House of Commons
Prayers
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Oral Answers to Questions
Kelvin Hopkins (Luton North) (Lab)
1. What steps he is taking to help households improve their energy efficiency
Ian Lavery (Wansbeck) (Lab)
11. What steps he is taking to help households improve their energy efficiency
The Parliamentary Under-Secretary of State for Energy and Climate Change (Amber Rudd)
Making households more energy efficient is the surest and safest way to reduce energy bills. Thanks to the energy companies obligation and green deal schemes, more than 1 million homes have been made more energy efficient, helping households stay permanently warmer for less. In Luton North, more than 2,726 households have been helped by ECO alone, which is nearly the twice the national average in respect of households.
Kelvin Hopkins
The truth is that millions of low-income families are still living in poorly insulated and cold homes, and paying very high fuel bills. Cuts to the energy companies obligation have meant that nearly half a million fewer households will receive vital upgrades to make their homes warmer and cheaper to heat, and, in any case, half of that budget goes to households that are not in poverty. Have this Government’s policies not been a failure, leaving millions of families too cold in their homes, struggling to pay heating bills and in need of a Labour Government to make their lives better?
Amber Rudd
I do not share the hon. Gentleman’s interpretation. Fuel poverty under this Government has gone down. The changes to the ECO specifically took £50 off the bill, but reserved the amount that was to help the vulnerable and those on low incomes. So we have continued to focus on low-income and vulnerable people, to ensure that they are the first households to be made warmer for less.
Ian Lavery
With one in 10 green deal companies being struck off, what assurances can the Minister give constituents of mine, and people across the country, who might suffer as a result of lower standards and shoddy workmanship?
Amber Rudd
I thank the hon. Gentleman for giving me the opportunity to address this matter. The fact is we have very tough consumer protection in this area. One in 10 have been struck off, but that is not necessarily to do with any criminal behaviour; it is to do with their not engaging properly with the certification process. It is because we have a tough certification process, which is in line with other organisations’ arrangements, that some have been struck off in order to protect the consumer better.
Mr Philip Hollobone (Kettering) (Con)
Many household electrical appliances use up far too much electricity. What progress has been made over the past five years on persuading manufacturers of these products to make them far more energy-efficient?
Amber Rudd
I share my hon. Friend’s views on this issue. Some products do use far less electricity than others, and of course saving energy is the best way to save on people’s household bills. I am happy to say that the EU product regulations have been helpful in implementing this and we will continue to be able to do that.
Mr Mike Weir (Angus) (SNP)
The Minister will know that rural homes are often some of the worst in terms of energy efficiency. The renewable heat obligation should help with that. Unfortunately, I have encountered constituents who have installed a wood-burning boiler and been granted the renewable heat incentive payments, only to have them removed later on the spurious grounds that the boiler may be able to burn logs as well as pellets. Is that not illogical?
Amber Rudd
The scheme has been successful and we will continue to support it. On his specific question, may I suggest that he writes to me about the particular example and I will certainly look into the matter?
Graeme Morrice (Livingston) (Lab)
2. What recent assessment he has made of trends in levels of investment in low-carbon energy sources.
Mrs Mary Glindon (North Tyneside) (Lab)
4. What recent assessment he has made of trends in levels of investment in low-carbon energy sources.
Mr David Hanson (Delyn) (Lab)
6. What recent assessment he has made of trends in levels of investment in low-carbon energy sources.
Ms Karen Buck (Westminster North) (Lab)
13. What recent assessment he has made of trends in levels of investment in low-carbon energy sources.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
On 24 March, we will be publishing a detailed report on the progress this coalition is making on investment in low-carbon energy, but let me now share two findings from that report ahead of next week’s publication. First, for the second year running the UK has invested more in clean energy than any other country in Europe, Secondly, Bloomberg new energy finance data show that last year was the UK’s best ever year for new-build renewable energy finance, placing the UK in the global top five. I promise, Mr Speaker, to give each Member in turn a new statistic showing how the UK is doing so well on low-carbon energy investment.
Graeme Morrice
More than 50 companies called on the Secretary of State to implement a 2030 decarbonisation target. They warned that the absence of a specific carbon-intensity target was undermining investment. Does he regret not joining the 16 Members from his own party who rebelled against the Government and voted for this target?
Mr Davey
The hon. Gentleman knows that my party and I are in favour of this target, which is why we legislated in the Energy Act 2013 to put one in and it will be in our manifesto. But he is wrong if he thinks this target is some sort of panacea for low-carbon energy investment. We were told by the Labour party that if we did not do this, we would not see the supply chain growing. But here is a statistic for him: the supply chain in the UK for low-carbon energy investment is booming. We have had the massive investment from Siemens and Associated British Ports in Hull, transforming that city, and we have seen what MHI Vestas has been doing in the Isle of Wight. Under this Government, low-carbon energy investment and the whole supply chain are booming.
Mrs Glindon
I am sure that the Minister will be pleased to know that Northumbrian Water has an advanced anaerobic digestion plant in my constituency that is not only producing green energy from the sewage treatment process but injecting it into the gas network. However, according to the Environmental Audit Committee, investment in clean energy is running at only half the rate needed if we are to meet our binding carbon emission commitments. Will the Minister explain why he is failing to generate the investment that we need?
Mr Davey
Let me give a statistic to the hon. Lady: the annual rate of renewable energy investment in this Parliament is more than double the rate that it was in the previous Parliament. From 2010 to 2014, low-carbon investment has amounted to more than £40 billion. That is a record of which we are very proud.
Mr Hanson
What assessment has the Secretary of State made of the impact on employment in the onshore wind industry from the effective moratorium on onshore wind? He will probably know that my right hon. Friend the Member for Don Valley (Caroline Flint) and I recently visited West Coast Energy in my constituency, which employs many people developing onshore wind. The organisation is now threatened by the Secretary of State for Communities and Local Government, who is blocking wind farms. Surely the right hon. Gentleman does not support him in that.
Mr Davey
The right hon. Gentleman will know that onshore wind has boomed under this Government. There is no moratorium, so what he said was wrong, but it is true that there are Conservative colleagues who do not share my enthusiasm for onshore wind. I recently opened the largest onshore wind farm in England, at Keadby, and I was able to grant, after the recent very successful first auction of contracts for difference, 15 out of 27 contracts to new onshore wind farms. That sounds to me like we are going ahead fast.
Gregory Barker (Bexhill and Battle) (Con)
Without doubt, investment in low-carbon energy is booming, thanks to the bold reforms of this coalition Government and our long-term economic plan. But one of the unsung success stories of this Government has been the renewable heat incentive. Will the Secretary of State update us on just how many thousands of commercial, industrial and residential installations there now are?
Mr Davey
In answering my right hon. Friend’s question, may I pay tribute to him for the role he played in this boom, particularly in the renewable heat incentive? We have seen more than 25,000 domestic installations. I cannot give him the figure for non-domestic installations, but we are seeing a big increase. Now that this renewable heat scheme has really got going, the next Parliament will need to build on our success.
Julie Elliott (Sunderland Central) (Lab)
Every few months, the consultancy firm EY publishes its renewable energy attractiveness index. This month, the UK fell yet again. In November 2013, we were fourth in the world. In February 2014, we fell to fifth; in May 2014, to sixth; and in September 2014, to seventh. This month, the UK fell to eighth, which is a 12-year low. The Secretary of State’s sole solution to our broken energy market is telling people to switch. In order to reverse that appalling record, is it not time we switched to a Labour Government so that we can drive the investment, create the skilled jobs and produce the clean energy that our country needs to succeed?
Mr Davey
The hon. Lady has scored a massive own goal. She trailed us going down the attractiveness index for future investment, but she should realise that the closer we get to the election, the more worried investors are. Members do not have to believe me about the potential threat of a Labour Government to investment; they can believe the Secretary-General of the OECD, Angel Gurria, who said that Labour’s energy price freeze could bankrupt investors. That is why the index is going in the wrong direction. The hon. Lady might also want to know that that index was prepared as a snapshot before the recent successful contracts for difference auction, which saw 27 new renewable energy plant contracts issued. This Government are seeing huge investment. The only thing that can stop that investment is the election of a Labour Government.
Energy Supply Market
Adam Afriyie (Windsor) (Con)
3. What recent steps he has taken to increase competition in the energy supply market.
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
We have made it quicker and easier for consumers to switch supplier. Now 10% of dual-fuel customers use one of the 21 independent suppliers in the domestic retail market, which provides more competition and more choice for consumers.
Adam Afriyie
It really saddens me that Labour’s misunderstanding of markets meant that it backed the big energy businesses and drove the smaller ones out of operation. If we are to have a healthy energy market, it seems to me that what we need is more competition and faster switching so that consumers can enjoy lower prices and better quality services. Does my right hon. Friend agree?
Matthew Hancock
My hon. Friend is completely right. We have halved the time it takes to switch. Our Power to Switch campaign is now up and running. I myself am going to switch energy supplier today as part of that campaign, and I look forward to saving serious amounts of money as a result. I urge all Members, and indeed all consumers, to consider switching, because the power of competition is one of the best ways to get energy bills down. Instead of the big six that Labour created, we now have 21 new independent suppliers.
John Robertson (Glasgow North West) (Lab)
It might be better if the right hon. Gentleman switched party, rather than energy supplier. Is not part of the problem with cost down to the fact that we have companies that generate electricity selling it to themselves, which allows them to hike the prices paid by consumers? People need those prices to come down in order to heat their homes. Why not just split those roles completely to ensure that we get an honest broker in the middle?
Matthew Hancock
First, we got the Competition and Markets Authority to look into that matter, because it had not been investigated under the previous Government. The CMA’s initial conclusion was that we have a competitive market at that level, so the precise detail that the hon. Gentleman sets out is not the problem. The remaining problem in the UK’s energy market is that it needs to be more competitive in order to get a better deal for customers. The last thing anybody needs is for prices to be frozen at the high levels at which Labour proposed to freeze them.
Wayne David (Caerphilly) (Lab)
5. What steps he is taking to help households with their energy bills.
Susan Elan Jones (Clwyd South) (Lab)
10. What steps he is taking to help households with their energy bills.
Chris Evans (Islwyn) (Lab/Co-op)
15. What steps he is taking to help households with their energy bills.
The Parliamentary Under-Secretary of State for Energy and Climate Change (Amber Rudd)
Energy bills are a significant and important part of people’s household budgets. The Government have delivered, on average, a £50 reduction in energy bills, boosted competition in the energy market and ensured that fairer tariffs are in place. Last year alone, 3.1 million people switched energy supplier, and we are helping more consumers to save up to £200 or more through our Power to Switch campaign.
Wayne David
Wholesale gas and electricity prices have fallen by some 20% over the past 12 months, yet household bills have gone down by only 5%. Is that fair, and what is the Minister going to do about it?
Amber Rudd
We are taking action on that. My right hon. Friend the Chancellor led on that by calling in the big six to speak to them about it, and that was followed up by my right hon. Friend the Secretary of State. We have seen reductions. All I can say is thank goodness we did not have the freeze that Labour proposed in September 2013, because we would then have seen no reduction at all. We do not take anything for granted, which is why we are supporting the CMA review into the market. We eagerly await its results at the end of the year, when we can take action.
Susan Elan Jones
The Ministers’ words will ring very hollow indeed in many of our rural communities, where people are off-grid and rely on domestic oil for heating. I ask the Minister not to quote what the price happens to be this week, because we know that, like gravity, domestic oil prices go up and down. Will she tell us why the Government have not listened to MPs from across the parties who have asked for domestic oil to be put under the regulator Ofgem?
Amber Rudd
We have put in place a fuel poverty strategy, which will address some of the issues the hon. Lady raises. We are liaising with Ofgem and are encouraged by the early results from the CMA, and of course we will be taking them up further when they come through at the end of the year.
Chris Evans
Despite the rosy picture that the Chancellor wanted to portray yesterday, fuel poverty in Wales has gone up by 18% since 2011, and 90,000 people with children cannot afford their energy bills. When are the Government going to take real, tangible action to fight rip-off bills from these energy companies?
Amber Rudd
The hon. Gentleman may know that the Big Energy Saving Network is active in Wales. That is an initiative from this Department that instructs and funds third parties to go out and help people to switch and to access the warm homes discount. Yesterday in the Budget, my right hon. Friend the Chancellor announced further funding for the Big Energy Saving Network, and that will go exactly to the cause that the hon. Gentleman raises, which we care about as well.
Mr David Heath (Somerton and Frome) (LD)
Following on from the question from the hon. Member for Clwyd South (Susan Elan Jones), many, many people in rural areas like mine are dependent on fuel oil or liquid petroleum gas and have seen their costs go up inexorably over recent years. Even in an unregulated market, is there any way in which the Minister can ensure that the prices now fall commensurately with the fall in oil and gas prices, and do so promptly?
Amber Rudd
As the hon. Gentleman observes, the price has been falling, and we will keep a careful eye on it to make sure that it continues to fall. I would hope that it should fall at a greater rate than the major energy companies’ bills, because gas prices have been falling at a greater rate.
Caroline Flint (Don Valley) (Lab)
Recently the hon. Member for Bracknell (Dr Lee), a respected member of the Energy and Climate Change Committee, admitted that the Conservative party had no clear energy policy and had been relegated to “second fiddle”. Helpfully, he added:
“If I’m honest, I don’t think we’ve done particularly well.”
If Government Members do not have any confidence in their own party’s energy policy, why should the British people?
Amber Rudd
I will be answering a question from my hon. Friend the Member for Bracknell (Dr Lee) later, and I look forward to that opportunity. I think that our energy policy is absolutely clear and is delivering what we set out to do. To be honest, the lack of clarity and the chaos is only on the Opposition Benches, because we remain completely confused about the Opposition’s policy towards Ofgem, which they claim to want to amend, on the one hand, and abolish, on the other. As for the price freeze, I think I will hear about that later from my hon. Friend.
Caroline Flint
I am afraid that there will be nowhere to hide in the forthcoming general election as regards the coalition parties and their energy policies. The facts speak for themselves: energy bills £300 higher; three out of four households being overcharged by their energy supplier; the number of families with children who cannot afford to heat their homes at the highest-ever level; and, as we have heard today—it has been reconfirmed—a Government who, for five years, have just told people to shop around. Does not this show that the only way to help households with their energy bills is to elect a Labour Government to freeze energy prices until 2017 while we reform the market and give the regulator the power to cut bills in time for Christmas?
Amber Rudd
That is further chaos from Labour about a cap or a freeze—we have no idea which they would do. Let me point out to the right hon. Lady that during 2013 the UK had the lowest household gas prices and the fifth lowest household electricity prices in the EU 15. In no way are we complacent about what has been achieved in helping people; that is why we back the CMA’s reforms. It is very disappointing that she does not back the CMA’s approach, which will give us an independent review that we look forward to enacting at the end of the year.
Dr Phillip Lee (Bracknell) (Con)
7. What assessment he has made of the effect of recent trends in wholesale energy prices on household energy bills.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
12. What assessment he has made of the effect of recent trends in wholesale energy prices on household energy bills.
The Parliamentary Under-Secretary of State for Energy and Climate Change (Amber Rudd)
All the major suppliers have announced reductions to their standard variable gas tariffs in recent weeks in response to reductions in the wholesale gas price. The price of fixed-term deals has continued to fall, with the cheapest deal on the market £100 cheaper than the cheapest deal a year ago. The Competition and Markets Authority has made it clear that it will be looking further at the relationship between wholesale costs and retail prices as part of its investigation.
Dr Lee
I thank the Minister for her reply. The news about prices and bills is all very welcome, but does she agree that the next Conservative Government—as I hope and expect it will be—should concentrate primarily on energy efficiency? This would bear down on household bills and, indeed, bills for businesses, while also conserving our planet’s finite resources and helping to secure this great nation’s energy supplies in future.
Amber Rudd
On this account, my hon. Friend is absolutely right: energy efficiency is indeed the best way to help people and that is why it has been a Government priority for the past few years. He is also absolutely right that the benefit is not only in keeping bills down, but in conserving our resources.
Stephen Metcalfe
Is my hon. Friend as surprised as I am that the Labour party is still pursuing its policy of a price freeze? If a price is frozen at a high level, surely the danger is that when the market settles at a lower level, my constituents will end up paying more than they are now.
Mr Speaker
Order. The Minister must not be led astray, away from the path of virtue, by her hon. Friend. She will know that she must not talk about the policies of the Labour party. Her responsibility is with the policy of the Government. A brief and pithy reply on that matter would be in order, but nothing beyond.
Amber Rudd
Thank you for that guidance, Mr Speaker. My hon. Friend makes an excellent point, revealing the confusion being caused among his constituents. I hope they will make the right interpretation and support him and this Government in the future.
Barry Gardiner (Brent North) (Lab)
The drop in wholesale energy prices has allowed Governments around the world—including India, Indonesia and Egypt—to reduce the subsidies to fossil fuels in a way that is commensurate with the proposals of the United Nations framework convention on climate change and the Intergovernmental Panel on Climate Change. However, in yesterday’s Budget the Chancellor gave a £1.3 billion subsidy to our fossil fuel industries. What does the Minister make of that paradox?
Amber Rudd
The hon. Gentleman, who is well respected in this area, should identify the difference between taxation and subsidy. The point of my right hon. Friend the Chancellor’s announcement yesterday is that North sea oil is an important part of our industry and employment. We still feel there is more to be done in the extractive industries and we should support them despite the fall in oil prices.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
8. What assessment he has made of the effect on (a) generating capacity and (b) the transmission network of an increased reliance on intermittent energy supplied by renewable sources.
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
Electricity generation always needs to balance supply and demand. The transmission system clearly has to change to accommodate expanding renewables, and Ofgem’s new framework will help that happen.
Mr Lilley
I note that my right hon. Friend does not give any costs for the extra capacity required for when the wind does not blow or the sun does not shine and the extra transmission lines required to transmit from long distance. Will he confirm that those costs are not included in the £7.6 billion levy control framework, despite the fact that the former power director of the National Grid puts them at £5 billion a year? If they were included, the potential total cost of all the subsidies could be £500 per household per annum.
Matthew Hancock
The levy control framework specifically controls the amount of direct subsidy, but a whole series of changes needs to happen to make sure that our transmission system can keep up with the distribution of energy supply as well as the demand. That includes changes to interconnectors—in other words, getting more of them—and making sure that we have a smarter grid and distribution system. It is difficult at this stage to calculate the cost of those changes.
Mr Tim Yeo (South Suffolk) (Con)
14. Does my right hon. Friend agree that one very effective way to address the issues raised by intermittency from renewable generation is greater use of demand-side management, which is both cost-effective and environmentally attractive? As we get more sophisticated in our use of demand response, the balance can be maintained even with intermittent peaks and troughs in generation.
Matthew Hancock
I pay tribute to the huge expertise of my parliamentary neighbour, who will step down from this House next week, in this area. He has reminded me of something I should have said in my previous answer, which is to include demand-side response as one of the many ways in which we need to help manage the transmission system with more renewables on the grid.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
According to National Grid, on 26 December less than 1% of power generated into the national grid in Scotland came from wind, meaning that electricity generated south of the border and the doubling of output from the coal-fired Longannet power station in Fife kept our lights on. The Minister will be aware that Iberdrola, the Spanish owner of ScottishPower, which operates Longannet, has decided not to invest to make it compliant with the industrial emissions directive and is now threatening to announce the closure of that power station next week, jeopardising hundreds of skilled jobs. Given Iberdrola’s public statements, what discussions has the Minister had with the Spanish power company or National Grid about the implications of potential closure?
Matthew Hancock
We have of course considered the implications of the closure of any major power plant. Alongside National Grid, we continually assess the security of supply risks across Great Britain, including in Scotland. We are confident that we have the tools to address any issues at Longannet and any other fossil fuel plant that may close. We will ensure that the procedures and policies are always put in place to make sure that the supplies of energy are secure.
Tom Greatrex
I thank the Minister for that reply, but he will be aware that various public claims have been made by or on behalf of Iberdrola ScottishPower about the impact of closure on both security of supply and group resilience, and that National Grid has rejected those claims. What assessment has his Department made of the claims and their implications? Given the conflicting statements made in the public domain, will he publish the assessment and advice so that the veracity of the claims and counterclaims can be properly tested?
Matthew Hancock
I have looked in detail at the claims, and they are not correct. National Grid’s assessment is that the closure of Longannet is not a threat to the security of supply. I think that we should trust the assessment of the transmission grid operator, rather than that of an individual company playing one small part in the operation. I will of course look at what we can publish to make those reassurances yet more concrete.
Miss Anne McIntosh (Thirsk and Malton) (Con)
9. What recent representations he has received on the application of regulations to onshore unconventional oil and gas exploration; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
We receive a wide variety of representations on onshore unconventional oil and gas, and we always listen carefully to the views expressed.
Miss McIntosh
The current regulations that apply to unconventional oil and gas exploration onshore have not yet been properly tried and tested. The protections given to national parks, sites of special scientific interest and areas of outstanding natural beauty were withdrawn in the Lords. Given that the regulations will not be published until July, what is the legal position on protections in or under national parks as regards any application that may be submitted this month?
Matthew Hancock
The legal protections are in the Infrastructure Act 2015, which my hon. Friend played a role in shaping as it went through this House. I want to pay tribute to her for her long service in this House to her constituents: she has been unending in her determination to support them. I would say that anybody looking to propose a development of unconventional oil and gas ought to act as though the provisions of the Infrastructure Act were in place. There will be a period before they are formally implemented, but we need to ensure that development continues in the assured and careful manner provided for in the Act.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
16. What assessment he has made of the potential merits of devolving energy policy to a regional level.
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
We are proposing further devolution to Scotland and Wales consistent with the need for an efficient and good-value energy system throughout Great Britain.
Mr Sheerman
Is it not high time that the regions of the United Kingdom had a chance to have some power over energy policy? Yorkshire in particular, with its offshore wind power and its other resources, knows a lot about energy. Does not all the evidence show that if we grass-root energy policy, even at a community level, and give people ownership of it, perhaps through social systems of ownership, it works better? Taking energy policy down to the grass roots binds people into a good policy.
Matthew Hancock
No matter how great a county Yorkshire is—it is, indeed, a great county—[Interruption.] —we need to make sure that the system works on a GB-wide basis and that it is as efficient as possible. I agree with the hon. Gentleman that the ability to access distribution networks and indeed the wider grid to ensure that those producing electricity can connect to nearby demand will enhance the ability of communities to play a part. I can see where he is going, but I am not sure that breaking up the GB-wide energy system is the best way to reach a solution.
Mr Speaker
I note that a Lancastrian Whip blurted out what might be described as a competitive chant when the right hon. Gentleman was hailing the merits of Yorkshire, but I will not draw any further attention to the matter.
Paul Flynn (Newport West) (Lab)
17. What support his Department plans to provide to the development of the proposed tidal lagoon project near Newport.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I can confirm that the Government have announced that we are entering into a negotiation on a contract for difference for the Swansea bay lagoon to decide whether the project is affordable and represents value for money. I am strongly in favour of a tidal programme across the UK, subject to the usual planning permissions and to the lessons from the first project or projects being learned. Given that planning permissions are site-specific, the hon. Gentleman will understand that I cannot give a view on the Newport project.
Paul Flynn
The belated recognition by the Government of the enormous advantages of tidal power is very welcome. They should examine what has been taking place for the past 50 years at La Rance in Brittany, where the cheapest electricity in the world is being generated. Will the Secretary of State look at the other schemes? The schemes at Newport are far better value than the Swansea scheme. However, we all give a warm welcome to the Government’s recognition that tidal power is a British, eternal, clean, non-carbon and entirely predictable energy source.
Mr Davey
I think this is the first time that the hon. Gentleman and I have been in agreement on energy policy, so I would like to mark the occasion. He is right that tidal lagoon power presents a huge opportunity for this country. The Department is looking at it in detail. I hope that it will produce not only the clean energy that we need, but the green jobs that are so important in many parts of the country.
Pauline Latham (Mid Derbyshire) (Con)
18. What steps he is taking to encourage businesses to install solar energy panels.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The solar PV strategy, which we published last spring, sets out how we are maximising the deployment of panels on commercial and industrial buildings. We have taken a range of actions to assist owners of such buildings to deploy solar PV panels. To name just a few, we have consulted on allowing the transfer of panels without the loss of feed-in tariff accreditation; we have made changes to the feed-in tariff to protect the incentive for building mounted solar; and we are working with the property sector to remove other barriers to deployment.
Pauline Latham
Vaillant in my constituency is a shining example in this area. It is energy efficient because it has so many solar panels. Does my right hon. Friend acknowledge that after 13 years of Labour, just 6.8% of British electricity came from renewables, whereas since 2010, renewables generation has more than doubled?
Kerry McCarthy (Bristol East) (Lab)
19. What recent assessment he has made of the merits of proposals for the generation of electricity from tidal lagoons.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I am delighted that we are back on tidal power. My considered view is that tidal energy has many merits: it is clean, renewable, predictable, home-grown and secure. Tidal lagoons can be built in numerous places in the UK and have the potential to meet up to 8% of our electricity needs. Tidal lagoon costs could fall significantly in the next decade, as larger, more cost-effective projects are deployed. With tidal lagoons having the potential to last 120 years, this is a future green energy technology that I hope all parties will strongly support.—[Interruption.]
Kerry McCarthy
My hon. Friend the Member for Newport West (Paul Flynn) is claiming the credit for most of the Secretary of State’s answer. I share my hon. Friend’s enthusiasm for the prospects for tidal power in the Severn estuary. When does the Minister expect the strike price to be agreed, which will help to spur the full commercialisation of the sector? Does he share the concern of organisations such as Citizens Advice that the current strike price for tidal lagoon power is higher than that for any major green energy project to date?
Mr Davey
The negotiations with the Tidal Lagoon Power company are bilateral, so they will set the strike price over months and we cannot give an exact timetable on how long they will take. I read the CAB report, but it was not as informed as it might have been. The first tidal lagoon power plant, which will be the world’s first, is likely to be a bit more expensive, just as when the UK had the first offshore wind farm it was a bit more expensive. Unless we invest in new technologies, we will not get the costs down. We have seen the costs of solar tumble. We have seen the costs of offshore wind tumble. We have seen the costs of onshore wind tumble. That has only happened because we have invested in new technology. That is the way that Britain—a world leader—should go.
Mr Speaker
Untypically, we are ahead of time and can proceed with dispatch to Topical Questions.
Kerry McCarthy (Bristol East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Since the last oral questions to the Department of Energy and Climate Change, the first auction of low-carbon contracts for difference was completed. I was able to offer contracts for 27 new renewable power plants, including 15 onshore wind farms, two offshore wind farms, and five solar farms. The auction saw onshore wind prices fall by 17%, and offshore wind farm prices by 18%. Today I will publish the first annual update to our country’s first ever community energy strategy. That shows real progress in everything from district heating policy to grid connections, and from state aid clearance for the Green Investment Bank to lend to that sector, to our new water source heat map.
As this is the final DECC oral questions of this Parliament, I thank you, Mr Speaker, my Ministers and officials, Her Majesty’s loyal Opposition, and all right hon. and hon. Members for their help and advice—most of the time. The UK is now achieving on all our energy and climate change objectives, and I believe it is leading Europe on the path to a climate change treaty in Paris this December.
Kerry McCarthy
I thank the Minister for that response. The community energy stuff will go down well in Bristol, which is European green capital of the year, as I think I have mentioned in every DECC questions. Although we welcome the measures in the Budget, what does the Secretary of State plan to do to diversify skills in the North sea towards low-carbon and renewable technologies, given that the North sea is a mostly mature basin? Does he agree that we need a long-term transition plan for places that are currently heavily reliant on the oil and gas industry?
Mr Davey
We are seeing a huge amount of activity in the North sea for offshore wind, and the beginnings for carbon capture and storage. About 18 months ago I brought together representatives from the oil and gas industry with representatives from the renewable industry working in the North sea. We need them to work together, particularly on issues such as regulation and the way infrastructure will develop. We need a longer-term plan, and we have been kicking that work off.
Dr Matthew Offord (Hendon) (Con)
T4. Will the Minister confirm to the House that it is not the policy of this Government, or indeed the next Conservative Government, to freeze energy prices just as the wholesale market starts to reduce in price?
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
Absolutely. It is not the policy of the Government to freeze energy bills, not least at the level they were 18 months ago when we first received representations to do that. We have not chosen that path because we would end up with millions of consumers paying an average of £100 more for their electricity, and we would undermine investment, which is so critically needed, in the future of our energy system. It is a bad mistake and we will not do it.
Caroline Flint (Don Valley) (Lab)
I join the Secretary of State in thanking you, Mr Speaker, and others. Thursdays have become the ticket to have in questions, and there is no doubt that over the past four years energy has been front and centre of pretty much every debate across the policy range. I wish those on the Government Front Bench a happy retirement.
On a serious note, the devastation wrought by Cyclone Pam in Vanuatu has reminded us that climate change is a national security threat, not just overseas but in Britain. It is vital that the UK plays a leading role to secure a binding global agreement to tackle climate change at the Paris conference later this year. Does the Secretary of State agree that we will secure influence abroad only if we show leadership at home, and will he reaffirm his support for Labour’s Climate Change Act 2008?
Mr Davey
I am grateful to the right hon. Lady, who makes a serious point about the impact of climate change on some of the most vulnerable people on our planet. We need to lead in the world, as indeed we are doing. She will also know that not only the Liberal Democrats but the Prime Minister, on behalf of the Conservative party, and the Leader of the Opposition recently signed a letter to confirm their support for the Climate Change Act 2008. That had huge consensus across the House—[Interruption.] As the right hon. Member for Hitchin and Harpenden (Mr Lilley) notes, five people voted against it, and nine Members also voted against the Energy Act 2013, which I put through the House and is the practical way of delivering on the Climate Change Act 2008. It is important that the world should understand that across the parties there is a lot of agreement on this issue.
