House of Commons

Tuesday 16th December 2014 Commons Chamber

Tuesday 16 December 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 16th December 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 16th December 2014 Commons Chamber

The Secretary of State was asked—

[Sir Oliver Heald (North East Hertfordshire) (Con)]

1. What steps Her Majesty’s Courts and Tribunals Service is taking to ensure that urgent cases to remove trespassers from land are dealt with as quickly as possible.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

HMCTS treats such applications with the utmost urgency. Hearing notices are served by hand and hearings before a judge are listed urgently, normally immediately after the two days’ notice period. Warrants are enforced by bailiffs as a matter of priority.

[Sir Oliver Heald]

I thank my hon. Friend for helping me to resolve an urgent constituency case involving a mass trespass in Letchworth, and for doing so speedily. Is it his Department’s policy, and are the courts aware, that it is vital that these cases are dealt with speedily in order to avoid the risk of nuisance to local residents, as happened in Letchworth?

[Mr Vara]

I thank my hon. and learned Friend for his kind comments. It was a pleasure to be able to help out in his constituency matter. He is right: there are existing processes that enable such cases to be dealt with and I am keen that they are dealt with speedily. I will certainly make sure that Her Majesty’s Courts and Tribunals Service is made well aware of that principle.

[Maria Miller (Basingstoke) (Con)]

I would like to applaud the swift work of Basingstoke and Deane borough council in stopping unauthorised activity this year at Dixon road in my constituency, with the Crown Prosecution Service successfully prosecuting last week those who felled up to 800 trees on that site. Does the Minister agree that tougher fines might also help to deter this sort of criminal activity?

[Mr Vara]

I join my right hon. Friend in congratulating her council. We have a lot of measures to deal with trespassers. On increasing fines, we are always on the lookout for ways of improving the law and I will take that on board.

[Mr Andrew Turner (Isle of Wight) (Con)]

2. What proportion of immigration and asylum appeals were made on the grounds of alleged breaches of the Human Rights Act 1998 in the last five years.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

In 2009-10, 10% of recorded appeals, lodged from inside the UK, raised human rights grounds; in 2010-11 the proportion was 28%; in the last three years the proportion has been 34%. Information is not available for appeals lodged from outside of the UK.

[Mr Turner]

Does my hon. Friend agree that incorporating the Human Rights Act into British legislation by the Labour party is rightly seen by the public as a disaster? It should be replaced with a Bill of Rights as soon as possible.

[Mr Vara]

My hon. Friend’s comments are timely given that next year we will commemorate the 800th anniversary of the sealing of Magna Carta. The House will be aware that the Government agreed in the coalition agreement that no major changes would be made to the human rights framework in this Parliament, but as he rightly says, the Conservatives believe that we need major reform to the way in which human rights operate in this country. We believe that we need to curtail the ability of the European Court of Human Rights to tell our courts what to do. We have an excellent record in this area, of which we should be proud, but Conservatives believe that a new British Bill of Rights and responsibilities would remain faithful to those basic principles of human rights while restoring much-needed common sense to their application. This is a debate that we will have over the next few months and I look forward to debating it with the Opposition, when they are prepared to listen, as well as with the Lib Dems and the British public.

[Mr Speaker]

I think that the Minister’s initial essay, quite a lengthy one, has been completed.

[Jeremy Corbyn (Islington North) (Lab)]

It is obvious that Magna Carta in the 13th century was a great step forward and I am glad the Minister recognises that. Will he also recognise that the European convention on human rights and the universal declaration of human rights were massive steps forward, not just for this country but for humankind? Does he not recognise that the narrative of trying to leave the European convention on human rights and the Court diminishes our human rights, the human rights of everyone in this country and the human rights of people across the continent? Will he please rethink this narrative and be slightly more sensible about the universal need for human rights?

[Mr Vara]

The hon. Gentleman talks about being sensible. He will be aware that it was only very recently that the convention was amended by the Brighton declaration, which was welcomed by all the countries concerned and made sure that nation states had a greater say in their own cases. That has to be good because it means that Strasbourg can deal with the urgent cases that should be dealt with there rather than having a backlog—there is a huge queue—because nation states cannot deal with a lot of the cases that should be dealt with domestically.

[Charlie Elphicke (Dover) (Con)]

May I tell the Minister that my constituents in Dover and Deal feel that the level of immigration and asylum appeals that are being made undermines our border security? They want to see human rights reform to ensure that our borders are safer and more secure.

[Mr Vara]

As I said, that is a debate that we shall have very forcefully with the British people and the other parties in the months ahead.

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

In relation to general human rights issues, does the Minister agree with the opinion of his right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) that non-compliance with the European convention on human rights calls into question the devolution settlements for Wales, Scotland and Northern Ireland?

[Mr Vara]

My right hon. and learned Friend is a very distinguished Member, and he can speak for himself, so I do not need to comment.

[Karl MᶜCartney (Lincoln) (Con)]

3. What recent steps he has taken to prevent fraudulent whiplash claims.

[Michael Fabricant (Lichfield) (Con)]

9. What recent steps he has taken to prevent fraudulent whiplash claims; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

The Government are taking forward a whiplash reform programme that will deter unnecessary, exaggerated or speculative claims. Reforms to control the costs of claims were implemented on 1 October, and on 2 December we announced further plans to have independence and quality safeguards in the system for obtaining expert evidence.

[Karl MᶜCartney]

What evidence does the Minister have to demonstrate that his measures have been effective in cracking down on fraudulent whiplash claims, as it would seem that, as a nation, we are happy to allow both the profits of insurance companies and our reputation for having the weakest necks in the world to go unchallenged?

[Mr Vara]

This Government have made and continue to make major changes to deter fraudsters and reduce the number and cost of whiplash claims. We have already seen an impact from these reforms and industry data show that they have contributed to a 14% reduction in premiums since February 2012.

[Michael Fabricant]

Some years ago, I was shunted up my rear end—by a car on the M1, Mr Speaker—and I was then contacted by a number of companies that all said, “Surely you are suffering from whiplash. You should be making a claim.” Does the Minister agree that such actions are reprehensible?

[Mr Vara]

I very much hope that there are no long-lasting effects from the experience my hon. Friend had. The Government take insurance fraud very seriously and have recently set up a taskforce to tackle this important issue and drive down premiums. The taskforce will consider insurance fraud across the board, and will aim to publish an interim report by March 2015 with a final report issued by the end of 2015.

[Mr Speaker]

I trust that the experience was even more unpleasant for the hon. Member for Lichfield (Michael Fabricant) than it was for the car.

[Andy McDonald (Middlesbrough) (Lab)]

Fraudulent whiplash claims are criminal activity, plain and simple, and everybody in the House would condemn them. Will the Minister also condemn those insurance companies that created third-party capture, massively contributing to the number of these claims in the first instance? While he is at it, does he have any evidence to suggest that medical practitioners are failing their obligations under civil procedure rules—CPR—35?

[Mr Vara]

For too long, honest drivers have been bearing the cost and, with that, higher insurance premiums because of the whole issue of whiplash. Government reforms have been robust. We have set up a system whereby we hope to deter unnecessary or speculative claims and ensure that those who are genuinely injured can claim. We have clamped down hard on the insurance companies. We have been working with them, along with the medical profession and the lawyers, to try to make the system a lot better. Medical reports from now on will cost £180 and lawyers will carry out previous claims checks on potential claimants in order to combat fraudulent claims. That will, of course, impact on the insurance companies.

[Richard Graham (Gloucester) (Con)]

4. What progress he has made on the disposal of former prisons; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Justice (Andrew Selous)]

Canterbury prison was sold earlier this year. We have also exchanged contracts on Shrewsbury prison, and we are finalising commercial negotiations on Bullwood Hall, Shepton Mallet, Dorchester, Kingston and Gloucester prisons. When we dispose of surplus property assets, we will always seek best value for the taxpayer.

[Richard Graham]

It is good to see that progress is inching forward as the former HM prison Gloucester is key to the regeneration of the city centre. Will my hon. Friend confirm, first, that the agreement will include provisions making the buyer subject to the broader aspirations of our master plan for Blackfriars, which will be published in January; and, secondly, that there is clear intent on both sides to finalise everything before the end of the financial year?

[Andrew Selous]

My hon. Friend is a great champion of Gloucester. Such a clause would be problematic to a bidder, given that master plans can change, but a purchaser seeking to develop the site inappropriately would not obtain planning consent from the local planning authority. We hope to give my hon. Friend and Gloucester an early Christmas present by exchanging contracts before Christmas if possible, with completion proposed for April 2015.

[Ian Lavery (Wansbeck) (Lab)]

Will the Minister tell us how many prisons have been closed since May 2010, how many have been disposed of, and how much cash has been generated in receipts?

[Andrew Selous]

We have disposed of 14 prisons, and I can tell the hon. Gentleman that when we disposed of Ashwell, Latchmere House and Canterbury prisons recently, we raised nearly £31 million. In general, we have a “new for old” policy. We are closing down old and inefficient prisons that are expensive to run, and creating new prisons that are better for prisoners and prison officers.

[Sadiq Khan (Tooting) (Lab)]

Since May 2010, 18 prisons have closed—some of which, as the Minister accepts, remain unsold, at substantial cost to the taxpayer—and one third of prison officers’ jobs have been cut. That has led to what the chief inspector of prisons has described as a “political and policy failure” resulting in increased overcrowding, violence and suicides. The highly regarded chief inspector was doing his job of telling the truth about the Government’s prison crisis, but he was effectively sacked by the Justice Secretary.

If we are to rehabilitate offenders effectively, we need prisons that work and chief inspectors who are able to do their jobs properly, without fear or favour. What does the Minister think the chief inspector meant by “political and policy failure”, and will he confirm that non-sycophants can apply for the vacancy created by his departure?

[Andrew Selous]

I have a very good relationship with the chief inspector, whom I meet regularly.

Let me tell the right hon. Gentleman what a real prison crisis looks like. A real prison crisis happens when 80,000 prisoners are let out early—many of whom, including terrorists, go on to commit further offences—and when it is necessary to spend £75 million on locking up prisoners in police cells.

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

5. What progress he has made on expanding the scope of the Freedom of Information Act 2000 to include private companies providing public services.

[The Minister of State, Ministry of Justice (Simon Hughes)]

The coalition Government are committed to increasing the accountability of private companies that deliver public services, including through freedom of information. As the Justice Committee recommended during its post-legislative scrutiny of the Freedom of Information Act, the best way in which to achieve that is to include transparency provisions in contracts. I am working to ensure that a revised code of practice and revised guidance are in place by the end of the current Parliament in March.

[Charlotte Leslie]

Transparency is at the core of the Government’s agenda, especially in the context of health. May I urge them to act more quickly, so that commercial confidentiality can no longer be used as a blanket term to obscure information to which the public should be entitled, and which would be available in the case of an equivalent public provider?

[Simon Hughes]

I am at one with my hon. Friend. Contracts between the Government, Government agencies or local councils and the private sector for the delivery of services on behalf of the public ought to meet at least the same standard of transparency as the Freedom of Information Act applies to contracts with public sector organisations. That is what the guidance and the new rules will say. Companies should do better than that if they can, but the public are certainly entitled to a similar amount of information. It is 10 years since we introduced the Act. We have extended it in this Parliament, and will extend it further before the end of the Parliament.

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

I agree with what the Minister has said about transparency, but should not the same level of transparency apply to lobbying companies which represent wealthy corporate clients, and which are trying to procure public sector contracts on behalf of those clients?

[Simon Hughes]

The rules about lobbying do not fall into the same category. They are dealt with by legislation, and the hon. Gentleman has been present for debates on it. We have legislated in relation to lobbying companies; the question relates to contracts for the provision of public services, and the need—about which I hope the hon. Gentleman and I agree—to ensure that the public know exactly what is going on. As a Liberal Democrat, I hope that we can extend the rules to other public companies and to private companies that are effectively public sector monopolies, such as the water companies, which are not currently covered by freedom of information.

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

The Government have never dissented from the principle advanced by the Justice Committee that information that would be available under freedom of information in the public sector should remain so when a service is outsourced to the private sector. While I welcome my right hon. Friend’s efforts in this direction, is he looking back at some of the older contracts to see whether that principle has been applied?

[Simon Hughes]

The answer is yes. My right hon. Friend and his Committee have been very clear as to the right way forward. We agree with them. There has been good practice and bad practice. The intention of the new guidance and the new code of practice is that we should monitor the situation carefully, and where bad practice follows, that should be made public so that we can name and shame those who do not deliver at least the standard that freedom of information legislation requires.

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

I am a bit confused. We have had one Minister answering questions on behalf of the Conservatives and now another Minister answering on behalf of the Liberal Democrats. May I ask the right hon. Gentleman to answer this on behalf of the Government: have the Government looked at what the Public Accounts Committee said about the heavy reliance on a very small number of private sector contractors in justice, in health and anywhere they have been privatising our public services? Can we have more scrutiny? Can we have more information about who gets these contracts and how?

[Mr Speaker]

That question is to be put on this occasion only to the Ministry of Justice. Health issues are very important, but are for another day.

[Simon Hughes]

On behalf of both parties in the coalition, the answer to the hon. Gentleman is yes, we want maximum scrutiny of all those who have contracts with the public sector, and of at least as good a standard as legislation imposes on public sector authorities. The question of who gets the contracts—the PAC question—is a different question for different Ministers on a different day, but with the same commitment to openness on behalf of both parties in the coalition.

[Helen Jones (Warrington North) (Lab)]

But does the Minister, who after all used to be a Liberal, agree that what he is proposing simply does not give the same rights to the public as they would have had with a public body under freedom of information legislation, and that the community rehabilitation companies this Government have set up, with the hundreds of millions of pounds of public money that is being given to them, should be subject to FOI in exactly the same terms as a public corporation, so that we can see not only how they are spending that money, but their links with others in the justice sector?

[Simon Hughes]

The community rehabilitation companies are part of a programme to do what the hon. Lady’s Government never did, which is to ensure that those who are in prison for a year or less come out and have support in a way that will reduce reoffending. The answer on accountability is, yes, they will be as accountable and transparent—

[Helen Jones]

indicated dissent.

[Simon Hughes]

Yes, because those with contracts with the public sector will have an obligation, in contract, to have the same duty at least as the public sector, and if they fail, they will be held to account.

[Martin Vickers (Cleethorpes) (Con)]

6. What steps he is taking to reduce the number of crimes committed by ex-prisoners.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

10. What steps he is taking to reduce reoffending.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

Despite investment, reoffending rates remain stubbornly high. We are fundamentally reforming rehabilitation services by opening up the market to new providers and incentivising them to focus relentlessly on reducing reoffending. For the first time in recent history virtually every offender released from custody will receive statutory supervision and rehabilitation and mentoring in the community. We remain on track to deliver these key reforms early in the new year.

[Martin Vickers]

I thank my right hon. Friend for his reply. Notwithstanding the fact that I hope he would agree with my constituents that there are cases where offenders should remain in prison for considerably longer, what assessments has he made of the effect of extending supervision to the group of offenders who leave prison having served less than 12 months?

[Chris Grayling]

As was said earlier, this is the key part of the reform we are pushing through. There was a group of people who were literally left to walk the streets with £46 in their pockets, and not surprisingly the majority of them reoffended very quickly. From 2015 all those people will receive a 12-month period of mentoring, support and supervision after prison to try to turn their lives around, and we know from trials in different parts of the country that this can make a real difference to the level of reoffending.

[Bridget Phillipson]

Probation works best when the service has close relationships with prisons, councils and others, but under the Justice Secretary’s reforms is there not the real risk that police intelligence will not be shared with the new companies? Not only will that put at risk the tackling of reoffending, but it also runs the risk of jeopardising public safety.

[Chris Grayling]

The reason that that is simply not true is that, under the last Labour Government, we had examples of police control rooms being contracted out to private organisations. If the police are happy to share control room data with private organisations, there is no earthly reason to believe that they will not work together with providers of all backgrounds on the rehabilitation of offenders.

[Mr Christopher Chope (Christchurch) (Con)]

One in seven offences are committed by foreigners, and many of those foreigners are ex-convicts from foreign countries. What is my right hon. Friend doing to ensure that only people with good records can come into our country?

[Chris Grayling]

Of course, this is predominantly a matter for the Home Office, but I can say that we are working closely with the Home Office. I stand second to no one in desiring to see foreign national offenders moved out of this country. I hope very much that the European prisoner transfer agreement, as it comes on stream and is completed by 2016, will make a real difference to ensuring that offenders in prisons in this country are able to be returned to their home country as quickly as possible.

[Sarah Champion (Rotherham) (Lab)]

23. Given the amount of upheaval in probation caused by the Government’s reckless privatisation, I echo colleagues in saying that we need a strong, independent chief inspector in order to reduce reoffending by ex-prisoners. How can the current postholder possibly fulfil his duties, given his links to winning bidders? Why did the Justice Secretary appoint him, given that these links were known to him at the time?

[Chris Grayling]

Let us be clear: I regard the current chief inspector as a man of great integrity and great skill, who has been doing a very good job for the past few months. He was selected on merit by my Department and his appointment was approved by the Justice Committee. The fact that an issue has now arisen with the very recent appointment of a member of his family to a senior position in one of the providers clearly has to be addressed. It will be addressed sensitively and I will report to the House when it is appropriate to do so.

[Mr Philip Hollobone (Kettering) (Con)]

In order to prevent foreign national offenders from committing further crimes in this country, what steps are being taken together with the Home Office to ban them from returning to the United Kingdom once they are repatriated?

[Chris Grayling]

The deportation process should mean that these people are not entitled to re-enter the UK. Of course, the increased sharing of data between European police forces is one way of ensuring that we know who they are before they try to enter the country and that they do not return. My hon. Friend and I share the same ambition of ensuring that people who have committed terrible crimes in other countries simply cannot come to live here.

[Jenny Chapman (Darlington) (Lab)]

The Lord Chancellor is correct in describing the chief inspector of probation as a man of great integrity, because his report yesterday contradicts somewhat the description of the Transforming Rehabilitation programme that the Lord Chancellor has just provided us with, even though the chief inspector’s wife runs half the service now. The chief inspector said that splitting the probation service in two has caused problems with process, communication and information sharing—I am not being funny, but some of us have been saying that for quite some time. Is it not now about time the Lord Chancellor woke up to the reality of his risky, shambolic privatisation?

[Chris Grayling]

I do wish the hon. Lady would get her facts right. She just said that the chief inspector’s wife is running half the service at the moment, but of course that is not true. The service remains, as of today, entirely within the public sector, and she might get her basic facts right. Had she read that report, she would have seen that the chief inspector identified a number of long-term systemic problems that predate any change we have put in place and were ensuring underperformance. He said that it was necessary to move to a steady state—in other words, to complete the reforms and get things bedded in for the long term—as quickly as possible.

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

7. What his policy is on the constitutional role of judicial review.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

Judicial review plays a crucial constitutional role as an essential component of the rule of law. When used properly, it allows public authorities to be held to account. But it can be misused, with unmeritorious challenges brought simply to cause delay. The Government’s package of reform, in particular the clauses in the Criminal Justice and Courts Bill, will limit the potential for abuse without undermining judicial review’s vital role.

[Mr Bain]

I am grateful for that, but the Secretary of State’s proposals to reform judicial review have been condemned by, among others, the senior judiciary, leading civil liberties organisations and charities, and they have now been forcefully rejected by wide cross-party majorities twice in the other place. Will he now admit defeat, see sense and withdraw these unnecessary proposals?

[Chris Grayling]

Let me refer the hon. Gentleman to a wise comment about judicial review:

“Removing the constant use of judicial review, which frankly has become a lawyers' charter, will not remove the basic freedom to apply due process of law.”

“Oh dear!”, says the new shadow Solicitor-General. That quote came from the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), the former Labour Home Secretary. The reality is that we are pushing forward a sensible package of reforms, most of which have been approved in the other place. There are only two items left to be passed through.

[Dr Julian Huppert (Cambridge) (LD)]

There is clearly a balance to strike between trivial judicial reviews and defending the rule of law. Does the Secretary of State agree that the Pannick amendment, 102B, helps to strike a good balance between those two? Will he think carefully about whether he can recommend that we agree with the compromise suggested by that amendment?

[Chris Grayling]

I am giving careful consideration to that matter in the wake of the Lords debate. In the new year, I intend to return to the House with further thoughts on how we take matters forward. As my hon. Friend will understand, I will not set out those plans until I have carefully considered with my colleagues what we are going to do.

[Mr Andy Slaughter (Hammersmith) (Lab)]

How does the Secretary of State intend to respond to what the Daily Mail calls his latest humiliation yesterday at the hands of the Master of the Rolls and the Court of Appeal? Having lost seven judicial reviews, does he now think it is time that he as Lord Chancellor stops acting unlawfully? In January, he will have a third chance to abandon his attempt at muzzling judicial review following two defeats in the other place. But will he tell us now—he does not need to wait until then—whether he intends to protect the rule of law or carry on getting confused by his own legislation and behaving like some tin-pot dictator?

[Chris Grayling]

May I start by extending my commiserations to the hon. Gentleman? It was widely expected on the Government Benches that he would become the shadow Attorney-General. He did not manage that, and we all express our disappointment about that and extend our commiserations to him. By retaining him on the shadow Front Bench, we will continue to enjoy in these sessions on a monthly basis the usual load of nonsense that he so often comes up with.

[Andrew Bridgen (North West Leicestershire) (Con)]

Recent figures show that the number of judicial review applications lodged between 2000 and 2013 increased threefold, and many of them related to immigration and asylum cases. Does the Secretary of State agree that the Government have a responsibility to ensure that the judicial review process is used appropriately?

[Chris Grayling]

I absolutely do. Interestingly, the hon. Member for Hammersmith (Mr Slaughter) talks about the views of the judiciary, but it was one of the immigration judges who said, 18 months ago, that judicial review was being abused for those cases. Opposition Members must understand that they themselves in Government said that the system needed to change. We are changing it in a measured and sensible way that will make a difference without compromising its principles. That is the right way to approach this matter.

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

8. What steps his Department is taking to improve value for money from its private sector contracts.

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

A contract management improvement programme has been running at the Ministry of Justice since early 2014 in order to implement and embed best practices in contract management. As part of that programme, we have established new governance committees, strengthened our assurance of major contracts, clarified roles and responsibilities and improved the skills of our people. We have also renegotiated or retendered a number of our significant contracts to improve value for money from our private sector contractors.

[Robert Flello]

Does the Secretary of State really think that guaranteeing a decade of profits to private companies as compensation when a probation contract is cancelled represents value for money? It is unprecedented and a scandal. What will he do to reverse that typical Tory rip-off?

[Chris Grayling]

It is so unprecedented as a typical Tory rip-off that it is a very similar approach to the one taken by the Labour party when it set up the flexible new deal. Sometimes its hypocrisy is breathtaking.

[Sir Tony Baldry (Banbury) (Con)]

For public accounting purposes, many of the charities and new social enterprises that are coming into being to help with managing ex-offenders will be considered to be private contractors. Will my right hon. Friend explain to the House how he will measure the performance of these charities and social enterprises so that we can demonstrate that it is possible to have payment by results and to get better support for ex-offenders?

[Chris Grayling]

The mechanism for monitoring the performance of all our providers in the private, voluntary and social sectors is very simple: are they successful in bringing down reoffending? This is not a payment by results programme as ambitious as the Work programme because we have to fulfil the orders of the court over which there is no discretion. But they still represent good value for the taxpayer as they ensure that we pay when we get results. That is the way that Government should operate.

[Dan Jarvis (Barnsley Central) (Lab)]

If the Government want to improve value for money, they should start by scrapping the £85 million contract for a secure college, which is a flawed proposal that has twice been rejected by the other place. Given the universal opposition, how close we are to the general election and the fact that the project is facing difficulties obtaining planning permission, will the Secretary of State agree that the contract should not be signed before 7 May so that we can avoid saddling the taxpayer with a huge bill for this untried, untested and unworkable project?

[Chris Grayling]

I am baffled by the attitude of the Labour party. The secure college will take troubled 16-year-olds out of prisons with iron bars and put them into a modern, supportive environment that is focused on education. My view is that we are much more likely to turn a troubled 16-year-old into an untroubled 16-year-old in a nurturing and supportive environment than we are by leaving them behind iron bars. I am astonished that the Labour party does not understand that.

[Mr David Ward (Bradford East) (LD)]

11. What steps his Department is taking to improve the regulation of claims management companies.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

A number of reforms have been made or are being made, including a new set of toughened rules to crack down on abuses, a new power to impose financial penalties on CMCs from later this month and extending the legal ombudsman’s remit to consumer complaints against CMCs from January 2015.

[Mr Ward]

Among other things, the bad behaviour of CMCs has contributed to car insurance premiums that are not only unacceptable, but unaffordable, particularly for many young people. Many have argued that the regulatory oversight of CMCs is simply too light. Does the Minister agree that, as the British Insurance Brokers Association has suggested, there is a strong argument that if the regulation were overseen by the Financial Conduct Authority, CMCs would have to abide by the FCA’s 11 principles of business, which would provide a more effective way of bringing down car insurance premiums?

[Mr Vara]

It is important that the hon. Gentleman bears it in mind that since 2007, when regulation began, licences of over 1,200 CMCs have been removed across sectors, and others have left the industry after the commencement of enforcement action. We have introduced tough measures. From later this month the regulator will reinforce its enforcement tools with a new power to impose financial penalties of up to 20% of a CMC’s turnover. Next month, from 28 January, we will extend the legal ombudsman’s jurisdiction to deal with complaints from clients dissatisfied with the service provided to them by authorised CMC’s. The legal ombudsman will provide a new avenue of redress for clients of CMC’s and will assist the claims management regulator in driving up poor standards and practices in the market.

[Mr Speaker]

Perhaps the material can be placed in the Library of the House, where it can be devoured by colleagues at their leisure in the long winter evenings that lie ahead.

[Graeme Morrice (Livingston) (Lab)]

12. What his strategy is for supporting victims of crime.

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

14. What steps he is taking to increase funding for services to support victims.

[The Minister for Policing, Criminal Justice and Victims (Mike Penning)]

We published “Our Commitment to Victims” in September, which sets out a broad package of reforms, including a victims law that we will bring forward. Money is not everything, but we have increased the budget to £100 million for victims and victim support.

[Graeme Morrice]

The whole House knows how much the Justice Secretary detests being held to account for his actions by judicial review, but because of this Government’s actions, 40% of women subjected to domestic violence are denied access to justice as a result of changes to legal aid. Does the Minister agree that a sign of a healthy democracy is groups such as Rights of Women challenging the lawfulness of the Government’s actions? Does he also agree that for so many women suffering domestic abuse to go without access to justice is a national disgrace?

[Mike Penning]

Looking after victims and witnesses is one of the most important things that any Government can do, and I would have thought that there was cross-party agreement on the sort of work we all need to do to ensure that they are looked after. The hon. Gentleman’s question was very detailed, so I will write to him, because that is how we should answer questions when they are that long.

[Stephen Mosley]

Many victims of crime still find the judicial process confusing and intimidating, so what steps is my right hon. Friend taking to make sure that vulnerable victims of crime find the court process less harrowing?

[Mike Penning]

It is important that victims and witnesses have the confidence to go to court and give evidence in a way that they feel comfortable doing. We must amend the way that the court process works, and we must use video much more, particularly with young and vulnerable children. That is the sort of thing we are going to do as we go forward, and I would have thought that that had cross-party support.

[Philip Davies (Shipley) (Con)]

Does the Minister agree that before a prisoner is downgraded to being suitable for an open prison, the victim of the crime should be consulted on whether that is appropriate? Can my hon. Friend guarantee that in all cases that will start to happen?

[Mike Penning]

It is important that victims are informed at each stage of the pathway, from when they report the crime to when the offender is released from prison. They should not have a veto, but they should be consulted.

[Mr David Hanson (Delyn) (Lab)]

13. If he will undertake a review of the enforcement of compensation orders agreed by the courts.

[The Minister for Policing, Criminal Justice and Victims (Mike Penning)]

The Government take enforcement of compensation orders very seriously and remain determined to find new ways to ensure that they are paid and that those who do not pay are traced and have to pay.

[Mr Hanson]

In the past five years on average only about 42% of compensation orders awarded to victims by the courts have been paid by the perpetrators of those crimes to those victims. Does the Minister think it is right that victims are victims of the crime and then victims because they are not paid compensation by perpetrators? What will he do to improve the situation?

[Mike Penning]

I pay tribute to the right hon. Gentleman from the outset. He has written to me on several occasions about particular constituency cases which we have, I believe, resolved. The real problem, which is not new for this Government and has been going on for many years, is that the courts impose a fine or compensation or both and the person does not have the money to pay that. It is important, for instance, that the benefits system works with the courts and with the Ministry of Justice. I would be more than happy to meet the right hon. Gentleman as many times as he wishes so that we can try and get this right.

[Mr Speaker]

I call Mr Simon Kirby. Not here.

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

16. What steps he is taking to rehabilitate women offenders.

[The Minister of State, Ministry of Justice (Simon Hughes)]

The coalition Government are clear that reducing reoffending through effective rehabilitation of previous offenders is the most effective way to cut crime and reduce the victims of crime. As the hon. Lady knows, female offenders disproportionately have short sentences. The new reforms will for the first time mean that all those leaving will have targeted support on release. We are reconfiguring the women’s estate so that women spend the bulk of their time, if they are in prison, near where they will be released so that they have the best links with the community.

[Kate Green]

The Minister will be aware that maintaining good relationships with one’s family while in custody is a particularly important factor in rehabilitation, and for women in particular maintaining relationships with their children. But Women Moving Forward, a group of women offenders in Manchester has told me that a tightening of release on temporary licence provisions is making it more difficult for them to have time with their children. Will the Minister take a look at this situation, which is not just important for reducing reoffending among those women, but is in the interests of their children?

[Simon Hughes]

I am completely persuaded by the argument that women need more time with their children. We are expanding the capacity for that in all prisons. I will be up in Greater Manchester next month meeting colleagues and I am happy to meet the hon. Lady in Manchester with colleagues. We are clear that women in prison need to have maximum time with their children, and that children need to be protected as much as possible from the adverse effects of having their mother away from them.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

In the previous Session of Parliament, the Justice Committee identified that under this Government the progress made in implementing the recommendations of the Corston report on women prisoners had stalled. What has happened in the past year to address that and to make sure that the different needs of women, particularly in preventing reoffending, are being properly addressed by this Government?

[Simon Hughes]

There is a list of steps that the Government are taking. I cannot give them all now because Mr Speaker would not allow me. We have legislated to make sure that women’s interests are specifically provided for in the rehabilitation process. There have to be specific programmes to meet the needs of women. We have made sure that in each of the women’s prisons there will be the capacity for women to have spaces outside the walls on a gradual programme, so that they can be rehabilitated more quickly. I am clear that the needs of women are entirely different from the needs of men in prison, not least because of their family responsibilities, and that is written through—as through a stick of rock—all that we are seeking to do in relation to women in custody. I will give the hon. Lady the full list later.

[David Rutley (Macclesfield) (Con)]

17. What steps he is taking to encourage the use of mediation in family disputes.

[The Minister of State, Ministry of Justice (Simon Hughes)]

The Government are committed to advancing mediation as the best way of reducing the stress on separating couples, alleviating pressures on the court system, and saving money for taxpayers. Last year, seven out of 10 couples who went into mediation had a successful outcome. In the past few months, we have set up a system where the first mediation session is free for both parties if one of the parties is legally aided, and we are already seeing an increased take-up in mediation as a result.

[David Rutley]

I welcome the progress that is being made in encouraging the use of mediation, but when does the external advisory group of experts on the voice of the child plan to put forward recommendations on improving best practice?

[Simon Hughes]

In the summer I made a clear commitment to make sure that the voice of children and young people is always heard, not just in the courts but in mediation too. The advisory group is due to make recommendations about best practice in February next year—in two months’ time. I am clearly of the view that the voice of children and young people must be heard in every single case where there is family breakdown so that their needs are taken into account and not just the needs of the parents.

[Peter Aldous (Waveney) (Con)]

22. Two cases have recently been referred to me where mediation has been used to review court orders for child custody arrangements. In both cases, one of the parties refused to co-operate and did not turn up to the mediation sessions. Will the Minister consider imposing penalties for such behaviour so that mediation can play a full role in settling such disputes without recourse to expensive legal proceedings?

[Simon Hughes]

I am sympathetic to the hon. Gentleman’s question, but the honest answer is no, because mediation requires both parties to agree, and it has to be a voluntary process. When people have a breakdown of a relationship, there is often anger and frustration at the beginning, but if they can get over that, it is far better for them to agree a solution with the other party than to go to court, where they may get something that neither party wants or something that they themselves might not be happy with.

[Kerry McCarthy (Bristol East) (Lab)]

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

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

May I start by sending, on behalf of the whole House, the condolences of this Parliament to the people of Pakistan after this morning’s terrible terrorist attack?

I would like to inform the House about the continuing work that we are doing to help victims of rape and sexual violence. I can announce that we have established a fund which, for the very first time, has been created specifically to help male victims of sexual crimes. We have dedicated more than £1 million to provide services to support those male victims, including funding for face-to-face centres as well as creating a national website and online support service. Approximately 75,000 men are victims of sexual assault or attempted assault each year, while 9,000 men are victims of rape or attempted rape, yet fewer than 3,000 offences of male rape or sexual assault were recorded in 2013-14. We want to change this. We hope to encourage male victims to break the silence on a topic still seen as taboo by giving them access to crucial information and emotional support, either in person or online if they find that way more accessible. This Government will continue to put supporting victims of serious and sexual crime at the forefront of their plans.

[Kerry McCarthy]

I spent this morning at Kids Company helping to wrap some of the 20,000 Christmas presents that it will be giving out to children this year. I was told that 80% of the kids who go to Kids Company are involved in some way in criminal activity, but very few of those who spend time there go on to continue that activity. Will the Minister acknowledge that that sort of intervention is far more successful than putting kids in youth custody centres, and so we should be supporting it?

[Chris Grayling]

I think we would all pay tribute to the work done by Kids Company. I have been to see its work as well. Like many similar charities around the country, it makes an enormous difference to the support provided for people in the most difficult circumstances. The work that it is doing combines with the work done in our troubled families programme and with the work done in our schools to try to help those who start school behind to catch up before they go on to secondary school. Those are all important parts of the jigsaw puzzle of dealing with the real need to use early intervention to keep people out of the criminal justice system where we can possibly do so.

[Martin Vickers (Cleethorpes) (Con)]

T3. A development that has the potential to create 4,000 jobs in my constituency is being further delayed by judicial review, despite its being approved at local, ministerial and parliamentary level. Does my right hon. Friend agree that the use of judicial review in such circumstances should be curtailed?

[Chris Grayling]

That is precisely what we are trying to stop. My hon. Friend makes the valid point that those opposed to essential developments in our country are able to use judicial review, on technicalities, to try to prevent them from going ahead or to delay them. It does nobody any favours that that can happen. It uses up huge amounts of taxpayers’ money, it wastes the time of essential projects and project teams, and it must change.

[Sadiq Khan (Tooting) (Lab)]

I find the Justice Secretary’s answer interesting, because there is a widely held view that one of the reasons why this Justice Secretary is so hostile to judicial review is that it means the unlawful decisions he makes can be challenged in court. In the past few days, he has been held to have acted unlawfully in relation to his decision to ban the sending of books to prisoners. Does the Justice Secretary accept the decision of the court and, very simply, will he now acknowledge that it was a stupid policy and that he acted unlawfully?

[Chris Grayling]

Let us be absolutely clear: I took no decision to ban the sending of books to prisoners. I simply unified across the whole of the prison estate the rule that existed under the previous Government, in almost all of our prisons, not to allow parcels to be sent into prisons. Once again, we hear the hypocrisy of the Opposition.

[Sadiq Khan]

The right hon. Gentleman briefs his Back Benchers and the right-wing media that he is banning books, but when he has been found to have acted unlawfully he says something very different in the Chamber of the House of Commons.

We know this Justice Secretary is obsessed with repealing the Human Rights Act 1998, walking away from the European Court of Human Rights, making it very difficult to bring a claim for judicial review, and making access to justice almost impossible for people with limited means by ill-thought-through deep cuts to legal aid. When the highly respected, legally qualified and knowledgeable former Attorney-General, the right hon. and learned Member for Beaconsfield (Mr Grieve), talks about politicians who risk “eroding” Britain’s legal framework for the sake of populism and short-term political gain, who does the Justice Secretary think the former Attorney-General is referring to? Why does he think that a highly respected and knowledgeable colleague has views so different from his own?

[Chris Grayling]

What I know is that I am pushing forward the policies that the public want. The fact that the right hon. Gentleman is opposed to them might explain the fact that his party’s ratings have been sliding persistently in the polls over the past two years.

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

T2. We know that sport has a vital role in rehabilitating prisoners, and evidence is mounting that limiting the sporting activities to which violent offenders have access can severely limit their rehabilitation possibilities. Will the Minister meet me to discuss this matter, and will he assure me that we will put practical reality over prejudice in getting outcomes?

[The Parliamentary Under-Secretary of State for Justice (Andrew Selous)]

I fully appreciate the positive impact that being a member of a sports club can have on release. The National Offender Management Service is keen to discuss options for how it can improve links between England Boxing, in which I know my hon. Friend has a particular interest, so that offenders can benefit once they have left custody. If she has new ideas to share on this matter, I will of course be delighted to meet her.

[Nick Smith (Blaenau Gwent) (Lab)]

T7. Will the Secretary of State update the House on how many Members of Parliament have had their telephone calls with prisoners recorded, and have all those MPs been informed?

[Chris Grayling]

I can confirm that all MPs who have had their calls listened to have indeed been informed. I can also inform the hon. Gentleman that I have now received an interim report from the chief inspector, which is being made available to Members of Parliament through the Library. The chief inspector’s interim findings are that there is no systemic problem and that the situation has improved substantially since 2012, but he recommends a number of other things we can do to improve the situation still further.

[Andrew George (St Ives) (LD)]

T4. What progress are the Government making on the introduction of a women’s justice board? The important question asked earlier by hon. Member for Livingston (Graeme Morrice) emphasised the need to address such issues.

[The Minister of State, Ministry of Justice (Simon Hughes)]

The coalition Government are clearly committed to making sure that we reduce the reoffending and imprisonment of women. As my hon. Friend knows, at the moment I chair an advisory board on female offenders, which is very helpful and successful—indeed, it is meeting this afternoon—in making sure we have a good policy. The introduction of a women’s justice board has been put forward. As it happens, our party, the Liberal Democrats, supports the policy. It is not yet an agreed policy across government, but I am determined that we will do as much as we can with the present structure in the rest of this Parliament, even though we might be able to change it in the next Parliament.

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

T9. Since the Government introduced employment tribunal fees, there has been a drop of 84% in the number of women who have been able to bring discrimination claims. Does the Minister accept that, because of the up-front fees of £1,200, many women are being denied justice under his Government?

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

The situation is a lot more complex than the hon. Lady makes out. First and foremost, anyone who does not meet the financial criteria has a waiver and can go to court. Secondly, there have been a lot of pre-determinations by ACAS. Employment is going up and there are fewer applications. There are a lot of factors and she does herself no credit by simplifying matters.

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

T5. Following the introduction of my private Member’s Bill, which calls for a tougher stance on repeat driving offences, will the Minister confirm that those matters are being reviewed fully, and will he clarify when the Government will respond to the review?

[The Minister for Policing, Criminal Justice and Victims (Mike Penning)]

I pay tribute to my hon. Friend for the work that he has done in that area. As a former Transport Minister, I have looked at this issue for many years. I will continue to look at the review and we will come forward with proposals. We are determined that whatever proposals come forward will be fit for purpose. His work will be very helpful.

[Stephen Timms (East Ham) (Lab)]

The international child abduction charity, Reunite, reports that the wrongful overseas retention of children is up by 30% so far this year. We need urgent action to implement the welcome recent recommendation from the Law Commission that wrongful retention should be made a criminal offence. Will the Minister say when the Government will respond to that recommendation, and can he give a date by which we can expect to see the legislation that is needed?

[Simon Hughes]

Kidnap and child abduction can have devastating effects on victims and their families. It is vital that the law reflects the gravity of the offences, and that those who commit them are punished accordingly. I pay tribute to the right hon. Gentleman and his colleagues who formed a group in this House to argue for a change in the law. In the past, people could be punished for taking their children out of the country, but not for keeping them illegally out of the country rather than bringing them home. The coalition Government asked the Law Commission to consider the issue. It has reported back and recommended a change to the Child Abduction Act 1984. We are looking at that recommendation actively and I hope that we will be able to make progress in this Parliament.

[Karl MᶜCartney (Lincoln) (Con)]

T6. What steps can my right hon. Friend the Secretary of State and his Department take to ensure that young people do not regard vehicle insurance as an optional extra, as is the case now due to the monopoly and cartel that is operated by the insurance companies?

[Mike Penning]

While I was a Transport Minister, it was my honour to bring forward the continuous insurance legislation, which made it compulsory for all vehicles that are registered on the road to have insurance. We will continue to look at how we can stamp down on the hard core of people who do not have insurance, because they are a danger not only to themselves, but to others.

[Mr Graham Allen (Nottingham North) (Lab)]

Does the Secretary of State agree that sex crimes against children are among the worst crimes on the statute book? Does he also agree that it is time that we had a national institute to look at the prevention of crimes of that nature against children and to help perpetrators—a “what works” foundation of the sort that he kindly supported on early intervention and policing?

[Chris Grayling]

First, the hon. Gentleman has a track record of addressing these issues to compare with anyone in the House. I commend him for the work that he has done. I share his view on sex crimes against children. That is one reason why the Criminal Justice and Courts Bill contains a provision to end automatic early release for those who commit such horrendous crimes. He has expressed an interesting thought today. We cannot have too long a conversation about it across the Dispatch Box, but my colleagues and I would be happy to hear his views.

[Philip Davies (Shipley) (Con)]

T8. The Minister is aware of my request that the former Keighley magistrates court in Bingley be sold off as soon as possible. The failure to do so is wasting taxpayers’ money and preventing an important town centre building in Bingley from being regenerated and brought into use. There seems to have been a lot of faffing about between the Ministry of Justice and West Yorkshire police. I urge the Minister to get on with it and get the building up for sale to allow this regeneration to take place in Bingley and to save the taxpayer some money.

[Mr Vara]

My hon. Friend is as forthright as ever. He is well aware that I wrote to him last week. We are doing all that we can to ensure that the court is sold and that the proceeds are put into the Exchequer.

[Mr Speaker]

I think that the hon. Member for Shipley (Philip Davies) regards “faffing around” to be a technical expression.

[Kelvin Hopkins (Luton North) (Lab)]

The Ministry of Justice has massively upgraded its prediction for the prison population, which could be up to 100,000 by 2020. Does that suggest a total failure by the Government to take seriously the reduction of reoffending, and was privatising the probation service precisely the wrong policy?

[Andrew Selous]

The Government are expanding prison capacity, and four house blocks are under construction and will open early next year. We have a new prison in north Wales, and we keep such matters under review. We will always have enough places for those sent to us by the courts, unlike what happened under the previous Government.

[Fiona Bruce (Congleton) (Con)]

Will the Minister join me in commending Timpson shops that provide work for hundreds of former offenders, including many who are still serving their sentences? What can be done to encourage other employers to follow suit?

[Andrew Selous]

My hon. Friend is right to mention that issue, and I think that around 10% of Timpson’s work force are ex-offenders. Other companies such as Greggs do similarly good work, and I have been particularly impressed by the Halfords training academy at Onley prison. There is good work, and we need more companies to carry on in the same way.

[Karl Turner (Kingston upon Hull East) (Lab)]

In his drive to make savings in his Department, does the Secretary of State think it is time to start listening to legal advice that would save his Department an awful lot of money in lost cases in judicial review proceedings?

[Chris Grayling]

The hon. Gentleman talks about saving money, but I have waited in vain to hear how Labour would address the spending challenge. Last week, Labour Members said that they would deliver a spending reduction in this and other Departments year on year, but as of today we have no idea how they would do it.

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

My right hon. Friend recently visited Purfleet in my constituency where he saw the mile long fly tip that has been left following an unauthorised Traveller encampment. Does he agree it is important that the police and local authorities use the powers at their disposal so that public confidence in our justice system is maintained?

[Chris Grayling]

The scale of what happened in my hon. Friend’s constituency is shocking and the local police, local authority, and police and crime commissioner must learn the lessons to ensure that such a thing cannot happen again. If powers need to be taken at national level to help in that battle, the Government will certainly consider how we can contribute.

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

Two women a week die at the hands of their partner or ex-partner. Let me press the Minister on his earlier remarks. Is it acceptable that 40% of domestic violence victims cannot get access to legal aid?

[Chris Grayling]

I simply reiterate that we have tried to drive through the necessary change to meet a financial challenge in the most sensitive way possible. The changes that the hon. Lady describes in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 were considered in detail in this House and the other place. Time again I hear from the Opposition Benches that Labour would do things differently, but although Labour Members have said that they will match our spending plans, they have yet to give any sense of what they would do to save money elsewhere.

[Mr Philip Hollobone (Kettering) (Con)]

How many foreign national offenders are in our prisons, and what steps are being taken to return them to secure detention in their own countries?

[Andrew Selous]

As always, I commend my hon. Friend’s persistence on this issue. There are 10,319 foreign national offenders in custody—down from 11,153 in May 2010—and that figure is the lowest for the end of any quarter since March 2006. That is in marked contrast to the Labour Government under whom the number of foreign national offenders doubled.

[Yvonne Fovargue (Makerfield) (Lab)]

The Ofsted inspection of Hindley young offenders institution in my constituency rated it as outstanding, particularly in the provision of literacy and numeracy. Why was it slated for closure?

[Andrew Selous]

We are not closing it; we are re-roling it to put in adult male prisoners. I am sure the hon. Lady welcomes, as I do, the reduction in the number of young people in custody. We must take account of that and will use Hindley young offenders institution for adult male prisoners.

Unsolicited phone calls and texts

Tuesday 16th December 2014 Commons Chamber

Alison Seabeck (Plymouth, Moor View) (Lab)

- Hansard - - Excerpts

I present this petition having heard the concerns and personal examples of my constituents, particularly those from the areas of Southway, Estover and Budshead, who have been affected by persistent nuisance phone calls and—even worse—phone and text scams.

The petition states:

The Petition of residents of the Plymouth Moor View constituency and others,

Declares that the Petitioners would like the Government to provide additional powers to the Information Commissioner to stop the scourge of nuisance texts and phone calls; further declares that these calls are unsolicited but can result in the recipient being inconvenienced and charged when abroad.

The Petitioners therefore request that the House of Commons urges the Government to review the current law on cold and marketing calls and texts.

And the Petitioners remain, etc.

[P001413]

Closure of Glenburn Sports College

Tuesday 16th December 2014 Commons Chamber

Rosie Cooper (West Lancashire) (Lab)

- Hansard - - Excerpts

Parents, pupils and members of the wider Skelmersdale community are opposed to the possible closure of Glenburn sports college that is currently being consulted on by Lancashire county council. People have marched through the town in protest and signed petitions, and the message in their consultation submission is clear: pupils and parents do not believe that closing the school is in the best interests of pupils. Delivering high-quality education unlocks choice and opportunity for our children and young people, and we strive for the best quality education that we can get. To achieve that goal there needs to be a comprehensive review of education across the town, and a desire to invest in the futures of those young people. To that end, I bring a petition to the House of Commons from the residents of West Lancashire and others.

The petition states:

The Petition of residents of West Lancashire,

Declares that there are plans to close Glenburn Sports College; further that the Petitioners do not support the closure of Glenburn Sports College but wish to keep it as the local school in the Skelmersdale area; further that the Petitioners deplore the high-handed way that Lancashire County Council decided to consult on the possible closure of the school; and further that a local petition on this matter was signed by 2,759 individuals.

The Petitioners therefore request that the House of Commons urges the Government to encourage Lancashire County Council to have a genuine consultation about the possible closure of Glenburn Sports College in order to listen to the pupils and parents of the school and to explain the decision-making process behind the plans to close the school; and further request that the House of Commons urges the Government to encourage Lancashire County Council to give time and support to Glenburn Sports College to enable the school to improve its performance and financial position.

And the Petitioners remain, etc.

[P001415]

Treatment for Gastroparesis

Tuesday 16th December 2014 Commons Chamber

Paul Burstow (Sutton and Cheam) (LD)

- Hansard - - Excerpts

I am presenting a petition on behalf of my constituent Lauren Dobbe who is 14 years old. After many tests, she has been diagnosed with a disease called gastroparesis. There is a treatment: a gastric stimulator, which acts like a pacemaker. It is not a cure, but it helps with the symptoms. Unfortunately NHS England, which is responsible for funding this procedure, is dragging its feet. In addition to this petition, there is an online petition with more than 1,149 signatures from residents in Sutton, Cheam and Worcester Park. I am asking for common sense and compassion, and that NHS England act on the advice of four specialists and fund the treatment to give Lauren the most precious gift at Christmas—a normal teenage life.

The petition states:

The Petition of residents of the UK,

Declares that Lauren Dobbe suffers from Gastroparesis which causes her to be sick and suffer pain 24 hours a day, 7 days a week and requires her to be tube fed which denies her a normal teenage life; further that NHS England is causing unnecessary suffering and misery to Lauren and her family by delaying the use of a proven medical intervention to treat her Gastroparesis; further that the Petitioners regret that NHS England has failed to properly assess the case for funding the fitting of a Gastric Stimulator which would act like a pacemaker helping to control symptoms and would allow Lauren to eat normally; and further that this has happened despite the recommendations of four specialists and the second opinion sought by NHS England confirming the recommendations of the specialists.

The Petitioners therefore request that the House of Commons asks the Government to urge NHS England to review the application and make funding available for the fitting of a Gastric Stimulator for Lauren Dobbe and further request that the House of Commons asks the Government to urge NHS England to recognise that a failure to provide the procedure would condemn Lauren to a life being fed by tube, ignoring her wishes as well as those of her family and the independent and expert advice of clinical specialists.

And your Petitioners, as in duty bound, will ever pray. [P001414]

Devolution (Implications for England)

Tuesday 16th December 2014 Commons Chamber

12:34

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

With permission, Mr Speaker, I would like to make a statement on the Command Paper on the implications of devolution for England, which the Government publish today. The House will recall that on 19 September my right hon. Friend the Prime Minister announced the establishment of a commission, chaired by Lord Smith of Kelvin, to take forward the commitments to further devolution in Scotland made by all three UK pro-Union parties during the referendum campaign. On 27 November, after the publication of the Smith commission’s report, my right hon. Friend the Secretary of State for Scotland announced to the House that draft legislation to implement its recommendations would be prepared by 25 January, and presented in a Bill to Parliament following the general election. The Prime Minister also said that a new and fair settlement for Scotland must be accompanied by an equivalent settlement for all parts of the United Kingdom.

This is a fundamental issue of fairness for all the people of the United Kingdom. Just as the people of Scotland will have more power over their affairs, so it follows that the people of England, Wales and Northern Ireland must have the opportunity to have a bigger say over theirs. The Wales Bill has completed its final stages in Parliament, and the Secretary of State for Wales is leading a cross-party process to move towards a fair and lasting devolution settlement for Wales. The Northern Ireland Secretary is hosting talks on a number of issues, including reforms to make the devolved institutions work more effectively. Depending on progress, in particular putting the Executive’s finances on a sustainable long-term footing, the Government stand ready to introduce legislation to devolve corporation tax, with a view to seeing it on the statute book during this Parliament.

Today’s Command Paper covers proposals on decentralisation within England and proposals on English votes on English laws. It sets out the position of each of the coalition parties, just as the Command Paper on Scotland did for three parties. We invited the Labour party to submit its own proposals for publication, but it declined to do so. The Secretary of State for Scotland has been able to work on a cross-party basis. The talks held by the Secretary of State for Wales have been on a cross-party basis. It is only on matters concerning England that the leadership of the Opposition are hostile to cross-party talks. However, the contribution to our thinking by leaders of local authorities, including those from the Labour party, has been welcome and constructive.

There has been a significant shift in where power resides in the United Kingdom in recent years. Since 2010, the Government have undertaken the most radical programme of decentralisation within England in a generation. In addition to the significant new powers for local communities, there are now five combined authorities, 15 directly elected local authority mayors, a metro mayor in London, and plans for a metro mayor to be elected for Greater Manchester in 2017. The regional growth fund, growth deals and growing places fund have been made available to all local areas. This summer, the Government set out plans to create a northern powerhouse and consulted on Northern Futures. Taken together with what we are doing on science and transport infrastructure, this Government have the most ambitious and substantial plan for the north of England of any Government in decades.

Both parties of the coalition wish to continue this major progress towards decentralisation of power in England, and their ideas are set out in the Command Paper. In the Command Paper, the Liberal Democrats call for a process of devolution on demand to be delivered through an English devolution-enabling Bill, under which areas would be able to demand powers from Westminster and Whitehall from a menu of options. This would include many powers devolved to the Welsh Assembly, although the exact powers available would be subject to cross-government confirmation, and the UK Government would retain a list of reserved powers. In order to claim powers, a given area would need to demonstrate that it met tests on geography, population, competence, local democratic mandate, a fair electoral system, and a transparent and accountable governance structure.

For our part, the Conservative party wishes in the next Parliament to continue with the empowerment of neighbourhoods and parishes in England, as well as seeing the type of arrangements being created for Greater Manchester agreed elsewhere. This includes a large further increase in neighbourhood planning, greater local accountability and use of direct democracy, such as local referendums on local issues. In addition, Conservatives want to work with local enterprise partnerships and councils to promote jobs and growth, to help local authorities join up different public services, and to work with local business to support jobs and improve quality of life locally. We strongly believe that localism must not be a way of imposing new taxation. We believe that the Westminster Parliament is and should remain the English law-making body.

Decentralisation within England cannot on its own create fairness for England as a whole on policies decided at the UK level but which apply only in England. On the crucial question of the implications for England of devolution in the rest of the UK, fairness for all the people of the UK now requires this issue to be addressed decisively.

Devolution to other parts of the United Kingdom has created the situation in which MPs representing constituencies outside England may vote on legislation that does not affect their constituents, while English MPs are not able to influence these policies in other nations where they are devolved. Both coalition parties believe that this so-called West Lothian question needs to be addressed and have put forward their proposals in the Command Paper.

The Liberal Democrat party believes—[Interruption.]

[Mr Speaker]

Order. I want to hear what the Leader of the House has to say about Liberal Democrat policy. We must hear it.

[Mr Hague]

At least the Liberal Democrat proposals are set out in the Command Paper, unlike any proposals from the Labour party.

The Liberal Democrat party believes that English MPs at Westminster should have a stronger voice and a veto over English-only issues. Their preferred method of addressing this would be for there to be votes for Westminster elections using the single transferable vote system. However, accepting that there is currently no cross-party consensus on this—which is certainly true—they instead propose that the composition of those serving on any new stage, such as a Grand Committee of English MPs, should reflect the votes of the electorate in England. The Liberal Democrats also believe that measures that unambiguously affect England only and are not devolved below the Westminster level should be subject to a new parliamentary stage before Third Reading or equivalent, composed of MPs proportionately representing the votes cast in England to allow them to scrutinise proposals and to employ a veto if they so wish.

The Conservative party believes that equalised constituency sizes remains necessary to fairness for all voters. We set out three options in the Command Paper for resolving the West Lothian question. All of them represent a stronger and more binding version of English votes for English laws than the work of the McKay commission, but all rest on the guiding principle set out by McKay, that

“decisions at the United Kingdom level with a separate and distinct effect for England (or for England-and-Wales) should normally be taken only with the consent of a majority of MPs for constituencies in England (or England-and-Wales).”

The first option, which was put forward by Lord Norton of Louth in 2000, is to reform consideration of Bills at all stages. All stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England or from England and Wales. The key advantage of this proposal is its simplicity and the absence of any need for any new stages in the legislative process.

The second option is to reform the amending stages of Bills, as proposed by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) in 2008. Under this proposal all amending stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England and Wales. Committees would be in proportion to party strength in those countries. The key advantage of this proposal is that it allows MPs from England, or from England and Wales, to have the decisive say over the content of legislation while not excluding other MPs from other stages and not introducing any new stages to the legislative process.

The third and final option is to introduce a reformed Committee stage and legislative consent motion, providing an effective veto. Under this option, the Committee stage of legislation relating only to England, or only to England and Wales, would be considered only by MPs from those parts of the United Kingdom. Report stage would be taken as normal by all MPs. An English Grand Committee would then vote after Report, but prior to Third Reading, on a legislative consent motion. English, or English and Welsh, MPs would therefore be able to grant their consent or veto a Bill, or relevant parts of it. Such decisions would have the same status as those of the Scottish Parliament on devolved matters. The key advantage of this proposal is that it would give English, or English and Welsh, MPs a crucial say over the content of legislation and a secure veto over its passing while not excluding other MPs from its consideration in the full House of Commons.

The Conservatives and Liberal Democrats invite comment and views on all the options in the Command Paper—[Interruption.] We await the views of the Opposition. For hundreds of years, the constitutional arrangements of the UK have evolved successfully through taking account of the needs in each century and decade for the giving or withholding of consent. The pursuit of devolution in recent years has been based on the importance of establishing the consent of parts of the UK for the policies particular to them. The next stage of our constitutional evolution must involve that principle of consent being applied to all parts of the UK.

Whichever option is ultimately decided upon must be clear, decisive and effective in producing fairness for the whole United Kingdom. The Government encourage debate so that this matter can be fully considered and resolved for the long-term strength of the United Kingdom. It is an issue that too many people have avoided for too long, and that can no longer be put aside.

12:46

[Sadiq Khan (Tooting) (Lab)]

I thank the Leader of the House for his statement. September’s referendum was momentous because of its fantastic turnout and the decisive way in which the Scottish people voted to stay in the United Kingdom, and also because of the way in which it unleashed a devolutionary vigour up and down the country. We are a party with an unequalled record on devolution, and this is a debate that Labour embraces and seeks to lead. We welcome Westminster further releasing its grip on the levers that run this country. I hope that, despite the Prime Minister’s 7 am jitters on the morning after the referendum, Members on both sides of the House will welcome the fact that, through the Smith commission, we are delivering on the vow to the Scottish people.

This is only the beginning of the change we need to make to the way the country is run. In England, cities and towns are demanding a greater say in the running of their affairs. Labour has responded to those demands and made a commitment to introducing an English devolution Act in our first Queen’s Speech. This will devolve skills, transport and economic development. In Wales, we will take forward the proposals of the Silk commission for further devolution, and place Welsh devolution on the same legal footing as that for Scotland.

It is also right that we should look at how Parliament works, as more power is shifted away from Westminster. We need a democratically elected senate of the nations and regions to replace the House of Lords. And, yes, we need to consider the ways in which English MPs—or English and Welsh MPs—can have a greater say on legislation that affects only England, or England and Wales.

But what we must not do, only months after the Scottish people voted to keep our kingdom united, is allow the division of our country by the back door. Nothing we do should jeopardise the future of the Union. Last year, the Government commission led by Sir William McKay looked at that very issue. Its report included the option of a change in the way legislation is dealt with at Westminster. It would involve a Committee stage made up only of English MPs, who would scrutinise and amend legislation that applied only to England. We should consider Sir William’s approach to an English— or English and Welsh—Committee stage, because it is right that English MPs, or English and Welsh MPs, should have a key role in considering such legislation. We will study the Command Paper published today by the Government, but our criterion would be not what is in the interest of the Conservative party but what is in the interest of our country. Uniting our country is more important than uniting the Tory party. Ultimately, the way in which we bring about constitutional reform has to change. The old “Westminster knows best” approach will not wash any more.

Labour, like the Liberal Democrats, the Greens and others, is prepared to put aside tribalism and put its faith in a constitutional convention to determine a bold, new way of delivering political reform. The convention will not just be made up of elected representatives; it will give members of the public the loudest voice. That would encourage the debate that the Leader of the House talked about in his statement. The convention should consider the McKay commission approach of an English Committee stage. We hope that the Conservative party will also support the constitutional convention approach, helping us to achieve the cross-party consensus that the convention idea deserves.

On the back of the statement I have a number of questions for the Leader of the House. Does he genuinely believe that politicians cooking up deals behind closed doors is still the best way to go about long-lasting constitutional reform? Does he agree that for reform to be successful there needs to be consensus? Therefore, what are his specific objections to a people-led constitutional convention? We are all agreed that change is needed when it comes to laws applying only to England, or to England and Wales. But as the Command Paper shows, there are several options available. What are his objections to a constitutional convention deciding on the best option available, rather than partisan politicians? Labour is proposing to devolve more than £30 billion to the cities and counties of England. Do the Government support that? If the Conservative party cares about a stronger democratic voice for England, why is it so opposed to introducing democracy in the House of Lords? Given that the House of Lords is dominated by politicians from south-east England, do the Government agree that it is time for a democratic second Chamber, drawn from the nations and regions of the United Kingdom?

When it comes to constitutional change, we must consider the unintended consequences of our actions and think through the way changes are interrelated and interdependent. There should be no more backroom stitch-ups.

[Mr Hague]

There is clearly a little bit of common ground, in that across the House we are determined to implement the recommendations of the Smith commission and to meet the commitments made in the Scottish referendum. As many of us have often made clear, that is not conditional on any of these other considerations or deliberations. Certainly that is common ground. The right hon. Gentleman did say that the Command Paper should be studied; that is certainly common ground.

There, perhaps, it comes to an end, because the right hon. Gentleman’s attempt to suggest that the Labour party was embracing and attempting to lead this debate is at the risible end of the scale of parliamentary statements. Saying that Labour has responded to cities and towns demanding greater say over their affairs when, for 13 years, those rights and powers were not given to the cities and towns of England is extraordinary.

The right hon. Gentleman asked about deliberations behind closed doors. The reason we have published options for consultation today is so there can be a wide debate and everybody’s views can be taken into account. But the people who have taken part in the deliberations have included the Labour leaders of many local authorities. I have welcomed into my office to discuss these things the Labour leaders of Birmingham, Cardiff, Glasgow, Leeds, Manchester, Newcastle, Nottingham, Sheffield and Liverpool. It is not that this process is out of touch with local authority leaders in the country; it is that Labour Front Benchers are out of touch with their own local authority leaders. They have performed the remarkable feat in politics of being out of touch with themselves in this process, with part of their party willing to engage and other parts determined not to, hoping that this will go away.

We have achieved something in terms of the Opposition’s deliberations, in that they have now said that they are open to the idea of Committee stages of Bills being dealt with by English, or English and Welsh, MPs. That is drawn from the McKay commission. But as the right hon. Gentleman knows, McKay presented a range of options, including that. We believe on this side of the House that as further devolution is now taking place to Scotland, it is necessary to have something stronger and more binding than the McKay commission recommended, which is why the addition of legislative consent motions is an idea put forward by both coalition parties.

The right hon. Gentleman asked about the upper House. I remind him that legislation could have been enacted in this Parliament to reform the House of Lords, had the Labour party been prepared to help get such legislation through.

The right hon. Gentleman asked about a constitutional convention. The Command Paper sets out the arguments on a constitutional convention and the Government are open to ideas on that—but a constitutional convention cannot be an excuse for delay on what needs doing now in the British constitution. No one is arguing that the Smith commission recommendations should be delayed in order to wait for a constitutional convention. No one is arguing that the work on the Silk commission, and the work of my right hon. Friend the Secretary of State for Wales, should be delayed for a constitutional convention. Similarly the resolution of the issue on English votes and English laws cannot be delayed for a constitutional convention. That must be resolved and these are the options for resolving it.

[Mr John Redwood (Wokingham) (Con)]

England expects English votes for English issues. We expect simplicity and justice now: no ifs, no buts, no committee limitations, no tricks. Give us what we want. We have waited 15 years for this. Will he now join me in speaking for England?

[Mr Hague]

Yes, for the whole of the United Kingdom, I hope, including England. My right hon. Friend has made a strong case for a long time that this issue needs to be resolved, in his view through advocating a particular option. But any of the options presented in this Command Paper would provide a substantial change in our arrangements and an effective veto for English Members over matters that affect only England, which I think is what he means by speaking for England.

[Mr Jack Straw (Blackburn) (Lab)]

First, may I give the Leader of the House a spot of advice? He should not go on too much about the Conservatives’ record on devolution. When he was leader of the Opposition, his policy was to oppose devolution to Scotland and to Wales and a Mayor of London.

On a more consensual note, does he accept that the fundamental problem is that England is so dominant within the Union of the United Kingdom? We have to be very careful about the way in which we proceed. I welcome the endorsement by my right hon. Friend the Member for Tooting (Sadiq Khan) of what is in the McKay commission, which provides a way through that is similar to the proposal from the right hon. and learned Member for Rushcliffe (Mr Clarke). Does the Leader of the House accept that, to some extent, this is a bigger problem in theory than in practice? My recollection of the last 35 years is that, in practice, the Government of the day of the Union have also had a majority of English MPs in this House. Will he therefore, as a contribution to this debate, ensure that there is published a list of legislation that, in the judgment of officials or of himself, would not have gone through this House if it had been endorsed only by English or by English and Welsh MPs?

[Mr Hague]

Yes, it would help everyone to have that analysis. The right hon. Gentleman is right: this should be thought about in a way that respects the fact that England is such a dominant proportion of the UK as a whole. That is why we are not setting out here plans for an English Parliament equivalent to the Scottish Parliament or Welsh Assembly. These are various forms of plans to ensure that English consent is signified, or not, to legislation that has a “separate and distinct” effect for England, in the words of the McKay commission. That is an example of treating this sensitively and proportionately and respecting the overall nature of the UK. I will certainly seek to provide to the House the analysis that the right hon. Gentleman mentioned. On the great majority of occasions in the post-war world, there has not been a party difference between an English majority and a UK majority. There might be occasions nevertheless where even such Parliaments produced different results on issues that relate only to England. I will certainly have such an analysis published.

[Several hon. Members]

rose—

[Mr Speaker]

Order. A very large number of right hon. and hon. Members are seeking to catch my eye. I am keen to accommodate all of them if possible, but if I am to do so of the essence is brevity. I call Sir William Cash.

[Sir William Cash (Stone) (Con)]

Where there are clearly devolved functions, Scottish and other MPs from devolved parts of the United Kingdom have no justification whatever to vote on exclusively English matters—and the voters get this. I urge my right hon. Friend to ensure that this matter is dealt with in the near future by amendment of our Standing Orders as I proposed, and not by legislation—thereby avoiding interference by the courts. Will he do this?

[Mr Hague]

There is a very strong case for these matters to be dealt with by Standing Orders. In the consultation we have had so far, some have made the case for a piece of legislation such as a “Statute of the Union”, but that brings the disadvantage of bringing in judicial considerations. There is a very good case for what my hon. Friend suggests, and when we are ready to advance a single option, I hope it will be possible to debate it here. Indeed, I hope the House will be able to vote on it, having due regard to my hon. Friend’s point.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

In the light of the contribution from the right hon. Member for Wokingham (Mr Redwood), perhaps the Leader of the House as a reasonable man would reaffirm that our constitution does not belong to any individual political party or any individual Government. Secondly, does he accept that the history of constitutional change over recent years has not exactly been one that we would wish to emulate. In view of the alternative vote or the shambles we saw over the House of Lords proposals, would it not be sensible to take a deep breath and address these issues for the long term in a way that I believe the right hon. Gentleman would agree with if we met after 7 May next year in genuine debate outside this House?

[Mr Hague]

I absolutely agree with the right hon. Gentleman that these matters do not belong to any one party or any one part of the United Kingdom. That is why we brought forward this Command Paper on a cross-party basis. I regret the fact that the Opposition did not want to supply their ideas and proposals to be considered on that cross-party basis. There will be continuing opportunities to do so, however, and we have set out a number of options in order to facilitate debate on them. Let us hear the argument about all the options; then the House can consider them together exactly as the right hon. Gentleman says.

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

I very much welcome the statement made today and the progress made so far. Does the Leader of the House agree that fairness has to be at the centre—fairness not only to England as a whole, but to English voters—and that the proportional element is of vital significance? Does he also agree that the absence of any proposals from the Labour party makes a proper comparison of these matters very difficult?

[Mr Hague]

It is about fairness, and I think that issue is now strongly felt by people across the United Kingdom, and most intensely in recent months by people in England. The issue must be addressed and visibly addressed; it is dangerous for the UK for it not to be addressed. On the issue of proportionality, of course we have a different view within the coalition. We have discussed electoral reform for many years and had a referendum on it, which produced a very clear outcome. We have a different view within the coalition on that, but the principle of establishing English votes on English laws is one on which we in the coalition can agree.

[Mr Graham Allen (Nottingham North) (Lab)]

Does the Leader of the House accept that 23 million people—more than voted Conservative and Labour combined—did not vote at the last election; that 10 weeks ago we came within 400,000 votes of the Union dissolving; and that a right-wing party is now coming in at 15% in current polling? Does he accept that the people are saying, “It’s broken; we ought to fix it”? Does he accept, too, that failure to include a comprehensive English devolution settlement based on the vehicle of independent local government and to substitute it with a minor issue of moving around the green benches of the Titanic on English votes for English laws just does not meet the historic need put to the right hon. Gentleman to do this job of putting forward a Cabinet Committee on devolution—not EVEL. Has he not missed that historic opportunity?

[Mr Hague]

I agree with a good deal of what the hon. Gentleman said at the beginning of his remarks, and I am grateful to his Political and Constitutional Reform Committee for its input so far and its discussion of all these issues. This is partly about decentralisation and devolution to local government in England. However, I have seen nothing to suggest that that will address the problem here in this House where laws are made with some Members able to vote on things outside their own constituencies and other Members not able to do the same. That is why we have to make sure that, in addition to decentralisation, we address that further issue here as well.

[Mrs Anne Main (St Albans) (Con)]

I thank my right hon. Friend for today’s statement because of the democratic deficit that exists. I ask Opposition Members to imagine what they would think if we English Members of Parliament were to sit on the Welsh Assembly or the Scottish Parliament and vote on their issues. I am sure they would find that equally galling. I caution my right hon. Friend about taking the advice of the right hon. Member for Blackburn (Mr Straw). It is no good saying that we should just look at the historical facts, because we cannot anticipate what may come up in the future that would need a veto from English Members of Parliament on English matters.

[Mr Hague]

My hon. Friend makes an extremely powerful point. It will always be valuable to look at the historical record, but we cannot forecast the composition of future Parliaments, or indeed the issues they debate. Irrespective of issues and party considerations, we have to try to put in place arrangements that are fair to the whole of the United Kingdom—including England.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Is the right hon. Gentleman aware that I never expected to hear such a load of rubbish from such a normally sensible person? It is inappropriate to call it a dog’s breakfast because any sensible dog would turn up its nose at it! The principle ought to be inviolable that the vote of every Member of this House should be equal on all issues that come before it. I give notice to the leadership of both sides that I shall vote against any other proposal whoever puts it forward, and including a Labour Government. If it ain’t broke, don’t fix it.

[Mr Hague]

Well, the hon. Member for Nottingham North (Mr Allen) just made the case that it is broke. The right hon. Gentleman may prefer different solutions from mine, but as I say, some of his hon. Friends are advocating that it is broke. The right hon. Gentleman has to understand that there is not an equality between Members of Parliament now because, of course, what we are able to vote on is already different as a result of devolution. That is the point that he is not taking into consideration. We all take due note of his concern and his opposition to any of these proposals, but it will not be possible to suppress and avoid this debate. This issue has to be resolved.

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

I warmly welcome my right hon. Friend’s proposals to rebalance the constitution and to put right an injustice to England. Does he recall that 15 years ago the Procedure Committee unanimously recommended changes to our procedures, since when we have had endless debates here and numerous reports have been published, culminating in McKay 18 months ago. Nothing is being rushed, but with the imminent transfer of more powers to the Scottish Parliament, is it not now urgent to address this issue in the remainder of this Parliament?

[Mr Hague]

Yes, it is; I am grateful to my right hon. Friend. I absolutely agree with him. This issue, as he points out, has been discussed for many, many years—from the recommendations of the commission on strengthening Parliament in 2000 and for the last 14 years. Two of the three options we are putting forward have been discussed for many years—from 2000 and then again from 2008—while the other is based on a stronger version of the McKay recommendations. It is now time for us to make decisions about these issues and to do so in the coming months.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I cannot help but wonder whether the once great Conservative and Unionist party understands its own notions of Unionism any more. It certainly does not understand federalism, although it is now drifting towards it and idealising it. Is the Leader of the House seriously saying that he wants to reform the way in which we vote in the House of Commons and leave the House of Lords untouched—or are we going to have English Lords for English laws?

[Mr Hague]

Personally, I have always been in favour of House of Lords reform—radical House of Lords reform—but I believe that linking that issue to this issue of the implications for devolution of England is a recipe for delaying it for a very long time. In fact, I suspect that that is why the Labour party wants to link this issue to reform of the upper House. It is, however, an issue that must be dealt with on its own merits.

[Sir Roger Gale (North Thanet) (Con)]

At the beginning of his statement, my right hon. Friend said that commitments to further devolution of Scotland had been made by all three pro-Union parties during the referendum campaign. Those commitments were not approved by the Parliament of the United Kingdom. There are many Members on both sides of the House who want a wholesale rather than a piecemeal solution and who want a swift solution, but who also believe that the processes should be concurrent and not consecutive.

[Mr Hague]

I also believe that they should be concurrent. The commitment is to legislation at the beginning of the next Parliament to implement the recommendations of the Smith commission, and it will be a commitment met, I believe, by whoever wins the general election. I hope that then, before then or by then, decisions will be made on the implications of devolution for England, so that the processes will indeed be concurrent.

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

The Leader of the House will of course know that the Scottish National party does not vote on English-only issues. [Hon. Members: “You did last night.”] We think that that is quite an easy principle to observe, and if the Leader of the House had bothered to pick up the phone, we could have told him how it could be done. Will he assure me that any legislation will not be tied, will not be conditional, will not be in tandem, and will not be concurrent with any consideration of more powers for the Scottish Parliament?

[Mr Hague]

I respect the fact that the Scottish National party does not usually vote on such issues, although I think that it breaks that self-imposed rule now and again. [Laughter.] I was putting it politely. However, there is nothing conditional about any of these proposals. We have made it clear time and again—the Prime Minister, the Deputy Prime Minister and, I believe, the Leader of the Opposition have made it clear—that the implementation of the Smith commission proposals is not linked to any other constitutional change in any other part of the United Kingdom. Of course we can express the wish, on our part, that we will deal with the issues concurrently, but they are not conditional and not tied.

[Duncan Hames (Chippenham) (LD)]

Any change in the statutory functions of English local government that involved an associated reduction in the local government grant would, of course, have Barnett consequentials, How does the Leader of the House intend to reconcile the understandable view that those would be English-only laws with the continued operation of the Barnett formula?

[Mr Hague]

My hon. Friend is aware of the commitment to the Barnett formula, but he is also aware that as tax-raising powers are devolved to Scotland, that will become less relevant over time. He is right to suggest that the level of local government finance in England has consequential effects on other parts of the United Kingdom, but the distribution of local government finance within England does not have such consequential effects, and a strong case can be made for the distribution of such finance within England to require the consent of English Members of Parliament.

[Mr Ben Bradshaw (Exeter) (Lab)]

Does the Leader of the House accept that the sense of disillusionment with the over-centralisation of our politics and economy in London and the south-east is as keenly felt in regions such as the south-west of England as it is in Scotland? What the people of cities like mine want is more meaningful control over their own affairs, not some political stitch-up by Westminster politicians which is being rushed in this way by the right hon. Gentleman.

[Mr Hague]

I agree with what the right hon. Gentleman has said, apart from the partisan element of it. People do want more control over their own affairs. That is the way of the 21st century, and the Government are delivering it, although there is much more to do. The new general power of competence for local authorities, the devolving of planning functions to neighbourhoods, community rights to bid, local referendums, business rate retention by local authorities, city deals and growth deals are all in operation now. My Government colleagues and I want those policies to continue, so that there can be a greater degree of truly local control.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

I welcome the statement. Does my right hon. Friend agree that England is more than a clutch of regions, and that, as such, it is entitled to its own devolution? In respect of the point made by the right hon. Member for Blackburn (Mr Straw), we are not suggesting the establishment of an English Executive, and that in itself is a restraint on English devolution. Is it not right to give as much autonomy as possible to English MPs to make English laws? I personally think that there is a very strong case for the Norton proposals.

[Mr Hague]

My hon. and learned Friend has himself made a very strong case. He is right to say that England is more than a collection of regions. That is one of many reasons why a federal solution is not available to us in this context, and why it is important for the proper rights of the representatives—the parliamentary representatives —of England to be enhanced.

[Mr Clive Betts (Sheffield South East) (Lab)]

The Leader of the House referred to the voting powers of Scottish and Welsh Members of Parliament, although not, I think, to those of Northern Ireland Members. As more powers are devolved to London and combined authorities in England, will MPs from those areas continue to have full voting rights on all matters, including devolved matters, in the House as well?

[Mr Hague]

As I made clear in my statement, it is certainly the view of the Conservative party that law-making powers should reside here at Westminster, for England. To be fair to the Liberal Democrats, they have put forward a different concept that can include the devolution of legislative power within England, but I am not advancing that cause. Laws that relate to England would continue to be made in the House of Commons, and, according to our options, would require the consent of English Members of Parliament.

[Mr David Jones (Clwyd West) (Con)]

Does my right hon. Friend agree that it would be wrong to equate the positions of Wales and Scotland? Does he, as a former Secretary of State for Wales himself, acknowledge that a great many people in Wales rely heavily on services that are delivered in England, and that it would be wholly wrong for the representatives of those people to be denied a voice on issues that so clearly concern them?

[Mr Hague]

Some of the options that are presented in the Command Paper provide opportunities to deal with that difficulty. Option 3, for instance, would allow Members of Parliament from the rest of the United Kingdom to continue to vote and speak on all issues, although they would require the consent of the English MPs to legislate on English matters. In respect of a small number of cross-border issues involving a strong structural dependence—health care in Wales is one such instance—there is a strong case for a wide definition of what constitutes an English matter, so that others can be involved.

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

This issue is not new to the House of Commons. As the Leader of the House will recall, the Conservatives have not won a general election since 1992. I have been hearing this debate ever since 1992, and it has been Conservative policy to use a veto to diminish the influence of Scottish Members of Parliament ever since 1992. However, I am concerned less about the problems that the Tories are having with UKIP and so forth than about the impact that these proposals would have on the Barnett formula. We need to hear a clear denial that they do not provide a back entrance to its destruction. If we take away the right of Scottish Members to vote on issues that determine the Barnett formula, we shall be seeking to destroy it.

[Mr Hague]

rose—

[Mr Speaker]

Order. The Leader of the House has given very succinct replies, but we must have shorter questions; otherwise, some Members will not be able to ask their questions, and will be disenchanted. That will be perfectly avoidable if Members show a bit of consideration for each other.

[Mr Hague]

I will give even shorter answers, Mr Speaker. What we are talking about is not some veto over Scotland, but a potential veto over what is decided in England by English Members of Parliament. I hope that the hon. Member for Lanark and Hamilton East (Mr Hood) will bear that in mind.

There is nothing about the Barnett formula in these proposals. That is a separate consideration. The commitment to the formula was made clear during the referendum campaign, and nothing in these proposals changes that debate and that commitment.

[David T. C. Davies (Monmouth) (Con)]

Does my right hon. Friend not find it extraordinary that those who shouted loudest for extra powers in Wales and Scotland are now doing as much as they possibly can to prevent powers of a similar nature from being given to England? As a proud Welshman and a proud Unionist, may I urge him to proceed with these proposals as quickly as possible before the general election, so that the English can be given the voice that they deserve?

