrol bombs being thrown at Willowfield police station in east Belfast, what steps is the Secretary of State taking to ensure local police officers are given sufficient safeguards against extremist acts?

[Mrs Villiers]

Of course that was a disgraceful attack, as was the shooting attack on a G4S vehicle involved in tagging offenders. PSNI officers subject themselves to risk every day. The terrorist threat continues to be lethal and is predominantly focused on police and prison officers. That is one of the reasons why this Government acted to provide an additional £231 million of funding to help the PSNI fight terrorists and maintain the safety of its officers.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

10. Can the Secretary of State confirm that an independent arbitration body is absolutely necessary to arbitrate the contentious parades, and will she confirm that the Parades Commission is the law and that those who want to support law and order must support the Parades Commission rulings, even if they disagree with the detail of a decision?

[Mrs Villiers]

Yes I can. The Parades Commission is the lawfully constituted authority. Its determinations have the force of law. They must be obeyed and I welcome the huge efforts made over the weekend to ensure the determination in north Belfast was obeyed. I am afraid that I think we always will need some form of body to adjudicate parades where there is no local agreement, but I hope in all cases as much effort as possible is made to try to reach local agreement so there is not a further need for a determination.

[Stephen Pound (Ealing North) (Lab)]

I, too, welcome the Minister—my fourth—the hon. Member for South West Wiltshire (Dr Murrison) to his position, but I confess myself saddened by the Government’s decision to downgrade the post from Minister of State. I hope this is not indicative of any diminution in the Government’s commitment to the proud people of Northern Ireland. I would also say that those on my Front Bench need be under no duty to emulate that.

While the whole House will pay tribute to outgoing Chief Constable Matt Baggott—and I hope I speak for everyone—the Secretary of State will shortly be meeting the new Chief Constable. What are the strategic priorities she will wish to establish with the new Chief Constable?

[Mrs Villiers]

I have met the new Chief Constable on a number of occasions. I commend him and his officers on the work they did over the twelfth of July. I am sure his strategic priorities will continue to be countering the lethal terrorist threat from dissident republicans, keeping Northern Ireland safe and secure from that threat, and also being absolutely serious and determined in providing community policing as close to the community as possible and cracking down on organised criminals in cities in Northern Ireland.

[Glyn Davies (Montgomeryshire) (Con)]

6. What recent representations she has received on levels of inward investment into Northern Ireland; and if she will make a statement.

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

I regularly discuss inward investment with Northern Ireland Executive Ministers, including at the recent meeting between the Prime Minister and the First and Deputy First Ministers.

[Glyn Davies]

Some 16,000 new employee jobs were created in Northern Ireland over the last year, the vast majority of them in the private sector. As we see in Wales, so we can see in Northern Ireland that the Government’s economic strategies are working well. What plans does my right hon. Friend have for building on this success, particularly through Invest Northern Ireland, to ensure that it continues into the future?

[Mrs Villiers]

The Government are working closely with the Northern Ireland Executive on economic matters. Following the economic pact we signed last year, we have recently published an update demonstrating achievements on improved lending to small businesses—that is up 46% on last year—and we have got the enterprise zone set up, and access to finance initiatives from the business bank are also helping to restart the economy in Northern Ireland. Securing 100% assisted area status for Northern Ireland is also hugely helpful to Invest NI in attracting inward investment.

[Sammy Wilson (East Antrim) (DUP)]

The economic package agreed between the Prime Minister and the Northern Ireland Executive is now a year old. It was designed to rebalance the economy. What specific measures in that package have now been implemented that will assist in attracting inward investment, dealing with youth unemployment and rebalancing the economy?

[Mrs Villiers]

There are some which I just mentioned; the specific inward investment conference attended by the Prime Minister, which prompted 800 new jobs at Convergys and EY; the banking transparency measures, which were a specific ask of the business community—we now have details of lending to small and medium-sized enterprises published for the first time in Northern Ireland; the enterprise zone has been set up; we are pressing ahead with projects from the green investment bank on anaerobic digestion in parts of Northern Ireland; and we are pressing ahead with a UK-Ireland visa system, which means that business people from China and India can visit our two countries with just a single visa, thus encouraging tourism, business links and inward investment.

[Kevin Brennan (Cardiff West) (Lab)]

7. What recent discussions she has had with the Minister for Education in the Northern Ireland Executive on shared education.

[The Parliamentary Under-Secretary of State for Northern Ireland (Dr Andrew Murrison)]

My right hon. Friend the Secretary of State has had a number of discussions with the First Minister, Deputy First Minister and Northern Ireland Minister for Education on this issue. Shared education featured prominently at the recent meeting of the Prime Minister, Secretary of State, First Minister and Deputy First Minister. Through the capital borrowing provisions in the economic pact, the Government have supported a number of initiatives to promote shared education, including the Lisanelly project in Omagh. I look forward to visiting Lisanelly shortly. [Interruption.]

[Mr Speaker]

Order. There are very serious matters affecting the people of Northern Ireland, and it would be a mark of respect for the people of Northern Ireland if the questions and the answers could be heard.

[Kevin Brennan]

Thank you, Mr Speaker. I recently met the Minister for Education in Northern Ireland and the Chair of the Education Committee there, and we discussed shared education, among other things. I was listening carefully to what the Minister just said and although I would not expect him to have met the Minister for Education, can he confirm whether the Secretary of State has ever done so?

[Dr Murrison]

Yes.

[Bob Blackman (Harrow East) (Con)]

I welcome my hon. Friend to his new position. Clearly, one key issue in Northern Ireland is the future of education, so can he set out his plan for how he is going to encourage the breaking down of the divide in terms of the sectarian side of schooling in Northern Ireland?

[Dr Murrison]

My hon. Friend is absolutely right to say that it is important that we move towards shared and integrated education where the parents wish that that should happen. He will know from the pact, and from the update that is to be published shortly, that £100 million of additional borrowing has been made available as part of that pact for shared education and shared housing, both of which will be of help.

[Dr William McCrea (South Antrim) (DUP)]

When the Secretary of State meets and has further discussions with the Minister for Education in Northern Ireland, will she ask him to expedite the digging of the first sod of the Parkhall integrated college in Antrim as soon as possible, because that new build has been announced for some time, and the staff, pupils and community are anxious for the work to commence right away?

[Dr Murrison]

Through the noise I think I just about made that out, Mr Speaker. I am sure that Hansard will record it accurately and that my right hon. Friend the Secretary of State will take note of it for her next meeting with the Minister for Education.

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

8. What recent progress the Government have made on reducing youth unemployment levels in Northern Ireland.

[The Parliamentary Under-Secretary of State for Northern Ireland (Dr Andrew Murrison)]

Tackling youth unemployment remains a critical issue, but specific measures to address it in Northern Ireland are the responsibility of the Executive. The Government are reducing the largest structural deficit in UK peacetime history, and that, more than anything, will help deliver a sustainable economic recovery and so directly assist young people to get into employment.

[Ms Ritchie]

I welcome the new Minister to his position. Almost one in four young people in Northern Ireland are out of work. Many are forced to seek agency jobs on zero-hours contracts, while others are taking the path to emigration because of the downturn in the construction industry. Will the Secretary of State and the Minister have discussions with the Chancellor about the need to reduce VAT on tourism, as such a reduction would provide an opportunity for these young people to remain in Northern Ireland, working in tourism attractions and so on?

[Dr Murrison]

I am grateful to the hon. Lady for that. She will of course have seen today’s figures, which show that although youth unemployment in Northern Ireland is 20.4%—that is too high—it has dropped by 2.1% over the quarter. I am sure she will warmly welcome both that and the drop by 1% to 6.7% in the overall level of unemployment in Northern Ireland—the 18th successive drop in the claimant count. I hope she warmly welcomes that, as right hon. and hon. Members from across the House certainly will.

[Jim Shannon (Strangford) (DUP)]

Young Protestants in Northern Ireland are experiencing great difficulty in seeking employment. Will the Minister confirm the steps that the Government are taking to help those Protestant youths gain worthwhile skills, training and employment?

[Dr Murrison]

The hon. Gentleman is absolutely right. We need to work at school level and to build the number of apprenticeships in Northern Ireland to ensure that the figure to which I have referred, which remains too high—albeit fairly good in comparison with many other countries in Europe—comes down dramatically.

[Mr Speaker]

The last question relates to the commemoration of the first world war, so I hope that there will be respectful attention.

[Andrew Stephenson (Pendle) (Con)]

9. What role her Department is taking in commemorations to mark the centenary of the first world war.

[The Parliamentary Under-Secretary of State for Northern Ireland (Dr Andrew Murrison)]

The Northern Ireland Office is committed to assisting in the delivery of the Government’s programme for the first world war centenary. I pay tribute to the right hon. Member for Lagan Valley (Mr Donaldson) for his work on the Prime Minister’s advisory group. The Department is also co-ordinating closely with the Irish Government on the centenary and the wider decade of commemorations in the island of Ireland.

[Andrew Stephenson]

Earby town council in my constituency has given the freedom of the town to all world war veterans. Will the Minister join me in welcoming the initiative, and will he encourage local councils across Northern Ireland to consider doing the same?

[Dr Murrison]

I very much welcome the move of my hon. Friend’s local authority in that respect. It is absolutely right. There is great potential over this centenary period for local authorities to mark appropriately the contribution made by local people. That goes for Northern Ireland as it does for the rest of the country.

The Prime Minister was asked—

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

Q1. If he will list his official engagements for Wednesday 16 July.

[The Prime Minister (Mr David Cameron)]

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

[Mrs Lewell-Buck]

Given the Prime Minister’s commitment to equality, will he explain why 75% of his Cabinet are still men?

[The Prime Minister]

The hon. Lady is being a little bit churlish. The Government before mine had four women Cabinet Ministers and three additional women attending Cabinet. We now have five full members of Cabinet and an additional three attending, so more women are attending. I am of course leading a coalition Government, and when it comes to Conservatives sitting around the Cabinet table, I am proud to say that a third of them are now women.

[Sir Alan Haselhurst (Saffron Walden) (Con)]

Having rightly reaffirmed his confidence in the Transport Secretary, may I urge my right hon. Friend to urge the Transport Secretary to give early priority to the improvement of the railway lines serving East Anglia?

[The Prime Minister]

I am well aware of this problem and campaigns such as Norwich in 90. I know that my right hon. Friend the Transport Secretary, now backed by a larger team of Ministers in the Department for Transport, will give it his urgent attention.

[Edward Miliband (Doncaster North) (Lab)]

We have always said that we will support the Government when they do the right thing, so can I join thousands of parents across the country in congratulating the Prime Minister on getting rid of the Education Secretary? Why did he demote him?

[The Prime Minister]

Before answering the question, I hope that the whole House can come together in this way. My right hon. Friend the Member for North West Hampshire (Sir George Young) has served in this House of Commons for over 40 years and will be retiring at the next election, so when it came to replacing an extraordinary politician and someone who has given so much to this country as the Chief Whip, I wanted to find the very best candidate, and I am proud to have done so in the former Education Secretary.

[Edward Miliband]

The right hon. Gentleman obviously has a very short memory, because this is what he used to say about the former Education Secretary:

“I want to trust”—

the Education Secretary—

“to get on with that job for many years rather than saying…‘I’m now going to shove you over somewhere else.’”

So why did he do it? Is it the shortage of primary school places, the unqualified teachers, or the failure of his free schools?

[The Prime Minister]

Let me tell the right hon. Gentleman what the former Education Secretary achieved: a record number of academies, new free schools, standards rising across the country and reforms that will endure. Is it not extraordinary that on the day of a record increase in the numbers in work in our country, the right hon. Gentleman will do anything not to talk about economic recovery, the deficit falling, the economy growing or the numbers in work rising? I am not surprised that he does not want to talk about people in work; his own job looks a bit shaky.

[Edward Miliband]

I am bound to say that if it has all been such a great success, I still do not know why he has sacked the Education Secretary. Let us talk about the figures today. We have welcomed the fall in unemployment, but the Prime Minister’s real problem is that this recovery does not benefit most working people, who are working harder for longer for less. There are 7 million people in working families who are paid so little that they are in poverty. Does he think that the economy is working for them?

[The Prime Minister]

Let me bring the House up to date on the unemployment figures released this morning. We see employment up by 254,000 this quarter, women’s employment up, youth employment up and the unemployment count falling by 121,000. We have reached an important milestone, which is that there are more people in work in our country than ever before in our history. We can now say that since this Government came to office there are 1.8 million more people in work. That is a record of which we can be proud.

On an issue that the Labour leader has raised week after week, long-term youth unemployment is now lower than when this Government came to office. Of course, it is disappointing that pay is not rising faster, but let me remind him of what the director of the Institute for Fiscal Studies said:

“We’ve had a great big recession. We had the biggest recession we’ve had in 100 years; it will be astonishing if household incomes haven’t fallen and earnings haven’t fallen.”

That is what has happened, and we know who is responsible for the great economic recession because, extraordinarily, they are still in their jobs.

[Edward Miliband]

The right hon. Gentleman is in his fifth year as Prime Minister and all he can do is try to blame someone else. He just does not get it. This week, we saw shocking figures about another group suffering from the cost of living crisis: millions of young people whose earnings are falling faster than everyone else’s. One in four are living with their parents because they cannot afford to buy a house or even rent one. Does he honestly think that they are feeling the benefit of the recovery?

[The Prime Minister]

Of course we want living standards to recover faster and there are two things we need to do to make that happen. First, we need to get more people into work, and we are getting people into work. Secondly, we need to cut spending so that we can cut taxes, which is exactly what we are doing. Yesterday, Labour made the important announcement that it is now its policy to put up taxes on middle-income people. Perhaps the right hon. Gentleman can now get to his feet and tell us which taxes on which people.

[Edward Miliband]

I ask the questions and the right hon. Gentleman fails to answer them. The reality is that he has the worst record on living standards of any Prime Minister in history. There is one group—[Interruption.] Government Members are shouting “weak”. I will tell them what is weak: saying a month ago from that Dispatch Box that he is happy with his team and then sacking part of his team.

One group is feeling the benefit of the recovery. Will the Prime Minister confirm that while average pay is down £1,600 a year since the last election, last year the top 1% took home an extra £15 billion after his millionaires’ tax cut?

[The Prime Minister]

I have to say that I am happy with my team and, looking at the shadow Chancellor, I am pretty happy with the right hon. Gentleman’s team too. Let me explain one of the things that was not noticed that happened yesterday. The deputy leader of the Labour party said on the radio, and I want to quote her very precisely:

“I think people on middle incomes should contribute more through their taxes.”

That is what she said—[Interruption.] They should? There we are. That is their policy. The squeezed middle will be squeezed more. Now the right hon. Gentleman needs to tell us which people will pay which taxes, because on this side of the House we have cut council tax, we have cut petrol duty, we have cut the jobs tax and we have increased the married couple’s allowance. Labour would put a tax on your job, on your mortgage, on your home and on your pension, so will he tell us where the middle-income taxes are coming from?

[Edward Miliband]

This is totally desperate stuff because the Prime Minister has nothing to say about the cost of living crisis. That is the reality, and his reshuffle had nothing to do with the country and everything to do with his party. After four years of this Government, we have a recovery that people cannot feel, a cost of living crisis that people cannot deny, and a Prime Minister whom people cannot believe.

[The Prime Minister]

The right hon. Gentleman talks about five years under this Government. We have record numbers in work, the economy growing, record numbers of businesses, record numbers of women in work, our health service is improving, and everyone can see the contrast: in this party, the leader reshuffles the Cabinet; in his party, the shadow Cabinet desperately wants to reshuffle the leader.

[Hon. Members]

Hear, hear.

[Mr Speaker]

I call Mr Charles Kennedy. [Hon. Members: “More! More!”] I am sure the right hon. Gentleman is delighted to be lauded in such enthusiastic fashion.

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

It is just like the old days, Mr Speaker.

As the Prime Minister is enjoying a week in which he is making a lot of new best friends, when he gets to the Brussels summit will he give a particularly warm greeting to the man who might yet be his best and certainly his newest friend—President Juncker, who yesterday called for more European reform and warned that applicant states who want to join the European Union face a complex, difficult and drawn-out period of up to, perhaps, five years? As we do not meet before the Scottish referendum, barring a recall, should not the Scots voters bear those words in mind?

[The Prime Minister]

This is a remarkable moment when the right hon. Gentleman and Jean-Claude Juncker have together said something with which I wholeheartedly agree. It is noticeable in what the right hon. Gentleman said that there would not be new members joining the European Union in the next five years. That is very important in the context of the Scottish referendum debate. But I will take him up on one point. He says we will not meet again before the Scottish referendum. According to my diary, the House of Commons will be meeting in September.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Q2. Can the Prime Minister explain why he has now given more knighthoods to men he has sacked than he has given Cabinet jobs to women?

[The Prime Minister]

It is always interesting to take a lecture from a party that gave a knighthood to Fred Goodwin. That is always a good place to start. I have appointed more women to the Front Bench and more women to our Cabinet on the basis that they deserve those jobs. I want a team that reflects modern Britain and can be everything that modern Britain needs it to be. I make no apology for saying that I think in public life we should recognise public service—people who have worked hard, people who have contributed to our nation and to our Government. I think that is a good thing to do.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

People with autism have specific social and communications needs which can cause distress and misunderstanding, particularly when they are admitted to hospital for routine or emergency treatment. Will the Prime Minister join me in congratulating Baroness Angela Browning and the National Autistic Society, who tomorrow will launch the new hospital passport for people with autism? That will make a great difference to many people’s lives in this country.

[The Prime Minister]

I thank my right hon. Friend for raising this important issue. Baroness Browning has worked very hard on this issue over many years in both Houses, as has my right hon. Friend with the Autism Act 2009, which is making a huge difference to the way that we help young people with these conditions. I join her in making sure that these services are properly put together.

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

Q3. Given that recent data show that the gender pay gap is increasing again, can the Prime Minister confirm the excellent news that any woman not receiving equal pay for equal work will now have her salary topped up from Tory party funds?

[The Prime Minister]

First, it is welcome news that under this Government the pay gap for those below the age of 40 has all but disappeared, so we are making progress. I am happy to confirm that the Leader of the House of Lords will do the same job as her predecessor, will sit at the same place round the Cabinet table as her predecessor, and will receive the same amount of money.

[Caroline Nokes (Romsey and Southampton North) (Con)]

Q4. Charlotte’s Helix is part of an international research project seeking to establish a link between the DNA of anorexia nervosa sufferers. This afternoon, the project is coming to Parliament, seeking to obtain DNA samples from former sufferers, including my hon. Friend the Member for Braintree (Mr Newmark). Will my right hon. Friend commend the work of Charlotte’s Helix and all those who have been brave enough to speak out about their struggles with eating disorders?

[The Prime Minister]

I thank my hon. Friend for raising that issue. I am sure that everyone in the House has friends or family who have been affected by the condition and who desperately want to see the help that we provide as a country improve. I commend the bravery of all those who have spoken out about their experience with eating disorders. It is not an easy thing to do. We need to learn more about these conditions so that we can provide the right kind of support. In that context, what the Government are doing about parity of esteem for mental health conditions is also important.

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

Q5. We now know for certain that last year taxpayers were robbed of around £1 billion because of the botched, bargain basement fire sale of Royal Mail. Will the Prime Minister now do as the Select Committee on Business, Innovation and Skills has asked and publish the list of those preferential investors? When will somebody be held to account for this right Royal Mail fiasco?

[The Prime Minister]

I completely disagree with the hon. Gentleman. For year after year, Royal Mail lost money and the taxpayer had to back it up. This Government have achieved what no previous Government have achieved, which is a successful privatisation of Royal Mail. The taxpayer has received money from that sale and we now receive the tax on the profits of Royal Mail, rather than the losses and the mismanagement of the Labour years.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Q6. Later this year, North Yorkshire will become the best connected county in terms of superfast broadband, which is hugely helpful for our growing hospitality and tourism industry, which already provides thousands of jobs in my Harrogate and Knaresborough constituency and received a wonderful boost from the recent visit of the Tour de France. Does my right hon. Friend agree that rolling out superfast broadband is a great boost for jobs in all sectors, not just hospitality, and will help to build upon the wonderful economic legacy of the Tour de France?

[The Prime Minister]

I thank my hon. Friend for the warm welcome that he and people in Harrogate gave me during the stage of the Tour de France, marred only by Mark Cavendish’s tragic accident. It was an extraordinary event and showed his constituency and the whole of Yorkshire in their best light. He is quite right about the importance of superfast broadband. We are putting £790 million into superfast broadband access. We have half a million UK premises connected already and around 400,000 new premises are being upgraded every week. Everyone in the House has a duty to get out there to help to advertise what is happening with broadband and to encourage take-up rates.

[Mr Jack Straw (Blackburn) (Lab)]

It is fundamental, is it not, that the holder of the office of Attorney-General should be fiercely independent, defend the rule of law and be ready to speak legal truth to power. Given the distinction and respect with which the holder of that office pursued that role, what possessed the Prime Minister to dismiss him yesterday?

[The Prime Minister]

I absolutely agree with the right hon. Gentleman that it is vitally important that the Attorney-General gives unvarnished, independent advice, and is the Government’s legal adviser. But I also believe that, in government, when someone has served extremely well for four years, there are often times when it is right to bring on new talent and to make the most of all the talent in one’s party. That is the approach that I take as Prime Minister, and I explain that very clearly to my team.

[Julian Smith (Skipton and Ripon) (Con)]

Q7. The number of young people coming off the unemployment register across North Yorkshire is at a record high. Does the Prime Minister agree that today’s small business Bill, Conservative-inspired, is yet another boost to the women and men who are creating the jobs to make this happen?

[The Prime Minister]

Today’s Bill will help to make the United Kingdom the most attractive and easy place to start, to finance and to grow a small business. That is our ambition. My hon. Friend is absolutely right about the unemployment figures. In his constituency, the claimant count has fallen by 37% in the last year and by 51% since the election, and the long-term youth claimant count is down 60% in the last year. The most important thing is to make sure that young people are getting those opportunities.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

Q8. The last two European Commissioners from the UK have held major portfolios that have been central to our interests. The outgoing Commissioner has been the spokesperson on foreign affairs, and her predecessor held the trade portfolio. What post does the Prime Minister hope to secure for his nominee, Lord Hill, as the consolation prize for his failure to prevent the appointment of Mr Juncker? How does he intend to build support for his objective this time?

[The Prime Minister]

First, I think this is a good moment for everyone across the House to pay tribute to Cathy Ashton and to the very good work that she has done as the High Representative—effectively the Foreign Minister for Europe—over the past four years in what is a gruelling and exhausting job. We will be discussing these issues tonight; whether there will be a resolution or not I do not know, but there is an opportunity to ensure that Britain has an important portfolio so that we can maximise our influence in the areas that we care about the most. Those are areas to do with our economy, and we will work very hard to do that. Lord Hill has experience in the previous Conservative Government and in this Government, holding as he does the equivalent post that Baroness Ashton held before she became a Commissioner, and he will do a very good job for our country.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

My constituency is very dependent on the oil and gas industry, in which the unemployment rate is currently 0.5%. The Prime Minister will therefore understand that there is some concern following the reshuffle, given that the Treasury Minister and the Energy Minister responsible for that industry have been changed yet again. Will he take this opportunity to reconfirm the commitment to implement the Wood review, as announced by the Secretary of State for Energy and Climate Change in a written statement today?

[The Prime Minister]

My hon. Friend makes an important point. North sea oil is absolutely vital and we must ensure that we have the tax regime appropriately in place. Implementing the Wood review is absolutely something that we are committed to. My hon. Friend the Member for Witham (Priti Patel), the new Exchequer Secretary to the Treasury, will do an excellent job, and I am delighted to welcome her to the Treasury.

[Dan Jarvis (Barnsley Central) (Lab)]

Q9. On 4 August, people from across the country will come together to mark 100 years since the outbreak of the first world war. That is an important opportunity to commemorate a conflict that changed Britain for ever. Will the Prime Minister join us in supporting the 14-18 NOW “Lights Out” campaign and encourage people across the UK to turn out their lights between 10 and 11 pm on 4 August, so that as a country, we can pay a fitting tribute to those who sacrificed themselves and served their country 100 years ago?

[The Prime Minister]

The hon. Gentleman is absolutely right to raise that excellent campaign, which was inspired by Sir Edward Grey’s famous remark on the eve of the war:

“The lamps are going out all over Europe”.

This is a way to get people, particularly young people, engaged with what happened a century ago and to help them to understand the consequences for Europe, for our world and for our society. A lot of events will take place this year to commemorate the first world war appropriately. One of the most significant will take place tomorrow when the Imperial war museum—an absolutely superb museum—reopens to the public after a major investment. I know that my own children enjoy going there, and I am sure that many people will make the most of it.

[Mr Stephen O’Brien (Eddisbury) (Con)]

Q10. Given the north-west’s and Cheshire’s proud history of contributing significantly to our national economy, does my right hon. Friend acknowledge the importance of the rapid and safe development of fracking to boosting the competitiveness of our country and to ensuring that the north-west and Cheshire continue to be a significant contributor to our wealth and welfare?

[The Prime Minister]

My right hon. Friend makes an important point. It is good news that, in the north-west, we have seen the claimant count in his constituency come down by 40% in the past year. If we want to sustain the increase in employment and sustain our economic growth, however, we should not hold ourselves back from new sources of energy, including unconventional gas. It is striking that the United States has something like 100,000 unconventional gas wells, whereas there are only about 100 in the whole of Europe. We have about three quarters as much unconventional gas across the EU as there is in America, and I do not want us to miss out on this. It could help to deliver more competitive energy prices, it will help to keep our economy and our industry competitive, and I think it is vital for the future of our country.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Parliament may be about to close down for the summer, but that will not stop people from having babies, getting injured and needing routine and emergency care on the NHS. In the light of the forthcoming report into safety at Stafford hospital by the Care Quality Commission, will the Prime Minister have a word with his friend, the Chancellor of the Exchequer, to ensure that the Treasury funds in full the changes to health services across north Staffordshire that the University hospital in Stoke-on-Trent has to provide—and provide at no extra cost to the health of people in Stoke-on-Trent?

[The Prime Minister]

I certainly take into account what the hon. Lady says. I am following the situation in Staffordshire very closely and am regularly advised about it. Changes do need to take place, and the inspection that is under way is vital. The important thing is that where we have problems in the health service we should not hide them but properly address them. Today, Bruce Keogh is reporting a year on from his report. He put something like 11 hospitals into special measures. What his report will show is that all 11 of them are making improvements, and that five of them can come out of special measures all together. We need to ensure that we see improvements in all our hospitals.

[Anne Marie Morris (Newton Abbot) (Con)]

Q11. I thank the Prime Minister for supporting the west country and particularly for investing in our railway in Dawlish and in our broadband. Does he agree that our recently announced growth deal of £130 million needs to be matched by a fairer funding formula for rural councils such as mine in Devon, which play a vital part in delivering the Government’s long-term economic plan?

[The Prime Minister]

My hon. Friend makes an important point. We must continue to support transport infrastructure in the south-west. We have the important report on Dawlish coming out, and work is being done right now to ensure that the line is more resilient. We have had the important announcement about the sleeper service to the south-west and announcements about a number of other road and rail schemes. I will look carefully at what she says about fair funding, because it is important that everyone can see that the situations are fair.

[Julie Elliott (Sunderland Central) (Lab)]

Q12. Figures from the Office for Budget Responsibility show that the Government’s new system of student fees will add £15 billion more than expected to Government debt by the end of this Parliament. Have the Government not got it all wrong when it comes to tuition fees?

[The Prime Minister]

Of course, what we were told by Labour is that no one would take up these loans, no one from poorer backgrounds would go anywhere near university and the numbers going to university would collapse. What has actually happened is that record numbers are going to universities, including record numbers from low-income backgrounds. Obviously, we need to ensure that this system is cost-efficient, but I am satisfied it is working. The Chancellor announced in his recent Budget that, far from having problems with the funding, we are uncapping the numbers that can go to university. That is the aspiration society we are building in this country.

[Julian Sturdy (York Outer) (Con)]

Q13. Unemployment has more than halved in my constituency since 2010, and York is poised to benefit from a multi-million pound investment through three agri-science projects as it strives to become a world-class centre of excellence in agriculture. Does my right hon. Friend agree that that clearly demonstrates our commitment to tackling the north-south divide and delivering a northern-led long-term economic plan?

[The Prime Minister]

I am delighted to share with my hon. Friend the fact that the claimant count in his constituency is down by 42% over the past year, and by 61% since the election. [Interruption.] I know that Labour does not want to hear about falling unemployment numbers and the numbers of people in work, but the fact is that every single one of these people getting a job is someone having a livelihood and the chance to provide for their family. That is what this is about. He is absolutely right to raise the importance of the agricultural and linked industries in Yorkshire. I am sure that the new Environment, Food and Rural Affairs Secretary will want to make an early visit to her birthplace of Yorkshire.

[Ian Lucas (Wrexham) (Lab)]

Q14. Specialist spinal cord injury beds are a precious resource for people and patients in desperate need. Why is it therefore that, on the Prime Minister’s watch, specialist beds at the Stoke Mandeville spinal injuries centre are being used for people who do not have spinal cord injuries?

[The Prime Minister]

Obviously, decisions are for individual trusts and individual clinical commissioning groups, but we made two important decisions as a Government: to fund the NHS with extra money, £12.7 billion in this Parliament; and to abolish the bureaucracy that built up under Labour, with 17,000 fewer bureaucrats. Both those decisions were opposed by the Labour party, but we can see 7,000 more doctors, 4,000 more nurses, more patients treated and an NHS that is doing well.

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

In the recent case of Nicklinson, on the question of assisted dying, Lord Neuberger, President of the Supreme Court, said that Parliament now had the opportunity to consider reforming the law in the knowledge that if Parliament does not act, the courts may. That could raise serious constitutional issues. Does the Prime Minister agree that, whatever one’s views on the subject, the other place is to be commended for having a debate, but what the public really want is a debate in this House?

[The Prime Minister]

It is good that a debate is being held. I am sure it will be worth while reading the report of the debate that will take place on Friday in the other place. I am very happy for a debate to be held here, and there are opportunities for Back Benchers to secure debates in the Chamber. I am sure that the new Leader of the House of Commons—I am sure we all want to welcome him to his place—will be listening carefully to that request. I myself am not convinced that further steps need to be taken. I worry about legalising euthanasia because people might be pushed into things that they do not actually want for themselves, but by all means let us have the debate.

[Fiona O'Donnell (East Lothian) (Lab)]

Returning to the issue of taxes and the wealthy, when will the Prime Minister keep his promise and publish his tax return?

[The Prime Minister]

On the subject of taxes and middle-income people, when will we get an answer from Labour about what the deputy Leader of the party meant when she said—let me repeat it again for the record:

“I think people on middle incomes should contribute more through their taxes”?

As we go into the summer, there is one party in this House with a big tax problem, and I am looking at it.

[Paul Burstow (Sutton and Cheam) (LD)]

Given that poor mental health is the single biggest driver in relation to well-being in this country, will the Prime Minister act on a recommendation from the think-tank CentreForum and tackle the £23 billion cost to business of poorly supporting mental health by signing the Government up to the mindful employer framework? They should tackle those issues by giving a lead as a Government.

[The Prime Minister]

I will look very carefully at the CentreForum report that the right hon. Gentleman mentions. It is important—he helped to do this in government—that we now have a situation where mental health is given proper parity of esteem through the NHS constitution. We have made good progress in making available more talking therapies for mental health patients in the NHS, and I will look carefully at the report.

[Angus Robertson (Moray) (SNP)]

On a point of order, Mr Speaker.

[Mr Speaker]

Order. I am grateful to the hon. Gentleman but there is a statement now and, as he will know as an experienced parliamentarian, points of order follow statements. We will hear from him later.

Proposed airspace changes at Birmingham Airport

Wednesday 16th July 2014 Commons Chamber

Mrs Caroline Spelman (Meriden) (Con)

- Hansard - - Excerpts

I present a petition on behalf of my constituents regarding the proposed flight path changes at Birmingham airport in my constituency, which has been signed by more than 2,000 residents in the community at the southerly end of the runway. When a planning application was submitted in 2008—[Interruption.]

Madam Deputy Speaker (Mrs Eleanor Laing)

- Hansard - - Excerpts

Order. I am sorry to interrupt the right hon. Lady, but will hon. Members who are leaving please do so swiftly and quietly? There is business going on in the Chamber.

Mrs Spelman

- Hansard - - Excerpts

When a planning application was submitted in 2008 for a runway extension, it was not clear to me, local councillors or residents that it might require a flight path change. Otherwise, opposition would have been greater. Aircraft are finding it impossible to stick to the route that was consulted on, and we urge the Transport Secretary to intervene and find a better solution for the community.

Following is the full text of the petition:

[The Humble Petition of Communities Affected by the Proposed Airspace Changes at Birmingham Airport Limited.

Sheweth,

That we wish to bring to the attention of the Secretary of State that local communities in the vicinity of Birmingham Airport Runway 15 have been significantly affected by the noise and disturbance of aircraft flying departure routes established by Birmingham Airport Ltd (BAL) as part of their air space change proposal. BAL is conducting trial flights in relation to their preferred route options as submitted to the CAA (Options 5 & 6 of BAL’s proposal). During the public consultation process the community raised significant concerns about the loss of the existing Noise Preferential Route, and accurately predicted a significant increase in noise disturbance. Members of the community made detailed submissions to BAL highlighting how a departure that included a turn at altitude could closely replicate the existing Noise Preferential Route and accommodate the extended runway. This is an option that gained a great deal of community support but was rejected by BAL without any meaningful qualification. Additionally the CAA has confirmed that two of the departure routes from Runway 15 are not producing the intended flight paths. We should also like to bring to the Secretary of State’s attention that BAL has no mechanism for gathering community feedback on the trial routes being flown. Given that a technically valid alternative exists, which would substantially accommodate the noise preferential routing, but was not included in BAL’s submission to the CAA, we have no other recourse but to submit this petition to The Honourable House of Commons.

Wherefore your Petitioners pray that your Honourable House urgently review the proposed flight path changes at Birmingham Airport in view of the sharp increase in noise nuisance to the communities living at the southerly end of the extended runway and the failure of the trial to ensure aircrafts follow the new flight path options accurately and to explore an alternative option which was previously submitted to BAL by the community itself and which would substantially minimise noise nuisance.

And your Petitioners, as in duty bound, will ever pray, &c.]

[P001370]

Sentence of Dennis Igo

Wednesday 16th July 2014 Commons Chamber

Susan Elan Jones (Clwyd South) (Lab)

- Hansard - - Excerpts

I present a petition on behalf of the residents of Clywd South concerning the sentence of Dennis Igo.

The petition states:

The Petition of residents of Clwyd South,

Declares that the Petitioners believe that the two year suspended sentence and three hundred hours of community service handed down to Dennis Igo was far too low; further that Mr Igo possessed more than 250,000 indecent images of children; further that the Petitioners believe that Mr Igo used his wife’s illness as an excuse for his behaviour; further that the Petitioners believe that Mr Igo’s wife’s illness should not have been used as a mitigating factor; further that the Petitioners believe that the low sentence handed down to Mr Igo sends the wrong message to other people committing similar offences; and further that a local Petition on this subject has received over 100 signatures.

The Petitioners therefore request that the House of Commons requests that the Attorney General review the sentence given to Dennis Igo.

And the Petitioners remain, etc.

[P001371]

Development proposals on land off Lightwood Road (Stoke on Trent)

Wednesday 16th July 2014 Commons Chamber

Robert Flello (Stoke-on-Trent South) (Lab)

- Hansard - - Excerpts

I present a petition on behalf of residents of Lightwood in Stoke-on-Trent and those in the wider area. I have a small bundle in front of me, but the petition has many hundreds of signatures, with David Evans being the first named petitioner.

The petition states:

The Petition of residents of Lightwood, in Stoke on Trent,

Declares that the Petitioners are deeply concerned by proposals for a residential development on land off Lightwood Road, which the Petitioners believe the infrastructure of the local area cannot support and would destroy a large area of green-belt land, despite more appropriate areas of land being available in the city.

The Petitioners therefore request that the House of Commons urges the Department for Communities and Local Government to intervene in this matter at an early stage to ensure a more suitable site is found for any development and any application submitted for a development on this particular piece of land is rejected.

And the Petitioners remain, etc.

[P001372]

Special Measures Regime

Wednesday 16th July 2014 Commons Chamber

12:33

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

With permission, Mr Speaker, I would like to make a statement about hospitals in special measures, and the next steps for rolling out a new inspection regime in the social care sector.

One year ago in the wake of the Francis inquiry, Professor Sir Bruce Keogh delivered his report into NHS hospitals with the highest mortality rates. Shockingly, he found that the poor care swept under the carpet for four years at Mid Staffs was not an isolated incident or “local failure” as some have claimed, and he recommended that 11 trusts should be placed into special measures. As a result of the new independent hospital inspection regime introduced by this Government, a further five trusts have been placed into special measures, taking the total to 16 trusts—more than 10% of all acute trusts in the NHS in England. Today I am reporting back to the House on the progress of the first trusts to be put into special measures, and on how the lessons we have learned can be applied to adult social care.

I would like to start by thanking all the front-line staff who have been involved in the special measures process, which can often be traumatic and stressful, with difficult media coverage in local and national newspapers. Thanks to their superb efforts, I am pleased to report today that progress is being made in nearly every trust and that the chief inspector of hospitals has recommended that five should now come out of special measures. Together with Monitor and the TDA—the NHS Trust Development Authority—he will shortly be publishing a report of his findings.

Across all the initial special measures trusts, leadership capability was carefully reviewed, leading to 53 changes at board level. A hundred more doctors and 1,300 more nurses and nursing support staff have been recruited. Every hospital has put in place a comprehensive improvement plan and was partnered with at least one other high-performing hospital, giving access to best practice and hands-on guidance and assistance.

The chief inspector and Monitor have confirmed that Basildon and Thurrock NHS Foundation Trust can leave special measures with no further support. Under Clare Panniker’s inspired leadership, the trust has appointed 241 additional nurses and has been given a “good” rating overall, with its maternity unit the first in the country to be rated “outstanding”. The chief inspector has recommended that George Eliot NHS Trust should also exit special measures, with a new acute medical unit, 31 more doctors and a strong partnership with University Hospital Birmingham NHS Foundation Trust.

The chief inspector and the TDA have confirmed that Buckinghamshire Healthcare NHS Trust, where there has been good progress on staffing, nutrition and hydration, should also leave special measures, with some continued support in place. The chief inspector has recommended that East Lancashire Hospitals NHS Trust, with some 238 more nurses and nursing assistants in place, should also exit special measures with some continued support. He has recommended that Northern Lincolnshire and Goole Hospitals NHS Foundation Trust should also leave special measures, with some continued support in place, having improved stroke care and employed 166 extra nurses and nursing assistants.

While United Lincolnshire Hospitals NHS Trust has made progress, including the employment of 140 additional nursing staff, work remains to be done, and the chief inspector has recommended that it should remain in special measures for a further six months. Turning around a hospital which had significantly high death rates going back to 2006 is a big task, but I know, having visited the trust myself, how much enthusiasm there is to exit special measures.

At North Cumbria University Hospitals NHS Trust, a further 90 nursing staff have been employed, and mortality is now within normal limits. However, the chief inspector has recommended that further progress is still needed, although we are hopeful that this will be completed within six months. At Tameside Hospital NHS Foundation Trust, while staff are reporting a better leadership culture and there have been improvements on some key safety indicators, he recommends a further six months in special measures to ensure that sustainable improvements really are in place.

The chief inspector continues to have strong concerns about Medway NHS Foundation Trust—an organisation with long-standing difficulties, care failures and high mortality rates going back to 2005. He recognises some progress, including the recruitment of 113 nurses, but has concerns about the sustainability of those improvements. He will make his recommendations about Burton Hospitals NHS Foundation Trust and Sherwood Forest Hospitals NHS Foundation Trust in the next few days, following their local quality summits.

All the Care Quality Commission’s recommendations will need to be fully considered by Monitor or the TDA before they are confirmed. I pay particular tribute to the work done by the chief inspector and his team from the CQC, and to Monitor and to the TDA, for the extraordinary effort they have put into making the improvements outlined above.

However, the responsibility for safe and compassionate care goes far beyond hospitals. Hundreds of thousands of people—some of the most elderly and vulnerable in our society—receive care in their own homes or in residential and nursing homes. Yet in recent years a member of the public, Jane Worroll, discovered from a secret camera that her mother was being systematically abused in Ash Court care home in London. Another secret camera filmed a resident being slapped and mocked at the Old Deanery home in Essex earlier this year. Perhaps most shocking of all was, in the words of the West Sussex coroner, the “institutionalised abuse” handed out to the residents of the Orchid View care home in Copthorne, where five people were found to have died as a result of poor care. The long list of failings included residents being left in soiled sheets, call bells ignored or left out of reach, and medications mismanaged.

Every older person has a right to be treated with dignity and respect in the way we would all wish for our own parents and grandparents. This Government are determined to see demanding standards and tough enforcement apply as much outside hospitals as inside.

Inexplicably, the previous Government scrapped expert-led inspections of adult social care organisations—as they did for hospitals. The same individuals, therefore, might have been inspecting a large teaching hospital and a small care home in the same week without any opportunity to develop the detailed expertise necessary to make important judgments.

Today I can confirm that we are bringing back expert-led inspections for adult social care, and I am encouraged that the new chief inspector of social care, Andrea Sutcliffe, has announced the toughest ever enforcement regime, to ensure that ongoing abuse and neglect in residential care homes and domiciliary care services is stamped out once and for all.

Alongside the new programme of rigorous and independent inspections, the CQC is being given the power to produce ratings of care providers that will provide a fuller picture of the quality of care than mere compliance with minimum standards. The first ratings will be published in October.

New fundamental standards of care will also be introduced, which will allow the CQC to prosecute those responsible for unacceptable care. In addition, we are introducing safeguards that will allow the CQC to remove and bar individual directors.

I can announce today that once in special measures, care services will be given six months to shape up or action will be taken that will lead to them closing down. This regime will start next April. From then, any care service rated as “inadequate” under the new ratings system will be required to improve within a time-limited period. The CQC will then take action to close down any services that do not meet the standards that people have a right to expect.

My Department and the CQC will work with the sector on the details of that framework, including what support can be given to failing providers and the timing of any closures. In particular, the CQC will work with people using services, their carers and their families to ensure that no one suffers as a result of any service closing down.

We are taking these steps because we have a moral duty to our most vulnerable people to ensure that they receive the best possible care and that they are treated with compassion, dignity and respect. We also owe it to those many excellent providers who deliver good care every day and need proper recognition.

When this Government took the tough decision to confront the reality of poor care within the NHS, people said we were running down the NHS and its dedicated staff. But we refused to accept a status quo that tolerated poor standards, betrayed NHS values and, most of all, betrayed hard-working staff who have given their lives to the care of others.

As a result, we are finally turning around performance in failing hospitals—something we are today extending to social care. Much remains to be done, but after a traumatic moment in its history, both the NHS and the social care systems have faced the truth, confronted the past, and can now face the future with confidence.

I commend this statement to the House.

12:43

[Andy Burnham (Leigh) (Lab)]

Anyone who supports the NHS must always be prepared to shine a light on its failings so that it can face up to them and improve. Therefore, I welcome much of what the Secretary of State has said today, and I join him in thanking Sir Mike Richards and Sir Bruce Keogh. Their work builds on foundations laid by the previous Government, and I do not think the Secretary of State helps his case today by continuing to make assertions not supported by the facts. Let me once again gently remind him of the broader context.

It was following care failures in the 1980s and 1990s that independent regulation of the NHS was introduced for the first time by the previous Government. It was that independent regulator that, as Sir Bruce Keogh said, helped reduce mortality in all NHS hospitals over the past decade and then uncovered problems at Mid Staffs.

The Secretary of State was right to say that Mid Staffs needed to be a moment of change for the NHS. The central lesson of the first Francis report, which I commissioned, was that staffing levels were critical to safe care. The big question that arises is for this Government to answer: why, following that report, did they fail to learn the lesson and allow staffing to fall across the NHS in the first three years of this Parliament? Nurse numbers were cut by almost 6,000 in the three years between July 2010 and July 2013, but the cuts fell particularly hard on some of the 11 trusts that we are considering today. North Cumbria cut 148 nursing posts, United Lincolnshire cut 179 and Basildon cut 345. When the Health Secretary was forced to put those trusts into special measures, it was because they were getting worse on his watch.

The Health Secretary mentioned Basildon—like him, I congratulate the trust and its staff on its improvement—but I left a clear warning in place about Basildon in 2010, following a statement I made to the House. Why on earth was it allowed to cut so many staff in the following three years when Francis had already warned of the dangers of doing so? I have an answer to a parliamentary question that shows that Ministers did not hold a single meeting about Basildon up to its being placed in special measures, presumably because they were distracted with their reorganisation. Will the Health Secretary now admit that it was an error to cut so many nursing staff, and will he today accept the National Institute for Health and Care Excellence recommendations on safe staffing levels?

Let me turn to the special measures regime. We welcome the improvements at some of the 11 hospitals and pay tribute to the staff, but it is a concern that four are showing only limited signs of improvement. One trust, Medway, has barely shown any, but how can that be after a year in special measures? Does it not raise questions about whether the regime is providing enough support to improve? A CQC inspection published last week found a catalogue of concerns at Medway—patients on trolleys overnight without appropriate nursing assessment, medication given without appropriate identification of patients, and insufficient nursing levels with an over-reliance on agency staff. The Secretary of State claims that all the problems are long-standing ones, but the CQC found that happening right now. The trust has been in special measures for one year. How can there have been no improvement, what is he doing to help Medway to improve, and given its worrying lack of progress, will he report back to the House at the first opportunity?

There are also questions about the inspection regime. Last week, it was revealed that in 2012 the CQC employed as inspectors 134 applicants who had failed competency tests, of whom 121 are still in place. Again, how was that allowed to happen? Is the Health Secretary confident in the ability of those inspectors, and if not, what is he doing about it?

Three of Cumbria’s four largest hospitals are in special measures. General practitioners are under severe pressure, and my hon. Friend the Member for Copeland (Mr Reed) relayed their warnings to the House yesterday. Is there not a much wider failure in the health economy, as he warned, and with an overly hospital-focused inspection programme, is there not a risk that wider problems in the heath economy are being missed? Is it not the case that hospitals are often dealing with pressures and problems not of their own making—but due to cuts to primary care, social care or mental health—and to be truly effective, should not the Health Secretary’s inspection regime take a much wider view of the whole health economy?

That brings me to social care, about which the Health Secretary is right to say that we have seen appalling failures in recent years at Winterbourne View, Orchid View and Oban Court. We welcome the extension of the special measures regime to care homes, but I must say that it sounds like a U-turn. Only recently, he legislated to remove the CQC’s role in assessing whether councils commission care effectively. Is he conceding that that was a mistake, and does he accept that it must be reversed if we are to have truly effective care inspection?

Local authority commissioning can be the root cause of care failures, but so can the impossible budget cuts that many providers now have to absorb. Is that not the real reason why we have such problems in our malnourished social care system today? New House of Commons Library analysis—we are publishing it today—shows that £3.7 billion has been cut from adult social care since 2009-10. That is not sustainable. How does the Health Secretary think that older and disabled people will ever get the standards of care to which he aspires with cuts on this scale?

The truth is that the collapse of social care is in danger of dragging down hospitals, which are becoming dangerously full of older people and struggling to function. The Health Secretary will not like to admit it, but in the year to the day since he stood at the Dispatch Box and made his first statement on the Keogh report, hospital accident and emergency departments have missed his own lowered A and E target in every single one of those 52 weeks. Does that not tell us more clearly than anything that it is not just a small number of trusts that have got worse on his watch, but the whole NHS? The cancer treatment target has been missed for the first time ever, it is harder to see a GP, and waiting lists have hit a six-year high. He does not just need a plan for some trusts; he urgently needs a credible plan to get the whole NHS back on track.

[Mr Hunt]

I had hoped for a little more consensus on the issue of dealing with poor care. I am afraid that what we had from the right hon. Gentleman was a set-piece speech. However, let me go through the points that he raised.

First, the right hon. Gentleman spoke about nursing numbers. Let us look at the number of nurses since the Government took office. We have 6,200 more nurses on our wards than when he was Secretary of State for Health. Why is that? It is because we took the difficult decision, which he opposed every step of the way, to get rid of the bureaucracy, the primary care trusts and the strategic health authorities—19,000 administrators—so that we could afford more nurses, more doctors, more paramedics and more front-line staff. It is time that he admitted that he was wrong to oppose those important reforms.

The right hon. Gentleman then talked about trusts missing A and E targets. Despite the fact that we are doing better on A and E than he did as Health Secretary, he has missed the point about targets. It was an obsession with targets under Labour that led to the problems in Mid Staffs and many of the trusts that are in special measures today. Let us just take one example. [Interruption.] The Opposition should listen to this example because it provides an important lesson about targets that the Labour party has still not learned. Buckinghamshire had a terrible tragedy in 2004 and 2005, when more than 30 pensioners died in a clostridium difficile outbreak. Why did that happen? The independent report said that the trust was too focused on Government targets.

That is the dividing line. The Opposition want an NHS that is obsessed with targets. The Government recognise that targets matter, but that treating people with dignity, respect and compassionate care matters. Is it not extraordinary that the party that founded the NHS has got itself into a position where it does not care how people are treated in the NHS?

The right hon. Gentleman talked about social care. If he wants more funding for social care, why has he called for the better care fund to be halted, when it will put an extra £1.9 billion at the disposal of the people who commission adult social care?

Let us look at some of the examples that the right hon. Gentleman raised. He talked about Basildon. When he was Health Secretary, the CQC sat on a report about that trust for six months that talked about bloodstains on the carpets, blood on the floors and vital safety measures being ignored. When the reason why the report was not published for so long was looked into, people at the CQC said that they were afraid to publish something that could embarrass the Government of the day. Is it not time that he admitted that the way the Labour Government ran the CQC was wrong? We now have an independent inspections regime, which is a big step forward.

The right hon. Gentleman talked about Cumbria. There are real issues in some of the hospitals in Cumbria. However, when Labour was in office, somebody in one of those hospitals—North Cumbria—was paid £3.6 million because they were disabled for life. Should that not have been a warning sign? There were also issues at Morecambe Bay involving children.

[Mr Jamie Reed (Copeland) (Lab)]

What are you doing?

[Mr Hunt]

What are we doing? We are doing what I set out in the statement. We are putting more nurses and doctors into hospitals that are in special measures. We are turning around the failing hospitals that Labour swept under the carpet.

Even if Labour has not understood the lessons of Mid Staffs, the NHS has. We have 6,000 more nurses; five hospitals are out of special measures; there is record public confidence in safe and compassionate care; and, from today, we have new plans to stamp out poor care in adult social care. When everyone in the NHS is so keen for those plans to work, is it not time that Labour ended its denial about the past and backed them as well?

[Margot James (Stourbridge) (Con)]

I congratulate my right hon. Friend on bringing back an expert-led inspection regime for adult social care. I ask him to learn from the experience with schools in Birmingham five, six or seven years ago, which managed to bamboozle Ofsted by planning for the inspections. I ask him to ensure that a good proportion of the inspections under the new regime have no notice whatsoever.

[Mr Hunt]

My hon. Friend, as ever on health issues, makes an extremely important contribution. She is right that we drew a lot of inspiration from the Ofsted regime, which is clear, transparent and easy for the public to understand. She is right that snap inspections are importation. I reassure her that the CQC has the power to perform snap inspections. It has already used that power and will continue to do so.

[Mr Jack Straw (Blackburn) (Lab)]

Does the Secretary of State agree that it is a tribute to the new leadership of Professor Eileen Fairhurst, the chair of the East Lancashire Hospitals NHS Trust, the other senior clinicians and managers, and the vast majority of staff at the trust, who are of a high quality, that the trust has been able to turn around and get out of special measures? Does he also accept that, as Professor Sir Bruce Keogh makes clear—these are my words, not his—it is essential that the trust does not take its foot off the gas, but continues the process of change and, above all, cultural change in the way that patients are treated? Lastly, although the additional nurses are welcome, will he say something about the implications for the future funding of the trust?

[Mr Hunt]

The right hon. Gentleman makes some important points. I will start with the point that provides a broader lesson for the NHS. Not taking our foot off the gas is really important. This is the start of a very long journey. I said last year that it would take about three years to turn around a hospital where the wrong culture has become entrenched.

I pay tribute to the leadership at East Lancashire Hospitals NHS Trust. The CQC report said that the staff on the front line now feel more supported, more empowered to take decisions and more able to raise concerns. If there is one thing that we have learned, it is that successful hospitals make it easy for their staff to speak out and support them in speaking out. The hospitals with problems are the ones where people feel bullied and intimidated when they speak out. I am delighted with the progress that has been made.

In respect of finances, this is a challenging time for finances across the NHS. I simply say that, as I am sure the leadership of the right hon. Gentleman’s trust recognise, the most expensive thing of all is delivering poor care. The most important way of saving money is ensuring that the care that is delivered is safe.

[Paul Burstow (Sutton and Cheam) (LD)]

I very much welcome the changes the Secretary of State has announced on social care inspections. However, standards and enforcement alone are not sufficient. Does he agree that we need to look at the support that is provided to organisations so that they can change before they get to a point of crisis? If so, will he look at the work of My Home Life, which runs programmes to transform the lives of people in care homes and improve their quality of life by working with staff in a different way? I commend that work and hope that he looks at it.

[Mr Hunt]

I am happy to do that. I agree with the right hon. Gentleman. I would like to see a lot more innovation. Even in the best care homes, which deliver good care by today’s standards, there is room for much more innovation and imagination in seeing how we can make people’s last years ones that they really enjoy. I have seen some amazing dementia care homes that break the mould. I am very happy to look at the work of that organisation. I am sure that there is a lot we can all learn.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Secretary of State said that 16 trusts are in special measures, but he mentioned only 11 of them. As he knows, Barking, Havering and Redbridge University Hospitals NHS Trust includes King George hospital in my constituency. Will he take this opportunity to explain why he has not said anything about that trust? Is it because the plans to close the A and E this year or next year are in total disarray, but he does not want to admit it publicly? Will he take this opportunity to clarify—yes or no—whether it is still his intention that King George hospital’s accident and emergency will close?

[Mr Hunt]

First, let me reassure the hon. Gentleman on the last point. The trust has made it absolutely clear that the change in A and E will not happen until it is safe. It is very unlikely that it will happen in the near or medium term. The reason I did not mention his trust is that the statement was about the 11 trusts that were put into special measures exactly a year ago and his trust was not put into special measures until just before Christmas. It, too, is making progress. It has employed 31 additional nurses, it has an excellent chief nurse, whom I have met on a number of occasions, it has had a new chief executive since April and there is an increase in patient satisfaction. However, there is still a long way to go because it is a very challenged trust with some deep-seated problems. We need to support it at every step of the way.

[Jeremy Lefroy (Stafford) (Con)]

Today’s statement and the appointment of the chief inspector of hospitals arise from the Francis report on Mid Staffs in my constituency. I am sure my right hon. Friend acknowledges the great improvements that have been made at Mid Staffs thanks to the hard work of staff and others, but he will also acknowledge that the situation remains fragile. Will he ensure that both Stafford and the University Hospital of North Staffordshire are given the full support they need to come together and implement the recommendations of the trust special administrators in full, as a minimum?

[Mr Hunt]

I pay tribute to the staff in Stafford hospital. I also make the point that, even through the four years when those terrible examples of care happened in the hospital, much excellent care was happening, too, and the hospital had dedicated and hard-working staff. This has probably been tougher for them than for anyone else in the whole NHS. I thank my hon. Friend for the way in which he has campaigned for his local hospital. No one could have done more for their local services. I agree with him that we must implement the very detailed recommendations of the TSAs quickly and in full, and ensure that we give every bit of support necessary to both Stafford and UHNS to ensure that that merger works.

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

The Health Secretary talked about denial of the past, but that was a bit rich given that Conservative Ministers gave Jimmy Savile a managerial post at Broadmoor. He wants to think about that a bit more.

In view of the disgraceful care failures the Health Secretary detailed, I find it surprising that he relies on inspection to raise standards and ignores the obvious impact of cuts of £3.7 billion in social care budgets. Does he not see that inspection will not fix the parlous state of social care?

[Mr Hunt]

I am afraid that that is the difference between Government and Opposition Members. The hon. Lady says that there was denial over Jimmy Savile, but I stood at this Dispatch Box and apologised to relatives and members of the public for the mistakes relating to Jimmy Savile. I do not call that denial; I call it facing up to the past.

Of course, inspection is not the only answer, but the reason it was so wrong to abolish the expert-led inspections we used to have in social care is that the first step, if we are trying to improve standards, is at least to know where the problems are. Until we have those expert-led inspections, we will not know that. The next step is to work out how to solve the problems. We will be doing both.

[Mr Henry Bellingham (North West Norfolk) (Con)]

The Queen Elizabeth hospital in King’s Lynn serves my constituency and that of the Secretary of State’s deputy, the Minister of State, Department of Health, the hon. Member for North Norfolk (Norman Lamb). Will the Secretary of State pay tribute to the superb acting chief executive, Manjit Obhrai, and the former acting chairman, David Dean, who have done a sterling job, along with the hard-working staff, on the hospital’s comprehensive improvement plan? When will that hospital come out of special measures, and will he pay tribute to the excellent work that has been done in the past few months?

[Mr Hunt]

I am happy to do so. The hospital has recruited 95 more nurses and nursing support staff since last July. It has appointed a director of nursing and a medical director and lead for patient safety, which strengthens clinical leadership. Some very important changes have been made, and I pay tribute to the hospital’s leadership for making that possible. I hope my hon. Friend understands that, under the new system we have set up, it is not for the Secretary of State or any Minister to say when a trust is ready to come out of special measures. We have deliberately given that judgment to an independent chief inspector, so that no one who has a vested interest or a hope that a hospital will come out of special measures, and no one who is involved in turning around a trust, is responsible for that important independent judgment. However, that means that, when hospitals come out of special measures, people can have confidence that the judgment has been correctly made.

[Grahame M. Morris (Easington) (Lab)]

This is an important statement, but it is regrettable that the Health Secretary is implying that the care failures were all the fault of the previous Government. Will he confirm that Sir Bruce Keogh, who gave evidence to the Select Committee on Health yesterday, and not the Secretary of State, decided which hospitals would be placed in special measures? I understand that Sir Bruce’s decision was based on those hospitals being outliers for two consecutive years. According to my maths, that means that the failures described by the Secretary of State occurred on this Government’s watch. If he is apologising and feeling contrite, would he like to own up to that failure?

[Mr Hunt]

The examples of poor care I gave happened under this Government. I am therefore being absolutely clear that failures in care happened under both the previous Government and this one. The difference is that this Government are doing something about it. We are taking action and taking the difficult steps to get those trusts out of special measures. The public are beginning to have confidence that, when there are problems, they are not being swept under the carpet but being dealt with.

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

Bad care is unacceptable, but what turns bad care toxic is covering it up and denying that it is happening. I am pleased that we are beginning to get a consensus across the House that transparency and unearthing problems is the beginning of solving them. On that note, will my right hon. Friend the Secretary of State work on a cross-party basis with the right hon. Member for Leigh (Andy Burnham) and the Labour party on Wales, which was also targeted by Bruce Keogh’s expertise? He has suggested that it would be sensible to have a Keogh-style investigation in Wales, not only because of mortality statistics and diagnostic waiting times, but because tales coming to me and the right hon. Member for Cynon Valley (Ann Clwyd) are raising the alarm. I urge hon. Members on both sides of the House who are worried about patients in Wales to urge such an investigation there, because the investigation here unearthed problems.

[Mr Hunt]

I totally agree with my hon. Friend. It is an absolute tragedy for people who use the NHS in Wales and Welsh NHS workers that they are not getting the support that people in England get to deal with poor care. For some reason, the Labour Administration in Wales believe that it would be incredibly embarrassing to find problems, but that is what hospitals and hospital staff are crying out for. The staff did not go into those jobs to deliver poor care. They want the support to deliver the best care. It is time that Labour in Wales understood that and got the support of Labour in England to do so.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The Secretary of State will know that the local MPs covering Tameside hospital have never pulled their punches in calling for the need to improve our local hospital. He may recall that we publicly called for the previous leadership of our hospital to be removed even before the Keogh review process began. Speaking on behalf of my hon. Friend the Members for Denton and Reddish (Andrew Gwynne), who sits on the Opposition Front Bench, and my hon. Friend the Member for Ashton-under-Lyne (David Heyes), we are disappointed that Tameside remains in special measures, but we believe that progress has been made, particularly in A and E and with regard to mortality rates. We believe that the new management team, who have brought about those changes, deserve our support. We will never accept anything but the very best care in Tameside, and we agree that there is more to do, but we believe we are on a journey of improvement and that our hospital is in a different place from where it was 12 months ago.

[Mr Hunt]

I thank the hon. Gentleman for the tone of his comments and totally agree with his sentiments. Tameside has recruited 70 new nurses and nursing staff. To take one important indicator—it is only one—the number of falls has decreased by 18%. The staff definitely feel more supported by the management. However, he is right that this is a long process—the trust has been troubled for many years—and we are absolutely determined to back the staff and get them over the line.

[Mark Reckless (Rochester and Strood) (Con)]

Mortality rates at Medway are not as elevated as they were in 2005, but does the Secretary of State believe that the astonishingly well paid interim managers have made any sustainable improvements, and will he expand on how University Hospitals Birmingham will help us to drive improvements at Medway?

[Mr Hunt]

To be frank with my hon. Friend, the situation at Medway is still troubling. It has made some improvements to maternity services and has about 100 more nurses, and the dementia unit has made progress, but we have not had the stability of management and leadership that will be necessary to sustain improvement. It always takes a very long time to make such improvements. We will therefore work hard to do that. I hope that the partnership with UHB will be a part of that change, because Julie Moore is one of the best chief executives we have in the NHS. I will work closely with my hon. Friend, because I know he takes a great interest, to ensure that we get the lasting changes we need at Medway.

[Graham Jones (Hyndburn) (Lab)]

Sir Bruce Keogh focused on the A and E at Royal Blackburn, which I have had the privilege of visiting. However, Hyndburn faces significant NHS cuts, such as cuts to the walk-in centre, which 36,000 people have been through; cuts to the NHS GP practice in Accrington Victoria; and cuts to personal medical services GP contracts, which GPs are deeply concerned about, and which will lead to a reduction in hours. GPs tell me that that will impact on A and E. Is the shadow Secretary of State right to say that we should look not only at hospitals, but at the broader picture, if we are not to neglect patients and let them down?

[Mr Hunt]

If the hon. Gentleman is worried about cuts, perhaps he might talk to the shadow Secretary of State and ask him why he said it was irresponsible for us to increase the NHS budget as we did.

On the particular issue the hon. Gentleman raises, I actually agree with the shadow Secretary of State. It is not always possible to solve these problems simply by reference to the institution. Sometimes we have to look at the broader health economy. That is particularly true of A and E, but it is true for many other parts of the NHS too. Where there is a broader health economy issue we must look at that as well, but this process means that Ministers are held to account for finding a solution, whatever that solution is.

[Martin Vickers (Cleethorpes) (Con)]

I join my right hon. Friend in his tribute to the front-line and managerial staff at North Lincolnshire and Goole NHS Foundation Trust. My constituents will particularly welcome the increase in staffing levels and the improvements in the stroke unit, which has been a particular concern. He will be aware of recent public criticism of the hospital trust by North Lincolnshire clinical commissioning group. Can he assure my constituents that the continuing help and support will focus on the aspects of its criticism?

[Mr Hunt]

That certainly needs to happen. I visited my hon. Friend’s trust and saw a knee operation. I talked to the staff about the special measures regime, and they said that they thought important changes were happening, so I was delighted too when they came out of special measures. We will certainly give all the support they need, and I thank him for the support he is giving his local hospital.

[David Heyes (Ashton-under-Lyne) (Lab)]

Does the Secretary of State agree that possibly the single most important factor in turning these hospitals around is the quality of the leadership? He has referred already to Tameside hospital, where the report talks of the staff reporting a better leadership culture. This hospital has suffered for far too long from inadequate leadership. I am confident that good leadership is in place now. The change in the hospital is palpable. I am confident that, given a fair wind, it can be out of special measures within the six months referred to, despite the severe underfunding with which the hospital management is grappling daily.

[Mr Hunt]

Funding pressures are everywhere in the NHS, but I agree with the hon. Gentleman’s sentiments that this is largely about leadership. As well as this work, we are working with Sir Stuart Rose to try to understand what we can better do to sustain and support the highest quality leadership. We have some great leaders in the NHS, but we probably do not have enough of them. I think there has been an improvement at Tameside. I strongly welcome that and we will certainly be supporting the leadership and the staff in that hospital every step of the way.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I congratulate my right hon. Friend on his statement. I, too, congratulate Clare Panniker on her inspirational leadership at Basildon hospital. She informs me that rather than cutting 345 nurses between 2010 and 2013, there were 1,908 in 2010, 2,000 in 2013 and that that number is now up by 241. Does he agree that to tackle problems in the NHS we need honesty and accuracy when discussing these issues?

[Mr Hunt]

We do. I think it is time that those on the Opposition Front Bench, in particular, recognised that they were wrong to oppose so bitterly the move to get rid of 19,000 administrators in the NHS, so that we can afford 7,000 more doctors and 4,000 more nurses across the whole NHS. That has made a huge difference to the statement we are making today.

[Helen Jones (Warrington North) (Lab)]

The Secretary of State is right to say that abuse should never be tolerated, but does he not also accept that many of the problems in residential care for the elderly stem from a system that is trying to make profits out of the running of homes that are grossly underfunded because of the cuts his Government have imposed, and which, despite having some excellent staff who do their best, rely largely on untrained and underpaid staff? When is he going to tackle the real problems at the heart of the system, as well as announcing inspection regimes?

[Mr Hunt]

I do not accept that all profit-making organisations are going to deliver poor care. There are some excellent ones and some bad ones. Poor care is poor care wherever it exists. The hon. Lady is right to say that we need to value more the staff who work in residential care homes and domiciliary care services. They do a fantastic job that is often not well paid. The best thing we can do for them is to make sure that, where they are in an organisation that delivers poor care, we shout about it and talk about it, so that people find out about it and something gets done.

[Mr Robin Walker (Worcester) (Con)]

More nursing staff and a rigorous focus on care for the person, as well as an improved inspections regime, are very welcome, but does the Secretary of State agree that we also need to focus on sharing best practice and innovative approaches to care, such as those being pioneered at the Association for Dementia Studies at the university of Worcester?

[Mr Hunt]

We absolutely do need to do that. Dementia care is an area where there needs to be lots more work and innovation. There is huge variation and even some very caring places could try new ideas. There are some very interesting ideas about dementia care in Holland, too. I absolutely welcome that work.

[Derek Twigg (Halton) (Lab)]

Does the Secretary of State think that standards could be improved further by having minimum levels of staffing in care homes, and does he think that more can and should be done to improve pay and rewards for care workers?

[Mr Hunt]

We have recommended levels of staffing, but in the NHS we have decided not to have minimum levels of staffing. We were worried that that would be seen as a hurdle where, once achieved, nothing more would need to be done about staffing levels. The real issue about staffing levels and mandating numbers from the centre is that care needs change on a daily basis depending on how complex the needs are of the patients in a particular ward or home. That is why it is difficult to do it from the centre. We want to make sure that everywhere has the right numbers of staff. That is why I hope the hon. Gentleman welcomes the fact that we have so many more nurses.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

Barking, Havering and Redbridge University Hospitals Trust is working really hard to get out of special measures. We have a new chief executive and a new chairman who are paying particular attention to the recruitment of nurses and improving the efficiency of the appointment system. Will my right hon. Friend join me in congratulating Barking, Havering and Redbridge Trust on improving the level of patient satisfaction by four points?

[Mr Hunt]

I am very happy to do that, and I pay tribute to the leadership of the trust. There is a new chief executive and, as I have said, I have met the chief nurse. It is a very large trust with two big hospital sites. There are some very big challenges to tackle, but they are making important progress, and, like my hon. Friend, I am keen to get them out of special measures as soon as we can.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Having read the Care Quality Commission annual report and met the CQC, and seen in the report that in Stoke-on-Trent more than 20% of care homes have not been fit for purpose for a period of more than three and four quarters, may I welcome the inspection regime of care homes? Training and enforcement will be important.

May I refer back to the comments made by the hon. Member for Stafford (Jeremy Lefroy) in respect of Mid Staffordshire Trust and Stafford hospital, and to previous meetings we have had with the Secretary of State, his colleague in the House of Lords and the Prime Minister and say that, between now and September, we need to know categorically from the Treasury whether the Government are going to fund in full what the University Hospital of North Staffordshire trust says it will cost to run the new configured hospital services across the whole of north Staffordshire? Only when that happens can the Government say that they have solved the issues relating to Mid Staffordshire.

[Mr Hunt]

I thank the hon. Lady for her support for the new special measures inspection regime for care homes. With respect to the merger of UHNS and Mid Staffs, we will make sure that the funding is available that is necessary for that merger to happen. Money is not the issue. The issue is doing what the TSA asked to be done quickly and in full, and making sure that we have the right leadership across both hospitals on a long-term sustainable basis. I do not think it is about money; it is about taking rapid action to make sure there are stable services and that there is continuity of care.

[Mr Marcus Jones (Nuneaton) (Con)]

Will my right hon. Friend join me in congratulating the staff at George Eliot hospital on their hard work in the past year and on the excellent result they achieved in the CQC review? Does he acknowledge that we need to do more at George Eliot to keep that improvement going and agree that we have now built a very strong platform on which to build the future of George Eliot as an important district general hospital in my constituency?

[Mr Hunt]

I agree with my hon. Friend on both points. We have seen 31 more doctors there since special measures, 52 more nurses, a new acute medical admissions unit and better flow throughout the hospital, reducing the number of moves that patients make between wards during their stay, so lots has been done. When I did a stint in the A and E department at George Eliot, I was very well looked after by the nurses there, but they told me how bad the IT systems were—I think they said there were 16 different IT systems in the hospital—and how they were constantly filling out new forms. I therefore hope that the partnership with University Hospitals Birmingham, which has one of the best hospital IT systems in the country—a fantastic system, developed by the trust itself—will mean that George Eliot can move to having really good IT, so that nurses have more time with patients, which is what they want.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State spoke earlier about the need to value staff who work in residential homes. I presume he meant by that people who care for vulnerable, elderly and disabled people in their own homes as well. I completely agree with that, and he knows that we have discussed many times in the House issues such as the 15-minute time slots and the lack of reimbursement for the travel costs that people who care for elderly or disabled people have to bear. Does he agree, therefore, that unless we address issues such as the pay and conditions of staff, whether in residential homes or in people’s own homes, we will struggle to recruit and retain the very best staff, whom we desperately need to look after our vulnerable people?

[Mr Hunt]

I agree with the hon. Gentleman that we need to value staff who work in the social care sector much, much better. I think they do a fantastic and very difficult job for what is not high pay at all, so I recognise that issue. I also agree with his concern about 15-minute slots. I find it hard to believe that anyone can really do everything they need to when visiting someone who is frail or vulnerable in their own home in just a 15-minute slot. The new inspection regime will look at that and if it is unsatisfactory, it will say so.

[Several hon. Members]

rose—

[Mr Speaker]

I am very keen to accommodate the interest of colleagues who are still waiting to question the Secretary of State. I should just remind the House that we have quite a substantial load of business today, and I know that the main debate is very heavily subscribed, so if I am to accommodate all remaining colleagues, there is a premium upon brevity—a seminar in which I think can most appropriately be conducted by a member of the Procedure Committee. I call Mr David Nuttall.

[Mr David Nuttall (Bury North) (Con)]

The families of elderly people in care are often those best placed to spot the early warning signs of poor care. To what extent will reports from families be used to determine and prioritise where inspections take place?

[Mr Hunt]

Such reports will be used. Members of the public will be involved in the inspection regime and the way that care homes respond to complaints and concerns raised by families will be an important part of what the new chief inspector looks at.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

We all hope that the special measures regime speeds up the improvements that are needed in Morecambe Bay hospitals, but does the Secretary of State accept that the turmoil that those hospitals have been in for years now will never properly end until the Government recognise that the trust simply cannot deliver services with the same level of funding, given the almost unique challenges of rural isolation, severe deprivation and health need in the area?

[Mr Hunt]

I thank the hon. Gentleman for the work he has done with James Titcombe on the tragedy that happened at Morecambe Bay. I think there are particular issues in that trust owing to the fact that it is on two sites that take a long time to travel between geographically. The point of the new regime is to ensure that those issues get surfaced and that Ministers and the system have to address them. I hope that that is what will happen.

[Robert Jenrick (Newark) (Con)]

We await the report from Sherwood Forest Hospitals Trust with interest. Improvements have been made there, certainly in staffing levels, with the number of nursing staff rising significantly since the hospital trust went into special measures. However, one of the impediments to change at the trust is the terrible legacy of the private finance initiative, which is taking up 15% to 20% of the trust’s annual budget—something like £45 million. Is there anything more we can do to assist trusts in special measures that have a crippling legacy of PFI?

[Mr Hunt]

That is certainly something we keep under constant review, because it is a particular issue in some trusts. I would like to pay tribute to the progress made in Sherwood Forest trust—and in Newark hospital, which I know my hon. Friend has campaigned for—and to mention that it has an excellent chief executive, who has done a very good job in challenging circumstances.

[Nic Dakin (Scunthorpe) (Lab)]

I would like to pay tribute to the staff team at Northern Lincolnshire and Goole Hospitals Trust for the progress they have made, which has resulted in the trust moving out of special measures, but there is still much more to do. How will the Secretary of State ensure that the funding challenges faced by the local health service do not get in the way of making the further progress that is necessary?

[Mr Hunt]

Good progress has indeed been there, including centralising stroke services in Scunthorpe. There are funding pressures everywhere. What I would say about funding is that I do not want to run away from the fact that money is tight throughout the NHS, but lots of places are delivering safe, compassionate care even with those funding constraints. In fact, when we look in detail, we see that less safe care is the most expensive, so what we are doing should help trusts such as the hon. Gentleman’s to deliver safer care.

[John Stevenson (Carlisle) (Con)]

May I reiterate my support for my right hon. Friend’s policy of putting patients at the centre of the NHS? Clearly I am disappointed that North Cumbria Trust continues to remain in special measures, particularly given the hard work of the staff and management there. However, will the Secretary of State assure me that if the trust, with the support of Northumbria, produces a robust action plan to address the issues that have been raised, a re-inspection by the CQC can happen sooner rather than later?

[Mr Hunt]

No one is keener than my hon. Friend and I to get the trust out of special measures as quickly as possible, and I thank him for the many representations he has made with respect to North Cumbria. I know that the trust is disappointed not to come out of special measures, but it is now rated good in terms of being caring, and the CQC said in July that the staff were supportive to patients and those close to them, so some encouraging things are happening at the trust, and we will do everything we can to help it to go the final furlong.

[Andrew Stephenson (Pendle) (Con)]

I very much welcome the progress that has been made at East Lancashire hospitals. Following action by the Secretary of State last year, the trust has now recruited more than 200 new nurses, nurse support staff and consultants. In March, a new state-of-the-art £9 million urgent care centre at Burnley was officially opened to the public, replacing the old A and E department, which was downgraded under Labour in 2007. Given that poor performance at the trust was established back in 2005 and that the last Government failed to act on it, how can we ensure that future problems are addressed speedily, rather than being hushed up?

[Mr Hunt]

I thank my hon. Friend for his interest in his local hospital and I agree with him that the trust has made good progress. There is a simple way to ensure that these things get acted on quickly and that is to make sure they are public. When things are public—when they are transparent and everyone knows about them—the NHS and Ministers have to act, and that is the purpose of this system.

[Bob Stewart (Beckenham) (Con)]

Will my right hon. Friend confirm that if someone dies or is hurt in a residential care home, the directors of that home will also be held culpable under law?

[Mr Hunt]

Absolutely, and I think we have legislated to make that the case.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

With reference to University Hospitals of Morecambe Bay NHS Foundation Trust, which has just gone into special measures, may I reassure the Secretary of State that the CQC has seen some improvements there delivered by front-line staff, particularly at Royal Lancaster infirmary? However, I want to underline what the hon. Member for Barrow and Furness (John Woodcock) said about the unique geographical problems facing a trust with four hospitals separated by hundreds of miles of sea, mountains and valleys.

[Mr Hunt]

I absolutely recognise that issue, which is something we will have to think about in terms of the long-term sustainability of the trust. Let me reassure my hon. Friend and the hon. Member for Barrow and Furness that the CQC chief inspector will not say that a trust can come out of special measures unless he can see a long-term sustainable future for that trust, so part of the purpose of the regime is to force everyone in the system to confront those issues so that we bite the bullet quickly.

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

The positive progress of the Northern Lincolnshire and Goole NHS Foundation Trust is to be welcomed and is a direct result of the work of health care assistants, nurses and doctors. On the issue of social care, may I commend North Lincolnshire to the Secretary of State and ask him perhaps to visit again? The local council has not only refused the request by the Labour opposition on the council to cut social care in the budget, but has actually increased funding for elderly and disabled people by £1 million in this year’s budget and is opening up a network of well-being centres to support older people in their own homes, as well as constructing a £3.2 million intermediate care facility, so that a lot of our residents do not have to go into hospital in the first place.

[Mr Hunt]

I thank my hon. Friend for the warm welcome he gave me when I visited the trust—including the visit to a not particularly healthy, but delicious bakery as part of the trip. I welcome what is happening in social care, and I think it is something on which we can agree at the national level across the House—that cuts in social care can be very counter-productive, leading to more pressure on the social care system and more pressure on the NHS.

Point of Order

Wednesday 16th July 2014 Commons Chamber

13:30

[Angus Robertson (Moray) (SNP)]

On a point of order, Mr Speaker. During Prime Minister’s questions, the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) referred to “President Juncker, who yesterday called for more European reform and warned that applicant states who want to join the European Union face a complex, difficult and drawn-out period of up to, perhaps, five years.” The right hon. Gentleman went on to say, “As we do not meet before the Scottish referendum, barring a recall, should not the Scots voters bear those words in mind?” The Prime Minister then said that he “wholeheartedly” agreed with Mr Juncker’s comments, which he said were “very important in the context of the Scottish referendum”.

Since yesterday, the BBC has been running the following report:

“Scottish independence: Jean-Claude Juncker ‘not referring to Scotland’. New European Commission president Jean-Claude Juncker was not referring to Scotland when he said there would be no new members of the EU in the next five years, BBC Scotland has learned…a spokeswoman confirmed that he was talking about countries outside the EU.”

I know you are not in a position, Mr Speaker, to explain why the Prime Minister or the former leader of the Liberal Democrats would falsely attribute comments to the Commission President about Scotland. However, how can both the right hon. Member for Ross, Skye and Lochaber and the Prime Minister correct the record, withdraw the bogus assertions and apologise in the Chamber?

[Mr Speaker]

I am grateful to the hon. Gentleman both for the fact of his point of order and for his courtesy in giving me advance notice of his intention to raise it. The hon. Gentleman will be aware, as all Members will surely be conscious, that there are means by which people can correct the record if they think that they have inadvertently erred. It is open to any Member, including the two Members to whom the hon. Gentleman has just referred, to do so. I think it would be fair to say, however, that such matters are way beyond the pay grade of the Speaker. Suffice it to say, I do not think the question of attribution was specifically in the forefront of the minds of the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) or of the Prime Minister. I think they were probably thinking in terms of what they judged to be a read-across between Mr Juncker’s observations on the one hand and the situation appertaining to Scotland on the other. In that sense, it seems to me that it is a matter of debate, but the hon. Gentleman has made his point with his usual alacrity, and he looks satisfied to have done so. We shall leave it there.

bill presented

Counsellors and Psychotherapists (Regulation) Bill

Presentation and First Reading (Standing Order No. 57)

Geraint Davies, supported by Dr Julian Lewis, Jonathan Edwards, Mrs Siân C James, Jessica Morden, Chris Evans, Mr Mark Williams and Jim Shannon presented a Bill to provide that the Health and Care Professionals Council be the regulatory body for counsellors and psychotherapists; to prohibit gay to straight conversion therapy; to make consequential provision for the protection of children and adults; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 7 November, and to be printed (Bill 78).

Political Party Policy Costings (Office for Budget Responsibility)

Wednesday 16th July 2014 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:33

[Alison McGovern (Wirral South) (Lab)]

I beg to move,

That leave be given to bring in a Bill to amend the Budget Responsibility and National Audit Act 2011 to allow the Office for Budget Responsibility to scrutinise and certificate the policy costings of political parties represented in the House of Commons.

This Bill would allow the Office for Budget Responsibility independently to audit tax and spending measures in the manifestos of the main political parties. I think that would provide tough and serious scrutiny for all political parties. Although the Bill is not specifically about forecasting, I remind Members of the comments of the American economist J. K. Galbraith:

“The function of economic forecasting is to make astrology look respectable.”

That is a little joke for economists, but perhaps in years gone by economic forecasting owed more to its being an art than a science. The innovation of the OBR, however, has done much to improve transparency and the manner in which economics is discussed and debated in this place. The Bill would build on that reform and improve the way in which the OBR is able to contribute to democratic debate about the economy.

If I may, I shall provide three short reasons to explain why I think the Bill is a good idea. First, it would not introduce a particularly large change; it is rather modest. The OBR’s current purpose is to provide independent scrutiny of the Government’s policy proposals. Providing scrutiny of those seeking Government office is, in fact, a relatively small change, as it is already central to the OBR’s mission and a natural extension to what it does. It is neither complicated nor difficult for us to decide to accept the Bill, which would require just a few clauses. It would not introduce a wholesale change or invent any new bodies; it would merely extend existing responsibilities. It would introduce a moderate change to what the OBR already does.

Despite it introducing a small change, I think the Bill could make a huge difference to the quality of economic debate. In a good year, the spending of public money should always be done carefully. Even when times are better than they have been recently, we should think hard about each pound spent in the public’s name. At times like the present, however, when all our constituents have had to face four very difficult years, scrutiny of the spending of public money and taxation becomes all the more important, particularly to those who are the hardest up in our society, who have often worked hard to pay the taxes we collect.

At the end of this Parliament, we know that the Chancellor will leave any future Government with very serious challenges, both on the deficit and on borrowing. Any future Government would need to be careful and cautious. Without being too party political at this point, the Chancellor has failed the test he set for himself. We will still have a significant deficit, and the value to political parties of the OBR performing this function would be significant at a time when we need to be so careful about the spending of public money.

Proper scrutiny and transparency will help political parties to get it right and help the public to choose in a well informed way. In fact, Robert Chote of the OBR said that

“independent scrutiny of pre-election policy proposals could contribute to better policy making, to a more informed public debate.”

I think he is right. Our experience tells us that where scrutiny and transparency are carried out in a considered and well resourced way, we get better policies in the end. The academic literature is absolutely clear on this point—independence and transparency are crucial to the political process, generating good economic results. That is almost certainly why other countries—the Netherlands, Australia, Canada, and even the US Congressional Budget Office—already do this and have similar functions to help political parties and, more importantly, the public to see what is going on in manifestos by independently auditing tax and spend measures.

For those three reasons—this would be a relatively small change; despite its modest nature, it would have significant impact on assisting the public and our democratic process; and various countries whose economies and democracies are similar to ours already carry this out—the Bill provides a straightforward way to use the powers of this House to help the public to understand our economy a little better, to choose in a democratic way which of the political parties they want to vote for, and to understand what is going on in manifestos at election time. I can think of very few reasons why we would not want to proceed, and I have provided three very good reasons why we should do so.

Question put (Standing Order No. 23).

13:40

Division 41

Ayes: 203

---

Labour: 182
Conservative: 7
Democratic Unionist Party: 4
Scottish National Party: 4
Liberal Democrat: 3
Social Democratic & Labour Party: 3
Plaid Cymru: 2
Green Party: 1

Noes: 16

---

Conservative: 15
Liberal Democrat: 1

Ordered,

That Alison McGovern, Ian Murray, John Woodcock, Bill Esterson, Gregg McClymont and Barbara Keeley present the Bill.

Alison McGovern accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 23 January 2015 and to be printed (Bill 79).

Retirement of the Clerk of the House

Wednesday 16th July 2014 Commons Chamber

13:50

[The First Secretary of State and Leader of the House of Commons (Mr William Hague)]

I beg to move,

That Mr Speaker be requested to convey to Sir Robert Rogers KCB, on his retirement from the office of Clerk of the House, this House’s gratitude for his long and distinguished service, for his wise contribution to the development of the procedure of the House and to public understanding and appreciation of its work, for his leadership and professionalism in the discharge of his duties as chief executive of the House Service, and for the courteous and helpful advice always given to individual honourable Members.

It is a great pleasure, as my first duty as Leader of the House on the Floor of the House, to move the motion on the Order Paper and to lead the tributes to a highly respected Clerk of the House, Sir Robert Rogers, who is to retire at the end of August. He has been a distinguished presence at the Table for 10 years, the last three as Clerk, itself the culmination of an eminent career of 42 years in the service of the House.

Expertise, intelligence and authority are the essentials of a successful Clerk. Robert has these in full measure and combines them with an abundance of good humour, which at times he has certainly needed. He is both our Clerk and the chief executive of the House, and he has fulfilled each of those responsibilities with great assurance and imagination, for which we salute him. The two roles involve ensuring the highest quality of service to Members at the minimum cost to the taxpayer, and perhaps the greatest testament to his success in combining those goals is his stewardship of a challenging savings programme without detriment to the front-line services provided to Members.

Some might think from his dignified bearing and the immaculate performance of his constitutional duties that he represents only the formal, traditional nature of the House and, of course, he is, indeed, a doughty defender of the interests and traditions of the House— and few, if any, of his 48 predecessors have sported such a fine and constitutionally correct beard. This beard is beyond criticism, since he maintains he wears it by royal command, having been told many years ago to keep it by the Queen of Denmark. But it would be a great mistake to think this means in any way that he is wedded to outdated customs or averse to reform—in fact, quite the opposite, and I hope and believe it is true that the scale, scope and success of the House in scrutiny of the Executive and the relevance of the Chamber to those who elect us to represent them have increased in this Parliament, and his role in fashioning the ideas for this and steering reform has been instrumental to that success.

Throughout a career in which he has discharged all the principal Clerks’ roles, Sir Robert has demonstrated a readiness to enable positive change. Over a decade ago, he supported the Liaison Committee by drafting its report, “Shifting the Balance”, which set out its goal to disprove the notion that the House of Commons was nothing more than a

“toothless adjunct of an all-powerful Executive”.

Looking at the range and prominence of Select Committee activities today, a great deal has been achieved in that regard.

As Clerk of Legislation from 2006 to 2009, Sir Robert implemented the changes in the legislative process agreed by the Modernisation Committee. In 2009 he drew up a 75-point menu of potential changes to the procedures and practices of the House, some of which, such as the appearances by the Prime Minister before the Liaison Committee and the more active use of urgent questions, have come to fruition and have improved the accountability of Ministers to this House.

As Secretary to the Commission and in his present role, he has supported the House’s adoption of new technology. Parliament is continuing to adapt to the digital era, including by the establishment of a Digital Office. Written questions are about to become fully electronic, and many Select Committees now operate on a paperless basis.

Sir Robert has embraced such changes himself. I understand that 1972, the year Robert joined the House services, was the last year in which quill pens could be seen on the desks of the Clerks. The current Clerk, we have all observed, by contrast taps away on a tablet at the Table, and I am assured it is not only to keep abreast of the cricket scores.

It is a further tribute to him that he has been an ardent and very visible ambassador for the House. He has also promoted the explanation of some of the mysteries of the House to the outside world. He has been a great supporter of the outreach service, which you, Mr Speaker, have also championed. He has laid on briefings for the media on complex procedural issues. He has given a large number of lectures and presentations each year. Behind the scenes, he has forged stronger links with both the Executive and the judiciary. He has also seen and embraced the hinterland of Parliament. Many hon. Members will have got to know him while singing in the parliamentary choir or participating in the armed forces parliamentary scheme. Still more will have enjoyed coming across him indirectly, through his two books on Parliamentary miscellany, which must have helped lighten many a constituency speech, and the more cerebral book he co-authors, “How Parliament Works”, which I suspect is not yet read as widely as it should be, even in this House. He has also led his staff well. His loyalty, leadership and support to them have earned him the admiration and affection of his colleagues, as has his unstinting generosity, in which the distillation of the fruits of his knowledge has apparently often been joined by regular baskets of apples from his orchard.

Members, too, have benefited from this largesse in many other ways, such as those on the Defence Committee, which Robert clerked in the mid-1980s. Prior to one visit to British forces in Germany, the Committee insisted they would rough it with the troops in “field conditions” rather than stay in a hotel. They arrived on a wet and windswept night, and found that their enthusiasm had evaporated. They discovered that the Minister for the Armed Forces was staying in a nearby castle with the local baron, and that the standard issue sleeping bags were not built for their bulk. Dealing with this mutinous Committee, Sir Robert apparently produced from somewhere about his person a bottle of fine malt whisky and plastic cups, and restored good order and temper all round. This is a very splendid Clerk indeed.

Members will be familiar with his gift for anecdote and laughter. For every problem or predicament, he has an historical equivalent or amusing anecdote, or a few apposite lines from “Blackadder”. His customary response to any office disaster is a twinkling, “So that went well then.”

In retirement, our loss will be Herefordshire’s gain, where he plays the organ at his local church, is active in the local community and will find more time to indulge in sailing, shooting and watching the cricket.

So I believe I can speak on behalf of the whole House in saying that in all these things, from offering us his excellent advice to cheering us with his good humour, Sir Robert has been unfailingly helpful, patient and courteous, showing admirable and calm authority and finely honed diplomatic skills. In short, he has been an exemplary servant of the House, and I want to thank him, on behalf of us all, for his loyal service to this House and I wish him, his wife Jane, and their family all our very best wishes for the future.

13:59

[Ms Angela Eagle (Wallasey) (Lab)]

First, I would like to welcome the right hon. Member for Richmond (Yorks) (Mr Hague) to his new role as Leader of the House. There will be time on Thursday to pay proper tribute to his predecessor, who is in his new place, but I just wanted to acknowledge that this is his first outing in the House since the reshuffle and wish him well in his new role.

It is with great pleasure that I rise to support the motion in the name of the Prime Minister, the Leader of the Opposition and other right hon. Members to mark the retirement of Sir Robert Rogers as Clerk of the House. Sir Robert has been in the service of the House for more than 42 years, for the past three serving with great distinction as our 49th Clerk—and as chief executive. Since becoming a junior Clerk in 1972, Sir Robert has served in all of the most important roles. He has been Clerk of Private Members’ Bills, Clerk of the Defence Committee, Clerk of the European Legislation Committee, Principal Clerk of the Table Office, Clerk of the Journals and Clerk of Legislation. To all those important roles he has brought his formidable intellect, his insight and, as the Leader of the House has pointed out, his great sense of humour.

I think all Members will agree that Sir Robert has left his mark on this place. He has delivered a savings programme that has ensured that services to Members are protected and value for money is much improved. I know some of his proudest achievements are improving the outreach programme, expanding Parliament week and increasing efficiency by creating a single commercial division. He has also improved diversity by ensuring that the management board of the House contains a 50:50 ratio of women and men. He would be the first to admit that there is more to do on diversity, but he has certainly made a difference.

To serve as Clerk of the House is to occupy a position at the very heart of our democracy. The job description for his successor includes a recommendation from Sir Robert saying that the position is

“the best job in the world”.

Perhaps that explains why in 1748, Jeremiah Dyson, who was to became the 25th Clerk, bought the role for a whopping £6,000 in old—very old—money. I would like to reassure the House that there will be no “Cash for Clerks” scandal to mar the recruitment of the 50th Clerk, which will be done strictly on merit.

While reading Sir Robert’s book “Order! Order!”, I discovered that in 1854 an exam was introduced as part of the selection for employment in the House service. Among the prerequisites were good handwriting and spelling; good knowledge of the history of England from 1603 onwards; and fluency in French, German and Greek. This long-standing requirement to be fluent in several languages stood Sir Robert in good stead when in 1977 he did three weeks on a Royal Navy fishery protection vessel as part of a Committee investigation into the fishing industry. During that stint of practical research, he was part of a boarding party on to a 1,300-tonne Russian trawler caught fishing illegally. Rather than be impounded, the Russians set course for Murmansk, with the boarding party kidnapped—cue international incident and the scrambling of quite a few of our military assets. When the Russians finally agreed to go into Plymouth late at night their officers refused to navigate the ship and so Sir Robert, who is an amateur sailor, took orders from the accompanying warship and translated them into German for the helmsman, who understood no English. The fact that Sir Robert has been with us for the rest of the time demonstrated how successful he was at steering the ship safely into port.

While at Oxford Sir Robert captained Lincoln college’s team on “University Challenge”, when it was presented by Bamber Gascoigne—I say that for hon. Members who remember as far back as I do. Having got in touch with the producers, I can reveal that, unfortunately, no TV footage survived, but with his typical flair Sir Robert led his team to the semi-finals. Over the past 10 years Sir Robert has managed to write three books—“Order! Order!”, “Who Goes Home?” and “How Parliament Works”, which is now in its sixth edition. I should tell the House that a parliamentary question from last year revealed that “How Parliament Works” is the most requested book in the Library— apparently, just ahead of Tony Blair’s autobiography.

Many Members will be aware that Sir Robert read old Norse, mediaeval Welsh and Anglo-Saxon at Oxford. So accomplished was he at his studies that he was offered a scholarship to study “Anglo-Saxon colour words”, but he clearly decided that he would pursue a study of modern rowdy behaviour in the Commons Chamber rather than waste his talents studying ancient swear words and their uses—Mr Speaker, we have reason to be very grateful that he did.

Sir Robert will be remembered as one of the most forthright defenders of this place and the work we all do here making democracy survive and thrive. His letter of resignation offered a typically eloquent case for Parliament’s role as the fulcrum of our democracy, which I know was greatly appreciated by many Members on all sides of this House. I know Sir Robert is a huge cricket fan, although age has dictated that spectating is all that is now left for either of us to do if we are to avoid the possibility of sustaining serious injury. So I hope he will follow the example of the right hon. and learned Member for Rushcliffe (Mr Clarke), who entered government in the same year that Sir Robert joined the House, and leave office to spend more time at the test match.

Mr Speaker, on behalf of the Opposition, I would like to extend our sincerest gratitude for 42 years of the most distinguished public service. May I add my thanks and best wishes to Sir Robert, and wish him, his wife, Jane, and their family all the best for the future?

14:06

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

There can be few public offices with an unbroken history of over half a millennium, but the office of Clerk of the House of Commons is one of them. If Sir Robert Rogers had taken the Clerk’s traditional place at the Table at any time over the past 626 years, he would always have looked perfect for the role. I am also confident that had Sir Robert been there when King Charles I burst into the Chamber, with his troops in the Members Lobby behind him, he would have coped with the situation with as great aplomb as did John Rushworth at the time.

We went to the same school—I refer to Sir Robert, not the King. It was not a four-letter school calculated to cause concern; it was Tonbridge school. We were not contemporaries at Tonbridge. I am 20 years older than Sir Robert, as I seem to be of almost everyone nowadays, except of course our Sovereign. But what our school lives had in common was that at our time of leaving, the Worshipful Company of Skinners, who owns the school, bestowed on both of us an Andrew Judde Exhibition to Oxford—the school’s top academic honour—together with a golden quill pen, which both of us, in different ways, have put to good use.

At Oxford, Sir Robert was an all-round athlete at university level. As the hon. Member for Wallasey (Ms Eagle) has told us, for his degree he studied old Norse, mediaeval Welsh and Anglo-Saxon, an almost uniquely challenging trilogy of academic disciplines. I am told that on the rare occasions he loses his temper, he breaks into incomprehensible old Norse—although its meaning is clear to the dimmest recipient.

To new Members this House may sometimes seem crowded, but after serving in a few Parliaments those of them who retain an inclination to think for themselves may find that the House of Commons can be the loneliest place in the world. Asquith said that Parliament is an institution that eventually destroys all friendships. He was thinking of Haldane and Grey, his closest friends, both of whom he sacked in reshuffles forced upon him—plus ça change. Harold Macmillan, in his old age, told me that, even after his four years in the trenches and his two serious wounds, there were times in the 1930s when he had to summon up all his courage to go into the Smoking Room or the Carlton club. The fact is that any worthwhile parliamentarian must be able to stand with a tiny minority, or alone if necessary, in the defence of their conviction of the national interest.

When friends are in short supply, I strongly advise a visit to the Clerk of the House of the day. There will be found kindness, comprehension, wise and disinterested advice and absolute discretion. That is part of the fine tradition of the clerkship. No one has been better equipped by temperament and experience to discharge it than Sir Robert Rogers. His countenance at the Table is of a granite detachment, unmoved by the funniest of jokes or by the most tedious misbehaviour. In private, he sparkles with vivacity and wit. He is, of course, a man of immense scholarship, steeped in a life dedicated to the rules, practices and conventions of this House. Any Clerk of the House who was not so equipped would leave the Speaker of the day hopelessly floundering in a crisis.