Adam Afriyie (Windsor) (Con)
T5. In my constituency, we have seen some dreadful flooding over the last decade, and I wanted to rise to thank the Department for making available the funds to complete the lower Thames flood alleviation scheme, which will save tens of thousands of homes and thousands of businesses and really help my constituents have a better quality of life with greater economic outcomes.
Mr Speaker
Order. I am tempted to think that that would ordinarily be a matter for the Department for Environment, Food and Rural Affairs, but if ingeniously the Secretary of State can contrive to fashion a response that relates to his own important responsibilities, and if he can give us what he described a few moments ago as his “considered view”, the nation will be enriched.
Mr Davey
Mr Speaker, you are just too kind.
The Government, whether the lead has been taken by a different Department, such as DEFRA, or another Department, have done their best to deal with flooding issues. I speak as one of the Ministers with responsibility for flooding. We have done a lot of work in the south of London to assist with this matter, including on aspects of the Thames flood alleviation, but the real issue for me, as Secretary of State for Energy and Climate Change, is that if we do not tackle climate change, this country will be badly hit by more flooding. We can build the flood defences we need, but in the long term if we are to reduce the cost of climate change to this country we need to tackle climate change itself.
Chris Evans (Islwyn) (Lab/Co-op)
T2. Over the last five years, one of the biggest problems, particularly for elderly constituents of mine, has been complicated, high-tariff energy bills. On 17 occasions, the Prime Minister has said he would force energy companies by law to put their customers on the lowest energy tariff, but three out of four households are still on energy tariffs that cost on average £180 more than the lowest one. What are the Government going to do about that?
Mr Davey
We inherited an energy market that was completely broken and a situation where energy bills were complicated and opaque, but we and the independent energy regulator, Ofgem, have acted. We now have simpler bills, fewer tariffs and increased levels of switching, which are helping huge numbers of people. On the specific point the hon. Gentleman raises, Ofgem, in its retail market review, proposed the policy he refers to and is making sure it goes through, but if he has examples suggesting that any suppliers are not delivering on that new regulation, he should bring them to the independent regulator’s attention.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
T6. Does my right hon. Friend agree that the single biggest boost to the British and world economy has been the halving of the oil price, and does it not follow that forcing British industry to use energy that costs twice as much as conventional energy will have a depressive effect on the British economy? Why oh why is he insisting on our moving to wind, which costs twice as much, and this Swansea tidal power, which, according to the Financial Times, will involve a price three times that of conventional fuels for 35 years? Is that not going to depress the British and Welsh economies?
Mr Davey
I have a lot of respect for the right hon. Gentleman, who is known for his intellectual abilities and knowledge, but I am afraid that on this occasion they have failed him, and for this reason: we do not use oil to produce electricity—we haven’t for a long time. His point relates to transport. Oil is a substitute for transport fuels. I think he is talking about gas, but the price of gas has not come down by very much. Moreover, the fall in the price of gas was taken account of in the way we produced the levy control framework, which is the support for low-carbon electricity.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T3. Earlier this month, I spoke at North East Call to Action’s time to act day, which brought together organisations and people from across the region who wanted the UK to lead in combating climate change through decarbonisation and to build a long-term sustainable economy based on clean energy, green technology and skilled jobs. When I reminded them of the Prime Minister’s promise that this should be the “greenest Government ever”, there was widespread laughter. Why does the Secretary of State think that was?
Mr Davey
Because some people have not looked at the facts. This is the greenest Government ever, but as I have said—[Interruption.] Well, we have seen massive increases in low-carbon energy and a big increase in energy efficiency, so I am afraid that the hon. Lady is completely wrong. Let me explain why some people laugh. It is because the bar for being the greenest Government was not very high—the last lot did such an appalling job. I want to make sure that if Liberal Democrats are in the next Government, it will be the greenest Government by a long way, which is why we have published proposals for five green Bills. We need to build on the success of this Government and go a lot further.
Mr Philip Hollobone (Kettering) (Con)
T9. By when does the renewable energies Minister think it might be possible to generate solar energy without subsidy?
The Parliamentary Under-Secretary of State for Energy and Climate Change (Amber Rudd)
Solar energy has been a great success under this Government. As my right hon. Friend the Secretary of State pointed out, 99% of solar energy developments have taken place under this Government, not least because of the great boost given by my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), who put together the solar strategy in 2014, for which we are very grateful. The great news about solar energy is that it is likely to become subsidy-free in the next five years. That will be a classic example of investing in renewable energy and making sure that, as it increases, it becomes subsidy-free.
Ian Lavery (Wansbeck) (Lab)
T7. Hundreds of jobs are still waiting on a state aid application from UK Coal. The Minister promised an announcement would be made before the Dissolution of Parliament. Will he confirm when it will take place and whether it will be before the Dissolution?
Matthew Hancock
This is an important issue for the two coal mines owned by UK Coal—two of the three remaining deep coal mines. I pay tribute to the hon. Gentleman, who has been steadfast and hard working in delivering on this issue. There will absolutely be a decision before the Dissolution of Parliament.
Duncan Hames (Chippenham) (LD)
I warmly welcome the Government’s commitment to expanding renewable energy generation, but does the Minister agree that we should not tolerate the payment of renewables obligation certificates or feed-in tariffs to unlawful developments?
John Robertson (Glasgow North West) (Lab)
T8. The Secretary of State will be well aware that he promised me at the last Question Time that he would come back to me on the report on vulnerable customers that I produced with the Energy and Climate Change Select Committee. Is this going to be another one of the Government’s unfulfilled promises, or will he come forward as soon as possible with a reply to this important report on how to ensure that vulnerable people will be taken care of when they most need help?
Mr Davey
I am surprised that the hon. Gentleman asked that question. He knows that I have read the report, because I have talked to him about it. I have told him in this Chamber that I wanted to respond to it. I thought that the reply had winged its way to him. If it has not, I shall chase it up. Let me say to him and the House that I read his report and thought it was very good.
Martin Vickers (Cleethorpes) (Con)
I recently met senior management at the Phillips 66 refinery in my constituency. The refinery has the lowest per barrel SO2 emissions in the country, but it fears that the continuing demands of the industrial emissions directive will increase costs with little benefit to the environment. Does the Minister share my concerns, and what action is he taking to protect the industry and the jobs?
Matthew Hancock
It is important to ensure that we have clean emissions and that we abide by our international obligations. None the less, I am looking forward to my visit to Cleethorpes and the refinery to see the impact for myself and to make sure that, locally, whatever changes need to be made will be implemented as carefully as possible.
Graeme Morrice (Livingston) (Lab)
T10. An elderly constituent recently contacted me about her confusing energy bills. She had to make a payment, but the complicated bill structure meant that she had no idea of how the charges had been calculated, causing her some distress. It is obvious that Ofgem’s reforms to make bills simpler, clearer and fairer have not worked. Is it not about time that the Government started to stand up for consumers and treat ordinary people fairly and honestly by ensuring improved transparency in energy bills?
Mr Davey
I am surprised to hear the hon. Gentleman make that point. There has been a great improvement in bills, which are much simpler now. Furthermore, the energy suppliers must now inform consumers if a lower tariff is available, even if it involves different payment methods. However, if there is an issue I shall be happy to look into it. and the hon. Gentleman should also contact Ofgem.
One of our purposes in setting up and investing in the Big Energy Saving Network was to ensure that vulnerable people could obtain face-to-face advice, and organisations such as citizens advice bureaux, Age Concern and National Energy Action are funded and trained to deliver that advice.
Mr Tim Yeo (South Suffolk) (Con)
A few minutes ago, my right hon. Friend the Minister of State gave a very helpful answer to a question about demand-side response. In support of the Government’s fully justified claim to be the “greenest Government ever”, which I congratulate them on achieving, may I press him a little further? Is he aware that some people in the demand-side management industry are worried about the way in which the capacity market auction operated just before Christmas, and will he undertake to look into exactly how it is working in good time before the next auction, with the aim of establishing a level playing field as between different types of demand?
Matthew Hancock
I met representatives of the demand-side response industry in the autumn. I can give a commitment that we will review the way in which the market operates before the next auction, which we expect to take place this autumn.
May I take this opportunity to pay tribute to the Secretary of State? Although we are members of different parties, we have worked extremely closely, and I think that he has been a terrific Secretary of State. His support for the nuclear industry has been revolutionary, not least in his own party; his support for market-based solutions to renewable subsidies has been first-rate; and his support for my right hon. Friend the Chancellor’s proposal for a Swansea bay tidal lagoon has been exemplary. It has been a pleasure to work with him, and I wish him all the best.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
You will know, Mr Speaker, that I hate to be the curmudgeon at the party, but I must inform the Secretary of State that, according to findings published this morning by the Leeds university research team, we have entirely failed to meet proper carbon emission reduction targets, and must redouble our efforts if we are going to take account of all the goods that we import from China and other parts of the world.
Mr Davey
The hon. Gentleman has clearly not read the report, and he has clearly not read what the Chair of the Energy and Climate Change Committee, and indeed Greenpeace, has said about it. Not only are we more than meeting our carbon emission reduction targets, but as the hon. Gentleman will see if he reads the report, there are different ways of accounting—we have made that point a number of times—and we are accounting in the way that is internationally recognised. If the hon. Gentleman wants to change that system on the eve of climate change talks, he must be completely barmy.
Gregory Barker (Bexhill and Battle) (Con)
Does the Minister agree that, when the history of the coalition comes to be written, the Department of Energy and Climate Change will be seen as outstanding in terms of effectiveness and impact, and as a cut-out example of two parties, Conservative and Liberal Democrat, coming together to govern in the national interest? In that context, may I also pay tribute to the terrific leadership of the Secretary of State, his effective ministerial team, and the brilliant officials—[Interruption.]
Mr Speaker
Order. I must say to the House, in response to a sedentary interjection from an Opposition Member, that the use of the word “barmy” is a matter of taste rather than order.
Mr Davey
Talking of taste, Mr Speaker, I thought that the question from my right hon. Friend for Bexhill and Battle (Gregory Barker) was very tasteful, and that he made a very sensible point. I am grateful to him. I think it is clear that, although there are some differences between us on some aspects of energy policy such as onshore wind, the two parties have been able to work together in the country’s interest to achieve our objective of providing affordable, secure, green energy. I am grateful to the Minister of State for what he said earlier, although he did make me laugh when he claimed that the Chancellor was the force behind the tidal lagoon.
Kelvin Hopkins (Luton North) (Lab)
What discussions has the Secretary of State had with the Chancellor about the damage that could be caused to community energy co-operatives by the proposed exclusion of co-operatives from future tax allowance schemes?
Mr Davey
We have discussed the matter extensively with the Treasury, and we have introduced something called social investment tax relief. It is better than its predecessor, because it gives community energy companies tax relief not just on equity finance but on debt finance, thus expanding the instruments.
There is an issue concerning which types of organisation should be able to claim the tax relief. The whole purpose of supporting community energy is to support schemes that give real benefits to the community, and energy co-operatives do not necessarily do that, although they benefit their membership. However, we have been working with the community energy sector as well as the Treasury, and I think that if the hon. Gentleman reads today’s update, he will see that we have come up with a very effective solution.
Andrew Gwynne (Denton and Reddish) (Lab)
Before the last election the Prime Minister, when he was Leader of the Opposition, said:
“I think we all feel that when the gas prices or the oil prices go up, they rush to pass the costs onto us and yet when we read in the papers that the oil price has collapsed…we wait for a very long time before we see anything coming through on our bills, and I think the first thing you’ve got to do...is give the regulator the teeth to order that those reductions are made and that is what we would do.”
Why did he break that promise?
Matthew Hancock
That is exactly what is happening. At that time, in 2009, when the Leader of the Opposition was the Secretary of State for Energy and Climate Change, nothing happened: bills did not come down and the Secretary of State did not lift a finger. Instead, this time I called in the big six and as a result they cut prices: they cut prices to pass on in full the wholesale reductions, and consumers benefit in a way that they could not if the energy price had been frozen at the high level suggested by Labour.
Barry Gardiner (Brent North) (Lab)
At the Paris negotiations the central words will be “common but differentiated,” and while I entirely agree with the Secretary of State’s response on the subject of consumption emissions, does he accept that consumption emissions will play into that debate about common but differentiated responsibilities?
Mr Davey
I have met a range of climate change negotiators, particularly the Chinese negotiator Minister Xie, and interestingly they have never raised that issue. They have raised many other issues, but they have never raised that specific one, so it would be a first for the negotiations. There are other issues that we need to focus on, however, and we set out our position in a publication last September.
Mr Speaker
Order. I think we will leave it there. I am sorry to disappoint remaining colleagues, but we have quite a lot to get through.
Barts Health NHS Trust
(9 years, 9 months ago)
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Andy Burnham (Leigh) (Lab)
(Urgent Question): To ask the Secretary of State for Health if he will make a statement on Barts Health NHS Trust being placed into special measures.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The NHS Trust Development Authority announced on Tuesday 17 March that Barts Health would be placed into special measures. This followed a report by the Care Quality Commission which rated services at the Barts Health site at Whipps Cross as inadequate. As a result of this decision the trust will receive a package of tailored support to help it rapidly make the necessary improvements for patients. This will include the appointment of an improvement director and the opportunity to partner with a high-performing trust. The chief inspector of hospitals has highlighted the scale of the challenge ahead and this is an opportunity to ensure that the trust has the extra support it needs to meet that challenge. Barts Health has already announced that it has begun to strengthen management arrangements at Whipps Cross, in response to concerns raised by the CQC.
We make no apology for the fact that, under the new rigorous inspection regime led by the chief inspector of hospitals, if a hospital is not performing as it should, the public will be told. If a hospital is providing inadequate care and we do not have confidence in the ability of its leadership to make the required improvements without intensive support, it will be put into special measures. It will remain in special measures until it is able it to reach the quality standards that patients rightly expect.
While the trust is in special measures, it will receive increased support and intensive oversight to help it address its specific failings. This process is publicly transparent, so patients and the public can see and track for themselves, online through the NHS Choices website, the progress that their trusts are making. Any changes or additional support required for the trust leadership are put in place early on in the improvement process, as has already taken place at Barts Health.
The expectation is that an NHS trust or foundation trust will be re-inspected by the CQC within 12 months of being placed in special measures. It is the job of the chief inspector of hospitals to recommend when a trust is ready to exit special measures. The NHS TDA or Monitor will then formally decide to take the trust out of special measures when it considers the trust is able to sustain the quality of care at the level patients rightly expect.
Andy Burnham
Barts Health NHS Trust is no ordinary hospital trust: it is the largest NHS trust in England, employing more than 14,000 staff and treating patients from all over London and indeed the whole country. Importantly, it is also one of the few trusts directly managed by the Trust Development Authority and the Department of Health.
Is it not true that the problems at Whipps Cross have been known for some time and have not just been uncovered this week? Is it not also true that these problems have been allowed to get worse over the past two years, with 208 serious incidents in the last year alone, and that specific warnings have not been acted on? Given all this, is it not a cause for real concern that this trust has become the 20th to be placed in special measures under this Government? People in east London need to know why, and what is being done to bring their hospital back up to an acceptable standard. Does the Minister accept that, given the seriousness of this issue, they are entitled to be disappointed that the Secretary of State is not here today to respond to these concerns?
One of the report’s main conclusions is that the root cause of care problems in the past two years was the reorganisation of the trusts in 2013. It states that
“the decision…to remove 220 posts across the trust and down band several hundred more nursing staff had a significant impact on staff morale and has stretched staffing levels in many areas”.
These findings raise significant questions for the Department and Ministers. Given that it is a directly managed trust, was a proper assessment made of the reorganisation plans, and was it signed off by Ministers? Why did Ministers overrule the Co-operation and Competition Panel, which advised against the proposed merger and warned of material costs to patients? What action did the TDA, the Department and Ministers take on the warnings raised at the time?
The Minister will know that my hon. Friend the Member for Leyton and Wanstead (John Cryer)—I am afraid he has a constituency engagement this morning; otherwise, he would have been here—and, as I understand it, her Cabinet colleague the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), raised specific concerns about the decision to remove the management structure from Whipps Cross Hospital, concerns echoed by my hon. Friend the Member for Walthamstow (Stella Creasy). Why were those concerns ignored, leaving Whipps Cross without an adequate management structure?
Looking ahead, can the Minister say more about what is now being done to improve management at Whipps Cross, and to reassure local people that their hospital is safe? What immediate steps are being taken to improve staff numbers? On finance, is she aware that the bill for agency staff across the trust has gone up by a huge 44% in the last year alone, and what is she doing to bring that down? It is unsustainable and unaffordable, but it is also damaging standards of patient care on the ward and continuity of care.
The inspection took place in November. Why was it published only this week—one day before the Budget? Given that this is about a failure of NHS management, why is the Department of Health still sitting on the report by Lord Rose on NHS management? Will the Minister give a firm commitment to this House today that it will be published before Parliament is dissolved?
This report has been widely described as the worst assessment ever seen from the CQC. It will be seen as a symbol of the decline of the NHS on this Government’s watch, and people are looking now, today, for an urgent plan to turn things around.
Jane Ellison
The whole House will have noted that the right hon. Gentleman asked why the report has only just come out. He might reflect on his own time in office, when there were reports that did not come out at all just before the general election. If there is any better example of weaponising the NHS—we have just seen it. Instead of trying to make political capital, should the right hon. Gentleman not admit that the new CQC inspection regime illustrates exactly why transparency is so important, and why this Government were right to implement it?
Under the previous Government, failures of care were swept under the carpet and not acted on, which led to the tragic consequences we know about. Before the last general election, Labour tried to block the publication of a devastating report into Basildon and Thurrock hospital. [Interruption.] These are serious matters, and that is exactly why the CQC inspection has to be taken seriously. As I have said, local management is looking at these important issues, some of which we have debated before in the House, and which need to be addressed very seriously. However, the hospital management are beginning to do that, and they must take such action to ensure that they bring care up to the right standards.
All the things that the CQC has identified have to be addressed. As I have said, this illustrates exactly why the new CQC inspection regime is so important. Even now, a week before Parliament dissolves before the general election, this Government are committed, without fear or favour, to transparency and to bringing out this report. We are committed to ensuring that we put into the public domain the measures that need to be taken to put that hospital back on track and to ensuring that its patients can have confidence in the safety of its operation.
Jeremy Lefroy (Stafford) (Con)
This is a very serious matter, and it is extremely important that it should be brought to the House. I am pleased that the Francis report on Mid Staffordshire resulted in the appointment of a chief inspector of hospitals, which has led to the production of reports such as this, but does the Minister agree that this case highlights the vital importance of having proper safety systems within each health and social care provider, as is proposed in the Health and Social Care (Safety and Quality) Bill, which is now going through the House of Lords with the support of the Opposition and the Government? Will she ask the CQC to ensure that each hospital and social and health care provider that it inspects has such safety systems in place and that that includes management systems, to ensure that the providers cannot make cuts that would put patient safety at risk?
Jane Ellison
I pay tribute to my hon. Friend’s remarkable work in this Parliament on campaigning for transparency in patient safety. He is exactly right to say that these are important features of the inspection regime. As I have said, work has already begun to strengthen the management arrangements at Whipps Cross, but he is right to say that patient safety must be the predominant concern of the management when they come to address failings such as these.
Stella Creasy (Walthamstow) (Lab/Co-op)
Whipps Cross is my local hospital. I have been a patient there and my family have been patients there, as have friends and neighbours. I join the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) and my hon. Friend the Member for Leyton and Wanstead (John Cryer) in being horrified at what I am sure they would see as the Minister’s insulting response to this issue. She is playing politics with the hospital that serves our community. We all want to put on record our support for the patients and staff who spoke out and demanded that the CQC should come back to the hospital, despite the assurances from the management and the Government that all was well there. They were begging the CQC to return to look again at Whipps Cross, and when we read the report, we can see that they have been vindicated. The lead inspector has rightly expressed his concern that front-line staff will feel even more demoralised following the report, and that their welfare needs to be our priority. What assurances can the Minister give me that, rather than playing party politics, she will listen to the inspectors and heed that warning?
Jane Ellison
The hon. Lady is quite right to say that patients would be concerned, but they should also be reassured that this inspection regime has exposed some of the issues, and now is the time for them to be addressed adequately. The additional support that the trust will receive as part of the special measures is part of what will help it to make the necessary improvements for patients. The chief inspector of hospitals has highlighted the scale of the challenge ahead, but this is an opportunity to ensure that the trust has the extra support to meet that challenge. That is exactly why the regime exists—[Interruption.] I am sure that, like me, the hon. Lady will have been concerned to read of the culture of bullying and low morale, which is not acceptable. Part of the transparency regime that this Government have put in place involves ensuring that staff can speak out, and I am glad that some of them did. It is never acceptable for staff to feel unable to speak out on the issue of poor care, so I am glad that this report has given them the chance to voice their concerns. Those concerns must now be properly addressed.
Dr Matthew Offord (Hendon) (Con)
The House will be reassured by the Minister’s coming to the House today to make this statement and taking this early opportunity to highlight these issues. [Hon. Members: “What? She was dragged here!”] I am sure you would agree, Mr Speaker, that the Minister stands head and shoulders above those who failed to do anything during their time in office to ensure patient safety.
Jane Ellison
I thank my hon. Friend for that—[Interruption.] We are hearing a lot of chuntering from a sedentary position, but I refer the right hon. Member for Leigh (Andy Burnham), who asked the urgent question, to a quote from Roger Davidson, former head of media at the CQC, who said in evidence to the Francis inquiry that
“there were conversations between the CQC and ministers to the effect that the CQC would not cause any trouble in the run up to purdah. The message that we don't want bad news infected the whole organisation.”
However much of a small discomfort it might be to Ministers to come and answer an urgent question on such an important matter for patients, people should be reassured that it is far more important that these issues come out transparently, whatever the timing, even if it is ahead of a general election.
Mike Gapes (Ilford South) (Lab/Co-op)
Both trusts that serve constituents in the London borough of Redbridge—Barking, Havering and Redbridge, which serves King George hospital in my constituency, and Barts, which serves Whipps Cross—are in special measures. In 2013, the Government forced the closure of maternity services at King George hospital, and as a result some of my constituents had to go to Whipps Cross. I am therefore shocked by what I have seen in the report. It is about time that the Government ruled out their plans to close the A and E at King George, because I do not want constituents of mine dying as a result of inadequate provision in north-east London.
Jane Ellison
The hon. Gentleman and I have debated these issues in Adjournment debates in this House, so I know that they are of great concern to him. All these issues in that part of London’s health economy need to be considered.
Rehman Chishti (Gillingham and Rainham) (Con)
Will Barts be given the same excellent support from the Government as Medway hospital in my constituency, which is in special measures? It has received extra resources and been paired with excellent hospitals such as Guy’s and St Thomas’s. Will the Minister join me in paying tribute to the excellent staff who work day in, day out caring for patients at Medway? Will she also note that in 2006 Medway hospital had the seventh highest mortality rate in the country, yet nothing was done? Will the shadow Health Secretary apologise for that? I welcome the support that the Government have given Medway hospital to turn it around.
Jane Ellison
I thank my hon. Friend for that question. He illustrates the fact that these problems can be addressed through this regime of extra support. I pay tribute to the staff at his local hospital, who have worked so hard to address the failings and to provide much safer care for their patients. He illustrates exactly why this regime of being transparent about issues and ensuring additional support can be given to trusts to address their problems can be successful and can benefit patients.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I am shocked by the Minister’s tone, as there are genuine concerns about the services that my constituents and those of colleagues are receiving. Barts is the largest trust in England, and when it was formed many concerns were raised. It dilutes accountability and direct line management. Does she agree now that it was too big and that consideration needs to be given to making a number of trusts out of this large trust that are more manageable and directly accountable?
Jane Ellison
As the hon. Lady knows, the site in question in this report is Whipps Cross. The priority for its management is to address the issues that the CQC has identified.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
As my hon. Friend knows, Basildon hospital was one of 14 to go into special measures and one of the first out. I believe that the reason for that is the Government’s openness to accept there are problems and not duck them, the hard work of hospital staff and the open and transparent attitude adopted by the management team to accept the problem and make it their own. Is my hon. Friend confident that the leadership of Barts is willing to accept the problems unreservedly and has the ability to face up to the challenges?
Jane Ellison
The failings at the site are laid out in black and white in the CQC’s report and it is important that people accept that. There will be intensive support to address that, and the management have already said that they are looking at the problems and have begun to address them. My hon. Friend is right that management and leadership are critical. We have seen that in his area and in others, and that is what those involved must now face up to.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) and I have been assisting the save our surgeries campaign in Tower Hamlets for 18 months, because, like many other GP surgeries in east London, ours are feeling under threat. Today’s response from the Minister indicating that the trust for Barts and the Royal London is in special measures, as well as the Barking, Havering and Redbridge University Hospitals NHS Trust, demonstrates that there is anxiety across east London about the state of the national health service. We did not hear anything in the Budget statement yesterday to give any reassurance to the people of east London. Does the Minister not recognise how serious this is for east London?
Jane Ellison
This report alone is a very serious report, and of course it is recognised. But it is right that we are transparent about it. As a London MP, I know some of the challenges that parts of the London health economy face. The issues need to be addressed, but this Government have put record amounts into the health service. We are also committed to backing the NHS’s own “Five Year Forward View”, and moving forward new ways of delivering GP care is a part of that vision. We have to make sure that that delivers for the hon. Gentleman’s constituents, as well as for mine and for other people in London.
Mr Speaker
It is good to know that in his capacity as a distinguished ornament of the Health Committee, the hon. Member for Easington (Grahame M. Morris) takes a keen interest in matters appertaining to east London.
Grahame M. Morris (Easington) (Lab)
Absolutely, and not least because we warned of these dangers during the passage of the Health and Social Care Bill, which later became an Act. With all due respect, I should point out to the Minister, on her references to openness and transparency, that this failing has happened as a direct result of mergers introduced by this Government. May I respectfully point out that when this merger was approved by the Secretary of State three years ago, Labour MPs, including my hon. Friend the Member for Leyton and Wanstead (John Cryer), did point out that such a change would be a disaster, and that has come to pass? The Secretary of State pressed ahead. May I point out the bullying issues that the report throws up? The chairman of the Unison branch was sacked on trumped-up charges. Will the Minister issue instructions to have those individuals reinstated?
Jane Ellison
The bullying of NHS staff who are trying to draw attention to poor care is never acceptable, and this Government have taken a lot of measures to make sure that NHS staff are protected. The trust’s chief executive has said the following about the report:
“We are very sorry for the failings identified by the CQC in some of our services at Whipps Cross and we know the Trust has a big challenge ahead.”
Part of that big challenge will be in restoring staff morale, and making sure that that culture of openness and support for staff is in place.
Heidi Alexander (Lewisham East) (Lab)
The placing of Barts into special measures this week confirms what many of us already know: London hospitals are under enormous pressure, some simply cannot cope and too many patients are not getting the care they deserve. In the light of that, can the Minister confirm that the recently announced Monitor investigation into the Princess Royal hospital at Farnborough will not result in another attempt by her Government to take the axe to Lewisham hospital and to services in south-east London more generally?
Jane Ellison
I believe we may well be addressing that issue in an Adjournment debate next week. There will be a chance to discuss it in more detail then.
Liz McInnes (Heywood and Middleton) (Lab)
Like my hon. Friend the Member for Easington (Grahame M. Morris), I am not from London, but I do feel qualified to speak on this subject. The issues that have been raised about staff morale and the “down banding” of nurses are all too familiar to me. Until October last year I worked for the NHS—I worked for the NHS for more than 30 years—and what is going on at Barts is very similar to what was going on in the trust in the north-west where I worked. Again, it was a large trust, having been formed by the merger of four hospitals. It is an unworkable plan. As my hon. Friend said, we warned about what was going to happen with the Health and Social Care Bill, and it is depressing to see all this come to fruition. The cost of agency staff, which has been referred to—
Mr Speaker
Order. May I exhort the hon. Lady to come to a question? I know she has provided her diagnosis, and we are grateful to her for that, but what we need is a question.
Liz McInnes
My question is regarding the trade unions and the welfare of staff. Staff morale is at an all-time low in the NHS, and trade unions need to be involved in any special measures that are taken in this trust.
Jane Ellison
The CQC’s inspection report does identify some issues of concern to do with staff morale and bullying. As I said to the hon. Member for Easington (Grahame M. Morris) a moment ago, the issues need to be addressed. We want a culture in which all staff can speak out about poor patient care and feel supported in doing so. That is exactly what we have put in place over recent years.
Paul Flynn (Newport West) (Lab)
It has been very disappointing that the Minister, for whom I have a very high regard, has dealt with this disgrace with a crudely political response. Does she not agree that an important element in the recovery of all patients is for them to have faith in their doctors and in the health service? No Government have done more than this one to undermine confidence in the health service throughout the nation. Does she not feel that great damage is being done by making the greatest political achievement of the past 100 years—the national health service—a political football to be knocked about by parties and by undermining that faith in the health service? That is something that the public will not forget and will never forgive.
Jane Ellison
I do not agree with the hon. Gentleman’s basic premise—not at all. In fact, recently, people’s satisfaction with the NHS has gone up. What he says is a slur on our hard-working clinicians, who respond so magnificently to the pressures in our system. This Government have backed them with money and support. I just do not recognise the picture the hon. Gentleman paints.
Mr Speaker
Yes, in a moment. I notice that the interest in this debate grew as it was taking place. The First Deputy Chairman of Ways and Means, the hon. Member for Epping Forest (Mrs Laing), and the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) have toddled into the Chamber. [Interruption.] Yes, I understand that the right hon. Gentleman has a constituency interest, and that others have taken a keen interest.