[Mr Hague]

Yes, I absolutely agree. I think there is sometimes a desire on some parts of the Opposition Benches to try to suppress debate on this issue and hope that nobody will talk about it over the coming months or years. That will not be a successful approach. People across England now expect this issue to be addressed.

[Mr John Denham (Southampton, Itchen) (Lab)]

The tragedy is that we are so close to a lasting settlement for England and the Union. We could agree on devolution in England, we could agree on an elected second Chamber, and we could also clearly agree on changes here. Does the Leader of the House not understand that his partisan and highly political desire to rush to an early vote in the Westminster club on just one element puts at risk the constitutional change this country needs?

[Mr Hague]

I do not think it is open to the Labour party to opt out of a cross-party process and accuse the rest of us of being partisan. This is a Command Paper on which two parties have participated. There would have been no harm at all in the Labour party putting its own proposals into this Command Paper, and the reason we have set out a number of proposals is so that there can be a debate, not a rush to a single proposal, and there can be consultation about those proposals. I look forward to the comments on these options from the right hon. Gentleman.

[Mr Christopher Chope (Christchurch) (Con)]

Why has my right hon. Friend rejected the simple and straightforward solution precedented in the Government of Ireland Act, what happened in Stormont and, indeed, in the Scotland Act itself, that if a part of the United Kingdom has less power for its own MPs, those MPs should be reduced in number? Would that not make it possible to ensure a better solution? It also means that the reduced number of Scottish MPs would at least have full voting rights in this House.

[Mr Hague]

There is of course a precedent for that in relation to Northern Ireland in the past. [Hon. Members: “And Scotland.”] My hon. Friend is talking about a reduction below a proportionate representation in this House of Commons, and that has not been done for Scotland, to correct the hon. Members opposite. There is a precedent for that, but I do not think it is the answer to this question. When it comes to decisions about peace or war and major issues of foreign policy or economic policy for the entire United Kingdom, I think it is very important that all parts of the United Kingdom should be able to share equally in that on the basis of equal constituency sizes, which is a matter we will have to return to.

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

In the north-east of England, the right hon. Gentleman’s statement will sound like Tory votes for Tory laws. Without inviting him to repeat all the generalised superficial remarks contained in the Adonis report, could he say something to the House about regional policy?

[Mr Hague]

Yes, indeed. As the right hon. Gentleman knows, regional policy has been pushed forward very seriously by the whole approach to city deals, local enterprise partnerships and local growth deals, and parts of the north-east are already benefiting from that. Indeed, there are city deals involving Newcastle and Teesside. So there ought to be greater opportunity for that whoever is in government in the coming years. That opportunity, however, does not resolve the issue of law making, which requires us to address issues in this House.

[Mr Andrew Turner (Isle of Wight) (Con)]

I am very grateful to the Leader of the House for the work he is doing to introduce EVEL—English votes for English laws. Will he ensure that the English can vote as quickly as possible, particularly to protect smaller island and rural areas from city deals and metropolitan areas like Manchester and Birmingham?

[Mr Hague]

It is important that the ability to have greater powers at the local level is available to local authorities of every kind, and that that applies in rural as well as urban areas. Indeed, that is why a lot of our work has taken place at the neighbourhood and parish level. For instance, more than 1,200 parishes have now adopted a local neighbourhood plan with a local referendum, so increased localism and local decision making is available to people across England, and I hope they will make full use of that.

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

There are times when I have been very proud of this House rising to the great occasion, but today I feel ashamed of the House and the way it is tackling this big issue of a fundamental change in our constitution and in the basis of parliamentary sovereignty. We are inevitably going to be getting rid of the United Kingdom as a concept and a reality, and not one of my constituents has ever been consulted, and nor have the people of this country, through a proper constitutional convention or a referendum.

[Mr Hague]

Discussion of a constitutional convention is in the Command Paper. We have, of course, provided an opportunity for cross-party discussion of all these issues, and I am happy to provide further opportunities. The hon. Gentleman is right about the importance of the issue, which is why we made every effort to ensure this could be a Command Paper issued by three parties together, with parts of it put together by three political parties. His party opted out of that; perhaps he should advise it to do differently in the future.

[Sir Tony Baldry (Banbury) (Con)]

The principle of English votes for English laws is unassailable, particularly given now the greater devolution of powers to Scotland, but can my right hon. Friend reassure the House that there is nothing in this Command Paper that will lead to further layers of local or regional government, and that there is nothing in it that will result in extra cost to the taxpayers?

[Mr Hague]

Yes, I think I can reassure my right hon. Friend about that. None of these options involves additional tiers of government and we are very clear in the proposals we are putting forward on local government and decentralisation that this is working with existing authorities, giving them greater power and giving power at the neighbourhood level. So it does not involve adding to the tiers of government, nor is it intended to add to the expense to the taxpayer.

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

Will the Leader of the House confirm that his policy remains indefinitely to spend £1,600 a year more on each Scottish constituent than our own, and that his party will do nothing about that unfairness?

[Mr Hague]

As the hon. Gentleman will appreciate, this statement is not about the Barnett formula; it is about our constitutional arrangements. The position on the Barnett formula is well known, and as tax-raising powers are devolved to Scotland, of course the Barnett formula becomes less relevant over time, as is well understood.

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

After spending decades debating the West Lothian question, it is difficult to see how anyone could argue that this issue is being rushed, so may I urge my right hon. Friend not to pay any heed to those who want to kick this issue into the long grass by setting up another convention to spend years looking into it? My constituents want to see action on this matter now.

[Mr Hague]

My hon. Friend speaks up, as always, for his constituents. I think they do want to see action on this matter. Some of us have been talking about this for a very long time indeed, and many references from the Opposition Benches about a constitutional convention or reform to the House of Lords are designed to delay the matter indefinitely, rather than to assist in coming to a solution.

[Paul Flynn (Newport West) (Lab)]

Will not EVEL accentuate the differences and deepen the divisions between the four countries and accelerate the progress towards the break-up of the United Kingdom?

[Mr Hague]

Not if done in the correct way. We are talking here about determining whether there is consent in England, and I hope the hon. Gentleman will study the Command Paper and some of the options, such as option 3, of the Conservative proposals, which talk about determining English consent for proposals that only affect England, rather than excluding MPs from other parts of the United Kingdom from each stage of the legislative process. We all have to give the necessary care to keeping the United Kingdom together.

[Sir Hugh Robertson (Faversham and Mid Kent) (Con)]

The Leader of the House is to be commended on the work he has done to move this forward, but what representations has he had from the leaders of the shire counties, who clearly fear that if there is a transfer of power to urban centres, they will be left behind?

[Mr Hague]

I take that issue very seriously, as does my right hon. Friend the Secretary of State for Communities and Local Government. It is possible for shire counties to join in city deals—just because they are called city deals does not mean they are only for the cities—but I will also be meeting the County Councils Network in the near future to hear its representations.

[Mark Durkan (Foyle) (SDLP)]

As the Leader of the House presses his version of “WesLo-min” for devo-max, does he recognise that some of us do screen ourselves out of voting on legislation that is wholly and solely English? However, many Bills here contain clauses that are varied and variable in scope. In addition, Bills that purport to be “English-only” do have implications for the base loading of the Barnett formula and others represent issues of principle or precedent such as makes them predictive legislation, not least the Welfare Reform Act 2012, which led to the expectation that a karaoke Bill would be passed through the Northern Ireland Assembly. So should people not vote on those issues here?

[Mr Hague]

The hon. Gentleman makes some important points and illustrates the complexity of our current arrangements; decisions about welfare payments in England of course have an immediate effect in Northern Ireland as well. Nobody is suggesting that Members of this House should be excluded from voting on matters that do affect their constituents; we are simply talking about determining whether there is English consent to proposals on matters that, in the words of McKay, have a “separate and distinct effect” for England and on England.

[Sir Edward Leigh (Gainsborough) (Con)]

Will my right hon. Friend confirm that our overriding concern must be to preserve the United Kingdom and the sense of unity in the United Kingdom? Therefore, it should be possible to proceed with caution and by consensus to achieve that, and to persuade our Scottish friends and allies—our Scottish MPs—that they are valued Members of our Parliament but there has also to be a sense of justice for English voters.

[Mr Hague]

My hon. Friend puts it very well; there has to be that sense of justice, which is why this issue has to be resolved, but we do have to take great care with it. That is why we have presented a number of options for Members from all parts of the House to react to before all of us come to a final decision on how to proceed.

[Hugh Bayley (York Central) (Lab)]

May I remind the Leader of the House that the last time the Conservative party won 50% of the vote in England in a general election was in 1959 and the last time his party had a majority of English votes was in 1955, before most of us were born? The idea that a Conservative majority among MPs elected from England, which has been the case for most of that period, should determine English laws is simply his party putting party interest before the national interest, and that is why the Lib Dems do not support his proposal.

[Mr Hague]

On that basis, I am not sure why the hon. Gentleman supported the last Labour Government, who were elected in the whole of the UK with 36% of the vote. But he was always happy to vote for their measures and insist that they should be the Government.

[Iain Stewart (Milton Keynes South) (Con)]

May I urge my right hon. Friend to back a variation of option 3 in the Command Paper, which is simple, could be quickly implemented, does not require a change to the legislative process and does not deny any MP the right to vote at any stage? I am talking about the double majority option, which provides an English shield and English consent on matters affecting only England.

[Mr Hague]

That option is mentioned in the Command Paper as a variant of option 3, as my hon. Friend says. He and others of my hon. Friends have long put forward that proposal for a double count—the requirement for a double majority, a UK majority and an English majority, for Bills affecting England. Consulting on that proposal is part of the Command Paper’s job.

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

Does the Leader of the House accept that all matters put before this House involving expenditure or taxation have an impact on other parts of the UK, in terms of public borrowing, debt and the interest rates that people across these islands pay? Does that not mean that there should be no proposal to restrict the rights of Members of Parliament from Scotland to vote either on the Budget or the Finance Bill?

[Mr Hague]

I do not accept that all matters of finance and expenditure affect the whole of the UK, and I gave the example earlier of the distribution of local government finance in England as something that affects only England—the same point could be made about the distribution of health spending in England. So that is not true of all matters, and one option in the Command Paper provides a vehicle, through a legislative consent motion, for English consent to be determined for rates of tax or welfare payments that might apply only in England in the future. But of course I think we all envisage that the overall macro-economic decisions of the country always remain a matter for the UK as a whole and for the whole of Parliament.

[Christopher Pincher (Tamworth) (Con)]

Does my right hon. Friend accept that the Union will be preserved only if the English want the Union too, and that means that we must move with greater speed to address this West Lothian-plus question, which has been on our backs for nearly 20 years? The proposals that he tabled show that we have the will to act, whereas the Opposition seem to have no will at all.

[Mr Hague]

My hon. Friend is absolutely right about that; it is important not only to show that we are addressing this issue, which we are, but actually to address it. That means moving, in the coming weeks, to decide on one of these options and then that can be debated in this House and, if necessary, in the general election campaign, too.

[Ian Lucas (Wrexham) (Lab)]

Many specialist health services delivered to my constituents are delivered from English hospitals. Is legislation relating to those hospitals an English law?

[Mr Hague]

As I indicated in a previous answer, the definition of “English matters” should be quite broad when there are matters that are structurally related across borders. Understandably, there is a particular anxiety about health services in Wales, given such a close relationship with the provision of health care in England. The cross-border treatment of those issues is something we would have to debate.

[Mr Robin Walker (Worcester) (Con)]

I welcome these proposals, because they address a real injustice by allowing English votes on English laws. However, another injustice is the unequal funding between different parts of England for health, education and local government. In order for English counties to have a proper say on that and for their voice to be properly heard, we need to resist Labour’s attempt to create artificial regions dominated by the big cities. May I therefore encourage my right hon. Friend to speak up for the English counties?

[Mr Hague]

Yes, absolutely. As I mentioned, I look forward to discussing this point with the County Councils Network, and my right hon. Friend the Secretary of State for Communities and Local Government is very conscious of it. I reiterate that the greater freedoms and opportunities for local authorities are open to counties and rural areas, and we should encourage them to make full use of those freedoms.

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

The Infrastructure Bill, currently in Committee, contains clauses relating to England, to England and Wales, to Scotland and to London, and permutations of all four. Voters in the south-west will not be happy if the English solution delivers up a block vote for London and Manchester MPs, who have devolved powers. The Leader of the House did not answer the question put by my hon. Friend the Member for Sheffield South East (Mr Betts) on London, so will he have another go and explain how devolved powers to London will be responded to under his proposal?

[Mr Hague]

We—both of the coalition parties involved—envisage greater devolution of powers to local authorities. I mentioned that the Liberal Democrats have proposed devolution on demand, which could include legislative powers. The Conservative party regards legislative powers as remaining here in this House, so on law relating to any part of England the decision would continue to be one for all the Members of Parliament for English constituencies.

[Guy Opperman (Hexham) (Con)]

The injustice is particularly felt by my constituents 1 mile south of the Scottish border, who wish to see powers, votes and spending devolved to them in England. Does my right hon. Friend agree that after five reports over 17 years of consideration of this process, and the Labour party now opting out of the process, we should simply press on and get the resolved settlement that we all so need?

[Mr Hague]

We absolutely should press on, and this Command Paper provides the foundation for doing so. This will be essential in all political parties, as all candidates will find in the coming general election that they need to address this issue, because the voters will want to know where they stand on it. Therefore, we should proceed with considerable speed in identifying the preferred option in our parties and in this House, and I look forward to doing so over the next few weeks.

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

London is not just a local government, but a city region. As a Greater London MP, I have no say on what the Mayor of London or the Greater London authority do with regard to transport policy, yet I do have a say on matters relating to transport and roads in the constituency of the Leader of the House. Will he explain why that anomaly is not referred to at all in either the Conservative or the Liberal Democrat papers?

[Mr Hague]

I have answered that question several times. Liberal Democrats propose the devolution of law-making powers to city regions or to other smaller local authority units. We are not proposing that in the Conservative party. The laws that relate to the hon. Gentleman’s constituency and to mine are set in this Parliament, and it is the setting of those laws that we are discussing in this Command Paper.

[Charlie Elphicke (Dover) (Con)]

My constituents feel that we should have a fair Union, which means a fair deal for England. They say that laws that apply only to England should be voted on only by English MPs, and that anyone who does not subscribe to that view does not speak up properly for England.

[Mr Hague]

My hon. Friend’s constituents are representative of opinion across a wide swathe of England, which is why so many people in England want to see this issue addressed and the injustice that has emerged put right for the future.

[Chris Bryant (Rhondda) (Lab)]

These proposals fundamentally breach the theory advanced by William Pitt and William Wilberforce in the Act of Union 1801, which declared that all Members of this House should be equal—whether they are on the Back Benches or Front Benches, however big their majority and whatever kind of constituency they represent. The proposals will also lead to a bifurcated Government and they will drag the Speaker, whoever they may be, into constant party political decisions about whether or not a Bill is an English-only Bill, which is why I fundamentally disagree with them. But will the Leader of the House explain why it can possibly be right for Baron Smith of Kelvin in Glasgow to be allowed to vote on legislation on which the Member of Parliament covering Kelvin in Glasgow, who is elected, will not be allowed to vote?

[Mr Hague]

The answer is that Members of the other House are not elected representatives of any particular part of the country. [Interruption.] That is the answer. If the hon. Gentleman did not know the answer to that, he does not know the answer to very much. He should be careful about going into the history of the Act of Union with Ireland. He is quite right that William Pitt the Younger advocated that all Members of this House should be equal, but that is because the Irish House of Commons voted itself out of existence in 1799, and the decision was made to have a Union Parliament without any devolved Parliaments. What has happened in the past 15 years is the introduction of devolved Parliaments, so we have an entirely different situation from that prevailing in 1800.

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

The issue of cross-border health care, which has been mentioned on a couple of occasions, demonstrates the unfairness of the current system. I have constituents who are registered with GPs in Wales over whom there is no democratic accountability whatever. The cross-border health care issues demonstrate the unfairness of the current system and the urgent need to introduce English votes for English laws.

[Mr Hague]

Yes, as my hon. Friend says, this can be unfair in both directions. He makes an important point about his constituents, and it is a further reason why we have to enhance the rights of English Members of Parliament on English matters in this House.

[Nia Griffith (Llanelli) (Lab)]

Instead of making allegations about our views, as the Leader of the House did in his response to my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart), could he explain why he is introducing far-reaching proposals for this House without having any reform of the House of Lords to make it more geographically representative of the nations and regions of the UK?

[Mr Hague]

I am not making allegations about the Opposition’s policy; I am just wondering what it is, because there is nothing on it in the Command Paper. The point about the House of Lords is that for 103 years we have been debating in this House the reform and the further reform of the upper House without reaching a conclusion on the matter. Saying that these issues should be inextricably linked is a means for some Opposition Members to delay consideration of the implications of devolution for England and put it off for many years. The issues are not linked and must be treated on their merits.

[Martin Vickers (Cleethorpes) (Con)]

I warmly welcome the moves towards English votes for English laws, and the sooner we can make the procedural changes necessary the better. The Leader of the House has already acknowledged the importance of local decision making, and the further we move away from Westminster, the greater the demands are for that. However, successive Governments of both sides over the years have reduced the powers of local government. Although this Government have done a great deal to improve things, will he take the opportunity that this debate presents to revitalise local government and, if necessary, to restructure it?

[Mr Hague]

Revitalising local government is an important part of the Government’s approach, but we are not advocating the restructuring of local government, which has often been expensive and time-consuming. However, we are advocating giving more powers to local government, and the details of how we could do more of that over the coming years are set out in the Command Paper.

[Ian Paisley (North Antrim) (DUP)]

I remind the Leader of the House that devolution to Northern Ireland occurred not 20 years ago, but 95 years ago next year, and it was not without its problems. I ask him to reflect on the constitutional proposals that were made by his then hero in the 1980s which would have changed the relationships on these islands altogether. There were three proposals, and the Iron Lady rejected them with her immortal refrain, “Out, out, out!” Should that refrain not be echoed today at a proposal that appears to me as a Member of this kingdom to be more about a party political necessity than the needs of the Members of all this kingdom?

[Mr Hague]

It is about not only the needs of the whole kingdom, but fairness to the voters of England and to the representatives in this House of the voters of England. I hope that the hon. Gentleman will read the Command Paper and look at the options, because some of them are designed to determine whether there is English consent on English matters without excluding from those matters Members of Parliament from other parts of the United Kingdom. I will be interested to hear his views when he has considered that.

[Glyn Davies (Montgomeryshire) (Con)]

I greatly welcome the statement by the Leader of the House and the Command Paper. The enhanced settlement of devolution to Scotland and Wales inevitably means that the English question must be addressed. Does he understand the concern of the current Member of Parliament for Montgomeryshire, and indeed any future Member of Parliament for Montgomeryshire, that almost the entire health care delivery to that constituency is delivered in England—not a part of it, but almost all of it? It seems inconceivable that that MP would not have any say at all on those powers.

[Mr Hague]

As I have already said, I very much understand that point. My hon. Friend has been very assiduous in making that argument over recent months. That is why at least one option does not exclude Members of Parliament from other parts of the United Kingdom from speaking and voting on these issues while determining whether there is English consent. It is also why we must be careful in how we define the cross-border issues, so that MPs are not unfairly excluded when there is such a strong structural relationship between the health care needs of people in parts of Wales and its provision in England.

[Kevin Brennan (Cardiff West) (Lab)]

Will the Leader of the House explain why his party in the 50 or more years that there was a devolved Parliament in Northern Ireland never proposed the sort of things we are talking about today? Could it be because his party used to be the Conservative and Unionist party and today it is morphing into an English nationalist party?

[Mr Hague]

No, it is because throughout that period, as the hon. Gentleman knows, there was a reduction in the number of MPs from Northern Ireland. The existence of a devolved Assembly in Northern Ireland was treated in a different way in this House, by reducing the number of Westminster MPs from Northern Ireland. I do not think that he would want to advocate that now for Wales, so we have to deal with this in a different way.

[Jason McCartney (Colne Valley) (Con)]

My constituents tell me every weekend that English votes for English laws is a basic principle of fairness. Talking of fairness, I have more than 81,000 constituents, but a neighbouring Member has just 67,000. How fair is that?

[Mr Hague]

It is not fair. We have debated previously in this Parliament equalising the size of constituencies, and indeed reducing the size of the House, and I believe that both proposals remain important priorities for the future. The first is very important for fairness for people casting their votes in future elections.

[Mr Kevan Jones (North Durham) (Lab)]

How many Bills in this Parliament would have been affected if we had had English votes for English laws?

[Mr Hague]

A great many, because these options could be applied to parts and clauses of Bills as well as to Bills as a whole. They could therefore have affected a large proportion of the Bills that have been before the House in this Parliament.

[Bill Esterson (Sefton Central) (Lab)]

The Leader of the House mentioned planning. Many of my constituents believe that we have a top-down approach to planning through the national planning policy framework, which favours developers over local people. If he is serious about localism and devolution, will he support changes to the planning system that consider local people and are not just a developers charter? I suggest that he starts by looking at the excellent recommendations in the Communities and Local Government Committee report on the subject published today.

[Mr Hague]

The details of the Select Committee’s report, of course, are for my colleagues in the Department for Communities and Local Government, and those matters have also been debated in the House recently. I will certainly draw what the hon. Gentleman has said to the attention of ministerial colleagues. I also point out that part of what is happening with more localism in recent years is the introduction of neighbourhood plans. Over 1,200 parishes, with about 5 million people, have now adopted a neighbourhood plan. They have become a very important factor in planning decisions.

[Nic Dakin (Scunthorpe) (Lab)]

The English people should be trusted to speak for England. Devolution in Scotland, Wales, Northern Ireland and London was led by referendums, and the early ones were not in favour. Does the Leader of the House believe that Westminster knows best when it comes to the English regions?

[Mr Hague]

I think that many of the cities and regions know best, which is why we are giving them more powers and responsibilities. That is what we are seeing with the agreement with Manchester and the prospect of equivalent deals in many other parts of the country. We are trying to ensure that there is much more local decision making across the cities and regions of the country, in place of decision-making here.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

The Leader of the House came here in 1989, and I came in 1992, and during my 22 years here this place has been full of anomalies. Only yesterday I was told by the hon. Member for Mid Bedfordshire (Nadine Dorries):

“This has nothing to do with firefighters in Scotland”.—[Official Report, 15 December 2014; Vol. 589, c. 1157.]

But the debate had everything to do with Scotland, as a consequence of the fact that the Scottish nationalists introduced only part of the deal required by firefighters. On that basis, is it not true that we will now have, as a result of his proposals, second-class MPs in Scotland?

[Mr Hague]

The hon. Gentleman is quite right that there are many anomalies in how we do things in this House, although the injustice for the voters of England is now sufficiently great to be considered more than an anomaly. When it comes to deciding who votes on matters in other parts of the United Kingdom, it is English Members of Parliament who feel that they are second class. That is why we must deal with the issue. Otherwise, it will damage this Parliament and damage the United Kingdom.

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

Is my hon. Friend the Member for Rhondda (Chris Bryant) right that the Leader of the House plans to hold the Speaker responsible for determining what constitutes England-only matters and, if so, has he consulted you, Mr Speaker, on how that might work?

[Mr Hague]

It is envisaged in most of the proposals that have been made for English votes for English laws that the Speaker, or some other impartial authority, would have to certify what is English or English and Welsh legislation. Of course, there are other ways of doing that, for example through a panel of Chairs or some other impartial authority. I look forward to discussing these matters with you, Mr Speaker, as I do on so many matters, and with other Members of the House.

[Wayne David (Caerphilly) (Lab)]

rose—

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

rose—

[Mr Speaker]

Oh, what a delicious choice. I call Mr Wayne David.

[Wayne David]

Good choice, Mr Speaker.

Following the Leader of the House’s previous answer, has he had any consultations at all with you, Mr Speaker, on possible options for deciding what is English-only legislation?

[Mr Hague]

The hon. Gentleman has waited all this time only to find that his question was asked by the Member who spoke just before him. The answer is the same. You, Mr Speaker, do not play a role in determining the policies of the Government—you have enough to do in keeping order in the House. However, where there are implications for the job of Speaker, I and other Ministers will of course wish to consult the Speaker now that we have made our proposals.

[Mike Kane]

I put it to the Leader of the House that publishing the Command Paper is shutting the constitutional stable door after the horse has bolted. His own Chancellor has agreed a devolution deal with Greater Manchester. If he does not believe in English votes for English laws, why should anybody else?

[Mr Hague]

I can assure the hon. Gentleman that the Chancellor believes very strongly in English votes for English laws. He is quite right to have agreed the deal with Manchester, and we advocate in the Command Paper agreeing similar deals with other city regions so that they can have the same control over local affairs that Manchester is going to enjoy. However, that does not involve the devolution to Manchester of the legislative power of this House. The issue of English votes for English laws, therefore, must still be addressed on top of decentralisation and greater powers for areas such as Manchester.

Post Office Card Account

Tuesday 16th December 2014 Commons Chamber

13:56

[The Minister for Pensions (Steve Webb)]

With permission, Mr Speaker, I should like to make a statement about the Post Office card account—potentially a slightly less contentious topic than the previous statement, but we will see.

The Post Office card account provides a basic payment service by which people who are without a traditional bank account may receive their benefits, pensions, allowances and tax credits. Although most people have a bank account, there are certain groups for whom that is not viable, and for them the Post Office card account provides an important lifeline. The account is used by around 2.5 million people, including over 1.3 million pensioners. It was introduced to support the move from order books to direct payment into an account, and it was due to come to its natural conclusion in March 2015.

I am pleased to announce that the Government have agreed a new £250 million, seven-year contract that will protect a key service for vulnerable pensioners and benefit claimants as well as helping to safeguard the future of the post office network. For those people who cannot access mainstream banking, the Post Office card account is a vital facility. Through this agreement, we are ensuring that their needs are met. The contract with Post Office Ltd will ensure that the Post Office card account remains available until at least the end of 2021. That long-term deal is good news for the users of the service, good news for the Post Office and for sub-postmasters and good news for taxpayers.

The new contract provides a minimum of 10% efficiency savings over the life of the contract, saving the taxpayer over £27 million, while protecting the income of sub-postmasters. That is an important contribution to reducing the costs of providing contracted services, and the savings are commensurate with what has been achieved in other service contracts.

The new contract will be provided through the FOCS—front office counter service—framework. FOCS was awarded to the Post Office in 2012 following a competitive tender, with the intention that other Government services could be provided through a framework in the most efficient way possible. FOCS provides the Post Office with a gateway to win future Government business. I am pleased that we have been able to use the framework to deliver the new Post Office card account contract.

The latest Post Office card account contract, which was signed by the previous Administration, was due to reduce the number using the service. However, that did not happen as planned, which means we are starting the new contract with more customers than originally anticipated.

The Post Office card account was always intended to be a stepping stone to mainstream banking. The new contract continues to support that important principle of movement into financial inclusion. I welcome yesterday’s announcement that banks will remove punitive charges from their basic bank accounts. Increased access to basic bank accounts is a huge step forward for those who have previously struggled to open an account, and it supports the delivery of universal credit, breaking down the barriers to financial inclusion and work. Like most other bank accounts, those basic bank accounts are accessible at the post office. This means that those who prefer to collect their money at the post office can continue to do so, preserving footfall for sub-postmasters. The Post Office also has a range of financial products which are currently being trialled in various parts of the country, and are due to go nationwide soon. This contract allows a further seven years for the Post Office to develop these accounts and move to a secure and sustainable business model.

The benefits of financial inclusion cannot be overstated. Claimants who are paid into a transactional account are more likely to find long-term employment, and can more easily manage payment of utility bills and direct payment of housing costs to landlords. But we recognise that certain groups remain unable to access such services and the Post Office card account is designed to meet their needs, even if it is as a stepping stone to mainstream banking. The Post Office card account is simple and easy to use and is readily accessible. People with a POCA can collect payments and check their balance either over a post office counter or by using one of a network of almost 2,500 Post Office ATMs spread across the UK network. Such accounts can be opened without a credit check, which means, crucially, that they can be accessed without difficulty by people with a poor credit history.

The Post Office card account is invaluable for those people who rely on someone else to collect their money for them, for example because of a disability. Just over half of Post Office card account users are pensioners, including a significant number over the age of 80. This agreement means that they can continue to receive their payments into a POCA and collect them at the post office, as they do now. I know how important the sense of continuity and familiarity that comes from using their local post office is for many older pensioners. I also know how important the local post office is to local communities. This contract provides certainty for the Post Office and sub-postmasters and helps safeguard the future of the post office network. The new agreement will help sub-postmasters to retain footfall and generate income for their important local businesses.

In 2010 this Government committed £1.34 billion to maintain a national post office network, modernise branches and safeguard the future of the post offices that play a vital role in urban, deprived and rural areas. In 2013 we committed a further £640 million to support the modernisation of the post office network over the next three years. Since then, the post office network has been at its most stable for 20 years. I am pleased that the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), who has responsibility for Post Office and postal affairs, is here to support this statement.

To conclude, this £250 million, seven-year contract with Post Office Ltd for the Post Office card account represents good value to taxpayers and security for sub-postmasters, protects local services and ensures that we continue to meet the needs of the most vulnerable users. I commend this statement to the House.

14:02

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

This is a welcome announcement from the Government, especially for all those who rely on Post Office card accounts. Indeed, it is the only sensible decision for consumers, pensioners and small businesses and for the Government. After all, it was this Government who promised to make the Post Office the front office of Government, to the tune of contracts worth £450 million per annum.

In the context of that promise, today’s statement raises as many questions as it answers. This is a not a new contract, but the renewal of an existing contract. What is the value of this new contract to the Post Office relative to the current contract? Where will the £27 million of efficiency savings come from? Does this mean more money for the Post Office or less? Does this statement take the Government closer to or further away from fulfilling their broken promise to the Post Office of an annual income of £450 million from the provision of Government services?

Before this renewal, Government services accounted for about £130 million of Post Office income. What is the total amount of Government income through the provision of Post Office services which will be in place following the contract renewal? Again, does this mean more money or less for the Post Office and for sub-postmasters? The National Federation of SubPostmasters urges the Government to fulfil their promise to deliver £450 million of income per year. Can the Minister be clear to the House about whether the statement takes the Government closer or further away from delivering that promise?

As the Minister knows, the Department for Work and Pensions had several pilots under way, which the Post Office was undertaking on its behalf. Will the Minister update the House on the progress of those pilots? They involved, for example, verification for national insurance and verification of documents for the Pension Service. What stage have those pilots reached, and will they contribute to closing the gap between the promise made and not delivered to the Post Office during the botched privatisation of Royal Mail?

More widely, the Minister rightly reflects on the importance of Post Office card accounts to those with disabilities and to pensioners. The Post Office Local programme is part of the network transformation and can, in some circumstances, reduce the number of counters available that provide privacy to those undertaking POCA business. What is the relationship between the post office modernisation programme and the ability of Post Office card account users to continue to enjoy the privacy that they associate with post office transactions, especially pensioners and the large number of Post Office card account holders who are over the age of 80?

The Minister referred in his statement to the number of transactions undertaken through Post Office card accounts. Does he seek to arrest the decline in usage? Is he clear that there has been a decline both in the number of people using POCAs and the number of transactions? His statement is ambiguous on that point. Finally, will he be clear about whether the Government have a strategy to increase the usage of Post Office card accounts or whether they are happy to let the decline continue?

This is a welcome announcement for all those who use post offices, but as far as we can see, it takes the Government no closer to—indeed, it takes them further away from—meeting that broken promise to the Post Office about Government services and making it the front office of Government. Can the Minister provide clear answers about the value of the contract, what it means for the Post Office’s total income and what it means for all those who care about the Post Office and Post Office card accounts?

[Steve Webb]

I am grateful to the hon. Gentleman for his characteristically enthusiastic welcome for this very important announcement that will help to safeguard the post office network. The big contrast between the past four or five years and the preceding 13 years is the hours that hon. Members are not having to spend running “Save our post office” campaigns. The hon. Gentleman talks about decline. The policy of the previous Government was to have rounds of post office closures; this Government have invested £2 billion in preserving the network. This contract will be a further fillip for postmasters.

The hon. Gentleman asks what we are doing to reverse the decline in Post Office card account use. Back in 2005 there were 4.2 million people using POCAs, and in 2010 there were 3.4 million. Under Labour the number of people using POCAs fell by 800,000, so the idea that continuing decline in the use of POCAs is a new phenomenon is news to me. What is happening is that older pensioners, sadly, die and do not use a POCA any more. Newly retired pensioners tend to be more familiar with banking, so the number of pensioners using the POCA will gradually decline, but when Labour set up the previous POCA contract, it asked the Post Office to migrate 700,000 working-age people off these accounts to save money. In fact, this did not happen. When Labour set the contract, its intention was to reduce the scope.

I made it clear in my statement that we believe we will keep the POCA over the next seven years for pensioners. People of working age, as they come within the scope of universal credit, will need a transactional bank account, so although the most vulnerable universal credit recipients will continue to have access to POCAs, we will seek to ensure that wherever possible people of working age have a transactional banking account that will allow them to benefit from direct debits, budgeting and so on. That is where they want to be.

The hon. Gentleman asked about post office locals. I am advised by my hon. Friend the Minister with responsibility for postal services that customer satisfaction, which is presumably the yardstick in these matters, is up in post office local branches. The hon. Gentleman asked about privacy. Presumably, when customers decide whether they are satisfied or not, privacy is one of the things they consider. In answering our questions, they say that they are more satisfied than they were before the investment went into these post offices.

The hon. Gentleman asked about efficiency savings in the contract. Unlike the previous Government, we do look to make those savings, but we have not reduced the price that sub-postmasters get for each transaction. We could have said to Post Office Ltd, “Save us some money—give the sub-postmasters less”, but we did not do that because the sub-post offices are our priority. He asked about the figure of over £400 million. That is not a target that the Government have set for ourselves.

The hon. Gentleman asked about other services. We are exploring the use of identity-related services at the post office. We run a cross-government service called Tell Us Once for customers to report births and deaths, and we are looking at whether that can be carried out at the post office and linked with ID verification. There is plenty of potential for new services. Driver and Vehicle Licensing Agency counter services have gone into post offices, as has Check and Send, an excellent service from the Passport Office. The crucial thing about this seven-year agreement is that it allows plenty of time for new services to be developed so that our post offices have a long and prosperous future.

[Andrew Stephenson (Pendle) (Con)]

Between 1997 and 2010, under Labour, Pendle lost 17 sub-post office branches. I am therefore delighted by this statement on the Post Office card account, with £250 million of support and a new seven-year contract. Will my right hon. Friend confirm that the front office counter service framework will allow the Post Office to bid for, and win, more Government business in future?

[Steve Webb]

Yes, my hon. Friend is right. The front office counter framework was competitively tendered. The Post Office won because of its unrivalled network and what it was offering, and that meant that the contract could be awarded much more straightforwardly. Using the framework, we have already been able to award other contracts for DVLA counter services, for example, and the Post Office will be able to bid for other Government contracts as they arise.

[Dame Anne Begg (Aberdeen South) (Lab)]

In his statement and his reply to my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), the Minister made it clear that the POCA will not become a transactional account, and it is therefore less likely to be suitable for people who have been moved on to universal credit. The Government promised that jam jar accounts would be developed. Clearly, the POCA is not going to be a jam jar account, as some people had hoped. What are the Government doing about this? Who is going to provide these jam jar accounts, because as yet we do not know of any?

[Steve Webb]

I am grateful to the Chair of the Work and Pensions Committee. We have not added features to the Post Office card account because, for example, adding direct debit means that the credit check threshold suddenly gets much more serious. Instinctively, I am with the hon. Lady on this. My approach would have been that the POCA is a good thing, so why should we not add nice things to it? We have not upgraded it, however, because one of its attractions is that people who have poor credit histories or who would struggle with some of the identity checks can be enabled to access it. In developing universal credit, my right hon. Friend the Work and Pensions Secretary is working with local authorities and the banking industry to look at different sorts of accounts, including, as the hon. Lady suggests, budgeting accounts. The basic bank accounts that were improved yesterday will be part of a suite. We intend that there should be the right sort of accounts for the right people.

[Jenny Willott (Cardiff Central) (LD)]

I am delighted by today’s news that the Post Office will be able to serve customers using the new POCA well into the future. As the Minister said, that will enable the Government to achieve their commitment to protecting the post office network, unlike the previous Labour Government, who closed thousands of branches in every single constituency across the entire country. How many customers does he estimate will access the new accounts, which will bring trade into these post office branches, and how many are unable to access bank accounts at the moment?

[Steve Webb]

I am grateful for the work that my hon. Friend has done on this. As she will recall, we met to discuss how we could deliver this contract when she was postal services Minister. About 4,000 people in her Cardiff constituency currently have Post Office card accounts, and they will welcome this announcement. She is right that we have to work out how we can develop and expand this in future. We are trying to make sure that we have the right accounts for the right people. The number of pensioners with these accounts will gradually decline. For people of working age, we want, where possible, financial inclusion and transactional accounts. Many people with POCAs do have other bank accounts—for various reasons, they hold both—but we will make sure that the most vulnerable people have access to their money at the post office.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am sure that it will be a great relief to many people running post offices to know that the contract is going to be extended in this way, because there was uncertainty for some time. On being able to move from the Post Office card account to a basic bank account, I understand what the Minister said about credit checks, but would it not be possible for the Post Office to establish a basic bank account to which people could migrate, because that might speed up the movement of people into proper transactional bank accounts?

[Steve Webb]

Post Office Ltd is coming up with a range of accounts, some of which have monthly charges and other different features. The basic bank accounts of the largest nine clearing banks, among others, are all Post Office-accessible. The key thing is that Post Office Ltd is a business that can develop accounts of different sorts, as it is now doing—perhaps it has taken a bit longer than we might have wished—and customers can choose between them. For us, the crucial thing is that people will, if they wish, be able to get their cash at the post office, whether from a POCA, a basic bank account or a Post Office account.

[Justin Tomlinson (North Swindon) (Con)]

This announcement is vital for customers in our local post office network. The previous Labour Government presided over more than 6,000 post office closures. Labour MP after Labour MP queued up to have their photograph taken before coming down to Parliament to vote to close those post offices. To what extent will this announcement protect our existing network?

[Steve Webb]

My hon. Friend is absolutely right. There has been a sea change. Of course, nobody notices something that does not happen. For the past four years, we have not seen these mass organised closures. It was not just attrition, but at least two rounds of organised post office closures. This Government, despite difficult financial situations, have made it a priority to address that. Not only have we have invested in upgrading the network, but the post office local model means that people will be able access their cash on a Sunday morning if the shop is open, and that will be good for business. This is a seven-year contract, so it covers a very long period. The intention is to give the post office network breathing space to develop new products for the longer term.

[Ian Paisley (North Antrim) (DUP)]

This statement is very welcome. Will the Minister tell us how it will apply to the network in Northern Ireland and assure us that it will be proportionate across the whole of the United Kingdom?

[Steve Webb]

I am grateful to the hon. Gentleman. The social security administration system in Northern Ireland is a significant user of the Post Office card account, and we anticipate mirroring provision in Northern Ireland as well.

[Jason McCartney (Colne Valley) (Con)]

As deputy vice-chairman of the all-party group on post offices, I greatly welcome this announcement on the Post Office card account. Because of the new local branches across my constituency, we now have over 300 extra post office opening hours every month. Does the Minister agree that this signals an end to the 13 years of decline in our wonderful post office network?

[Steve Webb]

My hon. Friend is right; 2010 marked a sea change in the attitude of central Government towards the Post Office. I pay tribute to him and to the all-party group for their work on this issue. I recall attending a meeting of that group. The coalition parties have shown persistently, in very concrete terms, their commitment to the post office network in a way that the previous Government did not.

[Mr Kevan Jones (North Durham) (Lab)]

I welcome the Minister’s statement. In my constituency, the local credit union uses the card accounts to allow people to deposit and access their cash. What discussions has he had with the Post Office about developing further services with local credit unions, such as jam jar accounts?

[Steve Webb]

I am grateful to the hon. Gentleman. We set great store by credit unions. As he knows, we have invested about £38 million in the credit union expansion project. Previous Government interventions in this space were well meaning but did not create a new sustainability for the credit union movement. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman), who is a former Minister, says, “Rubbish.” The previous Government put up money for loans, the money got lent, and the credit union was no more sustainable at the end of the process than it was at the start. We are taking a different approach whereby we are trying to ensure that there is an infrastructure that makes running a credit union cost-effective. We are also very open to the possibility of a link with the post office network.

[Mr Robin Walker (Worcester) (Con)]

As chair of the all-party group on credit unions, I was going to ask almost exactly the same question as the hon. Member for North Durham (Mr Jones). I commend the Minister for this statement, which is good for pensioners, good for consumers, and good for our post office network. Under this Government, seven local branches in Worcester have been upgraded; under the previous Government, our last Crown post office closed. That is quite a contrast.

[Steve Webb]

I am grateful to my hon. Friend for his work on the crucial issue of financial inclusion. I stress that we see the Post Office card account as being particularly suitable for vulnerable people such as elderly pensioners. Over the next few years, people of working age will move from these types of accounts to more transactional accounts. The credit union movement is clearly an important part of this financial inclusion agenda. The crucial thing is to ensure that whether it is through a POCA, a basic account or any other sort of account, people can, if they wish, go to the local post office for their money, and they cannot do that if it has been shut.

[Mr Mike Weir (Angus) (SNP)]

It might be the Christmas spirit, but I find myself in the unusual position of actually welcoming a statement from the Minister. The Post Office card account is welcome, but I have to say that the Minister is wrong in what he says about Post Office modernisation. Many of the post offices in my constituency are suffering changes, with stand-alone post offices being closed in favour of local post offices. There is real concern about the lack of positions for POCAs in local post offices, where queues can build up—many quite large communities have only one local post office to serve the whole community—and banks are beginning to close some of their branches. In those circumstances, how can he be certain that the POCA will be a stepping stone to mainstream banking?

[Steve Webb]

I will take what I can get: I am grateful to the hon. Gentleman for his enthusiastic response. The 3,760 POCA holders in his constituency, as of last year, will welcome this announcement. On the issue of post office locals, each proprietor has to think what works in their premises, but I am advised by a normally reliable source—the Minister with responsibility for postal services—that queuing times are falling in the local model.

[Sarah Newton (Truro and Falmouth) (Con)]

I really welcome today’s statement about real investment in this vital public service—our local post offices. May we have a bit more information on how soon POCA customers who do not already have a basic bank account will be able to pay their bills by direct debit and therefore secure the best deals on their utility bills?

[Steve Webb]

There is a real tension between an account that is easy to open—limited identity checks; designed for people with poor credit histories—and an account that is sophisticated and transactional, and we feel that basic bank accounts offer a bridge between those two accounts. I was delighted by yesterday’s announcement by my Treasury colleague, the Economic Secretary: one of the things putting people off basic bank accounts is getting hammered with fees, say if a direct debit fails or something like that, and the fact that those fees are no longer in place is an important step forward for people making the transition to more regular sorts of accounts.

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

The Post Office card account was always intended as a stepping stone to a transactional bank account, which is a gateway to other financial services. The basic bank account agreement with the nine banks is to be welcomed, but there is still incredible suspicion in the marketplace about transactional bank accounts. What more will the Minister do to persuade POCA holders that it is in their interests, as well as in the interests of everyone else, to move to a transactional bank account?

[Steve Webb]

The hon. Gentleman makes an important point. We are testing and trialling approaches to try to work out which sorts of accounts are most suitable for which people. It is important to understand the revolution that universal credit will bring in, because people will get the whole of their benefits—tax credits, and potentially help with housing—and they will have to budget from that one relatively large sum. An awful lot of work is going on to trial which sorts of accounts work best for which sorts of people, but over the coming years we will clearly contact people of working age to indicate to them the merits of a transactional bank account.

[Simon Wright (Norwich South) (LD)]

Malcolm Fuller, the sub-postmaster of Eaton post office in my constituency, will step down from his role in the new year after decades of service to the local community. How will today’s announcement support initiatives to encourage new sub-postmasters to come forward, and to encourage existing businesses to deliver post office services in their communities?

[Steve Webb]

My hon. Friend is a doughty campaigner for the more than 5,000 POCA holders in his constituency. He is right that one reason why we are delighted to make the announcement is that sub-postmasters have told us they want an end to the uncertainty. For example, if they were selling a business, the person thinking of buying it needed to be confident that the business had a long-term future. We believe that the seven-year horizon gives sub-postmasters that confidence. We hope that it may unblock some sales, and enable new people who are prepared to move on to the next generation of services to plan for the future. Crucially, to respond to my hon. Friend’s question, it will give post offices the breathing space in which to do that, which they lacked in the past.

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

I thank the Minister for his statement, because the POCA clearly provides accessibility for many people, particularly elderly people, who rely on the service. In that context, what other Government financial services does the Minister contemplate treating in that way, particularly at a time when many of the mainstream banks are closing many of their branches and people do not have accessibility?

[Steve Webb]

We are trying to ensure that a range of Government services, not just financial ones, can be accessed at post offices. I recently renewed my family’s passports. The Post Office Check and Send service before the passports went off provided peace of mind and meant that they came back quickly. The Post Office is very good at providing that very valuable service. Identity verification will become increasingly significant: as Government services move online, the way in which someone proves their identity online will become important. As a trusted brand, the Post Office could play an important role as one of the potential providers of those services. Not only will services that Post Office Ltd is willing to offer on a commercial basis be available at post offices, but so will a range of Government services.

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

The Minister referred to the fact that the Post Office card account includes the facility to enable someone to allow another person to collect their money for them, which is particularly useful for the disabled. Under the new contract, will the account still provide for the issue of a second card for someone who wants one?

[Steve Webb]

Yes, I can confirm that. There is a system called simple payment for some of the most vulnerable people, who used to have giros, but for those with Post Office card accounts we will continue the facility of a second card for a family member or a carer.

[Jim Shannon (Strangford) (DUP)]

Last week, the hon. Member for Bristol North West (Charlotte Leslie) had an Adjournment debate in the Chamber on a LINK project to try to put ATMs in locations, such as villages, where there are not any ATMs already. For that reason, I very much welcome the Government’s announcement, which is really good news. Will the Minister confirm what the changes are in using the new system at post offices, and will the Government work alongside the LINK project to reduce or nullify charges for usage of the Post Office card account?

[Steve Webb]

As the hon. Gentleman knows, it is clearly already possible to access cash from a Post Office card account through the network of Post Office cash machines fee-free. As the number of Post Office card accounts drifts down and working-age people move to transactional banking accounts, one danger was that cash machines in rural and deprived urban areas would become unviable and be withdrawn from the network. One of the things we have specifically done through the new contract is to ask the Post Office—this is ensured as a term in the contract—to retain cash machines in rural and deprived urban areas.

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate my right hon. Friend on his announcement. It is good news for all the village post offices in my constituency and the pensioners who use them. It guarantees the long-term future of such post offices, and it is a contrast with the attitude of both the previous Government and the banks that are shutting rural branches. For the long-term survival of such post offices, the Post Office needs to develop its own basic bank account. Will my right hon. Friend encourage it to do so?

[Steve Webb]

I pay tribute to my hon. Friend as an officer of the all-party group on post offices and, indeed, as a persistent thorn in my side on this issue, which he recently raised at Business, Innovation and Skills questions. He has shown his commitment to post offices, and I know that his constituents will respect the work that he has done.

We have left Post Office Ltd, as a commercial organisation, the freedom to design bank accounts of the sort it feels appropriate. It has come up with a series of accounts; for example, some have a monthly charge, and others have different features. It is obviously testing the market, starting—if I remember rightly—in the east of England. That is clearly a commercial issue for it, but we are keen to make sure that a range of accounts are available to people to meet their needs.

[Liz McInnes (Heywood and Middleton) (Lab)]

Does this contract provide more income or less income for post offices?

[Steve Webb]

To be absolutely clear, the amount we pay sub-postmasters per transaction will be the same. We have protected that. The number of Post Office card accounts has been falling and will continue to fall, because older pensioners die, new pensioners have a tendency to use banks more and the working-age population generally moves towards other forms of transactional accounts. However, if someone moves to a bank transactional account that is accessed at a post office, they can still go into the post office and the post office will still get the footfall. The volume of POCAs is clearly going down, but the value that we are paying in the contract per transaction is staying the same.

bills presented

Local Planning and Housing Bill

Presentation and First Reading (Standing Order No. 57)

Sir William Cash presented a Bill to make provision for the clarification and improvement of local planning procedures; to make provision in relation to housing supply; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 9 January 2015, and to be printed (Bill 139).

Off-Road Vehicles (Registration) Bill

Presentation and First Reading (Standing Order No. 57)

Mr David Ward, supported by Graham Stringer, Stephen Lloyd, John Hemming, Sir Bob Russell, Greg Mulholland and Mr Adrian Sanders, presented a Bill to make provision for the establishment of a compulsory registration scheme at the point of sale for all off-road motorcycles and quad bikes; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 23 January 2015, and to be printed (Bill 140).

Equal Pay (Transparency)

Tuesday 16th December 2014 Commons Chamber

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

14:29

[Sarah Champion (Rotherham) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to make Regulations under Section 78 of the Equality Act 2010 to require employers of more than 250 employees to publish information relating to the pay of employees for the purpose of showing whether there are differences in the pay of male and female employees; and for connected purposes.

Forty-eight years ago, the women of the Transport and General Workers Union at Ford Dagenham got up from their machines and marched for equal pay. Today we have the privilege of having some of those women here in Parliament. Sadly, they are not here to celebrate a victory won, but to support a campaign to deliver on the promises that were made by Barbara Castle and this Parliament when we passed the Equal Pay Act 1970. I am ashamed to say that 48 years on from that historic strike and 44 years since the Act was passed, equal pay is still no more than a promise.

Women in Britain earn, on average, just 81p for every £1 earned by men. In my constituency of Rotherham, women earn just 77p for every male pound. Over a lifetime, that means women miss out on a staggering £200,000—enough to buy a house outright. Young women in their 20s, who the Government like to claim do not face the problem of the gender pay gap, get paid an average of £1,570 less a year than their male peers. In 10 years, that amount will buy them a car or pay for a deposit on a house. It is a life-changing amount that young women are denied.

It is not just women who are poorer because of the pay gap; it is their families too. Equal pay is an issue for all of us. No father, husband or son wants the woman they care about to work in a world where they are valued less for being a woman. The Government may claim that there is no need to worry and that the gender pay gap is falling, but I would hardly call a small fall last year, after a widening gap the year before, a victory. It is true that the last Labour Government closed the pay gap by almost a third, but even that progress is too slow. Women should not have to wait another 44 years for the gap to disappear.

Birmingham city council and, more recently, Asda demonstrated that pay inequality—being paid less as a woman for doing work that is of equal value and demands equal or even higher skills—is still a factor for women across the UK. We have progressed from the days when jobs would be advertised with one hourly rate for men and another for women, but that does not mean that the biases do not continue—they are just more subtle. According to the Chartered Management Institute, the average man’s bonus is £11,000 more than a woman’s.

The inequality becomes self-perpetuating. Men who have earned more in one job enter at a higher salary than women doing the same job who are already employed. That is justified not by performance, seniority or skill, but by the realities of recruitment. Sometimes, as in the case of Birmingham city council workers, there are historical pay inequalities that have simply never been rectified. All I am asking for is equal pay for equal work. Whether on the shop floor or the trading floor, that principle is as relevant now as it was back when the women of Dagenham marched.

Pay transparency—the simple act of a company publishing its gender pay gap—would mean that these differences were public for all to see. Why should the burden be on women to investigate pay inequality and to ask their colleagues how much they earn? How can we expect women to call out their employer if they do not even have access to the evidence? We should not have to wait for whistleblowers. We need to empower women to use the equal pay laws that are already in place.

Of course, the pay gap is not only about how much workers in the same job are paid. It is about equal reward for equal work. It is about valuing people’s skills and experiences equally, regardless of their sex, whether they are a parent or have just returned from maternity leave, and whether they are working part time, flexitime or full time. It means not only being paid for the job that they do, rather than the person they are, but being able to expect that if they do a good job, they will be promoted; that they can keep progressing in their career; and that reaching the highest-paid role is possible.

The workplace is changing and there are many examples of businesses that are committed to breaking down these barriers and of women who have made it to the top of their professions. However, today, in this very Government, there are 18 men in the Cabinet and only five women. In the Chamber, 23% of MPs are women and the majority of those are Labour. The Liberal Democrats have not even appointed a woman to the Cabinet in their four and a half years in government.

Pay transparency would push companies to focus on why the pay gap still exists, whether it is because women working on the shop floor are paid less than men in the distribution centre, despite doing work of equivalent skill and responsibility; because men in the company are getting higher bonuses; or because the highest-paid roles in the company are held by men. All those factors require changes to be made to allow equality in the workplace.

This is not about naming and shaming, about telling companies what to do or about micro-managing them; it is simply about changing the emphasis. Pay transparency places the responsibility on employers to be actively conscious of the law on equal pay, and to have policies to address the gap. It is a simple ask, and we know that because some employers, although too few, do it already. PricewaterhouseCoopers recently announced that it would join Genesis Housing and the three other companies that publish their pay gap.

This is not a vast new administrative burden on employers. It would apply only to employers of over 250 employees, and would be as simple as publishing the information in the companies’ annual reports. What it will do is focus minds. Businesses that already publish their figures tell us as much. The insurer Friends Life says that it publishes its pay gap by each pay grade for two key reasons:

“one is trust and the second builds on the old adage, ‘what gets measured, gets managed’…This was shown to be the case when we reported a slight widening of our gender pay gap at two middle management grades in our 2013 Report. The issue was investigated and the explanation included in the report.”

Openness and transparency are principles that this House should be voting for and that Governments of all colours should champion. However, on entering Government in 2010, the two coalition parties announced that they would not be implementing section 78 of the Equality Act 2010, which the last Labour Government introduced to enable pay transparency. The former Lib Dem Equalities Minister, the right hon. Member for Hornsey and Wood Green (Lynne Featherstone), made a speech in June 2012 in which she said:

“I firmly believe that for most companies who are trying to do the right thing, voluntary business-led initiatives are key. They secure more buy-in and achieve more lasting change than the big stick of legislation…It is not about forcing companies to report information they don’t want to.”

The Government believed that that passive approach would bring about lasting change.

The “Think, Act, Report” scheme has been hailed by the Liberal Democrat Under-Secretary of State for Women and Equalities, the hon. Member for East Dunbartonshire (Jo Swinson), as bringing about “significant steps forward”. However, when asked, the Government admitted that only four—it is now five—of the 200-odd companies that were signed up to the scheme had published their pay gap. That is hardly surprising when the Government’s website for “Think, Act, Report” tells companies that they should publish information on their gender pay gap only

“if they feel comfortable doing so”.

That is hardly robust encouragement from the Government.

It appears that the Liberal Democrats have had a change of heart. They now admit that section 78 of the 2010 Act was the right approach all along. We still have time before the election to make pay transparency a reality. It does not require primary legislation. Section 78 already gives the Government the power to make regulations to require pay transparency across all large employers.

Finally, I want to pay tribute to Grazia magazine and its readers for their fantastic campaign, “Mind the Pay Gap”, which has seen tens of thousands of women sign the petition to enact section 78 for pay transparency. I also thank Unite and all the other unions that have championed equal pay for decades for the thousands of working women across this country.

Today, Parliament has the opportunity to take a big step closer to making good on the promise of equal pay, which was fought for and won by the women of Ford Dagenham 48 years ago. MPs of all parties must listen to the voices of women up and down the country and support pay transparency today.

Question put (Standing Order No. 23).

14:39

Division 117

Ayes: 258

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Labour: 192
Conservative: 29
Liberal Democrat: 22
Scottish National Party: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Independent: 2
Democratic Unionist Party: 2
Green Party: 1

Noes: 8

---

Conservative: 8

Ordered,

That Sarah Champion, Ms Harriet Harman, Gloria De Piero, Fiona Mactaggart, Kate Green, Sheila Gilmore, Roberta Blackman-Woods, Stephen Doughty, Andy Sawford, John Mann, Mr Steve Reed and Andy McDonald present the Bill.

Sarah Champion accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 27 February, and tobe printed (Bill 138).

Counter-Terrorism and Security Bill

Tuesday 16th December 2014 Commons Chamber

[Relevant documents: Oral evidence taken before the Home Affairs Committee on 3 December 2014, on the Counter-Terrorism and Security Bill, HC 838; Written evidence to the Home Affairs Committee, on the Counter-Terrorism and Security Bill, reported to the House on 3 December 2014, HC 838; Oral evidence taken before the Joint Committee on Human Rights on 26 November 2014, on counter-terrorism and human rights; Written evidence to the Joint Committee on Human Rights, on counter-terrorism and human rights, reported to the House on 26 November 2014, HC 836; Oral evidence taken before the Joint Committee on Human Rights on 3 December 2014, on the Counter-Terrorism and Security Bill; and Written evidence to the Joint Committee on Human Rights, on the Counter-Terrorism and Security Bill, reported to the House on 3 December 2014, HC 859.]

[3rd Allocated Day]

Further considered in Committee

[Mr Mike Weir in the Chair]

Clause 21

General duty on specified authorities

14:51

[Hazel Blears (Salford and Eccles) (Lab)]

I beg to move amendment 30, page 13, line 34, at end insert

“and must also develop capacity to combat and reject the messages of extremism”.

This amendment introduces a requirement to support work combating the ideology of extremism as part of preventing people being drawn into terrorism.

[The Temporary Chair (Mr Mike Weir)]

With this it will be convenient to discuss the following:

Clause 21 stand part.

That Schedule 3 be the Third schedule to the Bill.

Clauses 22 and 23 stand part.

Amendment 19, in clause 24, page 15, line 6, leave out “may” and insert “must”

Changes it from optional to compulsory for the Secretary of State to issue guidance to accompany the statutory obligation provided for under Clause 21.

Amendment 31, page 15, line 7, at end insert—

‘(1A) Any such guidance should include a requirement to develop capacity to combat and reject the messages of extremism”

This amendment introduces a requirement to support work combating the ideology of extremism as part of preventing people being drawn into terrorism.

Amendment 20, page 15, line 21, leave out subsection (5) and insert—

‘(5) Before giving guidance under this section, or revising guidance already given, the Secretary of State must lay before Parliament—

(a) the proposed guidance or proposed revisions, and

(b) a draft of an order providing for the guidance, or revisions to the guidance, to come into force.

(6) The Secretary of State must make the order, and issue the guidance or (as the case may be) make the revisions to the guidance, if the draft of the order is approved by a resolution of each House of Parliament.

(7) Guidance, or revisions to guidance, come into force in accordance with an order under this section.

(8) Such an order—

(a) is to be a statutory instrument, and

(b) may contain transitional, transitory or saving provision.”

This would ensure that statutory guidance produced under Clause 24 was subject to an affirmative resolution of each House.

Clauses 24 to 28 stand part.

Amendment 21, in clause 29, page 17, line 29, leave out subsection (7) and insert—

‘(7) To support panels exercising their functions under this section the Secretary of State must—

(a) provide guidance on the exercise of those functions;

(b) provide a list of approved providers for de-radicalisation programmes that may be referred to under subsection (4);

(c) ensure that the providers listed under paragraph (b) are subject to monitoring.”

This would give a greater role to the Secretary of State in supporting the role of local support panels. The Secretary would have to provide guidance (rather than it being optional) and she would also have to provide a list of approved providers for de-radicalisation programmes and ensure they would be subject to monitoring.

Amendment 22, page 17, line 41, at end insert—

“(c) the responsible local healthcare commissioning group; and

(d) local representative of the National Offender Management Service.”

This would include local health bodies and the probation service on the assessment and support panels.

Clauses 29 and 30 stand part.

That Schedule 4 be the Fourth schedule to the Bill.

Clauses 31 to 33 stand part.

New clause 12—Review of international best practice around deradicalisation—

‘(1) The Secretary of State Shall, within three months of this Act coming into force, lay before both Houses of Parliament a review into international best practice around deradicalisation.

(2) The review under subsection (1) shall include in particular—

(a) examination of best practice in—

(i) Germany;

(ii) Denmark;

(iii) Sweden;

(iv) other countries as determined by the Secretary of State.

(b) the role of community-based organisations in developing and delivering strategies to prevent radicalisation and to deradicalise individuals.

(c) evidence-based recommendations for the rapid implementation of a comprehensive deradicalisation programme in the UK.

[Hazel Blears]

Before embarking on my remarks on the amendments, I want to say a few words about the appalling events that have taken place in the past 24 hours that illustrate the importance of the work we are doing this week in Committee. I am sure the Committee will join me in sending our deepest sympathies and thoughts to the families of Katrina Dawson, the young barrister, and Tori Johnson, the café manager, who were killed during the 17-hour siege in the Lindt café in Sydney. Those were horrendous events and the whole community in Sydney is shocked. Our thoughts are with them and their families.

Also in the past 24 hours, we have seen a terrible attack on a school in Pakistan. I understand that at this moment the figures are hard to determine, but about 128 people have been killed, the vast majority children under the age of 16. As far as we know, six gunmen broke into the school compound, entered every single classroom and killed the children. Locals heard the screams of students and teachers. This has been described as a national tragedy and utter barbarism. I am sure the Committee endorses those sentiments. The work we are doing this week sometimes does not necessarily attract as many Members to the Chamber as other topics, but it is of the utmost importance to national security.

Amendments 30 and 31, tabled in my name and that of the hon. Member for New Forest East (Dr Lewis), seek to address what we consider to be a really important gap in the proposed legislation. We welcome part 5 of the Bill as a whole, and we had a good debate on it on Second Reading. The Government’s proposals to put the Prevent strategy and the Channel programme on a statutory footing are absolutely welcome.

[Lady Hermon (North Down) (Ind)]

Will the right hon. Lady join me in saying how disappointed she is that part 5, which is a critical part of the Bill, does not extend to Northern Ireland? Young people in Northern Ireland are not immune to being radicalised and entreated to join terrorist organisations.

[Hazel Blears]

The hon. Lady has deep, if not unique, experience of the practicalities of these issues in her community in relation to Northern Ireland terrorism, which we have faced for many decades in this country and in Ireland as a whole. She makes a powerful point. I am sure that the provisions aimed at preventing young people in particular from being drawn into terrorism would have the same applicability in Ireland as they do in our country. In fact, I am sure there are many lessons we can learn from the dreadful experiences in Ireland that could inform our policy and practice in England, Scotland and Wales. I hope she will return to that in her remarks later on.

I welcome part 5 of the Bill and putting the Prevent and Channel programmes on a statutory footing. I hope that that will succeed in achieving more consistency, better practice and the sharing of projects. At the outset, I say to the Minister that I was very grateful for the recent briefing given to members of the Intelligence and Security Committee on the operation of some of these programmes. I think I saw a step change in intensity, breadth and depth in some of the programmes being implemented. I give the Government credit for doing that. As ever, I will say to him, “Good try and good effort, but there is much, much more we can do,” but I was pleased to have that information.

Amendments 30 and 31 are small, if not quite perfectly formed, but I hope that they will enable us to have a good debate on one of the most important things we ought to be doing to stop people being drawn into terrorism: challenging and combating the ideology that is the foundation of many of the problems we find here and across the world in the global jihad movement and in extreme political Islamism. I hope the amendments will be a catalyst for debate and I am very interested in what the Minister has to say.

Amendment 30 relates to clause 21(1), which puts a general duty on local authorities and other agencies to have regard to work done to prevent people from being drawn into terrorism when they are exercising their functions. The amendment specifically requires that when those duties are being carried out, they must also develop capacity to combat and reject the messages of extremism. Amendment 31 relates to clause 24, which provides that the Government should produce guidance on how those duties in clause 21 are to be carried out. I am very disappointed that the guidance has not yet been published. The Government’s explanatory notes to the Bill state that the guidance will be published in tandem with the Bill. It is very difficult, if not impossible, to have the fullest possible debate that I want us to have, without having some guidance in front of us. A key question for the Minister is when the guidance will be available. Will it be available before Report at the very least, so that we can have a full and proper debate when the Bill returns to the House? Amendment 31 states that the guidance should include provision on developing capacity to combat ideology.

The purpose of the amendments is to fill a gap in the Bill. My biggest concern is that part 5 of the Bill is couched in terms of addressing the vulnerability of individuals being drawn into terrorism. Clause 28 refers time and again to working with individuals who are already at risk of being drawn into terrorism. There are two things to say about that: it is a narrow interpretation that deals with individuals, but it also deals with individuals when they are already on the path to radicalisation. I believe there is a real gap in the Bill. As well as work with individuals, work ought to be undertaken on a broader basis with families and communities to build resilience so that people are able to withstand and reject the messages of extremism in the first place.

[Keith Vaz (Leicester East) (Lab)]

I thank my right hon. Friend for all the amazingly important work she does on this issue. She is making a very powerful argument. Do we not also need to reassure families that the purpose of participation in those engagement activities is not punishment but rehabilitation? We have had far too many examples of families ringing up and reporting young people at the centre of this only for those young people then to be broken away from their families. It is important to keep the family unit close together when dealing with these issues.

[Hazel Blears]

My right hon. Friend makes an important point. He is correct to say that much of this work needs to be done with families in a supportive environment. People who are already involved in terrorism are another matter. Unfortunate though this may be for some of the families affected, there will often be a case for prosecution when people cross the line and engage in criminal activity. Before that point, however, if we can find at the earliest possible stage people who are just beginning to be groomed—this is about grooming, which is relevant to other contexts as well—and who are about to take that path, and if we can support them and get good families and the rest of the community around them to give them resilience, we will have a much better chance of keeping them out of trouble than if we let them go down that path. It is much harder to bring people back than to stop them getting on that conveyor belt in the first place. That is why this work is so important.

15:00

[Mr Mike Hancock (Portsmouth South) (Ind)]

I agree entirely with the right hon. Lady that we have to start the process as early as possible, but the real problem in my city, which has been suffering quite badly from extremism—we have already lost four young men and there are others still out there—is how to give confidence to families in the community that, first, they will be taken seriously, and secondly, as the right hon. Member for Leicester East (Keith Vaz) has said, that, somehow, their children will not be punished. How do we get to the families? I have yet to hear a decent argument that will give confidence to families.

[Hazel Blears]

The hon. Gentleman makes an important point. The work is difficult and complex. It is not easy. During my contribution I shall give a couple of examples that I hope will reassure him that we have made more progress over the past couple of years than in the past on exactly the area he mentioned.

I want to cover several aspects. Why is this work important? Who is best placed to do it? That is a key issue. I also want to address the importance of having an online presence these days, because so much is done through social media. I also want to address the role of religious leaders and scholars. That is a controversial area, but it is absolutely essential to work with them. I shall also give some practical examples.

Why is the work important? Young people are being drawn into situations and scenarios that are absolutely horrendous for them and their families.

[Bob Stewart (Beckenham) (Con)]

The right hon. Lady is a good friend of mine and one thing that has not been mentioned so far is friends. Does she agree that the peer group is probably as important—and sometimes more important—in influencing young people? I speak as the father of four teenagers.

[Hazel Blears]

The hon. Gentleman, whom I count as a friend in the House, makes an extremely important and valid point. Interesting research has been done lately on the contrast between exposure to radicalisation online and peer groups. It is very interesting that we concentrate on having a presence on online social media, but evidence is emerging that peer group influence is just as important—possibly more important—than online messaging.

This work is very important, particularly for young people who are even more vulnerable. Quite a lot of research has been done on people with mental health problems and how vulnerable they are at certain points in their lives. We had a good discussion about that on Second Reading. My right hon. Friend the Member for Leicester East (Keith Vaz) asked about the tipping point and what we really know about the issue. The work is also important because it counters the justification for terrorism and the powerful narrative about grievance and victimhood, which underpins all the work done by our Contest counter-terrorism strategy.

In the past such work was seen as something of an add-on to the Contest strategy: the important thing to do was to pursue the terrorists, disrupt plots, prosecute and convict. All that is absolutely essential, but because the Prevent strand of our work is about emotional vulnerability, mental health problems and families, friends and peer groups, it is much more difficult to have a direct and targeted strategy. It was therefore almost seen as a second-order issue. I am absolutely delighted that Prevent has now been put centre stage not only because the Bill puts it on a statutory footing, but because of the contributions of many Members. Of the 500 young people who have gone to Syria, 250 have come back, some of whom will be radicalised and pose a threat to this country. There is now an increased focus on that aspect, and I am absolutely delighted about that.

I ask the Minister whether that increased focus will be reflected in the money to be allocated to the Prevent programme. I would be very interested to know how much of the £130 million that the Prime Minister promised will actually be allocated to Prevent and Channel work.

[Lady Hermon]

I am sincerely grateful to the right hon. Lady for allowing me to intervene on her once more. Church leaders are another very important and influential group. I speak from the horrible experience in Northern Ireland. My late husband was the Chief Constable of the Royal Ulster Constabulary during the worst of the troubles—indeed, he was the longest-serving Chief Constable—and the late, wonderful Cardinal Cahal Daly, the leader of the Catholic Church, condemned, without hesitation, IRA violence and beseeched young people not to get involved with the IRA. The involvement and contribution of religious leaders is hugely important.

[Hazel Blears]

The hon. Lady makes another point illustrating the depth of her personal experience of the issues under discussion. The leaders of our faith groups play an essential role. Increasingly, Muslim leaders are condemning many of the atrocities, even so far as to issue fatwas and to say that they are un-Islamic activities. There is, however, further to go, because it is one thing to condemn something, but the big challenge is to build an alternative narrative that says it is not justified by religion or Islam, and that the way in which quotes from the Koran are twisted and perverted to justify violence is absolutely wrong. Government cannot play that role, and nor should they: it ought to be the role of respected scholars and religious leaders in the community. That work is essential, because the violence is justified by reference to a perverted view of a religion, which is a betrayal of mainstream, moderate Muslims.

[Mr David Ward (Bradford East) (LD)]

Is the right hon. Lady aware of the distrust and suspicion in some communities of what might happen? After the Bradford riots, many parents escorted their children to the police thinking they would get told off, but they ended up with long, extended prison sentences for actions that, at the beginning of the day, were simply not in the minds of those young people. There is a danger that people will be reluctant to come forward because of the way in which they will be dealt with by the police.

[Hazel Blears]

I am very much aware of the difficulties faced by people in such circumstances. It can be a dilemma for families and friends to take those steps, but what I will go on to say might reassure the hon. Gentleman to some extent.

Sara Khan is the director and co-founder of We Will Inspire, which might be an unfortunate name, given what has been said so far in the debate. The group works with Muslim women and empowers them. Sara Khan says:

“When I was growing up I was exposed to a moderate British Islam which talked about integration, active citizenship, love for one’s neighbours and it was this theological grounding that played a significant role in making many young Muslims that I knew resilient to the extremist narrative.”

She goes on to talk about a project she did:

“Earlier this year, Inspire completed a 6 week challenging extremism programme in Leeds to help educate women about the extremist threat and taught them key theological counter-narratives to extremist ideology. Many of the participants lived doors away from the homes of the 7/7 bombers and participants time and again stated ‘if I knew this information ten years ago when my children were teenagers, I would have taught them about the issues raised in this course. This is the first time I’ve been educated on such a crucial and important topic.’ These women expressed feelings of disappointment in religious and civic Muslim leaders in not providing their children with a contextualised understanding of Islam and their inability in directly challenging extremist ideas so easily available on the internet.”

When such work is done, therefore, and people feel confident in being able to rebut those arguments, it is absolutely possible to provide that kind of community assurance.

[Mr Mike Hancock]

I agree entirely with the right hon. Lady about the role of women in the community. I have talked to women in communities in Portsmouth, some of whom have lost their sons. They wished they had had more information and had been aware of what was going on. The trouble was that those young people had been radicalised outside the home and, in most cases, outside their working environment. Most of those young men were in further education and that was where they had been radicalised, which led them to go to Syria and, ultimately, to lose their lives.

[Hazel Blears]

The hon. Gentleman is right. He will see that in schedule 3 to the Bill there is a list of educational organisations that will be subject to the general duty in clause 21. I am pleased about that, and hope that the Minister will give us the assurance that, as well as formal education institutions, madrassahs will also be covered by this kind of work. Sometimes informal educational settings do not have standards that are as robust as we would all like.

Sara Khan has also given a good example of where community resilience building has worked really well, in Bristol. Five or six years ago, when local people were worried about young people being drawn into extremism, they set up an organisation called Naseehah, which trained 25 local people to recognise radicalised people, and then support and deradicalise them using Islamic theology. A potential suicide bomber who wanted to blow up Bristol town centre was sent to prison, where he was deradicalised. He then sent a message of endorsement to the community organisation, saying how important it was to challenge extremist ideologies.

That is one of the best illustrations I have seen of preventing extremism. It is about building resilience in communities, directly challenging the ideology, supporting vulnerable individuals and then referring them on to a channel project for an early intervention. If all the parts of the circle work together, we have a really powerful mechanism. At the moment, the Minister has a general duty on Prevent and his Channel provisions, which deal with individuals. I honestly think there is a gap on challenging ideology and building the resilience of communities so that they can take that work forward.

When I have raised that matter previously in the context of the Bill, people have said that that is implicit in clause 21—if there is a duty to prevent people being drawn into terrorism we will have to challenge the ideology. If it is implicit, what is wrong with making it explicit? The Prime Minister has said time and again—in his Munich speech, for example, and in his speech in Canberra—that this is a long-term generational struggle. It therefore ought to be explicit within the legislation. [Interruption.] The Minister talks about the Prevent review, but that was in 2011. I hope to persuade him today that it is a tiny step to say that work under clause 21 will include combating ideology.

I will move on now to online messaging. We have discussed previously some of the excellent work done by Erin Saltman of Quilliam, who has pointed out that, yes, it is important to take pernicious material off the internet so that people cannot access it, but that is not enough. People will find other ways to put that information back up, perhaps via another website, as there is still the technology. Therefore, what Quilliam has classed as counter-speech is very important. The hon. Member for New Forest East has talked a lot about that issue and has a lot of in-depth knowledge on it.

Quilliam has been good at saying what that counter-speech should look like. We need three things: a good message, credible messengers and a means of getting the message across. Quilliam has made the distinction that that should be done through a partnership between civil society, the Government and local government, and has pointed out that civil society organisations are often the best placed to deliver that message. It is not always the case that the Government have to do everything; they can facilitate, help, encourage and provide financial assistance, but the people out there in civil society organisations are crucial to efforts on this matter. Quilliam has made the point that many extremist groups are themselves peripheral civil society groups, so what better way to challenge them than robust civil society groups with really good values that want to do the right thing?

15:15

That point brings me on to the role of scholars and of theology. We have already had a good discussion on that. Ed Husain, who is a senior fellow at the Council on Foreign Relations, has written a very good article, called “Until We Understand ISIS, We Cannot Hope to Defeat It”. He talks at great length, in a much more expert fashion than I can, about the way in which religious ideology drives ISIS. He talks about the Salafis and their adherence to a violent creed around Islam:

“To the violent Salafi, tawheed is political as well as credal. To rule by democracy is to violate God’s sovereignty. Man-made law is the ultimate violation of pure tawheed”—

that is, under the ISIS version—

“and, to oppose this corruption of monotheism, extreme Salafis will walk the path of jihad. Their jihad is not to remove Syrian President Bashar al-Assad or a secular government; it is to create ‘God’s government’ or a caliphate that holds up God’s law by applying their form of sharia.”

That is an interesting analysis of why people hold so dearly to that kind of ideology. Fortunately, only 3% of Muslims hold to that creed, but it can be influential in the wider sphere. When something is explained by reference to religion—the things that people hold really deeply and have a real adherence to—that can be very powerful indeed.

Ed Husain goes on:

“Isis offers a caliphate and death. Our message needs to be of life, an Islam of the Muslim majority supported by 1,400 years of history.”

So he has an optimistic message as well as a dire warning. Many of us in this House will never have that depth of knowledge and expertise; if we are not of the faith and have not been brought up with it, we will have some knowledge, but being able to work with people who have that depth of understanding will be really important for us. Will the Minister make absolutely sure that when we are doing Prevent work and building resilience, we draw on all the skills and talents of people who increasingly are doing a lot of academic research on this area and have a lot of in-depth knowledge?

In other places around the world, people are engaged in exactly the same work as we are. In Singapore, a religious rehabilitation group has set up a counselling centre and reference centre for religious teachers, researchers and the community. The Australian Government have just produced their first strategy on countering violent extremism. That strategy discusses building

“community cohesion and resilience to violent extremism”

and the need to work with communities,

“both through their own activities and in collaboration with government”

to do this kind of work. If building community resilience can be in the Australian strategy on countering extremism, I am sure we ought to be doing precisely the same in our legislation.

This is an emerging area of study. As we said on Second Reading, no one has all the answers. It is a complex and developing area, and we are learning a great deal as we go along. I was heartened to see Bradford’s action plan for the Prevent programme for the next two years, “Working Together to Challenge Extremism”, which is very practical. I was pleased to see that it says:

“Our approach is centred on challenging the ideology which leads individuals to extremist views and actions. Prevent will work with young people offering them forums to express themselves. Through education and dialogue we will provide access to a wide range of knowledge and opinions enabling groups to further develop ‘critical thinking’ skills and to make informed choices.”

That is a really good encapsulation of what the duty in clause 21(1) should be doing. If in their action plan Bradford Prevent workers can talk about combating ideology, I am again at a loss to see why we cannot incorporate amendments 30 and 31, on combating ideology, into the Bill. That is a really important message that we should be sending out to people in everything we do.

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

I will not pre-empt my speech by seeking to respond to all the points made so far, but I thank the right hon. Lady for the manner in which she is approaching the debate. Let me assure her that the fundamental aspect of challenging ideology is at the core of Prevent and the intent of putting this on a statutory basis is to endorse the work of Bradford and many other local authorities and organisations that are doing absolutely that.

[Hazel Blears]

I am grateful to the Minister for putting that on the record in such trenchant terms and I still want to encourage him to take the extra small step of putting it on the face of the Bill as well as putting it on the record in Hansard. Perhaps we will be able to do that together with our colleagues.

I have a few questions for the Minister. First, does he agree that tackling the ideology is important? He absolutely does. Does he agree that there is a gap in the legislation, in that it does not refer specifically to this work? Does he agree that this work should specifically be included in the guidance? I would be very interested in his response on that point. We might actually see the words “combat ideology” in the guidance, which would be very helpful. Perhaps we could return to the issue on Report to see how far we have moved.

My final questions are about resources. How much of the £130 million announced by the Prime Minister will be allocated to Prevent and Channel? We cannot do this work without the resources and the funds to do it. When does the Minister expect to be able to publish the counter-extremism strategy that I know he and the Home Secretary are working on? That would provide an important backdrop to the legislative work we are doing to make this happen.

I think there is a great deal of consensus across the House. I wish we were not having this debate and that we were not faced with the terrorist threat that we are, but as we are I am pleased that the Prevent part of the counter-terrorism strategy has become more central to what we are doing. There is recognition that if we stop people being drawn down this path, it not only would be good for them but would mean that we would not have to spend millions and millions of pounds on disrupting the plots that unfortunately threaten the essence of our nation. As with many other programmes, if we invest in prevention we do not have to pick up the pieces at the end of the day.

I am an optimist and although this work is difficult, I believe that if we work together—communities, central Government, local authorities, families, practitioners and academics—and ensure that we put every bit of our energy into preventing people from being drawn down this path, we can all learn together, although it will take time, and we can ensure that we live together as communities in peace and prosperity rather than being driven apart, as we are at the moment, by the hatred of this pernicious ideology, which is causing so much heartbreak and concern to communities across the world.