The Clerk is not a civil servant. He is appointed by the Sovereign on advice and owes his loyalty to this House and to none other. However, Sir Robert has not confined his energies to this place and its staff of 2,000—the size of three infantry battalions. He has always been passionate about getting people to understand the great contribution that Parliament makes to our national life. He has, as the Leader of the House told us, given many lectures around the country, not only about the history and procedures of Parliament, but over a wide range of legal and constitutional issues. Last year, when he addressed a seminar in the Lord Chief Justice’s court, he attracted an audience of 70 High Court judges and Lord Justices of Appeal.

I was shocked when I heard that he had decided to retire early. He has been an adornment to his historic office.

14:13

[Mr Jack Straw (Blackburn) (Lab)]

If I may, I will begin by paying tribute to the Leader of the House for his work as Foreign Secretary. The right hon. Gentleman will know from my interventions in the House that I have great admiration for the way in which he conducted that office and for his indefatigable energy. Few who have not held the office—still more who have not been married to one who has—appreciate its pressures. The Foreign Secretary—still more than, say, the Home Secretary—is never off duty and it can feel as though sleep is not allowed. There will be other occasions to pay such tributes at greater length, but I say to the right hon. Gentleman that the path from King Charles street to the office of the Leader of the House is now a well-trodden and, some may say, a distinguished one. It was begun by Geoffrey Howe, it was followed by Robin Cook, and is now taken—someone whose name I forget came in between—by the right hon. Gentleman. I wish the new Leader of the House very well.

The right hon. Member for Louth and Horncastle (Sir Peter Tapsell) referred to Macmillan’s nervousness about going into the Smoking Room. I regret to say that in the bad old days when the hours were long, the collegiality was great and the Smoking Room did what it said on the door, I had no nervousness about entering that room to drink and smoke—not a huge amount, of course, just like the rest of the House. I remember being offered for the first time, by one of my smoking mates, a cigar from a packet. I looked at the pack and thought, “I recognise that man. He is in the Clerk’s Office.” It was only on further examination, when I discovered the name of the cigars, that I found that the fine portrait on the front of the pack was not of Sir Robert Rogers but was in fact of Edward VII, whose name was given to the cigars.

As the Leader of the House said, Sir Robert has a distinguished bearing, which I am sure is designed to give the appearance—and indeed does—that he is a 24-carat gold, wholly signed-up member of the British establishment who takes a similar view to the Duke of Wellington that the British constitution is perfect and needs no alteration—[Interruption.] I remind hon. Gentlemen on the Conservative Benches that the duke said that in the face of the Reform Act of 1832, in case they now propose to repeal what turned out to be a modest Act and return to rotten boroughs and much else besides.

However, Sir Robert’s appearance belies an intellectually adventurous mind and considerable radicalism—meaning not rampant, mad modernisation, but sensible reform—with regard to this place. As Leader of the House for a year, I saw his work and the careful advice that he gave to the Clerk of the Modernisation Committee when I chaired it and how he was able to steer the Committee’s bright ideas for timed speeches in the Chamber and topical questions and turn them into a reality that would work. It is never quite as easy as it would seem.

The Leader of the House spoke of the stronger links that Sir Robert forged behind the scenes with the Executive and the judiciary. It is worth saying a word about those, because from the feedback that I received from senior members of the judiciary I know just how valued they were. Previously, there had been an astonishing absence of real engagement by the Clerks responsible for legislation with those who had to form the legislation and those who had to interpret it—one of the hardest tasks in the world. Sir Robert put that right, and that demands great commendation.

In a country of which we are all immensely proud, with a vibrant democracy that still manages not to have a formal written constitution, there are some individuals on whom rests the working of our democratic arrangements and the responsibility for ensuring the proper balancing of the power of the state and the rights of elected Members and of the public. In that regard, there is no greater responsibility than that which rests on the Clerk of the House, who in many respects is the keeper of our constitution. No one has better met that role than Sir Robert Rogers.

14:19

[Sir George Young (North West Hampshire) (Con)]

It is a pleasure to follow the right hon. Member for Blackburn (Mr Straw). One advantage of no longer being Chief Whip is that one can take part in debates rather than moving, from the Dispatch Box, that they be curtailed. I can think of no better way of resuming an innings on the Back Benches than by adding a brief and well-deserved footnote to the generous tributes that have been paid to Robert Rogers, who holds a post that 100 years ago was held by my great-grandfather, Sir Courtenay Ilbert.

Sir Robert joined the House at about the same time as I did and, as we have heard, he helped to guide the House through the changes that were necessary if we were to continue to do our job properly. He was on my radar in the 1990s when I was shadow Leader of the House, when he was secretary to the Braithwaite committee—one of many committees set up to consider the administration of the House—which considered the vexed question of whether the job of the Clerk should be split into two, a Clerk and a CEO. He navigated his way around those rocky waters with dexterity.

That debate is for another time, but I endorse what the Leader of the House has just said: in my view, Sir Robert has all the qualities necessary to perform the job of both Clerk and chief executive and he has the energy to do both at the same time. His knowledge of procedure is legendary, but is backed up with some sensitive antennae that can assess the mood of the House, steer it through “Erskine May” and arrive at the destination that the House needs to reach. He has been a fantastic chief executive, which requires a totally different portfolio of skills from that of the Clerk. He has pioneered the introduction of new technology into this place and has been the accounting officer for a huge budget. He has taken his HR responsibilities very seriously and has helped to shape the debate about the long-term future of the building.

He has always been totally impartial. As Leader of the House and as Chief Whip, I have had frequent occasions to ask his advice and he always put the interests and reputation of the House at the heart of any advice. The Deputy Leader of the House at the time has asked me to say how grateful he was to the Clerk for his advice on the highly complex issue of privilege.

Sir Robert has been a great servant of Parliament. He is a civilised man, a successful author, a man with a mischievous sense of humour, legible handwriting and a delightful turn of phrase. He is excellent company, and he is a man with interests outside this place. We wish him and Jane all the best as he pursues those interests with the same commitment and enthusiasm with which he pursued the interests of the House, its staff and its Members.

14:22

[Mr Nigel Dodds (Belfast North) (DUP)]

I, on behalf of my right hon. and hon. Friends, happily and heartily endorse everything that has been said so eloquently by previous speakers during this short tribute debate. In expressing our gratitude to Sir Robert for his decades of service to this House, I particularly thank him for the courteous, professional and ever helpful way in which he treated smaller parties such as ourselves and individual Members. I extend to him, his wife Jane and his family every best wish and blessing for a long and happy retirement.

14:23

[Mr Andrew Lansley (South Cambridgeshire) (Con)]

I am very glad to have this opportunity to pay tribute to Robert Rogers, with whom it has been my pleasure to work during the last two years as Leader of the House. I heartily endorse everything that has been said and, in particular, what the Leader of the House said in tribute. I welcome him to his responsibilities. I know from personal experience that he will start out, as a previous Leader of the House advised me, not knowing precisely what his tasks will entail, but he will find that he enjoys it far more than he perhaps anticipates. One of the things that I have most enjoyed has been having the ability to work with Robert Rogers, the Clerks and the administration of the House. Many Members might not understand the complexity and demands of the tasks they have to undertake, and I was one of them before I was Leader of the House. I now appreciate the skill with which not only the Clerks but the whole House service manage to achieve that.

I completely agree with all that has been said. Robert’s scholarship and knowledge are legendary and I have had the benefit of them. From my point of view, one of the things I most appreciated was his ability to take on problems, often of a complex procedural kind. I must say that I did not lack advice, often expert advice, but the problems with which one must deal as a business manager are sometimes deep. The quality of the advice one receives is not just the product of time spent in this House. It often depends on the quality of the intellect and the judgment that goes with it, and Robert has brought to the House in an exemplary fashion not only expertise and authority but the judgment and intellect needed to advise on how such problems might be solved. Just because things sometimes look easy does not mean that they are, and the nature of what the Clerk—and especially Robert over his career—can achieve involves making people believe that procedure can be dealt with readily whereas in truth it is the product of immense expertise and effort. He has demonstrated that to a remarkable and exemplary degree.

Let me add just a couple of points. From a personal point of view, many of the tributes illustrate that the relationship between Members and Clerks, particularly on the Committees on which we serve, is often a close one. At the heart of it—this has been the case for me over the past two years—is trust. Trust is a very precious commodity and I could trust Robert with every question, every issue and every problem that might arise, knowing that he would address it utterly impartially. I know that that was the experience of Government, Opposition and other parties in this House. He was utterly impartial among Members and parties, in a way that enabled one to have absolute trust in the integrity and authority with which he applied himself to issues. That has been tremendously important and I have greatly appreciated it.

I also appreciate, as I think we all do in the House, the ability to have such personal relationships, and the fun that we have had together. Over the past two years, I have particularly enjoyed many humour-laden conversations about issues that might not otherwise have been regarded as being that funny.

I share the Father of the House’s regret that Robert Rogers was not able to be persuaded to continue in post for longer. We have benefited immensely from his expertise, authority, integrity and honesty, and the trust we can place in him, which has been discharged so wonderfully over these past three years. I join others in wishing Robert, Jane and his family fun, enjoyment, humour and a very full life in Herefordshire and elsewhere in the years to come.

14:27

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

First, may I add my welcome to the Leader of the House and wish him well?

I endorse everything that everybody has said in the past half hour or so, but I rise principally to speak on behalf of Plaid Cymru Members past and present and Scottish National party Members past and present who, as one, are very grateful to Sir Robert for all the years of assistance he has given us as minority parties—I echo what the right hon. Member for Belfast North (Mr Dodds) has said—without fear or favour, always being fair and always doing his best.

I am standing down from the House myself next year after what I feel has been a rather lengthy 23 years. The fact that Sir Robert has been here for 42 years should humble us all and bears testament to his wisdom, leadership and guidance, all provided to Members in an unfailingly courteous and helpful way. It also, incidentally, speaks to his stamina and his great patience.

I was recently reminded of his great humour and his kindly ways when at Christmas time, in the lead up to the festive period, he had on a red and white hat and was serving food to the masses of Westminster in Portcullis House. He looked not too unlike a certain other Christmas figure and was in a similarly jovial mood.

Aside from his duties in the Chamber, it is a continual wonder that Sir Robert is also chief executive of the House of Commons service, meaning that he is responsible for a budget of £220 million and a work force of more than 1,850. From a bit of reading that I did when I was considering this tribute, I understand that he put in action the decision to move Select Committees to paperless briefings. As someone who is still coming to terms with my iPad, I have to thank him for dragging me into the electronic age, much to the amusement of my staff, members of the Justice Committee and everybody who knows me. I am conscious that the aim is to save the House money and cut down on some of the 8.5 million pages printed annually.

Sir Robert is a moderniser, despite what has been said about his stately appearance, and he has always been keen to use technology and to bring in all kinds of people to ensure that the Commons really does represent the times we live in. As he has said,

“My aim is to enthuse people who would be put off by the look of the building and think they will never have the privilege of working for Parliament.”

That sums up much of his thinking.

On Sir Robert’s educational background, I was very pleased to find out that he had studied mediaeval Welsh at Oxford university, along with old Norse and Anglo-Saxon, as has been said. Therefore I consider it appropriate to quote from the laws of Hywel Dda, Hywel the Good, from the manuscripts of Jesus college. This section sets out the treatment of thieves in medieval Wales:

“Cynnen a Rhaith yn Erbyn Lleidr.

Ny dyly Kynnen vot ar leidyr a berthyno y werthu yny vo manac arnaw yn gyntaf (trwy twg) yn tri lle, megys y mae racdywededic kyn no hynn.

Ny dyly bot reith ar leidyr kysswyn yny vo manac ar(n)aw yn gyntaf yn llys.”

I had the privilege of studying mediaeval Welsh laws, and it is entirely possible that within the confines of this building only Sir Robert and I understood what I have just said. I hope I pronounced it correctly.

[Mr Straw]

What did you say?

[Mr Llwyd]

I quoted a passage about the treatment of thieves in mediaeval Wales, who were treated with a great deal more compassion than by some Ministers I could think of.

If I had known of his background before, I would no doubt have approached Sir Robert to discuss the golden period of Welsh literature—greats such as Taliesin and Aneirin, and the Mabinogi. I am sure he and his family will be very welcome at the National Eisteddfod or anywhere in Wales whenever he wishes to rekindle his interest in the field. I look forward to seeing him there if he does. I wish him a fond farewell and the best of luck to himself and his family for the future.

14:29

[Sir Alan Haselhurst (Saffron Walden) (Con)]

I am grateful to have the opportunity to make a short appreciation of Sir Robert’s service to the House, although I am conscious that it may lack the erudition and eloquence that we have heard so far. However, compared with the speech of the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), Hansard may have less trouble with it.

When one enters the House, the clerkship is held in great awe. I remember the fear, almost, of going into the Table Office to put down a question, seeing one’s English mangled into proper form and leaving somewhat chastised. It is part of the tribute to Sir Robert over the years that it is a far less daunting experience now to go to the Table Office and generally to deal with Clerks who serve us.

It is a bit of a shock to me to realise that I entered the service of the House before Sir Robert, and I have had the opportunity to see him in many different guises. I suppose our relationship was closest first of all when he was Clerk of the European Legislation Committee. That is when I became aware of his scholarship, his organisational skills and his great good humour, particularly when having to shepherd a group of lively and not all like-minded colleagues to Brussels for the annual interrogation of UKRep. Then, perhaps his greater difficulty was to settle where we might all have dinner together.

On becoming the Chairman of Ways and Means, I developed regular contact with Sir Robert as he then occupied a series of posts which related to matters on which I had to adjudicate. That is when I became fully appreciative of the clarity and impartiality of the advice which our Clerks provide and of which Sir Robert was an outstanding exemplar. As Clerk Assistant it was part of his responsibility to liaise closely with the Chairman of Ways and Means. Within the bounds of propriety, I think I can say that that is when we became very good friends. Perhaps our shared love of cricket helped. I remember walking along the corridor, and from his door, which was ever open, I was beckoned. He proceeded to show me his smartphone which had all the details and scoreboard of every cricket match being played. My Nokia was dispatched very soon afterwards.

Mr Speaker, you will recognise as well as any that the performance in the Chair of those who are privileged to occupy it is dependent to a great extent on the instant availability of advice, particularly at tricky moments. These can occur at the time of handover from one occupant of the Chair to another. Just as I thought I might have developed some reputation for capability in that role, it took a severe knock when I took over from Sir Michael Lord at a moment when we were dealing with Lords amendments. The House will not necessarily appreciate that the documentation for that is particularly complicated, including paper A and paper B. It just so happened that we were proceeding to a question not on one matter, but on a whole series of matters, which I was unable to grasp as readily as I should have done. So I was conducted through that by Sir Robert sotto voce, which possibly helped to save my reputation on that occasion.

Since 2010 I have been Chairman of the Administration Committee, which has brought me closer to management and to understanding the responsibilities that Sir Robert has held so effectively as our chief executive. I have begun to understand some of the barriers which are in the way of decision making. The joy of dealing with Sir Robert—apart from delving into his rich experience of “How Parliament Works”, to give an extra plug to one of his publications—was his can-do approach in surmounting those barriers, and a determination to see that we could cut through some of the difficulties for the benefit of Members and the wider public that we serve.

Finally, during this last period, I have had the honour to be Chair of the Commonwealth Parliamentary Association. Sir Robert is by no means the first Clerk of the House with a love of the Commonwealth and its parliamentary network, but Sir Robert again and again in my experience has demonstrated his support and understanding. There will be many other Commonwealth Parliaments, I believe—Parliaments, Clerks and parliamentarians across the Commonwealth—who will echo the sentiments being expressed in this House today. In the line of distinguished people who have served us as Clerk, I have no doubt whatsoever that Sir Robert will stand extremely tall.

14:38

[Mr Jim Hood (Lanark and Hamilton East) (Lab)]

I welcome the new Leader of the House to his place. I am delighted to support the motion that he moved, along with my hon. Friend the Member for Wallasey (Ms Eagle), the shadow Leader of the House, to say thank you to a very remarkable servant of this House.

I was the Chairman of the European Legislation Committee and its successor, the European Scrutiny Committee, for 14 years. For almost five of those years Sir Robert was the Clerk to the Committee. That is when I got to know Robert Rogers and as a Back Bencher to value him.

We have heard many tributes to him today, but I shall offer my experience as a Back Bencher of this remarkable man. As the right hon. Member for Saffron Walden (Sir Alan Haselhurst) said when he was talking about the trips to Brussels, Robert would have been with us when I was the Chairman of that very interesting Committee. I truly appreciate how he guided that Committee through difficult times and how he guided me as its Chairman.

When Robert first came to the Committee, I had one difficulty: I had word blindness to his name. I started off calling him Roger Roberts. Robert, being the man that he is, just ignored it. I am sure he would say that he never noticed. It was one of those moments where, if you ever have such moments of word blindness, you say to yourself, “I shouldn’t have done that,” and the more you concentrate on that, the more you do it. For the first few meetings, I was getting his name wrong, but I soon got to know how to work with Robert Rogers, and I enjoyed the four years that he was Clerk to our Committee.

Robert has written two books. I could write a book on my experiences during those four years with Robert. I was just thinking of what wonderful memories I have, but I will give one. Just remember what the right hon. Member for Saffron Walden said about the Committee that we were with. When we went to Luxembourg to meet the Court of Justice, seven judges had agreed to meet the Committee and give us 45 minutes. It was a tribute to the Committee that seven of them accommodated us. We met the judges and one particular Member, who will be nameless, for good taste, was going on a bit, longer and longer, and taking up the time of the Committee and the judges who had kindly agreed to listen to us. Robert, who was famous for is post-notes—he would write a little post-note and pass it to you—sent one to me saying, “Chairman, you may wish to ask the hon. Member to ask his question.” At which, I turned round and said to the Member, “Shut up,” then I asked, “Is that okay, Robert?” He blushed, and he knew he had got his point across.

As well as understanding the fantastic service that this man gave to the House, we have to remember his expertise and the way it was given to us. Robert Rogers taught me to value the Clerks of this House. I am sure that any Select Committee Chairman will tell you, that the quality of the service that the Clerks give to the House is absolutely outstanding, and I am sure is incomparable with anywhere else in Europe or even in the world. It is excellent. I often say that there is no such thing as a bad Clerk; they are just better than others. Their service is immense, and Robert was rightly given the top accolades that could be given to them.

I want to finish by saying thank you to Sir Robert for all that he taught me about what goes on in this place. I have been a Select Committee Chairman for 14 years and I have had the honour to be on the Speaker’s Chairmen’s Panel for almost 17 years, and I know the value of the Clerks in general, and I know the value of the Clerk of the House to whom we are paying tribute today in particular. He was an outstanding public servant, and all the voluminous tributes that we will hear today could not give adequate compliment to what he has been able to do for us and for the House during his 42 years in the House. I say a personal thank you to him for his help and friendship. and I wish him and his wife, Jane, and his family all the best for the future.

14:44

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

It is an unusual retirement occasion when the man we are honouring hears tributes from two of those who have worked most closely with him who have demitted office in the preceding 24 hours. I pay tribute to both the former Leader of the House and the former Chief Whip. It has been a pleasure to do business with them, as it is sometimes said. I look forward with the same pleasure to doing business on behalf of Select Committees with the new Leader of the House, following his distinguished service as Foreign Secretary.

When I came to the House in 1973, Robert Rogers was already here, and it would come as no surprise to any of those who knew him then that he would emerge as being a particularly distinguished Clerk of the House. The fact that he had those qualities of leadership was obvious to many people even then.

Reference has been made to the way in which the post of Clerk of the House combines that of being the chief procedural adviser to the House and to you, Mr Speaker, with that of chief executive, and it is not necessarily an easy match. But some people can do it, and Robert Rogers could do it very well. He led the House service very well, saw through changes—I will refer in particular to those that affect Select Committees—but continued to speak with authority on procedural matters and when giving procedural advice. It was very much easier to take his advice because it was rooted in such considerable knowledge and such wise judgment.

It is particularly Sir Robert’s work in relation to Select Committees that, as Chairman of the Liaison Committee, I want to mention. He served in the Select Committee role extensively from its earliest days. He was Clerk of the Trade and Industry sub-committee of the Estimates Committee, which was the nearest thing we had to a departmental Select Committee—or the House had, because it started even before my time. He was Clerk of the Defence Committee during the storm over the Westland affair. A colleague recalls that

“his efforts at this time kept the Committee on an even keel despite the political storms which threatened to capsize it”.

Some of us remember that well. He was Principal Clerk of Select Committees when the Liaison Committee produced the report “Shifting the Balance”, of which he wrote the first draft. That work began the process of strengthening Committees and foresaw the outcome—things that we have come to take for granted: pre-legislative scrutiny of draft Bills; confirmation hearings for major public appointments; an enhanced role for Chairs recognised by an additional salary; a more open system for choosing Committee members; and the creation of the extremely valuable Scrutiny Unit to support Select Committees. All these were envisaged in his earlier work, and he has led the House service during their implementation.

As several hon. Members have mentioned, Sir Robert has a hinterland both of academic knowledge and, over many performances, a formidable contribution to the bass section of the Parliament choir.

In his valedictory letter, Sir Robert referred to the House as

“the precious centre of our Parliamentary democracy”,

and, he said,

“with all my heart I wish it well”.

Promoting the work of the House, and making its work known to the public, has been part of the mission of a distinguished career. To the extent that we have been able to be successful in making the Commons more effective in its scrutiny of the Executive, we have built on the foundations that he put down, and we have enjoyed his continuing support and encouragement while we have done so. Those who follow him in this role, and those who follow us as Select Committee Chairs, will need to maintain that same determination to make this House effective. We thank Sir Robert, and as he has wished us well, we wish him well.

14:48

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

It is a great pleasure to rise to support the motion and add my voice to those who have already expressed appreciation for the dedicated and superb service that Sir Robert has given over so many years. His knowledge of the House, its procedures, its tradition, its history, is without peer, whether as an author of both amusing and serious volumes, or in the advice that he has given from the Table or to us privately. If I may just mention one small personal example, we now regularly debate on a substantive and amendable motion our finances and financial plan. It was an idea that was conceived by the Finance and Services Committee, but we could not find a procedural way of doing it. It was Sir Robert who found the way through, and therefore has, through his advice, enabled a valuable tool to come to the House’s management that we would not otherwise have had.

Others have paid tribute to his skill in the procedural areas and I wanted rather to record my appreciation for his work as Chair of the Management Board and leader of the House service and Accounting Officer, a less seen but none the less vital part of what he has done. This has been a quite extraordinary Parliament for innovation and change. There has been a wellspring of renewal that has come from a number of sources. It has come from ourselves through the Wright report, it is has come from the Chair, through the Chair of the Commission and other areas, and it has come from the House service.

Let us consider what is now happening in Parliament: the election of Select Committee members and Chairs; the revitalised opportunities for scrutiny; the new rules of governance in the House service, which many Members might not be aware of; the savings programme and its successor, continuous improvement; the diversity challenge; and the education and outreach programmes. Any one of those taken on its own would be a substantive management challenge, but taken together they represent a comprehensive management challenge that has required leadership demonstrating integrity, skill and competence. That is precisely what we have had from the Clerk.

I have had the opportunity to observe at first hand, at meetings of the Commission and of the Audit Commission of the House and at staff gatherings, how Sir Robert has sought to lead by example and from the front, but using a collegiate and collaborative style. He offers both challenge and support. He has been open to new ideas and has sought to mesh those new ideas with tradition and innovation, to give the best to the House service. He is the diversity champion on the Management Board, and as such he sought to widen access to the House service. He said at the last Commission meeting that he was particularly proud of the fact that all the apprentices in the scheme had found full-time work in the House service.

It is not easy to change a culture or to adapt to new ways, just as it is not easy to adapt to stricter financial times. Similarly, it is always a challenge to keep the customers happy, and if there is a bunch of customers who are more difficult to keep happy than us, I don’t know who they are. Sir Robert has managed to do all those things with singular success. He has led a transformation in the governance and financial management of the House service, which has moved from what could be described as an era of gifted amateurism to one of thoroughly competent professionalism. That is no mean feat, and I add my thanks to those of other Members for all that he has done. I wish his wife and family the very best in his retirement.

14:52

[Sir Edward Garnier (Harborough) (Con)]

When I first met Robert Rogers, when I first came into the House, I assumed that he was a 19th century duke, simply because he looked like one. He assured me that he was not, however. Since then, I have got to know him very well indeed, not least because his sister-in-law is my son’s godmother. Robert Rogers has led by example. He has shown himself to be a learned man, a kind man and a very great man. We will miss him terribly.

14:53

[Mr Andrew Robathan (South Leicestershire) (Con)]

I rise briefly to support the motion. It is about someone with whom I overlapped at university, although he is self-evidently a great deal older than me.

[Mr Speaker]

Seventeen months, to be precise.

[Mr Robathan]

As always, Mr Speaker, you are a mine of information.

I just want to share a little story with the House. Hon. Members might not be aware that, at one stage, Sir Robert was thinking of joining the Army. I think that he wanted to join the Welsh Guards, but instead he decided to come and serve this House. I think we would all agree that the Army’s loss has very much been Parliament’s gain. However, he did not lose his interest in shooting, as we have heard. One day, when he was Clerk Assistant and I was the Opposition Chief Whip, I was walking past his office and I heard the sound of muted explosions. I went in and he showed me what he was doing. As we have heard, he embraced modern technology with great fervour, and he showed me something that one could play on the internet, which was a grouse shooting practice game, produced by Purdey. I am sure that he was not wasting his time doing that, and it was extremely helpful of him to show it to me. I have tried it since then, although only very occasionally. I remain a poor practitioner of the game and of shooting on grouse moors, but he is a fine practitioner of the game and of shooting in general.

When I was doing my job with defence personnel, Sir Robert decided in a sensible, pragmatic and compassionate way that he wanted to bring disabled service personnel—particularly those who had recently been injured in Afghanistan—to work in the House, especially in security. I do not think that the programme came to much in the end, but it was a really good idea. That was Sir Robert showing his compassionate side to people who might not have seen it before.

Not every Member of the House has brought it into good repute; indeed, some have behaved very badly. However, the Clerks’ department has been a rock and, in Sir Robert Rogers, we have had a fantastic exemplar of someone who can uphold the dignity of the House. For that, we should all thank him.

14:55

[Jacob Rees-Mogg (North East Somerset) (Con)]

I hope that the House will forgive me for following the line of distinguished right hon. and hon. Members who have just been speaking, but I thought that a Member from the 2010 intake might say a few words. Before this debate, I consulted the Clerk of the House to find out whether I could amend the motion. I thought it might be sensible to table an amendment to say that Sir Robert could not retire until he had exceeded the length of service achieved by one Paul Jodrell, who managed 43 years in the post. I am sure that everyone in the House would have wanted that, as his retirement is a matter of great sadness and regret. It is a loss to us.

Sir Robert is a walking “Erskine May”. He is “Erskine May” made flesh. He understands and appreciates every bit of that great document and gives us the benefit of his wisdom. As a new Member, I came into the House and saw this splendidly bewigged figure. There is a lot to be said for wigs, as I am sure you will agree, Mr Speaker. I found him to be a gentle, amiable and knowledgeable person who was willing to help Members to find their way around procedures and help them to use those procedures to achieve their ends, rather than saying that precedent did not allow things to be done. When I asked him about a particular motion that I was thinking of tabling, he told me that it had not been used recently, by which he meant that it had not been used since 1751.

That is exactly what we want from a Clerk to the House. We want someone who is so steeped in the history that he understands where things have come from, and therefore how they can be used. When Sir Robert appeared before the Procedure Committee recently to discuss the concept of renewing petitioning and introducing e-petitions—a very modern idea—he took us back to 1305 and the origins of petitioning. Indeed, petitioning predates 1305. He explained how powerful petitioning had been in the earliest days of Parliament, and we drew the interesting conclusion that e-petitioning could be equally powerful in the new Parliament. That is where precedent can take us. It does not show us what cannot be done; it shows us what can be done. It is more a living aspect of this Parliament than a dead hand that does not allow change. Sir Robert saw that clearly; he got that right.

Sir Robert therefore enabled us to do things in a better way by ensuring that the powers of the House were there to be used, ideally, to keep a check on the Executive, which is what we are here to do. I am sorry that quill pens went out when he came in. Modernisation can sometimes come in too quickly and be taken too far. Finding that there is a precedent for exercising our power is at the heart of what we do, and the precedent of this House, which is vested in the Clerk, is the way in which we stop arbitrary uses of power. In Sir Robert, we had a man who was able to help us to hold the Executive to account, to stop arbitrary uses of power and to preserve democracy in this country. Whoever succeeds him will have a very hard act to follow. His departure represents an enormous loss, and I am very sad that he is not going to exceed the length of service achieved by Paul Jodrell. As a cricketing man, he will know that, although 42 is not a bad average, one will always want to carry on a bit longer in any individual innings.

14:59

[Michael Fabricant (Lichfield) (Con)]

My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and I agree on most things, but not on everything, and perhaps I am a bit more in favour of modernisation than he is. However, I certainly agree with him when he says that this particular Clerk will be a very hard act to follow. The Leader of the House, the shadow Leader of the House and others have rightly pointed out the great attributes of this Clerk. The motion also talks about his

“professionalism in the discharge of his duties as chief executive of the House Service”.

What it does not talk about, and perhaps what no one has mentioned up to now, is the deep affection that many of us feel for this particular Clerk. It is for that reason, and not just for his competence, that he will be greatly missed.

My first dealings with Sir Robert were on the Administration Committee—I was on the Committee when Stuart Bell was Chairman. I remember a particularly difficult issue to do with whether we should have straight or crinkly chips. Those chips were discussed in some detail and indeed it got quite stressful in the Committee. But, as ever, Robert Rogers was able to calm things down. A resolution was made and we decided on straight chips, and, as everybody knows, I support everything that is straight in so many ways.

As people have pointed out, Sir Robert is a moderniser and open to new ideas. If I can boast, I came up with an idea a short while ago, suggested it to the Clerk and it has now been incorporated in our practice. I do not see it on the Order Paper today, because it is not relevant. My suggestion was to do with the notes at the bottom of each motion where it makes it clear not just that something might be subject to a Standing Order, such as Standing Order No. 52(1)A, but that it is something that is not votable on when we reach the 7 o’clock or 10 o’clock finish time. He has not just been helpful to me in that way. When I, like my hon. Friend the Member for North East Somerset, appeared on “Have I Got News For You”, he was instrumental in lending me a wig—in fact it might have been your wig, Mr Speaker—

[Mr Speaker]

Well it wasn’t that one.

[Michael Fabricant]

I was able to demonstrate very clearly what a wig should indeed look like.

I have already said that our Clerk is one of the most popular Clerks that we have had in this House—that is certainly the case in the 23 years that I have been here. His cheerful disposition, often under difficult circumstances, has been an illumination to many of us. As people have already said, his detailed knowledge of procedure is important. So this Clerk will be sorely missed by the House and by me personally. I wish him and his family well in retirement. Now, we do not know why he has chosen to retire early, though his working environment, behind closed doors, has not always been easy, as those in the know have already alluded to. In that respect, despite Sir Robert having studied Anglo-Saxon at Oxford, being told at least once in front of others to f-u-c-k off by you, Mr Speaker, would not have encouraged him to stay.

[Mr Speaker]

I will ignore the last observation, which suffered from the disadvantage of being wrong.

May I thank the Leader of the House, the shadow Leader of the House and all who have contributed to the exchanges on this motion for what they have said? Just before I put the question, let me record, for the benefit of the House, two experiences of my own. Within a small number of weeks of my election to this office, I had raised with me in correspondence by a constituent a knotty constitutional issue, the details of which I will not belabour the House. It seemed proper to mention it to Robert, as I happened to be seeing him on unrelated matters. I was immediately impressed by his response. He said, “Yes, Mr Speaker, the thesis that your constituent advances is interesting, but if I may say so it is not original. Moreover, it is open to quite straightforward rebuttal. You will recall that a fortnight ago, when you were elected the Speaker of the House, I presented to you a signed copy of the sixth edition of my book ‘How Parliament Works’ co-authored with Rhodri Walters. The matter in question is treated on page 46.” I checked, and sure enough it was on page 46.

Secondly, reference has been made by several people to the hinterland of the retiring Clerk. Robert has many interests, cultural and sporting alike, and several colleagues have referenced his interest in cricket. Unlike the right hon. Member for Saffron Walden (Sir Alan Haselhurst), I cannot claim to share that interest, but colleagues will know that I happen to be passionate about tennis. We discussed this question of our sporting interests, and I said, “I am afraid that I can’t play cricket with you, Robert, because I simply cannot play.” He said, “Mr Speaker, I am afraid that I am unable to play tennis with you, because it is not a sport that I can play. However, may I suggest a compromise?” I said that I was all ears. He said, “I am myself a past practitioner of real tennis, which has a considerable lineage in this place.” He would be prepared, he said, to play me at real tennis. I confess that I thought it prudent to allow a lengthy period of practice before subjecting myself to such a difficult task, and that period of practice is ongoing.

Question put and agreed to.

Resolved, nemine contradicente,

That Mr Speaker be requested to convey to Sir Robert Rogers KCB, on his retirement from the office of Clerk of the House, this House’s gratitude for his long and distinguished service, for his wise contribution to the development of the procedure of the House and to public understanding and appreciation of its work, for his leadership and professionalism in the discharge of his duties as chief executive of the House Service, and for the courteous and helpful advice always given to individual honourable Members.

Small Business, Enterprise and Employment Bill

Wednesday 16th July 2014 Commons Chamber

Second Reading

15:06

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

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

The Small Business, Enterprise and Employment Bill has two fundamental purposes, one of which is to help small businesses grow and succeed, and the other is to ensure that the UK continues to be regarded as a trusted and fair place in which to do business. It is an extensive Bill, and I fear that if I talked through the 12 parts, 149 clauses and 10 schedules, we would have a speech of Fidel Castro-like proportions from me now, and I do not want to stray in that direction. I apologise to the House in advance that I may therefore have to gloss rather superficially over what are some very complex and meaty issues. There will, as a consequence, be many happy hours spent in Committee. I am pleased to say that the Minister for Business, Energy and Enterprise, my hon. Friend the Member for West Suffolk (Matthew Hancock), who has just enjoyed a welcome and deserved promotion, will be leading our team in Committee.

I thought that the most useful way of introducing the Bill is not to follow through the mechanics of the Bill itself, but to dwell on four big themes that flow through it in different ways. The first relates to employment. We want to make changes to the legislation in a way that benefits both employees and employers to ensure that employees are not disadvantaged by unacceptable practices, be they exclusivity clauses in zero-hours contracts or underpayment of the national minimum wage.

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

rose—

[Vince Cable]

I am coming on to that matter in detail. I do not know whether the hon. Gentleman will be happy to wait until we get to that section.

Secondly, I want to ensure that our companies are trusted and transparent, so that they cannot conceal ownership or control and that they engage in good corporate behaviour. Thirdly, I want to help our small businesses get access to the finance they need to grow and export, compete in public sector procurement and address some of the issues around late payment. Fourthly, I want to support the Government's regulatory reform agenda, ensuring that ineffective, out-of-date and burdensome regulation does not hold back our businesses. Those are the four basic themes of the Bill.

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

There is so much in this Bill that many of us interested in small business welcome. However, there is an undercurrent of people saying, “Has it got enough teeth?” What is the right hon. Gentleman’s response to that allegation, which is being heard from all parts of the House?

[Vince Cable]

Many provisions that we will discuss are about enforcement, which in everyday language is what we mean by having teeth. When we get to the relevant sections, the hon. Gentleman will see that much of this Bill is about tough enforcement of regulation, not simply about creating rules for their own sake.

Let me just deal with the issues around employment. I think we saw today some of the remarkable and positive developments that are taking place in the labour market. We now have unemployment down to 6.5%, which is one of the lowest rates in the developed world. More than a million jobs were created in the past year, which is a record. That is an extremely positive outcome of the recovery, which is now clear and well-established.

[Chris Williamson (Derby North) (Lab)]

Although it is welcome that those jobs have been created, will the Secretary of State accept that many of them are insecure and low paid? If people do not have money in their pockets because they are working on zero-hours contracts, that will have a negative impact on the long-term economic recovery of our country—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We do not need Back Benchers to join in at this stage. We are all right; I am sure the Secretary of State can handle it himself.

[Vince Cable]

Indeed, I believe that in the hon. Gentleman’s constituency unemployment has fallen by 46%, and he is gracious enough to have acknowledged that. We are in the first stage of the long-term recovery. There are, of course, issues around low pay and low productivity that will require investment, and that is where our long-term commitment to growth and industrial strategy is important. We want employment that is high-quality and secure, and all the evidence suggests that, compared with most parts of Europe, British employment in this recovery is more permanent and secure than elsewhere, although clearly there is more to be done.

That leads us to zero-hours contracts, which as far as we can establish apply to around 2% to 4% of jobs. The issue has aroused a great deal of concern because of its implication that many people are insecure in their work, and on the back of those concerns I initiated a call for evidence and a consultation on how we should deal with the problem. Two contrasting views came to light. There were indeed shocking examples of abuse, many of which are captured in the problem of exclusivity clauses that we have now committed to end. At the same time, it was clear that zero-hours contracts have a genuine positive role in the labour market and are appreciated by many individuals because of the opportunity they provide, as well as the advantages to employers. Indeed, recent research from the Chartered Institute of Personnel and Development, which has done much of the authoritative work in this field, contrasts satisfaction levels in zero-hours contracts with other work, and whether people are treated with respect by their senior management. It shows that zero-hours contracts are marginally better in both those criteria than other forms of employment.

[Jonathan Edwards]

The measures in the Bill to prohibit exclusivity in zero-hours contracts are to be welcomed, but why not just ban zero-hours contracts? Is the Secretary of State seriously saying that the only way to have a flexible labour market is to have zero-hours contracts?

[Vince Cable]

Absolutely not. That is merely one aspect of a positive feature of the UK and a reason why companies wish to invest here. As I said, we want to maintain the best of flexibility while dealing with abuses. The evidence that we gathered led us to reject calls for an outright ban on zero-hours contracts, which some campaigning groups have argued for. Where we deal with abuse, we want effectively to ban exclusivity contracts when those do not guarantee any hours. There are two reasons for doing that. First, it is unfair to the individual that they are prevented from earning, but it also makes a nonsense of flexibility if employers prevent workers from migrating to work. Those are two good and powerful reasons for rejecting exclusivity arrangements, and they came through quite unambiguously in the consultation. Some 83% of 36,000 responses—a large number of responses—argued that such a ban should take place, and we will consult during the passage of the Bill on how we make that effective. Banning zero-hours contracts of any form is not straightforward, and some unscrupulous employers could simply shift to one-hour, two-hour, or three-hour contracts. We want to ensure that whatever we introduce is absolutely guaranteed.

[Chris Williamson]

The Secretary of State has addressed one of the points that I was going to make about the penalties associated with employers who exploit their employees and try to get round the restriction on zero-hours contracts by migrating people on to a one-hour or two-hour contract. He seems to be moving in that direction, so will he give a commitment that meaningful penalties will be imposed on employers who seek to exploit and get round the measures that he is bringing in, so that a financial penalty is imposed on employers if they step outside the law?

[Vince Cable]

If the hon. Gentleman reflects on this matter, he will see that it is not about penalties. If the exclusivity ban is made effective—as we are determined it will be—the simple remedy for somebody who is affected is to go somewhere else. The issue of penalties is not relevant; we want to ensure that the ban is effective, which is why we are consulting on the best mechanism for making that happen.

[Richard Fuller (Bedford) (Con)]

One of the most significant issues in employment is the massive amount of corporate welfare in the form of tax credits for people on low incomes. A move to promote the living wage across a wide range of industries would have a positive impact on employment. Will my right hon. Friend tell the House what thoughts he had in this Bill for promoting the living wage, and say why he did not include those in the provisions under debate?

[Vince Cable]

Anything that raises wages takes people out of the tax credit net. There are, of course, other ways of dealing with this problem, one of which is taking people out of tax, and that is what the Government have been doing through their tax threshold. This Bill builds on the minimum wage system—I will say a few words about that in a moment—and does not relate to the living wage. The living wage presents all kinds of practical problems, not merely that it is way in excess of the current minimum wage and therefore presents problems for employment levels. There is a perverse feature that the recommended level of the London living wage, which would introduce a regional differential, is highest in London, which is an area with the highest levels of unemployment. If we are concerned with maximising employment, pursuing the living wage may not be the best of way of doing that. None the less, I have given guidance to the Low Pay Commission on how we increase real wages, and that is a major policy objective. I think we are better doing that by strengthening the minimum wage regime.

I assure the House that the Government are taking a series of steps to ensure proper penalties for employers who fail to comply with the minimum wage. In 2013-14, 650 employers received penalties totalling £815,000 for failure to comply with minimum wage law, and we have increased the penalty percentage from 50% to 100% of underpayment. A naming and shaming regime has come in since the new year, and we have increased the maximum penalty from £5,000 to £20,000, which came into effect in March. The Bill goes one step further. The maximum penalty will now apply on a per worker basis, rather than per notice. As a result, in future overall penalties will be substantially higher for employers that owe high arrears to multiple workers.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I appreciate the points that the Business Secretary is making, but is he aware just how vulnerable some of the workers affected by these arrangements are? Constituents have come to me who dare not go to an employment tribunal. They are already in a vulnerable position because of their employment and dare not pay the costs of that tribunal in case they are unsuccessful. Has the Business Secretary really considered the reality for workers affected by the policies he is introducing today?

[Vince Cable]

The point of access for people who have such concerns is the pay and work rights helpline, which is free, so the first stage of remedying those faults and getting an investigation into illegal activity does not cost anything. The tribunal is a different process as that involves dismissal, but if we are concerned with remedying abuses of the minimum wage, we have a system in which complaints can be made free of charge—there is access to the system—and in which there is effective and prompt enforcement.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Is the Business Secretary aware, though, that the number of employment tribunals has decreased by 80% since the introduction of these charges?

[Vince Cable]

Yes, I am aware of a substantial fall in numbers. There are several reasons, which we are currently investigating, one of which could be connected with fees. Another reason is that earlier legislation sought to introduce an arbitration mechanism through ACAS as a first port of call. As I am sure that the hon. Lady will realise when she studies the figures, there has been a very big increase in the number of cases going through ACAS, as I recently discussed with its chair. That is exactly as we wished; to ensure that we headed off a legalistic process and that people were able to remedy their disputes in a more successful way.

[Stephen Lloyd (Eastbourne) (LD)]

I totally applaud clause 136, which will penalise people who do not pay what they are due when they lose a case at an employment tribunal. One of my concerns, though, is that it is not clear that the employer pays the penalty to the employee who won the case before going to the state. I would be grateful if my right hon. Friend clarified that.

[Vince Cable]

Perhaps I can correct a matter of fact. There is a penalty, and that is absolutely right: it is outrageous when somebody who has had a tribunal award made against them simply does not pay it. There will be a penalty, but it will go to the Government, not to the individual.

[Stephen Lloyd]

My concern is that given how the provision is framed, it is possible that the recalcitrant employer could pay the penalty to the Government and not pay the employee what they should have received.

[Vince Cable]

Any employer foolish enough to go down that route would find themselves subject to multiple penalties and, eventually, to contempt of court if they were clearly malicious in their intention. I understand where my hon. Friend is going with this, and he might wish to pursue it in more detail in Committee.

The final employment aspect of the Bill relates to whistleblowing. If something is amiss in a company, those who step forward and blow the whistle take risks by doing so, and they want an assurance that action will be taken. Last year, a report by the university of Greenwich and Public Concern at Work found that 75% of whistleblowers expressed frustration that nothing was being done about the wrongdoing they reported. This is clearly unacceptable. The Bill will require “prescribed persons”—usually regulators—who deal with whistleblowing to report annually on reports received and actions taken, while maintaining confidentiality obligations for the whistleblower. In that way, we want to improve the general standard of best practice around whistleblowing procedures.

Company transparency has been one of the key themes of our work in Government over the past few years, including in relation to reforms of narrative reporting, reporting on executive pay, and, more recently, the directive relating to the declarations on natural resource payments. I now want to introduce measures that strengthen the provisions on corporate transparency. I will start with an area for which we have not previously had an opportunity to prepare the House. We have discussed the Bill with Opposition Front Benchers and with others, but this issue will be new to them, and it is important that we show them that courtesy. The issue relates to takeovers. I have made it clear publicly that we need to take action in this area that may well—not certainly, but very probably—involve legislation for which this Bill would be the vehicle. The approach we are adopting is that we continue to welcome inward investment as being good for the country.

We also continue to welcome merger activity as a normal part of market processes, although I have to say that the evidence on the benefits of mergers is somewhat ambiguous. What emerged as a result of the recent high-profile case of AstraZeneca and Pfizer was a lack of clarity around the enforcement of assurances. The approach we adopted in Government was to talk to the company where issues of wider public interest were involved—it was clearly involved in extensive research and development activity—to seek assurances. That is what should happen, but then the issue arises of how we make sure that any commitments given are clear and, absolutely crucially, binding. In order to ensure that that aim is realised, we are currently talking to the Takeover Panel. Legislation may well also be necessary to underpin cases where a commitment is not honoured. I will bring these proposals back to the House in due course.

[David Rutley (Macclesfield) (Con)]

I thank the Secretary of State for expressing his views on this important subject. Does he agree that although Pfizer put forward commitments that it regarded as unprecedented, it was by no means explicit about the number of employees it would have taken on should the takeover have gone forward? This sort of legislative approach—or at least a tightening of the takeover code—would help to improve the situation in future.

[Vince Cable]

I recall the major role that the hon. Gentleman played in trying to obtain commitments in relation to the north-west and, in particular, his constituency. The same issue will arise in other cases. He is right. Although commitments were made, there is an issue of enforceability. That is what we now wish to address by strengthening the rules.

Let me move on to company transparency. The OECD has reported that

“almost every economic crime involves the misuse of corporate vehicles”.

There are staggering sums of money involved. Organised crime costs the UK alone about £24 billion a year. The European Commission estimates that global criminal proceeds are in the order of $2 trillion. Of course, not all crime flows through companies, but much does. More specifically, in 2011 the World Bank carried out an exercise that suggested that 70% of grand corruption cases involved at least one corporate vehicle to hide beneficial ownership and the true source of funds. Very often, criminals create complex corporate structures spanning multiple jurisdictions to hide the involvement of a company. That is why the UK pushed the agenda for greater corporate transparency during our G8 presidency last year. We obtained agreement from G8 members that all would take action to increase corporate transparency. That is what we are now doing, thus demonstrating our commitment.

We wish to help to deter, identify and sanction those who hide their interest in UK companies to facilitate illegal activities, as well as generally creating a more trusted business environment. That is why we are going to require companies to keep a register of the people who have significant control over that company—their beneficial owners—and provide this information to Companies House, where it will be publicly available. We will lead the way within the developed economies in having an open register. Alongside that, the Bill abolishes the use of bearer shares, which can change hands without any record and have been open to abuse for tax evasion and money laundering purposes.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Will the Secretary of State acknowledge that the vast majority of beneficial owners are absolutely legitimate and are not involved in crime, and that his regulatory proposals will significantly attack privacy and reduce the amount of investment going into British companies?

[Vince Cable]

I do not accept any of those propositions. It will be possible to devise a register—we have devoted a great deal of thought to this—to ensure that individual privacy is respected. We do not want the kind of invasion of privacy that occurred, for example, with life sciences companies in respect of animal testing. That is exactly the kind of problem we wish to avoid. We have discussed this extensively with business groups. We do not believe that it will have a negative effect on investment; we think that the opposite is the case, because honest, transparent transactions will be acknowledged. Indeed, moving to an open register is a process that many organisations, including business organisations, welcome. The hon. Gentleman’s starting point is quite right: the vast majority of companies are completely honest and therefore have absolutely nothing to fear from an open register.

[Sir Andrew Stunell (Hazel Grove) (LD)]

Somewhat contrary to the previous intervention, I strongly welcome the proposition, which includes a provision for exemptions in certain circumstances. That is no doubt a desirable legal provision, but will my right hon. Friend assure that House that it will not simply be the gateway for mass exemptions, particularly of the kinds of apparatus and companies to which he has referred?

[Vince Cable]

Yes, I give that assurance. We have thought hard about the balance that must be struck between the protection of privacy and openness. Many of us have had examples in our constituencies—I certainly have—of individuals who were shareholders in companies that were targeted because of animal rights issues and suffered enormously. Naturally, we wish to protect people’s individual addresses, for example, and we will take steps to ensure that the exemptions are carefully thought through and are of that kind. In general, however, the principle of openness is absolutely right.

The final element in the transparency agenda will be to prohibit companies from acting as directors—again, with exemptions—because in the past that was often used to conceal illegitimate transactions.

[Catherine McKinnell]

I thank the Secretary of State for the work that has been done in this area, but one concern that has been raised is that, although the penalties in relation to maintaining the records of the person of significant control are relatively high at a maximum of two years’ imprisonment, the sanctions for not providing that information to the public register are relatively low at £250 a day, given, as the Secretary of State has said, the staggeringly high amounts of money that are potentially involved. Has he considered whether the deterrent is sufficient?

[Vince Cable]

We will obviously consider the hon. Lady’s points, but it is worth bearing in mind that the vast majority of companies that register are extremely small and that sums of money that may seem trivial for a big international company may be quite onerous for a small company. We need to keep that proportionality in mind.

Before I leave the issue of transparency, let me deal with two other issues dealt with in the Bill, the first of which relates to director disqualification. We want to modernise and strengthen the disqualification regime, giving the business community and consumers confidence that wrongdoers will be barred as directors. To give an example of the kind of problem that currently arises, it is very difficult in disqualification proceedings at present to take into account serious abuses that have occurred overseas when individuals have been directors of companies abroad. In other cases, directors have often had multiple failures, which is perfectly reasonable in entrepreneurial culture, but some have done it with bad intent. We are familiar with the problem of phoenix companies, which deliberately fail in order to be reborn and exploit consumers. We want to make sure that those considerations are borne in mind in the director disqualification regime.

[Lorely Burt (Solihull) (LD)]

I have had a lot of involvement with companies that have suffered at the hands of such directors, who subsequently set up again, perhaps by using a pre-pack or some other way. The unsecured creditors are the people who suffer and they may have to absolve their company. One suggestion is that we should have a register to track the record of a company’s directors so that any company wishing to supply could look it up and see what is going on.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Twenty-four Members want to speak, but the Front Benchers have already taken 30 minutes and we have only just begun. We want to get everybody in. I am sure that interventions are helpful, but they may be holding up the end of the speech.

[Vince Cable]

I was trying to be helpful to Back Benchers by taking their points, Mr Deputy Speaker.

[Mr Deputy Speaker]

I do not mind the Secretary of State taking interventions, but he will understand that, if Back Benchers cannot get in, it will be because of the amount of time the Front Benchers have taken. He must choose which he prefers—interventions or Back-Bench speeches.

[Vince Cable]

That is a choice I would rather not have to make.

I entirely agree with my hon. Friend the Member for Solihull (Lorely Burt), who makes a useful point and we will reflect on its practicality. She also mentioned pre-packs. She will have noticed that there are measures in the Bill to deal with bad pre-packs. Of course, many of them provide satisfactory outcomes, but some do not. We are going to try to differentiate them in a more structured way.

The final issue in relation to transparency is the insolvency regime. We are going to introduce measures to give greater confidence to the regime when companies enter insolvency. We will remove administrative burdens, which I hope will save creditors substantial amounts of money. We are talking about having a less complex system of regulation. I think there are eight or nine separate regulatory bodies in the insolvency area, and there are issues regarding insolvency fees and fairness. It is a complex bit of legislation, but an important one.

Moving on to help for small business, I will start with an area that has preoccupied a lot of people in the House, namely pubs. There are 20,000 or so sole traders and small businesses that run tied pubs across England and Wales. In recent research, the Campaign for Real Ale found that 57% of tenants who are tied to large pub companies earn less than £10,000 a year, compared with just 25% of tenants who are free of tie, and 80% of them earn less than £15,000 a year. In other words, a very large number are taking home less than the minimum wage. Through the Bill, we want to address the imbalance in bargaining power between pub companies and their tied tenants, to ensure they are treated fairly by their pub-owning companies.

[Grahame M. Morris (Easington) (Lab)]

rose—

[Vince Cable]

Bearing in mind Mr Deputy Speaker’s comments, I will take a limited number of interventions, although I am sure there will be a lot of interest in this particular issue.

[Grahame M. Morris]

I am grateful to the Secretary of State for giving way and I will be brief. Although many of the proposals are welcome, may I ask him a simple question? Why does the Bill not give the tenants of large pub companies the right to a fair, independently assessed rent-only option? That was the recommendation of the cross-party Select Committee and it was the outcome of the consultation. Why is it not being offered by the Bill?

[Vince Cable]

I will explain in a moment our proposal in relation to rents. The hon. Gentleman will know that a considerable variety of views emerged from the consultation. I know there are strong views that we should perhaps have done more—there will be plenty of opportunity to air them—but we have taken a big step forward. Let me briefly describe what it is.

The Bill will introduce a statutory code of practice, which I think has been the House’s basic demand over the years, to govern the relationship between companies and tied tenants. It will establish an independent adjudicator to enforce the code that will build on the experience of the groceries code adjudicator, which is building a track record in addressing similar problems. That should result—this is our objective—in getting transparency, fair treatment and the right to request a rent review for all tied tenants if they have not had one for five years, and the right to take a dispute to an independent adjudicator under the enhanced code.

[Richard Fuller]

Why did my right hon. Friend not exempt small pub companies, given that the problem is with large pub companies?

[Vince Cable]

As the hon. Gentleman will now have realised, we envisage a two-tier code system. There will be an enhanced code, with more demands on the bigger pubcos. Of course, other people are concerned that the provisions are not extensive enough. We have tried to identify the problems presented by the large pubcos, where we fully accept the major problems lie.

Let me give an example of a case that was drawn to our attention recently that in many ways exemplifies the issues. After seven years with a large pub company and a personal investment of £50,000, a tied tenant was renewing his agreement. His pub company presented him with a rent increase and reduced discounts on the price of beer. That means that, in effect, he will be paying £60,000 to his pub company for a year. Under our measures he would expect a detailed justification for the rent and, if he thinks it unfair, he will be able to go to the adjudicator for independent arbitration.

From the submissions that I have received, I am already aware that there are many concerns about the details, including of how the code will be formulated once the Bill goes through Parliament, as we hope it will. I am certainly very happy to receive any representations that Members want to make about those crucial details.

Another provision affecting small business is the public sector procurement market, which is worth £230 billion. Many small businesses have found it very hard going in the past, with bureaucratic and time-consuming processes. Under this Government, we have attempted to make the burdens less onerous—for example, by lifting the need for pre-qualification questionnaires—and, as a result, we managed to increase the direct spend in central Government procurement from about 6.5% to 10.5% between 2009-10 and 2012-13. It is our firm intention to lift that figure to 25% of central Government procurement next year.

[Chloe Smith (Norwich North) (Con)]

I thank the Secretary of State for giving way in the short time he has available. He will know that I welcome the measures, to which I contributed during my time at the Cabinet Office. Is it not a shame that Labour Members left no clear data on such procurement when they vacated office, and does he agree with the journal of Spend Matters, which has said that their proposals are “meaningless manifesto fodder”?

[Vince Cable]

We started small business procurement in central Government from a very low base, which I guess reflects the previous Government’s lack of attention to the problem.

The Bill will provide the Government with a series of measures to help us remove the barriers for small business across the entire public sector—pre-qualification questionnaires in bits of the public sector, such as foundation hospitals, and so on—and it will now be possible to open up procurement much more widely. Moreover, we want to increase the power of the public procurement mystery shopper, by giving it more teeth and ensuring that it has the capability to identify and address poor business contracts.

Another set of critical issues for small business that the Bill deals with involve access to finance. There has of course been an enormous problem of small business access since the banking crisis. We are now beginning to see really positive changes, including the emergence of challenger banks and crowdfunding, and the business bank, which we operate, is making a significant difference, but it is a slow process.

Some things can be helped through legislation. For example, all businesses depend on cash flow, and even successful businesses can run into trouble if there is a long gap between completing a job and receiving payment. Small and medium-sized businesses are currently owed about £40 billion in late payments, and there is a lot of evidence that it is a particular problem for the small business sector. More than 50% of companies experience late payments, but the figure for big companies is much lower. That distinction is not completely clear, but the preponderance is obvious. We will enable a requirement to be placed on large businesses and quoted businesses to report on their business payment practices, thereby giving greater confidence to small businesses entering into new contracts and providing a boost to larger businesses that pay on time by attracting the best suppliers.

[Robert Flello (Stoke-on-Trent South) (Lab)]

When I met small businesses in Longton a couple of days ago, one point that they made was that whenever they did not pay money to the Inland Revenue on time, there was a penalty, and they asked whether they might please have the same arrangement whenever people do not pay them on time.

[Vince Cable]

We have looked at the idea of penalties. Certainly one country in Europe—Sweden—applies a penalty system. The problem is that it is often difficult to distinguish between those who “can’t pay” and those who “won’t pay”. Sometimes a large company is in arrears of payments because it is itself struggling, and we need to be careful to identify such matters. We therefore judge a penalty regime to be inappropriate, but greater transparency will certainly help.

There are issues concerning the banks. Despite the emergence of competitors, the four large banks still account for 80% of lending to UK small and medium-sized businesses. To try to broaden competition and choice, we will require larger banks to share data on their small and medium-sized business customers with credit reference agencies, and we will require the credit reference agencies to provide equal access to those data for challenger banks and alternative finance providers, which will make it much easier for businesses to seek loans. We are also looking at the possibility of mandatory referral, whereby banks who pass over a customer must refer them to others, including challenger banks.

[Sir Andrew Stunell]

I very much applaud what the Government have done with funding for lending, but will my right hon. Friend comment on the fact that the banks have reduced their lending to small businesses while sucking up all the Government money to support that lending?

[Vince Cable]

The issue is complex. Some banks are now undertaking substantial net lending—that is certainly true of Lloyds and Santander. RBS is the big contributor to net lending being negative, and there are specific issues in relation to the deleveraging that is taking place there. I think that my right hon. Friend is referring to the fact that, as a result of the guarantees we have given, we are now managing to encourage an emerging crowdfunding sector, which is expanding rapidly and replacing the banks.

There are specific issues for export finance. A survey suggests that about 80% of small businesses find it very difficult to get export finance from the banks. For that reason, I introduced some time ago a whole tranche of trade finance provisions for UK Export Finance, which hon. Members may recall as the Export Credits Guarantee Department. As a result, 130 exporters won overseas contracts worth £2 billion last year. Most of them are small enterprises, and we want to go further. Provisions in the Bill will give UK Export Finance broader powers to support small business, react more quickly to changes in the market and offer a suite of products comparable with those on offer overseas.

Lastly in this category, there are two very specific but important provisions. One will remove the legal barriers to invoice finance, which is important for small businesses wanting finance for their cash-flow demands. The other will make it easier to clear cheques. Nine out of 10 businesses still extensively use cheques—I recall that my hon. Friend the Member for Solihull fought a battle to keep cheques—with sole traders and small and micro-businesses. The Bill will make provision for cheque imaging, so that cheques can be paid more quickly and easily, reducing the clearing time from six days to two days or less.

Finally—I apologise for the Castro-like length of my speech, Mr Deputy Speaker—I will deal with the issues of regulatory reform. We want to ensure that businesses no longer have to wade through ineffective and burdensome regulation, and a series of specific provisions will help to guarantee that. Since the Government introduced the one-in, one-out rule, which we strengthened to become the one-in, two-out rule, we have reduced the net burden of regulation by £1.5 billion, while safeguarding the essential protections for consumers, workers and the environment. We have aggressively tackled ineffective and out-of-date regulation, and have scrapped more than 1,000 regulations.

That work must continue. That is why, under the Bill, we will set a deregulation target for each parliamentary term, with transparent reporting against that target. The Bill will also ensure that new regulations that affect business contain a review provision. Finally, some businesses are subject to poor regulatory decisions, such as those that we have discovered through the focus on enforcement reviews. There have been some really shocking examples of regulators giving rise to problems for which there is no satisfactory complaint. For example, a blue cheese maker was told that they could have absolutely no mould on their cheese. There are numerous examples of that kind. The Bill will require non-economic regulators to have a small business appeals champion to ensure that complaints and appeal processes are fair and accessible for all businesses.

There is a variety of other measures, which I will not go into, on child care registration, the work of employment tribunals, which has been mentioned, and education evaluation to provide better information about skills training.

To summarise the provisional reaction to the Bill, the national chairman of the Federation of Small Businesses has said that it

“reflects the growing recognition of the role small businesses have to play in driving forward the economy and the need to do all we can to support them”.

The Bill will make the UK a much better place for business and, therefore, I commend it to the House.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I warn Members that the time limit is now down to five minutes.

I now have to announce the result of the deferred Division on the question relating to the draft Gangmasters (Licensing Authority) Regulations 2014. The Ayes were 294 and the Noes were 200, so the Ayes have it.

[The Division list is published at the end of today’s debates.]

[Mr Deputy Speaker]

I call the right hon. Chuka Umunna.

15:50

[Mr Chuka Umunna (Streatham) (Lab)]

Thank you, Mr Deputy Speaker.

[The Minister for Business and Enterprise (Matthew Hancock)]

Have you been to see the Queen?

[Mr Umunna]

No, I have not been to see the Queen yet.

I will be as quick as I can, Mr Deputy Speaker.

It is good to see the Secretary of State back in his place after the reshuffle, leading this debate. I note that he has acquired some new Conservative minders. He no longer has three, but five. [Interruption.] Somebody behind him says that he needs them.

[Vince Cable]

I’ve got seven.

[Mr Umunna]

For the record, the Business Secretary says that he has seven minders. I am sure that he will not let them get him down.

It is also good to see the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) back in her place. I know that her shadow, my hon. Friend the Member for Edinburgh South (Ian Murray), has missed their exchanges and looks forward to the lengthy exchanges that they will have in Committee.

The Bill is a long one and comes in 11 parts. The House will be glad to know that I will not go through all 11 of them, but I will deal with the key parts in turn as quickly as possible to allow the maximum time for other Members to get in. First, I will address the purported purpose of the Bill, which was set out by the Secretary of State.

Our wealth creators—our entrepreneurs and particularly our small businesses—are fundamental to growth in this country and create almost two thirds of private sector jobs. They are crucial to the success of large firms and vice versa—the relationship between the two is symbiotic. We recognised that in government and were determined to build an environment in which business could flourish. I am proud to say that by the time we left office, the World Bank ranked the UK the best country in Europe for the ease of doing business and the fourth best in the world, ahead of the US. I am glad to see that where we led, this Government seek to follow with this Small Business, Enterprise and Employment Bill.

We are told that the Bill is designed to reduce the barriers that hamper the ability of small businesses to innovate, grow and compete, and that it seeks to pave the way for the Government to be more supportive of small business. After four years of this Government, it is about time too. We support the purported general purposes and principles of the Bill—how could one not?—but the detail is everything and we will scrutinise it.

However, the Bill and the Government’s policy more broadly do not resolve the underlying structural issues, which I have discussed on many occasions with the Secretary of State, that hold businesses and employment back in our economy. He and I agree that we need a different model of capitalism—one that is more inclusive, productive, responsible and long-term in outlook. The fact is that our economy is still grossly unbalanced by sector and region; short-termism is still endemic in business and government; we still have a dysfunctional finance system; and we have a stubborn and increasing trade deficit. Meanwhile, the use of food banks has soared and many people still struggle. In some wards of my constituency, one in three children is living in poverty.

The recovery is not what we would want it to be, and it looks a lot like the model of growth that we need to get away from. It is a business-as-usual recovery, based on a rising housing market and consumer spending; it is not the export and business investment-led recovery we were promised. Therefore, now is the time to intensify the pace of reform of the economy to build a better-balanced, sustainable economy. It should also be said that the Bill is not just about building an economy with flourishing businesses. We must remember that, if we want to be pro-business, we cannot continually beat up on the rights of the people who work in businesses. I will return to that later.

The first key element is access to finance. Any scheme that helps small businesses to access finance is welcome, but the Government’s record in getting the banks to lend to small businesses is lamentable. Flagship scheme after flagship scheme, from Project Merlin to funding for lending, has failed to deliver. Net lending to businesses is down by £14.2 billion in the past 12 months. In fact, net lending to businesses by banks participating in the funding for lending scheme fell by £2.7 billion in the first quarter of this year.

If part 1 of the Bill does anything to help affairs, for example by making it easier for businesses to seek loans from challenger banks, and lenders other than high street banks and by opening up access to credit data, such measures will have the Opposition’s support. Equally, the measures to ensure that support is available for those who wish to export are welcome, particularly given our need to get more of our small businesses exporting—it looks like the Government are nowhere near reaching the target of getting 100,000 more companies exporting by 2020.

However, we know that increasing late payment, to which the Secretary of State referred, is becoming a more significant challenge than access to finance. In a recent Institute of Chartered Accountants in England and Wales survey, almost twice as many businesses cited late payment as a bigger challenge in managing their cash flow than access to finance. We must end the national scandal of small businesses being effectively forced to bankroll large customers that persist in refusing to pay them on time. According to the Federation of Small Businesses, 51% of the invoices of its members are persistently paid late by large companies. That is wholly unacceptable. The Forum of Private Business has cited the example of Marks & Spencer, which extended payment terms to some suppliers to 75 days, for no apparent defensible reason.

In 1998, the Labour Government responded to that growing problem by introducing the Late Payment of Commercial Debts (Interest) Act 1998. Towards the end of our time in government, we worked with the British Chambers of Commerce, the Institute of Credit Management and others to get FTSE 100 companies signed up to the then new prompt payment code, but we need to go further, because for all our hard work, we were not successful in fixing the problem, and this Government have also not been successful. At this juncture, I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who is in the Chamber, on her work as chair of the all-party parliamentary inquiry on late payments, along with other members of the group. The two measures in part 1 of the Bill are good, but the problem is that, when there is late payment, it is still for the business to pursue and have a row with its customer for payment, potentially losing the customer in the process. We must square that circle. We will return to that provision in more detail in Committee.

I will not say much about the regulatory reform in part 2. Of course, the Opposition support the general principle that we need to be mindful of the quantity of regulation we impose on business, but equally important is ensuring that the quality of the regulation is up to scratch, and that it is written with the small guy in mind, so that they do not need to employ an army of accountants, lawyers and risk managers to tell them what they need to do to comply. We support the publication of a target for the removal of regulatory burdens in each Parliament, which is provided for in part 2. We also support the proposed statutory review provision for new regulations that affect businesses. However, unless the Secretary of State addresses the way in which the Department for Work and Pensions—I spoke to him about this the last time we were in the House—is massively increasing the burden on people in receipt of benefit who wish to start a business, the Government’s credibility will be sorely lacking.

We were told that part 3 aims to remove barriers and help small businesses to gain fair access to the £230 billion of Government procurement contracts through a more efficient process that is more small business friendly. We are broadly supportive of these measures. It is a shame that the hon. Member for Norwich North (Chloe Smith) is not in her place. It is deeply disappointing, and she might recognise this as a former Treasury Minister, that one of the worst offenders in ensuring that small businesses get a look-in on Government contracts is the very Department she used to work in. Just 5% of the Treasury’s direct procurement spend is with small business. If this measure kicks the Treasury into touch, then good.

Before turning to part 4 and measures relating to pubs, I would like to pay tribute to the shadow small business Minister, my hon. Friend the Member for Chesterfield (Toby Perkins), and the coalition of people, including Government Members—the hon. Member for Leeds North West (Greg Mulholland) is in his place—who have worked on this too. It has to be said that I can think of no better day for a pint in a pub beer garden, given the hot weather.

The Opposition have had to force three votes on this issue in the House since 2012, demanding a statutory pub code to put the relationship, between tied pub licensees in England and Wales and the large pub companies, on a fairer statutory footing. Every time we did this most, though not all, Government Members voted against, and in the meantime 28 pubs a week have closed. We are pleased that the Government have finally accepted the need to legislate for a statutory code. We will work with them to help to protect our community pubs, which are national institutions, but we are far from convinced that what they propose goes far enough. We are not convinced that the limited transparency envisaged by the Bill will deliver the Government’s own principle that no publican should be worse off than if they were free of tie. We will also seek to ensure that the Secretary of State gets the right to introduce the mandatory rent-only option for tied tenants in the near future, if these reforms do not deliver.

Part 7—I am trying to go as fast as possible—seeks to increase transparency on who owns and controls UK companies. I very much welcome the measures to create a public register of beneficial owners of companies. A prerequisite to maintaining a register of beneficial owners, of course, is knowing in the first place that companies exist. The Business Secretary and I have had exchanges on this. Never mind the new measures that are envisaged, it is very important that we ensure compliance with existing requirements, for example on disclosing overseas subsidiaries. The Secretary of State kindly wrote to me last year, outlining how 40% of the FTSE 350 had failed to disclose overseas subsidiaries in the first instance. Enforcement is therefore key to ensuring that data are accurate and up to date, and that sanctions of sufficient gravity can be applied to ensure that people comply in the first instance. We must do all we can to persuade others around the globe to comply and adopt public registers too, particularly UK overseas territories and Crown dependencies. Let us send a clear message: what our overseas territories and Crown dependencies do in this area affects the UK’s reputation as a whole, and we will not sit idly by while our reputation is damaged.

Part 9 seeks to strengthen the rules of disqualification for directors, and we have no problems with the measures suggested here. As I think the CBI has said, they will help to boost the UK’s internationally recognised company law regime and promote even higher standards of corporate governance.

That brings me—it is connected—to the measures the Secretary of State mentioned on streamlining insolvency law. Among the changes the Government intend to implement is a measure to abolish the requirement to hold physical creditor meetings in an insolvency situation. I have to say that R3, which represents insolvency practitioners, and a number of creditor representative groups have very serious concerns that this will reduce creditor engagement and undermine the insolvency regime.



Creditor meetings serve an important function, as I know from my professional experience. For example, the insolvency practitioner engaged may have limited knowledge of the company’s history at the outset, but in a creditor meeting they can get useful information about the company and its financial affairs that it might otherwise not have occurred to them to think about. We are therefore not convinced that the proposal to do away with creditor meetings is at all sensible, so in Committee we will carefully scrutinise these proposals and the others on insolvency.

Before I finish up by looking at the employment law reforms in part 11, I want to turn to the measures on public sector workers receiving large pay-outs if they go on to work in other parts of the public sector. Let us be clear what has prompted the inclusion of that measure in the Bill. The Prime Minister promised that there would be no top-down reorganisation of the NHS and then he broke that promise. When the Government embarked on that top-down reorganisation, we warned them about the huge amount of taxpayers’ money that would be wasted, but we were told that our claims were unfounded. What happened? More than 4,000 have been made redundant and then rehired in the NHS since 2010. As the shadow Health Secretary, my right hon. Friend the Member for Leigh (Andy Burnham), has said, that has meant the Government handing out cheques like confetti to people who were rehired. Some £1.4 billion has been spent on redundancies in the NHS alone, at a time when NHS budgets are stretched. That is a complete disgrace. Pay-offs for managers and pay cuts for nurses—that is what we are seeing.

The Secretary of State will no doubt say, “This has got nothing to do with me, guv. It’s not my brief; it’s those terrible Tories sat behind me.” Well he can say what he likes, but everyone knows that he voted for all the changes in the Health and Social Care Act 2012—in fact, he was a sponsor of it—when it was going through Parliament, and now he is having to clear up the mess in this small business and enterprise Bill. What a total and complete shambles.

That brings me to the employment aspects of the Bill, covering employment tribunals, the national minimum wage and zero-hours contracts. If anything demonstrates that this Government have run their course and are running out of steam, it is the employment provisions in part 11. The Government have done the minimum in this part that they thought they could get away with or that they could reach agreement on. I will deal with the points of agreement first. There are measures in the Bill seeking to limit the number of postponements that parties can be granted in a case, with judges being given the power to make cost orders where late applications for postponements are made. Based on my experience of practising as an employment lawyer, I think those measures are sensible, as do others, such as the TUC, which points to the difficulties that witnesses face in getting time off work to attend hearings.

However, improving the process once people get to tribunal will be no more than an academic exercise for those claimants who frankly cannot afford to pay the tribunal fees instituted by this Government. What the Government have done with those fees is erect a barrier to justice for some of the lowest-paid people in the country. They have simply priced them out of the system. That is the reason for the 79% drop in employment tribunal claims that was referred to earlier. It is women and low-paid workers in particular who seem to be the principal losers.

[Catherine McKinnell]

My hon. Friend is making a powerful argument. Further to the Secretary of State’s response to my inquiry about a constituent who came to me, I just want to clarify that she had already gone to the helpline and been told that she had to go to tribunal, but she did not want to do that because she was frightened of the costs.

[Mr Umunna]

That is an example of the effects of what this Government are doing, which I think is truly reprehensible.

The other issue about tribunals is that there is a serious problem of non-payment of employment tribunal awards. We therefore welcome clause 136, which will allow for the imposition of financial penalties on employers who fail to pay the compensation that is awarded at tribunal. Indeed, the Department’s own research indicates that in 2013 just 49% of people successful at tribunal were paid all the compensation due to them, with 35% receiving none of their compensation at all. However, I am not too sure how these provisions are intended to be enforced or what will happen to those seeking redress from a company that has gone insolvent, for example. That is another issue for Committee.

Let me move on to where I believe there will be real disappointment at the modesty of the Government’s proposals, starting with the national minimum wage. We know what the Conservative party’s argument is going to be at the next general election—all this nonsense about Labour ruining the country. Let me remind Conservative Members that, when we entered government in 1997, some people in this country were earning as little as £1 an hour. We are proud to be the party, along with an entire labour movement, that saw to it that a national minimum wage was introduced. For that reason and many others, I am more than happy to debate our record and the real difference we made to the country when we were in office. We left it in an immeasurably better situation in 2010 than we found it in 1997. [Interruption.] As I said to the new Minister for Business and Enterprise, I am happy to debate these matters with him in future.

[Susan Elan Jones (Clwyd South) (Lab)]

My hon. Friend speaks of people earning as little as £1 an hour. I wonder whether he can recall that at the Conservative party conference before the 1997 election, a prospective Conservative party candidate stood up and boasted that in Conservative Britain, he could get away with paying 74p an hour.

[Mr Umunna]

I thank my hon. Friend for that contribution, which is a reminder of the huge difference our Government made during our time in office and of why we should be very proud of what we achieved.

The Bill will increase the fines for employers who fail to pay the minimum wage and amend the maximum penalty, as I think the Secretary of State mentioned, so that it can be calculated on a per worker basis. We have been calling for that for some time, so of course we support it. The fact is, however, that the Government should be going much, much further as it is estimated that more than 250,000 people who should be in receipt of it, still do not receive the minimum wage. It is disappointing that the Government have refused to match our plans for more robust enforcement, including by giving local authorities new enforcement powers and increasing maximum fines—not to £20,000 but to £50,000.

[Robert Flello]

We should also bear in mind those people on zero-hours contracts, who do not get paid for travelling between care jobs, for example, which means that their wages are effectively below the minimum wage.

[Mr Umunna]

I thank my hon. Friend for that intervention; I shall quickly be coming on to zero-hours contracts.

In the context of the national minimum wage having become disconnected from levels of growth and productivity, there is a wider problem, because it has led to a squeeze on wages and a fall in the real value of the minimum wage. That is why we would set a long-term ambitious target for the Low Pay Commission to increase the minimum wage to a more stretching proportion of median earnings over the next Parliament. It is a shame that the Secretary of State has set his face against that. We also want to promote—I think the hon. Member for Bedford (Richard Fuller) mentioned it—the payment of a living wage through “Make Work Pay” contracts, but there are no provisions at all that touch on the living wage, which is disappointing once again.

Let me turn to zero-hours contracts, which my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) mentioned. There are 1.4 million such contracts in use in the UK at present.

[Richard Fuller]

Before the hon. Gentleman moves on from the living wage and in the context of the important issue of Government contracting, will the Labour party table amendments to ensure that, when local authorities contract, there is the potential for companies to pay the living wage?

[Mr Umunna]

I may have the figures wrong, but I think that at least 29 Labour-run local authorities have become living wage employers, and I think we should absolutely do all we can to encourage them to pay the living wage. That may take time because current contracts are left to run, but the more who sign up to become living wage employers, the better.

On zero-hours contracts, it is worth reminding Members what we are talking about. Let me quickly tell the story of a lady I met last year who was on such a contract—I have, of course, met many others, including my own constituents, since. She worked in the care sector and had to be available to visit clients in their homes on at least six days a week, including evenings. Her rota could change in a flash. If visits were cancelled at short notice, she would often not be paid. If visits were added at the last minute, she would have to manage her child care commitments as best she could. That was because she had a zero-hours contract which did not oblige her employer to offer guaranteed hours of work.

Thankfully, that lady has managed to find a permanent job, but she has left behind several hundreds of thousands of other care workers who are still on zero-hours contracts in England. She featured in an excellent report produced by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth), and my hon. Friend the Member for Wirral South (Alison McGovern). Her experience illustrates the reality of life on zero-hours contracts for many people. Such contracts put a strain on families who cannot plan and do not know when the next pay cheque is coming. They create a huge obstacle for people who aspire, for example, to obtain mortgages so that they can own their homes and do things that many others take for granted. And what is the Government’s answer to all that, in the Bill? To ban exclusivity clauses.

[Stephen Mosley (City of Chester) (Con)]

Will the hon. Gentleman give way?

[Mr Umunna]

I will give way shortly.

The Government’s answer is simply not good enough. Do they really think that, on its own, that will stop the exploitative use of such arrangements?

As well as ensuring that the terms and conditions of employees on zero-hours were made clearer and that they were free to work for other employers, we would give employees the right to demand regular contracts if they were, in practice, working regular hours for a certain period, with an automatic right to a fixed-hours contract after a year. We would also ensure that employees on zero-hours contracts were not obliged to make themselves available outside contracted hours, and that they had a right to compensation if shifts were cancelled at short notice. That is what the Government should be doing. If they did what we are proposing to do, they would be able to clamp down on these exploitative practices.

[Jonathan Edwards]

I am heartened by some of what the hon. Gentleman is saying, but can he explain why, during recent deliberations in the Welsh Assembly on the Bill that is now the Social Services and Well-being (Wales) Act 2014, the Labour Government voted down my party’s proposals to ban zero-hours contracts in the social care sector in Wales?

[Mr Umunna]

We, as a party, have made it very clear that we want to end the exploitative use of zero-hours contracts.

[Stephen Mosley]

Will the hon. Gentleman give way?

[Mr Umunna]

No. I must make a little progress, because otherwise the hon. Gentleman’s speaking time will be reduced to three and a half minutes, and he will blame me.

Let me now say something about takeovers, which I had absolutely no idea would feature in the Secretary of State’s speech. He made two announcements on the BBC’s “The Andrew Marr Show” over the weekend. First, he said that he wished to introduce measures that would ensure that commitments given by bidders for British companies had some teeth, and that a sanction could be applied if those commitments were reneged on. Secondly, he said he believed that the Government should have a backstop power to strengthen the existing public interest tests if that proved necessary.

I support the thrust of the Secretary of State’s proposal in relation to commitments given by bidders in takeover circumstances. As I said earlier, I suggested at the weekend that he should include such measures in the Bill. According to the legal advice that I have received, primary legislation would be required; simply amending the City code would be insufficient. I think that that is sensible, and I am happy to work on it with the Secretary of State in the context of this Bill.

As for the proposal to strengthen the public interest test, my own view—based on the legal advice that I have received—is that, if the Secretary of State wishes to change the current set of criteria, there will be no need for primary legislation. He has expressed concern—as did we, some months ago—about the need to protect our science and research and development bases in the national interest. Obviously, the way in which any provisions were crafted would be important—in particular, we would need to ensure that there was clearance from the European Commission—but, as I have already said on several occasions, we are happy to work with the Secretary of State on that.

I think that I have gone on for long enough. The Bill contains other measures—relating to company filing requirements, child care and schools, and education—with which we have no major issues, and the details of which we will examine in Committee.

This is not a terrible Bill but, to refer to what the Secretary of State has said about the Government’s economic policies before, it is all rather piecemeal. Given the challenges we face as a country—a country with huge potential—our constituents were entitled to expect a bit more from this Government in this Bill. The only way to get that is to change the Government and vote Labour next year.

16:20

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I declare my interests as they appear in the Register of Members’ Financial Interests and I shall be using my precious five minutes to discuss the clause 70 proposals for a register of people with significant control.

The Government have spoken about anonymously owned companies having connections with terrorist groups and being used to hide shadowy funds, and they suggest that transparency of ownership is the best cure for that. These proposals are, of course, a departure from current English law, where transparency of ownership relates to whether a company is public or private. If it is public, there are various disclosures that have to be made as to ownership—for instance, once a shareholder owns 3% or more of a company’s shares. However, in situations where the public are not involved—say, a family company or a private equity company—privacy can be maintained.

There are four issues at stake here: the first is fighting crime; the second is the right to privacy; the third is the increasing regulation; and the fourth is encouraging investment in British private companies. I doubt that the first ambition will be much satisfied through this measure, while I do have significant concern about the loss of privacy and investment that could result and the increased regulation. Moreover, if criminals have concerns that this legislation will stop their money laundering potential, they will simply buy other assets. There is no beneficial register of stamp collections, for instance, or blood diamonds, but the family business that legitimately wants privacy of ownership will suffer as a result. We need to know how many of these private companies are being used for crime, compared with the hundreds of thousands that are legitimate—in effect, are these provisions worth it?

The provisions apply to those with more than 25% ownership or control, and I foresee many court cases arising over whether someone actually exercises significant influence or control over a company. Shady players will give stakes in companies to third parties to go beneath 25%—that is, of course, if they ever own any of the shares at all. Families, likewise, will split shareholdings between them, often making it impossible to determine control. Should we not be concentrating on the legitimacy of the money going into and out of companies, rather than the shares being held?

I know that the finance industry also has concerns. The problem here is that fund structures will often mean that those who are defined by the legislation as having significant control over a UK company may, in fact, have delegated management to a fund manager. It will be important for the legislation to navigate the complexity of private fund structures to arrive at an appropriate result.

If the impact of these regulations is to put off institutional or angel private equity investment, this would be a case of throwing the baby out with the bath water, but I think from my own practice experience that there are also some serious privacy issues here. People have a right not to show their wealth, and if they cannot do that by buying shares, they will buy gold or art or put their money abroad. Some people do not want their shareholdings to be known to other people with whom they work or live. Many foreigners want anonymity for legitimate reasons, and we should not just assume that their private companies are fronts for dirty money laundering. Some have ethical issues; Muslims come to mind in respect of investing in companies that may conduct lending or brewing.

During the passage of the Companies Act 2006, I presented amendments aimed at protecting legal, rather than beneficial, shareholders who were under threat from animal rights terrorists, who were taking their names and addresses off the share register and persecuting them. The fear of this will only increase with these proposals and broad exclusions are going to be needed.

I see from the House Library that significant concerns have been raised by the Association of Pension Lawyers, the British Bankers Association and the British Private Equity and Venture Capital Association. Let me add my concerns on behalf of the thousands of family businesses that are going to be affected by this. I think we should remove these clauses, but if we go ahead, I would suggest some system whereby people could avoid the register and maintain their right to privacy if they show the authorities that they are legitimate and of previous good character.

With my remaining time, I shall turn to director disqualification. I understand the need to have overseas offences included in the grounds for disqualification, although the technicalities of this could be very complicated. However, I have concerns about the proposal to increase the time limit for starting disqualification proceedings from two to three years. Sometimes the investigation will indeed require more time, but I do not think we should be giving the authorities more time to delay their processes and so it may be better if the extra year were to be provided for upon application to the court.

As for striking off a company by the registrar, I note that the proposal in clause 91 is to reduce the notice period from six months to as little as two months. Given that that will give creditors less time to make their objections, will the Minister please explain his thinking here? On the clause 73 proposal to abolish bearer shares, the notes say that only 900 companies using them are still trading, but getting rid of them will be inconvenient and a cost to business. Why can we not make these proposals retrospective? I also note that British companies that trade their shares in the US financial markets use American depository receipts, which are presumably bearer stocks. Will those also be excluded? Could the Minister please explain?

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. I am sorry but there is huge pressure on time and the time limit may have to go down. I call Mr Adrian Bailey.

16:25

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Thank you, Madam Deputy Speaker. The Secretary of State described his 50-minute speech as “Castroesque”, whereas I shall describe my five-minute speech as highly castrated. But, in the limited time available, I wish to concentrate on an issue that has long exercised the Select Committee on Business, Innovation and Skills and its predecessors: pub companies and their regulation. Let me say to the Minister that although I may appear critical, I recognise that, having wavered and gone down the voluntary route, he has tried to rescue this and put regulation on the statute book. That has long been the position of the Committee, but grave flaws remain with the proposals before us.

The Shadow Minister outlined the problems of low incomes among tenants and mentioned the attrition rate of 28 pubs being closed every week. Our basic model of tenant and pub company is not viable and is in long-term decline. Worse still, the low incomes of tenants mean that many have to resort to state benefits to prop up their income. Under the current model, the pub companies take substantial profits from an unfair relationship with the tenants; the number of pubs is declining, with a consequent impact on the community; and many pubs that do survive have tenants on low incomes, which generates personal problems and the taxpayer liability. So that issue needs to be addressed.

Having the statutory code and adjudicator, which the Government are supporting, is a step forward, but it does not address the issue of the free-of-tie option. The Minister said that the Government were not going to introduce that because of the potential impact on the pub industry. It is difficult to see how, in the long term, we are going to affect the balance of risk and reward between the pub companies and the tenants without introducing a mechanism that will strengthen the hand of the pub tenants. The proposals for parallel rent assessments, which would enable the tenant, in certain circumstances, to apply to have a rent assessment, suffer from a number of difficulties, not least that it has to be after a five-year review or after protracted negotiations have failed. In some cases, they can last two or three years and drive the tenant into bankruptcy long before they reach the assessment point. It is difficult to say how such a time-consuming and complex procedure can substantially alter this balance of risk and reward. Indeed, under the existing system there is a voluntary arrangement whereby tenants can go to an adjudicator and, although that has addressed certain problems, it certainly has not changed the overall balance of risk and reward in the industry.

The argument against that is that pub companies will abandon their tied tenants and become real estate investment trusts and that others may step in and try to reproduce the model to the detriment of the existing variety of agreements and range of beers. That is a hollow threat, because under real estate investment trust legislation, 95% of rental income must go to shareholders, which would render that impossible for pub companies, and 75% of income must come from rents, which would also be a barrier. Therefore, the threat of an alternative model is hollow.

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

I pay tribute to the hon. Gentleman’s work and the fantastic work of the Select Committee on Business, Innovation and Skills over the years, including the four crucial reports that have finally led us to legislation. Does he share my bewilderment that the Government did not listen properly to the Business, Innovation and Skills Committee and have not introduced the market-rent-only option that he proposed? A clear two thirds—67%—of all respondents to the Government’s consultation said that it was the right way to deal with the problem.

[Mr Bailey]

I thank the hon. Gentleman for his intervention and pay tribute to his contribution to the ongoing political pressure. I do find it mystifying; at the end of the day, the Government have fudged the issue and have bought some of the pub companies’ arguments. They are being more protective of pub companies than of tenants, which is to the potential detriment of the industry.

The free-of-tie option would lead to considerable changes in the industry, but such changes would be difficult to quantify. The survey by the Federation of Small Businesses found that 75% of tied tenants would take on more staff and increase staff hours, 78% would increase investment, 73% would invest in modernisation and 91% would deal with microbreweries. It therefore seems that the alternative model has the potential to strengthen the industry while the present proposals will only lock it into a long-term, terminal decline.

16:32

[Stephen Mosley (City of Chester) (Con)]

As someone who ran a small business before being elected to Parliament and who is a director of two others, I know that small businesses are the lifeblood of our economy. They account for 99% of all businesses in the UK. They employ over 15 million people and account for half of our GDP. Small businesses play such an important role that if each small business took on just one new employee, we would eliminate unemployment overnight. As our economy moves forwards, grows and evolves, so do small businesses.

In my constituency of Chester, we have recently seen a record number of small businesses starting up—an increase of over 300% over the past two or three years. It is not just in Chester that records are being broken; record numbers of new businesses are being created across the country. We want that to continue and the Bill is all about encouraging and allowing that to happen. The Bill will make it easier than ever before to set up a new business, streamlining the process, cutting down on the paperwork required and unleashing ever greater entrepreneurial spirit and an ever greater number of new small businesses. Such businesses have great potential.

Last year, I was delighted to organise and run Chester’s first ever small business awards, which allowed local customers to nominate and vote for their favourite local shops. Local people recognise the difference that such businesses make.

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

I am sure that small businesses tell the hon. Gentleman, as they do me, that one of the biggest barriers to growing, expanding and taking on more people is that the banks—regardless of what they tell us—are still reluctant to lend businesses money or constantly change the arrangements placed on them.

[Stephen Mosley]

I agree and a big section of my speech dealt with that, but as time is very limited I think I might move on and stick to what I want to say, highlighting some of the businesses in Chester that are doing exceedingly well.

In my small business awards, more than 1,000 people nominated more than 150 different businesses, such as G and M Goold funeral directors in Vicars Cross and Monogram dry-cleaners in Newton, which were winners of the awards. Next year we hope to have even more people nominate small businesses and even more people entering and backing those local businesses.

As well as receiving support from the public, more and more small businesses are accessing Government help, advice and funding. Last year, I ran a small business fair in my constituency and I know that small businesses benefit from the advice and funding that is available. More than 100 small businesses and entrepreneurs attended the small business fair at the university of Chester’s Riverside innovation centre. The feedback we received was fantastic. By bringing together the private sector, public sector and third sector bodies we can give these businesses the boost they need.

One scheme that I have been particularly impressed by is the new enterprise allowance. In Chester, more than 100 people have taken advantage of the scheme to set up their own small business. They are not just statistics. They are people like Lois Lee of Kitsch Krafts who, after finding herself unemployed, was determined to get off welfare and back into work. Today, Lois is running a successful, popular and expanding craft boutique. A year after she first set up in a corner of Saltney post office, I was delighted to be able officially to open her new larger premises on Chester street in Saltney. It is another great small business success story, and Kitsch Krafts is not alone. Oil Monster, which started in my constituency, recently received a best start-up business award. It too is growing and that benefits everyone. Indeed, the company has recently taken on three new apprentices, helping young people into work and teaching them vital skills for the future.

As the economy improves and as Bills such as this give more and more support to our small businesses, more and more people will have confidence in our long-term economic plan and will want to set up and expand their own small businesses. That is fantastic news, and the Bill shows that the Government welcome that and that we are not complacent. We want to see even more small businesses start up, we want to see more and more jobs and we want to see more and more apprenticeships and training schemes. The measures in the Bill will make it easier than ever to start up a business and for a small business to expand. It will reduce the burden of bureaucracy and red tape on our businesses, allowing them to concentrate on growth and innovation. It will help to ensure that Britain is the best place in the world to start and grow a business.

16:34

[Bill Esterson (Sefton Central) (Lab)]

Many people in my constituency do not see a recovery in the economy and they are yet to experience the benefits of the recovery talked about by the Government. We have more than 15,000 people in work who earn less than a living wage. Many people in work up and down the country are using food banks and many others rely on extortionate payday loans just to survive and get through the month. For my constituents and many others, the reality is falling living standards and rising costs. The Bill contains some welcome measures, which could help address some of the reasons that many people, such as those on zero-hours contract and the minimum wage, are struggling to make ends meet, but I wonder whether they will go far enough.

Others Members have mentioned the care sector. I met the wonderful carers who looked after my mum at weekends before she died earlier this year, and they were paid for 10 hours out of the 25 they worked in a weekend shift. They were not paid for transport or given money for travel costs, but were paid just for the 15 minutes for which they were expected to be with somebody like my mum, who desperately needed their care. That is the scandal of low pay and it is a combination of zero-hours contracts and the minimum wage not being properly enforced. The effective pay rate is way below the minimum wage, let alone the living wage. We need to deal with that scandal in our society if we are to see rising prosperity for many people, not just in the care sector but elsewhere. We all benefit: it is good for the economy, good for businesses, which benefit from prosperity as people spend their money, and good for the taxpayer because there is less need to subsidise low pay from employers.

Like the hon. Member for City of Chester (Stephen Mosley), I used to run a small business and I enthusiastically encourage people to shop locally to support the businesses in my constituency. The hon. Gentleman claimed that it is easy to start up a business, but the rules that the DWP enforce make it difficult at times. The requirements on monthly reporting go way beyond what any established business has to do and create difficulties for new businesses. It is about time that BIS worked more closely with DWP to make it a lot easier for people to start and to grow their small businesses.

As my hon. Friend the Member for Alyn and Deeside (Mark Tami) said, it is getting harder, not easier, for people starting or running a small business to borrow money. That is the case not just for start-ups, but for existing businesses that want to buy equipment or expand. That is where the growth comes from that creates the jobs that the hon. Member for City of Chester rightly said will come from the small business sector—4.7 million businesses employ fewer than 10 people. There is significant upside in the opportunity for jobs to come from small businesses.

Late payment is the No. 1 issue cited by the Federation of Small Businesses from a survey of its members, as we have heard. The unequal relationship between large and small business needs attention as we debate the Bill further. Small businesses should not be afraid to take on their large business partners for fear of loss of future business, but that situation is all too common at present.

On borrowing, we need better signposting so that small businesses know where to go if the banks will not lend. I hope the measures on credit scoring that we heard about earlier will help, as few small businesses are aware of the alternatives. On Merseyside we have the Merseyside special investment fund and in the north-west we have the Cumberland building society, which offers a full range of banking services. Those are two examples that I have come across which show that there are good lenders out there, and there is hope. We can learn a lot from them, which is why I hope Labour’s proposals for a proper system of regional banks will come to fruition when we get into government next year. We will then be in a position to support small businesses and make sure that they can borrow the money they need to develop their business, ensure growth and create the jobs that we have been talking about.

16:42

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

In the limited time available to me, I shall, as chair of the all-party save the pub group, restrict my comments to the pubs section of the Bill. That is not to say that there are not many excellent measures in the Bill, but I want to concentrate on those relating to pubs. I am sorry that the Secretary of State is no longer in his place, as I wanted to put on the record my thanks to him for listening, doing what was clearly needed and legislating to deal with the flawed and discredited business model that has done so much damage to the valued institution of the great British pub.

I have said very vocally that BIS and the Government got it badly wrong in 2011 when they decided to go down the self-regulatory route yet again, even though it had clearly failed, as was shown by the Select Committee. I give every credit to my right hon. Friend and to Ministers for looking at the issue again, listening, acknowledging that the problems were still there and in many cases getting worse, and finally acting. I pay tribute to my colleagues in the all-party group and to the Fair Deal for your Local campaign, which was formed in April last year, bringing together the Federation of Small Businesses, the Forum for Private Business, the Guild of Master Victuallers, the GMB, Fair Pint, the Pubs Advisory Service, Licensees Supporting Licensees, Justice for Licensees, the Campaign for Real Ale, and Licensees Unite, part of Unite the union, which represents more than 2 million members and many, many licensees up and down the country as a strong voice for the pub sector.

We in the campaign and the all-party save the pub group warmly welcome the fact that we will have legislation; that we will finally have a statutory code of practice. I and the two vice-chairs of the all-party group have written to the Secretary of State—which is a good job because I will not get the chance to outline my position in the limited time available now—to make clear the Bill’s flaws as we see them.

First, there is no apparent mechanism by which the Government will deliver their clear commitments to fair and lawful dealing and—crucially, to pubs in companies that have 500 pubs or more—to a tied licensee not being worse off than a free-of-tie licensee. It is not clear how the parallel rent assessment can do that or how the adjudicator would enforce that.

Secondly, it is a huge flaw that the enhanced code will apply to companies with 500 tied pubs. That makes no sense at all. This is about market share, as with the beer orders. As we have said clearly and consistently, it must apply to companies with 500 pubs or more of any kind, but within that it must apply only to leased and tenanted or franchised pubs, not tied pubs. That is crucial; otherwise, as we have seen, the large pub companies will simply put people on free-of-tie agreements, or so-called free-of-tie pricing, and put their rent through the roof, even further above market level. Clearly, that will take more money, and the problem will not be solved.

[Toby Perkins (Chesterfield) (Lab)]

I add my congratulations to the hon. Gentleman on the work that he has done on this issue. Does he agree that in some ways what is proposed misses the mark, because not only does it expect too much of the small family brewers, for which we have such high regard, but it expects too little of the pub companies that many of us have considerable concerns about?

[Greg Mulholland]

The Fair Deal for your Local campaign clearly campaigned for a statutory code to include the all-important market rent only option—the Select Committee solution—for companies with 500 pubs or more. We did not envisage or call for a code for companies smaller than that. It is interesting that we have ended up here because the so-called British Beer and Pub Association, which is the mouthpiece for the pubcos, decided that it was a clever tactic to try to deflect any legislation by saying, “Oh no, we mustn’t have a two-tier system,” which has backfired terribly. Once again, the BBPA has badly let down the family brewers, who should seriously consider whether to continue to remain part of an organisation that lets them down and is increasingly discredited.

[Caroline Nokes (Romsey and Southampton North) (Con)]

rose—

[Greg Mulholland]

I give way to the vice-chair of the all-party save the pub group.