I will now allow a point of order, because it relates directly to the exchanges that have just taken place. I know that the right hon. Member for Leigh (Andy Burnham) will not abuse his privilege.
Andy Burnham
I am grateful to you, Mr Speaker, for allowing this point of order.
In the Minister’s non-reply to my questions, she inadvertently misled the House. She said that, before the last election, I had blocked a report on Basildon hospital. I wish to place it on the record that I made an oral statement to this House about Basildon hospital and published reports on it on 30 November 2009. I followed that up with a written statement to the House on 5 March 2010. I would be grateful to the Minister if she withdrew her comments.
Mr Speaker
I note what the shadow Secretary of State has said. He has put it on the record. The Minister is welcome to respond if she wishes, but she is not obliged to.
Jane Ellison
I was not a Member of the House at that time. Of course I would not wish inadvertently to mislead the House. Nevertheless—[Interruption.] I read out evidence that was given to the Francis inquiry that made it clear that such a culture did exist. However, if, on the specific point, I was not quite right, I will withdraw what I said.
Mr Speaker
I am grateful to the hon. Lady for what she has said. We will leave it there.
Speaker’s Statement
Mr Speaker
Before we come to the statement by the Chief Secretary to the Treasury, I will make a brief statement. The content of ministerial statements is, by longstanding practice, not a matter for the Chair, nor is my permission required for such a statement to be made. However, these statements must be ministerial, delivered not in a personal or a party capacity but on behalf of the Government. Although some latitude is of course permitted, there comes a point at which using the privilege accorded to Ministers for purely party purposes would be unfair to the House and would put the Chair in a very difficult position. I know that the Chief Secretary to the Treasury will bear that in mind.
Fiscal Responsibility and Fairness
(9 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Danny Alexander)
Yesterday my right hon. Friend the Chancellor of the Exchequer set out the final coalition Budget of this Parliament. The policy measures contained in the Budget document were all agreed between us. I secured key Liberal Democrat commitments, including the significant increase in the income tax personal allowance, support for mental health, and tax measures to support motorists, Scotch whisky and the oil and gas sector, because together they make our society fairer and our economy stronger.
However, I know that millions of people who watched yesterday’s exchanges between the Chancellor and the Leader of the Opposition were left wondering, “Isn’t there another way to do this?” Of course people want a stronger economy based on a credible plan, but they also want a fairer society based on modern public services. Therefore, to all those left cold by yesterday’s exchanges, to all those asking themselves whether there is another way, today I say, “Yes, there is a better way.”
Today I set out a better economic plan for Britain, a plan that is based on values of fairness as well as strength, a plan that delivers on our commitment to balance the books in a fair way, a plan that borrows less than Labour, cuts less than the Conservatives and enables our country to see light at the end of the tunnel. It is not a rollercoaster ride, but a steady path back to prosperity. It sticks to the path we have chosen in this Government, rather than lurching away from it by cutting too much or borrowing too much.
The fiscal forecast published by the Chancellor yesterday would, according to the Office for Budget Responsibility, return Government consumption—the effective spending power of the state—back to levels last seen in 1964. But the era of “Cathy Come Home” is not my vision for the future of Britain. [Interruption.] Although, I can see why 1964 might appeal to some on the Government side of the House—after all, that was before Nigel Farage was born.
The economic plan that I am publishing today has been produced by the Treasury, based on assumptions I provided, using data from the Office for Budget Responsibility—[Interruption.]
Mr Speaker
Order. I will not take points of order in the middle of a statement.
Danny Alexander
Finishing the job we started in 2010 will require roughly £30 billion of fiscal consolidation by 2017-18. All parties in this House signed up to that in January, although the shadow Chancellor has been trying to wriggle out of that commitment ever since.
Our first priority must be to ensure that those with the broadest shoulders bear the largest share, so the fiscal plans I am setting out today are based on a further £6 billion from tax dodgers—an additional £6 billion of tax rises. We should expect those in high-value properties, the banking sector and others to pay more, rather than asking those working on low incomes to accept less. That would leave around £12 billion of departmental expenditure savings and the remaining £3.5 billion from welfare savings. Those measures would allow the structural current deficit to be eliminated in 2017-18. In fact, the coalition’s fiscal mandate is met with headroom of £7.7 billion.
Once that task is complete, we need to continue to cut the debt as a share of the economy, and we will not flinch from that task, because to do so would be to leave an intolerable burden to future generations. Provided that we can meet that target, borrowing for productive investment in infrastructure—in roads, railways, broadband and housing—can and should be part of our plan. We will therefore grow public expenditure as the economy grows after 2017-18. Ten years on from the financial crisis is the right time for the public finances to turn the corner. To continue the pain beyond that date is unnecessary and simply making cuts for cuts’ sake. To go too slowly, as the Opposition recommend, would drag out the pain for too long.
The national debt as a share of the economy would fall in every year of this plan, from 78.2% in 2017-18 to 76.1% and then 73.9%. The implied spending envelope for Departments would be £314.3 billion in 2017-18, rising to £324 billion and then £348.1 billion in the last year. That is £25 billion, £36 billion and then £40 billion more available for public services and infrastructure investment than in the plans presented yesterday. Just think what could be achieved with that. [Interruption.] They might not like to hear it on the Opposition Benches, but that money could be used—[Interruption.]
Danny Alexander
That money could be used to ensure that the NHS has the £8 billion it needs to secure its future, or to ensure that the education budget can be protected in real terms from cradle to college and not allowed to wither, or to support growth-enhancing spending of the sort delivered so effectively by my right hon. Friend the Secretary of State for Business, Innovation and Skills—[Interruption.]
Mr Speaker
Order. The hon. Member for Denton and Reddish (Andrew Gwynne) must resume his seat.
Mr Speaker
Order. Sir Bob, I do not think I require a lecture from you upon the matter of good order. Calm yourself, man; it will be better for your health.
Danny Alexander
Labour Members may not like it, Mr Speaker, but I am setting out the numbers in the Treasury document published today, which is an entirely legitimate thing to do.
This will also allow us to reward the hard-working public servants whose pay restraint has helped so much to balance the books. Public servants have made big sacrifices, and we need to repay that.
No Chief Secretary has ever had to control public spending in the way that I have, and no Chief Secretary should ever have to do so again. But this scenario proves that there is no need to shrink the state in the way that some in this House propose. The recovery secured, the fiscal mandate met, national debt down, public finances that have turned the corner, a stronger economy and a fairer society, and a better future for the United Kingdom: that is what these plans deliver.
However, fairness is not simply embodied by the numbers on a spreadsheet; it is also about the actions that we take. Nothing makes people more angry than the sight of some refusing to pay the tax that they owe. Last month I committed to ensuring that any individual or company that facilitates tax evasion would face stronger criminal penalties and financial sanctions. Today we deliver on that commitment by publishing a substantial package of next steps in the clampdown on these immoral and illegal practices. We inherited—[Interruption.] If the hon. Member for Denton and Reddish (Andrew Gwynne) would simply listen to what is being said instead of ranting like a lunatic, he would hear the measures that the Government are taking to clamp down on tax evasion.
We inherited from the previous Government a tax system that had more holes than a Swiss cheese and was more complex than a Rubik’s cube. The opportunities for those who wish to get away without paying were many and varied.
Andrew Gwynne (Denton and Reddish) (Lab)
Which page of the Budget is this on?
Mr Speaker
Order. The hon. Gentleman should not keep shrieking from a sedentary position, “Which page?” If the Chief Secretary wishes to go through page numbers, that is his prerogative, but if he does not, excessive gesticulation is rather unseemly. I have high aspirations for the hon. Gentleman’s future as a statesman, but I am not sure he is aiding his objective of becoming a statesman by this rather shrill shrieking, which in any case, as I am sure Mrs Gwynne will confirm, will be injurious to his health.
Danny Alexander
We would not wish to injure the hon. Gentleman’s health, Mr Speaker, nor to allow him not to hear the changes that we are making to deal with tax evasion.
For too long, our tax system struggled with the fact that a small minority felt it perfectly okay to indulge in tax avoidance and commit the crime of tax evasion. The public will not tolerate being stolen from any more. When this coalition Government came into office, we made it clear that we would eradicate loopholes that the previous Administration had left wide open. We said, “If you have not been compliant, we will give you the chance to put your affairs in order, but then we will come after you.” Since 2010, in every year of this Parliament we have put in place measure after measure to tackle the abuse of the tax system. Her Majesty’s Revenue and Customs will have secured £100 billion in additional revenue over the course of this Parliament. That includes more than £31 billion from big businesses and an extra £1.2 billion from the UK’s 6,000 richest people.
Yesterday’s Budget announced further measures targeting those who persistently enter into or market tax avoidance schemes that HMRC defeats. The Budget also announced game-changing information exchange agreements with over 90 tax authorities worldwide. Today I can announce the next steps—a tough, comprehensive new evasion-deterring package. First, for offshore evaders, following consultation we will introduce a new strict liability criminal offence so that people can no longer simply plead ignorance in an attempt to avoid criminal prosecution. Strict liability will bring an end to the defence of, “I knew nothing—it was my accountant, m’lud.”
Secondly, the Government will introduce a new offence of corporate failure to prevent tax evasion or the facilitation of tax evasion. No longer should any organisation be able to get away with facilitating or abetting others to evade tax. If people help a burglar, they are accomplices and criminals too. Now it will be the same for companies that fail to prevent their employees from helping tax evaders; they will be treated as accomplices too.
Thirdly, we will increase financial penalties for offshore evaders, including, for the first time, linking the penalty to underlying assets. A billionaire evading £5 million of tax will not just be liable for that £5 million. Fourthly, we will introduce new civil penalties so that those who help evaders will have to pay fines that match the size of the tax dodge they facilitate. If someone helps someone else evade £1 million of tax, they risk a penalty of £1 million, or even more, themselves. Fifthly, we will extend the scope for Her Majesty’s Revenue and Customs to name and shame both evaders and those who enable evasion.
Our message is simple: “Come forward and settle your affairs, or be caught and face the consequences.” These measures are helping to put in place a far more effective tax system in the UK. Once again it combines fiscal responsibility with fairness.
I would like to mention one last measure. Mr Speaker, you and the right hon. Member for Salford and Eccles (Hazel Blears) have pioneered measures to open up politics and Parliament to people from a more diverse range of backgrounds. Following extensive discussions, I am delighted to confirm that the Treasury has agreed to provide reserve funding of £200,000 a year for the Speaker’s parliamentary placement scheme in both 2015-16 and 2016-17, to ensure that its excellent work can continue beyond this year. I pay tribute to the work done by you, Mr Speaker, and the right hon. Lady as the driving forces behind the programme.
Combining fiscal responsibility with fairness—that is the approach that we as Liberal Democrats have brought to the coalition Government. We will finish the job of dealing with the deficit, and do so fairly. We will get the national debt down, we will secure the economic recovery and we will have no tolerance of people who evade tax or those who help them. That is the approach that will deliver a stronger economy and a fairer society. I commend this statement to the House.
Chris Leslie (Nottingham East) (Lab/Co-op)
What a farce! Why has the right hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) been allowed to use the Government Dispatch Box for his party political pleading this morning? Is this a statement of the Treasury’s policy or not? He said he was publishing fiscal plans today—where is that document? I thought that statements in the House of Commons were supposed to be from Ministers speaking collectively on behalf of the Government, but the right hon. Gentleman has totally abused that privilege, assembling MPs this morning on a false pretence.
I know it is usual to have several days of Budget debates in the Commons, but not several Budgets. On a procedural point, I have to ask you, Mr Speaker: what recourse do we have, as the official Opposition, when statements are made that are not Government policy? [Interruption.] I do not know where the Deputy Prime Minister is going. I think that was his valedictory appearance in the House of Commons.
Can we all have a turn at giving statements and using civil service resources in this way? Will we get to vote on both Budget statements or just one of them? The Government refused to let the Office for Budget Responsibility cost all the manifesto policies of the main parties, but then they waste Treasury time and money specifically funding a Lib Dem policy document. Will the Chief Secretary at least tell the House how much this morning’s phoney exercise cost the taxpayer? What better illustration can there be of the shambolic downfall of this miserable Government when we cannot even tell whether a Minister is speaking in an official capacity? This is an alliance driven totally by party political interests, rather than Britain’s best interests.
The right hon. Gentleman spoke about measures supposedly to tackle tax evasion and tax abuses. Are they actual Government policy or are they things that he would quite like to do but that other Ministers are squabbling about? Are they genuinely new powers to tackle tax evasion or just a series of press releases to give the impression of activity?
The OBR has expressed doubt about the right hon. Gentleman’s approach to common reporting standards and says that these plans have “very high” levels of uncertainty. Can he clear that up? The OBR also says on page 209 of its report that today’s announcement relies
“on extra HMRC operational capacity in order to be implemented as intended.”
How much additional HMRC resource will be committed to the measures? When will it be committed and with what guarantee?
With the tax gap widening a further £1 billion, to £34 billion, why should we believe that these steps will be any different from the Government’s failed deal on tax disclosure with Switzerland, which has raised less than a third of the promised £3 billion and involved agreeing to turn a blind eye to abuses in the future? Would the new powers to tackle offshore tax abuses prevent what looks to have happened at HSBC? The ex-chairman of HSBC’s Swiss bank, Lord Green, apparently admitted last night to feeling “dismay and deep regret”, adding with enormous understatement that
“the real world of the markets is shot through with imperfections”.
You san say that again! Will the Chief Secretary at least now admit that it was an error that Lord Green was appointed as one of his ministerial colleagues in the face of all the evidence, or did he sign up to that as well?
The Chief Secretary came to the Dispatch Box to set out an alternative Lib Dem Budget, desperately trying at the eleventh hour to distance himself from the extreme and hazardous fate that awaits our public services—our police, our defence, our social services and the NHS—if his boss is re-elected. Let us just get this straight: is he now saying he cannot sign up to the Chancellor’s Budget, as in the Red Book, this time around? We know, or at least I thought we knew, that the quad, of which he is a member, had signed off the Budget and autumn statement figures. Is he now saying that next week he will not be voting for what is in the Red Book?
Are the Liberal Democrats ruling out a coalition with the Conservatives after the election? If they cannot even sign up to the Chancellor’s Budget when they are part of the Government, how on earth could they sign up for another five years? Does the Chief Secretary not realise how two-faced he looks? They want to have their cake and eat it—to be in government, but not in government. I can almost hear his constituents saying, “It’s too late, Danny. You’ve been propping up the Tories for five years—taking the NHS backwards, imposing the bedroom tax and trebling tuition fees, while slashing taxes for millionaires—so don’t come along now with your alternative plans and expect anybody to believe you.” It is too late for this: the Liberal Democrats have backed the Tories all the way—working families have paid the price—and now it is time for him to pay the ultimate price for his behaviour.
Danny Alexander
Frankly, the hon. Gentleman should know about farce—he has presided over the farce that is his own economic policy for the past five years.
The hon. Gentleman referred to collective agreement. I can confirm that the publication of “An alternative fiscal path beyond 2016-17” has been collectively agreed by the Government as an alternative fiscal scenario. He may not like this constitutional innovation, but he should get used to having coalition Governments in the future. The fact that he does not like constitutional innovation is perhaps why he and his colleagues blocked House of Lords reform earlier in this Parliament.
No Treasury resources were expended apart from in the work of the civil servants who calculated the numbers. It is entirely appropriate for civil servants to carry out work on a scenario on behalf of the Chief Secretary. In relation to the hon. Gentleman’s questions on tax evasion and avoidance, the new powers introduced by this Government are set out in a report today. I am sorry to hear that he opposes the common reporting standard. I would have thought that he welcomed the fact that there is UK leadership on ensuring that there are international agreements to open up offshore bank accounts to scrutiny by tax authorities from around the world. The new offences and penalties will of course hit any organisation, whether a bank or an accountancy firm, that facilitates others to engage in tax evasion.
On the hon. Gentleman’s last question, he knows very well that, as the OBR says in its own document, its forecast is constructed on the basis of a neutral fiscal assumption that is presented for the rest of the Parliament. That conceals a range of differences between the parties in the coalition. It is entirely proper for me to set out today what I think we are undertaking, exactly as the Chancellor did in his speech yesterday. Instead of this pathetic display, the Labour party should get on with apologising for the economic mess it created, and it should congratulate the Liberal Democrats and the coalition Government on clearing up its mess.
Mr Speaker
Order. I must tell the hon. Member for Leeds North West (Greg Mulholland) that he is a cheeky fellow. He came into the Chamber after the start of the statement, and I therefore know that he will not expect to be called to ask a question on it, for in parliamentary terms that would be inappropriate. I know that he would not knowingly commit a misdemeanour in that regard. He can sit and listen if he so wishes, but he will not take part in this particular exchange. That is only fair.
Adam Afriyie (Windsor) (Con)
I have to say that I am stunned by this statement. The fact that not a single Conservative is on the Front Bench says an awful lot. This is the Westminster bubble at its absolute worst, and it represents everything that is wrong with politics today. The Liberal Democrats have betrayed their voters, and their voters know it; their own candidates are now pretending to be independents; and today’s display is an absolute betrayal of the role they have played in government. I have no question, Mr Speaker. I think the voters will make up their own minds.
Danny Alexander
Given that we have secured a substantial fall in the deficit, the strongest economic growth in Europe and the creation of jobs in numbers that are not being seen in the rest of the European Union, the hon. Gentleman ought to be congratulating me and my hon. Friends on our role in this Government, not criticising us.
Chris Bryant (Rhondda) (Lab)
A fanfare went up around the country when, in the autumn statement, the Government announced that there was going to be a tax relief for orchestras. Now we learn that the Government’s definition of an orchestra says that an orchestra can get tax relief only if it has woodwind, strings, percussion and brass—all four. That means that no string orchestra is included, the London Sinfonia is not included, the Orchestra of the Age of Enlightenment is not included and nor, for that matter, is a single brass band in the land. If the Chief Secretary wants somebody to trumpet his orchestra tax relief, will he not have to change the rules?
Danny Alexander
I think that the hon. Gentleman is trying to make a serious point. Officials in HMRC have worked very carefully on writing a definition that is appropriate. I will certainly take his points back to HMRC and see whether they can be taken on board.
Ian Swales (Redcar) (LD)
I welcome the Chief Secretary’s statements on tax evasion and avoidance. Does he agree that it should no longer be a respectable occupation to advise those who want to avoid paying their share towards our schools, hospitals, our armed forces, pensions and all the other things on which our country relies, and enable them to do so?
Danny Alexander
I wholeheartedly agree with my hon. Friend. I have championed action on that matter in the Treasury over the past five years, and today’s Government announcements show the next stage of that. As he says, this country does not and should not tolerate the abuse of the tax system that has gone on in the past.
Stewart Hosie (Dundee East) (SNP)
I have never seen a statement, other than a Budget statement, that is so heavily redacted. It is almost as if the Chief Secretary is trying to pretend that he is important. He sat there yesterday and grinned as the Chancellor announced £30 billion of cuts. He voted for £30 billion of cuts in January and he has boasted about it today. He has not laid out a plan that combines fiscal responsibility and fairness. The plan is in the Red Book. It is not responsible and it is not fair; it is just another five years of austerity and cuts, and he knows it.
Danny Alexander
Given that the hon. Gentleman speaks on behalf of a party that wants to break up and bankrupt the United Kingdom and that has set out plans to have the national debt higher at the end of the next Parliament than at the beginning, he has a cheek. The Scottish National party’s plans would do nothing to sort out this country’s economy. They would damage the recovery and cause jobs to be lost in Scotland. I think that the people of Scotland can make up their own minds about that.
Sir Malcolm Bruce (Gordon) (LD)
I congratulate my right hon. Friend on the work that he has done to ensure that the wealthiest pay a much higher contribution in taxes than they did under the last Government, who created more loopholes for the rich to avoid taxes than there are holes in a sieve. Surely it is perfectly legitimate for a coalition that has secured recovery and growth for five years to set out how that can be taken forward in the next five years. May I suggest that if coalitions are to become the norm, we need to find better ways of handling them, so that the two coalition parties can present their cases to the House? This statement is a perfectly reasonable way of doing that.
Danny Alexander
I am very grateful to my right hon. Friend. I thank him for his support on the measures to support tax avoidance and evasion and on the package of measures that we announced yesterday to support the oil and gas industry, which has been widely welcomed in his constituency and elsewhere. He is absolutely right that although the Labour party might not like the fact that we have a coalition Government, it needs to get used to the idea that that may well be the norm for many years to come. Innovation will be needed in parliamentary procedures and other things to accommodate that.
Yvonne Fovargue (Makerfield) (Lab)
At the beginning of his statement, the Chief Secretary seemed to express concern over the direction of the coalition Budget and some of its measures. Will he confirm that the Liberal Democrats will go through the Lobbies with their coalition partners?
Danny Alexander
As I said in my statement, all policy measures in the Budget have been agreed across the coalition. What is being set out is an alternative fiscal scenario for meeting the path of deficit reduction to 2017-18, which is an entirely legitimate thing to do. Labour Members may not like the fact that they crashed the economy, made a mess of the nation’s finances, and have no plan of their own to sort it out, but they should welcome the fact that an alternative plan has been set out today.
Duncan Hames (Chippenham) (LD)
I commend my right hon. Friend for the action he is taking in government to prevent tax dodging—not long ago it was relatively easy to take advice on that simply by watching the “Daily Politics”. Will he say how much extra revenue Her Majesty’s Revenue and Customs has been able to collect as a result of action he has already taken to prevent tax dodging?
Danny Alexander
I am grateful to my hon. Friend for his question, which gives me the opportunity to pay tribute to the excellent people who work for HMRC. They work hard, day in, day out, on behalf of us all, to ensure that we bring in the revenue that is required, and that compliance procedures are in place to ensure that people cannot get away with dodging tax. As a result of the actions we have taken, more than £100 billion of revenue is being collected by the Exchequer that would not otherwise have been collected.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
A Budget, in other terms, is an estimate. Will the Chief Secretary to the Treasury please tell us about estimates that the Lib Dems will have more or fewer MPs after the general election than the 16 who are currently in the Chamber?
Danny Alexander
I am not sure that is a matter for the House; it is a matter for the British people in the coming election, and I confidently expect that the Liberal Democrats will do far better than any of the pundits predict.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I commend my right hon. Friend for setting out a fair path to a stronger economy. Will he join me in congratulating Wick tax office, which has done such a sterling job on cracking down on avoidance through film partnerships, and which is still open despite many Treasury attempts to close it? As the economy grows, will he pay real attention to investing in infrastructure and education so that we can maintain a sustainable recovery and invest in our future?
Danny Alexander
I pay tribute to my right hon. Friend and his work on the Treasury Committee, and to staff at Wick tax office for their work to ensure compliance in our tax system. They have brought in many millions of pounds of revenue that would not otherwise have been collected. He is right to stress the importance of investment in infrastructure. Under this Government, we have the largest programme of investment in our railways since Victorian times, and in our road network since the 1970s. The plans I am setting out today would allow and enable borrowing for productive capital investment after the books are balanced, which will allow us to do more of that still. That is the right, fair plan for this country.
Susan Elan Jones (Clwyd South) (Lab)
The Chief Secretary to the Treasury may be aware of a popular television programme in this country called “Pointless”—it would be unkind of me to use the same description about him, so I will not. Can he say in one short sentence what exactly was the point of what he has said today, apart from pacifying some of his colleagues?
Danny Alexander
The hon. Lady is a member of a party whose last Chief Secretary left a note boasting that there was no money left—I think “Cashless” might best describe the Labour party. The point of my statement is exactly what I set out. I do not intend to repeat the entire statement in response to the hon. Lady’s question, but it is clear that behind the neutral fiscal assumption on which the OBR constructs its forecast, many different paths are open to this country. The alternative scenario published by the Treasury today illustrates one such path, which I would endorse.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I commend the Budget and congratulate the Government on focusing on reducing national debt, which seems to have taken the wind out of Opposition sails. I thank the Chief Secretary for agreeing to a rural fuel duty discount for Hawes. Regrettably that is not in Thirsk, Malton and Filey, but I am sure my right hon. Friend the Member for Richmond (Yorks) (Mr Hague) will be very pleased. Will the Chief Secretary take heart that the £10 less duty paid on tanking up a car will bring great comfort to families in north Yorkshire?
Danny Alexander
I thank my hon. Friend for her consistent support for the rural fuel discount scheme. She was one of the Conservative Members who spoke up for this in the last Parliament, as well as in this one, and she makes the right argument. I am delighted that we are the first country in the EU to put in place a rural fuel discount scheme for remote mainland communities, and I hope in due course it will be possible to extend it—so I do not wish her constituents to think that the hope of its being extended to them is extinguished.
Alex Cunningham (Stockton North) (Lab)
The right hon. Gentleman has tried to give a very different impression today, but if he is still “all in it together” with the Chancellor, will he do what his boss has refused to do and tell us where the £12 billion of cuts to the welfare budget will fall?
Danny Alexander
It might have escaped the hon. Gentleman’s knowledge, but his Front-Bench team signed up to the revised charter for fiscal responsibility, which requires £30 billion of further deficit reduction. I can reassure him that I do not support the Conservative policy of £12 billion of welfare cuts in the next Parliament, but no doubt that matter will be debated in the election campaign. I believe Labour claims it has some plans for reducing welfare expenditure, though, as on everything else, it has not set out any detail.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I commend my right hon. Friend for his determination in staying a course that avoids the excessive borrowing advocated by Labour and the ideologically based welfare cuts of the kind just mentioned. Without such a course, it will not be possible to deliver what he has given a personal commitment to—dualling the A1 and repairing the road into Rothbury taken away by a landslide. These and other measures have been based on the success of Liberal Democrat participation in the coalition.
Danny Alexander
I agree with my right hon. Friend. The plan I have set out today ensures that we would borrow less than Labour and cut less than the Conservatives, ensuring a fair path for the public finances, which is necessary to deliver in full on our plans to dual the A1—plans that he has championed relentlessly during his time in the House. I am pleased it has been a Liberal Democrat Chief Secretary who has enabled that scheme to be funded.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
This is clearly the Chief Secretary to the Treasury presenting an alternative Liberal Democrat Budget. He obviously did not hear your statement at the beginning, Mr Speaker. To press him on the point my hon. Friend the Member for Nottingham East (Chris Leslie) raised, how will he be voting on Monday, and if he is going to vote for his own alternative Budget, will he be resigning as Chief Secretary to the Treasury?
Danny Alexander
With the greatest respect, I think it was the hon. Lady who was not listening. I made it clear that the policy measures in the Budget were ones that I helped put together, on an equal basis with the Chancellor, and I will be voting in favour of all the Budget resolutions, as I think Labour should. If it wants to oppose income tax cuts for working people and measures to support first-time buyers and savers and motorists, it should tell the British electorate.
Dr Matthew Offord (Hendon) (Con)
I am grateful to the Liberal Democrats for coming to the House and announcing their policies, because it will allow me to campaign in the election for the Conservative party manifesto and put clear blue water between our two parties. However, I have to congratulate the right hon. Gentleman on his stance today. I think he has pulled off the neat trick of not only being a member of the Government but showing himself able to be part of the opposition—something that Her Majesty’s loyal Opposition have not been able to do in the last five years.
Danny Alexander
I think I will take that as a compliment, although I do not know if it was meant as such. The hon. Gentleman makes a perfectly reasonable point. He and I are members of different political parties and have different visions of the future, but we have worked together in this coalition Government very effectively to clear up the mess left by Labour and get our country back on the right track. Of that, both coalition parties ought to be proud.
Mrs Mary Glindon (North Tyneside) (Lab)
How does the Chief Secretary expect to tackle tax evasion and avoidance if the Government go ahead with reducing the number of HMRC staff—the staff he was just praising—from 50,000 to 40,000 by next year?
Danny Alexander
As I explained in my statement, we have set out a range of measures in this Parliament to improve compliance activity, including by investing an extra £1 billion in precisely the areas of HMRC that focus on this, so there are more specialist tax inspectors, accountants, lawyers and so on focusing on this area. Yesterday, we announced the ending of the tax return and the move to a digital system for tax reporting, which will save money for both taxpayers and HMRC and allow even more resource to be focused on tackling avoidance and evasion.
Annette Brooke (Mid Dorset and North Poole) (LD)
I thank my right hon. Friend for his statement. Will he comment briefly on its implications for the future funding of our nurseries, our schools and our colleges—something very important to us on the Liberal Democrat side?
Danny Alexander
My right hon. Friend makes an important point. I believe that in the next Parliament, we should protect the budgets in real terms not just of schools, but of early-years education and 16-to-19 education as well. Saying simply that cash per pupil should be provided on a frozen basis across the Parliament amounts to real-terms cuts for education. That is what people will get from one party of this coalition, but from our part of it people will get real-terms growth and expenditure in all parts of the education system. I think that is vital, given the role of those institutions in fostering opportunity for all in our society.
Mr Jim Cunningham (Coventry South) (Lab)
The Chief Secretary has just talked about education. If he is really concerned about the education of 16 to 24-year-olds, why is he cutting the further education budget in Coventry by 24%? He should look further at the validity of the claim that the Government are going to create more apprenticeships. That rings hollow, certainly in my ears, so will the Chief Secretary please clarify the answer he just gave to the hon. Member for Hendon (Dr Offord)?
Danny Alexander
It is a matter of record that 2.1 million apprenticeships have been created under this Government. That was the result of substantial investment by my right hon. Friend the Secretary of State for Business, Innovation and Skills. I would have thought that apprenticeships, and their growth, would be welcomed on all sides, because it is an important way for people to gain skills, not least within this House. I very much hope that, on reflection, the hon. Gentleman will welcome that substantial investment.
Business of the House
(9 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The First Secretary of State and Leader of the House of Commons (Mr William Hague)
With permission, I should like to make a statement on next week’s business:
Monday 23 March—Conclusion of the Budget debate. I expect my right hon. Friend the Prime Minister to make a statement following the European Council.