[Dr Julian Lewis (New Forest East) (Con)]

I rise to support the thrust of the argument made by the right hon. Member for Salford and Eccles (Hazel Blears). We have worked on these issues in tandem so many times that if they were put on to a DVD, we would be in danger of compiling a box set between us. However, by returning to the same subject again and again and often in the same terms in our campaign to get the Government to do more in this field, we are illustrating the principle that the Government ought to be applying when they do that—namely, if one is to win an argument about or involving ideology, it is not good enough to set out one’s stall a single time as though one were a university professor and to think that that is the end of the matter. One must keep the message coming over and over again until one gets one’s own way. We are saying that what is lacking in the machinery is the ability to consolidate and wage counter-propaganda warfare—I use that term in a non-pejorative sense—against this barbaric ideology, and we are talking about doing it in a way that will have an effect at a much earlier stage of the process than most of what is proposed in the Bill as it stands.

It is quite understandable, in the light of atrocities such as 9/11 at one end of the spectrum and what happened in that restaurant in Sydney in Australia at the other, that the Government’s first concern must be countering and impeding what in IRA terms used to be called the “men of violence”. I fully accept that as long as there is a totalitarian ideology at large in the world, in most societies, even democratic ones, there will always be a few people extreme enough, unbalanced enough, criminal enough or at a loss and vulnerable enough for indoctrination to subscribe to it. Even in this day and age, we can find supporters of Aryan theories of Nazism and supporters of Marxist-Leninist totalitarianism, but the key point is that those supporters are absolutely isolated from the wider communities in which they live. We are not concerned about the ability to prevent, by persuasion or counter-indoctrination, every last person who is susceptible to becoming an extremist from becoming an extremist. We are talking about ensuring that that minority remains a minority and that their poison does not leach out into the wider community and, in particular, that the counter-measures taken by the state against what they are doing do not have the effect of radicalising the wider community.

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

I am grateful to the hon. Gentleman for giving way; he is always very generous in these debates. Although I agree with almost everything he says, I have a small concern and perhaps he could talk me through some of it. He talks about “combating” extremism and ideology, but does he not think that the whole notion of combat and conflict was one of the things that got us into this trouble in the first place?

[Dr Lewis]

I disagree. When one is dealing with an intolerant ideology, one cannot simply say that one will, through some calm rationalisation, remove all the barbs, evil and poison. I am talking about what must be done to counter the pernicious ideology with which we are confronted.

[Mr David Davis (Haltemprice and Howden) (Con)]

Will my hon. Friend give way?

[Dr Lewis]

I had not quite finished, but of course I will.

[Mr Davis]

Although I understand what my hon. Friend is saying, I rather agree with the hon. Member for Perth and North Perthshire (Pete Wishart) that we are sometimes very unwise in our choice of words. When we choose words such as “war on terror”, we give the other side the standing of soldiers when often we are dealing with criminal misfits. Should we not be more careful about our language?

15:30

[Dr Lewis]

Absolutely, and by using concepts such as “the war on terror” as part of our counter-propaganda campaign we may indeed be scoring an own goal. But in discussing techniques for what we are doing in this place, believe me, there are not a host of radicals hanging on every word we use in this debate about the machinery that we should set up. Once we have set up the machinery, we can then go into the niceties of which expressions we use and which we do not. But let us be frank; this is a battle of ideas. It is a battle between barbarism and civilisation. The hon. Member for Perth and North Perthshire and others can shake their heads as much as they like but were I to make, for example, a similar argument against racist and Nazi exterminatory ideology, they would not blame me for couching the argument in the terms of a battle of ideas. It is a battle of ideas; the people who subscribe to this extreme doctrine have declared war on our civilised standards of democracy and tolerance.

I always mention—it so appropriate and someone always forces me, or perhaps I should say, incentivises me to do so—what the late great Sir Karl Popper described as the paradox of tolerance in a free society. He defined it in the following terms: you should tolerate all but the intolerant because if you tolerate the intolerant, the conditions for toleration disappear and the tolerant go with them. I make absolutely no concession to the hon. Member for Perth and North Perthshire or indeed to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). My right hon. Friend was talking about something slightly different—what we do when we are engaged in a battle of ideas—so I will give my right hon. Friend that get-out. But I make no concession to the hon. Member for Perth and North Perthshire about using the phrase “a counter-propaganda battle.” That is exactly what it is. We used to wage it against fascism and Nazism and against communist ideology and extremism. This is the latest incarnation, albeit one that goes back to a time hundreds of years before those terrible and extreme ideologies came on the scene to terrorise mankind.

It is fully understandable that a Government’s first concern has to be with the end of the conveyor belt at which fully formed terrorists spring into action, either on what they call a “spectacular” scale by killing hundreds or even thousands of people, or what we on the Intelligence and Security Committee prefer to call the self-starter end of the spectrum. We use that rather than the “lone wolf” appellation for reasons similar to the point made by my right hon. Friend the Member for Haltemprice and Howden. But whichever it is, by the time we reach that end of the conveyor belt nothing can be done. I venture to say that even the best counter-radicalisation and counter-extremism programme will not prevent some individuals from getting on that conveyor belt and travelling all the way to the end. The question is how we isolate them from the majority and prevent them from infecting the majority.

In the amendment, my opposite number—and friend—the right hon. Member for Salford and Eccles and I are trying to get something stronger in the Bill. For example, we are trying to add to clause 21 words about developing

“capacity to combat and reject the messages of extremism”.

I am terribly sorry but the word “combat” is in there; I make no apology for it. The clause says that a

“specified authority must, in the exercise of its functions, have due regard to the need to prevent people from being drawn into terrorism.”

I think having “due regard” is a pretty weak obligation and, as the right hon. Lady said, much of the focus here is on the obligations of various organisations and authorities covered by the Bill towards individuals who have already been identified as being vulnerable, at risk or on the path towards radicalisation. But we need to do something else. We need to try to create an atmosphere and a climate that is totally hostile to the propagation of the basic extreme ideology so that it becomes increasingly difficult to find anyone who is on that path to radicalisation because the whole concept of the ideology is anathema to society as a whole, or will be by the time we have finished.

[Bob Stewart]

I have been listening to my hon. Friend talk on the subject of ideology. One thing that crosses my mind is that some of these gentlemen may well have no ideology whatever, beyond the fact that they think that it is a good cause and they are a jihadi and are suddenly big men in their community. They can swank around and say “I’m a jihadi and I’m going off to fight.” After all, did not one of them have “Islam For Dummies” in his bag when he left?

[Dr Lewis]

My hon. Friend is absolutely right and the insincerity of some of those who do these sort of things is an important issue. It is important because if we succeed in making adhesion to the ideology something that nobody in the community would want to touch with a bargepole, it makes it much more difficult for anyone motivated by the desire to say “Look at me: I’m this glamorous figure and I’m going on jihad”, particularly if they know that the rest of the community would respond with “What are you saying? Are you mad? Why do you think we should admire you for saying that you are signing up to this ideology?”

A related point common to all these totalitarianisms is this: it is interesting to note how often everybody else gets wrapped up with the historic inevitability of whatever extreme cause it is or the God-given duty to follow it, but funnily enough, it is the people at the top who always seem to end up having supreme power over everyone else. Is it not convenient if someone is an megalomaniac to have to hand an ideology that justifies doing whatever the person wants to do in a society in which civilisation has broken down? As the famous philosopher Thomas Hobbes said, life would be “nasty, brutish and short” in such circumstances.

In reality, these extreme ideologies allow psychopaths and megalomaniacs to get to the top and exercise untrammelled power—but not, of course, for themselves. No, they are doing it because God has laid down that society should be run this way. I feel that, over many hundreds of years, our civilisation has torn down this edifice of extremism, and most of us feel that we will be damned—I use the word almost literally—if we do not stand up to prevent it from being re-erected in the heart of our own society or other societies.

[Mr Mike Hancock]

I hope that the hon. Gentleman does not fall into the trap that his hon. Friend the Member for Beckenham (Bob Stewart) was leading him into—of believing that these young men and women who have gone to Syria were parading themselves around the community saying that they were on their way there. I do not think that any available information suggests that that is the case. In fact, it is the very opposite of the case.

[Dr Lewis]

Indeed. It is certainly true that, for obvious reasons, many of these journeys are undertaken in conditions of great secrecy. I cannot help interjecting one of my concerns—I have to be careful not to step into judicial areas and I make no reference to any particular recent case even though there might have just been one—which is about judges who take the view that they want to set exemplary and terribly harsh sentences on people who have come back when we do not know whether they have done anything while overseas other than commit the crime of going overseas to fight in the conflict. Handing out a sentence that would be commensurate with the sort of sentence someone would get in this country if they have committed manslaughter and taken a life, must be a huge discouragement to members in these communities—mothers, for example—to co-operate with the authorities when they are trying to get their sons back and when there is no reason to believe that their sons have any evil intent to carry out terrorism on their return. That is why we sometimes feel there is a need for greater co-ordination and that the issues should not be managed within just one Department. We should try to work out an integrated strategy.

Let me return to the point about counter-propaganda. I learned this lesson many years ago in an entirely different context—in fact, in several different contexts where time and again one would see extremist minorities hijacking moderate majorities and purporting to speak in their name. Where that sort of thing was going on repeatedly, it was almost like trench warfare or a battle of attrition. In those days, such battles would be carried out in the letters columns of the newspapers. A particular organisation or cause might get report after report in the media—and nobody would be answering. The way to deal with it then was to ensure that every report was followed by another report—or, alternatively, a critical letter in the press—so that eventually the radicalisers and the counter-radicalisers would be neutralised, and the wider community would say “We are sick of all this bickering—why don’t both of you just shut up and stop?”

We are not talking about some idealised situation in which we shall be able to let down our guard because there will never again be a small number of people who are willing to try to carry out terrorist acts at the end of the process. We are talking about a wider threat: the danger that, however effective we are in catching terrorists at the end of the conveyor belt that leads to their crimes, there will always be plenty more being fed on to the beginning of the conveyor belt by people who, shall we say, have a certain strategic grasp of what they are trying to achieve.

I thank the Committee for its patience in listening to my speech. As I said earlier, the sort of counter-campaigning that needs to be done on the issue of extremist ideology is, in a sense, demonstrated by the fact that we have to keep returning to this subject until the House gets sick of hearing from us, and the Government decide that the line of least resistance is to toughen up the legislation and create an agency that will be able to supervise, co-ordinate and resource the efforts of moderates in our Muslim community to ensure that their own communities are not hijacked by the barbarians.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I want to say a little about new clause 12, which I tabled. I believe that there is strong evidence from countries that are already investing in deradicalisation programmes that they are effective, and I think that we need to look more closely at those programmes—as well as counter-radicalisation programmes—and learn from them.

Let me make it clear at the outset that none of the programmes is a substitute for effective counter-terrorism legislation. They are, however, an important tool that we can and, I believe, should be using to better effect in tackling terrorism. They acknowledge that someone becomes radicalised for a reason, and suggest that therefore, in principle, that person can be deradicalised.

Members who were in the Chamber yesterday may have heard me read the words of Abubaker Deghayes, a Brighton man whose two sons were recently killed while fighting in Syria. He warned:

“The strategy you are using with our sons does not work. You are criminalising them just out of the fear they might become a threat to this country.

Do not push them to be radicalised, used by groups like Isis who are out for revenge and thirst for blood.”

He feels passionately about the need not simply to take urgent, effective action to curtail suspected terrorists, not simply to wash our hands of those who may have become radicalised, and not simply to generalise about who people of this kind are. He believes that we need to understand more about who they are, and why they have become radicalised.

I met Abubaker Deghayes, the father. I met his solicitor, Gareth Peirce, and I met campaigners from organisations such as Cage UK. All of them have a wealth of experience related to the impact of counter-terrorism legislation, and all of them paid tribute to the difference that deradicalisation programmes can make. I hope to host a parliamentary meeting early in the new year, before the House of Lords debates the Bill, in order to give colleagues an opportunity to hear from a range of experts, including police officers, who are engaged in such programmes in other European Union member states.

Before I say any more, it might be helpful if I defined my terms. In doing so, I shall refer to a very useful paper published by the Institute for Strategic Dialogue, which has conducted a comparative evaluation of counter-radicalisation and deradicalisation approaches in the Netherlands, Sweden, Denmark and Germany. It describes deradicalisation programmes as those that are

“generally directed  against individuals who have  become radical with the aim of re­integrating them into society or at least dissuading them from violence.”

That is notably distinct from programmes such as Prevent, which are concerned more with counter-radicalisation, which the Institute for Strategic Dialogue defines as

“a package of social, political, legal, educational and economic programmes specifically designed to deter disaffected (and possibly already radicalized) individuals from crossing the line and becoming terrorists.”

[Hazel Blears]

I, too, have read the paper from the Institute for Strategic Dialogue. Would it be fair to say that a lot of the evidence that has been gathered is about deradicalising people from far-right groups, because the work around political Islamism has not yet been developed to the point at which we would be able to get a lot of useful evidence? We need to do much more work in that area of threat facing us, because the far-right work is not necessarily completely comparable with the other threats we face at the moment.

15:45

[Caroline Lucas]

The right hon. Lady makes a perfectly fair point. Most of the evidence is coming from that direction. I agree that we need more evidence gathering specifically on the Islamist threat, but none the less I think the point I am making remains that we need greater understanding of why people are radicalised.

I was talking about counter-radicalisation and Prevent, and I wanted to flag up the fact that, as Members will know, Prevent has been criticised for failing properly to engage at the community level and instead making some communities feel singled out and stigmatised. I think that is a lost opportunity and we must redouble our efforts and engage in effective community-led counter-radicalisation programmes, learning from other countries that have done just that.

Deradicalisation is more relevant to the debate we are having now. I draw Members’ attention, if they are not already aware of them, to programmes in places such as Denmark, where a programme called Back on Track has been operating. Its targets include prison inmates who have been either convicted of terrorism or involved in hate crimes or other extremism-related crimes. The aim of the project is to support inmates through mentoring to become better at handling everyday situations, problems and conflicts. Another key element is to focus on engaging families and social networks in order to offer inmates long-term support when re-entering society. Other Members have already underlined the importance of family and kinship groups.

Back on Track has been running alongside another programme, De-radicalisation-Targeted Intervention, which uses mentoring to support individuals who are trying to leave an extremist group. It is focused particularly on being proactive by reaching out to potential beneficiaries and motivating them to participate. A key objective is helping them to find constructive social alternatives to extremist groups.

Germany has what is known as the Hayat programme, which has been developed to reflect the premise that the minds of young Europeans intent on practising jihad in Syria or Iraq are perhaps less likely to be changed by politicians’ threats or force of law than by their next of kin. One of Hayat’s family counsellors says:

“Families are the closest social community that most radicalised young Muslims have. It is the perfect living counter-narrative to radical Islam.”

Since 2012 Hayat has operated a national helpline, which families who are concerned about their sons or daughters drifting into radical Islam can contact.

[Mark Field (Cities of London and Westminster) (Con)]

While I agree that there is much we can learn from what happens in other nations, does the hon. Lady agree that significant work already goes on in our communities, both with the Prevent programme and without it, which takes the lead and which also co-operates with other nations along the lines she is outlining? On the deradicalisation programme, it strikes me that we have to deal with incredibly difficult issues, but I am confident that a lot of thinking is going into this and there is a lot of co-operation between nations, particularly on the very large number of returning jihadis, which is an even bigger problem, in numbers terms at least, in places such as France and Germany than it is in the UK today.

[Caroline Lucas]

I do not doubt that much work is going on, some of it very good, but I wanted to pinpoint the experience of young people who have got caught up in some of these things. They have gone to places such as Syria and they want to come back, and at the moment it does not feel that there is a path that is particularly encouraging to them to come back. We talked about this yesterday when we discussed the temporary exclusion orders and whether or not that means someone will go straight into criminal proceedings.

What I would like us to do is look at some of the models in places such as Germany and Denmark, so that when we have someone who is trying to come back and who is turning their back on what they have done, we do not automatically put them through the criminal process but instead devote a lot more time to trying to see how they can be reintegrated. Obviously one would not do that at the expense of wider security issues, but neither do I think that this is a soft approach. I think, in fact, that it could be a way of making us safer in the long run if some of these deradicalisation programmes work. There is a bit of a gap there, and it is an area that I would like us in this country and our Government to be looking at in more detail.

[Mark Field]

Does the hon. Lady not recognise that we are some 20 weeks away from a general election and so, unfortunately, the rhetoric about throwing away the keys will inevitably come from party leaders? However, in their heart of hearts they all recognise the importance of looking at this issue in a much more holistic way. I agree with her that it is in the interests of our intelligence services, apart from anything else, that we make common cause to find out about some of these returnees, as they can perhaps co-operate. I suspect that work of that order is going on, as well as the range of programmes to which she refers. In many ways, it is understandable that tabloid rhetoric has its part to play, but our authorities are bringing to bear a much more sophisticated, nuanced approach to this very real problem.

[Caroline Lucas]

Again, I thank the hon. Gentleman for his intervention, but I would not be as relaxed about the tabloid rhetoric as he is. I certainly do not think we should be stoking it in this Chamber because that sends out a message that is heard out there and makes young people believe it is too dangerous to come back. I am aware of people from my constituency and the wider area where I live who are out in places such as Syria and do want to come back, but are terrified of doing so. It is not in the interests of wider security that we just send out the same messages; we have to have different messages and learn from countries that seem to be doing a better job on some of this work than we are.

[Pete Wishart]

The hon. Lady was on to a powerful theme when she was describing some of the other initiatives we witness across Europe. I am familiar with some of the programmes in Germany and Denmark that she mentioned. Would she say that the major difference in character is that Prevent seems to be a more prescriptive solution whereas the initiatives in Europe are much more organic and involve the community more? The language of “combat”, “taking on” and “fighting” seems to be the prevalent language in Prevent. If the Minister and the Secretary of State were to look a little more carefully at the European models, they might find a more useful model of working within our communities.

[Caroline Lucas]

I thank the hon. Gentleman for that intervention. He rightly says that in this country it feels very much more as though deradicalisation is done to people, rather than being something people get involved in, and therefore own and are more likely to be part of.

[James Brokenshire]

In the light of the previous intervention, I should make it absolutely clear that Prevent is a locally based approach. The right hon. Member for Salford and Eccles (Hazel Blears), in her initial contribution, highlighted clearly the excellent local work done in a number of different areas, including by civil society groups. I assure the hon. Lady that the Government continue to look at other programmes from various parts of Europe—indeed, I was in Scandinavia last year visiting various Governments for that very purpose.

[Caroline Lucas]

I thank the Minister for that. If it is all happily happening as he suggests, I hope that he will be able to agree to new clause 12. I suspect it is not happening, which is why young people in my community tell me that they feel that the Prevent approach is stigmatising. That is not a criticism of the local people in my constituency who are doing their very best to deal with what they themselves feel is not a terribly helpful approach. It is a criticism that echoes what the hon. Member for Perth and North Perthshire (Pete Wishart) just said about the feeling that the approach targets people in a very stigmatising way, as though they are the problem, rather than asking the wider questions we have a responsibility to ask about how and why people become radicalised. If we ask those questions, we might find ourselves rather more responsible for some of the answers, in the broadest sense, than if we simply assume that this is somehow outside our control and our responsibility.

[Lady Hermon]

rose—

[Hazel Blears]

rose—

[Caroline Lucas]

I give way to the hon. Lady.

[Lady Hermon]

I am most grateful to the hon. Lady, who had a difficult choice to make. I am curious about why she did not look a little closer to home at the best practice that has worked in Northern Ireland. We have former republican terrorists who have committed the most appalling terrorist crimes and former loyalist terrorists who have committed equally appalling crimes, including just murdering Catholics because they were Catholics, who have turned their back on violence and turned young people away from the path of violence in Northern Ireland. She has cited what has happened in Denmark and Germany, but I say to her that good lessons could be learned from experience in Northern Ireland.

[Caroline Lucas]

I thank the hon. Lady for a well made contribution. She was perfectly right to make such a point, and it does not undermine the position that I am advancing. Indeed, I would love to learn more about the experience she describes. I suspect that the success of the scheme was not achieved by making people feel excluded or terrified about coming forward. I worry about the context in which we are having this discussion, which is the proposed legislation that the Government are setting out right now.

[Hazel Blears]

I echo the points made by the hon. Lady, but I just wonder what projects she has visited. Some of the work I have seen has been about not stigmatising individuals but putting on drama in schools to enable these issues to be brought to the surface and then challenged in quite provocative ways. There is training for teachers and some community-based projects. She is making the point that I made to the Minister, which is that I want to see more of that kind of work, because it is about enabling us to build community resilience rather than targeting individuals. There is some excellent practice in this country, as well as in Ireland.

[Caroline Lucas]

I completely agree with the right hon. Lady. I have seen and been part of some of those extraordinary community engagement processes. The drama in particular has a huge role to play. I come back now to the wider context. I am simply reporting to her what young people have said to me, which is that when they hear the Prevent programme being talked about and the kind of language and rhetoric that get used when we are talking in the abstract it feels to them as if this is something that is stigmatising and off-putting. They feel as if they are the problem. The programme does not seem to be the most conducive thing to engage them, even though when they get to it, they might find that it is something as constructive and as community based as she describes.

[Dr Julian Lewis]

There is a vast difference between stigmatising individuals who are at risk, which is not proposed, and stigmatising a barbaric ideology, because the idea is to save individuals from being sucked into the ideology.

[Caroline Lucas]

I think that I thank the hon. Gentleman for that. There are problems with the way he describes things in a black and white way. Of course I would be the first to say that we are seeing barbaric acts, which are part of a barbaric ideology. But to continue to use that language is not helpful when we are talking about young people. There are young people who have got mixed up in this in an ignorant way. I am not trying to excuse what they have done; I am just trying to understand it. If we think in terms of barbaric ideologies, that suggests someone who has spent an awful lot of time becoming involved in this, understanding it, knowing it and thinking of themselves as ideologues rather than as people who may have mental health problems, who may be excluded, who have faced massive racism in their lives and who have ended up in a very unfortunate position for a huge number of reasons that are not necessarily helpfully described when we talk about a barbaric ideology.

[Dr Lewis]

The hon. Lady is very kind. This will be my last intervention, so she has an open goal after that. I simply say that nobody hesitates to describe Nazi ideology and communist ideology in terms of their barbaric nature. If we are to succeed in saving people from being drawn into this form of barbarism, we have to get it into the same category, because, fundamentally, it comes from the same drawer of ideologies.

[Caroline Lucas]

I have no problem with talking about barbaric ideology or about actions that are barbaric, but if we frame the whole debate in those terms, we do not get any closer to being able to understand why some young people are getting more and more attracted to going out to take part in wars in Syria. We certainly do not get any closer to understanding how we can get them back safely and deradicalise them. All of us share that as the overriding priority. What we want to do is to keep our country safe by trying to ensure that people who get involved in this kind of activity are prevented from doing it in the first place and by deradicalising them if and when it happens. I am simply arguing about the best way to reach out to those people. I am not sure that what the hon. Gentleman is describing is the best way to do so.

[Mark Durkan (Foyle) (SDLP)]

The situation in Northern Ireland has already been mentioned, where the emphasis has been on a process of inclusion, rather than one of labelling and exclusion. Indeed, there is a veritable infrastructure for inclusion through EU moneys and other mechanisms that were used precisely to work at community level to ensure that people had a real stake in new beginnings and new processes. Attempts to exclude through broadcasting bans, vetting of community funding and all the rest of it did not work. We have to take people at the level they are at so that they can move forward while thinking that they retain the integrity of their outlook.

15:59

[Caroline Lucas]

I definitely thank the hon. Gentleman for that contribution, which is immensely helpful and really sets us back on track to where I think we are best placed to move forward on the issue.

I will begin to draw my comments to a close, because I have spoken for longer than I had originally anticipated. In conclusion, analysis of successful deradicalisation programmes suggests that the most effective identify how individuals become radicalised, rather than simply labelling them. They examine whether and how the process can be reversed, and how Government-led initiatives can help ensure that committed terrorists avoid illegal activity after they are released from custody. We know what some of the ingredients are; we have talked about the importance of family members, education, vocational training and religious dialogue, for example.

Religious engagement is one of the more contentious elements of deradicalisation programmes. It may be effective in reforming radical Islamists, but primarily because it provides an environment that is conducive to behavioural reform, not necessarily because it encourages ideological reform. Some of the reports from the Council on Foreign Relations seem to suggest that focusing on rehabilitation, rather than ideological change, is particularly sensible if it is acknowledged that committed ideologues might not give up their beliefs but might just change their behaviour, which I think is what we want them to do.

These programmes are not about being soft on terrorism. On the contrary, as I said at the beginning, they are an add-on to, rather than a substitute for, good counter-terrorism laws. I hope that Members will join me in calling for a review of deradicalisation and counter-radicalisation best practice in order that we might equip ourselves as effectively as possible for the substantial challenges we face from jihadi and other terrorist groups.

[Pete Wishart]

It is a pleasure to serve under your chairmanship, Mr Weir—the more Scottish National party Members we see in such positions, the better—and to follow my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas). She made several pertinent points, particularly on the need to look at experiences from across Europe, and I shall listen carefully to the Minister’s response. It struck me that there is an attempt to look at some of the measures that other countries are adopting to try to tackle this serious issue, but there are also different things being done across the United Kingdom. I wish to focus my remarks on what we are trying to achieve in Scotland.

We are absolutely committed to ensuring that law enforcement agencies and other bodies have all the tools they need to tackle terrorism effectively. We take that particularly seriously in Scotland. We believe that we have robust but different measures in place to tackle these issues. We have massive concerns about what is proposed in the Bill, particularly in part 5. We are concerned that it might cut across some of the initiatives in our Prevent strategy.

It is natural that in Scotland we look at things differently from the rest of the United Kingdom. We face a different range of issues, we have smaller ethnic minority communities, and we have not had the same sort of tensions within our communities, so obviously we look at things differently. I like to think that we therefore look at things a little more holistically, and certainly more holistically than a Conservative-led Government would, or even—if I may be so brave as to say it—than a new Labour Government would.

Our Scottish Prevent strategy shares the same objectives as Prevent across the rest of the United Kingdom, but it differs in some pretty serious and significant ways, particularly in how it is delivered. I think that it does all it can to reflect our Scottish context. Our approach uses Prevent though a safeguarding lens, with an emphasis on keeping people safe, on community cohesion, on participative democracy and on making sure that it is consistent with the needs of, and risks to, all our communities. The Scottish Government’s Prevent strategy for tackling violent extremism works with and through key sectors, including higher and further education, the NHS, the Scottish Prison Service and local authorities. Prevent delivery also benefits from Police Scotland’s model of community engagement and the strength of the relationship between our Muslim communities and the police service.

We sometimes ignore the cultural context, but it is important. One of the most impressive features of Scotland’s Asian community is its willingness and eagerness to adopt what is seen as Scottish identity. We have what is called the bhangra and bagpipe culture. Particularly in Glasgow, where we have a large Muslim community, it is striking how eager the community is to take on board some of the central, defining features of Scottish culture and to get involved. We saw that during the referendum campaign, as Mr Weir in particular knows. One of the fastest growing groups in the movement was Scottish Asians for independence, because there was a natural affinity with what we were trying to achieve as a nation, and there was something about what we were trying to do in order to transform society that proved attractive to many people who had come from countries such as India and Pakistan, which had in their own way secured their independence from the United Kingdom at some time in history.

This feature in Scotland differs significantly from the rest of the United Kingdom. Efforts have been made by the Scottish Government, Ministers and colleagues to try to ensure that the cultural context is taken into account when we approach issues such as radicalisation. I am sure the Minister has seen on his trips to Scotland how the Muslim community, particularly from south Asia, has been integrated in our society and our community. We should all be impressed by that, and perhaps the Minister can learn from our experience.

My hon. Friend the Member for Brighton, Pavilion made a powerful point about how we start to approach these matters and look at some of the community dimensions. We cannot be prescriptive. We cannot talk down to communities or expect them to respond to our stimuli, our suggestions and our objectives. I shall not dwell on what my hon. Friend said, but we have to work with communities. This process has to be organic, a conversation within communities and groups, to ensure that we come to the right conclusions.

The one thing that I want to add to what my hon. Friend said is that we must also look at the external environment. We have to try to understand what motivates people to get involved in what the hon. Member for New Forest East (Dr Lewis) rightly describes as barbaric activity. There is one thing that this Government have never done, and it surprises me how little work has been done on it. I encourage the Minister to look more closely at it: there is very little profiling of people who have gone out to the middle east to get involved in such activity. We do not have a sense of the pull factors, the reasons why people go there and get involved, because we do not ask them. We are too busy locking people up and all the other things that go with that.

We spend very little time trying to understand what it is that drags people to engage in such awful behaviour and activity, and I suspect that our reluctance to do that has much to do with the results that we are likely to find. When we see people being interviewed about their involvement in such activity, they are not people who would concern the Government on a day-to-day basis—people who have just emigrated from Pakistan or the middle east. They tend to be second or third generation who have been here for a long time. The ideology has not been brought here; it is an ideology that has emerged and grown within our communities.

When we listen to people being interviewed by broadcasters trying to understand what informs the way they behave, they all seem to be pretty respectable, cultured, almost middle class, standard citizens of the United Kingdom. They do not seem to conform to the traditional vision, if I may say that, of jihadists, and the caricatures that develop around that. We fail to get that right, to understand and to do the necessary work to profile—

[Hazel Blears]

I have some sympathy with the argument that the hon. Gentleman is developing on working with communities, which is the approach that I have always wanted to emphasise. Does he accept that one of the reasons that many of the people who are born and brought up in this country and have lived here for very many years then decide to go to Syria, or to create a terrorist plot here in Britain, is that they have been influenced by an ideology based on hatred and a complete rejection of other people unless they agree 100% with their very narrow world view? We have debated whether we use the word “combating” or “countering” in relation to this ideology, which has its roots in Salafi thinking. It is about a violent version of Islam that supposedly justifies this kind of terrorist activity. There is quite a lot of research on this, and I am sure that the hon. Gentleman is aware of some of it.

[Pete Wishart]

Indeed. The right hon. Lady is partly correct. There is something that draws people in, but our failure to understand some of the motivations and pull factors is a fault that we have.

I do not want to labour my next point because I had an exchange about it with the hon. Member for New Forest East on Second Reading. It is that people feel such a sense of injustice and frustration about not being able to use the traditional, normal political process to exert some sort of change that they are driven to get involved in these activities. People are not born genetically programmed to become jihadists and terrorists: something fundamental and significant happens during their journey that influences them and makes them get involved. We fail to understand that.

We also fail to take responsibility for what we may have done in setting the external stimuli in this regard. For example, we fail to acknowledge the disaster that was the Iraq war and how that cause became a recruiting sergeant for a generation of young Muslims who, with their perverted sense of justice, saw no alternative but to get involved in these terrorist activities. We do not even need to debate this: we can see the line going all the way back to when it started. Yes, there were issues before Iraq and before some of the other difficulties in the middle east, particularly in relation to Palestine, but it is when we get to the invasion of Iraq that we can see the exponential growth in these activities.

We have to take responsibility for that. We have to acknowledge that the decisions we have made and the environment we have created perhaps give rise to some of the massive frustrations that people have. People are not born predisposed to be terrorists, to be jihadists, to be the most barbaric type of murderers. Something happens along the way and a frustration develops. Unless we address our responsibility for creating these conditions, we fail.

[Hazel Blears]

The hon. Gentleman and I have debated this on previous occasions. Does he think that ISIS is killing Yazidis and Christians because it has a grievance about British foreign policy?

[Pete Wishart]

No, of course not. If I may put it ever so gently to the right hon. Lady, that question is not worthy of her. There are conflicts right across the middle east that we fail to understand but only condemn, but in some way we are the major power in all this. We are the interveners in these types of activities, and we therefore have responsibilities in that regard. Of course this does not reflect UK foreign policy, other than perhaps at the margins.

[Mr Mike Hancock]

I apologise for not being here when the hon. Gentleman started his speech. I agree that the Iraq war was undoubtedly the tipping point, and most people now recognise that it was a mistake, but that has not stopped young Muslim men becoming radicalised. All the baring of our chests and saying “We were wrong and it was a terrible thing to do” has not changed what has happened by one iota.

[Pete Wishart]

The hon. Gentleman is right. Of course it has not changed behaviour, but we owe it to ourselves to acknowledge this issue. It is a flaw that runs all the way through a lot of the programmes to counter, or combat, radicalisation that we embark on. Unless we understand the external stimuli and the environment that were created, I am afraid we will not have any great success in these things.

There is another factor that informs this and it is some of the debates that we have in this House. If I were a young Muslim listening to some of the poisonous debate about immigration that takes place nowadays, I do not know what I would make of being told, “You’ve got to stay away from here; you’ve got to be kicked out, or sent back, or whatever”—all the inflammatory language that this House hears almost on a day-to-day basis when we debate these things. We have got to be careful, for goodness’ sake. We cannot just believe that it will all of a sudden be reasonably accepted and adopted, and that nobody will mind that this language is employed when such debates take place. Again, let us just be careful about what we do to contribute to the environment that has been created or the conditions leading to such frustration.

16:15

[Mark Durkan]

The hon. Gentleman is exactly right to warn of the dangers of hon. Members helping to feed the very things they say they want to fight. If there are those who are out to sow the seeds of radicalism, extremism, cynicism and alienation, people should take care not to propagate those seeds by measures that, in relation to international policy, only feed the cynicism of those who see them as double standards, or in relation to this country, even propose to create a twilight zone around the very concept of citizenship. How does that help to counter the very disillusionment of which the hon. Gentleman speaks?

[Pete Wishart]

I am grateful to the hon. Gentleman because he is right to say that we must see this in the round. That is one of the reasons why I have difficulties with what is suggested in the Bill. I will not support the amendment moved by the right hon. Member for Salford and Eccles (Hazel Blears), as I think she knows, because I just do not like this type of language. It does not really address the difficulties we face and the things we have to take on. In looking at anti-radicalisation or ensuring that our communities are resilient in fighting against such messages, as the hon. Member for Foyle (Mark Durkan) set out so eloquently, we must work holistically—in the round—and ensure that that is combined and merged with all other community issues that would help us.

We are trying to work towards that in Scotland. Historically, we have taken that approach. We have had responsibility for the Prevent programme for eight to 10 years, and I believe that we have made real progress. With our distinct legal system, we have our own means of doing this sort of thing, and we are making great attempts and efforts to do so. We just take a different view of such things: we have a different type of community and a different approach to the issues that have emerged during the past few years.

The Minister for Security and Immigration is now deep in conversation, but I hope he will allow us to pursue our agenda on such matters. Scottish public bodies that were initially listed in schedules 3 and 4 are no longer included, so I hope that the Minister, when he finishes his conversation, might be of a mind to allow us to make our own progress when it comes to such things. The Minister is now back with us. I was saying—I know he missed this—that Scotland has been excluded from the schedules of public bodies. I know that there have been conversations with the relevant Scottish Minister, and that the Minister for Security and Immigration understands that we have our own particular agenda for this sort of thing.

I hope that in time—perhaps amendments tabled during the remaining stages of the Bill will help him to come to this conclusion—we can have our own strategy without the combat and the fighting language that we do not like. We do not think it works or believe that it adds much to achieving the objective that we in this place all want, which is to make our communities safer and resilient enough to ensure that we get the right type of result and response. I hope that the Minister will be open to further suggestions that will exclude Scotland from part 5 and allow us to pursue our own agenda. We do not like some of the language, and we do not believe it works. Perhaps even in his response, he could satisfy me and my colleagues that we will be allowed to pursue our own agenda and do this our own way.

[Mr Mike Hancock]

I come to this debate with a great deal of sadness about what has happened in my own city. Six young men went out, of whom four are now dead, and one returned to the UK and is now starting a very lengthy prison sentence.

One of the saddest moments in my 45 years’ experience of politics was reading the letter that one of the lads wrote to his parents and left for them when he went to Syria. His parents sat in front of me in the office not saying that they wanted us to fight back, but really begging for something to happen or for someone to take the initiative. They could not understand how this very well educated young man, who was at university—he had a glittering career before him—could walk away from university and go to Syria without discussing it with anyone, not his local peer group or, most importantly, his parents. The last words of the letter were, “Don’t worry about what’s going to happen to me when I come back because I have no intention of coming back.” His parents read into that that he had every intention of fighting, wherever it took him. How sad it was for his mother to read that letter.

We have tried desperately hard with the community in Portsmouth. We have a large Bangladeshi community and four mosques. Portsmouth has a great, integrated society. Everyone was horrified that our city was highlighted in the way that it was and nobody could understand how it had happened. The imams in the mosques did not know, the people who run the madrassah did not know and the extended families of the young men did not know how it came about that these young men were radicalised in such a way that they were prepared to walk away from everything they had in front of them, put their lives on the line and even put it in writing that they did not believe they would be coming back. Some sort of fightback is required on the part of all of us who care about the young men and women who have done that.

I do not share the view that giving disproportionately long prison sentences to people who come back will help the situation. I do not know whether other Members have spoken to young Muslim boys who have been in prison or whether they understand the pressure that those boys are put under in prison by much older members of the faith and the other issues that they raise. We need to find a mechanism to sort that out. I am in favour of the various things that the right hon. Member for Salford and Eccles (Hazel Blears) exposed so eloquently. The Bradford example is a fine one. However, none of them offers an easy solution to finding the right role model who can put the alternative case to these young men and women, and do so in the right place.

Nobody has yet suggested that there is an easy way out of this situation. I have first-hand experience of the pitiful state of the families who are devastated when their young sons or daughters are killed and taken away from them. Surely the Bill goes some way towards starting the process that the mother who sat opposite me in my surgery called for when she said, “For goodness’ sake, Mike, we’ve got to find a way of preventing this. I’ve got an 11-year-old son and I’m worried about what will happen to him. What is he thinking? How will it affect him and his peer group when they talk about their brothers who have been killed fighting in a war in Syria?” It is no good just saying that they were mistaken and that they did not believe in what they were going to do. They were believers in what they were going to do and they knew the risks they were taking. They were so certain about it that they were still prepared to do it. We ignore that at our peril.

Again, I agree entirely with the right hon. Member for Salford and Eccles that we have to start lower down the age range. We need to find a mechanism for very young people.

[Jeremy Corbyn (Islington North) (Lab)]

I apologise for missing the beginning of the debate; I was in Westminster Hall. Does the hon. Gentleman not think that there is an issue with the general narrative in our society and in our media, where there is a high degree of Islamophobia, with throwaway comments being made on television programmes the whole time? It is regrettable, and on some people—on a very small minority, maybe—it has the beginnings of a very bad effect.

[Mr Hancock]

It is more than regrettable that that has happened—it is despicable. Of course the hon. Gentleman is right that it must have an effect on people. It would have an effect on me if I had that sort of problem. I know what it is like to have abuse thrown at me. I know what effect it had on me. Goodness knows how other people feel when they have abuse thrown at them day after day. I hate the thought that people in my constituency have stooped to cutting off a pig’s head and sticking it on the gatepost of an Islamic school. What sort of message does it send to young children going to school if there is a dead pig’s head stuck on a railing outside that school? It is appalling, and the hon. Gentleman is right to say that we must combat such things and be more realistic about allowing certain comments to go unchallenged. It is important that that message comes over loud and clear in debates such as this.

I hope that the Bill gets the support it deserves and that the promised resources are forthcoming and go to the right places. All of us involved in this issue for one reason or another must work hard with our communities and, most important, with those who are prepared to step out and say the right things, and encourage young men and women to think that there is an alternative to what they believe in. However, it is no good suggesting for one minute that those young men and women do not believe 100% in what they are doing at the present time, because they certainly do.

[Paul Blomfield (Sheffield Central) (Lab)]

I will make a couple of brief points on amendment 20 and the impact of clauses 21 to 27 on universities, and I do so as someone who represents Sheffield’s two universities and more students than any other Member of the House.

Some 28 years ago, in my previous career in the university sector, I remember preparing a draft code of practice on freedom of speech in universities, to entrench further something that has traditionally always had a strong place in our higher education sector. I did so in response to the Education (No.2) Act 1986, introduced by the then Conservative Government, which sought to ensure that universities maintained that commitment to freedom of speech.

As I am sure the Minister is aware, that Act imposed a duty on universities to ensure that the use of their premises is

“not denied to any individual or body of persons on any ground connected with the beliefs or views of that individual”.

Universities have always taken this issue seriously and sought to fulfil their legal responsibilities, but it is not clear how that provision sits alongside new responsibilities in the Bill. What potential legal quagmire might a university find itself in if, for example, an action is brought by a third party to challenge a decision made under the provisions of this Bill, on the basis of the university’s responsibilities in the 1986 Act? That issue needs clarity so that we do not find ourselves in a very big mess.

My second point relates to the general, sweeping nature of the Government’s new powers in the Bill, and the potential for direct intervention in the governance of universities that it establishes. Amendment 20 deals with that issue, but the House would be making a big mistake to allow such a measure to proceed without ensuring proper parliamentary scrutiny. I understand that universities have been reassured by the Home Office that guidance is being prepared, but our difficulty is that we have not yet seen that guidance and do not know how the Government intend to proceed. It seems a fairly fundamental principle that Parliament ought to be able to scrutinise the initial guidance, and any subsequent guidance that the Government might issue should they feel that universities are not complying with requirements in the Bill. Amendment 20, which I hope the Minister is able to embrace, seeks to strengthen confidence in what the Government are trying to achieve by ensuring proper parliamentary scrutiny of the process, and that links to some of the imprecision in the language and description of terms in the Bill.

16:30

The Minister will be familiar with a recent case, which has been well documented in the press, where Christchurch university in Canterbury found itself in conflict with the police over an unwillingness to provide information on its students in relation to a fracking debate. There is a concern within the university sector that the shifting balance of relationships that might be implicit in the Bill could add to the pressure on universities to co-operate or provide information on a much wider range of issues than is the Government’s intention. I recognise that that is not what the Government are seeking to do. The importance of ensuring proper parliamentary scrutiny in the guidance that might be issued is something we should endorse today.

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

I thank my right hon. Friend the Member for Salford and Eccles (Hazel Blears) for opening the debate and making a compelling case, along with the hon. Member for New Forest East (Dr Lewis), for why the amendments are important to today’s debate on Prevent. I agree with her sentiments about the appalling events in Sydney. Our thoughts are with the families and friends of the people who died. We stand in solidarity with the Australian people. We stand, too, with the people of Pakistan, where dreadful events have unfolded this morning, with hundreds murdered.

Part 5 introduces a series of obligations on public bodies and local authorities to deliver the Prevent agenda. I hope the Minister will respond to the issue raised by the hon. Member for North Down (Lady Hermon) on part 5 not covering Northern Ireland, and to the issue raised by the hon. Member for Perth and North Perthshire (Pete Wishart) in relation to Prevent in Scotland.

Most of the Bill is taken up with tough measures to tackle those who are thought to be involved in terrorism, but part 5 deals with preventing people becoming involved in the first place. The previous Labour Government introduced the Prevent agenda and we remain absolutely committed to supporting and strengthening it where necessary. However, before we look in detail at the measures to strengthen the delivery of the Prevent programme, I want to point out two areas where I think there are gaps in the Bill. First, there needs to be a much clearer commitment from central Government to do more to support and facilitate the Prevent agenda. A lot of additional duties are being put on to local authorities and public bodies, but there is more of a role for central Government to support them in fulfilling that duty. Secondly, in the past four years there has been some confusion in relation to the Prevent agenda and the roles of the Home Office and the Department for Communities and Local Government. It would be helpful if the Minister is able to enlighten us on the problems that have arisen due the confused situation relating to Prevent.

We all agree that Prevent should be about local delivery, but, as I said, there have been some problems because of a mixed approach by central Government. For example, it was a Government decision early on to reduce the number of priority areas for Prevent from 90 to 23. The Government then realised that leaving areas such as Greenwich out of the priority areas was a mistake, so a number of local authority areas had their funding reinstated. Even within those priority areas, however, I do not think the Government have been paying enough attention to whether the Prevent agenda is being successfully delivered with evaluations. Only four of the 30 priority areas provided evaluations to the office for security and counter-terrorism last year. That is obviously of concern when public money is being spent, because we want to know that it is being used effectively.

There has also been a marked decline in funding streams for Prevent: funding is down from £17 million to £1 million a year. Some of that has been part of a conscious decision about reallocating funding, but questions are raised by the fact that, while £5.1 million has been allocated every year for local delivery, over the past six years more than 60% of it has gone unclaimed by local authorities.

[Jeremy Corbyn]

My hon. Friend is making a very good point about funding. Does she agree that it is also important, from the point of view of a public message, that we place a strong emphasis on preventing extreme right-wing racism in our society, and on combating it as vigorously as we combat any other kind of issue?

[Diana Johnson]

My hon. Friend makes a very important point as part of the debate about Prevent spending on combating extremism across the piece.

On the Government’s record with Prevent, it is striking that, while overall spending has gone up—it reached £40 million last year—spending on local delivery accounts for barely 10% of the total. Will the Minister confirm whether those figures are correct?

Local authorities are not the only bodies captured by the new duty. Universities will also be covered and my hon. Friend the Member for Sheffield Central (Paul Blomfield) has just addressed some of the concerns relating to the university sector. However, just because universities are included in this particular duty does not mean that they have not previously been included. My hon. Friend referred to work that was done many years ago to tackle these issues. A significant section of the Prevent agenda is devoted to universities, which are asked to agree Prevent action plans with local police forces. I have repeatedly asked parliamentary questions to find out how many universities actually have a Prevent plan in place, but the Government have repeatedly refused to provide an answer. I do not understand why, because it is not a matter of national security: the information requested is simply a number. Do the Government refuse to answer the question because they do not actually know how many universities have agreed a plan or because they are not willing to tell Parliament? Why are we not allowed to know?

The Bill also extends obligations on schools, which were also not excluded from the previous Prevent agenda. A significant thread of Prevent has always been aimed at schools. Indeed, the 2011 Prevent review identifies a significant number of threats to schools and suggests measures to counter those threats. Given the conclusions of Oftsted’s investigations into Birmingham and Tower Hamlets, the 2011 review seems remarkably prescient. It identified a series of risks facing schools, including that posed by people with radical beliefs who were attempting to obtain positions in schools—that is, on school governing bodies.

The review also identified some challenges that needed immediate action in schools. For example, 70% of schools felt that they needed more training and information to build resilience to radicalisation. To address those issues, the Department for Education committed to a nine-point plan of action to prevent radicalisation in schools. However, it has provided no evidence on the delivery of that plan. I have asked it numerous questions—both written and on the Floor of the House—about the overall implementation of the Prevent agenda and the specific commitments contained in the 2011 review, but I have received no evidence in response to my inquiries. I have asked the Department to provide a general update on its work delivering the Prevent agenda, but to no avail. Will the Minister tell the House whether the measures in the Bill that relate to schools are a response to the failure of the DFE to deliver on previous commitments?

Also missing from the Bill are measures to address radicalisation outside public institutions. Local councils can of course try to counter radicalisation in public places and public bodies, and universities can try to counter it on campus, but as my right hon. Friend the Member for Salford and Eccles said, much more work needs to be done on broadcasting and the internet industries to reduce hate speech and extremism arriving directly into homes through social media and satellite television.

Last week, the Prime Minister announced international efforts in partnership with industry to tackle online child abuse. We all welcome those. However, equivalent measures on terrorist propaganda are in their infancy. Although the Internet Watch Foundation has forged vital links with industry to actively prohibit the dissemination of abusive images, my understanding is that the Home Office’s counter terrorism internet referral unit has never received a referral from a communications service provider about extremist conduct. I will be interested to hear from the Minister whether that is correct. Although we welcome the measures in the Bill, which are about the Government telling other authorities to do more, we should remember that there are areas where the Government themselves could do more and have failed to deliver so far.

I turn now to the specific provisions in the Bill, starting with clause 21, which puts a general duty on various public bodies to tackle terrorism; the bodies are numerous and are listed in schedule 3. The clause is complemented by the provisions in clause 24, which allow the Secretary of State to introduce guidance on how authorities should implement their obligations. The Secretary of State’s power in this area is strengthened still further by the provisions in clause 25 for her to direct public bodies to act in a certain way.

Parliament’s scrutiny of the Bill has been constrained, once again, because we are debating the principle without getting to see the specifics. It is extremely unfortunate that the Government have not published draft guidance to aid our considerations. We have no problem with the principle of a general duty to prevent terrorism, but that could mean a number of things. It is therefore essential that we have access to the guidance, so that we can debate what is in it.

For that reason, the Opposition have tabled amendment 19, which would ensure that the Government must use their powers to issue guidance, and amendment 20, which would ensure that Parliament could scrutinise the guidance under the affirmative procedure. I would like to hear the Minister’s views on those amendments, but if he is not able to accept amendment 20 I will test the opinion of the House on giving Parliament an opportunity specifically to debate the guidance.

The Secretary of State could introduce guidance of potentially enormous scope, which, as my hon. Friend the Member for Sheffield Central said, could have a bearing on free speech and academic freedoms—I would go so far as to say it could even affect patient-doctor relationships—yet at the moment Parliament would have no role in debating that guidance. My understanding is that only one set of guidance will be issued. It will apply to the numerous bodies set out in schedule 3, and will therefore have to apply in disparate settings. It is important that the implications of the guidance are discussed fully in Parliament to allow the potential implications for different sectors to be raised and debated fully.

The guidance will also be important in ensuring that the policies implemented are both efficient and effective. Thousands of similar bodies will be implementing policies under clause 21, and it is important that they do not all start from scratch in deciding how to comply with their new duty. The issues that bodies will need to address are complex and disparate, ranging from the far right, as my hon. Friend the Member for Islington North (Jeremy Corbyn) just mentioned, to the intra-religious issues that have been discussed this afternoon. The Home Office needs to support organisations in dealing with those disparate issues, particularly intra-religious conflicts of the sort we see in Syria, which are the driving force behind the rise of ISIL. They are particularly difficult to address, and public bodies need full support in tackling them.

My right hon. Friend the Member for Salford and Eccles talked earlier about the counter-narrative issue and the Muslim community is trying very hard to combat sectarianism with a narrative of peace and unity. Public bodies should be supporting community bodies in doing that, but they need guidance on how best to achieve it. That is why the Opposition think we must have guidance and that it must be properly and effectively scrutinised. I hope that the Minister will therefore agree to accept amendments 19 and 20.

16:45

I want now to turn to the cost of the Government’s approach. The impact assessment presumes that a local authority with high risk will face costs of about £40,000. It also estimates that about a third of local authorities will be in this high-risk category—that is, just about the 90 local authorities that Labour deemed priority areas when Prevent was introduced. As I said at the outset, that number reduced when the Government had their review in 2011. I want to be clear whether the Minister is now acknowledging that the 2011 Prevent review got the numbers wrong and that 90 is nearer the mark for the number of areas at high risk. The £40,000 compliance cost is about the level of support provided to those areas under Labour, so will the Minister confirm whether the Home Office will meet those costs? Or is it a cost that local authorities will have to meet?

I have spoken about the problems in the Department for Education in delivering on the Prevent agenda and I want to talk a little about the cost to schools. The impact assessment now seems to put the onus on schools to bring in people to help with training and says that that will cost £62 for every 20 people trained. That seems a rather low figure to me. For example, if a school in my constituency wanted to bring in an individual to provide Prevent training in Hull it would probably need to bring in someone from an area with expertise—let us say Leeds. That person would have to travel for an hour from Leeds and then deliver the programme. A cost of £62 to cover the travel costs, travel time, the presentation and the preparation seems very low for 20 people. Will the Minister explain how he reached the figures for the additional costs that will be put on the police, prisons and the probation service?

Schedule 3 lists the bodies to which the duty will apply and clause 22 gives the Secretary of State powers to add to that list. Schedule 3 is extensive and includes health bodies, education bodies, prisons and probation services. I note that local NHS trusts and foundation trusts are included but there is no mention of the clinical commissioning groups. Why has no duty been put on the commissioners of services to fulfil their duties on Prevent? I also note that there is no mention of general practitioners, or some of the social enterprises that have been set up to deliver NHS services, such as community health partnerships. We know that more privatisation is coming into the NHS, so will the Minister explain how private health care providers will be covered by this provision? Similarly, the Government are in the process of privatising probation services, so will the Minister explain how G4S, Serco and others will be covered by this duty?

In theory, the Government can extend the duty to other bodies as they see fit subject to the limitations of clause 22(2), which lists legislative and judicial bodies as exempt, as are the Secret Intelligence Service and the Security Service. Why cannot the intelligence bodies be included in a duty to prevent people being drawn into terrorism? It seems the type of provision destined to fuel conspiracy theorists.

More importantly, I want to turn to the implications of clauses 21 and 22 for the devolved Administrations in Wales and Scotland. While counter-terrorism is a retained power, clause 21 will cover a number of bodies that are otherwise entirely accountable to the Welsh Assembly or the Scottish Parliament. The Opposition welcome provisions in clauses 23 and 24 that would demand consultation with the Scottish and Welsh Governments, but can the Minister confirm that, regardless of the specific set-ups in Scotland and Wales, devolved bodies will be covered by the same guidance as English bodies? It is noticeable that no Scottish institution is included in schedule 3. Presumably that is because consultation with the Scottish authorities has not yet concluded. Is the Minister expecting, or intending, to add to schedule 3 while the Bill is going through the remaining stages?

[Pete Wishart]

I presume from her comments that the hon. Lady does not want Scotland included in this. I am sure that she has heard about the different, more holistic approach that we have. Could she help us to persuade the Minister to allow us to do our thing uninterrupted by what has been proposed in the Bill?

[Diana Johnson]

We are at the Committee stage of the Bill, looking specifically at the Government’s provisions. Scotland is covered by Prevent. I am concerned that within schedule 3, which lists the bodies that are covered by the duty, there is nothing from Scotland. That worries me. I want to hear from the Minister why that is and what discussions are being held. As the rest of the Bill applies, I assume that there is a gap that needs to be filled.

On Northern Ireland, when the Government introduced the Anti-Social Behaviour, Crime and Policing Act 2014, they neglected to consult the Northern Ireland Executive. The result is that, after four years, the National Crime Agency still does not have a remit to work in Northern Ireland. I am concerned that we could end up with a similar situation with Prevent and the agenda in Scotland.

[Lady Hermon]

I am grateful to the hon. Lady but I just want to correct a tiny detail. The National Crime Agency’s full remit does not extend to Northern Ireland because Sinn Fein and the Social Democratic and Labour party refused to allow that. It is not about consultation with the rest of the parties or with the Northern Ireland Executive; they all want it. The people of Northern Ireland want it, but two parties are holding the rest of us hostage, so to speak.

[Diana Johnson]

I am grateful to the hon. Lady for that comment and for putting the record straight.

Although clause 38 is not covered by this group, I want to refer to it as it confers upon the Secretary of State the power to make amendments to any piece of legislation that interferes with the operations of the Bill, including Acts of the Scottish Parliament or Welsh Assembly. If I have read this correctly, if the Home Secretary thinks, for example, that the setting up of a new type of school in Scotland by the Scottish Parliament is affecting not just the implementation of clause 21 but the specific policies provided for under clause 24, she can change the devolved legislation on its operation. She can even do that without consulting the relevant Government, which is why I have tabled amendment 18, which we will discuss in the next group.

Similar issues exist with the Channel programme. It would be placed on a statutory footing alongside the rest of Prevent. As with Prevent, this is a policy area of enormous importance and the Opposition support efforts to strengthen it. Once again, however, the Government are putting obligations on local authorities without ensuring that there are provisions to make sure that they are fully supported by central Government. Clause 28 provides for the creation of local assessment and support panels in every local authority. According to clause 33, this includes county councils, district councils and unitary authorities in England and Wales. Again it seems that the Government have not yet reached agreement with the Scottish Government on how this would be implemented in Scotland. I am sure that the Minister will respond to that point. In addition, the legislation is not clear on which local authorities are meant to have a panel when there are multiple tiers of local government. Does the responsibility rest with district or county councils? What happens where there are unitary authorities and district councils? Has this yet been decided and thought through? The impact assessment says that local authorities will be able to combine to create support panels, but can the Minister explain why that is not provided for in the Bill?

Many panels should already exist and comply with the current guidance provided by the Home Office. Will the Minister tell the Committee how many councils have created these boards and what assessment has been made of their operation? What evidence led the Government to decide that the current system was not working? I have asked parliamentary questions about this in the past, but the Government have refused to give details or even to confirm that a monitoring framework is in place. Will the Minister provide further information about how well these panels are working?

Under clause 28(3), a chief officer of police must make the referral to the local support panel. The current system allows numerous local bodies, including schools, colleges, universities, youth offending teams, local authority troubled families teams, charities and voluntary groups to be able to refer to the police, who can then conduct a screening process. Will the Minister confirm that this process will be allowed to continue, and will he explain why this particular aspect was not put on a statutory footing as well?

My first concern is with the level of expertise that these panels must have, which is why I tabled amendment 21. As provided for in the Bill, local support panels have to assess the individual’s risk of radicalisation and tailor a support package to address those risks. The issues are complex: the current guidance cites 22 vulnerability indicators that may lead to a Channel referral. The panel must weigh up these factors and tailor a support package, which could have any number of elements. In some areas, the panel will be addressing issues it has not faced before, such as sectarian hatred, which can be exacerbated by poorly provided support.

This is why we feel the Home Office needs to support local panels by providing an approved list of support providers who are able to give the specialist interventions needed to address the specific issues facing the individual. The panel is tasked with assessing the progress the individual makes, but it does not necessarily have the ability to assess the quality of support provided by other agencies, which is why we want the Home Office to assess providers.

The Government have repeatedly claimed to be stepping up efforts to stop Prevent funding going to organisations that could be radicalising people. That cannot be done unless the Home Office takes a lead in vetting those bodies. Under clause 32, the Home Secretary may indemnify Channel providers, so it seems quite reasonable for her to assess them as well. Indeed, it is my understanding that the Home Office, along with regional groups of police forces, do provide this level of support. It is our view that this role should be in the Bill, alongside the responsibilities given to local authorities. I hope that the Minister will be able to accept this amendment. We both want to see support working better to provide locally led interventions, but the Home Office needs a stronger role in supporting local authorities.

The second amendment I shall speak to is amendment 22, which seeks to expand the membership of panels provided for under clause 29. At present, the Bill provides for just two statutory members of the panel: the local authority and the local police force. The local authority may, according to the explanatory notes, appoint other members. This contrasts sharply with current best practice as set out in the Home Office guidance, which suggests panels of up to 14 members. We do not think all need to be on every panel, and indeed many of them are part of the local authority, so they could be brought in as and when necessary, but we do think that both probation and health professionals should always be on the panel.

There are two advantages to increasing the expertise on the panel. First, the panel will be in a better position to assess the 22 vulnerability indicators that I mentioned and to make a correct decision. Secondly, it ensures that more of the bodies that will provide the support have a role in determining that support. If we look at the existing guidance, we find that it may include: life skills, anger management, cognitive and behavioural contact, health awareness contact and drug and alcohol awareness. Each of those categories would obviously need to be tailored, and would come with a cost. We therefore think it is important for probation and health professionals to be included as statutory members of the panel.

17:00

I want to raise three more issues with the Minister. First, will he tell us who will be responsible for monitoring the duty given to public bodies, which would potentially lead to the issuing of a direction by the Home Secretary? The Bill refers to a mandatory order, which I assume the Home Secretary can seek when she wishes to enforce a direction, but will an appeal process be available to a public body that considers a direction to be unfair or unfounded?

My second question concerns co-operation. Clause 30 gives various bodies, as listed in schedule 4—again, Scottish bodies are absent—a duty to co-operate with the directions of the panel, which, as I have said, could take a number of forms. Who will bear the cost of providing the support, and how will disputes between the panel and the provider on questions such as cost, proportionality and effectiveness be settled?

Thirdly, there is the issue of compulsion. The programmes for which chapter 2 of part 5 provides are—rightly—voluntary. Will the Minister tell us how the police, or indeed the panel, would respond if an individual rejected support, or if support were deemed to be ineffective?

Although we support the measures in this part of the Bill, we have a number of concerns, to which I hope the Minister will return. They relate to burden-sharing between local agencies and central Government, practical support for local authorities, implementation in devolved areas, and the level of scrutiny. I hope that the Minister will feel able to accept the modest improvements that we have suggested, and to give assurances on other matters. If he does not, we will reserve our position, and may return to the issues at a later stage.

[James Brokenshire]

We have had a good and wide-ranging debate that has touched on powerful and important themes relating to how we should confront some of the extremism and terrorism that sadly resides in many of our communities.

The right hon. Member for Salford and Eccles (Hazel Blears) rightly drew attention to the very direct context in which the debate takes place. I referred last night to the unfolding events in Australia, but we have now learnt that Katrina Dawson and Tori Johnson lost their lives in that appalling incident, and I know that the Committee will wish to send its kindest wishes and thoughts to the families and friends of those involved. We also learnt today of a shocking further attack in Peshawar, where innocent children who were simply going about their studies in north-west Pakistan were brutally killed. That news is deeply shocking. It is horrifying that children should be killed simply for going to school. I think that we all share an utter revulsion at and condemnation of those who were responsible for these despicable acts.

We have had a useful debate on part 5, and the nature of seeking to put the Prevent strand of our Contest counter-terrorism strategy on a statutory footing. Of course, Prevent aims to stop people becoming terrorists or supporting terrorism—it deals with all forms of terrorism, including terrorism associated with far-right extremists—but resources are focused on the areas of highest threat. The most significant of those threats currently comes from al-Qaeda, from the so-called Islamic State, or ISIL—which is neither Islamic nor a state—and from other terrorist organisations in Syria and Iraq. However, terrorists associated with neo-Nazis and far-right extremist groups pose a continued threat to our safety and security, and remain very much a focus of our work.

[Lady Hermon]

Before the Minister moves further into singing the praises of part 5, with which I actually agree, I do think he owes the people of Northern Ireland, and indeed this House, an explanation or some justification for the omission of Northern Ireland from the application of part 5. We in Northern Ireland suffer not just from those who leave Northern Ireland to be radicalised in Syria and come back into Northern Ireland; we also have to deal with the current recruitment by dissident republicans such as the Real IRA and Continuity IRA. The Minister must explain why part 5 does not extend to us.

[James Brokenshire]

Of course I absolutely recognise the continuing challenge and threats in Northern Ireland and commend the work of our various agencies and the Police Service of Northern Ireland in keeping people in Northern Ireland safe from Northern Irish-related terrorism. What I would say to the hon. Lady is that Prevent does not currently extend to Northern Ireland. Different measures are put in place in Northern Ireland and the intent of the Bill is to put on a statutory footing the programmes and arrangements that currently exist under the Prevent strand, but that is not in any way to undermine the very important work taking place in Northern Ireland to confront the terrorist threat there.

[Lady Hermon]

I rise with some sense of exasperation because with the greatest respect to the Minister, for whom I have a very high regard, he will know that the only mention of the Prevent strategy is in the explanatory notes, which are not part of the Bill. The terms of the Bill, and clause 21 which is under consideration, provide that there is a duty to have

“regard to the need to prevent people from being drawn into terrorism.”

That applies to Northern Ireland and should apply to Northern Ireland. The word “Prevent” is not in clause 21.

[James Brokenshire]

As I have sought to explain to the hon. Lady, the clause seeks to give effect to the Prevent strategy. That is why it has been formulated in the way it has. As I have underlined, these provisions are about placing the existing programmes on a statutory footing. Currently Northern Ireland does not have programmes equivalent to, for example, Channel, which is available in England and Wales, and that is why the Bill has been constructed in this manner, but that is not in any way to resile from the exceptionally important work that continues to be undertaken in seeking to arrest or to disrupt terrorist threats in Northern Ireland and work seeking to counter people being drawn into terrorism. We have taken that different approach in respect of Northern Ireland. I recognise that the hon. Lady does not accept or agree with that response, and obviously I respect her perspective, but this is the manner in which the Bill has been advanced.

[Lady Hermon]

rose—

[James Brokenshire]

I will give way one last time to the hon. Lady, but then I will need to make some progress.

[Lady Hermon]

I am grateful to the Minister. I need him to put on the record whether or not the Home Office has capitulated to any overtures made to it by Sinn Fein or other political parties that this part of the Bill should not extend to Northern Ireland. I am glad the Minister is shaking his head.

[James Brokenshire]

I can give a categorical no to the hon. Lady’s question. This is rather about the manner in which the Prevent strategy has been advanced and, indeed, the separate arrangements with the Secretary of State for Northern Ireland, who has the lead responsibility in relation to a number of these matters.

I want to come back to the right hon. Member for Salford and Eccles, who opened the debate, and her direct challenge in relation to where the focus should lie and the underpinning of terrorism. I draw her attention to objective one of the Prevent strategy, which is the ideological challenge. That is absolutely at the heart of the Prevent strategy—the work we do as central Government and the work undertaken at a local level in communities. It says in terms:

“All terrorist groups have an ideology. Promoting that ideology, frequently on the internet, facilitates radicalisation and recruitment”,

and

“Challenging ideology and disrupting the ability of terrorists to promote it is a fundamental part of Prevent.”

I will come on to respond—

[Hazel Blears]

rose—

[James Brokenshire]

I will respond, if I am given a chance, to the amendment the right hon. Lady has tabled and to a number of points other Members have made.

It is worth underlining that we have made it clear that we will work with all sectors and institutions where there are risks of radicalisation, including, as we have heard, those in education, health care providers and the wider criminal justice system. In legislating, our intention is to spread the many examples of good practice that have developed and to ensure that across the country specified authorities understand the risk from radicalisation in their area, and take proportionate steps to confront and deal with it. What that will mean in practice will be set out in statutory guidance, which I will go on to talk about.

One area that has attracted comment is the power in clause 25 for the Secretary of State to issue directions to a specified authority to enforce the performance of the Prevent duty. Directions may be given only where the Secretary of State is satisfied that the specified authority has failed to discharge that duty. The Secretary of State must consult the Welsh or Scottish Ministers before giving a direction where the direction relates to the devolved functions of a Welsh or Scottish specified authority.

The hon. Member for Kingston upon Hull North (Diana Johnson), speaking for the Opposition, asked what challenge process there would be. In essence, there is an escalation process. The guidance will set out certain responsibilities for each of the different agencies and institutions. If an agency or institution is then not meeting that, the Government will seek to work with that body to put in place appropriate guidance and steps that may be necessary. I chair a Prevent oversight board—Lord Carlile is a member of it—which seeks to assess our delivery. It would seek to assess that process and perhaps make a recommendation to the Secretary of State in those circumstances. The Secretary of State then has to give a direction, which is open to challenge by way of judicial review. For the Secretary of State to enforce it, she would have to get the specific order from the court and the court would need to enforce it. So there is a clear escalation process. Reaching the end of it would be highly unlikely, but it is absolutely right that we reserve that ability to give directions in that way and provide that escalation process.

That is an important point for the universities sector to understand, and it was certainly in the evidence I gave to the Joint Committee on Human Rights in highlighting some good practices. There is good guidance to be found among individual universities and in other sectors—indeed, I could cite the guidance of the National Union of Students. Many examples of good practice highlight where the duty needs to go, in ensuring that good practice is put in place and in sharing it. So a number of safeguards and limitations are built into these proposals to ensure that the powers are dealt with appropriately, with multiple layers of protection, including judicial oversight. It is important to restate that.

Let me deal with amendments 30 and 31 to chapter 1 of part 5, which stand in the names of the right hon. Member for Salford and Eccles and my hon. Friend the Member for New Forest East (Dr Lewis). I listen carefully to their recommendations and contributions, because I know the passion they hold for this subject matter, the knowledge they have and their intent to ensure that the Government and society as a whole are doing the right thing when seeking to prevent terrorism and in confronting the narrative, and the perverted and twisted justification that may lie behind it. She made some good points in drawing the Committee’s attention to the work of Sara Khan and We Will Inspire, and I am very aware of its work. It is a good example of a civil society group taking action, underlining the role British Muslim women play and empowering people. Other organisations such as Families Against Stress and Trauma are looking at the role of family and seeking to ensure that families feel able to come forward to seek assistance.

[Hazel Blears]

One issue that has been of deep concern to me for the past few years has been the lack of support for communities more generally to build their resilience to the extremist message. The Government seem now to be making a distinction between their work with individuals and Channel, and their work with families, but what I do not see is the broader work with communities more generally that can help to create a climate within which this ideology is not tolerated, the discourse is not acceptable and work is done on a broader framework. I am concerned about this and I would like to hear from the Minister that communities are not excluded from this programme of work.

[James Brokenshire]

They absolutely are not. Those communities are very much a core strand of the work. If we look at what Prevent has achieved over the period from 2011, we can see that approval has been granted to 180 projects, reaching out to 55,000 people. This year we are supporting more than 70 projects, and with the engagement of our co-ordinators we are actively building the capability of communities and civil society organisations and providing them with the skills to campaign against extremist material, including that which is available online. I recognise the point that the right hon. Lady makes, but it is absolutely our intent that Prevent will continue to do that work.

17:15

The Prime Minister has announced an additional £130 million to be made available for increased counter-terrorism work, which will include Prevent activity. I can assure the right hon. Lady that although there is still work to do on how the funding is to be allocated between different aspects of our Contest strategy, Prevent will clearly be an important part of the support and indeed will help to meet the obligations that are contemplated in the Bill.

On the counter-terrorism internet referral unit, the right hon. Lady made a point about challenging extremism online, as did the hon. Member for Kingston upon Hull North. I underline the fact that since the CTIU was set up, 65,000 pieces of unlawful terrorist-related content have been taken down, with 46,000 items being taken down since December 2013. There is the ability to report that. The general point has been made about the role of industry, and there is more that industry can do. That is a point that we as a Government have underlined very clearly. It is also a message that this House has underlined, reflecting as it has on the work of the Intelligence and Security Committee in its recent report.

Let me move now to the specifics of the right hon. Lady’s amendment. In respect of the duties in the Bill, confronting extremism that can lead to terrorism is not some implicit aspect of this but absolutely intrinsic to the work. That was why we did not see the necessity of placing this matter in an explicit way in the Bill, because it is so intrinsic in meeting that obligation. We believe that that is adequately covered in the duty, but obviously I will continue to reflect on the clear message that the right hon. Lady has given on this. I recognise the sincerity and the manner in which she has advanced her amendment.

I certainly recognise that extremism goes much wider than terrorism and includes behaviour that it would not be appropriate to target in counter-terrorism legislation or work, and that we must not consider that wide-ranging work solely through the lens of counter-terrorism. That is why the Home Secretary has announced that the Home Office is developing and leading a new extremism strategy across Government, recognising that it is not simply the Home Office that should be involved, as a number of different Departments also have roles and responsibilities. We plan to publish the new strategy in the spring.

Amendment 19 would change clause 24 to say that the Secretary of State “must” instead of “may”

“issue guidance to specified authorities about the exercise of their duty”.

We have publicly committed to issuing guidance at the same time as we commence these provisions. We will be publishing a draft version of that guidance for consultation very shortly. The guidance will set out the type of activity that we expect specified authorities to consider when complying with the duty. The draft guidance will set out a risk-based approach to the Prevent duty. As a starting point, all specified authorities should demonstrate an awareness and understanding of the risk of radicalisation in their area, institution or body. It will also address the circumstances in which it is appropriate to share information and make it clear that neither the Prevent programme nor this duty will involve any covert activity.

I want to take on board the point about universities and freedom of speech. As I have said previously, universities’ commitment to freedom of speech and the rationality underpinning the advancement of knowledge mean that they represent one of our most important safeguards against extremist views and ideologies. The duty is not about restricting freedom of speech.

[Diana Johnson]

We have not had the advantage of seeing that guidance. Is the Minister saying that there will be just one set of guidance covering all the bodies we have been discussing this afternoon?

[James Brokenshire]

It is intended to be one set of guidance covering all the relevant public bodies, but our intention is not simply to publish it; we also intend to hold a public consultation. It is not simply about the House being satisfied with the guidance; we intend to consult widely so that these issues can be examined carefully. The hon. Lady also mentioned clinical commissioning groups. Certainly, as part of the consultation, we will want to receive inputs regarding whether any other bodies should be brought within the ambit of the Bill.

[Hazel Blears]

When we were discussing the need to counter ideology, I asked whether that would be included in the guidance. I think it is absolutely essential that we have that guidance before we debate the Bill on Report, because so much hangs on its contents. It will be impossible for us to take that broader view without it.

[James Brokenshire]

I hear that message loud and clear. I hope that the right hon. Lady will receive further reassurance when she reads the guidance.

We shared the details of our proposals with the devolved Administrations at the earliest opportunity, subject to ongoing discussions within the Government. I have spoken and written to the Scottish Cabinet Secretary for Justice and the Welsh First Minister about the Bill. The Home Secretary also had the opportunity to discuss these matters with the First Minister in the Joint Ministerial Committee on Monday, which was chaired by the Prime Minister. We continue to work closely with counterparts in the Scottish and Welsh Governments, at both ministerial and official level, but the Government’s intention is that the provisions will apply to Scotland. We are discussing that with the Scottish and Welsh Governments.

I heard the comments from the hon. Member for Perth and North Perthshire (Pete Wishart), but this is a reserved matter and many of the specified authorities that will be subject to the duty in Wales and Scotland will exercise devolved functions, so it is important that they continue to work in that way. The clear point is that this is about national security. I think that we can learn in both directions. He said that lessons could be learned from practice in Scotland, and I am sure he would recognise that equally there might be very good lessons—we have heard some examples today—that could be learned from practice in England and Wales.

The hon. Member for Kingston upon Hull North mentioned amendment 20 and the requirement that it be considered. I hope she understands that it is still to be considered by the Delegated Powers and Regulatory Reform Committee. We shall wait to hear what it says before making a change of the sort she contemplates. I recognise the need for appropriate examination of these matters and note the comments she has made. We will certainly reflect upon that point in the light of any further considerations and recommendations.

Amendment 21 would require the Secretary of State to issue guidance to support panels in carrying out their functions. As I have explained, clause 28 already includes provision for the Secretary of State to issue statutory guidance to support a panel in respect of its functions. Guidance already exists for local partnerships. We will consult relevant bodies on how that should be updated and then issue new statutory guidance. The amendment also seeks to provide the panel with a list of approved providers of deradicalisation programmes and ensure that they are subject to monitoring. The list of approved providers is already made available to key members of the panel so that they can determine who might be best placed to deliver a theological or ideological intervention. It is the role of the chair to use the panel’s expertise to identify the most appropriate support package for an individual.

Amendment 22 would amend clause 29 to add the local health care commissioning group and a local representative of the National Offender Management Service as required members. These organisations are listed in schedule 4 as partners of local panels under the duty to co-operate. It is key to the success of the programme that panels have access to the right information and have the most appropriate attendance. I agree that it is essential that partners from health and NOMS co-operate under these provisions, and I believe they will. It is not necessary to express that in the terms of the amendment. It may not be appropriate for them to take part in all aspects of the meeting, but we need to keep the matter under review.

Clause 30 places a duty on partners of a panel to co-operate with the panel and the police in carrying out their functions and supporting people who might be vulnerable to being drawn into terrorism. This will include the giving of information.

Finally—[Hon. Members: “Ah!”] Thank you. Finally, on new clause 12, I say again to the hon. Member for Brighton, Pavilion (Caroline Lucas) that we consult closely with our European partners and that is kept under close review. We take international best practice firmly to heart. Her new clause, which specifies certain European countries, is not needed because of that over-arching requirement.

On the basis of the assurances that I have provided, I ask right hon. and hon. Members to withdraw their amendments.

[Hazel Blears]

I thank the Minister for his customary good manners, politeness and attention to detail on these issues. I have no doubt that he will consider in great depth the amendments that were tabled.

I thank my hon. Friend the Member for New Forest East (Dr Lewis) for supporting the amendments today, and I thank members of my own Front-Bench team for their attention to detail, helping to raise the profile of Prevent and Channel and countering radicalisation, which is so important to all of us not just in this country, but across the world.

I do not want to ruin the Minister’s Christmas, but he has given me a solemn undertaking that he will continue to consider the substance of our amendments. If, indeed, countering the ideology is intrinsic to all the Prevent work, I still cannot understand why there is a reluctance to make that commitment explicit in the Bill. I accept that it might not be implicit. I accept now that it is intrinsic. I would like the Minister to move just that one step forward from intrinsic to explicit, and if he was able to do that, I would be extremely grateful.

The Minister has also given us an undertaking that the guidance under clause 24 will be available for consideration on Report in this House. That is essential. I am delighted to have that commitment on the record today. On that basis I am happy to withdraw the amendment, reserving my right to come back on Report.

Amendment, by leave, withdrawn.

Clauses 21 to 23 ordered to stand part of the Bill.

Schedule 3 agreed to.

Amendment proposed: 20, page 15, line 21, leave out subsection (5) and insert—

‘(5) Before giving guidance under this section, or revising guidance already given, the Secretary of State must lay before Parliament—

(a) the proposed guidance or proposed revisions, and

(b) a draft of an order providing for the guidance, or revisions to the guidance, to come into force.

(6) The Secretary of State must make the order, and issue the guidance or (as the case may be) make the revisions to the guidance, if the draft of the order is approved by a resolution of each House of Parliament.

(7) Guidance, or revisions to guidance, come into force in accordance with an order under this section.

(8) Such an order—

(a) is to be a statutory instrument, and

(b) may contain transitional, transitory or saving provision.” .—(Diana Johnson.)

Question put, That the amendment be made.

17:28

Division 118

Ayes: 216

---

Labour: 202
Scottish National Party: 5
Plaid Cymru: 3
UK Independence Party: 2
Social Democratic & Labour Party: 2
Independent: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 299

---

Conservative: 258
Liberal Democrat: 40
Independent: 1

Clause 24 ordered to stand part of the Bill.

Clauses 25 to 30 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clauses 31 to 33 ordered to stand part of the Bill.

New Clause 12

Review of international best practice around deradicalisation

‘(1) The Secretary of State Shall, within three months of this Act coming into force, lay before both Houses of Parliament a review into international best practice around deradicalisation.

(2) The review under subsection (1) shall include in particular—

(a) examination of best practice in—

(i) Germany;

(ii) Denmark;

(iii) Sweden;

(iv) other countries as determined by the Secretary of State.

(b) the role of community-based organisations in developing and delivering strategies to prevent radicalisation and to deradicalise individuals.

(c) evidence-based recommendations for the rapid implementation of a comprehensive deradicalisation programme in the UK.’—(Caroline Lucas.)

Brought up, and read the First time.

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

17:40

Division 119

Ayes: 217

---

Labour: 203
Scottish National Party: 4
Plaid Cymru: 3
UK Independence Party: 2
Social Democratic & Labour Party: 2
Conservative: 1
Independent: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 296

---

Conservative: 255
Liberal Democrat: 40
Independent: 1

Clause 34

Insurance against payments made in response to terrorist demands

Question proposed, That the clause stand part of the Bill.

[The Temporary Chair (Mr Gary Streeter)]

With this it will be convenient to consider the following:

Clause 35 stand part.

Schedule 5 stand part.

[James Brokenshire]

Clauses 34 and 35 address two discrete but important aspects. Clause 34 amends the Terrorism Act 2000, so that an offence is committed if an insurer or reinsurer reimburses a payment that they know, or have reasonable cause to suspect, has been made in response to a terrorist demand. Like other terrorist-financing offences, the measure will have extraterritorial effect. As a result of the measure, we will ensure and put beyond any doubt that UK insurance companies do not form part of a terrorism ransom chain, and that those who make payments to terrorist entities cannot be reimbursed for the payment.

Clause 35 introduces schedule 5, which contains amendments to the power to examine goods at ports contained in schedule 7 to the Terrorism Act 2000, as well as amendments to other enactments relating to that power. Those changes follow on from a number of recommendations that David Anderson, the independent reviewer of terrorism legislation, highlighted in terms of the need for certain clarifications in respect of the specific schedule 7 power. The purpose of these changes is to clarify the legal position in relation to where goods may be examined and the examination of goods that comprise items of post, and to put beyond doubt the basis in law for this vital investigative capability.