[Caroline Nokes]

Does my hon. Friend agree that some of the pessimism that we have heard about the market rent only option is unwarranted in the case of family brewers?

[Greg Mulholland]

Of course, the market rent only option would not apply to family brewers. They would be excluded even in the current proposals, because the enhanced code is only for companies with more pubs. But a lot of myths have been circulated and there is a lot of scaremongering. The all-party group has done a good job with other campaign groups in debunking that. We were told that free houses used to close in greater numbers than pubs—absolute nonsense, and we have proved that. We are now being told that somehow this would close breweries. That is complete and utter scaremongering. It is nonsense. Only 14% of Marston’s revenue is even from its tied estate. It makes huge amounts of money—I am glad to say—from selling its beer to supermarkets and to the free trade from its managed pubs. It is scaremongering without evidence, and the Government must deal with that. It is also why the Treasury must finally answer the freedom of information request and tell us what evidence it has been sent. There is no credible evidence to back up the claims of the BBPA and the big pub companies, which are simply trying to defend the indefensible and to prop up what has been a disastrous business model, which made a few people very rich and has destroyed pubs, and is continuing to make perfectly viable pubs close because of the huge debts they are paying.

In the limited time that I have I must challenge the Minister. This will be a conversation that will be had between now and Committee stage when it will be explored. As set out, the adjudicator will deal with breaches of the code, yet the fundamental problem is that the pub companies are taking too much in the form of excessive tie prices and inflated rents from pubs. How will the adjudicator deal with that? How will the parallel rent assessment deliver that? The adjudicator must have the power to impose a new, fair tied rent. That is the only way in which the Government will be able to deliver their commitment, but it is not clear that the adjudicator will have that power.

Also, I can see no specification of the level of fines. The only arrangement that would make any sense would be one that enabled the adjudicator to say, “Yes, you have been considerably overcharged for this period, and the fine will be set at a level that will allow the pub-owning company to pay you back the entire amount by which you were overcharged through unfairly tied prices and excessive rents.”

The Government have not explained why they have not adopted the simple solution. Their current plans will result in a huge work load for the adjudicator, but there is a simple solution. It was put forward by the Select Committee and backed by 10 organisations including the Federation of Small Businesses and the Forum of Private Business, and it is now time to look seriously at improving the situation with a market rent only option.

16:50

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

I welcome the general intention of the Bill to support small businesses, but I worry that it does not go far enough. In Northern Ireland, small businesses form the heart and the backbone of our local economy, and they have faced an extremely challenging economic environment over the past six years. I agree with those right hon. and hon. Members who have said that the unwillingness of banks to lend to individuals has resulted in many of those people’s businesses going to the wall. I recall hearing about conversations between a bank and a local farmer who lost his business, and between a bank and a local shop owner who sadly had to close his business. In both cases, this was a result of the banks’ unwillingness to show a level of mercy and compassion.

I hope that the measures in the Bill will go some way towards helping businesses to compete and grow and, in doing so, to create jobs. I know that the Federation of Small Businesses is encouraged by the measures to strengthen the prompt payment code and to force larger businesses to publish their payment terms. Today, however, I would like to take this opportunity to focus on another element of the legislation: the issue of zero-hours contracts contained in part 11 of the Bill.

The Bill at least acknowledges that the wide-scale use of zero-hours contracts can present a problem, but I fear that it will do little seriously to reform the practice. It is predominant in the lower-skilled sectors of the economy and in manual work, but just yesterday I heard reports of a university lecturer post being advertised on a zero-hours basis. The practice has become more and more common, and it represents a gradual erosion of the important connection—and the concept of a fair settlement—between an employer and an employee.

This is not some abstract problem on the fringes of the economy; it is becoming increasingly prevalent. Last year’s excellent “Channel 4 News” report on care home staff showed the reality for people on such contracts. My hon. Friend the Member for Sefton Central (Bill Esterson) has already referred to this issue. Those people have no economic power; they live day to day with little ability to manage their own finances or plan for the future. They have their hours texted to them, often with little notice, and they have no flexibility or rights. They have little possibility of negotiating any form of pay rise because they have minimal employment rights and there is always someone else ready to do their job.

[Catherine McKinnell]

My hon. Friend is making a powerful speech about the individuals who face those challenges. Is she also aware of constituents like mine who even have trouble accessing housing benefit and other forms of support because their hours fluctuate so much from one week to the next? That makes it very difficult for them to access the state support that should be there for them.

[Ms Ritchie]

I agree with my hon. Friend’s fine intervention and compelling point. I have had similar instances of people who, because of the fluctuating nature of their contracts and their lack of access to money on a continuous basis, have found themselves outside the housing benefit bracket and in trouble, so to speak. The nature of zero-hours contracts removes any sense of stability from people’s personal or family life, and leaves them on a treadmill with no hope of promotion, a pay rise or progress. How can people be expected to manage a tight family budget on such a basis?

I welcome the fact that the Bill will ban exclusivity clauses for zero-hours contracts, which prevent people from working for another employer even when no work is guaranteed. I issue a caution, however, as that is only a start and does not get at the underlying problem represented by the low-wage, temporary and fragmented nature of large parts of the economy. Retail prices index inflation has tracked above wage growth for five years, and more and more people are being pushed into shadow jobs that offer no security and leave them precariously perched on the bottom rung of the employment ladder. Is that correct? Is that proper? Is it fair? More concrete measures must be put in place to change those practices and re-establish the connection and fair agreement between an employer and employee. I hope that progress made during the Bill’s passage through this House will enable that to happen, and that the Minister will provide us with some solace in that regard this evening.

16:56

[Sheryll Murray (South East Cornwall) (Con)]

My constituency was built on small businesses and the ingenuity of those who run them, but I must express some concerns that I discussed with one of my constituents, James Staughton, who owns St Austell brewery, when he invited me to a dinner recently. St Austell brewery has about 170 pubs, and although I welcome the protections afforded in the Bill to hard-working pub tenants, I wish to mention the concerns that James raised.

Smaller organisations would find it more difficult to operate under a new statutory code. There is little doubt that gaming machines are an important revenue source, and not to allow smaller companies that important revenue stream would simply put costs elsewhere—the last thing we want is a rise in rent that those hard-working tenants have to compensate for. Having the fixed cost of a compliance officer is unfair on smaller companies that have a much smaller base to cover the additional burden. The same can be said of the necessity to have a valuer qualified by the Royal Institution of Chartered Surveyors to sign-off rent assessments and a number of other compliance requirements.

It is clear to me that the small businesses that run fewer than 500 pubs need to be excluded from most, if not all, these regulatory changes. After all, I fought the last election on removing Labour’s red tape not adding to it, and I remind the Secretary of State—unfortunately he is not in his place—of his words:

“In order to place the most proportionate burden on business, the Government is proposing that this new regulatory regime should apply to all pub companies with more than 500 pubs.”

There was no mention of these measures applying to smaller pub companies.

Further concerns are short-term agreements and tenancies-at-will, which are often used to assist when a business is in crisis. Because of the short-term nature of those tenancies, I ask the Government to consider the regulations carefully, as short-term emergency measures, by their very nature, need more flexibility than longer-term tenancies. Tied pubs are a tradition. A tenant should not be able to come in and change all the beers, losing the landlord much of the revenue and possibly changing the whole nature of the pub—which, if successful, will go through many tenants in the period of its life.

I welcome the Bill, but I want to ensure that we have got it right. I want to save the British pub, not punish it.

16:59

[Simon Danczuk (Rochdale) (Lab)]

It is a pleasure to follow the hon. Member for South East Cornwall (Sheryll Murray), who made some excellent points, particularly about the pub trade.

As many hon. Members will know, I am a small business owner myself, so I begin my speech by declaring an interest through Danczuk’s Deli in Rochdale. I extend an invitation to hon. Members to pay a visit whenever the opportunity arises. It is also important to say that today I was unanimously elected chairman of the all-party group on small shops—a position I am very pleased to be able to take up.

As a Member of Parliament and as a small business owner, I welcome this Bill. Before I discuss it in detail, I want to make a couple of brief but important points. First, we often talk about social mobility, but usually in relation to schools and university. It is my strong view that small business can be a very powerful tool for social mobility and vital in helping individuals to achieve their potential. That is worth remembering.

[Toby Perkins]

On social mobility and the roles of schools and small businesses, I am sure my hon. Friend will be pleased to know that the Labour party recently announced that we are going to make it easier for small business owners to get involved in being school governors so that they can make sure that schools are turning out people who are work-ready and that schools and business have closer links.

[Simon Danczuk]

I thank my hon. Friend. I am pleased to hear that, because the link between education and business and enterprise is very important.

Secondly, small business is important to communities. Small businesses have helped to keep Rochdale going during very tough times, and they have formed the building blocks on which the future success of the town will be based. For example, Hanson Springs in Rochdale has developed from being a very small business into a major employer providing secure jobs for local people, creating skilled occupations, and providing many exports for the country.

Let me turn to the Bill. I welcome the commitment to tackling issues such as late payment and procurement. Small businesses, especially new ones, often operate on very tight time scales with very small margins of error. When invoices are not paid on time, that can have a huge impact on a business. It is not simply a case of having to wait for money; it can hold back investment and cause small businesses to lose important contracts. Late payment also has a domino effect that flows along the supply chain, affecting many businesses and harming business relationships. It is shocking that 51% of invoices paid by large businesses are paid late. Something really needs to be done to tackle this. The problem does not relate only to large businesses. We know from research by the Federation of Small Businesses that central Government pay 29% of their invoices late. That is clearly unacceptable. I would hope that the Bill could do more to tackle the issue of Government and large businesses not paying on time.

I recently wrote an article for a new think-tank called The Entrepreneurs Network in which I suggested the idea of a small business kitemark for local government that would assess whether a local authority was fulfilling its obligations to small business and help to share best practice. There are many such ideas that could improve the relationship between Government and small business. I hope that that can be considered as part of the Bill.

That brings me to procurement. According to FSB figures, every £1 spent by local authorities with small local firms generates 63p of economic benefit for the local economy. Given that local authorities spend literally billions of pounds on procurement every year, there is a lot of potential benefit for local areas.

On the scope of the Bill, the section that deals with access to finance is mainly limited to late payments and does not deal with the more tricky issue of getting banks lending to businesses again. There are some great companies out there, such as Octopus Investments that are helping innovative new businesses get off the ground, but Government could still do much more. I would like to see—and this is a Labour proposal—more regional investment banks such as those in Germany that are investing in small and medium-sized enterprises and helping them to grow their businesses and to export.

I also want to address business rates, which are still the No. 1 issue among small businesses. The current business rate system is completely out of touch with reality and needs fundamental reform. The British Retail Consortium is looking at the issue and I think we should consider its interesting proposals.

In conclusion, this Bill is a step forward, but it is not a step change. It tinkers where it should transform. It does not show the ambition that our small businesses need and deserve. After this Bill, there will still be much more to do.

17:06

[Mr Brian Binley (Northampton South) (Con)]

I wholeheartedly welcome the Bill. I have been an advocate in this place of small business since I came here, having founded two small businesses that have grown to employ almost 300 people. That underlines the power of small businesses in our business sector. I am vice-chairman of the Business, Innovation and Skills Committee and am proud of the work we have done, particularly in advocating the pub code. I am also the chairman of the second largest all-party group after that on beer, namely the all-party group on small business. It has been one of the major themes I have pursued since I came to this place.

I want to concentrate on clauses relating to the pub code. When the BIS Committee took evidence, we found that many tenants had been attracted to pub tenancies by misleading information given by pubcos—I am excluding small and sizeable family breweries—that turned out to be untrue. The Committee proved that estimated profits were often overstated and that the effect of estimated costs relating to a combination of dry and wet rent was often understated. The result was tenants investing money on a fake premise. They lost that investment over time by supporting an ever-more costly business which eventually failed. What happened then? Similar tenants came in to support a pubco financial model that is heavily laden with debt and that simply does not work without that sort of subsidy—but it is a criminal sort of subsidy, and I say that without fear or favour.

I am for a pub code, but I do not think it goes far enough with regard to those particular pubs and companies. We need to do more. The Federation of Small Businesses survey found that almost 90% of tied tenants would take a free-of-tie option with an independently fair-rent option, and 51% confirmed that the rent paid to a pubco is higher than in the open market—a crazy situation—while 98% would have more confidence in the future of their business if they were free of tie, 78% would invest in pub maintenance and 73% would invest in modernisation. The figures are meaningful.

[Greg Mulholland]

My hon. Friend forgot to mention in his long list of titles his elevation earlier this year to president of the save the pub group. It has been a pleasure working with him. As well as the figures he has—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. Sit down. We are really pressed for time and Members need to be disciplined. We did not need the introductory remarks, so you have lost the opportunity to make your point. I call Brian Binley.

[Mr Binley]

President Brian Binley. [Laughter.] I apologise, Madam Deputy Speaker.

The Bill proposes a mechanism called a parallel rent assessment. From a tenant’s point of view, such a mechanism is time consuming, and it will allow a pubco to run a tied tenant into financial collapse long before they receive an adjudication determination. It is potentially expensive for tenants, requiring them to employ professionals to represent their case, and it is complex. It is also totally unsupported: no organisation, pubco, brewer, tenant or consumer supports the parallel rent assessment mechanism. I am therefore surprised that the Government have recommended a mechanism with so little backing.

I appeal to the Minister to reconsider the proposals on pubcos, especially as they relate to the tie, and to consider the opportunity for a fair rent option without a tie. I am happy that the breweries are excluded from that particular element—the Select Committee in fact asked for that—but pubcos should be willing to face up to their responsibility in relation to encouraging tenants to take their pubs on false pretences. If hon. Members have, like me, seen a woman in their office in tears because she owes £94,000, having taken on a pub on a false premise, or seen a husband trying to comfort his wife because they know they are going bust, having sold their house to invest in a pub—there are many examples of that kind—they would recognise that reality.

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

Will the hon. Gentleman join me in congratulating all those organisations and individuals in constituencies up and down the country, such as Paul Naylor of the Legh Arms in my constituency, who campaign tirelessly for community pubs?

[Mr Binley]

I am delighted to help the hon. Gentleman with his press release. I of course congratulate the gentleman concerned.

Pubs are a social institution of massive worth: their value to our community is as great as almost any other institution that we might name. The pub landlord often acts as an adviser to people on everything from legal matters right through to how to get their car repaired. His wife often helps with the charity work undertaken in pubs, including by creating refreshments for pub teams when they return from playing a game. The whole institution of pubs cannot be overestimated for our local communities.

I want to emphasise that pubs are, however, under serious threat, especially from the large pubcos. I want to ensure that our local and regional breweries, which have brave defenders, are also protected, because they also play an important role.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Will my hon. Friend give way?

[Mr Binley]

I had better not, or Madam Deputy Speaker will have words with me privately later.

I conclude simply by urging the Minister to reconsider the option proposed by the Business, Innovation and Skills Committee in its report. The Secretary of State initially seemed to accept it, but I fear that the Treasury oar then had an impact, smacking him—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order.

[Mr Binley]

Pity.

17:09

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Speaking in my capacity as co-founder and co-chair of the all-party group on anti-corruption, I welcome the proposals in the Bill to create a public register of beneficial owners known as the register of people with significant control. That move will mean that the UK is the first major economy to have a public register providing details of who really owns and controls what are currently anonymous shell companies. That is important because, although businesses play an important role in developing thriving societies around the world, some companies abuse global corporate structures. Secret ownership structures allow wealth to be hidden away. Many companies and individuals avoid or evade tax by keeping their money in a complex network of trusts and shell firms, which are often based in secretive tax havens. That deprives developing countries of much needed tax revenue that could be invested in public services and infrastructure.

It is secret company ownership that makes most cases of large-scale corruption, criminal money laundering and terrorist financing possible. A World Bank review of 213 big corruption cases between 1980 and 2010 found that more than 70% of them relied on anonymous shell entities. Many of the company service providers were registered in the UK or in our Crown dependencies and overseas territories.

The cost of this activity to developing countries is vast. The best recent estimates suggest that between $21 trillion and $31 trillion in private financial assets is held in tax havens, which is greater than the entire global aid budget.

That is why the all-party parliamentary group has been lobbying hard and speaking to Ministers about how we can ensure that the public register does the job that it sets out to do. We want to ensure that a number of issues are taken into consideration. We want to ensure that the information on beneficial ownership is available to the public as open data, that it is machine-readable and that it conforms to the Open Knowledge definition. We want to ensure that the information can be verified and that there is sufficient information to distinguish one individual from another. For example, a date of birth might be necessary. We want to ensure that there is a legal responsibility for companies to acquire and declare information on the identities of beneficial owners, as well as a legal requirement on beneficial owners to declare to companies that they are the ultimate owner. As I said to the Secretary of State, we want to ensure that there are significant penalties for failure to comply to ensure that everybody complies with the requirements. People must not think that it is worth while ignoring the requirements and they must not get away with doing so.

I want briefly to raise the concerns of Public Concern at Work about whistleblowing. The proposals go some way towards addressing those concerns, but do not go far enough. There are still concerns about gagging clauses. Many people who receive severance payments believe that they are gagged, but in law they are not. There are concerns about blacklisting and job applications. There is no cause of action in law if somebody who has blown the whistle and has been put on a blacklist is not recruited on that basis. There is currently no protection for armed forces and national security whistleblowers who raise concerns about wrongdoing or malpractice. We need greater protection for individuals who seek advice from trade unions. For example, people who raise concerns but do not take the matter forward still need protection under the law. We all welcome greater support for whistleblowers, so I would be interested to hear the Minister’s views on the concerns that have been raised.

Finally, it would be remiss of me not to touch on the proposals in the Bill on pub company regulation, particularly as I am due to meet members of the Tyneside branch of CAMRA at the Millstone pub in South Gosforth on Friday. Many of the issues have been discussed by hon. Members, but Tyneside CAMRA believes that the Government need to go further in protecting community pubs. Its members are particularly disappointed that the Bill does not include market rent only and guest beer options, because it believes that requiring the big pubcos to provide tied licensees with those options would be the simplest means of ensuring fair play. Those options would support not only community pubs, but microbreweries across the country, such as the excellent Big Lamp brewery in Newburn in my constituency.

[Andrew Griffiths (Burton) (Con)]

Will the hon. Lady give way?

[Catherine McKinnell]

I will give way.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

No you will not, because your time is up. You just missed it by a second, I am afraid.

17:19

[Rebecca Harris (Castle Point) (Con)]

I rise with some trepidation to speak on Second Reading, because it is such an enormous Bill and contains so many interesting measures. I am well aware that speaking on Second Reading sometimes marks Members out as candidates for the Bill Committee. I envisage that it will be a very long but fascinating Committee. The Bill contains many disparate measures. Some are not eye-catching or glamorous, but they will do a good deal to support small businesses in practical ways. They demonstrate that the Government take their commitment to make life easier for small firms very seriously. I like the Bill so much that I think we should have a small business Bill at the beginning of every parliamentary Session.

I am especially interested in the new measures on prompt payment, which is a big issue in my constituency—a lot of construction firms in my constituency are often troubled by the late payment of fees. The requirement for certain companies to supply details of payment times and for them to be published is welcome. I have sympathy with the views of the Federation of Small Businesses, which says that records of payments to sub-contractors should be taken into account when companies bid for Government contracts. I would be tempted to go further than that—all of a private company’s businesses arrangements, including how well it pays its suppliers in private business dealings, should be taken into account when it bids for a Government contract—because we need to foster a culture in which not paying promptly results in reputational damage to firms. About £40 billion is owed to SMEs in contract payments. It is not acceptable for firms to enjoy the Government’s prompt payment policy if they do not share it with their supply chains.

It is brilliant that the Government’s mystery shopper scheme is being made statutory. It is a fantastic scheme. I am pleased that about 80% of the cases referred to the mystery shopper scheme have resulted in a positive outcome and improvements to procurement practices to improve small firms’ access to public sector contracts. I am a big fan of that initiative, but it needs to be used more widely. I have been given many examples of SMEs that have gone through the time-consuming process of bidding for a significant public sector contract. They hear that they have submitted the most competitive, best-value bid, only to find that a major firm has secured the contract. The major firm then asks the SME to be its sub-contractor to do the work in any case.

The suspicion is that, often, public sector procurers use excessively high requirements when they are not relevant to the contract—for example, on financial track records—as a means of simplifying their work load and of letting the bigger corporations manage multiple contracts for the public sector. At the same time, the bigger corporations take a sizeable top slice of the cost to the taxpayer. I have found the mystery shopper scheme to be a useful tool in my arsenal to assist businesses that approach me when they are based in my constituency or are seeking to invest in it. However, the scheme needs wider publicity—more businesses need to know about it—and I am encouraged that things are taken forward in the Bill.

Hon. Members on both sides of the House agree with banning exclusivity clauses in zero-hours contracts. Many workers, and especially many women in my constituency with whom I have discussed the matter, say that they like the flexibility, but when things go wrong, and the employer abuses the system, the problems start. They can cause serious hardship. Strictly speaking, banning exclusivity clauses will not entirely end the abuses of zero-hours contracts. The Government clearly recognise that, which is why clause 139 gives scope for further reform.

I praise the Department and the work of UK Trade & Investment on exports. UKTI is undoubtedly the driving force behind some of the measures in this huge Bill. As a member of the Business, Innovation and Skills Committee, I consider it my implicit duty every time I meet a business owner who exports to ask whether they are getting support from UKTI and how they rate it. The feedback has recently been 100% positive, from tiny, niche luxury food exporters to big bespoke boat builders such as Blyth Workcats, which manufactures catamarans on Canvey Island. Businesses have great confidence in UKTI and increasingly value its work and approach. I am happy to take this opportunity to say so.

I commend the numerous common-sense measures in the Bill, which will do a great deal to support business growth and small businesses as the engine of our long-term economic plan. I am very proud to commend—

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order.

17:25

[Mr William Bain (Glasgow North East) (Lab)]

Small business needs a Bill that unlocks new finance to help businesses grow, gives new impetus to business investment, boosts science and research, and provides fairness and clarity on rights at work, while removing the worst abuses of zero-hours contracts. Sadly, judging by the Bill before the House today, the real radicalism of this Government is expended on the frenzy of briefing against each other, rather than on dealing with the underlying problems that affect the sustainability of the recovery and small businesses: a serious skills shortage, a growing trade deficit, still modest business investment, stagnant productivity threatening permanently lower living standards, short-termism on infrastructure, and chronic insecurity at work.

The Bill falls short on the challenge of putting optimism back into business in Britain for several key reasons. First, it fails to address the crisis of young people, work and skills identified by the OECD in its study last autumn. Small businesses are struggling to find employees with the required skills in our weakened labour market. In the production sector alone, 25% find the availability of workers with non-management skills worse than the year before. A third of small firms say skill shortages are stifling growth. When four out of five manufacturers in this country say that they are finding it difficult to find employees with the right skill set, and two thirds of those go on to say that that is because of a lack of technical skills, we in this House should listen.

[Stephen Metcalfe]

Does the hon. Gentleman not accept that the skills shortage cannot possibly have happened in the past four years alone? There must have been a deficit going back to the previous Government for there not to be any skilled employees around now.

[Mr Bain]

That is an interesting point, but to answer it I advise the hon. Gentleman to listen to what businesses are actually saying, which is that the problem is getting worse on this Government’s watch. What are the Government doing to deal with it and what will the Bill do to deal with it? Precious little.

The Government should be doing more to support small businesses to improve the technical skills of their staff. They should be looking at the idea the Opposition proposed to introduce technical degrees, which would give hundreds of thousands of people the opportunity to get the degree-level skills that small businesses are looking for while they are still in work.

Secondly, the Bill fails the test of promoting small businesses because of a lack of any substantial measures to improve access to finance. The £1.5 billion direct lending scheme, launched by the Government in autumn 2013, received only 15 inquiries by April 2014; just one firm applied for support under a scheme first announced in the previous year’s autumn statement. The £5 billion export refinancing scheme was launched in July 2012 as part of the Treasury’s UK guarantees scheme. As of April this year, not a single business has been helped by that scheme. As welcome as clause 4 is on the sharing of data on small and medium-sized businesses between challenger banks, the Bill does nothing to create additional competition in the banking system to repair broken financial pipelines that would mean that corporate surpluses can find a home in productive investment in our economy. Just one third of SMEs are using external finance and only a third of applications for first-time loans are being accepted.

Thirdly, on access to broadband, the Bill fails to remove some of the practical barriers many firms suffer from, particularly in remote areas, and fails to promote competition in ways recommended by the recent report on broadband by the Federation of Small Businesses.

Fourthly, on zero-hours contracts, as many as 1.4 million people, plus those who work in agencies, will still have insecure working hours despite the provisions in the Bill. There is no commitment that people who have been consistently employed for a year or more will receive guaranteed hours at work. I recently met a constituent in Blackhill in my constituency who has worked for 15 months with the same employer. He can see his weekly hours fluctuate from zero to as many as 74 hours via text and with minimal notice. The provisions in this Bill will not help him. They are weak and easy to evade.

Some of the faces on the Treasury Bench may be different, but it appears that the mindset of this Government remains closed to new ideas. There may be new voices at the Dispatch Box, but on policy this is a no-change Government, dominated by the same old Tories. For a lasting recovery that will genuinely benefit ordinary people and small businesses alike, next May’s general election and a Labour Government cannot come soon enough.

17:30

[Caroline Dinenage (Gosport) (Con)]

It is a great pleasure to take part in this debate and I warmly welcome the Bill.

Like many other Members who have spoken today, I come from a small business background. I started my own company at the age of 19—it is still going, which is good news—so I understand very well that small businesses are indeed the engine of our economy. The unemployment figures that we have seen in Gosport and other parts of the country this week are testament to the incredible role of small businesses in driving employment and growth. Small businesses make up more than half of the UK’s jobs and GDP. They are absolutely essentially to the UK economy and it is important that we do not fail them. That is why I am so pleased that we have a Government who actually get it and are firmly backing small business, with the first ever Bill that genuinely reflects the role that small businesses play in our economy.

I like to think of small businesses as the ideal romantic partner. They are quite low maintenance and do not really expect grand gestures from Government. What they really want is to be allowed to keep their heads down and focus on the job of running their businesses, generating growth and jobs. However, there are a few things that the Government need to put in place to allow small businesses to flourish and grow, and they certainly should not put obstacles in their way. Some of those things are covered in this Bill, which is why I welcome it.

The skills issue is incredibly important. We are all aware of the OECD report that showed that under the last Government, 16 to 24-year-olds in this country were likely to have lower skills than their grandparents, and we are the only country in the developed world to which that applies.

[Mr Binley]

I have already said that I founded two companies, which now employ 300 people. Labour Members have to recognise that one of the problems is that their policy on literacy and numeracy education in schools has been a total disaster, with many young people seeking jobs who cannot properly express themselves and certainly cannot add up properly. Does my hon. Friend think that that is one of the problems with skills training now?

[Caroline Dinenage]

I am pleased that the whole issue of adult literacy and numeracy will come before us on the Business, Innovation and Skills Committee shortly. I feel that we are in a global race. Every era has its valuable commodities and the most valuable commodity of this era is an educated work force. It is what our international competitors most understand. The measures in the Bill to provide us with a deeper understanding of the impact of education choices on labour market outcomes are therefore welcome.

[Neil Carmichael (Stroud) (Con)]

I want to emphasise my support for the Government’s measures to ensure that outcomes from the education system are properly tracked into business and employment, because that is the essence of our training and school reforms.

[Caroline Dinenage]

My hon. Friend is absolutely right. For too long under the last Government we saw a proliferation of courses that were not valued by employers, and young people paid the price. Better information will help to cut out courses that employers do not value, making sure that our young people get the skills they need.

Another important pillar for business is of course access to finance, which is also covered in this Bill. There were more new businesses last year than ever, but businesses still identify access to finance as a problem for them. The measures in the Bill will help business to get the funding they need, as well as helping to ease the problem of late payments, which has been the downfall—in fact, sometimes the death knell—of so many fledgling companies.

Another big issue is red tape and bureaucracy, which is covered widely in the Bill. Any business owner will tell you, Madam Deputy Speaker, of the burden of pointless regulation and paperwork, which spiralled out of control under the last Labour Government. Important steps have already been taken to address that, including the red tape challenge, which has seen at least 3,000 regulations scrapped so far, and the one-in, two-out rule.

There is still so much to do, however. I sent a survey to SMEs in my constituency, and over half of those that responded said that, despite the Government’s efforts, regulation was still a problem for their business. So measures that will help reduce the costs of company registration and make Companies House more efficient, along with the introduction of e-registration, are all really welcome. I welcome, too, the five-year review of secondary legislation, including laws that come from the EU. It is important to review laws after a reasonable amount of time, but could we not go further and apply this provision retrospectively to existing legislation?

Access to markets is, of course, absolutely fundamental to business, both domestic and overseas. The public procurement market is worth £230 billion, and I welcome the Government’s commitment to simplify Government contracts, giving small businesses better access to this marketplace. This must go hand in hand with a Government approach that sees us as early adopters of innovation. Too often we see our great British invention and innovation adopted first by overseas Governments, particularly the US and Germany. Where the marketplace goes, the jobs and prosperity follow. I would like to see all Government Departments encouraged to welcome British innovation and to adopt it early.

On overseas opportunities, it is estimated that if SMEs could raise their export performance to the EU average—if the one in five British SMEs that exports could now be raised to one in four—it would wipe out the trade deficit overnight. We have seen steady growth in this area, with our exports to Brazil, India and China rising faster than those of our competitors, but we still have a lot of catching up to do, so I am pleased that the measures in the Bill will make it easier for small businesses to expand overseas.

The challenge now is twofold: making sure that businesses are fully aware of all the support that is available, so that they can get maximum use out of it; and making sure that UK Export Finance has the resources to deliver this wide range of support. In addition, we need to make sure that support is tailored to the needs of individual businesses. Exporting can be a daunting prospect for a small business, so first-time exporters should be given both up-to-the minute information about emerging markets, and as much assistance as possible in finding new customers.

Tomorrow, I welcome the business woman Karren Brady to a school in my Gosport constituency, where a programme of events will be run to help inspire the entrepreneurs, business people and innovators of the future. These young people hold the key to our nation’s future economic prosperity. It is up to the Government to deliver them an environment that ensures that they can work in the most competitive, business-friendly country in the world. All in all, I feel that this Bill is another step in the right direction from a Government who have consistently backed small businesses to deliver that.

17:37

[Chris Evans (Islwyn) (Lab/Co-op)]

It is indeed a pleasure to follow the hon. Member for Gosport (Caroline Dinenage). It is a great thing that we are debating small businesses, which are at the heart of British life. From the cornershop to the village pub, business and free enterprise are at the heart of the British way of life. From the Marks & Spencer penny bazaar, we have seen so many businesses grow from small roots. I am concerned, however, that there are still several anti-small business practices and broken markets where an active Government taking the side of small business could make a real difference and a real change.

If I were to open up my postbag and draw out the top three things that small businesses write to me about, the first would be procurement. Smaller firms find it difficult to procure larger contracts that could be vital to the future of their business. The second and perhaps the most important and the most dangerous is tackling the scourge of late payments. Finally, many of my constituents love their pub and are afraid that it is disappearing off the high street.

Speaking as someone who comes from the betting industry, I can say that we have seen the decimation of small, independent betting shops. They were once a common sight on the high streets of Britain, but they have all but disappeared as a result of massive change. I am fearful that the same thing is happening to the pubs. There is no sadder sight than seeing boarded up a pub in which people enjoyed their youth and perhaps their first pint, or where they joined their first football or pool team. It is sad when such a pub has no future. We must address this real problem now. Some 27 pubs a week have been closed since 2010. Many people are not interested in the big pub companies, but they like their local, along with their local landlord or landlady. These are the ones that keep the sports teams going, whether it be pool, darts, football, rubgy or cricket. They are often places where people meet, discuss tactics and enjoy a pint afterwards.

I am not going to make sweeping statements about pubcos. That is sometimes a problem with us politicians: we have a habit of making sweeping statements. However, I am deeply concerned about the position of pubs. Many industry stakeholders are not profiteering from the opportunities made available by the terms of tied pub contracts, and I welcome the introduction of regulation in principle as a platform for meaningful and material reforms. However, I have grave concerns about the weakness of the Government’s proposals. I fear that they will cause further detriment to the nation’s pubs by encouraging pub companies to accelerate what many consider to be their asset-stripping programme of disposal of pubs for alternative use.

The fundamental problem faced by tenants is the charging of excessive rents that do not reflect the over-inflated prices of tied products. I urge the Government to accept that, if we are to have meaningful reforms, a market-rent-only option would offer a genuine remedy should a pub-owning company act inappropriately, and a clear, tangible power for the adjudicator for whom the Bill provides would render unfair lease or tenancy provisions unenforceable.

I also want to say something about late payments in the short time that is available to me. The Bill empowers the Secretary of State to require businesses to publish their payment records in order to increase transparency, but gives no indication of when that will be done. It does nothing to shift the burden from small businesses which have to complain about their large-scale customers. The Bill also provides for action to make public sector bodies pay more quickly. I welcome that, but, according to statistics that I have seen, 77% of members of the Federation of Small Businesses have said that private sector organisations are more likely to make late payments. Late payments are a moral issue. What is lacking is an unambiguous statement from the Government that this is an anti-business practice which must be stamped out. I call on them to take strict action.

I should have liked to develop my argument further, but perhaps I talked about pubs too much. Let me end by drawing attention to the difficulty that small businesses experience with procurement. Many complain to me that the process is unfair, time-consuming and costly. I think that there should be a way of simplifying it so that businesses can compete for both Government and private sector procurement contracts.

As I have said, I should have liked to develop my argument further, but I look forward to the Government’s response.

17:42

[Mr Marcus Jones (Nuneaton) (Con)]

I welcome the Bill. I think it significant that we are debating a small business Bill, because I know that, for far too long, many people who run small businesses and many of the organisations that represent them have felt that they are “out of the tent” when the Government make decisions and produce legislation that affect businesses. They feel that they are the Cinderella of the business world when it comes to Government engagement.

Today, we should welcome the fact that small business has a voice. Organisations such as the Federation of Small Businesses certainly have a voice: many of their recommendations appear in the Bill. We should listen to those organisations, because small businesses are extremely important. They have created 2 million private sector jobs in the last four years, 2,000 of them in my constituency, and have driven down the unemployment rate. Unemployment has fallen by 26% in my constituency in the last 12 months, and youth unemployment has fallen by 38% during the same period. We need to engage with small businesses and listen to what they say in order to find out what they want us to do to enable them to create the jobs that we need.

The Bill comes off the back of a number of other measures that the Government have taken to help small business. They have, for instance, extended small business rate relief, introduced the employment allowance, frozen fuel duty, cut beer duty, and reduced corporation tax to the lowest rate in the G20.

In the short time that I have, I want to say a few words about specific parts of the Bill. Many businesses come to me with problems caused by late payments, which are dealt with in part 1. In the last week alone two people who run small businesses in my constituency have mentioned the issue of late payment to me. It is extremely important at the moment when a lot of businesses are expanding. Often when businesses try to expand after a recession, they hit cash flow issues, and the Bill’s measures on late payment will be extremely important in assisting them.

Turning to part 3 on public sector procurement, many of my constituents would probably also like to see something in the Bill about prequalification questionnaires and reducing the burden of them for small businesses. It would be a good signal from Government if there were something in the Bill about late payment from Government organisations and local authorities, too. When I was a local authority leader in the depths of the great Labour recession in 2008-09, we made our payment terms 10 days and many local small businesses benefited from that.

Many of my pub landlords who are pubco lessees will welcome part 4, but we need to be careful to avoid unintended consequences, particularly in terms of the effect on family brewers and their cost base. We must also properly recognise the role of franchises, which now seem to be coming to the fore. I have at least one pub in my constituency that is owned by Marston’s and is franchised, and it is important that that is recognised as well in this Bill.

Finally, I want to talk about part 9 of the Bill. Many small businesses in my constituency have fallen foul of rogue directors, some of whom seem to have the habit of setting up businesses, failing them and abandoning all their creditors, and then starting up businesses again very soon afterwards. We need to have a culture where we do not think it is completely awful to fail, and we need to make sure our entrepreneurs feel that they can fail at times. However, people who habitually cause major distress in this way to other businesses—many of them small businesses, some of which then go out of business—need to be dealt with, and I hope the provisions in part 9 will go some way towards doing that.

I am pleased with this Bill. I am extremely pleased that it is a Bill for small business, and I am very enthusiastic about seeing it pass through the House. I hope I will be able to say a little more on Report.

17:47

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Small businesses are the powerhouse of the economy, contributing 46% of the UK’s annual income in the private sector. If we are to have a sustained economic recovery, it will be built on the backs of small businesses. I support the principles of the Bill, although it has been late in coming, but I have some concerns about the detail.

I want to refer in particular to the late payments provisions. As has been mentioned, I have had a campaign on this, stemming from a local issue, for the last three years. A local haulier came to me and said his business was going out of business as a result of late payments. That opened a whole can of worms. Small businesses do not want to go public about late payments because of the possibility of retribution. This all culminated in a Radio 5 Live phone-in programme on late payments last November, which had the highest ever recorded response.

That shows the scale of the issue, and it is hardly surprising. We know from BACS—bankers automated clearing services—data that £46.1 billion is currently owed in late payments. That affects not only productivity—158 million hours have been spent chasing overdue bills—but also access to finance and the terms of that finance. The Forum of Private Business estimates that in 2012 it put out of business 124,000 businesses, so it is a huge issue, not just in the private sector, although it is more predominant there, but in the public sector, as was reported on the “File on 4” programme last week.

My hon. Friend the Member for Streatham (Mr Umunna) mentioned the inquiry I held last year, involving people from across the House. Its fundamental finding was that late payments reflect the culture of a company, which is ultimately down to the company’s leadership. Late payments are a form of corporate bullying, because large companies are able to exert their power over small companies.

[Chris Evans]

I am listening to what my hon. Friend has to say, because she speaks from a position of great knowledge. What advice would she give small companies that find themselves in an unequal position where they cannot get the payment out of a larger company, which can bully them? What would she say to them?

[Debbie Abrahams]

I would say that the measures in the Bill are not enough. There is a power imbalance between the large companies and the small companies, and late payment needs to be seen as unacceptable as tax evasion.

The Government’s proposals to remedy the situation are disappointing. They have taken up a number of recommendations from my inquiry, but those have been very watered down. For example, clause 1 fails to describe how the prompt payment code will be updated. As we have heard, the code is already being abused by a number of prominent large companies, so, without that detail, it is legless. Similarly, the Government have reneged on their promise made last December to introduce 30-day payment terms throughout the public procurement supply chain. Instead, clause 3 states that regulations “may” be introduced to require large companies regularly to publish information about their payment practices. That is very disappointing indeed.

Another example is the Government’s failure to reform the pre-qualification procedures for public sector contracts, which have been estimated to cost the construction industry alone more than £1 billion annually. One of my recommendations on the pre-qualification questionnaire was that there should be regular updates on the past payment performance of such companies, but such a provision has been omitted. Article 7 of the EU directive on late payment, which protects small businesses and allows them to maintain their anonymity when challenging grossly unfair practices, has still not been implemented. The mystery shopper scheme in clause 34, which allows small businesses to complain about poor practices, including late payments, does nothing to address the climate of fear in reporting these events. This is not good enough; it really does not go far enough. The fundamental point I made earlier about the bullying culture and the power imbalance has not been addressed at all in the Bill.

[Toby Perkins]

I wish to place on the record my admiration for the work that my hon. Friend has done on late payments, but may I assure her that—

[Mr Mark Prisk (Hertford and Stortford) (Con)]

On a point of order, Madam Deputy Speaker. The Opposition Front-Bench team have intervened on four separate occasions on Back Benchers. Is it in order for the Front-Bench team, who are about to have 10 minutes at the end of the debate, to intervene on four separate occasions, meaning that colleagues are having their chance even to speak limited?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

It is, of course, in order, because the person who has the Floor can take an intervention whenever she wishes to do so. But one would expect discretion from the Front Benchers. Now, we were halfway through a very short intervention—

[Toby Perkins]

I am willing to show discretion.

[Debbie Abrahams]

I am grateful to my hon. Friend for what he said. The Bill does not go far enough on addressing the cultural issue that underpins and drives late payment, and we need to make sure that it does. The Bill fails to stand up to powerful vested interests on behalf of small businesses and the people they employ. The business associations I have spoken to see the Bill as a “massive disappointment” on late payments, and I will be tabling amendments to address these issues.

17:54

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to rise to support the Bill today. We are unashamedly pro-business. We have already created 1.8 million jobs and 400,000 new businesses, and business is delivering jobs, growth and opportunity. I want to cheer up the hon. Member for Glasgow North East (Mr Bain), who was scrabbling around looking for doom. Unemployment has fallen by 45% in my constituency. Apprenticeships have increased by 66%, equipping apprentices with the real-life, tangible skills that our growing economy needs. We saw the terrible OECD reports about young people not being equipped with basic skills, but I know from my 10 years running my own business and employing people that we are making important education reforms to ensure that every young person is not robbed of opportunities and is equipped to make a positive contribution in their lives and to the economy.

In the brief time available, I want to comment on a few parts of the Bill. The first part is about access to finance and I welcome the measures to improve opportunities for businesses to access different types of finance, because it is vital that we recognise that the world is changing, technology is becoming far more important and businesses are increasingly operating 24/7. We should do all that we can to encourage innovation to match that. Long gone are the days when business owners would wait several days and put on a suit for an appointment with a bank manager who does not understand their business. The world is changing and we should encourage new technologies to ensure that businesses can access finance as quickly as possible and recognise new opportunities.

I attended a business lunch organised by Total Politics and the Asset Based Finance Association at which different types of finance were mentioned. A clear message was that many businesses, which are often too busy to sit down and study the things that we deem to be important in Parliament, are not aware of the available options. I appeal that we should include in the annual business rates mailer, for which the taxpayer has already paid, helpful information to update busy businesses about such opportunities. I would also encourage teaching business students, whether in school or university, about the different types of finance now available beyond core banking.

On regulatory reform, I welcome the fact that we now recognise micro-businesses, which, as we should always remember, are significantly different from small businesses. Too many speeches often call for further regulation, forgetting that micro-businesses simply do not have the time to conform.

The most popular subject today seems to be the important issue of the pubs code. My constituency has 1,400 connected to the industry. I supported much of what my hon. Friend the Member for South East Cornwall (Sheryll Murray) said, because we must be careful about what we ask for. There is a massive difference between pub companies with over 500 pubs and traditional family brewers, including Arkell’s in my constituency, which has just over 100. Piling extra regulation on such brewers would be a major problem and would impact on their ability to employ people and to support our local economy. I am probably in a minority here, but the idea of a guest beer is crazy. It would be like going to McDonald’s and saying, “Okay McDonald’s franchisee, you are allowed to host one Burger King burger or one KFC sandwich.” The Society of Independent Brewers is also totally opposed to the proposal. We do, however, need to go further to ensure that the terms that tenants sign up to are absolutely crystal clear, so that they understand, as should be the case for any business signing up to something, exactly what it is that they are signing. We should also do more to train the future generation of landlords, because companies tell us about a real shortage of people. A lot more could be tied in with hospitality management courses, particularly now that food has become so important in many pubs.

On education evaluation, I welcome the fact that further information will be provided about what happens after students leave school, which will encourage education facilities to arrange partnerships, involve mentors and even embrace the opportunities of Young Enterprise. Schools should encourage their students to sign up to schemes such as the National Citizen Service or the Duke of Edinburgh’s award, which can build up CVs and improve the chances of getting work.

Finally, on employment, I am a big advocate of pushing hard on enforcing the minimum wage. It is unfair on the staff who are exploited, often akin to slave labour, and on the competition which cannot compete on price, and it encourages the economy to become a race to the bottom.

17:59

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I shall try to keep my remarks as brief as I can.

My hon. Friend the Member for City of Chester (Stephen Mosley) laid out much of what I wanted to say about the importance of small businesses as a sector. We ignore them at our peril as they are, as we have heard, the backbone of our economy and have, I think, played a vital part in driving down the claimant count in my constituency by nearly 36%, driving youth unemployment down by nearly 45% and upping the number of apprenticeships by nearly 60%. They play an important part and we must do all we can to support them.

Although perhaps not everything we have done as a Government has been helpful to small businesses, I truly believe that the Bill is helpful. It takes steps towards helping secure their future and addressing the challenges they face. We could go one step further, perhaps, by creating a US-style small business administration unit within the heart of Government to ensure that the impact on small businesses of every piece of legislation that goes through this House is taken into account.

There is one issue in particular that I want to speak about that might not be covered elsewhere, and that is clause 117. It relates to the Government’s proposal to create a reserve power to prohibit pre-pack administration sales to connected parties if certain criteria are not met. I want to talk about that in the context of the printing industry. I should declare an interest and refer people to my entry in the Register of Members’ Financial Interests, where they will find that I am a shareholder in a small family printing business.

The printing industry is particularly vulnerable to the impact of pre-packaged sales in administration. Printing is an over-capacity industry dominated by small companies. Consequently, the incidence of pre-pack administrations in the industry has been relatively high and the damage caused to creditors and competitors alike has been significant. Those controversial business rescue arrangements enable the debts of previous owners to be written off and have attracted criticism from creditors and competitors. When there is a connected party—that is, when the owners of the new company are the same as those who ran the old company—creditors are aggrieved because they have lost money owed to them and competitors are aggrieved because they face a rival who now has an unfair trading advantage.

The British Printing Industries Federation believes that an insolvency practitioner, or IP, who has previously provided advice to a company on the potential for a pre-packaged sale in administration has an inherent conflict of interest should they later accept a formal appointment as administrator with a view subsequently to execute a pre-pack sale. The BPIF therefore considers that an IP advising a company prior to a pre-pack sale should be precluded from becoming the administrator for the company concerned, to curb the incidence of cases where an IP attempts to secure new business by inviting distressed businesses to enter a pre-pack before other options, such as seeking an alternative operator for the business or a potential sale, are properly explored.

The introduction of a requirement for a different IP to accept appointment as administrator would improve confidence that pre-packs are used only in appropriate circumstances by ensuring that conflicts of interest were avoided. That would enhance the confidence of creditors in the insolvency practitioner’s handling of the administration. I realise that this is a technical issue, but it is a big issue for the printing industry and, I suspect, other industries, too. I have no pecuniary interest in the business any more as I am no longer a director and no longer receive any payment from it. I would like the Minister to look hard at this issue and ensure that we have covered every option in the clause to ensure that it works the way we think that it does.

I would have liked to have said much more, Madam Deputy Speaker, but I am sure that it will all be covered elsewhere or can wait until another day.

17:59

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I welcome both the intention behind the Bill and much of its content. Over the past four years, we have been able to foster a genuine entrepreneurial spirit across the country and, in particular, we have seen participation rates among women and young people rise year on year. There are now 15% more women-led businesses than there were just four years ago. I am proud to have been the Minister who began the reform of support for SMEs, put in play the 27,000 mentors for start-ups, and enabled the entrepreneurship growth that we are seeing on our university and colleges campuses, but there is more to be done. That is why I think the Bill is excellent in seeking to support the extension of export finance support to companies, not just to individual transactions. The Germans have done this for years, and I am glad we are catching up. I am also pleased, although I am a keen supporter of flexible labour markets, to see that the Government are looking to get rid of exclusivity clauses within certain contracts. They are right to do so and have my strong support.

In the time I have, I want to touch on two topics—deregulation and the long-term challenges in the employment market. On deregulation, good progress has been made. We have seen, for example, the annual flow of new regulations fall by 70%, and the stock of existing regulations cut by £250 million. That has been achieved principally by making the process of regulation more difficult for officials—making it the last resort for Whitehall, rather than the default first option. But the measures in the Bill need to be strengthened and I hope Ministers will respond to these points.

First, the Bill allows the Ministers of the day to define what is in scope and what is not, what is measured and what is not measured. All Government burdens on SMEs should be measured and the costs published. I have no problem if the Chancellor of the day wishes to count, shall we say, the administrative costs of the tax system separately from other regulatory burdens. Fine, but they should be measured and they should be published. The Bill currently fails to commit to this.

Secondly, we need a truly independent overseer. Clause 22(5) states that an independent body means

“a body which, in the opinion of the Secretary of State, is independent of the Secretary of State.”

That is not good enough. What the House will look for is an open process whereby we can see an independent body established and its membership chosen.

Thirdly, as has been mentioned, the Government should commit—I hope those on both Front Benches will think about this—to an annual debate in Government time on progress in reducing the burden.

My second issue revolves around longer-term changes in the world of work. Since 2000 here and in the United States we have seen a 38% and a 50% rise in self-employment, but conventional jobs have risen by percentages in just single figures. So this is not a cyclical change. It is a long-term structural change in the labour market. Over the next 20 years the concept of a conventional job as we now understand it will be just one form of work for most people. Young people coming into the workplace now will be in and out of employment, self-employment and contracts right the way through their careers, yet we in politics still argue about the previous century’s form of labour markets and terminology. We use terms that do not relate to the lives of many people.

So what is to be done? First, I hope Ministers will think carefully about getting the right information and terminology. We should instruct the statistics authorities, including the Office for National Statistics, to overhaul how we measure what we call work—both the way in which those definitions are made and the way in which the data are collected. At present they are incomplete and out of date.

Secondly, we need to make sure that our taxation and our employment law are overhauled. What we currently call IR35, or what I like to think of as a complete mess, is one example that we need to change. It is an example of the past. What is needed instead is a system that is clear to the individual, consistent for the working individual, and above all neutral as to how people earn their living. At present we are obsessed with which particular box to put them in. That is a mistake and it is out of date.

I welcome the Bill, which makes important contributions to an important issue, but I hope that in the long term we will get these issues right for all of us.

18:09

[Andrew Griffiths (Burton) (Con)]

It is a delight to take part in the debate, albeit with a shortened contribution, and to follow my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who did such a fantastic job when he was a Minister.

I wholeheartedly support the Bill, which will be welcomed by businesses in my constituency. They will benefit from the red tape that is to be cut, the help to export, the support that they will be given to access finance, and the ability to be paid more quickly. It will be welcomed by the workers who are on the minimum wage, who will see that enforced, and by those on zero-hours contracts, who as a result of the safeguards will no longer be victimised.

Obviously, as the Member of Parliament for the home of British brewing, and the chairman of the all-party parliamentary beer group, I want to speak on the issues that relate to pubcos. I can honestly say that this is the most pub and beer friendly Government that we have seen in generations. It was this Government who scrapped Labour’s hated beer duty escalator, which saw beer duty increase by 48%. It was this Government who had the historic two successive cuts in beer duty, which have seen a growth in our beer market—two successive quarters of beer growth for the first time in 10 years and sales up in our pubs.

I had concerns about the consultation, but I strongly believe that this is a good compromise and a workable solution to draw a line in this long-running sore that we have seen for too long in the debate over the tie. It works because it introduces a tough statutory code that clearly demonstrates how pubcos and breweries should operate, and offers proper protection to tenants. They can see in this code the help that they deserve and the requirements on those pubcos. With an adjudicator with real teeth they will have protection. They will have somewhere to go quickly to get proper redress. The adjudicator can say if a tenant is paying too much in rent or for their beer, and can fine those pubcos if they act irresponsibly. That is the perfect protection.

Intervening in the marketplace, such as scrapping the tie, would have had disastrous effects. No one today has mentioned the BIS report by London Economics, which showed that 1,600 pubs would close almost overnight if the tie was scrapped. No one wants to see that. We need evolution. We need this to work for our tenants and for our pubs.

There are things that we can do. I draw attention to a number of speeches, such as that of my hon. Friend the Member for North Swindon (Justin Tomlinson) in particular, and the issue of the smaller family brewers—the 500 mark. No one is suggesting that they have acted irresponsibly. No one is suggesting that the legislation is to catch them. One solution would be to move some of the more prescriptive and expensive regulatory issues from the basic code to the enhanced code—things such as the RICS requirements and the need for a compliance officer. Those sorts of things could be moved into the enhanced code, freeing up the smaller family brewers from being dealt with by the legislation.

There is a need to look at the tenancies at will, which are covered by the legislation. They are basically quick tenancies. If a pub is closing, if a tenant leaves or dies, the pubcos have two choices. Either they close the pub, board it up and wait until they have a tenant to take over or they have a tenancy at will. The suggestion of a tenancy at will not being encompassed in the legislation, up to a point of say 12 months, would allow that flexibility in the marketplace.

I urge the Minister to consider the franchise issue. Marston’s in my constituency has a number of franchise pubs. Franchises are very different from tenancies. There is no rent review or wet rent. They are covered by the British Franchise Association code of ethics. There is an argument that they should not be covered. I am glad that we do not have free of tie in relation to the guest beer. The Society of Independent Brewers, which one would think would be most in favour of this, has warned that it would be damaging, and we would just see foreign fizzy lagers, not British cask ale.

I commend the Government on the Bill. It offers help to our pubs and I hope it works.

18:14

[Grahame M. Morris (Easington) (Lab)]

I want to follow on from some of the issues that have been raised, not least by the hon. Member for Burton (Andrew Griffiths), although I take a rather different view. I am speaking not for the brewers, but rather for my own union, Unite, and for Save the Pub, CAMRA and Fair Pint. I want to make a couple of brief points, having listened to some of the earlier contributions, particularly in relation to the levels of unemployment and the triumphalist claims from Government Members about how wonderful the situation is. I emphasise that the recovery—such as it is—is uneven, and there are huge regional disparities. I advise the Minister and Government Members that in my region unemployment is 129,000, and rose by 5,000 between last December and May this year. That needs addressing, and I was hoping for rather more practical measures to deal with those problems.

The main point I want to raise is about pubs, and I pay tribute to the hon. Members for Leeds North West (Greg Mulholland) and for Romsey and Southampton North (Caroline Nokes), who are also officers of the all-party save the pub group. Pubs, and indeed working men’s clubs, are vital community hubs, but they are closing at an alarming rate—10,000 pubs in 10 years, which is 26 a week. I fear that the measures in the Bill will not adequately address the problems faced by our pubs.

I welcome the introduction of a statutory code of practice for large pub owning companies, and we have already rehearsed the arguments about the difference between those large pub companies and smaller regional brewers. Such a code is long overdue and much needed to address the fundamental problems created by pubcos, which I believe have done so much damage to pubs.

I do not believe that the current problems properly address that matter, and neither do they deliver on the Government’s commitment to the two core principles that the Secretary of State told us about in his opening remarks: a fair and lawful deal to ensure that the tied licensee is not worse off than the free-of-tie licensee. We know how many pubs are closing—26 a week—and for too long, large pub company chains have been giving landlords a raw deal. It is clear that large companies take too much profit from pubs—profit that would go into expanding those small businesses, employing more staff, offering longer hours, and boosting the local economy. That fundamental problem is acknowledged by the industry, and I hope that the Government will address it in Committee.

The Government have said that they will not introduce the market rents only option, and instead they have the principle that no landlord should be worse off than if they were free of tie. The reforms in the Bill aim to ensure that the tied licensee is not worse off than the free-of-tie licensee, but as the hon. Member for Leeds North West indicated, there is no effective mechanism to deliver that.

There is a strong economic argument to end the abuse by pubcos which unfairly exploit tied tenants, and there is lots of survey evidence that 90% of tied tenants would take a free-of-tie option with an independently assessed—that is important—fair rent, if that were on offer. More than half confirm that the rent they pay to pub owning companies is higher than the open market rent. I find it strange when some hon. Members say that such a measure would be a backward step and lead to wholesale pub closures, as I do not think that is the case. I have indicated where I think the extra profit would go in terms of additional staff, and under the proposed scheme licensees would be granted the right to ask their pubco to show them how much their rent would be under a free-of-tie scheme. Those calculations would be made by the pubcos, however, which obviously have an interest in providing the highest possible estimates. There are some problems with the Bill, and I hope we can explore them in more detail in Committee.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Since all Members have taken the full five minutes, and some longer because of interventions, I must reduce the time limit to four minutes to allow everybody the chance to speak.

18:19

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

Is that for speakers after me, Madam Deputy Speaker?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

No, sir.

[Chris White]

Thank you, Madam Deputy Speaker.

I am sure that hon. Members will be relieved to know that my speech is not about pubs, which were very well covered by the previous two speakers. My hon. Friend the Member for Burton (Andrew Griffiths) put the case very well.

I thank small businesses in my constituency for their role in reducing unemployment and jobseeker’s allowance claimants by 63.5% since 2010. One of the biggest issues that businesses face is the financial hurdles they come across. In giving better access to finance and improving cash flow for small businesses, the Bill will go a long way towards addressing some of these problems. Small and micro-businesses, in particular, face issues with excessively long payment terms imposed on them by large companies. I am pleased that the Government are going to tackle this head on.

In relation to employment, I particularly welcome the provisions in the Bill to clamp down on employers who are not paying their employees the national minimum wage. I hope that increasing the maximum penalty that can be imposed on employers will be a significant deterrent to those who continue to avoid their obligations. I have supported the campaign to widen the uptake of the living wage, and I hope that encouraging business to do this will also be one of the Government’s top priorities.

The Bill makes important provision regarding procurement. I am particularly interested to see the extension of the Cabinet Office’s mystery shopper scheme, which a number of Members have mentioned. The scheme has been used successfully to monitor the implementation of social value. I have no doubt that giving it additional powers will provide more opportunity for the Government to improve procurement practices.

Small businesses are thriving in my constituency. I particularly commend the Leamington business improvement district for the work it has done to promote business in our area. That is a fantastic example of the results that can be achieved when business is able to work collaboratively to achieve the common goal of regenerating and supporting local business. Nationally, BIDs across the country are generating £100 million per year of investment in town centres. I also pay tribute to the local chamber of commerce and organisations such as Leamington Business Forum, which do so much to support the sector.

Small business is fundamental to our economy. I am pleased that measures in the Bill will free companies from unnecessary burdens and support them to make the day-to-day running of their work more successful and free from regulation.

18:22

[Richard Fuller (Bedford) (Con)]

People who start or run their own small businesses are heroes. Every day, they take the risks, they work the extra hours, they manage the anxieties, and they go the extra mile to create employment and wealth in constituencies across the country. They are people like Amy Taylor and Zak Resinato. Amy Taylor started her beauty business very early in her teenage years and is now at the stage of putting it on a solid and sound foundation for future growth. Zak Resinato is a person I see every week who is not only inspiring in running his own business but inspiring others who work with him to have the vision that they too can start their own business. Beth and Mahmood, through their dedication and hard work, have created a café that is working in a location where it never worked before—an environment that local people want to spend time in. Maria has battled a council that does not understand the role of business rates in suppressing entrepreneurship. Year after year, she carries on in business because that is the core of her passion.

We live in the age of the entrepreneurs, and those people in my constituency are some of the leaders in that age. They look to this Bill and this Government for inspiration. There is indeed much in the Bill that can inspire them, but, alas, too much in the way of intervention and regulation. It is as if the Secretary of State sees himself as a real-world version of Saruman, the character who came down to Middle-earth with the best of intentions but unfortunately took the power to himself and believed that he alone was benign enough and so all-seeing that he could create a wonderful environment in which all would be good. Alas, the Secretary of State has not read his Hayek. He does not understand that it is a far better solution for our country’s economy to leave these decisions and powers in the hands of the entrepreneurs—the people who make these decisions and take these risks every day. The shadow Secretary of State noted that the Secretary of State had Conservative minders. It is important that he has Conservative minders, and I am delighted that the Minister for Business and Enterprise will be a strong, solid Conservative voice in getting this Bill through Parliament.

Part 4 is where some aspects of intervention and regulation fall down. It was never the intention that family-owned breweries would be impacted by the regulations, yet the Bill has measures that will do so. That should not happen in a Bill that is supposed to support small businesses. It also provides for an adjudicator whose role is flawed, and for a publican code that, as many hon. Members have already said, lacks some of the necessary details to be able to support small businesses. The Government’s own impact assessment states that there are additional costs on a brewing and pub industry that is already reeling from the cost competition provided by supermarkets and other places where people can buy alcoholic beverages. Those things should be looked at by the Minister and given a Conservative slant, to make sure that we support not only our publicans who want a fair deal, but our family brewers who also deserve a fair deal.

Let us hope that, through this Bill, people such as Zak, Amy, Beth, Mahmood and Maria can say that the Conservative Government stand, in the age of the entrepreneurs, on the side of our small business leaders.

18:26

[David Rutley (Macclesfield) (Con)]

It is an honour to follow my hon. Friend the Member for Bedford (Richard Fuller), whose enthusiasm for small business I fully share.

Macclesfield has a great tradition of enterprise, from silk in the Georgian and Victorian days to pharmaceuticals today, with AstraZeneca producing 1% of UK exports, which is an incredible statistic. I welcome the Secretary of State’s announcement today that he will tighten up the takeover rules and ensure that any entity wanting to make a major acquisition in the UK makes stronger commitments and that penalties are enforceable. The company is a national asset that is vital to our local economy and science base.

I want to focus primarily on not just the major businesses in Macclesfield and north-east Cheshire, but the many small and micro-businesses that are the lifeblood of our community—those entrepreneurs who are helping to continue our rich tradition of enterprise. The Minister for Business and Enterprise is doing a tremendous job in taking the Bill forward and initiating all the work that it pulls together. Small business makes a big impact and the Bill acknowledges just how big that impact is. The Government have a long-term economic plan that is working—Government Members often mention it—and Ministers are right to use the Bill to roll out further measures in support of that plan. It is absolutely critical that we take away the barriers to success, create a level playing field for small businesses, promote exports and help employment growth. This is an unashamedly pro-small business Bill, which is what we would expect from this Government.

I am passionate that what we do in this place has to help the four Es of sustainable economic success: entrepreneurs, employers, exporters and, of course, employees. The vital measures in the Bill will help all of them. Part 1 will lower the cost of access to finance, which is absolutely critical not just to existing businesses, but to businesses that people hope to set up—Government Members are passionate about helping people who want to set up businesses. We are going to ensure an increase in competition in that marketplace as well. Clause 4 in particular will encourage new entrants by removing the barriers to knowledge. The situation has been too imperfect for too long. That knowledge has been available only to big lenders, so now it will be shared with a wider group of potential lenders.

Part 3 will make more available in terms of public procurement. A £250 billion market of public expenditure will be made available to smaller businesses. That will help to break down the tangible and psychological barriers that are holding too many businesses back from getting started in the first place.

It is incredible. We have received feedback from different outside enterprises and organisations and they are heralding the Bill. The Federation of Small Businesses, for example, has called it a landmark Bill, and it is—it is both symbolically and actually important for small businesses.

We need to help first-time employers in their work. We have done so with the employment allowance, but we can now go further. We must make sure that we can de-risk by enhancing what goes on in the tribunal system and by taking deregulation to a higher and more statutory level, which will ensure that such businesses are supported over the lifetime of the next Parliament. I wholeheartedly support the vital steps that are being taken, as I hope all hon. Members will this evening.

18:30

[Mr Robin Walker (Worcester) (Con)]

Like my hon. Friend the Member for Castle Point (Rebecca Harris), I hope that this debate sets a precedent for more discussions and legislation on supporting small businesses, but like my hon. Friend the Member for Bedford (Richard Fuller), I hope that we will free entrepreneurs from the shackles of intervention, rather than encourage more of it.

The Bill’s aim is to make the UK the best place in the world to start, finance and grow a small business. The Government are already helping to achieve that admirable aim by backing small businesses through scrapping the jobs tax, extending small business rate relief, introducing the employment allowance, cutting fuel duty and reducing the rate of corporation tax for small businesses, which, under the previous Government, was higher than the rate paid by some large corporations.

That is why employment has risen by 250,000 in a single quarter, with new business creations at record levels. In Worcester, I have seen how start-up loans and the new enterprise allowance have helped new entrepreneurs to come into the market, and how youth unemployment has been halved since the general election, while apprenticeships have more than doubled. Like the FSB, the CBI and the British Chambers of Commerce, I support a Bill that will extend that progress.

The Secretary of State said that the Bill is complex, and it certainly is. There is far too much to address in a four-minute speech, but I want to speak about a few of the things it gets right and about one big omission. The Bill is right to address access to finance, which is clearly a concern for all small businesses in our constituencies. Data sharing is a very important way of doing that—for example, organisations such as Impetus, which helps many businesses in my neck of the woods, should get access to a list of businesses that have been refused finance by banks and get more of the data that the banks at the moment keep to themselves.

Supporting small businesses and exporting is great. We are all in favour of that, and I agree with the many hon. Members who have praised UKTI’s work and the extension of UK Export Finance to more small businesses. However, I want to sound one note of caution. A business in my constituency that exports to more than 20 countries has contacted me to say that it has lost access to passport to export funding, because that has been refocused on larger employers. I hope that we can support small businesses to get bigger as well as support bigger and more established businesses.

The Bill is right to extend the red tape challenge, which has already saved more than £1 billion, and to replace one in, one out with one in, two out. It is also right to help small and medium-sized enterprises to access more Government procurement. In my view, it is much better to do so by removing barriers and simplifying the application process than by some kind of central business administration, as the FSB has suggested. We need to learn from the US model. The Government have increased small business procurement from 6.5% to 10.5%, but there is still a long way to go to reach the target of 25%. I hope that the Bill will help us to reach it.

It is right to address the pubs code and to create an adjudicator, but I share some of the concerns of my colleagues on the Select Committee on Business, Innovation and Skills in that the Bill could go further and that more could be done to protect some of the smaller family brewers.

As my hon. Friend the Member for Gosport (Caroline Dinenage) said, the Bill will do important work on the skills agenda, including by improving access to destination and training data. It was great that the Minister for Business and Enterprise recently visited Worcestershire Business Central in my constituency, which is linking employers and schools in Worcestershire. However, I agree with the hon. Member for Rochdale (Simon Danczuk), who said that a fundamental reform of business rates is missing from the Bill. When the Select Committee looked at the future of the high street and the retail sector, it recognised that there is a need to reform the business rates system to make it deliver for small businesses that are growing, to remove some of the shelves in the system and to update it for the 21st century. That will be a challenge for all the parties in their manifestos for the next general election.

I commend the Bill. It is great to see the Government really striving to help small business.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Today’s prize for patience goes to Anne Marie Morris.

18:34

[Anne Marie Morris (Newton Abbot) (Con)]

I congratulate the Government on the Bill, which is an excellent piece of work. Having been a champion of small businesses and particularly micro-businesses for many years, I am very pleased to see it making its way on to the statute book. Small businesses represent 96% of businesses as a whole, and they provide 50% of the jobs in this country and 30% of private sector turnover. In my four minutes, I clearly cannot deal with the whole content of the Bill, but given that so much has already been said, I will make a few comments.

On late payment, the Government’s suggestion of a reporting requirement on payment performance is a good first step. However, we all feel a little frustrated and feel that there needs to be a bit more stick. The prompt payment code has inevitably had a very good start. The challenge is that, because compliance is not mandated, it has not delivered all the results that we want. Perhaps listed companies—whether fully listed or listed on the alternative investment market—could be required to comply.

We might also consider having an adjudicator, as with the pubs. If there is a persistent defaulter who breaches the prompt payment code five or six times, that could be brought to the attention of the adjudicator. An adjudicator could also look at the public sector. Although central Government have done a good job of reducing payment periods, local government has not been quite so good. An adjudicator might be able to improve that situation.

The Government have done a grand job on regulatory reform. One-click incorporation is being pushed forward. I suggest that, although incorporation is the goal for many organisations, limited liability is often what they seek. We should consider having limited liability for sole traders. That has been looked at before, but I suspect that the people who were consulted were those with, might I say, a prejudicial interest.

The defining of micro-businesses and small businesses is long overdue. I commend the Government for doing that, but would issue a note of caution. In my view, the EU definition is not the right definition. The all-party parliamentary group for micro-businesses produced a report in 2012 that showed that research from America, Australia and other parts of Europe suggested that many countries had moved the definition of micros from 10 or fewer employees to five or fewer. That must be reviewed carefully.

The steps that the Government are taking on public procurement are first-class. However, the problem has not been fully addressed. The problem for small businesses, on top of the administrative burden and the red tape, is that those who are seeking to procure often look for an organisation that can supply five, six or 10 different products. Many small businesses provide only one product, which shuts them out of the opportunity altogether. That needs to be looked at.

I will not comment on the pub code, because the Government have done a first-class job with their proposals. Many of the proposals on employment law are also well drafted, particularly the changes to zero-hours contracts.

I would like to know where we have got to with the Enterprise and Regulatory Reform Act 2013, which also looked at tribunals. It tried to minimise the number of people who go through the tribunal system by requiring people who want to go to tribunal to talk to ACAS as a first step or say that they are not interested. It also introduced settlement agreements. We must ask how successful those have been, because this is the last opportunity for the Government to fix anything that has not quite worked in that piece of legislation.

This is an excellent Bill and I commend it to the House. As a champion of all micro-businesses, I am sure that they will be very pleased about what the Government are endeavouring to do.

18:37

[Toby Perkins (Chesterfield) (Lab)]

Some of my colleagues are at the memorial service for Paul Goggins and so are unable to be here, even though they contributed to the debate. I ask for the forbearance of the House for that.

We have had a fascinating and excellent debate that has demonstrated the passion that the House has for small businesses. In the four years since my right hon. Friend the Member for Doncaster North (Edward Miliband) first set out his determination to make his one nation Labour party the party of small business, there has been a welcome change across the political spectrum in the recognition of the importance of small businesses.

Like my hon. Friends the Members for Sefton Central (Bill Esterson) and for Rochdale (Simon Danczuk) and the hon. Members for City of Chester (Stephen Mosley) and for North Swindon (Justin Tomlinson), I am a former small business owner. We were described as heroes by the hon. Member for Bedford (Richard Fuller). I therefore know that although the Government’s words have been warm and welcoming, they have not always materialised into action for small businesses. Small business Saturday, which is a significant cross-party initiative, originated with my hon. Friend the Member for Streatham (Mr Umunna).

[Matthew Hancock]

It was Barack Obama!

[Toby Perkins]

The Minister is not the first to confuse the two.

We welcome the fact that this is the first of the Government’s Bills to have small business in its title, and it contains a number of measures that we will support. Indeed, on pub companies, late payments, zero-hours contracts and takeovers, the Bill demonstrates the extent to which the Labour party has set the political agenda. However, in the final analysis, the Bill is a metaphor for the entire Government. They know that there are important things to do, they hear what some of the key issues are, but they cannot agree on what to do, so they deliver a Bill that fails fully to grasp the nature of the challenge that faces Britain if we are genuinely to rebalance the country’s economy, support more small business growth, and create an economy that works for the many and not just the few. Members on both sides of the House are pleased that there is a small business Bill, but the sense of a missed opportunity was widely articulated by them.

On access to finance, we are four years into this Government, but net lending is still falling year on year. The right hon. Member for Hazel Grove (Sir Andrew Stunell) said that banks have sucked up Government money and reduced lending to small firms. That view was also articulated by the hon. Member for South Down (Ms Ritchie) and my hon. Friend the Member for Alyn and Deeside (Mark Tami). Labour’s plans for local lending, a beefed-up British investment bank and support for alternative sources of finances have the potential to be truly transformative for Britain’s small businesses, which have been struggling for access to finance for far too long.

On pub companies, Labour Members have argued on Opposition days and in Back-Bench debates since 2011 that the Government were wrong not to introduce an independent adjudicator, and not to put the pub code on a statutory footing. We welcome the fact that they are doing so today. On three occasions, they voted against the measures they now propose. However, the parallel rent assessment process lacks credibility, as was reflected in the comments of the hon. Member for Northampton South (Mr Binley) and my hon. Friend the Member for Easington (Grahame M. Morris). The impact on small family brewers—no one suggests that they are the cause of the problems facing the industry—was mentioned by the hon. Members for Bedford, for South East Cornwall (Sheryll Murray) and for North Swindon. The measure means that those family brewers face costly and incoherent plans that could be damaging for them.

Unless strengthened, the Bill will not deliver the change we need for Britain’s pubs. It was hard to find an hon. Member who was fully in favour of the proposals. My hon. Friend the Member for West Bromwich West (Mr Bailey), who has done fantastic work on the issue through the Business, Innovation and Skills Committee, said that the pub company model had failed. He gave the Committee’s support for a mandatory rent-only option. The hon. Member for Leeds North West (Greg Mulholland) is bewildered as to why the Government did not follow the recommendation of the Committee or of Her Majesty’s Opposition. To demonstrate the extent to which the Bill falls short of expectation, it was welcomed by the hon. Member for Burton (Andrew Griffiths). If there is a clearer definition of why the Bill fails to stand up to the test we should set for it, I do not know what it is.

The Government are taking sensible steps on strengthening late payments provisions down the line with respect to public procurement, but they are leaving the onus on the public sector and small businesses to avail themselves of data to discover whether or not they are likely to be ripped off if they sell to a company. Action on public sector late payment is fine, but it does not tackle the lion’s share of the problem. Seventy-five per cent. of businesses that cite late payment as a problem are talking about corporate late payment. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who has a fantastic pedigree on the issue, spoke powerfully on the importance of tackling private sector late payment as well as public sector late payment. My hon. Friend the Member for Rochdale described the measure as a step forward and not a step change, which was a neat way of putting it. My hon. Friend the Member for Islwyn (Chris Evans) said that we need action on corporate late payers. My hon. Friends will be pleased to know that Labour will propose serious steps during the passage of the Bill that will shift the burden of responsibility off small firms that wait and on to the large firms that pay late. We will truly stand up for small businesses. Those small firms want an end to being used as a cash cow by their large counterparts.

On zero-hours contracts, the Government have done the least they possibly could. I suspect the Secretary of State recognises that the steps in the Bill offer little to employees who face a choice between the insecurity of zero-hours contracts or going back on the dole. As my hon. Friend the Member for Streatham laid out, Labour will take serious steps to recognise that the benefits of a flexible work force should not come at the expense of basic security for long-term employees.

We recognise that there will always be a need for temporary work. There will always be seasonal variations. Any sensible regime will allow for that, but the Government’s policy is all about political presentation—they want to be seen to be doing something about an issue they recognise is toxic on the doorsteps—and is not serious action to end the misery of life on zero-hours contracts for workers in Cameron’s Britain. Those whose working day is spent picking vegetables, working in a call centre, caring for the elderly or plucking a chicken deserve the right to be represented by this House. The House will speak up for them on zero-hours contracts.

The measures on public sector exit payments, as my hon. Friend the Member for Streatham said, are a bit rich coming from the Government who, in the biggest ever NHS reorganisation, sacked hundreds of senior managers, paid them off, and then discovered that they still needed them to do their jobs. I think the sense of frustration was felt on both sides of the House. The hon. Member for Bedford, who I have to say was in mid-season form and speaking very well—it is clear why he was not promoted; he is far too sensible—asked why there are no steps towards legislation on the living wage. That is a valid point, which was not properly answered.

The hon. Member for Eastbourne (Stephen Lloyd) exposed the fact that Government proposals on minimum wage fines will not deliver for workers, as the money will simply go back to the Government. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said that the Secretary of State did not understand what life was like for people in her constituency struggling to get by on low incomes. My hon. Friend the Member for Glasgow North East (Mr Bain) said that the Government were closed to new ideas.

There were contributions from the hon. Members for Castle Point (Rebecca Harris) and for Nuneaton (Mr Jones). The hon. Member for Gosport (Caroline Dinenage) criticised Labour’s record on education. It was almost as though she did not represent a party that sacked their Education Secretary yesterday. The hon. Member for Macclesfield (David Rutley) welcomed the takeover plan, which, I have to say, on first hearing sounded very much like what my hon. Friend the Member for Streatham and my right hon. Friend the Member for Doncaster North proposed just a few months ago.

What is clear is that small businesses are very important, and they are respected and admired by Members across the House. However, this is a Bill that misses an opportunity to take some of the steps that really could make a very significant difference. I welcome some measures, but we feel that the Bill demonstrates a series of compromises from a Government who have run out of ideas. They have lost a sense of central purpose and are trapped in their own contradictions. They are frightened to ask the electorate for their verdict and so they stagger on unloved even by those who are in it. It is time for a Government with a fresh agenda. A Labour small business Bill would have delivered real opportunity. This is a Bill that speaks of a Government who are approaching the end. We will give Members the opportunity in Committee to turn it into a Bill that really means something: a Bill that delivers for workers on zero-hours contracts, a Bill that protects publicans, pubs and family brewers, a Bill that empowers small businesses waiting for money they are owed, that boosts our world-class insolvency regime and protects Britain’s manufacturing pedigree. That is what the Bill should be about and that is what the Bill still can be about. Let us strengthen it so that it really delivers, or admit that this Government never will deliver and let us have a general election.

18:47

[The Minister for Business and Enterprise (Matthew Hancock)]

It is a huge privilege to respond to this debate on the Small Business, Enterprise and Employment Bill. This is the first ever small business Bill and it demonstrates the wholehearted, full-throated and determined support of this Government for business. We give this support for a reason. We are building a recovery in which all can share, where the principle of fair exchange builds prosperity and creates jobs, with the financial security and peace of mind that they bring. Business is a force for good in society and we will do everything we can to support it. In the passion my hon. Friend, the Member for Northampton South (Mr Binley) showed in his remarks, and in the service he has given in support of business in his time in this House, he demonstrated what it means to say, “We support small businesses and we will help them to expand and grow.”

We welcome the broad support for the Bill from the Opposition. I had an inkling, from the suggestion that they want to improve it in Committee, that they will not vote against the Bill on Second Reading. I would welcome that. They made some constructive remarks, but occasionally I thought we heard a tone that was just a little bit shrill and did not quite make up for 13 years of failure to support small businesses and of burdening them with more borrowing, more regulation and more taxation. The small business men and women of this country will not forget how much more difficult it got to do business under Labour. They will not forget that every Labour Government have left office with unemployment higher than when they started. This Bill is part of our long-term economic plan and it takes steps to help to put that right.

Let me go through the parts of the Bill in turn. Many Members contributed to the discussion on access to finance. The hon. Members for Alyn and Deeside (Mark Tami), for South Down (Ms Ritchie), for Islwyn (Chris Evans)—he called late payment a moral issue and he is right—and for Oldham East and Saddleworth (Debbie Abrahams) all contributed, alongside Government Members, supporting the progress being made on access to finance in the Bill. Of course, recovering from the biggest banking crash in the history of this country takes time and is difficult. This Bill contains measures that will help us to travel further on that journey.

Many supported the proposal on regulatory reform, and I welcome the support from the hon. Member for Streatham (Mr Umunna) for putting the one-in, two-out rule into law. Underneath the bluster, I think the Opposition supported the proposal on public sector procurement—I am not quite sure—but ending the revolving door of pay-outs in the public sector will certainly help.

There was a huge amount of discussion about pubcos and strong support for that part of the Bill. The crucial action we are trying to take is to bring the balance—[Interruption.] The hon. Gentleman says, “Three years,” but Labour did nothing in 13 years. The key is to balance the need for changes and the need not to undermine the tied model as a whole, because we do not want the unintended consequence of large-scale closures. We will work to ensure we get the details right. I pay particular tribute to my hon. Friend the Member for Burton (Andrew Griffiths), who is surely the strongest supporter of pubs and beer that this Parliament has known—and my goodness, that is an accolade. The hon. Member for Leeds North West (Greg Mulholland) has rarely risen in this House to speak of anything but the need for action on pubcos. We also heard from my hon. Friend the Member for South East Cornwall (Sheryll Murray), the hon. Member for West Bromwich West (Mr Bailey), my hon. Friend the Member for Northampton South—or should we call him President Binley?—and the hon. Member for Easington (Grahame M. Morris).

Several points of detail need to be addressed. The first is the issue of smaller pubs. There are, of course, two levels to the pub code, but it is important to make sure it works for smaller pub companies and the smaller brewers, as well as the big pubcos. On the issue of franchises, most also have ties, particularly for the beer arrangements, and that is why we have included them. Several Members asked for more details. We are consulting on the level of the fines and will bring forward more details in due course.

Another important part of the Bill concerns child care—and improvements to ease access to it—and schools. Then there is the issue of education data, in part 6. Those provisions will have one of the biggest impacts on the long-term efficacy of our education system, because if we can see what earnings people take home several years later, we can know which courses work. My hon. Friends the Members for North Swindon (Justin Tomlinson) and for Worcester (Mr Walker) spoke passionately in support of that.

Company transparency is an issue that the Prime Minister has pushed hard in the G8. We heard cautionary words from my hon. Friend the Member for Huntingdon (Mr Djanogly), as well as strong and passionate support from the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). There are important measures on company filing and one-click—I will mention that now because nobody else did—that will make it easier to start a business. There was broad support on director disqualification. On the insolvency measures, I thought my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) made a strong speech about his personal experience in the printing industry and the importance of ensuring that pre-pack works properly and is not abused.

Finally, let me turn to the part of the Bill that deals with employment law. There was strong support, particularly from the Opposition Front Bench, as well as from my hon. Friends the Members for Warwick and Leamington (Chris White) and for North Swindon, for the measures to ensure that the national minimum wage works properly, with proper penalties for those who breach it. I am a strong supporter of the national minimum wage, and this Government support it strongly. We are putting it up in relation to average earnings. The hon. Member for Streatham mentioned the policy of putting it up relative to average earnings, but it is at record highs relative to average earnings and has gone up relative to average earnings under this Government, so I do not know what exactly he is looking for.

Many Members mentioned employment, particularly youth employment. One reason why we love small businesses so much is that they create so much employment. We heard, however, an unfortunately partisan tone from a couple of Opposition Members. The hon. Member for Sefton Central (Bill Esterson) launched into an argument about how things were not getting better in his constituency, but youth unemployment in Sefton has fallen by 52% over the last year. In Easington, it is down by more than a third, so I think that the complaints from the hon. Member for Easington were overdone. In Glasgow North East, youth unemployment is down by 42%, and in Newcastle upon Tyne North—I see that the hon. Member for Newcastle upon Tyne North has just left—it is down by 37%. The same issue was raised by my hon. Friend the Member for Warwick and Leamington (Chris White), where youth unemployment is down by 63% over last year, which is extraordinary.

That amounts to huge progress, and it matters to each and every young person whose whole life chances are benefited from having a job early on. We have not one ounce of complacency on this issue, however, and every young person not in education, employment or training is one too many. We will not rest until we eliminate this problem through our drive on youth unemployment.

In my last couple of minutes, I want to pay tribute to a couple of Members who spoke particularly strongly and passionately. My hon. Friend the Member for Newton Abbot (Anne Marie Morris) leads the all-party group with verve and determination. I always listen carefully to all her points, and always try to go back and read the Hansard because she gets so much into her four minutes that I want to be able to reflect on every single point. I pay huge tribute to the work she has done to add to and strengthen the Bill: engaging early, getting measures in and making changes to ensure that we have a legal definition of what a small business is—much of that came from her work. I will look further at her point about the definition. She made the point that more people going to arbitration instead of tribunals is a good thing. The Opposition’s employment lawyers need to learn that.

The hon. Member for Rochdale (Simon Danczuk), who is still in his place, said that small business is an agent for social mobility, and I agree wholeheartedly. That is why we Government Members love small businesses so much. I would like to let the hon. Gentleman know that 20 new banks have come into existence since 2010. I agree with him that the Leader of the Opposition is past his sell-by date—and for a man who runs a deli, I guess he knows what he means. I also agree with him on his point about small business being an agent for social mobility.

Finally, I mention my hon. Friend the Member for Hertford and Stortford (Mr Prisk), the previous Minister, who kicked off the measures introduced by this Government to support small business. He argued for the importance of cutting the stock of regulation and improving the quality, as well as reducing the quantity, of regulation. Of course, he is right that this is part of a plan, but only part of our long-term economic plan, albeit an important one.

The Bill rises to the challenge of trying to make this country the best place in the world to start and grow a small business and to employ more people. For the first time in our history, we have a Bill with small businesses at its heart. They are a driving force of our economy. I want the UK to be the best place in the world to start, to thrive and to scale up a business. We have made a contribution today—a crucial part of our long-term economic plan—and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Small Business, Enterprise and Employment Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7),

That the following provisions shall apply to the Small Business, Enterprise and Employment Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 6 November 2014.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Gavin Barwell.)

18:59

Division 42

Ayes: 289

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Conservative: 240
Liberal Democrat: 43
Democratic Unionist Party: 5

Noes: 127

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Labour: 122
Plaid Cymru: 3
Green Party: 1

sMALL bUSINESS, eNTERPRISE AND eMPLOYMENT bILL (mONEY)

Wednesday 16th July 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Small Business, Enterprise and Employment Bill, it is expedient to authorise the payment out of money provided by Parliament of:

(a) any expenditure incurred under or by virtue of the Act by a Minister of the Crown, and

(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Gavin Barwell.)

Question agreed to.

Small Business, Enterprise and Employment Bill (Ways and Means)

Wednesday 16th July 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Small Business, Enterprise and Employment Bill, it is expedient to authorise:

(1) the imposition of a levy on pub-owning businesses to fund the Pubs Code Adjudicator,

(2) fees, and

(3) the payment of sums into the Consolidated Fund.—(Gavin Barwell.)

Question agreed to.

Petitions

Wednesday 16th July 2014 Commons Chamber

19:14

[Mrs Caroline Spelman (Meriden) (Con)]

I present a petition on behalf of my constituents regarding the proposed flight path changes at Birmingham airport in my constituency, which has been signed by more than 2,000 residents in the community at the southerly end of the runway. When a planning application was submitted in 2008—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. I am sorry to interrupt the right hon. Lady, but will hon. Members who are leaving please do so swiftly and quietly? There is business going on in the Chamber.

[Mrs Spelman]

When a planning application was submitted in 2008 for a runway extension, it was not clear to me, local councillors or residents that it might require a flight path change. Otherwise, opposition would have been greater. Aircraft are finding it impossible to stick to the route that was consulted on, and we urge the Transport Secretary to intervene and find a better solution for the community.

Following is the full text of the petition:

[The Humble Petition of Communities Affected by the Proposed Airspace Changes at Birmingham Airport Limited.

Sheweth,

That we wish to bring to the attention of the Secretary of State that local communities in the vicinity of Birmingham Airport Runway 15 have been significantly affected by the noise and disturbance of aircraft flying departure routes established by Birmingham Airport Ltd (BAL) as part of their air space change proposal. BAL is conducting trial flights in relation to their preferred route options as submitted to the CAA (Options 5 & 6 of BAL’s proposal). During the public consultation process the community raised significant concerns about the loss of the existing Noise Preferential Route, and accurately predicted a significant increase in noise disturbance. Members of the community made detailed submissions to BAL highlighting how a departure that included a turn at altitude could closely replicate the existing Noise Preferential Route and accommodate the extended runway. This is an option that gained a great deal of community support but was rejected by BAL without any meaningful qualification. Additionally the CAA has confirmed that two of the departure routes from Runway 15 are not producing the intended flight paths. We should also like to bring to the Secretary of State’s attention that BAL has no mechanism for gathering community feedback on the trial routes being flown. Given that a technically valid alternative exists, which would substantially accommodate the noise preferential routing, but was not included in BAL’s submission to the CAA, we have no other recourse but to submit this petition to The Honourable House of Commons.

Wherefore your Petitioners pray that your Honourable House urgently review the proposed flight path changes at Birmingham Airport in view of the sharp increase in noise nuisance to the communities living at the southerly end of the extended runway and the failure of the trial to ensure aircrafts follow the new flight path options accurately and to explore an alternative option which was previously submitted to BAL by the community itself and which would substantially minimise noise nuisance.

And your Petitioners, as in duty bound, will ever pray, &c.]

[P001370]

19:15

[Susan Elan Jones (Clwyd South) (Lab)]

I present a petition on behalf of the residents of Clywd South concerning the sentence of Dennis Igo.

The petition states:

The Petition of residents of Clwyd South,

Declares that the Petitioners believe that the two year suspended sentence and three hundred hours of community service handed down to Dennis Igo was far too low; further that Mr Igo possessed more than 250,000 indecent images of children; further that the Petitioners believe that Mr Igo used his wife’s illness as an excuse for his behaviour; further that the Petitioners believe that Mr Igo’s wife’s illness should not have been used as a mitigating factor; further that the Petitioners believe that the low sentence handed down to Mr Igo sends the wrong message to other people committing similar offences; and further that a local Petition on this subject has received over 100 signatures.

The Petitioners therefore request that the House of Commons requests that the Attorney General review the sentence given to Dennis Igo.

And the Petitioners remain, etc.

[P001371]

19:17

[Robert Flello (Stoke-on-Trent South) (Lab)]

I present a petition on behalf of residents of Lightwood in Stoke-on-Trent and those in the wider area. I have a small bundle in front of me, but the petition has many hundreds of signatures, with David Evans being the first named petitioner.

The petition states:

The Petition of residents of Lightwood, in Stoke on Trent,

Declares that the Petitioners are deeply concerned by proposals for a residential development on land off Lightwood Road, which the Petitioners believe the infrastructure of the local area cannot support and would destroy a large area of green-belt land, despite more appropriate areas of land being available in the city.

The Petitioners therefore request that the House of Commons urges the Department for Communities and Local Government to intervene in this matter at an early stage to ensure a more suitable site is found for any development and any application submitted for a development on this particular piece of land is rejected.

And the Petitioners remain, etc.

[P001372]

Rail Services (Northern Lincolnshire)

Wednesday 16th July 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Gavin Barwell.)

19:18

[Martin Vickers (Cleethorpes) (Con)]

My first duty is to welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Devizes (Claire Perry), to her new place on the Front Bench. I wish her well. I know that she will not want to let her colleagues down—no pressure. Madam Deputy Speaker, with your permission, my hon. Friend the Member for Brigg and Goole (Andrew Percy) will also contribute to the debate. The Minister has given her consent.

My constituency, despite having 10 railway stations, the largest port complex in the country and an international airport, does not have the best transport links and certainly needs improved rail connections if it is to maximise the potential for economic growth. The Government have indicated on many occasions the importance they place on northern Lincolnshire and the wider Humber area. It has been acknowledged that the area has great economic potential. Siemens has already confirmed its investment on the north bank. The massive development by Able UK is going through its final planning stages. I hope that that major scheme will start in the not too distant future. It has the potential to create thousands of jobs and no one, least of all the Government, would want to put those jobs at risk.

As I have pointed out, northern Lincolnshire does not have good rail connections. We have had no through services to London since 1992, although the open-access operator Alliance Rail Holdings has an application with the rail regulator at the moment. The proposal is for four services each day in both directions and I urge the Minister to consider the proposal carefully with a view to doing all she can to allow it to go ahead as quickly as possible.

Our main link to the rest of the network is provided by First TransPennine Express, which operates an hourly service between Cleethorpes and Manchester 15 times a day, plus an additional one that finishes its journey in Sheffield. It is those services that are central to this debate as one of the proposals is to end the through service and to replace it with services all of which will terminate in either Sheffield or, more likely, Doncaster.

The argument is that not enough people travel the full length of the route. If that is what the Department for Transport is to hang its proposal on, it must come clean. How many passengers travel the full distance between Euston and Glasgow: 20%, or perhaps 40%? How many travel the full distance between King’s Cross and Edinburgh? Many will get off at York or Newcastle, or indeed at Doncaster because they want to get to Cleethorpes. The Department cannot hide behind the phrase “commercial confidentiality”. It cannot release just the figures that support its argument, but must release all of them. Will the Minister agree to release the figures—yes or no?

I also draw the Minister’s attention to the role in the process of Rail North, a consortium of local authorities across the north of England with the aim of devolving decision making. That sounds fine and like something we could all agree with until we look at the make-up of Rail North, which is dominated by the big cities and passenger transport executives. Councils such as North East Lincolnshire might have signed up to the broad principles, but I am sure that they did not intend that their voice in determining the services that serve their area should be silenced or ignored. What they have at the moment is the equivalent of a vote at the annual general meeting.

I do not want to be too hard on Rail North, as we can all sign up to its key objectives as outlined in the consultation, in particular paragraph 12, which outlines the three key points. The first is to support economic growth by delivering more rail capacity and better rail connectivity. The second is to improve the quality of the railways in the north, with a better offer for passengers to encourage more use.

[Austin Mitchell (Great Grimsby) (Lab)]

I congratulate the hon. Gentleman on raising this issue, which is uniting the whole of south Humberside and north Lincolnshire, or northern Lincolnshire, whichever we care to call it. Its political forces are all here; our mighty forces in flesh assembled to oppose this consultation proposal. I hope that I can encourage him to criticise Rail North, but I want to express my support for the view that the direct service from Cleethorpes to Manchester airport should not be cut off in the way that the consultation paper proposes. The transfer of the modern class 170 units to Chiltern to give southerners a more comfortable ride while we are put in cattle transport should be opposed. It is quite right to raise the question of the direct service to London and the electrification of the line, but the main thing now is to stop a service that is bad being made worse by this consultation document.

[Martin Vickers]

I entirely agree with the hon. Gentleman. As he points out, we are, as northern Lincolnshire, united in our opposition to the proposal to withdraw the Manchester services.

Let me return to Rail North’s objectives. Its third is to deliver a more efficient railway and to secure greater value for money for the support from the public purse. I point out that the north does not just mean the major centres of population in Leeds, Sheffield and the north-west. I support the Government’s policies to strengthen and expand the economies of the north based on city regions, but there is a danger that the focus can too often be on Liverpool, Manchester, Leeds and so on. That is all very well, but if northern Lincolnshire is to receive maximum benefit from the investment in the renewables sector, and much of that is taxpayers’ money, we need good rail connections to a growing number of major centres.

I was pleased that the senior civil servant from the Department for Transport confirmed to the Select Committee on 30 June that the Secretary of State would make the final decision, although at this week’s meeting of the Committee, Passenger Focus was clearly concerned that this might be a ritual signing-off. As far as I am concerned, if the Secretary of State has to sign it, the Secretary of State is responsible, and I will continue to bombard him and my hon. Friend the Minister with questions and correspondence at every opportunity to stress the importance of this vital service to Cleethorpes and northern Lincolnshire. What I and my constituents want is for this proposal to be killed off quickly. I recognise that the Department must consider all options, but some can quickly be consigned to the waste bin.

Paragraph 2 on page 6 of the consultation refers to the importance of

“views from passengers who travel on the Northern and TPE”—

that is, TransPennine Express—

“franchises, as well as from other members of the public”.

I can assure the Minister that she will be hearing from the travelling public in great numbers, thanks to the campaign being run by the Grimsby Telegraph and the Scunthorpe Telegraph, which have been inviting readers to complete a petition form and to date have received over 4,000 completed forms.

I put on record my thanks to the Secretary of State, who will be meeting me and the editor of the Grimsby Telegraph tomorrow morning to receive the petition forms. This, though, will not end the campaign as I will deliver further petitions in the weeks to come and urge local residents and businesses to continue completing them and to submit their own response to the consultation, highlighting the impact on their own circumstances.

The consultation document repeatedly draws attention to the potential for economic growth and the need to use rail services to drive that growth. Table 1.1 on page 11 states that one of the objectives of the franchise is to

“help the economy of the north of England to thrive by offering competitive inter-regional rail services between urban centres, providing sufficient passenger capacity and expanding rail’s mode share.”

It goes on to state that a further objective is to

“realise the benefits from rail investment in the north of England, ensuring the successful delivery of journey time, frequency, reliability and connectivity benefits for passengers.”

These statements are, of course, motherhood and apple pie—we can all sign up to them. Can the Minister explain how, if inter-regional rail services are essential for the northern economy to thrive, the Government intend to achieve this by proposing an end to the one inter-regional service that northern Lincolnshire has?

I draw the Minister’s attention to paragraph 2.19 which states:

“The growing demand for air travel will also drive increases in the number of rail journeys. In particular, by 2020 passenger numbers are expected to increase by 5 million at Manchester Airport compared with 2010, an important destination for rail travellers in the North.”

Manchester has become the airport of choice for many of my constituents simply because of the direct through trains. How can the Minister square that statement with the proposal to end through services to that very airport?

Paragraph 2.27 states that TransPennine Express has one of the newest fleets of any train operator. Can the Minister assure the House that, whatever the configuration of services and whichever company provides services to Cleethorpes, the new franchise will specify that the quality of rolling stock will be at least equivalent to the class 185 units currently in use? If the proposal that trains start and terminate at Doncaster is introduced, it is suggested that the Northern service from Sheffield to Scunthorpe be extended to Cleethorpes. That service stops at all stations. It would be totally unsatisfactory and would have to be more regular than the current hourly service, alternating fast and stopping services.

Having spoken to many involved in the rail industry, I recognise some of the difficulties. Indeed, some result from the success of this Government’s massive investment in the rail network. As more and more of the network is electrified, there is a temptation to treat the more peripheral areas as mere feeder services into the core electric network, but that is no help to the economy of those areas. More electrification means there are fewer diesel units both on the existing network and being manufactured. How best to make use of the available units is a conundrum for the Department, but not one to be resolved at the expense of my constituents.

I have referred to the Government’s repeated statements that economic growth is increased where good rail connectivity exists. This was again acknowledged by my right hon. Friend the Chancellor in his northern powerhouse speech only two or three weeks ago. It may be opportune at this point to emphasise the importance of the area now, even before potential expansion is considered. That is why, I am pleased to say, that both North Lincolnshire and North East Lincolnshire councils will be fighting this proposal vigorously, and Councillor Liz Redfern, the leader of North Lincolnshire, contacted me this morning to report that the council has agreed to a joint campaign with North East Lincolnshire and that they have committed to a feasibility study on the potential to electrify the 50 miles of track between Cleethorpes and Doncaster—something the Government ought to be supporting. Perhaps they would like to contribute.