Tuesday 24 March—Consideration of a Business of the House motion, followed by consideration of Lords Amendments to the Recall of MPs Bill, followed by consideration of Lords Amendments to the Small Business, Enterprise and Employment Bill, followed by a motion relating to section 5 of the European Communities Amendment Act 1993, followed by a motion to approve statutory instruments relating to counter-terrorism, followed by consideration of Lords amendments.
Wednesday 25 March—All stages of the Finance (No. 2) Bill, followed by motion to approve a statutory instrument relating to terrorism, followed by consideration of Lords amendments.
Thursday 26 March—Consideration of Lords amendments, followed by an opportunity for Members to make short valedictory speeches as recommended by the Backbench Business Committee. The House may also be asked to consider any Lords messages which may be received. All consideration of Lords amendments announced for next week will be subject to the progress of business. The House will not adjourn until Royal Assent has been received to all Acts.
This is the last weekly business statement of this Parliament. Although I will be seeking to catch your eye on several occasions next week, Mr Speaker, now seems an opportune moment to thank the shadow Leader of the House for her good humour, her support for reform of the House and her commitment to the interests of the House. We worked together on many bodies, such as the House of Commons Commission, and she has always been a constructive colleague. I have enjoyed working with her.
I would also like to thank my right hon. Friend the Deputy Leader of the House for his dedication and companionship, particularly on Thursday mornings. I praise his industry, because since becoming Deputy Leader of the House in September 2012, he has clocked up more than 114 legislative hours dealing with six different Bills. I wish him well. I thank other colleagues for their assistance and often their patience, particularly those who have regularly attended business questions and given close attention to our proceedings.
Ms Angela Eagle (Wallasey) (Lab)
I thank the Leader of the House for announcing the business for the final days of this Parliament, and, of course, for his extremely gracious and entirely typical thanks and tributes not only to me, but to all Members. I am sure that next week, during the “valedictory addresses”, we shall have an opportunity to repeat some of the graciousness.
I must say, however, that despite the heroic efforts of the Leader of the House since he took the reins, this is a Parliament that will be remembered for being so devoid of business in its second half that “zombie Government” has entered the political lexicon, and so badly managed that it has lost two MPs to UKIP, seven Cabinet Ministers, and no fewer than 103 votes in the House of Lords. No wonder the Tory Chief Whip cannot even organise his way out of a toilet.
Yesterday, we heard a Budget that people will not believe from a Government whom they do not trust. No amount of rhetoric can mask the Chancellor’s failure. He told us that the deficit was the most important thing, and promised to eliminate it by the end of this Parliament. He has failed. He claimed that we were “all in this together”, but he has given us tax cuts for millionaires and a bedroom tax for the most vulnerable. We have had tax breaks for hedge funds from a party that is now a wholly owned subsidiary of the tax avoiders, and, for the first time since the 1920s, working people are worse off at the end of a Parliament than they were at the beginning.
What did the Chancellor offer when he told us to choose the future? Extreme and dangerous cuts, the deepest for 50 years, which the independent Office for Budget Responsibility has described as a “rollercoaster”. It is no wonder that the Chancellor mentioned Agincourt more than he mentioned the NHS. It has been calculated overnight that he spent £80 million on bad jokes in his Budget speech. I can give you this promise, Mr Speaker: my jokes will always be cheaper than that.
It is no surprise that this week one Tory MP has been caught desperately trying to hide his true identity. He has come up with a cunning disguise, and has taken on a whole new persona. I am not talking about Michael Green. This week, the hon. Member for Croydon Central (Gavin Barwell) contacted constituents, begging them to endorse him to their families and friends. So confident is he about the Government’s stunning record that he said:
“it'll be much more effective if it doesn’t mention the Conservative Party”
or the Prime Minister.
Meanwhile, the Tory party chair, after years of denial and threatening to sue one of his own constituents, has finally admitted that he did, after all, have a second job while serving as a Member of Parliament. He created a brand-new alternative to “economical with the truth” when he apologised for “over-firmly” denying the facts. After five years, there we have it: the Liberal Democrats misadvise themselves, and the Tories over-firmly deny.
As this is the last session of business questions during the current Parliament, I thought it would be remiss of me not to take a few moments to poke fun at the Liberal Democrats, but, given what we have just heard from the Chief Secretary, I think that they have done it all by themselves. The Chancellor’s apprentice, the mini-me of the Treasury, came to the House to deliver his very own faux-Budget statement—and what did he say? That today he disagrees with everything that he signed up to yesterday. Apparently, he is so determined to feel important that he had his very own yellow Budget box constructed, and—absurdly—posed with it at the weekend. However, I hear that he has already taken it to a Liberal Democrat fundraiser and sold it off to the highest bidder, much like his principles. I understand that he got fifteen hundred quid for it.
Meanwhile, the former president and aspiring next leader of the Liberal Democrats, the hon. Member for Westmorland and Lonsdale (Tim Farron), tried to boost morale at the party’s spring conference by saying that he thought they might lose half their seats, and that they deserved a mark of just two out of 10 for their time in government. I think that that is a bit generous.
Let me take this opportunity to pay tribute to the Leader of the House, who is retiring from this place in just a few days’ time after 26 years of service. He has gone from blond bombshell to slick statesman. He commands respect across the House. Over his career he has befriended celebrities, he has written books, he has travelled the world, he has led his party, and he has been a hard-working and effective Leader of the House whom I have enjoyed working with. Now that’s not bad for someone who was once rejected for a job as a special adviser by Margaret Thatcher, who wrote on his application form, “No, no, no.”
I know the right hon. Gentleman is off to a new house in Wales, which I gather has 10 bedrooms, 10 bathrooms, and I am not sure how many kitchens—perhaps he will tell us. All I can say is that he is lucky a Labour Government will repeal the bedroom tax, although he may be less happy about our plans for a mansion tax.
Yesterday the Chancellor laughably claimed that this Government were helping the north, but what he does not realise is that he is about to lose the only northern powerhouse the Tories have ever had.
Mr Hague
I am grateful for the hon. Lady’s touching remarks. As last week, I will not join her in making fun of the Liberal Democrats; I pointed out that I am going to wait a little while for that. I have spent a lifetime making fun of the Liberal Democrats, but I have had a five-year interregnum, and I am looking forward to it coming to an end. Since I will be released from this place anyway, I will be able to join in, but they are deeply valued colleagues—for another few days anyway—and I very much meant the tribute I paid to my right hon. Friend the Deputy Leader of the House.
The hon. Lady asked about various matters including referring again—we have debated this before—to the Chief Whip and his experiences in toilets. I have explained that it is an essential part of the duties of a Chief Whip to know who is lurking in there at any one time.
I want to take the hon. Lady up on what she said about this Session of Parliament, because I believe when we come to the end of it next week a great deal will have been achieved: the Infrastructure Act 2015 that provides a nearly £4 billion boost to the economy; the small business Bill that will help businesses get credit from banks and ensure they can expand; the Pension Schemes Act that gives people freedom and security in retirement; the Criminal Justice and Courts Act that allows us to properly punish serious offenders; the Modern Slavery Bill, which will be a landmark piece of legislation; and the Childcare Payments Act that helps more parents with the cost of child care. These are all from this Session of Parliament. That is not a zombie Session of Parliament; that is real, constructive legislation that is of immense assistance to many people in this country.
I have all the great respect for the hon. Lady that I spoke of earlier, but I think she may have written part of her remarks before the Budget, because she said people would be worse off at the end of the Parliament than they were at the beginning of it, but as we now know from the Office for Budget Responsibility one of the achievements of this coalition—Conservatives and Liberal Democrats—will be that on average households will be £900 better off in 2015 than they were in 2010. So the script will have to be changed, albeit at the very end of the Parliament.
Talking of the northern powerhouse, I am very proud that, as the Chancellor pointed out yesterday, more jobs are being created in Yorkshire than in the whole of France. That is not remotely a surprise to those of us from Yorkshire, but it is part of the achievement of this Government that employment is at its highest since records began, and that 1,000 more jobs have been created every day under this Government. One particularly striking aspect of yesterday’s figures is that the rise in youth employment in the last year has been higher than in the whole of the rest of the European Union put together. It is very rare for a Government at the end of a Parliament to be able to say that—very rare indeed—and the Opposition, who voted for the charter for budget responsibility but are now unwilling to maintain any spending discipline, have to explain where the tax rises are going to come from in their programme. There will be a great deal of suspicion that there will be large hidden tax rises from a Leader of the Opposition who has that large hidden kitchen he did not want to speak about.
Such issues will be considered in the Budget debate, continuing until Monday, and in the general election campaign. We will do everything we can in the meantime to bring the business of the House next week to an orderly conclusion.
Sir David Amess (Southend West) (Con)
My right hon. Friend and I were both born on 26 March but a decade apart. I wish him well, but I do think he is retiring at too young an age.
Will my right hon. Friend please find time for a debate on the Scrap Metal Dealers Act 2013? My constituents Nick and Jane Winfield feel that all manner of people are collecting and selling scrap metal without a licence, and that something needs to be done to ensure that the law is being enforced.
Mr Hague
This is a very important issue that has affected rail services, and war memorials have been desecrated and church roofs damaged. We have taken action, as my hon. Friend knows, and there is indeed the 2013 Act. The licensing scheme is administered by local councils, and we fully expect them to take action where scrap metal dealers are found to be unlicensed or are failing to comply with the Act. I hope that is of some reassurance to my hon. Friend. I do not think it will be possible to add a debate about that issue into the remaining few days of this Parliament.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have known the right hon. Gentleman for a long time, and on Yorkshire issues we have got on very well indeed. I shall certainly miss the double act, which is one of the best I have seen in business questions over the years.
We have had the Budget and we are debating it, but I urge the right hon. Gentleman to give even more attention in the remaining few days to the reality out there: museums, libraries and art centres are closing, as are hospitals—we are in a dreadful state. Is there an opportunity in the coming week to reconnect with the people out there, because they are not connecting with the Budget we heard yesterday?
Mr Hague
It is sad that the double act is coming to an end—although my jokes might be more expensive than those of the shadow Leader of the House.
I point out to the hon. Gentleman that part of the Budget debate can of course be about the matters he has raised. My right hon. Friend the Secretary of State for Communities and Local Government will open tomorrow’s Budget debate, for instance, so the hon. Gentleman will have a further opportunity to raise those matters. He talks about the reality out there. The reality is that there are more people in work than ever before, and that we have the fastest growing of all the major industrialised economies. That, of course, allows us to have strong public services in the future, and without a strong, growing economy, we cannot have the public services the hon. Gentleman is talking about.
Philip Davies (Shipley) (Con)
May we have a debate on election conduct? As the Labour party clearly has nothing positive to offer, I fear that this will be the dirtiest election campaign on record. My right hon. Friend may be aware of some of the disgusting smears and lies that have been put out about our hon. Friend the Member for Witham (Priti Patel) by the Labour candidate. Does my right hon. Friend agree that although it is perfectly reasonable for political parties to point out the threats, as they perceive them, posed by the other parties being elected to government, personal smears, attacks and abuse of individual constituency candidates are not acceptable and bring politics into disrepute? Perhaps a debate next week in advance of the forthcoming general election would allow all the political parties to maintain that they will not tolerate that kind of behaviour.
Mr Hague
I cannot offer a debate, but my hon. Friend is absolutely right: we believe in vigorous political debate in our elections, but I have seen comments made about my hon. Friend the Member for Witham that are offensive, malicious and often false, and which will be particularly offensive to women and to people of Asian origin. It is time the Labour party took that in hand in Witham.
Keith Vaz (Leicester East) (Lab)
I join others in paying tribute to the Leader of the House. He has clearly been one of the most outstanding parliamentarians, certainly in my time in the House. I played a small part in his career when I gave him his first job, as secretary of the all-party footwear and leather industries group, and look how well he has done!
Next Thursday will be a very important day in the history of Leicester when the interment of Richard III takes place. If the right hon. Gentleman wants a ticket for the occasion, I can try to arrange one for him. May we have an urgent look at the criteria for boroughs and cities being permitted to use the title “royal”? Leicester must surely be entitled to use it—as Kensington and Chelsea, and Greenwich, have done—and to become a royal city, given our new connection with royalty.
Mr Hague
I am grateful to the right hon. Gentleman for his kind words. The role I played as secretary of the all-party footwear and leather industries group was so crucial that I have completely forgotten it, actually. But it played a very important part in my career in the House a quarter of a century ago—
Mr Hague
It was indeed a footnote to my career. I thank my hon. Friend for that.
There are periodic opportunities and competitions for towns to compete for city status and for cities to request an increase in their status. I do not think that that will be able to happen in the coming week, however. Leicester will have many important claims for advancing its status but I do not think that the connection with Richard III would be decisive, given that he lost the battle of Bosworth and that the royal line that flowed from him was rather weakened as a result.
Greg Mulholland (Leeds North West) (LD)
Will the Leader of the House welcome the new manifesto for change which calls for justice for the victims of criminal driving? This is a hugely important issue, and a number of changes need to be made in order to bring justice to many people. I should like to thank the many people who have contributed to the process. May we have a debate on this new manifesto, which is backed by Brake and other organisations as well as by a number of MPs from both sides of the House, so that Parliament can discuss how we can get the changes that we need?
Mr Hague
I welcome the continuing debate on this matter and on the many concerns that have been raised. The Criminal Justice and Courts Act 2015 has increased the maximum penalty for causing death while disqualified from two to 10 years, and created the new offence of causing serious injury while disqualified, which carries a maximum penalty of four years. That does not mean, however, that all the concerns have been dealt with. This is a welcome campaign and manifesto, and I will certainly ensure that ministerial colleagues are made aware of my hon. Friend’s work, alongside the Government review. Although there is not time to debate the matter further in this Parliament, I am sure that it is an issue that the next Parliament will want to return to.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I should like to associate myself with the tributes that have been paid to the right hon. Gentleman and to my hon. Friend the Member for Wallasey (Ms Eagle), his shadow.
I do not expect the Government to comment on the outcome of elections in other countries, but will there be a statement on Premier Netanyahu’s announcement that he will not support a two-state solution? Might the Prime Minister refer to it at the European Council and then comment on it in the House next week? The two-state solution has been the policy of the UK, the US and the EU for some time, and the statement by the Israeli premier must have disappointed the Government as much as it has disappointed so many people in this country.
Mr Hague
Support for the two-state solution is a very important part of our policy on the middle east peace process, and it is common across the House of Commons. I did a good deal of work on this as Foreign Secretary, although the greatest amount of work has been done in recent times by Secretary John Kerry and I salute all the work that he has put into the process. I have often said in the House that time was running out for a two-state solution and, sadly, that remains the case. The best opportunity to ask Ministers about this will be when my right hon. Friend the Prime Minister gives a statement to the House next Monday or at Prime Minister’s questions next week, when this would be a perfectly normal thing to ask him about.
Julian Smith (Skipton and Ripon) (Con)
The Leader of the House is not only one of the finest Foreign Secretaries and parliamentarians that Britain has ever had but a much loved and respected local North Yorkshire MP. May we have a debate about North Yorkshire, its people, its businesses, its beauty and its beer?
Mr Hague
Everybody is being very kind, but none of this will persuade me to stay. I am grateful to my hon. Friend and neighbour for all his support and co-operation on North Yorkshire issues. There would be a great deal to say in a debate on North Yorkshire, including about the beer. I understand that a beer has been launched in my honour called Smooth Hague and I have already tasted it. We could debate all those things, and I hope, if I manage to catch your eye, Mr Speaker, at the end of the valedictory debate next week, to say a few sentences about the great people of North Yorkshire and what a privilege it has been to represent them over the past 26 years.
Chris Bryant (Rhondda) (Lab)
I first met the Leader of the House when I was 18 and I went to his 21st birthday party, which I remember was subtitled “wine, women and song”, so it is with mixed emotions that I congratulate him on leaving the House. We will miss him, but we are all looking forward to some wonderful new books, as he is a very fine writer. He says that he will keep up his campaign against the use of sexual violence in war and we all praise him for that, but who knows, perhaps he will appear down the corridor in a few weeks’ time in another guise.
May I ask him about the use of LIBOR fines announced yesterday? I gather that more announcements are coming today. Of course we support the Government’s announcements on how they are being given out, but it feels a bit like pork barrelling at the moment, as Treasury Ministers, without any formal process, have just been doling out cash to organisations that have not even asked for it. Would it not be better to go through the Arts Council or the Heritage Lottery Fund?
Mr Hague
I had already given up my support for proportional representation at that point, but yes, I have known the hon. Member for Rhondda (Chris Bryant) for a very long time and I am grateful for his remarks. He mentions my work on preventing sexual violence, which I will continue outside this House, but that is another illustration of the use of LIBOR money. Last month, I was able to announce £1 million of that money going to the London School of Economics to create a centre for women, peace and security. My right hon. Friend the Chancellor has just joined us, and I do not think that it is fair to say that that is pork barrel use of money. That is an example of how well used the LIBOR funds are. They are, of course, available only on a temporary basis, so setting up a whole structure to disburse them is probably not the way forward, but I will be able to pass on to the Chancellor what the hon. Gentleman has said.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I join colleagues in paying tribute to the Leader of the House and the shadow Leader of the House for the work they have done, on the House of Commons Commission in particular. Much has been achieved together and it has been great working as part of that team.
Will it be possible to have a debate on the provision of communication infrastructure by BT? It has been suggested recently that that should be hived off from the company. In the highlands of Scotland, in my constituency, I have received 45 complaints, such as that from John Sinclair of Caithness Creels, who has been waiting for more than three weeks to get broadband. The residents of Lothmore have been waiting for up to six weeks to be reconnected. There is a clear shortage of engineers, and BT seems to regard that as perfectly acceptable. I wrote two weeks ago to the chairman, Sir Michael Rake, pointing out the potential reputational damage to BT; I never received an answer from him. The high-level complaints team has however told me that it will look at the issue, but that it might take some time. That is not acceptable from the provider of a national infrastructure and I believe we should be concerned about that.
Mr Hague
I am grateful to my right hon. Friend and pay tribute to the tremendous work he does for this House, which I have seen at close quarters. We have been able to work together very well in the House of Commons Commission, so I thank him very much for that. He raises an important issue. The Government of course have a very strong record on the development of superfast broadband around the United Kingdom, particularly in rural areas, but he is right about the difficulty in some of the remotest areas. I see that in North Yorkshire, and he highlights the difficulties in the extremely remote areas that he represents. Although there is not time for a debate, I think he has succeeded in raising the matter on the Floor of the House, and I hope that BT will take that very seriously and attend quickly to the matters affecting his constituents.
Paul Flynn (Newport West) (Lab)
The Leader of the House will be remembered in Wales as one of the most agreeable alien governor-generals we have had, in a period when he had the great good fortune to meet the wonderful Welsh woman who was to become his wife. Can he add further lustre to his reputation today by looking at a profoundly anti-democratic measure that was blocked by several voices last night? It would remove from the local authorities their powers to control drilling and the dumping of toxic waste, including nuclear waste, in their country. Would it not be an affront to democracy if that measure passed through the House on a deferred decision by a thinly attended House? Should the measure not now be withdrawn, for consideration by the next Parliament?
Mr Hague
I am grateful for the nearest thing to a ringing endorsement from the hon. Gentleman. I have fond memories of being Welsh Secretary. The Prime Minister who appointed me to that role, Sir John Major, asked me to take Wales to my heart. When, a year later, I married my private secretary, he said, “I think you are taking this a little bit too literally now.” Of course I have been deeply fond of Wales ever since.
On the measure the hon. Gentleman refers to, we must follow the procedures with all matters before the House, including the large number of orders in the remaining few days of the Parliament, so I cannot offer him an additional debate, but he will be able, as ever, to use every possible procedure of this House—he is very skilled at that—to make his views known. I am sure he will continue to do so on that matter.
Dr Matthew Offord (Hendon) (Con)
My first question in this House resulted in £2 million being awarded to Jewish schools in my area to enforce their security. Yesterday, I was pleased to present the petition signed by more than 2,000 people seeking that sum again to be renewed. Will the Leader of the House take this opportunity to confirm the Prime Minister’s announcement last night that not only has that money been extended and increased, but that it will now also cover independent schools, synagogues and Jewish cultural centres such as the JW3 centre on Finchley road?
Mr Hague
The Jewish community is a vital part of British life. Although we meet additional security costs at state-funded Jewish schools, we recognise that a wide range of independent establishments face the same risks, as my hon. Friend has said. We are therefore widening eligibility for the grant to cover those schools and colleges, so that their pupils and students can have the same degree of security as those attending state schools. The new package announced by the Prime Minister is in addition to the existing Department for Education grant, which will also continue in the next financial year. So we remain staunchly committed to tackling anti-Semitism wherever it occurs, and I can confirm the announcement, as my hon. Friend says.
Ms Karen Buck (Westminster North) (Lab)
As a former political child star, the Leader of the House will, I am sure, join me in wanting today’s young people to grow up informed and active participants in the political process. Will he find time for a debate on how we might do more to encourage young people to become involved? Pending that, will he join me in endorsing today’s BBC school report news day, which has involved 1,000 schools and 30,000 teenagers at schools in making the news? The Westminster and Paddington academies in my constituency are taking part, as are schools right across the United Kingdom. Does he think that is one important way in which we can get young people actively involved in citizenship, news making and understanding politics?
Mr Hague
Yes, I absolutely join the hon. Lady in welcoming that initiative. Indeed, my right hon. Friend the Deputy Leader of the House will be marking this day with one of his own schools later today. It is important that all parties keep up the work to engage and inform young people. The new education centre, which you, Mr Speaker, have always strongly supported, will be available to encourage that work. One of the most impressive moments of the past year for me as Leader of the House was when the Youth Parliament gathered in this Chamber. Its representatives set quite a good example to all of us who are not so youthful, and we should be greatly encouraged that, in this country, we have great young people who will be the leaders of the future.
Mr Speaker
I shall communicate colleagues’ shared enthusiasm for youth participation when I meet the students of Holland Park school this afternoon. Those students will be comforted and reassured to know of the esteem in which their involvement is held.
Sir Bob Russell (Colchester) (LD)
I am confident that I speak for all members of the other coalition party when I pay tribute to the Leader of the House and endorse the comments made by the shadow Leader of the House. The right hon. Gentleman is a remarkable parliamentarian who will be missed in this House. Perhaps he will find a perch at the other end.
Is there time to have a quick debate on the geography of the United Kingdom? The reason I ask is that the Conservative party has issued a leaflet in my constituency, which has Colchester on the coast. Mr Speaker, you will be aware that Colchester is on a tidal river. Although the Conservatives may be at sea, I am not.
Mr Hague
As always, I am grateful to my hon. Friend for his remarks. I doubt that we will find time in the remaining five days for a debate on the geography of the United Kingdom. How close to the coast anywhere is in the United Kingdom depends on the scale of the map. If it is small enough, we are all on the coast; this is an island. I am sure that he will bear that in mind.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
May I reiterate the tributes to the Leader of the House? I wish him, very sincerely, good luck for the future. I was particularly delighted with his remarks about the Office for Budget Responsibility. I wondered whether they meant that the Government had had a change of heart over the OBR scrutinising manifesto spending commitments. If they have, will he enlighten us?
Mr Hague
I am grateful to the hon. Lady for her remarks about me. As for the OBR, it is an important innovation that was introduced by my right hon. Friend the Chancellor. There was no such independent auditing of Government Budgets and statements before. It has produced an extensive report that goes with the Budget, but it would be in some difficulty assessing the policies of the Labour party, because we do not know what all the tax rises would be in order to fill the gaping hole now left in its finances. That is something that it will have to explain.
David Morris (Morecambe and Lunesdale) (Con)
Will my right hon. Friend indulge me while I say that he is the finest Prime Minister we never had? I feel that I have grown old with him, because he has been there on the mantelpiece for successive elections since 1997. Talking of growing old, my right hon. Friend the Chancellor, who has just taken his place, said yesterday that we should provide for people in their old age, as they have paid tax on what they have earned. In the future, could we have a debate on council tax reduction and exemption for the over-75s?
Mr Hague
I am grateful to my hon. Friend, whom I have known for a long time. He says that we have grown old together, but I do not feel very old. I have enjoyed all the work that we have done together over the years. He is quite right about the importance of council tax and other fixed costs for older people, which is why it is so important that, under this Government, councils have had the opportunity to freeze council tax for the entire period of this Government, whereas it doubled under the 13 years of the previous Government. That freeze, the reduction in the scheduled increases in fuel taxation and now falling energy prices are major benefits for older people.
Mr Philip Hollobone (Kettering) (Con)
I bring good news from Kettering. International food manufacturer Alpro has opened its new extension to its UK production facility at Burton Latimer. Alpro’s sales in the UK are increasing by 25% year on year, and its £30 million investment will double production in its drinks made from almonds, hazelnuts, soya, oats and coconut, and create 50 additional jobs for the local economy. That investment is a vote of confidence not only in the UK, but in the local economy in Kettering. Before Parliament is dissolved, may we have a statement from Her Majesty’s Treasury about how much foreign investment this country has attracted over the past five years as a result of the success of this Government’s long-term economic plan?
Mr Hague
My hon. Friend has been absolutely assiduous, particularly in recent months, in bringing good news to the House from Kettering and in creating, through his work as an MP, great good news for Kettering. He has missed only one week, which was, I think, last week. His absence caused much concern about Kettering, but I know that he was working on additional good news. Again, Kettering is a microcosm of what is happening in the country as a whole with the remarkable growth in employment, of which I spoke earlier. He is right about the importance of foreign investment, which has, in the UK over the past five years, far outstripped foreign direct investment in other countries in the European Union, and it will continue to do so provided that we stick to a long-term economic plan.
John Glen (Salisbury) (Con)
Last week, the deposed elected President of the Maldives, Mohamed Nasheed, was sentenced to 12 years in prison by a corrupt court. Although it is believed that he is safe in Dhoonidhood, it is expected that when he is moved to Maafushi island, there will be real concerns for his safety. Will my right hon. Friend ensure that the Foreign Office is doing all it can to highlight the concerns of Nasheed’s supporters, and can a statement be made to the House about sanctions and whether they should be taken against this much misunderstood set of islands?
Mr Hague
The Government are deeply concerned about the sentencing of former President Nasheed of the Maldives. We have called on the Maldives to follow due legal process. The Foreign Office Ministers were the first to make a strong statement, making it clear that we are monitoring the case closely. We are pressing the Government in the Maldives to give international observers access to any appeal hearing and to allow them to visit the former President in prison. We continue to urge calm across the country, to encourage political parties to act with moderation and to appeal to the Government of the Maldives to ensure that they work within the bounds of the law.
Adam Afriyie (Windsor) (Con)
It has been a privilege to serve with the Leader of the House, and I appreciate the advice that he has given me over the years. I wish him a wonderful retirement, which I am sure will be as energetic as his time here in Parliament.
In Windsor and across the country, unemployment is at the lowest level that I have ever seen, which means that young people are getting livelihoods and life chances that they have not seen for a very long time. That has been driven by private sector businesses competing with each other in a very enterprising way. They have been set free by the pro-enterprise policies of the Government. May we have a debate on how markets work, largely for educational purposes for the Opposition party?
Mr Hague
That is not a bad idea. I am grateful to my hon. Friend for his remarks about me. He is quite right about employment. I pointed out earlier how the rise in youth employment over the past year has been greater than in the whole of the rest of the European Union put together. We have also seen in this Government more than 750,000 new businesses created in the United Kingdom. We have a strong economic future ahead provided that we continue to follow a long-term plan. I hope that my hon. Friend will take the opportunity of the Budget debate—[Interruption.] Oh, he has already done so. He has spoken in the Budget debate and so has already been able to contribute to the education of the Opposition, but they clearly need more educating. As the shadow Chancellor has just arrived, they could do with a bit more educating in the next half hour.
Rehman Chishti (Gillingham and Rainham) (Con)
As a relatively new Member, may I say to the Leader of the House that it has been an immense privilege to see not only an outstanding parliamentarian, but someone with immense integrity and humour?
This week the first council houses to be built in Medway for 40 years were officially opened in Gillingham, and last month MHS Homes in Medway was shortlisted for a UK housing award for its construction of shared ownership apartments in Rainham. Will he join me in wishing MHS Homes every success for the award ceremony, and may we have a statement on the excellent work that this Government are doing to build more homes?
Mr Hague
I am grateful to my hon. Friend for his comments, although it is getting a bit embarrassing—I am beginning to think that I might have died. Of course, had I died, hopefully I would not still be here. He makes an important point about affordable homes. Our affordable homes programme is on track to deliver 170,000 new, good-quality and affordable homes, and over the next Parliament we will build more of those than were built in any equivalent period in the past 20 years. That includes a £400 million rent to buy scheme for up to 10,000 homes. That is very important work that the Government have done, and I know that my hon. Friend has done great work to encourage such developments in his constituency.
Jeremy Lefroy (Stafford) (Con)
May I associate myself with the tributes to the Leader of the House and the shadow Leader of the House and wish the Leader of the House a very long life? [Interruption.] Of course, I wish that also for the shadow Leader of the House.
Many of my constituents are facing problems with blight because of High Speed 2. Although there is an exceptional hardship scheme, which I must say in some cases works reasonably well, some people, particularly those who have difficulty negotiating with the scheme or who might have real personal difficulties because of illness or disability, find this a very troubling time, and I believe that sometimes they end up with a less than satisfactory outcome. May we therefore have a debate on ensuring that the compensation for people who have been put in that position through no fault of their own is full, fair and speedy?
Mr Hague
I am grateful to my hon. Friend for his remarks. He raises an issue that of course is very important to his constituents. As he will be aware, the High Speed Rail (London – West Midlands) Bill is receiving painstaking consideration, and that will continue into the new Parliament, so there will be further opportunities to raise those matters. They are matters that would naturally fall to Adjournment and BackBench business debates, but no more of those are available in this Parliament. However, he will be able to pursue the matter in the next Parliament, to which I am confident he will be returned.