[Mr David Hanson (Delyn) (Lab)]

I thank the Minister for his helpful explanation. It is right that we do not pay ransoms and that insurance companies are not allowed to do so. The Bill proposes to make it illegal to make payments on ransom insurance policies, and that is an argument I support and do not wish to argue against this evening. However, I do want to ask him a couple of questions.

Will the Minister tell the Committee how he has consulted insurance companies on the impact and implementation of these measures? The Government’s own impact assessment makes it clear that there is a risk that:

“UK insurers/reinsurers may lose business. Overseas insurers may be able to offer the same product as UK insurers but without this restriction. Based on consultation, we estimate…UK insurers/reinsurers’ annual gross premium income from kidnap and ransom insurance policies to be between £60 and £160 million.”

a year. There are two issues I want to raise. What response has he had from insurers on their potential loss of £160 million? I am particularly concerned about whether the measure will simply transfer that insurance risk to companies that operate abroad.

I want clarity on clause 34, which makes it a criminal offence for people in the UK to take out ransom insurance. If a UK citizen insured themselves through a foreign company, would the provisions still apply? The Minister has mentioned extraterritorial reach, but I want to be clear that the Bill does not deny UK insurance companies the premiums of £60 million to £160 million by simply transferring the fund to foreign companies. Will the provision apply to a company based in the UK but whose policy could be placed with an insurance underwriter based in America, France or Rome? I would be interested to know whether all those aspects are covered. I am sure the Minister will be able to allay my concerns and fears.

As an Opposition spokesman I continue to support the straightforward principle—I supported it when I was a Minister—that we do not pay ransom demands, because they simply encourage further kidnappings and associated activity. Does the Bill cover other areas, such as a kidnapped oil worker? We may not pay a ransom, but there might be insurance issues related to covering his loss of salary or his mortgage payments. I want to be clear that the measures cover the issue of ransom, as opposed to other insurance matters that a responsible company would want to implement.

Finally, the Bill has a clear definition of terrorism, but I would welcome the Minister’s view of, for example, Somali pirates. They are not terrorists, but does the definition cover the payment of ransoms in general, or is its focus on terrorism alone? If the Minister wishes to table further amendments, I would be happy to support measures that address other types of ransom, because it is a cardinal principle that we do not pay ransoms in any way, shape or form for individuals who have been kidnapped. I do not quite understand the Minister’s approach to insurance payments, helpful though it is, and I would welcome an explanation of his position on other types of kidnap ransoms.

We support clause 35, which is a sensible measure. I do not need to say anything else. I hope the Minister will respond to my comments.

[James Brokenshire]

I thank the right hon. Gentleman for his support. It is a sobering fact that ISIL alone made $35 billion to $45 billion between September 2013 and September 2014. There is no doubt that that has boosted its capability. Simply put, money paid to terrorists equals an increased threat to the safety of UK citizens. The right hon. Gentleman understands that, as he made clear in his speech.

We consulted leading representatives of the insurance industry and its regulators, the police and operational and international partners about the measure. We have had constructive discussions with the industry. This is a niche part of the wider insurance market and it makes up only a small part of the business of those insurers. Insurance companies have been clear that their policies exclude reimbursement of ransoms paid to proscribed groups in any case. The point of the measure is to make that absolutely clear and put it beyond doubt. Section 17 of the Terrorism Act 2000 centres on what constitutes arrangements and we are seeking to provide complete clarity. The measures are framed in the context of terrorism, although there are various insurance policies that operate in the market, because they are intended to prevent money going to terrorist groups.

The right hon. Gentleman asked about extraterritorial jurisdiction. The measures are intended to govern insurance companies based in the UK, so that they cannot offshore those payments; if they have some other insurance company with links to the UK, that company will be caught by the measures. It is therefore important that the legislation is framed in that manner.

18:00

There is no suggestion that UK insurance companies have been paying or facilitating the payment of terrorist ransoms. The UK insurance industry conducts itself professionally and with due regard to UK legislation and regulations. However, we do not want insurance companies to be put in a position in which they reimburse payments that have gone to terrorist groups, which does represent a real risk. It is important that we underline the due diligence that both insurance companies and their customers should undertake in such situations.

We believe that this legislation will give a clear message that kidnap for ransom is deplorable. The focus of the Bill is countering terrorism, and ransom payments can provide terrorist groups with huge injections of money, which they can then use in threatening the public. That is why the measures are required.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.

Clause 35 ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 36

Privacy and Civil Liberties Board

[Diana Johnson]

I beg to move amendment 24, page 22, line 14, leave out subsection (1) and insert—

“(1) The Secretary of State shall by regulations made by statutory instrument establish a body to—

(a) provide advice and assistance to the persons appointed under—

(i) section 36(1) of the Terrorism Act 2006,

(ii) section 31(1) of the Terrorist Asset-Freezing &c. Act 2010, and

(iii) section 20(1) of the Terrorism Prevention and Investigation Measures Act 2011,

in the discharge of their statutory functions;

(b) review the operation, effectiveness and implications of the Anti-Terrorism Crime and Security Act 2001, the CounterTerrorism Act 2008, this Act, and any other law or prerogative power to the extent that it relates to counter-terrorism;

(c) consider whether such legislation contains appropriate safeguards, is proportionate and remains necessary;

(d) review intelligence-sharing guidance and practice to the extent that it relates to counter-terrorism and the functions of the Board;

(e) make recommendations to any public authority about the exercise of its statutory functions relating to the prevention of terrorism;

(f) undertake inquiries relating to counter-terrorism when invited to do so by the Home Secretary, the Treasury or the Secretary of State for Northern Ireland, or on the initiative of the Board;

(g) encourage good practice in the prevention, investigation, detection and prosecution of terrorism.

(h) provide advice and assistance to Government on the development and implementation of policy relating to the prevention of terrorism.”

This expands the remit of the body to match that which is described in the Government‘s Terms of Reference for this body.

[The Temporary Chair (Mr Gary Streeter)]

With this it will be convenient to discuss the following:

Amendment 23, page 22, line 22, leave out “Privacy and Civil Liberties Board” and insert “Counter Terrorism Oversight Panel”.

This would rename the body created by Clause 36.

Amendment 25,  page 22, line 25, at end insert

“in accordance with the Code of Public Appointments”.

Amendment 26,  page 22, line 32, at end insert—

“(i) the information-gathering powers of the board;

(j) reporting requirements, and the formulation of and consultation on an annual work plan;

(k) the access to such relevant classified material as may be required in order for the board to undertake its functions under subsection (1);”

This increases the points that have to be included in regulation brought forward by the Secretary of State to include information gathering powers, formulation of an annual work plan and relevant to classified material.

Amendment 8, page 22, line 32, at end insert—

“(3A) Regulations under section (3) shall include provision requiring the board to undertake an inquiry into the retention of and access to data relating to professions that operate under a duty of confidentiality.”

Amendment 9, page 22, line 34, at end insert—

“(4A) Regulations under section (3) shall provide for the membership of the board to include representatives of professions who operate under a duty of confidentiality.”

Amendment 10, page 23, line 9, at end insert—

““professions who operate under a duty of confidentiality” shall include, but not be limited to, journalists, legal representatives, medical professionals and Members of Parliament.”

Clause 36 stand part.

Clause 37 stand part.

Amendment 18, in clause 38, page 23, line 31, at end insert—

“(4A) The Secretary of State must consult with Welsh Ministers before making provisions under subsection (1) so far as relating to any Measure or Act of the National Assembly of Wales.

(4B) The Secretary of State must consult with Scottish Ministers before making provisions under subsection (1) so far as relating to any Act or instrument of the Scottish Parliament.

(4C) The Secretary of State must consult with the Northern Ireland Executive before making provisions under subsection (1) so far as relating to any Act or instrument of the Northern Ireland Assembly.”

This would ensure that the Secretary of State could not amend legislation from the Scottish Parliament or Welsh Assembly or Northern Ireland Assembly without first consulting with the Scottish or Welsh Governments or the Northern Ireland Executive.

Clauses 38 to 41 stand part.

Government amendment 12.

Clauses 42 and 43 stand part.

New clause 3—Intercept Evidence—use in legal proceedings—

“(1) Section 18 of the Regulation of Investigatory Powers Act 2000 (c.23) is amended as follows.

(2) After paragraph 1(f) insert—

“(g) any proceedings relating to an offence which, if committed in England and Wales at the time of the conviction, would have constituted an offence triable only on indictment (“an indictable-only offence”) under section 51 of the Crime and Disorder Act 1998.””

This new Clause removes the exclusion of intercept evidence from legal proceedings in criminal prosecutions.

New clause 7—Review of Intelligence and Security Committee of Parliament resources and powers—

“The Secretary must, within a reasonable time period, consult the Intelligence and Security Committee of Parliament and lay a report before Parliament within six months of the commencement of this Act, on the resources and powers of the Intelligence and Security Committee of Parliament.”

[Diana Johnson]

This group of amendments relates to the Government’s plans to create a privacy and civil liberties board. Clause 36 does not actually tell us very much—it is an enabling clause—so I have tabled amendments 24 and 25 to allow us to debate what the board will actually do.

As the clause is drafted, we have a name for the board, and there are three possible ways it could go. First, we have an idea of what a privacy and civil liberties board could look like from its name, which invokes the idea of a body with a wide remit of work on privacy and civil liberties issues in the United Kingdom, and which would safeguard human rights. Such a body would be very similar to the Joint Committee on Human Rights, which was created by a Labour Government.

Secondly, the Home Office has published terms of reference, which suggest a body that will support the independent reviewer of terrorism legislation in providing oversight of counter-terrorism legislation in the UK and investigating the operation of that legislation. We think that what is contained in the terms of reference is sensible and would provide both capacity and openness in the oversight of counter-terrorism policy. However, as I have said, clause 36 is quite an empty provision at the moment.

The third possible version of the board is as currently constituted in clause 36, which gives the Home Secretary powers to create—in future, if she wishes to do so—procedures, membership and the work plan for the board and provisions on publishing of reports. All those details are left to future secondary legislation.

If the body is created it is important that it has strong powers. Our amendments 23 to 26 would help achieve that. The post of independent reviewer of terrorism legislation has been around for over 40 years and its current formulation was created by a Labour Government. The post works well, and both holders of it since 2001 have served with real distinction. That does not mean that we are opposed to further strengthening of the oversight arrangements. Earlier this year, the current independent reviewer, David Anderson, QC, identified the limitations of his reviewer role, including the fact that it was restricted to certain statutes and the fact that significant powers, including those in the Counter-Terrorism Act 2008, were excluded and were therefore going unreviewed. He also pointed out that as a part-time reviewer without proper administrative support, he has extremely limited capacity.

[Mr David Davis]

I guess that the precursor of the proposal is the organ with exactly the same name in the United States, which was activated only after the Snowden events, when information was not just put in the public domain but became controversial and raised issues in Washington. The danger is that the body becomes toothless, does not have investigatory powers and cannot pre-empt a future Snowden. It seems to me that the most important aspect of that is the investigatory powers, not the rest.

[Diana Johnson]

I am sure that the right hon. Gentleman will contribute to the debate, and I certainly have things to say about the title of the body and what it will be doing.

It is important to note what David Anderson said about being a part-time reviewer without proper administrative support and limited capacity. If the proposals on clause 36 were meant to address those concerns, they do not achieve that. They do nothing to address the areas of counter-terrorism legislation excluded from the remit of the commissioners, such as those in the 2008 Act, the powers in this Bill or use of the royal prerogative. David Anderson notes:

“These omissions reduce confidence in counter-terrorism law and are hard to understand, particularly after the Home Secretary agreed, as recently as March 2013, that ‘the scope of the Independent Reviewer’s responsibilities should keep pace with changes to primary legislation’, and accepted in principle my recommendation that the 2001 and 2008 Acts ‘should be examined with a view to extending your statutory functions to include the review of relevant sections of those Acts’. Indeed, as initially proposed in July, the functions of the PCLB would have extended to both these Acts.”

The Bill does not address issues of capacity and resources for the independent reviewer, either, although the impact assessment suggests that the board will receive far greater resources than those given to the independent reviewer. The cost of members of the board seems to take up much of that, and the impact assessment anticipates that the rate will be £897 a day. Is that correct and will the Minister comment on it?

The work that members of the board will do is not clear, either. The current reviewer describes the relationship between the independent reviewer and the proposed new board as

“ill-defined and potentially problematic”

and goes on to say that

“the idea is…for the Board ‘to provide advice and assistance’ to the Independent Reviewer. Both advice and assistance are always welcome: but the former, including from the most eminent and knowledgeable quarters, is already frequently sought and freely given, whereas the latter is critically lacking. To require the Independent Reviewer to chair a Board…will make further claims on the Independent Reviewer’s time and could easily lead to competing priorities and inefficiencies. For there to be a net benefit, commensurate with the cost of resourcing the Board, its members will have to be doers rather than talkers, willing to accept direction in relation to often unglamorous researching and writing tasks.”

The Bill does not make provision for this, nor does the impact assessment’s description explain who will undertake the research and assistance roles that are so badly needed.

Finally, there is an issue about access to documents. Will the panel be security-cleared to the same standard as the independent reviewer? Will the staff? What will be the procedures for redacting documents either before they are passed on to the board or before they are published? These are the issues we are trying to address with our amendments.

Amendment 24 has been tabled to ensure a board with a statutory remit that includes the areas that the independent reviewer does not cover. It will also ensure that the board could respond to other areas of considerable and understandable public concern about the operations of counter-terror policy. We want the board to consider not just privacy but other human rights impacts, as well as the effectiveness of counter-terror policy. As David Anderson points out, counter-terrorism oversight in the past has taken strength from not being limited. If the office of the independent reviewer has influence with the authorities, it is in part because the reviewer can make recommendations to improve not just the fairness, but the effectiveness of counter-terrorism law.

Importantly, especially given the earlier discussions about the breadth of public bodies going to implement Prevent, we also want the board to be allowed to make recommendations to public bodies and public authorities. We tabled amendment 25 in particular to ensure that appointments to this body are made in line with the code of public appointments. We want the board to include real experts who will be able to access materials and provide real insight. We do not want a body compiled through patronage. We tabled amendment 26 to ensure that the statutory instrument creating this body addresses key questions about information gathering, reporting and access to documents.

We would rename the body to give it a title that reflects the nature of what it will actually do. As I said, the current name is misleading. As David Anderson has pointed out, the name not only offers little clue as to the function of the proposed body, but suggests a pure civil liberties watchdog, which this is not. It is not clear why privacy is singled out. Other important human rights are potentially infringed by counter-terrorism law, including the right to liberty, the right to a fair trial and freedom of expression. Mr Anderson takes issue with the word “board”, which he feels is better suited to the historical management of waterways than to the rigorous exercise of scrutiny under the direction of an independent reviewer. So Labour would call the board “a counter-terrorism oversight panel”, and we would give it the powers to back that up.

If the Government are genuinely committed to creating the body they outline in the terms of reference, they should accept these amendments without any hesitation. Of course, this is only part of the oversight package that we require. When the Justice and Security Bill was before the House, the Opposition suggested a number of ways of strengthening the Intelligence and Security Committee to give it a stronger, more independent and more open remit. We remain absolutely committed to the ISC and want it to continue to play a vital role in the oversight of the security agencies alongside a more prominent role for the intelligence commissioners, which is why we tabled new clause 7.

Let me turn briefly to the miscellaneous provisions, particularly clause 38, to which I have tabled amendment 19. Under clause 38, the Secretary of State can make changes that are

“consequential on any provision of this Act”

in any piece of legislation made by any UK legislative body, including the Scottish Parliament and the Welsh Assembly. This is important because under part 5, and particularly under clauses 21, 24 and 30, the Bill creates obligations on a range of bodies that are otherwise entirely devolved. As I mentioned in speaking to an earlier group of amendments, I do not think the Home Secretary should be able to amend devolved legislation without first consulting the relevant Government. That is why we tabled amendment 19, which I hope the Minister will feel able to accept.

[Mr David Davis]

I shall speak to new clause 3, tabled in my name. It is entitled “Intercept Evidence—use in legal proceedings”. It is a probing amendment and I do not propose to press it to the vote on this occasion. If I had wanted to press it, I would have included in the new clause the relevant legal machinery required, which is complex but not difficult to achieve if I wanted to do so. My aim is to provoke some sort of non-partisan debate on what is the cornerstone of counter-terrorism strategy—the legal treatment of intercept evidence. If need be, depending on what the Minister says and what the Government do in the meantime, I shall come back to the issue on Report.

The United Kingdom is unique among major western powers—common law powers and European Union countries—in not allowing the use of intercept evidence in court. I shall come on to the few exceptions in a moment. Why is that the case? It is difficult to know. GCHQ and its predecessor has always resisted putting any intercept evidence into the public domain. Frankly, this has probably been the case since the invention of the telephone. In the early days, I suspect it happened because gentlemen thought it ungentlemanly to listen in on other people’s conversations. Today, however, the argument advanced by the agencies concerns the protection of technique and capacity. Their attitude is very different from that of every other agency of its sort in the world. All our allies in the “five eyes” countries and beyond are equally concerned about protecting capability, but they also give high priority to the prosecution and conviction of terrorists and those who commit serious crimes. They manage to square that circle, but we do not appear to be able to do so at present.

18:15

The fact that we cannot use intercept evidence makes it more difficult for us to secure convictions in court in terrorism and serious crime cases. Lord Lloyd of Berwick has talked of the

“difficulty of obtaining evidence on which to charge and convict terrorists, particularly those who plan and direct terrorist activities without taking part in their…execution”.

Obtaining such evidence is incredibly important to those who must deal with the al-Qaeda style of terrorist operation, in which the bit players disappear in a cloud of vapour as they carry out their evil tasks.

I pay attention to Lord Lloyd because he is an appeal judge, a past Interception Commissioner, the man whom the last Conservative Government put in charge of reviewing all terrorism legislation, and a strong advocate of the use of intercept evidence in court—as, indeed, are the past Director of Public Prosecutions Ken Macdonald and the past Attorney-General Lord Goldsmith, along with a large number of senior police officers who are in charge of counter-terrorism.

The result of not being able to use intercept evidence in court is the greater difficulty of securing convictions. That in turn has been used to justify indefinite detention under part 4 of the Anti-terrorism, Crime and Security Act 2001, control orders and terrorism prevention and investigation measures, and the proposals for first 90, then 42, then 28 days of detention without charge. I am glad to say that all those proposals were defeated, or have subsequently been revoked.

What is perhaps worst of all is that the difficulty of securing convictions encourages our counter-terrorism agencies—both the intelligence agencies and the police agencies—to rely too much on disruption rather than prosecution. As the hon. Member for North Down (Lady Hermon) is present, let me add that that approach patently failed in Northern Ireland. It leaves too many terrorists on the streets, and leaves the agencies with a bigger job and a very difficult, perhaps impossible, task of assessment. That is clear from the report from the Intelligence and Security Committee on the Lee Rigby murder. The agencies fell down on the assessment of the murderers, who were known to them. The 7/7 bombers were also known to the agencies, but were judged to be too far down the list of 2,000 suspects. The problem is made worse by the failure to prosecute terrorists and to imprison terrorists after their convictions, and the lack of intercept evidence makes it worse still.

GCHQ told the Chilcot inquiry, and the subsequent Privy Council committee, that the use of intercept evidence would not deliver many extra convictions, but it is very hard to square that with evidence from other countries. When I was looking into the matter seven or eight years ago, I went to America to speak to all the various “three letters of the alphabet” agencies over there, as well as—most important in this context—the Department of Justice, about their use of intercept evidence. The man who was the second-highest-ranking representative of the Department of Justice—the highest-ranking non-political appointee—said that not a single terrorism or organised crime case had been successfully prosecuted in the United States without the use of intercept evidence, which was a major part of its massively successful counter-terrorism and counter-Mafia operations.

I have mentioned the Mafia and counter-organised crime operations because the problems involved are quite similar. Obtaining witnesses is difficult, as is obtaining intelligence. Those people kill their witnesses, and they are very clever about their use of communications. The organised crime syndicates in America are better advised than the likes of al-Qaeda by lawyers and technical people. The Americans have something called a CIPA process—CIPA stands for “Confidential Information Protection Act”. There is a CIPA court, which is a bit like the Special Immigration Appeals Commission. It involves security-cleared prosecution and defence counsel and a security-cleared judge, and all its hearings take place in secret.

That court decides on what evidence can be put to the main trial. This is a big battle that goes on. It prevents malevolent fishing expeditions by malevolent or badly judged lawyers, but it ensures that both sides of the case get proper treatment and proper justice is delivered. The Department of Justice representative said: “If we win the CIPA case, the main case goes straight to plea bargaining”—in other words, the other side gives in and accepts the outcome. He viewed the British approach as “incomprehensible.”

It is not just the Americans; all the other English-speaking peoples in the “five eyes” do much the same. In 2006, Australia, under its intercept arrangements delivered just short of 1,500 convictions—a combination of serious crime and counter-terrorism work. Its director of public prosecutions was even fiercer. His words at that time were: “If you don’t use intercept against terrorists, you are not being serious.” There are various problems in the UK under the European Court of Human Rights regime which make things a little bit more risky for us than for others, but there are nevertheless issues that can be dealt with.

The agencies talk about protecting methods or techniques and operations. They are both perfectly legitimate concerns and we need to deal with them. Let us deal first with methods or techniques. GCHQ is good but it is no better than the National Security Agency and it is tiny in comparison with the NSA. The techniques that are used to intercept are commonly in the public domain in court in all of the “five eyes” countries—in America, Canada, Australia and New Zealand. In the days of the internet, we can get court records from around the world, and if we are worried about al-Qaeda knowing what we are doing, it can know by looking at every other country in our alliance, because they do the same things. So I do not think that that argument—the argument of technique—stands up much at all, but we can protect it.

The second question is about protecting individual operations and agents and I will come back to that. This is manageable, too. All the countries—the USA, Australia, Canada, New Zealand and Israel—have techniques for certification and warranting that explicitly protect operations and operational security, again from malevolent defence lawyers going on fishing expeditions. I will cite the example later.

Before I go any further, we should be clear that there is a range of exceptions to the ban on intercept evidence in court. One exception is intercepts carried out in other countries. We have this extraordinary arrangement in our law that means we can use intercepts arrived at abroad but not in the UK, so quite how we deal with the issues of protection of technique and operations in that regard is interesting and debatable. A number of the suspects who were charged after the Heathrow bomb plot were not convicted and the lack of some of those convictions were critical. Three in particular—Ali, Sarwar and Hussain—were so critical that they were retried. The evidence that convicted them was e-mail intercept evidence obtained from Yahoo! in California. It led to their conviction in 2008. That demonstrates straight away the value of intercept in difficult cases. Those intercept data were not initially released because the US felt at first that it compromised an existing operation—against a man called Rashid Rauf in Pakistan. He disappeared or died—we do not know which—under strange, mysterious circumstances, and the information was then available because that operation was no longer sensitive. That is a simple example of both the effectiveness of the mechanism and the fact that we can control the information using American or other “five eyes” processes to release it when appropriate, and do it safely.

There are two other exceptions to the use of intercept evidence in court that the House should be aware of. The first is the intercept of telephone and other communications out of prisons, which is open. For example, the Soham killer, Ian Huntley, was convicted largely on the basis of intercept evidence arrived at from there. The second is bugging. If we bug a phone, we can use the information, but if we intercept the phone we cannot. That is an extraordinary distinction, particularly given that if we put a physical bug in the phone I am holding, we could use the data, but if we put a software bug in it, we cannot. That is an astonishing piece of out-of-date law and it needs to be brought up to date.

As I said, the intercept ban inevitably pushes agencies towards disruption rather than prosecution, which, of course, is inevitably less effective and leads to a progressively more difficult problem for agencies over time. The Privy Council committee very nearly recommended allowing a tentative use of intercept evidence some time ago, after Chilcot, but it appeared to be put off by one case that came up at the last minute—Natunen v. the Finnish Government. The ECHR stepped into that case, which revolved around intercept, and struck down the conviction. Natunen had been convicted as a drugs smuggler and some intercept evidence had been used in the case. It turned out that the police had destroyed some other intercept evidence that could have been—may have been—exculpatory. That case shocked the Privy Council committee. The reason for the change of stance at the last minute, as I understand it, was that Chilcot laid out five principles, a couple of which said, “The agencies have at all times to control the recording, transcription, storage and, by implication, the possible destruction of any evidence, and this should only be under the agencies’ control, not under judicial control.” Of course that leads to a problem—if they destroy evidence without judicial control, the balance in a court case may be changed—and so that cannot be done. It seems to me that we need to revisit that issue and start to try to copy some of the techniques used by other countries.

This matter is very technical on one level but straightforward on another, and I go back to what I said about how the Americans do it. They have a court that goes through this information and sifts out what is available to put before the court, which is fair to both sides and does not allow the compromising of proper intelligence operations. That court is very like SIAC, a court we already use and which can hear intercept evidence. Although SIAC has had its rulings overturned from time to time by the ECHR, it has never been given any sort of instruction to put that intercept evidence in the public domain or make it available to people who are perhaps not responsible. So this issue is capable of resolution. We have been overly nervous and overly attentive to the understandable worries of GCHQ and the other agencies in the past. That is why those who work with this, including the police, are more—

[Lady Hermon]

I have listened intently to the right hon. Gentleman’s contribution. Will he reflect on the fact that when we had Diplock courts in Northern Ireland they were supported by one section of the community and despised by another. We do not have Diplock courts in Northern Ireland any longer. If his proposal were to be legislated upon and we have a secret court that sits and hears all the evidence, including the intercept evidence, which I agree should be allowed into court, how does he think that would be received in Northern Ireland?

[Mr Davis]

I speak as probably one of the last people to give evidence at a Diplock court. It was against a terrorist who was convicted and then, under the Good Friday agreement, promptly released—it was a very frustrating process. Of course there is a problem of acceptability with any secret court. The hon. Lady will know that I fight vigorously against the idea of secret justice, but what we are talking about here is not secret justice; it is about a decision to let into the public domain more than is currently let into the public domain. Sometimes that information is exculpatory. One of the problems that has arisen with SIAC is that the agencies have not been good at their evidence discipline. At least one case has been struck down. A special advocate called Nichol, who is now a judge, discovered that MI5 was claiming that one person against whom it was bringing a case had used a passport to cross a border one week, and then the next week had brought a case against somebody else claiming that he used the same passport on the same day in a different place. So the agencies have their weaknesses. Nevertheless, the tool is significantly better than what we have at the moment. We may use intercept evidence in terrorism prevention and investigation measures and control orders. I happen to think that TPIMs and control orders are completely ludicrous, because they people who should be inside prison leave out on the streets. They should perhaps be called non-control orders, because all the dangerous ones disappear. Of course, it is not easy and there is an issue of presentation, but if there is fair representation from both sides to decide on what information should be put in the public domain, it is as close as we can get to public justice. That is the point.

18:30

Most important of all, the agencies’ job now begins to look more possible. Even some members of the Intelligence and Security Committee have been critical of the agencies. The right hon. Member for Knowsley (Mr Howarth) criticised the agencies, saying that they seem unable to deal with the thousands of suspects that they have in front of them and to sift them in such a way that they can find the ones who are really dangerous. That is what happened in 7/7, 21/7 and in the terrible murder of Lee Rigby. This tool will give us a powerful anti-terrorism weapon and make the job easier to do. It will reduce the size of the target and, at the end of the day, deliver justice. I take the view that one of the most important things that we can do with would-be terrorists and actual terrorists is to convict them in a court of law so that their own communities understand what they have been planning and then punish them properly and take them out of circulation so that they are no longer a threat to the public. We need to take this matter incredibly seriously. Frankly, it is more important than most of the other issues in this Bill, except perhaps for Prevent. The Government should get a grip of this issue after 30 years of indecision.

[John McDonnell (Hayes and Harlington) (Lab)]

I congratulate the right hon. Member for Haltemprice and Howden (Mr Davis) on his consistent approach to this matter. I wholeheartedly support new clause 3, and hope that he brings it back on Report. I still cannot comprehend why intercept evidence has not been used. I have never had a satisfactory response to that in all the debates we have had.

Let me turn now to amendments 8, 9 and 10, which stand in my name. I bring the Committee back to the debates we have been having throughout this Bill and that we had during the Data Retention and Investigatory Powers Act 2014. I am talking about the protection of professionals, journalists in particular, who have a duty of confidentiality and secrecy. Let me remind Members of the background to this. The Regulation of Investigatory Powers Act 2000 has been used as a device to avoid the requirement in the Police and Criminal Evidence Act 1984 for judicial authority to undertake police investigations of the operation of journalists in particular, which also means collecting data on them.

There is currently a case before the courts involving six journalists. Despite frequent freedom of information requests, there has been a complete inability to find out how much RIPA has been used by the police to investigate journalists. That puts journalists at risk, undermines the relationship that they have with their sources and puts their sources at risk.

In addition to that concern, which is now being addressed by the courts, there is the issue with regard to the European Court of Justice, which struck down the EU data retention directive. That directive explicitly recognised the importance of data retention in preventing and detecting crime. It also stated that one of the 10 principles that a state must abide by is to

“provide exceptions for persons whose communications are subject to an obligation of professional secrecy.”

The Minister helpfully allowed me, National Union of Journalists representatives and its solicitor to meet officials to discuss his earlier indication that the data acquisition code of practice would be amended to ensure that where there are concerns relating to professions that handle privileged or confidential information, such as journalism, law enforcement should give additional consideration to the level of intrusion.

The Minister kindly published the guidance last week. It is now out for consultation, which I welcome. Paragraph 3.74 states that

“applicants, giving special consideration to necessity and proportionality, must draw attention to any such circumstances that might lead to an unusual degree of intrusion or infringement of privacy, and clearly note when an application is made for the communications data of a medical doctor, lawyer, journalist, Member of Parliament, or minister of religion. Particular care must be taken by designated persons when considering such applications.”

I think that is really helpful. It does not go as far as the NUJ and others wanted, which was judicial oversight or approval in some form, but at least it gives us the basis for special considerations being taken into account with regard to journalists and others.

My amendments would simply strengthen the role of the privacy and civil liberties board, or whatever title we give it tonight as a result of various amendments. Amendment 8 would ensure that the Secretary of State publishes regulations under section (3) that include a provision requiring the board to undertake an inquiry into the retention of and access to data relating to professions that operate under a duty of confidentiality. That would allow the privacy and civil liberties board to look at how the new code of practice is operating and report on what impact it is having on the operation of journalists and those in the other professions.

Amendment 9 seeks to amend the regulations so that the membership of the board includes representatives of those professions that operate under a duty of confidentiality. In that way, we would ensure some overview of the new code of practice and of the implications for journalists and others. In addition, the voice of journalists and others in professions that operate under this duty of confidentiality would be represented and heard on the civil liberties board when it advises the Secretary of State on the overall operation of this legislation.

The amendments are in the spirit of trying to find, as we have done throughout our considerations of the Bill and the debate on DRIPA, a balance between ensuring that the authorities can investigate appropriate crime, including terrorism, and protecting those professions that work under this duty of confidentiality. It is a serious matter for journalists. There is a real concern that it might undermine their operation and put them at risk, but it would also undermine the ability of whistleblowers and others to come forward and put them at risk. As we have seen in recent cases, that might now be tested in the courts.

I do not intend to press my amendments to the vote. They put forward some points for debate. Hopefully we will get a positive response from the Minister on the inclusion of at least some review, but also perhaps representation on the board.

[James Brokenshire]

Let me first address that last point from the hon. Member for Hayes and Harlington (John McDonnell). Obviously we touched on that during our previous consideration of the Bill with regard to the code of practice under DRIPA, which has now been published, and I welcome his comments on that. We look forward to receiving feedback from him and from the NUJ on their views about our proposals as part of the consultation exercise. I understand his desire to see further scrutiny and challenge. Indeed, that examination remains ongoing on a number of different fronts. The interception of communications commissioner is carrying out a review in that area, which he intends to complete by 31 January next year. I repeat that we will of course want to consider his recommendations when we come to finalising the code, along with any other comments received. This is an important area that we have already debated. As I made clear on that occasion and am happy to reiterate, the Government recognise the importance of a free press and are determined that nothing should be done that might jeopardise that.

It is notable that the independent reviewer of terrorism legislation is examining the issue more broadly. The civil liberties and oversight panel is intended to support the independent reviewer in some of his work. The Home Affairs Committee has provided its thoughts in relation to this issue, and Parliament’s Intelligence and Security Committee is looking more broadly at privacy and liberty. We look forward to receiving its report in due course, which may well touch on some of the themes that the hon. Member for Hayes and Harlington brought to the Committee this afternoon. Although I think his amendment is not necessary in the context of the debate today, I can reassure him about the level of scrutiny and examination that is being given to these essential points. I look forward to continuing the discussion of the matter.

On clause 36 and the Opposition amendments, the privacy and civil liberties oversight board is intended to support the independent reviewer and in so doing will provide much-needed capacity to allow the reviewer to consider a wider range of subjects than it is currently possible for one individual to undertake. However, it is right that we ensure that the statutory functions and objectives of the board are in line with those of the role it is designed to support.

Clause 36 provides for regulations to be made that would set out the detail of the board, including provisions about its composition, functions and appointment. These regulations will be subject to the affirmative procedure. Clearly, this is an important matter and any changes to existing oversight must be carefully considered—the point that the hon. Member for Kingston upon Hull North (Diana Johnson) rightly highlighted. That is why the Government will publish a full public consultation that invites comments on the proposals and provides an opportunity for all interested parties to influence key elements of the board, including its composition and appointment, some of the rights of access to documentation and the structure of the membership.

We will carefully consider the outcome of the consultation prior to bringing forward the regulations. We will invite comments on key elements relating to the organisation, membership, appointment and work programme of the board. Clause 36 already provides, subject to the outcome of the consultation exercise, that regulations may include provision about any number of the most important considerations relating to the board. That would allow the matters addressed in the amendments to be dealt with in the regulations, should it be appropriate to do so.

[Lady Hermon]

Even though part 5 does not extend to Northern Ireland, I would welcome a guarantee from the Minister that there will be at least one representative from every region of the United Kingdom, including Northern Ireland. Northern Ireland has, unfortunately, a huge wealth of experience and expertise in counter-terrorism. A guarantee that there will be a member from Northern Ireland on the new board would be very helpful and reassuring indeed.

[James Brokenshire]

I recognise the knowledge and expertise that reside in Northern Ireland. The independent reviewer has made a number of visits to Northern Ireland to satisfy himself about the application of a number of items of terrorist legislation pertaining to Northern Ireland. In the support that the board provides to the independent reviewer, it will look at those functions. I have heard clearly the hon. Lady’s representation and when the consultation is launched, I encourage her to make representations for the appropriate changes.

The consultation will invite views on the important matter of the work programme—a point made by the hon. Member for Kingston upon Hull North. The Bill provides that the privacy and civil liberties board will support the statutory functions of the independent review. Its remit is therefore in line with this aim. Should the statutory remit of the independent review change in the future, this would be reflected in the role of the board. The appointments will, of course, be undertaken in accordance with best practice, but until we have decided exactly how appointments are to be made, it would be premature to prescribe the process unduly.

I turn to some of the other amendments tabled by the hon. Lady. The name of the board properly respects privacy and civil liberties. The aspects she referred to, such as broadening its scope, relate to matters of privacy and civil liberty. We therefore judge that the name of the board properly reflects its process of independent scrutiny of counter-terrorism powers to ensure that the balance is right.

On the consequential amendments, amendment 19 addresses a point that we recognise in terms of how this may apply to other related matters, including the devolved matters that the hon. Lady highlighted. In practice, we would consult devolved Administrations. However, although Parliament and, in this case, the Secretary of State could still legislate, I can see the case for statutory consultation. Accordingly, I have some sympathy with what the amendment seeks to achieve, and I do not believe that we have a particular difference of view. Therefore, if she would be minded to withdraw her amendment, I would like to reflect on how we might best achieve the objective that I think we both share.

18:45

On the ISC, the Justice and Security Act 2013 expanded the Committee’s role and remit, including formalising its role in overseeing the wider intelligence community. The budget has been doubled to £1.3 million per year, and that is reported on in more detail in the ISC’s annual report. This additional funding has strengthened the ISC, as is already being seen in the work it has undertaken in its scrutiny of the agencies through the new powers. As recently as 25 November, the ISC laid before Parliament a memorandum of understanding, which, in addition to addressing certain matters in the Justice and Security Act, sets out the overarching principles governing the relationship between the Committee and the parts of government that it oversees, including its remit and powers. It is important that we allow the new memorandum of understanding to bed down properly before we institute another review. Therefore, I am not currently minded to accept the hon. Lady’s amendments.

New clause 3 was tabled by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), who has had to step out of the Chamber. That is not intended to be any discourtesy to me in seeking to respond, and he has sent his apologies. I am grateful to him for tabling the new clause, which gives me the opportunity to debate an important issue that is recognised by many Members across the Committee. I think we all start from the same position that people who have committed a crime should be prosecuted and brought to justice. Anything that might make a successful prosecution less likely in cases where a person is guilty is clearly less than ideal and should be contemplated only where there is very good reason. The Government are committed to securing the maximum number of convictions in terrorism and serious crime cases. If a viable regime were identified, the introduction of intercept evidence might help us to do that. For that reason, the Government have sought to find a practical way to allow us to use intercept evidence in court.

A further review of the issue has been undertaken—the eighth in 21 years. It has been overseen by a cross-party group of Privy Counsellors, including the right hon. Member for St Helens South and Whiston (Mr Woodward) and my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who is in the Chamber, as well as Sir John Chilcot and a former Home Secretary, the noble Lord Howard. I am sure that the whole Committee will recognise the breadth of experience and wisdom to be found in that group. The review will be published imminently. I hope that its findings will help further to inform consideration of this legally complex issue, which is crucially important for the UK’s national security. It is vital that all options are thoroughly explored and assessed. It would be wrong at this stage to seek to make the change that my right hon. Friend the Member for Haltemprice and Howden proposed, albeit that it was a probing amendment more than anything else.

This will probably be my last opportunity to speak in the Committee. I thank all right hon. and hon. Members for their thoughtful and constructive contributions to our three days of discussions and debate on the Floor of the House, which have added to the Bill. I have very much enjoyed taking part, and I look forward to continuing a number of these debates when we return on Report.

[Diana Johnson]

I listened to what the Minister said, in particular, about the amendments on clause 36. While I will not press them to a vote, I am minded to reserve our position until we return after the Christmas break. I thank everybody for their contributions to the Bill’s Committee stage on the Floor of the House, and wish everybody a very merry Christmas. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 36 to 41 ordered to stand part of the Bill.

Clause 42

Commencement

Amendment made: 12, page 25, line 3, at end insert—

“() section 18(10);”—(James Brokenshire.)

Clause 42, as amended, ordered to stand part of the Bill.

Clause 43 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill, as amended, reported.

Bill to be considered tomorrow.

[Mr David Winnick (Walsall North) (Lab)]

On a point of order, Madam Deputy Speaker. I understand that references have been made during the course of today’s proceedings to the atrocities that have occurred in Pakistan. The latest information is that 141 have been murdered in Pakistan, of whom 132 were children aged between five and 14. As we would all agree, this has undoubtedly been an act of murderous inhumanity.

Madam Deputy Speaker, I raise this point of order not just to give the latest information, but to ask you whether there is any way in which the House can express its horror at and condemnation of what has occurred in Pakistan. It is an act of terror carried out —and recognised and admitted as such—by the Taliban. I hope that it will be possible for such condemnation to be expressed by the House.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I thank the hon. Gentleman for his point of order. I am sure that he is aware that I am not strictly in a position to say precisely when or by what means the House will be given the opportunity to express, on behalf of the people of this country, its feelings about what has happened in Pakistan. However, I am quite certain that those on the Treasury Bench have listened to what he said. Indeed, Members referred to this matter during the debates on terrorism this afternoon.

May I on behalf of the House say that I am sure that every Member of the House, on behalf of the people whom we represent, would wish to express our absolute horror and enormous sadness at this terrible atrocity? We are used to seeing dreadful acts of terrorism, but rarely have we seen such an awful act of terrorism against children. I thank the hon. Gentleman for bringing the matter to the attention of the House. I am quite sure that the House will, at some point in the very near future, have the opportunity to address this matter.

Local Government (Religious etc. Observances) Bill (Money)

Tuesday 16th December 2014 Commons Chamber

Queen’s consent signified.

18:53

[The Parliamentary Under-Secretary of State for Communities and Local Government (Penny Mordaunt)]

I beg to move,

That, for the purposes of any Act resulting from the Local Government (Religious etc. Observances) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.

May I associate myself with your remarks, Madam Deputy Speaker?

The Government are keen that the Bill should move forward, and the passing of the money resolution is an important step in that process. The costs to local authorities of implementing the new freedoms in the Bill—to include prayers as part of official business, and to facilitate and support activities with a religious dimension—are seen as a new head of expenditure to be met out of the grants that authorities already receive from central Government. The motion refers to payments under other Acts being increased as a result of the Bill because, technically, a new head of expenditure is a notional increase for the purposes of Commons financial procedure, even though it might not, in fact, give rise to an increase in expenditure.

I pay tribute to my hon. Friend the Member for Rossendale and Darwen (Jake Berry) for his work on the Bill. The House last debated it on 21 November, when the Government’s support for the Bill was made clear. We support allowing the members of local authorities the freedom to pray if they wish to and making this a matter of local choice once again.

We consider the provisions in the Bill to be important. They right a wrong decision that was taken by the High Court when it ruled that councils had no power to carry on the centuries-old tradition of holding prayers at their meetings. The costs associated with the provisions are negligible. The Bill will not compel anyone to pray or any local authority to include prayers in their official business, nor does it define what constitutes prayer. The Bill will ensure that local authorities can support, facilitate and be represented at events with a religious element. Again, nothing in the Bill will compel a local authority to do anything that it cannot already do, such as organise a Remembrance Sunday event safely by closing a road for a short time. Rather, it protects local authorities from those with an axe to grind, who might wish to challenge such a decision. As far as local authorities are concerned, we expect any new expenditure to be negligible.

I commend the motion to the House.

18:56

[Jake Berry (Rossendale and Darwen) (Con)]

I shall speak briefly in support of the money resolution to my Bill. There was no opportunity to speak on Second Reading, so I want to put on the record my thanks to the Minister and her officials in the Box, and to colleagues across the House who have agreed to serve on the Public Bill Committee in the coming weeks and to support the Bill’s passage through the House.

I believe that putting the freedom to pray on a statutory footing for all local authorities is an important issue for elected representatives who serve communities across the UK. I want to put on record my thanks to all councillors—from county councillors to parish councillors —for the work that they do in the community on our behalf.

Finally, I am delighted to be able to take the Bill through Parliament and to protect people’s freedom to pray, because it is an important issue. As we approach Christmas, the celebration of the birth of who I believe to be the Prince of Peace, all elected officials might like to reflect that there may be more power in prayer than in any stroke of a Minister’s pen or ruling from the Chair, and that this Bill, which seeks to protect people’s freedom to pray, will enable people of all religious beliefs to seek guidance in their deliberations in elected office.

18:58

[Lyn Brown (West Ham) (Lab)]

I rise to speak in support of the Bill. As we know, it came about owing to a successful challenge of Bideford town council’s practice of having religious prayers on its meeting agendas. The decision of the High Court in 2012 was that a local authority had no power to hold prayers as part of its formal business. The Bill will confirm unequivocally that prayers, religious observances or even philosophical observations may take place as part of the business of local authorities in England and Wales.

I welcome the fact that the Bill is not prescriptive. It will leave it to local communities to determine what, if any, observances are appropriate to them; where they should be placed on the agenda; and whether they should be faith-based or otherwise. We must see this as a matter of local choice. Religious observance is a matter where local choice should prevail and in respect of which the virtues of tolerance, sensitivity and community well-being should shine through.

This is a short, two-clause Bill with a simple intention that does not seem to conflict with the most liberal of expectations. It will enable local authorities of all types to include prayers if they wish to. It is not prescriptive, but enabling. I am content, on behalf of the Opposition, to wish the Bill and its purposes well.

Question put and agreed to.

Business without Debate

Tuesday 16th December 2014 Commons Chamber

Delegated Legislation

Tuesday 16th December 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Constitutional Law

That the draft Government of Wales Act 2006 (Amendment) Order 2015, which was laid before this House on 5 November, be approved.—(Mel Stride.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Tribunals and Inquiries

That the draft Transfer of Tribunal Functions (Transport Tribunal) Order 2014, which was laid before this House on 10 November, be approved.—(Mel Stride.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Corporation Tax

That the draft Changes in Accounting Standards (Loan Relationships and Derivative Contracts) Regulations 2014, which were laid before this House on 17 November, be approved.—(Mel Stride.)

Question agreed to.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With the leave of the House we shall take motions 7 to 10 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Banks and Banking

That the draft Banking Act 2009, (Mandatory Compensation Arrangements Following Bail-in) Regulations 2014, which were laid before this House on 24 November, be approved.

That the draft Banks and Building Societies (Depositor Preference and Priorities) Order 2014, which was laid before this House on 24 November, be approved.

That the draft Banking Act 2009 (Restriction of Special Bail-in Provision, etc.) Order 2014, which was laid before this House on 24 November, be approved.

That the draft Bank Recovery and Resolution Order 2014, which was laid before this House on 24 November, be approved.—(Mel Stride.)

Question agreed to.

petitions

Tuesday 16th December 2014 Commons Chamber

19:01

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

I present this petition having heard the concerns and personal examples of my constituents, particularly those from the areas of Southway, Estover and Budshead, who have been affected by persistent nuisance phone calls and—even worse—phone and text scams.

The petition states:

The Petition of residents of the Plymouth Moor View constituency and others,

Declares that the Petitioners would like the Government to provide additional powers to the Information Commissioner to stop the scourge of nuisance texts and phone calls; further declares that these calls are unsolicited but can result in the recipient being inconvenienced and charged when abroad.

The Petitioners therefore request that the House of Commons urges the Government to review the current law on cold and marketing calls and texts.

And the Petitioners remain, etc.

[P001413]

19:02

[Rosie Cooper (West Lancashire) (Lab)]

Parents, pupils and members of the wider Skelmersdale community are opposed to the possible closure of Glenburn sports college that is currently being consulted on by Lancashire county council. People have marched through the town in protest and signed petitions, and the message in their consultation submission is clear: pupils and parents do not believe that closing the school is in the best interests of pupils. Delivering high-quality education unlocks choice and opportunity for our children and young people, and we strive for the best quality education that we can get. To achieve that goal there needs to be a comprehensive review of education across the town, and a desire to invest in the futures of those young people. To that end, I bring a petition to the House of Commons from the residents of West Lancashire and others.

The petition states:

The Petition of residents of West Lancashire,

Declares that there are plans to close Glenburn Sports College; further that the Petitioners do not support the closure of Glenburn Sports College but wish to keep it as the local school in the Skelmersdale area; further that the Petitioners deplore the high-handed way that Lancashire County Council decided to consult on the possible closure of the school; and further that a local petition on this matter was signed by 2,759 individuals.

The Petitioners therefore request that the House of Commons urges the Government to encourage Lancashire County Council to have a genuine consultation about the possible closure of Glenburn Sports College in order to listen to the pupils and parents of the school and to explain the decision-making process behind the plans to close the school; and further request that the House of Commons urges the Government to encourage Lancashire County Council to give time and support to Glenburn Sports College to enable the school to improve its performance and financial position.

And the Petitioners remain, etc.

[P001415]

19:04

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

I am presenting a petition on behalf of my constituent Lauren Dobbe who is 14 years old. After many tests, she has been diagnosed with a disease called gastroparesis. There is a treatment: a gastric stimulator, which acts like a pacemaker. It is not a cure, but it helps with the symptoms. Unfortunately NHS England, which is responsible for funding this procedure, is dragging its feet. In addition to this petition, there is an online petition with more than 1,149 signatures from residents in Sutton, Cheam and Worcester Park. I am asking for common sense and compassion, and that NHS England act on the advice of four specialists and fund the treatment to give Lauren the most precious gift at Christmas—a normal teenage life.

The petition states:

The Petition of residents of the UK,

Declares that Lauren Dobbe suffers from Gastroparesis which causes her to be sick and suffer pain 24 hours a day, 7 days a week and requires her to be tube fed which denies her a normal teenage life; further that NHS England is causing unnecessary suffering and misery to Lauren and her family by delaying the use of a proven medical intervention to treat her Gastroparesis; further that the Petitioners regret that NHS England has failed to properly assess the case for funding the fitting of a Gastric Stimulator which would act like a pacemaker helping to control symptoms and would allow Lauren to eat normally; and further that this has happened despite the recommendations of four specialists and the second opinion sought by NHS England confirming the recommendations of the specialists.

The Petitioners therefore request that the House of Commons asks the Government to urge NHS England to review the application and make funding available for the fitting of a Gastric Stimulator for Lauren Dobbe and further request that the House of Commons asks the Government to urge NHS England to recognise that a failure to provide the procedure would condemn Lauren to a life being fed by tube, ignoring her wishes as well as those of her family and the independent and expert advice of clinical specialists.

And your Petitioners, as in duty bound, will ever pray. [P001414]

Bombardment of the Hartlepools

Tuesday 16th December 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mel Stride.)

19:06

[Mr Iain Wright (Hartlepool) (Lab)]

Exactly 100 years today, the towns of Hartlepool and West Hartlepool were attacked by German forces. This is probably the single most momentous day in my constituency’s history, a day which for ever altered civilian life and the way in which modern warfare is conducted. The bombardment of the Hartlepools has been remembered and commemorated ever since, none more so than today, its centenary. A beautiful and poignant ceremony took place in Hartlepool this morning, at the precise time when the shells starting raining down on the innocent people of the town. I particularly want to thank John, Mandy and Charlotte Southcott of the Heugh Gun Battery Trust for their tireless efforts, but there are countless others who made the commemoration events today so special. On behalf of the House, I thank them all.

It is a huge honour for me to be able to mark the centenary in this House and to ensure that Parliament has the chance to reflect on this important event in our country’s history. I am pleased that the Minister is in her place to respond to the debate, and I am particularly touched that my hon. Friend the Member for Barnsley Central (Dan Jarvis) is in his place on the Opposition Front Bench.

By the last weeks of 1914, the great war had been fought for four months. In that time it had descended into stalemate. From Calais to the Swiss border the allied forces and their German counterparts faced each other in dank, dangerous and rat-infested trenches. Countless attacks and raids had brought death and injury to thousands of soldiers, but had not been accompanied by any strategic breakthrough or military advance.

In the space of a few short weeks in that short-lived optimism of summer 1914, Lord Kitchener, the new Secretary of State for War and darling poster boy of the British empire, had been able to raise, from a standing start, the first 100,000 recruits for a land army. German high command feared that the additional substantial resources on the western front, once operational, had the potential to inflict disproportionate damage on the German army. High commands in London, Paris and Berlin were anxious and frustrated, and sought alternative strategies that might give them the upper hand.

In the very week of the bombardment of the Hartlepools, Winston Churchill, as First Lord of the Admiralty, was considering a direct attack on Germany by the Royal Navy across the North sea. Rumours had gained ground in England that a German invasion of the south coast was imminent, and Berlin hoped that a bombardment of the north-east coast, using cruisers, might have the dual consequence both of ensuring that Kitchener’s forces would be kept away from the western front and in England to defend against possible invasion, and dispersing the land forces thinly across the coast from Berwick to Brighton, thereby keeping the option of invasion open to Germany.

Those were the origins of the bombardment. The objectives of the mission were clear: a desperate need for a breakthrough against the stalemate of the trenches; a wish to boost the morale of the German people, especially just before Christmas; and a desire to provoke the Royal Navy into a confrontation that might reduce the capacity of the British fleet against its German counterpart. In addition, Germany hoped to inflict damage on Britain’s ports and coastal defences; reduce her industrial capability by damaging capacity and infrastructure; and, in perhaps the first example of mass and dramatic propaganda in modern warfare, demonstrate to the British people in as vivid and horrific a fashion as possible that Germany had more than the means to wage war and, indeed, that it had the technology and guile to wage such war on Britain’s own homeland.

The Hartlepools were an obvious target. West Hartlepool was immensely important for munitions to the war. It had been a leading driver of the industrial revolution and in 1914 still possessed one of the busiest ports in the British Isles as well as significant engineering works used to supply the war effort. Despite their industrial importance, the Hartlepools were rather meekly defended. There were two batteries, one at the Heugh possessing two six-inch guns, and the other 100 yards to the south at the lighthouse, with only one six-inch gun. The authorities clearly never anticipated an attack on the homeland from the sea.

Wednesday 16 December 1914—nine days before Christmas—dawned with heavy mist and fog. It was cold, but without any wind. Visibility was low, giving the German cruisers effective cover to reach 4,000 yards off the coast without being detected. At precisely 8 o’clock, the fire commander at Fairy Cove, about 500 yards from the Heugh battery, received the following message from South Gare battery, about five miles down the coast: “dreadnoughts steaming south”. That was followed immediately by a message from the port war signal station: “Three warships coming in at great speed!” Those three warships were German cruisers: the Seydlitz, the Moltke and the Blücher. Between them they had twenty 11.2-inch guns, eight 8.2-inch guns, eighteen 5.9-inch guns and a whole host of other armaments.

At precisely 8.10 am, the German cruisers opened fire on the Heugh battery. The first round of shells fell beside a low wall that formed the boundary between the battery and the pathway leading to the promenade. The wall, or at least its successor, is still there: I walked past it this morning. The blast from the shell killed Private Theophilus Jones, of the 18th Battalion the Durham Light Infantry. Private Jones was 27 and a teacher at a Leicestershire school, but he was originally from Ashgrove avenue in West Hartlepool. He was on sentry duty that morning. He was the first solder killed on British soil by enemy action in the first world war. Indeed, he was the first soldier to be killed on British soil in warfare since the battle of Culloden in 1746. Almost immediately afterwards, three other men from the 18th DLI—Privates Liddle, Clark and Turner—were also killed.

Tactically, the German plan had been to concentrate the first phase of firepower on the batteries at the Heugh and the lighthouse, in order to put the battery guns out of action, then to switch to firing on industrial and infrastructure targets, such as West Hartlepool’s steelworks, docks, shipyards, gasworks and railway goods and passenger stations. However, the Heugh battery had erected a camouflage extension, giving its height a false impression. That, combined with a low tide, probably had tragic consequences: although the German cruisers failed in their objective of taking out the gun defence, it meant that if the German shells hit too low, hitting the rock of the headland, dangerous fragments of shrapnel ricocheted into the civilian population of old Hartlepool. Any shells that were fired too high sailed over the Heugh battery and into the densely populated area of West Hartlepool.

Shrapnel from the second round of shells struck Hilda Horsley—Horsley is such a strong Hartlepool name and it is still shared by many of my constituents—who was a 17-year-old tailoress on her way to work. She was the first civilian fatality of the bombardment. Shrapnel also struck the end house of Cliff terrace, immediately to the rear of the Heugh battery. Two sisters, Annie and Florence Kay, were killed instantly.

William street in old Hartlepool was one of the worst-affected areas, with eight fatalities, all of whom were children. The youngest was Selina Herbert, aged three, and the oldest was George Dixon, aged just 14. The Dixons lived at No. 30. At the start of the bombardment the family started to flee, hoping to seek refuge in the neighbouring countryside and the villages of Elwick and Hart. As they passed Church Close street, a shell exploded in front of them. Not only George but his eight-year-old sister Margaret Ellen and seven-year-old brother Albert were killed instantly.

Their mother Margaret was blown off her feet by the scale of the blast, losing one of her legs in the process, but her maternal instinct overtook any thoughts for her own safety and she still clutched in her arms the blood-soaked baby of the family, John, who was not yet one. Margaret was losing consciousness, but told her surviving children, 12-year-old Joseph and three-year-old Billy, to run for safety. Joseph had 17 separate pieces of shrapnel in his leg and was bleeding profusely, but he took John in his arms and ran for his and his remaining brothers’ lives. He collapsed from blood loss and was found by soldiers, close to Trinity church. Although they lost three of their family, Margaret, Joseph, Billy and John all thankfully survived and recovered.

Thirteen-year-old Bertie Young was at his home in Princes street, Middleton, with his face pressed to the glass window, watching the bombardment, when a stray piece of shrapnel hit the glass and killed him.

Shells flew above the Heugh battery into West Hartlepool, across Hartlepool United’s football ground and the neighbouring allotments into the Furness, Cameron and Belk area—those streets and houses still stand to this day—and the streets named Turnbull, Dyke, Gas, Water and Crimdon. Belk and Turnbull streets were the most badly affected. Five deaths occurred in Belk street, including the youngest victim to die during the bombardment, seven-month-old Benjamin Lofthouse, of No. 25; 11-year-old Henry Bell, of No. 31 Belk street, also died.

Henry’s brother was working at Gray’s shipyard and was still on shift when the bombardment started. He recalled:

“In a few seconds a shell hit the offices and blew nearly all of it in the air. At the same time railway wagons were being blown sky high”.

He started running down Middleton road. He goes on:

“A few yards further on I saw Barney Hodgson of Water Street, pinned up against the Swedish church wall bleeding very badly. I went to run towards him but he shouted, ‘Keep on running son, I’m done for.’ I think he was a brave man.”

I think the House would agree.

In Turnbull street, nine deaths occurred, including three sets of brothers: Albert and Stanley Walker, aged nine and six, five-year-old William Peart and his two-year-old brother Charles, and Harold and Wilfred Cook, aged 10 and eight. It was the job of 12-year-old Alfred Claude, of 11 Gordon street, to walk each day to the dairy on Mulgrave road to get the family’s bread and milk. Alfred was killed on his way back from his errand when a shell exploded in Bright street.

Against disproportionate odds, and with great bravery and accuracy, the gun teams at the Heugh battery managed to return fire against the German attack. A total of 1,150 shells were fired by the German cruisers, but the bravery and professionalism of the men at the Heugh meant significant damage was inflicted on the ships and the bombardment—originally meant to last an hour—was curtailed to 42 minutes. The shortening of the attack, thanks to the bravery of the gun men, probably prevented further death, injury and damage.

Gunner Harry Tyson, of 17 Rowell street, was a member of the gun teams at the Heugh, and he recalled how something profoundly British took place—peace or war, there is nothing like a good, hot cup of tea—

“our cooks, Billy Sanderson and Arthur Hall…must have been making tea all the time we were in action. As soon as we stopped firing out came buckets of hot tea.”

In the space of 42 minutes, 119 people had been killed by the bombardment, including 37 children. Several deaths occurred in later weeks, bringing the total number of people killed as a result of the attack on our coast to 130, with over 500 people injured.

Writing after the bombardment, an officer of the Green Howards commended the people of the Hartlepools, stating:

“This account cannot be concluded without paying a tribute to the gallant behaviour of the civil population of the bombarded towns...Men, women and children following their daily tasks do not expect to be blown to pieces in the streets or to have the roofs of their houses come crashing in over their heads. Yet the inhabitants of the Hartlepools behaved like soldiers. There was no panic—no wild rush to safety. An hour after the firing ceased normal life was resumed just as if nothing had happened. This seems to show that these northern people still possess those sterling qualities which we associated with their ancestors, yet which many feared that modern luxury and modern comforts had sapped.”

In updating Parliament on the war on 6 January 1915, Lord Kitchener, as Secretary of State for War, paid tribute in the other place to the people of my constituency, stating:

“On our own coasts, on the morning of December 16, German battle-cruisers bombarded for half an hour Hartlepool, Scarborough, and Whitby. At Hartlepool a battery replied with some effect, though it was out-classed by the heavy guns of the cruisers. No military advantage was gained, or could possibly have been gained, by wanton attacks on undefended seaside resorts, which attacks had as their chief result fatal accidents to a certain number of civilians, among whom women and children figured pathetically. The people in the three towns bore themselves in this trying experience with perfect courage and coolness, and not the least trace of panic could be observed.”—[Official Report, House of Lords, 6 January 1915; Vol. 18, c. 235.]

Unfortunately, most references to the bombardment of the Hartlepools in this House and the other place for most of the next decade or so were from right hon. and hon. Members pushing the Government of the day for compensation for those affected by the attack. It would not be until 1922, some eight years after the bombardment, that compensation was duly paid to the peoples of the Hartlepools.

The effect on the people of my constituency following the bombardment was astonishing. In the weeks and months after the attack, 22,000 men from the Hartlepools signed up for the war effort, something like one in two of the towns’ adult male population. The Hartlepools received the award for raising the most money per head of the population for the war effort of any place in the British empire, a modern equivalent, in a town of 100,000 people, of £545 million.

In 1914, the Hartlepools were a tough little town. Their people were plucky, patriotic and protective of their community. That was demonstrated exactly 100 years ago today in the bombardment and it was reiterated today by the people of the town in its commemoration. I and everybody in Hartlepool will never forget the sacrifices made by our ancestors—made by our own—in the Hartlepools during the bombardment of 16 December 1914.

19:22

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

The raids by the imperial German navy on Hartlepool, Scarborough and Whitby 100 years ago today are justly remembered this evening for the devastating effect they had on normal people going about their daily business, so I begin by extending the sympathy and good wishes of the Government to the people of these northern seaside towns.

The hon. Member for Hartlepool (Mr Wright) has recounted most passionately and sensitively the events of that day, and I will not do so again, but the 16 December bombardment was a terrible demonstration of what being in the line of enemy fire means for ordinary members of the public. The attacks on Hartlepool, Scarborough and Whitby resulted in 137 fatalities and 592 casualties and, of course, there was public outrage towards the German navy for an attack against civilians. Given all that, some might ask why the Government are not hosting a commemoration. It is true that we have chosen to focus on commemorating the key military milestones of the war for Britain and her then empire, but that certainly does not mean that we are ignoring the dreadful things that happened much closer to home. We especially want young people to learn about the sacrifices of the 1914 to 1918 generation, some of them those plucky people from Hartlepool. We want people to be able to mark the centenary locally in ways that are meaningful to them. I would like to take the opportunity tonight to outline some of the events and activities that will commemorate the attacks on these very special seaside towns 100 years ago.

The Heritage Lottery Fund, which has so far given out nearly £64 million to first world war projects large and small has earmarked a significant part of the pot for local projects that increase understanding of the effects of the war up and down the country. It is good to see that a grant of £9,900 has gone to Hartlepool Headland local history group for the “Hartlepool Bombardment—Then and Now” project, which will show photographs of the town in 1914 compared with today. We also welcome the activities of organisations such as the museum of Hartlepool, Scarborough art gallery, Scarborough maritime heritage centre and Whitby museum in marking the anniversaries.

Hartlepool is the only official first world war battlefield site in the UK, in that the Heugh battery on the Headland is the only location in this country where our land forces engaged the enemy during the war, as Hartlepool tried to defend itself. Their brave stand is being honoured with a day of civic and community events organised by Hartlepool council in partnership with the Heugh gun battery trust. The highlight will be the unveiling of the new bombardment memorial near the Headland lighthouse by the Lord Lieutenant of County Durham.

I am very pleased to see that Arts Council England has provided a £400,000 grant to enable the period to be commemorated on Teesside. Hartlepool will, of course, benefit from this, too. One of the town’s most iconic paintings—James Clark’s “Bombardment of the Hartlepools” has recently been restored, and it has to be said that the “Scarborough Remembers” programme has something for everyone. An extensive exhibition at Scarborough art gallery is being complemented by stunning new paintings being created by the Woodend creative in collaboration with a local artist. The Western Front Association and Scarborough Museums Trust are holding a day conference exploring important war-time themes, and the Scarborough archaeological and historical society and Scarborough library are hosting extensive talks.

There has been a service of civil commemoration today at the exact time of the bombardment in an act of remembrance at Scarborough castle. In Whitby, the coastguard has laid lay a wreath in commemoration at the new Bombardment garden on the West cliff, and Whitby air cadets have organised an early evening candle-lit vigil followed by a music night at St. Hilda’s church. A 1914 exhibition is already on display at Whitby museum, which features the bombardment prominently.

All these various commemorations, large and small, allow us to come together to honour the past. In doing so, we can find ways of working together to build a better society—both nationally and within localities. We therefore sincerely wish the people of Hartlepool, Scarborough and Whitby every success in their commemorative projects. May they be well attended and may they give rise to new friendships and co-operations so that these special towns continue to prosper for the next 100 years and beyond.

Question put and agreed to.

19:28

House adjourned.

Petition

Tuesday 16th December 2014 Petitions

Tuesday 16 December 2014

Deportation of Giovanni Di Stefano

Tuesday 16th December 2014 Petitions

The Petition of Giovanni Di Stefano,

Declares that the Petitioner is currently detained at HMP Swaleside in Kent; further that the Petitioner was born in Italy; and further that the Repatriation of Prisoners Act 1984 and the Council Framework Decision 2008/909/JHA are being breached as the Italian authorities have agreed that the Petitioner can be deported to serve the rest of his sentence in Italy, but the UK Government have failed to comply with the timeframe for deportation.

The Petitioner therefore requests that the House of Commons urges the Government to comply with the agreement and allow the Petitioner to be deported.

And the Petitioner remains, etc.

[P001417]

Westminster Hall

Tuesday 16th December 2014 Westminster Hall

Tuesday 16 December 2014

[Mr David Crausby in the Chair]

UK Company Supply Chains

Tuesday 16th December 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Damian Hinds.)

09:30

[Ian Lavery (Wansbeck) (Lab)]

As ever, it is a pleasure to serve under your chairmanship, Mr Crausby.

This issue—human rights abuses in the UK supply chain—is an extremely live one. Whether it is the children of the Colombian coalfields, abuse in the sweatshop economies in Bangladesh, the exploitation of the workers in India in relation to the blood bricks, or the migrant workers in Qatar working in construction in the most inhumane of conditions, and whether it is British American Tobacco, BHP Billiton, Rio Tinto, Glencore or many other multinationals, it is essential that everyone works together within the supply chain authorities to eradicate violations of human rights, from one end of the chain to the other.

We have an absolute moral duty to tackle and stamp out legally the human rights abuses that we see on an almost daily basis. They take many forms. We see women forced into prostitution, and children, men and often entire families forced to work in agriculture, domestic work, factories or sweatshops producing goods for global supply chains. As I say, this abuse needs to be stamped out.

In recent years, the extent of human rights abuses in the overseas supply chains of UK companies has come to light in a way that has emphasised the urgency around tackling modern slavery. At this early stage of the debate, I want to place on the record my thanks to Unite the union for its outstanding work on such issues. Had it not been for Unite, my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) and I would not have joined the fact-finding trip to the tobacco fields of North Carolina, which I will now discuss.

My hon. Friend and I were invited as part of a delegation to North Carolina by the American farm workers’ union, the Farm Labor Organizing Committee. We had the opportunity to witness at first hand some of the many human rights abuses endured by tobacco industry workers in the fields of America. We heard disturbing stories of what is essentially daily life for them—instances of child labour, sexual exploitation of women and human trafficking. It was a world away from what we would expect in a developed country and the so-called “land of the free”, which is one of the richest nations in the world.

The working conditions that we saw were absolutely atrocious, with unbelievably long hours of manual labour in unbearable heat; squalid living conditions, which mean workers have a lower quality of life than inmates in UK prisons; and employers showing a total disregard for basic health and safety regulations by not providing gloves to workers picking tobacco plants, so that their skin is exposed to the toxic nicotine, which meant that many of them develop green tobacco sickness, an affliction with symptoms including nausea, intense headaches, vomiting and insomnia.

We visited about five farms. We also met many people working in the tobacco fields; men, women and even children. I have to say that it was quite harrowing. We listened to the testimonies of many people who were working in the fields. I will take just a little time this morning to outline what some of these people had to say. They were workers who were being exploited in the tobacco fields.

There was Hector, aged 49, who was from Wilson county. He said:

“I had an accident and the farmer didn’t take responsibility. I don’t agree with that…they made me suffer there in the field. I was working the tobacco and a harvesting machine cut off part of my finger. The farmer told me that someone was going to take me”—

to the hospital—

“but the hours went by and I couldn’t tell if he was telling me straight and there I was with my finger bleeding all the while.”

We visited Hector where he lived and at that time his hand was bandaged but he still had not been seen by anyone, days after the accident. At the same time, he was not being paid any wages, even though the accident was because of the negligence of his employer in the tobacco field. Many people were scared to speak out, in case there was retaliation by their employer; that is a huge issue in many of the places that I have mentioned.

There was also Sandra, who is only 13 and from Wayne county. She said:

“I started working in tobacco when I was seven. I work in tobacco because I’m thinking of my future. I want to go to college. My parents have a hard time paying for high school…and I have younger brothers and sisters that want to go to college, too. It’s important for me to work to help my parents, but there are many problems.”

There was Lorenzo, who was 26 and from Nash county. He said:

“If you have a contract”—

commonly known as an H2A visa—

“they treat you differently, but for us they lower the weekly wage. There’s no bathroom and if there is, you can’t use them; you can’t even go in because they are so dirty, and they don’t clean them.”

He said that when the inspectors come around the employers

“bring the bathrooms”—

that is, the portable bathrooms—

“and clean, too, but the inspectors leave and nothing changes”.

So the employers change things when the inspectors arrive to make them look an awful lot better than the dismal situation that workers usually face.

We visited some of these camps and saw some of these toilets. Can you imagine the squalid conditions that these people are living in? I said that those conditions were worse than those in UK prisons. However, to say that is a bit of a nonsense; you would not keep hens on an allotment in places such as those where these human beings reside, seven days a week and 24 hours a day. They were ashamed of the conditions themselves. And to see the toilets, one after another without any privacy shields between them for example, not cleaned for months on end—what sort of way is that to treat ordinary human beings?

We spoke to Gloria, who was 23 and from Duplin county. She said:

“Women with children have it harder. We have no support. If you go out with the contractor, in every way you get treated better. If you go out with him, you’ll get a lot of hours in the good jobs and if you don’t, your pay will suffer. We have to take care of our children! All I ask is that women get treated equally as men in the fields.”

Just for clarification, when she said that women have to “go out” with the contractor, that is what she means—women must give the contractor sexual favours to ensure that they get equality in employment with the men in the tobacco fields. It is an absolute disgrace that that is continuing in what is, I must add, the land of milk and honey.

There was also Maria, who was 26 and from Greene county. She said:

“We get pesticides sprayed near us when we work and we don’t know what they are. This season—”

the 2014 season—

“I got sick from the chemicals and one day I was sick in the bathroom and the supervisor came and told me I had to get back to work. When I couldn’t, he told me he didn’t need me anymore and that was my last day working there.”

Those are a few of the testimonies we heard.

There was also the case, which has become well-known now in North Carolina, of a chap who was feeling pretty poorly after working in the 110° or 120° temperatures in the tobacco fields. The farmer said, “Well, you cannot leave: this is your job,” and sent him to sit under a tree in the shadows in the hope that he would recover. At the end of the day, everybody went home and did not realise that this chap had not come back to the camp with them. They were not too concerned, but as the days went on they realised that this chap had not come back and were slightly worried. So they decided to go back and look, following his traces from where he was in the tobacco field to the tree under which he was supposed to recover, only to find that his corpse was still sitting there, decomposed. Nobody had been to see whether he was recovering. That is why we raise these issues today.

Of course, a lack of regulation causes these poor conditions. Here we have a catalogue of atrocities that amounts to less of an American dream and more of an American nightmare. This is largely due to the lack of regulation in the tobacco farming industry. Labour standards are generally weaker in America. This, coupled with the inadequate resources provided at both state and federal level, means that it is near impossible to ensure that employment rights are enforced.

It is equally damaging that agricultural workers are excluded from the National Labor Relations Act, which denies them the fundamental right of the freedom of association. With no collective bargaining structures in place and with the precariousness of their employment, workers see no alternative to withstanding the appalling conditions and abusive treatment, particularly as many of them are undocumented workers, originally from central American countries, such as Guatemala and El Salvador, with the overwhelming majority hailing from Mexico.

FLOC, with its president Baldemar Velasquez, has for many years been playing a leading role in trying to get these abuses eradicated. It estimates that at least 20,000 tobacco farm workers are not unionised, in an industry where joining a union would be essential in providing the necessary protection in the workplace. With this in mind, it is of the utmost concern that, as workers in those tobacco fields supply companies such as British American Tobacco, many people in this country could be unwittingly supporting this form of modern slavery.

My hon. Friends the Members for Paisley and Renfrewshire North and for Birmingham, Erdington (Jack Dromey) met representatives from BAT on 29 October, and although BAT expressed sympathy with the workers in question, it refused to be proactive in regulating its own practices, as confirmed in writing in its letter of 10 November 2014. BAT has also ignored calls for it to use its influence as an owner and customer of Reynolds American to urge that company to sign up to the Dunlop Commission, a mechanism already in place in America, which would give guarantees to tobacco farm workers on Reynolds American contract farms, a source of tobacco for BAT.

BAT was prepared to meet colleagues who had been on the delegation, and others, but there seems to be some difference in views about how that meeting concluded. My hon. Friend the Member for Paisley and Renfrewshire North believes that although BAT listened it would not be happy to do very much about using its influence, as I have suggested. BAT says that the meeting was quite helpful. Does the Minister think that this is the way that a modern company should operate, waiting for legislation to compel it to protect employment rights and the human rights of tobacco farm workers on contract farms in its US supply chain?

Urgency is needed to tackle this issue. Worryingly, stories such as those I have mentioned from North Carolina are not uncommon. The reality is that, over the last decade, current measures have failed to tackle modern slavery in our supply chains. We have seen first hand how the lack of regulation of the industry in America breeds worker exploitation, so the focus must be on imposing regulations on all companies throughout the world that feed into supply chains in Britain. Companies should have to report on their working conditions and those of their suppliers, to ensure that we have transparency in our supply chains and that we can help reduce the risk of modern slavery.

We should be focusing on this issue through the Modern Slavery Bill, which is currently going through Parliament. We need to look at procedures for the investigation and monitoring of modern slavery risks, both in UK organisations and their global supply chains; we need support and access to remedy for victims of forced labour and modern slavery; and we need to train staff and suppliers to draw on expertise and advice to remove confusion over lines of accountability with companies down the chain. We need greater clarity in lines of accountability of businesses of all sizes, which could be achieved through introducing minimum reporting standards, effective scrutiny bodies and enforced penalties. These functions should be monitored as part of the anti-slavery commissioner’s duties.

Like most hon. Members in this House, I welcome the vital role played by the Gangmasters Licensing Authority in managing and mitigating risks of slavery in the food and agricultural sectors, but I urge its expansion to deal with other high-risk areas, such as fisheries, apparel, construction, cleaning, care and hospitality. All authorities responsible for inspection, monitoring and enforcement of labour standards should work proactively to identify abuses of labour standards and act effectively if modern slavery is found. Truly to tackle modern slavery, the Bill must address this.

Thousands of temporary workers in the UK fall between the cracks of labour inspection and regulation because they are not covered by the GLA. UK labour inspectorates should take proactive measures to ensure protection of workers from abusive and fraudulent recruitment practices. Companies should also seek to ensure that migrant workers do not pay a recruitment fee, including in their country of origin. These fees put them in debt bondage, which is a critical factor in forced labour and trafficking for labour exploitation.

In conclusion, I hope that the Minister shares the view that I have wholeheartedly expressed here, which is that Britain should not tolerate human rights abuses in our overseas supply chains or indeed modern slavery in any form—a view shared by many of my hon. Friends in the House. Does the Minister agree with me that freedom of association agreements would make all the difference in improving the rights of employees of multinational companies? Will the Minister support the extension of the GLA and its use as a model for good industrial relations practices?

Greater scrutiny and regulation in our supply chains are long overdue. We need to take a stand on the world stage to show that Britain will not profit from exploitation. With this in mind and Britain’s industrial reputation at stake, I invite the Minister to say why the UK does not insist on proper legally binding corporate social responsibility reporting, and why we do not push harder for better regulation at the international level to hold multinational companies to account. I finish by saying that anyone who saw the things that my hon. Friend the Member for Paisley and Renfrewshire North and I saw in the tobacco fields of North Carolina would be truly ashamed that the supply chain in the UK is contributing to modern-day slavery. Those individuals were treated like animals and worked like animals.

09:50

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I congratulate my hon. Friend the Member for Wansbeck (Ian Lavery) on securing this debate. He has eloquently spoken about what we saw in North Carolina, which was depressing. I put on record my thanks to president Velasquez of the Farm Labor Organizing Committee and his team of volunteers who work tirelessly every day to try to identify and expose what is happening in that part of America. I also put on record my thanks to the local communities, the Churches and the faith groups that we met in North Carolina. They told us clearly that they do not want British American Tobacco, Reynolds or any of these companies operating in their communities and treating people in the way that they do.

My hon. Friend mentioned the meeting that I and others had with BAT. We were offered all the empathy in the world, but nothing of substance to help people. We have multinational companies that are quite prepared to spend hundreds of thousands, if not millions of dollars in courts trying to defend themselves against having to give workers a say at the workplace so that they can lead a decent life, with respect. Those companies would rather pay fancy lawyers hundreds of thousands, if not millions of dollars to continue to treat their workers in the way that they do. From what we have seen, the situation is depressing.

Another company that is coming on to the radar for behaving in that way is the bus company National Express. It is well respected and well established in the UK, but when it goes abroad to America, the first thing it tries to do is indulge in union busting, which is a complete waste of people’s time. The most important thing from a British perspective is that the company has the contract to take kids in America to and from school. A number of safety concerns have been raised, and the last thing we want is a UK company being responsible for fatalities in America. Anyone who complains or highlights those safety issues suddenly finds themselves unemployed. National Express is a well-respected, well-established company, but when it goes abroad I am reminded of the television programme, “An Idiot Abroad”. That is exactly what it is. It behaves like an idiot and does nothing until such time as legislation forces it to, which is not a progressive way forward.

I will focus on the Blood Bricks campaign—it is a difficult name to say and I have been caught out a few times by mispronouncing it—and early-day motion 362. Union Solidarity International, working in partnership with Prayas, ActionAid and Thompsons solicitors, has developed an international campaign to highlight forced labour and child labour in the global brick construction sector. The Blood Bricks campaign focuses on India, where trade union organisations, non-governmental organisations and human rights campaigners have been organising, educating and mobilising thousands of workers to raise wages and access to public services and to combat child labour and sexual exploitation.

The issues of forced labour are not restricted to India. Recent case examples in Brazil and Qatar highlighted problems with the work on the infrastructure for the football World cups of 2014 and 2022. However, bonded labour, forced labour, child labour and infringements of domestic and international legislation are widespread in India. According to the International Labour Organisation, almost 21 million people across the world are victims of forced labour: 11.4 million women and girls and 9.5 million men and boys. Those who exact forced labour generate vast illegal profits. Domestic work, agriculture, construction, manufacturing and entertainment are among the sectors of most concern. Migrant workers and indigenous people are particularly vulnerable to forced labour.

The early-day motion, which stands in my name and has a significant number of signatures, focuses on the workers who were faced with choosing which limb they wanted cut off when they tried to escape from bonded labour, as featured in a BBC story by Humphrey Hawksley only a few weeks ago. The USi has identified a company operating in the UK with ties to bonded labour. Those workers were said to have been working for Jai and Raj Group, a subcontractor of Indian engineering and construction giant Larsen and Toubro Ltd. In 2010, Renfrew firm Howden Group entered into a multimillion pound joint venture with L&T to manufacture equipment for power plants. The USi has written to Howden Group, alerting it to the allegations that have been passed to the Indian Government’s Ministry of Labour and Employment, but its response is completely inadequate. The Howden Group, despite being controlled by L&T on this site—a fact it acknowledges—says we should raise our complaints directly with Larsen and Toubro.