Twenty-five per cent. of the freight tonnage moved by rail starts or ends in Immingham. The Humber local enterprise partnership predicts that investment linked to renewables and regeneration could result in up to £7 billion of further investment across the Humber. More than 30% of the UK’s coal and an increasing amount of the biomass to fuel power stations passes through Immingham, and approximately 27% of UK oil refining capacity is provided by refineries at Immingham. The port handles 10% of the UK’s seaborne trade amounting to 50 million tonnes annually, including 30 million tonnes of coal and petroleum. I recognise that rail freight companies, because they move goods to so many different locations, do not always benefit as much from electrification, but with more and more of the network now electrified the case for electrification into Immingham and the remaining few miles to Grimsby and Cleethorpes is more compelling.

To return to the Chancellor’s powerhouse speech, he pointed out that the Yorkshire and Humberside region was where construction is strongest. He also spoke of the economic advantages of developing clusters and, as the Government have previously acknowledged, northern Lincolnshire and the Humber is where the renewables cluster is taking place.

I am sure that my hon. Friend the Minister will have noticed one very important passage in the Chancellor’s speech when he said that

“we cleaned polluted rivers like the Mersey and the Humber. Now we should take the next steps in improving them and making them great places for leisure and tourism and natural beauty.”

As I have said on more than one occasion in this Chamber, Cleethorpes is the premier resort of the east coast. No one has ever contradicted that statement and I am sure they will not this evening. I suspect that the Chancellor was unaware of the existence of this consultation document when he delivered his speech, but I hope he has had his attention drawn to the letter from me and my hon. Friend the Member for Brigg and Goole pointing out the inherent contradictions of developing an area for tourism and withdrawing its main rail service.

I appreciate that the Minister will be in a difficult position in replying to this debate because she will not want to pre-empt the outcome of the consultation, but she can give an absolute reassurance that the essential points from this debate will be considered in detail by all the relevant Departments involved in the development and regeneration of the northern economies, and if she will emphasise the unique circumstances that prevail in northern Lincolnshire the debate will have been worth while.

There are other issues to be considered. The Cleethorpes to Barton service, one that is essential to the outlying areas, is something of an anomaly. It is part of the existing Northern franchise but entirely cut off from the rest of its network and is crewed by TransPennine. Yes, it could be operated by East Midlands, which currently operates between Grimsby and Newark via Lincoln. All I will say is that I and my constituents will want an assurance that it will not be treated as an inconvenient Cinderella service but as an essential part of the network.

We do not want a return to the days of British Rail when we had a slow, stopping service to Doncaster with a few trains that continued beyond that. It was intermittent, slow and uncomfortable. The arrival of TransPennine transformed the situation. In May, I was invited to a photo-shoot at Cleethorpes station to celebrate the improved services and the provision of an extra 90,000 seats in the summer timetable. If we lose our Manchester service, the economy of the area will suffer, not just new burgeoning businesses but traditional ones in Cleethorpes that serve the tourist trade. We need as many services from as many different locations as possible.

I know that the Minister shares my passion for providing good rail services because the edition of “Marlborough News Online” on 27 June—just three weeks ago—said that she had written to the then rail Minister, telling him that she and her constituents were “horrified” by the options offered in his Department’s consultation on services to her constituency. She continued:

“I cannot stress enough, the importance of fast and frequent rail links to my Constituents”,

and rounded off her comments by stating that the two options would almost certainly mean people leaving the area

“with catastrophic effects on the local economy.”

With an ally like my hon. Friend in the Department, I am sure all will be well.

It seems that the rail industry is like politics. Change can come quickly. Someone wakes up as a Whip and goes to bed as the rail Minister, with the ability not only to save their own constituents from a decline in services, but those in northern Lincolnshire as well. My hon. Friend has come along at just the right time; the Government have a good record on rail investment, allowing train operators to provide improved services, and they now have a chance to prove that to the people I represent. I urge the Minister to visit North East Lincolnshire on 18 October—that is what her predecessor had agreed to do—and act quickly to remove this threat, recognise the strength of feeling in the House and in northern Lincolnshire, and announce, if not tonight then very soon, that this particular proposal has hit the buffers.

19:36

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

My hon. Friend the Member for Cleethorpes (Martin Vickers) has proved by his speech what a better friend he is than enemy. He has done a great deal of local research on the new rail Minister, and her words could also be applied to our situation. I will make a short contribution, and begin by welcoming the new Minister. I am genuinely delighted that she has been promoted to this position. She was kind to me when I was first elected and we were new boys and girls, and she has been extremely kind and pleasant ever since.

I agree entirely with the comments by my hon. Friend the Member for Cleethorpes, and wish to make a couple of additional points. My constituency is the most western part of northern Lincolnshire, and the area closest to Manchester, so connectivity west is as important as connectivity east. It is not far to Manchester from that area, and retaining that link west is important, not least because Manchester airport is our regional airport. We might prefer to have a bigger regional airport, but Manchester is our biggest and very much our local airport.

When I talk to businesses, there is genuine concern that losing that connectivity west could be damaging to local businesses. One business said to me recently that it really struggles to convince people that our area is not the end of the line, and that it is a place where people should and can live because of that connectivity. The proposal is potentially very damaging to that.

I will not say much more, other than to do a quick name check for my local newspapers, thereby assuring me of getting in them next week. The Grimsby Telegraph and the Scunthorpe Telegraph are doing an excellent job on this matter, as is The Epworth Bells. This is an important issue, and the Chancellor’s words about east-west connectivity were important. We could not put a fag paper between his words and our aspirations for our area. The proposal, however, goes in the opposite direction and I know that the rail Minister takes such matters seriously. I implore her to look at the proposals again and ensure that when the franchise tender comes out, we keep our direct rail services.

19:38

[The Parliamentary Under-Secretary of State for Transport (Claire Perry)]

I thank my hon. Friend the Member for Cleethorpes (Martin Vickers) for initiating this debate. He is a northern powerhouse in his own right, and has been an ardent campaigner on this issue, as have colleagues from across the House who represent constituencies in that area. He has impressed on my predecessor, my hon. Friend the Member for Wimbledon (Stephen Hammond)—who I believe did a sterling job in this role—and on the Department, the importance that his constituents place on rail services in northern Lincolnshire. I am happy to say that the Government recognise the importance of rail services in the north of England, and also in my fine constituency which, as my hon. Friend knows, I am proud to represent.

Rail services are vital nationally. As hon. Members will be aware, since privatisation the number of passengers on our rail network has doubled, with record numbers of people choosing to travel by train. Indeed, the rail network has not been this busy since the 1920s. This is particularly obvious in the north of England, where the Northern and TransPennine Express franchises have far exceeded the original expectations of passenger growth. We are now dealing with the challenges of success, with the increase in passenger numbers meaning that we need to provide capacity where it is most needed. That is a key concern.

Capacity constraints in the whole region have driven the Government to invest a very welcome £1 billion in electrification projects and the northern hub, which my hon. Friend the Member for Cleethorpes mentioned. This programme will see improved services, increased capacity and reduced overcrowding across the north of England over the next five years, allowing for faster trains between the major northern cities and also benefiting freight, which he name-checked as being incredibly important. This investment will bring enormous benefits to the area and will complement the £104 million investment specifically for the Humber region that was announced as part of the local growth deal. In researching this today, I was particularly delighted to see that that money includes funding for a number of transport schemes, including funding for the Humber local enterprise partnership to further develop proposals for electrification between Hull and Selby.

The hon. Member for Great Grimsby (Austin Mitchell) alluded to the rolling stock transfer. My hon. Friend and hon. Members across the House will be pleased to hear that the Department has been working very closely with the train operating companies and the train leasing companies on the move of nine class 170 trains from TransPennine Express to Chiltern railways that is scheduled for April 2015. I am confident that we have developed a solution that will ensure that current capacity is maintained and that suitable and appropriate rolling stock will be provided for passengers in north Lincolnshire. I hope to make an announcement to that effect in due course.

As we heard, the lines in this area provide an incredibly important rail freight link, especially to and from the major port of Immingham. As my hon. Friend said, he estimates that 25% of all rail freight starts or ends his journey in his constituency. Recognising this, the Government have recently invested £45 million in the new Doncaster North chord. That will remove a significant bottleneck between the port and the power stations in the region, providing capacity and performance improvements for passenger and freight services and relieving pressure on the all-important east coast main line.

As we know, the Government have big ambitions for rail travel in the north. The prospectuses for the TransPennine Express and Northern franchises set out the transformation that we want to see. We are encouraging ambitious bids, and we want partners for the new franchises that have vision and the capability to deliver on that vision. They will need long-term plans for franchises that truly place passengers at the heart of their operation.

[Nic Dakin (Scunthorpe) (Lab)]

Will the Minister give way?

[Claire Perry]

It would be a pleasure.

[Nic Dakin]

I fully associate myself with the comments by the hon. Member for Cleethorpes (Martin Vickers), who set out the position very well. I congratulate him on securing the debate. The Minister will have noted the consternation of businesses and domestic users across northern Lincolnshire regarding this issue. I very much congratulate her on taking on this role, which is a well-deserved promotion. She will have been listening to the debate carefully and will want to reflect on it. I ask her, after that reflection, to meet the four MPs from northern Lincolnshire to consider the matter further so that we can properly represent the concerns that have been very fully expressed tonight.

[Claire Perry]

The hon. Gentleman, who I would like to call my hon. Friend given the nights we have spent counting votes together, raises the important issue of the representation of business and passengers. It would be a pleasure to meet the hon. Members representing this important area to discuss this further.

We need to ask not just Members here but all users of rail services in the region what they need and what matters to them. The consultation document launched last month does just that by inviting MPs, councils and all rail users—indeed, all interested parties—to tell us what matters to them. The questions raised in the consultation cover a large number of areas and set out some of the options we are considering for services on the Northern and TransPennine Express franchises. It is important to remember, however, that the consultation is a genuine one. We are a Government who believe in listening. No decisions have been made and there have been no backroom dealings, so the document is what it says on the tin—a consultation document. As my right hon. Friend the Secretary of State said in a recent interview in that estimable publication, the Grimsby Telegraph, there is nothing sinister at all about the proposals. It is important that we are able to ask all sorts of questions and listen to the answers that people provide. As he said:

“Quite often we’re accused of not asking and just acting. Now we’re asking, we’re getting into trouble for that as well.”

My hon. Friend the Member for Cleethorpes and the hon. Member for Great Grimsby asked about Rail North, which is an important partner both in the consultation process and in the long-term future of the operation of the franchises. I commend the local councils of the Members in the Chamber. The councils have been assiduous in campaigning for the rail links and will work hard throughout the consultation process. However, I emphasise that there is nothing to stop those councils, or indeed anybody, from putting their own consultation directly to the Department.

I appreciate that some of the questions we have asked, particularly those in relation to service changes from Cleethorpes to Manchester airport, have raised concerns and strong feelings from, I imagine, many of the 400,000 people who use Cleethorpes station every year, and who are represented well in the Chamber, but I believe it is a good thing to engender such reactions, because it shows the importance that people place on their rail services and that we are asking the right questions.

As we have said throughout the consultation document, we place a great deal of importance on the evidence and value the submissions. I encourage all hon. Members and their constituents, and anyone else with a strong view, to make it known before the consultation closes on 18 August.

My hon. Friend the Member for Cleethorpes asked specifically about passenger loading figures and the drop-off ratio between stations. I am happy to consider releasing such information to him. Perhaps he would be kind enough to drop me a note on specifically what he would like, and we will get to work on it.

It is clear from this evening’s debate that there is a great strength of feeling about rail services throughout the north of England and the country. I should take this opportunity to recognise again my hon. Friend’s assiduous campaign on behalf his constituents. I am sure I will discuss the subject with him on many other occasions and that I will receive many more submissions from him. I hope that strength of feeling translates into a large number of responses, which will allow the Government to deliver the improvements people want.

Question put and agreed to.

19:47

House adjourned.

Deferred Divisions

Wednesday 16th July 2014 Commons Chamber

Division 40

Ayes: 294

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Conservative: 241
Liberal Democrat: 44
Democratic Unionist Party: 6
Labour: 1
Alliance: 1

Noes: 200

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Labour: 193
Social Democratic & Labour Party: 3
Scottish National Party: 3
Plaid Cymru: 2
Green Party: 1

Westminster Hall

Wednesday 16th July 2014 Westminster Hall

Wednesday 16 July 2014

[Martin Caton in the Chair]

Ofsted (14 to 17-year-olds)

Wednesday 16th July 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

09:30

[Mr Graham Allen (Nottingham North) (Lab)]

It is a great pleasure to serve under your chairmanship this morning, Mr Caton. It is also a pleasure to welcome the new Minister of State for Skills, Enterprise and Equalities on his first full day at work. I hope this debate will be a memorable start to his tenure. He and I have worked closely together on various issues over the years, and I hope he brings the same sort of energy, commitment and good humour to this important subject. I hope we can work together to do everything we can for the 14 to 17-year-old group that we call pre-NEETs—for those unfamiliar with the acronym, it stands for: not in employment, education or training. The idea is to catch those young people before they become proper NEETs and long-term youth unemployed, so I have called the debate to bring to the attention of the House some of the ideas we are developing in Nottingham to pre-empt the creation of those NEETs and long-term youth unemployed.

I have about 300 NEETs in my constituency. I will refer later to the fact that getting one of those young people into work will save the taxpayer an estimated £160,000. Imagine the benefits if we could get 300 of them into work; imagine the benefits if we could get my 1,200 or so long-term youth unemployed into work. So there is a human tale that I want to tell, but also a story that I hope will make the Chancellor salivate in terms of the savings we could afford the taxpayer and recycle some of that money into helping those young people make the best of themselves. We have a fair amount of time this morning. I will outline the positive ideas that we have in Nottingham and hope to get the support and encouragement of the Minister.

Ofsted is due to publish new guidance on that 14 to 17-year-old group this autumn, but it will be on inspecting the school provision for pre-NEETs. If we can follow it through locally with Ofsted, it should make it easier for schools to give this group of young people the structure that they need to thrive. I intend to bring lots of resources to bear on the pre-NEETs problem: first, the energy of the rebalancing the outer estates project in Nottingham North, of which I am the chairman-designate; secondly, our project bid for the youth engagement fund; and thirdly, a positive and productive relationship with all of those who are involved in educating these young people, especially Ofsted. I want to touch on each of those three resources that I think we need to direct at this problem.

I am leading the rebalancing the outer estates project with partners in my constituency of Nottingham North, and helping the 14 to 17-year-old pre-NEETs is one of our work streams. Rebalancing the outer city estates is a concept that local partners have developed over the past year in conjunction with the Secretary of State for Business, Innovation and Skills, Lord Heseltine, my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas), the Big Lottery Fund, and lots of other partners, especially our superb local enterprise partnership, D2N2. We are putting that forward as part of the growth fund bid through the LEP.

I hope that, ultimately, the lessons learnt in Nottingham North can be taken to scale to help dozens of neglected and forgotten outer city estate-based constituencies throughout the UK. The Minister will know my record of starting things in Nottingham, trialling them, testing them and taking them to national scale, and this is no different. There are lessons, good and bad, from which we can hope to learn if we use the Nottingham North experience effectively, and it can work to the benefit of any Government that comes to power in the near future.

There are nine former council estates in my constituency. They illustrate the social and economic imbalance in the modern UK economy. They were visionary in their design—as in the garden city concept, there are no high rises or towers blocks. They were built to house those who worked in manufacturing, but those people have now lost their work-related identity following the loss of key employers. I am something of a microcosm: my father was a miner, but the mines have now gone; my mother was textile worker, but the factories have closed; my grandfather did 50 years at Raleigh bicycles, which has relocated to China; and some family members worked at Imperial Tobacco—John Player’s—which, sadly, has announced in the past few weeks that it too is closing.

One in five of the people in my constituency claim an out-of-work benefit, four out of six of my secondary schools are in special measures, and we have the lowest number of people going to university of any constituency in the United Kingdom. Our number of single parent households and free school meals is double the national average. However, I want to focus on employment and skills this morning. The number of unemployed claimants in Nottingham North is the ninth worst out of 650 constituencies in the UK. One in eight young people aged 18 to 24 are unemployed—1,190 on the last total. Nottingham North also has low levels of skills and qualifications. That is a poisonous combination. It is one of only 20 parliamentary constituencies in the UK that has more people with no qualifications than it has people with a degree level qualification. There seem to be particularly low levels of skill among the 25 to 29 age group. That is why there is merit in early intervention, going right back to the 14-year-olds and younger children to try to give them the skill base that is essential to their future development.

Using the evidence-based principles of the What Works centres, as well as Nottingham’s early intervention model, which has now been taken to scale in 20 different places with more to come across the UK, we are working closely with Government Departments to form a broad-based local partnership to develop and implement a rebalancing outer estates action plan. We have done a business plan, which has been submitted to the LEP and has got through all the hurdles so far, and we are looking for good news from it towards the end of the month. We believe that that can be taken to scale from the initial work that we do in Nottingham North.

We are also working closely with central and local government to propose and trial flexibilities, discretions, innovations and freedoms. Note, Minister: I am not putting in a bid for money and asking, “Please can you help us out with some more dosh?” This is all about letting us get on and do what we know we can do best in our constituency, and tailoring the one-size-fits-all regulations that governments inevitably need to put forward at national level. We are seeking that local discretion and some discretion to use existing moneys—not additional moneys—in a more single pot concept so that we can spend it how we feel is appropriate, which I think will deliver greater value for money.

We have very good relationships with officials and Ministers not only in the Department for Education, but in the Cabinet Office, the Department for Work and Pensions, the Department for Business, Innovation and Skills, and the Ministry of Justice. The Department for Communities and Local Government troubled families scheme is working with the Centre of Excellence for Information Sharing, which has been set up by DWP to facilitate data-sharing agreements between the local DWP, skills agencies and others, such as public health. That is quite central, because it will allow us to collect robust data, facilitate proper sharing between agencies and ultimately allow us to measure the impact of what we do. That is so important, because much of what we want to do in the longer term is about payment by results and social investment. Consequently, measuring outcomes so that they can be effectively monetised is a key part of this process.

Our aspiration is in our business plan and has the agreement of the LEP and others. It is that, emerging from this process, perhaps Nottingham North could help Her Majesty’s Government to explore the potential of our approach. We have suggested that it could be adopted in 12 cities within about three years, and perhaps in 24 cities during the next Parliament.

It is appropriate that I put on record my thanks to the Minister’s predecessor, the hon. Member for West Suffolk (Matthew Hancock), who took a great interest in what we are trying to do in Nottingham North. He was especially helpful in progressing the development of a new campus on our further education campus, which is part of New College Nottingham and is called the Basford Hall site. Anyone driving by there today will see builders demolishing the old campus and building the new campus in a £27 million development. We do not have many physical assets in the constituency, which consists of nine enormous council estates, but the catalyst in the middle is this redevelopment of the Basford Hall site, because we think it can be the hub for our local skills, including entrepreneurial skills, which we can use with our partners, community groups and social enterprises. Hopefully, in the not-too-distant future, we will be able to go to a second phase of development. There is enough land on the site that we can dream about starter units for the young people who go to the FE college. Much of the current activity there is construction, plumbing, painting and decorating, but green technology and many other things will go on that site, and there is the potential to put in starter units, low-rental units and lots of other things, one of which I will go on to talk about.

Our key ambition for our project is summed up as making every four-year-old school-ready and every teenager work-ready, and then carefully to craft a Nottingham North job offer for every individual on jobseeker’s allowance or employment and support allowance. We will continue to explore with the DWP the possibility of a Nottingham North social investment bond because, as I mentioned earlier, just one NEET going back into productive life will save us £160,000. Given the number of NEETs and people in long-term unemployment that we have, that is a very large pot of money that we could bring to bear if we do this work properly.

Having talked about the rebalancing project, the second area to discuss is a slightly more specific one around the youth engagement fund. I do not want this to sound too much like a funeral, but I will put on record the support and assistance that I have received from the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd). I regret very much that he is no longer in the Government, given the work that he has done; it has been a pleasure working with him. He has encouraged people locally to apply for the youth engagement fund, so we have put a bid together. We really want to initiate a 20-year behaviour change programme—it is pointless doing starburst, flash-in-the-pan, one or two-year projects, thinking, “Let’s throw some money at it.” We have to set out our stall. That programme would go alongside our 20-year early intervention work plan, which we have in our city of Nottingham.

In making the bid, we have put together a package that we hope will reduce the flow rather than the stock—I will use those economic terms. We need to use our existing providers to do what we can with the existing individuals, but we want to turn the tap off and start a process that will feed through and produce an intergenerational change by giving these young people what they need far earlier and way more upstream than is the case now. At the moment, we are firefighting and throwing money at a problem that is deep-rooted. I suppose that our bid and our objective could be summed up as, “Every young person work-ready in Nottingham North.” We will work with all the people locally, including some brilliant partners, to complete an individual pathway for every young person. That is perfectly possible. I said that the number of young people involved is high—it is way too high—but it is not so high that it is not manageable to produce a personal programme for each one.

We will do two main things in our package. The first one, which I am trying to do, is have a work-readiness coach for every child in secondary school. I am up with the jargon, so I use that term rather than being old-fashioned and saying, “careers adviser”—I was familiar with careers advisers when I was at school, but you certainly would not be, Mr Caton, as you are too young. In the six secondary schools in my constituency, current provision is lumpy—let me put it that way—but a work-readiness coach could give training skills and work advice throughout an individual’s school life, but with a focus on the period from 14 to 17. There would be professional, human and proper guidance delivered by a trusted and committed friend at the correct age, and tailored to the individual and their background; in addition, it would be given face-to-face. Time and again in the project and throughout this debate, the need for a known individual has come up: having all sorts of stuff on tap or accessible via a computer is not enough; for this group of young people, a face and personal contact is needed. They need to be able to pick up the phone and speak to a person, or to go and see them, to develop a relationship that literally lasts for years, so that that person gets to know them and can guide them in the right way. I understand from the experts that the best time to start this process is at the age of 13, or at key stage 3, because that is when these young people are at their most open, and supportive one-to-one interviews can make a huge difference, not least if they are supplemented by work experience that is not hindered by health and safety red tape. In that way, we can get these young people to raise their aspirations and focus their academic progression.

That is the first thing—having a careers or work-readiness coach in every school, who is dedicated to this group of young people and known to them. The second is to create a state-of-the-art Nottingham North work-readiness centre for those 14 to 17-year-olds who are least likely to go on to education or training from school, to build their social and emotional skills to work-readiness standard, and taking them out of school between one and three days a week. We are lucky to be rich in excellent social enterprises and local providers, including Building Engineering Services Training Ltd or BEST, Right Track, Groundwork, Futures, Aspley community centre and New College Nottingham. Using high-quality new premises in the brand new Basford Hall further education redevelopment that I mentioned earlier, we will show that we value these youngsters as much as those who are studying full time in our smart rebuilt schools across the constituency.

As one of the national advocates of social investment, I strongly welcome that our bid has to take the form of a social impact bond. I am asking my council and my LEP to guarantee the required 20% local participation, but I will try to ensure that we bring in a wide range of partners, including our excellent police and crime commissioner, our clinical commissioning group and schools themselves, which are able to use the pupil premium, so that they can all take a stake in what we are trying to do, even if they are providing only a tiny amount of money. That way, they will have a financial stake as well as an educational or social stake in our bid.

We are partnering Social Finance Ltd, which I know very well, to raise the initial investment that is required to pay for the delivery of the programme, and we are engaging with a range of social investors, including the Private Equity Foundation, Big Society Capital and many others.

I think that we are doing more than our bit and now I need the Minister to try to encourage Ofsted, which has done a lot of good work, to come to the party. Ofsted can become a tremendous power for good for the 14 to 17-year-old pre-NEETs. There are lots of well intentioned sentiments in Ofsted’s school inspection handbook about pre-NEETs. It talks about

“the next stage of their education and training”

and employment; about

“an appropriate balance between academic and vocational courses”;

about

“timely independent information, advice and guidance to assist pupils on their next steps in training, education or employment”;

and about lots of other good things. If Ofsted works with what we have done in Nottingham, as an exemplar of what can be done, I believe that we can turn those words into action. It is no good just having a framework and then not helping schools and young people through, and following through. That thread runs through this final passage of my speech.

The truth is that many heads of schools in disadvantaged areas with poor demographics will say privately that the education and inspection systems incentivise schools to place greater emphasis on those capable of getting five A to Cs than on those who cannot. The pre-NEETs group is often packaged and parked, destined to become expensive NEETs and long-term unemployed, although that is wasteful. With Ofsted, we can change that by attacking a number of issues together. I shall list a few.

First, there should be clarity about targets for pre-NEETs. We know that for a generation schools have been programmed to focus on their target of five A to Cs. There is a message sent strongly from the ground, including from my patch, from the people who are there. These people do not lack leadership and are not lazy; they get out of bed every morning to go to a difficult educational environment and are among some of the most courageous, capable people to be found in education. They deliver in all sorts of ways. Their strong message is that any additional activities relating to work-readiness for supporting the 14 to 17-year-olds need to be rigorously tested, inspected and, above all, targeted or that provision will be an afterthought.

Schools need to be targeted on where their pupils progress to: carrots for good progression to FE, work and apprenticeships and sticks for bad progression—NEETs, prison, etc. Then schools will not be penalised, but motivated, as they wish to be, to invest energy into work-readiness provision. Otherwise they will pay lip service or just will not be able to do it, however much they want to, given all the other pressures. We have to help them by setting that framework and letting them do what they know they would like to do anyway—to help that group rather than park it, sometimes, in training that is not as good as we would like. That will require Ofsted not merely to pronounce and inspect, but to encourage and guide—to be a bit more proactive— in a willing local partnership. That can be pioneered in Nottingham, if people are up for that and willing to do it.

Secondly, we need the right type of qualifications for demographies such as mine, which exist in dozens of constituencies. The DFE and Ofsted rightly acted to remove the over-reliance on equivalency qualifications, as they were called, that were seen as being used to boost overall GCSE figures. What was lost in that change was the fact that many pupils were following credible, well regulated courses that served their needs and aspirations. The pendulum has swung too far the other way, because by forcing schools down a more academic route, the needs of the 14-to-17 pre-NEETs are not being met.

Employers in the locality tell me that many of these pupils fundamentally lack employability skills: social and emotional capability; functional literacy and numeracy; a sense of responsibility about such issues as punctuality and attendance; and the chance to develop self-discipline, resilience and respect for authority. They lack achievable goals in relation to their aspirations and, most importantly, a sense of direction and progression that will give them life skills that will turn them into active, engaged citizens for life.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I pay tribute to the hon. Gentleman, not just for securing this debate but for the work that he has been doing in this area for some time. His list of issues affecting young people, particularly in hard-to-reach areas such as working -class estates, resonates, I am sure, with a number of hon. Members. Does he believe, as I do, that we need to ensure that best practice is replicated? Has he considered a template to be used throughout the United Kingdom, so that a new generation does not suffer the problems suffered by the generation that is out there now?

[Mr Allen]

I fully agree. If we can do this, even in one place, we can see what fails and what works. If we can have all the institutions working together in that one, tiny place—I do not want the Government to pass legislation and do something across the whole country—and prove, in the engineering sense, what can work, that will benefit everybody.

On the subject of capabilities, when I took Lord Heseltine to my constituency, we went to Right Track and met its chief executive, Stuart Bell, who said, “I’ve got 80 jobs available for any kid that walks through the door.” We both looked at each other and said, “No, don’t you mean you’ve got a job available and 80 kids are looking for it?” He said, “No, I’ve got the kids, but they haven’t got the wherewithal—the social and emotional capability—to work in retail and say, ‘Welcome, sir. Do you want a jacket or a tie today?’, ‘How are you?’ or ‘The weather’s nice’, or whatever.” That is the sort of basic capability and interaction they lacked. The vacancies were on the wall and Mr Bell was working with the kids to give them some of the basics that we would give our children, probably before the age of eight, at home in a normal environment, completely unconsciously.

That is what I mean when I say that measuring those kids on a five A to C basis is irrelevant. Measuring them on the demanding basis of what they should be attaining in terms of their own functional literacy and so on—a tough challenge—is exactly where they need to be. They will then attain and get self-respect and will, hopefully, spread that to their own children and raise good families of their own.

This is a complicated area—having looked at it for some time, I do not pretend to be an expert—and I certainly do not expect the Minister to be able to answer some of these questions on his first day. However, I hope that, when he has had a chance to get his feet under the table, he will consider whether he can work with us and Ofsted to review the balance on qualifications. Has the pendulum swung too far? Will he consider that, because it is quite urgent now? We need to get that balance right as this new Ofsted inspection comes in and, if we have the right qualifications going with it, the two things will be greater than the sum of the parts. We should ensure that there is a proper range on offer for demographies such as mine.

Thirdly, we should consider which roll children are on—the school roll or the FE roll—and all the complications that come with that. Schools are judged on how many pupils meet the requirement to achieve five A to Cs, including English and maths, and that judgment is based on all pupils in the year 11 cohort at census time. Pre-NEETS are therefore in danger of becoming victims of that system. Schools need flexible arrangements for these pupils, so they are able to develop through transitional arrangements to work and training.

Most of all, schools need to be freed somehow from the need to count all pupils in league tables as if they were all the same, because they are not. This means students at 14 onwards having a more sophisticated school roll, non-school roll allocation, so that they can benefit from a personally tailored vocational and functional skills programme. As schools receive funding for each student, there is an initial reluctance to have any more than a handful of their most difficult students offsite. I am not talking about the most difficult students, such as the young lads who might end up in a pupil referral unit; I am talking about the big chunk of those who will not get five A to Cs, who are not the really bad lads. That is a big chunk of the population.

As a result of the disincentive, every school tries to develop some sort of partial vocational provision or units on their campus and, for that reason, they cannot then work out block timetabling. Such timetabling would mean, for example, that my six schools could have a given period when those young people could go somewhere else together, forming a critical mass to make it work economically. With absolutely stringent, tested criteria, so that the system cannot be abused, schools need to be legally entitled to remove from their league table accountability pupils who are following certified programmes. By doing so, we will find meaningful progression for such pupils, many of whom could be characterised as white, working-class young people from former council estates.

At the moment, some of the provision is done under the table or with sleight of hand. We need to smoke the issue out, make it transparent and take action to make it clear that we are all working together. I do not pretend to have the issue buttoned down; I do not have a little policy document that I can hand to the Minister and say, “It has all been thought out and here it is,” but I know we can work together and find a much better way, so that we have a system that works for the kids I am talking about as well.

There are challenges. How can such kids be kept on the school roll, yet have a range of options externally? Who would be accountable for their outcomes, attendance, exam results and so on? Would the home school have to pay a premium for sending them to a further education institution? Many schools in special measures are facing financial difficulties. Would the student be removed from the home school roll? Many schools are struggling with falling rolls. If the Minister asks us to, we, working with Ofsted, would like to confront those challenges. With some flexibility and a little brainpower, we could trial that in my constituency, if the Minister felt it appropriate, as part of our rebalancing project.

“Destination outcomes” is a new phrase that we are using a lot these days. Post-16 progression routes need to be mapped for these learners, and we should aspire to put an offer in place for them to work towards at the start of a programme. A lot of the time, there is a sense of things being a package for a 14-year-old, moving on to a package for a 15-year-old, moving on to one for a 16-year-old and then one for a 17-year-old, rather than a sense of, “You should be working towards this end goal.” The goal might change, but if there is a sense of direction on roughly where someone wants to go, that can be set out at the start; the sense of “pass the parcel”, which a lot of these kids and a lot of the people involved with them feel, would diminish.

What a young person does in the September after leaving school is important, but we should be even more interested in what happens six months after that. It is okay saying, “We have pushed our pre-NEETs levels down and everyone is properly accommodated”, but then it is, “Oh my goodness, look at the NEET figure! We do not know where that came from. It has just shot up suddenly.” We need to measure where those kids are six months after they leave. That test must be on whether they have managed to stick with their college course, apprenticeship or whatever. That is a much more accurate measure. Working together, we should be able to organise a watertight data track for those kids.

Destinations need to be better factored into Ofsted’s inspections, so that efforts with the group are acknowledged and rewarded. Schools in my constituency are buying in external services to support the career progression of their students. Ofsted needs to acknowledge the exceedingly low “not known” numbers, which are being forced down due to the innovation fund, the good links between employers and schools and the role of the voluntary sector in supporting young people. Ofsted needs to work with that and make it even more standard in what it does. If we can pilot these ideas, we could help create an ever more demanding, but ever more helpful, Ofsted regime, which gets head teachers and principals to where they want to be.

Relevant inspections are at the heart of these ideas. This is a plea, on the Minister’s first day, to track us on progress over the next 290 days before the election, and to track Ofsted and our partners on how we can innovate to build a more effective inspection service, for the benefit of our 14 to 17-year-olds, by pre-empting NEETs and youth unemployment. A smarter system for measuring young people with complex needs is required, rather than their being measured against a “norm” group. I repeat: alternative provision for work-readiness is fine, but if a school is then faced with the consequences of that in the exam profile on their cohort, it is self-defeating, because heads will not do that. We need to facilitate heads and principals to do what they know to be right. They know what they can deliver. This is not rocket science—they know they can help those kids, but we have to reduce the disincentives in that.

To their credit, the Government have recognised the problem and have scrapped the five A to C measure for summer 2015 onwards in favour of the new “Progress 8” measure, which gives a much more rounded picture of every child’s progress in a school. That significant breakthrough having been made, however, it has to be followed through by the Department and, above all, by the inspection regime.

Ofsted, too, deserves commendation for recognising the need to address the issues. It says it wishes to go further than it did last year. The progress last year was great, but it has now told the House of Commons Library, which asked it a question on my behalf:

“We are adding some increased reference to advice and guidance into the school inspection handbook for Sept 2014”—

that is a couple of months away—

“which should increase the focus on the quality of advice offered to young people and their careers education. Schools will be assessed on whether they ‘provide timely independent information, advice and guidance to assist pupils on their next steps in training, education or employment.’ Inspectors will explore the extent to which the school has developed and implemented an effective strategy for ensuring that all pupils in years 8 to 13 receive career guidance; the impact of this guidance in helping young people to make informed choices about their next steps and how well what is provided is meeting the needs of all vulnerable groups of students, including reducing the numbers who do not continue to education, employment or training.”

There is more:

“There will also be references to destination measures as one of the factors for inspectors to consider. The extent of any NEETs will be taken into account, depending on the structure of education in a specific area.”

All those things are incredibly welcome, as are the drive, sentiment and good intentions behind them. I have publicly put on record, and repeat again, how good and positive that is from Ofsted’s point of view, but we now have to make it happen on the ground—in reality—so that it is more than just a question asked at an inspection that then disappears. If we are to tackle 14 to 17-year-old pre-NEETs, we have to have Ofsted as part of that team following through, encouraging and ensuring that the guidance is implemented, as well as inspecting.

One quibble is that the schools are about to break up for the summer holidays, and the new handbook, which I have just quoted parts from, courtesy of the Library, is not yet published. Will schools in my constituency or that of any Member have the time to take advantage of the good things in the new guidance and get them up and running for September, when the kids come back? I doubt very much that they will. I hope the Minister will facilitate getting that handbook, if only by a question, to Ofsted and into the hands of the heads and principals who can use it and put it to work. They can then talk to their local Ofsted inspectors to make it a reality.

I hope that the Minister has a little more success in reaching the Ofsted HQ team than I have had, although I must immediately say what wonderful people we have in local and regional Ofsted; they have been very supportive and encouraging. Given the chance in my area to co-operate with Ofsted and to demonstrate how we can help the inspection regime, we could make a real difference. I am thinking of our youth engagement fund, the rebalancing project, our schools and Ofsted working together, and great guidance. Let us make it work. We can do that.

I have a number of other issues to touch on briefly, because I consulted with people in my area and a number of suggestions were made. I want to put them on the record. First, family support, because we are not talking only about what happens at the school; the issue is about bringing all the other services together and ensuring early intervention with families and others to ensure that we support the child outside school as well. Secondly, schools staying open, so we need to ensure that in high-NEET areas they have the funding to operate on a 46-week year, not a 39-week year, to reinforce continuity and positive learning. Thirdly, employers—local chambers of commerce, local small and medium-sized enterprises and LEPs—should come to the party, bringing their capabilities to speak not simply formulaically because there is a little money in training, but with real passion: to get involved, to take on individuals and to work very closely with what we are trying to achieve.

Finally, there are a number of things around technology. Sometimes we look for new technology to be a shortcut and a cheaper way to get information to people, but that does not always work in a demography such as that in my constituency. We may be piloting particular proposals and schemes, but many young people in my area do not have access to iPhones or the internet. Moreover, they cannot use phones for conversations; many of the students in my area cannot be accessed when they run out of credit. Ofsted, the Department, the National Careers Service and others come forward with apparently great things that might work in other constituencies, but they need to have an eye to what will actually help NEETs and pre-NEETs.

To sum up, I am making an offer to the Minister and, through him, to Ofsted that Nottingham North’s rebalancing the outer estates project will work hand in hand with schools, Ofsted and all our local partners to pilot an exemplar of the new Ofsted framework. We will try to make that work, to show how far the envelope can be pushed and, I hope, to be an example to others. The project will be backed up by work-readiness coaches in every school, a work-readiness, purpose-built college funded by us through the youth engagement fund and, perhaps above all, an in-depth and wholehearted collaboration and partnership.

In that way, we can demonstrate how the pre-NEETs group can be removed from the bureaucratic, one-way conveyor belt to NEETs and long-term unemployment and on to a genuine pathway to work and self-motivation. It is a great prize, which will save the taxpayer millions of pounds otherwise spent on the costs of failure. More importantly, it will turn wasted lives into productive and happy citizens. The Minister has not had long in his new role, but if he works with me, as I hope he will, he will have long enough to make a real difference for the young people I have been discussing.

10:13

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to follow the hon. Member for Nottingham North (Mr Allen). That was an extremely constructive, thorough and positive speech, and it boded well that he made no request for extra money—had he been part of the reshuffle yesterday, I am sure he would have done well. Furthermore, he recognised that one size does not fit all. Every single town and community has different challenges and different opportunities, and that shone through.

I was not intending to speak, but I was disappointed that the Chamber is not packed with lots of eager Members. We are debating a challenge in all our communities, and yet there are so many opportunities to shape ways in which we can make a real difference, so I am cobbling together some of my suggestions and will then be supported by my hon. Friend the Member for Brigg and Goole (Andrew Percy), who has a huge amount of experience in this area. I want to concentrate on how Ofsted can focus on engagement, but not at the cost of the academic pursuit of the five A to C grades. Between us all, we are not asking for money or for huge amounts of change; we are only looking for some extras.

I welcome the new Minister of State for Skills, Enterprise and Equalities, my hon. Friend the Member for Grantham and Stamford (Nick Boles). I hope he is “planning”—boom, boom!—a bright future for the development of young people; it is early in the morning, so apologies for that.

My interest arises because I went to a school at the bottom of the league tables. Many of my friends failed to engage and they took a very different path from me. Two of them spent time at Her Majesty’s pleasure, although it is fair to say that, when I phoned up my old headmaster to say, “I have made it into Parliament,” he suggested that that was possibly worse. Also, in Swindon we are proud that we will have one of the first university technical colleges opening in September. The UTC will focus on real, tangible skills and working with local employers. I am envious of that, because it was not something I had when I was growing up.

The crux of what I am asking for concerns utilising our fantastic school and community facilities. We have spent huge amounts of taxpayers’ money, rightly, on building brilliant schools, but right up and down the country, as soon as it gets to 4 o’clock, for use of the facilities we slap on a huge hire fee for community and sports groups and groups that want to engage constructively and positively. In a world of extremely busy families, it is incredibly difficult to find volunteers to contribute to society and to make a difference. Where we find them, however, we then say, “By the way, if you want to put on a football or street dance club or to provide scouts activities, we will charge you”—what a huge disincentive. We have already paid for the schools, they already exist, so it is simply a question of getting a caretaker to open them up.

I was a councillor for 10 years and we had precious little open space in my area, apart from in the schools, separated from us by huge fences. No wonder we have childhood obesity and children stood on street corners, not being engaged. I encourage, where possible, opening up those schools for sport, not only for the next potential draft for the World cup, after our disappointing performance this summer, but for the future coaches, treasurers and club secretaries, because the opportunity is for all to engage constructively. A huge number of careers can come about through sport, other than by being top-notch athletes.

Other obvious groups who might use the facilities include the St John Ambulance or the scouts. I have to pay credit to some of their work in the most challenging communities. Such groups have been given extra money to engage in those communities, and they have adapted their models. What might be offered in one community can be very different in another. Any group of parents who wish to engage with young people constructively should have access to our fantastic facilities without price being a barrier.

I also want to touch on the opportunity for young entrepreneurs. Many of the brightest entrepreneurs in this country, such as Lord Sugar and Richard Branson, left school without a single qualification between them. They found, however, that entrepreneurship engaged them. We already have fantastic organisations such as Young Entrepreneur, but we can go further.

I organised a session with one of my local colleges, Swindon college. Rather than running something for a week, based in the main foyer and selling to their friends, the students were dispatched to Blunsdon market. For those who do not shop there regularly, I should point out that it is a really tough environment, where the customers are price sensitive and trade is hard to come by. The students were given a stall on a wet Wednesday afternoon, but all seven teams engaged positively. The best team set up a 1950s cake stall, after visiting the week before and recognising that the clientele was older. They tried to match the market and took £120. What happened after that session is key—the landlords and local business entrepreneurs offered to mentor one of the young entrepreneurs to take things forward. After she left, she set up her own bakery, which is doing well, and the good people of Swindon enjoy her produce. There is real opportunity in such engagement, whether after school or in the school holidays.

I am also a big fan of the National Citizen Service programme. I make six or seven visits to each of the processes in the summer holidays—it is the highlight of the summer recess. The key is the absolute transformation of the children. As its stands, we wait for children to engage proactively—generally, these schemes are advertised and it is the most proactive children who sign up. I would like the NCS programme to be expanded far more, using the long summer break to get children to do good things. For those not familiar with the NCS programme, aptly, there is a debate on it following this one. It involves sport, team work and charity and community work and places a huge emphasis on carrying on beyond the initial programme during the summer.

My final request concerns the battle in this country of youth services versus sport—the two, it seems, will never meet. Actually, those budgets should be merged. Again, if leisure centres are not being used in the evenings, let us open them up and use the facilities. Sport often captures the imagination. When I was a councillor, I was the lead member for leisure, and I remember the lead member for youth saying it was their job to engage with the youth. I said, “Well, I’m beating you, because on a Friday evening when we put the ice-skating disco on, I have 600 young people enjoying themselves. You should be parking your youth facilities outside our ice-skating disco and then you will actually engage with the public.”

When I first got elected, I tried to get in touch with young people by asking them whether we should expand youth clubs. They looked at me as if I was something from the ’80s—I probably was. We therefore need to merge youth and sport programmes and use them better. As with schools, we are not using our leisure centres on a Friday night at 10 o’clock, so let us open them up for constructive engagement if local parents want to put something on.

We have an extremely enthusiastic Minister. I would like every effort to be made to engage and inspire young people. They have only one opportunity. We cannot deliver one size fits all, but we can open up and provide fantastic facilities for positive and constructive engagement, and that will make a real difference.

10:21

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

It is a pleasure to follow my hon. Friend the Member for North Swindon (Justin Tomlinson) and to almost follow the hon. Member for Nottingham North (Mr Allen), who, as my hon. Friend said, made a thoughtful and in-depth speech. I share my hon. Friend’s concern that there are not more people here. This is an important subject and should concern every Member of Parliament. I know that not every Member can attend every important debate, but it is sad that there are not more of us here today.

I will speak briefly about my own experience growing up, attending a proper comprehensive school and my time in the classroom as a schoolteacher, and then talk about some of the positive things that are happening in one of the local authorities in my constituency, North Lincolnshire.

I do not want to outdo my hon. Friend, but I went to the worst performing comprehensive in the worst performing local education authority in the country. Like him, I went to school with people who went down a range of different routes. Some of them unfortunately went to prison on more than one occasion—that was just from my class, and we were the top set. Some went into good old proper, traditional apprenticeships, which I am pleased to see this Government have reinvigorated and restored. A small number of us went on to university. It saddened me that in the years after we left, that route to university was taken less and less by those from my school. In the end, our school was closed down on two occasions—it was a cycle of decline. Unfortunately, a lot of this happened before we had the term “NEETs” and before anybody really seemed overly concerned about disengagement.

By the time I started teaching, there was a lot more emphasis on the issue, I am pleased to say, and there has since been a lot more emphasis on different ways of engaging young people. The point the hon. Member for Nottingham North was making throughout his speech is that we need not only a co-ordinated solution—and not a one-size-fits-all solution—but early intervention. We hear about that all the time. The statistics are quite appalling: if we cannot get to a kid by the time they have started school, it is often too late to recover them.

I saw that both as a secondary schoolteacher and then, up to the day I was elected to this place, as a primary schoolteacher. They are very different jobs, but doing both really convinced me of the case for early intervention. When I was a secondary schoolteacher, we would sometimes be thinking, “What have they done to them in primary school to result in us ending up with this?” I realised as a year 1 teacher that unfortunately the battle was often lost before children even got into primary school. I would strongly endorse any strategy that identifies—as indeed the troubled families initiative and others do—families whose children are at risk of failing pre-school.

In my own area, we have tried to address some of the problems connected to literacy and to get kids to sit down with their parents through launching a project called the imagination library. That project was started some time ago by Dolly Parton, who comes from a family in which illiteracy was normal. It was first launched in the UK in Rotherham; the Labour leader of Rotherham council, Roger—unfortunately I have forgotten his last name—was the first man to bring it here. I took the project to North Lincolnshire council, which agreed to fund it.

Every child under the age of five receives a book in the post every month, and the scheme is properly integrated into the children’s centres in the local authority—an excellent local authority that has not closed a single children’s centre and indeed has expanded some services such as library services. Everything, including the children’s services and library services, is tied in together. Every child is now getting a book in the post every month and getting support from the children’s centres, so that by the time children get to school they have some of the basics. That is really important for their progress through school, but more important is that parents are tied into their child’s educational attainment in literacy very early on.

In the part of my constituency covered by a different local authority, East Riding of Yorkshire council, we have unfortunately not been able to secure council funding, but I run the scheme in Goole myself and raise the money for it. In North Lincolnshire, over 7,000 kids are signed up now, but the number in Goole is unfortunately a bit smaller. After the scheme had been running for a year, we did a feedback survey; I got a letter from a parent of one the children saying that having the books in the post every month was really great because there was a focused thing every month when the family sat down and talked about books. She also said that her own reading had been pretty poor, but the scheme had really helped her and she felt confident that she could help her own children. That is just one example of how we can engage with families early on to ensure that they buy in properly to their children’s education. When I was teacher, we always used to say that the one thing worse than the children was the parents, but the saddest thing I used to see was the parents who never engaged.

[Justin Tomlinson]

My hon. Friend is as ever delivering a powerful speech. When I visited some of the more challenging schools in my constituency, they echoed that comment about parents not wishing to engage. That is a further reason for using school facilities during the summer, as it would allow children to be in a constructive environment rather than one in which they are simply abandoned in front of the television.

[Andrew Percy]

Absolutely—I entirely endorse what my hon. Friend says. There are some parents who, if they have not achieved at school or school was a particularly bad place for them, remain intimidated by teachers or by school. In some cases, there is a sort of embarrassment—I have seen this myself—because they feel as if they are going to be tested and they know their own reading and literacy skills are really poor. Consequently there are some who are almost embarrassed if their children do better than them and so are disengaged from their children’s education. That is one of the saddest things to see. I entirely endorse anything that means we can bring parents in so that the school buildings become their buildings—for example, by putting on adult literacy and numeracy courses, as happens in a lot of places. Whatever, it is all for the better.

Moving up to secondary school, I agree entirely with the comments of the hon. Member for Nottingham North on the changes around equivalency. I taught in a really tough school in Hull, and I was appalled that, despite my protestations, which saw me dragged into the head teacher’s office, we went down the route that I call the GNVQ fiddle. That is exactly what it is. I had children who wanted to do my subject, history, at GCSE but were told they could not because they were not going to achieve a C, and consequently they were forced on to GNVQ media studies. Now, I do not disparage GNVQs at all, and perhaps GNVQ media studies was an entirely appropriate course for some young people, but when it was not their course of choice, and these things were done purely to get the figures up, something is seriously wrong with the system.

What happened when we started allowing the GNVQ fiddle? The school’s figures went through the roof, but as soon as the measure changed again, they plummeted—I think we recorded a pass rate of about 60% one year, but that plummeted to 15% or 16% when the measure changed. We were therefore absolutely right to remove what was clearly a way of fiddling the league tables. However, I share the hon. Gentleman’s concern that the pendulum should not swing too far the other way so that we concentrate only on traditional academic subjects. That was my concern about the EBacc when it was first introduced—that it would become the primary measure, whatever statements were made at the time.

This is not about not having aspirations for young people, but about what is best for their futures. I always give the example of foreign languages in the school I taught in. When I taught at Kingswood, in Bransholme, in Hull, the French department was above my classroom—I certainly knew it was, because of the way my projector used to shake. A lot of people could not engage in French language classes because they lacked the basic literacy skills to engage in English, let alone a foreign language. Often, the message that came back from home was, “Why do you need to learn French? It’s no use round here. Everyone should speak English.” Unfortunately, those children were instantly set up to fail. It would be lovely if they could all achieve at Latin, but unfortunately some of the changes we have seen set some young people up to fail. We need flexibility so that we have proper child-centred education—I know that is a bit of a cliché—and a curriculum that is appropriate for every child.

We are quite right to change how we measure achievement in schools—equivalence and the rest of it—and to want the best for every child. However, what I also saw in my school was that children were written off if they were going to deliver more than five GCSEs at grade C or above for the school. There is a balance to be struck, and something needs to be done to push those children too. There were problems at both ends, and we need to make sure that we do not, as the hon. Gentleman said, allow the pendulum to swing too far.

I want to talk now about a couple of things happening in North Lincolnshire. I am pleased the NEETs figure has been going in the right direction for the past few years. Obviously, North Lincolnshire forms part of the Humber region, which unfortunately has a very low skills base. That is one of the biggest risk factors on the local enterprise partnership’s risk register in terms of bringing in new investment. New investment is coming from Siemens, and one of the company’s big concerns has been about the local skills base. The Humber has some wealthy areas, but also some very challenging areas in places such as Hull, Scunthorpe, Goole and Grimsby. There is a job of work to be done in north Lincolnshire, and I want to talk about a couple of projects.

One thing the local authority has done, which I am very pleased about, is to completely reform and reinvest in youth services. It is not often that local authorities spend more on youth services. It was a painful process to go through, and the Labour opposition was, unfortunately, very anti the proposal to spend more money. The Conservative council reversed the previous council’s cuts of £137,000 to youth services and has actually increased the youth service budget by £200,000.

We also moved away from the traditional in-house model. One of the biggest opponents of the changes said that that model had worked for 40 years, but that defence tells us everything we need to know about why the system was not working—it had not changed for 40 years. It was bizarre that people protested at the council spending more on something, but we got through that. We now have a range of different providers, targeted at every young person but especially trying to engage those who are most at risk of becoming NEETs. We have got Streetbeat in, we have street sport and we have theatre groups. We still have all our youth centres, and not a single one will be closed, because they still have a role to play. We need fixed places, but we need something flexible too. The number of young people engaging with the youth service has increased substantially. The change may not have been popular with the youth workers we had at the time, but the proof of the pudding is always in the eating.

In North Lincolnshire, the employability skills framework has been launched. The scheme targets young people to make sure that they have the CBI’s seven essential skills. There is also the raising aspirations project—it is in the Barton area for now—under which primary schools develop their curriculum to include a real focus on enterprise. We also have the September guarantee and the engagement panel, and business links are improving. The local authority is also providing free careers advice and guidance to most vulnerable young people, which chimes with what the hon. Gentleman said. Most schools buy in additional services.

There is plenty more I could say, but I am aware of the pressure on time. I would just add that external careers guidance is really important, and we need to look at how we require schools—or do not require them—to buy it in. There is a risk of conflict where schools expand to include sixth forms, as is happening in my area. I entirely agree with such moves, because it is important that young people can continue their education in the place most appropriate to them, but there is a risk that too many young people will be pushed in a particular direction, so we must have a real emphasis on proper external careers advice that gives young people a full range of options.

I should add that people in my area are delighted to have a university technical college coming to Scunthorpe. We hope that that will not only regenerate the town centre, but transform the choices available locally for young people.

Finally, I welcome the Minister to his post. I forgot to do so at the beginning, which was terribly rude of me.

10:37

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton. I welcome the Skills Minister to his new role. This is a vital debate, and I hope it will inspire him to charge ahead and make the difference. As my hon. Friend the Member for Nottingham North (Mr Allen) so powerfully highlighted, that is desperately needed by young people who fall into the NEET category, which has rapidly come to be talked about very pejoratively.

I congratulate my hon. Friend on the work he has been doing for many years. About seven or eight years ago, when I worked at the Young Foundation, he came to pitch his ideas. His work was inspirational then, and it remains inspirational now. The need to tackle the challenges he highlighted is something we should all identify with if we want to create a socially mobile, highly skilled, strong economy and to maximise the economic potential of all young people, and especially NEETs.

My hon. Friend identified the need for pre-emptive, targeted intervention. As his work has shown, that needs to happen not only in education, but from the very early years—from early childhood. That should be done by supporting child care and through interventions inside and outside school. Other hon. Members have mentioned that issue, which I will come to later.

The latest figures show that 975,000 young people fall into the NEETs category. Although there has been some progress in getting some of them back into training and employment, that is not enough, and the situation is not satisfactory for any of us, whichever side of the House we are on. If we look at European comparisons, we find that about 14% of young people in the UK are classified as NEETs, but the proportion is as low as 4% in the Netherlands and 7% in Denmark. That shows that we should aim much higher, because we can achieve similar figures. We should aim to beat those countries and be a leader in tackling such youth inactivity and unemployment.

My hon. Friend talked about early intervention and powerfully highlighted the possible economic gains. I was struck by research that found that if we fail to engage 120,000 young people who are aged 13 today and who are at risk of becoming NEETs, they will collectively lose £6.4 billion in lifetime earnings. The argument is not only about fairness; it is about economic benefits, as has been noted.

Clearly, we need to identify and improve mechanisms to find out who is likely to fall into the categories in question, and track them. More work needs to be done through the agencies, including schools and further education colleges, as well as charitable organisations, which play a vital role, as hon. Members have said, in supporting those who are at risk. Youth offending teams are also among those whose work is relevant. We need more collective working across Departments to address the challenges for young people who are likely to be at risk, who could be diverted through the interventions—in school or as part of the work-readiness or other programmes—discussed by my hon. Friend.

I was encouraged by the remarks of the hon. Member for Brigg and Goole (Andrew Percy) about the need for pre-school support. My party supports an increase in child care hours and I hope that the Government will match that. The hon. Gentleman also talked about troubled families. The previous Labour Government introduced the relevant programme and I am glad that he supports it. He mentioned pupil referral units. They are important, and successive Governments have at best done minimal work on them, and at worst neglected them. Often, talented young people are excluded; I saw that in my work, before I was elected to Parliament. We need to do more to make sure that they can get access to the sorts of opportunities that my hon. Friend the Member for Nottingham North described, in programmes such as those he is developing in Nottingham, which I hope could be scaled up for other parts of the country.

We need to consider suggestions such as those that my hon. Friend made about work-readiness. There are great examples around the country involving many organisations, including City Gateway in London. I was involved in setting up a programme called Fastlaners, which works with 16 to 18-year-olds and is currently working with Jobcentre Plus and JP Morgan. Another programme supports graduates who lack employability skills; that is a lack that exists throughout the system and it is significantly related to disadvantage, social class differences and the lack of social capital. The Minister has done a great deal of work on those issues in his previous life, and I know that he will understand how serious they are, particularly for young people who get free school meals and who are disadvantaged by lack of connections, whether to employers or to people with a professional background who could mentor and support them.

My hon. Friend the Member for Nottingham North talked about the importance of careers information and guidance. We have made it clear how damaging the situation is, and I hope that the Minister, in his new role, will address some of the major concerns of the CBI, which described careers information guidance and advice as being on “life support”.

Concerns were also raised by the Select Committee on Education, as well as by Ofsted, about the need to deal quickly with the situation. I hope that the Minister will make it an urgent priority that schools should provide proper guidance and advice, which should be independent. It should also be much more creative, as hon. Members have discussed—linking with employers but not expecting them to be a substitute for independent guidance and support. The work should also involve the further education sector, among the other institutions that can play a vital role in careers guidance.

A related issue is work experience. Since it was, in effect, scrapped, 15% of young people cannot obtain a placement. There is a social class effect, in that the families of well connected young people can arrange work experience for them, while the rest are left high and dry. I hope that the Minister will attend to that, because there is a link to the points that my hon. Friend the Member for Nottingham North made about indirect disadvantage and discrimination, which kick in, often, on the basis of class. I know that the Minister will be concerned about that and want to rectify it.

I was particularly struck by something that the hon. Member for North Swindon (Justin Tomlinson) said about taking over school and other public buildings to provide facilities, which resonates with programmes introduced by my party through extended schools. He made a powerful point about the need to make sure that those facilities are available without charge. I hope that the Minister will look into that, because there are huge gains to be made if we can open those facilities up and maximise the potential for work with the group that we are now considering, in particular—but also with young people more generally.

That is very much what has been done by programmes such as Futureversity—a national charity that I was involved in setting up. It worked with universities and schools, and took over the facilities, helping to raise aspiration. It also worked with young people at risk, and a famous alumnus is Dizzee Rascal, who was excluded from a school in Bow. His tutor identified that he had musical talent and put him in touch with the organisation; he could then develop his talents. That goes to show what is possible for young people who are totally at risk. Dizzee Rascal has said that he could have ended up in the criminal justice system. With early intervention, and if there are facilities, and mentors and inspirational people available to give support, someone’s life can be transformed. That is what we are interested in; that is what we are in the business of.

I hope that the Minister will consider the key issues that my hon. Friend the Member for Nottingham North raised and the innovative projects and programmes, in Nottingham in particular, but also in other constituencies, where many in Parliament do impressive hands-on work on improving the life chances of young people—both in the category we are considering and more generally. I hope that the Government will listen, and learn from those examples, and consider how they can use their influence, power and resources. I do not necessarily mean, as others have said, investing more; I hope that they will use resources effectively to address the challenge of getting young people who do not now receive the support they need into work and meaningful activity, and into making a contribution to society.

If we pull together and organise our resources—our connections with the world of work—and leverage our support with Government resources and local employment partnerships, as my hon. Friend powerfully described, there is no reason why this country cannot compete with other countries that have reduced the number of people who fall into the appalling category that we should all, whatever party we belong to, be ashamed to have in our country.

We should make a united, collective effort to agree on interventions that work, and make sure that the Government can scale them up. I know that the Minister will be interested in new ideas as part of his new brief. I look forward to working with him and my hon. Friends to make sure, once and for all, that we have a long-term plan that is rapid and immediate in ensuring that we can abolish the terrible category of young people defined as NEETs. It is degrading and demeaning, and not fit for a society that is one of the largest economies in the world. We can do better if we work together on that important issue, as my hon. Friend the Member for Nottingham North said.

10:49

[The Minister of State for Skills, Enterprise and Equalities (Nick Boles)]

It is a great pleasure, Mr Caton, to serve under your chairmanship in this first debate to which I have been invited to respond in my new job. I congratulate the hon. Member for Nottingham North (Mr Allen)—he is an old friend only because we have been friends for a long time and not for any other reason—on securing this debate and bringing to it his customary insight, passion and wisdom.

We have heard from three Members who are the very models of modern Members of Parliament and are not content just to respond to casework and to make speeches in Parliament, but seek a deep understanding of the issues affecting their constituents and think creatively about long-term solutions to those problems. They do not stop there, but devise programmes and initiatives in their constituencies to bring partners, businesses, charities and public sector agencies together. As my hon. Friend the Member for Brigg and Goole (Andrew Percy) said, they even raise money personally to fund some projects. That is what being a Member of Parliament is about, and I wish I could claim to be nearly as good a one as my hon. Friends.

There are many phrases and much jargon that a newly appointed Minister must get to grips with. We have heard some jargon this morning—work readiness—which I do not like any more than I like any other jargon. I feel peculiarly un-work-ready this morning, having had less than 24 hours to get my head around the issues. Nevertheless, I have the advantage of the superb work of my predecessor, my hon. Friend the Member for West Suffolk (Matthew Hancock), who properly earned the respect of colleagues in the House for his indefatigable energy, enthusiasm and drive.

I join hon. Members in paying tribute to my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), the former Minister for Civil Society, who is one of the most decent and honourable men in politics. I regret that he is no longer in his role, but I know that he will continue to work hard to support the charitable sector and to help turn society around through the good work of people in that sector.

My understanding, which is high level and brief, is that when the Government came to office in 2010, we inherited a system in which there were brave intentions, but fundamental dishonesty. The fundamental dishonesty lay in the fact that we said to many young people that if they studied a range of courses and collected qualification confetti, they too would be able to share in the benefits of our growing economy. That was not true. It was not true in 2010 when the economy was not growing and it was not even true in 2007, 2006 and 2005, when our economy had been growing for a very long time, but a huge number of people—for all their GNVQs and other qualifications—were not able to share fully in the benefits of it. That fundamental dishonesty is the key challenge that we have tried to face with the help of the fantastic Alison Wolf and others. We have tried to identify the core skills that are essential for every young person to acquire if they are to have a chance to share in that economic prosperity.

In my previous job, my simple mission was to get more houses built so that young people could have a chance to own their own home, as my generation and previous ones have done. In this job, I have an equally simple mission to ensure that every young person acquires the skills they will need to share in our economic recovery. We have made substantial progress even while coming out of one of the deepest recessions for several generations, but we have not made enough and we are not satisfied. We will not rest, and the work will continue right up to election day and long afterwards to ensure that that mission is fulfilled.

I believe that we were right, as hon. Members on both sides of the House recognise, to scrap some of what my hon. Friend the Member for Brigg and Goole described as the GNVQ fiddle and some of the qualifications that purported to give people the equipment to get a job, but did not. We were perpetrating a fraud and it was entirely right that we got rid of that fraud. However, I have heard clearly from the hon. Member for Nottingham North and my hon. Friend that perhaps that reform has gone too far. I am not saying yet whether I agree with them, but I promise to talk to them and other hon. Members—and to the Chairman of the Select Committee, who may have similar concerns—and to understand where that concern lies and consider how we can preserve the massive gains we have made while dealing with any issues.

The other important thing we have done is to revive, restore and re-inspire the apprenticeship concept. It had become a low currency in our education and training system and I am glad to say that that is no longer the case. We are on track to deliver 2 million apprenticeships over this Parliament—not just 2 million in number, but 2 million high-quality, long-term apprenticeships that people who run businesses and other organisations value and that provide real ways of getting young people into good, long-term employment.

In the few minutes remaining, I want to deal with some of the specific points raised by the hon. Member for Nottingham North and others. On performance measures, the hon. Gentleman was good enough, as he always is, to acknowledge that the progress 8 measure is an important step forward in addressing some of his concerns. I will be very happy to explore with him whether that measure is absolutely the best answer, the only answer and the complete answer. I am glad that he welcomes it and I look forward to talking to him further about that.

The hon. Gentleman talked about a desire to engage with Ofsted at national level, having rightly and properly praised Ofsted in his own area. I will be straightforward with him. I will secure him a meeting with officials at national level at Ofsted and I hope that he will then meet me to discuss the outcome. I cannot promise always to agree with him, but I promise to engage with him and to talk to him as he makes progress.

I want to refer to a couple of the programmes to which my hon. Friends the Members for Brigg and Goole and for North Swindon (Justin Tomlinson) referred because they are tremendously important. They have new university technical colleges opening in their constituencies, and that is a superb initiative. Like most good Government initiatives, it was invented by a previous Government, developed by a later Government and is now being further developed by the present Government. I strongly welcome it and I am delighted that those two communities have benefited from it.

The National Citizen Service initiative is important, and I am proud to claim a small portion of the authorship. In opposition, I was responsible for developing that policy and for creating Charity Challenge, which is now the leading provider of the National Citizen Service. I am particularly delighted that the Labour party is an enthusiastic supporter of the National Citizen Service and look forward to it being developed and offered to all teenagers as they reach the appropriate stage, whoever is in government.

I acknowledge the important work of the Imagination Library. I did not know about it, but I am even more keen on it now that I know that Dolly Parton had something to do with it. It is a fantastic project, and it is fantastic that my hon. Friends are being so constructive in supporting it and ensuring that they can offer it to their constituents.

I am tremendously privileged, lucky and happy to have been given this job. Like poor Manuel, I know nothing at the moment, but I am keen to learn and this debate has been the most fantastic tutorial that a new Minister could possibly have. It would be hard to find four Members of Parliament with more passion, commitment and knowledge. I look forward to learning from them and working with them. I hope that together, we will ensure that young people have the skills they need to share in our economic recovery.

[Mr Allen]

Will the Minister come to Nottingham to see the work we are doing?

[Nick Boles]

I will be delighted to do so.

[Martin Caton (in the Chair)]

We will now move on to our next debate, which happens to be on the National Citizen Service.

National Citizen Service

Wednesday 16th July 2014 Westminster Hall

11:00

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

It is a pleasure to be here under your chairmanship, Mr Caton, just as it was to hear part of the last exchange between hon. Members and the new Minister of State for Skills, Enterprise and Equalities, whom I know well. He knows that I know him well, and I hope that we will be working more closely together in future, given my interest in skills and through my chairmanship of the Skills Commission. Of course, I must also welcome the Minister for Civil Society, the hon. Member for Braintree (Mr Newmark), who will be replying to this short debate of ours. I know him well, as do most of us in the House, and we are delighted to see him in his new position.

Anything that I say today about the National Citizen Service is not a criticism of what we have; it is an appeal to do more and to make it more thoroughgoing and rigorous. In a recent question to the Prime Minister, followed up by an article published last Saturday in the Yorkshire Post, I argued for people to realise that 100 years ago this August, a war started that led to the deaths of 16 million mainly young men, all over the world.

I was recently in France, overlooking a hill where 300,000 young men died during the first world war. Seventy hectares are still in a red zone and no one can go there. Any of us who think this year about that war and the casualties do not want that ever to happen again. We had a second world war, with—not many people know this—even more casualties worldwide, because of the sophistication of the weaponry used. We perhaps take it a bit for granted that there has not been a conflagration of that size since, although there have been, and still are, conflagrations, wars, and dreadful civil unrest and unhappiness across the world; I am thinking this morning about Gaza, Israel, Syria and so on. There is an extensive list.

I suppose I sound a bit like Colonel Blimp when I say that probably the best trainers ever in this country were the armed services. I have done a lot of work looking at the history of training in this country. The armed services, when we had national conscription and national service, took every young man who could see and walk into national service and made something of them. All the research shows that the experience was dramatic, certainly for young men in our inner cities and in our big towns, who would rarely move off their local estate or out of their local neighbourhood. National service took those young men and not only gave them a skill, a trade, a routine and much else, but sent them all over the world and all over the United Kingdom. They met people whom they would not otherwise have met, and many of them married them, so we had a real opportunity for mobility and change.

It is interesting that the young people who are able to travel, to see the world and to meet other people from other places are the sort of children who most of us in this room have—who I have. I have four children who have done their gap years in exotic places, some of which I have never been to. These young people have travelled and gone to university, well away from home, so there is mobility for them, but that mobility is not shared, particularly in the most deprived communities in our land.

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

May I be the first Member on this side of the House to congratulate the Minister on his new role? I look forward to working with him. I also congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing the debate. I particularly enjoy working with him on a cross-party basis, as we are both co-chairs of the Associate Parliamentary Manufacturing Group. I welcome how he is framing his remarks.

[Martin Caton (in the Chair)]

Order. This is an intervention, not a speech.

[Chris White]

As chair of the all-party group on the National Citizen Service and volunteering, I would welcome the hon. Gentleman’s support. Does he not think that this issue would also benefit from cross-party consensus?

[Mr Sheerman]

As the hon. Gentleman said, he works well with me and I hope he can work with me on the much more ambitious programme that I am going to talk about today. Nothing I am going to say today is negative about the existing National Citizen Service programme, but I want to finish my analysis. I believe that we have become a very different country. More and more people are living in cities and towns, with fewer people living in the countryside. There are real problems with the mobility of young people—getting off their estates, travelling, and getting away from their sometimes troubled environments.

I would like to see an open discussion about the possibility of having a much more powerful National Citizen Service, because we are in a time when democracy is under threat. When I asked that particular question of the Prime Minister, the other thing I said was that, 10 days before, only 36% of people voted in the European elections and even fewer voted in the local elections. Interestingly, if we look at Europe, even countries that are so keen on getting democracy had levels of involvement of 19%.

It is worrying for Europe and for our country that there is a disengagement from politics. All of us, when we are out canvassing, or in different parts of the country—in my case, trying to persuade the people of Scotland to stay in the Union—hear too often that the perception is that democracy does not make any difference because we are all the same. I think we need citizenship, because it will get to the root of that kind of attitude.

[Justin Tomlinson (North Swindon) (Con)]

The hon. Gentleman has my absolute support for his passion on the subject, and I have seen the complete transformation of young people who engage in the NCS programme. They all go on to become constructive and proud members of our local communities.

[Mr Sheerman]

I thank the hon. Gentleman. I shall point us to the direction I want to go in. There is complacency about our democracy. From studying history, we know that when we become complacent about our history and learning its lessons, problems emerge—extremist politics of various kinds. If there is a vacuum, there is a danger, historically, that something will fill it.

Perhaps we do not have anything like the extremes of left or right that we had in the Europe in the 1930s, which Michael Oakeshott wrote so vividly about at that time, but we have a serious problem of engagement, and we also have much higher migration than we used to. It is true—it would be nonsense for Opposition Members to deny and not address this fact—that many people come to this country. They want to learn about the country, be good citizens and be absorbed into the culture of this country, and they get very few opportunities to learn.

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

I absolutely share the hon. Gentleman’s ambition. As one of the architects of the National Citizen Service, which I thought he was talking about, I wonder whether he acknowledges that the NCS, which this year will, hopefully, take 90,000 kids through its programme, has a much higher proportion of children from free school meals and deprived backgrounds, and from black and minority ethnic backgrounds, and is providing just that degree of social mix? There can be a kid from Eton on one end of a rope and a kid from the youth justice system, from east London, on the other end, and, as I have seen with my own eyes, they are entirely reliant on each other. In other circumstances, they would never have come together, and that is what is being achieved.

[Mr Sheerman]

This is becoming embarrassing, Mr Caton. There are all these Members from across the House whom I have become accustomed to working with closely on various issues. I agree with that point, too.

I come to the nub of what I am saying. I am not criticising the existing service, but we are a bit complacent, in that we think it is enough. I do not think that it is enough. I go to many university campuses and talk to students. Everyone thinks that if people enter higher education, if they go to college, they learn something about this country, but all the evidence is that very often they do not. They might go to study physics, architecture, design or foreign languages, but my experience is that, even in the higher education sector, very little time is spent talking about the culture and nature of this country, the nature of democracy and the nature of a parliamentary democracy in particular.

What also worries me is that when, as Chair of the former Select Committee on Education and Skills, I looked at the way in which citizenship was taught in schools, I found that it was not very good at all. We visited many schools, and too often that was the situation with citizenship, despite all the brave efforts of my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and all the other efforts that were made. What we found on the ground was the old story of the PE teacher who does not have a heavy timetable being asked to teach citizenship. There was no training, no back-up and no real curriculum. We found that it was very lacking.

The one exception—the one bright star—was the Blue school in Bath and Wells. It had innovated and created the Learning to Lead campaign. We were so keen on the Learning to Lead campaign that I persuaded the Edge Foundation to give it £100,000, and I believe that it is now in nearly 150 schools. It really works, because it changes and suffuses the nature of the school and teaches people about how democracy works.

[Karl MᶜCartney (Lincoln) (Con)]

The view expressed at the start of the hon. Gentleman’s speech was so traditional that I thought he might be crossing the Floor to join all his positive colleagues on the Government side of the House. If he would like reassurance about how widely drawn and diverse the youngsters are who take part in the National Citizen Service, he should please come and see Lincolnshire and Rutland’s, which is most professionally run by Elaine Lilley and her colleagues.

[Mr Sheerman]

I appreciate that intervention as well, but I am not going to be doing what the hon. Gentleman thought; let me just finish now. I believe that there is a complacency outside the House about citizenship. I believe that citizenship teaching should be much more rigorous. I believe that it would fit into another radical scheme that I propose, because I do not believe that anyone under the age of 25 in this country should be unemployed. We looked at that in the former Select Committee.

The fact is that it is a terrible waste of talent, money and everything else if a young person becomes unemployed before the age of 25. In my view—I have said this very clearly in the House many times—every young person should be in employment with training, in education, in training or getting high-quality job experience. The leader of the Labour party was misquoted recently on this. No young person should be allowed to be living on the margins of society on a little bit of benefit, a little bit of housing benefit and so on. Too many lives are destroyed by that dependency that develops up to the age of 25—

[Jason McCartney (Colne Valley) (Con)]

Will the hon. Gentleman give way?

[Mr Sheerman]

No. My citizenship programme would build on the excellent citizenship programme that has been so innovative and has grown. I have looked at the current programme and I think that it is good, but it is still small. I believe that there is a cost of £50; it certainly was that the last time I looked. As I said, the programme is small. It will have engaged 100,000 people this year, but I want to build on that experience. It has been a good learning process, but I want my hon. Friends on my side of the House and my friends of a different type on the other side of the House to come together on this. I do not think that there should be a political—

[Jason McCartney]

Will the hon. Gentleman give way to one of his friends?

[Mr Sheerman]

Very quickly.

[Jason McCartney]

I thank the hon. Gentleman, my near constituency neighbour, for giving way and I welcome the Minister to his post. May I clarify what the hon. Gentleman is saying? I get where he is coming from. Attending National Citizen Service events at the John Smith’s stadium in Huddersfield and at Huddersfield town hall, we saw the wonder of the teamwork. People were away from home and working together in self-reliance. Is there not a fear that burdening the scheme with the citizenship training provided by local colleges, such as Huddersfield New college and Kirklees college, could take away the sense of adventure, self-reliance and teamwork that our young people are getting from this fantastic scheme?

[Mr Sheerman]

The hon. Gentleman makes a very good point, but that is not what I am saying. I do not want to touch that scheme. It can carry on—it can improve and we can learn from it. However, I think that there is a deeper lesson: we need a more thoroughgoing programme of inducting people into our society.

Personally, I do not believe that such a programme should be voluntary. I think that every young person in this country should do it. It should be equivalent to a year’s commitment; they should be able to do it full-time or part-time over a longer period. It should be applicable to the college and university student, as well as the young person coming out of school who does not yet have a job. It is a radical programme that I want and it builds on what already exists.

I have found that certain Conservative Ministers are rather jealous of me, because I studied at the London School of Economics with the well known Conservative philosopher Michael Oakeshott, who believed in the pursuit of intimations—not picking up wonderful policies of the left or right, which was the cure-all for everything, but learning from experience and edging forward. I have become much fonder of that kind of attitude as I have got older.

What we can learn from what we have done in the citizenship programme is that there is a real need. Disturbingly, we have found in Birmingham schools and in some in Bradford that there are things going on that we need to find a positive alternative to, rather than just getting into a frenzy when we pick up on something like that. There is also the very worrying experience that I had when I was Chair of the Select Committee of increasingly seeing people withdrawing children from school and saying that they were being home educated. We then lost track of them.

There are some real problems in our society. It would be silly of any political party to sweep them under the carpet. I think that a thoroughgoing one-year commitment to a national citizenship service, learning from the excellent work being done in the voluntary programme, is the way forward. I will continue pressing for that with the new Minister and with my colleagues on the Opposition and Government sides.

11:17

[The Minister for Civil Society (Mr Brooks Newmark)]

It is a pleasure to serve under your chairmanship, Mr Caton. I congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing this important debate and I thank all hon. Members for their extremely constructive contributions. There are lessons that we can learn. Individuals and Members from both sides of the House have come to the realisation that this is something that it is extremely important to do. The hon. Gentleman, in looking back to national service—those of us who had parents who did national service have heard the stories of that and what they got from it—brings us forward to what the National Citizen Service is really about.

The issue of citizenship goes to the heart of my values and beliefs as a father, as a politician, and now as the Minister for Civil Society. Just last month, I visited a project in Peckham called Leaders of Tomorrow, which to me was an exemplar of what national citizen service is about. When I was invited by my right hon. Friend the Prime Minister yesterday to take on this role, I was thrilled by the opportunity, because it gives me the chance to pursue an interest of mine—something that I have taken outside the realm of being a Member of Parliament. It is the bread and butter of what I do every week, not just as a Member of Parliament but as someone who has a huge interest in the importance of social action. I have spent the past eight years going to Rwanda on something called Project Umubano, which is a social action project. We in the Conservative party take a group of 50, 60 or sometimes 70 people to Rwanda to work on five or so different social action projects.

[Sarah Newton (Truro and Falmouth) (Con)]

I am glad to have the opportunity to congratulate my hon. Friend on his appointment. On that point, does he agree that the citizenship programme is a key part of social action? Just this weekend, I saw some fantastic work being done by Cornwall college, which is really engaging young people in social action, and I am sure there will be a legacy for the rest of their lives.

[Mr Newmark]

My hon. Friend is absolutely right. From a standing start, the programme of national citizenship now engages 10% of young people in the relevant age bracket. As someone who has five children between the ages of 16 and 25, I know that engaging young people for three weeks of their summer is a challenge. Most have the attention span of what they see on their iPhones or whatever digital devices they play with. The fact that the Government are now engaging 10% of our young people every summer represents a huge success.

I saw at first hand the value of bringing together young people from different backgrounds and supporting them in giving back to their communities. Each and every one of us sees many examples in our constituencies of youth organisations that bring together groups of young kids from different backgrounds to work together. It is vital that we encourage all our young people to participate. That is why His Royal Highness the Prince of Wales was right to create the “Step Up to Serve” campaign, which is supported by all three main party leaders, with the ambition of increasing the proportion of young people taking part in social action in our country to 50% by the end of the decade. That is a tremendous ambition, and as Minister I am committed to working as hard as I can with community groups to try to engage our young boys and girls. It is right that the National Citizen Service, which is delivered by the independent NCS Trust, should be part of that vital cross-party campaign.

The NCS grew out of the recognition of a need to equip our young people with the skills and confidence they require to transition into adulthood, to re-engage them into a cohesive society and to utilise their energy and passion to improve their local communities. NCS is delivering against each of those needs. The 2012 independent evaluation of the programme found that 92% of participants thought that NCS gave them the chance to develop skills that would be useful in the future, and 95% said that NCS gave them a chance to get to know people with whom they would not normally mix. Two or three Government Members made that point.

NCS participants so far have given some 2 million hours to serving their communities, taken part in more than 50,000 social action projects and raised almost £750,000 for charities around the country. That is a tremendous achievement for the initiative from a standing start. Since 2011, nearly 80,000 young people have benefited from their involvement in NCS, and the programme is on track to have its 100,000th graduate this summer. The NCS started in England and spread to Northern Ireland, and I am delighted that it will soon be launched in Wales as well.

NCS is a special opportunity for our young people at a critical point in their lives, but social action is a habit that evolves over a lifetime. Across our country, there are many fantastic examples of organisations helping our young people to give something back. The Government have granted up to £11 million through two youth social action funds to encourage more young people to take part in social action and support high-quality programmes across England. A further £3 million will be granted through the vulnerable and disengaged young people fund for social action programmes working with vulnerable young people, including those in care and young offenders. As a result of our support and the efforts of charities and community groups across the country, 2012-13 saw the highest levels of informal and formal volunteering in England among 16 to 25-year-olds since 2008-09.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I welcome the Minister to his new position. I know that some work has been done on this, but is he aware of any further work on progression routes for those who graduate from the NCS? That is an area that could benefit from his attention in his new brief.

[Mr Newmark]

I thank the hon. Lady for her welcome. She is exactly right, and I have been talking about precisely that topic this morning. How can we engage local businesses? If someone gets a certificate to state that they have graduated from the NCS, will local businesses in our communities recognise the certificate and say, “I will give this person a job opportunity,” whether that be a summer job, a temporary job or a full-time job? The hon. Lady makes an excellent point.

[Karl MᶜCartney]

I welcome the Minister to his new post. I assure the hon. Member for Huddersfield that Government Members were not ganging up on him earlier; we were very supportive. On the point that the Minister just mentioned, career academies offer some business engagement with young people at the ages of 15, 16 and 17. I recently set one up in Lincoln, which is a good model. The Minister, in his new role, might like to look at such academies.

On the NCS, the hon. Member for Huddersfield made a point towards the end of his speech that needs to be looked at. He mentioned those who are home educated, who might miss out on the opportunities that the NCS offers. When I was out with my NCS team in Boultham park recently doing some clean-ups, one home educating mother came up to us and asked whether her nine-year-old daughter could join in. Her daughter was a little bit too young for the NCS, but there is a need and a desire among parents for their children to be included.

[Mr Newmark]

My hon. Friend makes a good point. We want to get more people involved, as the hon. Member for Huddersfield urged us to. That means committing resources to engage positively with parents, and I will be using part of our resources to do just that. Many people still do not know about the programme, so it is important that we try to market this great opportunity to young people.

The hon. Gentleman talked about national service and the skills that young people learned there. I remember hearing when I was younger from my stepfather, who went through national service, about the mix of people he encountered. All sorts of people from all sorts of background got together, and many people found when they left national service that they had a greater sense of social mobility than they had had when they entered.

We are not simply talking about skills. The hon. Gentleman described engaging with people, trying to create a cohesive society, encouraging individual responsibility and developing a responsible society. Those are all the hallmarks of NCS. He said that not enough is being done, and I am sympathetic to that. Like him, I would love every young person to be engaged in some form of community work or social action. I would draw the line—he did not really cross this line—at making such work compulsory, because I do not think that it is necessary to do so. If people engage with us voluntarily, they will be engaged with their communities for life. That is the sort of sense of social responsibility that we want to create from the NCS programme.

I conclude by returning to the hon. Gentleman’s remarks. He talked about Professor Oakeshott, and about the concept of learning from our experience. We are engaged in an iterative process, and we will continue to learn from it, continue to grow and continue to engage people, particularly young people. I am told that nearly 300 young people are expected to take part in the NCS in Huddersfield and the surrounding area this summer. I was pleased to note the hon. Gentleman’s tweet on meeting some of the NCS participants last September:

“Inspirational young people @NationalCitizensService in Huddersfield Town Hall if these guys are the future we’re OK!”

I could not agree more.

11:29

Sitting suspended.

Relocation Scheme (Syrians)

Wednesday 16th July 2014 Westminster Hall

[Jim Dobbin in the Chair]

14:24

[Sarah Teather (Brent Central) (LD)]

It is a great pleasure to serve under your chairmanship, Mr Dobbin.

I am grateful for this opportunity to speak about the Syrian vulnerable persons relocation scheme. Like many others in Britain, I have watched with horror as the situation in Syria has developed. I have friends with relatives trapped in Syria, and the pictures of people streaming out of that country have been almost too shocking for me to watch.

Last November, in my capacity as chair of the all-party group on refugees, I travelled to Jordan to witness for myself the conditions in which Syrian refugees are living, to hear their stories and to see first hand the strain that supporting more than half a million extra people is putting on local communities in countries across the region. The details of that visit are, of course, recorded in the Register of Members’ Financial Interests.

Jordan is a relatively small country with a population, before the refugee crisis, of some 6.5 million people, but that figure includes more than 2 million registered Palestinian refugees and tens of thousands of Iraqi refugees, all in what is considered to be one of the world’s 10 most water scarce countries—a country with an economy that has struggled greatly in recent years.

On my first day in Jordan, I visited the Zaatari refugee camp with the United Nations High Commissioner for Refugees, which I thank for organising the visit. The Zaatari refugee camp is just a few miles from the Syrian border. At the time of my visit, the camp had a population of around 100,000 Syrians, which made it one of the largest settlements in Jordan.

The UNHCR showed me the route that newly arrived refugees from Syria take when they arrive at the camp, and we began by going to a large tent in which several families were gathered. The families were still recovering from their overnight journey and were yet to go through the formal process for registering as a refugee. Via an interpreter, they told about the journeys they had taken to get to the camp. If they were lucky, the journey had taken several days, but in most cases the journey had taken weeks—weeks across desert, weeks of having to find food and shelter where they could. For much of the journey, they were terrified that the planes they could hear overhead would spot them en route.

When I visited the region, the Jordanian Government had all but closed the border crossing closest to the camp. Most of the families I met at Zaatari had come from Daraa in the south of Syria, not far from the camp itself. The closing of the border crossing forced people to cross hundreds of miles of desert. At best, it took two weeks to reach the only open crossing, which is up in the corner with the Iraqi border.

We heard about families who had endured days out in the rain without shelter, with freezing conditions at night. They were finally picked up in no man’s land between the Syrian and Jordanian borders by the Jordanian army and driven through the night back to Zaatari camp, arriving in the early hours of the morning. Most arrived at Zaatari with very little, perhaps only the clothes on their backs, having fled their farms and villages with what they could carry and having discarded belongings along the route. They were all tired, hungry and covered in dust from the journey.

A short sleep and a shower awaited them on arrival at the camp before they began the registration process with the UNHCR, which entitles refugees to a mattress, some emergency provisions and a tent that will be their home during their time in the camp. It is a meagre existence for families who have typically spent their lives living in first-world conditions not dissimilar to our own, with all the luxuries that we would expect. When we see pictures on the television, it is worth reminding ourselves that most of the people we see have been living in conditions not dissimilar to what we consider to be normal.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Lady on securing this debate. She has outlined some of the horrific and awful conditions that face those 500,000 people. Does she agree that we need a strategic international resolution to the issue before those people are affected not only by the oncoming winter but the regional problems that will emerge if the situation is not resolved?

[Sarah Teather]

I absolutely agree with the hon. Gentleman. The situation in Iraq is only making the plight of people in Syria worse, because many of them have fled into Iraq. As it happens, many of those people are travelling up to Kurdistan. Even so, the sheer movement of people in the region is worrying, and it puts extra strain on the countries that are taking the bulk of the refugees. I will return to that point in a moment.

During my visit to Zaatari camp, I met Doctors of the World and Save the Children to see their work supporting refugees. I pay tribute to their work, and I place on the record my admiration for the many people who support those very vulnerable people—they are usually separated from their own family and friends, living a long way away. Despite the hard work of many, conditions in the camp are extremely difficult due to the lack of privacy, the cold of living in a tent and the shared toilet facilities, which have provoked persistent allegations of sexual harassment. That makes it a difficult life for anyone to bear.

Overall, it is the children who stay most in my mind. I was shown some of the provision in the camp, including a football pitch built with funding from South Korea, a playground with swings and a slide, and a project run by Save the Children that does excellent work giving the camp’s children space to learn, play and speak about their traumas, but that is not what stays most in my mind. What stays most in my mind is the sight of children working, as I saw most children doing.

Refugees are not allowed to work in Jordan, yet many are desperate to supplement the small levels of support they receive, so their children work. Children digging are a common sight in the camp, and it took me a minute to notice what they were doing, as at first sight I thought they were playing. When I looked a bit closer and talked to staff in the camp, I realised that they were actually making cement. The Jordanian authorities have banned cement from being brought into Zaatari, so instead the residents of the camp make their own. Groups of children dig through sand and dirt for many hours in the sun to get at the finer material needed to make cement.

Conditions in the camp are so difficult that many choose to leave and take their chances living in neighbouring villages or, if they are lucky, Amman, where they may have friends and relatives. They get more privacy that way, but the conditions for those living outside the camp are also terrible, and it requires raising further funds to support housing costs. Child labour is therefore endemic. In Jordan’s capital, Amman, I visited a team from the Jesuit Refugee Service, which goes out to visit families that are almost invariably living in cold, damp and unfurnished apartments.

None of the children from those families is in school. Instead, many of them are out working to pay the rent for the property in which they live, including a 10-year-old boy I met called Bashir. He is the sole bread winner for his family of six, whose lives are particularly difficult because two of the children have severe disabilities. Bashir sells vegetables on the streets from 8 am until 10 pm. He has no time for school or play, and he is not the only child I saw on that street doing exactly the same thing. That is the reality for refugees in Jordan, and it is a reality mirrored in Lebanon, Turkey, Iraq and Egypt.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I visited Lebanon with the support of World Vision, as I have declared in the Register of Members’ Financial Interests. The difference there is that there are no established camps in Lebanon and the nearly 1 million people are dispersed. Only 23% of the international community’s funding commitment has been delivered in 2014, which makes it difficult for the agencies to provide support to register people quickly. That is often a huge blockage.

Has the hon. Lady observed similar problems? Does she agree that our Government need to take a stronger line on encouraging our international partners to ensure that the funding commitment is honoured urgently?

[Sarah Teather]

I did see similar things. There is one set of difficulties for refugees living in camps and another for refugees living in communities. The thing that really bothers refugees living in camps is the lack of privacy and the shared toilet facilities. Most of them are living in tents, although the UNHCR has gradually been trying to replace the tents with more permanent caravans. The lives of people living in camps are extremely hard, and many get to a point at which they can no longer cope. That is when they move out into the community. However, in the community, they are not having their housing costs paid, so they find that they run out of money. Some people cycle between one and the other as they try desperately to find a bearable situation. It is quite obvious that a lot of agencies are not reaching people living in communities. Those who are living in the cities and have been picked up by an agency are luckier than others.

I do not want to go too far into the question of aid, because I am trying to outline some of the conditions before moving on to talk about the relocation scheme, but I hope that the hon. Lady finds the opportunity for a detailed debate on the issues relating to aid in Lebanon and other countries, because they are very important.

I was talking about the five countries—Jordan, Lebanon, Turkey, Iraq and Egypt—that currently host 2.8 million refugees. I am going to say that figure again because it is really important: when we talk about the numbers in this country, it is worth bearing in mind that there are 2.8 million refugees, half of whom are children. Of those children, six in 10 are not enrolled in school. Of all households, one in four is headed by women, who face a lone fight for survival. It is extremely difficult for them.

Despite the conditions I saw, nearly every refugee I spoke to was desperate to return home. They consider the phase they are in to be temporary and are desperate for peace to begin so that they can start their lives all over again. However, with no end in sight to the conflict in Syria and with the crisis in Iraq growing bloodier by the day, as we discussed a moment ago, the pressure on neighbouring countries to cope with the constant influx of refugees continues to mount and the prospects for safe return to Syria continue to diminish.

By contrast to Syria’s neighbours, Europe has been relatively unaffected by the refugee crisis. Excluding Turkey from the figures, only 4% of all Syrians who have fled their homeland have sought asylum in Europe. That is a total of 123,600, of whom a mere 4,084 have applied for asylum in the UK. I am going to repeat the number I cited a minute ago: 2.8 million. Of 2.8 million refugees, 4,084 have applied for asylum in the UK. That is a drop in the ocean.

Last September, the UNHCR called on countries to admit 30,000 Syrian refugees on resettlement, humanitarian admission or other programmes by the end of 2014. That 30,000 sounds like a big number, unless we keep repeating 2.8 million. We then remember that it is a really small number. In February, with the refugee crisis growing by the day, the UNHCR expanded its call, seeking an extra 100,000 places in 2015 and 2016. So far, 31,817 resettlement places have been offered by European countries, including Germany offering 20,000, Austria 1,500, Sweden 1,000 and Norway 1,000. The USA has an open-ended number of available places.

What about the UK? The British Government have been among the most generous donors to the humanitarian response to the Syrian refugee crisis, and I want to place on the record my congratulations to them on their strong leadership. However, they have been much slower to move on resettlement issues. In the words of the UNHCR representative to the UK, Roland Schilling:

“this is an extraordinary crisis requiring extraordinary measures”.

He also said:

“International solidarity and burden sharing is now an imperative if we want to ease the suffering of Syrian refugees, assist the neighbouring counties and avoid further destabilization of the region.”

Back in January, I was delighted that the Government announced that the UK would set up the vulnerable persons relocation scheme, which would run in parallel to the UNHCR’s resettlement scheme. The Government were late to make that decision, and it took concerted effort and leadership from the UNHCR, the Refugee Council and Amnesty International, among many others, to persuade them to make it, along with strong advocacy from MPs from across the political spectrum. Nevertheless, the Government did make that very welcome announcement.

I was not concerned that the Government were running their own scheme in co-operation with the UNHCR rather than as part of the UNHCR scheme; what is important is that those vulnerable refugees for whom returning home is nigh on impossible—for example, those who have suffered sexual violence, or who would face persecution or need specialised medical care—are offered resettlement in the UK. However, I am extremely concerned that, six months on, very little seems to have come of that announcement.

Answers to parliamentary questions show that so far only 50 refugees have been resettled through the Government’s scheme, although perhaps the Minister will correct me if I have the wrong figure; if it is out of date, he can update us. When the scheme was announced, the Government said that there would be no quota but that those who were deemed the most vulnerable would be prioritised. However, despite the Government’s not providing a quota, it was suggested that the scheme would support

“several hundred people over the next three years”.

Will the Minister explain why the number of people who have managed to come here has so far been so very low? Assurances were given to the House that the Government were committed to the scheme. What has happened to delay the resettlement of refugees? Why has the take-up been so slow?

[Keith Vaz (Leicester East) (Lab)]

I congratulate the hon. Lady on securing this debate and on her outstanding work as chairman of the all-party group on refugees. We will miss her hugely when she leaves the House next May.

One important element might be the involvement of the diaspora community in this country. I have been approached by so many members of the Arab diaspora, including Syrians who have been settled here for many years, who want to help the Government and to assist in bringing more people over. Does the hon. Lady agree that it is important to include members of the diaspora? They might be able to help to increase the numbers from the very low figures we currently have.

[Sarah Teather]

The right hon. Gentleman makes an excellent point. There are obviously going to be some sensitivities relating to why a person is so vulnerable that they need to be resettled, but there are certainly areas of the country with a significant Syrian diaspora population and the Government should encourage councils in those areas to work to ensure that support systems are in place. I encourage the diaspora to pressure the Government and councils to take part in the scheme and try to increase the number of people we are able to resettle.

I return to the questions I was asking a moment ago. Will the Minister comment on how the figure of “several hundred people” was reached? The VPR scheme appears to be based on need, and that need is obviously increasing, as shown by the UNHCR’s call for more resettlement places. Has the Minister considered re-evaluating that “several hundred” figure upwards? If not, why not? What are the Government doing to ensure that their commitment is delivered and is not just an announcement?

It is worth re-rehearsing the reasons for beginning the scheme in the first place. In the run-up to agreeing to the VPR scheme, Ministers argued that it was more favourable for Syrian refugees to remain in the region and for us to supply aid rather than resettlement places. I and many others made the point that it was not an either/or but a both/and situation; doing one does not preclude the possibility of doing the other well in a targeted and effective way. Both are necessary to cope with the ongoing crisis and to support those countries in the region that are supporting by far the brunt of the refugee population.

The scheme was necessary for the following reasons: first, because some refugees simply cannot adequately be resettled in the region because of their particular vulnerability, as recognised by the name of the scheme; secondly, because, as Roland Schilling hinted at in the quote I read out, there is an acute need to show political solidarity with the countries most affected by the refugee crisis—if we are going to argue that they must keep open their borders so that refugees have a chance at life, we must do something to demonstrate our equal commitment; and thirdly, because if we do not provide safe routes for refugees to travel, they will find unsafe routes, as we are already seeing.

Neighbouring countries are struggling to cope with the numbers, resulting in increased numbers of refugees making dangerous journeys to Europe to seek safety. In 2013, the number of people who arrived in Europe by crossing the Mediterranean sea reached nearly 60,000—almost three times the number who arrived the previous year. That increase has been driven at least in part by the ever-increasing numbers of Syrians taking to boats in the Mediterranean, mostly departing from Libya, Egypt and Turkey. For example, last year Syrians were the No. 1 nationality arriving by sea, with one in four arrivals being Syrian or Palestinians from Syria. Many of them were children, with more than 3,600 Syrian children arriving in Italy last year alone, including 1,224 who were unaccompanied.

This year, the trend has continued. During the first six months of the year, 60,000 people arrived by sea in Italy alone: a fourfold increase on the same period in 2013. Those are not journeys that people choose to take lightly. They are the actions of people who are desperate and see no other option.

In December, some parliamentary colleagues and I boarded a migrant boat on the Thames outside Parliament for international migrants day. It was a tiny boat that had brought around 30 migrants into Lampedusa from Libya. We were given permission to have just eight on board after modifications for safety, and on a fine day on the Thames the boat rocked in ways that gave me a real insight into the dangers that people face travelling on an ocean in an overcrowded boat.

Resettlement programmes offer safe and legal routes for refugees to find safety in Europe. Each year, the UK takes around 750 resettled refugees through the gateway protection programme, something that we as a country should rightly be proud of. We cannot watch the tragedies happening in the ocean around Lampedusa and pretend that it does not have any relevance to us and that we bear no responsibility. Unless we are prepared to offer safe routes into Europe, we bear responsibility for some of those people who drown in the Mediterranean.