Points of Order
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
On a point of order, Mr Speaker. As you will be aware, for over 18 months I have been looking into the inappropriate use of sanctions by the Department for Work and Pensions. At a Select Committee hearing on 4 February, I questioned the Minister for Employment and one of her officials on peer reviews undertaken by the Department of cases in which claimants have died. I asked whether there were any instances in which DWP actions were considered inappropriate or incorrect. I also asked about their association with sanctions. The answers I was given were inconclusive and opaque. I have since tabled written questions on the same matter, but again I received responses that bore no relation to the questions. Given that Parliament is due to be dissolved in the next few days, I seek your advice on how I can get answers to those very important questions.
Mr Speaker
I thank the hon. Lady for giving me notice of her point of order. She will understand that the content of Ministers’ answers, whether in Select Committees, in written answers or on the Floor of the House, is not a matter for the Chair. That said, I understand her frustration on the subject. The shortness of time before Dissolution limits the opportunities for her further to pursue the matter. However, the deadline for tabling a question for written answer on a named day is next Monday, so she still has a little time. Eyes can be kept on the matter. In the meantime, she has at least succeeded in putting her concern on the record.
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Mr Speaker. This morning I visited Sir Christopher Hatton school for a debate with young people. In fact, five years ago I did the same thing, and out of that came a parliamentary candidate, Tom Pursglove, who is fighting in Corby. I have a problem with the sitting times of the House, because as a result of attending that debate I was unable to get here in time for business questions. Had I done so, I would have been able to pay tribute to the Leader of the House for all that he has done and for the way he has answered questions absolutely brilliantly and not entirely to my satisfaction. I could also have paid tribute to the shadow Leader of the House. Is there any chance that the sitting hours of the House could be looked at again?
Mr Speaker
Anything is possible, but in the meantime, as the puckish grin on his face eloquently testifies, the hon. Gentleman has found his own salvation.
Chris Bryant (Rhondda) (Lab)
On a point of order, Mr Speaker. You have already referred to the fact that this parliamentary Session is coming to an end and that it is difficult for hon. Members to get replies to questions. I think that you were in the Chair on 4 March when I asked the Financial Secretary to the Treasury whether he could confirm the figure, which the Conservatives had announced on 5 January, of £83 million for the cuts to Arts Council England’s budget, which would start in April. He undertook to write to me at the time, but he has still not done so, despite the fact that I also wrote to him on 4 March. Would it be in order for you to encourage the Financial Secretary to make sure that he replies to all correspondence, particularly on undertakings he has given, before Dissolution?
Mr Speaker
I have no control over the matter, but it is a very simple ethical principle that people should honour their commitments, whether in respect of the House of Commons or elsewhere. If a Minister has committed to write to the hon. Gentleman, either stating explicitly that the letter would be sent before Dissolution or giving the strong impression that it would be, it just seems to me to be axiomatic that that should happen, and it would be extraordinary if anybody were for a moment to suppose otherwise. But I know the hon. Gentleman, and he does not let go, so I have no doubt that he will persevere on the matter in all manner of ways until he receives some satisfaction.
Bill Presented
Confiscation Orders (Sentencing and Offence) Bill
Presentation and First Reading (Standing Order No. 57)
Keith Vaz, supported by Nicola Blackwood, Dr Julian Huppert and Yasmin Qureshi, presented a Bill to provide that payment of the recoverable amount determined in a confiscation order by a court must be included as a component of a custodial sentence; to provide that non-payment of the recoverable amount be a criminal offence; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 27 March, and to be printed (Bill 191).
Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
(9 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls (Morley and Outwood) (Lab/Co-op)
It is an honour to open today’s Budget debate. Less than 24 hours after the Budget statement, the truth is becoming clear. For all the Chancellor’s hubris, yesterday’s Budget has changed nothing for working people in our country. He spent an hour telling people that they have never had it so good, but working people are still, on average, £1,600 a year worse off after five years of the Tories. Our national health service is still in crisis, but he had nothing to say about the NHS.
The Chancellor started the day with plans for extreme spending cuts, and he ended the day with plans for extreme spending cuts: cuts to spending even bigger in the three years after the election than those of the past five years; deep cuts that go way beyond balancing the books; and deep cuts that can be delivered only by another Tory rise in VAT or by putting our NHS at risk. It was a Tory Budget from a Tory Chancellor who gives with one hand and takes much more with the other—an out-of-touch Budget that made twice as many references to Agincourt as it did to our NHS.
I will examine all the Chancellor’s claims and set out the truth behind the spin and hubris, but first I want to set him straight on one issue. I applaud the £1 million he announced to commemorate the battle of Agincourt, but before he goes any further with those plans I have to correct his rather shaky understanding of the battle. I know he has a degree in history, and that I have a mere A-level in mediaeval history, but I suggest he stick to the period he knows. For a start, the Chancellor should be aware that not a single Scottish soldier fought on the French side at Agincourt. Indeed, if he reads Shakespeare’s version of the battle, he will see that there were representatives of Scotland, Wales and Ireland, all fighting as captains in King Henry’s army.
The story of Agincourt was one of an arrogant and complacent king who, rather than fight the battle himself, sent his weak and ineffective right-hand man to defend an impossible situation. He got his tactics wrong, he lost control of the situation, and he became bogged down in mud. He was no match for the stout yeomen on the other side. They may have lacked money, horses and noble blood, but they outfought their opponents on the battlefield. We stout yeomen will be happy to join in the commemorations of Agincourt. As fans of hand gestures, if anyone can think of any famous hand gestures traditionally associated with Agincourt, we will be happy to use them towards the Chancellor again and again at every stage of this debate.
It was fitting that the Chancellor chose to invoke Shakespeare in his Budget speech. He has, after all, been a poor player these last five years. Yesterday he strutted and fretted his final hour upon this stage, and after May he will be heard no more. Yesterday was a Budget full of sound and fury, ultimately signifying nothing.
Julian Smith
On the subject of sound and fury, will the shadow Chancellor clarify what he would do to stick to the commitments he made when he signed up to the charter for budget responsibility only a few weeks ago?
Ed Balls
People say that empty vessels make the loudest noise. I will set out clearly our approach to deficit reduction, but before I do let us go back to the ineffective right-hand man, who apparently is now standing in front of Downing street holding a yellow Budget box—less reality, more “Midsummer Night’s Dream”. What a shambles! Yesterday we had the Budget, today we had the farce of the alternative Budget from the Chief Secretary, the Liberal Democrats’ new economic spokesman, and now, with the Business Secretary shortly to come to the Dispatch Box, I presume we are to get the alternative alternative Budget from the man the Chief Secretary displaced from the job.
One has to feel sorry for the Business Secretary. He lost a job and still has to turn up to give the speech, sitting there beside one of his Treasury nemeses, with the other outside Downing street. Another Shakespeare quote comes to mind:
“Misery acquaints a man with strange bedfellows.”
How true. Let us not forget that the Business Secretary and the Chief Secretary served with the Chancellor in the Cabinet for five years. Together all three of them voted to put up VAT. The Liberal Democrats voted with the Tories to raise tuition fees to £9,000. They voted with the Tories for the hated and iniquitous bedroom tax. The fault is not in their stars, but in themselves, and the British people will not let them forget it.
Mr Brian Binley (Northampton South) (Con)
Will this ploy of much ado about nothing delivered in a tempest form continue for the whole of the right hon. Gentleman’s soliloquy, or will he come to some points of import shortly?
Mr Richard Bacon (South Norfolk) (Con)
“Drest in a little brief authority,
Most ignorant of what he’s most assur’d,
His glassy essence, like an angry ape,
Plays such fantastic tricks before high heaven
As make the angels weep”—
When is the right hon. Gentleman going to get on with it?
Ed Balls
I don’t know. That was all Greek to me.
Let us stop wasting time with the ridiculous Liberal Democrats and return to the Chancellor’s Budget. The Chancellor claimed, first, that working people are better off than they were in 2010. How out of touch can you get? No wonder Conservative Back Benchers were so muted in the House of Commons yesterday. They know, as we know, the reality of people’s lives. Unlike the Chancellor, they hear it on the doorstep. They know that with wage growth stagnant over the past few years, energy bills rising, and 1.8 million zero-hours contracts, when the Chancellor says there is a recovery, most people say, “Where is the recovery for me? It is not a recovery for me, our family and our community.”
The Chancellor tried to invent a new measure of living standards yesterday. It was a flawed measure because it includes income to universities and charities, but, compared with the first quarter of 2010, in the first quarter of 2015 the Chancellor’s measure has not gone up; it has gone down. Even on his own measure, people are worse off than they were in 2010. We know from the independent Institute for Fiscal Studies and the Resolution Foundation that on more sensible measures confirmed by the IFS two weeks ago, household incomes are down compared with 2010, and wages after inflation are down by more than £1,600 a year since 2010. This is the first Parliament since the early 1920s when the average person in work will be worse off at the end of the Parliament than they were at the beginning. In answer to the famous Reagan question, “Are you better off than you were five years ago?”, the answer is a resounding no.
We welcome the action to help savers and increase thresholds, but where was the action to help working people? Why did the Chancellor not announce an ambition to raise the national minimum wage to £8 an hour? Why did he not commit to expanding free child care for working parents to 25 hours? Why not cut business rates for small companies? Why not ban exploitative zero-hours contracts? Why not repeat the bank bonus tax and have a compulsory starter job for our young people? Why not scrap his absurd married couples allowance, which he barely mentioned yesterday, because it goes to only a third of married couples, and instead use the money to cut the taxes of working people? That is what he should have done. That is what a Labour Budget will deliver.
The Chancellor’s second claim is that he is rebalancing the economy. We all remember his claim of
“a Britain carried aloft by the march of the makers”—[Official Report, 22 March 2011; Vol. 525, c. 966.]
but the independent Office for Budget Responsibility said yesterday that growth is still lower than was forecast in 2010. Growth is set to be slower this year and next year than last year. The OBR confirmed that the Chancellor is on course to miss his 2010 target to double exports to £1 trillion—off course by more than £600 billion, and business investment has been revised down this year. The OBR says that “the growth of potential productivity per hour remains below its historical average throughout the forecast” and that “actual hourly productivity growth has again been weaker than expected”. The only thing it has revised up is its forecast for net migration.
Why did the Chancellor not act to deal with the housing crisis by committing to build 200,000 more homes a year by 2020? Why did he not establish a proper British investment bank for small and medium-sized businesses? Why did he not take up our idea, now the subject of consensus across our country, and establish an independent national infrastructure commission to stop long-term decisions being kicked into the long grass? Why did he not go further and devolve powers, including the uplift on business rates, to all areas in our country, rather than just to some? Why did he not commit to securing Britain’s place in a reformed European Union?
Sir Edward Leigh (Gainsborough) (Con)
I would not want the right hon. Gentleman to forget to mention the deficit, so can we get back to that? It is quite important. When we came to power, following the Labour Government, the annual budget deficit was £141 billion a year. It is now £93 billion a year—still far too much. Will the right hon. Gentleman explain his plans for matching our plans to keep that budget deficit under control and preferably get rid of it by 2020?
Ed Balls
I understand the hon. Gentleman’s concerns. I know from reading Hansard that he said to the House a year ago that
“for all the huff and puff, when it comes to what it actually puts into and takes out of the economy, the Budget represents a 0.3% change . . . That is somewhat worrying when we consider the very big challenge we face on deficit reduction”.—[Official Report, 20 March 2014; Vol. 577, c. 993.]
I share his concerns about the Chancellor’s track record, and I am going to set out our alternatives in a moment.
Before I do that, let us go back to the Chancellor’s claims yesterday. He seems to have been telling the media this morning that he has retreated from his commitment to austerity, but the OBR’s document sets out the truth. Its verdict on the Budget is that it represents
“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years.”
It goes on to give the details on page 130, where it sets out in graphical form the cuts in public spending that we shall see from the Chancellor. Paragraph 4.108 states:
“One implication of the Government’s spending policy assumptions is a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services and administration in 2016-17”.
I am going to set out a better way to do this, but first I will highlight what the Chancellor is actually doing. The reason he has to set out such deep cuts to public spending—deeper in the next Parliament than in this Parliament—is that, as the OBR confirms, and as the hon. Member for Gainsborough (Sir Edward Leigh) knows very well, in this Parliament he has failed to balance the books. Yesterday’s numbers confirm, according to the OBR, that the Government are borrowing £200 billion more than they planned in 2010. The deficit is set to be not balanced, but £75 billion. For all this Chancellor’s boasts about national debt falling, public net debt in 2015-16 is £217 billion higher than he was forecasting in 2010. He now claims that the national debt is going to be falling. That is based on his forecasts of short-term, one-off money coming in from the sale of bank shares. In 2014-15, he was planning on the national debt falling from 69.4% to 67.4%. In fact, his forecast yesterday has the national debt in 2015 at 80.4%, falling to 80.2%. It takes some hubris for a Chancellor to borrow over £200 billion more and then claim he has succeeded. That is the reality, and we know why. As the OBR confirmed yesterday, income tax and national insurance receipts have come in short of the 2010 forecasts by £97 billion cumulatively across the Parliament.
The result is the deeper spending cuts that the Chancellor had to set out yesterday. The IFS said back in the autumn that these were colossal cuts; they are still colossal cuts. The OBR said in the autumn that this would take spending on day-to-day public services back to the level of the 1930s. The Treasury tried to tell us yesterday that that was no longer the case. Its special advisers tweeted that they are only the deepest cuts since 1964. It comes to something when they have to boast that we are cutting our public spending to a level not seen for 50 years. In fact, the small print of the OBR tables reveals that 2018 spending, on the historical comparative measure that the OBR uses—day-to-day spending on public services—falls to its lowest level since not 1964 but 1938.
The Chancellor claimed that he had changed the position, but he has confirmed the reality—even deeper cuts in the next three years than in the past five years. That is the truth. These are, in my view, cuts that will be impossible for our police services, our defence and armed forces and our social care to bear. Even this Chancellor cannot make this scale of cuts to our armed forces, our police forces or our social care, so he is going to have to end up doing what he always has to do—raise VAT and cut the NHS. That is the reality.
The Chancellor wants us to believe that this does not have to happen. He says that he can instead cut welfare and tackle tax avoidance. The problem is that his record on both is miserable. He is promising £12 billion more cuts to welfare, but he cannot tell us where they are going to come from. We know he has brought in the bedroom tax, but he cannot tell us what else he has in store. In this Parliament, he has overspent on his welfare plans by £25 billion.
Apparently the Chancellor is now going to crack down on tax avoidance. This is the Chancellor who has seen the tax gap—uncollected tax—rise by £3 billion. This is the Chancellor who, with the Prime Minister, appointed Lord Green—who, it turns out, had presided over HSBC’s industrial-scale tax avoidance. Despite repeated questioning, the Chancellor still cannot tell us whether he actually talked to Lord Green about tax avoidance. Why will he not, between now and the general election, come clean and tell us whether he had conversations with Lord Green about tax avoidance? No wonder the Chancellor did not come to Treasury questions a couple of weeks ago. No wonder he does not want a head-to-head debate. We now know why. One member of the Tory Cabinet does not want to talk about Michael Green, and another member of the Tory Cabinet does not want to talk about Lord Green. One is a deluded fantasist who has great problems with the truth, and the other is the chairman of the Conservative party. To be fair, only the chairman of the Conservative party changed his name—although, then again, perhaps the Chancellor did too.
This is the truth: the Chancellor promised to make people better off, and they are worse off. He promised to balance the books in this Parliament; that pledge lies in tatters. He promised, “We’re all in this together”, and then cut taxes for millionaires. Now he is forced to confirm extreme and risky cuts to public spending in the next Parliament, bigger than in this Parliament.
We need a fairer, more balanced approach to the deficit and living standards. That is why Labour is now the only centre-ground party in British politics. We will cut the deficit every year and balance the books, with a surplus on the current budget and the national debt falling, as soon as possible in the next Parliament. Unlike the Conservatives, we have no unfunded commitments on welfare or on taxes. We were the party that wanted the independent OBR to audit all our manifestos—blocked by this Chancellor.
Andrew Gwynne (Denton and Reddish) (Lab)
I am glad that my right hon. Friend mentions the OBR. I do not know whether he has had a chance to look at the online version of the Liberal Democrats’ document “An alternative fiscal path beyond 2016-17”, table 2.A of which is entitled, “Scenario input assumptions”. Can he guess who the source is? It is not the OBR, it is not the IFS: it is the Chief Secretary to the Treasury.
Ed Balls
We know from the autumn statement that the OBR confirmed that the scale of these spending cuts was agreed by the Prime Minister, the Chancellor, the Deputy Prime Minister and the Chief Secretary, and the same thing is clear about this Budget document. The OBR says:
“This profile is driven by a medium-term fiscal assumption that the Treasury has confirmed ‘represents the Government’s agreed position for Budget 2015’ and that was ‘discussed by the Quad and agreed by both parties in the Coalition.’”
The Liberal Democrats now come along and say that they were not really in favour of the bedroom tax, and not really in favour of these fiscal plans, but we know the truth. That is why we need a fairer and more balanced approach.
We will have sensible spending cuts in non-protected areas. We will cut winter fuel payments for the richest 5% of pensioners. We will cap child benefit at 1% for two years. The shadow Chief Secretary has been setting out in our zero-based review of every pound spent by Government cuts from rooting out waste and inefficiency in policing, in local government, in defence, and in schools. We are going to get rid of the police and crime commissioner elections. We are going to get rid of the free schools. We are going to stop the overpayment of housing benefit. We are going to deal with the issue of—[Interruption.] I meant new free schools. The shadow Chief Secretary has set out ways in which we can make those sensible cuts in non-protected areas.
We will also make fairer choices. We will reverse—[Interruption.] If the Chancellor wants to intervene, I will happily give way.
Ed Balls
I am sorry, but I thought the Chancellor was about to stand up and tell us whether he talked to Lord Green about tax avoidance. He knows very well that our policy is to not have any more new free schools, and our £230 million saving is based on that.
We will make fairer choices, reversing this Government’s £3 billion a year tax cut—[Interruption.] Does the Chancellor want to intervene? The fact is that he cannot give us a yes or no answer about whether he talked to Lord Green about tax avoidance.
We will reverse this Government’s £3 billion a year top-rate tax cut for the 1% earning more than £150,000. We will introduce a mansion tax on properties worth more than £2 million, to help save and transform our national health service.
Our plan will deliver the rise in living standards and stronger growth needed to balance the books. It is a better plan for more good jobs and more balanced growth, because we know that if we can get our economy not to slow down, but to keep growing 0.5% a year faster than forecast, Government borrowing would be more than £32 billion lower in the next Parliament.
After this Budget, it is clear that Britain needs a better plan, not a Budget flop from a Chancellor whose failing plan is not working for working people. The choice is now clear: a tough but balanced and fair plan to deliver rising living standards, save the NHS and get the deficit down with Labour, or an extreme and risky plan under the Tories for bigger spending cuts in the next four years than the past five, which would cause huge damage to our public services and put our NHS at risk.
If they ever write a play about this Chancellor, it will be a tragedy of hubris, fantasy and thwarted ambition: the ruthless prince whose desire to be king has blinded him to reality and made him reach too far. Nothing will better reflect his time in office than the leaving of it: a final Budget built on sand and smoke—a Budget signifying nothing. He has run out of lines, and it is time he left the stage.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
It is a privilege to respond to the Budget. I have calculated that, if we include emergency Budgets, this is the 20th successive Budget to which I have responded. I have begun to recognise some common traits, one of which is that the shadow Chancellor, whoever it is, has to adopt a tone of outrage. The current shadow Chancellor does outrage very well—I will concede that—but what he does not do so well is memory. He has the same problem as his party leader of forgetting important things.
The shadow Chancellor seems, for example, to have had problems remembering his own version of the millionaires’ tax cut, when throughout almost all the period of Labour Government the top rate of tax for millionaires was 40% rather than the 45% it is today. I think he has forgotten his authorship of that famous phrase, “No more boom and bust,” and his own role in boosting the banking sector such that it became overweight, toppled over and caused much of the damage and hurt we are still living with today. I think he has forgotten his record as a forecaster: we all remember his triple-dip recession—there was no triple and there was not even a recession.
There is help at hand, however, because one of the genuinely good legacies of the previous Labour Government is the Crick Institute, which will open shortly and will do medical research. I understand it will be taking forward some of the excellent work of University college London on neural pathways. That will open the door to a cure for amnesia, which seems to be the shadow Chancellor’s main problem.
Kelvin Hopkins (Luton North) (Lab)
Does the Secretary of State not accept that the real change took place when Mrs Thatcher and Geoffrey Howe abolished exchange controls, raised interest rates, raised the value of the pound, destroyed manufacturing and shifted power to the City?
Vince Cable
From what I remember of the facts, the biggest decline in manufacturing took place when the hon. Gentleman and his colleagues were in government. I will come back to that later.
Chris Bryant (Rhondda) (Lab)
I am genuinely flabbergasted that the Secretary of State is accusing others of suffering from amnesia. He seems to have forgotten all the speeches I remember him making from the Opposition Benches in support of our spending plans. In fact, the Chancellor, who is sitting beside him, made exactly the same sorts of speeches in support of our spending plans all the way up to the eve of the recession. If some of us are a little sceptical it is because the Secretary of State is forgetting his own amnesia.
Vince Cable
We will come in a moment to my own and my party’s distinctive approach to spending and taxation, which offers a very sensible middle way between the two extremes on offer.
Let me deal with the shadow Chancellor’s various critiques of Government policy, including whether we have made the numbers add up, inequality and living standards, and the balanced recovery. I will start with his accusation that we have failed to balance the books. The shadow Chancellor is a very clever man, but there is a great deal of intellectual confusion about what Labour is accusing us of. The Government started with the objective of trying to deal with the structural deficit—in jargon, the cyclically adjusted current deficit—within four to five years. We are now spanning that over seven years.
What is the problem? If the Government had pressed ahead dogmatically with the timetable, we would have been accused of being inflexible and causing undue economic harm, and there would have been righteous indignation from Labour. In the event, however, the Chancellor was flexible and responded to changing circumstances, not least the effect on the UK economy of rising world commodity prices and the slowdown in Europe.
The Chancellor is a learned man. He is familiar with Keynes’s “General Theory”—I am sure he had read it several times from cover to cover—and he understands that, in periods of economic slowdown, counter-cyclical stabilisers should be used, which is what we did, alongside the use of monetary policy, to stabilise the economy. It is greatly to his credit that he did that, and that accounts for the fact that we are taking longer than was planned to deal with the deficit. None the less, having done that, the deficit is clearly now being reduced. We have got to the single point that debt as a share of the economy is starting to decline. There is a strong recovery—the strongest in the G7—and we have extraordinary employment figures, with the largest number of people in employment in history.
On the shadow Chancellor’s reference to the balanced recovery, I want to focus on one important development, namely what is happening with business investment, which is what drives sustainable recovery. Let me cite for the shadow Chancellor an interesting contrast. Between 2000 and 2007, 3% of the contribution to British growth came from business investment. That was a period when the British economy was being driven by consumption, household borrowing and a boom in house prices. There was very little business investment. Since the crisis—since this Government have been in office—30% of growth has been driven by business investment.
It is possible to break that figure down even further as to where that investment came from. In the period of Labour Government running up to the financial crisis, the contribution made to investment by property—overwhelmingly commercial property speculation—was 80%, and 4% of that investment was in the form of plant and equipment, which is why we had rapid de-industrialisation of the kind referred to by the hon. Member for Luton North (Kelvin Hopkins). Under this Government, the share of property investment has fallen to 30%, and 50% of all business investment is now plant and equipment—real factories making things and a revival of manufacturing industry.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Is it not the truth that the deficit today is where it would have been under the plans of my right hon. Friend the Member for Edinburgh South West (Mr Darling), and that until this moment not a single Government Member has admitted that the Chancellor was talking nonsense in 2010 when he claimed that he would wipe it out by the end of this Parliament?
Vince Cable
The Chancellor was not talking nonsense. It was perfectly sensible to aim to remove the structural deficit as quickly as possible. The fact that we have taken longer over it is a reflection of common sense.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
The Business Secretary will know that manufacturing has hardly shifted as a percentage of GDP in a period when Tata Steel is potentially selling off half its UK operations to a gentleman with a spurious background in that industry. Is he really saying that the march of the makers and manufacturing is doing so well when 20,000 to 30,000 jobs might be at risk because of de-investment in British and European markets, particularly in the steel industry?
Vince Cable
We do not know what will happen in relation to Tata Steel, but I and my Department are talking to the parties involved, including the trade unions, and we are very concerned about the situation. The hon. Gentleman may, however, have overlooked one thing in the Budget. We had a very emotional debate in the House about the future of the steel industry a couple of months ago, and there is a lot of genuine concern, which I share, about the future of steel. Many of its problems derive from relatively high energy costs, but one element of the Budget was to bring forward the compensation to help steel producers—whether in south Wales, the midlands or the north—to deal with the pressures on their costs. I would have hoped that, at the very least, there would be a little acknowledgment of that.
Tom Blenkinsop
Yes, the Chancellor announced that, but he had said that the compensation scheme would come in much earlier than next year. The Tata long products division is still operating under the existing conditions and, may I add, with a carbon floor price brought in unilaterally by this Government—without any discussion with the industry—which is jeopardising all those jobs. Will the Secretary of State at least talk to the Chancellor about speeding up the compensation package, which is much needed for energy-intensive industries?
Vince Cable
The industry has already received a certain amount of compensation. The constraint on bringing it forward is not the reluctance of the Chancellor, but the problem of getting state aid approval. Once that approval has been given, the compensation can and will be brought forward.
Adam Afriyie (Windsor) (Con)
Does the right hon. Gentleman share my bemusement at the fact that Labour Members are complaining about our rate of economic growth and the low levels of unemployment? This country is respected around the entire world for its position on all such matters, which affect the livelihoods of our constituents across the country. I am surprised that Labour Members will not acknowledge even one point when it comes to this Government’s great, solid, sensible economic management.
Vince Cable
The hon. Gentleman is right. I do not think that the shadow Chancellor mentioned the word “employment”, which is interesting because when we first entered office we heard nothing other than the threat of mass unemployment.
Let me pursue the argument about how we will deal with the deficit in the future. It is perfectly right to say that the parties could debate our actual priorities. To be fair to my Conservative colleagues, they are quite explicit about how they wish to deal with the deficit by relying on reductions in public spending. They recognise, as we do, that there is still a significant problem left. This morning, my right hon. Friend the Chief Secretary set out a different way of achieving the same objective. We all have a responsibility to deal with the problem, and we suggest going about it through a different mixture of taxation and spending. The Conservative approach is to deal with it through spending cuts, and given where they come from politically, that is perfectly understandable. Our approach is different: it is a mixed approach, with a ratio of 55% spending increases to 45% tax increases.
With that different balance, we could do more for the NHS. We have talked to Simon Stevens about the finances required to sustain services, including the extra £8 billion and the commitment on mental health. As far as my Department and its work in supporting growth is concerned, I can say—I do not know what my shadow can say, because he is not in the Chamber—that, on such a trajectory, we could sustain spending on the Budget headings that support growth. Those headings cover the industrial strategy and business support; financial interventions, such as the business bank, the green investment bank and the regional growth fund; innovation, which we need to double by the end of this decade if we are to be competitive internationally; science and research, which we plan to grow in real terms, and which the Chancellor has shown a particular interest in and whose budget he supports; adult skills, further education colleges and apprenticeships; and higher education teaching, research and student support. Those are my priorities, and I am very interested to hear what the Opposition’s are. I think their priority is tuition fees, and I will make a little analysis of how that will be done in a moment.
Sir William Cash (Stone) (Con)
My right hon. Friend made a very important speech relating to banks, particularly in rural areas. Will he be kind enough to give us a few extra thoughts on that question? For example, the last bank in Eccleshall in my constituency has been closed. Does he not regard that as a very retrograde step? It is very important to maintain facilities for banking in rural areas.
Vince Cable
The hon. Gentleman is absolutely right to say that that is a very retrograde step. The Economic Secretary and I have had discussions with the banks about how to deal with that problem, and about how to mobilise the post office network—under this Government, it has been saved and stabilised—to provide an alternative. I am not absolutely certain, but I hope that an announcement will be made within the next few days to protect the position of the last bank in the village.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
There was a £30 billion unanswered question in yesterday’s Budget. We know that there will be £12 billion of cuts in welfare, but will the Secretary of State outline to the House where the axe will fall for the remainder?
Vince Cable
If the hon. Lady read the document that the Chief Secretary introduced this morning, she would get a very clear picture. I have explained the 55% to 45% split, which is quite explicit, and I am very happy to defend it.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
I am very pleased by the announcement in the Budget of additional support for British businesses exporting to China, but will my right hon. Friend continue to press the case for ever-greater investment in UK Trade & Investment, and for its reform, so that we can start to help small and medium-sized enterprises to export to important emerging countries, such as Brazil, Argentina and India?
Vince Cable
The hon. Gentleman is absolutely right. Indeed, UKTI’s work these days concentrates on supporting SMEs. As a country, we underperform on the contribution of the SME sector to exports, compared with countries such as Germany, and that is the focus of UKTI’s work. I would also emphasise his other point on the need to build up our relationship with China. We have worked very hard on that, and the Prime Minister and the Chancellor have led from the front on our relations with China, which are good. The establishment of the new financial institution, in which Britain is a co-investor, is a signal of the importance we attach to our relations with China, and that will continue.