The workers, who are from the state of Uttar Pradesh, were said to have been lured to work on a construction site in Delhi by an advance of 1,000 rupees, which is approximately £10.26, and promised wages of 12,000 rupees, which is £123.08 a month. We believe that the allegations, which potentially implicate L&T—it has major operations in the UK—are a serious breach of domestic and international law. If companies want to operate in the UK, that must come at the price of proactively ensuring that their supply chains are free from slavery. UK companies operating around the world have a legal duty to uphold the law.

In a statement, Howden confirmed that it was in a joint venture with Larsen and Toubro in the power industry in India, but added:

“However, we are not aware of any issues around bonded or forced labour (or allegations thereof) in connection with L&T or a subcontractor of L&T in India.”

A spokesman for L&T denied the allegations of bonded labour and said the company had the highest standards of labour welfare at all establishments and job sites, and was compliant with Indian labour laws and Acts. He added:

“Among other rules and regulations, there are specific checks in place that prohibit the use of bonded labour. We understand from our project site that we hire various equipment from the agency (Jai and Raj), and confirm that no bonded labour is deployed at our project site, directly or indirectly.”

However, USi has evidence directly to the contrary, which it believes to be the tip of the iceberg of companies operating in the UK with ties to modern-day slavery and of UK companies operating in countries such as India that are implicated in those practices. That is why we need a robust response.

Analysis of the records of workers across three states shows that average wages over the working period of six months range between $2 and $3 a day. Those rates are significantly lower than the statutory minimum wage. Even to earn that level of wage, workers have to put in 12 or more hours of work every day. Even children are forced to work, as the food expenses given to workers are correlated with production levels. Lower production can simply mean that a family does not have enough to eat.

A significant change in law is needed. We need obligations with teeth. As the UN recognised in its guiding principles, it is not enough to encourage companies. If companies do not ensure respect, protection and human rights compliance, there must be proceedings that can be brought against them and remedies available through the courts.

Accordingly, the following obligations are a minimum for any company wanting to be registered to do business in the United Kingdom. First, they must do more than simply produce a report; there must be a positive obligation upon the company to proactively audit and carry out due diligence to ensure no human rights breaches within its operation in the United Kingdom or anywhere else it does business. Secondly, the same positive obligation must apply to subsidiary companies, joint ventures and supply chains, when the supply represents a minimum financial limit or a minimum percentage of a company’s turnover. Thirdly, any company that is linked to human rights breaches by its own operation, joint ventures, subsidiaries or supply chains will not be entitled to any Government subsidy or export credits. Fourthly, when a company knew or ought to have known about negligence or was recklessly indifferent to human rights breaches, it shall be liable to pay compensation for the extent of the human rights breaches against individuals in claims brought in the United Kingdom, irrespective of where the human rights breaches took place. Finally, deliberate, grossly negligent or reckless indifference to human rights breaches in such circumstances shall also be a basis upon which criminal proceedings may be brought against the company or individual directors.

I have referred to just one example, which is the tip of the iceberg of the total exploitation of vulnerable workers around the world. The British taxpayer is clearly saying that such exploitation should not be done in their name. They want no part of it. I ask the current Government, or whatever new Government we have after May, to take forward legislation to ensure that people are not exploited and that Britain and companies registered here play by the rules.

10:01

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

It is a pleasure to take part in this important debate. I thank my hon. Friend the Member for Wansbeck (Ian Lavery) for a good opening speech, in which he highlighted the severe exploitation of workers in the tobacco industry, particularly under British American Tobacco and R. J. Reynolds. My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) made specific reference to the Blood Bricks campaign, and there are many other examples. My comments will centre on the food industry.

As the debate is focused on the UK’s supply chain, I will consider not only what we could do with regulations, but what we should tell supermarkets. There are effectively only six major buyers among the supermarkets and retailers in the UK. Those buyers sit in offices alongside people who are responsible for corporate responsibility and ethical trading. If they wanted to, they could drive a race to the top, rather than a race to the bottom. There is case for regulation, as I will describe in a moment, but there is also a case for going beyond regulation and actually telling companies, “You should be showing British leadership and world leadership.” We should go far beyond what regulations can deliver and seek far higher standards right along global supply chains.

[Anas Sarwar (Glasgow Central) (Lab)]

My hon. Friend mentioned global leadership. The UK shows such leadership with our international development objectives in many of the countries where supply chains are located. Does it not make sense for us—a partnership of our business community, our public and our Government—to ensure that we are helping development in such countries with measures such as fair pay, decent work and decent working standards?

[Huw Irranca-Davies]

I agree entirely. While today’s focus has been on the deplorable gross exploitation of workers in different parts of the world, there is also routine, daily exploitation through the suppression of wages and the absence of terms and conditions and protections. There is no recognition not only of unions, but of grievances in the workplace. Many workers experience a dampening effect that keeps them under control, having to do what the employer says because they have no voice.

My hon. Friend is right to suggest what our cross-Government international development approach should be on the food and clothing sectors and so on. We should not only look to see where regulation can work, but work with the sectors and say, “As an island nation, we have such global reach that we should be forcing standards up.” We should not be waiting to be told to do that; we should be working at it now, whether in Africa, India or South America. Ultimately, if we have products on our shelves that are being produced extremely cheaply, we know that somebody or something is being exploited somewhere. In the food sector, that could mean exploitation of animals, communities or workers.

I ask hon. Members to cast their minds back to 2004 when some of this debate began. In the Morecambe bay tragedy, 32 Chinese cockle pickers died out on the mud banks. It was a horrendous incident that woke the country up to something that we thought could not happen in a modern society. Chinese workers, trafficked by rogue gangmasters into the UK, were exploited in terms of pay and conditions and then placed in hazardous and ultimately fatal conditions. They were paid £5 for 25 kg of cockles while being left to the ravages of the tide. In the eyes of the gangmasters, they were expendable. As a result of a cross-party and cross-sector approach, many people came together and said, “We must deal with this,” and the Gangmasters Licensing Authority was established as a result.

The GLA has done tremendous work on tackling exploitation in a lean and mean way, but it is still happening. Back in 2012, two people were arrested in Kent following the exploitation 17 Lithuanian workers, who were being moved around the country in minivans to work. Sometimes they went without pay for weeks on end. Sometimes they received a pittance, but with deductions. They slept in a van as they travelled. When they were not sleeping in vans, they slept on floors in the most basic of portakabin accommodation. It was complete exploitation. What surprised people after it was picked up by the GLA was that it was occurring in our supposedly reputable food supply chain. It involved Noble Foods, which supplied companies such as McDonald’s, Tesco, Asda, M&S and Sainsbury’s. The products that Noble Foods supplied to those companies included—with no irony—chicken bearing the Freedom Food mark, yet people working for the company were being exploited and had no freedom themselves. It was debt bondage. They worked 17-hour shifts and slept on buses. It was crazy.

Well done to the GLA on that, but the point has already been well made by my colleagues that the GLA needs to follow its intelligence whenever exploitation is taking place. We know that it happens in the social care and construction sectors. It is a lean, mean organisation that now needs to target sectors where its nose suggests there is a stink and where exploitation is occurring.

I want to consider a more recent case that brings the issue right back home and into the produce that we take off the shelves and put on our plates. It has been reported that abuse and exploitation are widespread in the Thai fishing industry. It looks very much like slavery, but certainly involves human rights abuses. Thailand produces 4.2 million tonnes of seafood each year, 90% of which is exported. The main markets are the USA, the EU and the UK—we do like our seafood. The Guardian reported this year that people were forced to work 20 hours a day and endured regular beatings if they complained. They received one plate of rice a day to keep them going. People were purchased by boat captains from brokers for between £450 and £640—direct, old-fashioned slavery and exploitation of human beings. At every stage officials were bribed, so that the slaves could be brought in. The Guardian reported that a slave trafficker called the Thai police “business partners”, while the people forced to do the work were seen as expendable. Kevin Bales, an anti-trafficking activist, estimates that slaves cost 95% less than they did at the height of the 19th-century slave trade.

The vessels that use those slaves each year catch roughly 350,000 tonnes of so-called “trash fish”, turned into fishmeal for multinationals such as CP Foods, which supplies major retailers in the UK, including Asda, Iceland, Tesco, Morrisons and the Co-op. Many of those retailers—I come back to the point about the power of the retailers and the six major buyers in the UK—were not aware of what was going on, but many people would say, “You did not show due diligence in looking at what was happening in your supply chain.” The case has woken many retailers up, but the question is, why did it take that to wake them up?

CP Foods has stated that it requires its factories to buy trash fish only from legal and licensed boats. Captains, however, often fail to record where their fish comes from, so how can we have a trail for where the fish is being purchased? Tesco says that it regards slavery as unacceptable, and it is working with international organisations such as the ILO to achieve a broader change in the Thai fishing industry. All the retailers who were caught out have responded rigorously, in part to deal with reputational damage.

Exploitation remains a major concern. The two biggest industries in which exploitation, trafficking and slave labour are rife are the garment industry and the food industry. A tremendous amount could be done by the British food sector. My hon. Friends have already mentioned asks that go beyond where the Government are with the Modern Slavery Bill. We want to see elements from the Ethical Trading Initiative brought forward. We want to see comparability between different companies on reporting along the long line of their supply chains; we need to be able to compare Marks & Spencer, Tesco and everyone else in the UK—apples with apples, not apples with pears. We want to see directors having individual fiduciary duties to ensure the accuracy of reporting; we do not want another Thai fishing industry exploitation case to come up and a director to say, “I knew nothing about it. I did my best, but someone lower down the chain is responsible”—that is not good enough. Things have to stop right at the top; leadership has to come from the top. We also want not only large public, but privately listed companies included.

A lot more can be done, not only with regulation, but by working with such companies, so that we go way beyond regulation and so that the UK shows real leadership in ending exploitation in the food sector and every other sector mentioned by my colleagues. Consumers can also play a role, because the consumer voice, as we have seen in recent history, frequently shames sectors into taking action. Let us get on with it.

10:13

[Chris Williamson (Derby North) (Lab)]

It is a pleasure to be serving under your chairmanship this morning, Mr Crausby.

I congratulate my hon. Friend the Member for Wansbeck (Ian Lavery) on securing this vital debate, and him and my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) on their excellent work in highlighting the appalling abuse in the tobacco fields of North Carolina. The exploitation of the workers there shocked me. One hears about the American dream, but those workers were clearly not living the American dream; they were living what can only be described as an American nightmare, as my hon. Friend the Member for Wansbeck pointed out.

Depressingly, such exploitation is happening all around the world, not only in the most powerful nation on the planet, the United States of America. Exploitation is happening not only in developing nations, but in so-called highly developed western democracies. It is also happening, as my hon. Friends mentioned in their contributions, in what is, per capita, the richest nation on earth—Qatar.

I visited Qatar earlier this year with a delegation led by the construction workers’ union UCATT—the Union of Construction, Allied Trades and Technicians—and by the Building and Woodworkers’ International. We went to look at the impact of the World cup, the transformation taking place in that country and the terrible abuses to which construction workers and migrant workers across the piece are being subjected there. Again, I was absolutely shocked. When my hon. Friend the Member for Wansbeck was talking about the squalid circumstances in which the tobacco workers in North Carolina were living, it struck a chord, because that was precisely the kind of thing that I witnessed in Qatar. The working conditions, too, were appalling.

At one level, we can look at Qatar and say, “An amazing transformation is being made in that nation.” I visited what I believe to be the largest construction site anywhere in the world and it is incredible what is being done in the country, but there is absolutely no excuse for the kind of exploitation that migrant workers are being subjected to in order to make the transformation. Money cannot be the reason why people are being exploited, because Qatar is the richest nation on the planet, as I said. Nevertheless, it is subjecting workers to terrible working conditions, such as the heat of the day, and terrible living conditions.

When we arrived in Qatar, 1,200 workers had already lost their lives since the World cup had been awarded to the country. At an attrition rate of that level, 4,000 construction workers will have lost their lives before a ball is kicked in the World cup. That cannot be right and cannot be allowed to go on. There can be no excuse. What saddened me most of all was the fact that British companies are implicated in such exploitation.

On our trip, we visited Balfour Beatty, which at the time was carrying out some work in Qatar. A senior Balfour Beatty representative to whom we spoke told us, when we put it to him that workers were being subjected to such terrible exploitation, “You mustn’t look at this through western eyes. These people like to live together—in these appalling squalid circumstances.” He did not say the last bit, but that is what the circumstances in which they are living are like.

People are brought to Qatar by disreputable recruitment agencies, who lie to them about how they will be able to earn riches beyond their dreams, to send money back to their families and in effect to be set up for life. They are charged up to £1,500 for the privilege of getting there, but when they arrive they are told, “The salary you were told you were going to earn is not true. We will rip up that contract that you thought you had signed and give you this one. You can’t go back to your home country, by the way, because we will have your passport off you.” So people are trapped and, before they start to earn anything, they have to pay back the recruitment agency up to £1,500. They were told that they would earn a huge sum, but they are only earning about £30 a week. Those are skilled people—skilled tradesmen—who at best are earning about £30 to £35 a week. That is completely wrong and it is disgraceful that British companies are involved in that process.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) hit the nail on the head when he talked about how the senior representatives in companies say, “We didn’t know anything about it.” I took it upon myself to get the House of Commons Library to provide me with a list, as best they could, of all the British companies operating in Qatar today. I have written to each and every single one of them demanding to know what steps they are taking to stop that exploitation.

When people are working incredibly hard, they are entitled to live in decent accommodation. In Qatar, not only do they work long days, but the labour camps are miles away from the construction sites; before people even start their day’s work, they have a one or two-hour bus journey and they have another at the end of the day. I was absolutely shocked. Yes, the conditions were squalid and filthy, but people have also not even got mattresses to sleep on, and there were eight, 10 or 12 people to a tiny room.

I could not believe what I was seeing—people did not even have mattresses. They were sleeping on bunk beds of hard, solid planks of wood. After a long, hard day of grafting in the heat of the day—I used to work in the construction industry so I know what a hard job it is, although we did not work those hours or in that kind of heat—they go home to appalling filth and squalor and they cannot even get a decent night’s sleep because they have to sleep on a hard plank of wood. Then the representative of Balfour Beatty tells us, “You mustn’t look at this through western eyes.” That kind of colonial mentality still seems to pervade these British companies.

The other point my hon. Friends referred to was the lack of trade union recognition in the tobacco fields. We put that to the Qatari authorities. It is vital that there should be freedom of association and the right to form a trade union in order to secure workers’ rights, and we want to see that. In fact, we could do with much greater trade union membership in this country, with the Government encouraging that rather than continually attacking the unions and their attempts to secure workers’ rights over here. My hon. Friend the Member for Ogmore talked about the cockle pickers—would they not have benefited from being members of a trade union? They certainly would not have been put at risk of losing their lives.

It was Ted Heath who once talked about the “unacceptable face of capitalism.” Here we have just that in the examples highlighted by my hon. Friends and what I saw in Qatar. That is the unacceptable face of capitalism and British companies are implicated in it. When I wrote to those companies, all bar one of them—I think—came back to me and effectively said, “It’s nowt to do with us, guv—we don’t employ these workers directly.” They were washing their hands of the issue in a kind of Pontius Pilate approach. They say, “You can’t blame us,” but they are happy to take the profits from this huge transformation.

It is incumbent on the Government today—I hope that the Minister will do this when she responds to the points made by my hon. Friends—to explain what they are doing about the British companies implicated in exploiting workers across the globe. From the United States of America to Qatar and beyond, that must stop and the Government have a huge and important role to play in making it stop. When we have asked questions about that, we have heard encouraging words from Ministers. They have said that human rights are sacrosanct and that they will certainly bring pressure to bear on the Governments—and, I hope, the companies—who are implicated.

However, there is a twin pressure. While on the one hand we hear welcome talk from Ministers who say, “Human rights is important and we’re going to bring pressure,” on the other hand, when we are talking about places such as Qatar, the rewards are immense because the contracts run into many billions of pounds. I know that representatives from Qatar have been here and have had meetings with the Mayor of London and, as I understand it, with Ministers too—I do not know what they spoke about, but I understand that they are keen to secure work in Qatar—so I wonder whether the Government are speaking with a forked tongue. I hope that they are not, because it is really important that their response is about not just rhetoric, but action. That is what I want to hear.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

indicated assent.

[Chris Williamson]

I am pleased to see the Minister nodding her head. I hope that, when she gets up, she will tell us about some of the positive actions that the Government have taken and those that they propose to take to ensure that we do not have, as my hon. Friend the Member for Ogmore said, the continual race to the bottom. British companies and the British Government should be about a race to the top. We should be setting standards. We have a proud tradition going back many years of standing up for human rights, so it is really important that the Government step up to the plate in all the circumstances highlighted, including those I highlighted in Qatar.

I want to close with a quotation from Thomas Piketty’s best-selling book in America, “Capital in the Twenty-First Century.” He said:

“Capitalism should be the slave of democracy, not the other way around.”

I could not have put it better myself. That is essential, because if capitalism is not the slave of democracy and it serves only the richest and most powerful people around the world, what is the point of it? If it is only about exploiting ordinary working people, I would say let us throw it aside and have a socialist state in every nation. However, I am not actually asking for that. Capitalism can work, but we need to make it work—we need to make it the slave of democracy. In conclusion, when we hear from the Minister, I hope that she will give us some indication of how the Government will ensure that workers are protected and that capitalism is indeed made to be a slave of democracy, not the other way around.

[Several hon. Members]

rose—

[Mr David Crausby (in the Chair)]

Order. I want to call the two Front-Bench Members no later than 10.40 am.

10:27

[Mark Durkan (Foyle) (SDLP)]

I congratulate my hon. Friend the Member for Wansbeck (Ian Lavery) on leading the debate and I commend him and my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) on their initiative in North Carolina and the meetings that they have held here since. I was struck that my hon. Friend the Member for Wansbeck made the trip to North Carolina having been in Columbia the previous week with me and others on a Justice for Colombia trip.

When we were in Colombia, among the things we witnessed was a major project driven by the EU-Colombia free trade agreement that is leading to the degradation of land rights and further abuse of labour rights. However, in a poignant way that project is not just throwing up issues about new dimensions of modern slavery; it saw us meet Afro-Colombian families who are the descendents of the original escaped slaves—the people who were given and found this land by the shores in Colombia—who are now being driven off that land and forced to live in concrete batteries up mountains, well away from their previous experiences. That is happening not just to them, but to indigenous peoples as well.

That mega project of a super port at Buenaventura is driven not just by the Colombian Government and big business, but by myriad vicious paramilitaries who are completely indulged by the police. That is one of the reasons why, as a member of the Modern Slavery Bill Committee, in Committee and on Report I tabled amendments that would have broadened the issues around ethical trading and supply-chain proofing. That was to make sure not just that customers were taking responsibility for what happened in the workshops from which they bought goods, but that people were taking responsibility for wider aid and trade policies that were driving wholesale, pernicious human rights abuses, affecting not only people’s labour and land rights, but their basic living conditions and even where they had the right to live.

In the Bill Committee, we did see progress on supply chains. Initially, the Bill was completely deficient in that area, but there was strong lobbying, which, I must acknowledge, came from Members on both sides of the House—from the Government Benches and the Opposition Benches, and from parties big and small—and that was reflected in the Committee. Obviously, there was also a big lobby, involving groups ranging from Anti-Slavery International to the Catholic Fund for Overseas Development, Oxfam, UNICEF and many others, and they all highlighted, among other issues, the Bill’s deficiency in that respect.

Even though all those groups and coalitions inside and outside Parliament must be commended on the strong case they made to the Government, the business voices responding to the ethical trading initiative were decisive in persuading Ministers. Although I commend the businesses involved for being ethically alert and active and for working in partnership with others, it is a poor comment on the Bill that the issue would have been missed altogether had it not been for the intensity of those business voices.

[Huw Irranca-Davies]

My hon. Friend makes a good point. Some of the more progressive, ethically aware companies see the competitive advantage in driving higher standards, which will, hopefully, drive the rogues out of the marketplace in different sectors. There is therefore an advantage in driving higher standards.

[Mark Durkan]

Exactly. That is exactly the point those businesses made, and it was clearly taken on board by Members on both sides of the House. It was also stressed by the trade union movement, which has been an active driver of the ethical trading initiative.

Whenever the Government resisted widening the Bill’s scope, they would tell us that ethical auditing was already taking place. However, ethical auditing, as talked about and supposedly practised over a number of years, is really a badge for big business, rather than a shield for vulnerable, exploited workers. My hon. Friend the Member for Ogmore (Huw Irranca-Davies) and others have quoted examples of scandals that have been identified, including the case of the Thai fishing industry, which was revealed in The Guardian. We were previously told that those things were the subject of ethical auditing—that companies were aware of the issues and would respond to any problems—but it is up to somebody else to show them the problems, and then they respond.

In the example of the Thai fishing industry, there has been some positive response subsequently. After The Guardian exposed the story, with the assistance of Anti-Slavery International, that organisation, along with Thai NGOs, retailers and seafood suppliers, embarked on a project called Issara—the Thai word for “freedom”. The inspections the project team has been able to carry out are already delivering positive results and driving change. That shows that there needs to be effective intervention, as hon. Members have said.

As my hon. Friend the Member for Paisley and Renfrewshire North said, effective intervention should be about making sure not only that companies are liable and held to account for what happens in their supply chain, but that the state has the power to ban goods. What is the point of passing legislation saying that companies will have responsibilities and liabilities in terms of knowing what is going on in their supply chains, saying that we encourage consumers to be responsible, conscientious and aware—for example, that the goods they buy may come from southern India, where young Dalit women and girls are exploited, or from Uzbekistan, where the exploitation involves not just companies, but the Government—and saying that there is a responsibility on consumers, suppliers and retailers, if there is no responsibility on the state? If it is evident that the sourcing or manufacture of a product involves slavery and human rights abuses, there should be the power to ban that product.

Such a power has existed in American law since 1930—since the Tariff Act—and it was in the scope of one of the amendments I tabled to the Bill to say that there should be the power to ban or prohibit something where there was clear evidence of abuse. That amendment would not have imposed a duty on the state to police trading practices in all parts of the world, but it would have been based on the state’s right to respond when someone else brought evidence to it. In the American system, the Department of Homeland Security can be petitioned with evidence, and it would then have the power to issue a ban. If we are serious about dealing with these issues, we should follow through.

[Chris Williamson]

My hon. Friend is right. I am closely following his point about the importance of the state being meticulous in enforcing greater protections. As my hon. Friend the Member for Paisley and Renfrewshire North said, these multinational companies are quick to resort to litigation, and they will spend a lot of money on lawyers. Chevron, for example, had a case brought against it for causing terrible pollution in the Ecuadorian rain forest, but it said it would fight the case

“until hell freezes over and then fight it out on the ice.”

When international companies have that attitude, states need to be strong and to stand up for their citizens; otherwise, these powerful companies will ride roughshod over them.

[Mark Durkan]

I fully accept my hon. Friend’s point. That is why, rather than leaving these issues to all sorts of litigation, there should be the power to ban a product where it can be specifically identified.

I have closely followed all that my hon. Friend has said today and previously about Qatar. Several Members in the Bill Committee mentioned the system of employer-tied visas for domestic workers in the UK, where the visa, which rests with the employer and is almost their property, can be abused in a way that makes the employee their chattel. The style and logic of the visa system used to exploit workers in Qatar are exactly the same, and that should give us all pause for thought.

10:38

[Ian Murray (Edinburgh South) (Lab)]

It is a pleasure to serve under your chairmanship in this important debate, Mr Crausby.

I pay tribute to my hon. Friend the Member for Wansbeck (Ian Lavery) not only for bringing this issue here for debate, but for visiting Colombia and the North Carolina tobacco fields and for his report, which I would encourage all Members of the House to read to see what he experienced. We should all reflect on the personal, real-life stories he has told us this morning and do everything we can to resolve some of the issues.

I also pay special tribute to my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) for all his work on these issues not only in the UK, where he has stood up for the rights of individual workers, but across the world. It is no exaggeration to say that, without his dedication, the Gangmasters Licensing Authority may never have come into being. The authority has transformed the lives of many in the UK, and I hope it will be a blueprint for transforming many other lives across the world.

The issue is huge: global exploitation in UK companies’ supply chains cannot be tolerated and we should say that clearly. We cannot be serious about tolerating slavery in the United Kingdom if we are prepared to accept the use of slave labour for products or in construction in other parts of the world. We have heard many examples this morning of such forced labour, including blood bricks. The 1,200 people killed in the collapse of the Rana Plaza were supplying clothing to some of our main high street stores, many of which will do quite brisk trade over the festive season as the public do their Christmas shopping with them. We heard, particularly from my hon. Friend the Member for Ogmore (Huw Irranca-Davies), about prawn fishermen held in a lifetime of slavery. We have heard, and I have certainly read, about the human rights issues affecting them, and about bodies torn apart by vessels for fun. The prawns were being sold to many high street stores—Tesco, and even the Co-op. It is not good enough for those companies to say “We didn’t realise it was happening.” Our conclusion today—the whole point of the debate—should be for the Government to say it is unacceptable and that ignorance is no defence, and that we should do something about it. We should put the onus on companies to investigate their supply chains.

We have heard many times about small children being paid pennies a day for sewing sequins on to children’s clothes, and we heard reports from the tobacco fields of North Carolina. I was much struck by the wonderful speech of my hon. Friend the Member for Derby North (Chris Williamson) about serious exploitation in Qatar, in the building of World cup venues. It is the primary sporting event in the world, and those workers are being exploited. How can we possibly tolerate the possibility that in a few years’ time Scottish football fans may celebrate, in the patriotic way of passionate fans, goals scored by a Scottish football team at those venues—when the death toll for building those very terraces could be as high as 4,000? That must be unacceptable, because there is a blueprint for how to carry out such projects properly. The UK Olympics in London was a major construction project—one of the biggest in the world at the time. There was not one death. It can be done, and we should secure legislation to prevent such deaths.

There are various studies showing that the public are highly aware of the issue; 84% of the UK public want legislation and so do the overwhelming majority of companies. The Government have come some way on the question of supply chains, as we shall probably hear from the Minister, with regard to the Modern Slavery Bill; but the Opposition think that they should go an awful lot further. Some of the stories that we have heard today reinforce that.

Most large retailers are implementing policies to tackle the issue, but it is hard to see tangible progress that would enable consumers to make direct comparisons between companies, as my hon. Friend the Member for Ogmore mentioned. We must be able to compare apples with apples rather than pears. That is why we must introduce mandatory standards for reporting, to force companies to adopt standard procedures. We must be able to assess supply chains, because we want to support British businesses that act on the issue, and create a level playing field. It is a pro-business agenda, and the hon. Member for Foyle (Mark Durkan) was right to suggest that. Businesses want to stamp out the practices in question. However, we will not get to the stage where the advantage to business is clear unless there is a level playing field to allow comparisons to be made and businesses that do not take action to be exposed. Many large companies have backed legislation to create a level playing field, and so have the British Retail Consortium and the Ethical Trading Initiative, which was set up with 81 corporate members. Retailers are also acting. Sainsbury’s, Next and even Primark have complained about competitors who have not acted.

A community of NGOs and businesses has coalesced around the Ethical Trading Initiative to recognise that three fundamental things are needed. First, it concluded that there must be more regulation of national and international supply chains to establish the level playing field. Secondly, there should be a partnership with unions and non-governmental organisations; that would be essential to tackling forced labour issues in international supply chains. Thirdly, Governments would need to shoulder their portion of the burden in tackling those issues. I believe that when Governments regulate in such matters, although it is necessary, it is because there has been a significant business failure. I think that businesses have recognised that and that they must do something about it.

UK companies undoubtedly have hugely complex supply chains, as we have heard in the debate. That is particularly true of the fishing matters set out by my hon. Friend the Member for Ogmore. Even best practice in auditing is not foolproof. That is why the approach must be about changing market conditions and creating incentives for the suppliers to be shown to be fair. That would mean suppliers being able to show that they meet International Labour Organisation standards, backed up by kite marking and a proper inspection regime.

I acknowledge, as I think that everyone would, that it is hard for UK companies to implement that approach individually. They say that to us consistently; but collective action could make it the norm. The Bribery Act 2010 has reduced the burden on business by creating consistent standards and an industry to audit them. It is regulation, and the Government will talk about their one in, two out approach to regulation; but the Act has brought in consistent standards, reducing the burden on business and creating a level playing field.

As to the Modern Slavery Bill, the Government have to some extent had to be dragged along kicking and screaming. It took them until Report to introduce relevant provisions, and there was massive criticism of their proposals, questioning whether they are appropriate. My hon. Friend the Member for Wansbeck concluded that the lack of proper, enforceable regulation led to the removal of all humane conditions from the supply chain—something he witnessed on his many visits.

We proposed amendments to the Modern Slavery Bill in Committee. They would have built on proposals from the Joint Committee that dealt with the draft Bill, and would have allowed for legal reporting on the supply chain within the Companies Act 2006, and regulations including four standard reporting elements, with definitive actions for companies. It is not good enough for companies just to report on those issues. They must also show that they have taken action.

The first of the four elements was accountability for tackling modern slavery and forced labour, including policy commitments, resourcing and actions to exercise due diligence. The second was that modern slavery and forced labour risks should be investigated, monitored and audited in the UK and throughout global supply chains. The third was that victims of forced labour and modern slavery should have support, and access to remedy. It is not good enough just to deal with today’s problem. Things that have happened in the past must also be dealt with. The fourth thing on the list was, crucially, that staff and suppliers should be trained and have access to expertise and advice in dealing with the issues. Those are the critical things that we need to think about to get robust and legally enforceable reporting mechanisms.

We welcome the measures that the Government have introduced, as far as they go, but they need to go further. In the other place, Lord Rosser, who tabled some amendments, concluded:

“I can only comment that it is very difficult for civil society to make a judgment if there is not enough information in the statements in the first place.”

He added that there is no legal requirement to produce the relevant statements and that the Bill

“still does not go far enough and will not enable those judgments to be made by society, whether it be consumers, voluntary organisations, the media or others.”—[Official Report, House of Lords, 10 December 2014; Vol. 757, c. 1892.]

We can see that proper regulations work. The Gangmasters Licensing Authority works. The groceries code adjudicator is limited but seems to be working. Where there is good regulation, such as the Bribery Act 2010, it can work.

I will be interested to hear whether the Minister will respond to the debate by saying that the Government will present proper, strong, robust regulations. It is clear from what we have heard this morning that morally unjustifiable things are happening in our supply chains. As consumers in the marketplace going shopping we should know clearly where products come from and how the companies look after their employees. If we do not act we will have missed an opportunity. Not only that, but the United Kingdom will be ducking its responsibilities on the international stage to do something about what is happening.

10:49

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Mr Crausby. It is also a great pleasure to respond to this thoughtful and powerful debate. It is customary on such occasions to say that this has been a good debate, but it really has been striking, particularly the number of examples of individuals who are suffering in the most horrific conditions. Sometimes the discussion of business issues and human rights becomes abstract, and bringing it back to individuals is helpful.

I congratulate the hon. Member for Wansbeck (Ian Lavery) on securing this debate and on sharing his personal testimony and experience of the individuals he has visited. He is right that this is an issue on which there is a moral duty. Of course there are business benefits from improving human rights, as the hon. Member for Ogmore (Huw Irranca-Davies) and others have said, and it is important that we make that business case, but the hon. Member for Wansbeck put his finger on it when he said that this is a moral duty. We are all human beings, and human rights are universal. Whatever we do and whatever our role, whether we are working in business, politics or the media, we have a responsibility to other human beings and to ensure that human rights are upheld.

The Government are taking a range of action, of which I am proud and which I warmly welcome and champion, from narrative reporting to our work with different sectors, including the retail sector, to ensure that they are improving their practices. We have also amended the Modern Slavery Bill to address supply chain reporting, to which I will return. At EU level there is also non-financial reporting, and of course we support these issues at the United Nations through the business and human rights action plan, which we were the first country to create. We can take international leadership on this issue, but that does not mean that there is any room for complacency.

It is also important to recognise that, although the issue is simple in terms of morality and what is right, it unfortunately is not simple to work out how to stop human rights abuses. Various Members have mentioned that some companies sometimes offer the excuse, “We didn’t know what was going on,” but it is true that it can be difficult for companies to get to the bottom of every part of their supply chain. There is a role for sharing best practice and for helping companies to understand the best way to get that information. There is a dividend or benefit from taking the issue seriously and creating what the hon. Member for Ogmore described as a race to the top. We need to do that.

Earlier this month I was in Geneva for the UN forum on business and human rights. It was the third time the forum has taken place, which shows how international business is taking this issue more seriously. The feedback I received from the 1,900 delegates was that the forum was much more constructive and positive both for business groups and for non-governmental organisations than in the previous two years, which is a sign of progress. I met a group of UK businesses that have signed up to the UN global compact, which commits them to reporting annually on the actions they are taking on a range of issues from working conditions to environmental impacts and human rights. Businesses turning up to the UN forum on business and human rights are probably already fairly committed to taking the issue seriously, but it is good that the forum shows that a large number of UK companies are doing so.

[Anas Sarwar]

It is good to hear about that international co-ordination to ensure that multinational companies are rightly reflecting on this issue, but that principle should also apply across Government here in the UK. Is the Minister therefore disappointed that the Department for International Development has withdrawn its funding for the International Labour Organisation?

[Jo Swinson]

I will happily speak to colleagues in DFID and write to the hon. Gentleman with a fuller answer. A range of international organisations play a hugely important role, and obviously the Government always need to consider the best way to further our overall objectives. I will certainly write to him on the specifics of that point.

There were many NGO representatives in Geneva who were rightly passionate about ensuring access to justice for victims of human rights abuses. I spoke a little of my personal commitment to this issue. Indeed, one of my political heroines when I was growing up and deciding to study business was Anita Roddick. She was a pioneer in proving that business has a social responsibility that needs to be taken seriously. I remember reading her book, “Business as Unusual,” which I found incredibly inspiring on the role that business can play. Business should be, and often can be, a force for good in our society. It ought to be a way of taking humanity forward, rather than ultimately being responsible for exploitation. Capitalism goes wrong when that happens, as some Members mentioned, but business is able to be a force for good.

As I said, many UK businesses are taking this issue seriously, but some are perhaps not taking it as seriously as they should. The examples we have heard today back that up. The hon. Member for Wansbeck talked very powerfully about the squalid conditions in North Carolina. We are used to talking about such issues in other parts of the world, but we would not necessarily expect it to happen in a country such as America. That juxtaposition of such wealth with such poverty and disregard for rights is awful, particularly when he talked about the example of a seven-year-old girl or someone who had part of their finger cut off without even being able to get hospital treatment.

The hon. Member for Ogmore rightly focused on the responsibility of big companies such as supermarkets and their power to drive change. He is right that, if something is incredibly cheap, it is not always the result of wonderful business efficiency. Sometimes that might be the case, but sometimes it means that someone, somewhere is being exploited, and he is right to point that out.

The hon. Gentleman also addressed the comparability of reporting so that people can compare apples with apples, rather than with oranges, which is a useful analogy in the context of our conversation about the food industry. This is an important issue, and at the event in Geneva there were some interim results from an interesting, in-depth study by The Economist on business attitudes to human rights. One of the early indications is that, when business leaders were asked what would make the biggest difference to their behaviour, they talked about some kind of benchmarking tool so that companies can be compared. Such a tool needs to be developed with care because these are genuinely complex issues, but UK companies such as Aviva are leading the way. There is an exciting project to create a human rights benchmark so that companies across the country, and internationally, can be compared so that we may have a proper analysis of their human rights records.

The hon. Member for Derby North (Chris Williamson) relayed stories about his experiences in Qatar, and they are a hugely powerful account of disgraceful behaviour, particularly in such an incredibly rich country. What I found most breathtaking about his speech was Balfour Beatty’s reported comment that we must not look at this issue through western eyes. I was blown away by that comment. Human rights are universal. Whether someone is in squalid conditions and having to work ridiculous hours here or in another part of the world, we should be concerned and acting to change the situation—responsible UK companies will act to change the situation.

I appreciate the hon. Gentleman’s action on writing to UK companies, and I know that he wants action from the Government, which is why we are introducing the reporting requirement on supply chains so that companies have to say what they are doing on slavery and trafficking. I am delighted that that amendment has been made to the Modern Slavery Bill. I have met campaigners on that issue over the past couple of years, and there is a strong case for introducing the requirement to drive transparency and change behaviour.

The hon. Member for Foyle (Mark Durkan) mentioned the voice of business, and there is a strong voice within the business community, which wants to see progress on these issues and is supportive of many of these measures. This is a complex issue, which is why the solution cannot be easily described in a soundbite; it is about proper engagement with business, and it is about taking the UN guiding principles that were developed by Professor Ruggie over a significant course of time and therefore have the buy-in of key players. He and his team are still very involved in trying to make that a reality. The UK has published its action plan, and a handful of countries have now published their own action plans, but we must ensure that we use that leadership to do what we need to do in our own country and to encourage other countries to do the same. I fully believe that in 20 or 30 years, this will be seen as a key and obvious business issue, but we are now at the stage where it has to be established. We have made great progress compared with 10 or 15 years ago, but there is still a lot more to do. I welcome today’s debate.

UK Film Investment (Tax Relief)

Tuesday 16th December 2014 Westminster Hall

11:00

[Sir Nick Harvey (North Devon) (LD)]

I am delighted to take the opportunity today to draw the House’s attention to the serious and widespread misapprehension about the current status of the tax affairs of those who, between 1997 and 2007, invested in the increasingly successful UK film industry, at the encouragement and incentivisation of the British Government. There is a general perception, perpetuated by the media and encouraged by Her Majesty’s Revenue and Customs, that all those who invested in UK film between those years did so for the purposes of tax avoidance, rather than as genuine investments.

On 22 October this year, I raised the matter at Prime Minister’s Question Time, and the Prime Minister gave a telling response. He said that

“the things…being investigated are abuses and were known to be abuses at the time when people entered into them.”—[Official Report, 22 October 2014; Vol. 586, c. 899.]

I find that rather a worrying statement. It rather suggests that the Government have made up their mind on these partnerships, on the basis of very little evidence and next to no attempts to engage with those involved. If it is ultimately ruled that the schemes are not in order, many investors could find themselves liable for tax bills of up to 10 times their original investment. The financial stress caused by sudden and unexpected demands from HMRC is proving ruinous in some cases. I have heard accounts of marriages breaking down and people becoming sick with worry, and the consequences should be clearly understood by all those involved.

There has been no engagement with the partnerships to discuss the situation nor any attempts to engage in meaningful settlement talks, despite a settlement opportunity letter being issued to partners at the beginning of last year. Today, I would like to ask the Minister to look again at the situation and urge HMRC to bring this business to a conclusion. The lack of information and engagement has been woeful, and I would hope that in many cases, investigations can be concluded or dropped outright, or at least, that a settlement can be reached.

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

I congratulate the hon. Gentleman on securing this debate. We desperately need investment in entertainment, culture and the arts. The one bright light of the recent autumn statement was the expansion of the enterprise investment scheme up to the full level of private investment. The opportunities for investment in film, theatre and all sorts of productions in a time of austerity is wonderful, and it would be a pity if what he is pinpointing ruined all that.

[Sir Nick Harvey]

I entirely agree with the hon. Gentleman. This takes us back to 1997, in the midst of the “Cool Britannia” era, in which stars of film and pop attended parties at Nos. 10 and 11 Downing street and the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), introduced a full tax relief on investment in small-scale British films in order to encourage investment and promote growth in the British film industry.

Encouraged by a report called “A Bigger Picture” from the UK film policy review group, the Government established a 100% write-off for tax purposes on the completion of films with budgets of £15 million or less. In real terms, that meant that sale and leaseback deals for smaller films would become financially viable, vastly stimulating the market. Those reliefs were known as section 42 relief, in place from 1992, and section 48 relief, in place from 1997. They lasted for 10 years until 2007 and were arguably a large success: the size of the industry increased from £1.7 billion in 1997 to £3.2 billion in 2008; the number of films made in Britain doubled over the period and 46,000 new jobs were created.

In the Budget in March 2004, the then Chancellor was able to report on the successes of the reliefs. He said that “a minority of” third parties had abused them, but he did not see the need for an “anti-avoidance rule”, saying simply that he thought that “loopholes” needed to be closed. However, other partnerships, including the 74 Movision film partnerships, applied the terms of the Films Act 1985 and the Financial Services and Markets Act 2000 scrupulously.

The Movision film partnerships were established between 2002 and 2004, entirely in accordance with the law and with significantly different arrangements from the “minority” that was commented upon by the then Chancellor. Furthermore, the Movision film partnerships, which were established with approximately £50 million of subscription capital raised from approximately 500 partners, with an average investment of £50,000 a head, produced 13 British films and acquired another 14 British films. Those films would not have been made without the involvement of the Movision film partnerships. In the end, the partners did exactly what the Government had asked them to do; they invested in British films and claimed their tax reliefs.

[Mr Sheerman]

The hon. Gentleman is making the point brilliantly clearly. I was born in Shepperton and when I was a youngster, my family worked in Shepperton studios, and I am passionate, as he is, about the film industry. The people who misused the tax relief were a tiny minority. Most of them have done really good stuff. “The Scottsboro Boys” is a big success at the moment—one of my constituent’s sons is a star of it. This is how that production was done. Small films and big films are being produced in this way. I beg the Minister: please do not spoil that, because this is the future of the film industry in Britain.

[Sir Nick Harvey]

I entirely agree with what the hon. Gentleman says. I think that this policy was a success and that one can visibly judge the tangible uplift in small film producing in Britain during the period that the tax relief existed. I think that the then Chancellor was right in March 2004 when he observed—this is widely recognised—that a minority of partnerships were abusing the tax relief, but they were a minority. This is the point: it is completely inexplicable and totally unacceptable that 10 years later, HMRC is treating the whole lot of them as though they were crooks, and when the Prime Minister gets up to respond at Prime Minister’s questions, he has in his folder a brief that says that all those involved were involved in abuse, and that they knew at the time that they were engaged in it. That is completely different from the experience of the Movision partners to whom I have talked and of my own constituent on whose behalf I have taken an interest in the subject.

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

Does my hon. Friend agree that the important thing is to consider the future of the film industry and particularly the young people who are involved in it? Whatever is the case, it is certainly not the fault of young people looking for a future in the film industry. I spoke to a young man—a Kendal college film student—called Emilio Methven on Friday. He did a survey of his fellow students over the weekend, and they want investment in the film industry going forward and more apprenticeships. They want the UK Government to demonstrate that in backing the UK film industry, they are going to back UK film students. They do not want a sense of there being a retrospective potential attack on the film industry that makes their future much harder to establish.

[Sir Nick Harvey]

My hon. Friend makes a series of very good points. These small films are something that Britain is good at. We have an international reputation in it and the developing creative industries in this country are something that we should celebrate, and yet investment in film is an inherently precarious thing to do. If it had not been, it would not have been necessary to contemplate these sorts of tax reliefs in the first place. The reality is that this scheme was almost too much of a success. It ended up costing more in tax reliefs than had been anticipated at the outset. However, as my hon. Friend says, young people up and down the country are engaged as students and as workers in the early stages of careers in the creative industries, and it would be a very backward step if the UK Government, the Treasury and HMRC were seen to be having a crusade against this industry at the very time when we should be encouraging it further and trying to ensure that more jobs are created in this area in years to come.

Anyone who has looked at this matter will understand that a minority of those involved had, arguably, been seeking to avoid tax rather than to invest in film. There are companies—for example, Icebreaker and Eclipse 35—that have been ruled to have abused the reliefs. Rulings have been made and money has been clawed back. However, I believe that the majority, including Movision, acted in good faith, and they are now being tarred with the same brush in the eyes of HMRC, which is refusing to give them the reliefs and challenging the availability of them to those that claimed them.

HMRC’s current position is that all compliant Movision partners who entered into investment in terms of their tax returns are under inquiry for all years ending from 5 April 2003 onwards. Hon. Members will be aware of how rarely retrospective legislation is passed, yet in effect that is what HMRC is doing by applying regulations in such a way that they are having a retrospective impact on these genuine film partnerships, as they were formed and invested in before 2007, and the abolition of section 42 and 48 relief. However, the sticking point is that HMRC will not engage with the partnerships either to discuss the rationale behind its position or to engage in any meaningful settlement talks. Many of its actions could even be viewed as obstructive. HMRC’s inquiries into Movision have been going on for 10 years—since 2004. When HMRC asked Movision how it incurred 100% production expenditure on films, Movision responded in detail on 11 December 2006. HMRC did not respond to that until June 2013—more than six years later. That is completely unacceptable.

It subsequently transpired that HMRC had had a resolution discussion embargo in place from 2010 to 2013, but had chosen not to inform anyone about that; none of the partnerships was aware of it. Why was that? What was the purpose of the embargo? What benefit did it afford to HMRC or the taxpayer?

In 2013, HMRC trialled an alternative dispute resolution and found it to be successful. Following that, it offered a 55% settlement to all partners. Many phoned back and at first were told that HMRC would get back to them after 10 days. Those who phoned later were told six weeks and then two months, and those who rang after that were told that the settlement team had been disbanded—with no explanation.

Movision has made two settlement offers to HMRC: one for £2.4 million and another for £3.95 million. It was told by HMRC that its offers were unsatisfactory, but not why, which obviously makes it very difficult for it to negotiate. The latest development, in the last fortnight, is that HMRC has issued a new embargo on discussions with film partnerships if the partnership has investment in films via anything similar to sale and leaseback. Sale and leaseback is a perfectly conventional method of generating financing whereby the owner of an asset sells the asset but then leases the asset back from the inquirer, thus freeing up some capital. It is commonly used in financing films, and HMRC recognises it in its own business manuals. It is unclear why the embargo has been issued, but it will certainly delay even further any meaningful discussions.

As I said at the outset, there remains a misapprehension about film tax relief. I fully understand the importance and, indeed, the necessity of putting a stop to tax avoidance. That is more pressing than ever in the current financial climate. It is clear that a light needs to be shone on these partnerships. HMRC needs to take immediate steps to identify those who were genuine investors as opposed to those who cynically abused the tax system. The Treasury must be clear that film partnerships that applied the correct legal procedures before 2007 are and remain eligible for the tax reliefs that they were promised by Her Majesty’s Government. With 65,000 cases of tax avoidance identified and a record 27,000 tax disputes waiting to be heard at tribunal, it seems clear that HMRC should be either prosecuting or moving towards a settlement with partnerships.

As I said, for the 500 partners involved in the Movision scheme, the average individual subscription was just £50,000. We are not talking about the super-rich; we are not talking about pop stars and footballers, who are advised on how to seek opportunities for aggressive tax avoidance. With every year that passes, the impact on some of the partners, with the HMRC sword of Damocles hanging over them, will worsen. Many have already become ill, suffering nervous breakdowns and stress-induced illnesses, and have seen marriages and businesses fail. That is a very high price to pay for responding to the call of “Cool Britannia”. Furthermore, it will no doubt make investors less likely to make use of current tax reliefs to invest in industries that the Government want to grow, of the sort that the hon. Member for Huddersfield (Mr Sheerman) suggested, and let us not forget that that is how this whole business started.

HMRC should stop prevaricating and engage with the film partnerships to resolve the inquiries. That should include the aim of either settling or prosecuting within two years, because this has already gone on long enough. I hope that the Minister will consider the steps needed to bring clarity out of the current chaos and rectify unfairness caused to genuine partnerships and investors.

11:16

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

It is a great pleasure to serve under your chairmanship, Mr Crausby. I thank my hon. Friend the Member for North Devon (Sir Nick Harvey) for securing the debate. It had two key and linked themes: investment in the film industry and concerns about tax avoidance. On both those issues, the Government have a strong, clear message. We of course strongly support the UK film industry and want to encourage genuine investment in film, but equally—and unapologetically—we condemn the use of tax avoidance schemes. We want low taxes and a competitive regime, but we expect those taxes to be paid.

We have in the United Kingdom a vibrant and successful film industry, of which we should be proud. In the past three years, employment in the creative industries has grown at five times the rate of the wider economy. The past year has seen film and television production in the UK boom, with, to pick names at random, “24” being filmed in London, “Outlander” in Scotland, “Da Vinci’s Demons” in Wales and “Game of Thrones” in Northern Ireland.

It is right that as a Government we lend our support to those who want to invest in the industry. We now have a robust corporate film tax relief, which was expressly designed to minimise the risk of tax avoidance and which has been in place since 1 January 2007. The new relief goes straight to those making films—in other words, it is the production company that gets the direct benefit of the regime.

The new regime has proved very successful in attracting inward investment. It is highly popular with film-makers and has helped to make the UK one of the top film-making destinations in the world. Since the film tax relief was introduced in 2007, 1,680 film productions have become eligible to claim the new relief, and total production expenditure by films claiming the relief was £7.8 billion, of which 72% was incurred in the UK.

As a Government, we have made the relief even more effective. From 1 April 2014, we increased the rate of relief for larger budget films, reduced the level of minimum UK expenditure and modernised the system of film tax relief qualification. To ensure that our creative industry flourishes across sectors, we announced in the autumn statement that we would introduce tax relief for children’s television and for orchestras.

With regard to the concerns raised by the hon. Member for Huddersfield (Mr Sheerman) and by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron), I should say that we have a successful record in this country. The existing film tax relief is working well and continuing to attract investment to the UK. I am pleased to confirm that there has been no reported avoidance activity with the new film tax relief.

[Mr Sheerman]

I hope the Minister takes the point that those of us who have spoken in the debate do not agree with tax avoidance, which is carried out by a minority. We are at a critical stage, having had such good news in the autumn statement—Opposition Members do not often congratulate the Minister on such things—about raising the social investment tax relief scheme to a much higher level, and about the seed investment scheme. The Minister knows that I am very keen on crowdfunding and crowdsourcing, and we are seeing a new beginning when it comes to vibrant theatre and social investment across our country. The Minister must not send a message in his response to the debate that some of that might be seen as tax avoidance. We are talking about social investment and investment in our arts, and it is to be welcomed.

[Mr Gauke]

The hon. Gentleman is nothing if not consistent; I have never known him to fail to take the opportunity to extol the virtues of crowdfunding and some of the other measures that we are taking. The point that I am making is that we have a film tax relief system that is working well and attracting investment. Nothing in what I am about to say should undermine that.

Our system is working, but I cannot, unfortunately, say the same about all investment under the film relief that was in place before 2007. The old relief was heavily exploited by partnerships of wealthy individuals. Typically, they sought to obtain tax relief out of all proportion to their economic investment. Many schemes used artificial and contrived arrangements to create excessive tax claims. In short, investors abused the relief to try to dodge paying their fair share of tax.

My hon. Friend the Member for North Devon argued that the old legislation was working well. The previous Government took significant legislative action over a number of years to try to prevent the various forms of abuse that were occurring, but they concluded in 2007 that they had to scrap the old regime and replaced it with a much better scheme that now works. HMRC is actively investigating and countering schemes under the old regime about which it has concerns.

[Sir Nick Harvey]

I am not dissenting from the Minister’s proposition that the post-2007 arrangement has been better than the arrangement that ran for the previous 10 years. Nor would I take issue with his assertion that there was some abuse of the previous system. However, when he says that investors used those schemes for the purposes of tax avoidance, is he seriously contending that every single investor who availed themselves of a tax relief that the Government had created was doing so for tax avoidance purposes, or does he accept that there were good and bad among those investors? Will HMRC please do more to distinguish between the two?

[Mr Gauke]

HMRC is not taking a blanket approach to all such schemes, and I will return to that point in a moment.

It might be helpful if I set out some of the problems with the old regime. At the extreme, the situation was so bad that some films were produced solely for the purpose of avoidance schemes, and they were never destined for release beyond the minimal qualifying requirements. Other schemes involved genuine commercial films, but the structure of the financing was designed to generate tax relief in excess of the scheme user’s genuine economic investment. Alongside the schemes that used the relief, other avoidance schemes were created that happened to use films as the avoidance vehicle of choice, even though they did not rely on the specific film relief.

Everyone should be clear that the use of films for tax avoidance is bad for the reputation of the UK film industry. I suspect that there is no dispute among us on that point. Such avoidance is unfair on the vast majority of the public who pay their fair share of tax, and it is correct for HMRC to tackle avoidance in whatever form it takes. HMRC has a strong track record in the courts, winning about 80% of tax avoidance schemes that go to litigation. In 2013-14, HMRC’s 30 wins protected some £2.7 billion of tax. HMRC has a strong track record of defeating film schemes in court. It is right for HMRC to challenge avoidance schemes, because that is its job, but it has not taken a blanket approach of opposing all schemes that involve the old film tax relief. If someone believes that HMRC’s view on a scheme is wrong, they can take the matter to the courts for a decision.

My hon. Friend the Member for North Devon has raised the concern that HMRC has not always worked the case properly. I cannot comment on specific cases or schemes, but let me reassure him that the resolution of existing tax avoidance schemes is a top priority for HMRC. During the past year, HMRC has created a dedicated counter-avoidance directorate, bringing together technical, policy and operational expertise from across the Department in one place to concentrate focus on tackling marketed tax avoidance. The Government have consistently supported HMRC’s work to counter marketed tax avoidance by introducing new legislation and investing in its resources.

That brings me to this year’s Budget, in which the Chancellor announced that from 17 July 2014, individuals and businesses involved in tax avoidance schemes must pay HMRC the disputed amount of tax up front while the dispute is being resolved. That new power, which is called accelerated payments, came into force as part of the Finance Act 2014, and it removes the cash flow advantage that those who deliberately try to bend the tax rules by avoiding tax previously had over the majority of taxpayers who pay their tax up front.

I am pleased to say that the collection of tax from avoiders has accelerated enormously since the introduction this year of accelerated payments, and avoiders have already agreed to pay more than £30 million since Parliament introduced that measure. It is quite right that the users of avoidance schemes involving films or film relief should also pay up front.

[Mr Sheerman]

Can we send the message to HMRC that although it must catch the rascals and make them pay, it needs to be more discriminating? If it is not, we on the Back Benches will put a lot of attention and focus on to making sure that it becomes so, to ensure that people who have innocently invested are not picked on. We have many powers, through Select Committees and from the Back Benches in Question Time, to keep our eye on HMRC and ensure that it does the job properly.

[Mr Gauke]

I am sure that that point has been noted, and I do not disagree that HMRC must pursue those who have engaged in tax avoidance and not pursue those who have not. However, an important part of HMRC’s role is to pursue tax avoidance thoroughly. It would be inappropriate for me to comment on any ongoing litigation, but I stress that neither accelerated payments nor any other HMRC action to tackle avoidance will stop genuine investment in UK films.

The UK film industry goes from strength to strength, supported by a successful, avoidance-free film tax relief that goes directly to film producers. We want to continue to support investment in the UK film industry so that it can grow. Tax relief, properly due, has an important place in helping to provide that support. As the hon. Member for Huddersfield has made clear, further announcements of such support were made in the autumn statement. Tax avoidance has no place in a modern film-making environment. The UK has a hard-won reputation for world-class creativity, but we want that to be expressed in the creation of films, not in the creation of tax avoidance schemes.

11:29

Sitting suspended.

Kew Gardens

Tuesday 16th December 2014 Westminster Hall

[Sir Alan Meale in the Chair]

14:30

[Zac Goldsmith (Richmond Park) (Con)]

It is a pleasure to speak under your chairmanship, Sir Alan. We have 90 minutes, but I will keep my remarks relatively short because there is an appetite for further speeches, although I admit that I would have preferred it if there were more MPs here for this debate on an important issue. I am here to defend a jewel in my constituency, but I am not here because Kew gardens is in my constituency. Kew gardens is a national, even an international, treasure, and I will briefly explain why.

Kew gardens has been a world-class centre for botanic research for nearly a quarter of a millennium—250 years. William Hooker, who was a director of Kew gardens in the mid-19th century, was Darwin’s principal sounding board for his theory of evolution, and it is said that “On the Origin of Species” would not exist without Hooker and Kew, certainly not as we know it today. Kew gardens goes back a long way, and today Kew has the world’s largest collection of living plants. It has one of the world’s largest botanical library collections, and it has more than 7 million specimens in a herbarium, including 350,000 “type specimens,” the original specimens on which new species descriptions are based.

Kew gardens is a UNESCO world heritage site. It attracts 2 million visitors a year and is one of the UK’s leading tourist destinations. Each year, 100,000-plus schoolchildren go to Kew to learn about plants. The extraordinary millennium seed bank, which I will address in a few moments, is the largest plant conservation programme in the world and I am told that by 2020 it will hold seeds from 25% of the world’s plant species. People will know what I mean when I say that Kew gardens is not just a constituency concern.

It is easy to see all that as nice to have, as of academic interest only, but at the risk of stating the blindingly obvious, plants are central to our life. Without plants we would not exist, so I will briefly focus on the world-leading science at Kew. Before this debate I received many letters from Kew’s members, staff and scientists, as well as from general lovers of Kew gardens. I had one letter from a member of Kew’s staff that cited one key area of Kew’s scientific work. She said:

“Taxonomy is something Kew excels in, in fact we are the world leaders. Taxonomy is a science that will rarely hit the news headlines or draw in funding. However; taxonomy underpins all biological scientific research. If we didn’t know one species from another, or how many species there are; or where they exist in the world, how would any other biological, conservation, climate change, ecological restoration, food security, or medicinal research take place? Taxonomy underpins science the world over, and Kew is currently the world authority. It would be a terrible mistake and an irreversible loss to science to jeopardise this.”

She is right, and that is just the start of Kew’s science. Kew has been involved in cutting-edge plant chemistry research to identify anti-cancer, anti-inflammatory and anti-diabetic properties in British plants. Kew is building a one-stop-shop register of medicinal plant names and researching medicinal uses of our own British plants. Our flora consists of some 1,600 species, of which 400 are believed to have medicinal properties. A quarter of all prescription drugs come directly from plants, and right now, as if just to prove the point, Kew is looking for potential Ebola drugs based on the tobacco plant.

Kew’s work on climate adaptation is also world-leading. It is using the natural characteristics of wild relatives of mainstream commodity crops such as coffee, which is among the most important economically, to breed climate resilience into commercial varieties. If we consider that, as a species, 80% of our calorie intake comes from just 12 dominant crops and that 50% of our calories come from just three big grasses—wheat, maize and rice—the in-built vulnerability of the global food economy is self-evident. Imagine what would happen if we were to lose any one of those crops. Kew is leading work on building resilience into the essential commodities on which we all depend.

Kew is leading studies on wild bees, which are hugely important given our dependence on pollinators and the fact that pollinators are declining rapidly in this country. Kew provides the Government with top-level advice on climate change, biodiversity and the illegal trade in wood from endangered species—the list goes on and on. We face countless challenges across the world, but the challenge that dwarfs all others is the environment. As the world’s population continues to grow, and as our appetite for resources continues to escalate, we are ravaging the very ecosystems on which we all depend. It is a mathematical certainty—this is not my opinion but a fact—that, unless we change dramatically, we will find ourselves scrambling to compete for ever-dwindling resources, and Kew is part of the solution. Kew is more important than ever, yet we have chosen this moment in our history to jeopardise its future.

I will put that in context. In 1983, 31 years ago, 90% of Kew’s funding came from Government. That has dropped below 40% this year. In April 2014, it was announced that there would be further cuts of £1.5 million and that up to 125 jobs, mostly in scientific research, would have to go, and Kew faced a £5 million hole in its budget. As of 1 December 2014, there had already been a 22% reduction in core science staff. The very small silver lining is that that appalling threat to Kew’s future has caused people from all over the world to rally to its defence. Here in the UK, 100,000 people signed a petition in a matter of weeks, and I was pleased and honoured to deliver the petition directly to No. 10 with my friend, the hon. Member for Hayes and Harlington (John McDonnell). Outside of that process, ecologists, conservationists and scientists from across the world have expressed real anger about the decision. The brilliant biologist Jane Goodall described the cuts simply as “unbelievably stupid”. I am thrilled to hear that, starting tomorrow, the influential Science and Technology Committee will be holding an inquiry into those cuts.

In the face of that storm, the Government felt compelled to offer some kind of reprieve. In September 2014, the Deputy Prime Minister was wheeled out to announce that funding would be maintained until April 2015. I think that he and other members of the Government had hoped that that would be the end of it, but it was only a pause. People could see that it was a delay, a temporary reprieve, so the campaign persisted. On the back of today’s debate, the Government have felt compelled to move yet again. This morning, just a few hours ago, they announced that a further £2.3 million will be awarded during the 2015-16 financial year, which is clearly good news. It gives Kew time to prepare and adjust, but it is only a reprieve.

It is worth noting that Kew has already lost a considerable number of its scientific staff, so the reprieve is not good news for them or, frankly, for their work. What it shows, however, is that the Government know that they massively miscalculated and misunderstood the level of anger that their decision would provoke and the value that we all attach to Kew and its work. The petition demonstrates that public campaigning can work, and I pay tribute to all the members of the public who signed it, as well as to all the celebrated ecologists, conservationists and scientists who succeeded in shifting the Government’s position.

Where now for Kew? I do not doubt that structural improvements can be made and that savings can be found. Kew has been run by scientists for many years, and it has suffered decades of underinvestment. From our conversations I know that Kew’s management and staff are up for the challenge, but the Government have to provide a realistic trajectory, over years not months. Kew is not looking for the odd reprieve. Kew cannot look to the long term if its funding arrangements are so short-term and so uncertain. Yes, Kew scientists know that they will have to look for other sources of revenue, but there is also a risk in that. There is value in, and a desperate need for, public-interest science, which does not always lend itself to commercial considerations. An obvious example of that is genetically modified food. Governments and businesses fall over themselves to invest in GM, but so far all the promises of cheap pest control, and crops that tolerate floods, salt and extreme weather, simply have not materialised. A different type of biotechnology, traditional hybridisation, has delivered those products, and at a tiny fraction of the cost. Using new technologies such as gene marker mapping and genome sequencing, conventional breeding has quietly delivered—

14:39

Sitting suspended for a Division in the House.

14:50

On resuming—

[Zac Goldsmith]

Before we were interrupted by the Division, I was making the point about the importance of pure public-interest science and saying that such science does not always lend itself to commercial considerations. The example that I was giving was GM food. As Members will know, GM food has attracted an enormous amount of Government time and commercial investment, despite the fact that it has not lived up to its hype. GM food has not delivered on the promises that have been made over the years, of cheap pest control and crops that tolerate salt, extreme weather, floods and all the rest of it. By contrast, more traditional biotechnology—traditional hybridisation—has delivered those products. For example, in recent years it has delivered drought-tolerant and flood-tolerant varieties of rice, with high yields and so on, using techniques such as gene marker mapping and genome sequencing. However, it has not received anything like the level of investment from industry or the level of energy from Government that GM food has.

The cost of bringing a single GM crop to market is roughly $136 million, but the cost of bringing a non-GM variety, through these more traditional means, costs one fiftieth of that sum. Businesses and Governments are not falling over themselves to back traditional biotech because there is very little money in it for them. Improving crop varieties that farmers can use year after year is clearly not as profitable to industry as a GM model that requires farmers to purchase patented seeds year after year, locking them into dependence on the giant companies, just three of which control a staggering 70% of global seed sales. I give this example, and there are many other such examples, simply to show why we need pure public- interest science. It is important and if we push Kew purely to the commercial, which is where I think it will head if these cuts continue, we risk losing something inherently important and valuable.

I will end by quoting Richmond’s greatest living resident, Sir David Attenborough, who, as people can imagine, has taken a keen interest in this issue. He said:

“The important thing to remember is that Kew is the premiere botanical gardens in the world scientifically. People who think it is just a place to go to look at pretty flowers and flower beds are mistaking the importance of Kew Gardens. The Seed Bank is of world importance and it should be supported by the Government like a proper institution or university. And the continuing idea that Kew Gardens is merely a playground and that it should just put up the prices to look after itself is a misguided assessment of the value of Kew. The Government and the scientific departments should recognise that and support it properly.”

Like Sir David Attenborough and so many other people, I urge the Government to rethink their plans—even further than they have this morning—and to provide a genuine, long-term plan for Kew gardens.

14:53

[John McDonnell (Hayes and Harlington) (Lab)]

I declare an interest as a member of the Friends of Kew.

I congratulate the hon. Member for Richmond Park (Zac Goldsmith), who has been campaigning so hard on this particular issue—not just as a constituency matter, but as a genuine commitment to the work that Kew undertakes.

I will echo some of the expressions that the hon. Gentleman used. If Members look at the correspondence received by the House of Commons Science and Technology Committee for its hearing tomorrow, they will see that it sets out in significant detail the role that Kew has played. There are more PhDs per square inch in this correspondence than in any other Select Committee correspondence I have seen, which reflects the intensity of the scientific debate about the future of Kew, and that debate is absolutely fascinating. I am not completely sure what “Angiosperm Phylogeny (Group 3)” is all about, but the reference to it demonstrates the breadth of the work that goes on at Kew and confirms what has been already said about Kew—namely, that it is a world leader in scientific research.

I also say that for any west London MP, for any London MP and for many other MPs beyond London, Kew gardens are themselves a world heritage site. In addition, Kew is a park enjoyed by literally millions of people. Many of our constituents enjoy it as one of the most important open spaces in west London.

[Mr Andy Slaughter (Hammersmith) (Lab)]

My hon. Friend is absolutely right. Kew is important to the whole world and certainly to the whole of this country, but it has a special place of trust for those of us who have grown up and lived in west London. We want to see a sustainable future for Kew. While I acknowledge that the announcement today is welcome, there has to be a long-term future, and we have to preserve something that is unique in the world.

[John McDonnell]

I agree.

May I remark on the success of this campaign so far? It started way back in April, when concerns were being expressed by members of staff at Kew through their trade unions—PCS and Prospect, among others. As the hon. Member for Richmond Park said, we delivered a petition of more than 100,000 names. Unfortunately, we were unable to take the wheelbarrow containing the petition up to No.10, but we took the petition itself. The campaign built up a head of steam. We held a public meeting down at Kew; there were at least 200 people there, who were incredibly enthusiastic about the campaign. That effort secured £1.5 million, which the Deputy Prime Minister announced and which was very welcome, and we have received £2.3 million today. If we keep on talking, we will be up to the £5 million needed to cover the gap identified some months ago.

I am grateful for the new money but there is a long-term problem, mentioned by the hon. Member for Richmond Park: we need stability now. We cannot keep on going through these ups and downs of budgeting, in which one month a £5 million gap is found and then the Government come up with the occasional £1 million in the short term. What we are looking for is a long-term consistent plan.

The difficulty at the moment is about the funding of Kew itself. I have been looking through the figures, as set out in the House of Commons Library briefing. If we look at the funding in recent years, to be frank we see that the money has been ricocheting around, and up and down, in that time. There is the Department for Environment, Food and Rural Affairs operational budget. In 2007-08, it was £17.6 million; it went up to £19.85 million in 2008-09; then it went down in 2009-10 to £17.65 million; and it is now down to £14.4 million. Again, the message that comes across from managers, trustees and others is the inconsistency and unreliability of the funding, which means that they are unable to plan from one year to the next because many of the decisions about the funding of Kew are made quite late in the year. Consequently, the management find it almost impossible to plan.

The money I have mentioned is the core operational funding, which pays for staffing. In addition, if we look at the capital budget, which also comes from DEFRA, we see that in 2007-08 it was £7.6 million; it went up in 2012-13 to £17 million; and it is now back down to £13.6 million, but that includes some elements that take into account redundancy costs and other costs. Again, even on the basic infrastructure costs, let alone the staffing, the inability to plan for the long term is affecting the efficient management of the organisation itself.

Kew has done all it can to raise its own funds. We can see from the trust itself the operations that it has undertaken, including the charitable work that has taken place and the charitable donations that have been made. In addition, the hon. Member for Richmond Park and I met Marcus Agius, the chair of the trustees at Kew, who set out for us the discussions that had been taking place about the restructuring, which aims to secure additional funds. However, at the end of the day that was overridden—well, the backdrop to all this was the reduction in core income. So even though the restructuring is there to ensure that there is enhanced income, particularly with regard to the scientific work, it is still based on an overall cut in expenditure from DEFRA itself.

Again, part of the problem is that the income comes from DEFRA, whereas the work that Kew does actually spans a range of different Departments. Kew plays an important educational and scientific role. A range of aspects of its work could properly be funded by other Departments, particularly its work in the developing world. However, it relies on DEFRA; unfortunately, DEFRA’s budget has been cut in recent years, meaning that the cuts have followed through to Kew. There is volatility about the whole funding process, both in terms of DEFRA’s funding and Kew’s ability to secure funds from elsewhere. That means there is lack of clarity about the future of funding and an inability to plan and invest in Kew’s long-term future.

As the hon. Member for Richmond Park said, the tragedy is that this year there have been significant cuts: 125 posts have been cut, with 65 staff having already gone, and there is now a group of staff in 51 posts who, although there are 42 vacancies, are declared surplus. Although it is possible that they will able to compete for some of the 42 vacancies, not all the vacant posts are suitable alternatives for those staff.

Kew’s expertise is described as a mosaic of individuals with their own individual expertise in small teams. In recent years, that expertise has been whittled down. For example, the voluntary redundancy scheme has meant that, in certain areas of activity, the expertise has either been reduced significantly or lost altogether. I shall give some examples that have been provided to explain the situation to us.

Expertise in legumes, one of the world’s economically important plant families, has now almost entirely gone and expertise in pollen has almost gone, with implications for health, forensics, conservation and the study of pollen in the archaeological and geological contexts. Capacity in many other areas has also been reduced, meaning that potential skills shortages are being faced in a number of areas. Kew relies on some world-renowned experts in these particular fields. It is absolutely admirable that a large number of staff who have retired or gone from Kew as a result of voluntary redundancy have come back voluntarily and are now offering their expertise as volunteers. What greater commitment can be demonstrated than that?

In addition, there is concern that the gap in funding from DEFRA is having an impact as Kew desperately tries to seek funding from elsewhere.

The entrance fee for Kew is £15 and there is now a discussion about whether children should be charged. For my constituency, Kew has become an oasis of calm within west London—particularly for families, who visit and enjoy it. Any further increase in fees will, unfortunately, deter many people from visiting Kew and there will be a self-fulfilling prophecy of decline as a result. More importantly, at the moment Kew offers the opportunity for all families to be able to visit. Any increase in prices will deter those least able to afford it and possibly those who need it the most in terms of being able to break away from the duress of their everyday lives.

There are other concerns. Yes, of course fundraising activities have to take place at Kew, but there has to be a balance as well. We do not want Kew turning into a base for funfairs and other activities that crowd out the environmental enjoyment of the park itself.

I have listed the range of issues put to us in the various public meetings that we have had. There is real concern that unless we get some agreement on stable funding over the longer-term period—the next five to 10 years in particular—the additional money that came in September and the additional money today, which of course is welcome, will tide us over perhaps for another 18 months and then we will be back to square one. In the meantime, we will have lost expert staff and—pardon the pun—their expertise does not grow on trees. These people have been trained throughout their lives and have dedicated their lives to Kew. Their expertise must not be lost.

Although Kew got some investment from the significant funds that other institutions gained—particularly the museums, with free access and investment over a longer period—because of its link to DEFRA in particular it never gained the scale of funding needed to tackle its long-term issues of physical infrastructure and the long-term financing of its staffing and research, particularly its scientific research capacity. Many people feel that, as a result, Kew has been discriminated against and that now is the time to stand back and look at where we go from here.

The triennial review is coming up in the new year—the scientific review is coming back to us as well—and that will give us some opportunity to look at the long-term role of Kew, but that must be linked to a long-term financial and investment plan. If that means looking at DEFRA’s or other Departments’ budgets, that discussion needs to go on within the Government.

I have a specific request for the Minister to take away with him. Kew management are desperately keen to work closely with the Government. There has been some close liaison between Kew management, the trustees and the Government in trying to look at a long-term financial plan for Kew, but we are nowhere near securing a sufficient deal on that.

My request is that the Minister should go back to his Department and convene a meeting with all interested parties—all the stakeholders—including the Friends of Kew, the relevant local MPs, trustees, the management of Kew and the trade unions. In that way, we can get absolute clarity on the current financial position and the Government’s plans for the long-term future of Kew. We cannot have the budget ricocheting around as it has done in recent years. A long-term, stable funding plan for Kew needs to be agreed between the Government and all parties. I ask the Minister to get everyone around the table in the coming months.

The £2.3 million on top of the £1.5 million has given us the breathing space to consider long-term staffing needs and examine a long-term plan, based on the restructuring that has taken place so far, in respect of the ambitions of Kew.

When we met the chair of the trustees, he outlined the work that had gone on: the development of a scientific vision; the way in which work force activities, in individual silos at the moment, were being broken down; the co-operation across areas of expertise; and the introduction of a better career development plan for the staff. However, at the end that was all clouded by the reduction in the core income. Unfortunately, I think that the plans that Kew is putting forward will hit the financial rocks—perhaps not in the next 18 months, now that we have the additional money, but after those 18 months, unless we have a clear commitment from the Government.

We need to address the issue on a cross-party basis. Bearing in mind its international and global scientific role, Kew’s budget and long-term planning cannot be dependent on changes in Government. I would welcome the opportunity for all stakeholders to come together and for a cross-party agreement on the long-term financing of Kew, agreeing a base budget from which the fundraising activities could be developed as well as some of the scientific project work, to bring in additional funds. There should be solid agreement between parties and all stakeholders on a long-term financial plan for Kew.

I turn to the current staff difficulties. Following the £2.3 million announced today and the £1.5 million announced earlier, the message to the management now should be to hold off any further redundancies and cutbacks because there is real anxiety about the loss of expertise as a result of the cuts and the voluntary redundancies that have already taken place. It is important that the message to management is that they hold on to what staff and expertise they have until there is a much better and deeper discussion about Kew’s long-term future.

I hope tomorrow’s Select Committee visit will produce a report that gives us some indication of what the Committee sees as Kew’s long-term future. The evidence that has already been provided emphasises Kew’s scientific role and the importance of holding on to Kew’s solid bedrock of scientists. However, those presenting evidence tomorrow will present ideas about how to establish a long-term budget. There is a spirit of co-operation between all the stakeholders now, and the Government should seize that opportunity. As I say, I hope that is done on a cross-party basis.

As a friend of Kew, I know that many of us have enjoyed the gardens over the years. Kew is a world heritage site and a beautiful park. Underlying all that, however, is the magnificent role that Kew plays in scientific research. If we do not address Kew’s needs now and seize this opportunity to secure its long-term future, many of us will feel extremely guilty in years to come when it is degraded as a result of waves of cuts and the instability of its funding base.

I hope the Minister will agree to meet us all and to bring all stakeholders together. We can create a long-term plan for Kew. In that way, we will not need to have another Adjournment debate in a few months’ time. Indeed, every time we go for an early-day motion or an Adjournment debate, it produces an extra couple of million pounds, so, in the long run, it would be cheaper for the Minister to bring us all together.

15:11

[Sir Tony Baldry (Banbury) (Con)]

There are three reasons why I want to contribute to the debate. First, I was the last Minister of State in the Ministry of Agriculture, Fisheries and Food—the Labour Government abolished it when they came into office in 1997. At the time, MAFF had responsibility for Kew gardens. For a while, therefore, I had ministerial responsibility for them, and they were an oasis of calm, especially when one was having to deal with things such as BSE and slaughtering millions of cattle. However, the case of Kew makes the machinery of governance point that non-departmental public bodies ricochet from one Department of State to another, depending on how the architecture of Whitehall responsibilities is made up. I will come back to that in a second.

My second reason for wanting to contribute is that, as my hon. Friend the Member for Richmond Park (Zac Goldsmith) and the hon. Member for Hayes and Harlington (John McDonnell) have made clear, Kew is one of the country’s outstanding assets. Indeed, in an oral question about Kew—looking at the House of Commons Library brief, I think I am one of the few colleagues who has asked one—I said that we all see it as a “national treasure”.

The third, personal, reason why I want to contribute to the debate is that my very first date with my wife was at Kew gardens. I therefore have a particular sentimental reason.

The hon. Gentleman’s machinery of governance point is very much the nub of the issue. Those of us who have been fortunate enough to be Ministers know that, each year, the Chief Secretary agrees a spending provision with the Secretary of State for each Department. Once that overall spending envelope is agreed, Ministers have to go through the Department to see how it will be shared out among the various commitments and statutory provisions it has to undertake. Inevitably, non-departmental public bodies come at the tail end of those negotiations because Departments tend, understandably, to look first at their core activities and then, if one is not careful, to say, “We are having to take an x% reduction in our public spending, so we have to apply that across the Department as a whole.” That leads, even if there is a three-year review, to the figures one sometimes sees.

As the hon. Gentleman fairly observed, and as the House of Commons Library brief demonstrates, the narrative here is not one of recent sudden cuts to Kew’s funding: there has been considerable yo-yoing over the last eight years or so. For example, in 2013-14, Kew’s funding was £28 million. In 2007-08, however, it was only £25 million. In the following years, it was £26 million, £28 million, £24 million, £28 million and £32 million, so it yaws around quite considerably over the years. In those circumstances, it is difficult for any organisation or institution to plan.

If one keeps Kew as a non-departmental public body, it will be hard for the Department of State to ring-fence funding for it, as against everything else it has to provide for. Of course, the figures are not small. DEFRA provided £32.5 million in funding in the financial year 2012-13, out of Kew’s total income of nearly £60 million. Kew’s budget is therefore quite substantial; indeed, I cannot think of any similar non-departmental public body with a similar budget. The hon. Gentleman spoke about the museums, but they tend to get direct grant in aid, while other research organisations tend to be parts of universities.

One of Kew’s great assets is its seed collection. I know from my time as a Minister with responsibility for the Overseas Development Administration and from chairing the International Development Committee that the seed collection is a global resource. However, that is really the responsibility of the Department for International Development, not DEFRA.

I rather find myself agreeing with my hon. Friend and the hon. Gentleman that we need to see how Kew, which is, by every account, an exceptional body, can be removed from the non-departmental public body, machinery of governance funding process. Permanent secretaries across Whitehall—in DFID, the Department for Culture, Media and Sport, DEFRA and, indeed, in the Department for Business, Innovation and Skills, which is responsible for innovation, science and connections with universities—should put their minds to determining what value the nation places on Kew and then work backwards from that. If the nation places a value on Kew, it may be more sensible for Kew simply to get a grant in aid directly from the Treasury.

[Mark Field (Cities of London and Westminster) (Con)]

As a London MP, I wish to make it clear that Kew is not just a museum piece or a phenomenally important research institution, but a wonderful part of London. It is used by many of my constituents as a place for general recreation and leisure. It is very much a 21st century asset, as well as having an important history.

[Sir Tony Baldry]

I think the whole House would agree with that observation.

I do not think the House should look on this as a beat-up for the Minister who has to respond to the debate. Nor do I think anyone would disagree with the Deputy Prime Minister when he said:

“Kew gardens is one of the world’s most important botanical research and education facilities…The Millennium Seed Bank is of global scientific significance, and scientists at Kew are heavily involved in research in the vital fields of biodiversity and climate change.”

All those things go pretty much across every Department. Climate change involves the Department for Energy and Climate Change. It is very hard that the responsibility for funding the whole of Kew should come within the budget of just one Department of state.

I would therefore hope for cross-party and cross-departmental discussions, not just about the funding of Kew, because such discussions would bring us perennially back to the same issue, but—although it may be rather boring talking about the machinery of governance—about where within the machinery of governance Kew sits and who is responsible for funding it under the National Heritage Act 1983. Changing that structure might make it possible to give Kew more certainty than it has had—and not just on the present Government’s watch. In fairness, I have not looked back to before 2007, and the Library has not given the figures, but I suspect that if I look back even to the time when I was the Minister, the figures tended to yo-yo around from year to year, depending on the departmental spend. I suspect that a cross-Government and cross-departmental review is required of where Kew should fit within the machinery of government and how it can be given sustainable funding. If we regard it, as I think we all do, as a national asset, we need to treasure it as one.