I want the Syrian vulnerable persons relocation scheme to be something we can be proud of, like the gateway protection programme. For that to be the case, the Government need to be bolder and more ambitious. The UNHCR now predicts there will be 4.1 million Syrian refugees by the end of this year. Through the vulnerable persons relocation scheme we are on course to have offered only 100 resettlement places by the end of this year. That is 0.002% of all Syrian refugees. We have to do better than that.

We have a proud history of offering sanctuary to those fleeing violence, and we have shown real leadership on humanitarian aid. It is time we lived up to that reputation here and resettled more refugees.

14:51

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to contribute to this debate. I congratulate the hon. Member for Brent Central (Sarah Teather) and thank her for all the hard work she does. I also thank her for her presentation to Westminster Hall today and for setting the scene for all of us here. No one present today will not support the hon. Lady’s argument; I am convinced of that. All of us have compassion and interest in others, and that is why we are here—to convey that through this debate. I was disappointed when the debate was postponed from last week, but at least we can revisit it today. Given the continuing violence in Syria, it is a matter of the highest importance, and it is good to make a contribution.

Each day, we read of the atrocities taking place in Syria, and a particular concern of mine is the despicable persecution of Christians in particular that is being carried out by ISIS. Syria continues to rise in the world watch list. The civil war has seen an increase in violence in general across the whole of Syria, but a rise in Islamist extremism is putting even greater pressure on Christians in Syria at the present time. Syria’s Christian minority, which primarily resides in the capital city, Damascus, is generally respected. That has been the case for many years. Christians make up 6.3% of the population, and they enjoy freedom and stability—at least they did—unparalleled throughout the middle east. Although there is freedom to worship, if Christians evangelise Muslims and share their faith openly, overt persecution is a possibility, but since the conflict began three years ago, the freedoms that Christians enjoyed have ceased to exist, and with increasing Islamising, Christians have faced some of the worst persecution.

I want to put the issue into perspective, because it very much ties in with the vulnerable persons relocation scheme. Killing of Christians in Syria more than doubled in 2013, with the charity group Open Doors confirming the figures as 2,123 compared with 1,201 in 2012. The head of research for Open Doors claimed that this was a minimum number, confirmed by media reports and its own research. The thought that that is just the minimum number of people who have been murdered because of what they believe is truly horrifying. The murder and killing of those in Syria who would benefit from the relocation scheme is something I want to highlight. The figures are testament to the need for us—I use “us” in the general sense, as the UK Government—to act.

It therefore should not come as a surprise that I welcome the relocation scheme and wish to see it extended and promoted, with more people getting the advantage of it. With sky-rocketing food prices and a shortage of water and other essentials, many Christians are facing malnutrition, as are others in Syria. Access to water, electricity and communications is very limited. It is perhaps the traumatised children of Christian families who suffer the greatest hardships. The hon. Member for Brent Central referred to the children in her speech, and we always see the children’s faces in any conflict. Whatever the war and whatever the reasons for it might be, it is the children, the women and mothers who suffer the most, and that is of great concern to all of us. Many face great danger, since rebel forces have even targeted Christian schools.

Terrorist groups have focused on people with Christian beliefs. They believe that Christians are westernised and are therefore supported by the United Kingdom and the USA, which is not the case. They are simply following their faith, as they should. An estimated 600,000 Christians have fled the country or lost their lives as a result of the civil war, and there are fears that Christianity will soon cease to exist in Syria. That is the magnitude of what has taken place. There is a massive humanitarian crisis taking place. The hon. Lady referred to the countries around Syria that are taking many of the refugees. That is having an impact upon those countries’ ability to look after not only their own people, but those who come to the country. That must be addressed. Although it might not be his direct responsibility, I am sure the Minister can indicate what help can be given in relation to health and hygiene and the prevailing issues of fresh water and sanitation.

For those reasons I fully support the scheme, although I recognise the importance of conducting appropriate and necessary checks to identify those who are most at risk, as well as working alongside migration and local authorities to ensure that our border control remains a priority. We understand the need for border control, but there is also a need to be compassionate and understanding towards those who are under direct pressure and who need help now. Again, I hope the Minister will be able to address the issue. I have no doubt that he will, but I would like to hear a wee bit more about what the Government are doing.

The UNHCR representative to the UK, Roland Schilling, stated:

“Humanitarian admissions and resettlement are part of our protection strategy for Syrian refugees.”

There is a clear role being played. He continued:

“As much as they provide solutions for vulnerable individuals and families, these efforts are also a concrete gesture of solidarity and burden sharing with countries in the region currently hosting more than two and a half million Syrian refugees.”

It is important that we all take a direct interest in how we can help the Syrian refugees. Any man of a compassionate hue recognises those who are less well off and in need of help, and, without a doubt, our country, the United Kingdom, is one of the most generous countries in the world in terms of both the aid and support that it provides to those in need around the world. It is always good to know that we have kept our commitment. The Government and the Department for International Development have kept their commitments and sent aid to other countries. Christian Aid is grateful and supportive of that as well.

The first group of Syrians have arrived in the United Kingdom, and I trust that the Government and local authorities will do all that they can to integrate them into the community. I am pleased that the families who have suffered so greatly will now experience both peace and the freedoms that they have been denied. It is important that we as a country help those people to integrate into society here. I know that MPs will always support that, but I urge everyone, including our constituents, to support those people and make sure they are made very much at home.

Critics of the scheme—and there are critics—need not fear that the UK will be inundated with Syrian migrants, because the latest figures have proved that that is not the case. If the figures in The Guardian are correct—the Minister will confirm the figures or not—only 24 Syrians have come to the UK under the vulnerable persons scheme. Many of the critics are simply trying to spread fear in the same way they did when we opened our borders to Romanians earlier this year. There is no comparison between the two countries. I always despair when people do not see the real issues of those who most need help.

Latest figures suggest that Sweden and Germany have received the highest number of asylum applications, with just over 24,000 and 23,000 applications respectively, compared to the figure for the UK that the hon. Lady referred to—3,947 applications. Given that 2.8 million Syrians have fled the country since the war began three years ago, these numbers are small indeed and it is time that we as a country helped more, or at least considered the need to increase the number of applications to the UK. I know that Opposition and Government Members are keen to see the Government expand that number, and I would also like to see it expanded.

The Minister himself has noted previously that our country has a proud history of granting protection to those who need it; he is on record as saying that and I support his comments entirely. We in the United Kingdom of Great Britain and Northern Ireland have provided nearly £600 million in relief efforts, and to conclude today I will say that the greatest contribution that we can now make is to provide safe homes and environments for those who are most at risk. I am delighted to support this scheme and I commend the hon. Lady for securing this debate on it and giving us a chance to contribute. I look forward to the responses of both the shadow Minister and the Minister. Like others in this House, I will continue to seek assurances about the protection of Christians and those who are most at risk in Syria, and indeed across the whole world.

15:00

[John McDonnell (Hayes and Harlington) (Lab)]

I do not want to bring a discordant note to the debate. I congratulate the hon. Member for Brent Central (Sarah Teather) on all the superb work that she has done for refugees; she will be a loss to this House when she goes. However, she mentioned the proud tradition of this country in rising to the challenge of refugees, and the hon. Member for Strangford (Jim Shannon) has just echoed her. To be frank, there is not a proud tradition; I do not accept the claim that there is. The one time that this country was asked to respond to the biggest refugee crisis in Europe was in 1939-40 and we failed to respond. As a result, large numbers of Jewish families, including their children, went to the gas chambers. I thought that we had learned the lesson then; I thought that we had learned that when there is an international crisis such as this one in Syria, our response is not only about providing financial help but about providing refuge. And to be frank, it is shaming of this country that among the European countries our performance is possibly the worst.

Here are the numbers. First, 50 families have been received here. And the other figures from the House of Commons Library that have been quoted today are absolutely staggering. The figures that the hon. Lady set out are just horrendous. Also, we can look at what the countries surrounding Syria have to face. There are 1 million Syrian refugees in Turkey; 400,000 in Iraq, which itself is in crisis; and 800,000 in Jordan, which has a population of 6.3 million, so a sixth of the country’s population now are refugees; and in Lebanon, there are 1.6 million refugees in a population of 4.5 million.

Here we are, a country of 60 million or 65 million people, and we accept 50 refugees. That is shaming—absolutely shaming. Providing financial assistance of £600 million is welcome, but what people are desperate for—we are talking about the most vulnerable groups within this category of those seeking asylum—is safety, and it is clearly not being provided, either within Syria or outside it. There are now 6.5 million Syrians who are internally displaced, and there were 2.4 million Syrians who had fled abroad but we think that the figure is now 2.8 million, of whom 2 million are children who cannot even go to school as a result of their displacement.

What those people want is somewhere to be safe and in many ways that means leaving the region, because it looks as though the accommodation and provisions within the surrounding countries are so overwhelmed that those countries cannot even provide basic shelter, education and—in some instances—supplies of food. So it is no wonder that people are desperately trying to get across the Mediterranean, risking their own lives and those of their family and children in boats. And yes, I was there on that boat that the hon. Lady referred to. In fact, it was relatively seaworthy in comparison with what we know of the boats that have been used to try and cross the Mediterranean.

It is no wonder that these people are desperate, yet we provide—so far—50 places. Some of the people who have already applied and who are being considered in the figures up to 4,000 are people who are already here and who cannot return to Syria, so that is not exactly “receiving” people either. I do not understand why we have responded in so small a way. I just wonder: is there a figure that the Government are willing to go to? Antonio Guterres set the goal at 30,000. Is the figure that we are going to accept 10,000? Or is it our objective to accept a higher goal? And have we taken only 50 people because of processing issues, or are there other obstacles that have so far restricted the number of people who can take up the opportunity to come to this country? What is the problem? Is there a target figure? If there is, let us hear it, and if there is not, what is preventing us from receiving more people? This situation is a disgrace. When people are absolutely desperate, this is a disgrace and we need to look at the system that is failing to enable people to come here and find the refuge that they seek.

As I say, our performance is absolutely shaming. This is not a party political point; this is a point that, as the hon. Member for Strangford said, has been made across the House in previous debates. We have been willing to say that we want to do more. If there is an administrative problem let us sort it out, but if it is a policy issue then let us have that out in a debate out in the open. At least let us confront the issue rather than letting the situation drag on, because these people are absolutely desperate and this level of refuge and support that we, the sixth or seventh richest country in the world, are providing by way of direct assistance and by allowing people to come here, is just not acceptable. It is not civilised behaviour. As a result of the performance of the programmes that we are considering, we are not meeting our obligations to fellow human beings.

I would welcome hearing the Government’s response to the question: what are we going to do about it? What sort of numbers do we aim to achieve by the end of this year? What emergency measures need to be put in place to improve our performance on this matter, because we are letting down not only the Syrians but our other European partners? And we will look back on this period and wish that we had done more, done it more effectively and done it much more speedily.

14:59

[Mr David Hanson (Delyn) (Lab)]

It is a pleasure to serve under your chairmanship today, Mr Dobbin.

I begin by thanking the hon. Member for Brent Central (Sarah Teather) for raising this issue. It is an important one, and we need to focus on the Government’s response to what is an extremely serious crisis in the middle east. I listened with great interest to her account of her visit to the region. I have not been there in the current circumstances, but she painted a very clear picture of the pressures that exist.

Nevertheless, I genuinely cannot begin to understand what it means to be lifted out of a city such as Aleppo, where I may have lived a perfectly normal and busy working life, and to be removed from my country in circumstances of civil war before being placed in a foreign country, where all elements of humanity have gone and where there is a major humanitarian effort just to maintain a basic standard of living. Even in my constituency, which is in the far-flung regions of north Wales, there are people who have been in touch with me to tell me about the circumstances of their relatives in Syria who have been displaced in cities such as Aleppo. The hon. Lady has therefore done a service in bringing this issue to the House today.

I also took on board what my hon. Friend the Member for Hayes and Harlington (John McDonnell) said about his understanding of the experience of people in Syria. And the hon. Member for Strangford (Jim Shannon) raised the issue of persecution, particularly of Christians, which is an important one that we need to reflect upon and consider in the context of today’s debate. The hon. Member for East Londonderry (Mr Campbell) said that a wider issue—the political situation in Syria—needs to be resolved. It does, to stop the haemorrhaging of refugees from Syria in the first place.

I pay tribute to the Government for their humanitarian response in-region. I think that the Department for International Development is the second biggest donor in the world in terms of in-region activity, which is extremely good and positive. However, I go back to what my hon. Friend the Member for Hayes and Harlington and others have said: people are leaving the region because they cannot live there. They do not wish to leave; they want to be back in the region where they have lived, grown up and made their lives and careers. For them to do that, we have to respond in a helpful way and achieve the humanitarian aims we have set.

Since the conflict in Syria began more than three years ago, some 2.8 million people have fled the country. The vast majority are being sheltered by a small number of neighbouring countries, and although the international effort is helping, those countries are now struggling to cope. Lebanon, which has been mentioned, is one of the most densely populated countries in the world. It is now sheltering more than 1.1 million refugees from the Syrian conflict. The hon. Member for Brent Central mentioned Jordan, which was sheltering about 500,000 people in September 2013.

More than 50% of Syrian refugees are children. Last year, the United Nations High Commissioner for Refugees, Mr Antonio Guterres, said:

“Syria has become the great tragedy of this century—a disgraceful humanitarian calamity with suffering and displacement unparalleled in recent history.”

Earlier this year, I met Roland Schilling, the UNHCR’s UK representative, and I have met the Refugee Council, to see what we can do to take matters forward.

Members will know that there was pressure for us to adopt a scheme to allow refugees to come to the UK. Last Christmas, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) called publicly for Ministers to accept up to 500 Syrian refugees who met strict criteria—that they were torture victims, people with family connections in Britain or women and girls at high risk. She did that in response to the UN call for assistance, and we have been given the figures for other countries, but they are worth repeating. Some 21 countries have responded to the UN call for refugees to be accepted. Some 20,000 have been accepted by Germany, 1,500 by Austria, 1,200 by Sweden and 1,000 by Norway. The United States has given an open-ended commitment on resettlement. The many other countries that have taken refugees under the UN scheme include Ireland, Liechtenstein, Luxembourg, the Netherlands, New Zealand, Portugal, Spain, Switzerland, France, Finland, Denmark, Canada, Belgium and Belarus. We have to respond, and I hope the Government will, to ensure we play our role in meeting those international obligations.

The Government did not initially warm to my right hon. Friend’s call for 500 refugees to be accepted. We had a statement in the Commons, Home Office questions and an Opposition day debate calling for the matter to be addressed. We had pressure from Government Back Benchers during the statement and the Opposition day debate. During Prime Minister’s questions, pressure was put on the Prime Minister by not only my right hon. Friend the Leader of the Opposition, but Members on both sides of the House.

There was concerted pressure, but the former Immigration Minister, the hon. Member for Forest of Dean (Mr Harper), said any proposals would be a “token” gesture—that was the word that appeared in Hansard. However, the Government ultimately announced in a statement that they would accept refugees, reflecting UN proposals. As my hon. Friend the Member for Hayes and Harlington said, therefore, there is not a proud tradition on this issue. As a result of pressure from outside and inside the House, the Government accepted the need to act, and I was pleased when they did act.

I want to help the Minister, but my concern is that, as a result of the statement in January about accepting refugees, we have not seen materialise the sort of numbers—I am waiting for more information later—that would meet even the obligations my right hon. Friend the Member for Normanton, Pontefract and Castleford spoke of last Christmas.

[Jim Shannon]

I think there is a willingness in the nation we represent—the United Kingdom of Great Britain and Northern Ireland—to see greater numbers coming here from Syria. If that is what I and other Members feel, it is up to the Government, and the Minister in particular, to respond with the numbers we wish to see coming. That is the issue: if people want this, the Government should reflect that.

[Mr Hanson]

I am grateful to my hon. Friend—I hope I can call him that—for raising that issue. We need to put on record the fact that refugee status is not the same as immigration. There is general concern about immigration, but these people would, I believe, ultimately want to return to their home nation when the situation there was settled and the conflict that drove them out of their home nation in the first place was resolved. There is a willingness to help, and there has been historically.

[Sarah Teather]

Members may not be aware of this, but a poll was done of first-time voters during refugee week. It showed that 70% supported the Government’s decision to resettle in the UK some of the most vulnerable Syrian refugees. I just want to give the Government some confidence that this proposal is popular; they are not working against a tide of popular opinion—people genuinely want this to happen.

[Mr Hanson]

I am grateful to the hon. Lady. I appreciate the way in which she has phrased her remarks, although Governments sometimes have to do things that are unpopular, even if those are the right things to do. That aside, this is the right thing to do.

In the short time I have, I want to test the Minister on a number of the practicalities of the vulnerable persons relocation scheme. First, I would genuinely welcome an update on how many people have arrived under the scheme, which was announced in January. The last answer to a parliamentary question on this issue was on 24 June—three weeks ago—and it indicated that 50 individuals had arrived as part of the scheme. I would welcome confirmation of how many have arrived as of 16 July. Like other hon. Members, I would also welcome an assessment of how many people are in the pipeline and may arrive in the next six months.

I accept, although I may not agree it was justified, that there were difficulties in establishing the Government’s scheme, rather than using the UN’s existing scheme. I would welcome an update from the Minister on whether proper assessments are in place to deliver a number of individuals. I would also welcome his assessment of how many people will go through the system and arrive in the UK in not only the next six months, but up to the general election next May, although we cannot commit beyond that.

I would welcome the Minister’s assessment of how many local authorities have signed up to assist with the Government’s scheme. I asked the Minister that question earlier this year, but he was unable to given an indication. He may not want to name the local authorities, but it would be helpful if he said that there was a certain number, that they were in London, that they were metropolitan or regional authorities, or that they were in Scotland, Wales or Northern Ireland, just so that we can get some flavour of how the scheme will progress downstream. When people arrive, they have to be dispersed and to have accommodation.

I would welcome an assessment of whether there are problems with local authorities. I have picked up that they may be worried about their ongoing costs and whether the Government will commit to meet those costs beyond a particular time. I would also welcome the Minister’s comments on what he regards as the minimum standard of support for those who arrive. The scheme is different from the UN one, and I would welcome his outlining the support he anticipates those arriving in the UK will receive from the Government.

In a further answer to a parliamentary question from me, the Minister said:

“Costs will be recovered wherever possible, including from the EU.”—[Official Report, 28 April 2014; Vol. 579, c. 427W.]

I would welcome an indication from the Minister of how much resource the Government have spent to date on the vulnerable persons relocation scheme, what he expects to spend by the end of the first full financial year, which started in April, and whether he expects to recoup any or all of that money from the EU.

I would also welcome an overall assessment of the longer-term picture. We do not know who will be in government post-May 2015, but does the Minister believe, on the basis of the position today, that the scheme will progress after that time? If so, how will it progress and for how long, given the still devastating political instability in the region? I believe that we need to respond in a positive way, as Opposition Members and the hon. Member for Brent Central have said. She has performed a service in bringing the matter before the House today. The House has been pressing the Government to say how their aspirations are being met on the ground and what support—when, where, how and for how many—they are giving through the scheme. I look forward with interest to hearing the Minister’s response.

15:19

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

I congratulate my hon. Friend the Member for Brent Central (Sarah Teather) on securing a debate on such an important matter. We have benefited from her direct testimony of visits to refugee camps, in which she explained the conditions and the situation. I recognise the passion, commitment and focus that she has brought to the issue, not just in the past few months but for a considerable time. She is committed to dealing with the refugee issue, which has motivated her to obtain this afternoon’s debate.

My hon. Friend made important points about the crisis in Syria, together with the continuing instability in Iraq, which the hon. Member for Strangford (Jim Shannon) also pointed out. It is right that the question of what support we provide to those in need provokes passion, and that was exemplified by the speech of the hon. Member for Hayes and Harlington (John McDonnell) about the contribution that this country should make to supporting people who are vulnerable and in need, and who are suffering during a huge humanitarian crisis.

I am sure that all hon. Members share our deep concern about the appalling violence in Syria and the suffering and hardship that that has caused for millions of people. Nearly 3 million refugees have now been displaced into surrounding countries and 6.4 million people are internally displaced inside Syria; 10.8 million require humanitarian aid. The scale of that tragedy caused my hon. Friend the Member for Brent Central to pause in her speech, and it is worth pausing and reflecting on how staggering the figures are. The Government have always been clear that the crisis is of international proportions and that it needs a fitting response from the UK and the international community.

The Government have three clear priorities in Syria: supporting efforts to find a political solution to the conflict; alleviating suffering; and protecting UK security by tackling extremism and getting rid of Assad’s chemical weapons. I strongly believe that only a political settlement will ensure that Syrian families who have fled the crisis can return to their homes and livelihoods in peace. In the meantime, only humanitarian aid can help the majority of those in the region who so desperately need our help. Aid is also the best way to ease the enormous burden on Syria’s neighbours, and I think that was clear from what my hon. Friend said about her visit to Jordan and the pressure that the situation is causing in the countries that are most generously hosting and supporting refugees.

That is why the UK has pledged £600 million to the regional relief effort, making us the largest bilateral donor after the USA. The right hon. Member for Delyn (Mr Hanson) acknowledged and appraised that fact fairly. UK funding is helping to support hundreds of thousands of refugees in Syria and neighbouring countries. The hon. Member for Strangford was seeking detail about that in some of his questions. For example, the UK provides food for up to 535,000 people a month, drinking water for more than 1.5 million and funding for more than 300,000 medical consultations. I think that that is the largest humanitarian aid effort that the UK Government have ever attempted, which shows the huge scale of the tragedy that has unfolded before us.

It is important to recognise the way in which aid can be focused on some of the most vulnerable people. My hon. Friend the Member for Brent Central highlighted the situation of children, and their lack of education. The UK helped to launch and mobilise international support for UNICEF’s “no lost generation” initiative, which provides education, psycho-social support and protection for Syrian children.

Humanitarian aid is the best way to ensure that the UK’s help has the greatest impact for Syrian refugees and their host countries. Compared with aid, resettlement can only ever support a comparatively small number of people in need. However, we recognise that there are some particularly vulnerable people who cannot be supported effectively in the region. That is why, in January, the Home Secretary launched the Syrian vulnerable persons relocation scheme to provide sanctuary in the UK for displaced Syrians who are most at risk.

We are working closely with the United Nations High Commissioner for Refugees to identify the people who need our help most. In particular, the scheme prioritises support for those with serious medical needs, survivors of torture and violence, and women and children at risk. Beneficiaries of the scheme are granted five years’ humanitarian protection, with all the rights and benefits that go with that status, including access to public funds, access to the labour market and the possibility of family reunion. All people who arrive under the scheme also receive a 12-month package of integration support to help them to start to build a new life in the UK.

I announced the scheme in January and am pleased to say that the first group arrived at the end of March, just eight weeks after that announcement. Groups are now arriving in the UK on a monthly basis. We expect more arrivals in July and August, and we intend to relocate two or three families a month. The figure of 50 people that has been cited is the number who had come by the end of June. We intend to provide the House with quarterly updates; as we publish transparency data in the Home Office, we intend to provide an update on the numbers who have benefited from the scheme, to keep the House and the public updated. Those who have benefited include a number of adults and children with severe medical needs, who could not get the treatment they desperately needed in the region.

The right hon. Member for Delyn asked me to provide estimates of future cost, but that is difficult, given that the needs will relate to particular families’ and individuals’ specific circumstances. We are not working on a quota at all. Rather, we are working on the basis of need with the UNHCR. Given the severe vulnerabilities of the beneficiaries, it is important that we ensure that the support and accommodation they need is in place before they arrive. As I said, we are working closely with UNHCR, the International Organisation for Migration and local authority partners to achieve that.

[Mr Hanson]

Will the Minister say when the first quarterly update is due, from today?

[James Brokenshire]

Yes, the first update is due in August. We are providing quarterly updates on that basis, in that regular pattern. The right hon. Gentleman will be able to see, quarterly, on our transparency release, the numbers of people who have benefited from the scheme. The intent is to provide a regular update in that way and that is fair and appropriate.

[Jim Shannon]

The shadow Minister mentioned regional variations. Has there been any discussion with the devolved Assemblies in Northern Ireland, Scotland and Wales, to see whether they can contribute to the resettlement of the refugees, at least in the short term? I am keen to know whether that is so. If there has not been such a discussion, I am keen that there should be.

[James Brokenshire]

Of course. I am keen to support more local authorities signing up to the scheme. Across the UK, a number of local authorities have already indicated their willingness and we are in discussions with others that have expressed an interest. Obviously, the scheme is based on vulnerability, including women and children at risk, medical needs and survivors of torture and violence.

[Mr Andrew Smith (Oxford East) (Lab)]

I apologise, Mr Dobbin; I could not be here at the beginning of the debate due to a constituency commitment.

Will the Minister say a bit more about the process and the criteria by which the number of vulnerable cases is identified? It is difficult to imagine that there are not very many more who would fit the criteria, but who we are not taking. I am interested in liaison with the UN and how the numbers are determined.

[James Brokenshire]

In respect of liaison, we are working with the UN to identify families and then to ensure that the support that they need is there before they arrive. As I said, two to three families are arriving steadily each month, under the regular plan for continuation of the scheme that we have in place. I will come to the overall numbers and reaffirm the commitment made by the Home Secretary in that regard.

The scheme is to ensure that families receive the support that they need in local areas, given their vulnerability, and central Government are responsible for its overall funding. However, as was mentioned, we will recover costs, if possible, from the EU and other funding sources, and work and discussions continue in that regard.

The Government have delivered what we promised in January: a bespoke scheme to complement the UK’s humanitarian aid, focused on giving sanctuary to the most vulnerable refugees and ensuring they get all the care and support they need in the UK.

[Sarah Teather]

I want to press the Minister a little further, because there is concern about numbers. I want to get from him a sense of whether this scheme is proceeding at the pace he expected. Was the Government’s initial ambition simply that we would only resettle two or three a month or was it higher? Has there been a problem and, if there has, what is it and what are the Government doing to try to resolve it? Two to three families a month is a small number; even my own council manages to move more people into accommodation per month, and this is across the whole of Britain. What is the problem?

[James Brokenshire]

To respond directly to my hon. Friend, we said we would support several hundred of the most vulnerable Syrians over the next three years. It was always envisaged that there would be a focus on a steady process of identifying families and seeing that they have the support that they need to be settled, working with the UNCHR, delivering the commitment to taking several hundred over the next three years. I believe that we remain on course to deliver on the commitment as a result of the excellent collaboration with the UNHCR and the International Organisation for Migration.

[John McDonnell]

I calculate that there will not be several hundred if we are taking only two to three a month, but never mind. How did we arrive at several hundred? What assessment was made about only several hundred wanting to come here or whether we would cope with that demand?

[James Brokenshire]

That was the basis of the statement made by the Home Secretary in January, on assessing specific needs and the ability to ensure that resources and capabilities could be in place to see that some challenged family groups—it is groups that will see this continued roll-out through the coming months—are supported, to ensure that there is appropriate integration.

I believe that we remain on track to meet the commitments that we stated to the House at the beginning of January. That is obviously in addition to the places available to refugees of other nationalities under our established programmes, which offer the opportunity of a new life in the UK for those in long-term, protracted refugee situations, for whom the only viable long-term solution is resettlement.

[Sarah Teather]

The Minister did not quite answer the question put by the hon. Member for Hayes and Harlington (John McDonnell), which I also asked. The Minister mentioned the basis of the Government’s statement, but did not explain how we arrived at the position of saying that we would support several hundred, as opposed to several thousand or tens of thousands. Why that particular figure?

[James Brokenshire]

Clearly, the Government considered what would be a suitable figure, to ensure that the scheme could deliver on its aims and ambitions to meet the needs of some of the most challenged and vulnerable, including some who need specific medical care and assistance, and ensure that they could be resettled within the UK with that support and that package. It was on that basis that the assessment and the programme was drawn up.

Given their vulnerabilities, it is essential that we give beneficiaries of the scheme the specific care they need as soon as they arrive in the UK. We have therefore had to ensure that the support and accommodation they need is properly in place before arrival, and we have been liaising, in the way I mentioned, to achieve this. Successful delivery of the scheme depends on the capacity of local authorities and health bodies to provide the high level of support required by beneficiaries of the scheme. Our emphasis is therefore on quality, not quantity. We are extraordinarily grateful to local authorities and health and education partners who have supported the scheme; they have played a vital role in helping those arriving under the scheme settle into a new, safe life in the UK.

We are, of course, continuing to consider Syrian asylum claims under our normal rules. Since the crisis began in 2011, we have received over 4,000 Syrian asylum claims. During the same time, we have granted asylum or other forms of leave to more than 2,700 Syrian nationals and dependants. We also operate an immigration concession for Syrian nationals who are already legally present in the UK, to enable them to extend their stay or switch immigration category without leaving the UK.

[Sarah Teather]

I should like to take the Minister back a little and question him on local authorities and health services. What is his Department doing to encourage local authorities to take more people? Is he having difficulty persuading them? If so, are there any particular barriers? Knowing that would help those of us who are interested in this issue, partly to see whether there might be anything we can do to help encourage local authorities increase interest. Will he give a bit more information on his discussions in that regard?

[James Brokenshire]

There have been discussions with local authorities, a number of which have been extraordinarily generous and positive in taking part in the scheme. As I said, other local authorities are expressing an interest in joining the scheme. Hon. Members have commented on individuals who have volunteered their homes and their personal support.

Having seen correspondence on my ministerial desk, I am struck by the generosity and desire of so many people wanting personally to see what they can do to provide support and assist in this appalling crisis. There have been ongoing conversations. I am confident that more authorities are coming forward, that we are able to house vulnerable Syrians fleeing the conflict and that we will provide support for them in different parts of the country.

We are, of course, aware that the international community has responded to the crisis in different ways. In the face of such an enormous challenge, it is right that the international community should use all means to relieve the suffering of the Syrian people. It is ultimately for individual states to decide for themselves how they help those displaced by the crisis, but we would not want to see a strengthened focus on resettlement detract from the international community’s continued relief effort to support the majority of refugees who remain in the region and their host countries. I do not see that it has detracted from that, but we need to retain focus on that.

I am conscious that the hon. Member for Strangford is no longer in his place, but I wanted to respond to the point he raised about protecting Christians in Syria. I share his concerns about those who are at risk due to the crisis, including Syrian Christians. There are a growing number of reports of Christians and other minority groups being targeted in Syria. The Syrian National Coalition has responded to those reports, emphasising that they are contrary to the coalition’s vision of a future Syria that protects pluralism and the rights of all its citizens. In that context, it is important to note that it is not only Christians who are being identified, brutalised and murdered as a consequence of their faith; we are aware of other minority communities that are also being targeted on that basis.

It is important to recognise that a brutalising group such as the Islamic State of Iraq and the Levant does not seek to concern itself in virtually anything. ISIL is a brutal organisation that kills those who do not hold the perverse beliefs that it puts forward. That means killing Muslims, whether Shi’a or Sunni, and other minority groups. That is why it is so important that we support the international efforts to resolve the crisis in Syria and that we support the Government of Iraq in finding a solution for that country that brings together all faiths and confronts the challenge that ISIL has brought forward.

To come back to the focus of the debate secured by my hon. Friend the Member for Brent Central, we believe that the vulnerable persons relocation scheme will make a real difference to the lives of the most vulnerable refugees, who can only be supported in countries such as the UK. I am delighted to see those who have arrived so far settling into their new homes and receiving the care they need, and I look forward to us welcoming further families to the UK as the scheme progresses. We must not, however, lose sight of the majority, who remain in the region. Continuing our efforts to help them must remain our highest priority, along with providing a long-term political solution for Syria.

15:42

Sitting suspended.

Welfare Reform (Cumbria)

Wednesday 16th July 2014 Westminster Hall

16:30

[Mr Jamie Reed (Copeland) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Dobbin, in this brief debate. The social cost of the current Government’s welfare reforms is extremely high and is being keenly felt in west Cumbria. The Welfare Reform Act received Royal Assent in March 2012 and has now been in force for more than a year. This debate, however brief, is crucial in assessing some of the devastating consequences of that Act on the people and communities of west Cumbria.

Before I begin, I would like to express my thanks to the Right Rev. James Newcome, the Bishop of Carlisle, to Willie Slavin, an incredible community champion in my constituency, and for the work of the Cumbria Welfare Reform Commission. The report that it has produced forensically details the impact of the Government’s reforms and informs much of what I wish to say. If the Minister has not had the opportunity to read that report, I hope that she will.

In the introduction to the commission’s report, the Bishop of Carlisle makes it clear that it is not a party political report. He states:

“We hope that our findings and recommendations will be of general use to politicians, civil servants, volunteers and benefit claimants alike. We also believe that, if implemented, those recommendations would ultimately help to save money rather than costing the Exchequer more.”

That is a crucial point in the entire debate.

I also thank the many people in west Cumbria and, indeed, throughout the country who do so much to help those in need. Staff in support roles and the many volunteers who do their best to ensure that those who need support get it deserve the highest praise. I dread to think how much worse the situation would be if we were left without their compassion and commitment.

The reforms seen in the past two years have been all-encompassing. There have been changes to support for in-work benefits and unemployed adults, changes to support for adults with disabilities, the introduction of the bedroom tax and more. The impact of these on individuals and families has been extremely tough, and I will touch on each of them in the debate. But that is not all; the impact on households resonates throughout the entire community and beyond.

The cumulative impact on individual families in a community can have major consequences for local esteem, pride, self-worth and, of course, the local economy. To understand fully the ramifications of what are ham-fisted reforms, we must examine not only the financial hardship that they are causing, but the damage done to communities such as mine and to the people who live in them. The harrowing testimonies of my constituents and the work done by the Cumbria Welfare Reform Commission are tangible evidence that families and communities in west Cumbria are feeling the painful brunt of the Government’s reforms.

The Opposition have consistently supported the principle of universal credit. That has the potential to simplify the working age benefits system and to make it much clearer to people how their financial position would change on moving from unemployment into work. That is right and proper, and we completely welcome it. However, that will be possible only if it is implemented properly and if there is a significant improvement in the relationship between the Department for Work and Pensions and claimants. The Cumbria Welfare Reform Commission highlighted serious concerns on how that has been done to date.

The Government’s welfare reforms will require enormous local capacity to ensure that changes are delivered with minimal disruption, but the Cumbria Welfare Reform Commission report details a truly worrying situation that will inevitably lead to many serious problems when universal credit is eventually rolled out in late 2014 or early next year. The commission states that locally

“Commissioners heard of significant capacity problems within DWP, and many current cases of delays in deciding claims. DWP have recently reduced staffing levels in Cumbria and Commissioners were told that while many back to work advisers genuinely wanted to help, claimants felt they were ‘overwhelmed’. One adviser said he had 400 cases per fortnight; one client said he had not seen an adviser in a year.”

The situation will only get worse. The success of any reforms will live or die by the ease—or, in this case, the difficulty—of getting access to services, advice and support. It is clear that before universal credit is even rolled out, the Government are failing my constituents.

One jobseeker’s allowance claimant told the commission that

“the system is in meltdown...I am no longer able to contact local jobcentre. There is a national helpline but it has long delays. I can’t afford to stay on the phone for hours”.

A young mother who had previously claimed JSA commented:

“I hate the way it’s”—

she was referring to the DWP—

“run…they don’t care…you phone the call centre and they say ‘it’s not our fault…the computer’s not working’...I hate being on benefits”.

A welfare adviser in Whitehaven slammed access to over-the-phone advice, saying:

“DWP call centre—it’s the most expensive way I know to listen to Vivaldi.”

The situation cannot be allowed to continue. The Minister must address these points in her response. I hope that if she cannot, she will commit to writing to me to detail the steps that she will take to improve the situation.

A breakdown in the relationship between claimants and clients and the DWP can have dire consequences. When people find themselves in times of hardship, additional stress and worry can cause significant additional distress. That brings me to an issue that has had an impact on many of my constituents: sanctions. The chief executive of Citizens Advice, Gillian Guy, when describing the current system of sanctions, said:

“The regime is not only self-defeating, it is also poorly administered.”

The evidence just does not exist to support the imposition of disproportionately heavy sanctions. A Joseph Rowntree Foundation international review shows the limited benefits of that, and the Cumbria commission found that research conducted in the United States that suggests some success from sanctions in getting people off benefits is down to claimants dropping out of the system altogether, rather than going into paid employment of any kind. Studies from Europe also show that the use of sanctions is likely to lead to worse employment outcomes, such as lower pay for benefit claimants when they do eventually get into work. The Cumbria commission argues:

“This is because the threat or use of sanctions makes people take lower-quality jobs than if they had been allowed to wait for a better opportunity.”

With regard to zero-hours contracts, the commission states:

“At present their wages plus benefits still leave many unable to pay the basics such as food and shelter. In particular there is a risk of a vicious circle whereby people on a zero hours contract can have their benefits cut if they can’t demonstrate that they can look for other work, but not only does uncertainty about hours required to work in these contracts make this availability difficult, but some employers use exclusivity clauses in their own contracts preventing employees from taking on other work in the rest of their time.”

That paints a desperate picture of the working poor.

In a damning indictment of Government policy, the Department told the Cumbria commission that sanctions

“make the vulnerable more vulnerable”.

How can the Minister allow that to continue? What will the Government do to address it? The Government definition of “vulnerable” is:

“An individual who is identified as having complex needs and/or requires additional support to enable them to access DWP benefits and use our services”.

That is too narrow a definition and will result in many people needing additional support falling through the cracks. The commission found that

“many people sanctioned in recent months have been sanctioned despite exhibiting vulnerability—indeed the sanctioning is often a result of such an expression.”

The impact of welfare reforms on Cumbria’s adults with disabilities is profound, too. Disabled people are twice as likely as non-disabled people to live in poverty; that is well understood and accepted across the House. Those unable to work are disproportionately dependent on benefit rates and therefore, obviously—QED—feel the changes to benefits more acutely than any other section of society. The Government have estimated that, through the introduction of the personal independence payment, the claimant count will fall by 23% compared with the number on disability living allowance. In Cumbria, there are 4,300 DLA claimants, so at least 1,000 individuals will lose their support.

The inquiry by Baroness Grey-Thompson found that severely disabled people living alone or with only a young carer will lose between £28 and £58 a week. One hundred thousand disabled children stand to lose £28 a week, and 116,000 disabled people who work will lose about £40 a week. Those are significant sums, and losing those amounts will have serious consequences on claimants and their families. They are outside this detached, self-obsessed, increasingly weird Westminster club. Let us not forget what is happening to people out there in the real world.

The commission reports:

“Where there are delays and stoppage of benefits, some families also face financial meltdown, leaning on family and friends for money and often becoming dependent on doorstep lenders.”

That has the potential to create a perfect storm of financial hardship, no support and mounting debt. It is a scenario that the Government’s reforms are actively facilitating.

That brings me to the impact of changes to housing benefit. The biggest reform in this field is clearly the Government’s bedroom tax, which affects approximately 4,750 households across Cumbria. It is simply an ill- thought-out policy. The unintended and far-reaching consequences of the bedroom tax are well known. The commission undertook to find out why people “under-occupy”. The vast majority of people do not under-occupy consciously; they do not choose to do it. They find themselves in that position usually as a result of family breakdown, children leaving home or the death of a family member. The Government should realise that after such events, most people would prefer to remain in their own homes close to neighbours, their family and the familiar support networks on which they rely.

Government figures show that two thirds of those who are affected are disabled. When the cumulative impact of the welfare reforms is assessed, it becomes crystal clear why so many of those people are facing serious financial hardship. For many, a spare room is not a luxury that they do not want to sacrifice, but an absolute necessity. I have heard reports of a recently separated father having to sleep on his sofa so that his children can have a bed to sleep in when they visit, and of returning university students who cannot remain in halls of residence outside term time but who cannot move back in with their parents because there is no longer a room for them. I have heard in my constituency offices about young soldiers returning home from conflicts in the middle east and having nowhere to stay.

The Government’s bedroom tax is a blunt and ineffective tool. Families who are forced to move out of social housing into the private rented sector will cost the taxpayer more in higher rents, and more will be lost as a result of arrears and evictions. The National Housing Federation states that two thirds of those who are hit by the bedroom tax cannot find the money to pay their rent, and one in seven are at risk of eviction. Consider that for a moment. That is the clear effect of Government policy. This has been said by many of my colleagues over recent years, but it is worth repeating: let there be no doubt that the next Labour Government will repeal the bedroom tax. As I have said, there is not only a financial cost to the families who are affected, but a cost to our local communities, as I see in my own community.

The report by the Cumbria Welfare Reform Commission highlights a deliberate policy to reduce child density in areas of concentrated social housing, to reduce and manage antisocial behaviour and to create more constructive living environments. The bedroom tax completely undermines those efforts. I am sure the Minister will claim that it is not a tax, but it is. What else could it be? People are forced to pay. They cannot move to a smaller property because there are no smaller properties. In Cumbria, for housing associations to house all under-occupying residents correctly and appropriately, it would be necessary to rebuild the equivalent of 7.5% of our total rented stock as one-bedroom properties.

The Department for Work and Pensions report “Evaluation of Removal of the Spare Room Subsidy”, which was published yesterday, shows that only 4.6% of claimants affected have moved to a smaller home in the social sector. The report contains some startling statistics. For example, 80% of affected claimants say that it is difficult to afford the amount of rent they pay. More than half of claimants report that they often run out of money before the end of the week or month. I sincerely hope the Minister can offer some meaningful advice to people who cannot afford the bedroom tax but cannot move because there is no other housing available.

The impact of the reforms can be seen clearly in my constituency and elsewhere across the communities of Cumbria. There are wards in Copeland in which almost a third of children live in poverty, and in Sandwith the rate is even higher. Food bank use continues to rise and shows no sign of slowing. In the last year, it was up by a third, and now almost 2,000 people rely on food banks. There is a clear correlation between the areas with the highest rates of child poverty and those with the highest prevalence of food bank usage. In Harbour ward almost 400 people, including more than 70 children, used the food bank in the last financial year. We used to believe that to be born British was to have won the lottery of life, but I am afraid those figures paint a very different picture. We repeatedly warned the Government that the effect of their policies would be most keenly felt by the most vulnerable in our society and by the most vulnerable peripheral economies, and so it has proven. Almost one in three referrals to a food bank has been the result of a delay in benefit payments, and a further 17% of referrals are the result of benefit changes. Together, they add up to almost half of all referrals.

The final verdict on any Government is based on how they treat the poorest and most vulnerable in society during the hardest times. The rise in the use of food banks, the reliance on payday lenders and the financial hardship faced by many, which have been brought on or at least significantly exacerbated by some of the Government’s most pernicious welfare reforms, are a damning indictment of their time in office. The Government’s legacy, the legacy of the Secretary of State, the legacy of Ministers and the Prime Minister is one of a growing class of working poor, of disabled people in hardship and of too many people living in turmoil and anguish caused by uncertainty, inflexibility and instability.

The Government should heed the advice of the Cumbria Welfare Reform Commission and the stakeholders who contributed to the report, and review their policies to secure successful implementation of universal credit, ensure that sanctions are not unfairly applied, reduce the complexity and delays in personal independence payments and work capability assessments, and stop pushing families into hardship as a result of their hated bedroom tax. I look forward to the Minister’s response.

16:44

[The Minister for Employment (Esther McVey)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, and to reply to the hon. Member for Copeland (Mr Reed). I congratulate him on securing the debate. I have listened closely to all that he has said, so I will answer all the points he has raised.

It is important to put the situation into context. When the Government came into office, it was clear that the welfare system we inherited was in need of reform and was not working. For far too long, Governments had shied away from making any significant reform, and we had ended up with a complex system that had numerous add-ons. It was complicated for all concerned. The benefit system frequently locked people into benefits rather than liberating them and allowing them to get into work. We had to look at that and think about how we could best sort out a complex system that had grown exponentially under Labour.

If we look at the costs, Labour spent £170 billion on tax credits between 2003-04 and 2010, and contributed to a 60% rise in the welfare bill. Supporting that bill was costing every individual an extra £3,000 a year, and 1.4 million people spent most of the past decade trapped on out-of-work benefits. Around 2.8 million people spent at least five years on some sort of out-of-work benefit. Youth unemployment rose by 45% and long-term unemployment doubled under Labour. Those were the things we had to tackle. The explosion in those numbers came during what some might have called a boom period, between 1997 and 2005.

It is worth noting that at the 2010 election, when we took over, there were 600,000 more people in relative poverty than there are today. There were 300,000 more children and 200,000 more pensioners in relative poverty. There were 400,000 more workless households and 50,000 more households in which no member of the household had ever worked. The hon. Gentleman’s contribution to the debate did not relate to the reality of those facts and figures.

[Mr Reed]

I am grateful to the Minister for her response so far, but she has not yet touched on a single issue that I raised about my constituents and the county of Cumbria.

[Esther McVey]

I am putting the situation in context and showing how many of the figures that the hon. Gentleman cited were inaccurate. I am putting into context why and how we are doing things. Today, the most recent employment statistics have been published. The aim of all our benefit changes has been to liberate people and help them to get into work, and today we have seen a record rate of people getting into work—a rate matched only pre-recession, in 2005. That is nearly 1 million extra people in work this year, and nearly 1.8 million people in work since 2010.

[Mr Reed]

rose—

[Esther McVey]

I will give way to the hon. Gentleman if he will provide some facts rather than fantasy.

[Mr Reed]

Fantasy is the Minister’s exclusive preserve. We clearly disagree over the figures, so will she come to my constituency? Will she come and do a tour of Cumbria, meet people and speak to them about the realities of their lives and the effects of her policies? Yes or no?

[Esther McVey]

I was in Cumbria only a week or two ago, discussing those things. I get out regularly and speak to people right across the country, many of whom have told me how they had been abandoned on long-term unemployment, but not any more. Many of them have been on the Work programme and they have now got a job. About 5 million people have been through the Work programme and 300,000 have got sustained work.

Looking specifically at unemployment in Copeland, the hon. Gentleman will be delighted that unemployment has come down by 25%, long-term unemployment is down 30%, youth unemployment is down 36% and long-term youth unemployment is down 40%. That is specifically in his constituency, and those figures are not mine or the Government’s; they are the latest independent, verified figures. I would like the hon. Gentleman to apologise for what he said.

[Mr Reed]

Of course there is no apology to be offered, because none is deserved. Does the Minister recognise the phenomenon of in-work poverty?

[Esther McVey]

There have always been people in work who find things hard. The figures I read out have significantly reduced under this Government. The process, ideology and thought behind universal credit is to ensure that work pays and that every extra hour worked pays, rather than having cliff edges as we had under the old system with which the hon. Gentleman was happy to live. People did not know whether it was right to get a job. They could be locked into benefits because there was a cliff edge at 16 hours a week. We have sought to remove all those things.

Cumbria county council has set up a county welfare reform group to keep a keen eye on the delivery and administration of welfare reform. A Jobcentre Plus manager is part of that group, enabling us to ensure that all concerns and worries are heard and addressed. I understand there is a good, close working relationship, so if anyone has any specific issues or concerns, they can go through Jobcentre Plus, and that is reflected in the survey of what goes on in the area. All of that is key.

There are nearly 24,000 Jobcentre Plus staff across the country. Their main aim is to support people by helping them with the benefits they need when they come through the door and by helping them into work. The Government have ensured that that relationship is more personal than ever before. We have introduced a claimant commitment, so that when someone comes in they can say, “This is what I hope to do,” and we will say, “Okay. How do we get you on that journey?” There has been a significant shift in the approach and in what people do. Perhaps the hon. Gentleman would like to visit his Jobcentre Plus and see that transformation in everything that happens.

[Mr Reed]

The Minister will appreciate that I have done that many times. The report makes it clear that there is an obvious competence deficit in the roll-out of these policies by the Department and Ministers. It is not only claimants who are saying that; people who work in jobcentres and non-party political figures such as the Bishop of Carlisle are saying it, too. Does the Minister regret the lack of competence in the entire policy platform?

[Esther McVey]

The chap obviously wants to write a press release—he wants to write something that is not true—to put in his local papers. Competence is not an issue. We have introduced some of the biggest ever welfare changes. We know they are working, because the things that the hon. Gentleman and his party talked about, such as double-dip and triple-dip recessions, never happened. They talked about an extra 1 million people being unemployed. It was wrong—it did not happen. He and his party put across terrible scare stories, but they did not happen. In fact, the total reverse happened. Nearly 2 million extra people are now in work, and they are predominantly full-time, permanent jobs. That is wonderful news. There are record rates of women in employment. Youth unemployment has fallen for 10 consecutive months, and it is now 127,000 lower than at the general election. Long-term youth unemployment is also lower than at the general election. I gave him the unemployment figures for his specific area, and they are all significantly down.

[Mr Reed]

I am uncertain whether the Minister is disputing the figures in the independent report. Will she be categorically clear about that? Does she accept the figures and the findings of the report? The Bishop of Carlisle and an independent group of people assessed the impact of welfare reform on Cumbria, not just my constituency. Are they wrong? Are their figures wrong? If they are, what is their motivation?

[Esther McVey]

Most people’s motivation is for the best and is to support people—

[Mr Reed]

Are the figures right or wrong?

[Esther McVey]

Hang on a second. People produce figures that have not been fully authorised, cleared or passed off. Our figures have to go through the National Audit Office and independent bodies such as the International Labour Organisation because their estimation of what has happened are much more thorough and valid. Estimates based on very small samples may be right, but they can be distorted by the smallness of the sample.

I will now make a little headway, as I believe I have been generous in giving way. The hon. Gentleman has made many points that, as I have pointed out, are not particularly accurate or are distorted by the prism through which he wants to see things.

[Mr Reed]

Will the Minister give way?

[Esther McVey]

No, I will not give way at the moment. We have talked about why the spare room subsidy was introduced—

[Mr Reed]

Bedroom tax.

[Esther McVey]

The hon. Gentleman wants to call it by another name. I am happy to call it by either name, but in statute it is the removal of the spare room subsidy. [Interruption.] The hon. Gentleman is smiling, so he obviously realises that his own party introduced it for the private rented sector in 2008. Indeed, his party was going to introduce it for the social rented sector, as we have read in Hansard. He is smiling and pretending that it is something that he might or might not do, but in reality it came from his party. Why did that come about? Because the housing bill had doubled in 10 years, reaching £26 billion, which we all know was a bill that we could not afford after the financial crash and after the biggest ever recession in peacetime since 1930.

[Mr Reed]

On a point of order, Mr Dobbin. The Minister is refusing to talk about the issue at hand. There is a blanket refusal to talk about the impact of welfare reform in Cumbria and west Cumbria in particular. How can that be in order?

[Jim Dobbin (in the Chair)]

I cannot take that decision. I am chairing this debate, that is all, so it is not a matter for me.

[Esther McVey]

I am in order. I have given the employment stats for what is going on in the constituency of the hon. Member for Copeland, and I have spoken clearly about what is happening in his jobcentres. We are now talking clearly about what is going on in his constituency with the spare room subsidy. I am saying why those decisions were taken, because I cannot give a specific answer unless people know the generality.

What happened with the spare room subsidy? We could not afford it. Labour had already introduced the measure. We have to consider the 2 million people on the housing waiting list and the 400,000 people in overcrowded accommodation. We have to ask how we will support the taxpayers paying for it, who might not have spare bedrooms themselves, as well as the people on waiting lists and the people in overcrowded accommodation. We took a decision, which had to be that people with a spare bedroom who are more than happy to stay would now have to pay for that spare bedroom. We also said that we would treble discretionary housing payments for affected areas to allow people to move if they wanted.

Discretionary housing payments were given to six different areas in Cumbria, but interestingly, although councils that needed more money for discretionary housing payments applied for money from a £20 million pot shared across the country, Cumbria did not do that. There was not one bid. There could have been—if Cumbria had thought that it needed more money to help more people in the area, there was an extra pot of £20 million. Unfortunately, only £13 million was deployed to the various places that made requests, and £7 million went back to central Government. Places such as Copeland did not ask for that money, so it must have been deduced that they did not need the money. If the local MP would have liked to have helped his local council and constituents by doing a bit more prep and homework—rather than arguing afterwards, once he had missed the money and once the money had been spent—he could have got some of that money and helped the constituents he is talking about. Unfortunately, he chose not to do that.

We were talking about how PIP is being introduced and why. DLA spending had increased considerably, and there is still an increase in expenditure. DLA has not been cut—it has been increased; it is just not growing as rapidly as in the past. What we had seen under DLA, which is why we are changing it, was that people did not have additional corroborating medical evidence. More than half of DLA claims do not have such evidence, so we are saying, “Under this Government, and in this Parliament, we will give out this money and we will support people as best we can, but we need to focus that money on those who need it the most. It is therefore vital that we have that corroborating medical evidence.” That is what we are doing.

[Mr Reed]

The Minister should be embarrassed by her response to this debate. She has refused to accept—

17:00

Sitting adjourned without Question put (Standing Order No. 10(13)).

Written Statements

Wednesday 16th July 2014 Written Statements

Wednesday 16 July 2014

Qualifications and Curriculum Reform

Wednesday 16th July 2014 Written Statements

[The Secretary of State for Education (Nicky Morgan)]

I am today announcing next steps on reform of the national curriculum, and consultations on new GCSEs and A levels. We want these reforms to ensure that all young people can achieve their potential, by studying a curriculum and qualifications that support them in progressing into further study and employment, and set expectations which match those of the highest performing countries.

GCSE and A level subject content to be taught from 2016

The Government have already published subject content for GCSEs in English baccalaureate subjects and for the first group of A levels to be reformed.

Today, I am publishing, for consultation, new subject content for a further set of GCSEs and A levels. These subjects will be first taught in 2016. The content for these subjects will prepare students better for further and higher education and employment. GCSE content will provide young people with more fulfilling and demanding courses of study; new A level content will encourage development of the skills and knowledge needed for progression to undergraduate study.

There are two parts to the consultation. The first part seeks views on content which awarding organisations have developed, working with subject associations and other stakeholders. At GCSE these subjects are art and design, computer science, dance, music and physical education. At AS and A level, the subjects are dance, music and physical education.

The second part of the consultation seeks views on content for AS and A levels in modern foreign languages, ancient languages, mathematics, further mathematics and geography. The proposed content reflects the recommendations of the A level content advisory board, which is publishing its reports to me today. Ofqual is consulting in parallel on the assessment arrangements for all these subjects.

This consultation is an opportunity for teachers, further and higher education, employers and all those with an interest in these important subjects to provide their views. We intend to listen to those views in shaping our final proposals.

In September, we will consult on content for the remaining subjects to be taught from 2016, citizenship studies, design and technology, drama and religious studies.

We want the reformed content for the subjects I am consulting on today to lead to more ambitious qualifications with more stimulating courses of study.

In art and design, there is a greater focus on creativity and new emphasis on drawing.

In computer science, students will be expected to develop deep knowledge and understanding of key principles and concepts including data representation, Boolean logic and different data types.

In dance, there is new theoretical content including critical appreciation, knowledge and understanding of professional works.

In music, there are new expectations for performing and composing and for students to apply knowledge and understanding in making critical judgments. At GCSE, students will need to write (as well as read) staff notation and understand chord symbols.

In physical education, rigour has been increased by sharpening the definition of what is expected of students and emphasising the theoretical knowledge needed to underpin physical activity and practical performance.

In modern languages, there is more stimulating A level content with new requirements to engage critically with literary works and carry out independent research, presenting findings.

In ancient languages, the new A level content has increased focus on developing strong interest in the literature, history and culture of the ancient world. Students will be required to read and understand in depth literary texts in the original language.

In mathematics, requirements are specified in more detail and the A level has new emphasis on problem solving, interpretation and testing so that students’ deep understanding of mathematical concepts is strengthened.

In further mathematics, A level content provides greater specification of the areas which need to be covered and new minimum requirements for matrices and complex numbers within the AS.

In geography, A level content provides a better balance between physical and human geography, with new emphasis on fieldwork and geographical skills needed at this level.

The consultation on reformed subject content for these GCSEs and A levels will be available later today at https://www.gov.uk/government/publications. Ofqual’s consultation on assessment arrangements will be available on its website at: http://ofqual.gov.uk.

Publication of key stage 4 English and mathematics national curriculum programmes of study

On 11 September 2013, the Government published the new national curriculum for all subjects except for English, mathematics and science at key stage 4. The Department consulted on the draft programmes of study for key stage 4 English and mathematics from 2 December 2013 to 3 February 2014 and, from 14 May until 13 June this year, on the draft order and regulations that will give effect to the new programmes of study.

I am publishing the final programmes of study for English and mathematics at key stage 4, which will be taught in schools from September 2015 alongside the new English and mathematics GCSEs. Last year, the Government published the new GCSE subject content for English language, English literature and mathematics. It is important to consider these programmes of study in tandem with the GCSE subject content to ensure that the curriculum and qualifications are fully coherent.

We are currently consulting on the key stage 4 science programme of study which will be introduced from September 2016, alongside first teaching of the new science GCSEs.

Copies of the new programmes of study for key stage 4 English and mathematics will be placed in both House Libraries.

Wood Review (Government Response)

Wednesday 16th July 2014 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

The UK should be proud of its world-class oil and gas industry. It makes a substantial contribution to the economy, supporting around 450,000 jobs and supplying the UK with around half of the oil and gas we use, reducing our reliance on imports. It is vital therefore both for Britain’s energy security and long-term economic outlook that we take positive steps to maximise the economic recovery of our indigenous hydrocarbon reserves. As our carbon plan has shown, Britain will still need significant oil and gas supplies over the next decades, while we decarbonise our economy and transition to a low-carbon economy.

As the North sea enters the next phase of its development, Government have a critical role to play in ensuring the stewardship and regulation of such an important national asset evolves with it. The outlook is bright and investment levels have risen in recent years. However there remain challenges. As stated in my June 2013 statement to Parliament when I commissioned Sir Ian to conduct the review, the UK continental shelf (UKCS) has faced steeply falling levels of production and exploration in recent years as well as declining production efficiency.

Sir Ian reported his findings earlier this year and it is clear that the size of the prize on offer is considerable. The review estimated that full and rapid implementation could deliver 3 to 4 billion barrels of oil equivalent more than would otherwise be recovered over the next 20 years, worth over £200 billion. It is for this reason that I am committed to fully implementing his recommendations as quickly as possible.

Sir Ian made recommendations for both industry and Government and the full impact of his report will not be realised unless industry take up his challenge in equal measure. In particular it will be vital for companies to change the way they work together within fields and between fields to maximise economic recovery. Also in support of this is the need to curb the over-zealous legal and commercial activity which can often increase cost and make co-operation more difficult.

The key policy decisions we have taken are summarised in this statement.

The four main recommendations from Sir Ian’s report are as follows:

That Government and industry should develop and commit to a new strategy for maximising economic recovery from the UK continental shelf (MER UK)

That stewardship of the UK continental shelf (UKCS) should move to a new arm’s length body that is better resourced, and funded by industry

That additional powers should be secured to implement MER UK

The new regulator should work with industry to develop and implement new industry strategies, such as on exploration and decommissioning cost reduction.

A phased approach to implementation

In order to make swift progress, we are taking a phased approach to implementation and we have already achieved a great deal. It has only been a year since I commissioned the review and less than six months since Sir Ian published his recommendations. In that time we have announced that the new oversight body will be called the Oil and Gas Authority (OGA); have determined its structure and that it will be headquartered in Aberdeen; begun recruitment of a world-class CEO to lead and shape the OGA; and have tabled clauses for introduction into the Infrastructure Bill in order to enshrine the MER UK principles into law and provide for a levy-making power to fund the body.

These steps will allow the OGA to operate effectively in shadow form, which could begin as early as autumn 2014. We will continue this momentum to build the OGA so it has the right skills, resources and powers to deal with the challenges facing the UKCS.

Maximising economic recovery from the UKCS (MER UK) principles

Government have tabled amendments to the Infrastructure Bill to place the MER UK principles into statute. Our proposals will ensure that we maximise the economic recovery of petroleum, and licence holders will be required to act in a manner best calculated to give rise to maximising the economic recovery of petroleum from UK waters as a whole, not just that recoverable under their own licences. The clauses also place a requirement on the authority to produce a strategy for enabling the principle objective to be met along with a corresponding duty for the authority, licence holders, owners and operators of production infrastructure to act in accordance with the strategy. The strategy, developed in collaboration between Government, the OGA and industry must be produced within a year of these provisions coming into force and can be updated as necessary.

Initially, the principles will apply to offshore activity, however Government intend that the OGA’s remit should extend to onshore—as well as to the licensing activity for natural gas storage and unloading and carbon dioxide storage—and so, working with the respective industry stakeholders and trade groups, we will look to extend the principles accordingly.

Establishing the Oil and Gas Authority

The establishment of the additional powers the OGA will need to perform its MER UK obligations will require primary legislation which cannot be delivered in the remainder of the current Parliament. The Department of Energy and Climate Change (DECC) will, therefore, in the first instance, and in order to demonstrate pace and its strong commitment to implementing Sir Ian’s recommendations, establish the authority in shadow form as an Executive agency. Our intention is for this to be operational in autumn 2014.

However, Government do not believe that an Executive agency provides an optimum long-term solution. It is our intention therefore to establish the OGA in its final form as a Government company. This will give the authority greater operational independence from Government. As such it will provide a more suitable platform to provide the arm’s length regulatory certainty the industry requires to invest in exploration and production activity to maximise economic recovery from the UK’s oil and gas resources.

DECC will develop the plans for establishing the OGA further in the coming months, working closely with industry and other partners to get the substance and the detail right. We will work both through the interim advisory panel, chaired by Sir Ian Wood and in wider fora, including the industry’s principal trade association, Oil and Gas UK.

Funding the Oil and Gas Authority

Government agree with Sir Ian that the challenge of delivering MER UK requires the OGA to be significantly better resourced than the current equivalent team in DECC. In line with the long-established practice across regulation and service delivery, and to ensure the OGA is not restricted by any future Government funding constraints, the Government consider that, in the long-term, the body should recover its costs from the companies who will benefit from the services of the authority. However, to demonstrate their commitment to the tripartite approach recommended in the review, and help realise the benefits outlined in Sir Ian’s report, Government have committed to contribute £3 million per year for five years beginning in 2016-17 to the running costs of the OGA.

Additional powers and strategies

The Government are committed to ensuring the new authority makes effective use of its existing powers, which in many respects are not inconsiderable, and they will therefore review the full range of current powers to see whether, and if so how, they could be deployed more effectively by a better-resourced regulator. As recommended, the Government will also equip the authority with additional powers to enhance its ability to maximise economic recovery by encouraging and facilitating collaboration and dispute resolution without compromising the incentives for efficiency and innovation achieved by healthy competition.

Government will work closely with industry and other interested parties in the months ahead to undertake this work and ensure we are ready to put legislation on the additional powers before the House in the first Session of the new Parliament.

Once it is established, the OGA will work with industry and Government to develop the sector strategies detailed in the Wood review. As outlined in the 2014 Budget, the Government will task the new authority to review how best to encourage exploration and reduce decommissioning costs as a priority with a view to reporting back its initial findings and recommendations at Budget 2015.

This Government’s commitment to change is clear. We also need an equally strong commitment to change from industry and, from my own contacts with the industry during the Wood review and since, I am very confident indeed that it will pull together and play its part fully in the spirit that Sir Ian has set out.

NATO Wales Summit

Wednesday 16th July 2014 Written Statements

[The Minister for Europe (Mr David Lidington)]

I wish to update the House on preparations for the NATO summit in Wales on 4 to 5 September, 50 days from now. Our theme for this summit is building stability in an unpredictable world.

This will be the largest gathering of international leaders ever to take place in the UK. It requires us to accommodate, move, feed and protect up to 185 VIPs, around 4,000 delegates and 1,500 media representatives. We have reserved over 24,000 room nights in 80 hotels in Newport, Cardiff and Bristol. It is a huge undertaking and preparations are on track.

The Wales summit will be one of the most important in NATO’s history, and comes at a key moment for the alliance. NATO’s combat mission in Afghanistan is drawing to a close and, as events in Ukraine and Iraq have shown, the world faces more complex threats than ever before. This summit will show that NATO, the most successful military alliance in the world, remains strong, united and ready to meet and defeat any threat.

NATO is the bedrock of the UK’s defence and security. As a leading player in NATO over the last 65 years, the UK continues to contribute to alliance operations around the world today. Beyond Afghanistan, there are British personnel serving in the Baltic air policing mission and counter-piracy missions. The UK is also home to NATO’s Maritime Component Command and the headquarters of the Allied Rapid Reaction Corps.

In today’s unpredictable world, familiar threats remain, but new challenges are appearing alongside them. At the summit, we will therefore focus on three key themes.

First, we will discuss the situation in Afghanistan as the International Security Assistance Force (ISAF) mission draws to an end, and decide how we will continue to support the Afghan Government. We must sustain Afghan confidence in their resourcing as we make this transition. And we should take the opportunity to recognise the sacrifices made by the alliance’s armed forces, and commit to safeguarding the welfare of our veterans and their families. In this context, we want to build on the Government’s work on the UK military covenant, by persuading all allies to articulate shared values on the importance of supporting our armed forces and their families, during and after their service, and by sharing best practice on supporting service personnel, supporting transitions into civilian life and supporting the wounded, injured and sick

Second, we need to agree on the long-term implications of the Russia-Ukraine crisis and how the alliance will continue to provide for the collective security of all allies. We must take the necessary decisions to strengthen NATO’s ability to respond quickly to threats, including new ones, to reassure those who fear for their security, and to deter further aggression from Russia.

Third, we must agree how NATO will adapt itself to address the new risks and challenges from an unstable world of failed states, regional conflicts, terrorism and cyber-attacks. In particular, we should show alliance unity through a commitment to invest in our defence sectors and agree how NATO can provide practical support to countries that need to strengthen their security sector by launching specific NATO defence capacity building missions. It also means building the broadest global security network ever by strengthening NATO’s relationship with partners elsewhere in the world, ensuring that we have the relationships necessary to tackle threats wherever they emanate from.

The then Secretary of State for Foreign and Commonwealth Affairs had a productive meeting with NATO Foreign Ministers at the end of June—the last major milestone before the summit—where they agreed some key deliverables for the summit. Foreign Ministers endorsed a package of support measures to strengthen Ukraine’s ability to defend itself and agreed on plans to develop a robust readiness action plan for the summit in September. They also reaffirmed NATO’s commitment to an “open door” policy and agreed continued support for the aspirant countries who hope to join the alliance in due course.

Parliament has an important role to play in preparing for the Wales summit. Portcullis House recently hosted an exhibition on the past “65 years of NATO” and I welcome the fact that the NATO Parliamentary Assembly will meet in London on 2 September to discuss these issues before NATO leaders meet in Wales. This summit also offers an unrivalled opportunity for all of us to shine the spotlight on Wales. In advance of the summit, we are highlighting Wales’ strong commercial sector and encouraging the world to visit Wales by showcasing the tremendous potential in Wales for investment and business, tourism and higher education.

Justice and Home Affairs Council

Wednesday 16th July 2014 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

The Informal Justice and Home Affairs (JHA) Council was held on 8 and 9 July in Milan. The Under-Secretary of State for Justice, my hon. Friend the Member for North West Cambridgeshire (Mr Vara), and a senior Home Office official attended on behalf of the United Kingdom. The following items were discussed.

The interior day began with a discussion of the strategic guidelines for legislative and operational planning in JHA that were agreed at the June European Council. The discussion focused on the migration aspects, and on the proposed replacement of the EU’s internal security strategy.

On migration, the Commission highlighted the progress being made on the EU’s legal migration policy and called for full implementation of the common European asylum system, for action against the smuggling of migrants and for enhanced regional protection efforts.

A number of member states said that limited migration from outside the EU was necessary to address skill shortages, though stressing that it needed to be balanced with action against illegal migration. Others emphasised that policy on legal migration should be primarily for member states to determine—legislation in this area only applies to the UK if we opt in to it. Some called for more action to address migration problems at their source and a more effective returns policy. The UK argued for effective action to tackle abuse of free movement.

The presidency concluded by calling for a balanced approach to migration addressing both legal and illegal aspects.

The Commission announced that it will issue a communication on the internal security strategy in early 2015, and hold a conference in Brussels on 29 September. Many member states intervened calling, variously, for a short and focused strategy and for the strategy to cover the organised crime policy cycle, cyber-security, counter radicalisation, data exchange and environmental crimes.

The UK called for the new strategy to cover modem slavery, foreign fighters and the exchange of passenger name records. The presidency agreed that foreign fighters were a top priority and also emphasised the need to agree the draft passenger name records directive.

The Council then discussed the implementation of Task Force Mediterranean, its agreed programme of actions to deal with illegal migration in the Mediterranean region.

The presidency called for FRONTEX to step up its activity in the region so the Italian “Mare Nostrum” search and rescue operation could be scaled back. The Commission called for a single, coherent operational structure to co-ordinate Mare Nostrum with Frontex’s operations. It also called for more efforts to persuade Tunisia to address the problem of its boats being used to pick up migrants in Libya, for the EU border assistance mission to Libya to be reinforced and for member states to resettle more refugees from outside the EU. The UK emphasised the importance of concerted action at the regional level and welcomed the involvement of the European external action service in working with countries of origin.

On justice day the Council discussed whether there should be greater flexibility within the proposed general data protection regulation for member states to provide a higher standard of data protection for the public sector at national level. Various approaches were discussed, including providing for specific exemptions throughout the text of the proposed regulation. The UK argued that the best way to achieve the desired flexibility was to legislate by way of a directive rather than a regulation as this already provides sufficient flexibility under the current framework. Member states in general believed that flexibility at national level for the public sector was necessary but further discussion on how this would be best achieved was required in the Council’s technical working group.

The second session was an exchange of views on the proposal to establish a European Public Prosecutor’s Office (EPPO). The presidency asked whether the proposal provided for an appropriate system of judicial review and, in particular, whether certain decisions by it to dismiss cases should be subject to judicial review.

The majority of member states agreed that some form of judicial review before national courts was necessary, although there was no consensus over which decisions should be subject to review. The UK is not participating in the proposal to establish an EPPO and did not take part in the discussion. The presidency concluded that further discussion was needed at expert level.

Over lunch, there was a discussion on the justice aspects of the strategic guidelines agreed by the European Council, especially developments regarding mutual recognition of judgments, and freezing and confiscation orders. Member states, including the UK, reinforced the message in the JHA strategic guidelines that the priority is now to implement and consolidate the EU acquis in the justice area rather than bring forward new legislation. The main feature of the discussion was the importance of judicial training to support implementation. Most member states wanted to see further EU support for judicial training, although some including the UK, cautioned about the need to ensure that judicial training remained primarily a matter of national competence.

During the final session, the presidency introduced its paper on the Commission’s proposal to abolish legalisation—a formality to confirm the authenticity of a public document—and reduce the need for certified copies and translations. Member states were invited to give views on the scope of the proposal and on the need for new information technology to support cross-border co-operation in this area.

Almost all member states who intervened believed that the scope should be limited only to civil status documents—that is, birth, marriage, death—in the first instance. The UK agreed that the scope should be limited in this way, and set out the reasons why the inclusion of educational certificates, intellectual property documents, and court judgments should not fall within the scope of the proposal. The UK also argued that the proposal should provide a common format for translations of civil status documents rather than creating a legal status for common format multilingual forms. This would avoid legal uncertainty and respect the sovereignty of member states in issuing the documents.

The Commission proposed to use the existing internal market IT system for a cross-border verification mechanism, but was willing if necessary to consider a feasibility study for a new IT system. The UK opposed this on cost grounds. The presidency concluded that there was strong preference for a step-by-step approach with the initial scope limited to civil status document and further work was required on the most appropriate IT system to use.

Rail Franchising

Wednesday 16th July 2014 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

On 27 June 2014, my Department announced its intention to award the Essex Thameside franchise to NXET Trains Ltd (National Express), pending the successful completion of a standstill period. I am happy to confirm to the House that this standstill period has ended and we completed the contract after the markets closed on 15 July. This means that NXET Trains Ltd (under their brand name c2c) can begin the mobilisation process that will mean the new franchise will begin in November this year.

The contract will run for 15 years and will allow the company to build on the impressive performance of the franchise and deliver a host of passenger benefits, worth around £160 million. The Essex Thameside franchise provides vital commuter services to millions of passengers every year travelling between London and the commuter hubs of Barking, Basildon, Southend. The new franchise will see c2c provide more capacity and a new fleet of trains during the franchise. The 17 new trains will provide almost 4,800 extra seats, on top of the 25,000 additional seats for morning peak-time passengers c2c has committed to provide every week by the end of the contract.

More than £30 million will be invested in improving stations during the franchise, including at the major hubs of Fenchurch Street and Barking. The operator will also provide free wi-fi, smart ticketing and better customer information that will all improve the experience for passengers on the busy route. This franchise will also see an enhanced delay repay scheme including automatic repayment for passengers with smart tickets, a first for the railway in Great Britain.

The successful award of this contract shows the continuing success of my franchising programme. A programme that is seeing real benefits for passengers and taxpayers.

Grand Committee

Wednesday 16th July 2014 Grand Committee

Wednesday, 16 July 2014.

Local Audit (Delegation of Functions) and Statutory Audit (Delegation of Functions) Order 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

15:45

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Local Audit (Delegation of Functions) and Statutory Audit (Delegation of Functions) Order 2014.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, this order is one of a number of statutory instruments that will put in place new arrangements for the audit of relevant authorities as set out in the Local Audit and Accountability Act 2014. I do not wish to take up your Lordships’ valuable time by repeating in this debate the arguments that were put forward during the passage of the 2014 Act supporting the abolition of the Audit Commission. However, it remains the view of the Government that the arrangements that we are putting in place, including this order, will create a more efficient audit system, giving greater responsibility to local bodies whilst providing greater opportunities for local people to hold those bodies to account. They will also save £730 million over the five years between 2012 and 2017 and an estimated £1.2 billion over 10 years.

On the specifics of the instrument being considered here today, the order delegates certain of the Secretary of State’s powers in relation to the eligibility and regulation of local auditors to the Financial Reporting Council, which is the independent regulator responsible for the oversight and development of corporate governance standards. Let me provide a little context on its background. The Financial Reporting Council is a company limited by guarantee that is partly funded by the Government. You might also wish to know that its board of directors is appointed by the Secretary of State for Business, Innovation and Skills, and it already carries out delegated functions, similar to those that I will shortly outline, for statutory—that is, company—audits. The functions that this order delegates to the Financial Reporting Council include: authorising professional accountancy bodies to act as recognised supervisory bodies for local audit; authorising professional accountancy bodies to offer a local audit qualification; undertaking significant public interest disciplinary cases and, where appropriate, imposing a range of sanctions on those auditors found to have committed misconduct; carrying out an additional level of oversight and monitoring of audits of significant local public bodies, defined by regulations as “major local audits”; and reporting to Parliament annually in relation to inspections. The order closely follows the existing delegation order for statutory—that is, company—audit approved by Parliament in 2012 and, in article 10, makes a small amendment to that order to ensure that the same minimum consultation period applies to Financial Reporting Council consultations whether the consultation relates to company audit or local audit.

How does the order fit into the new audit framework? These arrangements will simplify the rules that currently apply to auditors by removing unnecessary duplication from the system. At present, audit firms have to work under two regulatory systems—one set by the Audit Commission and the other by the Companies Act 2006. The new audit framework largely replicates the Companies Act regulatory regime, with which auditors are already familiar, to cover local audit. That is not to say that we are removing necessary safeguards or compromising the quality of local audit; the work of the auditors will not change. The National Audit Office will set out what auditors should do to fulfil their statutory duties and, as set out in this order, where appropriate the Financial Reporting Council and professional accountancy bodies will monitor the quality of audit, as they already do for the private sector.

Through this order, the Financial Reporting Council will take on the responsibility for authorising professional accountancy bodies to act as recognised supervisory bodies. These bodies will, in turn, have responsibility for deciding which firms are eligible to undertake local public audit and for monitoring compliance with the rules and practices that they have established, and also with auditing standards. The Financial Reporting Council will also have responsibility for the recognition and supervision of audit qualifications that are not recognised by the Companies Act 2006. In approving an additional qualification, the Financial Reporting Council will need to assess whether it meets the minimum requirements as set out in the Local Audit (Professional Qualifications and Major Local Audit) Regulations 2014—SI 2014/1627—which were laid on 27 June and are subject to the negative procedure.

The monitoring of major local audits will be covered by the Financial Reporting Council. The Secretary of State has specified in the regulations that I have just mentioned which relevant authorities will have their audits defined as major local audits. Briefly, the conditions are that an audit of relevant authorities with either total income or total expenditure above £500 million, or an audit of relevant authorities with local government pension funds with assets in excess of £1 billion or more than 20,000 members, will be considered to be a major local audit. The Financial Reporting Council will also, subject to consultation, be able to give a direction to a relevant authority specifying that its audit will be a major audit.

Why do we need this order? Without the order, the Secretary of State would retain oversight of the whole regulatory framework for local auditors, thus continuing an anomalous position and a dual regulatory regime. As I said earlier, the powers being delegated to the Financial Reporting Council here largely mirror those delegated by the Secretary of State for the Department for Business, Innovation and Skills to the Financial Reporting Council for oversight of the regulation of statutory—that is, company—audit.

Before the introduction into Parliament of the measures included in the 2014 Act, we consulted widely both on the broad policy approach and also in more depth on the proposed framework, through the publication of a draft Bill. Noble Lords may also recall that a parliamentary pre-legislative scrutiny committee provided detailed scrutiny of what is now the Act while it was in draft form. During the Bill’s passage through Parliament, we also provided draft regulations on several of its key provisions to the parliamentary Bill Committee, and last autumn we undertook an interactive public consultation exercise. Over 130 replies to the consultation were received in total, of which 62 commented on the regulatory framework, including the main audit firms which currently carry out local audits and which have been engaged throughout this process.

Nearly 80% of the relevant replies were in favour of the approach proposed for the regulatory framework. This reflects the work that we undertook before consulting, in having regard to the existing statutory framework and engaging with key stakeholders through a working group to make sure the proposals reflect their views. It was found that 71% viewed the Local Audit (Professional Qualifications and Major Local Audit) Regulations as providing an appropriate framework to allow a body to develop a suitable qualification for local audit, and 63% agreed that the proposed thresholds were appropriate to capture the audits of significant local bodies.

Following comments made during the consultation about the role of the Financial Reporting Council, we made minor changes to the order being discussed here today. It now includes a requirement that the Financial Reporting Council consults any bodies whose audits it decides should be subject to additional monitoring by being treated as a major local audit, even though it would fall outside the conditions described as defining a major local audit in the regulations I have just mentioned.

I commend the order to the Committee.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for her very full introduction to this order. As has been explained, it puts in place elements of the regulatory framework for the local audit regime. This involves delegating certain of the Secretary of State’s powers to the Financial Reporting Council. As would have been apparent from the debate in another place, we do not oppose this order. As has been said, it is about removing duplication and an attempt to replicate the Companies Act regime for local audit. However, I have one or two questions.

The Audit Commission is to be abolished in 2015. What arrangements are in hand for the management of the audit contracts that were outsourced and are not due to come to an end, I think, until 2017? Has a decision been taken on whether or not they are to be extended? I think there was the option of extending them for a further three years. Paragraph 7.1 of the Explanatory Memorandum makes reference to an “open and competitive market”. Could we therefore have an update on how many different firms are currently undertaking local audit work and how many were eligible to bid under the Audit Commission’s final transfer? Perhaps we could also have an update on the ultimate disposition of those audit contracts—I think some of them were bundled on a regional basis—and how they were transferred, and whether any of those arrangements have had to be unpicked and retendered for one reason or another.

As the noble Baroness explained, the FRC will have responsibility for monitoring “major local audits”. This term has been defined in the recent set of negative regulations, which have been referred to. Can we be told how many major local audits there are expected to be? Reference has been made to the consultation exercise from last autumn and comments received from the LGA about the Financial Reporting Council being involved in local authority audit policy. Would the Minister care to comment on that?

On the Government’s suggested savings, can we be told how much will be saved as a result of the audit arrangements already contracted out by the Audit Commission? I think that was a bone of contention when we debated the Bill.

Subject to the answers to those questions, as I said, we have no difficulty with this order and I am happy to support it.

[Baroness Williams of Trafford]

I thank the noble Lord for being the only person present for the beginning of the debate, and for the points he has raised.

He asked how many local bodies will be undertaking major local audits. We estimate that there will be around 100 to 150. He also asked whether there would be an extension to the existing audit contracts that are in place, to allow for the transition phase. We have asked the LGA to set up a company which will manage existing audit contracts, running to 2017, so I hope he is satisfied by that. We will make a decision on whether or not to extend those contracts in due course.

I think I have answered both his questions. Was there another one?

[Lord McKenzie of Luton]

I think there were one or two. There was one about the savings. I think the figure of £730 million was referred to. I was trying to understand how much of that, if any, relates to the work that was already done by the Audit Commission outsourcing its contracts in 2013 and perhaps 2014 as well. I was also interested in getting an update on how those contracts were actually dealt with when the Audit Commission contracted them out. I do not think they were all done in one contract; I think they were done in a series of regional contracts but I do not have in my mind the totality of how that all worked. Have any of those contractual arrangements had to be unpicked? I think the arrangement was that they were contracts between the audit companies and the Audit Commission.

I am certainly grateful for the update about the LGA being the entity that will monitor and manage those outstanding contracts, and that there is not yet a decision on whether or not they will be extended. If the Minister were able to pick up some of those other points, that would be helpful.

15:59

[Baroness Williams of Trafford]

I apologise to the noble Lord. On the £730 million-worth of savings that we have estimated over the next five years and the point that the noble Lord raised about the previous period, we estimate that there were about £200 million-worth of savings. I will write to the noble Lord with an update on who has the contracts and how they are located.

I have a correction. The LGA will set up a separate company, and we are working together for it to do so.

[Lord McKenzie of Luton]

To be clear, is that separate company going to manage the existing contracts as well as possibly looking to amalgamate or centralise contracted audits in the future, or is it just one of those functions?

[Baroness Williams of Trafford]

I understand that a transitional body will be in place to run the contracts at this stage. If the noble Lord is not entirely satisfied with those slightly hurried answers, I am happy to write to him.

[Lord McKenzie of Luton]

I would be very grateful.

Motion agreed.

Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) (No. 2) Regulations 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

16:02

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) (No. 2) Regulations 2014.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, these regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012. The regulations have been approved in the other place and, if approved by the House, would come into effect at the end of this month. The regulations introduce a new level of fees payable for prior approval applications for permitted development for change of use and associated physical works.

The coalition Government are committed to reducing planning regulation and ensuring that the system for securing planning permission is proportionate to the potential impact of any development. We want to ensure that the best use can be made of existing buildings and that we deliver the homes we need without unnecessary regulation. To support these key aims, we are increasing national permitted development rights so that appropriate development can take place more quickly.

In the Budget document, we set out the three-tier planning system. A full planning application is appropriate for larger-scale developments with the greatest impact on neighbours, the wider community or the environment. Permitted development rights, on the other hand, remove the need for a planning application. They are appropriate for small-scale changes and some strategic development where the impact is less. Permitted development rights with prior approval provide an intermediary role between permitted development and a full planning application. This is a simpler and cheaper process where the principle of the development has been established but certain specific issues still require local consideration.

In April, an order came into force introducing further flexibility for owners to make better use of existing buildings and to help increase housing supply. These new permitted development rights include enabling shops and agricultural buildings to change use to homes. For the first time, they also allow the limited building works necessary to deliver the new homes.

These permitted development rights are subject to prior approval, providing applicants with a less complex and less costly process than a full planning application. Prior approval for change of use normally requires the local planning authority to consider matters such as the impact on transport and highways and contamination and flood risks. By allowing some physical works, as well as the change of use, the local planning authority will also have to consider the proposed design and external appearance of the building. For example, an existing shop front with a large plate glass window is unlikely to be appropriate for a home without some alterations. However, it is important that any resulting frontage is still in keeping with the area. It may be adjacent to other shops, and the local planning authority will have to ensure that the design does not have a detrimental impact on an area.

Prior approval for change of use requires the local planning authority to consider specific issues, and we introduced a fee of £80 last year for these applications. These regulations now provide that a fee of £172 is payable for prior applications where the local planning authority considers not only the specific impact of the change of use but the design and appearance of building works associated with that change of use. This recognises that these applications involve some additional work for the local planning authority compared to a straightforward change of use.

These regulations will apply to the flexibilities introduced in April allowing change of use from shops to homes and from agricultural buildings to homes together with associated building works. The fee of £172 for prior approval is a considerable saving to the applicant. If we had not introduced these permitted development rights, a farmer making a planning application to convert a barn to three new homes would have faced a fee of £1,155, which is calculated as three times the planning application for a dwelling-house. When we consulted on the package of increased flexibilities for change of use last summer, we set out our intention to introduce a £172 fee for prior approval applications where some physical works are also permitted.

It is important that we continue to take steps to simplify the planning system and make the application process proportionate to the impact of development. This modest fee for a prior approval application for both change of use and some building works is a saving for developers trying to make better use of their existing buildings and will help planning authorities in meeting the costs of these applications.

I commend the regulations to the Committee.

[Lord McKenzie of Luton (Lab)]

My Lords, I again thank the Minister for explaining the regulations. As we have heard, they are focused on the very narrow point of the level of fee applicable to permitted development rights for change of use where prior approval is necessary and where limited building works are associated with the change of use. The fee is to be £172.

The Minister will be aware from the debate in another place on these regulations that we are not in agreement with the underlying policy involving this particular use of permitted development rights. As my honourable friend the shadow Planning Minister Roberta Blackman-Woods put it,

“we are not against allowing change of use, but we believe that it is best achieved through adherence to local plans”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 8/7/14; col. 5]

The Government’s Greater Flexibilities for Change of Use consultation proposed five different circumstances but, as I understand it, only two are the subject of this order. The fee levels apply where the change of use can involve some building work: one is where the change of use is from shops or financial and professional services buildings to a dwelling-house, and connected building work is involved; the other is when existing buildings currently used for agricultural purposes are to be used as a dwelling-house, and building work connected with the change of use is involved. In each case, certain building work is permitted. Can the Minister say something about the parameters under which that is considered? When is it connected to the relevant provision and when does it go beyond that? There are obviously plenty of opportunities for abuse of these provisions. I would like to understand how that matter is to be approached. In the case of change of use of shops, it appears that prior approval will be required to cover design, transport and risks of flooding, as the Minister explained. For agricultural buildings, prior approval will focus on siting and design. As I understand it, the prior approval is not necessarily looking at the same thing in each case. It has to look at specific things. That, presumably, is tucked away somewhere in regulations. I hope that the Minister will enlighten me on that.

One of the other flexibilities not covered by this fee proposal relates to the change in building use from buildings for agricultural purposes to new state-funded schools. How many times has this flexibility been used to date? Has it been used to facilitate free schools? I reiterate that we have difficulties with the underlying policy but, subject to the points I have made, we will not oppose these regulations.

[Baroness Williams of Trafford]

I again thank the noble Lord for taking part in this two-way debate. Our objective is basically to simplify the planning process, thereby making it easier and cheaper for developers who want to carry out small-scale works with a limited impact.

I was asked about the scope of a development. I understand it to be within the permitted development rights of the said dwelling. If it is anything other than that, I will let the noble Lord know. I hope I have responded to the point that he made but I take it to be within permitted development rights, which will, of course, be different for each dwelling.

Permitted development with prior approval provides developers with a less complex and less costly process than a full planning application. These regulations support that approach. As regards what building works would be allowed under this provision and what would not, work which is required to deliver a new use would be allowed and, I think, probably nothing beyond that. Therefore, in the case of a shop front, a smaller window as opposed to a large frontage would be allowed. If it was a barn, I am guessing that a suitable front door might be allowed but nothing beyond what would be required to change from the old use to the new use of dwelling. I think that addresses the point about not going beyond the original intention of the regulations.

I will have to write to the noble Lord about the point he made on schools. I have some experience of this issue in terms of free schools. I know that if local authorities have land or existing schools available, negotiations can be entered into but, as schools are not dwellings, I will have to write to him on that. Does that address the issue?

[Lord McKenzie of Luton]

I am grateful to the noble Baroness. Her response touched on the key points. As regards the point about whether the provision is connected with the building works, change of use from, say, an office to a dwelling is one thing, but I guess that what would be permitted to facilitate the change of use of agricultural buildings could be more contentious. Did the noble Baroness say that these provisions were set down in detail in the regulations or in the permitted development rights themselves?

[Baroness Williams of Trafford]

I understand that it is within the permitted development rights of those buildings, whatever those permitted development rights are. If that is not the case, I will write to the noble Lord. However, I will let him know whether or not the provisions are set down in the regulations.

[Lord McKenzie of Luton]

I am grateful. Perhaps the noble Baroness can write to me on the issue of schools. I was prompted to inquire because the terminology now used is “new state funded schools”. I have a feeling that we had a bit of run around this because we originally saw a specific reference to free schools, so I was interested in finding out what the current situation was on that. I have, however, no further queries and I am grateful for the response.

[Baroness Williams of Trafford]

I should clarify this because there is something in the recesses of my mind. Where local authorities have suitable buildings, and free schools are being set up, they should try to assist in making those public buildings available, but I will clarify that in a note.

Motion agreed.

Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

16:16

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014.

Relevant document: 4th Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, the private rented sector now represents the second most common form of tenure in England, providing for 4 million households. We believe that there are more than 3 million residential leasehold properties in England. I declare at this point that I am both a leaseholder and a landlord.

Approximately one-third of letting agents and a minority of property managers are not members of a redress scheme. This means that people using these services do not have ready access to an independent complaints procedure if they receive poor service from their agent. The majority of letting agents and property managers provide a good service. However, for people living in or owning property in the private rented and leasehold sectors, who rely on these agents, the inability to seek redress can have a significantly detrimental impact on their quality of life.

The Enterprise and Regulatory Reform Act 2013 gave the Secretary of State the power to require all residential letting agents and property managers in England to be members of a government-approved redress scheme. The first order, laid before this House on 25 October 2013, gave the Secretary of State the power to approve redress schemes and to set out requirements for them. As stated when that order was debated in November, a second order was to be made, making the requirement mandatory, once the Secretary of State was satisfied that all agents were able to join a redress scheme. The Secretary of State is satisfied that we have now reached that stage and we propose that the duty to belong to an approved redress scheme will come into force on 1 October this year.

In April 2014, the Secretary of State approved three schemes: the Property Ombudsman, the Ombudsman Services Property and the Property Redress Scheme. These three schemes provide an independent, transparent and competitive source of redress for landlords, leaseholders and tenants. Furthermore, the performance of these redress schemes will be monitored, ensuring that a high level of service and standards is maintained.

The redress schemes will have a range of options to tackle poor service by letting agencies. They will be able to require apologies, explanations, compensation, making good and even expulsion from the scheme. To ensure that all letting agents join a scheme, councils will be able to fine agents more than once for failing to join one. Yet the order is fair, in that should an agent or property manager feel that the fine is wrong or unreasonable, they will be able to appeal to the First-tier Tribunal.

We recognise that enforcing the requirement for membership of a redress scheme will entail a new burden for local authorities, so we will make additional funding available. Furthermore, councils will be able to retain the fine, enabling the proceeds from tackling cowboy agents to be used to tackle yet more rogue agents, where they exist, thus continually driving up standards in the industry. Councils will also be assisted by the redress schemes working together and with trading standards, minimising the capacity for rogue letting agents and property managers to hide.

The definition of what constitutes letting agent and property management work is very broad. We have therefore provided some exemptions where there is already a suitable mechanism for customers to seek redress or there is existing regulation. For example, universities helping to find student accommodation or operating halls of residence, legal professionals, managers of refuge homes and mortgage receivers are all engaged in work that could be covered by this order but are subject to existing regulation.

The order will bring a source of redress to the individuals who use around 3,000 letting agents and property managers. It will complement and strengthen existing provision in both the leasehold and private rented sectors. It will also complement the requirement that we are introducing through the Consumer Rights Bill for letting agents to publicise their fees both in their offices and on their website. This will encourage competitive fees, deterring agents from charging tenants and landlords for the same service.

Overall, we want to raise standards for landlords, tenants and leaseholders. Mandatory redress and transparent fees will go a long way to achieving this. I commend the order to the Committee.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I welcome the noble Baroness, as I think that this is the first time that we have done this. For me, this is a great delight because, as I am sure that she will not need reminding, it implements the amendment that I managed to secure, against the Government’s wishes, in the House. Needless to say, therefore, I warmly welcome the order. However, I want to make some comments and pose some questions to the Minister. I understand that my questions landed her on desk a little late and that some of the answers may have to be by letter.

First, the scheme will work only if all landlords and tenants become aware of their right to take any unresolved complaints against letting or property management agents to an ombudsman. What plans are there to raise such awareness? Will these include requiring every agent to publicise the relevant ombudsperson on their headed notepaper, website or whatever?

Secondly, in other retail areas, the consumer can shop around between providers, so normally transparency of fees is of great assistance. However, this of course is a different industry, where that does not apply to tenants, 60% of whom find their home via an agent. The tenant can choose only between properties; they do not select the agent. It is the landlord who selects the agent. What plans do the Government have to encourage landlords to shop around and thus drive up standards? Tenants simply cannot do that.

It is obviously too much to expect that the redress scheme itself will raise standards. It will certainly not be able to do it unless local authorities enforce the awards—although we are delighted with the incentive that the Government have made available, which I think local authorities will grab with both hands. In addition, standards will not rise unless there is some sort of feedback loop to ensure that bad practice is stamped out rather than continually requiring the consumer to suffer and then make individual complaints.

The Government may well say that they will oversee the redress schemes to make sure that they are effective, but I am more interested in how we oversee the sector to see that the lessons from those redress systems are brought together. Somebody should have responsibility for seeing what the common problems being complained about are and driving up standards in that way. It is, as we know, an industry infamous for instances of bad practice. According to Shelter, one in four people have been charged unfair fees. Reference checks can cost as little £10, which is very nice, but as much as £275, while renewal fees can cost up to £200. This is in a sector of 9 million tenants, where rents have increased by twice as much as wages since 2010. These unfair charges are hitting a group already suffering from high rents.

The Minister touched upon cases of agents double-charging; that is, charging both landlord and tenant for the same service. I am less relaxed than the Minister that simply putting up the list of charges will deter that. There is, furthermore, probably an interesting legal question as to whether tenants become clients if they pay an agent for a service. Can the Minister tell the Committee whether a payment for such a service makes the tenant a consumer under the Consumer Rights Bill? Would they therefore have the same consumer rights over those services, especially the right to have such a service provided with “reasonable care and skill”, as set out in that Bill?

It is clear that redress systems themselves cannot, of course, enforce their awards. If a letting or managing agent does not implement an adjudication, all the redress scheme can do is de-list the agency. The two existing schemes have an agreement that they would not take on an agency which has been debarred by the other, which is a pretty essential requirement to aid enforcement. Can the Minister tell the Committee whether the new, third scheme will undertake not to take on an agent that has been debarred from one of the existing schemes for not abiding by an adjudication? Without that, there will be no enforcement—unless the Government have something else up their sleeve they have not yet told us about. Can the Minister also tell us whether the new, third scheme will operate to an existing code, which the other two obviously already work to? What thought has been given to consistency of outcomes, which the two existing schemes strive to achieve?

On the selection of redress schemes, outlined by the Minister in her introduction, could she explain why, for the very first time in the development of statutory requirements to belong to an ombudsman, a profit-making body has been approved? All the others, across housing, energy, health, local government, telecoms, and legal and financial services, are either statutory bodies or not for profit. Why do the Government consider that this area of public policy should reside in the hands of someone out to make a profit? Why, anyway, did the Government want to add a third—a new, non-existent body—to two established, recognised and respected schemes? Is helping to set up a new ombudsman not at variance with Cabinet Office guidance that the Government should not set up a new ombudsman where there is already a satisfactory one in the relevant market? It would be interesting to know what risk assessment has been done of a “flight to the bottom”—in other words, making it as cheap as possible for landlords, when the majority of complaints will come from tenants—if there is a plethora of ombudsmen, with fairly obvious consequences for the quality of adjudications.

I understand that the new scheme is seeking to charge landlords considerably less than the established schemes, but does such competition on price—to be paid by the landlord, who will not be making the complaints on the whole—not risk compromising the quality of service provided to tenants? Will it not be confusing for consumers, tenants and landlords, to have to try and find out which is the appropriate ombudsman for their particular letting agent? Elsewhere, there is a move to rationalise and even reduce the number of schemes to make it easier for consumers, as we have seen from the report by the Select Committee in the other place. At the very least, should we not be working towards a common portal to help complainants rather than setting up ever more ombudsmen?

16:30

My concern is that this apparent government support for the fragmentation of the redress architecture with a plethora of ombudsmen may be a reflection of the lack of support for effective redress, particularly given the Government’s early resistance to this move. I would be interested to know what views they have sought from both landlords and tenants for their approach of supporting the increase in the number of schemes.

As the noble Baroness may know—I realise that she has taken this on very late—the Labour Party is against double-charging landlords and tenants for the same service. It would be interesting to know whether the Government share that view, and what assessment they have done of any conflict of interest where a letting or managing agent charges both contracting parties. To which does the agency owe a duty of care and other obligations?