Sir Edward Leigh
My right hon. Friend is making a very thoughtful speech, in marked contrast to that of the shadow Chancellor, who was more Henry VI than Henry V. Will he comment on the staggering paucity of the cuts the shadow Chancellor will make? They appear to have been dreamed up on the back of a plain-packaged fag packet. How will the shadow Chancellor get rid of the deficit just by abolishing police and crime commissioners and by not opening a few more free schools? I still do not understand how he is going to solve the problem of the deficit.
Vince Cable
The hon. Gentleman is absolutely right. I thought it might be useful to take one element of the Opposition’s policies to see how utterly incoherent it is. I want to home in on the particular issue of how they would fund a reduction in tuition fees. To be frank, this is a tricky subject for all parties. All parties, including the Labour party, have gone back on their commitments. My party has done so, and I know that the Conservatives had some embarrassment in 2005. I would have thought that common sense suggested we ought to draw a line under this episode. I know from the feedback I get from the shadow Cabinet that the shadow Chancellor has been a voice of sanity in this debate, but his leader has not listened to him. Clearly, I am parti pris on this matter, but let me read a comment made yesterday by a man who describes himself as having been
“responsible for delivery in Downing Street under Tony Blair”.
I am not sure that I would want that on my CV, but he is very happy about it. Referring specifically to this proposal, he said:
“The result would be to spend almost £3bn to subsidise high earners of the future. The present system is attracting more students than ever, especially from low-income families. In 2004, before fees were introduced”—
by the previous Government—
“14 per cent of the lowest socio-economic fifth…went to university; last year 21 per cent did. Labour’s proposal therefore offers not ‘more for less’ but ‘less for more’.”
The position is actually worse than that, because we do not understand how it will all be paid for. A £2.6 billion gap needs to be filled to pay for the cap. The original idea was that there would be some kind of granny tax, with grannies paying extra into their pensions. That comes down to the proposal about the pension pot. The proposals that the Chancellor made yesterday diminished considerably the resource available from that source, so where will the money come from? Even if the Labour party can identify where the money will come from, how can it guarantee to universities that the money will get from the grannies to the Treasury to the universities? How exactly will that be sustained in the years ahead?
This is not just a debating point; these issues really matter. The feedback that we are getting from universities is that they have stopped investing because there is a political risk—although it may not be high—of a Labour Government. Universities have stopped investing and are having to fall back on their reserves. Some universities, such as Cambridge, have said that if this policy were to happen, they would drastically reduce the number of students they admitted and cut back on their supervision. The quality of education would suffer.
It requires a particular kind of genius to dream up a proposal of such transcendental stupidity. I was going to ask the person responsible to stand up and tell us what it is all about, but the shadow universities Minister is not here. He is the same guy who left the note saying that there was no money left. What he is now proposing is that universities should experience precisely the same treatment.
Vince Cable
We did not promise to abolish the VAT bombshell. We did make the promise on tuition fees and that was a mistake. We have regretted it and apologised for it.
I just wish that the Labour party would have the same wisdom, because if it ever gets into office, it will go down this road and it will do severe damage to the budget and to universities. The worst thing about this policy is that the primary beneficiaries will be the investment bankers of the future. The shadow Chancellor has been going around complaining about millionaires’ tax cuts. What he is now advocating is a millionaires’ debt-relief scheme.
Mr George Howarth (Knowsley) (Lab)
To use the right hon. Gentleman’s own words, would he describe the promise to abolish tuition fees at the last election as transcendentally stupid?
Vince Cable
The promise was not to abolish tuition fees, but to not increase them. We did increase them and that was a matter of regret.
Mr Mike Weir (Angus) (SNP)
I speak as a representative of the one party in this House that has not gone back on its promise on tuition fees. There are no tuition fees in Scotland. The Secretary of State talks about the costs of the policy, but was not one of the difficulties in the recession the huge amount of personal borrowing? Students are now leaving university owing a fortune because of tuition fees and the other costs of their studies. How will that work through the economy in the future?
Vince Cable
I was hoping that we would have an intervention from the Scottish nationalists, because they illustrate better than anybody else the stupidity of this policy. There have not been tuition fees in Scotland and the quality of university education is declining because there is less resource. The worst thing of all in Scotland is that in order to maintain this policy, they have raided the budgets of further education colleges, taking money from working-class children in Scotland to finance middle-class undergraduates. That is a very retrograde policy. If anybody wants to see where Labour’s policy will lead, they should indeed go to Scotland.
Let me turn to the bigger question of inequality, because many of the accusations that are made by the Opposition relate to the question of whether we have become a more unequal society. It is certainly true that if we talk about the top 1%, there is extreme wealth. Some of it—that created by entrepreneurs and risk takers—is totally understandable in a free-enterprise society, but much of it is not. That problem is shared across the world. It is true of the top 1% in social democratic Scandinavia and in communist China. These people can move, and they can move in and out of our country. It is to the credit of the Chancellor that he was able to say yesterday that the share of income tax that is paid by the top 1% has risen under this Government from 25% to 27%.
Of course, there is one way in which the ultra-rich in society can be made to pay that they cannot run away from, and that is by targeting high-value property. That is one area where my party has common ground with the Labour party.
If we take the wider issue of income distribution and the effects of austerity, the evidence is clear. People in the top 10% or 20% have contributed more than average in cash or percentage terms to the austerity programme and deficit reduction. For an objective measure of inequality, we should look to bodies such as the Institute for Fiscal Studies, which is totally independent and has been a thorn in the side of successive Governments. It has done an analysis of income inequality before and after this Government, looking at the basic Gini coefficient, and found that inequality in income is lower today than in 2007-08. If one digs into the figures a little further, one finds that the numbers depend on which consumer index is applied. However, even if one applies different consumer indices, the IFS analysis shows that, at the very worst, income inequality is no worse under this Government than it was under the Labour Government. I hope that when we hear the righteous indignation in future, the basic facts about this matter will be properly understood.
Ed Balls
Will the Business Secretary confirm that because of measures such as the bedroom tax and what has happened to tax credits—things that have happened only because of Liberal Democrat votes—the quintile that has made the second biggest contribution is the poorest 20% of families in our country? Does he feel proud of that?
Vince Cable
It depends entirely on how we look at the combination of tax and tax credit. The simple point is that the top quintile—the top 20%—has paid four times as much in deficit reduction as the group to which the right hon. Gentleman referred.
Alex Cunningham (Stockton North) (Lab)
Of course, the poorest in our society are the people who are on benefits. The Chief Secretary to the Treasury has ruled out support for the £12 billion of cuts to the welfare budget, which would make income inequality even greater for the poorest people in our society. If the Secretary of State does not support those cuts, what cuts does he support to fill the gap?
Vince Cable
Let me deal with one of the points of righteous indignation that is made about welfare cuts—the point about the so-called bedroom tax. The problem with it is that the idea of relating housing benefit to the size of accommodation did not start under this Government; it was a long-standing policy in relation to people in private rented accommodation. Where we have disagreed with our Conservative colleagues—we have made this explicit—is in saying that the so-called bedroom tax should not apply retrospectively. If people are given an offer of accommodation in the council house sector and they turn it down, they should pay it, but if they do not receive a satisfactory offer, they should not. That is a point of difference. The sheer righteous indignation bears absolutely no relation to the history of this problem.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Will the Secretary of State give way?
Vince Cable
I will take the hon. Lady’s intervention later.
Let me turn to the broader issue of living standards. It is blindingly obvious that in all the western countries that were hit by the financial crisis, there has been a fall in real wages. That has happened everywhere. Countries—including ours—were made poorer, production fell, productivity fell and, although we got more people back into work, real wages fell with it. I am putting this in terms of basic economics. Unless real wages had been kept “sticky”, as Keynes termed it, they were bound to fall, and they have fallen. The alternative was what has happened in France, Spain and Italy, where real wages were maintained, but where there has been mass unemployment as a result, particularly among younger workers. That has not happened here, which is a blessing.
The figure that the Chancellor produced yesterday is highly relevant, because what matters to households is not just wages but people’s take-home pay and disposable income. Disposable income involves not just wages but tax credits and taxation, and families are now better off then when we came to office. That is a result of several interventions, the most crucial of which was lifting the tax threshold. We made the radical, massive change of lifting the income tax threshold from £6,700 to £10,800, and that has brought a great deal of relief at a time of economic crisis to 27 million people. Three million people have been lifted out of tax altogether—mainly women on part-time earnings—and that has benefited workers by the equivalent of £800 a year. That has cushioned working people from the effects of the crisis, and there should be some acknowledgement of that from the Opposition Benches.
Debbie Abrahams
I must challenge the Business Secretary on what he has said about the impact of this Government, which includes the Liberal Democrats and their policies. The Institute for Fiscal Studies clearly states that as a result of tax and spending changes, low-income families, particularly those with children, are proportionately worse off, and incomes have reduced by £1,100. We cannot avoid those facts.
Vince Cable
As I said, the whole of society was hit by the economic crisis, but it is clear that the poorest in society have not been proportionately badly hit, and the people at the top have paid proportionately more. I remind the hon. Lady of what the IFS data said, which was that if we take into account inequality in all its aspects—that includes tax, tax credits and earnings—in income terms Britain is more equal, or as equal now as it was under a Labour Government. Labour Members may need to explain why the economy got into that position when they were in office, but that is what the independent sources tell us.
In addition to the tax allowance, the other key step has been protection of the minimum wage and the Low Pay Commission. I was alarmed by comments made yesterday by the Leader of the Opposition about the minimum wage. I am not one of the people who wants to trash everything that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) did when in office. There were some mistakes but also some good things, not least making the setting of interest rates independent through the central Bank—a very positive step. Supporting science was another positive step, as was the establishment of the Low Pay Commission as a mechanism for deciding what is in the national interest as far as the minimum wage is concerned, and how we balance the perfectly natural wish of working people to see their wages rise with the overall interests of the economy and employment.
What was alarming about the comments of the Leader of the Opposition yesterday was that he now wishes to turn that valuable inheritance into a political football. I think he originally said that he would determine politically that there should be an £8 minimum wage, regardless of the conditions of the economy. Yesterday it was “at least £8”, but why not £8.50, £9 or £10? We could all bid in a Dutch auction on the minimum wage, but it would be ruinous for the economy.
Vince Cable
The Chancellor did not announce that as a goal; he made a projection about what, under certain assumptions, the minimum wage would be. He has agreed with me and we have a combined view that we should accept the advice of the Low Pay Commission, which is what we have done. We have maintained a valuable institution, and I am seriously worried about the irresponsibility that has crept in as a result of that simple populist gesture by the Leader of the Opposition. That is not just damaging to the economy in the future, but it undermines a valuable institution that his predecessor brought in.
Tom Blenkinsop
At least the Secretary of State is being consistent on this issue. Will he confirm that in 2012 the Government froze the national minimum wage for those under 21?
Vince Cable
We have always made a clear distinction between the basic recommendation on the minimum wage, which every Minister in my position has accepted, and some of the second-order questions. We have changed the recommendation on apprenticeships, and indeed others, but the recommendation on the basic minimum wage is fundamental and something that Ministers of both Governments have honoured. The Leader of the Opposition—for reasons that are unclear beyond anything other than political populism—now proposes to destroy that tradition, and that is very retrograde.
Mr Kenneth Clarke (Rushcliffe) (Con)
I share the right hon. Gentleman’s experience of having opposed the minimum wage when it was proposed by the previous Government, although I now realise that was a mistake and have been converted to the value of it, given how it has worked. Does he agree that if the political debate follows what the shadow Chancellor wants, and each of the parties—all seven of them, no doubt—says what it would tell employers to pay as a minimum wage, we go back to the danger that I initially feared of unemployment being caused by bidding up, for vote-catching reasons, the basic pay of people trying to get into work?
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. Before the Secretary of State replies, may I gently say that 23 Members wish to take part in this debate, and he has been speaking for nearly 35 minutes. I understand that he has generously taken lots of interventions, but will he perhaps think about all his colleagues who still wish to speak?
Vince Cable
I will certainly respond as you wish, Madam Deputy Speaker. I think I have taken at least 23 interventions, but I am happy to cruise to a conclusion on that note.
If we are going to lift real wages and living standards, that must be done through the growth of productivity. That is the only way it can happen. A whole set of measures in the Budget suggest how that can happen in the long term. It must come through skills and innovation, and there was a series of constructive initiatives—catapults, science capital investment, driverless cars, the internet of things, the energy research institution, and other things—in the Budget. Cumulatively, those will drive up productivity in British industry.
One announcement that perhaps did not receive as much attention as it should have done was about trying to improve the way funding flows through apprenticeships and a voucher system that enables employers—particularly small companies—to acquire the skills they need. The key, however, will be business investment, and I have already pointed to improving trends in that respect. One lesson of our period in office is that under the difficult conditions we have had, by investing judiciously through bodies such as the regional growth fund, the Green Investment Bank, and the British Business Bank, the Government can stimulate significant amounts of additional private investment.
I will finish with an announcement in response to a question that the Leader of the Opposition threw out yesterday about the Green Investment Bank. We have agreed that that is a successful initiative that stimulates private investment, and for £2 billion from Government there has been £3 billion extra from the private sector. We want to build on that success and are looking at a range of options for bringing private capital into the Green Investment Bank, and to give it greater operational freedom and enable it to borrow in capital markets. That will provide it with an alternative channel of funding, and ensure its future as a lasting and enduring institution.
There was a great deal of excitement earlier this morning about the alternative route to fiscal policy that my party was advocating, and it is right that in the run-up to the general election we should have a different approach to how we balance the budget. However, there was a lot of common ground, and this was a joint coalition Budget that we are proud to have been associated with. It was about economic growth—we are now the most successful in the industrial world having been in the worst crisis—and about rising business investment, exceptional levels of employment, and rapidly falling unemployment. All that is taking place at a time when the public finances have been approved, and we have moved from being a basket case to a successful economy.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have to apply an eight-minute time limit to ensure that everybody gets eight minutes.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I shall confine my remarks to the Chancellor’s speech yesterday. According to him, Britain is now walking tall and basking in the glow of economic recovery. From my constituency perspective, those words will ring hollow to many. It is difficult to feel pride or walk tall when going to a food bank, which is the reality for an increasing number of people desperate for alleviation of the policies that the Government have implemented over the past five years. Talk of walking tall and the sun shining rings hollow in their ears.
This is not just about those at the sharpest end of the Government’s policies, however; it also applies to the average family. Indeed, we have already debated income levels for average families over the past five years, and the overwhelming consensus of opinion and analysis is that there has been a considerable reduction in average incomes over those years. That is certainly the day-to-day experience of most MPs, either in their surgeries or knocking on doors. We cannot blame the public for being so cynical. If they hear the litany of Government achievements, they cannot help comparing it with their day-to-day lives.
Then there is the fear. The Government tell us that in spite of all this success more cuts need to follow and that those cuts will be sharper over the next few years than in the last. We cannot blame people for wondering, if we are doing so well and have suffered so much, why we have to have another round of cuts. It is because the so-called long-term economic plan is in reality just an extension of the Government’s failed short-term economic plan. They failed to reach their target on deficit reduction because, in spite of the headline economic fears, they have driven us in the direction of a low-income, low-productivity economy, resulting in a reduction of the tax receipts necessary to reduce the deficit.
Presented with the conundrum of how to get economic growth with lower tax receipts, all the Government have to offer is more of the same. They have outlined another £30 billion-worth of cuts to come, with £13 billion coming from departmental spending—I shall address the implications of that in a minute—and £12 billion from welfare. Can we blame the public for being cynical, given that the Government have been promising welfare cuts for the last couple of years but welfare spending has in fact increased?
The Government also say they will protect pensions. What does that mean for the balance of welfare provision for other people? It implies huge cuts. We cannot blame the public for being concerned. The Government say that £5 billion will come from blocking tax avoidance and evasion. Given their rather dubious record on securing money from that source so far, we cannot blame the public for being cynical.
There has been an improvement in manufacturing—part of the Government’s so-called rebalancing exercise—but it has been very modest. Indeed, in January, it actually declined. We were told that we had a £1 trillion export target for 2020, but we are less than halfway there. Research and development, which is key to keeping Britain’s advanced technology advantage over other countries, has been falling behind other developed and developing countries, and according to the OBR projection it is going to fall further. Bank lending to business—essential to get the investment needed to expand our economy—has lagged throughout.
One element that bothers me in particular about the headline £13 billion cut to departmental spending is this: if some Departments are protected, others will not be and will have to take a disproportionate spending cut, and one of those will be the Department for Business, Innovation and Skills. Notwithstanding our occasional differences, I recognise that the Secretary of State has been a doughty champion of business interests in this country, and to have a disproportionate amount of those cuts focused on his Department could have the most profound long-term implications for the so-called long-term economic plan. I fear for the future of BIS and the policies it promotes, which are vital to getting the sort of economic growth we need.
I want to conclude with a couple of remarks about a potential gaping hole in the figures. We have already debated student loans, tuition fees and so on, but I find it astonishing that the Secretary of State did not refer to the resource accounting and budgeting charge—the cost of the non-repayment of student loans and its future implications for the budget. It is now reaching about 50% and is estimated to be about £30 billion by 2030. The implications are enormous. Labour’s policies would address at least part of the problem. The Government can accuse Labour of being irresponsible, but they have failed to demonstrate how it is responsible to introduce a system that will leave a legacy financial black hole on the scale they are talking about.
According to the OBR, the Government are going to sell the student loan book after all—I praise the Secretary of State for blocking it. When we heard evidence on that point, experts told us that if they wished to sell it, they would have to offer sweeteners or sell it at a hugely discounted rate. I would like to know whether the Chancellor has factored in the cost of selling the student loan book and whether the sum involved will meet the Government’s financial projections.
Mark Simmonds (Boston and Skegness) (Con)
It is a pleasure to follow the hon. Member for West Bromwich West (Mr Bailey), but he will not be surprised to hear that I did not agree with his analysis at all. I gently ask him to reflect on how he will explain to his constituents during the election campaign his party’s plans to reduce the deficit, because we got none of that detail during the shadow Chancellor’s contribution.
It is a pleasure to support the Budget, against the backdrop of the fastest-growing economy in the G7, a record number of jobs having been created, with employment at a record high, the deficit down, the national debt starting to fall as a share of the economy, GDP up 7.8% since 2010 and more than 750,000 new businesses having been created. That is in stark contrast to the contribution from the shadow Chancellor, whose extraordinary strategy is both shallow and hollow, as articulated earlier. There is seemingly no policy framework and no detail, which is why he and the shadow Treasury team are focused purely on trying to scare the electorate into believing there are going to be VAT increases and NHS cuts, neither of which is true.
In 2010, I made a contribution in the House urging the Chancellor and the Government to do four things. The first was to control public expenditure to improve the UK’s credit rating and to reduce yields on Government bonds and gilts to allow more of taxpayers’ money to be spent in the UK, rather than being sent abroad. The second was to encourage the Chancellor to dismiss the scaremongering that fiscal consolidation and public expenditure control lead to economic slowdown: they do not. Instead, we will have an expansionary fiscal consolidation. The third was that once expansionary fiscal consolidation delivers greater consumer confidence, the tax burden should be revised down. Fourthly, as expansionary fiscal consolidation delivers, businesses should be encouraged to invest as confidence returns. All those facets have been delivered by this coalition Government, to the benefit of all our constituents throughout the United Kingdom.
These strategic macro-economic achievements have led to real, lasting, positive impacts on people’s lives in my Boston and Skegness constituency. There has been a 23% drop in jobseeker’s allowance claimants since 2010, while 3,500 new apprenticeships have started in my constituency over the same period. Approximately, 5,400 people have been taken out of paying tax altogether, and thousands have had their income tax bills reduced by the raising of the income tax thresholds. In addition, freezing fuel duty has been an important lifeline for many of my rural communities.
The driving force behind the economic recovery is inevitably the private sector—businesses. That is why I warmly welcome some of the announcements in the Budget: supporting the digital infrastructure strategy; supporting farmers by extending the averaging period, which is a huge and important change for farming communities such as mine in Lincolnshire; simplifying the tax system, including the abolition of class 2 national insurance for the self-employed—a huge simplification that will benefit up to 5 million people; the much needed review of the anachronistic workings of the business rate system. Those all provide further evidence that Government Members are on the side of business and Labour Members are hostile to business.
I have three specific requests for the Treasury team. The first is to continue to assess and make sure that there is fairness in the public sector funding formulas. Rural areas such as Lincolnshire still do not get their fair share of resources, particularly in education and police funding. Neither do they reflect the speed of population change in some parts of the country.
Secondly, in his immigration speech in Derby, the Prime Minister announced a fund to alleviate some of the pressures on towns such as Boston that have seen significant inward economic migration. Will the Exchequer Secretary say a little more in her response about when the details of this fund will be announced, the scale of support that will be available and the criteria that will have to be met for the distribution of the funds?
My third request is for an assurance from the Treasury of its continued commitment to flood defences. I was pleased to see that 47 new projects are being added to the six-year programme and pleased about the acceleration of some programmes, such as Lade Bank pumping station and the North Forty Foot drain, in my constituency. This is vital for the protection not just of people and property, but of valuable agricultural land on which we all rely as we purchase food in our United Kingdom supermarkets. I was pleased, as I am sure you were, Mr Deputy Speaker, to see on page 84 of the Red Book that business contributions to flood defence projects are now tax-deductible expenditure—a huge and welcome addition to the armoury for financing flood defences.
In conclusion, it is clear to me that significant progress has been made by this Government in rebuilding the shattered economy we inherited from the Labour party. Debt is down; borrowing is revised down; growth is revised up; employment is up. The Chancellor and his team are effervescing with innovation: personal saving allowances and Help to Buy ISAs have been strongly welcomed by hard-pressed savers and young aspiring home owners. This Budget evidences and demonstrates not only that the long-term economic plan is working, but that the short-term plan is working, too.
Derek Twigg (Halton) (Lab)
I congratulate the right hon. Member for Boston and Skegness (Mark Simmonds) on making a strong speech, but I have quite a few differences with it, as I shall explain. What we had yesterday was a Budget that does not meet the challenges of the future, as we are living in an increasingly uncertain world and this Budget does not provide a proper plan to deal with that.
The Business Secretary talked about memory. While we have already heard today that the Liberal Democrats backed the bedroom tax and supported an increase in tuition fees, we should remember, too, that they supported getting rid of the education maintenance allowance and agreed to scrap the Building Schools for the Future project, which affected many schools in my constituency. The Liberal Democrats’ greatest crime, however, is giving cover to the Tory Government to allow them to implement austerity, which has impacted disproportionately and negatively on constituencies such as mine. This gives the lie to the view that the recession and the financial crisis were Labour’s fault. We all know it was down to the banks, and we all know that when Labour left office in 2010 growth was up and unemployment was down. That is the reality.
This Government failed to keep their promises, failed to meet their target on reducing the deficit and failed on borrowing. Their austerity measures in the early part of this Parliament strangled the recovery that had started under the last Labour Government. I could go on about a number of measures, but we should never forget VAT policy, because a Tory Government always raise VAT.
Whatever gloss the Chancellor tried yesterday to put on his economic record and the prospects for the future, the fact remains that the recovery is fragile. The International Monetary Fund says that our real gross domestic product per head is below that of the US and well below that of Germany and France. The productivity problem has not been addressed by this Chancellor or this Government, and we have seen no sign yet that the large cash reserves held by businesses are being released for investment. That is another interesting sign. Many of the jobs created are, of course, insecure, temporary or fixed-hours-contract jobs. Insecurity presents a real problem; many of my constituents are finding that insecurity stops them planning for their future—whether it be in buying a house, picking a holiday or deciding on some of the most basic things in life.
This Government could have done much more on investment in infrastructure and capital projects, and I am sorry that the Chancellor did not say more about them yesterday, rather than making promises of jam tomorrow. Many road and rail projects that the Government have previously announced and trumpeted were planned or started under Labour. We need to do more on investing in our infrastructure. Given the cheap rates of borrowing available to the Government, they should have done more with investment, allowing them to provide many more quality jobs.
Lots of schemes could have been taken forward in every constituency. Let me mention the campaign to restore a lock and open up the Bridgewater canal to the Manchester Ship canal in Runcorn. This was a brilliant scheme put forward by the Runcorn locks restoration society, and it would also help Runcorn town centre. This is a typical example of where money could be found, and I hope that the next Government will do so.
Businesses, and especially small businesses, are still having problems borrowing money, which clearly is stunting further growth. The inability to get banks to lend to small businesses is one of the biggest failures of this Government. I am pleased that a Labour Government will do more to help small businesses. In particular, we will cut business rates for 1.5 million small businesses and then freeze them the following year. A Labour Government will do more.
Of course we have to attract businesses to constituencies such as mine. We do attract them. Halton council has done very well in that respect, but we need more help. Unemployment remains stubbornly high, particularly among the young, and there is a real problem with those not in employment, education or training with an above-average number of our young people in that category. The minimum wage will be important for providing better security, as well as helping people with their pay.
A couple of areas have not been dwelt on sufficiently in the debate so far. If this Government get back in, we will see cuts falling badly on local government, to which I shall return, and on defence, which has seen significant cuts already and no guarantees about the future. The police have been cut significantly, as well.
I find the way in which austerity cuts have been imposed on local government appalling. Local government has important responsibilities, not least for child protection and care and provision for the elderly, yet we have seen massive cuts. My local council, Halton, is considered to be a good and well-managed authority, but between 2010-11 and 2015-16 its Government grant will have been reduced by £46 million, or £365 per head. That is a substantial cut, and the £11 million reduction in next year’s grant represents a further cut of £87 for every man, woman and child. By contrast, the cuts per head in east Cheshire—which is in the Chancellor’s constituency—and West Oxfordshire will be £23 and £32 respectively. Scandalous, unfair cuts are hitting the most socially deprived areas in the country, and putting services in serious danger by lessening councils’ ability to fund and run them. The future Government must address that important issue.
Another big problem in Halton is housing, especially the supply of housing, including social housing, and the inability of young people to get on to the housing ladder. In response to the Chancellor’s announcement of Help to Buy ISAs, today’s edition of Inside Housing states:
“David Orr, chief executive of the National Housing Federation dismissed the move ‘as another short-term initiative for first-time buyers, not a Budget to end the housing crisis.’…The Chartered Institute of Housing has also criticised the move… ‘While the help to buy ISA may help some first time buyers to overcome barriers to home ownership, it fails to address the fundamental problem—that we are simply not building enough homes.”
Derek Twigg
As the hon. Gentleman will know, we have promised that if we win the election in a few weeks’ time, we will build 200,000 houses a year. That is a significant improvement on what the present Government have done. They simply have not done enough, and the fact is that there is a major problem with the supply of not just private but social housing. There are nearly 1,350 people on the housing waiting list in Halton, which is one of the smallest boroughs in the country, and the average waiting time is nine years. Housing represents a large part of all MPs’ casework, and a future Government must do something about it. I have already said what Labour will do.
The Chancellor did not say anything about the crisis in the NHS. We know that waiting time targets have been missed, that accident and emergency departments are crowded, and that access to GPs is a problem. We know that people are experiencing real difficulties as a result of waiting times, involving not just A and E services but some other procedures. We have clearly stated that we want to improve access, and to save and transform our NHS with a “time to care” fund worth £2.5 billion, which will pay for 20,000 more nurses, 8,000 more GPs, and a guarantee of cancer tests within one week. The NHS is a fundamental part of our society, and it is appalling that the Chancellor did not refer to it yesterday.
In Halton, the reality of what has happened under this Government—which the Chancellor failed to address yesterday—is that many people are in poverty and experiencing a cost-of-living crisis. People are unable to heat their homes properly, and there has been a massive increase in the use of food banks. Hundreds of families in Halton have suffered as a result of the bedroom tax. Many are struggling to find jobs, and, as I said earlier, a large number of those jobs are insecure and part time. Security is a key issue for my constituents and others, and it must be addressed.
Chris Kelly (Dudley South) (Con)
Thank you, Mr Deputy Speaker, for allowing me to make my final speech in the House. I shall not speak for too long, because I know that many other Members want to contribute to the debate.
The Chancellor’s stated goal is for Britain to become the most prosperous major economy in the world, and for that prosperity to be shared throughout the nation. As a fellow Member whose constituency is outside London and the south-east, I wholeheartedly agree with him, and, indeed, that is what we are starting to see.
The Chancellor was also right to say that no short-term giveaway could benefit people as much as a long-term recovery. That is why there were no pre-election gimmicks yesterday. Instead of short-term gimmicks, we have seen action: action on job creation and growth. Under this Government, 1,000 more jobs have been created every single day, and the Office for Budget Responsibility has confirmed that in the past year we grew faster than any other major advanced economy—50% faster than Germany, and a staggering seven times faster than France.
Dudley South is full of hard-working and enterprising people, many of whom take the plunge and set up their own small businesses. I am delighted that we will be supporting them—and the 5 million self-employed people in the country—by abolishing their class 2 national insurance contributions entirely, thus making tax simpler for those hard-working people and enabling them to get on with making a living, serving their customers, and building their businesses.
The news is also good for larger employers in my constituency. In two weeks’ time corporation tax will be cut to 20%, which is one of the lowest rates in any major economy. We are backing businesses such as Petford Tools, Boss Design and Pressvess, which are in my constituency, so that they can create jobs. Mike Wood, the excellent Conservative candidate for Dudley South, brought representatives of those companies to No. 11 recently to meet the Chancellor. By contrast, Labour’s plan for the first corporation tax rise since 1973 would put jobs at risk rather than helping to create more of them.
Business rates have not kept pace with the needs of a modern economy. Businesses in Dudley and the black country have called for a review, and will join me in welcoming the news that one is to take place. Ninder Johal of the Black Country chamber of commerce has said that, all too often, good local businesses
“have to scale back their growth ambitions because of out of control rates bills”,
and called business rates an “iniquitous tax”. I agree with him.