15:21

[Sir Gerald Howarth (Aldershot) (Con)]

I am delighted to take part in the debate. I congratulate my hon. Friend the Member for Richmond Park (Zac Goldsmith) on presenting such a cogent and comprehensive case for the support of the Royal Botanic Gardens at Kew. I agree with every word that the hon. Member for Hayes and Harlington (John McDonnell) said. I hope the message will go out that there is substantial unanimity across the House about something that is not just a national but an international treasure—an important and fantastic resource for the United Kingdom.

I have been going to Kew gardens since the days when it cost one old penny piece to go in. I see the hon. Member for Hayes and Harlington nodding. He and I are of a similar age and I suspect that we both delved into our pockets to obtain that coin, which perhaps had Queen Victoria’s head on it. The price has gone up, of course; it is now £15 to get in, I think. I declare an interest as my wife is a friend of Kew gardens, and I have a constituent who is one of the most distinguished scientists in the world in her field, Professor Monique Simmonds. She is the deputy director of science and the director of the Kew innovation unit. She was awarded the OBE last year for the extraordinary work that she and her team have been doing, not just in the United Kingdom, in the Jodrell laboratory at Kew where they do scientific research, but around the world. She, with her team, makes a fantastic contribution through visits and making connections, and identifying plants that can produce life-saving medicines. So I wholeheartedly support the campaign to ensure that Kew is properly funded.

I am a Thatcherite Tory—I see you nodding, Sir Alan; thank you—and I recognise fully the need for the nation to balance the books. Unquestionably it is the big challenge of the Parliament to address the budget deficit, but the nation still spends £700 billion a year, and therefore how to spend that money on services, even if the amount is reduced, is a matter of legitimate political and public debate. I feel strongly that the nation needs to capitalise on one of its greatest assets: the talents of its people. We face a competitive world out there, with countries such as China and India snapping at our heels, and the only way this nation will survive is by harnessing the innovative talent that fortunately runs through it.

I argued repeatedly when I was a Defence Minister that we need to spend money on defence research. We need to be at the forefront of technology, and that also applies to Kew, in the field of medical science. We have the means to do it. We have the talented and skilled people at Kew, who are able to deliver. Rather than cutting them back we should expand them for, if I may be permitted to use the expression, they are the seed corn of our future prosperity as a nation. One of Britain’s most successful businesses, apart, of course, from the defence industry, is the pharmaceutical industry. There is a synergy; what the scientific research at Kew produces complements one of Britain’s most important industries.

Kew is not an ancient monument to be preserved, although I entirely agree with my hon. Friend the Member for Cities of London and Westminster (Mark Field) and the hon. Member for Hayes and Harlington—as well as my right hon. Friend the Member for Banbury (Sir Tony Baldry), who mentioned his personal attachment to Kew—that it is a lung in west London, serving a wider purpose beyond the one that we have predominantly discussed today. That is important, but what is fundamental to the salvation of this nation is that we harness technology. In Kew we have a jewel in our crown, and I hope that we shall continue to fund it.

Another aspect of Kew’s work is the involvement of the Royal Botanic Gardens in the fight against crime and terrorism. We face a bio-threat, and without places such as Kew we would lack some of the expertise with which to address it. Some hon. Members may remember when a boy’s torso was found in the Thames. It had no head. The origins of that child were established by the forensic work done at Kew gardens. By analysing the contents of the stomach it was possible to tell which part of Nigeria the torso came from. I use that as a graphic but simple illustration of the depth of expertise that we cannot, as a nation, afford to lose.

I will not discuss the question that my right hon. Friend the Member for Banbury raised of how we structure government. I just believe, as others do, that there must be a long-term solution. My right hon. Friend suggested direct funding from the Treasury. In a sense, I do not mind how it is done, but done it must be, in the interest of the nation and the exchange of information and samples around the world. A huge amount of work has been done through fundraising at Kew, to raise funds without relying wholly on the Treasury; but as for the director saying it can all be done by selling more, that is what Kew has already been doing, and some of what it does involves payment in kind. By giving expertise it gets access to plants and other facilities available around the world. Much more bartering, as opposed to pounds, shillings and pence, may be happening.

I am left with the words of that magnificent magazine Country Life, to which I am sure the hon. Member for Hayes and Harlington is a regular subscriber.

[Sir Tony Baldry]

Compulsory reading.

[Sir Gerald Howarth]

Absolutely; required reading. The article said:

“The nation would, of course, be mad to let this treasure go, but that, in the worst possible sense, is what our elected representatives are doing already.”

Notwithstanding the funding that has been given, which I regard as temporary plastering, we need a fundamental, long-term solution, to preserve the fantastic work being done at Kew.

15:29

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I start with the usual courtesies. It is a pleasure to serve under your chairmanship, Sir Alan. You were a Minister who had responsibility for Kew in his time in government, so this debate will no doubt be of keen interest to you.

I apologise for the absence of my hon. Friend the Member for Brent North (Barry Gardiner). He has shadow ministerial responsibility for this brief, but he is indisposed, so I am standing in on his behalf. I wish him well for a speedy recovery. Finally, I of course congratulate the hon. Member for Richmond Park (Zac Goldsmith) on securing this debate, which has turned out to be incredibly effective. If it has served any purpose, it seems to have triggered, along with the e-petition, the decision to announce a further tranche of funding for Kew gardens. His contribution was passionate. He led the debate off with an excellent set of remarks that underlined the key point, which is the need for stability in Kew’s funding.

Kew remains one of the leading botanic gardens of the world. As my hon. Friend the Member for Hayes and Harlington (John McDonnell) pointed out, it is important not only to London, but to the whole of the UK and the world. It makes an essential contribution to our understanding of the world’s flora and to the conservation of plant and fungal biodiversity. It is clear that Kew’s committed team of scientists are highly valued internationally. Indeed, one could argue that it is difficult to overestimate the value of their contribution to plant science. They thoroughly deserve their reputation for world-leading research and for their essential conservation and curation work. In 2012, Kew was judged to be

“well placed to continue to make a significant and globally important contribution”

by the independent review panel chaired by Professor Georgina Mace. That review considered the position of Kew in 2010 and 2011. After a decade of investment from a Labour Government who understood the value of sound science, Kew was well placed to manage a slight real terms cut in its operational budget. That is where we were four years ago.

Today we have Richard Deverell, Kew’s director, warning of possible bankruptcy and a £5.5 million shortfall in Kew’s operational budget. I will refer to today’s announcement later in my remarks, because it alters things slightly. There is a stark difference between where we were and where we are, but that is what happens when we have a Tory-led Government who believe that protecting the environment holds back the economy. They seem to believe that we have to make a choice about whether we protect our economy or our natural environment.

Will the Minister clarify the evidence behind his Government’s approach to Kew, notwithstanding today’s announcement? Does he believe that Kew will be able to increase significantly its level of external funding, which seems to be the long-term plan, including for its core work? If so, why does he believe that and how will it be done? If not, he should be clear about the reasoning behind the Government’s initial decision to degrade the UK’s natural science capacity. The independent committee’s report contained a clear warning that

“Kew must guard against the risk that the allocation of its core funding is distorted by the need to chase external money.”

There is real concern that, in a context of declining resources for animal and plant science, Britain will not be able to deal with potential risks or new outbreaks of plant disease. I refer specifically to the recent outbreaks of ash dieback and oak processionary moth. Earlier this year, the Natural Capital Committee said that the incidence of disease has accelerated over the past 50 years. It also said that the current outbreak of ash dieback is expected to destroy all but a very small percentage of the total population of ash trees in Great Britain. Every time I go out walking in my constituency, I think about that and the difference that it could make to our landscapes and precious woodlands. With such a host of new pests and diseases attacking the United Kingdom’s native treescape, Kew’s scientists are more important than ever.

Climate change and the increasing presence of pests and diseases are placing additional stresses on our natural environment. We do not know exactly what impact they will have, but we must prepare properly for the increasing risks, and we simply cannot do that without Kew. Those who have a long-standing interest in the natural environment, as I do, will be asking why we are forced time and again to make basic arguments in favour of maintaining the levels of investment in environmental science. The Government clearly just do not get it, so it is worth rehearsing some of the basic points.

As many Members have said, Kew is a leader in plant conservation. It plays a major role in global assessments for the International Union for Conservation of Nature’s red list. The millennium seed bank supports the long-term conservation of wild species and the use of seed for innovation and adaptation in agriculture, horticulture, forestry and habitat restoration. Kew has a long tradition of global leadership and influence in plant discovery and description and in pure and applied research.

The Government’s failure to appreciate the value of Kew is one of the clearest signs that they do not take the environment seriously. Despite the sensible recommendations of the 2010 Chalmers independent review of Kew and the 2012 independent science review, Kew has been left on an unsustainable footing. That key point has been raised in, and crystallised by, today’s debate—the instability that Kew faces in the long term. It was illustrated perfectly by the hon. Member for Richmond Park and my hon. Friend the Member for Hayes and Harlington.

Today the Chief Secretary to the Treasury and the Deputy Prime Minister announced that an extra £2.3 million of Government funding has been secured through to April 2016. The right hon. Member for Banbury (Sir Tony Baldry) made the point that Kew should perhaps be funded by the Treasury, but some of us might argue that it already is effectively being funded by the Treasury, because this is the second time that the Treasury has bailed Kew out. That leads, however, to a few questions. Is the money additional grant funding or has it been moved from another part of DEFRA’s budget? If so, which programme is the money being transferred from? Does the £2.3 million include expected efficiency savings either from Kew or from elsewhere? Is the £2.3 million for operational or capital budget purposes? Will Kew receive all the £2.3 million in 2015-16?

The key point is that the announcement today—let’s face it, our Deputy Prime Minister is quite good at these kinds of announcements—does not negate the hand-to-mouth feel of the Government’s approach, which is one of the key reasons why the Science and Technology Committee is conducting an inquiry into the issue. I hope the Government will do more than just pay lip service to the Science and Technology Committee and its deliberations, because the £2.3 million does not deal with the issue, as Members here today have said repeatedly. As John Wood from the department of plant sciences at the university of Oxford said in his submission to that inquiry:

“The lack of core funding is forcing Kew to abandon its traditional roles and research and instead head in the direction of research to which it is not suited. Much will be lost if this process continues.”

Today’s announcement does not deal with that fundamental point.

Environmental science should be a priority of the Government’s, but it could not be further down their list of priorities. Just look at the Environmental Audit Committee’s report published in September; it has an environmental traffic light scorecard that has no green on it. Would you expect a Government with an environmental scorecard coloured red, red, red and amber to understand the value of Kew? Of course not. Labour is committed to halting and reversing the decline of our natural environment, and we are clear that Kew has an important role to play in meeting that ambitious goal.

15:39

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

It is a pleasure to serve under your chairmanship today, Sir Alan. I, too, congratulate the hon. Member for Richmond Park (Zac Goldsmith) on securing the debate and all hon. Members on their contributions made both today and at other times when the future of the Royal Botanic Gardens, Kew has been discussed. I also congratulate Kew on its approach to refreshing how it delivers its science in the 21st century.

As lead Government sponsor for Kew, the funding that the Department for Environment, Food and Rural Affairs provides helps to support the institution as an international, collections-based, centre of expertise in plant and fungal identification, taxonomy, conservation, sustainable use and related research. It helps to support Kew in its role as a UNESCO world heritage site and supports Wakehurst Place, which is managed by Kew and is home to the millennium seed bank. The funding also supports Kew in its roles as the world’s most famous botanic garden, an important visitor attraction, which has been highlighted by hon. Members from London, and a provider of science-based education to the public.

Kew was founded over 255 years ago. The Government and Kew’s shared challenge is to ensure that its structure is resilient and fit for purpose to meet the challenges of the 21st century. Its new science strategy is vital. Kew is recognised throughout the world for its unrivalled assets and expertise, and we want further to enhance that reputation. Kew is not simply another academic institution; it maintains a world-renowned collection, which enables it to be unique in the science that it can provide. This debate and the Science and Technology Committee’s hearing tomorrow on the future of the Royal Botanic Gardens, Kew will help to inform the final details of a new science strategy for Kew.

We have been able to offer relative protection to Kew in terms of total Government funding. Average funding has been more than £27.4 million a year over the past five years. Between 2007 and 2010—the last comprehensive spending review period—the average was less than £27 million. Others have already mentioned it, but I am pleased to confirm an extra £2.3 million unrestricted resource funding for 2015-16, which the Government secured through the recent autumn statement and which was announced today by my right hon. Friend the Deputy Prime Minister.

[Zac Goldsmith]

I thank the Minister for giving way so early in his speech. I want to echo the point made by the hon. Member for Hayes and Harlington about the need for a full, open stakeholder meeting. The grant that the Minister alludes to is a one-off, a reprieve, a delay and nothing more than that, so there is a need for such a discussion. I ask him to address that point directly. If he could facilitate that meeting, I am sure that we would all appreciate it.

[Dan Rogerson]

I thank the hon. Gentleman for his intervention. I will return to that point and some of the long-term issues later.

The funding announced by the Deputy Prime Minister today maintains Kew’s resource funding at 2013-14 levels right through to April 2016, which is in recognition of the need to embed the restructuring in order to deliver a sustainable future for Kew and the globally recognised science work that it provides. The funding is in addition to the announcement made by the Deputy Prime Minister in September that unrestricted resource funding for RBG Kew will be maintained until April 2015 at 2013-14 levels. Kew was provided with an additional £1.5 million to honour that.

We fully support Kew’s efforts not only to balance the budget, but to increase commercial and other sources of funding. That approach not only reduces reliance on Government funding, but potentially opens up additional and new opportunities. In support of that, I can confirm that we have extended to Kew more of the freedoms that are available to certain museums and galleries, to which my right hon. Friend the Member for Banbury (Sir Tony Baldry) referred. In particular, that will mean that Kew can bid for preferential Government loans to pursue projects that will enhance its ability to grow self-generated income. Kew has been asking for that and I am pleased that the Deputy Prime Minister confirmed that today.

Kew is already a valued partner in delivering DEFRA’s strategic evidence priorities. It has unique assets and globally respected expertise and is a top performing scientific institute that helps to deliver DEFRA’s science objectives. I welcome Kew’s approach to refresh how it delivers that science in the 21st century. In turn, that will help to deliver what people want of Kew and what the Government need. I support Kew’s restructuring as it will enable the right skills to be in place to secure long-term success, to maintain a world-class facility and to be able to respond to future challenges. Kew’s scientists directly support DEFRA’s work in several ways. For example, they contribute to international biodiversity, to tackling climate change globally and to a resilient, sustainable and growing food and farming industry. They help with the bio-security system and our ability to respond to plant, pest or disease outbreaks and contribute towards halting the loss of biodiversity in England by 2020.

Kew has a dedicated, committed and professional work force, but it needs the right skills to deliver a new scientific vision and to respond to future global challenges. It cannot afford not to change. It may be easy to think that it is all about reducing costs, but the restructuring is about securing long-term stability for the institution and creating and maintaining a world-class facility for future generations. That will enable it to make a unique contribution to meeting the 21st century’s great social and environmental challenges, to which the hon. Member for Richmond Park referred in his opening remarks.

Restructuring will also ensure succession planning by introducing new career and development opportunities for staff, so that future generations have the capability to continue its science legacy. Kew cannot afford not to change if it is to continue to be the world-class organisation that we all want it to be. The restructuring clearly impacts on individuals in different ways. It is too early to tell what that means for every person working at Kew, but Richard Deverell and his team are offering every support to the people affected by the transition.

[Zac Goldsmith]

I worry that the Minister is approaching the end of his speech, so I want to make a point before he finishes. Some of Kew’s key work, as the Minister and other Members have identified, clearly crosses over into the realms of the Department for International Development. Has the Minister’s Department approached DFID at any point to ask whether what would represent an almost immeasurably small pinprick in its budget could be diverted to support specific work at Kew that relates to poverty alleviation, building resilience into the global food economy and dealing with climate change?

[Dan Rogerson]

Part of Kew’s restructuring involves making it better able to look at other opportunities, some of which may come from other sources of public funding. We want to make it ready to take advantage of that.

[Zac Goldsmith]

Will the Minister give way?

[Dan Rogerson]

May I make a little progress? I want to refer to the points made by other hon. Members and, indeed, those made by the hon. Gentleman.

Turning to heritage, it is an important Government priority to meet our obligations as a state party to the world heritage convention. We are working with Kew to ensure that it is using resources effectively and looking for innovative ways to maintain and secure a long-term effective use of the assets that it manages. We will continue to involve our colleagues in the Department for Culture, Media and Sport in those discussions. We have invested considerable capital funding in recent years to help Kew reduce operational costs and increase self-generating income, including support to the temperate house restoration project, where we underwrote £10 million, which is a UNESCO management priority.

On the issues raised by hon. and right hon. Members the debate, I have sought to set out that the coalition Government have had to deal with public spending challenges to reduce the deficit. The hon. Member for Aldershot (Sir Gerald Howarth) was at pains to point out his ideological leanings. Mine might be slightly different, but we can agree that we need to tackle the problem facing the country in order to deliver growth and guarantee future investment in public services. Although DEFRA has faced a budget reduction, as have all Departments, Kew has done slightly better than DEFRA more generally. My right hon. Friend the Member for Banbury was concerned that non-departmental public bodies are at the end of the queue. That is a bad pun, but it is not the situation with Kew.

[John McDonnell]

The point that we were trying to make is that Kew has missed out on other opportunities. Even though it plays a role as a heritage centre, it comes under the Department for Environment, Food and Rural Affairs and so it did not gain additional money from the Department for Culture, Media and Sport that others, museums in particular, received. Even though it plays a key education role, it did not gain the protection of the education budget. It was the same with regard to the Department for International Development. As Kew is funded directly by DEFRA, it has missed out on all those other funding opportunities over the past 15 to 17 years.

[Dan Rogerson]

I understand the hon. Gentleman’s point, his commitment to the institution and his desire to look at every opportunity to secure its work and underpin it for the future. The triennial review offers an opportunity to look at the position of the institution and where it sits in the Government structure. He has referred to that chance, and that is the proper time, rather than asking the question separately today.

Hon. Members have raised issues to do with science and the crucial work that is done. The hon. Member for Richmond Park talked about the need for succession planning, to which I referred a little, and Kew is looking at the courses and other work it does as academic provision to ensure that it is bringing through the next generation of expertise for the future. That is an important part of its work.

Hon. Members from all parties have been campaigning to keep Kew at the forefront of debate in the House and outside it among people at large. I have been on the receiving end of that, too, not only from the hon. Member for Richmond Park, but from Opposition Members. I have heard from Liberal Democrats in Richmond and elsewhere. Today, we had the announcement of my right hon. Friend the Deputy Prime Minister. So there has been pressure from throughout the country to ensure that we are doing the absolute best to protect Kew and all that it does.

As for the prospect of a further meeting, I will take that to my noble Friend Lord de Mauley, who is the responsible Minister. Given the Science and Technology Committee inquiry that is to begin tomorrow and the opportunities of the triennial review and the next comprehensive spending review, we will have to decide when the right point for such a meeting will be, but I will certainly take the proposal back to my noble Friend for his consideration. He is always happy to hear from Members of this House, as well as Members of another place, on the subject.

I also want to refute some of the little barbs sent in my direction by the hon. Member for Penistone and Stocksbridge (Angela Smith), who spoke for the Opposition. The Government have invested in science. As Forestry Minister, I know that the appointment of a chief plant health officer, the work on forestry research and so on are crucial, which is why we will continue to fund such things and take science forward.

The hon. Lady also made some points about funding generally. We heard from her party leader a few days ago about the fact that all parties will need to tackle issues such as how much Government will be able to invest in public services, how much expenditure will have to come from taxation and how much will have to be borrowed in the future. Those are difficult questions for all of us to answer.

[Angela Smith]

The Minister is being generous with his time, but I wish to remind him that I asked questions about today’s announcement. We would like the answers to the questions, rather than responses to the points made.

[Dan Rogerson]

I was merely responding to the hon. Lady’s assertion that, somehow, all would have been well and rosy for every area of public spending had a Labour Government been in office. I suspect that that would not have been the case.

The hon. Lady wanted to know whether the money announced today was new money. It is—it is not money coming from elsewhere in DEFRA’s budget. The funding is unrestricted and has no conditions attached to it, so Kew will be able to use it across the range of its responsibilities. All that money will be available in 2015-16. I hope that that reassures her and answers her questions.

I am grateful for the opportunity to place on the record the Government’s commitment to the Royal Botanic Gardens, Kew. I thank hon. Members of all parties for their commitment and support. I hope that the announcement today by my right hon. Friend the Deputy Prime Minister demonstrates that the money is available to help the transition that the institution is having to make over the coming years towards the long-term future that we all wish to see.

[John McDonnell]

May I ask the Minister when we can look forward to the next instalment?

[Dan Rogerson]

The budgetary position has now been set out for the next 18 months, as the hon. Gentleman said, and the triennial review will then give us the opportunity to look at the future of Kew and where it sits in the Government apparatus. I thank him and all hon. Members for their contribution to the debate. I thank you, Sir Alan, for the opportunity to speak.

[Sir Alan Meale (in the Chair)]

We have a short time remaining, Mr Goldsmith, if you would like to say something.

15:55

[Zac Goldsmith]

I appreciate the unexpected perk, having spoken when I initiated the debate.

I do not know whether it is appropriate to ask the Minister to intervene, but I would welcome a clearer answer to my question on DFID funding, which is crucial. A lot of work that Kew does falls within the remit of DFID. If his Department has not yet approached DFID, will it now commit to doing so? DFID does some wonderful things, but no one would argue against the fact that huge chunks of money presided over by DFID are not as well spent as they might be. Kew would present a great opportunity to spend that money well.

I acknowledge the answer given to the hon. Member for Hayes and Harlington about the stakeholder meeting. When are we likely to hear back from the Minister about that meeting? There is not a lot of time between now and the election, and the meeting should happen before it. Although I am grateful for today’s bung, my concern is that it is a political device to kick the issue beyond the general election. As Members and campaigners, we are aware that if we are to have long-term stability for Kew, it will need to be secured this side of the election, because negotiating afterwards will be much harder.

[Dan Rogerson]

On the hon. Gentleman’s specific points, I will have to confirm with my noble Friend Lord de Mauley whether any such approach to or discussions with other Departments such as DFID have happened. The institution is going through a process and has been exploring with our officials in DEFRA the best path for getting to its future, but if we can help it to have conversations with other Departments, I am sure that that is possible and very much part of the bottom-up process of Kew deciding what would be appropriate. We would facilitate a conversation, rather than seek to push another Department to make a budget available unless it fits its core priorities. I will take the suggestion of a meeting back to my noble Friend.

On the hon. Gentleman’s political points, all the political parties are setting out our stalls for future funding. There are challenges. He and other hon. Members will look at what all the parties are saying about future funding of public services and will make up their own mind. With regard to the funding for Kew, however, the money is in place for 2015-16.

[Zac Goldsmith]

I put on record my thanks to the hon. Member for Hayes and Harlington, in particular, for campaigning so hard, which is appreciated by my constituents and by the staff and friends of Kew. It has not gone unnoticed. Personally, I am grateful to him for having pushed the issue so high up the agenda. We would not be having the debate or have seen the press release about the extra funding this morning had it not been for his leadership. I am also grateful for all the speeches.

[Sir Gerald Howarth]

Before my hon. Friend finishes, may I say how strongly I support his message to the Minister that he should be talking to DFID? The Department for International Development is simply awash with cash. It has had a bung of an extra £5 billion in the past four years. So much of the work that Kew does is overseas, helping developing countries, so I am sure that my hon. Friend and I can make a compelling case to the Minister to go and nick some of that cash off DFID.

[Zac Goldsmith]

With that, let us commit here and now as hon. Members and Back Benchers to visit the Secretary of State for International Development to make that case. My hon. Friend is absolutely right.

I thank you, Sir Alan, for presiding over the important debate. I hope that it is the beginning, not the end, of something positive.

Barnett Formula

Tuesday 16th December 2014 Westminster Hall

16:01

[Iain Stewart (Milton Keynes South) (Con)]

It is a pleasure to serve under your chairmanship, Sir Alan. I am grateful to have this opportunity to discuss the future of the Barnett formula in a little more depth than recent debates have allowed.

My reason for calling for the debate was neither to call for the abolition of Barnett, nor to say that it must stay unchanged for ever more. My motivation was born out of frustration at some of the ill-informed comments made about it. In advance of the draft legislation on further devolution to Scotland, which is due before Burns night next year, I want to put on the record an explanation of what the Barnett formula is and, perhaps more importantly, what it is not. I also put on the record that I absolutely support extra fiscal powers for the Scottish Parliament. That is good for the democratic accountability of Holyrood.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman mentioned the Barnett formula and, before he goes too far, I want to highlight its operation. About a fortnight ago, the Treasury gave out money because roads and health in England had a shout for that. Therefore, from that followed Barnett consequentials to Northern Ireland, Wales and Scotland.

However, I notice that, if there is a need in Scotland, Wales or Northern Ireland for money for health or transport, the Treasury does not dip its hands in its pockets in the same way with Barnett consequentials running in the other direction. Barnett consequentials follow on from need in England. It is surely a governance problem when the Treasury responds only to health and transport needs in England and then we get consequentials. Should not the Treasury give money and have consequentials running in the other direction when need arises?

[Sir Alan Meale (in the Chair)]

Order. May I point out to Members that we have only a short time for the debate? If interventions are to be made, can they be questions to the speaker at that time rather than statements? Hopefully everyone will have an opportunity to speak.

[Iain Stewart]

I am grateful for the hon. Gentleman’s intervention. If he bides his time a little, he will see that I will touch on some of those issues later on in my speech.

[Karen Lumley (Redditch) (Con)]

Does my hon. Friend agree, though, that the majority of people in my constituency would think that the Barnett formula is unfair?

[Iain Stewart]

There certainly is that perception. Part of my motivation for securing the debate was to address such issues so that we can have a more informed debate on the fiscal relationship principally between Scotland and England. I am conscious that Members from Wales and Northern Ireland are in the Chamber as well. My comments will be principally about Scotland and England, but the arguments also apply to the rest of the United Kingdom. As I said, there is much ill-informed comment and misunderstanding about what the Barnett formula is and does and that is why I wanted to have this debate.

As well as being misunderstood, the Barnett formula is much maligned. Contradictory simultaneous comments are made that it both penalises Scotland and is too generous to Scotland, but both of those cannot be right. I am reminded of a comment that Lord Foulkes made when he was a Scotland Office Minister about a decade ago:

“If the SNP think that Barnett is too mean and the English Tories think that it is too generous, most sensible people would think that it is just about right”.

For many years, reform of the Barnett formula has been parked in the “too difficult” box.

[Jim Shannon (Strangford) (DUP)]

In Northern Ireland’s case the Barnett formula is just right. It recognises the need to keep the balance of wealth, because in Northern Ireland our wages are lower and the products we buy in shops are more expensive. At the same time, if the current talks work out—I hope that they do—and corporation tax is devolved to Northern Ireland, that could be a poisoned chalice. However, Northern Ireland has already been able to set its air passenger duty for long-haul flights with the permission of the British Government.

[Iain Stewart]

As I said earlier, the purpose of the debate is not to say whether Barnett is right or wrong or whether it needs to be changed or not; it is just to help inform a more considered debate about the issues.

[Glyn Davies (Montgomeryshire) (Con)]

Will my hon. Friend give way?

[Iain Stewart]

Certainly. I will complete my tour around the United Kingdom.

[Glyn Davies]

I feel that Wales should have a contribution to this international debate. My hon. Friend is addressing the issue of clarity. In Wales, the lack of clarity in the Barnett deficit is leading the Welsh Government to resist financial accountability. Does he agree that it is vital that we find out what the Barnett deficit is? A whole range of figures have been bandied about. Most of them are untrue, but they are being used to prevent the financial accountability in Wales that we all want to see.

[Iain Stewart]

My hon. Friend makes an excellent point. There is a lot of darkness and cloud about these matters, and if we are to have a sensible debate about the fiscal balance between the component parts of the UK, we need that greater clarity.

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

I think that Lancashire needs a say. In the debate that is coming on English votes and so on, does my hon. Friend agree that we need to be honest with the English people? There is a cost to being the biggest part of the Union and there is a cost to the Union. Whether we agree about Barnett or not, England will have to pay more than the rest of the component parts of the United Kingdom.

[Iain Stewart]

My hon. Friend as ever makes a good point. At the conclusion of my speech I will say a little more on that.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Iain Stewart]

Once more and then I must make some progress.

[Mr MacNeil]

While the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) may be correct that England pays more, it pays more only because it is larger; it does not pay more per capita. Unfortunately, that has been Scotland’s preserve: it has paid more tax per capita into the UK each and every year for the past 33 years.

[Iain Stewart]

Again, I shall address those very points in a few moments. I want to shed some light on the issue. Critics of Barnett usually start by quoting Treasury figures that say that public spending per capita in Scotland is £1,600 greater than in England as a consequence of the Barnett formula. For once I may be in agreement with the hon. Gentleman, because that is not correct. The Barnett formula is only one part of the complex fiscal relationship between the different parts of the United Kingdom.

The Barnett formula applies only to certain parts of public spending. Currently, about 40% of public spending in Scotland is not covered by it because that spending is not determined by the Scottish Parliament. That proportion will reduce in time as further taxes are devolved, but that point is important. Nor does Barnett determine the size of the Scottish block grant as a whole. That has built up incrementally over the years and the Barnett formula determines only the annual changes.

In simple terms, Scotland gets a population share of a departmental budget change in England where the equivalent is determined by Holyrood. Each year, the changes for each spending programme are totalled up and an overall adjustment to the previous year’s block grant is made. It is then up to the Scottish Parliament to decide how it spends that grant; it is not hypothecated. If Scotland gets £100 million more for health services because of the change in England, it is not obliged to spend that on health. That partly explains why some public services and other matters in Scotland are different from south of the border.

It is important to note that when the formula was introduced in the late 1970s it was designed as a convergence formula to narrow public spending per capita between Scotland and England. In advance of the devolution legislation proposed by the Wilson and Callaghan Governments, the Treasury carried out a needs-based review to determine the extent to which public spending per capita in Scotland would need to be higher to provide a comparable level of public services to those in England. It was found that because of factors such as Scotland’s proportionally greater landmass, rural population, council housing stock and poor health indicators, spending needed to be 16% per capita higher than in England. It was actually 22% higher, so Barnett was introduced gradually to narrow the gap and avoid the annual round of what was described as table-thumping over agreements between the different spending Departments.

It would seem that convergence has not happened, and it is important to understand why. First, in the initial years of operation, the population share was never adjusted, and that was at a time when Scotland’s population relative to England was falling. For a decade or so, a bias was therefore built in to the formula in Scotland’s favour. In the 1990s, the population share was adjusted, but it helped to sustain the higher levels. Secondly, and more significantly, were the number of deals done outside the Barnett formula. Whatever calculation Barnett produced, there was always pressure, under Governments of all parties, for extra funding arrangements. In his autobiography, the noble Lord Lang notes that when he was Scottish Secretary, between 1990 and 1992, Barnett should have reduced the Scottish Office block grant by £17 million, but, as a result of separate deals agreed with the Treasury, it was increased by £340 million.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Iain Stewart]

I hope that the hon. Gentleman will forgive me, but I must make some progress.

The simple point is that if Barnett were to be ended tomorrow, the issue of comparative spending would not go away. There has not been a needs-based review since the 1970s, in which time many economic, social and demographic changes have taken place, so we do not actually know what the current position is. There are also difficulties in defining exactly what territorial spending is. One example is the building of High Speed 2, a project of which both phases will be entirely within England. One could therefore argue that spending on it should accrue only to England, but there is a benefit to Scotland and Wales—

[Mr MacNeil]

And France.

[Iain Stewart]

I am not quite sure whether the hon. Gentleman’s geography is correct. High Speed 2 will go from London to Birmingham and the north of England.

[Mr MacNeil]

The hon. Gentleman has conceded, as he is right to do, that High Speed 2 will be built in England, and says that it will also bring benefits to Scotland. If there are benefits to Scotland in the north, surely there will also be benefits at the other end, in the south—namely, to France. The benefits will be not only within but outwith the United Kingdom. High Speed 2 is not running in Scotland, but the hon. Gentleman argues that it will benefit Scotland; if it is going to benefit Scotland, it will benefit France in the same way.

[Iain Stewart]

Given the fact that there is currently no straight link between High Speed 2 and High Speed 1, that is a slightly tangential point. I have simply given High Speed 2 as an example of how difficult it is to assign exactly public spending on a territorial basis; I could cite many other examples.

It is worth while to look not only at public spending relationships between Scotland and England and Wales and England, but within each nation and the regions of each nation. There is currently a process of further devolution in England, which is producing more demands for tax and spending powers in the cities and regions. The north of England says quite regularly, “We’re being hard done to because of the Barnett formula.” London says that it pays far more than it receives in public spending—[Interruption.] I am not saying whether that is right or wrong, merely that such comments are made. I have funding issues in Milton Keynes in my constituency: with a rapidly growing population, sometimes the funding formulae do not keep up with the population need. There are also tensions between urban and rural spending—the issue is not only between the component countries of the United Kingdom.

We must start to open up a wider debate about the allocation of public spending right across the UK, bearing in mind the fact that we have a finite pot of money. We must also look at the tax receipts side of the ledger, which is also controversial. We have never definitively established the comparative amount of taxes raised north and south of the border, or, indeed, within England, because we have never had to assign taxes territorially. Many studies have been conducted, but they have been based on controversial assumptions.

It is difficult to assign tax revenues on a territorial basis because we have long had a unitary system. For example, my father was employed by the Civil Aviation Authority. He was based at Prestwick but spent one week in every two working at head office in London. He commuted between the two, so his time was spent equally between Scotland and England, and, to throw another spanner into the works, his tax office was in Cardiff. It would not be impossible to unpick all that, but it would be difficult, for corporation taxes as well as personal taxes. Nevertheless, it is something that we will have to do if more tax powers are devolved to Holyrood. We must also look at the disaggregation of national insurance and pension receipts and liabilities.

Simple calls for the retention or abolition of Barnett are very wide of the mark. If we are going to dismantle what has been a unitary fiscal system, there are many aspects to consider. Without updated figures on the current costs of providing public spending in each nation of the UK and within each region of each nation, we are working in the dark. I gently suggest to my hon. Friend the Minister that the Treasury looks at providing those figures.

My final point echoes the excellent one made by my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw). We must look at this matter in the context of the cohesion of the United Kingdom. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) has left the Chamber, but his party, the SNP, lost the referendum. We must make the Union work better and we need a sense of fairness; as my hon. Friend the Member for Redditch (Karen Lumley) said, every part of the Union must be treated fairly.

A few years ago, I began to do research for a book, and I looked at what is done in places such as Canada, Germany, Spain and the United States with regard to different tax-raising and spending powers in the component parts. Whatever the system, everyone still argued about spending levels and transfers from more to less affluent areas. That will never end—it is part and parcel of political debate—but the important thing is that we have a sense of fairness. I hope that today’s debate has helped to shed some light on matters that are often simplified and on a debate that is often inflamed, and that I have made a useful contribution to a much longer debate that we must have about public spending in the UK.

16:18

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

It is a great pleasure to serve under your chairmanship this afternoon, Sir Alan. I congratulate my hon. Friend the Member for Milton Keynes South (Iain Stewart) on securing this debate and setting out his case in a characteristically thoughtful and analytical way. He brings great knowledge and expertise to the matter. I also thank other hon. Members for their contributions to this short debate, the timing of which is very appropriate. Given the momentous referendum in Scotland not that long ago and the Smith commission’s subsequent report, this subject has never been more topical. Furthermore, hon. Members will have seen that the Government have published a Command Paper today looking at the options for devolution in England. The paper acknowledges that the treatment of tax and spending decisions that impact on funding to the devolved Administrations will need to be considered in any solution.

Since its introduction over three decades ago, the Barnett formula has proved to be a durable and robust method of calculating changes to the block grants for the devolved Administrations, providing population-based shares of comparable UK Departments’ changes in spending. The leaders of the three main UK parties have confirmed that the Barnett formula will continue, and the House of Lords report in 2009, as we heard, recognised advantages such as simplicity, stability and the absence of ring-fencing. However, we also recognise the concerns expressed about the formula and we welcome all views on its continued implementation.

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

The vow has been made to the people of Scotland that the Barnett formula will be preserved and that Barnett funding will be preserved at its current level. Does the Minister not agree with my analysis, therefore, that a new benchmark has been set for what we would term fair funding? Whereas before the argument was for some sort of needs-based formula, the argument is now about making sure that the people of Wales, for instance, are not disadvantaged compared with the people of Scotland in terms of public funding per head.

[Mr Gauke]

Let me turn to the issue of fairness for all parts of the United Kingdom, including for Wales—I assure the hon. Gentleman that I will get to that eventually. As my hon. Friend the Member for Milton Keynes South has mentioned, there is a perception, particularly in parts of England, that Scotland is overfunded because it offers generous policies on university tuition fees, for example. However, I must emphasise that devolved Administrations do not receive any additional funding for those policies. They accommodate them within existing budgets by prioritising those policies over others—for example, by not protecting school spending during this Parliament, as we have in England.

One of the purposes of devolution is to allow the devolved Administrations to make different policy choices. That was set out in 1997 in the statement of principles, which states:

“The key to these arrangements is Block budgets which the devolved administrations… will be free to deploy…in response to local priorities.”

In contrast, commentators in Scotland, Wales and Northern Ireland tend to be concerned about the Barnett squeeze convergence property of the Barnett formula, whereby the percentage changes in devolved Administration spending are lower than in England. However, the Barnett formula itself does not change the budgets of the devolved Administrations disproportionately to England’s: an extra pound per head in England means an extra pound per head in the rest of the UK. The so-called Barnett squeeze reflects the higher levels of spending per head in Scotland, Wales and Northern Ireland that have existed over many years, before and since devolution in the 1990s.

I know that some hon. Members consider Wales to be relatively underfunded as its spending has converged towards the level in England. In fact, spending per head there is 11% above England’s and has more than doubled in cash terms since devolution. Wales also benefits from large EU structural fund spending, having been awarded £1.9 billion from 2007 to 2013 and a similar amount for 2014 to 2020.

However, we recognise that there are concerns about relative levels of funding for Wales; that is why we have established a bilateral process to consider that in advance of each spending review. The most recent assessment, before the 2013 spending round, determined that convergence was not forecast to occur through to 2015-16 and that the existing level of Welsh funding was within the range suggested by the Holtham commission. The Government have now further agreed with the Welsh Government to review that process in the light of the tax and borrowing powers contained in the Wales Bill.

[Glyn Davies]

The Minister may have just answered the question I was going to ask, but perhaps he might reassure me on the uncertainty about the size of what I call the Barnett deficit in Wales. Everybody thinks it has decreased substantially over the last few years as a result of the change in public spending levels. Are we moving to a position where we will know precisely what that Barnett deficit is, because it is very important for the discussions that we are having about the powers over income tax that the Welsh Government should be taking on?

[Mr Gauke]

My hon. Friend raises an important point. I know that he has been very active in ensuring that the Welsh Government take advantage of the powers that may be available to them, and I know there is an issue of funding there. I hope that I did address his point by saying that the Government have agreed with the Welsh Government to review the process in the light of the tax and borrowing powers in the Wales Bill. I hope that process will satisfy him by shedding light on the issue that he raised.

I turn to the issue of the needs-based formula. I have heard it said that the Barnett formula does not take sufficient account of needs. The most basic issue here is that no one has been able to say how we would agree a needs-based assessment that would suit every part of the United Kingdom. However, far from being a static formula, the Barnett formula is regularly updated to take account of changes in population and levels of devolved responsibility.

The budgets of the devolved Administrations cover a very wide range of devolved spending programmes. It is, of course, for the devolved Administrations to decide how to allocate their overall budget to individual programmes, reflecting their own policies and their own assessment of the needs of each country. The Barnett formula allows them the freedom to do that.

However, we believe that financial accountability can be improved in Scotland, Wales and Northern Ireland as the devolution settlements evolve. The Government’s record on that speaks for itself. Both the Scotland Act 2012 and the Wales Bill currently in Parliament will devolve new tax and borrowing powers. We have also committed to implementing Lord Smith’s heads of agreement in full. As we devolve further powers, Scotland and Wales will be responsible for raising far more of their funding, so their block grants will become less important. The impact of the Barnett formula on overall levels of funding will decline.

Finally, in highlighting today’s debate in The Daily Telegraph, my hon. Friend the Member for Milton Keynes South set out that the debate would be better informed if we had

“detailed and incontestable territorial public accounts”,

which is a point he made earlier. The Government do not disagree, but this is a complex matter. The Office for National Statistics is considering the development of sub-national accounts as part of its implementation of the European system of accounts, and it is also undertaking work on the comparability of official statistics across the United Kingdom.

It is right that a formula that has set out devolved spending for over a third of a century is continually kept under review to make it fit for the needs of the current day. The three main party leaders have stated that the Barnett formula will continue, and that is therefore what will happen. However, we continue to listen to the strong views on the formula from all parts of the United Kingdom, which have been represented in this debate this afternoon. In that spirit, I thank everyone for their contributions today. I particularly thank my hon. Friend the Member for Milton Keynes South, who has brought to this debate careful, thorough and thoughtful analysis. He has succeeded in shedding some light on an important issue and has highlighted some matters that can often be lost in this important debate.

[Sir Alan Meale (in the Chair)]

Mr Stewart, would you like to add anything? We have a short period of time left.

[Iain Stewart]

I was not planning to, Sir Alan, but may I thank the Minister and other Members for their contributions? The debate has been helpful. I am particularly interested by the work of the Office for National Statistics on the development of sub-national accounts. I think that will help to inform the debate, but I am sure that this is not the last word on the subject.

National Minimum Wage

Tuesday 16th December 2014 Westminster Hall

16:30

[Sir Alan Meale (in the Chair)]

Before the start of the final debate, I point out that the vote that we had earlier added 11 minutes to the time scale. Because that time can be carried over to the next debate, hon. Members can finish at 5.11 pm, if there is not another vote in the meantime. You have a little extra time to play with, Mr Jarvis, if you want to take it; you can stick to your time scale if you so wish.

[Dan Jarvis (Barnsley Central) (Lab)]

Thank you, Sir Alan. It is a pleasure to serve under your chairmanship. I begin by thanking Mr Speaker for granting this debate. It should really have taken place a fortnight ago, on Friday 28 November, the date for the Second Reading of my private Member’s Bill—the Low Pay Commission (National Minimum Wage) Bill. That is a Bill to make work pay: to strengthen the national minimum wage, to give greater powers to the Low Pay Commission and to tackle the scourge of low wages, which blights the lives of too many people across Britain today. Regrettably, we did not have an opportunity to debate my Bill. Two hon. Members, both of whom are known throughout the House as long-standing campaigners to undermine the minimum wage—I believe that one of them even voted against it in 1997—spoke for more than two hours to sabotage the earlier debate on a Bill to tackle revenge evictions, blocking my Bill as a result. Given that we were deprived of a debate that day and given that this issue means so much to so many across our country, I have called this debate to say now what I would have said then and to give the House the opportunity to debate the important matter of low pay.

Choosing the subject of my Bill was a difficult decision. I had no shortage of helpful suggestions, but ultimately it was the story of one woman that made up my mind. I wanted to make a difference to people such as Catherine. Catherine is a cleaner and housekeeper in my constituency. She juggles six different jobs, working in six different locations across Barnsley. She works more than 50 hours a week on the minimum wage. Like many people, Catherine struggles to make ends meet. Her pay packet does not stretch as far as it used to, especially as the real-terms value of the minimum wage has declined since 2010. When I asked her how that had affected her life, she said that she had had to cut down on what she described as “luxuries”. Soon I realised that she meant that she could not afford essentials such as clothes. “I just work to exist,” she said, “I can’t afford nice stuff. I just work to keep my head above water.”

Catherine does not have time to take notice of polls or political pundits, but what happens in our politics, what goes on in this place and the Governments we choose to serve us here will shape her life more than most. It is easy now to take it for granted that Catherine earns a national minimum wage at all. Before 1997, many workers like her were expected to work for as little as £1 or £2 an hour. In its first months of existence, the Low Pay Commission found appalling cases of factory employees earning only £1.22 an hour, care home workers taking home just £1.66 an hour and even a chip shop worker from Birmingham forced to make do with 80p an hour.

It took a Labour Government to end that scandal. Their efforts were led by Sir Ian McCartney, the former Minister of State at the Department of Trade and Industry, who piloted the Bill that became the National Minimum Wage Act 1998 through the House, and by my right hon. Friend the Member for Derby South (Margaret Beckett), the former Secretary of State. The national minimum wage was one of Labour’s greatest achievements, but its path to becoming law included a record sitting in the House of 26 and a half hours as Members, mainly from the Conservative party, sat through the night, opposing the Bill line by line, to stand in the way of working people getting a decent wage for a hard day’s work. Today, their fears have failed to materialise. They were on the wrong side of history then, and the scourge of low pay explains why the Government’s plan to balance the nation’s books is failing now. A generation on from the national minimum wage becoming law, the low pay challenge for our country has changed. The national minimum wage did help to root out exploitation and extreme examples of poverty pay, but today we have huge numbers of people across Britain who do a hard day’s work and are still living on the breadline.

Catherine, whose story I shared earlier, is just one of more than 5 million people across Britain who are stuck on low pay. The number is up from 3.4 million in 2009 and is at an all-time record. Women and young people are being hit hardest. One third of all working women and nearly two fifths of 16 to 30-year-old employees do not earn a decent wage. Nearly two thirds of children living in poverty now live in families with someone in work. If we look at the proportion of our work force that is low paid, we see that Britain is towards the bottom of the pile, coming 25th out of 30 OECD countries.

Moreover, the real-terms value of the minimum wage is losing ground. The Low Pay Commission has acknowledged that its relative value has dropped significantly since 2004, and job creation in the lowest-paid sectors has exploded at double the rate of the rest of the economy since 2010. That partly explains why the Government now spend more on tax credits and social security for families in work than they do for the unemployed. It is why the Government have been forced to spend an extra £900 million on tax credits to top up low wages, and it is part of the reason why Ministers have had to spend £1.4 billion more than planned on housing benefit for people who cannot afford a roof over their head.

John Maynard Keynes famously once said:

“When the facts change, I change my mind.”

My central argument today is that as the challenge has changed, our approach to tackling low pay needs to evolve with it. Many of our country’s leading business voices have already called for the minimum wage to increase faster than it has done in the recent past. They include Sir Ian Cheshire, chief executive of Kingfisher, and Steve Marshall, executive chairman of Balfour Beatty. Professor Sir George Bain, the first chair of the Low Pay Commission, has described the organisation as a “child of its time” and has called for an ambitious target to bring the minimum wage closer to average earnings. We need the Government to put that into action.

Labour’s plan to tackle low pay—a plan mirrored in my Bill—preserves everything that has helped to make the Low Pay Commission such a success. I am referring to decision making based on strong research; a balance between the need for wage growth and concerns about the impact on employment; and a partnership approach between the employers who create the jobs and the employees who work the shifts. Let me run through the key points.

First, we need to give a mandate to the Secretary of State to set a target for the national minimum wage to increase over a Parliament at a rate higher than that for median earnings. I did not include a specific target in the Bill. Different people will have their own views on that. We as the Opposition have already expressed our ambition for a minimum wage closer to 58% of median earnings. The important point is that the act of setting a target alone would deliver a more ambitious approach to tackling low pay and a greater focus on what progress we are making. A clear long-term target such as that would give firms certainty and time to adapt their business models to boost productivity and support higher wages. It would also bring us closer to other countries such as Australia and European economies such as Belgium and Germany, where all the evidence shows that it is possible to support a higher minimum wage without any negative impact on employment.

The Low Pay Commission would keep its leadership role in delivering on the target and would set out a plan for how it could be achieved; and flexibility could be retained in the system. We know that the success of the minimum wage has been built on an approach that works hand in hand with industry and takes into account the state of our economy, so in the event of significant economic shocks, the Low Pay Commission could be required to present compelling evidence to the Government and to Parliament, setting out why it is not possible to meet the target during the proposed time frame. The Low Pay Commission could then make further recommendations to get progress towards the target back on track.

[Steve Rotheram (Liverpool, Walton) (Lab)]

I am grateful to my hon. Friend for bringing this vital issue to the attention of the House. The rate of the national minimum wage is important, especially to those who receive it. Does he agree that it is a shocking indictment of the Government that unscrupulous employers who are paying less than the national minimum wage are getting away with it because such a small number have been prosecuted?

[Dan Jarvis]

My hon. Friend makes an important point, and the figures bear out what he has said. I would be interested to hear what the Minister has to say on that point, but I agree that the tiny number of rogue employers who have been prosecuted for paying people less than the national minimum wage is a disgrace. That reflects poorly on the Government’s record.

I believe that the proposal I have just outlined regarding the Low Pay Commission is straightforward and reasonable, and that it is the right thing to do. I would be grateful if the Minister would respond directly to that point.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on securing this important debate. The problem is not simply the minimum wage; many workers have had their hours reduced just to stay in employment. Some workers have not had a wage increase in three years. Some people do not even have the minimum wage let alone a living wage. Does he feel as well that the Government need to address the issue of the living wage so that people can survive?

[Dan Jarvis]

That is a helpful and constructive contribution. If the hon. Gentleman will bear with me, I will talk about the living wage later in my speech. It would be useful to hear what plans the Minister has. The hon. Gentleman makes an important point that we currently have record numbers of people in this country who are underemployed. Record numbers of people want to work full time but cannot get full-time work, so they are stuck in part-time employment and struggling to meet their costs. That is a good point, and I look forward to the Minister responding to it.

[Liz McInnes (Heywood and Middleton) (Lab)]

In his deliberations, has my hon. Friend given any thought to the practice of many employers of paying the extremely low minimum rate for apprenticeships? Some employers set up bogus apprenticeships that last for only a few months so that they can get away with paying the absolutely paltry rate for apprentices, which I believe is less than £3 an hour. Has he looked at that aspect of the minimum wage and at the age-related minimum wage for under-18s?

[Dan Jarvis]

Completely by coincidence, my hon. Friend has made a timely contribution that neatly introduces the point that I was about to make. If we want to win the fight against poverty wages, the remit of the Low Pay Commission must be expanded. It should not be simply a national minimum wage commission that sets the level of wages; I believe that it should lead our national effort to tackle the problem of low pay. We need to give new powers to the Low Pay Commission to investigate the causes and consequences of low pay in different areas of our economy.

We know that some sectors have particular, systemic problems of low wages. More than half of cleaners, 48% of hospitality workers and more than 40% of hairdressers are paid less than £7 an hour. At the same time, other sectors—the banking sector, for instance—could pay a higher minimum wage. I would be grateful if the Minister could tell us today whether the Government would consider giving new powers to the Low Pay Commission to bring together task forces to tackle such issues. Those task forces could include all the key stakeholders and recommend a strategy to the Secretary of State on the best way forward.

[Jim Shannon]

To that list of bodies that the hon. Gentleman referred to, would he add the catering industry? Many workers in the catering industry receive a wage that they cannot live on, which is below the minimum.

[Dan Jarvis]

I absolutely would. There are number of different sectors of the economy to which that could be applied.

[Alex Cunningham (Stockton North) (Lab)]

rose—

[Dan Jarvis]

I know that my hon. Friend has a specific concern about care workers, and I am happy to give way to him.

[Alex Cunningham]

I am sure that my hon. Friend will agree that no matter at what level the minimum wage is set, it must be complied with. Would he be surprised to learn that although the Government claimed to include a minimum wage requirement in their social care commitment, such a requirement was not included? Following my intervention, the Minister who is responding to the debate added a paragraph to the commitment. Does my hon. Friend agree that a paragraph on a piece of paper is one thing, but we need much more robust action by Government to ensure that no one in the care industry or anywhere else is short-changed by unscrupulous employers?

[Dan Jarvis]

I absolutely agree with that point, and I am grateful for the work that my hon. Friend has done in that area. Robust action by the Government is required to ensure that no one in the care industry is short-changed by unscrupulous employers.

I conclude by putting on record the fact that if there is a Labour Government after 7 May next year, we will set a national goal of halving the number of people on low pay over the next 10 years. We will introduce a target for a minimum wage of at least £8 by 2020. We will use tax incentives to encourage more firms to pay a living wage, and we will make a world of difference to working people such as Catherine in my constituency. When I asked her what difference a higher wage would make to her life, she could not quite imagine it. She said:

“I could cut down my hours, couldn’t I? I would have some time to do other things.”

That is the important difference that I am arguing for today.

I would like to end with the words spoken in this place by my right hon. Friend the. Member for Derby South during the debate on the introduction of the national minimum wage 17 years ago. These words were true of the case for introducing the national minimum wage then, and they are true of the case for strengthening it now:

“That policy is right, it is fair, it is just and it is sensible. It is a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few. I commend the Bill to the House.”—[Official Report, 16 December 1997; Vol. 303, c. 173.]

16:47

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a great pleasure to serve under your chairmanship, Sir Alan. I congratulate the hon. Member for Barnsley Central (Dan Jarvis) on securing the debate, particularly after his less happy experience on Friday 28 November. I appreciate his frustration about Fridays. I have a vivid memory, from fairly early in my time as an MP, of spending an annoying Friday supporting a Bill promoted by the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on climate change and having the same experience of a couple of Members talking it out. The hon. Member for Barnsley Central mentioned the excellent Bill promoted by my hon. Friend the Member for Brent Central (Sarah Teather), which would have helped very vulnerable people, and I still hope that we will be able to find a way to take action on those issues. Of course, the opportunity to debate the Bill promoted by the hon. Gentleman was also a casualty of that experience. The procedure for dealing with private Members’ Bills on Fridays is something that I would be keen to see changed.

The hon. Gentleman started by talking about his constituent, Catherine. That is absolutely appropriate, because in discussions about the minimum wage it is easy to get caught up in the numbers of pounds and pence per hour. That is, of course, important, but it is also vital that we remember the individuals at the end of each payslip, who are working on a low wage that represents a minimum or floor.

The hon. Gentleman was right to set out the history of the minimum wage. He highlighted the difficulties that existed before 1997, and the fact that some factory workers earned £1.22 an hour. In 1996, I was 16, and in my first job in McDonald’s, I was paid £2.70 an hour. One of my good friends from school worked in a greengrocer on Saturdays, and she earned £1.90 an hour for lugging around sacks of potatoes.

The introduction of the national minimum wage was absolutely necessary, and the hon. Gentleman is right that it is an historic achievement that should be celebrated. Neither of us was in the House at the time, but my Liberal Democrat colleagues supported the national minimum wage. There perhaps was not agreement from everyone in the House, but the positive thing is that times have moved on and there is now wide acceptance of the national minimum wage’s importance. The Government are strong in our belief and commitment that the national minimum wage is a vital part of the employment protections and basic minimum standards in the labour market. Many business organisations are also strong supporters of the national minimum wage. Recent reports by organisations such as the CBI talk about the importance of supporting household budgets from a wider economic perspective.

The minimum wage level is always likely to be the subject of much discussion and interest, and we clearly need to find the right rate that helps as many low-paid workers as possible, but we must ensure that we do not damage employment prospects by setting the level too high. This year the Government accepted an above-inflation rise in the national minimum wage. In October, workers saw the biggest cash increase in their pay packets since 2008, which helps more than 1 million workers on the national minimum wage and means that anyone working full time on the national minimum wage gets an extra £355 a year in their pay packet. Of course, those workers are also helped by the increase in the tax threshold, which has taken more than 3 million low-paid individuals out of paying income tax and helped ensure that people’s money goes further because they keep more of what they earn.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise to my hon. Friend the Member for Barnsley Central (Dan Jarvis) for being late. I was in the main Chamber. We seem to miss out young people in these debates. I am not sure whether he referred to the figures: for an 18 to 20-year-old the national minimum wage is £5.31; for a 16 to 17-year-old it is £3.79; and for apprentices it is £2.73. That must be a disgrace.

[Jo Swinson]

The hon. Gentleman addresses both the youth rates and the apprentice rate, and the hon. Member for Heywood and Middleton (Liz McInnes) also raised that issue. I share those concerns, particularly on the apprentice rate. We want to encourage people to take up apprenticeships, and under this Government there has been a great increase in their number. Two million apprenticeships have started since the general election, but both hon. Members are right that £2.73 an hour is a very low rate. It is worth bearing in mind that the average pay for apprentices is upwards of £6 an hour and that most employers of apprentices pay well above the minimum rate, but there is also a concerning level of non-compliance with the apprentice minimum wage. Of course, there never used to be an apprentice minimum wage at all—it was introduced by the Government because apprentices were previously not covered by the national minimum wage. Although that was a step forward, there is still a real issue here.

Earlier this year, my right hon. Friend the Business Secretary stated that he is minded to seek a significant increase in the apprentice rate. He suggested that it might be combined with the £3.79 rate for 16 and 17-year-olds, which would provide a boost of more than £1 an hour. We have asked the Low Pay Commission to consider that carefully, and we look forward to hearing its views on the proposal as part of its overall report in February 2015.

The hon. Member for Heywood and Middleton mentioned bogus apprenticeships, under which people were taken on but not given the training that should go alongside an apprenticeship. The reason for the lower apprentice rate is because employers rightly have to support the development and upskilling of apprentices with training and qualifications. Where that is not happening, national minimum wage law is being broken, even if the apprentice rate is being paid. I encourage anyone who is concerned that they are not being paid the right amount to contact the pay and work rights helpline on 0800 917 2368. I will never tire of saying that number because I want people who are not properly paid the national minimum wage to get in touch and make a complaint. Her Majesty’s Revenue and Customs will investigate every complaint, and we have increased the resources available for enforcement. I am determined that people who do not properly pay the national minimum wage are brought to book and that those who have been underpaid are given the arrears that they are due. That would discourage employers who might be tempted not to pay properly.

The hon. Member for Liverpool, Walton (Steve Rotheram) mentioned prosecutions. I understand his point, but prosecution is not the only way to address non-compliance. The number of prosecutions is not high. We are talking single figures every year since 2007, and there are sometimes no prosecutions in a given year, but the number of prosecutions was in single figures when his party was in government, too. The reason for that is pretty compelling: the most important thing is that people who have not been paid the national minimum wage get the arrears that they are due. If they go through the civil process through which HMRC takes employers, people will get their arrears paid and a penalty will be paid to HMRC—there is effectively a fine for the employer—which delivers a better result for the employee. Of course, prosecution is appropriate in the most extreme circumstances where employers have been wilfully and continually not paying the national minimum wage, but given the costs of bringing a prosecution and the interest of ensuring that people get their arrears, the civil process is the right way to go about it.

[Steve Rotheram]

The Minister is absolutely right about trying to get the best deal for the person who has been short-changed. There is no argument about that, but the message needs to be sent out to unscrupulous employers who continue to underpay that they will be prosecuted. That is the only way that we will stop them, not by good will, nor by appealing to their better nature, but by saying, “If you continue to underpay your employees, we will prosecute.”

[Jo Swinson]

We may have a difference of opinion. I agree that there should be very tough consequences for employers who do not get it right. We have ensured that the fines are in place, increased the maximum penalty to £20,000 per worker—that is currently going through Parliament in the Small Business, Enterprise and Employment Bill—and introduced a naming and shaming scheme that is far more comprehensive than the previous scheme, the criteria of which were almost impossible to meet. We now regularly list employers that have not properly paid the national minimum wage, and we name them publicly so that in their local area people can be aware that those companies are not paying the national minimum wage, which affects the reputation of those businesses.

In response to the hon. Gentleman’s plea for more prosecutions, I would say that, in the cases that are named, in most circumstances the underpayment is not necessarily a malicious act by the employer. That does not make it right, and it does not make it okay, but very often someone has put the wrong digits into a computer program so somebody is not been paid the right pence per hour. There may be mistakes on the accommodation offset allowances or mistakes on the apprentice rate. Of course, if we increased the apprentice rate to the lower age rate, we would simplify the system and make it easier for employers to get it right. That is not an excuse, as employers have a responsibility to get it right, but I would not necessarily contend that those circumstances should also result in a criminal prosecution. Our tough penalty regime, increased fines and the reputational consequence of naming and shaming are the right way to address underpayment. We are increasing the resources available to HMRC to address this issue.

[Jim Shannon]

There might be an individual working for a firm who is getting less than the minimum wage. They might be concerned but there is a fear factor in pursuing the issue. That goes back to what the hon. Member for Liverpool, Walton (Steve Rotheram) said in his intervention. Is that part of the reason why we have a low prosecution rate? People fear losing their job for making a complaint. Would it be better for complaints to be tied to the company, not the individual?

[Jo Swinson]

I hope I can provide a lot of reassurance on those points. The hon. Gentleman is right that there is a fear factor, which is why it is important for people to recognise that they can make complaints in confidence. It will not necessarily be clear which member of staff has made a complaint. The HMRC investigator will not just go along to a company and say, “Can you show me the records for this particular member of staff?” The investigator can ask to see the records for all members of staff. That has two benefits. The first is confidentiality, but secondly, of course, if one member of staff is not being paid the minimum wage properly, it is possible—indeed, likely—that other members of staff are also not being paid properly.

To put the issue in context, the hon. Member for Strangford (Jim Shannon) suggested that the reason why there are not as many prosecutions as he might like is that people are not coming forward. Actually, since HMRC began enforcement back in 1999, more than 229,000 workers have received arrears worth more than £54 million. In the last year alone, £4.6 million in arrears was delivered to 22,600 workers, a significant 17% increase in the number of workers helped compared with 2009-10. The amount of arrears per case is also rising. HMRC is learning how to ensure that it does not just look at one person in the business; now it routinely looks much more widely at lots of workers within the same business. That is important to ensure that enforcement works.

We are the fastest-growing G7 economy at the moment, and that strong growth is reflected in our employment statistics, with more people in employment than ever before. That is good news, but hon. Members have raised issues about the type of employment and whether it is just insecure part-time employment. It is worth recognising that our figures from the Office for National Statistics show that full-time work made up three-quarters of the growth in employment since the election and 85% over the last year. The growth in the labour market is significantly of full-time work, but of course there are issues around the insecurity of work, which the Government are taking steps to address. We understand those issues too.

We will return to this matter, rightly, many times in this House. I pay tribute to the Members present today, who in their different elements have been campaigning on the issue. The hon. Member for Stockton North (Alex Cunningham) is particularly assiduous in the care sector, where HMRC has done a significant investigation and is seeking to follow up. That is an area where HMRC found a lot of non-compliance. We need to stay on the case of industries where there are greater problems, because lack of compliance is much less widespread in other industries.

[Dan Jarvis]

I am slightly concerned that the Minister might not address the fundamental issue that I raised in my speech, which is that the low pay challenge for the country has changed. Record numbers of people in low-paid work are struggling to make ends meet. I would be grateful if she critiqued the model that I proposed; I am thinking specifically of the five-year target and more powers for the Low Pay Commission. Will she respond on those two points?

[Jo Swinson]

Certainly; I am happy to. I understand where the hon. Gentleman and his Opposition colleagues are coming from when they call for a five-year target, but there are significant problems with that approach. Announcing an ambitious-sounding minimum wage level would not necessarily take into account future economic conditions, which could be a problem in two ways. If the economy did not perform as strongly as expected, job cuts could be the consequence of an ambitious target. Equally, if the economy did much better than anticipated, we might find that the target ended up holding back wage growth. We need to get the balance right.

My right hon. Friend the Business Secretary has said clearly that it would be helpful for the Low Pay Commission to be able to provide more forward guidance, so that it is no longer the case that once a year, business suddenly learns what the next rates will be without any idea of how things will go forward. It is worth bearing in mind what the Low Pay Commission has said about the period that we are entering now and whether we should be expecting further rises above inflation in the national minimum wage. That will be of great comfort to the many people who, like the constituent of the hon. Member for Barnsley Central, work for the national minimum wage.

On the taskforce suggestion that the hon. Gentleman made, a sectoral approach can be helpful, but there is a danger of distracting the Low Pay Commission from setting the basic rate of minimum wage. It is already considering the impact of the national minimum wage on pay, employment and competitiveness in the low-paying sectors, and it sets that out in its annual report. Members of the commission go out personally to visit lots of different organisations and employers across the UK in a range of sectors. In its recommendations, the commission manages to reflect back what it has considered after examining all the evidence.

However, there is an issue with the Government and others encouraging higher pay. The national minimum wage is not just what people are paid. It is just that: a minimum, a floor. It is right that we should set a basic level. Some employers will not be able to afford to pay more than the minimum wage. If somebody wants to come to any of our constituencies and set up a business, and they cannot afford to pay more than the minimum wage but they will provide jobs, we would probably welcome that. However, there are many businesses that probably can afford to pay more than the national minimum wage and currently choose not to. That is where we would like to encourage behavioural change.

I am heartened to see many employers making a virtue of the fact that they are living wage employers, for example, or making commitments about pay levels. We should encourage employers to compete with each other on such issues—with falling unemployment, that will be more possible in the months and years to come—because we should not just accept a situation in which it is expected that someone on the national minimum wage will stay there. We want basic jobs to be created with that wage floor, but we also want people to be able to progress from a national minimum wage job through the ranks. As their skills and the length of time with their employer increase, their wage should also. We will continue to encourage employers to pay more than the minimum wage where they can.

I know that hon. Members here will continue to campaign on the issue, and I thank everybody for such a constructive debate. I am, thankfully, not talked out.

Question put and agreed to.

17:06

Sitting adjourned.

Written Statements

Tuesday 16th December 2014 Written Statements

Tuesday 16 December 2014

Banking Act 2009

Tuesday 16th December 2014 Written Statements

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

The Treasury has laid before the House of Commons a report required under section 231 of the Banking Act 2009 covering the period from 1 April 2014 to 30 September 2014.

Copies of the document are available in the Vote Office and the Printed Paper Office.

ECOFIN

Tuesday 16th December 2014 Written Statements

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

A meeting of the Economic and Financial Affairs Council was held in Brussels on 9 December 2014. Ministers discussed the following items:

Financial transactions tax

The presidency provided a state of play update on the financial transactions tax, outlining work which will be taken forward under the next presidency. The UK is not taking part.

Current legislative proposals

The presidency provided an update on the status of current legislative files.

Single resolution mechanism—single resolution fund contributions

The presidency presented ECOFIN with an amended proposal for an implementing act specifying how contributions to the single resolution fund should be calculated.

Measures in support of investment

Ministers discussed measures to support investment ahead of discussion at December European Council.

Review of the Europe 2020 strategy

The Council held a follow-up discussion on the Europe 2020 review ahead of General Affairs Council.

Economic governance

Ahead of discussion at December European Council, the Commission presented a suite of documents, including the annual growth survey 2015, the alert mechanism report 2015 and a communication on the six-pack and two-pack review. Ministers then held an exchange of views on these items.

Annual report of the Court of Auditors on budget implementation

The President of the European Court of Auditors presented the Court’s annual report on the implementation of the budget for the financial year 2013.

Code of conduct—business taxation

The Council endorsed the report on the progress of the code of conduct group during the Italian presidency.

Letter by Finance Ministers Sapin, Schaeuble and Padoan to Commissioner Moscovici

Ministers received an update on a letter from France, Germany and Italy to Commissioner Moscovici outlining views on ways forward to tackle tax avoidance.

Counter-terrorist Asset Freezing Regime

Tuesday 16th December 2014 Written Statements

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

My noble friend the Commercial Secretary to the Treasury (Lord Deighton) has today made the following written ministerial statement.

Under the Terrorist Asset-Freezing etc. Act 2010 (“TAFA 2010”), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.

This is the 14th report under the Act and it covers the period from 1 July 2014 to 30 September 2014. This report also covers the UK implementation of the UN al-Qaeda asset-freezing regime and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the UN al-Qaeda asset-freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the Al-Qaeda (Asset-Freezing) Regulations 2011. Under EU regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.

Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council Resolution 1373. The two individuals subject to restricted designations under section 3 of the Act are denoted by A and B.

The following table sets out the key asset-freezing activity in the UK during the quarter ending 30 September 2014:

Employment Intermediaries: Temporary Workers

Tuesday 16th December 2014 Written Statements

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

At Autumn Statement 2014 the Government announced that they would review the increasing use of overarching contracts of employment by employment intermediaries such as “umbrella companies”. These arrangements enable workers to obtain tax relief for home to work travel that would not ordinarily be available.

The Government are today publishing a discussion paper inviting representations from interested parties to inform potential future action on this issue. The discussion document can be found on the gov.uk website.

House Building

Tuesday 16th December 2014 Written Statements

[The Minister of State, Department for Communities and Local Government (Brandon Lewis)]

New homes bonus allocations

My Department is announcing today £1.2 billion of provisional new homes bonus funding for local authorities in England. The new homes bonus rewards the delivery of additional homes and is a powerful, simple and transparent incentive for housing growth.

The bonus ensures that local authorities who promote and welcome growth can share in its economic benefits, and build the communities in which people want to live and work. Councils are free to spend the bonus as they choose, including on front-line services and keeping council tax low.

The bonus is based on the council tax of additional homes—net of demolitions—and long-term empty homes brought back into use in the 12-month qualifying period, with an additional premium for affordable homes.

These allocations bring the total amount of funding awarded under the new homes bonus since it began in April 2011 to almost £3.4 billion. This total recognises delivery of over 700,000 homes, plus over 100,000 long-term empty properties brought back into use. The increase for 2015-16 relates to 154,000 homes and 10,000 long-term empty properties brought back into use. The affordable homes premium is £15 million in respect of 42,790 affordable homes.

In keeping with our determination to protect those authorities who suffered from flooding last winter, we have ensured that any properties which have become long-term empty as a result of those floods will not be penalised by the bonus.

In London, boroughs will pool a proportion of their 2015-16 bonus allocation to the London Enterprise Panel, the local enterprise partnership for London. Pooled funds will be spent in borough areas in support of London growth deal priorities.

There are many good examples of local authorities using the bonus in a variety of ways. For example, Braintree council has allocated £750,000 of its bonus to affordable housing, and is investing £5 million in major infrastructure projects and projects which could stimulate housing growth, such as improvements to the A120. South Gloucestershire council gives grants to voluntary, community and social enterprise organisations and town and parish councils to support them with their projects. And Sheffield city council has used part of its new homes bonus to give a £1.6 million loan, allowing the development of six housing sites totalling 500 homes to be brought forward sooner than originally planned. Many other councils are simply using the funding to support front-line services and keep council tax down—there is no prescriptive approach set by Whitehall.

Local authorities will have until 14 January 2015 to make representations on their provisional allocations. The Department has written to local authorities with details for making representations on their authority’s provisional allocations. Final allocations are due later in the new year.

The incentive of the new homes bonus is complemented by the local retention of business rates and the community infrastructure levy, to ensure that local communities can share the benefits of new development.

New homes bonus evaluation

Alongside the allocations, my Department is also publishing today an evaluation report on the new homes bonus to date. It considers the effect of the bonus on the attitudes and behaviours of key figures, the financial impact of the bonus on local authorities, how bonus receipts are being used and other issues. The evaluation finds that

Almost 50% of planning officers agreed the bonus was a powerful incentive for supporting housing growth.

The bonus is seen to be delivering to its stated principles of being simple, transparent and flexible.

In 2014-15, 75% of local authorities are net gainers from the new homes bonus policy.

The new homes bonus is largely matching the distribution of housing need.

The policy is particularly helping to reduce the number of empty homes.

It has strengthened the links between housing, planning and finance for councils.

The bonus is contributing to a more strategic and co-ordinated approach to housing provision within authorities and is one of a number of factors encouraging and supporting a more proactive approach to house building.

The policy was supporting more positive attitudes towards new homes. The financial incentive and positive impact on attitudes is expected to further rise in time as the policy works it way through local plan-making.

Notwithstanding, the evaluation also found evidence that many local authorities could go further in raising awareness of the bonus within their communities, and communicating what activities the bonus is being spent on. In response to this we will set out proposals for improving the transparency of new homes bonus payments and usage early in the new year. I would like to place on record my thanks to the external technical advisory group set up to help inform the work of the review.

In addition to the evaluation we are publishing today, there have been several other expressions of support for the bonus from the local government sector itself. The District Councils’ Network has said that, “New Homes Bonus has been effective at incentivising growth and housing delivery” and “Districts have used this to support communities, invest in regeneration and keep council tax low”. The annual PwC survey of local authority chief executives and leaders found the bonus was the most popular government initiative with 59% of respondents saying it had had a positive impact.

According to our latest analysis of Glenigan data, the number of planning permissions for new homes in England has now risen to 240,000 in the 12 months to September 2014—showing that our locally-led planning system and incentives like the new homes bonus are working well.

Fundamentally, the new homes bonus reverses the perverse situation under the last Labour Government, where councils were effectively penalised for building new homes; councils with a larger council tax base from house building found that the amount of formula grant they received from central Government was reduced during the equalisation process. Indeed, the evaluation report notes that our broad local government finance reforms from the local retention of business rates have further enhanced the financial benefit from building new homes, on top of the new homes bonus. By contrast, by opposing the new homes bonus, I observe that HM Opposition are still wedded to a policy position where councils which build homes would be penalised.

Starter homes

Yesterday, the Prime Minister announced a new starter homes scheme which will free up the planning system to deliver more low-cost, high-quality homes for first time buyers without burdening the taxpayer.

The new starter homes exception site planning policy will enable starter homes to be built on underused or unviable brownfield sites that would not otherwise be released for housing, on both public and private sector land. Starter homes will be available to first time buyers under 40 years old at a minimum 20% below open market value.

My Department has now launched a consultation document to support the announcement, and take forward this new policy which will deliver more homes for first-time buyers, as part of our broader package of programmes to support local house building.

Details of the associated documents with these publications, including a breakdown of local allocations, have been placed in the Library of the House.

Armed Forces Covenant

Tuesday 16th December 2014 Written Statements

[The Secretary of State for Defence (Michael Fallon)]

The armed forces covenant was launched in recognition of the obligation and debt that the Government and the nation owe to those who serve, or have served, and to their families. Its two key principles are that members of the armed forces community should not face disadvantage compared to other citizens in the provision of public and commercial services; and that special consideration is appropriate in some cases, especially for those who have given the most, such as the injured and the bereaved.

It is entirely right that we should do this for those who give so much in support of their country. The Armed Forces Act 2011 enshrined the armed forces covenant into law, placing an obligation on the Defence Secretary to report to Parliament annually, on the effects of membership of the armed forces on serving personnel, veterans and their families. Today the Government have published their third annual report on the armed forces covenant and I am laying it in the House today.

The report sets out the action that has been taken to meet the commitments of the covenant, not only in the key legislative areas of healthcare, education, accommodation and the operation of inquests, but in all the other areas where we have an obligation to support our people.

Over the last 12 months we have:

changed our policy so that, from April next year, service widows, widowers and surviving civil partners will be able to retain their pensions for life, including if they subsequently remarry;

completed the £138 million Midlands medical accommodation project, a world class centre for excellence for the training and delivery of Defence Medical Services;

provided a further £20 million from LIBOR fines to improve the infrastructure in support of childcare provision for service families;

allocated £17.4 million, through the Department of Education to support the needs of some 58,000 pupils from service families;

increased the MOD education support fund to £6 million per year and extended the fund’s timeline to 2017-18 to help schools who support children from service families as personnel drawdown from Germany and rebasing takes place in the UK;

introduced the forces help to buy scheme to make it easier for armed forces personnel to get on to or stay on the property ladder. The scheme has already allocated around £29 million to help over 1,900 service personnel;

committed £40 million to support 16 new accommodation projects that will help veterans across Great Britain;

achieved a 100% sign up to the community covenant by all 407 mainland Great Britain local authorities, who have pledged to work to bring the civilian and armed forces communities closer together;

continued to grow the corporate covenant to over 370 organisations, including major names such as Tesco, Virgin Media and Liverpool FC, who have declared their support for members of the armed forces community who work for and use their services;

sponsored career assistance programmes designed for service partners which have already supported over 250 spouses;

implemented, with other Government Departments, the majority of the recommendations of Lord Ashcroft’s review of the armed forces transition process, and continued to strengthen the veterans support network, including: the development of a shared vision for veterans; and the setting up of a 24-hour veterans helpline;

for reserve personnel, we now provide better protection in civilian employment; we have also made changes to their terms and conditions of service including: granting an entitlement to paid annual leave, and enhanced occupational health care; and including them in the defence medical rehabilitation programme when they are mobilised and if they are injured during training;

£21 million from re-directed LIBOR fines the Chancellor announced recently in his autumn statement.

Looking ahead to next year, the report makes a number of commitments. We will:

launch a new £10 million consolidated armed forces covenant grant scheme;

make further announcements on the award of funding for veterans accommodation projects;

implement the majority of the healthcare infrastructure improvements recommended by the Care Quality Commission;

develop a system to transfer medical records between Defence Medical Services and the UK health services;

report on how LIBOR money has been distributed to support childcare provision for service families;

work with the National Foundation For Educational Research to produce some quantitative and qualitative data on service pupil premium use and improve understanding on its impact;

introduce a new, improved charging system for service family accommodation, coupled with a commitment only to allocate properties that meet decent homes standards on introduction;

improve MOD governance and work closely with the organisations who have signed the corporate covenant to ensure they deliver on the pledges they have made;

work with the financial services sector to address potential disadvantage associated with service overseas;

continue working to improve healthcare for reservists when not mobilised;

and provide a defined contribution to the future armed forces pension scheme for all paid service in the reserve forces.

The report has been compiled in consultation with the Covenant Reference Group, which brings together representatives from Government Departments, the devolved Governments in Scotland and Wales, and from external members, including the three Families Federations, the Confederation of Service Charities, the Royal British Legion, SSAFA, the War Widows Association and Professor Hew Strachan of Oxford University. As in previous years, observations by the external members of the Covenant Reference Group are published as part of the report itself. I am most grateful to all external members for their continued involvement and assistance.

EU Energy Council

Tuesday 16th December 2014 Written Statements

[The Minister of State, Department of Energy and Climate Change (Matthew Hancock)]

I am writing to report discussions at the Energy Council in Brussels on 9 December. The UK was represented by the Deputy Permanent Representative, UKREP.

The Council discussed the governance of the 2030 climate and energy framework. The Commission emphasised the importance of regional co-operation as well as a streamlined reporting process and noted that it will bring forward proposals on governance during the course of 2015. A number of member states emphasised specifically the importance of reaching the EU-wide renewable energy target. The UK and others argued that the governance framework should allow member states the flexibility in meeting their climate targets consistent with the agreement on the 2030 climate and energy framework as reached at the October European Council. In particular, they argued that there was no need for a new renewable energy directive. The UK also noted that it would be helpful for the governance framework to ensure that all member states developed long-term plans for greenhouse gas reductions. All member states emphasised the need to streamline reporting requirements.

The Council then adopted conclusions on the completion of the internal energy market. The Commission reaffirmed the need to adopt network codes and guidelines quickly and to tackle continued market fragmentation. The Commission also noted that it would be issuing a communication on retail markets in the light of the need to give consumers real and transparent choices.

The presidency reported on progress in reaching 2020 energy and climate targets as part of the mid-term assessment of the “Europe 2020 Strategy for Smart, Sustainable and Inclusive Growth” and noted the importance of energy and climate measures for growth and jobs. The Commission and some member states emphasised the importance of concrete targets for renewable energy and energy efficiency set at national level. The UK emphasised that the economic reform strategy should remain focused on growth and employment and that climate and energy should be kept on a separate track for 2030 to avoid duplication.