Finally, how do the Government’s plans to implement the EU directive on ADR tie in with this particular order? Are we to assume that a similar pattern is to be followed for other markets? Are the Government setting out to allow private, for-profit companies to be the main suppliers of alternative dispute resolution? That is of course wholly different from our long and very advanced history of ombudsmen in this country.

[Baroness Williams of Trafford]

My Lords, I thank the noble Baroness for her input on this debate, and I congratulate her on the part she has played in this area. I will go straight to the various questions which the noble Baroness raised. The first question was about raising awareness and agents publicising their fees. We expect scheme membership to be publicised by members, and all three schemes will publish a list of members. We expect the schemes to work with their members to publicise which scheme they have joined. This should be displayed on an agent’s letterhead and perhaps on a sticker in their windows, on their website and so on. As for what happens when an agent fails to display their membership details, all three schemes will publish a list of their members, which will enable the general public to search those lists. Alternatively, someone could contact their local authority, which will be obliged to investigate.

The noble Baroness asked what will prevent an agent being kicked off one scheme and then joining another without the public knowing. All three approved redress schemes have agreed to work together. They have the power to share information with the appropriate regulatory bodies and with each other to ensure that rogue agents do not play one scheme off against another. Should one of the schemes expel an agent, it must set the conditions for readmittance of that agent and tell the other schemes. An agent must then meet those conditions before they can join any of the schemes. Given that the majority of letting agents provide a good service, with only one-fifth of tenants and 17% of landlords dissatisfied with the service according to a Which? report of November 2012, this will only apply to a few exceptional agents.

The noble Baroness also asked whether tenants would qualify as consumers under the Consumer Rights Bill. I will write to her about that. She also asked whether the third scheme was working with the existing schemes and whether it will use the existing code. The answer to that is, simply, yes. The noble Baroness asked what the reason was for the third scheme. The DCLG will monitor the performance of the schemes through key performance indicators and will undertake a review of the policy in around a year, after the regulations come into force, to ensure its objectives are being met. The schemes were selected as they all met the conditions for approval, including demonstrating that they are independent, fair, effective, transparent and accountable. The first two are existing schemes, as the noble Baroness pointed out, which between them already have 60% of the total 11,560 agencies as members. The PRS is a new provider but is very much open for business.

The noble Baroness also asked whether approving a scheme which is run by the same company as one of the tenancy deposit schemes will create a conflict of interest. The PRS met all the conditions for approval, including that it should be independent. It indicated in its bid that it will apply for membership of the Ombudsman Association, which will demonstrate that it embodies the key characteristics of redress schemes, namely effectiveness, fairness, openness and transparency. I hope it will give the noble Baroness comfort that the DCLG will monitor the performance of all the schemes and will have the ability to withdraw approval should a scheme no longer meet the conditions for approval.

I think that addresses all the points that the noble Baroness made. If not, I shall write to her afterwards.

[Baroness Hayter of Kentish Town]

Some of those answers are particularly welcome, for example about publicity and working together, but the Minister has not commented on the use, for the first time, of a private for-profit company. I assume she took my comment as a comment rather than a question. I would be interested if she could respond to that but, if not, I will let it lie on the table.

[Baroness Williams of Trafford]

Perhaps I could write to the noble Baroness on that point.

Motion agreed.

Public Bodies (Marine Management Organisation) (Fees) Order 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

16:37

Moved by

[Lord De Mauley]

That the Grand Committee do consider the Public Bodies (Marine Management Organisation) (Fees) Order 2014.

Relevant documents: 1st Report from the Joint Committee on Statutory Instruments, 2nd Report from the Secondary Legislation Committee

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, the order is made under the Public Bodies Act 2011. Section 4 of the Act enables Ministers to make an order modifying the funding arrangements of certain public bodies, including the Marine Management Organisation. The purpose of the order is to allow the MMO to charge for the monitoring, varying and transfer of marine licences.

The MMO is the principal regulator of marine activities around England and was created by the Marine and Coastal Access Act 2009. Its mission is to enable sustainable growth in our marine area, facilitating growth in coastal communities while protecting and enhancing the marine environment. Its responsibilities include the operation of the marine licensing system in English waters and the offshore waters of Wales and Northern Ireland.

Part 4 of the Marine and Coastal Access Act created the new streamlined marine licensing system for most UK waters. The system replaced the previous licensing system under the Food and Environment Protection Act 1985. A marine licence enables consistent decision-making about what activities are allowed to take place in the marine environment. Developments subject to a marine licence can range from small projects, such as the installation of buoys or the construction of small jetties, to larger harbour, dredging and wind farm developments. It is government policy to recover licensing costs where practicable. To a large extent, the Marine and Coastal Access Act and regulations made under it allow for the recovery of most of the costs associated with marine licensing. Indeed, the fee structure for marine licensing was updated and revised in April this year. This revision was designed to ensure that the calculation of fees more accurately reflected the actual costs incurred by the MMO.

However, the powers in the Marine and Coastal Access Act do not allow for the recovery of all the costs associated with monitoring, variations and transfers of licences. These costs were recoverable under the previous licensing system, and it was never the intention to omit them from the Marine and Coastal Access Act. The proposed order under the Public Bodies Act is therefore designed to close this particular funding gap. The order specifies that the MMO may charge a fee in relation to monitoring an activity authorised by a marine licence, the variation of an existing licence and the transfer and variation of a licence from the licensee to another person. The order specifies the level of the fees that may be charged. The basic principle is to charge applicants for the hours that are worked on a case, with the hourly rate fixed at £94. However, maximum ceilings will apply to simple variations or transfers, or the monitoring of non-complex cases. This is intended to provide greater certainty for smaller businesses and other operators. A different formula will apply in relation to the monitoring of disposal sites for dredged material. In these cases, the fee is calculated on a per tonne basis, up to a maximum of £15,000. This is because disposal sites are typically used by more than one operator and the MMO needs to have a method for apportioning the monitoring costs. Once in force, the order will increase the MMO’s income from marine licensing by about £600,000 a year. In the overall context, that sum of money may not appear huge but, in the context of the MMO’s budget of about £28 million and the focus on costs, it will make an important difference.

We have consulted on these proposals. As explained in the explanatory document accompanying this order, most respondents agreed with the overall principle and the need to recover costs. However, there were inevitably some concerns about the potential burden of regulation and the need for transparency and consistency in charging. We and the MMO are sensitive to the pressures on marine businesses and other users and have worked hard to remove unnecessary regulation and make the system work as efficiently as possible. This has included exempting low-risk activities, the use of longer licences for activities such as dredging and disposal, fast-track licensing for simple straightforward applications and the introduction of a coastal concordat to improve co-ordination of the consenting process for coastal developments in England.

I am grateful to the Secondary Legislation Scrutiny Committee for clearing the draft order within the 40-day affirmative procedure. In its consideration of the order, the committee agreed with the Government that in the longer term it will be desirable to rectify the deficiency in charging powers through an amendment to the Marine and Coastal Access Act. My department will continue to look for a suitable opportunity to do so in the future.

In summary, the Government consider that the approach set out in this order will provide a fair means of charging, a modest saving to taxpayers and an essential support to the MMO’s efforts in safeguarding the marine environment. To this end, I commend the order to the Committee.

[Lord Greenway (CB)]

My Lords, I thank the Minister for his explanation of the order, which I very much welcome. I chaired the joint pre-legislative scrutiny committee on the Marine and Coastal Access Bill. One of the concerns of the committee was the funding of the Marine Management Organisation. That was reinforced during the passage of the Bill through this House. As the Minister said, the Marine Management Organisation is still somewhat underfunded. This is especially so since Defra’s budget was cut. I think that what is proposed here is really a variation on the “user pays” principle. It is absolutely right that the MMO should be able to recover the full costs of varying or monitoring marine licences. In my opinion, the measure is very much to be welcomed. I think the Minister said that the MMO will gain to the tune of £600,000 a year and the taxpayer will be saved from paying that amount.

16:45

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of the ordering. From these Benches, I am happy to approve of the measure. The Marine Management Organisation is a relatively new organisation set up by the previous Labour Government under the Marine and Coastal Access Act 2009. It was set up with cross-party support, and it is encouraging that it still receives that support.

We continue with our support for this order to allow the MMO to move towards full cost recovery in relation to the activities it undertakes. The old licensing system under Part 2 of the Food and Environment Protection Act 1985 was insufficient in a number of ways to allow cost recovery. It is therefore regrettable that, under the charging powers of the Marine and Coastal Access Act, monitoring costs, especially for dredging, are still not fully recoverable. While powers under the Public Bodies Act are being used to move more quickly towards full cost recovery, I join with the Secondary Legislation Scrutiny Committee in considering that it would be desirable that Defra remedies the situation through an amendment to the MCAA 2009 at an early opportunity.

I also recognise that the MMO has undertaken a review of activities and moved quickly to reduce unnecessary burdens and costs on businesses and other marine users by increasing the number of exempt activities, expanding the use of longer licences and other efficiency measures. Further improvements will be encouraged through the organisation’s stakeholder forum group, customer satisfaction surveys and key performance indicators.

Can the Minister clarify further, however, how the MMO will operate in relation to establishing an ambitious, ecologically coherent and well managed network of marine protection areas, which was also part of the MCCA 2009? Can he confirm that the MMO will be involved under the power to designate marine conservation zones in UK waters? What assessment have the Government made to allow the MMO to move towards full cost recovery in the activity on designation and regulation of the planned marine coastal zones? An independent science advisory panel concluded that 120 sites would contribute to an ecologically coherent network of marine protected areas, and that this network would need to be strengthened. However, in November 2013, the Government designated just 27 zones, covering 8,000 square kilometres of offshore waters and around 2,000 square kilometres of inshore waters. Will these cost recovery powers allow more sites to be designated and monitored at an earlier date—that is, much sooner—following further site-specific conservation advice?

Finally, I ask the Minister whether, under the regulations for fee ceilings, which will limit the cost to smaller-scale projects for small businesses, the cost met by the public subsidy will have a cap attached. If so, at what level will it be and how will it work? With those few comments, I am content to support the order.

[Lord De Mauley]

My Lords, I thank noble Lords for their comments on the order—in particular those of the noble Lord, Lord Greenway, which were helpful.

Noble Lords know that we are committed to achieving a sustainable marine economy, which means, among other things, having an effective system for managing activities taking place in our seas. The marine planning and licensing systems are operated by the Marine Management Organisation and are key to that. In setting up the MMO, the Government have been keen to ensure that it can operate effectively and efficiently, and it needs to have the right people and resources to act as a modern enabling regulator. This means working to find solutions that enable sustainable growth to take place while protecting and enhancing the marine environment. It also means recovering the reasonable costs that it incurs in licensing.

Noble Lords referred to the views of the Secondary Legislation Scrutiny Committee. As I said, the committee has agreed with the Government that, in the longer term, it will be desirable to rectify the deficiency in charging powers through an amendment to the Marine and Coastal Access Act, and we will continue to look for a suitable opportunity to do that.

The noble Lord, Lord Grantchester, asked a number of questions, partly around MPAs. As he said, we have announced an initial 27. The MMO will be involved in meeting the objectives on marine conservation zones; for example, through marine plans and licensing. We intend to designate further sites and will make a decision on them early next year.

The noble Lord’s other questions centred on capping of fees. Costs will be met by public subsidy, which we will be able to manage through careful case management and efficiencies. If I have missed anything in that answer, I will write to the noble Lord, but I hope that he will accept it.

Approval of the order will enable the MMO to recover the cost of regulatory activities that it cannot currently charge for. As I have said, this change will result in a saving of about £600,000 annually to taxpayers. Despite that not being a huge sum of money, it will make a big difference to the MMO’s finances in these straitened times and is essential to delivering and maintaining a high-quality service. I thank noble Lords for their contributions.

Motion agreed.

Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

16:52

Moved by

[Baroness Verma]

That the Grand Committee do consider the Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, since its launch in January 2013, the impact of the Green Deal has been growing steadily. At the end of May, more than 230,000 Green Deal assessments had taken place. Almost 24,000 of those took place in May alone. Research has shown that 80% of those who have had a Green Deal assessment have installed, or intend to install, at least one measure. More than 800,000 energy efficiency measures had been installed in almost 700,000 homes through the energy company obligation, cashback and the Green Deal by the end of April. This is a great achievement.

To continue building momentum, we recently launched the Green Deal home improvement fund. This fund will help even more people to install energy efficiency measures in their homes by providing them with money back on the contributions they make towards the installation of improvements. People in England and Wales can now get up to £7,600 back through this new fund, which will allow them to take control of their energy bills and have warmer, cleaner and greener homes. This includes: up to £1,000 for installing two energy efficiency measures from an approved list; up to £6,000 for installing solid wall insulation; and up to a £100 refund on the cost of their Green Deal assessment. Take-up of the Green Deal home improvement fund has been positive. The latest figures show that, as of 14 July, 9,559 applications had been received and 6,607 vouchers issued, with a total potential total value of £36,484,100.

The delivery of more measures, on a large scale, can dramatically improve people’s quality of life by making their homes warmer, by having an impact on their health and by driving down the cost of having a decently heated home. The successful implementation of the Green Deal is dependent on encouraging consumers to take decisions to retrofit their homes with a range of measures that they can trust to deliver savings in energy consumption and in their bills. To do this, we have put in place a robust framework that defines what measures are legally eligible for use within the Green Deal, alongside a robust methodology for estimating the savings that will be realised.

When the Green Deal was launched in 2013, the Green Deal (Qualifying Energy Improvements) Order 2012 defined an initial list of 45 measures that would be legally eligible for use. To ensure that we are promoting the maximum number of measures possible and taking account of developments in energy efficiency product technology, we are committed to keeping this list under review. This amendment order makes two minor technical adjustments to the original 2012 order. The instrument amends the 2012 order to allow two additional energy efficiency improvements to be installed under a Green Deal plan. Those are: more efficient circulator pumps; and storage wastewater heat recovery devices—attached to baths or showers. We will be introducing a number of further measures within the Green Deal later this year, which will not require a technical amendment to the 2012 order as they are already covered by its definitions. These additional measures are: energy efficient luminaires, including modern LED lighting for the first time in domestic properties; the use of replacement glazing panels for double-glazed windows; party-wall insulation; and more efficient storage heaters.

The amendments brought about by this order are technical in nature but will add greater choice under the Green Deal and form part of continuing efforts to maintain and improve a robust legal framework that provides consumers with the confidence required to take forward whole-house retrofit and therefore save energy. I commend the order to the Committee.

[The Earl of Lindsay (Con)]

My Lords, I welcome my noble friend’s explanation of this amendment order. I declare an interest, first, as chairman of the United Kingdom Accreditation Service, which provides accreditation in order to protect the consumer interest in the rollout of the Green Deal, although that is not relevant to this order. I also have a more specific interest, as I have recently had a Green Deal assessment of my own and have signed up to a number of measures arising from that assessment, although I should point out that the specific proposals in this amendment order do not affect my own circumstances.

I just want to put a question to my noble friend. Having had a long involvement with better regulation and advising the Government on how to make legislation and regulations more efficient, I welcome any ability for existing legislation and regulations to be amended promptly and easily. I have looked with interest at the final sentence of paragraph 8.1 of the Explanatory Memorandum—it contains a certain amount of gobbledygook or a typo, as it does not quite make sense, although I think I understand what it intends to communicate—which suggests that the measures are being brought forward after technical dialogue, albeit at an informal level. The question that I want to put to my noble friend is: is there a continuous process for reviewing and, where necessary, revising the technical and other aspects of the Green Deal, especially as they relate to legislation and regulation, or is it a periodic process? I suppose the sub-question of that is: is it a formal process or, as implied by that paragraph, is it very much reliant on informal dialogue? I ask that last question not because I have any concerns about the value of informal dialogue but to be better advised as to what that process is.

17:00

[Lord Grantchester (Lab)]

I am grateful to the Minister for her introduction to the order before the Committee today. On this side, we are very happy to support the Green Deal and all that it seeks to achieve to improve the energy efficiency of the UK’s housing stock. However, we urge the Government to do better. In the past, the Minister has side-stepped my requests for the Government to share with us their measure of success for the uptake of Green Deal plans. In the context of her extolling the numbers to date, is she able to tell us the date, on a projection forward, when the Government would identify the Green Deal programme as having been a success?

The measure before the Committee today is merely technical, in extending by two the measures that could be taken up under a Green Deal plan: namely, circulatory pumps and storage wastewater heat recovery devices attached to baths and showers. I am happy to support the order and agree that it is good to be able to make more measures available that will improve energy efficiency further.

In the debate on the order in the other place, it was mentioned that householders must now have two items to qualify for a cashback contribution. Will the Minister clarify that householders can still proceed with only one measure in their plan—they will just not qualify for cashback—or is the level of expenditure also important? The Minister might argue that this is sensible to drive forward the ambition for home energy efficiency improvements, but might imposing supplementary qualifying standards have the effect of reducing uptake? I appreciate the information given by the Minister on further measures to improve uptake. Will her department be monitoring the effects on uptake once these are introduced?

There was widespread concern about the cost of finance under the funding provisions at the inception of the Green Deal. While the introduction and extension of cashback measures may be a reaction to the slow uptake, can the Minister say who provides the cash for cashback and whether the department has plans to review the terms of finance from the Green Deal Finance Company? Will the Government be reassessing the total amount that could be financed under the Green Deal, especially in relation to the addition of these two measures today, and indeed any further measures once they are introduced?

We are a little anxious that the plethora of measures under the Green Deal may be adding unnecessary complexity to the scheme, but endorse the order before the Committee today.

[Baroness Verma]

My Lords, I am extremely grateful to my noble friend and the noble Lord for their supportive remarks. I reassure my noble friend that we are constantly reviewing the process, whether internally or externally with industry and more widely. That is because this programme is the first of its kind in the world and, therefore, as we learn how to better streamline some processes or make available information so that consumers can engage much more fully, we want to ensure that the process is responding outwards so that we get as much uptake as possible.

My noble friend is absolutely right. I have just looked at the grammar and I think that the grammar might be tweaked slightly. I will ensure that I take that back to those who put it in there in the first place.

The noble Lord opposite had several questions, as always, on this very simple order. If I do not pick up all his questions, I promise to write to him. He asked what success would look like. He is aware that these are still very early days in the programme, but I have indicated the figures that are now beginning to emerge. Of course, success will take many forms, so it would be wrong for us to put in place a real target, but an aspiration would be to have possibly around 1 million households adopting some of these measures by 2015. I add the caveat that we may not know about the take-up of some measures which have been financed through a different route. I am looking for inspiration from the officials behind me as regards other responses. If they are not forthcoming, I will have to write to the noble Lord on those responses.

The noble Lord also asked about cashback and whether it constituted support through subsidy. He is, of course, aware of the golden rule which is in place to protect consumers, so that, whatever they pay, they will make savings. Overall, I judge that the noble Lord supports this order although he will continue to question and challenge what the Government are doing, which is absolutely right. Does he wish to ask me another question, given that I have failed to answer the others?

[Lord Grantchester]

I merely wished to tease from the Minister whether cashback was a subsidy or part of the golden rule. Could people’s bills be larger at a later stage because they had received some cash savings upfront?

[Baroness Verma]

No, my Lords. As the noble Lord is aware, the golden rule is very strict. The cashback is the incentive which should encourage people to put measures in place given that the savings which flow from that will count towards the cost of installing the measures.

I will need to look at some of the questions that the noble Lord has raised. I hope that he is reasonably satisfied with my response. I commend the order to the Committee.

Motion agreed.

Gangmasters (Licensing Authority) Regulations 2014

Wednesday 16th July 2014 Grand Committee

Motion to Approve

17:08

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Gangmasters (Licensing Authority) Regulations 2014.

Relevant document: 5th Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, the regulations were laid before Parliament on 9 June 2014. They revoke and replace the Gangmasters (Licensing Authority) Regulations 2005 and reform the governance of the Gangmasters Licensing Authority (GLA) by reducing the size of the board from its current 29 members to nine members and enabling board members to be recruited through open competition rather than by nomination from a restricted set of organisations.

The GLA was set up in 2004 to protect vulnerable and exploited workers after the tragic deaths of 23 Chinese cockle pickers in Morecambe Bay. The authority licenses businesses which provide workers to the farming, food processing and shellfish-gathering sectors to make sure they meet the employment standards required by law, and carries out inspections and enforcement activity. Since 2004 the GLA has issued over 2,500 licences and initiated the successful prosecution of 70 individuals. Since 2010, the GLA has identified £1.2 million in proceeds of crime and protected over 5,000 workers, recovering some £4 million for victims. The GLA became a Home Office non-departmental public body on 9 April 2014, transferring from Defra.

The regulations before noble Lords today reflect one of the key recommendations of the Red Tape Challenge review of the GLA’s operations and implement a measure announced in a Written Ministerial Statement presented to Parliament in May 2012 by the noble Lord, Lord Taylor, when he was Parliamentary Under-Secretary of State at Defra. The planned reform of the board was a key recommendation of the triennial review of the GLA, which reported in April 2014.

When the GLA was established in 2004, the main concern underlying the design of its governance structures was to encourage a high level of participation from the widest possible cross-section of industry stakeholders in order to secure support for the introduction of the licensing regime. This resulted in a very large, representative board with places reserved—subject to ministerial appointment—to specific organisations named in statute, as well as a number of ex-officio places for government departments and agencies with operational interests in common with the GLA. This approach succeeded in helping the GLA establish itself as a well respected and effective regulator. However, it was recognised that the governance structures enshrined in the 2005 regulations were intended to serve the authority during its early years of operation, and that they should be reviewed to ensure that they continued to enable effective leadership.

The Red Tape Challenge review of the GLA concluded that its developing role in tackling worker exploitation and criminal activity demands more focused leadership, and the review recommended the introduction of a smaller board to provide the authority with clear strategic oversight and direction. Reforming the board in the way provided for in these regulations will enable the GLA to better adapt to the changing circumstances that it faces. Strong and effective engagement with the sectors that the GLA regulates remains important. This will be ensured through improved advisory groups reporting to the main board, building on the current system of sector liaison groups. I commend these regulations to the Committee.

[The Duke of Montrose (Con)]

My Lords, I greatly welcome the measure introduced by the Minister, particularly the reduction in the number of people involved in running this operation. This will presumably result in better value for money in what is produced by the Gangmasters Licensing Authority. However, considering that originally—and, probably, even now—the expenditure was supposed to be recovered from the applicants, will this mean that the cost of the licences will now reduce? I do not know whether the GLA was successful in that regard. It might well have had a shortfall but, as the Minister mentioned, it certainly issued a great many licences over the period.

Originally, the GLA appeared to have only one set fee in obtaining a licence, and I wonder whether the new body will be allowed to differentiate at all between large and small employers. This is a topic that I have followed on and off for some time, and one of the interesting things is the range of activities that the GLA covers. The Explanatory Memorandum states that the GLA issues licences to businesses supplying labour in connection with agriculture, and the gathering of wild animals and wild plants. The Minister mentioned this in her introduction, but it may not be immediately obvious to Members of the Committee that apparently the gathering of wild plants includes forestry, and therefore the whole forestry industry seems to be brought into the regulations.

The particular issue that I came across was that many of the people who come to work in forestry are single, individual contractors. For example, I came across a fencer. In fencing it is much better to have two people, but as an independent contractor he would ask someone to come along and cut branches off the trees along the path of the fence he was building. If that person, however, finished his work and stopped to pick up a hammer in order to help the fencer, a gangmaster’s licence would be needed. The distinguishing feature is that if you are in charge of equipment, you are not part of a gang. The minute you become involved in manual labour for someone else, a gangmaster’s licence is required. I should be grateful to know how this has progressed and whether there will be any discretion under the new body to tailor the way in which it applies the regulations.

17:15

[Lord Grantchester (Lab)]

I thank the Minister for her explanation. From these Benches, I am unhappy and reluctant to endorse this measure as currently drafted. Several features of the order cause considerable concern.

Labour is rightfully proud that in government it established the Gangmasters Licensing Authority. I remember that my noble friend Lord Whitty steered the Bill through this House without any amendment. It is unfortunate that the Government wish to press ahead with this order despite the misgivings voiced in the other place calling for a period of reconsideration, and the measure having been subject to a vote. That the Government wish to proceed with the governance alterations in spite of this controversy is to be regretted, given that the authority is so important and does such vital work.

My first anxiety stems from the fact that responsibility for the Gangmasters Licensing Authority passed from Defra to the Home Office in April this year. This runs the risk of interpreting the work of the authority as merely enforcement. I am sure the Minister will appreciate that there will be a difference of culture between the two departments. We are concerned that the Home Office may be focused only on prosecutions. Can the Minister outline how her department will widen the approach beyond mere prosecution towards prevention and guidance to encourage interplay in farming activities, with a view to achieving outcomes beyond prosecution?

Labour is approaching this area with a view to extending and building on the gangmasters legislation so that it covers other areas. In this regard, it is disappointing to hear that the Government may well have intentions to withdraw forestry from the authority’s areas of responsibility. The governance structure is a vital part of establishing full participation in the objectives and strategy of the authority, which is leading the way in tackling abuse among certain workers. The approach from my colleagues in the other place was to seek to be satisfied that the reduction in board representation from 29 ensured that the full skill set and expertise required by the authority would still be present. The Minister did not explain the logic behind reducing the number on the board to nine. While recognising that numbers could be reduced, we are looking for assurances that the board will continue to be effective, and indeed improved, by reducing its size to a certain number.

It is disappointing that the Minister in the other place did not explain how nine would be the correct number to ensure that the members of the board brought the level of expertise needed and that there was enough recognition from and connection to the community that will ultimately implement the regime. Instead, the Minister concentrated on the belief that the order had to be brought in immediately and could not be subject to further consideration. Since it is recognised that the board members will now be members on the basis of their own abilities and not as representatives of various organisations, the Government must have given some thought to the range of skills needed in order for the number nine to be proposed.

It would be helpful to understand better the consultation that was undertaken on the matter as explained in the memorandum. The explanatory document gives details of the consultation where the respondents agreed with the proposals to reduce the size of the board and to move away from a representative board to one recruited by open competition. Respondents were also asked to give details of their preferred mechanism for ensuring that a smaller board would have access to and take account of the wide range of stakeholder views. The memorandum says, at paragraph 8.5:

“Of those answering the question about the GLA Board structure, 56 agreed with the Government’s proposal for reform, while 5 expressed their disagreement. Forty five of the 48 responses to the question seeking views on how to maintain stakeholder contact with a reformed Board were in favour of the retention of a formal mechanism for ensuring these views were heard. There was no clear consensus on how this would best be achieved”.

I repeat the last sentence:

“There was no clear consensus on how this would best be achieved”.

Can the Minister say how many respondents came up with a number and how popular nine was?

I will be so bold as to suggest an amendment to the order today. Would the Minister consider an alternative, whereby the number of board members must total at least nine but not more than 15? That might go a long way to ensuring that the right skill set was always present on the board and make it flexible as to the operation of the authority and responsive to the challenges that may be thrown up in future. Would the Minister like to withdraw the order today to consider that? The TUC argued in its representation:

“If the Regulations are adopted, future Board members will be recruited against a generic skill-set. There is a risk that future Board appointees will have no knowledge of the agricultural, fresh produce and shellfish industries … The appointees are also likely to lack experience in representing or protecting vulnerable workers from exploitation”.

In her response today, will the Minister also include some further details that are not included in the regulations? Under Regulation 5, relating to,

“Tenure of office and remuneration of the Board”,

neither the length of time of a board appointment nor whether a board member may serve multiple terms of appointment is stated. Is this included in an earlier regulation that is not being changed by these regulations? Could the Minister perhaps expand with further details on how the department expects the board to be constituted and how it may operate? What assessment has been made of the impact of these changes on vulnerable workers? How will the Government ensure stakeholder engagement and provide joined-up government? Finally, will the Government review the impact of these governance changes on the Gangmasters Licensing Authority and its ability to perform its functions? On this crucial area, where so many people are vulnerable, I would like to be reassured by the Minister today.

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for her explanatory statement. I did not find that it addressed all the issues of concern that my noble friend Lord Grantchester has already enunciated. I declare my interest as the acting chair of the Ethical Trading Initiative, the organisation that probably drove the previous legislation, along with the trade unions and corporates that were involved at the time. Understandably, we have a significant interest in the current proposal.

We feel that the general direction of travel during the past few years has been to make the GLA a bit more biddable to the Government’s agenda, including a focus on enforcement, possibly to the detriment of licensing and standards-setting work, which is widely acknowledged as having been important in driving a change in attitudes in the industry. It is often stated that it was a part of the Government’s Red Tape Challenge in its early days to consider whether to dissolve the GLA as a burden to business. I hope that the Government have moved away from that.

The noble Duke, the Duke of Montrose, talked about better value for money. It depends on how you assess that value for money: whether we are talking about just the cost to business of providing the scheme or about whether potential employees in these industries are still being adequately protected. We know that a lot of the risks have not gone away. I do not profess to be knowledgeable about the forestry industry; I am more familiar with the meat-processing and shellfish industries. We need to be careful about how we assess value for money.

I share the views of my noble friend Lord Grantchester about the move from Defra to the Home Office and his feeling that it will focus attention on enforcement and prosecution. While we do not regard that as unimportant, there is a concern that it will be to the detriment of standards-setting and best practice development. I would welcome the Minister’s comments on that, because we think that prevention, rather than dealing with the symptoms through prosecution, is just as important. We know that the risk is still there and in some ways has an impact on modern slavery, of which we have had examples in these industries. We should not be under any illusions about the level of risk. We may not have had a Morecambe Bay tragedy—and thank goodness for that—but we have had other tragedies of individuals being held more or less in a situation of bondage or slavery, with passports confiscated, living in terrible conditions and not even being paid minimum wages. We should not forget that.

I listened carefully to what was said about the size of the board. If we are changing to a board of nine, it is legitimate to ask whether there will be a sufficient skill set in the way that my noble friend has suggested.

I want also to ask about the advisory committees that are referred to in the consultation document, which states that,

“this instrument permits the Board to establish advisory committees. Unlike the existing stakeholder liaison groups, the measure introduced in this instrument obliges the Board to pay due regard to the advisory committees findings and recommendations”.

Can the Minister give any more detail on “pay due regard”? Will the board publish the recommendations of the advisory committees and will we be able to see how the Gangmasters Licensing Authority reacts to them? That is important, because it is inevitable that the committees will raise the concerns of stakeholders in those industries.

By having the right type of legislation and a body with a statutory mandate, positive lessons have come out of the GLA experience for tackling deep-rooted practices such as labour abuse. I am not sure how one would tackle modern-day slavery across different industry sectors without bodies such as the GLA.

On the review process, I notice that the Explanatory Memorandum states that there is no need for an impact assessment because there will be no changes that merit it. Nevertheless, this is a fundamental change to the operation of the Gangmasters Licensing Authority. Will the Minister reflect on the suggestions made by my noble friend Lord Grantchester? If she is not prepared to go quite so far as he suggested today, will she consider the need for a review process before a triennial review given the change that is taking place?

17:29

[The Duke of Montrose]

My Lords, perhaps I might come in again. It was very interesting to listen to the noble Lords opposite and hear their concerns. I wonder if we have a clear picture of what the members of the Gangmasters Licensing Authority are required to do. Presumably they have a very great role in drawing up the regulations and looking into the particular circumstances of any industry. By and large, the regulations are fairly clear. The enforcement is laid on those who employ the gangmaster. At the same time, of course, the police and various other bodies can carry out the enforcement. I do not know whether the members of the Gangmasters Licensing Authority are asked to go round and check on what is happening in different circumstances. Particularly if there is a legal case that arises, I suppose that they are required to appear in court. I wonder on how many occasions the members of the Gangmasters Licensing Authority have been asked to appear in court to defend their regulation.

[Lord Young of Norwood Green]

There were two figures that the Minister quoted that I thought were interesting. I missed exactly whether the £1.2 million was the licence fee—I might have got that wrong but she can correct me if so. As interesting was the £4 million compensation that was obtained. I presume that was in circumstances where, for one reason or another, employment rights had been transgressed, whether it was minimum wage or whatever the circumstances were. It would be interesting to have some detail about what that compensation involved.

[Baroness Williams of Trafford]

My Lords, I thank all noble Lords who took part in the debate. First, I will discuss the future direction of the GLA now that it has become a Home Office body, which has been touched upon in various speeches.

The Government are determined that criminals who engage in forced labour, trafficking and other abuses, and unscrupulous employers who exploit vulnerable workers should face tougher enforcement action and stronger penalties. That is why the GLA became a Home Office body in April, to enable it to strengthen its enforcement and intelligence-gathering capabilities. In the Home Office, the GLA can benefit from closer co-operational links to the wider law enforcement family and it will work in partnership with the National Crime Agency, regional crime hubs, local police forces and immigration enforcement teams. The GLA will be able to secure expert support from the National Crime Agency intelligence hub and immigration enforcement intelligence. The GLA will also have access to College of Policing-accredited training developed for immigration enforcement investigators.

The GLA is at the forefront of the fight against worker exploitation, forced labour and slavery. Some noble Lords touched upon modern slavery. A reformed board able to steer the organisation through change and provide leadership is essential. This reform is even more important now that the GLA sits alongside enforcement bodies in the Home Office, sharing intelligence and reducing crime.

The first point made by my noble friend the Duke of Montrose was about value for money. The reform is not primarily about saving money but about increasing effectiveness. The cost of licences is a slightly separate issue, but there is no current plan to change the licensing fee structure. The fees are currently banded according to the turnover of businesses, which I think one noble Lord touched upon, and the lowest fee is £400.

My noble friend also touched on forestry businesses. Forestry businesses were excluded from the need for licensing under an order in October 2013. As in the example given by my noble friend, forestry is therefore not an issue in this case.

Going back to the move to the Home Office, it is not about narrowing the focus of the GLA to prosecutions only. The move will only enhance partnership working, in our view.

The noble Lord, Lord Grantchester, talked about getting the right skills for the board. We are aiming for a board that has the best skills and expertise, which includes the expertise of the sectors being regulated but also those with other relevant experience; for example, commercial, financial and legal expertise, and expertise in the regulation of comparable sectors. Each individual applies through open competition and will go through a recruitment process. We want the right make-up for the board so that it can take forward the reforms that are needed to ensure that the GLA can continue to fight for workers and ensure that they are not exploited.

Noble Lords also touched upon the advisory committees that will sit alongside the main board. It is a matter for the board how it establishes and works with advisory committees. The Government’s transparency agenda would expect the board to publish relevant papers as appropriate.

There has been quite a lot of discussion this afternoon about why the Government want to reduce the current number of board members. I do not know whether noble Lords have sat on boards; I certainly have, and a board of 29 does not make decisions in a very efficient manner. Just from personal experience, I would rather sit on a board of nine than 28 or 29. The current make-up of the GLA board was designed 10 years ago to encourage all stakeholder groups affected by the licensing scheme to take part in establishing the authority. Now that licensing is established in the regulated sectors, the GLA needs a more streamlined board with a clear remit to provide strategic oversight. Having a board appointed on merit through open competition will bring the GLA in line with similar public bodies and widen the pool from which candidates can be drawn.

One noble Lord—I think it was the noble Lord, Lord Young—talked about the wide variety of stakeholders to be heard and asked how the board would do that. The advisory committees will help in that endeavour, and the existing stakeholder liaison groups, which cover the labour providers, labour users, workers and businesses concerned, will also continue.

Noble Lords asked why nine is the magic number. We believe that the right skill set can be gained through a board of nine members, while also ensuring that it is able to take swift and clear decisions. Nine is not inconsistent with comparable boards of other arm’s-length bodies.

If I could just touch on the point that the noble Lord, Lord Young, made about the £1.2 million, that is how much the GLA has identified in proceeds of crime and in protecting more than 5,000 workers and recovering some £4 million for victims. That is where the £1.2 million has come from.

I do not know whether I have satisfied the concerns of the noble Lord, Lord Grantchester, but I am sure that he is about to stand up and tell me if I have not.

[Lord Grantchester]

I start by saying that I omitted to mention my farming interests in a dairy farm. I apologise to the Committee for that omission. However, in my experience in the farming sector I have never heard of a lack of back-up for any of the enforcement authorities that cover the many regulations that the general practice of agriculture has to abide by.

I listened very carefully to the Minister but I do not think I picked up how it was explained that the Home Office would ensure that best practice guidance and prevention would be maintained, even though there would be a greater emphasis on enforcement. Perhaps I could gently ask for that assurance to be given.

Similarly, I recognise that 29 is a very unwieldy number and that it could be reduced now the GLA is established. If the Minister could say a little more to reassure me on several of the further questions I posed about the GLA’s continuation of its functions, so that the Home Office could reassure stakeholders and the TUC, as the representative of workers, that possession of the proper skill set will be part of the background assessments in making an appointment, that would be most helpful.

[Lord Young of Norwood Green]

I asked whether the Minister would consider the review timetable. I do not know whether the existing triennial review is all that is proposed but, given the changes that are taking place, a shorter period would seem to be appropriate. If the Minister could respond to that, I would be grateful.

[Baroness Williams of Trafford]

As I understand it, the GLA’s current role and practice will continue. I will write to noble Lords and correct this if I am wrong, but I understand that there will also be a slight budget increase for next year. We are not taking anything away in the move to the Home Office. As to whether the GLA will focus only on enforcement, it will continue as a regulator in the sectors that it covers. It regularly issues briefing notes to the sector on licensing employment and the awareness of exploitation, and I understand that that will continue.

[Lord Young of Norwood Green]

The review period?

[Baroness Williams of Trafford]

As I understand it, there is currently a triennial review, but I will clarify that in a note to the noble Lord.

Motion agreed.

Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014

Wednesday 16th July 2014 Grand Committee

Motion to Consider

17:43

Moved by

[Lord Popat]

That the Grand Committee do consider the Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[Lord Popat (Con)]

My Lords, I apologise that my noble friend Lord Ahmad could not be here this afternoon. He has been moved on and I am taking up this particular order.

The order was laid in Parliament on 23 June. It makes provision for changes to be made to the mandatory licensing conditions. The purpose of the instrument is to tighten the existing mandatory licensing conditions relating to irresponsible promotions, the provision of free water, the adoption and application of age verification policies, and the provision of small measures at licensed premises.

The Policing and Crime Act 2009 amended the Licensing Act 2003 to confer a power on the Secretary of State to specify further mandatory licensing conditions relating to the sale and supply of alcohol. Sections 19A and 73B of the Licensing Act allow for such conditions where she considers it appropriate for the promotion of the licensing objectives.

The department carried out a consultation on the alcohol strategy from 28 November 2012 to 6 February 2013. This consultation included questions on reviewing the mandatory licensing conditions. A number of suggestions were received but, in order to strike a balance between promotion of the licensing objectives and burdens on business, it was decided to restrict the changes to those which caused the most concern. These are the measures that are before noble Lords today.

The order would apply to all licensed premises in England and Wales. Scotland and Northern Ireland are subject to different legislation. The measure will make the existing conditions more effective and ensure that they are consistently implemented, particularly those regulating irresponsible sales and promotions.

I will now talk about the impact of this order. The changes will affect four areas—irresponsible promotions, provision of tap water, age verification and availability of small measures of alcohol.

First, we have made the condition regarding irresponsible promotions clearer. Some promotions, such as drinking games where the aim is to drink as quickly as possible, and using promotional materials that condone anti-social behaviour or drunkenness, will now be irresponsible in all circumstances. We have removed the exemption for table meals that allowed some premises to offer unlimited drinks, and have instead clarified that such promotions are permitted only if they do not carry a risk of breaching the licensing objectives. We have also simplified this part of the mandatory conditions by incorporating into this strengthened condition on irresponsible promotions the current ban on dispensing alcohol directly into the mouth. We have also removed the specific reference to the ban on the provision of free or discounted alcohol in connection with a sporting event. This type of irresponsible promotion is already covered by the ban on the provision of unlimited or unspecified alcohol for free or for a fixed or discounted fee.

Secondly, on the provision of tap water, we have also stated in the existing mandatory licensing conditions that free tap water must be provided to customers on request. We are strengthening this condition to state free potable water to customers on request, rather than simply water from a tap. This will ensure that the water is of sufficient quality to be consumed.

Thirdly, on age verification, we have made it clear that the designated premises supervisor must now ensure that the supply of alcohol complies with the venue’s age verification policy. This means that the supervisor is personally responsible for compliance with the policy. We have also extended the range of identification that can be accepted by premises by stating that ID can contain either a holographic or ultraviolet feature. This means that, for example, visitors from overseas without a UK driving licence or passport will find it easier to prove their age.

Finally, we have tightened the rules on the availability of smaller measures of alcohol. We are requiring premises to display smaller measures—half pints of beer, 125 millilitre glasses of wine, and 25 or 35 millilitre measures of gin, rum, whisky or vodka—on menus or price lists in the venue. Where a customer does not state their preferred size of these drinks, they must be made aware of the range of sizes available.

These amendments aim to further the promotion of the licensing objectives and make the mandatory licensing conditions more effective in achieving the objectives that were originally set for them—namely, to raise standards across the industry, ensure that alcohol is sold responsibly and ensure that the alcohol industry plays its part in tackling the unacceptable levels of crime and disorder that blight our communities.

I hope noble Lords will agree with the Government that this order is an appropriate use of the powers conferred on the Home Secretary by the Licensing Act 2003. I commend the order to the House.

[Lord Kennedy of Southwark (Lab)]

My Lords, I generally approve of the order. I should mention that I am the vice-chair of the All-Party Parliamentary Beer Group and a member of CAMRA.

Alcohol-related crime and anti-social behaviour are at unacceptable levels and the provisions in the order to tackle that are welcome. I was struck by the impact assessment, which stated that the cost to society of alcohol-related harm is £21 billion a year, £11 billion of which is accounted for by alcohol-related crime—a shocking figure.

The beer, wine and spirits trade is important to the UK and to the economy. We all want to see an industry that is well run, creating jobs and enabling people of all ages to go and enjoy themselves. But alcohol-related crime and other problems due to the misuse of alcohol or irresponsible promotions are not welcome.

I looked at the points that the order is seeking to tackle and have the following comments and questions for the noble Lord, Lord Popat. Simplifying and tightening the law on irresponsible promotions is welcome. I can see the point about interpretation, and the problems that it has caused in the past for regulators and licensees, so this should be a better way. How do the Government intend to keep all this under review? Can the Minister explain to the Grand Committee how businesses will have to adapt to the removal of the exemption for alcohol provided with table meals?

Is the irresponsible promotion provision intended to be a catch-all? The provisions do not seem to deal with off-sales. When I go shopping at the weekend or on a bank holiday and walk past the beer mountain at the entrance to the shop, I always look at the price of it. They are just giving it away. That, too, is irresponsible, and perhaps we should look at that as well.

Requiring premises to list the prices of small measures is again welcome. I think that many well run establishments would do that anyway.

I welcome the requirement for free tap water to be provided. It amazes me that a provision making someone provide free tap water has to be put in legislation. It is ridiculous really.

On the provisions on age verification, the clarification that the responsible person is the premises’ supervisor is again welcome. I was today at a meeting of the All-Party Parliamentary Group on Voter Registration, of which I am the chair. We had a very interesting presentation from Mr Graham Shields, the Chief Electoral Officer for Northern Ireland. There, they provide every single citizen with an electoral identity card. He told us that young people love this card and everyone wants it, because, of course, it confirms their age for going into pubs and clubs. I have met the brewing industry and it confirms that the card is widely accepted in Northern Ireland as confirmation of a person’s age. Everyone uses it. It is provided free of charge by area registration offices. Could the Minister look at that? It is a clear example of good practice in Northern Ireland and perhaps it should be looked at over here, because it ensures that people going for a drink are lawfully able to buy a drink. That clearly has worked very well for them.

My final point relates to point 4 on page 6 of the impact assessment. The reference there to getting a free drink if England win a match is just cruel.

[Lord Popat]

I thank the noble Lord, Lord Kennedy, who raised a number of issues. The cost of alcohol-fuelled crime in England and Wales is £11 billion, and this is unacceptable. In reality, that figure is what the noble Lord cited: £21 billion—through loss of work, sickness and the burden on the National Health Service. We want the alcoholic drinks industry to raise its game and to do more to promote responsible drinking.

We have already introduced a radical package of measures to overhaul the Licensing Act, including giving local areas more powers to deal with problem premises. We see such premises in our major cities such as Sheffield and Leeds and they are a major problem, especially late at night. Local licensing authorities are quite capable of addressing the problems that they have in their own area.

Alcohol-related crime also entails a huge cost to the police. They will be reviewing what they charge for licences to make sure that charges cover the cost of policing areas which have a lot of crime.

[Lord Kennedy of Southwark]

I am pleased to hear that. As I said, I grew up in Southwark and I remember how, when I was a young man, there were lots of pubs on the Old Kent Road on Friday and Saturday nights. When I became a councillor there, I spoke to the superintendent in charge and he said that the resources he had to deploy on those two nights of the week to police alcohol-related disturbances gave him problems deploying officers for the rest of the week. Thankfully, things have moved on, but this is still a serious problem and I welcome the noble Lord’s comments.

[Lord Popat]

It is a serious problem. In fact, many operators are responsible and there are fewer problems in some areas than in others, so we have empowered local licensing authorities to look at that.

The noble Lord also referred to the off-licence trade and alcohol sold in supermarkets. There are significant differences between businesses where people remain on the premises consuming the alcohol they have just bought and those where alcohol is purchased for later consumption. It would not be appropriate to apply conditions such as requirements to provide free tap water to customers or to make small measures available to off-trade businesses. We recognise that there are issues with irresponsible promotions in-store and we are working with the off-trade to address these through self-regulation. We also talk to the Federation of Small Businesses about both alcohol and cigarette branding.

[Lord Kennedy of Southwark]

Supermarkets are at fault in this regard, not small businesses which often do not have the necessary resources. When you walk into a supermarket, often around a bank holiday, you have to walk past the beer mountain, comprising cheap lager, not usually of very good quality. There is an issue there. I hope that the noble Lord will look at it and get back to me on it. The behaviour of people who drink large quantities of alcohol at home also needs to be looked at.

[Lord Popat]

I referred to off-licences, and of course supermarkets have off-licences but a large number of them are independent shops. Supermarkets promote alcohol by offering deals such as two for the price of one. We have now made it mandatory for them not to sell alcohol below cost price. However, we cannot stop them setting a price whereby they make a small profit. As supermarkets buy alcohol in bulk, it is often cheaper in a supermarket than in a pub. However, the good news about people buying alcohol from supermarkets is that they tend to take it home and drink it at home and not commit alcohol-related crime in the streets, which costs money to tackle.

[Lord Kennedy of Southwark]

I am sorry, but there are issues with people drinking at home. For example, it can lead to violence against women, so I do not think the noble Lord can just say that, if people take alcohol home, there is no problem. As I say, there are issues with people drinking at home and the problems that arise from that.

[Lord Popat]

We are working with retailers, including the Federation of Small Businesses, to promote responsible retail practices. Last week, the Retail of Alcohol Standards Group committed to new guidance on this issue. But I understand what the noble Lord says about violence and drinking at home.

We are also seeking to clarify the irresponsible promotions condition. Removing this exemption will contribute to that. We do not believe that the impact of removing this exemption will be significant. Businesses can still offer this type of promotion as long as there is no significant risk of a breach of one of the licensing objectives.

The noble Lord, Lord Kennedy, mentioned Northern Ireland. I think it is best that I write to him. I have received some notes, but I want more information and it is best that I write to the noble Lord in detail on the subject. I think I have covered every area raised by the noble Lord, Lord Kennedy. The only things I have to write to him on are Northern Ireland and ID cards.

I welcome this debate. It came to me at very short notice, but I have really enjoyed doing it. When used responsibly, alcohol can be a welcome part of social situations and community events. However, alcohol-related harm affects many people in England and Wales, with victims in almost half of all violent crimes believing the perpetrator to be under the influence of alcohol. This is completely unacceptable, and that is why the Government are committed to tackling this issue, and why it is crucial that the Government use all the tools at their disposal to tackle the causes of that harm.

Through our alcohol strategy, the Government are promoting proportionate and targeted action to reduce the costs and problems caused to society by irresponsible and excessive drinking without affecting responsible drinkers. We have introduced a ban on the worst cases of cheap alcohol being sold below the level of duty plus VAT. As I said to the noble Lord, Lord Kennedy, quite often the supermarkets do that as well. We have also challenged the alcohol industry to do more to address the harm caused by alcohol and the Government welcome the package of new pledges by the industry that was announced on 8 July.

We are giving local areas more powers to address the alcohol-related problems that they face on a daily basis. We are also supporting local areas as they seek to reduce alcohol harms through the local alcohol action area scheme, which offers support to local areas in cutting alcohol-related crime and disorder, and reducing the damage caused to people’s health.

Licensed premises have a part to play in reducing alcohol-related crime by ensuring that they are responsible retailers of alcohol. The amendments to the mandatory licensing conditions will not only tighten the conditions to ensure that alcohol is sold responsibly but clarify them so that retailers can take steps to avoid a breach.

Now and in the future we must build upon and maintain this momentum and our commitment to reduce the harm caused by alcohol to consumers and their families, to the thousands of victims of alcohol-related crime, to local communities and to the businesses that are vital for our economy. I commend this order to the Committee.

Motion agreed.

Committee adjourned at 6.02 pm.

House of Lords

Wednesday 16th July 2014 Lords Chamber

Wednesday, 16 July 2014.

15:00

Prayers—read by the Lord Bishop of Carlisle.

Census 2021

Wednesday 16th July 2014 Lords Chamber

Question

15:07

Asked by

[Lord Naseby]

To ask Her Majesty’s Government, in relation to the next census due to take place in 2021, whether they have now rejected the possibility of replacing the traditional census format.

[Lord Wallace of Saltaire (LD)]

My Lords, the Government recognise the value of the census but believe that it is outdated in its current form and could be more effectively and more cheaply delivered. Decisions about its future after 2021 will be announced in the usual way but the Government agree with the conclusion of the Public Affairs Select Committee that the census needs to change.

[Lord Naseby (Con)]

Has my noble friend read the Economist of 5 April? It said:

“Britain’s decennial population count has been saved. Now make it work better”.

The Office for National Statistics also stated in March that it,

“recognises that special care would need to be taken to support those who are unable to complete the census online”.

In the light of both those statements, can my noble friend tell the House what safeguards there are to ensure that the roughly 20 million who are not literate online, and the half a million who were left out from the last census, will be able to take part in this new census?

[Lord Wallace of Saltaire]

My Lords, the Government are of course keen to encourage people to respond online. The paper-based census takes a great deal of time to analyse and transpose. It was some 16 months from the last census in 2011 until the first data became publicly available. If more people do it online, that could all be done a great deal more quickly but in 2021, although we already understand that 80% of households now use the internet daily, there will of course be support from the usual recruited field force to assist those who do not use online materials.

[Baroness Whitaker (Lab)]

My Lords, following the very pertinent question from the noble Lord opposite, can the Minister give the House an assurance that the new category—that is to say, since 2011—of Gypsies and Travellers will not be lost in any new system, because it has already yielded invaluable factored information about the disadvantage experienced by these communities?

[Lord Wallace of Saltaire]

My Lords, I think that all Members will recall that we use a field force to go and find the people who are the most difficult to get hold of and those in whom we are most interested. The Office for National Statistics estimates that the last census was some 94% complete. We suspect and fear that the 6% we missed were strongly represented among the most vulnerable elements of the population.

[Lord Greaves (LD)]

My Lords, the Minister referred to the delay last time between the census and the publication of the first results, and indeed to the further delays for the more detailed results. The forms are not complicated. Putting the information into databases and publishing it should not take 18 months, two years or even more. It is a simple task to get the information from the forms, whether the information is collected digitally or on paper, and then publish it. Can we have an assurance that the Government are looking at making this much more efficient and quick next time?

[Lord Wallace of Saltaire]

It is part of our mission to try to get the information ready for use more rapidly. It is also part of our mission, and the Office for National Statistics and the Public Affairs Select Committee reports both touch on this, to use the administrative data that are available to the Government so that we do not just have a snapshot of where we are every 10 years but, rather, we can have a rolling set of information about what we have. For example, if you want to know how many children there are living in a local authority area, the Government have that information in the form of recipient addresses for those on child benefit.

[Lord Wigley (PC)]

My Lords, given that presumably there will be a census organised on a UK basis from London in the year 2021 irrespective of the technology that is used, can the Minister give us some commitment on behalf of the Government that figures relating to the number of Welsh speakers living in England will be collected? The figures at the moment relate only to Wales, and whereas other languages are collected in England they are not in relation to Welsh speakers in England. This is very misleading.

[Lord Wallace of Saltaire]

I note the noble Lord’s question. We have not yet decided exactly how many questions there will be in the next census. I should correct him, however: the census covers Great Britain. The arrangements for Northern Ireland are a little different.

[Lord Wills (Lab)]

My Lords, I welcome the Government’s acceptance that the census needs to be updated. I also welcome what I take to be the Minister’s announcement today that the Government are planning to reuse administrative data to get more accurate and timely information. However, can he confirm that such reuse of administrative data will be coupled with a sample of annual household surveys to ensure that whatever conclusions are drawn from those data are accurate?

[Lord Wallace of Saltaire]

That is one of the issues currently under consideration. We have some time yet before we go final for the next census. Administrative data are an important issue. At the moment the Government are involved in an open policy-making process with stakeholders to discuss how we might modernise the various structures of law that apply to different departments and different local authorities about how one collects administrative data. It is our intention in the autumn to publish a White Paper on this.

[Lord Stern of Brentford (CB)]

My Lords, I speak as the president of the British Academy and on behalf of researchers who are working on the big social and economic issues of our time. In thinking about the census design, will the Minister place a high priority on its enormous value in validating other surveys that are at the heart of much of the research on these issues in the UK? Without the ability to validate them against the census, it is extremely difficult to use those to their full extent.

[Lord Wallace of Saltaire]

My Lords, we are well aware of the relevance to the social science community of government data in all their forms. The administrative data, some of which are not yet available, are also of considerable importance to social scientists of all sorts. I know that consultations are well under way, including with the British Academy, and I am sure that they will be taken fully into account.

[Lord Harrison (Lab)]

My Lords, the previous census recorded the increase in the number of us who profess no religion. Will the Minister ensure that that question is re-examined as there was a lot of controversy about it last time?

[Lord Wallace of Saltaire]

My Lords, there is a great deal of discussion about how many questions to put on the census on each occasion because the more questions you put on, the less likely it is that everyone will fill them in completely. That discussion is well under way, but we do not have to decide that until we are a good deal closer to the next census.

[Lord Roberts of Llandudno (LD)]

My Lords, with a multilingual Britain, will the forms be available online or offline so that everybody is able to fill them in and understand the full implications of their answers?

[Lord Wallace of Saltaire]

My Lords, I do not have full information about how it will appear online, but I note the question about the many different languages. The administrative data include a very good indicator of the changing ethnic and linguistic composition of local authority areas. The best indicator about changing composition is the first language of children coming into reception class in primary school. That is a rolling indicator that the Government can use to supplement the census.

Northern Ireland: National Crime Agency

Wednesday 16th July 2014 Lords Chamber

Question

15:16

Asked by

[Lord Empey]

To ask Her Majesty’s Government when they expect the National Crime Agency to be fully operational in Northern Ireland.

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, we fully support the efforts of the Northern Ireland Justice Minister David Ford to secure the support of the parties for the full extension of the NCA’s remit to Northern Ireland. We want to see an early resolution of this issue to avoid serious gaps emerging in law enforcement in Northern Ireland in areas where there is deep public concern, such as drug enforcement, human trafficking and other forms of serious criminality.

[Lord Empey (UUP)]

My Lords, I rather suspected that the Minister would answer in those terms. Is she aware that the Northern Ireland Executive has not discussed the National Crime Agency this year? Is she further aware that the Police Service of Northern Ireland has neither the personnel nor the financial resources to fulfil the functions that should be carried out by the National Crime Agency, which is a matter of grave concern?

[Baroness Randerson]

My Lords, the Government are well aware of the impact on the PSNI and of the need for agreement to be reached as soon as possible. I understand the noble Lord’s concern. It is clear to us that the NCA in Northern Ireland obviously has less capability than elsewhere. However, this is a devolved matter and it is right that discussions are ongoing between the Justice Minister, the NCA and the political parties—but UK Government Ministers and officials remain fully engaged.

[Lord Trimble (Con)]

My Lords, I understand the Minister’s desire to proceed by agreement, but with regard to the particular issues of trafficking, drugs and the related matters that she mentioned, is it the Government’s view that it is in the national interest that the National Crime Agency be fully operational throughout the United Kingdom on those issues?

[Baroness Randerson]

My Lords, in our view it is clearly in the national interest that the National Crime Agency is fully operational throughout all parts of the United Kingdom. However, the Sewel convention must apply at this point, and it is clear that we do not normally intervene and legislate on matters within the competence of the devolved Administrations without their consent.

[Lord McAvoy (Lab)]

My Lords, this is no nationalist versus unionist argument; clearly it is about the national interest. The non-involvement of the National Crime Agency in Northern Ireland was highlighted the other day when a Treasury Minister, from that Dispatch Box, indicated that HMRC was having difficulty in collecting taxes, VAT and so on. Despite the mention of the Sewel convention and the Justice Minister, surely it is time that some leadership was shown by the Northern Ireland Office in bringing these people together to get agreement, in the national interest.

[Baroness Randerson]

My Lords, the Government have taken the view that agreement is most likely to be obtained under the leadership of David Ford, the Justice Minister, who, after all, has support across the parties in Northern Ireland. It is important that we ensure that his discussions with the parties and with Keith Bristow of the National Crime Agency, which are active and ongoing, are facilitated. I assure noble Lords that my right honourable friend the Secretary of State for Northern Ireland is fully engaged in the process, and that the Home Secretary remains prepared to consider proposals that are put forward.

[Baroness Harris of Richmond (LD)]

My Lords, the National Crime Agency, as my noble friend said, is doing a terrific job under the leadership of the very able director-general, Keith Bristow, who told an audience at the Police Foundation conference two weeks ago that last year, 93% of five to 15 year-olds in the UK used the internet, which makes them very vulnerable to predators in that online space. Does my noble friend believe that some politicians in Northern Ireland could be endangering the lives of their young people by not letting the NCA investigate appalling internet crimes, some of which involve children?

[Baroness Randerson]

My noble friend makes an important point, and I very much hope that politicians in Northern Ireland who have not found themselves able to reach agreement so far on the remit of the NCA and its answerability in Northern Ireland are listening at this time, or will read the record afterwards, in order to realise the seriousness and importance of reaching agreement.

[Baroness Butler-Sloss (CB)]

My Lords, since this is a matter of enormous concern throughout the United Kingdom, and not just a Northern Ireland issue, what can the UK Government do about it?

[Baroness Randerson]

My Lords, I hope that I have made it clear that the Government are very closely involved in this, and that we remain optimistic that agreement will be reached. I understand the frustration that noble Lords are exhibiting at the length of time it is taking to reach agreement, but the talks and discussions are ongoing, and the work within the office of the Justice Minister is very much an active piece of work; we are reassured of that fact.

[Lord Kilclooney (CB)]

My Lords, if, as the Minister says, this is a matter of national interest, is it not time that it ceased to be a matter for a devolved Government?

[Baroness Randerson]

I think that noble Lords will appreciate that, having established devolution, it is very important that one trusts it to work its way through, despite issues and problems that arise on the way.

Palestine

Wednesday 16th July 2014 Lords Chamber

Question

15:23

Asked by

[Lord Hylton]

To ask Her Majesty’s Government what is their response to the formation of a Palestinian Government of unity with the prospect of elections in 2014.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, we welcome the formation of a new interim technocratic Government for the Occupied Palestinian Territories. We have made it clear that our continued support for the new Government will depend on their commitment to the principles of non-violence and an acceptance of all previous agreements and obligations, including Israel’s legitimate right to exist. However, we believe that the current crisis in Gaza decreases the prospects for elections in the near future.

[Lord Hylton (CB)]

My Lords, I thank the noble Baroness for her reply. She will appreciate that my Question was tabled a month ago. Will Her Majesty’s Government work towards a common European vision that would enable ordinary Israelis and Palestinians to demand effective ceasefires, together with an agreed ending to occupation and blockade? Are there not major incentives and penalties that Europe could apply?

[Baroness Warsi]

My Lords, the view of the United Kingdom, and indeed of the European Union and the wider world, is that there should be a ceasefire and it should come as soon as possible. The noble Lord will also be aware that the unprecedented package that the European Union put forward in the event of an agreement when the Kerry talks began is clearly the kind of incentive to which the noble Lord refers. The prize for peace is a much better life, both for Palestinians and Israelis.

[Lord Anderson of Swansea (Lab)]

My Lords, does the noble Baroness agree that, however welcome the formation of a unity Government, we are still some way from the development of a negotiating partner for Israel which can deliver; and that, given the failure of the unity Governments in the past and the deep divisions within the partners of Fatah and Hamas, perhaps the most appropriate response is considerable caution?

[Baroness Warsi]

My Lords, we welcome the formation of a new interim technocratic Government for the Occupied Palestinian Territories. We feel that reuniting Gaza and the West Bank under a Government committed to peace is a necessary condition for resolving the Israeli-Palestinian conflict. We have to be positive at all times; when we find a partner that agrees to the quartet principles, we should see it as a genuine partner for peace.

[Lord Alderdice (LD)]

My Lords, I very much welcome my noble friend’s announcement of the British Government’s approach, which appears to chime with the approach of the Obama Administration. However, part of the agreement is that there should be subsequent elections in the Palestinian Territories. Is my noble friend further prepared to recognise that the outcome of those democratic elections, if they are held in a free and fair manner, should also be respected, and that whatever Government or Governments emerge from that should continue to be part of any negotiating process?

[Baroness Warsi]

My noble friend makes an important point. However, sadly, the original timetable of six months from June—which was when it was anticipated that elections would take place once the technocratic Government had been formed—looks much more vulnerable because of the current situation. At this stage, all minds are focused on a ceasefire but, of course, we hope that elections will follow thereafter.

[Lord Turnberg (Lab)]

My Lords, leaving aside the failure of Hamas to accept the ceasefire that Israel accepted yesterday, does the noble Baroness agree that it is extremely difficult for Israel to continue to exchange security intelligence with a Government who get their main support, or part of it, from an organisation that is committed to Israel’s destruction, let alone to engage in meaningful negotiations with them?

[Baroness Warsi]

The noble Lord will be aware that no members of Hamas have formed the technocratic Government, which of course we welcome. However, it is important that we do not leave aside positions as regards the ceasefire. We welcomed Egypt’s attempt to secure a ceasefire, the Palestinian Authority’s endorsement of it and President Abbas’s commitment in calling on the different Palestinian factions to accept it. The Israelis’ acceptance in principle of the proposed ceasefire and the support for it from the Arab League are positive things, which I hope will soon form the basis of a ceasefire.

[Baroness Hussein-Ece (LD)]

Can my noble friend say whether media reports that Hamas was not even consulted on the so-called peace deal that Egypt announced are true, and that members of the Knesset themselves learnt about it from the media?

[Baroness Warsi]

It is important that any ceasefire and agreement have the agreement of the Palestinian and Israeli peoples through their elected representatives. There has been some reporting about the basis of that ceasefire. Although my noble friend raises an important issue, if the possibility of a ceasefire is on the table, it is important that we do all we can to support that process.

[Baroness Uddin (Non-Afl)]

My Lords, I take this opportunity to condemn the merciless attacks on innocent women and children in Gaza. While I accept the premise of this Question and its importance, does the Minister accept that the real issue of concern for the international community should be the illegal occupation and the continuation of illegal settlements?

[Baroness Warsi]

My Lords, there is no doubt that unless the underlying causes are resolved, this dispute will continue and we will see eruptions of the violence that we saw in 2008 and 2012, and which we see again in 2014. That is why we were supportive of the Kerry talks and that is why it is important that we have a ceasefire and that both parties can get back to the discussion table to try to resolve those underlying issues.

[Lord Lexden (Con)]

Are there to be international observers at the Palestinian elections, if and when they take place?

[Baroness Warsi (Con)]

My Lords, I am not sure. Certainly, we hope that these elections will happen in due course, but I am sure these are matters that will be discussed at the time.

[Lord Palmer of Childs Hill (LD)]

My Lords—

[Baroness Morgan of Ely (Lab)]

Does the Minister agree that any Palestinian Government should take better account of the needs of the youth of the territory, bearing in mind that 55% of the Palestinian population are under the age of 25, one-third of the youth are unemployed and 48% of Gaza youth have suggested that they would support an uprising against Hamas and believe that the new generation of leaders would do a better job? What can Her Majesty’s Government do to support the needs of Palestinian youth to help them get their voice heard in the future of their territory?

[Baroness Warsi]

The noble Baroness is absolutely right. This boils down to people and their futures. The Palestinian people and the Palestinian youth have a right to a strong, stable future where they can have the ambitions that we so take for granted. However, the tragedy of the current situation is that, unfortunately, if you look at what is happening on the ground, because of this current crisis Hamas is becoming more popular. That is not in the interests of the Palestinian people, it is certainly not in the interests of Israel and it is not in the interests of world peace.

Royal Mail Sale

Wednesday 16th July 2014 Lords Chamber

Question

15:31

Asked by

[Lord Young of Norwood Green]

To ask Her Majesty’s Government what recent assessment they have made of the value for money achieved from the sale of Royal Mail.

[Lord Popat (Con)]

My Lords, the Government’s overall objective in selling shares in Royal Mail was to protect the universal postal service by ensuring that Royal Mail has a sustainable and secure future. The sale raised £2 billion for the taxpayer and it enables Royal Mail to access the private sector capital that it needs to invest in growth. The sale guards against the real need for Royal Mail to request additional taxpayer support in the future.

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for his reply, even though it was what I expected. If the enhanced share price, which today stands at 479.60p, was just market “froth”, can the Minister explain why the long-term priority shareholders sold their stakes for huge profits? Given that the National Audit Office has said that the business department’s desire to sell Royal Mail before the election next year resulted in a knockdown price that cost taxpayers £750 million, does the Minister feel that there are any lessons to be learnt for any future sale?

[Lord Popat]

My Lords, there are a number of questions in the noble Lord’s question. First, let me cover the share price. The share price for Royal Mail is very volatile. It reached £6.15 in January and stands at £4.79 as of this morning. The Government achieved their intention to ensure that Royal Mail started with core, long-term, stable investors who understood the business, along with some hedge fund participation to ensure liquidity in the aftermarket. This was absolutely real value for money and such a success story of this Government.

[Noble Lords]

Oh!

[Baroness Wilcox (Con)]

Would the Minister remind the House that the Labour Party failed completely in its own attempt to sell Royal Mail, and was much relieved when this Government managed to sell it for what was certainly at that time a fair price, in order to save the post offices which we still have and—most importantly—to save the pension scheme, which had no money left in it at all?

[Lord Popat]

My noble friend raises a very important question. The party opposite failed to achieve a sale or to find a solution to the problem of Royal Mail. This Government have taken a loss-making public enterprise and turned it into a highly successful, respected public company. Both the National Audit Office report and last week’s Select Committee report reached the important conclusion that we had successfully achieved our objectives. The Royal Mail IPO has inspired other companies in the UK to go for a flotation.

[Lord Low of Dalston (CB)]

My Lords, the noble Lord will be aware that much concern has been expressed by Royal Mail and others at the threat posed to the sustainability of the universal postal service by the rapid rise of direct delivery competition in postal services, which are able to cherry pick the lowest hanging fruit without any obligation to serve less profitable and harder-to-reach markets. Would he agree that, in those circumstances, it would be helpful if Ofcom, which has responsibility for the integrity of the universal service, undertook a full review of direct delivery as a matter of urgency, instead of in 2015 as planned, and determined quickly any regulatory changes needed to protect the universal service?

[Lord Popat]

My Lords, the businesses complement each other. As the chief executive of Royal Mail has said, it is unthinkable that the two companies will not always work very closely. Ofcom is an independent organisation and it will regulate and oversee the function of the Royal Mail.

[Lord Clarke of Hampstead (Lab)]

My Lords, we certainly do not need to be reminded of the failure of the previous Labour Government, because I still feel the shame about how the Bill was introduced in this House. However, putting that to one side, could I ask the Minister a question that is pretty much along the lines of the previous question? I am sure that he will recall the assurances that the Government gave to Royal Mail and the British public. In talking about the value of Royal Mail, one should look at the value of the service that it gives. Has the Minister any idea of bringing forward the review, which I am told will not be until next year? The cherry picking is already having a great effect on the ability of maintaining a universal service, and I am sure that the Minister will agree that, if it carries on haemorrhaging the profitable parts of the mail business to unregulated operators, the regulator will quickly have to have another look at Royal Mail’s situation. Could he please give us the assurance that the review will take place sooner rather than later?

[Lord Popat]

My Lords, here was a company which prior to privatisation was turning around £9 billion a year. It lost money for a number of years, to the tune of £1 billion. Preceding the era of privatisation it made a £300 million profit, hence we went for the flotation, at the time when there was the real threat of the American debt crisis as well as unions threatening to strike—and each strike day costs roughly £30 million, so a £300 million profit can be wiped out in 10 days. It was a successful flotation, and the Secretary of State has appointed the noble Lord, Lord Myners, to look into how best we can do any future flotations.

[Lord Stoneham of Droxford (LD)]

My Lords, despite the generally successful privatisation of the Royal—

[Noble Lords]

Time!

[The Chancellor of the Duchy of Lancaster (Baroness Stowell of Beeston) (Con)]

I am sorry that we have reached the 30 minutes for Question Time and, even though it is me who is at the Dispatch Box next time, I think that it is time that we moved on.

Leader of the House: Cabinet Membership

Wednesday 16th July 2014 Lords Chamber

Private Notice Question

15:38

Asked by

[Lord Forsyth of Drumlean]

To ask Her Majesty’s Government whether the Leader of the House will be attending Friday’s Cabinet meeting as a full member of the Cabinet.

[Lord Forsyth of Drumlean (Con)]

My Lords, I beg leave to ask a Question of which I have given private notice.

[The Chancellor of the Duchy of Lancaster (Baroness Stowell of Beeston)]

My Lords, I will attend Friday’s Cabinet, as my noble friend and predecessor Lord Hill would have done, and will be able to participate fully in Cabinet discussions just as he would have done.

[Lord Forsyth of Drumlean]

My Lords, I am sure that I speak for the whole House in congratulating my noble friend on her appointment, and I am sure that she will do a brilliant job as the Leader of the House. The Companion to the Standing Orders, in paragraph 4.03, on page 61, says:

“The Leader of the House is appointed by the Prime Minister, is a member of the Cabinet, and is responsible for the conduct of government business in the Lords”.

It says so because it is vital that the Leader of the House has the authority of a Cabinet Minister, especially given the large volume of legislation that comes from the other place undebated and unconsidered. She needs the authority to be able to say to other Cabinet Ministers, “This will not wash”, and to say to the Prime Minister, “I think you need to think again”.

Can my noble friend reassure me that the Prime Minister will bring the situation into line with our Standing Orders and with the guidance in the Companion? Is she really happy with a situation where, for the first time in the history of this House and of Cabinet government, there is no Cabinet Minister in this House? What sort of signal does that send to the Civil Service and others about the authority of this place in its important duty of revising legislation?

[Baroness Stowell of Beeston]

My Lords, my noble friend raises a number of important points. Clearly he is right to question whether the Leader of the House of Lords is fully equipped to do that job. I am absolutely confident that the Prime Minister has given me the authority I need to represent your Lordships in Cabinet. A few months ago, in answer to a Question on another topic, I said that sometimes I liked to think of myself as an action woman. I like to get things done. I do not need status in order to get things done. I have the authority I need and I shall be judged on the work that I do.

[Baroness Royall of Blaisdon (Lab)]

My Lords, I have no doubt that the noble Baroness can get things done. This is not about her status; it is about something much more profound. When I heard about this yesterday, I simply did not believe that it could be true. When it was confirmed later in the day, I was deeply dismayed that the Prime Minister could treat this House with such contempt. The men previously appointed to this post by the Prime Minister sat at the Cabinet table as full members. When it is in government, my own party will reverse this. I shall refer the issue to the Constitution Committee and I hope that it will ask the Prime Minister to give evidence.

I have a number of questions but for the moment I will confine myself to this. Other than for a party chair, what are the precedents for a political party paying part of the salary of a Cabinet Minister? Given that the Leader is the Leader of the whole House and not just of the Conservative Benches, surely this is both improper and unethical.

[Baroness Stowell of Beeston]

I would emphasise to the noble Baroness and to all noble Lords that I shall sit around the same Cabinet table and participate fully in its discussions in exactly the same way as all my predecessors did. It will be a great privilege to do so. As to her question about the salary that the post attracts, I can assure the House that careful consideration is being given to the propriety of any arrangement.

[Lord Cormack (Con)]

My Lords, what is at stake here is not the status of my noble friend but the status of this House.

[Baroness Stowell of Beeston]

I can tell my noble friend that I believe that we have a duty to uphold the reputation of the House as a serious and distinguished institution that serves the public interest. That is what we will be judged on and that is what I intend to do. I hope that I have the support of all noble Lords in fulfilling that responsibility.

[Lord Laming (CB)]

My Lords, does the Leader accept that she commands the full support of the House? There is no doubt about that. Lest there be any doubt, she should understand that the Cross-Bench Members of this House join with all other noble Lords in saying we believe that it is most important that the Leader of this House is a full member of the Cabinet.

[Baroness Stowell of Beeston]

I am grateful to the noble Lord. As I have already said, I understand why noble Lords are raising this issue. However, if I were concerned that the status I have been given as Leader were in any way diluted and would affect the practical way in which I shall conduct myself in fulfilling my responsibilities, I would clearly question it. I do not believe that it does.

[Lord Dholakia (LD)]

My Lords—

[Baroness Scotland of Asthal (Lab)]

My Lords—

[Baroness Stowell of Beeston]

I believe that we have not heard from the Lib Dem Benches.

[Lord Dholakia]

My Lords, does my noble friend agree that the important aspect of this appointment is that the status of a full member of the Cabinet enjoyed by the former Leader, the noble Lord, Lord Hill of Oareford, is in no way diminished by the present appointment? Would she give a categorical assurance that this will be so?

[Baroness Stowell of Beeston]

I say to my noble friend that, in all practical ways, I will contribute to Cabinet in exactly the same way as my predecessor. That is what the Prime Minister asked me to do.

[Lord Cunningham of Felling (Lab)]

My Lords, I first join with the noble Lord, Lord Forsyth of Drumlean, in saying that this Question has nothing to do with the ability or the integrity of the noble Baroness. These issues concern the status of this House. Does not history tell us that since 1902 the Leader of this House has been a full member of the Cabinet? What has happened is not that the noble Baroness has done anything wrong; it is that the Prime Minister has diminished the standing and rank of this House.

[Baroness Stowell of Beeston]

Some historians might question whether there has ever been a Leader of the Lords who was not a full member of the Cabinet. Some documentation I have seen suggests that one of my most distinguished predecessors, my noble friend Lord Carrington, was not a full member of the Cabinet when he was Leader of your Lordships’ House. I refer back to my point that the most important issue, in the context of the status of this House, is how we all conduct our responsibilities.

[Lord Crickhowell (Con)]

My Lords, it may be true about the time when my noble friend Lord Carrington was Leader of the House, but at least two other Cabinet Ministers at that time were from the House of Lords. Is my noble friend aware that there is no constitutional or formal limit on the size of the Cabinet? The only limit arises on paid members of the Cabinet under the 1975 Act. Therefore, it ought to be possible to arrive at a solution that enables the Cabinet to be large enough to provide what the whole House thinks should happen: that the Leader is a member of the Cabinet.

[Baroness Stowell of Beeston]

I can assure my noble friend that all options have been carefully explored. The decision the Prime Minister has made is the right one given the constraints under which he has to operate. I share his view on that matter.

[Baroness Scotland of Asthal]

My Lords, can the noble Baroness accept from all of us that she has our wholehearted support? However, can she not understand that this is a matter of constitutional importance? When she stands at the Dispatch Box she represents the whole of this House. When she says, on behalf of the Prime Minister, that she understands his position, will she not accept that no one else in this House does? Will she convey to him, in the strongest possible way, that it is this House’s view that he has committed what amounts to a constitutional outrage that this House does not accept?

[Baroness Stowell of Beeston]

I believe that, in making his appointments yesterday, the Prime Minister ensured that we have a Government well equipped to serve the people of this country. I have made the point about the status of the Leader of this House. Clearly, I understand the very strong views that have been expressed during the supplementary questions to this Question. However, for my part, I want to focus on how I do my job and what I do.

[Baroness Royall of Blaisdon]

My Lords, I realise that a Private Member’s Bill is now due to be introduced, but this is a self-regulating House and there are two or three more noble Lords who wish to put a supplementary question to the Leader of the House. I have the greatest sympathy for the noble Baroness but I ask whether, in this self-regulating House, those Members who still have a question to put to her can do so.

[Lord Newby (LD)]

My Lords, I remind noble Lords that we are indeed a self-regulating House—but a House that has very clear rules about how we conduct our business. Noble Lords opposite are great defenders of the Companion. I propose that we respect the Companion in this regard.

[Lord Bassam of Brighton (Lab)]

My Lords, with the leave of the House, we could continue this session for at least another five minutes so that these important and valuable constitutional questions could be addressed. I think that the House is owed that by the Government.

[Lord Elystan-Morgan (CB)]

My Lords, I respectfully put to the noble Baroness the Leader of the House that the Act which limits the number of Cabinet members to 23 essentially creates a first and second division. The first division comprises ex officio members of the Cabinet, and that is a special status. In the 300-year life of the Cabinet as we know it, there has never before been a situation when at least one Member of the Lords, and probably more than one Member, was not an ex officio member. Has the Prime Minister done this out of oversight or out of a deliberate policy in relation to this House?

[Baroness Stowell of Beeston]

My right honourable friend the Prime Minister clearly has to operate in accordance with the legislation that prescribes how many Cabinet posts can attract a salary. He has made his decisions on his appointments, as he is at liberty to do, and I believe that he has made those decisions properly. I understand that noble Lords want to keep debating this matter but, as there is very little more for me to offer beyond what I have said so far today, I can only repeat what I said: some important points have been made but I am quite clear that the status that the Prime Minister has afforded me accords me to do my job appropriately.

[Lord Foulkes of Cumnock (Lab)]

My Lords, does the noble Baroness recall that when Gordon Brown was Prime Minister, he had not just my noble friend Lady Royall as a full member of the Cabinet but my noble friends Lord Mandelson and Lord Adonis as well—there were three full members of the Cabinet. The noble Baroness is Leader of this House. Surely she recognises the view of this House. Why can she not go back to the Prime Minister and say, “This is the view of the House”, and then come and tell us whether the Prime Minister will reconsider his decision in the light of the views of this House?

[Baroness Stowell of Beeston]

My Lords, the Prime Minister in the previous Government was responsible for the appointments that he made and I am not going to comment on them. However, the one thing that I will say to the noble Lord is that it was the previous Government who decided to make a very substantial constitutional change to this House, leading to the removal of the Lord Chancellor from this House. As I have said, many points have been made in this debate and I am grateful to all noble Lords for what they have said.

Chancel Repairs Bill [HL]

Wednesday 16th July 2014 Lords Chamber

First Reading

15:54

A Bill to make provision for ending the liability of lay rectors for the repair of chancels.

The Bill was introduced by Lord Avebury, read a first time and ordered to be printed.

Select Committees

Wednesday 16th July 2014 Lords Chamber

Membership Motion

15:55

Moved by

[The Chairman of Committees]

That Baroness Stowell of Beeston be appointed a member of the following Committees, in the place of Lord Hill of Oareford: House, Liaison, Privileges and Conduct, Procedure and Selection.

[Lord Foulkes of Cumnock (Lab)]

This Motion is debatable. We are talking about appointing the Leader of the House to various committees. If Members of the House wanted to pursue the issue that we were discussing earlier, we could discuss it now. This is a self-regulating House. It is unbelievable that one distinguished Member of the House—he is leaving now—should get up and move a Private Member’s Bill when it was clearly the wish of the House, indicated by my noble friend the Opposition Chief Whip, that we wanted to ask more questions and have this discussed. It is a pity that this House is being steamrollered in such a way.

[Lord Elton (Con)]

My Lords, we are now on the next business. I suggest we get on with it and rely on my noble friend the Leader of the House to take the message that we have given her to the Prime Minister and to ask him to read Hansard.

Motion agreed.

Supply and Appropriation (Main Estimates) Bill

Wednesday 16th July 2014 Lords Chamber

Second Reading (and remaining stages)

15:56

Moved by

[Lord Newby]

That the Bill be read a second time.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Data Retention and Investigatory Powers Bill

Wednesday 16th July 2014 Lords Chamber

First Reading

15:57

The Bill was brought from the Commons and read a first time. Standing Order 46 was dispensed with.

Data Retention and Investigatory Powers Bill

Wednesday 16th July 2014 Lords Chamber

Second Reading

15:57

Moved by

[Lord Taylor of Holbeach]

That the Bill be read Second Time.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, when I repeated the Statement of my right honourable friend the Home Secretary last Thursday, I outlined to the House the urgent need for this legislation. I am sure that noble Lords will agree with me that it is essential for both the Government and this Parliament to ensure that law enforcement, and the security and intelligence agencies, have the powers they need to do their duty. Those powers are now at risk. If we do not take urgent action, lives could be lost. As your Lordships’ House has already heard, the situation is pressing. The timetable for this legislation is, accordingly, inevitably very tight, and I will talk about the reasons for that.

However, it may be helpful to the House if I make clear that Members who wish to table amendments for the Committee stage of the Bill are now able to do so. Amendments for the Marshalled List may be tabled up until the rising of the House, at which point the Legislation Office will produce a Marshalled List in the normal way. Members will also be able to table manuscript amendments for the Committee stage of the Bill tomorrow morning. Arrangements for tabling amendments for subsequent stages of the Bill will be announced in due course.

Perhaps I may turn to the legislation itself. I should like to take a moment to reassure the House. This Bill does not provide any new powers. It does not alter or amend existing powers. It simply provides a clear basis, in respect of both data retention and investigatory powers, for the exercise of existing powers. Crucially, and quite rightly, the legislation is sunsetted. Its provisions will be repealed at the end of 2016. The intention—Clause 7 has been amended in the Commons to provide an explicit legal basis for this—is that we will have time in the interim for a proper debate about what powers are required in the future. There will be a review, led by the independent reviewer of terrorism legislation, David Anderson QC, into what powers and capabilities might be required in the future, considered in the full context of the threat. That review will consider capabilities but it will also consider safeguards to protect privacy, the challenge of changing technologies, issues of transparency and oversight, and the effectiveness of current legislation.

David Anderson’s work will be far-reaching. It will provide a robust, independent basis for the subsequent work of a Joint Committee of Parliament, to be established following the general election. There will be a public debate and Parliament will have the necessary time to consider legislation on these important and complex issues. I know that some noble Lords have questioned the timing of the sunsetting provision. I hope now that the Government’s intentions behind that timing are clear.

Noble Lords will also be aware of the wider package of measures, announced by the Prime Minister last week, which will strengthen safeguards and reassure the public that their rights to security and privacy are equally protected. We have now published terms of reference for the various measures, including the privacy and civil liberties oversight board. Following ongoing discussions with the Opposition and consideration in the Commons, we have amended Clause 6 to ensure that the independent Interception of Communications Commissioner will now report every six months. I am sure that your Lordships will agree that these measures will help to ensure a better-informed public debate.

I now turn to the purpose of the Bill and the matters before us today. Communications data—the who, where, when and how of a communication, but not its content—can be used to piece together the activities of suspects, victims and vulnerable people. They can prove or disprove alibis, identify links between potential criminals, tie suspects and victims to a crime scene, and help find vulnerable persons at risk of imminent harm. Only this morning, noble Lords will have seen the news that the National Crime Agency has made more than 600 arrests as part of a six-month operation targeting people accessing child abuse images online. Senior officers are clear that, without access to communications data, many of these investigations would hit a dead end.

Those data are held by communications service providers for their business purposes and where they are required to do so by law. They are then accessed by law enforcement, subject to stringent safeguards, where it is necessary and proportionate to do so for a specific investigation. But, as I explained last week, a recent judgment in the European Court of Justice has put into doubt the legal basis on which we require service providers in the UK to retain communications data. As a result, we run the risk of losing access to data that are vital to a wide range of investigations. This could be devastating. It would seriously undermine the ability of the police, the National Crime Agency, the intelligence services and others to prevent and detect crime, catch terrorists, and safeguard and protect children and others at immediate risk of harm.

The Bill also deals with investigatory powers and, specifically, the interception of communications. The content of a communication—the text of an e-mail or a telephone conversation—can play a critical role in the work of law enforcement and the intelligence agencies. The majority of the Security Service’s top priority counterterrorism investigations use interception in some form to identify, understand and disrupt the plots of terrorists. The police and the National Crime Agency rely on interception to prevent and detect serious crimes, including drug trafficking, human trafficking and child sexual abuse.

The House will know that interception can take place only if there is a warrant authorised by a Secretary of State and that can happen only where he or she considers it necessary and proportionate and where the information sought cannot reasonably be obtained by other means. The legislation that provides for interception—the Regulation of Investigatory Powers Act 2000 or RIPA—obliges telecommunications service providers to give effect to interception warrants. This Government, like our predecessors, have maintained that this obligation applies to companies with customers in the UK, irrespective of where those companies are based. Given the increasing reliance of suspects in the UK on internet-based communications, the compliance of overseas companies is increasingly important to the UK’s interception capability. However, in the absence of explicit extra-territoriality, some overseas companies have now started to question their obligations under RIPA. Those companies have made it clear that they will comply with the law only where there is an explicit obligation to do so. Unless we put the matter beyond doubt, we could, very shortly, see a damaging loss of capability.

I now turn to the Government’s response to this situation. The Bill before the House today is a narrow and focused response to these two issues: the ECJ judgment and the potential loss of compliance with RIPA. On both matters, it makes explicit what we have always asserted to be the case. The first part of the Bill deals with the issue of data retention. At present, we can oblige companies to retain data where they are issued with a notice under the data retention regulations passed by Parliament in 2009. This means that the data are available when the police need them for an investigation. In spite of the ECJ judgment ruling, we have been clear that these regulations remain in force. However, in the light of the judgment, it is necessary to put the legal basis for these requirements beyond doubt. If we do not, there is a risk that these companies may begin to delete crucial data. Equally, if there were a successful challenge in the domestic courts, this would lead to an immediate loss of data.

Accordingly, Clauses 1 and 2 of the Bill provide a clear basis for data retention. They will replace the existing data retention regulations of 2009, maintaining the status quo. The data types to be covered by this new law will be identical to those in existing law. Although the European Court of Justice was critical of the data retention directive, it recognised the importance of data retention in preventing and detecting crime. Crucially, while the court asserted that the directive itself lacked the necessary safeguards, it did not take into account the robust regimes that exist in member states governing the access to the data. We believe that our retention and access regimes already address many of the ECJ’s criticisms. Among other safeguards, they include an authorisation process that was scrutinised in detail and endorsed by the Joint Committee on the Draft Communications Data Bill, ably chaired by my noble friend Lord Blencathra, and they are subject to robust, independent oversight by the Interception of Communications Commissioner.

The Government have, however, considered the judgment at length and are bringing forward changes that will extend the safeguards in place in order to respond to elements of the judgment and to ensure that the Bill is compliant with the European Convention on Human Rights. These include: the imposition of a requirement on the Secretary of State to consider the necessity and proportionality of a data retention notice before issuing it; specifying that the length of time for which data must be retained should be a maximum, rather than an absolute, period of 12 months; and the creation of a code of practice for data retention, which will place on a statutory footing well-established best practice.

A number of further safeguards will be introduced through the regulations made under the Bill. These regulations were published in draft last week.

[Lord Phillips of Sudbury (LD)]

I apologise for interrupting the flow of my noble friend’s speech. However, he started by saying that the Bill introduced no new powers and did not amend existing powers, but he appeared just now to indicate that there were new powers in the Bill. Have I got it wrong?

[Lord Taylor of Holbeach]

My noble friend has got it wrong: it is about safeguards. I am talking about safeguards, not powers. I am talking about the Bill imposing limits on the discretion of the Secretary of State through the regulations and the Bill itself. If my noble friend will allow me to continue he will see that I am placing that in the context of seeking to provide a basis for continuing the provisions of the Bill without extending the powers that are available to the Secretary of State or the Government under the Bill.

[Lord Knight of Weymouth (Lab)]

I apologise for intervening in the Minister’s speech, but given that he has just been interrupted anyway, on the same point, can he clarify that Clause 4, “Extra-territoriality in Part 1 of RIPA”, is not an extension of the legal powers that the state has in respect of these matters?

[Lord Taylor of Holbeach]

I can indeed do so. Extraterritoriality was assumed by the Government to be part of RIPA, and rightly so, as part and parcel of their legislation. We are making it explicit so that there can be no question of doubt about it. On extraterritoriality, as I said in my opening remarks, RIPA was based on the correct assumption that any firm that provided services here within the UK was governed by the law that we had in connection with these matters. In my view, there is no argument about that. Perhaps I may go on and finish my speech. The noble Lord is gracious enough to acknowledge that this is all of a piece, and I would like to be able to present it to the House as a piece.

I mentioned the number of safeguards to be introduced through regulations made under the Bill. These regulations were published in draft last week to enable parliamentary scrutiny and are available from the Printed Paper Office. The Delegated Powers and Regulatory Reform Committee has considered those regulations and made a report, which I am sure many noble Lords will have considered. I thank the committee’s members for their work. They have, as always, provided a useful and thorough review of the issues. In the case of this Bill, they have done so in a necessarily short period of time.

The committee is of course correct that it would be best to avoid a gap between the passage of this legislation and the passage of regulations. That is why the Home Secretary has been clear that our intention is to ensure that this secondary legislation can be approved by both Houses before the Summer Recess. This should reassure members of the committee, and other noble Lords, that the powers in question will not be exercised in lieu of those regulations being approved. It will not, therefore, be necessary to use the “made affirmative” procedure in this case. However, I thank my noble friend Lady Thomas of Winchester and her committee: their suggestion was a positive one. I am pleased that we have been able, through the usual channels, to ensure a more direct way of achieving the same objective —bringing the regulations into play before the Summer Recess.

The committee has also invited me to address the potential scope of the delegated power at Clause 1(3). I am pleased to do so. The Government have already published a provisional draft of the regulations to be made under the Bill, and these go no further than the existing data retention regulations 2009. They are, I can confirm, limited to matters relating to the powers conferred by Clause 1(1) and (2). I hope that this will satisfy the House of the Government’s intention.

The second part of the Bill deals with interception. In relation to interception, Clauses 4 and 5 make it clear that the obligation under RIPA to comply with interception warrants applies to all those companies that provide communications services to people in the United Kingdom, regardless of where those companies happen to be based. These provisions do not extend existing powers. They simply seek to make explicit what has always been asserted to be the case.

I know that many noble Lords will be interested in Clause 5, which clarifies the definition of a telecommunications service. When RIPA was considered by Parliament in 2000, it was intended to be technologically neutral. Much of it relates to fixed line or mobile telephony, so it also covers web-based e-mail and social media communications. We are simply seeking to clarify that definition in order to put this matter beyond doubt.

These provisions will make clear the legal obligation on companies that provide communications services to people in the UK to comply with warrants issued by the Secretary of State. In the absence of such clarity, vital capabilities may be lost in the near future. It is of course never ideal for these matters to be considered in haste, but I trust that noble Lords will agree that it is imperative that we urgently address these issues.

I know that some noble Lords have asked about the delay between the court judgment on 8 April and this legislation being introduced. Following that judgment we needed to balance the necessity to respond quickly with the need to ensure that care was taken to get our response right. We could not have acted prior to that judgment because the precise response needed to be framed in relation to the detail of the judgment. While we are clear that the existing regulations remain in force, we must act now to put this matter beyond doubt, providing a basis in primary legislation and responding to some of the points made by the court.

In relation to interception, as I have told the House, we have reached a dangerous tipping point. It has become clear that without immediate legal clarity we could soon see a loss of vital co-operation. This is not a matter that we are able to leave until after the Summer Recess.

I express my thanks to both sides of the House for the support that they have given to the Bill. It has been constructive, I think, to have spent Monday talking to various Peers about it. I particularly pay tribute to the noble Baroness, Lady Smith of Basildon, for the constructive approach that the Opposition have taken. I look forward to an equally constructive debate in the House as we consider the Bill on Second Reading and at later stages.

I recognise that this is a tight timetable, but I hope that I have made clear the reasons for that. They were accepted in the House of Commons, which overwhelmingly backed the Bill yesterday. I am sure that noble Lords agree that we must ensure that the police and the security and intelligence agencies have the capabilities they need to protect the public and keep us safe. That is what the Bill will do. I beg to move.

16:20

[Baroness Smith of Basildon (Lab)]

My Lords, we are grateful to the Minister for his explanation of the content of the Bill before us today. We were clear in responding to the Statement last Thursday that, while recognising the immediate need to retain existing evidence relating to investigations into serious and organised crime and national security, the Government’s handling of this issue raises serious questions and concerns.

Those concerns remain, and I will come back to them, but, at the outset, I welcome the Government’s acceptance of the two amendments that we tabled yesterday in the other place, which gave statutory authority to both a six-month review of this legislation and a wider review of RIPA, the Regulation of Investigatory Powers Act—the legislation that provides for and underpins the whole basis of intercept evidence. That means a much more detailed and fuller consideration not just of the legislation but also of the context, application, implementation, impact and effects—and, importantly, the oversight—of the wider issues involved in retaining data and of intercept evidence. As the Minister said, that will be undertaken by the independent terrorism legislation reviewer, David Anderson, and we consider that such a comprehensive review is essential.

These are highly sensitive and crucial issues. Fast-tracking this legislation in the week before the House of Commons rises and just two weeks before your Lordships’ House goes into recess, when it could have been brought forward earlier does not inspire the confidence to which we and the public are entitled.

Clauses 1 and 2 provide for the retention of communications data—which is very similar to the powers provided for in the data retention directive and then in the 2009 order that gave effect to it. The directive allowed for data to be retained for up to 24 months, although the 2009 regulations provided a limit of 12 months, as the then Labour Government considered that to be adequate and proportionate. As the Minister explained, legal action then followed and, as a result, the directive was struck out in April this year. Although the UK regulations remain, they could be legally challenged.

We accept the necessity of retaining that data as an essential tool in investigating and providing evidence of some of the most serious and organised criminal activity. We also concur with the judgment of the Constitution Committee in its report today that the ECJ legal judgment means that the 2009 regulations lack legal authority and that new legislation is required urgently to replace them.

However, we are told that following the ECJ judgment, an assessment had to be undertaken as to the legal framework and what action was required by the Government. Why “following”? I appreciate that the judgment was detailed, but the basic, fundamental issue was clear. Given how important it is, we find it absolutely incredible that, prior to the court decision, the Government appear not to have undertaken the necessary work to ensure that a new legislative framework could have been put in place with the appropriate scrutiny of both Houses of Parliament in good time.

In its report today, the Constitution Committee reinforces this point in its comment at paragraph 6, when it says:

“The contrast between the time taken by the Government to consider their response and the time given to Parliament to scrutinise the bill is a matter of concern, not least because of suspicions that are naturally aroused when legislation is fast-tracked”.

It is not the first time. Albeit on a different issue, in July 2012 when the courts struck out the statement of Immigration Rules, it appeared that the Government had not taken the necessary advanced preparation and no action was taken until after the court decision; it was rushed in in the few weeks before recess. This is no way to legislate. Since the first Bill we have been dealing with in this new Session of Parliament was the Serious Crime Bill, I have to press the Minister as to why this legislation was not brought in alongside that Bill to ensure greater scrutiny. We may still have had to accept some truncated intervals but it would have been a significant improvement on what we have now and would have removed some of the distrust and suspicion that fast-tracking has brought.

In its 2009 report Fast-track Legislation: Constitutional Implications and Safeguards, the Constitution Committee set out certain principles that should be addressed when Governments seek to fast-track legislation. Looking at this, it seems that many of those principles have now been met, either in the legislation or by the Government’s acceptance of our amendments yesterday in the other place. Noble Lords will be aware that in the discussions we had with Ministers, we were insistent on a sunset clause. That has been agreed. The 2009 report also referred to post-legislative review; the Government’s acceptance of our amendments regarding the six-month review of the legislation and a statutory basis for the review of the Regulation of Investigatory Powers Act meets that criteria.

The Constitution Committee listed other principles then but there is one on which I seek a distinct and precise response from the Minister, and it is raised again by the Constitution Committee in its report today. Why has this had to be fast-track legislation? I have been clear, and the committee is clear in its report, that the issue is not the time imperative which we now face to ensure that investigations of serious crime can continue but why the Government failed to bring legislation forward before now. The Government have a duty to provide Parliament with a significantly better response than we have received to date.

As we have heard, Clauses 1 and 2 of the Bill, which is now somewhat affectionately known as DRIP, provide for the continuation of powers to retain communications data collected in the UK for a limited time. We are clear that these powers are needed. This information is used to investigate and prosecute some of the most serious crimes, and of course it can be used to prove an alibi of someone wrongly accused of such crimes. My understanding is that these data, held temporarily for up to a year, are used in something like 90% or 95% of all serious and organised crime investigations, counterterrorism investigations and online child abuse investigations.