Labour left manufacturing halved as a share of the economy, and a bigger gap between north and south in our country. The OBR has confirmed that growth is now broadly based, and that manufacturing has grown 4.5 times faster than it did in the pre-crisis decade. In manufacturing areas like Dudley and the black country, the evidence is all around us.
It is clear that the Conservative party has a plan that is working. Thanks to this Government’s long-term economic plan, Britain is walking tall again. We have a growing economy, a record number of jobs and rising living standards. The deficit is down, and yesterday it was confirmed that our national debt is starting to fall as a share of the economy. However, the country now faces a critical choice. Do we return to the chaos of the past, or do we keep on working through the long-term economic plan that is delivering for this country? Let us back stability for households and businesses by committing ourselves to running a budget surplus and ensuring that our debt share continues to fall. Let us support job creators by backing business and skills that will create full employment, and by cancelling the planned rise in fuel duty that is as much a tax on industry as a tax on households. Let us choose the whole nation by investing in a truly national recovery, so that areas such as Dudley and the black country do not miss out.
Tim Yorke, finance director of Ultra Furniture, one of the largest private sector manufacturing employers in Dudley South—whom I have had the pleasure of visiting— told Dudley News yesterday:
“The announcements about minimum wage and apprenticeships were welcome, as are the opportunities to give people more disposable income through increased personal allowances and more opportunities to buy homes through the help to buy ISA.”
This is a positive Budget, and much progress has been made in five years. The simple choice that voters will face on 7 May is between the chaos of Labour, propped up by the Scottish National party, and the Conservatives—including Mike Wood in Dudley South—with their long-term economic plan, which is working. Let us stay the course.
Kelvin Hopkins (Luton North) (Lab)
I shall be sorry to see the hon. Member for Dudley South (Chris Kelly) leave us. I have greatly enjoyed his company as a fellow member of the European Scrutiny Committee. Although we disagree about politics and I want Dudley South to become a Labour seat, I shall miss him.
The Budget statement was a process of glib window-dressing for election purposes: let us not kid ourselves about that. It was full of holes, and it failed to mention the harsh realities of the ongoing cuts agenda—an agenda that is really about reducing the role of the state on a road to the Hayekian nightmare of a world governed by private markets rather than democratic government.
My right hon. Friend the Leader of the Opposition spoke trenchantly and, I think, very intelligently yesterday in criticising the Chancellor, and my right hon. Friend the shadow Chancellor did the same today. My hon. Friend the Member for Halton (Derek Twigg) spoke very well about the effects of the cuts agenda on local government, and on child protection and adult and elderly care. We are already seeing vulnerable people being left at risk. There are crises of child abuse and insufficient child protection, and more elderly people are suffering from dementia. All those people depend on local government, which is being cut. We need more resources for local government, not less, and quality care for those who need it.
Millions of people are also in need of decent homes, as my hon. Friend the Member for Halton mentioned. In Luton, we have 8,000 on the waiting list. The only real solution is to recreate and restore the council housing sector. It was first attacked in 1972 with the then Housing Finance Act, which I well remember as a councillor at that time. Subsequently, we have had forced council house sales, which have left millions on waiting lists unable to get into a decent home, and a high proportion of those council homes sold did not end up in owner-occupation; they are now being let out as private rents.
The NHS is also threatened with deep cuts and creeping privatisation, inexorably driven by Government policies. It is substantially under-resourced now. Germany and France spend about 2% more of their GDP on health than we do, and that would amount to about £60 million per constituency per year. I would like my £60 million for Luton North now. It would make a tremendous difference.
The police have had savage cuts already, with more to follow, yet at the same time they are being asked to deal with terrorism threats and child abuse, looking at historical as well as current cases. They cannot do that unless they have the resources to do it, and they need more, not less.
On the subject of the deficit, the Government have refused to take the tax gap seriously, which is in reality £120 billion a year, not the £30 billion or so that they claim. What have the Government done? The Chancellor has decided to let another several million people not fill in tax returns, which is inevitably going to reduce the income to the Exchequer and make the tax gap, and the deficit, worse. Thousands of Her Majesty’s Revenue and Customs staff have been sacked already or lost their jobs, with more to follow, yet it is estimated that senior HMRC staff collect 20 times their own salary and junior staff 10 times their own salary, so more staff means getting in many more times the cost of those staff and helps to bring income to the Treasury. It is income that is the problem, not expenditure. The Chancellor’s biggest mistake, however, which I think he may come to regret, is abolishing tax returns for many people.
Today’s debate is really about business, however. I and many others are concerned about manufacturing. What the Chancellor has failed to recognise, despite pressure from me and others, is the crucial role of the exchange rate. After 1931, we had recovery after a big devaluation; after 1992 and the collapse of the exchange rate mechanism, we had a devaluation that drove recovery; after the 2008 crisis, we had a very substantial depreciation against both the euro and the dollar. We depreciated sterling by 27% against the euro and 31% against the dollar, which saved Britain from becoming another Greece, but writ large. We have survived simply because of the ability to devalue and the Government should thank my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) for keeping us out of the euro, which will be the case indefinitely now. That devaluation has saved us from a worse fate. It has still been difficult, but nothing like as bad as it would have been if we had not been able to devalue.
However, despite that depreciation we are still overvalued. We still have a massive trade deficit, with the EU in particular, amounting to about £1 billion a week, which is about 1 million jobs that we have exported to the continent of Europe. We must get an appropriate exchange rate for our economy that is considerably lower than it is now. Because the euro is depreciating, the pound is appreciating, which is going to make things worse. We therefore have what is called the J-curve effect: things seem to get better initially, but will get much worse later on when our competitiveness is seriously damaged by a depreciating euro. We therefore ought to be addressing the exchange rate, seeking to manage it down to an appropriate value, which will give us long-term protection for our manufacturing. As a result of consistent over-valuation over decades, manufacturing has fallen to half the size of that of Germany. Germany manages its exchange rate; it cemented it against all its competitor countries in the EU, which has protected it. We must do something similar, not by joining a fixed currency, but by managing our exchange rate. Our balance of trade is a serious problem that has to be addressed.
If competiveness is damaged by a poor exchange rate, investment is less likely. We still have a low level of investment compared with the average for the rest of the world, and it is a tiny fraction of China’s investment. We therefore still have low productivity. We have the second lowest productivity in the G7, above only Japan. All these factors are affected by the exchange rate. I hope the next Government—it should be a Labour Government—will address the exchange rate and ensure that we have a long-term appropriate exchange rate to make sure our industries survive and prosper.
Dan Byles (North Warwickshire) (Con)
I warmly welcome the Budget, and welcome the fact that the Chancellor resisted the urge, which all Chancellors face, to pull a pre-election rabbit out of a hat. Instead, we saw a competent Budget by a competent Chancellor that continues the excellent work of rebuilding Britain’s battered economy.
The headline figures are very welcome: the deficit is falling; national debt as a percentage of GDP is falling; growth for 2015 has been revised up to 2.5%; youth employment is rising by more than that of the rest of the EU put together; and 1,000 new jobs are being created for every day this Government have been in office. National figures can sometimes seem a bit dry, however. I am generally more interested in how the work we have done to rebuild our economy has had a direct impact on my constituents in North Warwickshire and Bedworth, and that record is one that I am proud of.
Our economy is genuinely working for local people. Just in the last month we saw a further expansion of the MIRA technology park enterprise zone on the A5, with £300 million of ongoing investment creating high-quality jobs and securing our position as the leading transport and automotive region in the UK. We also saw local employer Brose announce a £35 million investment package in Bedworth—private sector money—creating hundreds of new jobs there, too. These announcements of growth and new jobs have followed similar announcements over the last few years from a string of companies from a wide variety of sectors including Sertec, ADV Manufacturing, Aldi, Euro Car Parts, Ocado, Premier Group, Loades EcoParc, the Coventry building society, Leekes, the Rolton Group and Energetics UK. Thousands of new jobs for local people have been created since 2010.
Our economy in North Warwickshire and Bedworth suffered badly in the great recession of 2008, which saw local unemployment rocket by more than 1,500 in the last two years of the previous Labour Government alone, with more than 2,500 people claiming unemployment benefit. The number of jobseekers has now fallen by around 1,800 since the start of 2010—an incredible 70% drop. There are fewer people unemployed in North Warwickshire and Bedworth now than at any time in the entire 13 years of the previous Labour Government. That has not happened by accident; it is the result of five years of tough but essential economic policies designed to grip the deficit, get control of the economy, support employers and businesses, and rebalance the economy back towards manufacturing and exports.
In fact, the entire local economy is being rebalanced, with fewer people working in warehousing and transport than in 2009, and the number of people working in the manufacturing sector up by 20%. That amounts to more than 1,400 new manufacturing jobs in the constituency. This is essential for ensuring that we have high-quality and sustainable jobs going forward.
Helping people back into work is a fundamental moral priority, and I am proud of the work my team and I have done to help support local employers. I am also proud of the annual jobs fairs that my hon. Friend the Member for Nuneaton (Mr Jones) and I instigated in our local area, which each year has seen more and more real jobs available for local people.
Having a sound economy is the bedrock on which we can build stronger public services. Our local public services in North Warwickshire and Bedworth have faced the challenges of reform, and have risen to that challenge magnificently. Crime locally has fallen consistently over the last five years—down 10% last year alone—and is considerably below 2010 levels.
The George Eliot hospital is now out of special measures, after being driven there by the same Labour Health Ministers who refused repeatedly to hold a public inquiry into the Mid Staffordshire scandal, and has been rated “good” by the Care Quality Commission. Clinical staff numbers are rising: there are 39 more doctors and 86 more nurses than in 2010.
A number of our primary and secondary schools in North Warwickshire and Bedworth have taken advantage of the academy scheme in order to take control of their own destinies. In North Warwickshire, the number of schools rated as “needing improvement” has halved, from 20 to 10, while the number rated “good” or “outstanding” is up from 24 to 30.
All these developments rely on a strong economy underpinning the nation. But we are not there yet. We still face significant challenges both nationally and locally, but I am absolutely clear that the people of North Warwickshire and Bedworth are better off following five years of the Chancellor’s deft handling of the economy. They will be better off as a result of yesterday’s solid Budget, and with local small business man Craig Tracey as the new Conservative MP from May, they will continue to be better off in the years to come.
Susan Elan Jones (Clwyd South) (Lab)
It is a great privilege to speak in this Budget debate and to follow all the previous speakers, who have passionately expressed their views. I want to pay particular tribute to my right hon. Friends the shadow Chancellor and the Leader of the Opposition, who spoke thoughtfully and in great depth, sharing their vision of how our country can and should be better, and describing how this Government have failed working families. That is the real debate of this Budget—the one the Conservatives do not want to have.
I suspect it is even the reason why the Prime Minister is refusing my right hon. Friend the courtesy of a one-to-one television debate. The Americans have been doing this since Nixon and Kennedy, and at the last election the Prime Minister said that his predecessor would show that he was “out of touch” if he did not agree to such a debate. This is not like the Bullingdon club photograph that the Prime Minister has done everything in his power to stop media outlets showing: he cannot airbrush out a television debate. He can hide and refuse to debate, but he cannot stop the real debate taking place in households, workplaces, communities and families the length and breadth of the country.
We well remember the debate about “broken Britain”, thoughtfully expressed in the research of the Centre for Social Justice, which the Conservative party often trumpeted. However, that now demonstrates itself in the nightmare of the anti-family, debt-inducing curse of zero-hours contracts. It is a debate we hear in community groups, charities, churches and other faith organisations.
As we debate this Budget, it is worth noting that the 2014 National Church and Social Action survey reports that food distribution tops the list of church community activities. It is above parent and toddler groups; above community festivals and fun days; it is even above school assemblies and religious education. As someone who worked for charities for 15 years before becoming a Member of this House, I do not just welcome voluntary endeavours, I consider them vital. However, the Government have shown where their priorities lie—and it is certainly not with people facing zero-hours contracts. A lady in my constituency whose church collects food regularly for the Oswestry food bank just over the border, put it memorably:
“We’re used to collecting, but it used to be for Romanian orphans, not for people in our country without enough to eat.”
That is not to say that everything the Government do is bad. There were some positives in the Budget and I want to mention two I particularly liked. I welcome the increase in personal allowances, and in the gift aid-like payment in the Small Charitable Donations Bill, not least because a number of Labour Members worked on that Bill Committee to increase the threshold. The details need to be worked out, but there are some real positives. However, the Government need to increase support for the self-employed. I am very much of the view that if we as a nation handle this right, the potential for private sector-led regeneration in rural and semi-rural communities is great.
Let me tell the House about the kind of enterprise in my area that I am talking about. Recently, Alice Murray, who lives in Overton in my constituency, visited me here in the Houses of Parliament. Alice is responsible for setting up the company Giggles and Games, and last year she won the prestigious “Entrepreneur of the Year” award at the Free2Network business awards. Alice had not worked outside the home during the 17 years she brought up her four children. By her own admission, she was too nervous to attend an open day at Glyndwr university in Wrexham five years ago. But she grew in confidence while studying. Having organised a major event as part of a college module in entrepreneurship, Alice, after graduating in 2012, established Giggles and Games - The Giant Game People, a company that has achieved great acclaim for its games for parties, weddings and corporates. Based in north Wales, it covers Shropshire and Cheshire, but its staff are more than willing to travel further afield. The Giant Games include Giant 5ft Buzzers, Giant Connect Four, Giant Chess, Giant Snakes and Ladders—3 metres by 3 metres—and, best of the lot, Giant Stocks. The company is innovative, different and appealing, and it employs people and brings money into our local economy. I appreciate that Giant Space Hoppers are not everyone’s thing, but the business is thriving because it is innovative.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
My hon. Friend is making some very good points—and I am tempted to suggest some people who could be put in the stocks to which she refers. However, if such businesses are to be successful, they need universal superfast broadband that is accessible to all. Does she agree, and share my hope that the Government will take that issue up with even more vigour?
Susan Elan Jones
I agree with my hon. Friend that that is a hugely important issue. In my area there are many businesses waiting to be born that will never even reach gestation, simply because we do not give enough practical help to would-be entrepreneurs. The more than 5 million working people in our country who are self-employed face huge problems. Two thirds have no pension, and one in five cannot get a mortgage. My right hon. Friend the Leader of the Opposition spoke powerfully last autumn when he declared that the next Labour Government will ensure equal rights for the self-employed. That is a very important issue.
Finally, I want to use this Budget debate to seek clarity about a particular concern I have. There has been a great deal of interesting debate about the effectiveness of the new allowances for those who are married or in civil partnerships. That issue has been debated before in the House, and I am sure it will be in future. Both halves of the pantomime horse that seem to make up the coalition appear to have differing views on that issue. However, according to a written reply I received from the House of Commons Library, those who wish to claim the new transferable tax allowance for married couples and civil partners may only register for it over the internet. Given that 18% of adults in the UK cannot use the internet, the lack of options is quite surprising. Whatever our views on the efficacy and effectiveness of this allowance, it has no validity whatsoever if it is not available to those who cannot access the internet, many of whom are likely to be elderly and/or on lower incomes. Wherever we stand on this subject, there is a very real question for the Government to answer and I look forward to a response.
Mr Richard Bacon (South Norfolk) (Con)
I greatly welcome the Budget and particularly the announcements on housing. I make no apology for talking about housing in a debate opened by the Business Secretary. As the representative of the CBI said at the Homes for Britain rally in Methodist Central Hall earlier this week, housing is a business issue. If employees cannot find somewhere to live that is relatively near work, it affects the way they work, because they spend too long commuting. Housing is central to all our lives, so I welcome the measures the Government have taken on housing in the Budget.
The hon. Member for Halton (Derek Twigg), who, sadly, is not in his place, referred to the Chartered Institute of Housing’s comment on Help to Buy ISAs—that they would make no difference because they do not address the fundamental problem. I, too, have read that quote, but I thought it was slightly unfair, which is why I intervened on him. The Budget also addresses the supply side through the doubling of the number of housing zones, and I shall concentrate on that subject in my speech. It proposes to create 20 new housing zones which, according to the deputy mayor of London, Richard Blakeway, will provide a “framework for focused engagement” in particular geographical areas, create “planning certainty” and, most importantly, provide funding that is committed to essential infrastructure. I want to concentrate on that last aspect.
A number of endeavours have made an enormous difference over the past few years, in which the Government have engaged with the public and private sectors to provide a focused environment in which huge amounts of activity can occur. The most obvious example is the London Docklands development corporation, which transformed the docklands a generation ago. We can now see the extraordinary development that simply was not there 25 years ago. I have seen something similar in Northern Ireland, in the Laganside development, where the investment of £130 million of public money led to about £1 billion of investment from the private sector. This has transformed the nature of Belfast city centre completely.
The approach that has been adopted in the commercial sector can also be applied in the residential sector, and that is what housing zones are all about. I am pleased about the provision for them in the Budget. If we are to unlock finance for schemes in the residential space, the most important thing is to get rid of the blockages that are making that so difficult to achieve. We have to ask ourselves why housing supply does not rise to meet demand in the way that happens in most other markets. The truth is that people who would like to get involved in the housing market have very limited choices.
The volume house builders do a reasonably good job for the people who want to buy their product, but 75% of the people polled in a YouGov survey said that they did not want to buy the volume house builders’ product. In a well-functioning market, other providers would come in and the range of supply to meet that latent demand, which is not being satisfied, would naturally enter the market. That does not happen in the housing space, however, simply because it is so difficult to get into the market because of problems with access to land and access to finance. The Government’s proposals for housing zones start to address that, and I hope that their announcement in yesterday’s Budget will be the harbinger of a new direction that will solve the housing problem.
The hon. Member for Halton said earlier that Labour would build 200,000 houses if it got into government. I remember, half a generation ago, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he was Chancellor, appointing Kate Barker to undertake a review and subsequently announcing the building of 240,000 houses. Announcements do not actually make a difference, however, because it is not Governments or Oppositions who build houses. It is house builders who build houses, and if we took more notice of customers and their preferences, we would get more houses built.
Meg Hillier
The hon. Gentleman might have had a different experience in Norfolk, but in my constituency of Hackney South and Shoreditch, many of those “customers” are non-domiciled overseas landlords who never interact with the people who end up living in their homes. There is often a desire among those developers to get a quick, easy sale over a weekend in places such as Hong Kong and Dubai, rather than putting out to market properties that would benefit local people. Does the hon. Gentleman not agree that this really needs to be tackled?
Mr Bacon
The hon. Lady makes a valid point. I have listened to economists saying that this has not been a problem in London and that the wall of money that has come in to support investment was simply replacing investment that did not happen after the crash, but I am not sure that I agree with them. We see flats in London being exchanged time and again without anyone ever living in them, and there comes a point at which this becomes a moral issue. There is developed property with nobody living in it, and I think that we should be thinking first about our own people. That fundamentally describes the planning problem, and we need to decide how to do these things.
My Self-build and Custom Housebuilding Bill, which I am pleased to say is now going to become an Act, will give people in every area an opportunity to go to their local council and say, “Where is your register? I want to put my name down as someone who wants to acquire a serviced plot.” The council will have a statutory obligation to keep a register of such people and to have regard to it when drawing up its housing plans, whether for planning and housing, for regeneration or for the disposal of land. In visits overseas, I have seen that such space can also encompass housing for affordable rent through housing co-operatives as well as housing for private purchase. The point about serviced plots is key. This goes back to what I was saying about infrastructure and about removing the blockages to further development. This is about funding the essential infrastructure that is needed before further development can take place.
In the Government’s Budget last year, they announced the provision of £150 million towards serviced plots, and I interpret the creation of 20 housing zones that was announced yesterday as a further step in the right direction towards making the providing of the necessary infrastructure much easier. If a customer wants to come into the marketplace and take advantage of the opportunity to build a house that meets their own needs, the blockages that they meet can prove terminal. They might be trying to find a site, to acquire a piece of land or to obtain the necessary finance, for example. They might be told by the local authority to do an archaeological survey that they did not realise they would need, or a service supplier might tell them that the cost of supplying electricity or water, say, to the site would be prohibitive.
Going back to what Mr Blakeway, the deputy mayor of London, has said about planning certainty, removing all those blockages would create a focused environment in which we know that houses would be built. Housing zones are part of the way to make that happen. The underlying infrastructure being funded by the Government would create the possibility for much more housing being developed more quickly. There is also the possibility of recouping some of that cost through the tax revenues, including council tax revenues, that would flow once the housing was in place.
We need a housing market that works. We need to make the supply work in a way that it is currently not doing. We need to unlock the power of potential customers who do not yet have an opportunity to turn their latent demand into something real. The National Custom and Self-build Association commissioned Ipsos MORI to carry out a survey, which found that 1 million people would like to build their own dwelling or get someone to build it for them in the next 12 months, and that 7 million people would like to do that at some point in their lives. I hope that this Budget will be the harbinger of an important turn of direction towards emphasising the importance of getting underlying infrastructure in place so that the energy and vision of our own people can be deployed in providing the housing that we need.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I should like to draw Members’ attention to my entry in the Register of Members’ Financial Interests. I have an interest in housing.
I represent a constituency that is now often described as “achingly cool”, but it is also one of the poorest parts of the country. Those achingly cool young hipsters with their beards and pink hair who populate the coffee bars and watering holes of Hackney and who make the creative industries there the great success that they are—even they face challenges.
In yesterday’s Budget debate, and since then, we have heard so much huff and puff that anyone would think that the Budget had been written by the big bad wolf. In my constituency, that will be its effect on many people. This Government have left a £30 billion bombshell that will hit us after the general election. We know that there will be £12 billion of welfare cuts, and the rest will come from public services, but the Government have so far remained silent on where the axe will fall.
I know for a fact that Hackney council is looking to make £28 million-worth of cuts, and we have already seen 24% cuts to further education colleges, including my own excellent Hackney community college. These public services matter massively in areas such as Hackney, where about 36% of children live in poverty. That is the third highest rate in London. Many of those children live in households that are poor but ambitious. Their parents are working on zero-hours contracts in low-wage jobs while having to meet the costs of child care and high private rents. Many poor families cannot now get housing in the social sector. That means that many of them are trapped on benefits or tax credits. Talking about tax and welfare cuts sounds appealing, but it actually traps people who have the ambition to break out of benefits and into work and to be self-supporting. It stops them in their tracks. The routes to self-advancement are shrinking. Another cut like the 24% cut to FE would have a devastating effect, particularly on women stuck at home who do not speak English and who need English for speakers of other languages courses just to get into the initial job market.
At my surgery, a man came to see me in tears. He was a kitchen porter on minimum wage and had been asked by the jobcentre to seek jobs in zones 5 and 6, which is not an unreasonable request, but his wife had a part-time minimum wage job and they looked after two children between them, and the cost of child care and the extra travel combined meant that even in a council property he could not make ends meet. The Government are once again threatening to squeeze people in Hackney until the pips really squeak. In fact, I am not sure that there are any pips left to squeak for many people in my constituency.
A key issue that was not fully addressed yesterday is housing and I am glad that the hon. Member for South Norfolk (Mr Bacon) has mentioned it. I am fed up with the mantra from the Government about building brownfield land as though that is a great solution, because every experience I have in Hackney and across London shows how empty those words are. Huge publicly owned sites are being sold in my constituency to the highest bidder and not for local affordable homes.
I have some shocking examples. St Leonard’s hospital was taken from the local NHS and is now held by NHS Property Services Ltd, or PropCo. We do not know what will happen to that site but, in a horrible twist of irony, it was formerly Hackney's workhouse. In my view and that of the council and of others locally it should be used for affordable housing for local families when it is eventually redeveloped. That would do more for public health locally than the private housing that is likely to appear there.
Mr Binley
Does the hon. Lady recognise that Northampton especially will take on much of the burden of the problem of housing in London and the south-east and that the answer to the burden will be to build on brownfield sites? Outside London, brownfield sites are a massive opportunity.
Meg Hillier
I do not doubt that some are, but my particular issue is brownfield sites that are owned by the public—the taxpayer. They are part of Government departments and are being sold off to the highest bidder rather than adding value to the local community. With all due respect, I am sure that Northampton is a lovely place to be, but my constituents want to live in Hackney South and Shoreditch and Hoxton and Homerton. They do not want to be living out of London, facing long commutes to work. When people are on the minimum wage, that is just not an option. In fact, even if they are on much more than the minimum wage it is not an option, as commuting costs make it unsustainable.
Kingsland fire station was not only rashly closed by our Tory Mayor of London but has now been sold off for a rumoured £28 million. That clearly cannot be for affordable housing, but the situation is still shrouded in secrecy and we are waiting for final information. Another example, neighbouring my constituency, is the Mount Pleasant sorting office in Islington, which my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has rightly championed. That huge publicly owned former sorting office site is being sold mostly for luxury homes. It is time that the Treasury rules changed and, instead of the highest cash bid winning, the welfare and benefits of local people were taken into account.
What do the Government offer on housing? They offer Help to Buy and now the ISA for homebuyers, with up to £3,000 for young savers. They are great for those people, but it fuels the house price increases we have seen in my constituency. Let me give Members the flavour of that. In 2005, the average house price was £269,000. Today, the average house price—it might have gone up since I looked at it this morning—is £606,000. That is a staggering 124.9% increase in 10 years.
Rents are also rising sky high and there is nothing in the Budget for renters. The median private rent in Hackney is £330 a week and median full-time earnings in Hackney are £608 a week. More than half of people’s earnings are going on rent and many are trapped sharing bedrooms with strangers, using living rooms as bedrooms and not having the option of moving. It is impossible to be sure that one can raise a family in most private sector accommodation, as there is no security. I am glad that my Front Benchers are considering this, but we need to go further. Hackney is an example of what will face other parts of the country in future.
I was staggered to hear the Business Secretary defend the bedroom tax. In the Hackney Homes homes alone—the former council properties—2,160 tenants have been hit by the bedroom tax. It sums up the Government’s approach, because it does not work. There are no homes for people to move to and it is costing the taxpayer. Let me give an example. One woman was living in a three-bedroom property. Her teenager moved out and she was temporarily not working, so she was encouraged to move to a smaller two-bedroom property. She did so, but even though it was a social housing property, the rent was higher than that for her three-bedroom property. She faces a terrible struggle to find work that will pay the higher rent and she has lost the home that had been the family home. It is mean-spirited, it undermines the stability of secure tenancies and it is wrong. It must go. No ifs, no buts—if there is a Labour Government, the bedroom tax will be abolished.
The Chancellor talked about tax avoidance, and aggressive tax avoidance must be tackled. As a member of the Public Accounts Committee I have been playing a role, along with the hon. Member for South Norfolk, in ensuring that that happens. We know that uncollected tax has risen by £3 billion under this Government and all parties want to see more investment in HMRC’s ability to tackle companies that are running rings around Revenue officials to pay as little tax as they possibly can. Let us consider businesses up and down the country. Businesses in my constituency tell me that not only is it difficult to borrow money, despite the Government’s raft of lending schemes, but overdrafts are a big issue. I see that the Economic Secretary, who is the Minister responsible for banking, is in her place. Why do we let the high street banks off the hook every time we discuss these issues? They should be lending to local businesses. They are best placed to make a decision about what works for those businesses, but they do not do it.
I am delighted that the Minister is in her place, because I know she has a genuine passion for change in the banking sector. In the Budget and the document “Banking for the 21st Century”, there is no mention of real-time data on credit records. We currently have to wait 30 to 60 days for our data on lending to be available on a credit record. That encourages irresponsible lending. We have had a lot of debate about payday lending, but real-time data on credit records would have ensured that such lending applied only to those who could afford to pay back the loans. If the Minister can give me any indication of the Government's latest thinking on that and how fast they could move towards what seems to me to be a sensible measure, I would very much welcome that.
The Budget does nothing for my constituents. It screws the poorest down into a very difficult situation. They are feeling trapped, unable to escape from a situation that is not of their making. Their incomes have gone down and they are caught in a benefits trap, despite the fact that many of them want to get out of it. The Government are rewarding people they believe will vote for their party but not delivering for my constituents.
Mary Macleod (Brentford and Isleworth) (Con)
It is a privilege to speak in the debate and to welcome the Budget. We have a plan that is working in a Budget that works for people in our constituencies, unlike the hon. Member for Hackney South and Shoreditch (Meg Hillier). In my constituency, I have a growing economy, a record number of jobs and rising living standards. The deficit is down across the country and our national debt is starting to fall as a share of the economy. Great Britain is becoming great again and in 49 days’ time, hopefully, under a Conservative Government, Great Britain will become even more great.
Why is the Budget good for people in Chiswick, Brentford, Isleworth, Osterley and Hounslow? We have helped to transform their lives. My constituents want stability, jobs, a national recovery and aspiration in their lives. They also want to make work pay, which is why we heard yesterday about the increase in the personal tax allowance to £10,800 in 2016 and £11,000 in 2017. That is taking 3.7 million of the lowest paid out of tax all together. In my constituency, more than 53,000 people have seen their taxes cut since 2010 and nearly 6,000 have been taken out of tax altogether.
Business and jobs are critical to the recovery of this country and employment is at a record high, with 1,000 more jobs created every day under this Government. I will repeat that: 1,000 more jobs per day are created under this Government. We have 9,400 more businesses in my constituency since 2010. My Plumber, which my hon. Friend the Economic Secretary visited in Brentford, is one example of the many businesses that have been set up in my constituency in the past five years. The claimant count is down to 2% in my constituency, which represents a fall of 36%, and youth unemployment is down by 45%. We are also continuing to cut corporation tax.
I fought hard, along with my local Chiswick traders, to get a review of business rates, and we have seen that happen. The Chancellor confirmed that the reform of business rates will be “far-reaching”, which is great to hear. We do have to raise the £27 billion that business rates raise, but there are different and fairer ways of doing it. Businesses want to pay their fair share of tax, but they want to do so in a way that is fair to everyone. My right hon. Friend has already cut £1,000 off so many business rates on the high street, benefiting about 500 businesses in my constituency.