The presidency then reported on developments in external energy relations over the last six months, including the US-EU Energy Council, the Euro-Mediterranean energy dialogue, and agreement on the terms of winter gas supplies between Russia and Ukraine, facilitated by the EU. The Commission noted the cancellation of the South Stream project and emphasised that European laws had to be respected. Alternative options for diversifying supply routes to central and eastern European countries had to be explored.

Under Any Other Business, Slovakia highlighted a letter to the Commission on behalf of the Visegrad four countries—Slovakia, Czech Republic, Hungary and Poland—requesting that the European nuclear energy forum (ENEF) should be maintained and not subsumed into another wider forum. The UK and a number of other member states supported the letter and the role of nuclear energy as part of a low-carbon mix. The Commission replied that its focus was on improving rather than ending ENEF.

Finally, the Latvian delegation presented its energy priorities for its presidency in the first half of 2015: developing the Energy Union concept; supporting the development of the 2030 governance process; and continuing discussions of energy security.

Overseas Territories Joint Ministerial Council

Tuesday 16th December 2014 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)]

I chaired the third meeting of the overseas territories joint ministerial council in London on 2 and 3 December. The key theme of this year’s council was building the prosperity and economic development of the territories. The council was attended by political leaders and representatives from Anguilla; Ascension Island; Bermuda; the British Virgin Islands; the Cayman Islands; the Falkland Islands; Gibraltar; Montserrat; Pitcairn; St Helena; Tristan da Cunha and the Turks and Caicos Islands.

In addition to prosperity and economic development, UK Ministers and overseas territory leaders also discussed financial services, defence and security, policing and criminal justice, the role of the environment in delivering prosperity, migration, passports and border security, health, and pensions. The council agreed a communiqué which identified priorities and set out a clear road map for joint work in the year ahead. A copy of this communiqué has been deposited in the Libraries of both Houses. The communiqué reflects the commitment of the Governments of the overseas territories and the UK to continue to work together in partnership to achieve the vision set out in the June 2012 White Paper “The Overseas Territories: Security Success and Sustainability”.

In line with our commitment in the White Paper we will continue to report to Parliament on progress in implementing the commitments in the communiqué by territory Governments and UK Government Departments. We have also deposited in the Libraries of both Houses a report on progress made in meeting the commitments in the communiqué from the Joint Ministerial Council in 2013. The communiqué, UK progress report and reports by the territories are available for viewing on the website: www.gov.uk/government/topical-events/overseas-territories-joint-ministerial-council

Annual Reports (Home Office)

Tuesday 16th December 2014 Written Statements

[The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)]

My hon. Friend the Parliamentary Under-Secretary of State, Home Office (Lord Bates) has today made the following written ministerial statement:

I am pleased to announce that today I am publishing the annual reports of the Biometrics Commissioner, National DNA Database Strategy Board and the Surveillance Camera Commissioner.

Mr Alastair MacGregor, the Biometrics Commissioner appointed under Section 20 of the Protection of Freedoms Act 2012 on 4 March 2013 has presented his first annual report to the Home Secretary. The report of the Biometrics Commissioner is a statutory requirement of section 21 of the Protection of Freedoms Act 2012.

Chief Constable Chris Simms, current chair of the National DNA Strategy Board has presented the annual report of the National DNA Strategy Board to the Home Secretary. This report has been made a statutory requirement of section 24 of the Protection of Freedoms Act 2012.

Mr Tony Porter, the Surveillance Camera Commissioner appointed under Section 34 of the Protection of Freedoms Act 2012 on 10 March 2014 has presented his first annual report to the Home Secretary. The report of the Surveillance Camera Commissioner is a statutory requirement of section 35 of the Protection of Freedoms Act 2012.

Together, these reports provide evidence of progress made in the implementation of the Protection of Freedoms Act 2012. We are grateful to the Commissioners and to the National DNA Strategy Board for their commitment to fulfilling their statutory functions and are considering their reports.

Copies of the reports will be available from the Vote Office.

Palace of Westminster Restoration and Renewal Programme

Tuesday 16th December 2014 Written Statements

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

Following their consideration of the pre-feasibility study on the restoration and renewal of the Palace of Westminster in October 2012, the House of Commons Commission and the House of Lords House Committee agreed that a more detailed study should be carried out by an independent third party and that it should focus on the costs and technical issues associated with the range of options for carrying out the work.

In December 2013, the contract for an independent options appraisal (IOA) was awarded to a consortium led by Deloitte Real Estate and including AECOM and HOK. This followed a rigorous evaluation and selection process. The contract value was £2.02 million.

The full report containing the findings will be published in June/July 2015. It will form the basis for consultation and engagement in the next Parliament, with a decision on a preferred way forward expected by spring 2016.

Other major public projects consistently demonstrate that effort put into early planning is rewarded later with financial savings. While the IOA will provide detailed information to help the two Houses make a broad decision in principle, further studies are also required to support the more detailed planning and design process that must follow that decision.

The additional studies include a re-assessment of the risk of plant failure—on completion of the mechanical and electrical medium-term programme which has been addressing areas at greatest immediate risk—planning how the service infrastructure of the Palace will relate to the rest of the parliamentary estate, and further developing Parliament’s requirements in areas such as security and visitor management. These studies are being commenced now to ensure that Parliament is ready to commission design work once a decision has been made, which in turn will keep the programme on track for a potential 2020-21 start date without anticipating the selection of a particular scenario.

The next phase of studies and reports is expected to cost £5.8 million, shared between the two Houses and spread over financial years 2014-15 and 2015-16.

The work is being carried out by Deloitte Real Estate, HOK and AECOM following agreement to extend the contract under which the consortium prepared the IOA. As additional services were envisaged under this contract, which was procured in accordance with public procurement rules, retendering is not required.

Prison (Interception of Communications)

Tuesday 16th December 2014 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

On 11 November 2014, I announced that HM Chief Inspector of Prisons (HMCIP) would undertake an independent investigation, which will, by early 2015, report in full on the facts and make recommendations. On 30 November, HMCIP provided me with his interim report, which provides an initial assessment of the initial measures put in place and makes a small number of recommendations, which the National Offender Management Service have begun to address.

I am pleased to report that HMCIP has indicated that the interim measures that were taken have, to a large degree, addressed the immediate concern of confidential communication being inadvertently monitored.

The report is available online at:

http://www.justiceinspectorates.gov.uk/hmiprisons/inspections

I will also place a copy in the Library of the House.

Scottish Independence Referendum

Tuesday 16th December 2014 Written Statements

[Mr Gary Streeter (South West Devon) (Con)]

(Representing the Speaker’s Committee on the Electoral Commission): The Electoral Commission has today published its report on the Scottish independence referendum, held on 18 September 2014. The report provides a comprehensive overview of the issues relating to the referendum, from the passage of the legislation through to the conduct of the poll. It looks at the key issues that arose on the way to polling day, including the conduct of campaigners and the Electoral Commission’s regulation of them, and provides data on the views of voters and the experience they had throughout this period.

The evidence gathered by the Electoral Commission to inform its report shows that the referendum was well run, with high levels of voter satisfaction. Research found that 94% of voters who cast their vote at a polling station and 98% of voters who cast a vote by post were satisfied with the process. The research also found that 10% of those who reported having voted also claimed to have voted for the first time.

Of the 4,285,323 people who were registered to vote in the referendum, 109,499 of them were aged 16 or 17 on the day of the poll. The Electoral Commission’s research with these young voters found that 75% of them claimed to have voted and, of these, 97% said they intended to vote again in future elections and referendums. The Commission’s report notes that an important lesson from the experience in Scotland that others looking to extend the franchise should consider carefully, is that to do this well it is important that time is given both for administrators to do targeted activity to register young people and for campaigners to engage with them.

The Electoral Commission’s report also acknowledges the hard work and professionalism of those responsible for administering the referendum, from the Chief Counting Officer, Mary Pitcaithly, to all of the counting officers and electoral registration officers across Scotland. Their commitment and hard work led to the registration of almost 150,000 voters in the last month before the deadline and orderly management of the record number of votes cast on polling day, which ensured that voters across Scotland took part in an effective and efficient poll. The Electoral Management Board for Scotland provided a crucial role in advising, supporting and guiding the work of all those administering the referendum. The Commission has previously recommended that the EMB’s role should be placed on a statutory footing for all parliamentary elections in Scotland and it continues to believe that this is the case. The Commission would welcome this change being considered as part of the wider electoral changes proposed by the recent publication of the Smith Commission’s proposals.

The Commission itself had a number of roles at the referendum. As well as supporting the Chief Counting Officer and administrators across Scotland throughout the referendum period, it was also responsible for registering campaigners and regulating the campaign spending and reporting rules they operated under. In total it registered 42 campaigners, with 21 registering in support of a “Yes” outcome and 21 in support of a “No” outcome at the referendum. For the first time at any referendum, campaigners had to report their donations to the Commission before the poll. This meant that the Commission was able to publish the details of campaign donations totalling £4.5 million, giving voters access to that information before they went to vote. This level of transparency for voters and the overall level of compliance from campaigners in meeting this new requirement were welcomed by the Commission.

The report also acknowledges the crucial role played by the UK and Scottish Governments, in making an order under section 30 of the Scotland Act 1998, which enabled the Scottish Parliament to legislate for the main referendum legislation nine months ahead of the poll. These actions ensured that there was sufficient time for those administering the poll to prepare for delivering their respective roles at the referendum. It also allowed campaigners to familiarise themselves with the campaign rules and ensure they had adequate processes in place to comply with them. The experience at the Scottish referendum was in sharp contrast to the referendums in 2011 where the rules were confirmed only three months ahead of polling day. Therefore, the Commission continues to recommend that for all future referendums whether held across or in particular parts of the UK, the legislation—including any secondary legislation—should be clear at least six months before it is required to be implemented or complied with by campaigners, electoral registration officers or counting officers.

Finally, the Electoral Commission’s report on the referendum has also found that holding a poll on such an important constitutional issue on a separate day from other elections, helped both administrators and campaigners plan their activity more effectively and gave voters space to understand the issues. The Commission has previously recommended that combining a referendum with other polls should be considered on a case-by-case basis. The Commission believes that this remains the case, but that for issues of a similar scale, including for example the UK’s membership of the European Union, the example set in Scotland should be considered carefully to ensure that campaigners and voters are not in a position where the same parties may be working together in one contest, while campaigning against each other in another, thus causing voter confusion.

The Electoral Commission’s report contains a number of other recommendations for the conduct of any future referendum legislated for by the Scottish Parliament on any issue. But the lessons learnt from this event are equally relevant to the UK Government and Parliament and will need to be acted upon should the UK Parliament decide to legislate for a referendum in the future.

Copies of the Commission’s report have been placed in the Library of the House and it is also available on the Commission’s website: www.electoralcommission.org.uk

Post Office Card Account

Tuesday 16th December 2014 Written Statements

[The Minister for Pensions (Steve Webb)]

I shall be making a statement to the House, about a new contract for the Post Office card account, later today.

House of Lords

Tuesday 16th December 2014 Lords Chamber

Tuesday, 16 December 2014.

14:30

Prayers—read by the Lord Bishop of Bristol.

Dog Licensing

Tuesday 16th December 2014 Lords Chamber

Question

14:37

Asked by

[Lord Hoyle]

To ask Her Majesty’s Government whether they have any plans to reintroduce a dog licensing fee.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, we have no plans to reintroduce the dog licence. The previous dog licensing scheme ceased in 1987 because it cost more to run than it took in revenue, due in part to the low compliance rate of around 40%.

[Lord Hoyle (Lab)]

I thank the Minister for that reply, but I am sure he will agree with me that this is probably the right time to raise this Question, particularly when people get a dog or a puppy for Christmas, then find it very demanding and turn it out at a later date. I remind the noble Lord that in 2010 70% of those canvassed favoured a return to a dog licensing scheme. Does he know that there is one in Northern Ireland? It functions very well and almost 100% of dogs are microchipped? Dog wardens have more control over the people who own dangerous dogs. Why cannot we follow the example set by Northern Ireland?

[Lord De Mauley]

My Lords, I know that the noble Lord is a staunch campaigner on doggie matters. What we are doing—he referred to this—and which goes a long way to achieving what people want from a licensing scheme, is introducing compulsory microchipping under which the record of a dog’s ownership will be maintained on a database.

[Baroness Oppenheim-Barnes (Con)]

My Lords, does my noble friend not agree—especially as it comes from someone he would describe as a doggie person—that microchipping is particularly important where dangerous dogs are involved, such as dogs listed in the recent Dangerous Dogs Act?

[Lord De Mauley]

My noble friend is absolutely right.

[Lord Renton of Mount Harry (Con)]

Following on from what has just been said, may I say how delighted I am at what I have just heard the Minister say? It has always seemed to me that there are those who particularly need dogs and who love them dearly. They go out and buy food for them and take them to the vet; the dog is their regular company. I declare an interest; I have a lurcher who is five years old. If I fall asleep after lunch he always wakes me up precisely at 3.30 pm. That shows what a good dog does.

[Lord De Mauley]

My noble friend has given me the opportunity to declare an interest as a dog owner.

[The Lord Bishop of Chester]

My Lords, I am one of those who wear a dog collar in this House—and for the privilege of doing so I have to be licensed. But as far as I am aware, no fees have been paid. Might I suggest that enough is enough?

[Lord Mackenzie of Framwellgate (Non-Afl)]

My Lords, the right reverend Prelate has stolen my thunder, in a sense. I was going to ask: because of the increasing number of dangerous dog incidents, would it not be worth having a look at licensing the owners?

[Lord De Mauley]

The noble Lord raises an important point. This is why we have legislated this year to tighten up on the dangerous dogs legislation. Now is not the moment to go into detail, but he has a very important point and the new legislation goes to the particular problems that have arisen in recent years.

[Lord Redesdale (LD)]

My Lords, following on from that point, this is a time of year when the number of postal workers attacked by dogs rises quite considerably. We should not underestimate the number of hospital admissions that also take place due to dangerous dogs. Having campaigned on this issue for a number of years, I was encouraged when the Minister said that the Government were looking at further measures to link the owner to the dog through a microchip. Will he say what measures they might well bring forward to reduce the number of dog attacks?

[Lord De Mauley]

My Lords, we have worked with the Post Office, Royal Mail and the unions on the legislation that went through this year. Largely, they were extremely happy with what we did and are very pleased that microchipping is coming in.

[Lord Lexden (Con)]

Does my noble friend agree that perhaps in retrospect he was a little dismissive of our long-standing and much loved dog licensing scheme? Disraeli introduced it in 1874 and the cost—7s 6d—was exactly the same 113 years later. Of how many government schemes can this be said?

[Lord De Mauley]

My Lords, perish the thought that I should be dismissive. My noble friend put his finger on the problem, which was that the price had not gone up and therefore it became uneconomic to continue the scheme.

[Lord Harris of Haringey (Lab)]

My Lords, if it is acceptable to microchip dogs, why is it not acceptable to have a simple identity card system for humans?

[Lord De Mauley]

I think the noble Lord will accept that that is somewhat wide of the Question.

[Baroness Fookes (Con)]

My Lords, I sought in vain to introduce a dog registration scheme allied to microchipping in the mid-1980s. Can my noble friend expand on exactly what the Government plan to do now? He referred to it only briefly.

[Lord De Mauley]

My Lords, with effect from April 2016, it will be a legal requirement that every dog is microchipped and that its owner’s details will be maintained on a database. What is encouraging is that since the time we announced the consultation, when about 58% of dogs were microchipped, the figure has already risen to 70%.

[Lord Greaves (LD)]

My Lords, does my noble friend agree that compulsory microchipping actually achieves the main purpose of dog licensing, which is to know who the owners are of all dogs? Does he also agree that nuisance from dogs, on the street in town centres or wherever, requires quite intensive action by local authorities, which they are increasingly unable to provide because of the draconian spending cuts that are being enforced on them?

[Lord De Mauley]

I agree with the first half of my noble friend’s contention. In terms of addressing the second half, that is why we introduced the measures that we did in the Anti-social Behaviour, Crime and Policing Act, which we explained in a manual to authorities to make it easier for them to enforce action against irresponsible owners of dogs.

Abortion (Sex-Selection) Bill

Tuesday 16th December 2014 Lords Chamber

Question

14:44

Asked by

[Baroness Knight of Collingtree]

To ask Her Majesty’s Government what action they intend to take following the First Reading of the Abortion (Sex-Selection) Bill in the House of Commons on 4 November.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

My Lords, abortion is traditionally an area where there is a free vote on Private Members’ Bills. We have made it clear on numerous occasions that abortion on the grounds of gender alone is illegal. We take this issue very seriously and will continue to monitor birth ratios and consider any evidence that comes to light.

[Baroness Knight of Collingtree (Con)]

My Lords, did my noble friend note that at the end of the First Reading debate on the Bill 181 MPs voted for it and only one voted against it and the tellers counting the vote against insisted that their votes be counted in favour of the Bill? Does he consider that this indicates acceptance of the evidence that abortion for gender reasons is going on and is causing very grave concern? Even a Minister saying in this House that this is illegal does not make it so: only a parliamentary Bill can do that. If gender equality means anything at all, surely the protection of the lives of baby girls is a matter of urgency.

[Earl Howe]

My Lords, the legal position is not in doubt. It is illegal to abort a foetus based solely on its gender. The Abortion Act states that two practitioners have to be,

“of the opinion formed in good faith”,

that the woman had grounds for an abortion. It is for doctors, in line with any guidance from their professional bodies, to satisfy themselves that they are in a position to give the opinion and to defend it if challenged. We refreshed the guidance in May of this year to make the position crystal clear.

[Baroness Thornton (Lab)]

My Lords, anyone who seeks an abortion on the basis of wrong gender is perpetuating a practice that is not only morally repugnant but illegal, as the noble Earl said. Sex-selection abortion is banned in the UK under the Abortion Act 1967. Does the noble Earl agree that because this practice happens in certain places in the world it may be taking place illegally in those communities in the UK? What are Her Majesty’s Government doing to identify whether this is the case?

[Earl Howe]

My Lords, our latest analysis of data by country of birth and ethnicity, which we have done for a second year running, found no evidence of sex selection taking place in the UK. Without exception, the wide variation in birth ratios was within the bounds expected. Any termination wilfully failing to meet the requirements of the Abortion Act will render those performing such procedures liable to prosecution under other legislation.

[The Lord Bishop of St Albans]

My Lords, given that many are concerned that we may not be protecting the most vulnerable in our society in this area, we need to understand the full extent of sex-selection abortion in this country, if indeed it is taking place. We need to collect and collate data. In the light of that, will the Minister tell the House what Her Majesty’s Government are doing to require the registration of the gender of foetuses using forms such as HSA4 or something similar so that we can actually have the evidence?

[Earl Howe]

My Lords, we are not moving in that direction partly because it is frequently not possible to determine the sex of the foetus after an abortion.

[Lord Steel of Aikwood (LD)]

Does the Minister agree that sex-selection abortion is not just illegal, as he says, but totally abhorrent? Does he further agree that, as the BMA has said that in some rare medical cases it may be necessary, it is really up to his department to issue clearer guidance as the Bill to which my noble friend referred is a 10-minute rule Bill that is not going anywhere? It is up to the department to issue guidance on this matter.

[Earl Howe]

My Lords, we issued guidance in May of this year. It sets out the expectations around the procedure to be adopted by the two doctors involved: certifying that an abortion meets the criteria set out in the Act by considering the individual circumstances of the woman and how they reached their decision. The guidance also reaffirms our position that abortion on the grounds of gender alone is illegal.

[Lord Alton of Liverpool (CB)]

My Lords, is the noble Earl aware that in China there have been 34 million abortions on the grounds of the one-child policy and that that has led to a distortion in the population of 34 million more males than females? Similar policies in India using ultrasound scanning tests have also led to the targeting of little girls. Given that some of these policies have been financed directly or indirectly through development funds from our own Department for International Development, will the noble Earl undertake to speak to his colleagues in that department to ensure that no British taxpayers’ money is used for these purposes?

[Earl Howe]

I am sure that noble Lords around the House will form their own conclusions on the information provided by the noble Lord, Lord Alton, but I do give that undertaking.

[Baroness Scotland of Asthal (Lab)]

My Lords, is not one of the difficulties being faced by the practitioner the fact that the guidance talks about “alone”, whereas we know that the psychological issues which arise among women who are put under pressure to have only boys may count towards the rationale that produces the abortion? What, if anything, do the Government intend to do to address this issue?

[Earl Howe]

My Lords, coercion and violence is of course an issue that is taken very seriously. Every woman who is being seen for a possible abortion has the opportunity to speak to a healthcare professional on her own. Those healthcare professionals are trained to be alert to the signs of coercion and violence and will take appropriate action.

[Lord Anderson of Swansea (Lab)]

My Lords, it is clearly counterintuitive to say that there is no linkage of the practice to certain ethnic communities. As the practice is clearly illegal, can the noble Earl tell us how many prosecutions there have been, how many of them were successful, and whether he believes that any sanctions are sufficient?

[Earl Howe]

My Lords, to my knowledge there have not been any successful prosecutions in this area, but the decision by the Crown Prosecution Service not to prosecute two doctors involved in recent allegations led to the call for my department to reissue the guidance on this matter, which, as I have said, we did earlier this year.

Academies: Special Educational Needs

Tuesday 16th December 2014 Lords Chamber

Question

14:53

Asked by

[Baroness King of Bow]

To ask Her Majesty’s Government what assessment they have made of the impact of academies on the education of children with special educational needs.

[The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)]

My Lords, the Academies Annual Report sets out how academies cater for vulnerable and disadvantaged pupils, including those with special educational needs. In 2013, the results for SEN pupils in primary sponsored academies improved at a faster rate than in local authority maintained schools. In secondary sponsored academies, the results improved at a similar rate to those of local authority maintained schools. The results for SEN pupils in primary and secondary converter academies remained well above those for SEN pupils in local authority maintained schools.

[Baroness King of Bow (Lab)]

I thank the noble Lord for that reply. Is he shocked by the refusal of some academies to admit pupils with special educational needs on the basis that they do not contribute to the,

“efficient education of other pupils”?

One such excluded SEN pupil was an 11 year-old boy with cerebral palsy who already had passed his maths GCSE with an A* grade and was a prefect and reading mentor at his primary school. Will the Minister take another look at academies’ admissions policies towards SEN pupils because if gifted pupils like the one I have described can be selected out, what hope is there for other children with special educational needs?

[Lord Nash]

I do not recognise the point that the noble Baroness is making. There is a clear appeals procedure in relation to SEN admissions which is followed most rigorously for all pupils with SEN.

[Baroness Evans of Bowes Park (Con)]

My Lords, I declare an interest as the director of the New Schools Network. Under this Government, more than 1,800 new places have been created in free schools for children aged up to 18 with special educational needs. In light of the education, health and care plans, can the Minister tell us what consideration is being given to ensure that vulnerable young people up to the age of 25 have access to appropriate education to ensure that they are best prepared for their adult lives?

[Lord Nash]

My Lords, I am delighted to be able to answer my noble friend’s first question in your Lordships’ House. We know that some young people with SEN need longer to complete and consolidate their learning. That is why our reforms extend SEN provision to young people aged 18 to 25. Where needed, they can now get EHC plans from their local authority and receive the tailored support they need to remain in formal education. The code makes it clear that these plans should reflect their ambitions and enable them to make a successful transition into adulthood.

[Lord Storey (LD)]

My noble friend will note that there has been an increase in the number of children with special educational needs in academies to 12.5%. However, in 16-19 academies there is no requirement to have a special educational needs co-ordinator—the person in charge. Therefore, how does he envisage that those pupils who are on an old statement—or now an education, health and care plan—can navigate the transition and be provided with the support that they need?

[Lord Nash]

The schools to which my noble friend refers must make clear what their offer is for SEN pupils. They must provide for SEN pupils, and they must publish their plans on their website very carefully.

[The Countess of Mar (CB)]

My Lords, does the noble Lord agree that virtual academies provide a very valuable service for children who are unable to attend school by giving them online and blended learning? Perhaps I may also say how grateful I am to his department for incorporating this in the latest Bill.

[Lord Nash]

The noble Countess is quite right in that regard: for certain pupils, virtual learning is very appropriate.

[Baroness Uddin (Non-Afl)]

My Lords, the Equality Act talks of the need to make “reasonable adjustments” for disabled people, while the Special Educational Needs and Disability Act enshrines the right to access “mainstream education”. Does the Minister agree that all children with special educational needs, such as autism, whether at an academy, a maintained school or a further education college, should encounter a curriculum and qualifications that are accessible and adjusted to their needs?

[Lord Nash]

I agree entirely with the points the noble Baroness makes, particularly in relation to pupils with autism.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, the Minister gave the figures for percentage improvements. I did not hear any comparative figures between different bands of schools. I wonder whether he could make those figures available. A 13% improvement may lead to an equality of opportunity or may merely improve things. While he is writing about that, perhaps he will let me and the House know how many of those special needs improvement figures relate to the growing number of special needs pupils with behavioural problems who, in my experience, parents fear are being excluded on the grounds of the efficiency of the school, which has been referred to.

[Lord Nash]

I will write to the noble Baroness in the terms she requires. I can certainly tell her that she will find the headline figure she is looking for very reassuring.

[Lord Elton (Con)]

My Lords, in light of the importance for the progress of SEN children of the role of SEN co-ordinators, both by focusing the attention of any school in which they are placed on the needs of those children and in advising parents and children on appropriate placement, will the Minister tell us why, as I now understand is the case, some schools are exempted from the duty of having such a co-ordinator?

[Lord Nash]

I have already answered the point in relation to 16-19 academies but all other schools must have a SENCO, and we have funded more than 10,000 new SENCOs since 2009. We have funded more than 1,000 teachers to get postgraduate SEN qualifications. We are also investing heavily in the Achievement for All programme, which is reaching many schools, to help leaders improve their SEN provision.

[Baroness King of Bow]

The Minister said that he did not recognise the case that I set out of the disabled child who was rejected on the basis of his disability. That is a well known tribunal case. There are others like it, which I will write to the Minister with details of. In the light of those cases, will the Minister review the Government’s policy in this area, as well as the fact that parents want redress at a local level when they cannot get their kids into school? They do not want to have to write to the Secretary of State.

[Lord Nash]

I will of course look at any points the noble Baroness writes to me about, but I think it is fair to say that this Government have done more than any other Government in recent generations to reform the whole provision for SEN, as demonstrated by the Children and Families Act that came through your Lordships’ House earlier this year.

CIA: Torture

Tuesday 16th December 2014 Lords Chamber

Question

14:59

Asked by

[Lord Sheikh]

To ask Her Majesty’s Government what is their assessment of the report prepared by the United States Congress on CIA involvement in torture.

[Lord Wallace of Saltaire (LD)]

My Lords, the Senate committee’s account of the treatment of some detainees by the CIA is troubling. After 9/11, things happened that were clearly wrong. In Britain, we have made clear our determination to address allegations of UK complicity in the alleged mistreatment of detainees by others overseas. Her Majesty’s Government stand firmly against torture and cruel, inhuman and degrading treatment or punishment.

[Lord Sheikh (Con)]

My Lords, I thank my noble friend for that reply. Will our Government undertake an independent, judge-led inquiry to examine possible British complicity in the programme of torture, secret detention and rendition? Will our Government also provide all suitable help and assistance to UK citizens and residents who have been detained to enable them to seek justice and remedies? I point out that Shaker Aamer is still in detention and needs help to be released. He has apparently been very badly treated.

[Lord Wallace of Saltaire]

My Lords, the Government set up the Gibson inquiry in July 2010. It was asked to produce an interim report when police investigations into a number of potential criminal charges were instituted in 2012. The Gibson committee’s interim report raised 27 questions for further investigation. They have been taken up by the Intelligence and Security Committee, which has now been working for a year with some additional staff on that inquiry. When that inquiry is complete, it will be for the next Government to decide whether a further judicial inquiry is necessary. On the question of Shaker Aamer, the Government are engaged at the highest levels for his release as a matter of urgency.

[Lord Campbell-Savours (Lab)]

My Lords—

[Lord Bach (Lab)]

My Lords—

[Lord Campbell-Savours]

My Lords, I think that the Back-Benchers come first.

[Lord Bach]

My Lords, I thank the Minister for his original Answer to this Question. Will he set out whether Her Majesty’s Government believe that the Intelligence and Security Committee has the capacity and the resources that it needs to investigate these matters?

[Lord Wallace of Saltaire]

My Lords, I already said that the Intelligence and Security Committee has taken on additional staff to cope with this inquiry. I recognise that there are some considerations as to how open the report of the Intelligence and Security Committee will be. We have to wait to see how much it will be able to publish. I think we all recognise that this is all an extremely delicate area in terms of how much one can publish. I wish I could give an assurance that the next Government, whoever they may be, will do their utmost to ensure that as much as possible is published.

[Lord Deben (Con)]

Does not my noble friend accept that, however delicate these matters are, there is widespread concern that this Government should show themselves utterly open on these issues? It is therefore very important that the answers to questions such as this are rather clearer, so that people can see exactly what we are doing to ensure that the reputation of this country should no longer be besmirched by such allegations.

[Lord Wallace of Saltaire]

My Lords, I entirely accept that. We are talking about allegations of behaviour undertaken between 2001 and 2005, in most instances. The Government are doing their utmost to ensure that they are fully investigated.

[Lord Singh of Wimbledon (CB)]

My Lords, does the Minister agree that reacting to terrorism by brutally torturing suspects can induce revenge terrorism in a never-ending cycle? Will he condemn torture in those terms?

[Lord Wallace of Saltaire]

My Lords, the Geneva Convention condemns torture; that is very clearly set out in the Geneva Convention. We certainly condemn torture, and we will watch with interest the response of public opinion in the United States to the Senate committee’s report, including that within the Senate, where there are very divided opinions.

[Lord Campbell-Savours]

My Lords—

[Lord Avebury (LD)]

My Lords—

[Lord Thomas of Gresford (LD)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston)]

The noble Lord, Lord Campbell-Savours, has been very patient. We will allow him to ask his question and then we should have time for at least one more noble Lord.

[Lord Campbell-Savours]

My Lords, does this difficult question not take us back to the problem that stands at the heart of the operation of the Intelligence and Security Committee? A witness before that committee who does not tell the truth cannot be held in contempt of Parliament because that committee, while it is described as a committee of Parliament, is not a full Select Committee and does not enjoy parliamentary privileges.

[Lord Wallace of Saltaire]

My Lords, I take the noble Lord’s point and I encourage him to read the short 500-page executive summary of the US Senate committee’s report which has, from the summary of the summary that I have read, some rather shocking things in it. We very much hope that British officials were in no way associated with some of those actions.

[Lord Avebury]

How can my noble friend promise to address the claims of British complicity in acts of torture when those allegations have been redacted from the report, presumably at the request of the British Government themselves?

[Lord Wallace of Saltaire]

My Lords, the Government are clear that the question of the presence or participation of British officials in some of the acts that are alleged is one of the things that must be investigated.

[Lord Goldsmith (Lab)]

My Lords, does the Minister agree that at the moment we have the worst of both worlds? The interim report of the Gibson committee was published, which listed a number of questions that were taken by the media as being findings and therefore we do not know what the truth is. I do not say this because I want to see anything hidden—quite the opposite, as I was one of those who called for that inquiry. However, at the moment we have the problem that things are believed to be true about the British security services, maybe about British people involved in political life, but because we have not got to the bottom of them and have not got a report, they are being condemned without it being properly investigated and heard. I am hopeful that the noble Lord will do what he has said, which is to make sure that the ISC, or whoever it is going to be, reports as soon as possible and we actually know what the truth is in the interests of everybody.

[Lord Wallace of Saltaire]

My Lords, we are all entirely clear that we need to get to the bottom of this and to spell out the involvement of British officials, in so far as it took place, as publicly as possible. I stress that will be a matter for the next Government. It is not therefore a partisan issue. We are all concerned about the reputation of Her Majesty’s Government.

Privileges and Conduct Committee

Tuesday 16th December 2014 Lords Chamber

Motion to Agree

15:08

Moved by

[Lord Sewel]

That the 2nd Report from the Select Committee (The conduct of Lord Redesdale) (HL Paper 78) be agreed to.

[The Chairman of Committees (Lord Sewel)]

My Lords, this report follows an investigation by the Commissioner for Standards into the conduct of the noble Lord, Lord Redesdale. The commissioner received a complaint alleging that the noble Lord, Lord Redesdale, breached the Code of Conduct by not registering certain interests in the Register of Lords’ Interests and by registering certain other interests more than one month after those interests came about.

The commissioner considered nine allegations of non-registration and eight allegations of late registration. He upheld seven of the allegations of non-registration and six of the allegations of late registration. In respect of those findings, the noble Lord, Lord Redesdale, admitted to the commissioner that he had been in breach; he has corrected the register so far as it can be. In addition, the noble Lord, Lord Redesdale, drew the commissioner’s attention to a further interest which he had discovered he had neglected to register.

In accordance with paragraphs 129 and 130 of the Guide to the Code of Conduct, the Sub-Committee on Lords’ Conduct had to decide the appropriate sanction. The sub-committee recommended that the noble Lord, Lord Redesdale, be required to make a personal statement of apology to the House in terms approved by the chairman of the sub-committee. The noble Lord, Lord Redesdale, accepted the findings of the commissioner and the sanction recommended by the sub-committee and he did not appeal.

Paragraph 132 of the Guide to the Code of Conduct states:

“If the Member does not appeal to the Committee for Privileges and Conduct in the event of a complaint being upheld, the Committee reports forthwith to the House in the terms recommended by the Sub-Committee”.

I therefore report the findings of the commissioner and the sub-committee to the House. If this report is agreed today, the noble Lord, Lord Redesdale, will make his personal statement, which has been agreed in advance with the chairman of the sub-committee, immediately after the report has been agreed. I beg to move.

Motion agreed.

Personal Statement

Tuesday 16th December 2014 Lords Chamber

15:10

[Lord Redesdale (LD)]

My Lords, I rise to apologise to the House for breaching the Code of Conduct. The Commissioner for Standards found that I breached the code on 13 occasions, with seven instances of non- registration of interests and six instances of late registration of interests. In addition, I drew the commissioner’s attention to an interest that I discovered during the course of his investigation I had neglected to register.

I fully accept the commissioner’s findings. I recognise that 14 instances of breach demonstrate that I have fallen significantly below the standards expected by the House. Although the commissioner finds that some of the breaches were minor and that there was no evidence of my attempting to evade the registration requirements, I accept that the accumulation of breaches shows inattentiveness on my part about my obligations under the Code of Conduct. I will be much more careful in future and will ensure that I register all my interests punctually. I deeply regret having breached the code and offer the House my sincere apology.

Mutuals’ Deferred Shares Bill [HL]

Tuesday 16th December 2014 Lords Chamber

Third Reading

15:11

Bill passed and sent to the Commons.

Implications of Devolution for England

Tuesday 16th December 2014 Lords Chamber

Statement

15:12

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Leader of the Commons.

“With permission, Mr Speaker, I would like to make a Statement on the Command Paper on the implications of devolution for England, which the Government are publishing today. The House will recall that on 19 September my right honourable friend the Prime Minister announced the establishment of a commission, chaired by the noble Lord, Lord Smith of Kelvin, to take forward the commitments to further devolution in Scotland made by all three UK pro-union parties during the referendum campaign.

On 27 November, after the publication of the Smith commission’s report, my right honourable friend the Secretary of State for Scotland announced to the House that draft legislation to implement its recommendations would be prepared by 25 January and presented in a Bill to Parliament following the general election. The Prime Minister also said that a new and fair settlement for Scotland must be accompanied by an equivalent settlement for all parts of the United Kingdom. This is a fundamental issue of fairness for all the people of the United Kingdom. Just as the people of Scotland will have more power over their affairs, so it follows that the people of England, Wales and Northern Ireland must have the opportunity to have a bigger say over theirs.

The Wales Bill has completed its final stages in Parliament, and the Secretary of State for Wales is leading a cross-party process to move towards a fair and lasting devolution settlement for Wales. The Northern Ireland Secretary is hosting talks on a number of issues, including reforms to make the devolved institutions work more effectively. Depending on progress, in particular putting the Executive’s finances on a sustainable long-term footing, the Government stand ready to introduce legislation to devolve corporation tax, with a view to seeing it on the statute book during this Parliament.

Today’s Command Paper covers proposals on decentralisation within England and proposals on English votes on English laws. It sets out the position of each of the coalition parties, just as the Command Paper on Scotland did for the three parties. We invited the Labour Party to submit its own proposals for publication, but it declined to do so.

The Scottish Secretary has been able to work in Scotland on a cross-party basis. The talks held by the Secretary of State for Wales have been on a cross-party basis. It is only on matters concerning England that the leadership of the Opposition is hostile to cross-party talks. However, the contribution to our thinking by leaders of local authorities, including from the Labour Party, has been welcome and constructive.

There has been a significant shift in where power resides in the United Kingdom in recent years. Since 2010 the Government have undertaken the most radical programme of decentralisation within England in a generation. In addition to the significant new powers for local communities, there are now five combined authorities, 15 directly elected local authority mayors, a metro mayor in London, and plans for a metro mayor to be elected for Greater Manchester in 2017. The Regional Growth Fund, growth deals and the Growing Places Fund have been made available to all local areas. This summer the Government set out plans to create a ‘northern powerhouse’ and consulted on Northern Futures. Taken together with what we are doing on science and transport infrastructure, this Government have the most ambitious and substantial plan for the north of England of any Government in decades.

Both the parties of the coalition wish to continue this major progress towards decentralisation of power in England, and their ideas are set out in the Command Paper. The Liberal Democrat Party called in the Command Paper for a process of ‘devolution on demand’ to be delivered through an English devolution enabling Bill, under which areas would be able to demand powers from Westminster and Whitehall from a menu of options. This would include many powers devolved to the Welsh Assembly, although the exact powers available would be subject to cross-government confirmation, and the UK Government would retain a list of reserved powers. In order to claim powers, a given area would need to demonstrate that it met tests around geography, population, competence, local democratic mandate, a fair electoral system and a transparent and accountable governance structure.

For our part, the Conservative Party wishes in the next Parliament to continue with the empowerment of neighbourhoods and parishes in England, as well as to see the type of arrangements being created for Greater Manchester agreed elsewhere. This includes a large further increase in neighbourhood planning, greater local accountability and use of direct democracy, such as local referendums on local issues. In addition, Conservatives want to work with local enterprise partnerships and councils to promote jobs and growth, to help local authorities join up different public services, and to work with local business to support jobs and improve quality of life locally. We strongly believe that localism must not be a way of imposing new taxation, and we believe that the Westminster Parliament is and should remain the English lawmaking body.

Decentralisation within England cannot on its own create fairness for England as a whole on policies decided at the UK level but which apply only in England. On the crucial question of the implications for England of devolution in the rest of the UK, fairness for all the people of the UK now requires this issue to be addressed decisively.

Devolution to other parts of the United Kingdom has created the situation in which MPs representing constituencies outside England may vote on legislation which does not affect their constituents, while English MPs are not able to influence these policies in other nations where they are devolved. Both coalition parties believe that this so-called West Lothian question needs to be addressed, and have put forward their proposals in the Command Paper.

The Liberal Democrat Party believes that English MPs at Westminster should have a stronger voice and a veto over English-only issues. Its preferred method of addressing this would be for there to be votes for Westminster elections using the single transferable vote. However, accepting that there is currently no cross- party consensus for this—which is certainly true—they instead propose that the composition of those serving on any new stage, for example a ‘Grand Committee of English MPs’, should reflect the votes of the electorate in England. The Liberal Democrats also believe that measures which unambiguously affect England only, and which are not devolved below the Westminster level, should be subject to a new parliamentary stage before Third Reading or equivalent, composed of MPs proportionately representing the votes cast in England to allow them to scrutinise proposals and employ a veto if they so wish.

The Conservative Party believes that equalised constituency sizes remains necessary to fairness for all voters. We have set out three options for resolving the West Lothian question in the Command Paper. All of them represent a stronger and more binding version of ‘English votes for English laws’ than the work of the McKay commission, but all rest on the guiding principle set out by McKay, that,

‘decisions at the United Kingdom level with a separate and distinct effect for England (or for England-and-Wales) should normally be taken only with the consent of a majority of MPs for constituencies in England (or England-and-Wales)’.

The first option is to reform consideration of Bills at all stages, and was put forward by the noble Lord, Lord Norton of Louth, in 2000. All stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England or from England and Wales. The key advantage of this proposal is its simplicity and the absence of any need for any new stages in the legislative process.

The second option is to reform the amending stages of Bills, as proposed by my right honourable friend the Member for Rushcliffe in 2008. Under this proposal, all amending stages of legislation relating only to England, or only to England and Wales, would be determined by MPs from England and Wales. Committees would be in proportion to party strength in those countries. The key advantage of this proposal is that it allows MPs from England, or from England and Wales, to have the decisive say over the content of legislation while not excluding other MPs from other stages and not introducing any new stages to the legislative process.

The third and final option is to introduce a reformed Committee stage and legislative consent Motion, providing an effective veto. Under this option, the Committee stage of legislation relating only to England, or only to England and Wales, would be considered only by MPs from those parts of the United Kingdom. Report stage would be taken as normal by all MPs. An English Grand Committee would then vote after Report stage but prior to Third Reading on a legislative consent Motion. English or English and Welsh MPs would therefore be able to grant their consent to or veto a Bill, or relevant parts of it. Such decisions would have the same status as those of the Scottish Parliament on devolved matters. The key advantage of this proposal is that it would give English, or English and Welsh MPs, a crucial say over the content of legislation and a secure veto over its passing, while not excluding other MPs from its consideration in the full House of Commons. The Conservatives and Liberal Democrats both invite comment and views on all the options in the Command Paper.

For hundreds of years, the constitutional arrangements of the UK have evolved successfully through taking account of the needs in each century and decade for the giving or withholding of consent. The pursuit of devolution in recent years has been based on the importance of establishing the consent of parts of the UK for the policies particular to them. The next stage of our constitutional evolution must involve that principle of consent being applied to all parts of the United Kingdom.

Whichever of these options is ultimately decided on must be clear and effective in producing fairness for the whole United Kingdom. The Government encourage debate so that this matter can be fully considered and resolved, for the long-term strength of the UK. It is an issue that too many people have avoided for too long, and that can no longer be put aside”.

That concludes the Statement.

15:24

[Baroness Royall of Blaisdon (Lab)]

My Lords, I am grateful to the Leader for repeating the Statement made by the Leader of the House of Commons. It is good to hear that the coalition is alive and well: this was an intriguing government statement with a series of options between the parties. I think it is rather a pick-and-mix coalition—but hell.

September’s referendum was momentous, not only for the fantastic turnout and the decisive way that the Scottish people voted to stay in the United Kingdom, but also for the way in which it unleashed a devolutionary vigour up and down the country. This is something that Labour, as a party with an unequalled record on devolution, embraces—and it is a debate that we seek to lead. We welcome Westminster further releasing its grip on the levers that run this country—and despite the Prime Minister’s 7 am jitters on the morning after the referendum, all sides of the Chamber will, I hope, welcome the fact that the vow to the Scottish people through the Smith commission is being delivered.

But this is only the beginning of the change that we need to the way in which the country is run. In England, cities and towns are demanding a greater say in the running of their affairs. Labour has responded to these demands, committing to introduce an English devolution Act in our first Queen’s Speech. This will involve skills, transport and economic development. In Wales, we will place Welsh devolution on a stronger statutory footing. It is also right that we look at how Parliament works, as more power is shifted away from Westminster—and yes, we do need to consider ways in which English MPs, or English and Welsh MPs, can have a greater say over legislation that affects only England, or only England and Wales.

What we must not do, only months after the Scottish people voted to keep our kingdom united, is allow our country to be divided by the back door. Nothing we do should jeopardise the future of the union. Last year the government commission led by Sir William McKay looked at this very issue. Its report included the option of a change in the way legislation is dealt with at Westminster: a Committee stage for only English MPs, who would scrutinise and amend legislation that applied only to England. We should look at Sir William’s approach involving an English—or English and Welsh—Committee stage, because it is right that English MPs should have a key role in considering such legislation.

We will study the Command Paper published today by the Government. But our criteria will not be what is in the interest of a political party, but what is in the interests of our country. Ultimately, the way we go about constitutional reform has to change; it must not be done for political advantage. The old “Westminster knows best” approach will not wash any more. Labour, like the Liberal Democrats, the Greens and others, is prepared to put aside tribalism and put our faith in a constitutional convention—a bold and new way of delivering political reform. This will not be made up just of elected representatives, but will give members of the public the loudest voice. The convention should consider the McKay commission approach of an English Committee stage. We hope that the Conservative Party will also support the constitutional convention approach, helping us to achieve the cross-party consensus that the convention idea merits.

Many questions arise as a consequence of the Statement, and today I will pose but a few. Does the Leader agree that it is no longer acceptable for long-lasting constitutional reform to result from deals done by politicians behind closed doors—and that a piecemeal approach to constitutional change for political advantage is also unacceptable? As Vernon Bogdanor said,

“the British constitution is not the private property of the Conservative party”,

or of any other party.

Does the Leader agree that for reform to be successful, there must be consensus? I therefore ask, as I have done in the past: what are her party’s specific objections to a constitutional convention? We are all agreed that change is needed when it comes to laws applying only to England, or only to England and Wales, but as the Command Paper shows, there are several options available. Does she agree that a constitutional convention would be a much better way to consider and decide upon the best option, rather than partisan politicians?

In our debate on devolution on 29 October, the Leader said:

“There will be a time and a place for a constitutional convention”.—[Official Report, 29/10/14; col. 1204.]

I suggest that the time has now come, and I wonder whether the noble Baroness would agree. Noble Lords will know that Labour is proposing to devolve more than £30 billion to the cities and counties of England. I wonder whether the Government support this.

With regard to this House, does the noble Baroness agree that its future should be one of the issues considered by a constitutional convention, and that a democratic second Chamber, drawn from the nations and regions of the UK, would be a means of addressing many of the challenges that result from devolution?

When it comes to constitutional change, we must consider the unintended consequences of our actions, and think through the way in which changes are interrelated and interdependent. This must not be a matter of quick fixes or political stitch-ups, but a considered, consensual approach. That is why it is our firm view that the constitutional convention should take this forward, as part of a wider package of political reforms.

15:29

[Baroness Stowell of Beeston]

I am grateful to the noble Baroness, Lady Royall, for her response to the Statement. We want to approach this whole issue of devolution in a way that enables us to share some common ground. We were pleased that that was possible in Scotland and that all the pro-union parties worked together. All the parties—the Conservatives, the Lib Dems and the Labour Party—are committed to meet the commitment set out by the Smith commission.

As was made clear in the Statement that I repeated, we were very keen to have the Labour Party contribute to our Command Paper, which we published today, so that we could continue that cross-party approach. Therefore, it is a little surprising that the noble Baroness referred to our “behind closed doors” approach, given that the leadership of the Labour Party were invited to contribute to the process, but so far they have sadly declined to do so. However, that is not the case with many Labour leaders of local authorities in all parts of England. My right honourable friend the Leader of the House of Commons has met Labour leaders of local authorities from Birmingham, Cardiff, Glasgow, Leeds, Manchester, Newcastle, Nottingham, Sheffield and Liverpool over the past few weeks to talk to them and to hear what they have to say on further devolution within England following the Scottish referendum.

The noble Baroness referred to her party’s proposals to extend greater powers to cities and towns. We have done a tremendous amount during the lifetime of this Parliament to extend greater authority and autonomy to all parts of England. England is far more decentralised now than it has been previously, and is far more decentralised than Scotland and Wales.

The noble Baroness spoke about the McKay commission’s report and its proposals for English votes for English laws. As she rightly said, the McKay commission made several proposals, and the Labour Party is putting forward one of those as its preferred option. That is clearly worthy of consideration. However, since the McKay commission did its work, greater powers have been devolved to Scotland. Therefore, it is our view that we need to consider the current situation, which has led to both parties in the coalition putting forward something which goes beyond what is proposed by the McKay commission.

The noble Baroness mentioned a constitutional convention. The Command Paper sets out the arguments for a constitutional convention and the Government remain open to receiving ideas on it. However, the establishment of a constitutional convention cannot be used as an excuse for delaying what needs to be done now.

The noble Baroness also referred to reforms to the upper House. There was an opportunity earlier on in this Parliament for reforms to the upper House. Members of the opposition party—and, indeed, Members from other Benches in the other House—decided that that Bill should not come forward. Reform of the House of Lords should not be linked to something that is urgent, needs to be done now and addresses a fairness issue to do with English votes for English laws.

No one is arguing that the work of the Smith commission should be delayed for a constitutional convention. No one is suggesting that the work of the Silk commission should be delayed for a constitutional convention. Similarly, a resolution on English votes for English laws cannot be delayed for a constitutional convention. The issue of English votes for English laws must be resolved. There are some options now for resolving it; and it is right that we debate those options.

[Baroness Royall of Blaisdon]

Could I make it clear that we want the McKay commission’s proposals to be put forward into a constitutional convention? This is not the be-all and end-all, and we see what the noble Baroness and her party are doing as being strictly for political advantage. In terms of the constitutional convention, this is not the long grass. We want a time- limited constitutional convention that would look at all these things, not in a piecemeal way but in a proper and dignified way for the future constitution of our country.

[Baroness Stowell of Beeston]

I am a little bit baffled. A lot is happening in terms of Scotland, Wales and Northern Ireland, and the Opposition are not arguing that those changes should be delayed for a constitutional convention. Arising from the result of the Scottish referendum is the need for us to address an important issue, which is about English votes for English laws. That can be addressed quickly and there are some options for consideration. It comes off the back of several reports on the issue of English votes for English laws over many years. This is not about ruling out a constitutional convention or any other bigger issues that might arise in due course; but the issue of English votes for English laws needs to be addressed right now. It can be addressed and it should not be delayed.

[Lord Wallace of Saltaire (LD)]

My Lords, we now have 20 minutes of questions. I remind noble Lords that we should have brief interventions and questions to enable the largest number of people to contribute.

15:37

[Lord Tyler (LD)]

My Lords, as the Statement reported, the Liberal Democrats made a positive contribution to the Command Paper before us, setting out clearly our plans to strengthen devolution within England, so that, for example, the people of Yorkshire and Cornwall could have proper assemblies with proper local legislative and fiscal powers, akin to those now available in Wales. Does my noble friend agree that the first priority should be decentralising and devolving power out of this building, and out of Whitehall, and then having a constitutional convention that could look at how different representative bodies in the UK could interact with each other in those new circumstances and with the UK Parliament? Only then will the true, consequent remaining extent of the “English question” be clear. In other words, does she not agree that we should devolve power radically within England first, and worry about rearranging the Westminster deckchairs later?

[Baroness Stowell of Beeston]

This coalition Government have done a huge amount to decentralise within England. Much has been changed during our time in office. The key difference between the Conservative Party and the Liberal Democrats in terms of further decentralisation is that we, the Conservatives, support giving far more accountability and authority to people wherever they live, but what we do not support is the delegation of lawmaking out of Parliament. We believe that there should be one place for lawmaking in England—and that is Parliament.

[Lord Soley (Lab)]

My Lords—

[Lord Elystan-Morgan (CB)]

My Lords, I respectfully invite Her Majesty’s Government not to panic in this matter. There are some 120 Members from Wales, Scotland and Northern Ireland, leaving some 530 Members from English constituencies. Therefore, first, does the noble Baroness agree that there is no immediate danger of English interests being mercilessly swept aside constitutionally? Secondly, will she undertake not to take any steps to create either an English Parliament or an English Parliament within a Parliament unless and until a full, detailed and mature study of the constitutional position has been conducted, thus avoiding some of the ludicrous matters which were brought before the House in the last four years?

[Baroness Stowell of Beeston]

We have no plans for an English Parliament. That is not contained in the Command Paper before us. We have options for addressing the very important issue of English votes for English laws, which has become more pronounced now that more powers have been devolved to Scotland. Clearly I listen very carefully to any advice that I receive from the noble Lord, but this matter has been around for a very long time. There has been a huge amount of thinking on it and we have now got to the point where we have some clear options, one of which we should implement.

[Lord Foulkes of Cumnock (Lab)]

My Lords, will the noble Baroness answer one simple question? Why cannot a constitutional convention now be set up to look at matters in a coherent way instead of the piecemeal way set out in the White Paper?

[Baroness Stowell of Beeston]

I just do not accept the argument that the noble Lord puts forward. The point is that a huge amount of change is under way in Scotland, Wales and Northern Ireland. There is a single urgent issue in England that needs addressing. This is not about ruling out a constitutional convention in the future, but that should not delay us in addressing something that needs to be addressed straight away.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend accept that these proposals, together with the proposals for further devolution in Scotland, are regarded by many people outside this place as having been conceived in panic, delivered in haste and furthered by political expediency? Will she not therefore reconsider the Government’s view that there should not be a constitutional convention to look at this matter on the basis of consensus between the parties, which is the basis upon which we should make constitutional changes? The only beneficiaries of this approach have been the nationalists, who are surging in the polls, and this is not a moment to divide the unionists.

[Baroness Stowell of Beeston]

I shall try to make this as clear as I can. We are not ruling out a constitutional convention at all. There are clearly matters that some people would like to see addressed in a constitutional convention. We are saying that, in the light of greater devolution to Scotland, there is a need for us to address the issue of English votes for English laws. This is not being rushed into; Parliament has been looking at it for a very long time. We have some clear options, which we are inviting people to debate. We feel that that should happen without delay and that bigger issues beyond that should not be a reason to delay getting on with something that is very important to the people of England.

[Lord Soley]

The Minister does not understand the force of the argument for a constitutional convention, which is that by going on with this piecemeal approach, the Government are playing into the hands of the separatists. I want to see the United Kingdom stay together but this is not the way to do it. We need a constitutional convention and we need it soon in order to deal with relationships between and within the four parts of the United Kingdom. Working things out on the back of a fag packet plays into the hands of nationalists.

[Baroness Stowell of Beeston]

I understand the noble Lord very clearly and I hope that he understands me. I am saying to him that I disagree because a lot of change has already happened and is happening. No side of this House or of the other place is calling for those changes to be delayed for a constitutional convention. The Labour Party has been a part of the changes which have been made and which are going through in Scotland, Wales and Northern Ireland. There is a specific issue that we want to see addressed in England. We absolutely do not rule out a constitutional convention where other matters can be considered. I can see why it is important and that is why we are not ruling it out.

[Lord Kilclooney (CB)]

My Lords, when legislation is approved in the other place from which Members of Parliament from Scotland and Northern Ireland are excluded and that legislation then proceeds to your Lordships’ House, will Northern Ireland Peers and Scottish Peers also be excluded?

[Baroness Stowell of Beeston]

No, they will not. No one in this House represents an area of the United Kingdom. We are all United Kingdom Peers; we do not have representative responsibilities, so the change in the Commons will not affect the way in which we do our business.

[Lord Elis-Thomas (PC)]

My Lords—

[Lord Richard (Lab)]

My Lords—

[Lord Wallace of Saltaire (LD)]

My Lords, it might be appropriate to hear from a Welsh Peer and then we will come back to England.

[Lord Elis-Thomas]

My Lords, I am very happy for you to return to England as soon as possible. I have one simple question for the Government. It seems from some references in the Leader of the House’s Statement in the other place that he is inventing a new polity—a place called England and Wales. What is the constitutional basis of this place, if it ever existed in history, which I doubt, being a sort of cultural historian? Since devolution, it is very clear that every piece of legislation which appears before this House, or indeed within the devolved Parliaments, is defined according to its competence and its territorial application. Therefore, there is no place called England and Wales. Legislation is either for the United Kingdom, for England, for Northern Ireland or for Scotland. The Government must be clear about that. I do not wish to go back to the Tudor period.

[Baroness Stowell of Beeston]

I do not think that anybody is asking the noble Lord to go back to the Tudor period. As set out in the Command Paper, there are various points of detail that will clearly be discussed further before any changes are implemented in the way that the other place operates. A Bill, when it comes to this House, will be dealt with in exactly the same way as it is now.

[Lord Lang of Monkton (Con)]

My Lords, there are many matters of constitutional importance on which consultation should take place. Certainly I favour consultation whenever possible. It has to be said that 15 years of constitutional devolution have led to an extremely unsettled position in terms of the integrity of the United Kingdom, possibly because there was not wide consultation and asymmetrical measures were being introduced. There is a burning need to rebalance the constitution of the United Kingdom; we cannot go on as we are. I welcome the proposals that have come forward from my noble friend and the fact that a range of options is included. That opens the case for further consultation, and I hope that the Labour Party will take part in that consultation. There is absolutely no reason why it should not. This matter stands on its own, and it is important to rebalance, in the interests of England and of the United Kingdom, the way in which we govern ourselves. I particularly welcome the reference to an English Grand Committee. I assure my noble friend that the changes we made to the Scottish Grand Committee in the 1990s demonstrated the almost infinite flexibility of such a body. It could play an important part in the future of government within England and, indeed, within the United Kingdom.

[Baroness Stowell of Beeston]

I am very grateful to my noble friend for all the points that he has made and for his ongoing constructive contribution to this process.

[The Countess of Mar (CB)]

If I may correct the noble Baroness, there are in fact five Peers of Scotland in this House, all of whom are hereditary Peers, and I happen to be one of them.

[Baroness Stowell of Beeston]

The noble Countess is absolutely right. I was not trying to suggest that there are no such Peers here in this House. The point I was making was that Peers do not represent a particular part of the country. We are all Peers representing the public and the national interest at large.

[Lord Richard]

My Lords, with great respect to the noble Baroness the Leader of the House, what she is saying is that English laws should be made by English votes only in the House of Commons, and that once they come up to this House, which is also a legislative Chamber, anybody—whether they are Scots, Welsh, English or Northern Irish—is entitled to express a view and vote on issues that may not affect them. What is the logic in that?

[Baroness Stowell of Beeston]

My Lords, we in this House are contributing to legislation now on an equal footing regardless of where we are from. We do not represent a particular part of the country. I come from Beeston and am very proud of that, but I do not represent Beeston. I am here as a United Kingdom Peer, as is the case for all of us.

[Lord King of Bridgwater (Con)]

Would my noble friend pay particular attention to the intervention of my noble friend Lord Lang, who I think spoke extremely wise words on this matter? I thought that the most striking point of the Statement was the extraordinary contrast between the long list of Labour leaders of major boroughs and major cities in this country who take an entirely different view, as far as I can see, from the unfortunate position of the Opposition.

[Baroness Stowell of Beeston]

I am very grateful to my noble friend for that point because he is quite right. It was very welcome to see just how many Labour leaders of local authorities within England wanted to contribute to this process. We are grateful to them and we hope that the Labour leadership will take its lead from them.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, does the Leader of the House accept that for many of us there is a difference between the current Government’s decentralisation programme, where Labour leaders of local authorities are working with the Government of the day, and genuine devolution? I nail my personal colours to the mast of regional devolution in England. I do not believe that the people of the north-west of England, where I live—I accept that I do not represent them—should have their health policies determined by the predominance not only of the Westminster Parliament but of London and the south-east. We have different problems; we need devolution. I want to see a proper examination of that before something is cobbled together as a matter of urgency. What has changed for the Conservative Party that it wants instant action now?

[Baroness Stowell of Beeston]

It is open to the noble Baroness to put forward her ideas for matters that should be considered as part of a constitutional convention; that has not been ruled out. However, it is worth reminding your Lordships that regional devolution by way of regional assemblies was tried before and was not successful; it was not welcomed by people in regions. However, we have ensured throughout this Parliament that we have given greater authority and control to all parts of England than had happened before, and we want to see more of that.

[Lord Taylor of Goss Moor (LD)]

My Lords, the truth is that we are now three-quarters of the way to a federal system in the United Kingdom, and it is urgent that the matter is resolved now, by whatever means, rather than at a point of crisis, when a decision may be taken to impose on England something which is deeply unpopular in England and for which England has not voted but for which a majority has been created through a United Kingdom vote, when those other members of our federal United Kingdom would not have the same imposed on them as a result of devolution. We may have walked there by a long and winding path, but this matter now needs to be resolved—and it is better that it should be resolved thoughtfully than in a crisis.

[Baroness Stowell of Beeston]

Well, I do not recognise the description of our current situation that the noble Lord is giving. We know that lots of changes have happened. The particular issue that we feel is necessary for us to address has been around for a long time. A lot of thinking has been put into this over many years. We now have some simple options before us, but, as I keep saying, that does not rule out a constitutional convention on bigger issues, if that is what people feel is necessary.

[Baroness O'Neill of Bengarve (CB)]

Does the Minister have any worries that this way of proceeding will add to the raggedness of our constitutional settlement and lead to asymmetric forms of devolution, and confuses devolution and delegation? This is an area where many of us fear to tread without great care. Surely, from the start, a constitutional convention, discussion, collaboration and cross-party agreement are all needed.

[Baroness Stowell of Beeston]

I am grateful to the noble Baroness and I know how distinguished she is in terms of her very thoughtful approach to matters of great importance. But I can only say to her what I have said to other noble Lords. We are not ruling out the possibility of the kind of approach that she is promoting, but we do not believe that doing that should delay us from addressing a fundamental issue of fairness that now exists which we feel that it is very important to address.

[Lord Beecham (Lab)]

My Lords, is the Leader aware that the Prime Minister’s pledge on the morning after the referendum about English votes for English laws, and the proposals in this White Paper, are in fact an answer to the SNP’s prayers and will reinforce it considerably? Will the Leader also explain why in chapter 2 of the document Decentralisation and Localism in England: Achievements to Date, there is no mention of the singular achievement of the Government in imposing the biggest ever cuts on local government funding to the extent that even Conservative councils believe that by the end of this decade they will be able to provide only statutory services—if them alone?

[Baroness Stowell of Beeston]

As the noble Lord knows, what we have done in this Parliament and through this Government is given greater power to local authorities in terms of control of their own finances. They are now in a much greater position than they were before to make the kind of steps that are about real change in their approach to providing services for local authorities.

[Lord Cormack (Con)]

My Lords, would not my noble friend accept that with three months left of this Parliament and a general election, with all the frenetic atmosphere that goes with it, this is no time to rush a constitutional settlement? The constitution is not the possession of any party: it is the responsibility of us all. I urge my noble friend, while I agree with my noble friend Lord Lang that it is good that there are options in this paper, not to attempt to rush pell-mell before the general election. In the calm—I trust—atmosphere that will follow, we have to try to reach a solution where we do not have two classes of Member of Parliament at the other end of the corridor.

[Baroness Stowell of Beeston]

My Lords, my noble friend was a Member of the other place and I was not, but there are already two classes of MPs in the other place. We have at the moment MPs for Scottish constituencies who are not able to vote on matters that affect their constituents, but they are able to vote on matters that affect people in England. We feel that this is a fundamental matter of fairness. It is not something that we are rushing into. This issue has been around for a long time. Five reports have been published on how to address this very important matter over the past 15 years. In the past few weeks, we have done some further thinking and put forward some options. I urge all noble Lords interested in this to come forward with their views—but this is something that it is now right to address.

Pension Schemes Bill

Tuesday 16th December 2014 Lords Chamber

Second Reading

15:58

Moved by

[Lord Bourne of Aberystwyth]

That the Bill be now read a second time.

[Lord Bourne of Aberystwyth (Con)]

My Lords, I am grateful for the opportunity to open this debate on the Pension Schemes Bill and the Taxation of Pensions Bill.

Before I proceed to introduce these Bills, could I say this is an important occasion for a different reason? My noble friend Lord Jenkin of Roding has given distinguished parliamentary service for over 50 years and served in Cabinet with distinction. He has made an immense contribution to public life in our country. His contributions to the House of Lords, always effective and to the point, will be much missed, and he too, of course, will be greatly missed from the Chamber.

[Noble Lords]

Hear, hear!

[Lord Bourne of Aberystwyth]

I am sure that we all wish him a very happy and well earned retirement, and look forward to hearing his speech today.

I turn to the Bills before us today. Together, these Bills introduce the latest radical reform of pensions. These ground-breaking pension changes were the centrepiece of the Queen’s Speech, and are about encouraging new forms of pension saving, such as shared-risk schemes and the provision of collective benefits to give greater security in retirement, and giving people freedom and choice in how and when they access their pension savings. The time is right to make these changes to private pensions legislation. The new state pension will provide a simplified foundation for those in retirement, making it easier for people to know what pension they will receive from the state. It will provide a platform on which individuals can build their own private pension savings according to their wants and needs in retirement.

The excellent early results of automatic enrolment mean that millions more savers have joined workplace pension schemes. This Government have also taken forward other changes so that the future private pension landscape delivers high-quality, value-for-money pensions for members. For example, regulations are being brought forward so that, subject to parliamentary approval, from April 2015 there will be a charge cap in the default funds of qualifying schemes—schemes used for automatic enrolment—and new requirements for independent governance committees and trustees to report on costs and charges.

The market is therefore growing, and employers and the pension industry are already thinking about future pension provision. These Bills further encourage a flourishing private pensions market that provides greater choice for business on the pensions offered and for individuals on how they access their pension savings. Taking no further action is simply not an option. Despite government action, the Department for Work and Pensions estimates that there are 11.9 million people below state pension age who are not saving enough to provide adequately for their retirement.

I turn to the Taxation of Pensions Bill. My noble friend Lord Newby is the pilot of this legislative craft, but let me say a few words by way of introduction. The Taxation of Pensions Bill contains measures to make the tax system fairer by ensuring people have more choice about how they access their savings, to prevent this new flexibility being exploited by individuals to gain unintended tax advantages and to ensure the taxation of pension savings on death remains fair and appropriate under the new system. The Bill will mean that, from April 2015, individuals from the age of 55 will be able to access their money purchase pension savings flexibly if they wish, subject to their marginal rate of income tax, rather than the current 55% tax charge. In addition to the Government’s consultation after the Budget, we also published draft legislation for technical consultation in August.

I will talk about these changes in a little more detail, starting with measures to ensure people have more choice about how to access their savings. This Bill is about ensuring that people have greater choice at the point of retirement. The current system restricts choice at the point of retirement. Those with the smallest and largest amounts of pension savings have flexibility, but those with a moderate amount of savings have very limited options. The measures in this Bill will change that by extending this flexibility, such that it applies regardless of the size of the pension pot, thereby ending the effective compulsion to annuitise.

The Bill also introduces a new method to allow people to access their pension flexibly. The “uncrystallised funds pension lump sum”, or UFPLS—the clumsiest acronym I have ever seen in my life—is a new option. This will give individuals the flexibility to take one or more lump sums from their pension fund, with 25% of each payment tax free and 75% taxed at their marginal rate, without having to enter into draw-down or take all of their tax-free lump sum in one go. The Bill also increases choice by introducing changes to encourage innovation in the retirement income market, allowing providers scope to make annuities much more flexible products in line with consumer needs.

[Lord Beecham (Lab)]

I am grateful to the noble Lord for giving way. Could he tell us how much and for how long the Treasury will gain from the changes in the Taxation of Pensions Bill as people draw down or take their pensions early?

[Lord Bourne of Aberystwyth]

The noble Lord is right if he is inferring that there is a tax saving. Estimates have been made, but of course we cannot be certain of them. I have the estimates and I will ensure that I send them to the noble Lord—I do not have them to hand —but suffice it to say that this is not the thrust of the legislation. I think we will see that it is perfect in terms of providing what pensioners want, it gives a boost to the pensions industry and it probably saves the Exchequer money, although these are only estimates. However, that is not the main intention. As I say, it is to give consumers and members, after consultation, a very fair deal.

The Bill also contains measures to ensure that the new system cannot be exploited by individuals to achieve unintended tax advantages. If the Government were to put in place no protections, an individual over the age of 55 could divert their salary each year into their pension, take it out immediately and receive 25% of it tax free, thus avoiding income tax and national insurance contributions on their employment income. This is not the intention of the reforms. However, in the context of automatic enrolment, it is also important that any solution preserves the incentive for those aged over 55 to save after accessing their pension flexibly.

As a result of extensive consultation, the Government decided that introducing a £10,000 money purchase annual allowance for those who have accessed their pension flexibly strikes the right balance. On the one hand it allows people the flexibility to withdraw or contribute to their pension as they choose from the age of 55, while on the other it ensures that individuals do not use the new flexibilities, which are intended to provide people with greater access to their retirement savings, to avoid paying tax on their current earnings. It will also avoid unnecessary complexity for both consumers and pension providers when the new system comes into places in April 2015. As stated in the Government’s response to the consultation, we will be closely monitoring behaviour under the new system and will work closely with industry to ensure that it remains fair and proportionate.

I turn now to the changes made by this Bill to the taxation of pensions at death. As set out in the original consultation document which the Government published alongside the Budget, it is likely that the 55% tax charge which currently applies to pensions on death would apply to more people under the new system. If it were retained, it could provide an incentive for individuals to remove their savings from their pension in order to avoid the 55% tax charge. Consequently, the Government have amended the Bill to ensure that taxation of pensions at death remains fair and appropriate under the new system. The changes to the Bill will allow individuals who die with pension funds remaining to pass them on to anyone they choose. These funds can be paid tax free if the individual dies before the age of 75. If the individual dies having reached the age of 75 and the funds are paid out as a pension, they will be taxed at the beneficiary’s marginal rate, or at 45% if they are paid out as a lump sum. The aim of these changes is to ensure that individuals who have made sacrifices to save over the course of their lives can pass on their pension savings without worrying about those funds bearing excessive tax charges when they die. They will also preserve the incentive for individuals to keep money in their pension without fear of their beneficiaries being hit by a 55% tax charge.

Additionally, the Chancellor announced in the Autumn Statement that these changes will extend to annuities. Death benefit payments from joint life and guaranteed-term annuities will also be tax free when the policyholder dies under the age of 75, and such death benefits will be able to be paid to any beneficiary. This will also apply when an individual uses uncrystallised or draw-down funds to buy a dependant’s annuity. These changes will be legislated for in due course, although not through this Bill. The Taxation of Pensions Bill will therefore increase choice for the 320,000 people retiring each year.

The Taxation of Pensions Bill deals with the tax changes and the Pension Schemes Bill, which I will turn to shortly, deals with changes to enable the flexibilities to work as the Government intend. There are differences in the definitions of money purchase benefit in tax legislation and in pensions legislation which we have had to address. Tax legislation provides a definition of money purchase which in essence covers all forms of accrual that result in a cash amount. The pensions legislation definition is narrower, as it focuses only on those forms of benefit in which a deficit cannot arise. This is to ensure that the correct funding and member protection regime applies. In order to ensure that the provisions of both Bills work correctly together, the Pension Schemes Bill contains a new definition of “flexible benefit” which fits within the pensions legislation context and captures the forms of benefit to which the tax flexibilities apply. We also define the term “safeguarded benefits”, which are, in the main, forms of benefit to which the flexibilities do not apply but to which other provisions do. I will explain the context in which the term is used shortly.

I turn now to the Pension Schemes Bill. This Bill will make the changes required to pension legislation as a result of the freedom and choice created by the Taxation of Pensions Bill. This will include a legislative framework for a guidance service providing individuals who benefit from the new pension flexibilities with access to free, impartial guidance so that they are clear on the range of options available to them at retirement. The Bill places a duty on the FCA to ensure that the providers it regulates make people aware of their right to guidance and signpost them to this service, and the Department for Work and Pensions will ensure that the equivalent duty is placed on pension schemes regulated by the Pensions Regulator.

It is important to note that there is a fundamental distinction between advice and guidance. Providing advice on investments, including pensions, is an activity regulated by the FCA. A financial adviser will usually make a full assessment of a consumer’s circumstances and make a specific recommendation, and may sometimes sell a product, based on what is most suitable for that person. The guidance service will not aim to replicate this. Instead, it will provide tailored information to consumers regarding the options available to them but, unlike financial advice, it will not recommend specific products or providers. The guidance is designed as a first step for consumers, to support their decision-making and to empower them to make their own choices. Having had the guidance, it is expected that many people may wish to go on to seek financial advice to help them with their decision, and the guidance will help them to access the service they need.

The Government will continue to allow members of private sector schemes offering safeguarded benefits—that is, benefits other than money purchase or cash balance benefits—the freedom to transfer to other types of scheme. However, in the vast majority of cases where a member has safeguarded benefits, it will continue to be in the best interests of the individual to remain in their scheme. Therefore, two additional safeguards will be introduced to protect individuals and schemes. First, there will be a new requirement for individuals transferring safeguarded benefits out of a scheme to take advice from a financial adviser before a transfer can be accepted. Secondly, there will be new guidance for trustees of schemes on using their existing powers to delay transfer payments and taking account of scheme funding levels when deciding transfer values.

We will also ensure that the taxpayer and Exchequer are protected. First, transfers will not, other than in very limited circumstances, be allowed from unfunded public service defined benefit schemes into schemes from which flexible benefits can be obtained. Secondly, for funded public service schemes, Ministers will have a power to reduce cash equivalent transfer values in circumstances where there is a risk to the taxpayer.

The Pension Schemes Bill also makes other changes to the transfer requirements allowing individuals to access pension savings. We will do this by extending the current transfer rights for those with flexible benefits up to and beyond their schemes’ normal retirement age, and applying statutory transfer rights at benefit category—rather than scheme—level.

We will also make three technical changes to existing pensions legislation. The first will allow pension schemes to offer the new flexibilities to their members and will ensure that these flexibilities operate as intended in relation to those with cash balance benefits. The second will allow members to take one or more lump sums from their money purchase funds after the minimum age is reached. The third will prevent the conversion or replacement of non-money purchase benefits with money purchase benefits when a scheme winds up or during a Pension Protection Fund assessment period.

As the flexibilities will come into force on 6 April next year, we are making the relevant regulatory changes that are necessary to deliver these significant reforms by that date. The Department for Work and Pensions and the Treasury are co-ordinating a structured engagement with the industry on the drafting of regulations to ensure that final decisions are informed by stakeholder views.

With these changes, the Taxation of Pensions Bill and the Pension Schemes Bill together give the individual greater choice and flexibility in how they access their pension savings. The Pension Schemes Bill also introduces legislation to enable greater risk sharing between the employer and the saver—and, indeed, third parties—and risk pooling between savers, thus encouraging greater innovation in the private pensions market.

I now turn to the measures that grant pension providers greater flexibility in the sort of pension schemes they offer. The Queen’s Speech announced a radical reshaping of pensions legislation to ensure that it remains relevant for future generations. The Pension Schemes Bill reflects, recognises and encourages innovation in response to demand. It does this by creating a clear space for shared risk or defined ambition—as they are sometimes called—pensions and enables the provision of collective benefits in the United Kingdom. Those are two quite separate concepts.

With increased participation in saving, the Government are keen to support greater innovation in the products offered to savers, based on employer and member demand. Consumer trust in the pensions industry is relatively low, and although we can protect beneficiaries against risks of high charges or poor governance, our research shows us time and again that many individuals want more stability and more certainty. They want to know something about what their savings will give them and some protection from the worst of the vagaries of the market.

Many employers have found the increasing costs of longevity—welcome though it is—and investment risk too heavy to bear in traditional final salary defined benefits schemes, but if defined contribution schemes are the only alternative, outcomes for members and savers will be less certain and more volatile than for earlier generations, making it much harder for future generations of savers to plan for later life.

Although some forms of risk sharing can already happen, the current legislation is based on a binary structure, leading to a tendency for schemes to polarise into schemes in which either the member or the employer is bearing all the risks. While both of those types of pension can be the right product for many, we do not think it is right that the only future for pensions that our legislation explicitly recognises or encourages is either where the individual member or the employer takes on the full financial risk of such long-term savings.

Therefore, the Pension Schemes Bill introduces three categories of pension scheme and enables a new type of collective benefit along with requirements to ensure that there is appropriate regulation in relation to such benefits. The scheme categories are based on the type of promise that the scheme provides to savers during the saving phase about the benefits that will be available to them at retirement. The Bill includes new definitions of defined benefits, where the member receives a full benefit and the employer takes the risk, defined contributions, where the member takes the risk, and shared risk, or defined ambition, the third category of pension scheme.

The shared risk, or defined ambition, definition describes a middle ground between the defined benefits and defined contributions definitions. It creates a distinctive space to encourage innovation in pension design that provides for more certainty for individuals than defined contributions schemes, in which there is no promise during the savings phase, by sharing risks between employers, employees and third parties.

The new scheme categories will apply to existing occupational and personal pension schemes. They do not make any additional requirements about benefit design and do not change any current legislative requirements, such as occupational scheme funding or member protections.

The definitions work at scheme level, rather than the benefit level, so the wider legislative requirements that apply to certain benefit types still apply, regardless of the scheme category. That includes, for example the new Budget flexibilities, and the collective benefit requirements, to which I shall come shortly. The definitions are formulated very specifically and, along with the regulation-making powers, they ensure that current and new scheme designs will fall into the correct categories to reflect the member experience of certainty during the savings period.

The Bill also provides for a new definition of collective benefits. These are different from shared risk schemes, although shared risk schemes may include collective benefits. The collective benefit definition enables a new form of risk pooling among scheme members that can provide greater stability in outcome for members—partly by virtue of scale. Collective pension schemes are a key part of some other countries’ pension systems—for example, the Netherlands and some of the provinces of Canada—and they are recognised internationally as being of high quality. As we aspire to develop a pension system that is rated among the world’s best—we hope the best—it is only right that the United Kingdom should also have pension schemes offering these types of benefits. We also have the advantage of providing protections at the outset which address issues that have arisen in relation to these types of schemes overseas. The regulation-making powers are key to the success of collectives, ensuring appropriate safeguards can be applied and developed in discussion with industry, employers, and members’ representatives. The Bill enables collective benefits to be part of a defined contributions scheme or a shared risk scheme. The intent is that members of schemes offering collective benefits would be able to access their collective benefits flexibly, either directly or by transferring to a money purchase scheme.

The Bill makes changes to existing legislation in order to reflect the new scheme categories and collective benefits. It also provides for additional governance protections for these new types of pensions, reflecting the new types of decisions that are being made on behalf of members. We also intend to use regulation-making powers in other legislation in respect of governance and disclosure as appropriate. We have engaged extensively with stakeholders across the pensions industry and found there is appetite for legislation that allows for greater risk sharing and risk pooling. There are employers that would welcome the greater flexibility to create pension schemes that suit the needs of their workforce. Pension providers want the flexibility to design and offer pensions that provide greater certainty and more options for sharing risk, and individuals value greater certainty than that provided by defined contributions pension schemes and the greater stability that collective benefits may provide. All these are considerable advantages.

I turn to the other changes to private pensions legislation made by the Pension Schemes Bill. These are relatively minor in terms of the main thrust of the legislation. The Bill contains two clauses from the Ministry of Justice concerning judicial pensions. One corrects the Judicial Pensions and Retirement Act 1993, regarding the funding of pensions shared on divorce, to ensure that the Act works for cases where pension sharing is activated after a person has left judicial office. The second allows a pension scheme to be established for fee-paid judges, as required by relatively recent case law. It is aimed at old and transitional cases. Pensions for fee-paid judges will in the future be governed by a new scheme under the recent public service pensions legislation.

In addition, the Bill contains a minor and technical measure on the Remploy pension scheme. The legislation will allow the Department for Work and Pensions to fund the Remploy pension scheme directly rather than via the company, should this be required in the future.

Furthermore, the Bill contains an amendment to extend a regulation-making power in the Pension Schemes Act, relating to survivors’ benefits in the case of certain gender-change cases, to Scotland. Finally, the Pension Schemes Bill contains a provision the effect of which will be to permit schemes to increase the maximum age at which a pension credit, following a pension share on divorce, must be put into payment if the highest normal pension age for benefits payable under the scheme is higher than 65.