For absolute clarity, it would be helpful if the Minister could confirm that nothing in those first two clauses on data retention allows for the content of communications to be retained, only information relating to the fact that a communication has taken place. Can he also confirm that nothing in these clauses in any way extends or enhances the existing data retention directives and that, as the Home Secretary said in her Statement, the number of public bodies able to access communications data will be reduced, as referred to in the judgment of the ECJ? Is he able to say anything more about that at this stage and when the order limiting use of these data is likely to be brought forward?

The Minister commented earlier on the Delegated Powers Committee’s report on this issue. It addressed that in paragraph 7 and suggested using the “made affirmative” procedure to ensure that the regulations are in force before the powers can be exercised. That is a helpful and welcome suggestion, as he acknowledged, because it addresses the illogicality of having fast-track primary legislation if the accompanying and essential secondary legislation which provides safeguards is not made available at the same time. I heard what the Minister said in response to that report in his opening comments. If I understood correctly, he agreed that that should take place but I was not totally clear whether he was agreeing to the procedure or saying that some other procedure would be found to ensure that secondary legislation would be in place when this Bill comes into force. It would be helpful to the House if he could explain that when he winds up.

Clauses 3 and 4 make explicit the territorial provisions in RIPA to put it beyond doubt that interception warrants can be issued on companies which provide services to the UK but are based outside the UK. They also clarify how such warrants can be issued. As I think noble Lords understand—I am sure that the Minister understands this from the meetings that he has had with me and others—this part of the Bill is more complex and illustrates how global the communications world has become. Increasingly our communications are global rather than local, but local communications can also be provided by companies that provide services within the UK while their headquarters may be outside the UK. The distinction between national and international data is extremely blurred in the light of modern technology. Will the Minister confirm that such information is already sought and provided in certain circumstances, and that these clauses ensure that the legal framework is explicit?

We have heard from the interventions from the noble Lord, Lord Phillips, and my noble friend Lord Knight about whether the extraterritorial claims go beyond current legislation. It would be helpful to have further clarification on this. My understanding, and perhaps the Minister can confirm this, is that it does not extend beyond the current practice and application of the law but reassures companies of the legal basis to comply with the legislation.

Lastly, I want to address the issue of safeguards and the wider review. The Government have to recognise that bringing forward these measures under the fast-track procedure means that it is essential that Parliament returns to these issues but that it does so in a completely different way. As important as these measures are, we should all recognise that this is temporary. There is a sunset clause to say that these provisions will expire at the end of 2016, when new legislation will have to be in place. Before then, a much wider review has to take place that must inform any such future legislation and oversight arrangements.

We believe that data communication information and intercept evidence are vital in tackling the most serious of crimes, and for national security. I think that all noble Lords recognise that we do not live in an ideal society where all citizens are guaranteed total and absolute privacy, and that modern technology requires legislation protecting security and liberty to be kept up to date and relevant. Equally importantly, we recognise that there must be safeguards to ensure that any collection of information must be proportionate and justified, and that measures should be used only for the purpose for which they are intended. There must be safeguards to protect the public interest and public privacy. The public have a right to confidence that the collection and retention of data meets these criteria. The establishment of a privacy and civil liberties board, as mentioned in the Home Secretary’s Statement, is welcome but it will have to be set up and operated in a way that inspires confidence in its title. We also support strengthening and enhancing the Intelligence and Security Committee.

Previously, the Government have resisted our calls for an independent review, so we welcome their acceptance of our amendments in the other place yesterday to ensure the statutory review of RIPA and the wider implications of the legislation. There has to be more than that, though; following that review, and before new legislation, there has to be a wider public debate. I said at the beginning that these are sensitive issues; they are also complex ones that strike at the heart of the issues that we care about most. We care about crime, national security and public safety, but we also care about the rights and privacy of individuals. It is not unreasonable for the public to demand both security and liberty. We have to get that balance right. We have to have public understanding of the issues and public consent, and fast-track emergency legislation does not give us that.

We support the Bill and are content that it maintains the existing capabilities, and we are content that the proposals do not extend the application of existing frameworks but provide a secure legal position and fill an immediate gap to ensure that vital evidence will not be lost. However, these issues, with all their complexities and sometimes seeming contradictions, are not short term. They will be with us for a long time and we need proper, sustainable policies that command support, not just temporarily but for the longer term. The real challenge has yet to be met.

For all the concerns about the nature of today’s debate and the use of fast-track legislation, we should use this debate as a starting point. It is an opportunity to welcome the broader, wider review; to strengthen oversight; to properly and effectively consider the balance between liberty and security, between privacy and public safety, in a world where technology is developing faster than at any other time in history; and to ensure as far as possible that this is not a private debate but one that, through honesty and clarity, provides confidence that we can get the balance right.

16:34

[Lord Paddick (LD)]

My Lords, it is clear to me, having served as a police officer for more than 30 years, how important it is for communications companies to continue to retain the data that the Bill requires them to keep. Having said that, as a Liberal Democrat, I am extremely concerned to ensure that any invasion of privacy is undertaken only where it is absolutely necessary, proportionate and compliant with both the European Convention on Human Rights and the European Court of Justice judgment.

As the Minister said, there are two main aspects of the Bill: data retention and interception. On the first aspect, it is important, but not widely understood, that this legislation is about data being retained by private companies, not by the Government or their agencies, so that those investigating crime can make specific requests for data about specific individuals. It is also important, but widely misunderstood, that these data give only the context and not the content of the communication: the date, time, place and identities of those involved in the communication, but not what was said.

My noble friend Lord Macdonald of River Glaven will talk about his experience as a former Director of Public Prosecutions, but my experience is, as the noble Baroness, Lady Smith of Basildon, indicated, that there are very few prosecutions of those involved in serious and organised crime or terrorism that do not use such data. Indeed, some cases heavily rely on such data. I cannot overemphasise the importance of these data for crime detection purposes.

Despite the reassurances given by the Minister, there are justified and serious concerns about the haste with which this legislation has been laid before us. My noble friends Lord Carlile of Berriew and Lord Strasburger will take up those points. That is not to say that there are not justified and serious concerns about the use of these data. It is not just the data of those suspected of crime that are retained, but everyone’s data.

There are concerns that access to the data is being given where such action is not considered to be proportionate. In addition to the police investigating serious crime and the security services and the police investigating terrorism, other agencies, such as local authorities, can access these data for relatively minor matters. That is why the Liberal Democrats are insisting that the range of agencies that can access the data is restricted. Will the Minister please inform the House of what those restrictions will be?

There are also concerns that even those agencies that have legitimate access to the data might make requests that are not justified or proportionate. That is why the Liberal Democrats are insisting that annual transparency reports are produced to ensure that the number of requests does not significantly increase under this legislation. Will the Minister confirm that this will be the case?

The second area is the interception of the content of communication, which requires a warrant signed by a handful of senior government Ministers, and the apparent extension of this power overseas. Will the Minister confirm that it was always implicit in the Regulation of Investigatory Powers Act, passed by the former Labour Government, that the power extended to companies whose infrastructure is overseas and that this Bill merely clarifies and does not extend its geographic reach? I know the Minister made that statement in his opening remarks, but it would be helpful for it to be emphasised because it is a major concern of many non-governmental organisations.

More generally, there are genuine and serious concerns about the whole area of intrusion into privacy and where the balance needs to be struck between privacy and security, as the noble Baroness, Lady Smith of Basildon, said. That is why the Liberal Democrats are insisting that there is a fundamental review of RIPA. We are very pleased that that was taken up in the other place by the party opposite and put into legislation. We need a fundamental review of all other legislation in this area and a sunset clause in the Bill to ensure that this review is undertaken. We need a proper debate in this country about how far we are willing to allow the state to intrude into our lives to keep us safe. Such a conversation has been delayed for far too long, and I am very pleased that, through the negotiations by the Deputy Prime Minister, this review will allow a proper discussion of these vital issues.

Can the Minister also confirm that an independent privacy and civil liberties oversight board will be established to advise the Government, not only on this review but on an ongoing basis, and that the Intelligence and Security Committee will in future be chaired by an opposition MP, to provide further confidence that there is a proper check on the activities of the Government and their agencies?

The new oversight board, the review of RIPA and the new annual transparency reports to be made to Parliament are all things that the Liberal Democrats supported at our recent party conference, where we called for a new digital Bill of Rights. Far from being a new intrusion into civil liberties, the Bill, alongside the package of changes also announced, will, I believe, strengthen civil liberties. We need to go further and enshrine a new digital Bill of Rights in statute, but these measures are an important step in the right direction.

The Liberal Democrats are very concerned about this whole area of privacy and security, which is why we have sought the concessions the Government have promised. That is why, when the Home Secretary saw this case as an opportunity to bring forward the communications data Bill again, we again blocked it. However, we accept these changes, on the basis of one final and vital point—that it is clear that this new Bill does not extend the power to intrude into people’s privacy.

As the Minister has said, this is not about extending the law further via emergency legislation rushed through Parliament. It is about retaining the status quo, which has been undermined by recent legal developments at the European Court of Justice, and the Government are in discussion with major non-UK telecoms providers. On that basis, and subject to the agreed concessions coming into force, we support the Bill.

16:41

[Lord Butler of Brockwell (CB)]

My Lords, I should say at the outset that I am satisfied that the Government need the legislation before the House today. But like the noble Baroness, Lady Smith of Basildon, and others, I am very critical of the way in which Parliament has been treated on this matter. Taken with the subject discussed in the Private Notice Question earlier, this is a bad day for the relationship between Government and Parliament.

The Intelligence and Security Committee, on which the noble Marquess, Lord Lothian, and I represent this House, was warned a week ago today—last Wednesday, the day before the Home Secretary’s Statement—that this emergency legislation was to be introduced. The imminence of that Statement was widely reported in the next morning’s media, ahead of the Home Secretary’s Statement, so it appears that the media were briefed at the same time.

Why has Parliament been given so little time to consider this Bill? The two issues that it addresses have been apparent for weeks, indeed months. The ruling of the European Court of Justice was issued on 8 April. It was clear from that moment that the regulations that the intelligence agencies and the police in the United Kingdom use to seek details of communications from providers had become vulnerable to challenge. So the need for action, which this Bill addresses, has been known about for three months.

The second issue that the Bill addresses is the assertion that powers to require data from providers abroad have extraterritorial effect. But several of the communications providers based outside the United Kingdom have made no secret of the fact that they are willing to respond to requests for communications data only if they are required to do so by legislation. There is nothing new in that. Nor did it only become apparent last week that some of the major providers were based outside United Kingdom jurisdiction, or were about to move there. That, again, has been known for a long time.

The House may remember that following the Home Secretary’s Statement last week, which the Minister repeated, I raised this issue with him. He gave me a reply that at the time seemed good to me. However, on reflection, I find that I am not persuaded by it. The Minister explained that the delay between the ECJ judgment and the announcement of this legislation was due to the fact that the Government had been working with the law enforcement agencies and the data providers to get the details right. That is very understandable. Therefore the Government were discussing this problem with Microsoft, Yahoo! and other providers. Why were they not willing to discuss the issue similarly with Select Committees of Parliament when they were already discussing it outside the House? If the Government could reach a conclusion about the necessity for this legislation one week before the House of Commons went into recess, it beggars belief that they could not have reached that conclusion three weeks before the Recess, thus giving Parliament proper time to consider the Bill.

In 2012, when faced with the growing difficulty of getting access to communications data, the Government published a draft communications data Bill, as the House will remember. That Bill provided for a substantial extension of the Government’s powers, and the Government, very properly, provided the opportunity for a Joint Committee of both Houses and the Intelligence and Security Committee to examine the Bill and report on it. Both committees made some criticisms of the draft Bill, and the coalition decided not to go ahead with it as a result of the reservations of the Liberal Democrat members of the coalition. Unlike that Bill, this Bill does not break new ground, so the Government’s failure to give Parliament longer notice of it and enable Parliament to satisfy itself about its details is more difficult to explain. Those who take a conspiracy view of government might be tempted to speculate that having burned their fingers through consultation on the communications data Bill, the Government thought it wiser to bounce Parliament rather than to run the same risk again. The Minister owes the House an explanation of that.

I criticised the Government for their delay in consulting Parliament about the Bill. I have also asked myself whether the Bill is so urgent that it has to be treated as emergency legislation in the few days remaining before the Summer Recess. On this I believe the Government have a more convincing story to tell. I understand that the Government take the view that the UK regulations based on the European directive do not automatically lapse as a result of the ECJ judgment. One might therefore take the view that it could be several months before they could be challenged in a UK court, which would enable Parliament to consider the Bill properly in the autumn. However, I am advised that following the ECJ judgment, and ahead of a challenge, communications providers might feel obliged to destroy data that are no longer needed for their own operational purposes, and that evidence valuable for the prosecution of crime or prevention of terrorism might be lost. Similarly, the co-operation of communications providers outside the jurisdiction is sufficiently valuable in the prevention of serious crime and terrorism that I accept that the assertion of extraterritorial coverage should not be delayed. Therefore on the substance of the legislation, as I said at the outset, the powers in the Bill are necessary, subject always to the reservation that there has not been time to study its provisions in the detail that would have been desirable.

When the Intelligence and Security Committee examined the communications data Bill, which extended the Government’s powers, we were satisfied with the case in principle for extended powers, subject to important issues of detail. Although our committee has not had as much opportunity as it would have wished to examine the present Bill, it would be odd to cavil at the maintenance of existing powers which have been shown to be very important for the investigation and prevention of serious crime. Therefore, with regret that the Government have not given Parliament the time to examine the Bill properly in detail, I support the legislation.

16:50

[Lord Howard of Lympne (Con)]

My Lords, in view of the support for the proposals in the Bill, which has been voiced by the last three speakers—hedged around with caveats though that support was—I hope that I can be relatively brief in my support for those proposals. It is, of course, for my noble friend the Minister to reply to the criticism made by the noble Lord, Lord Butler, but it does not seem to me to be wholly unreasonable that the Government waited until they knew how they were going to proceed before putting proposals to Parliament or its committees. They could not know how they were going to proceed until they had completed their consultations with the companies to which the noble Lord referred. That does not seem to me to be unreasonable. However, that is really a matter for my noble friend the Minister. I propose to address my brief remarks to the substance of the Bill and the general proposals. They have not yet been challenged, but the debate is young and there may be those who may yet wish to challenge them.

One of my honourable friends in another place said yesterday that we should be cautious about allowing technology to infringe our freedoms. I would put it rather differently: I believe that we should embrace technology in order to protect our freedoms. The greatest freedom that any citizen can have is the freedom to carry out his or her lawful business without the danger of being blown up or being the victim of some other serious criminal offence. If the law enforcement authorities are to be able to carry out their job and protect that fundamental freedom, it is essential that they have the powers which are contained in this Bill.

The point was put extremely eloquently yesterday in another place. If noble Lords will permit me, I shall do something which I do not believe I have ever done before, which is to quote—with approval—from the observations of my immediate successor as Home Secretary, Mr Jack Straw. He said that,

“where there is a suspect for a crime, it is for a crime that has been committed in the past. The police will not know who that suspect is until they come to the police’s attention, at which point they have to get historical evidence. These days, part of that historical evidence will be in data records. They have to be able to access everybody’s data records in order to find those of one particular person, because the police, no more than the rest of us, are not given powers of clairvoyance with which to anticipate who is and who is not to be a suspect. Unless or until I hear from opponents of this Bill and of data retention how the police can be expected to identify in advance those who are going to be suspected of crime, I have to say that the whole logical basis of their argument completely falls away”.—[Official Report, Commons, 15/07/2014; col. 734.]

Mr Straw was absolutely correct in those remarks. They go to the nub of the need for the powers contained in this Bill. He went on in his speech to explain that the supervisory powers over the authorities which have the ability to exercise the powers contained in the Bill has been extended and strengthened in recent years. I believe that that supervision is robust, and that it is adequate to protect the essential liberties of the citizen. I commend these proposals to the House.

16:53

[Lord Knight of Weymouth]

My Lords, I have to start —like the noble Lord, Lord Butler, who made such an excellent contribution—by saying that the Government’s handling of this Bill has been a disgrace. I cannot repeat any better why it is a disgrace, and it would be ridiculous of me to try to compete with the noble Lord’s analysis. To have given Parliament three days when they have had three months to consider their response is a disgrace. Although my ministerial experience, at just five years, is much more limited than that of the previous speaker, whom I equally respect, particularly his experience as Home Secretary, I know that when there was the threat of a case in the European Court, Ministers would receive a risk analysis. I find it difficult to believe that no one in the Home Office had a plan B. If they were to lose that case, the thinking was not going on within government as to how they were going to handle losing the case and the uncertainty with which they would then have to deal with the RIPA powers. So I am afraid that that is my starting point.

I would also strongly agree with my noble friend Lady Smith of Basildon and others when they say that there is a need for Parliament to be seen to address the very real public concerns over the balance of privacy and security and the desire for personalisation of digital services. Some of us use digital services very heavily and are only just becoming aware of how much our desire for all those personal services that come through on our phones and tablets generate metadata that are now the subject of this legislation. Given the need for Parliament to be seen to address and debate, and lead a debate in the wider public, on those concerns, it is an affront to see the legislation railroaded using the fast-track mechanism. The basis of my comments is to analyse whether some of that is justified.

Yesterday, as is my wont, I gave some friends and some of their family who are over from Canada a tour of the Palace of Westminster. Highlights of that tour are always things such as the Magna Carta; there is a copy in the Content Lobby, and we will enjoy celebrating its 800-year anniversary next year. Then there is the statue of Lord Falkland, where the sword was cut to allow a suffragette called Marjory Hume to be taken off to prison in 1909, and the plaque commemorating Nelson Mandela speaking in Westminster Hall. Best of all is the broom cupboard in the Crypt, where Emily Wilding Davison hid on the night of the 1911 census, and the phrase at the end that Tony Benn put there:

“By such means was democracy won for the people of Britain”.

That tour contains in its highlights all those moments where we recognise hard-won civil liberties for us as individuals, both here and around the world. It is incumbent on us as a Parliament and those who serve at any given time in this Parliament to protect those liberties as strongly as we protect the safety and security of the people in this country.

We also need to remember that we have a different tolerance of our own privacy, because we agree to become public figures when we agree to come here, than do most people who live in our country. The information in Who’s Who would probably allow anyone who wanted to steal some of my information to do so, because it has my mother’s maiden name as well as my date of birth, which are the sort of questions that you get asked online. We understand that when we fill out the entry in Who’s Who and we are aware of the risks that we take when we do so. I hope when we make up our security information online that we are also aware of it and are accordingly cautious.

We also need to be aware of the issue of metadata. When I sat in the audience in the Donmar Warehouse theatre a month or so ago, as a guest of my noble friend Lord Mitchell, watching the play “Privacy”, we heard gasps from the audience when they found out how the default settings on an iPhone mean that Apple knows exactly where we are and exactly when at any given time, unless we change those settings. They were some of the greatest moments of theatre that I have seen in some years—it was my first profession— when I heard the gasps of the audience who saw the pictures of their houses flashed up on the back of the screen, because the researcher had researched them using metadata to show where they all lived. That is metadata, the subject of the Bill—and that is something that we have to be cautious about.

There has been a breakdown of trust in recent years between the people of this country and the state, particularly those pursuing criminal investigations. This is because of Hillsborough and Savile; because of phone hacking, and plebgate. We must have an active debate on a regular basis because of PRISM and because of the powers that the private sector and, through it, the state and GCHQ have to access our data. As a Parliament we have been remiss in not debating Snowden as actively as we should have and as actively as they have done in the US. If we do not, I think we are failing the public

I am persuaded by the arguments that Clauses 1 to 3 are necessary. I believe that security and the ability to continue criminal investigations mean that we have no choice but to pass Clauses 1 to 3 of this Bill. This was well put by the noble Lord, Lord Paddick. We need the status quo for criminal investigations.

I welcome the concessions that my right honourable friend the shadow Home Secretary, Yvette Cooper, has won in getting the RIPA review and six-monthly reporting into the legislation. I worry that the thinking behind these reviews is through the prism—if that is not the wrong word—of security and law enforcement as the starting point, rather than the data privacy of individuals. I should also like to see a review of the operation of the Information Commissioner’s Office. According to its website, it is:

“The UK’s independent authority set up to uphold information rights in the public interest, promoting openness by public bodies and data privacy for individuals”.

That office needs to be the guardian of members of the public on these issues. I hope the Minister will be able to give an assurance from the Dispatch Box that the Information Commissioner’s Office will be included in some of that review work.

Clause 4 concerns what I will call the new powers overseas because I cannot pronounce extraterritoriality very well. I struggle to see the emergency for this to be included in a fast-track Bill. In the report of the Constitution Committee, published today, paragraph 11 says:

“It is not clear why these provisions need to be fast-tracked”.

It may not be fashionable to quote Liberty but it says that Clause 5 of DRIP, read together with Clause 4 (8), gives the Government “new, express powers” to go to foreign webmail providers and demand that they hand over or obtain communications data. The objectives of the snoopers’ charter are therefore met via another route. That is their charge. If the Minister were able to respond to that, I think that supporters of Liberty would be pleased to hear it.

As I am sure your Lordships will all have done, I have received a letter from a list of highly credible legal experts on internet law. These are professors from a whole range of our best universities. They say that this clause,

“introduces powers that are not only completely novel in the United Kingdom, they are some of the first of their kind globally”

The letter continues,

“the proposed Bill arguably breaches EU law to the extent that it falls within the scope of EU law, since such mass surveillance would still fall foul of the criteria set out by the Court of Justice of the EU in the Digital Rights and Seitlinger judgment”.

They would say that the reassurance which the Minister gave, following my intervention, is not true. I am sure that everything the Minister is saying is on good advice and in good faith. I know him to be a completely honourable and truthful man and I do not question what he is saying. However, I would value it if he were able to publish or circulate to Members of your Lordships’ House the advice he has received that this legislation, particularly Clause 4, is not in further breach of EU law, and that it will not extend the legal rights—not the practice but the legal rights—of government in respect of these matters.

On balance, very reluctantly, I support the Second Reading of this Bill, but I question whether Clause 4 should continue to be in the Bill.

17:04

[Lord Macdonald of River Glaven (LD)]

My Lords, I am not going to labour the importance of communications data in serious criminal trials. That has been widely acknowledged. However, I cannot think of a single major terrorist trial in recent years in which this material has not been deployed to significant and sometimes determinative effect. As the central purpose of the Bill is simply to preserve a situation in which this material may be accessed and used under appropriate lawful authority, I support it.

Of course, the ambit of the Bill goes far beyond phone calls. The world has changed, bringing with it the internet, e-mails and social media. I listened with great interest to what was said a few moments ago by the noble Lord, Lord Knight. However, I do not believe that any sane rule of law jurisdiction can confer on the internet a form of immunity so that what occurs there cannot be used as evidence of criminal wrongdoing if it is such evidence. As for extraterritoriality, it is difficult for me to understand why e-mails to and from individuals in the UK should be accessible if they are routed through a UK server but somehow inaccessible if they are routed through the United States. For my part, I prefer these matters to be resolved by legislation, which can be debated, amended, repealed and improved, rather than by nods and winks between our authorities on the one hand and overseas providers on the other, which is what may have happened too frequently in the past.

The point surely is the means by which the state obtains access to the preserved material. If these means are proportionate and prescribed by law, the process is consistent with the rule of law. There is nothing in the Bill that alters the mechanisms by which this preserved material may be accessed by the state. It remains, in criminal cases, by warrant following suspicion. The Bill has nothing to do with a snoopers’ charter or with Operation Tempura. It mandates the limited preservation of data so that, where real suspicion exists, they may be accessed by lawful authority. It is not the bulk collection of data for random mining by the security agencies or the police. It is not a snoopers’ charter.

I make two other points. First, since the Snowden revelations first appeared in the Guardian and since we first learnt about Operation Tempura, many people have called for a wholesale review of the Regulation of Investigatory Powers Act. I have been one of them. We have argued that RIPA is hardly capable of regulating this sort of activity in 2014 and that the technological means of communication have altered so dramatically since the year 2000, when it was passed, that we need fresh legislation. The Bill brings that review in its wake. I welcome that very strongly. Secondly, many of us have looked with some admiration at the work of the Privacy and Civil Liberties Oversight Board, which was set up following a recommendation by the 9/11 Commission in the United States, and have called for the establishment of a similar board in our country. It seems, and I would welcome the Minister’s confirmation, that we will also have a privacy and civil rights oversight board in the United Kingdom.

From my perspective, these are powerful reforms, both coming in the wake of the Bill. My noble friend Lord Paddick referred to others. These powerful reforms show balance and the advantages of coalition. With respect to some of my noble friends, I very much doubt that we would have had these reforms without coalition. In combination, the Bill and these reforms seem to herald an environment with more respect for the appropriate relationship between national law enforcement imperatives and the prize of personal freedom. The Bill, set out as it is with clarity about extraterritoriality, in combination with these reforms will place us in a better environment than we have hitherto seen in this area. I welcome and support it.

17:09

[Lord Lloyd of Berwick (CB)]

My Lords, this debate has clearly attracted the attention of a large number of experts on this subject. We have already heard from five such experts on the Back Benches. My only justification for taking part is that I was the first ever Interception of Communications Commissioner, appointed as long ago as 1985. I think I can claim that, whatever my expertise may be, it at least antedates that of all the other experts in the Chamber today.

In the Statement that the noble Lord read the other day, he referred to the important role that communications data play in prosecutions. He mentioned that they are relied on in 95% of all prosecutions, and I have no reason at all to doubt that figure. However, as for the purpose for which the evidence is used, we were told that it is in order to identify criminal associations between people and possibly to answer a defence of alibi. Some of your Lordships must have thought that those were very narrow justifications or purposes for which the information is used, and they would have been very right to be puzzled by it. As we know, the evidence can be given to prove that a telephone conversation has taken place between two people. However, the contents of that telephone conversation cannot be used in evidence, yet that is by far the best evidence that there could be because it would mean that the criminals could be convicted out of their own mouths.

Before I am called to order by the noble Lord for venturing far beyond this Bill, he will understand why I am doing so, as this is a subject that I have been interested in for a very long time and I find it impossible not to mention it. No doubt, if there is to be a review of RIPA, it will be covered.

As for the Bill, it is clear that we must continue to be able to use communications data in court. For that reason, we must be able to serve valid retention notices on those who provide communications services to retain data for up to 12 months.

The 2009 regulations which contain those provisions are based on the data retention directive of 2006. Through no fault of ours, that directive has been held to be invalid by the ECJ—not the ECHR, which is of course the usual culprit in these matters. Therefore, it seems to me that we must give those regulations a better foundation. That is all that the Bill does; so far as I can see, it does not alter them or add to them in any way.

As for the other part of the Bill—the so-called extraterritoriality provision—I have certainly always understood that interception powers are applied to companies providing communications services in this country, wherever those providers are based. Apparently, that has now been questioned but, to my mind, the questioning is without foundation. All companies operating in this country must surely be subject to the same regime, and that is all that that part of the Bill achieves. It is extraterritorial—a word which always raises hackles—only in the sense that it enables us to serve warrants on companies which are based outside the country but operate within the country. Therefore, I can find no objection to that part of the Bill.

This, in my view, is a necessary and urgent Bill, and I can find no fault in it. I therefore urge the House to accept it.

17:15

[Lord King of Bridgwater (Con)]

My Lords, I join noble Lords who have expressed their regret—the noble Lord, Lord Butler, did so most forcefully—at the speed with which this legislation has come forward, and questioned whether there is a convincing explanation of why the European Court of Justice judgment, made in April, ended up with one day in the House of Commons in late July. I have my own suspicions as to how that happened. We seem to be quoting a lot from the other place, but if anybody reads Mr Jack Straw’s attempt to read the European Court of Justice judgment—which he found pretty incomprehensible and a load of porridge, as I think he described it—they will see that that may have been part of the extension of the problem. When this matter was raised in the debate on the Statement I warned the House that one is right to be deeply suspicious of emergency legislation that appears in this way. I should also say, deeply cynically, that that is even more the case when such legislation comes with all-party agreement. That is a time to fasten your seat belts and wonder what the background to it really is.

After that unhelpful opening comment for my noble friend, I should also say that I would regard it as pretty unacceptable if the Bill involved a major extension of powers. However, if it is true, as the Government maintain—and as is widely accepted, including by the Constitution Committee—that something that was lawful may now cease to be so, then a different situation obviously arises. Having said that, I certainly accept that this legislation is necessary. I absolutely recognise the critical importance of the retention of data and appropriately controlled interception in our fight against the increasing challenge of terrorism, crime, paedophilia, organised crime or whatever it might be.

The redeeming feature of the Government’s legislation is the sunset clause. I see that an amendment was moved in the other place that this should last only until Christmas, but that is quite inadequate. Having put this emergency legislation in place, we now need to have a serious look at the issues which arise out of it. I will quote again from the other place. I was impressed by the speech made by a former colleague, Yvette Cooper, who I was delighted to have serving with me under my chairmanship of the ISC. As a new Member of Parliament, she was immediately put on the ISC and made a very useful contribution to it. She rightly called for this not to be such a short sunset period, but to provide the opportunity for a major review of the issues of liberty and security. I am delighted to see that the ISC is going to conduct such a review. She also, in passing, made a comment about the many private companies that are making far more use of our private data than any police or intelligence agency has ever dreamed of doing. Some of us would be delighted to see this included as part of the consideration in any review that is conducted.

The former Attorney-General, Dominic Grieve, intervened to say that the question of interception is nothing new. This has been taking place since the telephone was invented. Alan Johnson then made an even more interesting observation that when he joined the Post Office there was a whole section in St Martin’s Le Grand post office entirely devoted to the steaming open of envelopes. Professor Christopher Andrew, in his study on this, identified that in 1969 that section opened 221,000 items. This is part of the background to some of these practices but it is not to say that any of this is justifiable unless it is strictly controlled, under proper legal authority and there is some accountability for the actions taken and the challenges that exist.

When I chaired the ISC, which goes back to when it started 20 years ago, it was clear that even then the agencies were struggling to keep up with the development of new technologies, with the amount of different systems and ways in which criminals, terrorists and others could communicate, and with how to keep some sort of effective protection against them. That was pre-Twitter, pre-Facebook and pre all the developments that have taken place.

The challenges now are definitely all the greater. Huge opportunities are offered to terrorists, to those involved in serious organised crime and to criminals who are very sophisticated in some of their methods of communication. It is a temptation for them. It is also a temptation for the agencies—not for any improper purpose but because they are trying to protect us and to keep us safe. They will be continually pushing against the limits of the constraints of legislation in the interests of trying to make sure that this country is as safe as it can possibly be. The challenges of oversight, of proper legislative authority and control, and of public confidence are very important.

Perhaps I may add one little personal note. I was delighted to see that Yvette Cooper said that if there were to be a Labour Government they would insist that the ISC should have a chairman from the Opposition, which is very wise. I have great respect for those who have been chairman of that committee, including Margaret Beckett and the current chairman, Sir Malcolm Rifkind. However, if an issue had come up that the ISC had to look at, and its chairman had been Foreign Secretary and responsible for the SIS, MI6 or GCHQ, maintaining public confidence when it produced a report would have been all the more difficult. I am delighted that that has become Labour Party policy and I encourage my noble friend to ensure that we move in that direction.

I am not sure that we have got the message across to the general public: they think that the retention of data is all about reading or listening to everybody’s messages and communications. I do not think that more than one person in 1,000 in this country knows what metadata means, which is the word that is frequently used. As my noble friend said in relation to data, we are concerned about the who, when, where and how, not about what people are actually saying. That is what we are talking about in relation to these data. I think that it is very important to do it.

I support this emergency legislation. If it goes through, it will protect our defences and ensure that they are in place in the next phase. Then we must look at the relationship between privacy and security. Although I have not heard much about it, I welcome the announcement about the privacy and civil liberties board. I welcome the work that it can do in ensuring that while we maintain our defences in a very dangerous world, the rights of the citizen, his liberty and his privacy are properly protected as well.

17:23

[Lord West of Spithead (Lab)]

My Lords, I start by saying that our nation needs secret intelligence agencies and the clue as to how open they should be rather lies in the word “secret”. Their job is to discover information, often hidden, that is important for our people’s security, safety and prosperity. It has always been important that adequate checks are in place to ensure that the agencies and the state behave in a manner that the nation expects of them.

What is unhealthy is the desperate desire generally, and particularly in some areas of the media, to see secrets and, indeed, to decide what should and should not be secret. Apart from anything else, it shows immense arrogance. I know that the days of thousands of men and women who worked at Bletchley Park keeping quiet for decades have gone, but the propensity of so many people today to divulge secrets about themselves and others on social media seems unfortunate. Indeed, in the case of national secrets it can be very damaging. As the noble Lord, Lord King, mentioned, although there are repeated concerns about our Government’s legal and warranted access to communications, we seem to accept quite happily that communications providers and other private firms read the content of our e-mails and use metadata—I actually understand what metadata are—to find out how we shop, how we travel, where we travel, where we live and about our lifestyle for the purposes of advertising. They do all those things, and yet Liberty and other such organisations do not seem to mind at all. Those private firms are totally uncontrolled, while the state is very controlled in what it can do.

Does UK law balance privacy and security in terms of the Government’s activity? I believe that it does. Article 8 of the European Convention on Human Rights states:

“Everyone has the right to respect for his private and family life, his home and his correspondence. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security … the economic wellbeing of the country”,

and for the prevention of serious crime. As has been mentioned by a number of noble Lords, to ensure that our agencies stick to the law, they are overseen by the Intelligence and Security Committee, the independent commissioners for oversight, the Intelligence Services Commissioner, the Interception of Communications Commissioner and the Investigatory Powers Tribunal. I know, from my time as a Security Minister and from travelling around the world, that we have one of the world’s strongest legal and regulatory frameworks governing the use of intercepted intelligence—much stronger than a number of countries in Europe. I believe that the intelligence agencies take their obligations under the law very seriously. When I was a Security Minister, it was implicit in the legislation passed by the Labour Government that it had effect on extraterritorial companies. That was the assumption, for the reasons explained so well by the noble and learned Lord, Lord Lloyd, and other speakers.

As the Minister said—it is worth repeating—the police and intelligence agencies currently use communications data to investigate crimes and catch criminals. They are crucial in 95% of cases. As a result of the European Court of Justice judgment, as was said, there is an imminent risk that this ability, which we have had for so many years, will be lost. The court said that it did not consider that the directive had the necessary safeguards, but it did not really understand our RIPA legislation. However, as far as that goes, we are where we are.

I share the view of my noble friends Lady Smith of Basildon and Lord Knight and the noble Lord, Lord Butler. I am not impressed by the speed with which this has happened. Something funny has happened; I would love to know what that is, and I feel that we have been slightly bounced. I am not happy with that, but we are where we are; that is the reality.

Nevertheless, I believe that this legislation is necessary and proportionate. It will ensure that the communications data required by the police and others continue to be available in the future, as they have been in the past. People refer to a snoopers’ charter, but I hate that expression; it really annoys me. We should call it the guardians’ charter—before Mr Rusbridger thinks that it has something to do with his newspaper, it is because I believe that the people who are doing it are guardians of the safety and security of us all. Snooping is a loathsome way of describing it. Do we really think that terrorists and criminals should have means of communication that they can be confident are beyond the sight of the Security Service, GCHQ and Special Branch acting with a proper legal warrant? I think not. It would be a disgrace if that were the case.

I suppose my parting shot is that I see the agencies and Special Branch as allies, not enemies. They are full of good, patriotic men and women working extremely hard, sometimes risking their lives for the good of our nation. They are part of our nation, not some alien force. Clearly, we must regularly review oversight mechanisms and it is right and proper, particularly in the case of emergency legislation, which none of us likes and is normally bad legislation, that we look in detail and include lots of safety caveats. Many noble Lords and Members of the other place have done that. I believe that we have the correct checks and balances in place, including the sunset clause. From what I have heard, they are sound and they are there. But speaking on an emotive level, and I like to go on the emotive level, I find it extraordinary that some of my fellow countrymen see the men and women of our agencies as the enemy. They are not. I would happily have them on my right flank in a fight. They work around the clock to ensure our safety and I believe the majority of our countrymen feel the same.

17:30

[Lord Armstrong of Ilminster (CB)]

My Lords, I do not propose—indeed I am not qualified—to comment on the ruling of the European Court of Justice which has made it necessary to introduce the legislation that we are considering. But as a consequence of what I learnt as a member of the Joint Committee for pre-legislative scrutiny of the Government’s draft communications data Bill, chaired by my noble friend Lord Blencathra, I am sure that it is important—indeed necessary—that there be no doubt about the legality of requirements placed on communications service providers to make communications data other than the content of communications available, mainly for the detection and prevention of serious crime and of terrorist outrages, but also for other purposes, particularly child protection, and to retain those data for longer than they would need for their own commercial purposes.

Yesterday, the Minister described the Bill as a puncture repair to keep the car on the road, not a new tyre. I accept that the Bill does no more than restore the legal cover to the state in which it was, or was believed to be, before the European court’s judgment, and as such I believe that noble Lords can and should approve it. I also believe that the case has been made for extraterritoriality, as was said by my noble and learned friend Lord Lloyd of Berwick. But I remember an occasion in 1993 when the late Lady Thatcher, in a visit to the United States, took the US Secretary to the Treasury robustly to task for the US Government’s attempt to impose their powers extraterritorially. It was so robust that when she had finished the Secretary to the Treasury said, “Margaret, you need to watch your blood pressure”, to which she answered, “I should like you to know that my blood pressure is extremely low”.

The inquiries made by the Joint Committee chaired by my noble friend Lord Blencathra persuaded me, and I believe other members of the committee, that a strong and effective system is in place for ensuring that only communications data essential for a specific and justifiable investigation are required from the communications service providers. As another noble Lord has pointed out, this is a real safeguard to protect the privacy of the ordinary citizen going about his or her ordinary business.

In this business, there is constant tension between the need to respect and so far as possible to protect the right of the citizen to privacy in the conduct of his or her life and business, and the duty of the Government to protect the safety and security of the citizen as he or she goes about that life and business. In this tension, there are no absolutes as to how the balance between them should be struck. That balance changes as circumstances change, as the technology of communications changes and develops, which it does with great rapidity, and as new threats to safety and security emerge.

The state of legislation on communications data needs to be constantly reviewed as those changes progress. But, in the end, it is Parliament that must strike the balance. Parliament last reviewed the balance during the passage of the Regulation of Investigatory Powers Act 2000. To save myself stumbling over that in future, I will call it RIPA. The world of communications has changed—as the noble Lord, Lord Macdonald, pointed out—almost beyond recognition in the 14 years since 2000. The determination and ingenuity of those who commit serious and organised crime have not diminished. New threats, or potential threats, of terrorism have appeared in this country. It is high time to look again at the balance and to introduce new legislation to take account of those changes. We are asked today to approve a puncture repair. We should be looking at a new set of tyres.

The Government produced a draft communications data Bill earlier in this Parliament. The committee of the noble Lord, Lord Blencathra, thought that the draft Bill had not got the balance right, and made recommendations for changing it to rectify the balance. The Home Office then revised the draft Bill in the light of those recommendations and made improvements which, in the judgment of many of us, went a very long way towards meeting those recommendations and striking a proper contemporary balance between the right to privacy and the need to protect safety and security. Unfortunately Parliament was denied an opportunity to consider that revised draft Bill.

There will now be no opportunity, this side of the forthcoming general election, for Parliament to consider a full-scale and up-to-date new Bill, finding and striking a new balance between the right to privacy and the requirements of safety and security in this area of communications data. However, there will be a pressing need to do so early in the life of the new Parliament, because of both the lapse of time and the pace of technological change since RIPA was passed in 2000, and now because of the sunset clause in this emergency Bill.

I welcome the proposal, as provided for in Clause 7, to set up a review by the independent reviewer of terrorism legislation. I have one query about that. The independent reviewer is the reviewer of terrorism. It is not clear from the Bill whether his remit would extend to the use of the communications data regulations for purposes other than countering the terrorism threat, including the detection of serious crime and the other purposes set out in Section 22 of RIPA 2000. I hope that the independent reviewer will have the remit to go that far—he is well equipped and qualified to do so. However, the point should be made absolutely clear.

To change the metaphor, today's Bill, though urgently necessary, does no more than patch the sleeves of the existing and old-fashioned jacket. What is required by the end of 2016 is a brand new jacket cut in the latest fashion.

17:38

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I begin by reminding the House of my involvement with the All-Party Parliamentary Group on Extraordinary Rendition and my trusteeship of Fair Trials International, since I shall want to refer to some of that in a minute or two.

It was quite properly said by the Prime Minister, and indeed by my noble friend Lord Howard in his comments a few minutes ago, that the first duty of a Government is to keep the citizens safe. Before us is a Bill that focuses solely on that objective. Moreover, it is a Bill with a sunset clause: one that is—for my taste —a trifle long, but nevertheless a sunset clause. Add to this the fact that my noble friend took the trouble to invite those Members of your Lordships’ House who were interested to a briefing—for which I greatly thank him. So what’s not to like? For me, like the noble Lords, Lord West and Lord Armstrong, the issue is of course balance: the balance between the need to keep us safe and the need to respect our privacy and our freedom. Never does the one trump the other. As the noble Lord, Lord Armstrong, pointed out, the balance is constantly shifting. It is that sense of balance on which I should like to focus in the next few minutes and on which I hope that my noble friend can provide reassurance when he winds up the debate later.

First, the Bill addresses a technical matter in what is a fast developing field—so fast developing that, we have been told, although the purpose of the Bill is to restore the status quo prevailing before the ECJ judgment, the technical developments in the industry in the mean time require an extension of powers. In the words of the Explanatory Notes, that is to ensure that,

“the definition of ‘telecommunications service’ ensures internet-based services, such as webmail, are included”.

The Explanatory Notes do not use the word “extending” to describe that; they use the word “clarifying”, which I suppose goes to show that one man’s clarification could be another man’s extension.

I am forced to ask myself what other aspects of clarification there are in the Bill on which I hope that my noble friend can reassure me. In particular, I hope that he will dwell briefly on the issues raised by Clause 4, which other noble Lords have raised, which concern extraterritoriality. Noble Lords will have received briefing papers circulated on the Bill which argue that RIPA as it stands has never had any extraterritorial powers. Indeed, your Lordships’ Constitution Committee raised that in paragraph 10 of its report. The Government may have acted as if it has, but the legal base does not exist. If that is the case, this would be another extension, not a clarification. Indeed, as the Constitution Committee pointed out, it emphasises the unfortunate necessity of rushing this through if we are actually extending the law, not merely putting a patch on a puncture.

Then there are questions about the utility of the provision: whether modern encryption and other safeguarding mechanisms render any data collection of little or no value. Perhaps my noble friend will enlighten the House later on whether he has had discussions with service providers on that point.

Finally, there are those who want to be reassured that the provisions of extraterritoriality are a one-way street: that there is nothing in the Bill—mutual recognition implied, or the like—which would enable overseas organisations to reach deeper into the personal information of UK residents.

In the Statement that the Home Secretary made on 10 July, which my noble friend repeated in this House, there was reference to the role of communications data in ensuring convictions. My noble friend said:

“It has played a significant role in the investigation of many of the most serious crimes in recent times, including the Oxford and Rochdale child grooming cases, the murder of Holly Wells and Jessica Chapman and the murder of Rhys Jones”.—[Official Report, 10/7/14; col. 280.]

Those are appalling crimes, and it is excellent that modern techniques have brought perpetrators to justice, but the use of those high-profile cases does not mean that we should suspend or blunt our critical judgment about the proposals before us today.

As a parallel example, my noble friend knows my concerns about certain aspects of the European arrest warrant. Defending the warrant, Ministers always use the high-profile cases of murderers, terrorists and paedophiles who have been speedily returned to justice. That is very good, but less publicity—or no publicity—is given to those cases where the process goes awry and innocent people suffer greatly. I am anxious to explore whether, in passing this legislation, we may be opening similar challenges or difficulties.

One answer to the conundrum given in the briefings is that the legislation refers only to the making of a communication—that is to say, as other noble Lords have said, the when, the where and the with whom—not its content. The Minister and the noble Lord, Lord Paddick, referred to that in their comments. However, as I understand it, this is another area where technological developments are beginning to blur familiar distinctions. The noble Lord, Lord Knight, referred to the term “metadata” as being increasingly used to describe the ability to build upon limited information to create a broader picture. My noble friend Lord King said that he did not have a definition but I do, provided by the invaluable Wikipedia. It says:

“Metadata assists in resource discovery by ‘allowing resources to be found by relevant criteria, identifying resources, bringing similar resources together, distinguishing dissimilar resources, and giving location information’”.

I am concerned that this could—not does but could—take us perilously close to the general mining and profiling of our fellow citizens and, in this regard, it is important to note that the House of Commons Library briefing note provided for the Bill makes it absolutely clear that the use of metadata does not require a warrant from the Secretary of State. With this so-called clarification, the Bill may open up a much greater degree of surveillance of the ordinary citizen than has to date appeared possible.

Given the complex nature of the Bill, it will therefore be vital that the public have confidence in these proposals if they are transparently operated and the Government of the day are frank about them. Those of us who have been involved with the UK’s involvement in rendition have not found it easy to establish such trust with the Government. For years, the previous Administration denied any complicity in rendition but have had to admit that in 2002 two rendition flights landed in Diego Garcia, the British Overseas Territory in the Indian Ocean with a base leased to the US Government. Now we are told that flight records since 2002 are,

“incomplete due to water damage”,

so I fear that the truth will probably never be known.

I share my noble friend Lord King’s concern about the importance of the role of the privacy and civil liberties oversight board. To do its job effectively, its members need the appropriate powers. I understand that there are some terms of reference being circulated; I am afraid that I have not yet seen them. However, these sorts of questions are not just about the terms of reference. They are questions such as: will the members of the board be guaranteed a proper degree of security clearance, and how will it actually operate? Will it be a day a week for senior grandees to glance over the issues and make a few ex-cathedra statements, or will they be expected to get their hands dirty and do the unglamorous but necessary work of ensuring that the proper procedures are followed? Only if the latter approach is followed will the public be reassured that the right balance between security and liberty is being struck.

Twelve years ago, in the spring of 2002, another piece of legislation concerning the Anglo-US extradition treaty was rushed through in response to the terrorist threats, post-9/11. In the event, most of the requests under that agreement have been about financial crime. There is nothing wrong with that but it was not what it said on the tin. Latterly, we have had the bizarre case of Mr Gary McKinnon. He may have been an unusual man but he was no terrorist: his crime was to embarrass the Pentagon by hacking into its computer systems. As my noble friend Lady Browning memorably said, the Pentagon should have hired him rather than seeking to imprison him. As we consider this legislation, we need to bear in mind these sorts of unintended consequences that result from rushed scrutiny.

17:48

[Baroness Kennedy of The Shaws (Lab)]

My Lords, like the noble Lord, Lord Hodgson, I have some problems with the Bill. It is utterly wrong that the Bill is being introduced as emergency legislation. Others may be quite sanguine about that but I am not. It has involved drawing down this expedited procedure when no emergency need has existed at all as there was plenty of time in the past three months to have dealt with this expeditiously. That is a serious abuse of Parliament. The use of emergency procedure to enact laws that are controversial and have a significant impact on individual rights is happening too often. This is not the first time it has happened and it is the sort of rubber-stamping that makes for careless law.

It is my concern that the Bill is seeking to provide a lawful basis for the unlawful exercise of power by the UK security agencies. I say that because the Snowden disclosures showed that in fact there was a sharing of information by GCHQ with the American security services. They were looking into metadata in ways that none of us knew about and which were certainly not covered by RIPA. It meant that the security services were involved in activities that were not covered by law. It is right that there should be new legislation but this is not the way to do it. It is deeply regrettable that we are having a bite at it in this way.

I am concerned that the excuse being made is that companies would have rushed out and somehow destroyed material in response to the judgment of the European Court of Justice. However, the Government were involved in deep and amicable consultations with provider companies. Indeed, their involvement in those consultations was given as the reason for the delay. Provider companies want to co-operate with the Government. It is in their interests that they have the support of government for many of their activities. I do not believe for a minute that undertakings could not have been given that there would be no rush to destroy material in the knowledge that legislation was in the pipeline.

Although it is generally accepted that RIPA is not fit for purpose—as the noble Lord, Lord Macdonald, said, it was enacted when the internet was in its infancy and no one anticipated that technological changes would enable government agencies to obtain enormous quantities of data on the personal activities and lives of individuals—I do not think it is right to embark on legal reform without full and well informed debate. The noble Lord, Lord King, is right. There is still inadequate understanding by the public of what this legislation will mean, but it is no wonder when there is not proper parliamentary debate and public discussion about giving the state intrusive powers about which they should be concerned. Information is not being given to the public.

When all three main parties agree to a piece of legislation behind the arras, the smell of rat regularly permeates Parliament and it is usually a signal that something else is up. The claim is made that this legislation merely maintains the status quo until a sunset clause expires in December 2016. How does the status quo comply with the ruling of the European Court of Justice that the UK’s data retention directive was contrary to law? And why is the sun setting so far in the distance?

I understand that the main political parties do not want accusations being made of being soft on terrorism and do not want finger-pointing. That is why this is being dealt with in this way. That is the truth and the reality of why we are rushing the Bill through Parliament now. It is a sad reflection on the quality of debate about terrorism that there is so much finger-pointing. We live with the fear that we would be blamed if a particular party were to say, “Hold on a minute”.

Legal experts in this field are clear that the Bill now being rushed through Parliament does not even try to comply with the ECJ judgment. Furthermore, DRIP does far more than replace the data retention regulations. It makes substantive changes to the interception warrants, interception capability and communications data access provisions of RIPA. We should always remember that it is the practice of those who draft legislation about the functions of the security services to make it as complex and impenetrable as possible, and that is what this legislation is—obscurantist lawmaking at its height. It is very difficult to fathom what is going on here. One of the tricks is to mix definitions. If Europe uses one set of definitions, we will find that the drafters of legislation here invent their own. If an old law exists, drafters choose to create new language but at times slip into old legislative usage just to confuse.

What we are definitely seeing here is a broadening of RIPA definitions. It is also important to know that words such as “facilitating” flag up to any lawyer that we are moving into “broad interpretation” territory. On 13 July the Sunday Times reported the Home Office as saying:

“The bill clarifies how the current definition should be interpreted, but this cannot change or extend the meaning of the definition in RIPA to capture new services”.

The lawyer Graham Smith says that this is “twaddle”, while the Explanatory Notes attached to the Bill say explicitly that it is intended that webmail and other internet-based services should be caught. There is a suspicion among many experts in the field that something else is going on here and that a significant change is being made without properly explaining the purpose behind it. That should be a matter of concern to this House.

The Minister tells us that it is important to be able to access communication data that can help to place a person in a certain vicinity at a particular time through their phone records. I agree with those who have spoken, who are criminal lawyers like myself, or who have been involved in very serious cases, that there is no doubt that it is invaluable to be able to access this kind of material. In my view, it is right that there should be the retention of data and interception, but with proper warrants and proper controls.

We should all recognise that our phones and other technological equipment are enormously revealing about our movements, activities, associations and interests, and that crime warrants are sought for this kind of material. However, we have to recognise that the disclosures of Snowden showed that we are regularly seeing programs such as Trojan or backdoor programs enter into our material without, one suspects, those kinds of warrants being obtained. Similarly, clouds can be accessed and captured so that they can be used for intelligence purposes without proper procedures being applied. If that were to be the case, we should know about it, and we should be insisting on proper controls. There is no doubt that there are important issues here requiring primary legislation, but they should not be subject to rushed law and they certainly need proper debate.

There is another matter of concern. It was announced in the past few days that there will be a privacy and civil liberties board, which will have four members. That may be very welcome but it will replace David Anderson, the independent reviewer of terrorism legislation. Will the new board have the same access to sensitive intelligence? I am glad that the noble Lord, Lord Carlile, is in his place and will be speaking shortly. The argument was always made that having just one trusted individual made that office effective and watertight. I would be interested to know whether it will be the same with the new board.

Secrecy is required for certain aspects of state function, but too often secrecy is overclaimed. It can be a cover for abuse, which is what we are seeking to prevent. That is why safeguards are essential and it is why Parliament has such an important role. The procedures that we are discussing today should have had the opportunity for much greater scrutiny. Civil liberties have to be protected and they require constant vigilance. They are eroded usually by creep, in small slices at a time, and we have to be the guardians of civil liberties and our constitution as well as our security.

17:59

[Lord Carlile of Berriew (LD)]

My Lords, like most noble Lords who have spoken, I support the Second Reading of the Bill on the understanding that its purpose is to preserve evidence of a kind that is currently available to the courts. Indeed, I congratulate the Government on their declared intention to increase the safeguards over the use of communications data, though I shall have something to say about safeguards a little later.

I am concerned that some near-hysterical misinformation has appeared in the media in relation to the use of the data concerned. The canard has been sold—I think that is what you do with canards—wholesale that the Bill is directed mainly, even exclusively, at terrorism. That this is not so is demonstrated by one statistic from the Crown Prosecution Service—my noble friend Lord Macdonald adverted to this—which is that 95% of its serious and organised crime cases include evidence of this kind as part of the proof against the accused, and sometimes it is the crucial proof. There is a necessity to ensure that such crucial evidence remains available and, of course, it is important that service providers know what the law is and where they stand.

All that said, I have three reservations with which I hope the Minister can assist the House. They have grown over the days since the Bill was announced, particularly on reading yesterday’s debate in another place. The first is my concern about the case for urgency. I, too, noticed the observations and reservations of the Constitution Committee, which were published this afternoon. The reasons given by the Home Secretary in the other place on 10 July and yesterday were, I am afraid, far from convincing. I have spent most of the past 15 years trying very hard to disagree with David Davis on almost everything, and he has been trying equally hard to disagree with me, but on this subject I agree with him. I also particularly agree with the noble Lord, Lord Butler, who brings to this discussion all his experience of the workings of government. I can see that a shortened period for this legislation might have been necessary, but one day in the Commons and two here just are not sufficient for legislation of this importance. Indeed, with a proper period, the new safeguards could have been included in the Bill and could therefore have been part of a holistic package, as opposed to a less than holy promise. There is absolutely no evidence that I have seen that this Bill could not have been introduced a month ago, and given that we are sitting until, I understand, 30 July, there is no reason why the Bill could not have been given some more days for proper debate in Committee. Indeed, as a veteran of dealing with the Anti-terrorism, Crime and Security Act 2001 when I was independent reviewer of terrorism legislation, I remind your Lordships that Ministers who introduce legislation in haste are later left to repent it in panic.

I now turn to my second reservation. Nothing more than a summary of the intended future safeguards is available. That is hardly a reassuring position. As I understand it, there has been precious little consultation about them outside Parliament. Will the Minister tell your Lordships who outside Parliament has been consulted formally on the safeguards? One of the things that were announced yesterday was the abolition of the independent reviewer of terrorism legislation, who is currently the brilliant David Anderson QC. We have heard much entirely justified praise of him in this debate, but he is being abolished. Can we have an explanation of why? Will the Minister please tell the House when Mr Anderson himself was first informed of the intended abolition of his post? How much earlier than yesterday was it? How long was he given to respond to the proposal? What arrangements exist for a full and proper consultation on the proposal to abolish the independent reviewer, who has the advantages just mentioned by the noble Baroness, Lady Kennedy of The Shaws? Why does the Minister believe that the replacement of the independent reviewer with a committee or board will strengthen the scrutiny of issues, subject to limitations that are necessarily dictated by national security?

I turn to my third concern, which is about the terms of reference of the proposed, so-called independent privacy and civil liberties board. The first thing I say to my noble friend is: let us be honest about what this board is. It is the counterterrorism oversight board, and we would do well to adopt the title used in the United States so that it is what it says on the tin, as it were. I ask my noble friend to answer these questions. Was Mr Anderson consulted about the terms of reference for that board, which have been published today? If he was, were any of his comments rejected as part of the terms of reference, and if so, which ones? I am sure that the Minister will have information at his fingertips within minutes. In particular, there is the crucial question raised by the noble Baroness, Lady Kennedy. Will members of the board enjoy developed vetted access to be able fully to scrutinise counterterrorism activity by the services? It is crucial that, if his post is abolished, someone should have that access. It is important to have a positive assurance of that, otherwise what has been announced is a seriously retrograde step in terms of scrutiny.

Mr Anderson, and, indeed, I before him, spent more than 100 days a year up to now as independent reviewer. At the worst time, after 2005, in one year I spent 144 days, I think, as independent reviewer. It was certainly more than 140 days. Will the members of this board be expected to give, and will they be paid for, the 100-plus days per year that independent reviewers of terrorism legislation have given in every single year since 2001? Can we be assured—I speak here of David Anderson, not of myself—that the people on this board will be of such a quality that they are able to scrutinise such matters using their past analytical experience? It is not something you can just walk into out of some other discipline.

I notice that one of the aims is expressed in the terms of reference, rather oddly, as being to:

“Provide public assurance that the current arrangements ensure”,

satisfactory regard to, “privacy and civil liberties”. May we at least have an assurance that the words “or otherwise” will be added so that the mission is not just to ensure that the Government are doing the right thing, but to be able to state clearly when they may be doing the wrong thing?

Also, can the Minister assure us that the current requirement for an annual review of all sensitive counterterrorism legislation will be part of the terms of reference of this board if the independent reviewer is abolished? That is something that happens now and it has proved peculiarly useful. My suggestion to your Lordships would be that if the Government wish to create this board—and, as I said at the beginning of these comments, I am very much in favour of increased safeguards—alongside that they should continue to have the independent reviewer of terrorism legislation, and he can usefully chair the board as well. It might involve more than 140 days, but I am sure somebody could be found to do it because it is an extremely interesting and intellectually rewarding task.

I apologise for taking up more than the average time in this debate, but the points I have sought to make are all, in my view, important ones that we could and should include in legislative scrutiny, were we to have a more normal timeframe. In the absence of that, I invite the Minister to respond to the questions I have just raised.

18:09

[Lord Hope of Craighead (CB)]

My Lords, it was on a Wednesday in July, like today, just over nine years ago, on 7 July 2005, that the London bombings took place. I am sure that all noble Lords have their own memories of that dreadful day. My memories are closely associated with this Chamber. That morning the Lords of Appeal, who were still working in this building, gathered to give judgment. We were due to give judgment at 9.45, and before we could sit, as the House, to give judgment, prayers had to be said—but we found that the Bishop was missing. Prayers were said by the senior Law Lord, Lord Bingham, on our behalf.

The rumour was that the Bishop had been unable to come here because there had been an electrical surge on the Underground, and his line had been out of operation. It was only when we got upstairs to our rooms on the west corridor that we realised the real horror of that day. Those who remember it will recall how London became completely seized up with traffic jams, no public transport was able to move, mobile phones would not work, and the general feeling was one of extreme distress—horror at what had happened to the victims, and immense inconvenience and disruption to the way of life in London.

I mention that because whenever I am confronted, in court or indeed in here, by this kind of issue, about the balance between security and the right to privacy, I seek to find where the balance should be struck, realising how immensely important it is, from whichever side one is looking at the problem.

Against that background, one must commend the security services for the painstaking work that they do on our behalf, which is, no doubt, greatly assisted by the data that we are thinking about. One should also appreciate the immense burden that rests on Ministers, who have to take some of these acute decisions on our behalf, balancing, as they have to, privacy against security.

This is an extremely difficult issue, but on the principle of the measure I am in no doubt—as I think almost all of us agree—that the Bill should have a Second Reading. Its purpose, and the principle that lies behind it, seem to me entirely beyond question. The problem, as always when one considers matters in this House, is one of detail—and it is the opportunity of detailed scrutiny that is, in effect, being denied to us by the speed with which the measure has come forward.

Speaking entirely for myself, I think it is a great shame that the Government have excited criticism of the kind that they have, which undermines public confidence in an area where, as others have said, public confidence is so important. It is a great pity, it is a great disadvantage, and it is difficult for us, who are coping with detail in an unfamiliar area, to meet the requirements we have to meet in order to contribute effectively to the debate.

For my own part, I started my study of the issue by looking at the judgment of the European Court of Justice that gave rise to all the problems, in the case called Digital Rights Ireland, reported in April this year. It is an interesting, and quite easily read, judgment, and quite a lot of it entirely supports what the Government seek to do. The basis of the criticism is Article 7 of the European Charter of Fundamental Rights, to which this country is not a party. However, one has to bear in mind the fact that Article 52(3) of the charter says that in so far as it,

“contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms”—

the ECHR, to which we are, of course, a party—

“the meaning and scope of those rights shall be the same as those laid down by the said Convention”.

So there is a read-across between Article 7 of the charter, which the European Court of Justice was talking about, and Article 8 of the convention, to which the noble Lord, Lord West, referred, which contains the guarantee of the right to privacy. However, it is extremely important to appreciate that, as he also said, it contains the balancing provision that:

“There shall be no interference … except such as is in accordance with the law and is necessary in a democratic society”.

One is entitled to take that into account in considering what the court was talking about.

When the court analysed the case—this is in paragraphs 41, 43 and 44 of the judgment—it was satisfied that there was a genuine national interest in what the measure sought to do, and indeed in the objective of the measure that it was considering, which was the directive. In its judgment the court clearly makes the point that in connection with such issues,

“the retention of … data may be considered to be appropriate for attaining the objective pursued by that directive”.

So far, so good. But what was the basis of the criticism? One has to examine the judgment a little bit to understand what caused concern, and ultimately led to the decision that the court gave. We find that in paragraphs 37, 45 and 46, as well as paragraphs 59, 64 and 65. It was the detail of the wording of the directive, and in particular the wide-ranging and potentially serious interference with fundamental rights that it gave rise to, that caused the problem. This is the crucial sentence, in paragraph 65:

“without such an interference being precisely circumscribed by provisions to ensure that it is actually limited to what is strictly necessary”.

We find the same phrase—

“limited to what is strictly necessary”—

in paragraph 64. The noble Lord, Lord Paddick, picked up that aspect when he used the phrase “absolutely necessary” in his speech. This is a high test, and the court found that it was not satisfied by the directive.

That leads me to my first point for the Minister. In Clause 1(1) of the Bill, everything depends on the view taken by the Secretary of State about the requirement being imposed. The phrase used is “necessary and proportionate”. I would be grateful if the Minister could explain where that phrase comes from. It is not the phrase used by the European Court of Justice, and one might be forgiven for thinking that it does not constitute quite as high a test as the strict test that the court laid down in the phrase, “strictly necessary”.

The wording is important, because any court that is testing the ability of the scheme that the Bill contains to satisfy the requirements of the convention will look at the precise wording and see whether the guidance given to the Secretary of State, who has to take the decision, is sufficiently accurate and precise to enable him or her to fulfil the requirements of the directive. I am disappointed, I must say, that the carefully chosen wording of the court was not adopted here, and I would be grateful for an explanation of why that was not the case.

This is not an opportunity to go into detail, but one of the unfortunate aspects of the procedure being adopted is that we are being asked to rest on the basis of amendments to a code of practice and no doubt further regulations, which we have not seen. So a great deal of this has to be taken on trust. I am prepared, in this area, to repose a great deal of trust in Ministers. But the wording of the test that they are being asked to apply is absolutely crucial. If one is seeking a sound foundation—a legal basis that puts the matter beyond doubt—one needs to choose the words extremely carefully.

Finally, I come to the question of extraterritoriality. Like others, I have been given suggestions—including a considerably detailed one—that there is an extension of the investigatory powers. I think I owe it to Jack Straw, as the noble Lord, Lord Howard, mentioned earlier, to make this point: in Section 2 of the Regulation of Investigatory Powers Act there is a definition of one of the expressions in the Act—“telecommunications system”. That definition says that a “telecommunications system” means a system,

“whether wholly or partly in the United Kingdom or elsewhere”.

Jack Straw stressed the words “or elsewhere”, and said that built into the definitions in RIPA from the very beginning was a recognition that such systems operate widely well beyond our own shores, so it was wrong to think that extraterritoriality was something new. I accept that, and here is the foundation for that proposition, right in Section 2 of RIPA. I also accept that since then there has been some informal method of imposing extraterritoriality—no doubt very properly, with the co-operation of overseas bodies—but that, the way things are nowadays, there is a need for that to be regularised. That is what Clause 4 is all about. However, I have a word of warning. Warrants are all very well; you can write a warrant and get it issued. The problem is in its enforcement.

I will give two examples, one of which takes us back to 1987 and the Zircon affair, which may not mean very much to us nowadays. The journalist Duncan Campbell was working with the BBC to present a series of programmes called “Secret Society”. One of his programmes was about the funding by government of a spy satellite, which in those days seemed a horrifying thing to do—perhaps we are now so used to them that we do not mind them. Nevertheless, Duncan Campbell thought that something extremely sinister was going on, and the BBC, in Glasgow, as it happened, had in its possession a great deal of material on that. Special Branch knew about that, got a warrant in London, went over the border to Glasgow and delivered the warrant to the BBC, which caved in and gave a lot of material to Special Branch. The BBC then consulted its solicitor, who looked at the warrant and said, “This is no good, because it hasn’t been passed through the system for the enforcement of warrants in Scotland—no sheriff has been asked to look at it”. So all the stuff had to be handed back. Special Branch went back over the system, tried a second time—got it wrong again—and the third time got it right. All sorts of things could have happened, although I do not suppose that much happened, because they were dealing with paper copies. However, nowadays it is so important to get the system right. Has thought been given—as has obviously been given to the mechanism for the creation of the warrant in the first place—to its enforcement?

The other example is a reported decision of this House in a case called Granada Television, in 1999, which was the reverse problem. The Scots were trying to enforce a warrant or to obtain material in Manchester under a warrant for use in Scotland. They ran into all sorts of difficulties, which are described in that case, because of the problems of cross-border warrants. Therefore, while a great deal of thought has been given to the design of Clause 4—which I admire, as it deals with many of the problems—has thought been given to how you can enforce these warrants on people overseas? What about their enforceability in the United States or in China and the mechanisms which are necessary to make them effective? There is enough here that goes so far within our own shores, but the enforceability of warrants overseas may matter at the end of the day if we are to move beyond the informal process into an area that stands up to scrutiny in a court of law.

18:22

[Lord Wasserman (Con)]

My Lords, I am very grateful to the noble and learned Lord, Lord Hope of Craighead, for that brilliant explanation of the judgments of the European Court of Justice and related matters. I find it intimidating to continue now with some rather tedious political points after his brilliant exposition.

I will not detain your Lordships very long this evening. I simply want to record my strong support for this essential Bill and to urge your Lordships to give it a speedy passage on to the statute book. However, before I say anything more, I declare an interest as a strategic adviser to the head of public sector business of Telefónica UK. As an international company, it provides communications services to customers in the UK and therefore will be directly affected by the Bill when it becomes the law of the land. I have never discussed any aspect of the proposed legislation with anyone at Telefónica, and my connection with the company is declared in the register of members’ interests. Nevertheless, I thought it wise to mention that to avoid any possible misunderstandings at a later date.

On 16 June, at Second Reading of the Serious Crime Bill, which your Lordships have been considering in Committee, I said that although I welcomed that Bill, I was disappointed that it did not deal with the situation caused by the 8 April decision of the European Court of Justice, which struck down the European Union’s data retention directive, thus raising serious legal concerns about our own national mandatory communications data retention framework. I am pleased that those concerns have been confirmed by the report of the Constitution Committee published today. I went on to say that the court’s decision had very damaging consequences—perhaps I should have said potentially catastrophic consequences—for our fight against terrorism and serious and organised crime.

As was pointed out by the Minister and many other noble Lords who have spoken, communications data of the kind affected by the court’s decision are critical to the success of almost all investigations of serious and organised crime, including rape, child sexual exploitation and murder. Of course, they are also critical to the prevention of terrorist activity at home and abroad. That material is also vital to securing convictions and, as one or two noble Lords have mentioned, to protecting the vulnerable who are at risk of serious harm. That is why we cannot afford for there to be doubts surrounding the legality of our communications retention and investigatory arrangements. In the speech of a month ago which I referred to, I also urged the Government, in putting things right by removing those doubts, to “act boldly and courageously” so that our law enforcement, security and intelligence agencies were able to use the full range of available technological systems and equipment to assist them in their mission of keeping us safe.

In saying that, I had in mind the communications data Bill, which, sadly, we will not consider in this Parliament. I very much hope that we as a nation will not have cause to regret the decision of the coalition Government not to proceed with that Bill at this time. I say that not only because I believe that a Bill of that kind is essential if our policing, security and intelligence services are to have even half a chance of keeping up with the ever-expanding capabilities of the information processing and communications industries. I say it also because that draft Bill was described in this House last Thursday by the noble Lord, Lord Armstrong of Ilminster, and again today, as,

“a good Bill which balanced the essential needs of civil liberty and privacy against the Government’s first duty to protect the security and safety of the citizen”.—[Official Report, 10/7/14; col. 288.]

That Bill has been ready for introduction for some time now, and has been sidelined for purely party-political reasons, despite a large amount of work having already been done on it by both the Government and the Joint Select Committee under the chairmanship of my noble friend Lord Blencathra. How sad that we should play politics with an issue that is so central to our national security and to the safety of our communities.

Be that as it may, I must admit that it would be difficult to characterise the provisions of this Bill as either bold or courageous. We have heard on a number of occasions from my right honourable friend the Home Secretary and from the Minister that this is a narrow and limited Bill, which does nothing more than maintain the status quo and ensure that police investigations do not suddenly go dark and criminals escape justice. I am sorry about that—it all sounds a bit too cautious for me. However, perhaps it is just as well that the Bill is not more courageous and bold. As we all know, courageous and bold Bills have a tendency to excite a good deal of political controversy, and therefore take up a good deal of parliamentary time. In the present instance, time is something we do not have very much of.

It is essential that we get these provisions on the statute book as quickly as possible. I see no justification for wasting precious parliamentary hours and days arguing about whether the Government should have brought the Bill forward more quickly, made it shorter or more comprehensive, or anything else. There will be plenty of time to argue about the Government’s management of the Bill and about their general approach to public safety and fighting crime in the run-up to the general election, which is about to begin, if indeed it has not already done so. The fact is that the Bill does the job that needs doing now. It does it efficiently and effectively. Those who want to have these issues discussed at much greater length can take heart from the fact that the Bill contains a sunset clause, which ensures that it will be repealed on 31 December 2016 unless Parliament acts to continue it, with or without amendment. That is why I endorse the Bill without reservation and urge other noble Lords to do the same.

18:30

[Lord Davies of Stamford (Lab)]

My Lords, we have heard a number of speeches this evening which, unfortunately, have been dismissive of public concerns about this Bill, but I am glad to say that the general tenor of the debate has been very thoughtful. We have heard some very sophisticated speeches which have engaged with this subject in considerable detail. I pay particular tribute to the speeches from the noble Lord, Lord Hodgson, the noble Baroness, Lady Kennedy, the noble Lord, Lord Carlile, and the noble and learned Lord, Lord Hope. There were a large number of questions in those speeches, and I hope the Minister will take time to address those when he sums up and to provide the House with suitable considered answers because I do not think that the public concern in this matter is misplaced.

The concern is probably growing because of the volume of communications and data available. It is certainly growing because of the phenomenon of metadata which has already been dealt with in a number of colleagues’ speeches. The concern has also grown because of a major scandal which, curiously, has not been mentioned. The Snowden revelations revealed that the NSA—it has a symbiotic relationship with GCHQ, as the House will know—was severely in breach of American law. The chief executive of the NSA gave answers which were certainly less than full and frank, to a committee of the US Congress. That sort of incident can only greatly exacerbate public concern. Emergency legislation on such a sensitive matter is a perfect formula for maximising public anxiety. So it is not surprising that there are some very serious questions in people’s minds. It is important that Parliament makes sure that it does its job today, and indeed tomorrow, and makes sure that all the various angles of concern are pursued and addressed and that we get suitable answers from the Government.

I agree with the remarks of my noble friend Lord West. Having mentioned the NSA, I want to make that clear. I also have had a lot of professional dealings over the years with officials of the three major agencies. I have always found them—and genuinely believe them to be, in their vast majority—people of great professionalism, who are patriotic, extremely well motivated, entirely honest and concerned to obey the law. So I agree with what my noble friend said and I endorse those remarks. However, at the same time, we need to make sure that the legitimate concerns are properly addressed.

We all have to strike a balance this evening in how we decide to deal with this matter. My strong inclination is to support the Government. We have heard the Government say that major criminal prosecutions depend on the continued availability of these powers. We are talking about powers that, in the main, are already in place and with which we are familiar, although there were interesting questions today about surreptitious and covert extension of the powers in the Bill. The Minister, who takes his duties very seriously and for whom the House has the greatest regard, said in his introductory remarks that lives may depend on the continuation of these powers, by virtue of our passing this Bill as rapidly as the Government are asking us to do. For those reasons, it would be difficult to do anything to hold this Bill up. I do not intend to do that. Nevertheless, I look forward with great interest to the answers from the noble Lord.

I want to make three brief points. The first is a repetition of what I said last week when the Statement was made, but the audience is slightly different tonight so I will repeat it. It is clear that we would not have got into this particular mess, and the Government would not have required this emergency legislation, if we had used primary legislation to provide ourselves the original powers. This is not a party political point because it is a point for both Governments. I know very well, and I said last Thursday, that all bureaucracies—it must be true around the world—and all Ministers like to have a quiet life if they can. Their first, instinctive, default reaction is always to try to put any legislation through the secondary process so that the scrutiny will be pretty soft, maybe even perfunctory, and unlikely to be very profound. That sort of behaviour only changes when it is seen to have a cost. On this occasion it does have a cost for the Government so I hope that a lesson will be learnt. When we have legislation that raises important principles, or as in this case, an important conflict of principles between privacy and security, that sort of legislation should always go through the primary legislative process.

My second point deals with timing. I repeat what has already been said by many others. I do not believe for a moment that it was necessary to wait three months after the ECJ judgment to tell Parliament—or anybody at all—that there was a need for new legislation on this matter. The Government, if they had been half-competent, would have known before 8 April that there was a possibility of the ECJ deciding in the sense in which it did, and therefore could have prepared some reaction on a contingency basis. Even without that, by 9 or 10 April, they knew what the position was and they could have taken action accordingly. Silence for three months followed by the demand that Parliament passes something in a week or two, is frankly taking Parliament for granted. I do not think Parliament can or should ever allow itself to be taken for granted. This is a very serious point. The Minister himself is not responsible for this. He has to come to this House to defend the actions, or failure to act, of colleagues. We understand that, but it is important that a message goes back that the Government’s behaviour on this occasion is simply not acceptable.

My third point is this: I have had no collusion with the noble Lord, Lord Butler—I had not the faintest idea what he was going to say. I personally was absolutely horrified that there was no report by the Intelligence and Security Committee available, when we have to take a decision so rapidly on this Bill. I may be wrong, but I thought the whole purpose of the Intelligence and Security Committee was that we had their ears and eyes on our behalf behind the security wall, able to ask questions of the agencies, able with their great experience and knowledge—which the noble Lord, Lord Butler, certainly represents—to weigh the answers, to decide what exactly the threat is, to decide whether the powers that the agencies have are adequate and if not, in what way they need to be supplemented, or whether they are excessive and gold-plated. All these questions are those which the committee is able to reach a judgment on, on our behalf. We could ask the questions but we would not get the answers, whereas the committee can not only ask the questions but can insist on getting the answers.

I was absolutely stunned that there was no report at all. I could not quite believe it. I went to the Printed Paper Office and asked for the committee report—I was told that there was not one. As the noble Lord, Lord Butler, has told us, the committee did not hear about this until a few hours before the rest of us, and so it is not surprising that it could not produce a report. If it had had two or three months’ warning, which it could easily have had, we could have had a very intelligent and helpful report. It might have helped the Government—I am assuming that the Government are not actually up to some terrible trick and are not deliberately trying to disguise the facts from the public and from Parliament. What an extraordinary. idiotic thing it was, to pre-empt the possibility of such a report being produced in the first place.

As I said, I will be supporting this Bill but I am very concerned about these matters. I think that the whole House is waiting with great interest to hear the Minister’s response.

18:38

[Lord Strasburger (LD)]

My Lords, I start my contribution to this debate with the words of Benjamin Franklin, in a letter to the colonial Government more than 250 years ago:

“Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety”.

Having said that, nobody in this House more than I wants the people of this country to be safe—to be safe from terrorists, safe from paedophiles, safe from drug barons, safe from anyone who would do us harm. I am sure that every noble Lord feels the same way.

I am also confident that we all agree that there are some limits on the price we are prepared to pay to nudge the threats to our citizens closer to zero. For example, not many of us would be happy to see the Government installing equipment in everyone’s home to continuously record video and sound. We would not like it if all our letters were being steamed open by the authorities, and then scanned and recorded for no better reason than that we might one day go off the rails and commit a serious crime. Although these measures would probably reduce crime of all types, most people would consider the level of intrusion too big a price to pay. We all have a privacy red line we would not cross in return for some sort of reduction in the threat to our safety. It is a matter of where that red line is that we are debating.

By the way, some noble Lords may not realise that so far as our use of the internet is concerned, the red line has already been crossed. GCHQ’s Project Tempora is doing the digital equivalent of steaming open our e-mails and web browsing, and recording it all, with no differentiation between metadata and content. I have tried on many occasions in this Chamber to raise this huge invasion of our privacy, which is without the people’s consent, but have just been stonewalled by the Home Office, which would rather that we talk about something else and leave it to get on with trampling on our liberty and our privacy.

To return to this Bill, some will be surprised to hear that I support it, for two reasons. The first is that I accept that the ECJ judgment could leave our police and intelligence agencies with no communications data about those who have committed, or are about to commit, serious crime. We do not have time to discuss and agree a Bill to replace RIPA that would deliver the data on the bad guys and leave the innocent alone, and would provide the extra security and control that is needed. So we have no option but to pass this Bill to temporarily fill the gap. Although that means that vast numbers of suspicionless citizens will have their metadata collected and stored, I am reassured that this Bill, when it is enacted, will start life under a sentence of death in 29 months. I will come to my second reason for not opposing this Bill in a moment.

Although other noble Lords—in fact, every noble Lord—has referred to it in this debate, I cannot stand here without drawing the House’s attention to the scandalous affront to democracy that is the timetable for this Bill. The Home Office and everyone else knew about the ECJ judgment on 8 April. Despite being told by many specialists in the field that there was a consequential effect on the validity of the UK’s 2009 data retention regulations, the Home Office repeatedly asserted that there was no problem. Then suddenly, 13 weeks after the ECJ judgment and two weeks before the Summer Recess, the Home Office now tells us that there is a problem and an emergency Bill has to be passed within a week.

There are only two possible explanations for this chain of events. The first is pure incompetence and a failure to understand the judgment; the second one, to my mind, is that it is a ploy by the Home Office to suppress scrutiny of important and complex legislation. Last Tuesday I watched the Home Secretary struggle to explain the sudden panic to the Home Affairs Select Committee. Perhaps my noble friend the Minister could have a go when he responds to this debate. Why was this Bill not mentioned in the Queen’s speech, which took place eight weeks after the ECJ judgment? Was it a mistake or was it a conspiracy? No wonder there is such cynicism about and distrust of politicians out in the country.

RIPA was deeply flawed for many reasons when it was passed. Today it is also out of date, having been passed seven years before the first smartphone was introduced to the market—Apple’s iPhone—and internet on the move became ubiquitous. It allows too many public authorities to delve into too much of our data for too many reasons. While the equivalent in America is used less than 60,000 times a year, there are more than half a million access requests a year in the UK. But the biggest problem with RIPA is that it contains a deliberate and well concealed loophole that is used to claim legal cover for Project Tempora’s hoovering up of everything that everyone does on the internet and storing it. The British people were never asked, via their representatives in Parliament, “How do you feel about the Government helping themselves to all your private data?”. I presume that they were not asked because the Home Office knew what the answer would be—and it would not have been, “Yes please”, especially if it had been explained that it is as if there is a man or woman from the Ministry looking over your shoulder and making notes whenever you use the internet, at home or at work or on a train, or wherever you are. So instead of getting the permission of the British people, the Home Office used legislative sleight of hand to slip it in under the radar. That must ring alarm bells about related legislation such as this Bill being rushed through without proper scrutiny.

Parliament, too, must take its share of the blame for this state of affairs. For too long, parliamentarians have been asleep at wheel when it comes to watching our spies or resisting Home Office land grabs. Is it not to Parliament’s shame that it took an ECJ judgment to point out that the European directive on data retention, which the UK was heavily involved in promoting, fails to comply with human rights law in many ways? Many specialist lawyers are saying that existing UK law and regulations, after amendment by this Bill and its accompanying regulations, fail to answer at least two of the ECJ’s concerns, which leaves them vulnerable to challenges. As a former Conservative chairman and shadow Home Secretary said in the other place yesterday:

“While the Bill may be law by the end of the week, it may be junk by the end of the year”.—[Official Report, Commons, 15/7/14; col. 731.]

What then—another emergency Bill?

I said earlier that there was another reason why I am supporting this Bill. It is that the Deputy Prime Minister has been very astute in extracting a high price for his co-operation. I am particularly pleased that the long overdue review of RIPA will now happen and that Mr Anderson’s report will go to a Joint Committee for consideration. The new Government will have to take notice because RIPA will be heading for the buffers when this Bill expires in 2016. As other noble Lords have said, it is high time that there was a full debate in this country on how much privacy we are prepared to sacrifice for a bit more security. The setting up of a privacy and civil liberties council has the potential to redress the balance in favour of the citizen versus the state. Time will tell. The small but meaningful decision that the chair of the ISC must be from an opposition party will make a difference.

Finally, I am not a politician, but I hope that noble Lords will forgive me for making a political point. None of these important steps forward, and others that I have not mentioned, would have happened without Nick Clegg’s steadfast insistence. None of them would have happened without the Liberal Democrats being in government.

18:49

[Baroness Lane-Fox of Soho (CB)]

My Lords, when Tim Berners-Lee famously typed his message “this is for everyone” at the start of the 2012 Olympic ceremony, I do not think he could have imagined just how prescient that statement would be and why. Tim has always striven for an open, transparent and universal web, one where people are able to have private conversations and assume complex identities. Nowadays his Olympic optimism could be read instead as a statement of the irrevocable powers of Governments and commercial organisations to know everything that people are doing in their digital lives.

I do not think that many of us who were around at the beginning of the web’s development imagined that the landscape would so quickly look as it does today. I certainly thought that, as the web became more mainstream, it would open up enterprise, policy-making and the monopolies that had characterised our society. The power for individuals to disrupt the status quo and to create better services—both public and private—seemed significant. Instead, it is remarkable how quickly the freedoms that I found so energising are in danger of being eroded.

In this context, I want to talk about three aspects of the Bill: first, the digital skills needed within Parliament to achieve proper scrutiny; secondly, the timing of the sunset clause; and, finally, the nuances of Clause 4. I spend a great deal of my working life encouraging large organisations to embrace the digital world, particularly the pace of digital change. Generally, I am on the side of speed, and I am often mocked for setting an unfeasible and unreasonable timeframe to complete a project. As noble Lords have said, the timeframes for this Bill are alarming.

I agree with all noble Lords who have raised the point, as well as with the World Wide Web Foundation, which said that,

“we fundamentally disagree with the lack of consultation and the speed with which the Bill will be rushed through. Full and frank public debate that informs the legislative process should have occurred by now—after all, these issues have been making headlines for over a year and the relevant ECJ judgment was delivered in April”.

Putting aside whether it is proper parliamentary process, this rush seems to highlight an issue of growing importance which we, as parliamentarians, face. I consider myself fairly digitally literate and yet I have struggled to understand the nuances that are informing this legislation. Whatever our political persuasion and whatever we feel about the subjects, we can all agree that these are complex areas which are understandably unfamiliar to many parliamentarians who are being asked to consider them. I felt as if I had a head start, yet I struggled to assimilate the different areas addressed in the Bill. As the noble Lords, Lord Knight and Lord Hodgson, demonstrated so effectively, even the meaning of metadata is complicated. Contrary to popular belief, it can very easily and quickly lead to individual identification.

Through no fault of their own, parliamentarians may well be making judgments on areas which are rapidly evolving and where technology is changing the art of the possible. For example, ways of intercepting and recording data that do not exist today will undoubtedly be invented. There are many products launching right now which will change the boundaries again. How do wearable technologies, such as Google Glass, which collect data fit into this new picture? It therefore makes me extremely nervous that Bills which require such deep technical expertise are given so little time.

The digital capability of the other place and of your Lordships’ House is something that will become more and more profoundly significant. All pieces of legislation will soon have aspects of technology at their core and our ability to scrutinise effectively will rely on a deeper understanding than currently exists. As someone from the digital sector, it is also disappointing to watch as legislation that directly affects that sector is so cursorily debated. It only goes to further people’s belief that neither House understands the modern world nor cares about their digital lives. It is a tough problem to crack, but may I suggest to the Minister that it would be interesting to consider a review of our own skills which might lead to some actions to improve them?

The lack of time to scrutinise the Bill is what makes the sunset clause so vital. If debate about these issues is as important as the Government reassuringly claim that it is, why would a sunset clause not come into force much more quickly than after two and a half years? The pace of technological change is so great that to be certain of anything two years out is brave. The questions under discussion are becoming more, not less important to citizens. Many in the technology community, including Jimmy Wales, the founder of Wikipedia, are calling for a six-month sunset clause. Despite the six-month reviews included as part of the amendments made yesterday, that would seem extremely sensible and desirable.

My final point is on Clause 4 of the Bill. If this clause is seeking to preserve the status quo, it is a status quo that has never been clear or legal. It is a status quo which, as has been intimated by other noble Lords, read in conjunction with Section 8(2) of RIPA would allow for the blanket interception of all data from international technology companies. Like the noble Baroness, Lady Kennedy, I would appreciate clarification as to whether this complies with the ECJ judgment.

I am not clear why, in an age where all data can be collected, all data should be collected. We require reasonable suspicion and an individual search warrant in order to enter someone’s home. Why cannot the same be true in respect of someone’s online property? No one would suggest that, where appropriate, Governments should not be able to target individuals about whom they have suspicions. The security of citizens is paramount. I have felt reassured that, where necessary, the security services have the ability to track an individual who may pose a threat, using all the available new platforms. However, I believe that this Bill is building on a modus operandi that has been going on for too long without clarity or transparency, and because it has been happening it does not mean that it should go on happening. In some ways it could be argued that at least Clause 4 puts a legal framework around something that, as the Home Secretary herself has said, was just previously assumed by Government, but at least let us be honest about the extent and genesis of these powers.

When the Snowden revelations broke, President Obama immediately set up an expert panel to examine oversight of the security services. That showed how far the political discourse in the UK lagged behind that of the US. No such steps were taken here. This panel looked into claims by the NSA about the necessity of data gathering. It found only one case where the bulk collection of phone records was helpful—itself a money laundering incident. Allegations that GCHQ and the NSA undermined encryption alarm everyone who trusts the web with their medical, financial or personal records. Public trust is at an all-time low and I fully understand why. We ignore people’s anxiety at our peril.

As many noble Lords are aware, this year is the 25th anniversary of the world wide web. It is essential that we do not charge headlong into decisions about the relationship between citizen and state in the new world that will influence us for the next 25 years. I am an optimist, but I must confess that I am uncharacteristically depressed. The web I want seems to be disappearing. Addressing the ECJ ruling and planning this Bill far earlier could have been an extraordinary opportunity to instigate a wide-ranging and sophisticated review about the future, a review which carefully considered the implications of data collection, the role of surveillance and the trade-off between privacy and security. Instead, we are being catapulted into legislation that builds on the badly understood and arguably dysfunctional RIPA legislation.

This Bill sets a precedent from which, even with reviews and a sunset clause, I believe it will be hard to row back. I sincerely hope that we do not regret it. I look forward to the Minister’s response.

18:49

[Lord Judd (Lab)]

My Lords, I am glad to follow two such courageous, perceptive and challenging speeches, with which I found myself in great agreement.

It would be foolish to deny that we live in a very dangerous world. One of the most important considerations is that we do not—deliberately or, at worst, inadvertently—give victories to the extremists. We must become resolute in defending the things that make our society worth protecting. At times I share the noble Baroness’s despair, which she was very honest about. I have an awful feeling that if we looked at ourselves from another planet and saw what had happened to the quality of our life in the past 20 years, we would be appalled at how far the extremists have won victories by getting us to restrict and undermine the whole quality of our society, of which law, as we understand it, and the operation of law is so essential.

A long time ago I dealt with security in the Ministry of Defence. I was not dealing with it in this particular context, but as a Service Minister. It struck me then that if you believe that in the reality of the world in which we live there must be security services, by definition it is crucial that they are headed and staffed by people who are second to none in their commitment to the defence of liberal democracy, and who in that context really believe that what they are about is maintaining the quality of British life. Therefore, it seems to me there has to be trust in all this. That is why it is so important to be able to be confident that the right culture operates in the security services and the Home Office.

That is why I cheered the very stern rebuke at the beginning of the debate from the noble Lord, Lord Butler, with all his distinguished experience. It is totally unacceptable and a very sad day for the quality of British democracy that we should rush the Bill through at the end of the summer Session, with all this duress. I share the view of the noble Lord, Lord Carlile. I cannot see any evidence as to why we could not have considered this earlier. One is forced to the sad conclusion that a political game is going on here: that the Government want to reduce the amount of public discussion. Let us take one statistic: 88% of the British public want their telephone communications to be private. If we move into this kind of area, it is crucial that we have the maximum public debate and discussion, starting with Parliament, about what is involved and what is at stake. We have not had that. Whatever the improvements to the legislation—I take my hat off to those who have worked very hard to get it improved—we still know we are not going to be able to begin to scrutinise it in the required detail.

I want to make another general observation. I often reflect that, in an age of advanced IT and incredibly advanced surveillance techniques, it is just possible that we in institutions such as Parliament are all trying to shut the stable door once the horse has bolted. That brings me back to trust. Unless the security services and others operate with a relentless commitment to values that matter, I am very dubious as to how far effective scrutiny can ever be ensured in the future. We can take certain steps, but there will always be potential for abuse. In recent years, there have been too many disturbing examples of the security services going off course. In saying that, I do not want to join an ill informed body of people yelling at the security services, which are doing immensely challenging work in very difficult circumstances. I have great admiration for them. However, we have to face up to the targeting, which has been seen in recent years, of benign activist organisations, of trade unions and, indeed, of my noble friend Lady Lawrence. Those are profoundly disturbing issues that raise all sorts of questions about how much trust there can be and how we can ensure we have as much accountability as possible, with all the reservations I have expressed.

In the mean time, I would like to raise certain specific issues, on which it would be helpful if the Minister was able to comment or indeed write—although I do not think there is much time to write to us before tomorrow. The Minister and the Government have repeatedly said that DRIP just maintains existing interception capability, but is that really the case? Is it not, in effect, primary legislation that is supporting and extending controversial mass interventions—let us face up to it—such as those revealed by Snowden, the use of which has been doubted by the US Privacy and Civil Liberties Oversight Board and criticised by the Interception Commissioner? I would like to hear more from the Minister on that point.

How can I know if we come to this urgent situation because we currently have some sort of acute emergency? How can any of us know the realities of the nature of that acute situation? If we really have such a situation, why will it take two and a half years before the emergency measures have to be reasserted and positively endorsed by Parliament? That is a hell of a long time. Surely we should have a much shorter period.

If there is to be an independent review of RIPA it obviously has to be robust. I believe it must include terms of reference, proper funding, specified timescales and scope. What is really needed is a convincing board of people with relevant and impressive experience, with a credible chair.

There is one other matter. If we are trying to establish minimum requirements for a review of UK-USA data sharing, we need to clarify our goals. We need to update existing arrangements for data interception and processing by the US in the UK. We need to review the whole process of UK-US data sharing, and we have to look at the US’s use of data retention in view of new technologies and innovative practices since the original 1946 UKUSA agreement, as amended. We need a specific assurance that UK data will not be available to support activities that would be unlawful in the UK, including extrajudicial targeted killing—noting confirmation from senior US officials that “metadata kills”. That is an extremely serious issue, which we cannot skate over. We need very specific reassurances from the Government.

I conclude as I was arguing a moment ago, and some of those who serve on the same Select Committee as I do will get a bit weary of how often I find myself repeating this. Because of the nature of the IT advances and the huge scope of surveillance that we now have, we are playing around unless we are second to none in the fight to establish a culture to defend what freedom, justice, the rule of law and open government are really all about. I am afraid that we have slipped a very long way.

19:10

[Baroness Kidron (CB)]

My Lords, it is an honour to follow such a speech from the noble Lord, Lord Judd. I feel that I had better declare my involvement in iRights, a civil society initiative that seeks to establish five principles that would frame all interactions with children and young people under 18 when they use the internet and digital technologies.

There seem to be four aspects of the Bill that cause concern: the process by which it came to your Lordships’ House; whether it does or does not represent the status quo; whether the status quo is what we want to reproduce; and, given the uncertainty of the first three, whether the sunset clause is too far away.

Given how much has been said on the first point, I just want to share the dismay of others at the lack of both foresight and oversight. I understand that heading off opposition and consulting stakeholders are legitimate parts of the legislative process but, somewhat unusually, in considering this Bill it is worth us noting that nearly all the UK population uses the technologies that the Bill addresses. They, too, are stakeholders, and to deny them a proper understanding through the reporting of public debate that the parliamentary process provides is at the very best disrespectful and most probably a further blow to public confidence in the political establishment.

The question of security versus freedom and privacy will be central in a world in which web and digital technologies become the organisational technologies of our society. Rushing through emergency legislation that has been privately consulted upon by an elite group of parliamentarians and international companies does not send a reassuring message of transparency and accountability that such an important issue deserves.

We are repeatedly told that this Bill is not intended as an extension of powers but that it simply upholds the status quo, that Clause 1 restores the previous position on communications data retention, and that what had previously been assumed about the extraterritorial application of communications data acquisition and interception powers was now being properly put on the face of the Bill in Clause 4. This reassurance has been repeated in briefings, in the Explanatory Notes attached to the draft Bill, in the impact assessment, in the other place and today in this debate, but it is in this Chamber on multiple occasions, listening to the likes of my noble friend Lord Pannick, the noble Lord, Lord Lester, my noble and learned friend Lord Woolf and many others that I have experienced the powerful art of clarification.

The companies at which the extraterritorial reach of RIPA is established and aimed want clarification, by Ministers’ own admission. If they need clarification, it must mean that there is some doubt. If there is no longer doubt then there has, de facto, been an extension, the purposes and meaning of which have not adequately been tested by the British public nor by their Parliament.

My noble friend Lady Lane-Fox, in her debate that celebrated the 25th anniversary of the world wide web and again today, suggested that we as a nation and we as a Parliament had not properly responded to the revelations contained in the leaks orchestrated by Edward Snowden. In spite of what we now know and the Pulitzer prize-winning efforts of the Guardian and the Washington Post to make us care, we are rushing through a Bill without the opportunity to determine whether the status quo should be underlined and underscored or whether, in a world where communications are central to every aspect of our lives, we now need to think again.

I should like to make it clear that I have little appetite for a lawless and untended communications highway with no responsibilities to real-world outcomes. Like most others who reject this emergency legislation, I would actively support a more carefully considered Bill that sought to address some of the broader issues that have been raised today and some of the newer technologies on the horizon. However, imposing suspicionless blanket communications data retention on the entire population challenges the basic premise of a free society. For that reason, this policy has been struck down in constitutional courts across Europe and, for that reason too, we must have a regime that takes account of all possible consequences of data retention, as well as the absolutely legitimate needs of the police and security forces.

The European Court of Justice found that on 10 counts the 2009 regulations failed to deliver proportionate retention of data. It laid out specific criteria that needed to be met. We have been told by Ministers in briefings that the Bill in front of us answers some of those findings and that others are answered by existing UK legislation. In spite of reading many late briefings, I cannot fully comprehend in sufficient detail whether all 10 counts have been fully answered. I ask the Minister whether there is any danger that the Bill simply re-enacts the disproportionate retention that has already been found unlawful by the European Court of Justice—a point put much more eloquently and precisely by my noble and learned friend Lord Hope of Craighead.

It is disappointing that the Bill has come to your Lordships’ House in such unhappy haste and that its progress to becoming law does not serve to educate Members of both Houses about the issues at stake. Nor does it ignite a desperately needed public debate about who is gathering the data, what those data are, and when and how they are being gathered. It is desperately worrying that its development has taken place entirely in private. I find myself wondering whether the explanations given by Ministers for conceiving this Bill in private suggest that Her Majesty’s Government’s need for privacy is a little more equal than the need for privacy of the population as a whole.

Given the inevitable passing of the Bill without it being subject to the parliamentary journey that it deserves, your Lordships may wish to send a message to the citizens of the UK by inserting an earlier date for the sunset clause. It would be a date not designed to serve the needs of the election cycle but one that reflects the urgent need of the British people—indeed, it is an emergency—for their Parliament to understand, investigate and decide how we are going to balance their need for security against their need for privacy and liberty.

19:18

[Lord Blencathra (Con)]

My Lords, I support the Bill, which is an essential stop-gap measure.

We must continue with our current powers and the 12-month retention period until we pass new legislation which tackles the so-called capability gap, deals with the vexed question of IP addresses and strikes a proper balance between the needs of the security services and the police on the one hand and the privacy of the individual on the other. For the moment, that means the Bill that we are considering today, and it means more Elastoplasts on the broken and bleeding RIPA 2000. Also, we must attempt to persuade our United States service providers to co-operate with us—the extraterritoriality clause.

I do not want to sound like a second-hand car salesman as I return yet again to extol the virtues of the report of the Joint Committee on the Draft Communications Data Bill, which I had the privilege of chairing 18 months ago. We were fortunate to have the noble Lords, Lord Armstrong of Ilminster, Lord Strasburger and Lord Jones, my noble friend Lord Faulks and the noble Baroness, Lady Cohen of Pimlico, as well as six excellent colleagues from the Commons. Our task was to scrutinise the draft Bill, which was then commonly known as the snoopers’ charter. We all started with some fairly strongly held beliefs, some of which we discovered were quite wrong, and we held widely different views on key issues. Nevertheless, we agreed on a unanimous report, which I commend to the House and the Home Office as a blueprint for new legislation to replace RIPA. It is only £15.50 and I have lots of remaindered copies.

To be fair, just after we reported, the Home Office showed me and the noble Lord, Lord Armstrong, the framework for a new Bill, which incorporated about 95% of the recommendations we made in the report. Unfortunately, that new draft did not find favour with all members of the coalition, but I will not be critical. However, it is essential that after the next election measures along the lines we suggested should proceed expeditiously. Why, you may ask? It is simply because RIPA is no longer fit for purpose and should not be the framework on to which we patch amendments to catch up with technological changes. The Home Office says that there is a capability gap of 25% in the information it collects now as compared to 2000. My committee was highly sceptical about that.

In 2000, I had a top-of-the-range Nokia phone which held about 100 phone numbers and 120 short text messages. I wish I had that phone back. In 2000, only 50% of UK adults had a mobile phone. In 2012, that figure was 92% with 81.6 million mobile subscriptions. What does your iPhone or Galaxy hold now? A thousand times more information, as it can also handle all web and e-mail traffic. Facebook was invented on 4 February 2004 and Twitter on 1 March 2006 and both have added billions of bits of new information to the airwaves. After Twitter was launched, we were told that it took three years before the billionth tweet happened. Now there are a billion tweets every two days, God help us. That is why my committee said that,

“the volume of communications data now available is vastly greater than what was available when RIPA was passed. The much quoted figure of a 25% communications data gap purports to relate to data which might in theory be available, but currently is not. The 25% figure is, no doubt unintentionally, both misleading and unhelpful”.

Clause 2 of the Bill defines “communications data” and gives them the same meaning as Section 21 of RIPA, but what exactly are communications data? There are three parts to this. First there are traffic data, identifying the location of the device to or from which the communication is sent. Secondly, there are use data, which are anything other than content about the use made of a service. Finally, there are subscriber data which are data, other than traffic or use, held by a service provider about the persons to whom it provides the service. Traffic and subscriber data are absolutely vital for law enforcement authorities, as we have all heard, since they give the location, name and address of the subscriber, their bank account details and stuff such as that. At least that was all they did in 2000, when half of communications were by land line. However, RIPA was drafted in such a way that every bit of information one supplies to a service provider is automatically classed as subscriber data unless it is in the narrow category of traffic or use data. Subscriber data have, therefore, accidentally become a catch-all for everything not called traffic or use. That is one major reason why there was widespread criticism of the draft Bill and why many people called it the snoopers’ charter.

However, there were other reasons. The original Bill was exceptionally widely drafted, for the best of intentions. That was a tactical mistake by the Home Office. It wanted to make the legislation technologically future-proof. Facebook and Twitter came out a few years after RIPA was passed and the Home Office, Ministers and many of us who served there know that although one can get a crime and justice Bill in nearly every Queen’s Speech, there was little likelihood of a new RIPA being passed every year. So the Home Office tried to make the legislation in the draft Bill as wide as possible, taking into account any new gizmo, widget, app or service that some brilliant geek might invent in his bedroom many years hence. Inevitably, that very wide scope concerned many people and rightly so. My committee said that no area of technology was moving faster than communications technology and that if Parliament wanted more control of legislation in this field, we had to have a very efficient means of annually, if necessary, amending the legislation to keep up with technological advances. That was the quid pro quo; if this House or the other place wanted narrowly focused measures requiring parliamentary approval, we had to give the Government a rapid mechanism to approve changes.

The other major tactical mistake that the Home Office made originally and later corrected—but by that time the damage was done—was not to spell out exactly what were the crucial bits of information it really wanted in the new measures. Opponents were rightly pointing out that the draft Bill wanted to capture and store every communication, including the content of all e-mails and records of every website visited. We were told that the reasons could not be revealed because of secrecy, hence the very wide drafting of Clause 1. Initially, the Home Office would not tell us what data types it was looking for. However, when we talked to the police and others, it soon became clear that 98% of the time they needed only location, name, address, bank details and numbers. This is basic traffic, use and subscriber data—the who, what and when stuff.

When applied to computers and the technology we have now, that meant three slightly different things. Subscriber data would include IP addresses, but that is no different, in principle, from telephone numbers. The second, highly contentious items we wanted were data identifying which services or websites are used on the internet up to the first forward slash. Thirdly, there were data from CSPs based overseas, which are addressed in Clause 4 of the Bill. The Home Office confirmed to my committee on 24 October 2012 that those three items were the capability gap it wanted to plug.

The extraterritoriality provision in Clause 4 attempts to deal with the difficulty of obtaining information and co-operation from giant service providers based mainly in California. I am with very distinguished and learned noble Lords but that clause is a little bit of wishful thinking. We are legally powerless to compel Google or Apple, or any of the rest of them in California, to give us information held on their servers outside the UK. However, in 2012, we heard fairly powerful evidence that they co-operated all the time with the British Government—nudge, nudge, wink, wink: we do all that co-operation stuff—but they wanted a comfort blanket of something judicial or semi-judicial that they could rely on. That is what they get in the States. The FBI gets a judge to approve a warrant and then the CSPs will hand over everything straightaway. So they wanted this fig leaf of some British warrant so that they could say to their customers, “We do not want to give anything away, we will keep everything secret, but we have this judicial warrant so we have to hand it over under the law”. It is great if they do that, but do not expect United States service providers to feel legally bound by the power we are putting in here. It is a good little fig leaf; it is ours and we should give it a go.

The one mega item that my committee wrestled with was internet protocol or IP addresses and web logs. There is deep division in the country and in Parliament about the state collecting and storing all these and how far that impinges on personal liberty. This is not the time to go into it but it is the core of the concerns raised about the earlier Bill. This Bill, rightly, does not touch on it, but we will have to return to this issue early in the next Parliament. My committee concluded that a new Bill should be drafted in such a way that this one item could be voted on in both Houses of Parliament and a definitive decision reached on it. We did not want it hidden away in some obscure legal or technical jargon that would cause suspicion of the Government’s motives, as well as confusing every single one of us who were supposed to vote on it.

I am proud to say that my committee was thorough and meticulous, not because of me but because of the others who served on it. We savaged the Home Office draft Bill and I make no apology for that. However, we drew up a framework for a better Bill. I pay tribute to Home Office Ministers and officials who rapidly took on board 95% of what we suggested. The noble Lord, Lord Armstrong, and I were fortunate enough to see some of the revised draft. That draft did not get full coalition support but, in my opinion, it dealt with all the problems. If that Bill were to be presented again, it could never be properly called a snoopers’ charter. It targeted the gap, narrowed the scope and built in protections.

Turning to Clause 7 and the independent reviewer, I shall send Mr Anderson our report since we have done most of the work for him—at least, on items concerning Clause 7(2)(b) to (f). We were not allowed, and we did not want to have, the power to comment on current and future threats to the United Kingdom. There is a clear case for new legislation to replace RIPA to give our security services, the police and others the powers that they need, but that has to be based on parliamentary approval of all aspects of all the powers. The public will consent to quite large levels of intrusion so long as the powers to do it are clear, open and proportionate, and have had proper democratic scrutiny. I hope that when Mr Anderson reports we will not be faced with a heavily redacted report on which the Government may wish to base the reasons for new legislation. That simply would not get through this House.

Noble Lords will be pleased to hear that that leads me to my final point. I think I heard the Home Secretary say that there will be a scaling back of the organisations that could get access of some sort to the data. On our committee, I think we were all surprised and appalled to discover that more than 600 organisations, including 400 councils, could use RIPA to access data. None of them is in RIPA except the police, SOCA, which is now the National Crime Agency, HMRC and the security services. That was another fundamental presentational mistake that the Home Office made and is still making. We have the repeated mantra from Ministers and the Government that access to communications data is essential to deal with terrorists, paedophiles and serious crime, and that these organisations need the exceptional powers granted in RIPA to deal with them. We all agree on that and there is no argument there. But when one finds that local councils are included as relevant authorities, and that one used RIPA to catch out a parent outside a school catchment area, and that others use it to catch fly tippers, no wonder people simply do not believe that the Government were thinking only of taking exceptional powers to deal with terrorists, paedophiles and serious crime.

Among the 200 other organisations is my favourite bête noire: the Defra egg inspectorate is on the list because its job, through its Veterinary Medicines Directorate, is to investigate the serious crime of stamping the little lion on the wrong eggs. I kid you not. I checked on the website this morning and—I do not know how this can be put in Hansard—I can give the Minister the pages from the website, including the picture of the little lion on the eggs. That is still being done. I make that slightly silly point because these organisations are on the list and they undermine the argument that we need RIPA powers to deal with the serious crimes. I ask the Minister to get rid of all these other organisations, which account for less than 2% of the access requests to RIPA but do enormous discredit to the main argument. I know that they cannot get access to intercepted communications data and that they are more limited in what they can get access to, but they get some form of access. Let us restrict the new RIPA powers to the police, the security services, the FSA, the NCA, HMRC and the United Kingdom Border Agency—the big players. If we do that, we will go a long way to removing the snoopers’ charter label. The British people and this Parliament will be happy to grant exceptional powers to these important organisations to access all data if it is to catch terrorists, paedophiles and serious criminals. But the quid pro quo is that they, and only they, should have access to these powers. I appreciate that some of these matters are not for this Bill but they are part of the broken and bleeding sore that is RIPA just now and which this Bill is trying to patch up. We need the Bill but we need a new RIPA even more. I apologise for taking so long.

19:34

[Lord Soley (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Blencathra, who knows a lot about this area. I do not need to repeat many of the very good arguments that have been made, including the obvious case about the delay between the European Court passing its judgment in April and this Bill being rushed through now, which is right. The Government have to answer for it. I do not wish to pursue it. I agree that the legislation needs to go through and that it is very good that the Government have accepted some of the amendments dealing with reviews, the sunset clause, and so on.

I heard the Minister say in his opening speech that he accepted the second recommendation in the Delegated Powers Committee’s report. I did not hear him say that he accepted the first recommendation, which deals with the affirmative procedure being used after the regulations have been brought into effect. Will the Government accept that recommendation in paragraph 7 of the report? The noble and learned Lord, Lord Hope of Craighead, made a number of interesting points. If I understood him correctly, as regards Clause 3 on grounds for issuing warrants and obtaining data, his question deserves an answer. Why are the Government using the words “necessary and proportionate”, which is a weaker phrase, when the European Court of Justice refers to “strictly necessary”? I am relieved to see the noble and learned Lord nodding because I did not quite follow some of the legal points that he made. That seems to be an important point.

I now turn to the issue in its wider sense, which has been very important to me for some time. I have had a long involvement in legislation, as the noble Lord, Lord Howard, will know, including in the Prevention of Terrorism Act in the House of Commons. The noble Lord, Lord King, made the point that about 30 to 40 years ago there was a department in, I think, the Home Office, which steamed open letters to see what was written in them. My memory is of making a speech in about 1979 pointing out that MI5 and MI6 did not have an existence in statute. No statute recognises the existence of those two organisations despite the fact that MI6 probably was the most famous secret service in the world, thanks in no small part to James Bond and, rather less romantically, to the Cambridge spy ring. What interested me was that they had no legal existence in the normal sense. As a result of the questions that I and others asked at that time, legislation was passed in the early 1980s which gave them a statutory basis.

It is also right to say that Bletchley Park, which was unacknowledged, emigrated after the war to Cheltenham and became GCHQ. I am not quite sure of the history. I asked the noble Baroness, Lady Trumpington, but I am not sure that she knew either at what point it became part of statute. To put this in a historical perspective, the interesting reason is that it is difficult for democratic states to deal with legislation of this type. Although everyone has been rightly saying that our security services are very good and deserve praise, it is also right to point out that the various civil liberty groups and individuals who rattle the bars at times of legislation of this type going through at high speed are absolutely right to do so. Although some people might get frustrated with them, a healthy democracy, if it did not have such groups and individuals, ought to invent them. It is worth pointing out that they are as necessary as the security services.

I strongly agree with the noble Lord, Lord Blencathra; we have discussed before how the Regulatory and Investigatory Powers Act was unfit for purpose before it hit the statute book. It was already out of date. In a sense, my main point, which also relates to the speech made by the noble Baroness, Lady Lane-Fox, is that we should be extremely proud in this country that Tim Berners-Lee invented the world wide web. We underestimate how much he is appreciated around the world. In the context of this debate, we also underestimate massively the complexity of the path before us with modern technology.

There is a balance here. We all know that the balance is between the powers of the state and the rights of individual—freedom, citizenship, privacy and so on. It is a recognition that, because of the nature of modern weapons, the threat particularly from terrorism—although the Bill goes wider than just terrorism—is profoundly dangerous, far more dangerous than the 19th-century anarchist going around with a smoking bomb, ready to throw it. We are now talking about the death of thousands, or perhaps tens of thousands, of people.

On the other hand, there is the complexity of the technology; it brings us great freedoms and we ought to be grateful for that. I am sorry that the noble Baroness, Lady Lane-Fox, was a bit depressed by it. I find that, with the invention of modern technology, the freedoms and the ability to deal with problems accelerate. I will give a very brief example. I was out walking in the Oxfordshire countryside at the weekend and came across a cow stuck in a pool of mud and water. It was drowning. Thanks to modern technology, I was able to give the precise latitude and longitude of the position to a police officer—using the 101 number, not the 999 number. Within 35 minutes—we were 30 minutes away from the nearest track—two firemen appeared and pulled the cow out. It might seem a minor example, but you have only to think of all the examples in your life in which modern technology had been profoundly useful and had opened up all sorts of possibilities. If that had been the old days, I would have had to walk for miles to find a phone or a farm, and I probably would not have got back in time for this debate. The difference is massive and, of course, it opens up all sorts of possibilities in real life.

I come to my main point in this debate. I was very glad that the Government had accepted the recommendations about reviews, sunset clauses and so on because I believe that the challenge to us is to use this time that we have, in this House and in the House of Commons, to devise better ways of looking at legislation, particularly in relation to issues of this type. We do not have a structure for examining legislation in a way that keeps us up with technological change. I agree with all the comments that have been made about some of the committees and so on. I feel that this view applies not just to this Bill but to many Bills, which are often slightly dated by the time they come into effect because they have been overtaken by technology.

Legislation such as this is particularly important because the control of the security services evokes the Nineteen Eighty-Four argument about how much power should be given to the state and how much you risk if you take those powers away and leave yourself at risk from the activities of other groups. I wish that I had a nice, simple model to offer to the Minister and could say, “This is the sort of structure that we need to develop in this House in order to have the processes that could keep us up to date with technological change on the legislation that we are passing”. I do not have such a model, and the challenge to this House and to the House of Commons is to devise such structures. Both Houses are famous—and rightly so—for their ability to defend and speak up for freedom over the centuries, but we are in such a strange situation.

I return to what the noble Baroness, Lady Lane-Fox, said about technology. Her speech was important because it was the only one so far in this debate that put it in the context of the digital revolution. As we try to legislate now, I do not think of myself as at the cutting edge of the digital revolution; I manage, but it is more of a struggle than a great success. Yet it is so important. It affects so many walks of life and so many people, and there is a danger that the public see us as not being relevant, in part because we cannot keep up our legislative processes with the speed of technological change.

There is an opportunity here to use this Bill and the period working up to the sunset clause to start looking at more effective ways of keeping legislation up to speed with technology. The importance of this Bill is massive because of the balance between the security of citizens in the face of threats from crime and the protection of their rights, of which we are so proud both in this House and in the House of Commons. I urge the Government to acknowledge that we all need to focus on how we can improve our legislative processes so that we do not have situations like this and, if we have to rush something through, that we examine and process them in a way which does not mean that we end up losing some of the freedoms that we value so dearly.

19:45

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I thank noble Lords for allowing me to speak. I will be brief, not least in view of the erudite speeches that have gone before. I thank the Government for adding to my general knowledge because until a week ago I did not know what metadata were, and I cared even less; now I know, and I care very much.

We have debated various parts of the Bill extensively today. On the emergency aspect of this Bill, I find it hard to believe that all those big brains at the Home Office did not see this coming. I simply find it impossible to believe. Along with hundreds of thousands of people outside this House, I do not understand why this is an emergency.

Do these regulations come in before the Summer Recess or will they be delayed until after? That, of course, has an impact on whether this truly was an emergency.

On the issue of extraterritoriality, the powers seem to have been implied, but they were implicit rather than explicit. For me, this is an expansion of powers and therefore should have had a proper consultation. Ducking public consultation is really not part of the democratic process. We hear again and again that this is being done to protect us, but the security services and the police will always ask for greater powers and more weapons so that they can do their job properly. However, it is for politicians to decide whether that is appropriate and whether it is for the common good and for the public good; I would argue that it is not.

Some of the clauses from the other place were accepted, and I am very pleased about that. However, the one on bringing the sunset clause forward to 2014 was an opportunity missed because, quite honestly, if we are not having a proper debate now, having it as soon as possible and ignoring the political timetable would have been a good way forward.

As other noble Lords have said, it is very easy to encroach on civil liberties and it is for us to decide where the line is between national security and civil liberties. I feel again and again that it is easy to be pushed into things through fear rather than for sensible reasons of national security. I do not support the Second Reading of this Bill.

19:47

[Lord Rosser (Lab)]

This Bill was the subject of just nine hours of discussion and debate in the House of Commons yesterday. We will have to wait and see whether the time spent on discussion and debate in this House exceeds or falls short of that over the two days—today and tomorrow—that have been set aside.

Serious concerns have been raised in this debate over the way in which this Bill is being rushed through in the light of the fact that the European Court of Justice judgment, which the Government say has been the driving force behind the need for this Bill, was handed down more than three months ago. The reality is that the date of the Summer Recess was known in April, when the judgment was given. Thus the need for minds to be focused on reaching conclusions without delay was also known. We could have avoided the situation that we now have of rushed legislation, rushed committee reports, committees being sidelined and a general feeling that the Government could have ensured that there was more time to consider the proposals in the Bill before it needs to be passed prior to the Recess.

The rush means that the reports of the Delegated Powers and Regulatory Reform Committee and the Constitution Committee have only today been published. The Constitution Committee has commented on its report that between the date of the ECJ judgment in early April and 10 July the Government did not indicate that fast-track legislation might be necessary to address the court judgment, and that the contrast between the time taken by the Government to consider their response and the time given to Parliament to scrutinise the Bill is a matter of concern. The DPRRC has stated that there is no actual duty on the Secretary of State to make regulations under Clause 1(3), simply a power. The committee also said that since the powers conferred by Clause 1(1) and (2) on retention notices, which allow a significant intrusion into the privacy of members of the public, will come into force on the passing of the Bill, with the regulations under Clause 1(3) subject to the affirmative procedure, it is possible with the Recess imminent that there will be a period of three months without any regulations under Clause 1(3) in place to govern the exercise of powers under Clause 1(1) and (2). The Minister has said that that will not be the case, but like my noble friend Lady Smith of Basildon, I would like him to spell out again the timetable that the Government will be following to avoid the potential situation highlighted by the DPRRC from actually arising.

The Delegated Powers and Regulatory Reform Committee also pointed out that Clause 1(3) confers a power on the Secretary of State to make further provision by regulations about the retention of relevant communication data, and does not restrict the scope of the powers conferred by Clause 1(3). Perhaps the Minister will also respond to the view of the Constitution Committee in the light of the scope of the powers conferred by Clause 1(3) that, since it is the Government’s intention that the Bill does not enhance data retention powers, perhaps the Bill should expressly so provide.

The delay in bringing forward the Bill and then having to rush it through is all the more surprising since the judgment of the Court of Justice of the European Union to declare the new EU data retention directive invalid cannot have been entirely unexpected to the Government, since it supported the earlier opinion of the Advocate-General in December 2013. He found the directive incompatible with the EU’s Charter of Fundamental Rights in respect of the right to respect for private life and the right to the protection of personal data. The case was brought by the High Court in Ireland and the Constitutional Court in Austria. In essence, the Court of Justice of the European Union concluded that the data retention directive adopted by the EU legislature exceeded the limits imposed by compliance with the principle of proportionality as it did not limit the interference in respect of the fundamental rights in question to what is strictly necessary, since the directive covered in a generalised manner all individuals, all means of electronic indication and all traffic data without any differentiation, limitation or exception being made in the light of the objectives of fighting against serious crime.

The effect of the European Court of Justice decision was to strike down regulations to enable internet providers to retain communications data for law enforcement purposes of up to 12 months, thus creating uncertainty among communications service providers about the legal basis for the retention of communications data in the UK. The ECJ ruling did not take account of any controls or safeguards in the domestic laws of member states and in particular our communications data access regime, which is governed largely by the Regulation of Investigatory Powers Act 2000. RIPA seeks to ensure that access to communications data can take place only where it is necessary and proportionate for a specific investigation. Our data protection laws mean that in the absence of a legal duty to retain specific data, companies must delete data that are not required under their strict business uses.

Communications data, as has already been said, have been crucial to every counterterrorism operation by the security services in recent years and are used as evidence in nearly all serious and organised crime cases dealt with by the Crown Prosecution Service. The view of the House of Commons Home Affairs Committee yesterday was that the retention of communications data, subject to appropriate safeguards, was an important tool in the fight against terrorism, organised crime and child sexual exploitation, and that the Government were right to bring forward urgent legislation.

Following the ECJ ruling, the concern has been that without new legislation data could be destroyed within a short period by communications service providers fearing legal challenges, with the result that the police and security services would be unable to access them. With the EC directive in question having been transposed into UK law, national legislation needs to be amended only with regard to aspects that become contrary to EU law after a judgment by the European Court of Justice, and a finding of invalidity of the directive does not cancel the ability for member states to oblige retention of data. Indeed, the European Court of Justice accepted that an ability to retain data was necessary and recognised purposes for which data could be retained. Its objection to the directive was to its generalised nature and scope.

The EU data retention directive was implemented through secondary legislation through the Data Retention (EC Directive) Regulations 2009, and the Bill that we debate today is intended to remove any doubt there may be about the legal basis of our 2009 regulations and to give effect to the ECJ ruling. Clauses 1 and 2 confer on the Secretary of State the powers currently in the 2009 regulations to require service providers to retain communications data. The Bill of course also addresses the application of our laws on interception to remove any doubt that the requirement that companies co-operate with UK law enforcement and intelligence agencies also extends to companies that are based overseas but provide services to people in the United Kingdom.

The Constitution Committee said in its report published today that it is not clear why this last part of the Bill on interception needs to be fast tracked as there is evidence that the Government have known about the problem for some time, since the Joint Committee on the Draft Communications Data Bill noted in its report published at the end of 2012 that,

“many overseas CSPs refuse to acknowledge the extra-territorial application of RIPA”.

Will the Minister give the Government’s response to that point?

A number of the contributions in this debate have referred to the need to strike a balance in making a judgment on the Bill between the two main concerns of privacy of information and the need for agencies such as the police and security agencies to know about information and have access to it. The need in a democracy is to sustain liberty and security, and privacy and safety. The Government have made it clear that the purpose of the Bill, which we support, is to maintain existing capabilities and indeed to restrict them in line with the ECJ judgment. Clause 3, for example, will change the basis for obtaining a warrant for intercept on grounds of economic well-being. At the moment, under the Regulation of Investigatory Powers Act 2000, economic well-being is the sole criterion without condition. In future it will be subject to the interests of national security.

In the House of Commons, the Government agreed to our amendments designed to ensure that the Bill does not go beyond existing capabilities by requiring six-monthly reports on the operation of the Bill when it becomes an Act, to ensure that its implementation does not go beyond what the Government have stated is its purpose. There is also a sunset clause in the Bill, on which we insisted, which means that the legislation will cease to have effect from the end of 2016. That provides an opportunity for full public consideration and debate about what powers and capabilities will actually be required and how they will be regulated after then in the field of communications data access and interception. It will also provide an opportunity to ensure that whatever is deemed to be required will have rather greater public understanding and acceptance than is the case at present. People want to feel secure, but they also value their privacy and they do not like to find out the sheer extent to which that privacy can be and is being invaded from whistleblowers. They rightly feel that there should be more transparency from government on this issue both on the extent and necessity, and with that greater transparency might well come rather more trust and acceptance of the need for what should be done, provided it is proportionate.

The Government said last week that they would review the interception and communications data powers that we need and how they are regulated in the context of the threats we face. It was helpful that in the Commons the Government accepted the need to go down the road of our amendments and place this work, which will be conducted in the first phase by the Independent Reviewer of Terrorism Legislation, David Anderson QC, on a proper statutory footing. I hope the Minister, having mentioned Mr Anderson, will respond to the numerous points raised by my noble friend Lady Kennedy of The Shaws and by the noble Lord, Lord Carlile, about the future of Mr Anderson’s post, and the role and powers of the proposed new board.

The review which Mr Anderson will be conducting in the first phase will also take account of the impact of changing technology on the work of the different agencies involved. We have been calling for an independent expert review of the legal and operational framework, and in particular of the Regulation of Investigatory Powers Act 2000, because the speed of the communications data revolution since that Act has probably already led to the law and our oversight framework becoming out of date. The police and the security and other relevant agencies need to be able to keep up with new technology, but the safeguards need to keep up too—though, as has already been said in this debate, it is the knowledge that some private companies and organisations have about our daily lives and what we do that is equally breathtaking.

We will play our part in seeing that this Bill is passed, because the existing powers that it seeks to retain are too important for public safety and security to be put at risk of being lost. However, we also need that full debate about achieving the right balance, in a democracy, in an increasingly technological age, between privacy and liberty on the one hand and safety and security on the other, and ensuring that that balance commands public consent and confidence.

20:10

[Lord Taylor of Holbeach]

My Lords, this debate has been an exceptional debate, not only because we are dealing with something of great importance but also because we have heard some extremely able and interesting speeches. Some have been more supportive than others of the Bill I have presented to the House, but I found them all interesting. The debate reflects the ability of this House to recognise the importance and significance of legislation and the scrutiny it can offer. We know that these are extraordinary circumstances: we are being asked to consider fast-track legislation. However, I think that everyone understands why the Government need a sense of urgency about this legislation.

I hope that where noble Lords have expressed reservations about that, I will be able to reassure them. I appreciate the concerns of some noble Lords about the constrained timetable, given the time that has elapsed between the ECJ judgment and this Bill being introduced. I hope that the House will understand and accept that we have had to make sure that our response both addressed the needs of law enforcement and intelligence agencies and provided the appropriate safeguards and public reassurance. This inevitably required careful consideration, in order to create a package to which all parties could agree.

We feel that it is important that the Bill has been widely supported across the parties, and indeed passed through the House of Commons with a very large majority. Building that consensus was important in a matter that was clearly as important as this.

In the absence of a clear legal basis for retaining communications data, the police stand to lose access to vital information, which—as has been pointed out—contributes to 95% of serious crime prosecutions. Unless we make clear the obligations that RIPA imposes on companies based overseas but providing services here in the UK, the security and intelligence agencies stand to lose their ability to monitor terrorists and organised crime groups in this country. Indeed, as a number of noble Lords have said, and have agreed with the Government, the Bill does not provide new powers. It does not alter or extend existing powers. It simply provides a clear legal basis for powers that the police and intelligence agencies have always relied on to keep people safe, which for different reasons—and there are different reasons within the two parts of the Bill—are now in question.

We have been clear that the Bill is not a permanent solution to the challenges we face in the future. We had a brilliant speech from my noble friend Lord Blencathra, who talked about the scrutiny he had given to previous attempts to find a solution to these problems. It is quite clear that in this Bill we are not attempting to address the future proofing of which he talked. It does not address the growing gap in relation to communications data that the draft communications data Bill sought to resolve. Nor does it address the wider question of the powers that law enforcement, and the security and intelligence agencies, will require in the future.

Those issues will have to be addressed. That is why the provisions in the Bill fall away at the end of 2016. A number of noble Lords have said that we need an earlier sunset. However, if we are to have a proper successor to RIPA, if we are to have a proper evaluation of this matter and if we are to have the public debate about these issues that noble Lords have called for, we need time to do so. Although there have been suggestions that we are being governed by the political timetable—the electoral timetable—I think it is important that we recognise that legislation is dependent on Governments, and Governments have to be elected. Governments have to develop programmes that they are able to communicate.

It is to the credit of this Parliament that we have been able to agree on this issue. I do not know who will form the Government after the election. I do, however, know that it is important that, whichever Government are elected, they have the responsibility of finding a successor to this law and future proofing this sort of issue in the ways outlined so ably by my noble friend. That is why the provisions will fall away. There will be a public debate. I want a public debate. It will have to take account of not only the threats we face but the safeguards required to strike the necessary balance between privacy and security.

[Lord Soley]

This is a very important point. I am sympathetic to the longer sunset, but I do not understand what sort of structures the Government want to put into place to enable that public debate to inform the changes.

[Lord Taylor of Holbeach]

For a start, not only will there be a review of this piece of legislation on a six-monthly basis, something that has been agreed and now forms part of the Bill, but David Anderson, the independent reviewer—that is the very paragraph I was turning to, the noble Lord, Lord Soley, will be delighted to know—will lead a review into these issues. The Bill now provides a clear basis in law for that review. The noble Lord, Lord Blencathra, suggested that Mr Anderson look at his report as a starting point for addressing this sort of issue. That will be available before the election, and will help inform public debate during the election. The wider safeguards and assurances that sit around the Bill are also important. I am glad that noble Lords have taken account of those safeguards, which build on the extensive safeguards that already exist.

However, there are wider issues, and I will do my best to go through some of them at this stage. I am going to demand a lot of my officials, in the sense that I will ask them, to the extent that they are able, before Committee tomorrow morning, to draft a letter which can be circulated to all noble Lords who have participated —if I do not get time, because I am conscious of time.

In a very interesting speech, the noble Lord, Lord Knight, asked whether there was compliance with the European Convention on Human Rights. The Home Secretary and I have signed on the Bill a declaration that it is so. We have also made available the memorandum to the Joint Committee on Human Rights, which explains how our Bill satisfies the ECHR. I hope that that reassures the noble Lord.

The noble Lord, Lord Rosser, asked: what are our plans for the timing of regulations? I understand the interest in that. The draft regulations have been published and we have informed the House that the Government’s intention is to lay the regulations following Royal Assent, so that they can be approved by both Houses of Parliament prior to recess. They have, of course, already been published, as I said, and we are liaising with both the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee, ably chaired by my noble friend Lord Goodlad, to ensure that they can consider these matters as soon as possible. The JCSI will meet on Monday to consider the regulations, so that the Commons can debate them prior to recess.

The noble Lord, Lord Strasburger, asked why the measures were not part of the Queen’s Speech. When the gracious Speech was written, our response had not been finalised. The noble Baroness, Lady Smith, asked why it did not form part of the Serious Crime Bill, which she and I are seeing through this House and has finished in Committee. As she knows, we will not return to Report until October. The difficulty of the timetable for that Bill means that it will not be through all its stages before the new year, if we are lucky.

[Baroness Smith of Basildon]

My Lords, the Minister has given answers to a lot of the questions that have been raised, but I said, when I talked about introducing the provisions at the same time as the Serious Crime Bill, that although these provisions may have had to be taken more quickly than the rest of the Bill, it is still the view of most Members of your Lordships’ House that these provisions could have been brought in sooner.

[Lord Taylor of Holbeach]

My Lords, I do not think that the Government consider that that was a satisfactory way to deal with the problem.

The noble Lord, Lord Davies of Stamford, asked why the Intelligence and Security Committee did not have time to report on the Bill. I note the noble Lord’s concern on that, but I draw his attention to remarks in the Commons yesterday by the chairman of the committee, Sir Malcolm Rifkind. He said:

“The Intelligence and Security Committee has considered the Bill, and we have taken evidence from the intelligence agencies on its content. If we were concerned in any way that the Bill simply added to the powers available to the Government and that they were using a fast-track procedure to implement it, we would not be able to recommend its endorsement, but we are satisfied that that is not the case”.—[Official Report, Commons, 15/7/14; col. 725.]

Noble Lords should bear that in mind.

[Lord Davies of Stamford]

My Lords—

[Lord Taylor of Holbeach]

Perhaps the noble Lord will allow me to answer other people’s questions.

The noble Lord, Lord Soley, asked about Royal Assent; I think that I have dealt with that. The noble Baroness, Lady Kennedy, was particularly concerned about the nature of the matters that we are trying to deal with. There are already a number of reviews in the system, including that to be headed by the independent reviewer of terrorism legislation, David Anderson. He needs to be given time to conduct that work. I see no point in requiring Parliament to return to those issues almost as soon as we return from the Summer Recess without the benefit of the work that we have set in train. Any such legislation would require an accelerated timetable, and we do not want to be doing that again if we can avoid it. I think all noble Lords will agree on that.

The noble Lord, Lord Armstrong of Ilminster, asked whether David Anderson’s review would cover all use of communications data. Clause 7 makes clear that the review covers the operation and regulation of investigatory powers. That extends to communications data for all purposes under RIPA for which it can be obtained. I hope that that reassures the noble Lord.

The noble Lord, Lord Knight, also asked: would the review consider all legislation relating to communications and lawful interception? It does indeed; I have just explained that to the noble Lord, Lord Armstrong.

In answer to the noble Lord, Lord Macdonald of River Glaven, the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Baroness, Lady Kennedy, who is about to resume her place, as I said in my Second Reading speech, we intend to create a privacy and civil liberties board. The terms of reference can be found on the Home Office website and in the Printed Paper Office. Legislation would be required to establish the board, and we will have plenty of opportunity to discuss the detail of the board’s functions then.

I am grateful to my noble friend Lord Carlile for the work that he has done in this area; he has been a very important figure in these matters. David Anderson, his successor, has been consulted on the proposals before the announcement was made to Parliament and as they have developed. Parliament will have the opportunity to debate these matters fully when the legislation to create the board is presented.

The noble Lord, Lord Judd, asked about US data sharing. He will be aware that the Government have announced the appointment of a senior diplomat to look at the issue of data sharing. That is another feature of the non-legislative part of the announcements made by the Home Secretary in the Statement which I repeated here.

My noble friend Lord Paddick asked: what is the annual transparency report and how does it relate to the internet section of the commissioner’s report? There will be an annual transparency report relating to the exercise of powers under RIPA. It will take advantage of as much detail as possible. There will, of course, be a six-monthly report on the operation of the Bill.

My noble friend Lord King of Bridgwater asked: will we reform the ISC so that the chairman is drawn from the Opposition? In view of the reforms that we have made in the Justice and Security Act 2013, the Government have no immediate plans to make further changes, but it is a matter that is live and to which Parliament may well wish to return.

I turn to some of the detailed items under data retention types. The regulations made under the Bill will directly replace the data retention regulations of 2009; they will not extend the list of data types being regulated.

The noble Baroness, Lady Kennedy, asked about the ECJ judgment on the EU data retention directive. It did not take account of any of the domestic safeguards that we had in place. Many of the ECJ’s concerns were addressed in the UK’s domestic legislation. The difficulty in responding to the judgment was that we had to consider how we implemented some of the safeguards so that it was clear that they were in primary legislation, not the secondary legislation in which we had translated the European directive in the first place.

I have always enjoyed listening to the legal mind of the noble and learned Lord, Lord Hope of Craighead, working in its Rolls-Royce fashion. The noble Baroness, Lady Kidron, also asked: how do the regulations respond to the issue of the ECJ judgment? They will replace the 2009 data retention regulations. In particular, regulations will set out what must be specified in a data retention notice; place requirements on the Secretary of State to keep such notices under review; set out the security requirements that apply; provide that service providers can be reimbursed for any expenses incurred in complying with the requirements; and revoke the 2009 regulations, as they will be redundant.

The noble and learned Lord, Lord Hope of Craighead, asked why Clause 1(1) does not use the wording of the ECJ judgment. The test in the Bill requires the Secretary of State to consider whether it is necessary to require a provider to retain data, but also whether it is proportionate for that legitimate aim. This is in accordance with the judgment, which also makes it clear that it is necessary to verify the proportionality of any interference with a person’s rights when requiring the retention of data. That is why that particular wording referring to proportionality is used.

My noble friend Lord Blencathra raised a plethora of issues, if I may refer to them as such. It is vital that future consideration bears in mind the parliamentary inquiry and accordingly, as I have said, it is explicitly referred to in the terms of reference. Local councils will no longer be able to access communications data under these proposals. From the lists that I have seen, the Egg Marketing Inspectorate does not, nor has it ever had, access to communications data under RIPA. Indeed, Defra will also be losing its entitlement to such access in future. We recognise that the list has grown and that it needs to be cut down. The 13 bodies which will have their powers removed are the Civil Nuclear Constabulary, the Port of Liverpool Police, the Port of Dover Police, the Royal Mail, BIS, Defra, the Department of Agriculture and Rural Development in Northern Ireland, the Environment Agency, the Scottish Environment Protection Agency, the Department of the Environment in Northern Ireland, the Food Standards Agency, the Pensions Regulator and the Charity Commissioners. I should think that noble Lords are amazed that those bodies had access in the first place. This just shows the necessity for reviewing this sort of legislation and working it out on the basis of who actually needs it.

There was some concern over territoriality—a difficult word to say, particularly if one has been sitting here for a few hours. The noble Lord, Lord Knight of Weymouth, raised this, as did my noble friends Lord Paddick and Lord Hodgson and the noble Lord, Lord Judd. The Bill clarifies the territorial extent of the Regulation of Investigatory Powers Act: in the absence of explicit extraterritorial jurisdiction, some companies have started to question whether the legislation applies to them. This is nothing new. Jack Straw—who as Home Secretary was responsible for RIPA in the first place—made this clear yesterday in the House of Commons. He stated that the “clear intention” of that Act was to extend extraterritoriality. My noble friend Lord Howard of Lympne quoted Jack Straw to great effect; his was a very effective speech. I am pleased that many noble and noble and learned Lords, including the noble and learned Lord, Lord Lloyd of Berwick, recognise that this is not an extension of powers.

I have done my best, within the relatively short time that I have had to wind up what has been an extremely useful debate, to reassure noble Lords about this issue. The wider safeguards that sit around the Bill are important and we will have a chance to discuss them at length. However, I am glad that noble Lords have taken account of them in discussing the Bill before us today. We will no doubt be back tomorrow to consider it in Committee. There are wider issues and it is good that they have been raised by my noble friend Lord Blencathra.

I welcome this debate, and I would like briefly to reflect on the importance of the issues that we will return to tomorrow. Communications data and interception powers are intrusive. They are rightly subject to very strict safeguards, but they are also of vital importance to the work of law enforcement and the security and intelligence agencies. Without the legislation that we are considering today, those powers would be undermined. Those who mean us harm would be able to evade detection. Put simply, lives would be at risk. These are important issues. That is why this debate has been an important one. On that basis, I commend the Bill to the House and ask that it receive its Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

Finance Bill

Wednesday 16th July 2014 Lords Chamber

Second Reading

20:25

Moved by

[Lord Deighton]

That the Bill be read a second time.

[The Commercial Secretary to the Treasury (Lord Deighton) (Con)]

My Lords, this Government have a clear and highly effective plan to secure our country’s economic future. It is a plan that is cutting the deficit, attracting investment and helping British households to work and to save. This Finance Bill builds on the strong foundations put in place over the past four years.

I begin with those measures aimed at increasing investment and growth. At the start of this Parliament, we set out our ambition to have the most competitive corporation tax system in the G20 and by the end, we will have delivered. We have cut our main rate at every Budget since coming to power. From 2015, it will be 8% less than the rate that we inherited. By 2016, that will mean £9.5 billion-worth of savings for businesses across the UK every year. That is why more and more businesses are starting up here and moving here. For the first time since 2007, business investment has grown for four consecutive quarters. We are helping businesses of all sizes to invest and create jobs. We have doubled the annual investment allowance to £500,000, introduced the first tax relief of its kind for investment in social enterprises and increased the research and development tax relief to provide support for early-stage companies that will become the industries of the future for us. These tax reforms are a central plank of our economic strategy. Employment is at record levels, business confidence is high and investment is forecast to grow rapidly. The Finance Bill 2014 continues to send the message that Britain is open for business.

The quid pro quo for our highly competitive tax regime is that all companies and individuals pay their dues. This Government have taken a firm line in tackling tax avoidance and aggressive tax planning. They have made more than 40 changes to tax law to tackle avoidance and introduced the UK’s first general anti-abuse rule—the GAAR. This approach is working but tough measures are still needed. Over the next five years, almost £5 billion of revenue will be brought forward from users of avoidance schemes which have been defeated in another party’s litigation, or which fall within the scope of the DOTAS rules or the GAAR. The evidence is that these cases are decided against the taxpayer, so this is a fair measure. It is fair to the millions of taxpayers who pay their fair share and expect others to do the same. This measure and others in the Bill which prevent the use of dual contracts or employment intermediaries artificially to reduce or avoid UK tax liability will help to ensure that setting up a contrived structure will not result in a tax advantage and that our tax system will help to provide a level playing field across the labour market.

Taking a firm stance against tax avoidance is an important part of delivering a tax system that is fair, but fairness goes further than just tackling avoidance. It is about making sure that those with the broadest shoulders bear the greatest burden. At our first Budget, we raised the income level at which people began paying tax and we have not stopped since. We are going beyond our original commitment to raise the personal allowance to £10,000, which we accomplished a year ahead of schedule, by introducing a personal allowance of £10,500 from 2015. To put this into perspective, when this Government came into office, the personal allowance was only £6,500. This Government have cut the number of income tax payers by a greater number in five years than any other Government in recorded history. That is not all that we are doing to help. The Bill introduces a transferable tax allowance for married couples, targeting the benefit on married couples and civil partner lower-income households.

Saving, especially saving for retirement, was a fundamental part of this Budget. Thanks to the changes in the Bill before us, from next April those individuals who have been sensible enough to put aside for their future will have far greater control over how they access and ultimately spend their savings.

I turn to this Government’s radical pension reforms, which from next April will allow individuals with defined contribution pension savings more choice and control over their pension wealth. The measures in the Bill help individuals who are approaching retirement now to benefit from that choice this year.

The Finance Bill before us reflects the Government’s commitment to greater consultation on tax policy changes. I thank my noble friend Lord MacGregor and the members of the Economic Affairs Committee for their detailed consideration of the draft Finance Bill legislation at the start of this year and for their report that followed on 11 March. I look forward to some of the contributions that follow, which I am sure will take us through their thinking.

I shall take this opportunity to respond to some of the main points raised in that very thorough report. The focus of the report was on the salaried member element of the partnerships measure, and a recommendation to defer this legislation for a year. The partnerships measure is about fairer taxation and removing distortions across different types of partnerships. It has two key elements. First, the new salaried member rules will reduce differences in the tax treatment between limited liability partnerships—the so-called LLPs—and partnerships generally by providing that individuals who are in essence employees are taxed as employees. Secondly, the mixed membership partnership element will prevent individuals from reducing their personal tax liabilities by allocating profits to a corporate member of the partnership. This measure brings in total tax and NICs revenue of about £3.3 billion over the current forecast period.

The salaried member legislation corrects an anomaly under current law that treats all members of limited liability partnerships as self-employed, regardless of the terms on which they are engaged. This legislation is based on specific statutory tests, as proposed in HMRC’s original consultation document. I would highlight that the draft legislation published last December did not go further than the original consultation proposals but merely updated them to reflect consultation responses received.

As set out in the original consultation document, the legislation has three conditions. Collectively, these capture what it means to be a partner in a traditional partnership by looking at the income entitlements of the members, the amount of capital they have at risk and whether they can significantly influence the LLP’s affairs. The legislation, which came into effect on 6 April 2014, will ensure that members of LLPs will be treated as employees for tax purposes if they are engaged on terms closer to employment.

The Government made clear from the start that the change would take effect from April 2014 and reaffirmed at Budget 2014 that there would be no deferral of this legislation. The argument, of course, is that any deferral would be unfair to the many LLPs that had already taken practical steps to implement these changes. Deferring implementation would also have a significant impact on the Government’s objectives of fairness and deficit reduction.

Noble Lords will of course be aware that the Bill before us today includes this revised legislation as part of the partnership clause and schedule. It was not amended during its passage through the Commons. This legislation will remove structural inconsistencies in the partnership rules and prevent the disguising of employment in LLPs and tax-motivated partnership allocations.

I turn to the points raised by the committee in relation to the development of tax policies in general. The Government set out a new approach to tax policy-making in 2010 following consultation. I am pleased that the committee itself said in its report:

“We commend the Government, HMRC and HMT on the quality of the consultations conducted and the tax legislation produced since 2011”.

Officials consult interested parties and groups from across the tax spectrum throughout the development of measures both to test policy and inform the Government’s understanding of the impacts. The findings are reflected in formal responses to consultations and tax information and impact notes, the majority of which are published with draft Finance Bill legislation in the autumn.

The Finance Bill contains a number of improvements from the technical consultation launched in December. We received more than 300 comments to the draft legislation that we published and have had continuing interaction with individuals and organisations since. The consultation has ensured better legislation and more effective policy.

The committee also considered the policy partnership between the Treasury and HMRC. I assure your Lordships that this is a strong, positive relationship where both departments work closely together, maintain constant contact and look at ways to improve things on a continuous basis. I can assure noble Lords that the policy partnership is kept under constant review to look for improvements. There is a big focus on improving skills and ongoing education. Part of that is being done through the introduction of the new programme, the Policy Skills Learning Programme.

To conclude, this Finance Bill legislates measures that improve our competitiveness, target tax avoidance and leave more money in people’s pockets. It carries out the Government’s economic plan, which has successfully consolidated our recovery and is now driving forward our growth and competitiveness. I commend the Bill to the House. I beg to move.

20:36

[Lord MacGregor of Pulham Market (Con)]

My Lords, I rise to speak to the Motion standing in my name on the Order Paper. However, before I do so, I shall make two brief points on the Budget as a whole. The Minister outlined many of the measures. I entirely endorse them, and I wholly support the Chancellor’s overall economic strategy and, in particular, his and the Chief Secretary to the Treasury’s heroic efforts to reduce public sector net borrowing and to reach the target of moving the public finances into surplus, which the OBR forecasts will be achieved for the first time in 18 years by 2018-19. That is, of course, clearly dependent on the return of a Conservative Government at the next election or, very much second best, but recognising the role that the Liberal Democrats have played in the past few years, perhaps a coalition Government.

In the context of the Budget itself, I warmly welcome the various measures in the Finance Bill which the Minister outlined, in particular on ISAs and defined contribution pensions further to encourage savings. Pensioners particularly hard hit by the current very low interest rates on savings will be helped by the new pensioner bond to be introduced by National Savings & Investments in January next year. There are various measures for businesses, including those designed to encourage and assist investment and exports and those specifically for small businesses. When I first became a Member of the other place, one of my passions was for small businesses. I give them my total support.

I cannot resist saying that for all of us who support tax simplification and all that goes with it, the Finance Bill is not the best example. I understand the temptation of a whole lot of fiscal lollypops, but it has resulted in a monumental Bill, one of the largest I can remember. Similarly, the Explanatory Notes are among the largest I have seen in all my time as a Minister or a Back-Bencher in the Committee on the Finance Bill in the other place. I shudder at the thought of having been on that one.

I now turn to the report of the Economic Affairs Committee on the draft Finance Bill. First, as the retiring chairman, I shall give some reflections on the role and process. The committee’s task is limited as the elected House, quite rightly, has sole prerogative over supply and all the revenue raising that goes with it. That means that in nearly all my time in the other place this House had no role in the Finance Bill. But it was recognised that there was considerable professional, actuarial, legal and accounting expertise here which was not being tapped. In addition, because of all the pressures in the other place as Members of Parliament have to deal with so many other things, detailed technical and less partisan examination of various tax issues with expert witnesses from outside was recognised as being a useful addition to parliamentary scrutiny, and so it has proved. I pay tribute to my noble friend Lord Wakeham for the crucial part he played in initiating that.

We cannot amend the Finance Bill so the committee concentrates on selected aspects of tax simplification, clarification, administration and so on which may not be the first priority in the other place. If the committee has to be useful, not least in drawing the attention of the Commons and, indeed, the Government, to certain issues or concerns, it has to work fast and be selective. The timetable aspect has been greatly aided by the present Government’s welcome decision to publish draft Finance Bills, which made our task easier and enabled us to make our report well in advance of the Committee stage in the other place.

Does the process add value? I believe it has three merits. It uses the often considerable experience, knowledge and skills of appropriate Members of this House; it is considerably valued by the expert bodies and associations outside concerned with tax, accountancy, legal issues and business generally in giving them a forum to bring to parliamentary attention in a non-partisan ways their concerns, which are quite technical but important; and it provides the Committee in another place with an independent assessment in its scrutiny of the Bill. There were references to our report in the debates in the other place on Clause 68.

I now turn to our current report. The Minister has already given answers to some of our points, but I still want to persist with them because I want a more detailed explanation. The draft Finance Bill was published on 10 December 2013, and we began our inquiry in January 2014 and published our report on 10 March. I thank my fellow members of the sub-committee for their substantial contribution, their intense scrutiny and the speed at which they were willing to work. I am also most grateful to our specialist advisers Dr Trevor Evans and Mr Tony Orhnial and our committee clerk Bill Sinton and his team for their immaculate and professional support. We made 34 conclusions and recommendations. This is a very complex area and I will touch on some of the most important.

We decided to look at the measures which deal with the taxation of partnerships, now Clause 68 of and Schedule 13 to the Finance Bill, because preliminary evidence suggested that they would be some of the most controversial proposals—technically and professionally as distinct from politically—in this vast Bill, and so it turned out. We had a lot of evidence from expert witnesses. As my noble friend said, the draft Bill contained various measures to counter the abuse—I stress the word “abuse” —of the current rules governing the taxation of traditional partnerships and limited liability partnerships, commonly known as LLPs. Our committee wholly supported the objective of that legislation.

A feature of the original Limited Liability Partnerships Act 2000 is that for tax purposes, all members of an LLP are treated as self-employed partners, even if they would have been treated as employees in a traditional partnership. Most of our witnesses accepted that this provision was being abused in order to minimise the income tax and national insurance contributions paid by LLP members. So the need for action was accepted.

The draft Bill introduced three legislative tests to distinguish between LLP members who were genuine partners and those who were in effect employees. As my noble friend said, the aim of those tests was to put members of LLPs in broadly the same tax position as members of general partnerships. LLP members failing the tests would pay income tax and national insurance contributions on the same basis as employees, and the LLPs concerned would pay employers’ national insurance contributions. There were also other provisions, including special arrangements to accommodate alternative investment fund management partnerships that were obliged to defer bonuses to meet the requirements of an EU directive. I do not have time to go into detail on those today.

Our report recognised the need for the current rules to be reformed in order to stem tax losses. The large majority of our witnesses, however, were concerned that the legislative tests proposed for determining whether, for tax purposes, a member of an LLP was an employee or truly a partner were quite different from those consulted on before the draft Bill was published. I heard what my noble friend said, but that was very much the tenor of the evidence that we were given—and we agreed with it. So: consultation good, but subsequent follow-up not so good.

Moreover, nearly all the evidence we received argued that the tests were unlikely to achieve the aim of aligning the tax treatment of LLPs with that of general partnerships. The differences from the original consultation document were key points for us, so we recommended that the proposals be delayed until April 2015, to allow both the legislative approach and the drafting to be got right, and to give LLPs time to adapt to the revised rules.

There was an issue of yield forgone here. The Government estimate was for a total yield at that stage of £3.26 billion—certainly not a sum to be sneezed at. However, we thought that only a very small part of that yield would be lost by delaying the measures for a year. Our main concern was that, given the substantial difference between the original consultation proposals and the draft Bill, and the concern of the professional bodies that in some respects the legislation could be unworkable—coupled with the fact that we felt that in order to minimise compliance costs, the Government should consider applying the new rules from the start of an LLP’s accounting year rather than the start of the fiscal year—a one-year delay to get all this right would be justified.

Another concern was that in the process of our inquiry the anticipated yield from these measures was increased by nearly £2 billion—pretty well all, I think, emerging from more detailed analysis by HMRC of the alternative investment fund managers sector. This difference was never really explained to us.

Our report was well received by the main professional bodies concerned. They supported our main conclusions, and pointed to the practical problems, which we had identified, in sticking to the Government’s timetable. The Chartered Institute of Taxation stated that,

“it is disappointing that the House of Lords recommendations have been ignored and this has been pushed through so quickly”.

The Law Society of England and Wales commented in similar vein.

In fairness, I must add that the Bill as published improved the drafting of some of the provisions, and introduced some new flexibility around meeting one of the tests. The guidance, too, has been redrafted and improved substantially following the consultation. We welcome these changes, which are in line with our recommendations. But the Government stuck to the proposed tests for determining the employment status of LLP members and to making the start date April this year. As a result, I understand that there is a general feeling throughout the industry—if I may refer to it as such—that although it has learnt to live with this legislation, it has caused a lot of unnecessary work and cost, and taken up a lot of unnecessary time, for not much revenue to the Government. It would have been so much better to have got it right through further consultation on the revised proposals in the first place. Having said that, this is an unfortunate case, because as we said elsewhere in our report, in our analysis of the new approach to tax policy-making:

“We commend the Government, HMRC and HMT on the quality of the consultations conducted and the tax legislation produced since 2011 in these areas (the large majority) where the new approach to tax policy-making has been applied comprehensively”.

There is much else I could say, but at this hour it is necessary to conclude. I will finish by saying that the Financial Secretary to the Treasury responded to the debate on all these issues in the other place on 13 May. In considering the Financial Secretary’s response to the debate, we maintain that the points made in our report have not been dealt with. First, while it is reassuring that the figures for yield have the OBR’s approval, the detail of how the figures were arrived at needs to be understood. That is why our report made a number of detailed recommendations for greater openness from HMRC. Secondly, the process of arriving at the legislative tests flies in the face of nearly all the evidence submitted to the sub-committee by witnesses. Thirdly, the proposed deferral of the salaried members provisions would have allowed more time for the tests to achieve the intended result and an orderly transition to the new system could have been managed. In contrast to the Financial Secretary’s assurances, the Financial Times reported on 14 April that:

“Thousands of UK lawyers, accountants and property consultants are scrambling to inject equity into their firms”,

in order to avoid falling foul of the new rules. Finally, the rejection of our proposals for formal, published post-implementation reviews is fundamentally inconsistent with the Government’s “new approach to tax policy-making”, which advocates openness and consultation at all stages of the process of developing and implementing a policy change and should include post-implementation reviews. Overall, however, I warmly commend the new approach to consultation that the Government are taking. Our committee makes a considerable contribution in assessing the key measures that we undertake to look at in the Finance Bill. I commend our report to the House.

20:51

[Lord Joffe (Lab)]

My Lords, it was a privilege to be a member of the Finance Bill sub-committee, which was so impeccably chaired by the noble Lord, Lord MacGregor, and which, as he has already said, was so superbly organised by the clerk to the committee and his staff and advisers. I will limit my comments to that report and the committee’s proceedings.

On the basis of the evidence received, I agreed and supported all the sub-committee’s recommendations. However, I was concerned about the very narrow base from which that evidence was drawn. There are some 420,000 partnerships of one form or another in the UK, 90% of which have three or fewer partners. Despite that, the evidence that the sub-committee heard was overwhelmingly from associations, organisations and professional advisers who represent large partnerships, which probably make up less than 1% of all partnerships. Professional advisers inevitably had potential conflicts of interest in that some of their members would benefit from a rejection of the proposed changes in the law.

The sub-committee recognised that narrow base in its recommendations in clause 291 of the report, in which HMRC and HMT were urged to urgently develop and publish comprehensive strategies for consulting smaller businesses, non-business stakeholders and other groups. It also drew attention to the same recommendation made by its predecessor committee in 2011, which does not appear to have been acted upon.

Clearly, it will take some time for HMRC and HMT to devise these innovative ways of reaching out to small businesses, or to non-business stakeholders and individual taxpayers. In the mean time, some balanced and objective evidence could be achieved by the sub-committee in future hearings by inviting a significant number of informed witnesses, from organisations to individuals, who are seriously concerned about tax avoidance from a society perspective and who would have no conflict of interest.

Additionally, it would probably be more effective if the committees of this House and those of the other place had budgets made available to them so that they could commission evidence from a wider variety of opinion on important issues such as tax policy. That would make a major contribution to accurately reflecting the views of society on controversial issues, unlike the present position, where we largely only hear from those with command of considerable financial resources, not from the rest of society.

Clearly, the problem for the Chancellor of the Exchequer—who has had considerable success in closing some of the loopholes in the law—is how to close all the gaps. This would require a complete revision of the law on taxation which currently provides endless loopholes that enable talented accountants and lawyers to devise lawful systems for companies and individuals to avoid paying the tax which these laws intend to levy. Unfortunately, the underresourced Inland Revenue is unable to confront on equal terms the talented and highly paid lawyers and accountants who devise these systems.

Pending a complete revision of the law, I draw attention to the budget suggestion made this year by the Association of Revenue and Customs, part of the First Division Association trade union representing senior staff at HMRC. Its suggestion was that if just £312 million a year were spent on additional senior staff in the department, then an extra £8 billion of tax revenue might be raised. If this is even half right, the question has to be why these funds are not being made available at this time, when tax revenue is insufficient to meet the needs of society as a whole.

The Government has rejected a key recommendation of the committee in relation to salaried members. I suspect that this will not make much difference to the amount of tax revenue that will be raised as a result of the changes in the law, as the professional advisers who so passionately oppose the changes in the law will now turn their talents to lawfully devising means to circumvent the provisions, and, with some knowledge of tax avoidance, I think they will probably succeed.

A final suggestion, which I fear may not be within the remit of the committee, is whether the army of highly paid tax lawyers and accountants—some of whom told the committee that the law was the problem—could not devote at least part of their time to developing proposals for policies for changes in the law to prevent avoidance of tax. They would thereby be using their talents and experience to benefit society as a whole, rather than mainly big business and the wealthy.

20:58

[Lord Lawson of Blaby (Con)]

My Lords, this is a relatively brief but remarkably wide-ranging debate. The most important thing, however, in my judgment, is to pay tribute to my noble friend Lord MacGregor, because this is something of a valedictory occasion. He described himself as the retiring chairman of the Economic Affairs Committee of your Lordships’ House. While his manner is always attractively modest, I have never considered him to be particularly retiring, but he is certainly retired, and his loss will be greatly felt. I have worked with him one way or another for quite a long time. We began working together when we were both what I believe is now known as special advisers to the then Prime Minister, Sir Alec Douglas-Home, 50 years ago. Off and on we have worked together ever since. He was a brilliant assistant and help to me—and more than that—when he was Chief Secretary to the Treasury during my time as Chancellor of the Exchequer. I hope that I served him equally well as a member of the committee under his chairmanship. I certainly enjoyed it; he will be a very hard act to follow. Nobody could possibly better combine a grasp of practical economics with the art of chairmanship of a committee of a very diverse kind, none of whose members was particularly retiring.

My noble friend the Minister began by saying a little about the state of the economy and how it was in pretty good shape. I absolutely agree with him, and I have no wish to add much to that. Of course, not everything is perfect. I am sure that the noble Lord who will respond from the opposition Bench will point that out, but I shall pre-empt that by saying that I have a secret to tell him. In this world, nothing is ever perfect. But the fact is that the state of the economy in this country is not merely pretty good in the way that my noble friend described; it is good relatively. It is the best performing economy in the G7, comparing particularly well with the economies of the eurozone.

One other thing that my noble friend the Minister could have said but did not is that in sticking to his guns, my successor George Osborne—goodness knows how many there have been in between—has proved to be right when pretty well everybody else was wrong outside those who supported the Government in the first instance. The Opposition predicted that these policies would prove to be completely wrong and would doom the country to an ever deeper recession, but they have been proved completely wrong. So has the IMF, which reminds me of the 364 economists who wrote that letter to the Times in 1981, saying that if we pursued the policies that we were pursuing—very similar to the policies that the present Government have pursued—we would commit this country to a self-perpetuating downward spiral. From the moment they said it, the economy recovered and went on recovering. It was exactly the same with the IMF; when it eventually said, “We no longer have confidence in you and you must change your policies”, from that moment the recovery became unequivocal. Of course, some academic economists supported the Government, but the majority did not—particularly the clever-clever ones, like Professor Paul Krugman of the United States, who is always wrong about everything. It makes him a rather useful man to follow, because you know what to believe. He, too, said that if the policy was pursued any further the recession would never end.

So what do we need to do now that the Chancellor has been vindicated? What threats face the economy? I refer to the threats within our own control. There are always threats that are not in our control, because we are exposed to the world economy. If things go wrong in the eurozone, which they usually do, or in China or the United States, it is bound to have a considerable effect on us.

There are three things in our own control, which I should like to mention. The first is the danger of allowing interest rates to remain at this crisis level of 0.5%—that is the official rate—for too long. Linked with that is the equally artificial crisis measure of quantitative easing, or “underfunding”, as it was known in my day. As many in your Lordships’ House are aware, I have always favoured an independent central bank. I think it is vital that monetary policy should be its province. That does not mean that noble Lords cannot comment on it. I believe it is of the first importance that we move away from the artificially low level of interest rates, and the sooner the better. We should also begin to unwind quantitative easing and change underfunding to overfunding, to use the old-fashioned expression.

I wish the present Governor of the Bank of England well, as we all must. He is relatively new. He got himself into a jam in the first place with the fiasco of his forward guidance which he has had to abandon. He has still been talking about what is going to happen next—perhaps more than he should.

The extremely able Labour Member of Parliament, Pat McFadden, who sits on the House of Commons Treasury Committee, told the governor that he was behaving rather like an unreliable boyfriend, blowing hot and cold. This was rather too close to the mark for comfort. He has given the impression of floundering, which is very dangerous. He does not need to talk about the future level of interest rates. When there is a change, then he needs to explain why it has happened, but he did not need to talk in the way that he did. The Governor of the Bank of England should not appear to be floundering; he should convey authority. It is particularly important in the context of the financial markets, which are very sensitive to this sort of thing.

The second problem, which is to some extent within our control, is the level of bank lending. We still have a situation in which thoroughly sound SMEs have difficulty getting adequate borrowing from the banks on which they rely. Big companies do not rely on the banks; they have no problem in accessing the capital markets directly. Small and medium-sized enterprises are reliant on the banks and it is very difficult for even the soundest of small businesses to get adequate finance at a reasonable rate of interest.

More attention needs to be paid to the recommendations of the Parliamentary Commission on Banking Standards. A number are relevant to this, though it is too late for me to go into them. I had the honour of serving on that commission. We need to see all those recommendations in force, including particularly ones that the Government have accepted in principle. Some of them are implemented in the banking Act which my noble friend dealt with so well in this House. Others are not in that Act because the Government said that it was not necessary to legislate since the regulatory authorities already had the power. We want to see these things being done. We want the separation between high street, as it used to be called, and investment banking rigorously enforced. Almost every month some new scandal emerges in the banking sector. It is always on the investment banking side and it is detracting from the need for the high street banks to finance SMEs. That is their job and their function.

In this area of bad behaviour we need also to stress the importance of individual responsibility. This is very strongly pointed up in the various reports from the Parliamentary Commission on Banking Standards. It is no good just fining banks. In my experience, that does not have a big effect on banking behaviour. There is no such thing as a bank being responsible for bad behaviour; it is always individuals who are responsible. Individual responsibility needs to be nailed down. Okay, penalise the banks as well, but it is important that the individuals responsible are punished. If they say, as they have in the past, “We didn’t know about it”, that is no excuse. It is their job to know what is going on in their institutions.

The structure of remuneration needs to be addressed. It is fundamental and again has not yet been done by the banks. It is the job of the PRA to ensure it is. It is also the job of the PRA and the Bank of England to introduce the requirement for banks to have a second set of accounts, which I hope they will accept. IFRS is of dubious correctness for companies generally, but it is clearly inadequate for banks. What we recommend, the Government have accepted and it is now for the PRA and the Bank of England to implement is that there should be a second set of accounts that meets regulatory needs and purposes.

The third threat that faces us is a misguided energy policy. Business and industry in this country, and indeed households, are forced to pay quite excessive energy costs as a result of the energy policy we have in place. It is accepted that that is done in the name of combating climate change. However, even Dieter Helm, the leading energy economist in this country and who accepts fully the alarmist interpretation of climate change, which I believe to be mistaken, is a bitter critic of the energy policies we have in place. His latest writing on this, which I commend to the House, is called The Return of the CEGB, which states that we are going back to a complete étatist energy policy—in fact, a rather worse one than we had under the Labour Governments of the 1970s. He also points out that it will be touch and go this coming winter whether the capacity margin will be adequate, but by the following winter it is almost certain the lights will go out because the capacity margin will come to zero or below.

It is very important that there is a change in our energy policy in the short term, but also in the medium term. Government talks the right talk about developing our indigenous supplies of shale gas, which will be a great help to the British economy in the medium term—although obviously not in the short term—but it is just talk. The most recent report of the Economic Affairs Committee, which as I say is so brilliantly chaired by my noble friend Lord MacGregor, was on this very subject. We pointed out that the regulatory regime is in a mess in this country and inhibits the development of shale. That is not because it is too strict—we need a strict regulatory regime—but because it is too cumbersome, involves too many departments that do not co-ordinate and too many agencies. It takes far too long. We produced a unanimous report.

We have now had a reply from DECC, which is the most complacent reply I have ever seen from any government department, and that is saying something. It says that everything is all right and that none of our recommendations is necessary. The department seems not to be aware of the evidence, including the fact that even now not a single exploratory well has been drilled. We had evidence from Cuadrilla, the most prominent of the companies operating, that, even if there is no judicial review of planning, it takes three years from first preparing the environmental impact assessment to being able to drill. That is ludicrous compared with what has happened so successfully in the United States. The response completely ignores the evidence that we had from Chris Wright, the father of shale gas in the United States and a great Anglophile. He said that he would love to invest in this country but, on the present basis, there is no way that it would make sense for him to do that.

I say to the Minister that there is one easy thing that he could do straightaway. The present Government have Cabinet committees on a whole range of trivial matters—one would find it hard to believe—but there is no Cabinet committee on something as important as the extraction of our shale resources. Because of all the departments and agencies involved—the Environment Agency and lots of others—it is absolutely essential to have a Cabinet committee to bring everything together, and we recommended that such a committee should be chaired by the Chancellor of the Exchequer.

I have one final point to make on the report of the Economic Affairs Committee. In 2012—again, under the excellent chairmanship of my noble friend—we produced a report on the economics of development aid. Again, there was unanimous, all-party agreement that the antiquated 1970 aid target of 0.7% of GNP made no sense. Above all, this should never be made statutorily binding. It is palpably absurd to make any public expenditure statutorily binding, and there are no such pretensions with things such as national health spending. I do not think that the public would see any sense in that at all, and we made that absolutely clear.

We are now told that there is going to be a Private Member’s Bill—from the Liberal Democrats, I understand —starting in the other House but reaching us during this Parliament, to make the 0.7% target statutorily binding. If it ever reaches this House—it may not—I hope that we will examine it with exemplary thoroughness and not take too little time over a Bill which is clearly a major nonsense and for which, if it were to be passed, future generations would curse us.

21:18

[Lord Razzall (LD)]

My Lords, I am glad that the noble Lord, Lord Lawson, has just contradicted his statement in The House magazine that the Liberal Democrats have only two policies; apparently, he has just added a third.

Many people outside your Lordships’ House regard this House as being rather pickled in aspic and stuck in procedures that have applied for the past God knows how many centuries. However, since I came to this House in 1997, there have been two significant procedural alterations. First, as demonstrated by this debate, although we cannot amend it, we now debate the Finance Bill. I remember the pressure to do that. The noble Lord, Lord MacGregor, was very much part of that and I think that the noble Lord, Lord Saatchi, also used to press for that to happen. Secondly, since 2003, we have had a Finance Bill Sub-Committee, which examines selected topics of the Finance Bill. This year, as we are debating today, it examined the detailed measures affecting changes in tax law for partnerships.

As a practising lawyer for over 30 years, I am well aware of the significant role that professional partnerships have played, especially the lawyers and accountants, in the development of the financial services industry. In my professional lifetime, there have been two very significant events in this area. First, a lot of people forget that, until 1967, no partnership could contain more than 20 partners. Our Victorian forefathers took the view that if you wanted to have a business with more than that, the appropriate thing to do was to have a limited liability company. Those of us who have attempted to manage professional partnerships in later years will realise their wisdom because of the significant problems of managing a large professional organisation where the owners of the business are also the means of production. The problem for the law and accountancy firms was that they could not incorporate because their professional organisations did not allow them to have limited liability. It was not until the Companies Act 1967 that, under pressure from the big firms of lawyers and accounts, the limit of 20 partners was removed. That has resulted in the huge organisations that have subsequently been created in both those industries.

The second major change was the Limited Liability Partnerships Act 2000. The major driver for that was the desire for individual firms of accountants and lawyers to obtain a limited liability to protect themselves against large negligence claims. Nowadays, almost all major professional firms have become limited liability partnerships and the structures of those organisations are well established. It would be common ground that, where a limited liability partner is in reality a salaried employee, he or she should be treated as such for tax purposes. However, as the noble Lord’s committee has indicated, there has been significant pressure from the professions that a case law test should apply to the definition of the nature of partnership rather than a legislative one. As the noble Lord, and his report, indicated, there has been significant concern that the consultation set up by the department was inadequate because the proposals on which it was based were not the same as those set out in the Finance Bill. I strongly support the recommendation by the sub-committee to delay implementation of these proposals until 15 April, not only to make sure that the rules are correct but to give a longer opportunity for firms to make any structural changes needed to comply with them. For example, this would enable them to put in place adequate resources so that the capital requirement needed by partners could be met.

As this House now has the opportunity to discuss the Finance Bill, I, like the previous speaker, cannot miss the opportunity to make an overall comment on the last effective Finance Bill before the general election. The tax provisions in the Bill must be looked at in the context of the overall economic position and the policy to reduce the deficit and the public sector borrowing requirement. As the Institute for Fiscal Studies has pointed out, no Government raise taxes in the year before an election but, surprise, surprise, taxes tend to go up straight after one. As noble Lords will be aware, both coalition parties are committed to eliminate the budget deficit in 2017-18, although there is some political difference about to how to do it. The Tories seem to propose that it should be done primarily through cuts in expenditure. I think that the Lib Dem members of the coalition think that there should be a mix between expenditure cuts and tax increases. The problem, as the Institute for Fiscal Studies has certainly demonstrated, is that if all the savings were to come from departmental cuts in order to get back to a budget equilibrium in that year, the cuts would have to accelerate from 2.3% per annum to 3.7% per annum.

Whoever is in government after 2015, if the decision is maintained to protect the National Health Service, the schools budget and overseas aid, and if they are immune to cuts in real terms, it is estimated that other departments will have to deliver annual cuts of more than 20% per annum for the three years after the election. The Home Office, the Ministry of Justice, Defra and DBIS, let alone other departments, could not deliver the current level of services if they were compelled to make cuts on that scale. Whatever political party, or combination of political parties, forms the Government after the general election, it would be impossible to achieve that in practice.

What is likely to happen? It may be that growth in tax revenues as the economy picks up will, to some extent, come to the rescue of a future Chancellor, or it may be that a future Chancellor will contemplate a modest deficit if the debt burden is falling as a share of GDP and if the economy is continuing to grow. In any case, I am sure that all noble Lords will accept that if we are forced by then to accept a drastically smaller state, a proper debate will need to take place.

21:27

[Lord Wakeham (Con)]

My Lords, this has been an extremely wide-ranging debate. Perhaps the Minister might like to take some comfort if I tell him that I support the Finance Bill that he has brought before the House and that I would like to see it passed. That would be an encouragement to him. I add my congratulations to my noble friend who has just finished his time as chairman of the Economic Affairs Select Committee. In fact, not many of us have been chairman of that committee because when it was set up the noble Lord, Lord Peston, was chairman. He was extremely good and when his term of office came to an end we changed the rules so that he could do another session as chairman. He might even have done a third term. He certainly did it for a very long time and was extremely good, so when I followed him as chairman some years ago, it was a bit of a revelation to have someone without the deep knowledge that he has. Certainly, my noble friend Lord MacGregor has tackled a number of very important issues very well. I remember my time particularly because the committee produced, as my noble friend Lord Lawson will remember, the first serious report on the economics of climate change. It was a unanimous report. As he was a very prominent member of the committee, we had a job to educate one or two members of some of the finer points but we got it through.

The Government need credit for their improved consultation but our report indicates that it is still not good enough. They are still not as good as I would like to see them in their consultation. Certainly, when plans change, they do not consult about the new plans. We are very impressed with the people who give us evidence. But I sometimes wonder whether, in practice, some of them know what they are saying or whether they are taking from their own members what they tell them to say. The noble Lord wanted experts in tax to come and tell us how to collect more tax, but I want these advisers to be very practical about telling us the unintended consequences of what the Government are doing. That is what I think these advisers are best at, or ought to be best at.

While the Government have made progress in all sorts of areas, the truth of the matter is that virtually every one of our taxes in this country will need some very serious looking at over the next few years—not necessarily to reduce the tax rates; that is not what concerns me. Virtually every tax has anomalies and difficulties. For example, with income tax, if you earn between £100,000 and £120,000 a year, your effective rate of tax is 60%, because as the personal allowances fall and you go up to the 45% rate, you end up paying 60% on your income. That is complete nonsense and it should not be so. The Government know this perfectly well and they should change it.

I will not go far into corporation tax because my noble friend Lord Lawson made a scathing attack on its inadequacies. However, if the Government think that they will get international agreement to deal with the problems of Starbucks and other such companies by negotiating on corporation tax in a wider world, they should forget it; that is not going to be the way. Corporation tax has passed its sell-by date as far as international business is concerned. We have to find some other way.

In the past I have talked about capital gains tax. Somebody in the Labour Party made a speech the other day to say that a rate of capital gains tax for long-term holders of investments should be considered. If that is not recognition that a substantial part of the capital gains tax that people pay is a tax on inflation, I do not know what is. Capital gains tax is very substantially —not completely, of course—a tax on inflation, and sooner or later we will have to face that.

I have had a go before in the House about stamp duty. It is fundamentally a bad tax. It is a tax on change. What we need in the country and in the world is for things to change and to improve. Of course, the Inland Revenue loves stamp duty because it is an easy tax to collect, but it is fundamentally a bad tax. The economic effects are being felt now. Things that would happen are not happening because stamp duty is too high. Lastly, I turn to inheritance tax. The Prime Minister has said in a speech that he thinks it needs to be looked at. Right across the board, you can see things that need to be done to bring our tax system up to proper modern standards.

The Minister quoted from a report about the greatly improved way in which tax policy is being achieved, but the formal review that was promised has not actually happened. I hope that it will happen. I am not saying that there are not some good things in what has been done, but I am not sure that it is as good as it might be. If the Government come to do their formal review, I would invite the people to look at one particular paragraph in our report. It is a quotation from the senior tax partner in a firm that I used to work for. I suspect that I left the firm long before he was born, so I do not know him, but he is very good. He is referring to the division of expertise between the Treasury and HMRC and whether that is right—whether the Treasury has sufficient experts. He says,

“if HMRC’s role was to ‘own’ the policies, ensuring that any proposals are rigorously evaluated by both the policy lead and those with practical experience of the operation of the tax system, then a number of the concerns of detail might be identified and addressed up front. HM Treasury would then have a clearer ‘scrutiny’ role, which would provide the ‘challenge function’ to the policies being developed”.

That is the way that policy arrangements between the Treasury and HMRC should develop rather than as it is at the moment, where there seems to be a division of expertise between the two. I am not sure it is as good as it might be. But I finish by saying that I am in favour of the Bill that the Minister has brought before the House.

21:35

[Lord Flight (Con)]

My Lords, I first make the rather obvious point that the relative brevity of this important debate and the thinness of the Chamber reflect the lack of power of this House to amend Finance Bills. It strikes me that now that this House is essentially an appointed and not a hereditary House, that is out of date. Much though I pay credit to the noble Lord, Lord MacGregor, and his committee, it is time for the issue of this House being able properly to consider financial legislation in the same way as the other place to be looked at.

I pay my own credit to the term of office of the noble Lord, Lord MacGregor, and the excellent work that his committee has done. His committee is right in its recommendations with regard to delaying the new measures for LLPs. I agreed with everything that my noble friend Lord Lawson and the noble Lord, Lord Wakeham, had to say. With regard to the issue of the personal conduct of bankers, I was recently rereading Professor Plumb’s biography of Walpole and noted that at the time of the South Sea bubble all those involved, including the Prime Minister of the day, were promptly clapped up in the Tower and had all their estates removed. They were let out in due course, but our forebears seemed rather more effective at disciplining people who had acted improperly than we are today.

There are obviously good things in the Finance Bill, and it has been a popular Bill. In particular, I like the improved export credit finance arrangements. Many of our small and medium-sized companies have found it increasingly difficult to get export finance. I also like the transferable tax allowance and the tax allowance for fracking development. But the most radical measures have been the anti-tax avoidance measures and I want to say a little about those.

First, I find it rather sad that even in this House the language of this territory has become rather muddled and, dare I say, misleading. Let us be clear: you start off with evasion, which is criminal. That is simply breaking the law and not paying the tax that you should pay. Then there is avoidance. By definition, avoidance is within the law. If it were not, it would be evasion and without the law. But within avoidance there is a hierarchy. There are all sorts of government tax incentives such as ISAs, EIS, pension saving and the very tax incentives that are in this Finance Bill, which everyone would say were fine. They are actually there to avoid tax. The other side of the coin is that they constitute tax avoidance. I am sure that there are very few Members of this House who have not invested in ISAs or benefited from the tax incentives of pension savings. Everyone is a tax avoider in that sense.

Then we have what have been essentially government schemes, but which have been poorly drafted and have then been exploited and abused where fundamentally the issue is that the original law needs tightening up. Then, at the bottom of the heap, are what I view as unacceptable schemes—fabrications. Tax is wholly justified on those. It has always been my view that I knew one when I saw one and always felt that it was unwise for anyone to consider using one of those.

However, the measures in this Bill do not apply just to the latter—as I think the noble Lord, Lord Deighton, implied. They also apply to statutory government schemes brought in by the previous Government, where the law is somewhat unclear—in part because they were legislated in a hurry—and where there are disagreements between lawyers and HMRC, often as to what is within and without the measures that were enacted.

There is a better solution—and here I declare an interest as chair of the EIS Association. There were criticisms that EIS was at one stage subject to abuse, and the industry sat down with HMRC and went through what HMRC thought and what the industry thought. It ended up with a win-win solution whereby in future all EIS issues are subject to pre-clearance. That means that those raising the money, and the companies, know where they stand, the Revenue knows where it stands, and the whole issue is satisfactorily cleansed of criticism. This Finance Bill introduces a retrospective requirement, where the Revenue considers that a scheme has been abused, for the full amount of tax being saved to be deposited. This applies to three areas of government statutory incentives in particular: to film and sale schemes, known as Sections 42 and 48; to enterprise zones; and, where I think there is most injustice, to the Business Premises Renovation Allowance —BPRA—scheme. I might add that I have no investment in any of these areas and no direct first-hand knowledge, but a lot of perfectly responsible people have brought concerns to me, and they have been raised with the Treasury.

I start by saying that if the Treasury and HMRC considered that some schemes did not meet the statutory requirements, they should probably have disallowed them at the outset. Instead, for years things have been waiting to be sorted out and have not been addressed one way or the other.

My next point is that many people registered under the so-called DOTAS—Disclosure of Tax Avoidance Scheme—rules before there was any obligation to do so. They registered with an intention to be transparent. Ironically, it now ends up with those registering being punished and those not registering not being punished. It is a very strange anomaly in the approach that has been taken. What is happening is that HMRC is demanding money when they cannot necessarily show that the relevant investors have done something wrong.

The proposed legislation which authorises HMRC to remove funds from individuals’ bank accounts goes even further towards a somewhat overbearing state. It is such a complicated and difficult area that very few people actually know what is in the Finance Bill in this regard. However, the Treasury Select Committee and the Chartered Institute of Taxation have complained about unprecedented HMRC executive powers of decision, and of HMRC being put in the position of judge and jury, and they have complained that it creates a precedent in the UK tax system whereby the tax authorities are given power to demand payment without any right of appeal. The Treasury Select Committee also objected to the retrospective nature of the requirement for taxpayers to pay 100% up front within 90 days—potentially applying, I think, to some 65,000 cases. This puts fiscal policy on a slippery slope towards arbitrary taxation. Many individuals have been good-faith, legitimate BPRA investors over several years with no complaints from HMRC. They now find themselves on the wrong side, with notices to pay.

Moreover, the current position seems immediately to be shambolic, in that although HMRC has published an extensive list of all those to whom those arrangements are to apply, at the same time it appears to be saying—if anyone can get through to it on the telephone—that, no, they will not apply until negotiations have been completed.

There is an important issue, which is that there may be some situations, particularly with the BPRA, where most of the schemes are completely in compliance with the law but some are deemed not to be by HMRC, so a modest and partial amount of tax may have to be recovered. I am advised—I do not know whether it is true—that HMRC did not take full external legal advice on the measures before the Finance Bill was produced and that there is a significant possibility of judicial reviews where the courts will find against HMRC.

Finally, the accelerated payments rules are contrary to two fundamental legal principles. First, I believe that in this country we are always innocent until proven guilty; whereas what is happening here is that the standard basis of self-assessment is being overridden and taxpayers are being treated as guilty until they can prove their innocence. Secondly, there is no proper appeal mechanism. As I have already said, HMRC is judge and jury in these matters. Extraordinarily to my mind, two of the schemes are—I repeat—government, statutory schemes, state-aid approved and brought in under the previous Government.

The Treasury and HMRC have been unwilling to listen to the concerns of many people. I exhort the Treasury and HMRC to be extremely careful how they use the new powers; to endeavour to use them justly; and that HMRC itself is wholly transparent in the use of those powers.

21:46

[Lord Davies of Oldham (Lab)]

My Lords, this has been a wide-ranging debate. I wish the noble Lord, Lord Flight, well in his campaign to wrest control of supply from the other place; he has to reverse more than a century of history and quite significant political obstacles before he achieves that objective.

We have had very interesting contributions. Of course, I particularly enjoyed that from the noble Lord, Lord Lawson. I appreciated him as a historian when he indicated to us that spads going on to become prominent parliamentarians is by no means a new phenomenon but went back more than half a century. As I shall show in a moment, he is also pretty good as a forecaster, because I shall be critical about the Budget. He is right on both counts.

First, I pay tribute to the noble Lord, Lord MacGregor, who introduced his report on limited liability companies and has played such a significant part in enriching our debates on Finance Bills through the reports of his committee. This was one of the more challenging reports in many ways, because it asked the Government to delay what they had clearly set their mind to do and indicated why consultation ought to be respected more clearly than appeared to be the case by both the Treasury and HMRC. My noble friend Lord Joffe put a particular perspective on that, suggesting that the committee itself could enhance its role in relationship to future Finance Bills by ensuring that it consulted in greater depth and produced reports that established contact with the smaller organisations in the country—even the very smallest. After all, this report was significantly about limited liability partnerships and SMEs. Of course, they are small. I gather that the danger for the committee was that it listened to representative organisations and a little less to those who are active on the ground. I am sure that my noble friend Lord Joffe has a significant point there. However, we all very much respect the work of the noble Lord, Lord MacGregor, and thank him for his contributions over the years. We know that he will still contribute significantly to our deliberations, even when he has retired from the chairmanship.

The noble Lord, Lord Wakeham, also introduced an interesting dimension to the debate. I identified three quite significant taxes which he wanted the Revenue to wipe out in terms of receipts. We are often accused on this side of the House of spending money too easily—quite wrongly, of course—but the noble Lord is in great danger of reducing the receipts of government in a dramatic way. Unless he comes out with some pretty clear proposals for where other tax revenues are going to emerge, I am quite sure that the Government will be giving fairly limited consideration to that at present.

The noble Lord, Lord Razzall, indicated that there will be choices before any Government after 2015. We know those choices to be harsh and challenging but he indicated that some amelioration might occur if the economy grew. My goodness: that is partly to recognise the Opposition’s case that the economy has not grown fast enough over these past few years, hence the level of privation. It is also not likely to grow very fast over the next few years, with the Government hell bent on following the principles which they have up until now.

I want to demonstrate that the Bill does of course show a long overdue growth in our somewhat fragile economy. There clearly is growth in the economy but in 2010, the Chancellor forecast that over this period, the economy would have grown by 9.2%. In fact it has grown by exactly half that, or 4.6%. Is it therefore any wonder that the Chancellor is short of some resources? I might add that if it is suggested that the economy now is doing well compared with other economies, first, it has risen from a very low base and, secondly, the United States and Germany have still both had growth rates over this period which have been far higher than those of the United Kingdom. There is not much to boast about there. It is also the case that the Chancellor is borrowing over this period £190 billion more than was planned and, as the Minister made quite explicit, the Chancellor is going to clear the deficit in 2018 when the proposition in 2010 was that it would be cleared by five years of coalition government. It is a pretty tawdry success that the Government are presenting to the House in this Bill.

Of course, we are all in this together, as has been emphasised on all sides. It is true that the top 1%, in order to be along with the rest and in it together, needed a tax cut which has been worth £3 billion while 7 million people who are at work are in poverty. That is the nature of it. I know that the Government constantly emphasise the employment figures but we are going to examine them more carefully. The nation knows the quality of the jobs that are being created. There are people who define themselves as self-employed, move out of the unemployment category and are living hand to mouth. That is why there is so much concern in the country about the constant use of food banks, and why on all sides there are indications that pressure upon ordinary people is very intense.

What is at the root of this? Quite clearly, it is that wages have continued to fall behind prices, and the Government know this to be so. Even this month, that has been confirmed for the most recent period. So people’s living standards have fallen over these five years. It may be that the Government think that because we now have a recovery—the slowest recovery for 100 years—people’s minds will wipe out the level of deprivation over these past years. They may not be right. If ordinary families are £974 worse off through tax and benefit changes than they were in 2010, these problems are deep.

Is the coalition completely unaware that in the past four years a massive stimulus has been given to the continuing creation of the unfair society, where wages stagnate and the resources devoted to the highest rewarded sections of our society continue to escalate? I know that from time to time it hits the headlines that some shareholders carry out a minor revolt against their chief executive but what continually goes on, day in and day out, is the widening of differentials between the pay of the super-rich—I am including people who work; I mean the chief executives of companies—and the average pay in their companies.

This growing inequality brings, as so much research now indicates, a clear problem of dissatisfaction in society, a sense of unfairness that may express itself in passive disillusion but may not be reflected at the ballot box in quite that way. The Government have opted for a low-wage, low-skill economy. That is what we have, with all these people working harder and longer for less, yet the Government pretend that they can congratulate themselves on the employment statistics that they represent. Surely the clearest indication of the Government’s limited success in this area is the decline in productivity and the problem of Britain being able to earn its way. Our balance of payments continually shows an increased deficit.

We are clear that this Budget and Finance Bill should have been based on much fairer principles than have been reflected in them. Hard-pressed families need help with their energy bills, which we have all seen rise rapidly and unfairly. Indeed, although the noble Lord, Lord Lawson, waxed strong on certain issues regarding energy, I do not think that he commented on whether he thought the public had been exploited by private monopolies in the way in which energy bills have gone up in recent years.

We will of course get rid of the dreadful bedroom tax. I am not sure that Members of this House are at all aware of the cost to families of very limited resources who are in real need and the misery that they suffer when they are told that they must give up the one room that they hold for a visitor or another member of the family, to give them some respite, particularly when it is concerned with the disabled, and the bedroom tax forces them into penury or having to move. We think that the ordinary earner also needs a fairer basic rate of taxation, and will attend to that.

Another area where we think there should have been much more emphasis in these past four years is housing stimulus. I understand the Minister’s role with regard to infrastructure and we applaud many of the initiatives taken in that area, but where is the support for the construction industry and the building of houses? Surely that has to be recognised as a priority, otherwise we are faced with a situation where the Government provide a token measure to help people to buy while house price inflation is rampant.

We believe that this Budget is a missed opportunity. The Government could have tried to get the people on their side, and they will pay the cost for not having done so.

21:59

[Lord Deighton]

My Lords, the phrase wide-ranging debate is often used in this House, but we can justifiably describe this debate as one of the widest-ranging. It ranged from the broadest macroeconomic issues and challenges to society to the very specific and detailed implications of the taxation of limited liability partnerships. I learnt a lot and I hope that noble Lords did too. Like many of the speakers, I pay tribute to my noble friend Lord MacGregor. I could not do it more eloquently than they have done, or with the same historical experience. It is clear that his contribution is enormously valued. I also thank the other members of the Economic Affairs Sub-Committee.

I shall try to address some of the questions, and given their breadth and technical depth, I am sure that noble Lords will grant me some poetic licence. I shall start with the noble Lord, Lord Davies, who summarised very well many of the contributions, so I shall not re-summarise them in exactly the same way as he did. As to our competing visions for an economic strategy, I tried very hard to determine the alternative economic strategy that was being offered. As I understood it, the objection to our economic strategy was that the economy has not grown quite fast enough. I do not think that that is an adequate basis for winning the hearts and minds of the British electorate in attempting to get back the keys to drive this particular car. I think that we also heard that one of the explanations for the strength of the recovery was the very low base from which we started. We all know why we had such a low base; I do not really need to revisit that. The work that this Government have done to stabilise the public finances and get the situation under control, so that we can focus on the key drivers of economic growth, is our major accomplishment. My noble friend Lord Lawson reminded me that I should have congratulated my boss the Chancellor of the Exchequer on sticking to his guns. I am not sure how many people would have done the same, given the extreme pressure of those early years of government when the depth of the recession really hit home.

I also have a very different view of the fairness behind this Budget and Finance Bill. The basis of the Bill is very clear. We are doing everything that we can to make this an extraordinarily attractive environment for businesses to grow, to create jobs and to improve their productivity—the very things that create value and drive the economy forward. The concept which I think the noble Lord opposite is not addressing is how you get this economy going. The Government are creating an environment in which businesses are growing and new businesses are starting up. Businesses from around the world want to come here. I have a long queue of investors outside my office every day from all over the world who want to come to this country because they think that it is the best place in the world to invest their capital. That is a result of the environment that this Government are creating.

The noble Lord focused hugely on fairness. This Finance Bill is all about fairness. There is a huge focus on making sure that people pay their taxes, and that focus is inevitably on people right at the top of the income levels. The core income tax measure is the progressive increase of the personal allowance, and there is no fairer way to benefit people at the bottom of the income chain. So what is driving this Budget could not be more focused on those combined goals of making sure that things are done fairly, but also of making sure that we have some growth, so that we have some real proceeds from that growth to distribute across the population.

I take on board some of the suggestions about things that need to be looked at and done better. I certainly agree that responsibility around executive pay is a big issue, and my personal view is that boards need to do their job as effectively as possible. It is certainly right to say that improving productivity will be at the heart of driving forward improvements in real disposable household income, which is what we are all looking for. The OBR tells us that, given what we have done with inflation and growth, we will see those lines cross this year. It has been a long hard path, but we are getting there. I also agree that a compelling strategy for improving the supply of homes is vital for this country. So although I disagree on many of the core approaches, there are two or three things in there that any new Government should redouble their efforts to attend to.

My noble friend Lord MacGregor asked absolutely the right question about the work of this House on the Finance Bill: does it add value? All I can say is that, having spent the weekend reading the report, and having listened to this debate, I am thinking a lot harder about the real issues and how we can do our job more effectively—whether that is about how the Treasury and HMRC work together, how we train our people, how we consult, or, in particular, how focused we are on improving tax simplification and administration. The quality of the work that my noble friend has overseen makes it easy to answer yes to his question.

I am in a rather strange hypothetical position, because normally when we are discussing such issues we are having a debate after which we could amend things, but I am now defending decisions that have already been taken, so no change will result from this debate. The fundamental difference between us is whether the consultation produced such different results that we needed more time to implement the system. When I looked into this with my officials, we were not in any way persuaded that spending another 12 months working through it would have resulted in a different outcome, and we were extremely keen to ensure that we could put this legislation into practice so that we could collect the money that needed to be paid. Indeed, as I have said before, many of the partnerships that had to change as a result of the measure had already made those changes. It may have been a pragmatic decision, but on balance we feel that we were justified in getting on with this.

The noble Lord, Lord Razzall, made the point about following case law rather than statutory provisions. Again, we felt that in order to administer the rules effectively, we needed the certainty that clear tests apply. The noble Lord, Lord Joffe, made some interesting observations about how much we should invest in HMRC in order to increase the yield. Since 2010 we have invested about another £1 billion in numbers of people and systems to help us collect revenue, so the management approach of evaluating the investment we need to make to enhance the yield is indeed a way in which we think about that challenge.

It is always fascinating to learn about the current perspective of my noble friend Lord Lawson on the economy. I am interested in those things that we can control, and therefore can do something about, but I shall not comment on monetary policy. It is dangerous for a Treasury Minister to do that, given the independence of the Bank of England. It is always good to revisit our discussion on banking reform. I agree that following through those things that the Parliamentary Commission on Banking Standards recommended is absolutely right. In particular, getting SME lending going is a key focus of this Government. On energy policy, to bring my own experience to bear, it is hard to think of another area where I personally spend more time in trying to think things through and make things work which have real economy implications than energy policy. I will certainly take on board with respect to shale and getting that whole industry moving whether the way the Government are looking at that is sufficiently focused and driven. At the moment, it is managed through the growth implementation committee, which the Chancellor chairs, but it is of course one of a wide number of topics. I have discussed with industry participants how we should follow through on that.

The noble Lord, Lord Razzall, talked about the challenges of keeping our focus on managing the deficit down. I acknowledge the simple point that our work is by no means done. We are still confronted by the same issues around priorities, and the same questions around having the right debate to ensure that we understand the implications of the choices that we will continue to be forced to make.

I agree with a specific point made by my noble friend Lord Wakeham and a number of noble Lords. The best role for advisers is to help us to understand and identify the unintended consequences of the changes and proposals we put in place. That is an extraordinarily valuable role. On rationalising, modernising and simplifying our existing portfolio of taxes, obviously to get the balance right between continuing to meet our tax yield objectives and making them operate more effectively is always something that has to be worked through. Personally, I am a big advocate of the simplest possible portfolio of taxation so that we do not have all the kinds of issues we talked about today—I will move on to address the comments of my noble friend Lord Flight later—which are in the main created by complexity and the perverse incentives you end up with when you fiddle around with a tax regime over many years.

My noble friend Lord Wakeham also referred to the formal review between HMT and HMRC that the committee recommended. I made those comments in my opening remarks, but it is kept continually under review. The independent Tax Professionals Forum also scrutinised the process. The Office of Tax Simplification looked at that and commented positively on how the two worked together. Therefore I do not by any means want to suggest complacency, but that is an ongoing process. I accept absolutely that everything we do could be done better. There is no situation in life where consultation cannot ever be improved. It is like communication—you can never have enough of it. However, we are well seized of the importance of that.

My noble friend Lord Flight, as ever, took on the difficult task of making the case for those who have participated in schemes to manage their tax payments. I admire him for that. He is certainly right that we need to be careful about the language and that there are tiers of how we should regard just how heinous the abuse or avoidance is. I could not agree more that we do not want to be in a position where we are creating retrospective acts, where we are left with anomalies which make it very hard for people to work out what to do. As regards taking money out of people’s bank accounts, if you look at the process that will be gone through by HMRC before that is done—I will not read out the details—we should take some comfort from that.

My final point on tax avoidance is my own personal view. I have always been a strong advocate in the Chancellor’s ear to pursue these changes quite aggressively. It is important that everyone who could potentially avail themselves of these schemes knows that they are being treated fairly. If you were in a position personally to be able to take advantage of them, you would not want to see other people in an equivalent position, who are prepared to be more aggressive, just paying less tax. There is a real fairness issue here. I think we have got the slant of what we are doing right—a whole regime of competitive taxes where we are rigorous in expecting people to adhere to them and there is no wriggle room for people with a more aggressive frame of mind to play the system. I like the way we are heading, though I know it creates some challenges.

In conclusion, I think we have taken some difficult decisions and resolute action to tackle the enormous debts we inherited. We are all agreed that the job is not done. The whole point of this Bill is to put us back on the right path. We are supporting enterprise, helping families and ensuring everybody pays their fair share of tax. I commend the Bill to the House. I beg to move.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time, and passed.

Draft Finance Bill (EAC Report)

Wednesday 16th July 2014 Lords Chamber

Motion to Take Note

22:16

Moved by

[Lord MacGregor of Pulham Market]

That this House takes note of the Report of the Economic Affairs Committee on The Draft Finance Bill 2014 (2nd Report, Session 2013–14, HL Paper 146).

Motion agreed.

House adjourned at 10.16 pm.