These are very radical reforms that build on this Government’s previous changes to improve pensions in the United Kingdom. Giving people greater choice is at the heart of these reforms—greater choice for business on the pensions they offer and greater choice for individuals on how they can access their pension savings. These are important changes to allow the private pensions market to flourish too. I commend these Bills to the House. I beg to move.

16:23

[Lord Davies of Oldham (Lab)]

My Lords, I thank the Minister for his extensive coverage of both Bills and reassure the House that my own contribution will be not to follow him down every detail of the legislation but to concentrate on those parts where we have anxieties and worries that we intend to contribute to the debate today and subsequently in Committee on the pension reform Bill. I thank the Minister for his extensive coverage but he will know that the Opposition support the principle of increased flexibility for people in retirement and reform of the pensions market so that people can get a better deal.

The Bill seeks to remove the limits on withdrawals from draw-down to make annuities more flexible and to prevent the Government’s pension reforms being exploited for unintended tax purposes, and we share those objectives. However, it is vital that the Government get the details of those changes right. We have set out three tests for pension reforms: guidance, fairness and cost. We are supporting the reforms to ensure that people have more flexibility in how they access their pension savings, but these are significant changes and we have to ensure that they work for all savers. First, on guidance, we need to ensure that savers get the right guidance, and I will develop that point subsequently. The fairness test needs to ensure that there are decent products for low-income and middle-income earners; it is fairly obvious that those with large pension pots are in a better position to look after their interests. The costs test that we are seeking to apply is to ensure that the reforms do not result in extra pressures on the state, either through social care or through pensioners falling back at a later stage on means-tested benefits such as housing benefit.

We have concerns about the speed with which these reforms have been pushed through. There was no consultation prior to the Chancellor’s Budget Statement, and the Government have refused our calls to publish further details and analysis of the behavioural impacts of these important reforms as well as, I might add, the potential impact on government revenues. I am not sure that the Minister was entirely convincing in his response to the point that my noble friend Lord Beecham made in his intervention; we need to examine carefully the potential impact on public revenues and resources.

We will press the Government to undertake a Treasury review within two years of the reforms coming into force. These are of such significance for such a significant part of our population that we need to know that they are working as intended. That review should detail the impact of the Bill on government revenues, with particular reference to opportunities for tax and national insurance contributions avoidance. The Government make great play of their approach to tax avoidance issues at present, but they must recognise that there are some anxieties about the potential effect in that area of those proposals.

The pension reforms will introduce increased flexibility for savers; however, they will also lead to the creation of a more diverse pensions market, with a range of new products available. Safeguards must be in place to protect customers from being exploited or facing unreasonable fees and charges. People need real support to negotiate this new, more complex landscape. That is why these changes must be accompanied by free guidance that is high-quality and impartial. The Government made a commitment to provide everyone with free impartial face-to-face guidance. They have a responsibility to ensure that that guidance is in place on time and meets customer expectations.

The Government are not always reassuring on that front; sometimes they seem to talk about guidance and sometimes about advice. Advice is something for which you pay in the industry; it is an activity regulated by the Financial Conduct Authority, which authorises individuals and firms acting as advisers. Guidance is different. Guidance in the context of the pension changes that will take effect from April 2015 must be free and impartial information to empower customers to make informed and confident decisions. That activity will not be regulated by anyone; the individual will have to make up their own mind as to the best route post-retirement.

After all, the FCA sums it up distinctly and neatly on its consumer website:

“The main difference between guidance and advice is that you decide which product to buy without having one or more recommended to you”.

That is why guidance will bear a heavy weight. The guidance envisaged in the Bill aims to provide the estimated 300,000 new retirees per year with defined contribution schemes with this service. Even with the distribution channels of the web, face-to-face—for example, Citizens Advice—and via telephone, including the Pensions Advisory Service, there must be grave doubts about the level of take-up that will be achieved. The amount of resources assigned and the task of preparation time leaves the impression that we are being subjected to rushed initiatives in the most crucial area for the citizen. There are no details on how the guidance will be delivered in a consistently high-quality manner, given that no specialist qualification, experience or regulation is required for the agencies to commence this process. The Minister must recognise our very clear anxieties on these points. Safeguards must be in place to protect customers.

The Bills, which share their Second Reading in this rather interesting procedure, allow for the establishment of the collective defined contributions pension schemes, which we promoted some time ago. We were convinced by the value of these potential schemes, and are of course pleased that they are included in the legislation. They have the potential to provide a more reliable retirement income than individual defined contribution schemes. Therefore, we are not opposed to the Bill but welcome it.

I hope that I have expressed the Opposition’s constructive criticism of the Bill, while at the same time indicating that we support its principles and wish it every success. Later in this debate and in Committee, my noble friend Lord Bradley will take up some of the challenges that I put forward. However, I hope that the House will recognise that our broad commitment of support does not involve a superficial approach to the very real challenges that this significant pension reform envisages.

Finally, in a rather more consensual manner than the one I normally adopt when expressing a view on government legislation from this Dispatch Box, I pay tribute to the noble Lord, Lord Jenkin, and his service to both Houses over a very considerable period. I will never forget the time when I had responsibility in this House for an Energy Bill on which we spent 17 days in Committee. The only noble Lord who was unremitting in his work at that stage, when even Ministers were forced to hand some responsibility over to each other, was the noble Lord, Lord Jenkin. It was a tour de force in everything we heard at that time, and of course the whole House will wish him well in his retirement.

16:34

[Lord German (LD)]

My Lords, I, too, join in the tributes to the noble Lord, Lord Jenkin, and associate the Liberal Democrat Benches with the good wishes that have been passed on to him so far. We look forward to his speech. Perhaps the House will afford me a moment for a small personal recollection. I know that the noble Lord, Lord Jenkin, has the words “love of music” stamped throughout him. One of the assurances that you can have about music is that you can continue to enjoy it no matter what age you are, from the youngest to the oldest. I wish him every success in his retirement, and hope that he will be able to join us, as he always has done, at future musical occasions of this Parliament, and enjoy with us once more those wonderful occasions. We all look forward to his speech later on in this debate.

This suite of Bills adds to the most comprehensive range of changes which we have seen to state and private pensions in a generation. Set against the backdrop of auto-enrolment—with the number of new savers reaching beyond 5 million and rising; the new single-tier state pension; establishing the link between pension age and life expectancy; and abolition of the retirement age altogether—I think it is safe to say that this Parliament has seen an unprecedented period of major pension change. In fact, I would venture to say that it has been a revolution, a quiet one, which has at last seen the coming together of major pension reforms.

I recognise that many noble Lords in all parts of this House, some present here today, have played a key role in ensuring that we have got to the place we are debating today. However, I pay tribute to my right honourable friend Steve Webb for the part that he has played in bringing these reforms to fruition. He is deserving of great praise, and it undoubtedly says something about his skills, as I understand that he is now the longest-serving Pensions Minister for many decades.

The Pension Schemes Bill follows two consultations, in November 2012 and November 2013. It will extend to three the present two-pronged approach to pension provision, defined contribution and defined benefit schemes. However, with the decline of defined benefit schemes, increasingly, as of now, for many people, the only realistic option available is a defined contribution scheme. The defined ambition option provided by this Bill provides a new alternative, one which allows people to act collectively, sharing risk, and smoothing out fluctuations, reducing volatility for the customer.

Sharing investment risks and longer-life risks has the potential to act against the interests of a consumer when operating as a solo investor. This measure will mean a reduction in the ups and downs of investment. The Bill therefore offers a third route, one which can provide more certainty and stability. I note that the Government do not claim that it will produce a better financial outcome, although some have claimed that it will—but it will provide stability. This new approach will also allow people to leave money within the scheme if they wish, even after entering the decumulation phase, so they can continue to see all, or part, of their pensionable savings invested.

As always, we look for parallel experiences in other countries, and my noble friend the Minister mentioned two in his introduction. However, each has conditions that render them unique, and it is not wise to try to lift the experience of others in a wholesale manner into the United Kingdom. For example, I anticipate that we will have a detailed discussion of the intergenerational nature of the new defined ambition pension. However, one benefit that your Lordships may wish to ensure as the norm in this measure is that joint action should lead to a spreading of windfalls and setbacks over time, so that fluctuations can be avoided. It is possible to mitigate changes in current market rates to reduce volatility and maintain stability within a collective pension scheme. The effect that this has on a defined cohort of pension recipients, by laying off the risk through smoothing over present and future generations, is one that this House will undoubtedly debate in detail at future stages of the Pension Schemes Bill. However, the experience of the Netherlands should lead the House to ensure that expectations are managed, that there are clear communications with members of the scheme, and that cross-subsidies within schemes are adequately and comprehensively managed, with legislative context for this to happen.

As a result of all the changes in pensions policy, and those in these two Bills, pension providers are increasingly being asked to think creatively, to adjust their provision, offer new products and provide more choice. Annuities have been a shackle on the pensions market, particularly as annuity return rates have gone steadily downwards over the past decade. The challenge for the pensions industry is to respond to the need for a strong dose of competition and innovation.

There is a danger that consideration of these Bills will mainly centre on the guidance guarantee. That is, none the less, a very important part of the legislation. It is important for the guarantee to consider the potential choices that a pension saver has, by looking at all assets that that person has. Here I must declare an unregistrable interest as a member of the advisory committee for the Equity Release Council. Housing wealth in this country is estimated to be £1.4 trillion—and many people also hold other assets, such as investments and savings. The FCA has just produced its “near final” rules and standards on the guidance guarantee, but the relevant standard, standard 20, is silent on the level of housing wealth being considered.

An Equity Release Council survey suggests that average housing wealth for the over-55s is £271,000. Meanwhile, the average defined contribution pension pot is in the order of £20,000. Whether these figures are robust is not the issue here, because they merely illustrate the need to consider housing wealth within the guidance guarantee. They show that housing wealth is more significant than the pension pot for most people over 55. This huge financial gap between the two assets is likely to continue in the next decade for people aged 40 and more, as this cohort is more likely than its predecessor to have defined contribution rather than defined benefit pensions, and they are just as likely to be pursuing home ownership through a mortgage that will be repaid before they retire.

I appreciate that the Government’s intention is for the guidance guarantee to equip people with basic concepts about their future financial needs, and to provide a basic knowledge of the range of products available. But not taking all assets into account when providing guidance will work against the guidance guarantee’s fundamental task, which surely must be to equip people with the questions they need to ask in order to help them make their decisions. To do this effectively the whole picture needs to be seen, and that means getting all the relevant information in one place, and in an easily understood format.

In respect of the pensions freedoms in these Bills, I would be grateful for confirmation from the Minister that the Government regard the FCA as the second line of defence, standing apart from the guidance guarantee, to ensure that the highest standards are met by those supplying financial products when people are at the point of making these crucial decisions involving their pension savings.

These Bills provide an opportunity for the introduction of much needed rights to improve the way that savers can engage with their savings. All the available evidence shows that people struggle to understand and engage with what is happening to their pension savings. This high level of disengagement must surely be a concern. One key mechanism for improving understanding and engagement is transparency—letting people know what is happening to their money. People are interested in knowing how their money is used, even though the language used by the financial sector may put them off. We could use this Bill to increase the ability for customer scrutiny over those who decide how to place their money. In a system where people cannot easily move their money, it is all the more important that their agents are held to account. What is required is customer-facing information and materials which help savers understand and access information. I look forward to a discussion on these issues at future stages of the Bill.

The number of government changes to the defined ambition Bill in its final stages as it went through the House of Commons was dramatic. Effectively, those changes added 65% or more extra detail to the Bill. This means that there is a real job of work to be done in your Lordships’ House to undertake scrutiny, particularly in Committee. I do, however, recognize that many of these changes were made as a result of announcements made in the Budget, after the Bill had been published.

Given the wide range and scope of subordinate legislation required for these Bills, there will undoubtedly be a need for detailed consideration at later stages of whether the affirmative or negative procedures are appropriate. Without draft regulations before us, I suspect that your Lordships’ House may well seek the affirmative procedure for many of these new regulations, but perhaps for some of them only on their first appearance in this House.

The timing of the new standards and rules governing all the issues in these Bills is a key consideration to be debated. The issues of quality of governance and levels of charging are high on the list of matters where the customer will require protection. The most urgent of these is the conversion of the FCA’s “near final” standards and rules on the guidance guarantee into their final form in time for when this Bill comes into force in April next year. I would be grateful if my noble friend the Minister could indicate when he expects these final standards and rules from the FCA to be received. Given that there are two regulators engaged in protecting the customer in these Bills, perhaps he could also indicate how it is proposed that the roles of both will be delineated, and how the Government will ensure that there is no overlap or, indeed, cracks between their respective areas of responsibility, where protection might subsequently fail. Perhaps my noble friend could give his and the Government’s view of whether it would be better to have a single regulator operating in this space rather than run the risk of overlap or gaps in provision.

In conclusion, I welcome these Bills and look forward to debating the key issues at future stages. They provide choice and rightfully put more powers in the hands of the consumer. They are to be welcomed.

16:46

[Baroness Greengross (CB)]

My Lords, I add my personal tribute to the noble Lord, Lord Jenkin of Roding, whom I have known for many years. He has always been very gracious in his various roles when I have wanted to discuss issues with him. He has made a huge contribution, and I shall miss him very much, personally and professionally.

I very much welcome the changes made through the Bill, as they seek to strike a new balance between the sensible accumulation of savings for later life and the freedom for people to choose how they spend their money in retirement. I believe that there should be more choice for people entering retirement. Increased choice should help to enable them to save for, and make informed decisions about, their retirement income. However, this means that they must fully understand the risks associated with these choices. My main point is that there are many risks attached to this, in particular, the risks associated with Part 3 of the Taxation of Pensions Bill, which creates the UFPLS. This will provide an additional option for flexible access to a pension, but there are associated risks here which I fear many consumers will not fully appreciate. I will come back to those risks later.

I very much welcome the fact that Schedule 3 to the Pension Schemes Bill will place a duty on the FCA to create and regulate the advice and information part of the “freedom and choice” pension reforms in the shape of the guidance guarantee, which is a crucial part of the reforms. My worry is that individuals are neither aware of the existence of this guidance, nor obliged to seek it, nor to follow it if they find it, and so many will remain seriously ill informed and may make wrong decisions. Recent research from Partnership has disclosed that, with so little time to go before the introduction of this new pension regime, 53% of people over 40 do not know whether they are eligible for the guidance guarantee, 18% said that they were not eligible and only 29% said that they knew they could use the service. There is a lot to be clarified, which we will work on at later stages.

While accepting that the FCA has the role of ensuring the quality of the guidance on offer, I think that there are areas that could helpfully be further clarified in the legislation. The proposed standards will work well for web-based guidance, for example, but I am not sure that they will work well for telephone or face-to-face provision; and that issue needs to be looked at. Perhaps also the guidance guarantee should be regularly reviewed in order to ensure that suitable information is there to make sure that people can make the important decisions that best suit their needs.

Also, a second line of defence regulation has been suggested—certainly, Dr Ros Altmann recently called for this—which would include knowing about dealing with risks such as outliving assets and running out of money or not providing benefits for a spouse on death. These are important issues and I very much hope that we can see some progress in those areas. Lastly, I should like the Government to commit to an annual report on the outcomes for everyone affected, whether they access the guidance or not.

Finally, the levy that will fund the guidance guarantee will come from only those firms regulated by the FCA. However, to create a level playing field, perhaps the guarantee should be funded by all pension and retirement providers, including trust-based pension schemes and master trusts, such as NEST, which currently would not contribute to the levy.

I end by considering people’s care needs. The funding of long-term care, which I mentioned earlier, is a growing concern of many retirees who potentially have to fund all or some of their social care needs out of their retirement funds. The proposals set out in the Care Act of this year will go a long way to helping to address some of those concerns, but these changes provide a good opportunity to encourage people also to consider how they could fund any long-term care needs that might arise. The role of care fees funding in pensions decumulation needs some consideration and should be part of the wider debate. I am wondering just how the Government plan to respond to the question asked by the noble Lord, Lord Hunt of Kings Heath, in last week’s Motion of Regret tabled by the noble Lord, Lord Lipsey: how will a pension pot be treated in relation to the calculation of a non-housing asset? Do the Government expect the new flexibility in assessing pension savings contained in the Taxation of Pensions Bill to have any effect on this policy?

In summary, these bold reforms bring with them new freedoms but many new risks, and we should all strive to ensure that the pensioners of today and tomorrow can fully enjoy the former in the safe knowledge that they will have appropriate information, guidance, advice and choices to minimise the latter.

16:53

[Lord Hutton of Furness (Lab)]

My Lords, I should like to draw the attention of the House to the interests I have declared in the register. I am an unremunerated non-executive director of Pension Quality Mark. I should also like to express my personal tribute to the noble Lord, Lord Jenkin of Roding, who in a few minutes will make his last contribution to our proceedings in this House. The noble Lord has made a truly extraordinary contribution to public and parliamentary life over a very long career. I, for one, am going to very much miss him in this House.

I strongly agree with what the Minister said in his opening remarks when he described these reforms as truly radical. They certainly are. I welcome the Government’s continued focus on looking at our pension system and ensuring, wherever possible, that people are thinking ahead to the needs they will have when they retire. This is a hugely important issue for our country. I regard it as perhaps the most important public policy challenge we face if one thinks about the nature and speed of demographic change in our country.

This problem has assumed even greater significance because of the general thrust and drift of public policy in the pensions space in the past 10 years or so. The burden of responsibility for providing secure retirement income is now rightly, in my view, steadily moving from the state to the individual. That is certainly the whole thrust behind the auto-enrolment reforms and the reforms to the state pension. For these policies to work, we have to be sure that people make adequate provision for their retirement. If they do not, the risk is that public finances will become unsustainable and that, once again, being old becomes the same thing as being poor. We need to avoid that outcome at every possible opportunity. Therefore, every reform to our pension savings system should pass one simple but important test: will it encourage more people to save more for their retirement?

There is much to be welcomed in the Bills before us today. None of us wants to be treated like an idiot, and it is right that we should therefore have more choice about what we do with our savings. I welcome that. However, it is right and proper that in this place we highlight some of the challenges that the Government’s reforms are going to create.

The first is that there is some tension between these two significant reforms—on the one hand, giving more freedom for savers in DC schemes and, simultaneously, providing for more risk-sharing in defined ambition schemes. Some people would say that these two reforms are not entirely compatible, and that is certainly the view of many in the industry. John Lawson, the head of pensions policy at Aviva and a much admired figure, went so far as to say recently that these reforms are completely incompatible with each other. On the one hand, encouraging more collective risk-sharing through collective defined contribution schemes sits oddly with the new freedoms at 55 to take out all the cash built up in conventional defined contribution schemes. One stresses the benefits of collective risk-pooling; the other, the right of the individual to make their own decisions about how to manage retirement income risks. In my mind, it begs the obvious question: what is the most important public policy objective that these reforms should prioritise? Is it freedom of choice or should it be income sufficiency in old age?

There is also the danger that we might begin to lose sight of something rather fundamental here. The purpose of a pension scheme is to provide secure retirement income for as long as the pensioner remains alive. It is not just about wealth accumulation and the instant gratification of converting your pension pot into a tidy cash sum. In my view, we should remain absolutely focused on the question of retirement income: how we can secure it and how, if possible, we can increase it.

One of the obvious risks in the Government’s approach to annuities reform is that there is a real possibility that more pensioners will start to run out of money in old age. Here, it is worth talking about the experience in Australia. It is true to say that auto-enrolment was heavily influenced by the Australian reforms, and successive Governments, including this one, have paid close attention to how this model has worked. The Chancellor of the Exchequer prayed in aid the Australian experience as providing the intellectual underpinning for his announcement on annuities reform. I am afraid to say that I am not entirely sure that he is on absolutely firm ground.

The recently published Murray report in Australia has recommended introducing compulsory deferred annuities that would pay out after the age of 85—going, I am sorry to say, in almost exactly the opposite direction to the one proposed by the Government here. This was recommended in Australia because it was found that a quarter of Australian pensioners had depleted their pension savings by the age of 70. There is a real warning sign here for us. That is why I strongly favour a hybrid approach—dare I say it, a third way—with greater freedoms to draw down pension savings on retirement, combined with a focus on the need to secure retirement income in later years. Allowing these new freedoms to be exercised at the age of 55 also poses another set of problems, particularly for employers.

The Organisation for Economic Co-operation and Development has also recently expressed similar concerns. It has pointed out—rightly, in my view—that pensioners in the United Kingdom are unlikely to achieve better incomes in retirement simply as a result of scrapping mandatory annuitisation. This, I think, gets us to the heart of the issue. We should remain focused on retirement income and on ensuring that every pensioner has adequate provision. At the end of the day, an annuity is merely an insurance against outliving your savings. This is a risk that the Government and individuals need to take very seriously. Partial annuitisation should at the very least be strongly encouraged as an integral part of planning for retirement. The danger today is that we appear to have created the sense that we have moved decisively against this kind of provision. That would be an enormous mistake.

As other noble Lords have said, there is the whole question of the so-called guidance guarantee which lies at the heart of the annuities reforms that are being set out in this legislation. I am yet to be persuaded that the guidance guarantee is sufficiently robust. It is not compulsory and what is being proposed is quite limited for such an important decision. Inertia will be a real problem. The FCA recently reported, for example, that 60% of people retiring with defined contribution schemes did not take advantage of the open market option of purchasing an annuity from a different provider, despite the fact that 80% of those individuals would have been better off. How confident can we be and how confident is the Minister that the guidance guarantee will be taken up properly?

The other great danger is that the benefits of the proposed collective defined contribution schemes are being seriously oversold. They are modelled largely on the experience of similar schemes in the Netherlands. It is important that we all understand that the Dutch pension landscape is not a land of milk and honey. I have no objection at all to these schemes being one option available to employers and employees, but I simply draw to your Lordships’ attention some problems. These schemes do not guarantee higher retirement incomes. They are no less vulnerable to unexpected lower investment returns than conventional defined contribution schemes. Just look at what has been happening in the Netherlands only very recently, with significant reductions being made to pension benefits. These schemes certainly expose younger savers to quota risks and the possibility that they will receive lower payouts as risks within these schemes are effectively shifted across different age cohorts.

I am not at all convinced that these schemes are all that progressive either. Lower earners who typically enjoy lower life expectancies effectively subsidise higher earners who tend to live longer. In the UK at present, those with lower life expectancies can receive higher retirement incomes through either enhanced or impaired annuities. This is not an option within CDC schemes. These schemes are inherently less transparent and certainly more complicated than other UK workplace pension schemes. My advice to the Minister and the Government is not to over-egg the pudding, although I suspect that it might be a little too late for that.

Looking at the provisions of the Bill relating to the defined ambition schemes, it is obvious that there is a very substantial regulatory risk for these schemes as the Bill grants enormous powers to the Secretary of State to legislate by way of statutory instrument as opposed to clearly setting out the parameters in the Bill. We do not yet know how these powers will be used and what form they will take. That creates obvious uncertainty for these putative schemes.

I shall conclude my remarks by saying one or two things about the Taxation of Pensions Bill. I am obviously aware that it is a money Bill and that we have no power to amend it, but I should like to raise with the Minister some concerns that I have about its provisions. I am pleased that the Government are removing some anomalies in the tax treatment of death benefits paid out of income draw down products and annuities, which will now be tax exempt if a scheme member dies before the age of 75. We all welcome that. It will, I hope, act as an incentive to save and should be supported. But the Government have made no changes to the taxation of a dependant’s pension scheme benefits which will still be taxable at the marginal rate of income tax. I am not sure that I understand the logic here. It seems perverse that a dependant’s scheme pension benefits should be treated adversely from a tax perspective compared with annuities and draw down products. This will surely encourage more members to transfer out of defined benefit schemes than would otherwise have been the case. Is this really the Government’s intention? It would be good for the House to know.

In fact the whole area of transfers from defined benefit to defined contribution and how they will be affected by these reforms is a moot point. It would be good to hear more from the Government about how they see developments in this space. Most informed commentators expect to see significant numbers transferring out of defined benefit schemes to defined contribution schemes to take advantage of the new freedoms on offer. There is a widespread concern that these DB to DC transfers, unless we are vigilant, are a potential mis-selling scandal waiting to happen. We really have to guard against that.

Much has been made of the fact that lump sum payments to nominated beneficiaries are going to be tax-free if the pension scheme member dies before reaching the age of 75. So far so good. I very strongly welcome the Chancellor’s focus on this issue. However, scheme administrators cannot nominate a different beneficiary from the person nominated by the scheme member himself or herself. That is clear from paragraph 3 of Schedule 2 to the Bill. I am particularly concerned that the effect of these changes could result in inheritance tax being payable on these lump sums—although not income tax because of the reforms in the Bill—on the basis that only death benefits paid out of a discretionary trust are exempt from inheritance tax. I hope that my fear is misplaced, but it would be very good to hear from the Minister on this point at some stage in our proceedings today.

I cannot fault the Government’s energy and commitment to pension reform, and I welcome it. It is impressive, particularly at this late stage of the Parliament, and both these Bills represent significant reform. The noble Lord, Lord German, who spoke earlier, said that this is a pension revolution. I think that it is, but, as any student of history knows, the problem with a revolution at the beginning is that you never can be quite sure where it is going to end. That, I think, remains the principal concern that I and many others have about the reforms set out in these Bills.

17:06

[Lord Jenkin of Roding (Con) (Valedictory Speech)]

My Lords—

[Noble Lords]

Hear, hear!

[Lord Jenkin of Roding]

My Lords, last month the House, in its wisdom, accepted the recommendation of the Procedure Committee that a Peer who has given notice of his wish to retire might have an opportunity to make what they christened “a valedictory speech”. I would point out that a number of noble Lords have retired recently, their retirements having been announced by the noble Baroness the Lord Speaker, and they have not felt it necessary to bother the House with any valedictory speech. However, when I see just how conspicuous this first valedictory speech has become, I wonder why I did not take the same decision. I suppose that one excuse I could offer is that I seem to have given the experts on pensions, to whom I have been listening for the last hour or so, a bigger audience than perhaps they might otherwise have attracted—although whether that is regarded as an advantage I do not know. However, I feel humbled, in a sense, by the numbers—their curiosity seems to have overcome their apprehensions—who have come this evening. I only hope that they will not regret it.

One undertaking I can give is that, in view of the very kind things that have already been said in this debate, I think I can be extremely brief. The Procedure Committee said not more than 10 minutes; I hope I will be rather less than that. I can give the House one further assurance. I have been advised that it is not necessary in a valedictory speech for the speaker to address the subject of the legislation in which he has chosen to make the speech. If my noble friends on the Front Bench and others will forgive me, I will not do so. I have been enormously impressed by the expertise that has been demonstrated. As a former Minister in charge of pensions, I am lost in admiration and realise that it is just as well that I am not trying to talk about this legislation.

In recent weeks, I have been approached by a number of noble Lords from all parts of the House asking, sometimes with some asperity, why I am retiring. After all, I am getting on a bit and I realise that, but I have two answers; one is very short and the other is slightly longer. The short one is that after 50 years in Parliament—a number of noble Lords have already made reference to that—and at the age of 88, I feel that I have done enough. I have done what I can offer, and it is best to bow out and let others carry on.

The slightly longer answer is that, if this House is to continue to perform its hugely important functions in the running of this country, I totally believe that there has to be a constant infusion of new blood introduced into the House, with people who have current experience and whose experience of business or whatever field they have operated in is completely up to date. They can bring their advice and guidance to the House. If the House is not to remain too big—there seems to be a fairly widespread if not universal view that, as the second largest legislature in the world after the Chinese congress, we are a little big—it seems incumbent on oldies to hand over to a younger generation. Everyone must make their own decisions about that: there is no sense of compulsion. I have made my decision and that is why I stand here before this House today.

Last month, a number of us were fortunate to attend what I found to be an inspiring thanksgiving service at Westminster Abbey for the late Mary Soames. Talking to people coming away from it afterwards, there was one phrase that was repeated by people: it really is the end of an era. When Winston Churchill’s youngest child passes on, that is the end of an era. I am conscious of having lived through much of that era. I was privileged in 1964 to follow Sir Winston as the Member of Parliament for Woodford, which was later renamed Wanstead and Woodford. I look back to the maiden speech that I made in the House on that occasion, where by convention the new Member is expected to say something nice about his predecessor. I thought, “What on earth can I say about that great man that would not be said with far greater eloquence by others?”. I therefore looked up his maiden speech to see what he had said on 18 February 1901. I was struck by a passage that impressed me. If nothing else, Sir Winston was a great parliamentarian. At the age of 26, just home from the Boer War, which was still going on, he said:

“In my opinion, based upon the experience of the most famous men whose names have adorned the records of the House, no national emergency short, let us say, of the actual invasion of this country itself ought in any way to restrict or prevent the entire freedom of Parliamentary discussion”.—[Official Report, Commons, 18/2/1901; col. 407.]

That was 40 years before Dunkirk, when the Nazis threatened the invasion of these islands. At the age of 26 he had such foresight. He was absolutely unique. Of course, during that war, as Prime Minister, he led this country to victory in 1945 and made sure that Parliament was always able to hold Ministers to account during that period. We should be very proud of that.

Here we are now in December 2014, 50 years after the 1964 general election. I look back and I have been very fortunate. I have had a very eventful life. It has had its tragedies. I never have the slightest hesitation when answering a question as to what for me was the biggest tragedy in that period. It was the death of my hero Iain Macleod, one month after he became Chancellor of the Exchequer. I see the noble Lord, Lord Armstrong, there. I have never forgotten—he was the Principal Private Secretary at No. 10 who rang us up early in the morning to give us the tragic news. For the rest of that day—indeed, for the weeks that followed—it was an appalling disaster and a huge loss for this country. I have no hesitation whatever in saying that.

Then, later on, the election of the first Thatcher Government was the start of six years’ service in her Cabinets. I have one disappointment. We always lined up every year for a Cabinet photograph, in two rows: the seated at the front with the Prime Minister and the standing at the back. I never made the front row. That gives one a very clear indication of where one stands on things. Those years saw successes and failures. I am not going to stand here and spell out the failures. There was a marvellous book published by two Essex University professors last year—a very revealing book— called The Blunders of Our Governments, by Professors Anthony King and Ivor Crewe. I have to tell your Lordships that my sins are ruthlessly exposed in that book.

I am sometimes asked what legacy one can point to. I am not sure that I am the right person to do that, but I offer two suggestions. In the other place I became Secretary of State for Industry and inherited six very major state-owned nationalised industries. As a former Chief Secretary, I could tell their chairmen and chief executives that there was no way they were going to get their investment requirements funded by the Treasury. I started with British Telecom and told the chairman that, if he wanted to have his £28 billion investment programme or whatever it was, he would have to go to the market and have 51% from the private sector. I look back at that decision: I was able to persuade first the Prime Minister and then the Cabinet that BT should be privatised. Other noble Lords were responsible for subsequent stages, but the decision to publish the White Paper and introduce the Bill was when I was Secretary of State. I look back on that with some pride. Nobody has ever suggested that that one should be reversed and I think it set a pattern.

What about this House? Some have pointed to the Science and Technology Select Committee report Science and Society of 1999. It was this report that convinced the scientific community—not just in the UK but across the world—that, if you wanted the public to support and understand, you had to engage with the public and not just preach down to them, and not just on the public understanding of science. It took a while for the message to get across, but there are very few national scientific bodies in this country or anywhere else that do not have their science and society activity, of which, quite rightly, they are very proud. Ten years after that report was published, the British Council organised a conference in London to celebrate the report. It was attended by the representatives of more than 55 different countries. As someone who never did any science at school or university at all, I felt rather pleased with that. It has not stopped: only last week at a gathering downstairs, to which I had been invited but did not attend, my son accepted an award for what is called “outstanding contribution to science”. It was meant for me. I am completely flabbergasted. However, there it is.

I am over my time. I must end by thanking all those who have made these 50 years possible, including my former constituents in Wanstead and Woodford, the clerks and staff of both Houses, and all the people who keep the wheels turning over and make it possible for us to do our job in the way that we do: the Library staff, the catering staff, the security staff, the police, the doorkeepers, the Printed Paper Office and many others. I offer to them all my heartfelt thanks. Above all, I thank my colleagues for their friendship and forbearance, and for their patience in listening to me this evening. My Lords, I will miss you all dreadfully.

[Applause.]

17:19

[Lord Freeman (Con)]

My Lords, it is a privilege and a pleasure to speak immediately after my noble friend Lord Jenkin of Roding. I must say that this is the first time I have heard applause in this House, and I think that it is a great tribute to my noble friend. He has announced his retirement after 50 years’ service in Parliament, 25 years in the other place and 25 years here. He was the MP for Wanstead and Woodford, and a Minister between 1970 and 1985. I think that those who have served in Government will realise that 15 years is a quite remarkable length of time. He was a Secretary of State three times—for social services, for industry and for the environment—and many of the Bills that he was responsible for and the decisions he took still stand and are respected.

I would particularly like to note the encouragement that my noble friend offered to new Members of the other place. He would not always praise them, but would offer them encouragement by saying, “I think that speech was a bit too long”—or too short, but that encouragement was always appreciated. It is now my pleasant duty to invite the House to salute in the traditional way a parliamentary career of great distinction and to wish my noble friend not only long life and happiness with his family, standing at the Bar and represented there, but also the wish to see him back here in the House often. We all salute a great parliamentarian.

[Noble Lords]

Hear, hear!

[Lord Freeman]

My Lords, I am quite conscious of the fact that my contribution to the Pension Schemes Bill is not likely to attract this number of noble Lords so, as they say, please leave quietly. I shall restrict my remarks to a relatively short period of time, because we are pressed by our schedule.

These two important Bills follow the very welcome Budget and subsequent announcements from the Chancellor of the Exchequer, which I fully support. Many noble Lords will warmly welcome the flexibility of the rules being proposed in these two Bills, particularly in relation to defined contribution schemes. I shall restrict my remarks to direct and defined contribution schemes rather than defined benefit schemes, which of course for very large companies in this country, including in particular the public sector, make up the majority of schemes. However, it is the defined contribution schemes where the amount of money that has been saved by the prospective pensioner is going to be affected quite significantly.

I welcome the provisions in both of the Bills that are before us today, particularly with regard to flexibility on the drawing down of savings, but, as has already been mentioned by the speaker on the Opposition Front Bench, there are certain concerns which this House should have when reviewing the Bill in Committee so as to ensure that this new flexibility, which I welcome, does not put a pensioner in a position of inadvertent poverty. The point made by the noble Lord, Lord Davies of Oldham, is absolutely right. Your Lordships—and those who are responsible for the implementation of this legislation—should always remember that there is a tremendous difference between guidance and advice. Advice is something that you pay for, as the noble Lord, Lord Davies, pointed out, and is between the pensioner and either an individual or a respected firm. Guidance is something that the Bill deals with, and is much to be welcomed.

When one starts contributing to a pension scheme, if one is employed by a large company, and it is a defined benefit rather than a defined contribution scheme—that is, over the lifetime the individual earns an entitlement from the pension fund that is underwritten by the employer, which is a big difference from the contribution schemes where an individual is saving for later life—it is important to look at who is providing advice. The Bill provides for guidance as opposed to advice—free guidance to individuals, who may wish to ask themselves, “I have built up this substantial pot of money but I still have 15, 20 or 30 years after retirement. What is the most sensible proportion that I should leave in my pension pot and how much should I draw down, either in individual lump sums or all at once?”. That is where advice is absolutely crucial.

I hope that when the Ministers take these Bills through Committee, they will be able to answer some of the detailed questions about who pays for those who will give advice. My understanding is that it will be from public funds, which the Treasury will require to be raised from those who are providing guidance, and that the individual bears no financial burden by saying, “I want to draw down some money. Here are my assets. Here is how long I and my dependants expect to live”. That advice is absolutely crucial. The citizens advice bureaux are perhaps not the right entities to provide that advice. We need a new cadre of trained and respected bodies and individuals to provide that free advice. Pensioners and prospective pensioners should be strongly recommended to take that advice.

I will conclude by making a comment, if I may, on defined benefit schemes. Like a number of noble Lords, I have served as a trustee and now the chairman of a large defined benefit pension fund. That fund bears the risk of a diminution in the assets and—this is my final point—the movement of interest rates. When a pension fund calculates its deficit or its surplus, typically every three years, one of the factors used is the gilt rate. The gilt rates are at historically low levels at the moment, which means that when the actuary discounts the liability of the lifetime of the remaining members of the pension fund, which might be 15 or 20 years after they have retired or even longer, a very low rate of discount is applied and therefore the liabilities in the accounts of the pension fund rise. Over the past two or three years, they have risen dramatically. Although I welcome low gilt rates and low interest rates, when we come to the valuations very shortly—on 31 December of this year—we will find that the deficits of some of our largest pension funds have again risen. I have no solution to that, but we need to reflect on whether there needs to be some kind of change in the principles that are applied.

I very much welcome the Bill and I look forward to Committee.

17:29

[Baroness Drake (Lab)]

My Lords, I declare my interest as a trustee of Santander and Telefónica pension schemes and a board member of the Pensions Advisory Service and the Pension Quality Mark.

I am extremely concerned about the extent of the new pension freedoms and the speed of their introduction. I think that the Chancellor is rushing his fences. I have two real concerns: the behavioural impact of those freedoms and poor decision-making by the saver. I am now confused as to where the consensus on pensions policy now is. The rush to put the freedoms in place from April 2015 is dominating the debate, overshadowing consideration of their efficiency for the long term. I favour some more freedom, an increase in the trivial commutation level and reducing the proportion of the pension pot that has to be compulsorily annuitised, but the extent of the freedoms unleashed in these Bills will create new problems. There is now a complete separation of tax-advantaged pension saving from any requirement to secure an income stream in retirement. The effect of that decision will be profound.

The Treasury cited Australia and the US as examples where consumers have similar freedoms, but they both have problems. In Australia, few people buy an annuity. The leading accounting body, CPA Australia, found:

“Lump sum superannuation benefits are being treated as a windfall and being used to pay for the lifestyle that’s been lived now instead of being put aside to provide income in retirement”.

As my noble friend Lord Hutton comments, the Murray review into Australia’s financial system found that a quarter of people with a pension pot at age 55 had depleted it by age 70. The complexity is tipping people into cash, and the review now recommends a default back into annuities.

In the US, 51% of the workforce has some form of pension plan, mainly in 401(k) schemes. Thirty-five per cent of those who left jobs in 2013 cashed out their 401(k)s outright. The US Treasury this year said that it will offer a tax break for savers who buy annuities and allow pension schemes to offer long-term deferred annuities as a default. Both those nations are rowing in the opposite direction of the Bills. The Office for Budget Responsibility states that the tax consequences of the reforms are “highly uncertain” because no one knows how many people will spend substantial parts of their pot from next April.

Choice is now extended, but for many millions the biggest challenge remains building an adequate pension pot. The average annuity in 2013 was bought with a fund of just over £35,000; the median was £20,000. How will the reforms help the next generation of savers? The Pensions Minister and the DWP are to be complimented on the rollout of auto-enrolment, but on the default contribution rate of 8% a median earner’s pension pot will still be very modest.

The employer pension contribution had been expected to increase over time, but the new freedoms make that more difficult. The Government have sent out a clear message to the individual—“It’s your pot of cash. You saved it. You spend it as you like”—neglecting the contribution from tax relief and, in most cases, the employer. The now public focus on early access to cash from age 55 contradicts the more important messages of working and saving longer and drawing your pension later. Employers are integral to the success of workplace pensions, and a major influence on the level of contributions, but what is the Government’s message to the employer? “Pension pots are for people to do with as they like; they are no longer reserved for retirement income”. The premise on which employers were compelled into making a pension contribution under auto-enrolment no longer holds. How will that affect employer attitudes? They may be less disposed to increase their contribution and more politically resistant to an increase in the statutory 3%. Will a finance director want to pay more to a worker’s fund so they have freedom to purchase a Lamborghini?

Historically, employer and employee pension contributions were so tax advantaged because they supported a retirement income. I agree with the Pensions Minister that tax relief should be reformed to give a more efficient distribution, but if pension savings policy is now, “Spend it all as you like”, then the fundamental principles of the tax relief will inevitably be revisited. I would not want to see the incentive to save for the long term seriously reduced for the next generation of young savers because successive Chancellors claw back too heavily on tax relief, but I fear that is now where we may be heading. The Institute for Fiscal Studies has already questioned whether the contributions to a DC pension saving should continue to be so tax privileged if annuitisation is voluntary.

The new freedoms bring new risks and complexities and uncertainty as to how the risk of consumer detriment will be mitigated. The Government are dependent on the market to ensure the success of the new freedoms. The Pensions Minister, Steve Webb, has said he will watch the pensions industry “like a hawk”—not a statement of confidence. Antipathy to annuities has been driven by falling annuity rates and the behaviour of providers, who will continue to supply the retirement products—so it is new freedoms, same market.

The new FCA study, which examined how market conditions may evolve from April 2015, found that competition in the retirement income market is not working well for consumers and the introduction of greater choice and potentially more complex products will reduce consumer confidence and weaken the competitive pressures on providers to offer good value. The chair of the FCA in a recent speech made two key comments. He said the increase in regulatory rules has failed to prevent misconduct and does not,

“seem to prevent further problems arising”.

At some point, inevitably, the Government will have to place in statute a clear fiduciary duty on providers and asset managers to put consumers first. Meanwhile, some good providers will want to respond positively to the new freedoms, but how will the market be placed in April 2015? The Legal & General Assurance Society chief executive John Pollock said:

“The fact is we were given hardly any time and then expected to deliver a satisfactory solution”.

Many employers will find engaging with the new freedoms a step too far because they are too complex, too costly and they fear associating with the products and poor decision-making. We may see a greater switch from trust to contract, an accelerated move to default ex-employees out of company schemes and a greater reluctance to fund employee access to guidance and brokering services—employers do not want any liability come-back. Employers are not obliged to provide access to the new freedoms through their schemes and many will not. People will have to embrace the complexity and cost of transferring their savings to get that access. I suggest a further tip into cash.

As to savers, policy now relies on one set of behavioural assumptions when people are saving and another when accessing pensions. It is assumed that workers are prone to procrastination and behavioural biases, which prevent them from making active decisions to save, so they are auto-enrolled and defaulted into an investment fund. However, at the age of 55 they become engaged savers, making active complex choices and informed decisions about their income and risks in retirement. However, as the PPI confirms in its report, Transitions to Retirement, making informed decisions about accessing DC savings was the hardest of all pensions, retirement and other financial decisions.

The Government need to help people to manage these risks. We will have the guidance guarantee, which is welcome, and it needs to be a success. However, some consumer and industry players want the FCA to introduce a second line of defence, requiring providers actively to ask customers whether they have considered the most important risks. We have little clarity on the charges and quality standards on retirement products in future, and the annuity market still urgently has to be tackled.

The Pensions Minister, Steve Webb, and the DWP have been focused—desirably so, and I compliment them—on new approaches to risk sharing, defined ambition and collective DC being their proposition, so it is most surprising that these two Bills are now being run together because one directly undermines the other. The potential for collective DC has changed as a result of the new freedoms. Intergenerational risk sharing between members with the provision of retirement income becomes very difficult if people can crystallise the value of their fund and take their cash from age 55.

As others have said, collective DC schemes are designed to smooth out income. The individual does not have a well defined pot over which they have individual ownership. That the collective DC schemes are not really compatible with the freedoms in the Taxation of Pensions Bill is not just a technical point but a cultural one, too. The freedoms row back to taking cash and seizing the individual while collective DC and defined ambition culturally, emotionally and sentimentally move in favour of sharing risk. It is not a coherent framework.

The Pension Schemes Bill has a significant number of delegated powers, so there is much still to be understood. In order to be sustainable, collective DC needs scale, an assured flow of new members, excellent governance and full transparency. On governance, the Bill is largely silent, yet collective DC and defined ambition can be run by trustees or private providers. The Government have added a clause to enable regulations to impose a duty on managers of non-trust schemes to act in members’ best interests, but it is unclear whether this would place an unequivocal fiduciary duty on private providers. Neither the NAPF nor the ABI detect a current appetite for such schemes, as they confirmed to the Public Bill Committee, so defined ambition, collective DC and any collective risk-sharing future in pension schemes need to be driven if they are to take off. However, we have no visibility as to how the Government will do that. Rather, I fear that the work of the Pensions Minister and the DWP has been undermined by the freedoms that come with the taxation Bill.

17:43

[Lord Holmes of Richmond (Con)]

My Lords, it must surely be Christmas soon, with not one but two pension Bills in the same afternoon. What treats to pop under the tree.

I give my respect and honour to my noble friend Lord Jenkin for his 50 years in Parliament. My sadness is that I got to know him only about a year ago, but I appreciated the wisdom that he shared with me when I joined your Lordships’ House and his witty comments, sometimes sotto voce when he was sitting next to me, at which I found it very difficult to suppress at least a snigger.

Where are we with pensions? It has been a tumultuous 20 years. We have heard the words “security”, “freedom”, “flexibility” and even “simplification”, until we all finally concluded that pension simplification is probably one of our greatest oxymorons. Defined benefit schemes, once the gold standard, with the ability to deliver two-thirds of someone’s income in retirement, were a solid proposition but have been undermined and eroded over the years by a whole series of factors, not least the tax raise by the previous Government, which put the final nail in their coffin. However, these current changes offer a lot; there is flexibility, but that must be balanced with the ability to have assured choices. I will not dwell too much on the Taxation of Pensions Bill, which is a money Bill and not our responsibility, but I ask the Minister what assessments HM Treasury has made as to the likely impact on tax take—not least as regards NICs—of these changes proposed in the Bill.

Much has, rightly, been said about the guidance guarantee. I will not add to those comments, but it is at the core of so much of this. If guidance is to be given, it must be guidance that can be relied upon. For many individuals, pensions are not only dull, boring and uninteresting, but that person will potentially hit a point where a decision could dramatically and irreversibly give them a retirement which they did not deserve, expect or need to have if they do not get that decision right.

The idea that a pensions board clearly sets out all of somebody’s benefits in one place—they have a dashboard picture—makes such sense. As regards wake-up notices, because of the profound nature of these changes I ask the Minister to consider whether such notices need to occur at five or maybe even 10 years before retirement, to get people thinking about what potential exists and how they may choose to act. We will almost certainly have guidance on it, but that is no bad thing. Much has been said on the guidance guarantee from a member’s perspective, but for a moment let us consider this from a trustee’s point of view, when somebody may want to transfer defined benefits into a defined contribution provision. Currently it is required that trustees consider the “appropriateness of the advice” that that member would have taken. I ask the Minister to consider sharpening this as we go through the legislative process. As it stands, it could be interpreted that there is a responsibility on trustees to look into that advice to consider its appropriateness. What is meant by that and what should be clear is that trustees need to convince themselves of the appropriateness of the independent financial advice and that it has come from an FCA-authorised provider rather than a responsibility on trustees which would be almost impossible for them to exercise to go into the details of that advice, and which would also go far too deep into the private matters of that particular member.

To turn to what is best seen as the £30,000 rule—the trivial commutation—again, potentially £30,000 of benefits can be moved without the need for advice. However, as the Bill stands, how can that happen if a member does not have nor should need the knowledge to understand how to assess the value of their benefits? It will not be measured on the cash equivalent transfer value measure but on the lifetime allowance measure. Not only does a member not need to know this, but even if they do know it, it will be impossible for them to gain all that information if they had existing crystallised provisions in a whole series of schemes. I ask the Minister to consider whether in these circumstances a way around this would be to enable that measure to be made on the CETV measure, which would cut through a whole heap of headaches and certainly allow everybody who currently understands that measure to go forward.

As regards the new types of schemes, again, I commend putting risk in there—the new defined ambition. However, there is a new issue here with regard to cost, complication and potential confusion. There is potentially a cost for trustees who seek to have to go through a process to come to the conclusion that their defined contribution scheme is a defined contribution scheme, as they always suspected. There is potential confusion for members to have their scheme potentially fall into a different name, despite the fact that the benefits structure is exactly the same.

There are a number of smaller provisions on which I will go into more detail when we get into Committee. However, what I would like to draw out is that, despite people’s lacklustre and disinterested approach to pensions, they impact our lives way before we come to draw the pension. For example, recent pensions case law demon-strates that, potentially, a part of a pensions trust can fall within a bankruptcy order. How will these new changes affect that? Similarly, how will the legislation impact on pension-sharing on divorce ear-marking orders, already issued and those yet to come? Pensions matter from the moment when a person begins with an employer, when they change employer and when, perhaps, they become bankrupt or get divorced. So many life elements impact on pensions provision.

I support the intent but, as always with pensions, the devil is very much in the detail. It is complex and it makes your head hurt, but it matters—and time is incredibly short.

17:51

[Lord McKenzie of Luton (Lab)]

My Lords, I start by congratulating the noble Lord, Lord Jenkin, on his splendid speech this afternoon, and I give him my personal best wishes for his retirement. It has been a privilege to work with the noble Lord on a number of pieces of legislation. I have always found him incredibly knowledgeable and there is an old-fashioned kindness about his approach, as well as enormous stamina. There have been times when he has still been going at 10 o’clock at night, or 10.15 or 10.30 and beyond, when other noble Lords were flagging and wishing that somebody would call the House to order and to be adjourned.

We have two Bills before us this afternoon but, sadly, no opportunity to undertake a line-by-line consideration of one of them—the Taxation of Pensions Bill. It may contain only four clauses, but there are some 75 pages of schedules to add to the nearly 3,000 pages of tax legislation that the coalition has visited on us to date. If there were a Committee stage, we would have the chance to examine the very important issues that my noble friend Lord Hutton raised earlier.

The Government herald these two Bills as introducing a radical reform, giving greater choice for individuals and business. Indeed they do, but whether it will mean better outcomes in terms of retirement income for individual savers is another matter. As my noble friend Lord Davies of Oldham has said, we support the principle of increased flexibility for people in retirement and reform of the pensions market so that people get a better deal, but the changes undoubtedly bring forward a more complex landscape with different choices for consumers and the prospect of new, more diverse pension products. Given the huge significance of the decisions which individuals make at or when they approach retirement, affecting their lives and that of their partners for 20, 30 or even more years, it is vital that they are supported to make the choices that are right for them.

The Government’s rhetoric has been about the benefits for retirees, and they have been a little coy about the benefits expected to accrue to government. The Taxation of Pensions Bill, after taking account of changes to taxation of death benefits and the reduction in the annual allowance, will generate increased taxation for the Government of £3.86 billion in the period to April 2020. Can the Minister confirm that figure? Increased income tax receipts are expected through to 2030, with modest reductions thereafter.

With taxation receipts for government falling short of expectations, it is doubtless welcome news to the Chancellor that pensioners will be contributing more. However, we do not know much about who is going to bear the extra tax, and in what circumstances. How much of the extra tax will be derived from individuals putting themselves into higher rate tax bands? We know that for any sum taken from uncrystallised funds, 25% will be tax free and the balance taxed at marginal income tax rates. So those wishing to access the whole of their erstwhile tax-free amount will have to subject the whole of the balance to income tax in one go. Perhaps the Minister can give us some breakdown of all of this.

What percentage of retirees is it estimated will continue to take annuities, and what percentage will take their pension pot in one go? Notwithstanding this tax bonanza for the Government, there are lingering concerns that some, with resources and compliant employers, will see the new flexibilities as an opportunity to reduce their tax bills by the use of salary sacrifice arrangements, thereby saving national insurance and tax on the 25% tax-free withdrawal. The Government have addressed this issue in part, by reducing the annual allowance from £40,000 to £10,000 once flexible drawdown is under way, but there still appears to be the prospect of tax leakage in pre-flexible drawdown periods. Are the Government accepting of that?

As we have heard, the Pension Schemes Bill allows for the establishment of collective defined contribution schemes—an arrangement that we support, and indeed have called for. Similarly, we support the concept of shared-risk schemes. It is high time that pension provision was broadened to offer more than just defined benefit or defined contribution schemes. Increasingly, the binary landscape has left new savings going into DC schemes as the longevity, investment and inflation risks, coupled with accounting rules, became too difficult for many employers to sustain. Efforts to chip away at some of the perceived more burdensome obligations of DB schemes have not stemmed the tide of closures in the private sector.

As the NAPF 40th annual survey identifies, active membership of DB schemes has reduced by two-thirds since 1975, to just 1.1 million today. Active membership of DC schemes outnumbers that of private sector DB schemes for the first time ever, and the success of auto-enrolment is expected to reinforce this shift.

At the same time this is taking place, decumulation of DC schemes is happening in an environment of sustained low interest rates, with quantitative easing helping to create an environment of miserable annuity rates. All this has been accompanied by a substantially dysfunctional market. So the defined ambition elements of the Bill which provide the framework for risk sharing between employers, employees and third parties are to be welcomed—as is the prospect of collective benefits involving risk pooling between members, with the opportunity of greater stability of outcomes.

I understand that it is hoped that the necessary secondary legislation will be ready for April 2016, to coincide with the abolition of contracting out. Does that mean that we will not see drafts of the key regulations during the passage of the Bill?

Undoubtedly the aspect of the Bill which has attracted most comment involves the new flexibilities around decumulation of DC schemes. The speed with which these changes were announced and are being introduced is, as other noble Lords have said, worrying. The lesson from previous major reforms, such as the single state pension, auto-enrolment and most changes to the state pension age, is surely the benefit of laying the groundwork, through extensive consultation and stakeholder engagement, and building a consensus where possible.

The guidance service—the deliverer of the guidance guarantee—is especially important, because the availability, scope and effectiveness of the service will be key if the new flexibilities are to work as intended. As a very recent PPI report shows, we will have to recognise the changing circumstances that face individuals as they approach retirement—such as rises in state pension age and the normal pension age in private sector schemes, removal of the default retirement age, increases in longevity, and current economic challenges. These factors are changing the way in which people approach retirement and pension transition. It is no longer necessarily just a case of leaving work and taking a pension—although accessing DC pensions is, as we have heard, currently considered the most challenging aspect.

Just at the time that inertia is being put to good effect to encourage accumulation by auto-enrolment, the Bill seeks to galvanise engagement and enthusiasm when it comes to decumulation, as my noble friend Lady Drake said. This engagement is expected initially of a generation who have generally not saved enough for retirement, whose longevity is increasing, but where men in particular underestimate life expectancy, and who tend to overestimate their income returns.

So far as the current market is concerned, let alone one selling more diverse products, as two recent reports by the FCA make clear, providers are not generally treating customers fairly. One of its reviews showed that 60% of retirees with DC pension savings were not switching providers when they bought an annuity despite the fact that around 80% of those consumers would obtain a higher income on the open market. I think that my noble friend Lord Hutton made that point. As for those with medical conditions and lifestyle factors, the FCA estimated that 91% could get a better deal on the open market. The review identified that only 5% of annuities sold by providers to their existing pension customers were enhanced, compared with 50% of annuities sold in the open market.

So how can we have confidence that the guidance guarantee will facilitate better outcomes, especially over time when the vacated space of compulsory annuities will engender a wide range of products? There are a number of concerns. The first is whether people will seek to access the service in the first place, and some piloting by Legal & General was not encouraging. We know from the “near final” rules published by the FCA on 27 November that they will introduce a requirement —the first line of defence—for DC providers to ask consumers whether they have used the guidance service or received financial advice, and to encourage them to do so if not. That is all well and good, but a growing number of voices are calling for a second line of defence—we heard some of these this afternoon, particularly that of the noble Baroness, Lady Greengross —which requires providers actively to prompt consumers, to ask whether they have considered matters such as tax, their partners’ needs, benefit implications, medical or lifestyle needs, including social care ramifications, the impact of inflation and the risks of running out of money. The FCA reviews certainly give emphasis to the need for such a second line, and we will doubtless explore this further in Committee. But perhaps the Minister can say whether it is intended that there will be only one free session at which guidance is provided. How will this work over a lifetime in circumstances where an individual does not opt for an annuity and new products are coming on stream over his or her lifetime?

There is much else that can be explored in Committee —matters that are in the Bill and, indeed, some that are not. Certainly, we will wish to pursue the issue of removal of restrictions on NEST. I take this opportunity to say that my attention has been drawn to the operation of the PPF and how it affects certain categories of employees. In particular this issue has been raised by pilots of BMI and Monarch. BMI entered the PPF in 2012 and Monarch is in the assessment period. However, the operation of the PPF cap is raising the prospect of such pilots receiving pensions dramatically below their original scheme expectations. Can I meet the Minister to explore that issue rather than raise it endlessly in Committee?

These Bills have the potential to change the pensions landscape and we have a duty to engage with them constructively but rigorously.

18:03

[Lord Kerr of Kinlochard (CB)]

My Lords, it is a pleasure and a privilege to participate in the tributes to the noble Lord, Lord Jenkin of Roding. I should like to add one footnote. As a former public servant when he was a great man in the Cabinet, I should like to say how much his courtesy towards the public service was appreciated. He was a great team leader. He was not one of those who thought that the public service was a lesser breed without the law. It was a privilege to work with him at that time.

I also agree with every word of what the noble Lord, Lord Freeman, said so elegantly, particularly the tribute he paid to the kindness of the noble Lord, Lord Jenkin, in welcoming new Members to this House. I learnt a great deal from him when I first arrived here, in particular about energy policy. I will greatly miss his consistent stress on the need for further back-up investment in generation. Governments of both hues have perhaps not paid sufficient attention to that. If the lights go out and we find ourselves in the dark as we brush our teeth, we will remember the noble Lord with very great affection.

18:05

[Lord Bradley (Lab)]

My Lords, I begin by adding my own tribute to the distinguished career of the noble Lord, Lord Jenkin of Roding. As we have heard, he has given huge service to Parliament in both Houses over 50 years and held many of the great offices of state—even if he did not get on to the front row of the photograph. His contribution today is further testimony to his massive wit, wisdom and insight into both Houses of Parliament. I wish him a very happy and healthy retirement.

We have heard a wide-ranging and high-quality debate. I thank the Minister for his detailed introduction of the Pension Schemes Bill which we will explore in great detail in Committee and at other stages in this House. I thank all noble Lords for their excellent contributions to the debate. A theme that has run through it is that, although we are taking the two Bills together, they do not necessarily fit together quite as well or as coherently as the Minister argued when introducing them, just as the four pensions Bills introduced during this Parliament belie the proposition of the Minister for Pensions, Steve Webb, that, overall, this is a coherent set of reforms.

My noble friends Lady Drake, Lord Hutton of Furness and Lord McKenzie of Luton made clear in their excellent speeches that how the new freedoms and flexibilities in assessing pensions, introduced through the Taxation of Pensions Bill, and the provisions to allow the creation of collective defined contribution and shared-risk schemes, sitting between defined benefit and defined contribution schemes, will impact on each other has not been fully worked out. I am sure that, as we go into Committee, the Minister will provide further details about the new pension freedoms and how they will impact on the types of shared-risk schemes that may be created following the changes in the Pension Schemes Bill. We want to explore the potential tension between guidance, help and encouragement to build up a pension pot, particularly following auto-enrolment, and flexibility and choice in turning this into an adequate retirement income.

As my noble friend Lord Davies made clear, we support freedom and flexibility in accessing pensions but want to ensure that three tests are met: savers should get the right guidance—I stress that we are talking about guidance, which is different from advice; the system should be fair to low and middle-income savers; and the reforms must not lead to additional burdens on the state. These principles will steer the questions we ask when we look closely at the guidance guarantee in the Pension Schemes Bill. For example, will the guidance be of sufficiently high quality and impartiality to help people with perhaps the most complex financial decision that they will ever have to make? Will take-up be sufficient to ensure that people are not left unequipped to deal with this decision? Will those who receive an annuity or are defaulted into one still be able to access a good-value product?

The Government clearly understand how important it is that the guidance guarantee—or whatever it is eventually called—meets the substantial challenge of equipping people to navigate what can be a very difficult market. This reflects another tension between the different strands of the Government’s pensions reforms. Auto-enrolment is based on the idea that consumers do not always make the best decisions in a complex market and, instead, may end up doing nothing. The pensions freedoms are predicated on those same consumers becoming highly engaged with the decision in front of them when they reach retirement. The guidance guarantee is the bridge over which they attempt to cross that fault line between different reforms, and it will need to be up to the job. We will address this issue in Committee when we look at that aspect in the detail that the noble Lord, Lord German, set out.

Those difficulties are possibly made more pronounced by the pace at which we need these reforms to be implemented and the pace at which the Government are pressing through this legislation in this House, as the noble Baroness, Lady Greengross, clearly pointed out in her excellent contribution. In the case of citizens advice bureaux, for example, it comes on top of an already challenging set of circumstances for people who rely on that service. I hope that the Minister will be able to reassure the House that all the organisations that will be responsible for giving guidance, including the Pensions Advisory Service, will be adequately resourced to do what they are being asked to do. That is especially important given the disparate estimates that have been made of the take-up of that guidance, as came out clearly in Committee in the other place. As we heard from my noble friend Lord McKenzie, Legal & General has said that following its own pilot a mere 225 out of 9,000 contacted took up the offer of guidance. Therefore, take-up could be very low. TPAS has estimated that it will be 25% but I accept that others have made higher estimates. However, take-up will be crucial if the guidance is to be meaningful for the people who rely on it.

Questions remain unanswered about how the new flexibility that has been announced will affect the way that pension savings are treated. If they can be accessed at 55, can a creditor demand that money be drawn down to cover debts? Currently, the fact that pension savings are put aside for purchasing an annuity prevent them being accessed and treated as free money. There are concerns that the pace at which these changes are being rolled out means that the Government have not ironed out all the details of such important matters for individuals reaching that age.

The other principal change to the legislation ahead of us is the outlining of new definitions of the different kinds of pension schemes, moving beyond the general money purchase and non-money purchase definitions in the legislation to make it possible to create shared-risk schemes. We support the changes and in fact earlier this year we called for these changes to create CDCs. Their benefits have been laid out by other noble Lords. They have the potential to offer a more stable retirement income than individual DC schemes. Modelling for the DWP showed that a collective pension would have outperformed an individual one by an average of 33%, according to historic data, and, just as importantly, would have performed more consistently. We need to look carefully at those outcomes. However, there is obviously the potential in collective shared schemes to achieve that stability and longevity in retirement income.

There can also be benefits from not having to divest from relatively riskier assets into safer ones with a lower return as the saver reaches retirement age, as is often the case with individual DC schemes. They can also have lower administrative costs. As a result, IPPR work from last year showed that it was the most popular option for government reform, backed by a broad spectrum of the population. Clearly there are benefits to be had from collective schemes.

The Bill is light on detail. As the Minister intimated, it does not contain the detail of the kind of defined ambition and DC schemes the Government envisage will be arrived at. Nor is there much suggestion of how many collective schemes the Government envisage will be set up in the short to medium term. I hope that the Minister will provide some more detail on the DWP estimate for the number of employers likely to take up the option of a defined ambition scheme. I hope that we will have details of that not only today but as the Bill passes through its stages in the House.

There are a number of missed opportunities in the Bill. There are steps that the Government could take to improve the market that would fit well with these reforms, such as changing the legislation so that pension schemes are required to have a board of independent trustees with a fiduciary duty owed to scheme members over and above that owed to shareholders. That was clearly identified by my noble friend Lady Drake. The OFT has shown that the contract-based market is not getting value for money for savers. As we have heard, international evidence shows that if the Government were to move in that direction it is likely to lead to better governance and transparency. We look forward in Committee to laying out the evidence on how trust-based governance can improve dysfunctional markets.

With this there is also the chance to build up scale in a way that would drive efficiencies and build up those economies of scale, which we again know from inter -national evidence can improve administration. It would mean that fewer trustees could cover more of the market and lead to the lower transaction costs through intermediation as recommended by the economist, John Kay. Two hundred thousand schemes are too many, so it would be helpful if the Minister could outline what is being done to encourage scale.

There is also a missed opportunity to build on the good work that NEST has already done by lifting the restrictions placed on it in the light of the European Commission’s confirmation that doing so would not breach state aid rules, as the Government previously argued it would. For NEST to remain influential in the marketplace, it needs to be able to grow to reach more employers and attract more savers. We will be exploring that possibility in Committee.

It is also crucial that, in the excitement of the new flexibilities being rolled out this April, we do not forget about reforming the other parts of the market that have not worked well for consumers but which provide the types of product for which there may still be demand. The Financial Conduct Authority’s interim report on the retirement income market published last week showed that the market is still not working well, and we know that of the 40% of people who get an annuity with their existing provider, 80% were not aware of the option to shop around. Others were not practically aware of how to go about this, or did not think it worth shopping around in the first place. In fact, it can make a substantial difference to people’s retirement income. The National Association of Pension Funds estimates that not shopping around can cost up to 20% of retirement income. It would therefore be of great benefit to the consumer to require an independent broker’s recommendation before it is possible to sell an annuity to someone who has saved with the scheme they are purchasing the annuity from.

We also urge the Government to take action to prevent people who are taking advantage of the new flexibilities being subject to similar examples of consumer detriment, albeit perhaps through a different product. It is concerning that the Government’s plans to address rip-off pensions do not include income drawdown, despite the fact that 320,000 people are likely to be looking to access these products after April. If charges equivalent to many of today’s drawdown products were to apply then, someone investing a pension pot of £30,000 could see 27% of their savings taken away in charges. Given that the median annuity in 2013 was purchased with a pot of £20,000, these charges could be significant.

As we have heard from other noble Lords, this Bill is more a framework than a completed piece of legislation, enabling rather than fully formed. It will be difficult to scrutinise without further details from the Minister about the likely content of regulations and the timetable for when these regulations will be laid. It is essential for this House to have sight of those regulations so that we can look across the piece of the primary legislation and the regulations to be absolutely sure that we are scrutinising effectively the impact of the Bill on future incomes in retirement. However, the number of amendments that the Government introduced as it progressed through the other place, and the number that we are likely to see as it progresses through this House, means that it is vital that these proposals are adequately tested here. We may therefore look at whether clauses should stand part of the Bill when we come to Committee stage to enable us to debate the crucial issues that have been identified by many noble Lords this afternoon.

We want a pension market that protects consumers and provides them with what they need in retirement. That is precisely what we will attempt to achieve as the Bill passes through this House.

18:30

[Lord Newby (LD)]

My Lords, it is a great pleasure to be able to respond on behalf of the Government to our debate this afternoon. As ever, your Lordships’ House has demonstrated a very considerable degree of expertise in the subject. I am sure that I will not be able to cover all the points made, but we will have the opportunity of doing that at some length in Committee.

Like other noble Lords, I begin by joining in the tributes paid to the noble Lord, Lord Jenkin. I first saw the noble Lord when I, as an official at Customs and Excise, was drafted to sit in the Box during one day of a Budget debate when he was Secretary of State for Health and Social Security. I was very excited about this, until I was asked a question that I could not answer—fortunately, not by the noble Lord. The fact that in 1980 he was at the peak of his powers in that position and has remained a very influential Member in Parliament in its various forms since then is a real testament to his achievement. His interventions here, as noble Lords have said, have always carried great weight and have informed and guided our deliberations. We wish him a long and very happy retirement.

[Noble Lords]

Hear, hear!

[Lord Newby]

I also pay tribute, very briefly, to my right honourable friend Steve Webb, who, as Minister for Pensions, has taken the lead in driving these and many other pension reforms forward. Many said that a coalition Government would not be able to make long-term reforms of a fundamental nature. Well, when it comes to pensions, whatever you think about them, you cannot claim that the Government have shied away from looking at all the issues. Indeed, they are effecting major changes.

At first sight, you would have thought that there could be no issue about the fact that giving people more freedom to spend their money is a good thing; that is what these Bills do, and therefore there will be unalloyed pleasure at the prospect of doing it. However, as noble Lords have pointed out, there are two challenges with this. First, many individuals either lack the financial literacy to make much sense of their finances, which we know about, or are slothful when it comes to thinking about pensions—which I think the current system encourages in some cases, not least because of the way in which they are treated by their pension providers.

As we know, many pension providers have been untrustworthy in the past, and have misled people rather than encouraged them. In the majority of cases, even now, they provide information to their individual policyholders in a manner that the policyholders cannot understand. Pension providers know jolly well that they cannot understand it and they have almost wilfully refused to make information available in a manner that people can understand. One of the great attractions of what we are doing on the guidance front is that it will require a template to be completed by pension providers about what on earth it is that individual policies amount to.

We have a market that is not working as markets are supposed to work. The purchasers do not have the information that they need and the suppliers very often are not providing products in a way that is fair to the consumer. That is why the whole issue of guidance is at the heart of these Bills and the debate today. I start with that because every noble Lord who has spoken has talked about guidance. As we have explained, from April next year everyone who benefits from the new flexibilities will get free and impartial guidance. The Treasury will take overarching responsibility for the service that will be delivered, but it will actually be delivered by the Pensions Advisory Service and Citizens Advice. I assure noble Lords that they will be adequately resourced and will be able to, and by their very nature will, give impartial advice.

To ensure that the service is in place in what is admittedly a tight timetable, an implementation team has been established within the Treasury to work with those providers. The Government have given the FCA responsibility for setting standards for guidance and monitoring compliance. This will, we believe, deal with the question asked by the noble Lord, Lord German, about whether the service will be of a high enough quality—we are confident that it will be. Further progress on how we intend to introduce and implement the guidance guarantee will be issued by the Government before Christmas.

Noble Lords asked whether there should be a second line of defence, so I should perhaps just explain what is already planned and what the FCA has already said. The FCA has made it clear that firms should not do anything to dissuade customers from getting guidance, but it accepts, and the Government accept, that not all individuals will seek to take up the offer of guidance. It is their choice to do so. In its new rules document, the FCA confirmed that pension providers must signpost individuals to the guidance service in wake-up packs. We have said that they should be issued four to six months ahead of an individual’s nominated retirement date. But I take the point made by a number of noble Lords that it might be advisable to think about giving earlier signposts to policyholders that they need to think about their pensions.

The FCA has reaffirmed the expectation that firms encourage consumers to shop around on the open market and that they should receive sufficient information about the consequences of their choices before signing up to a purchase. It is introducing a new requirement that, when communicating with customers about accessing their funds, firms are required to ask whether they have taken guidance or relevant financial advice. If not, they should encourage them to do so. As noted above, it has introduced a new requirement to recommend that consumers seek guidance or advice rather than simply signposting it.

Firms will be required to give a description of the tax implications of the option selected by the consumer and it has been made clear that firms can question the consumer’s decision when they feel that it is inconsistent with their circumstances without fear of overstepping the boundary into regulated advice. The FCA is considering whether it is appropriate to place further requirements on providers and, as noble Lords have mentioned, it is reviewing the rules in the first half of next year. The whole issue of what might constitute a second line of defence will be in its mind at that point.

Finally on the guidance, the noble Lord, Lord McKenzie, asked whether it would be one shot at getting the advice. I will say two things on that. First, the fact that the pension provider will have to provide details on the individual’s pension in a standard form will help to ensure that, when the person goes, they have the information that they need. One of my concerns is that people turn up without the key bit of information —I can imagine myself doing that. We hope that we are getting round that. At the very least, people who have had their advice will be able to go back to the website and access it to check further information that they then think they need.

I turn to individual noble Lords’ comments. The noble Lords, Lord Beecham and Lord Davies of Oldham, and others asked about the impact on the Exchequer. A number of noble Lords slightly implied that we were doing all this only to get a small amount of additional income. I can assure noble Lords that the public finances are not in such a bad way that we have completely to reorder the way we do pensions to get a short-term benefit. The Budget costings showed that the net additional income to the Exchequer from the scheme will be £320 million next year, rising to £1.22 billion in 2018, but then falling off after that because people will bring things forward. As I say, our motivation for doing that has nothing to do with something that is, though significant, a relatively modest figure in the overall context of the public finances.

The noble Lord, Lord Davies, set out the Opposition’s tests, which included guidance, which I have dealt with, fairness and cost. On fairness, we are ensuring that the generous tax reliefs available on pension savings are not used solely for tax planning, given the flexibility that the rules offer. Overall, we think that the rules promote fairness. On cost, and in particular the question of the impact of the changes on welfare and social care spending, that obviously will depend on how people choose to use their savings. However, the Government do not expect this impact to be significant in the context of the steps taken to improve the sustainability of pensions spending, such as the changes to the state pension age and reforms to public service pensions. I remind noble Lords that the estimated net impact of the Government’s key pension policies is a saving of about £17 billion in 2030 on today’s terms.

The noble Lord, Lord Davies, asked about the review. It has two elements. On reviewing the cost to the Exchequer, the Government are committed to keeping the policy under review through the monitoring of information collected on tax returns and tax records. Additionally, HMRC regularly publishes data on tax receipts, which will reflect any impacts on the Exchequer. Any such impacts will be reflected in forecasts made at future fiscal events. On the guidance, it obviously will be extremely important that we understand its outcomes. The Treasury will establish robust KPIs to measure consumer outcomes.

My noble friend Lord German asked about the publication of the FCA standards and when that would be. The FCA has stated that they will be produced before the new scheme comes in, which is hardly surprising. We hope that it will do that significantly earlier than that, we hope at Royal Assent. On his concern about regulators working together, I say that the DWP and HMRC work closely with the Pensions Regulator and the FCA to ensure that there are no gaps in regulation in this area. We have no reason to believe that there are any. He also asked about housing wealth. The guidance will make sure that consumers consider questions about their situation as a whole and will direct them to further sources of information as appropriate. However, one of the problems of housing wealth for many people is that they do not have any intention of accessing it as part of their pensions. Some people do, but very many do not. Given the practical problems of downsizing, which we discussed recently in your Lordships’ House, many people who in an ideal world might want to do that in fact do not.

The noble Baroness, Lady Greengross, asked about a possible extension of the levy beyond the number of firms currently planned. Until now, the Government have decided that those firms which are most likely to benefit from better informed and engaged consumers should help to fund the service, hence the levy on the current range of firms. Occupational pension schemes do not currently offer accumulation products, as membership of such schemes is linked to employment and they do not sell products into the market in the same way as financial services firms. It is possible, however, that schemes may wish to change this approach over time, and we will keep the levy under review.

The noble Baroness also asked about welfare and the impact of these changes on social care, as well as how the Government are treating the new pension arrangements. We are treating the options as similarly as possible for the current welfare means test purposes by applying a notional income of 100% rather than 150% of the income that an annuity would have provided. We want to make sure that the decisions people make about drawing down their pensions will not significantly affect how they are assessed for welfare and social care support.

A number of noble Lords, including the noble Lord, Lord Hutton, questioned the evidence that the pension flexibility as proposed will encourage or discourage saving. Of course, we will not know that definitively until we have the scheme up and running. However, the National Association of Pension Funds found in its spring workforce survey that 28% of workers say that they are now more likely to save into a pension. Young people are the most likely to say that, and lower-income respondents also said that they were more attracted to pension saving. While a number of noble Lords have been rather gloomy about how people will respond to these changes in terms of savings, one of the reasons people do not want to save for a pension at the moment is that they often think that an annuity is such appallingly bad value. That is definitely the case for young people, and indeed more generally.

[Baroness Drake]

Will the noble Lord accept that in terms of people not actively saving, the behavioural evidence shows that it has nothing to do with annuities, but with their own inertia about dealing with complex decisions? Any complex financial decision has the same effect.

[Lord Newby]

My Lords, I think that the strong take-up of auto-enrolment suggests that people are actually a bit more long-sighted than they are sometimes given credit for. Young people in their 20s and early 30s who are thinking about their pension savings are looking at what kind of value for money they can get from doing that as opposed to putting their money into alternative forms of saving. So I am not sure that I altogether agree with the noble Baroness.

The noble Lord, Lord Hutton, said that the Government should strongly encourage partial annuitisation. We have always been clear that an annuity will remain the right choice for many at some point in their retirement because it can provide the security that they are looking for. He also asked about inheritance tax. I can say that the intention of the legislation is that the scheme administrator will retain some discretion over how death benefits are paid, ensuring that these benefits can remain outside the scope of inheritance tax.

[Lord Hutton of Furness]

I am enormously encouraged by the Minister’s response, but can he explain to me how they will do that?

[Lord Newby]

My Lords, I do not know, I am afraid, but I will write to the noble Lord as I am almost out of time. The House has rules that, as a Whip—although I know I am going to break them already—I can break only to a certain extent. I will write to the noble Lord in that respect. I might also write to him about the situation in Australia.

The noble Lord, Lord Freeman, asked whether the new flexibilities would put people at risk of poverty in the future. The basic principle here is that people must be trusted to make their own choices about how to use their savings to fund their retirement. We believe that the introduction of the new, simpler state pension in April 2016 will help minimise the impact on means-tested benefits as the full level of the new state pension will be above the level of the basic means test in personal credit, and we expect over 80% of those reaching state pension age in the mid-2030s to be receiving the full new state pension.

The noble Baroness, Lady Drake, took up the theme of the noble Lord, Lord Hutton, about the dangers of a revolution. She saw the dangers as being significantly more considerable, I think, than most noble Lords who spoke. Of course, some of the potential problems that she foresees are impossible to predict absolutely, but I did not recognise the gloomy landscape that she portrayed in a number of respects. She asked why we were still paying tax relief when people will spend all their money. Tax relief is designed to support and encourage people to save for their retirement.

[Baroness Drake]

I did not ask why we are still paying tax relief if people are going to spend all their money. I asked whether, if people did not have to have annuities, it was possible that, over time, successive Chancellors revisiting the consequences for the next generation might not have this generation’s generosity on tax relief.

[Lord Newby]

My Lords, I was just about to say that this Government certainly are not going to revisit it. It is impossible to know what future Governments will do about tax policy. One of the key points about tax relief is to encourage people to save and I think any future Government will want them to carry on doing that.

A number of noble Lords, including the noble Baroness, Lady Drake, talked about the possibility of people taking their pensions early at 55. There is that freedom but my personal view is that, particularly as people are working to a later age rather than retiring earlier, the number of people who will wish or think it sensible to take their pension at 55 will not be very great. For some people, particularly those with health conditions, taking an early pension is absolutely the logical thing to do.

The noble Lord, Lord Holmes of Richmond, asked whether trustees and scheme managers will be required to evaluate the appropriateness of the advice that individuals are given when moving from DB to DC. As we have set out in our consultation, we intend that trustees and managers will be required to check that advice has been received from an FCA-authorised person but they will not be required to evaluate the content of the advice or to check its quality. The detail of the process by which scheme managers will be required to check that the advice has been taken will be set out in regulations, which we will work closely with the industry to develop. I apologise for rushing through.

The noble Lord, Lord McKenzie, asked whether I would be happy to arrange a meeting with BALPA, and I would indeed.

The noble Lord, Lord Bradley, gave a strong explanation of the benefit of collective schemes. He touched on one of the key benefits of the changes. We do not know at this stage how many people will take them up; we cannot give detailed estimates of how many people will do any number of things at this point. We see strong practical reasons to believe that collective schemes will benefit many people and that the industry will move to develop them.

To sum up, as my noble friend Lord Bourne laid out at the beginning of our debate, these are radical changes that build on this Government’s previous reforms to the UK private pensions market. At the heart of the reforms is the Government’s intent to give people greater choice. That entails both greater choice for businesses regarding the type of pensions that they offer and greater choice for individuals in how they access their pension savings. These radical changes need to be made to reinvigorate the private pensions market and to ensure that it remains relevant for future generations of savers. I commend the Bills to the House.

Bill read a second time.

Pension Schemes Bill

Tuesday 16th December 2014 Lords Chamber

Order of Consideration Motion

18:46

Moved by

[Lord Newby]

That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee that they consider the Bill in the following order.

Clauses 1 to 40, Schedule 1, Clauses 41 to 46, Schedule 2, Clause 47, Schedule 3, Clauses 48 to 65, Schedule 4, Clauses 66 to 76, Schedule 5, Clauses 77 to 85.

Motion agreed.

Taxation of Pensions Bill

Tuesday 16th December 2014 Lords Chamber

Second Reading (and remaining stages)

18:47

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

House adjourned at 6.47 pm.