We also talked about supporting small businesses and abolishing class 2 national insurance contributions for the self-employed. That represents a massive simplification for about 5 million people, with about 8,000 of them being in my constituency. The Chancellor has also raised the annual investment allowance for firms to £500,000, which is part of the reason why business investment is four times higher than it was in the last Parliament. He is committed to looking at that again in the autumn statement, which I know local businesses will welcome.
We also heard yesterday about the creative industries. I have created a west London creative industries hub, and we have a massive sector there. The sector is booming, with so much growth and opportunity in it. It is worth £76 billion to the UK plc economy as a whole, and there is much more that we can do. We heard yesterday about the TV and film tax credits, which will be more generous, and about expanding support for video games. That is great news for businesses in my constituency.
Several hon. Members have mentioned superfast broadband, and I ask the Minister to take this away and look it a bit further, because small businesses in London face a real issue on superfast broadband—I would like it if we just had fast broadband. Perhaps one day we will get to superfast broadband, but this issue is deterring growth in some of our small businesses in this great capital. We need to examine the digital infrastructure for London to make sure we are doing all we can to support small businesses and the growth we need from them.
We also heard yesterday about the support for the brewing industry; we are cutting beer duty for the third year running and taking another penny off a pint, helping companies such as Fuller’s and its brewery in my constituency. That move is great for the local economy. We heard about the freezing of fuel duty, helping small businesses, as well as families. Having that strong economy, which is growing faster than any other advanced economy, is fundamental to the investment for the future that we need.
Secondly, I wish to touch on housing, which has been discussed by some hon. Members, including my hon. Friend the Member for South Norfolk (Mr Bacon), who spoke eloquently about it. This is the No. 1 issue for Londoners, according to the Mayor’s recent annual survey. Some 45,000 homes on brownfield sites in London have been announced, and my area will have a new Hounslow town centre housing zone, containing 3,500 new homes, including nearly 1,400 affordable homes. We do, in London, need to push for those affordable homes, because it is difficult for people to get on the housing ladder. I was pleased to hear yesterday about the Help to Buy ISA to help people save for their first deposit. For every £200 saved, the Government will add £50—in effect, this is a tax cut—for first-time buyers, up to a value of £3,000. That will be very welcome across London.
Thirdly, I wish to touch on education, because four new schools have been confirmed in my constituency under this Government. That is a huge investment, and I thank the Prime Minister, the Chancellor and the Education Secretary for it. London has had such a large population growth, with my borough being the fourth-fastest growing borough in London. School places are one of my biggest issues. This Government have delivered two new primary schools and announced two new secondary schools only last week. They will make a massive difference to families across my constituency, whether we are talking about the Nishkam school, which has already opened, the Floreat Brentford school, which is opening in September, or the two announced recently, the Green school for boys and the Hounslow improvement partnership school. This is exactly what we need for the people in west London.
I was also pleased to hear about the news on skills for London, with more power for the Mayor over skills funding to support apprenticeships and the commissioning role in the National Careers Service. In London, crime has fallen by 16%, and we have had £10 million for domestic abuse refuges from the Home Secretary and £5 million from the Mayor of London. We have been given the Piccadilly line upgrade, with trains stopping at Turnham Green once that upgrade takes place—that is another achievement. If the Government want to make some savings, I suggest that they opt to expand Gatwick rather than Heathrow, because the expansion of Gatwick is simpler, easier and better and it will cost the taxpayer nothing, whereas Heathrow’s expansion will require billions of pounds of taxpayers’ money.
In conclusion, over the next 49 days I will perhaps be focused on a tough fight I have in west London where every vote counts, but I hope residents will judge me on my record of what I have done and what I still want to do. If I am fortunate enough to be re-elected, I will make sure I go about implementing the approach of more schools, more apprenticeships and more businesses, and transforming lives in my communities.
Alex Cunningham (Stockton North) (Lab)
I worry about the poorest people in society, including the working poor, in places such as Stockton-on-Tees, because this outgoing Government have failed, even at the last opportunity, to do anything to help them. The Government have done nothing to boost their incomes or provide them with the jobs they would love to have. The Budget will bring no benefit to tens of thousands of people across Teesside, and more across the country, who hold low-paid jobs, with wages of no more than £5,000 or £6,000 a year. While the Chancellor maintains huge tax cuts for millionaires and increases tax-free allowances for people paying higher-rate tax, very few low-paid workers gain anything from changes to the tax system. These people can only dream about saving some money.
This is another Budget for the better off to be better off still and the poor to be poorer. The Chancellor even failed to deliver the promised minimum wage of £7 an hour—Labour will do much better. In his very first Budget speech, the Chancellor pledged that under his economic management the coalition Government would build
“an economy where prosperity is shared among all sections of society and all parts of the country.”—[Official Report, 22 June 2010; Vol. 512, c. 167.]
Many of the people I represent have not benefited from even the low inflation rate. Instead they have been stung by above-inflation increases in the cost of things such as energy and other utility bills. The Chancellor might be in it with his rich pals from the hedge funds who bankroll the Tory party, but I do not see much evidence on Teesside of everyone sharing in that prosperity.
Perhaps more worryingly, we have seen the repeated pattern of the poorest being hit the hardest, and nowhere are the effects of this more starkly illustrated than in the jobs market. For too long, unemployment has been higher in the north-east than anywhere else in the UK and that has been the case in every quarter since April to June 2011. Hon. Members will not be surprised to learn, then, that the claimant count in the north-east is also the highest in the country, and in my constituency the numbers are higher still. The 4.1% we have claiming support related to unemployment is more than three times higher than the rate in the south-east, and almost seven times higher than the rate in the Chancellor’s seat in Tatton.
Are Government figures an honest reflection of the numbers of people who ceased claiming this allowance? They are not. According to research by the House of Commons Library, of those who have ceased claiming jobseeker’s allowance in my constituency, only just over one third did so because they had found work. Conversely, more than half were recorded as doing it “for other reasons”. Not a single person has done so as a result of upping their hours to more than 16 a week. So, where have they gone? We know that they do not have jobs. Although a few may have gone abroad, into education, or even died, that has not happened to the hundreds of people who have disappeared from the Government’s statistics.
It is also a sad fact that too many people feel insecure and powerless at work. Record numbers of people are working fewer hours than they would like, and there is an increasing reliance on zero-hours contracts. The result is that more people worry about having enough money to pay their way. More than 5 million people are in low-paid jobs, while a quarter of a million people earn below the national minimum wage.
Meg Hillier
My hon. Friend sums up the challenges well. People may be in jobs, but what is the quality of those jobs and what prospects do they have? Does he agree that that is an issue not just in his constituency but in many other constituencies, including mine?
Alex Cunningham
Certainly, it is an issue across the entire country. I hear from people who are told at 6 o’clock in the morning that they are required for work, or, worse still, that they are not required for work. That is nonsense. What surety of income does that give them as they go into the week ahead?
The value of the national minimum wage has dropped by 5% since 2010, which is why the amount spent on in-work benefits and tax credits has risen 18%. Why cannot this outgoing Government recognise that people want to earn their money and look after their families rather than exist in a dead end, low-paid role that leaves them dependent on the state? What of those who, through no fault of their own, are dependent on the state? I fear what the Chancellor is planning to do to them next. Why is the Chancellor so coy about spelling out where the £12 billion cut in welfare spending will fall? Is it because he knows that decent people will baulk at his plans to devalue further the incomes of our most vulnerable?
Has the Minister seen the report that came overnight from Herriot-Watt university for Centrepoint, which shows that more young people will be homeless as a result of Government policies, and that many in work could lose their jobs if their housing benefit is removed and they are forced to return to live with their parents? We should not forget that this Government’s policies have seen these young people shoulder a disproportionate share of austerity and its worst effects.
Karl Turner (Kingston upon Hull East) (Lab)
Before my hon. Friend moves on, will he estimate the number of people in his constituency who are living with their parents because they are unable to buy their own home? How many of them could afford to save £200 to get the advantage of the individual savings account?
Alex Cunningham
I may not have the exact statistics, but I do know that large numbers of young people are in such a position. When I go to local colleges, I hear the anxieties of young people. They say that they want to live independent lives, go to university, and develop their plan for their own home, but they cannot do any of that.
The education maintenance allowance has been removed, support from the access to learning fund and student opportunity fund has been cut, housing benefit for under-25s has been reduced, higher education tuition fees have been trebled, and careers services have been slashed. On top of that, youth services have been hit by funding cuts of £60 million since 2012. I saw nothing in the Budget to address those issues, just a prediction of many more cuts to come.
In the north-east, 11 of the 12 councils suffered higher than average reductions in spending power for 2014-15 along with a 5% funding reduction. That is 10 times higher than cuts in the south-east, and almost four times higher in percentage terms. Our front-line emergency services are suffering more than most, too. It is no secret that A and E departments up and down the country are having a torrid time as a result of this Government’s wanton neglect of the NHS. We have £3 billion wasted on a reorganisation that has increased bureaucracy and allowed confusion to reign; fewer nurses than in 2010; and a GP work force in crisis. But much less well publicised has been the net loss of 293 officers from Cleveland police force since 2010, with more to go as the police and crime commissioner faces another 5.1% budget cut. Cleveland police are £35 million worse off than they were in 2010-11.
That picture is repeated in the fire service, with many brigades struggling to budget for the coming year while having to maintain confidence in the speed and efficiency of their emergency response services. Despite being a centre for the petrochemicals industry and posing one of the biggest fire risks in Europe, Cleveland is facing one of the biggest hits to its spending, with additional cuts this year of 10.4%.
Would the Chancellor still have the temerity to suggest that the quality of public services has gone up, not down, if he could see that services such as Cleveland are having to replace trained, full-time firefighters with retained firefighters just to make ends meet? Would he also do so if he knew that his cuts had spurred the service to close the marine fire station at the centre of our industrial complex?
Energy intensive industries form a large part of the economy on Teesside and across the north-east. The Chancellor mentioned the steel and chemical industries, but he has done little to help them. Although it was announced that the feed-in tariff element of renewable compensation for energy intensive industries will be brought forward to the point of state aid approval, renewables obligation compensation will not be introduced until 2016. That means yet another year of struggling in highly competitive global markets against international competition, which has more favourable conditions, thereby risking jobs and growth in Teesside, as companies are undercut and the jobs moved elsewhere.
With energy prices being business critical, it is possible for these industries to operate only in countries with competitive prices. If we continue in that manner, the UK will fall off the list, and it is areas such as Teesside and the north-east that will again be hit the hardest. That represents yet another missed opportunity to stimulate growth and create jobs.
With working people worse off than they were in 2010, millionaires receiving tax cuts while VAT has been bumped up to 20%, public services being decimated and front-line emergency services slashed, and at the same time that employment is insecure and those on low pay are struggling just to make ends meet, it is little wonder that people in the north-east, and indeed across the country, feel no connection at all with the two parties in government.
Angie Bray (Ealing Central and Acton) (Con)
The Chancellor’s Budget yesterday has been warmly welcomed by business organisations up and down the country. The British Chambers of Commerce, for example, has said:
“The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes”.
It is certainly the kind of Budget that businesses in my constituency wanted to see, and what is good for businesses is good for our constituents and the communities in which they operate—something that Opposition Members do not always appear to understand.
Despite the strong growth we have seen under this Government, there is no denying that things have been challenging for smaller businesses. Things are getting better, but at my most recent business breakfast club last week, several local businessmen and women raised their No. 1 concern: there is still more that could be done to support businesses, especially smaller businesses and the high street more generally. I expect that they welcomed what they heard yesterday.
In particular, they will have liked the Chancellor’s big announcement that the major review of business rates will report back in time for the 2016 Budget, which is just one year away. It sounds to me like the Government need to be getting on with that, as there is a massive amount of work to do. As he said, business rates have not kept pace with the needs of the modern economy and the whole structure needs rethinking. The advent of online businesses, both commercial and retail, has thrown the whole system out of kilter. When one considers the massive retail giants such as Amazon, one realises that it cannot be right that the businesses on our high streets that continue to trade out of bricks and mortar, in shops and other premises, should have to pay tax on the space they occupy while their online competitors do not. There is no longer the same relationship between the size and location of premises and the contribution businesses make through business rates. As I have said, that cannot be right, so I welcome the decision to have a root-and-branch review.
It is great news that corporation tax is to be reduced again to 20%, which sends an important signal that Britain is really open to business, with
“one of the lowest rates of a major economy in the world.”—[Official Report, 18 March 2015; Vol. 594, c. 776.]
It is to be regretted that the Labour party wants to raise the tax, were it ever to get a chance—what a retrograde step that would be.
Another measure that will surely benefit business is the announcement that fuel tax will be frozen again, making that the longest duty freeze in 20 years. Many small businesses that depend on a van or some other vehicle will continue to benefit from the freeze as well as from the much lower petrol prices at the pump, which we are all enjoying at the moment.
I very much welcome the Chancellor’s continuing commitment to supporting our creative industries. As the Member of Parliament for Ealing Central and Acton, which of course contains the world-famous Ealing film studios, the world’s longest continually running studios, I am delighted that he proposes to make TV and film tax credits more generous, along with expanding support for video games and a new tax credit for orchestras. As a member of the Culture, Media and Sport Committee, I participated in our report on growing our creative industries, which make an increasingly important contribution to Treasury revenues. On a visit to Los Angeles to find out whether the UK is seen as a good place to film and do business, we were given a resounding yes, and our film tax credits were singled out as a major reason for more studios choosing to shoot films over here. I was delighted to learn recently that Ealing Studios is fully booked for the whole of this year. That is a tax credit that earns far more than it costs.
I also welcome the Chancellor’s plans to provide more support for our digital infrastructure, funding work to improve mobile networks, funding free wi-fi in our public libraries and continuing to roll out ultra-fast broadband to nearly every home, which is vital in a world where people work on the move and at home. However, I still make the point that many smaller businesses, as my hon. Friend the Member for Brentford and Isleworth (Mary Macleod) said, continue to get a poor deal when it comes to superfast broadband. In Park Royal in Acton, many businesses complain that they keep being promised that it is just around the corner, but it never actually happens. That is crazy. Park Royal is less than 15 miles from one of the busiest international airports in the world. We need all our businesses to be properly and speedily plugged in. To be fair, I have had an assurance from the Secretary of State for Culture, Media and Sport that this issue is being looked at, but we need it to happen fast if we are not to leave our small businesses in places such as Park Royal at a disadvantage.
Business will benefit from the good news on tax cuts for hard-working people, families and savers. The more comfortable and secure we feel financially, the more likely we are to feel able to spend a little more, so it is great news that yet again the personal tax allowance will be raised. Next month we will see it go up to £10,600, and it will go up again next year to £10,800 and then £11,000. According to the Office for Budget Responsibility, the average taxpayer in 2015 will be better off by £900 a year, compared with 2010. The best news for the low paid is the raising of the minimum wage to £6.70 an hour in October, the largest real-terms increase since 2008. Apprentices will get a pay rise, too—up to £3.30 an hour.
Basic rate taxpayers with savings will be able to enjoy the first £1,000 of the interest they earn on savings tax free. Higher rate payers will benefit from the first £500. From this autumn, savers will be free to take money out of an ISA and put it back in later in the year without losing their tax-free entitlement. These measures are all about freeing up people’s earned and saved money, which can only help businesses.
I welcome this Budget because it does what Conservatives do best—trust the people. We trust the people to make investments in their businesses and to drive growth, and they have. We trust the people to invest in their employees and bring on apprentices, and they do. We trust the people to spend their own hard-earned money in retirement in a way that best suits them, and they will. Put simply, and unlike the Labour party, we trust the people to do the right thing—and it is paying off, with the fastest growth of any major economy in the world. More people are in work than ever before, paying down the deficit and taking more people out of tax. The Opposition may not like it, but the plan is working. As Government Members know, we cannot invest in proper public services, including the NHS, unless we have a strong economy to pay for it. If we cannot get the economy right, we cannot make the investments we all want to see. This Budget puts Britain firmly back in business and I support it.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I have been in this place 18 years and I can think of few events that make it clearer why people have lost faith in our politics than yesterday’s Budget—little effort to address the main issues, just shameless grandstanding by a man more concerned with fitting his policies to scriptwriters’ gags than addressing the needs of our communities. Just days before the end of this Parliament he delivered a Budget which he knows cannot get proper parliamentary scrutiny and where the measures actually implemented will be largely dependent on the support and agreement of the Opposition. It is a political ploy and people can see straight through it. It may have improved on the chaos of the man who gave us the pasty tax, the granny tax and the omnishambles, but I doubt whether history will judge yesterday’s little show as a particularly competent moment.
There are measures that deserve support. Who could object to a penny off a pint? That is not exactly original, like much else to do with this Chancellor, although I believe there is currently a vacancy for a baron of Bexley. Anything that helps jobs in the whisky industry is welcome. If there was ever any likelihood of an increase in petrol duty, thank goodness somebody has persuaded him to drop it. However, yesterday’s Budget certainly will not go into the history books as a great radical or reforming Budget.
I welcome the decision to allow Greater Manchester and Cambridgeshire to retain their business rates. I welcome it because it is Labour policy, but of course I would like to see the same opportunity given to Birmingham. Voters in Birmingham must be asking what the Government have against them. Why is our police service subject to the largest cuts in the country? Why are our council services being decimated? Why is there no extra support for our small businesses? Just what has this Chancellor got against our city?
I support the plan to raise the starting point at which people pay higher-rate tax, but I wonder why the Chancellor did that and left the cut-off for losing child benefit unchanged. That is not a very family-friendly policy, because under his plans the number of households losing child benefit is now set to double. While the increase in the personal allowance is welcome, it does nothing for the 4.6 million people who do not earn enough to pay tax in the first place, and, as we have heard, any gains will be wiped out overnight if he makes it back to the Treasury and promptly raises VAT, just like he did last time.
I was bothered by the fact that the Chancellor completely ignored the NHS. In my constituency, a walk-in centre at Katie road has been under threat ever since this Government came to power, and nothing he did yesterday makes it any more secure. The Bournbrook Varsity practice, which caters for a large number of our student population, is set to lose substantial funds through the abolition of the minimum practice guarantee and other cuts that will lead to redundancies and a loss of services. Our wonderful Queen Elizabeth hospital is set to lose about 11% of its budget as a result of punitive measures that attack its success as a regional specialist centre. Labour has a plan to grow the NHS. Under this Chancellor, we are already experiencing NHS cuts, and most people feel that there is more to come. Yesterday’s Budget largely confirmed these fears.
My constituency has an unemployment rate of 4.4%. It is now in the top 17% of constituencies for unemployment —110th out of 650. Try telling my constituents that the sun is shining. What they experience is insecure employment, zero-hours contracts, and people working all hours to make ends meet and still having to resort to food banks to feed their kids. Try telling them about the Chancellor’s economic plan. What we need is action to support start-ups, with Government money to match initiatives like Entrepreneurial Spark, a cut in business rates and taxes for small and micro businesses, an improvement in the minimum wage that amounts to more than 70p over a Parliament, and action to enforce the minimum wage so that unscrupulous employers cannot exploit those desperate for work.
As the hon. Member for Stone (Sir William Cash) said, instead of a headlong rush to offload Lloyds bank, perhaps the Chancellor should encourage it to show a greater sense of social responsibility and more respect for local business people in places like Bournville, where its high-handed closure programme shows contempt for the local community and taxpayers. It is a joke for the Business Secretary to come here and say that he will protect the last bank in the village. It is the last bank in the village, there is a massive public stake in it, and he cannot lift a hand to do anything about it.
Where are the measures in this Budget that people in my constituency really care about? They are absent. The Chancellor says that the sun is shining as he strives to paint a rosy picture in the face of the misery endured by so many. It is a Budget where he simply ignored his broken promises and inaccurate predictions—a Budget where the threat of more suffering is ever present. It is less “Here Comes the Sun” and more like here comes the “Sun King”: a man who has lost touch with reality, with vanity crowding out the ability to speak or hear the truth; who is not interested in the lives of real people; and who is armed with an economic soundbite rather than a plan. His assurances are as reliable as those of the party chairman, and his integrity is as intact as that of the former party treasurer. We deserve better, and the country needs a lot, lot more.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Let me say to Members that we have more time than expected because of some withdrawals, so I can lift the time limit to 12 minutes. I call Brian Binley.
Mr Brian Binley (Northampton South) (Con)
As ever, I am most grateful to you, Mr Deputy Speaker. It has been an honour to serve under you. This will be my last speech in a major debate and I am delighted that you are in the Chair.
Let me continue to be nice by telling the Economic Secretary how much I welcome this Budget for growth. It is based on five years of careful management, the provision of affordable services and the gradual reduction of a massive budget deficit. I pay tribute to my hon. Friend and the Chancellor for creating this opportunity for growth, which I believe many businesses and taxpayers up and down the country will welcome enormously.
Some years ago, I said that my grandmother would have told this place, “You have only two options when you’re in financial difficulties: earn more or spend less.” Listening to the Opposition’s arguments, it seems to me that they believe that, while earning more has some merit, spending less has no merit at all. My grandmother would have said that they were foolish. I would not dare say that in this place, but I know that she would have been pleased with the Budget this Government have produced.
It does no harm to recognise the inheritance this Government were dealt by a Labour Government who had themselves inherited a golden legacy that they frittered away. [Interruption.] It certainly was a golden legacy and was said to be so by pretty much every economist in the country, except, of course, for those affiliated to the Labour party. The Labour Government engineered a growing structural deficit from 2002 onwards. That is totally irrefutable. The deficit they left was not, as has been said, £140 billion; in their last Budget, they left a deficit of £163 billion.
If we consider that 1 billion seconds is 32 and a half years, we may get an idea of what £1 billion looks like. What a massive, massive sum.
Debbie Abrahams
The hon. Gentleman is as charming as ever and I am grateful to him for giving way. I want to correct the record. I am sure he will acknowledge that there was a global economic crisis in 2007-08 and that we reduced the deficit from 47% to 37% of GDP.
Mr Binley
The deficit was reduced because you spent more money—of course that would reduce the deficit.
I thank the hon. Lady for her intervention, because it leads me on to the next part of my speech. You failed to mend the roof while the sun was shining. You failed to recognise the fact that there was a global storm approaching. You massively increased borrowing when every business in the land was doing just the opposite—I can tell you that as a business man. Indeed, you almost broke the country.
Mr Deputy Speaker
I think you need to sit down for a second. Once was fine, but I think that was your fifth “you”. I am being accused of a lot of things that I know you will not want me to take responsibility for.
Mr Deputy Speaker
Order. I can assure the hon. Gentleman that there will not be a lax approach. I will allow him to get on with his speech without any more “yous”.
Mr Binley
I am most grateful, Mr Deputy Speaker. I will remember that.
This Government need no lessons from the Opposition, even if they had lessons to give, which I have failed to hear during this Budget debate. The Minister will not be surprised to know that I will again bang the drum for business, as I have in this place for the past 10 years. In many respects, I am sorry that this place does not have more business entrepreneurs, and often fails to appreciate their needs or the sort of economic atmosphere in which they work best. Thankfully, this Chancellor has had a plan. It is a plan that is working, and business confidence continues to rise. The Budget will frame our prosperity for the entirety of the next Parliament. I have no doubt that there will come a time when, if the Opposition ever again assume the seat of government—pray the Lord that it will never happen—they will recognise the reality of the situation, instead of talking in Shakespearian fairy tales, as the shadow Chancellor did.
The Chancellor has introduced Budget measures that business will welcome: the reduction of the rate of corporation tax to 20%; the abolition of national insurance contributions for those employing under-21s, and indeed young apprentices, which will come into effect in April next year; the extension of small business rate relief and the much welcomed employment allowance; and especially the promise of a major review of business rates. Business will be delighted by the abolition of class 2 national insurance contributions for the self-employed, which will follow in the next Parliament, and by the abolition of annual tax returns. On behalf of small businesses up and down the country and of the independent operators—it is so important for this nation that those single men and women plough their own furrow—I thank you.
Chris Heaton-Harris
It will be a great loss not to have my hon. Friend in the House after the general election, because he is a worthy champion of the wealth creators of this country. In his valedictory speech to this place, will he share with us some of his great expertise on why small businesses are the bedrock of British society, and how they employ so many people to the benefit of our tax system?
Mr Binley
I would be delighted to do so. Small businesses are the bedrock of the growth in the number of businesses overall because, first, they welcome the Government’s approach, and secondly, they have the courage to go out, put their own money on the line and add to the number of jobs available in this country. I am delighted to say that that is exactly what I did 25 years ago, and the companies I founded now employ 300 people —that is what entrepreneurialism is about—and to say that that is a part of my record and always has been.
The Chancellor has acknowledged that the success of the Budget will not be calculated by the accumulation of individual measures. I will therefore speak about the economic architecture that will help to achieve his ambitions. I want to comment on how his efforts to rebalance the economy are taking off, something which requires a bold and strong local infrastructure that supports businesses.
In particular, I want to speak about the importance of local enterprise partnerships. I am delighted to say—here is a compliment—that I understand that the Opposition have welcomed LEPs and will continue to use them. That is sensible, and we should give the Opposition credit when they agree with sensible measures. LEPs are critical to the rebalancing of a successful economy in every part of the UK. As some of my colleagues know, I am the vice-chairman of the Northamptonshire LEP. I may be the only Member of the House to be so intimately involved in an LEP. I believe that it is important for hon. Members to take an active interest in their LEPs and be associated with them with a view not to running them or overpowering their potential, but to being involved because they can be a great help. I hope that the Opposition spokesman, the hon. Member for Hartlepool (Mr Wright)—to be fair, he is a great supporter of small business—will take that message on board.
Northamptonshire had the vision to create the Northamptonshire enterprise partnership before LEPs were mooted. I pay tribute to the leaders of the county council for their foresight. The pressures on local government funding will increasingly restrict the ability of local authorities to sustain their support for LEPs. If we are to make them work, they need to be owned by the entirety of the local economic community, and not just by one sector.
Why has the performance of LEPs across the country been so patchy? I believe that it is because many of them, particularly many of the smaller ones, are not in receipt of the support that they need to create the sort of administration that will produce the growth that we are seeking. The original design for LEPs envisaged local businesses as the main source of income for the administrative costs. However, in areas where small businesses are the main engine of economic growth, that is an optimistic expectation. In Northamptonshire, some 94% of those working in the private sector work in SMEs. SMEs simply do not have the spare cash fully to support the LEPs in the way the Government originally envisaged.
I would like to see a system whereby a proportion of the finance that is available for the projects that LEPs handle is allocated to sustain their administration. I hope that the Economic Secretary will recognise that I am not asking for more money, but for some of the money that is devoted to local growth to be redirected to the administration of LEPs so that they can achieve the objective of growth.
This Budget must be seen as the prelude to prosperity in the next five years. Frankly, the Chancellor will need the support of LEPs after the election. That support will have to be strong and sensible. Consequently, the Government will have to give careful thought to how best to organise and manage the structure of LEPs. I appeal to the Economic Secretary to recognise that, in view of the Government’s policies that were expressed by the Chancellor, LEPs will need a little more financial help if they are to do their job correctly on behalf of the Government.
I am happy to offer an exemplar for what can be achieved by a LEP. I refer to my own LEP in Northamptonshire —there’s nothing like blowing your own trumpet! The economy in Northamptonshire is recovering well from the great recession. The food and drink sector is the largest sector in our county in terms of employment and turnover. We are building a new food and drink academy at one of the important colleges just outside Northampton. More than 40,000 people are employed in the auto sport and aerospace industry. They are grateful for the help that has been given to the industry, but they want it to continue. Our craft industry, which makes the best boots and shoes in the world, has received help from the LEP. Church’s, which is one of the best-known brands, has had help to extend its manufacturing facility. Northamptonshire’s enterprise zone has created more than 1,000 jobs.
Finally, Northamptonshire’s Challenge 2016 project, which aimed to achieve a massive reduction in youth unemployment, has far exceeded our expectations. Two years ago, we had more than 5,600 young people not in education, employment or training; there are now a little under 1,500. That is the success of this Government—giving people opportunity and aspiration. I say to those who tell me that young people do not have aspiration that it is amazing how aspirational young people become when they have a job.
If we are to put ourselves in the premier league of economic growth, the measures in the Budget must be combined with an effective local economic framework. I am confident that Northamptonshire will continue to provide an example of how best to drive regeneration and economic growth, but it will need more help, as will many LEPs across the country. I beg that you consider that factor—you being the Economic Secretary, Mr Deputy Speaker—
Mr Mike Weir (Angus) (SNP)
I am pleased to follow the hon. Member for Northampton South (Mr Binley) who is the authentic voice of Conservatism in this place, and blue in tooth and claw. He will be sorely missed, and I wish him well in whatever he chooses to do in the future—somehow I cannot see him retiring quietly to a rocking chair.
When I listened to the Business Secretary introducing this debate, at times I wondered which Budget he was talking about since he seemed to flip between the Budget presented by the Chancellor yesterday, and the fantasy Budget presented by the Chief Secretary to the Treasury this morning, and it was a bit difficult to follow his line of thinking. In response to a question from the hon. Member for Stone (Sir William Cash), he spoke about possible changes in banking and protection for the “last bank in the village”, as he put it, but I am afraid that in many communities that ship has long since sailed.
Banks have been pulling out of rural communities for many years, and substantial communities in my constituency no longer have a bank. Indeed, the Royal Bank of Scotland recently closed a branch and when questioned about it said, “Well you can use the post office”. Unfortunately, the Post Office is also undergoing a procedure at the moment. There may no longer be closure programmes, but many post offices are “changing”—or rather closing—and business is being transferred to other local businesses. In many ways I see the logic of that from its point of view, but it means that many businesses are now running the “post office local model”, which is a much reduced service. In many communities in my constituency, including substantial communities, that is the only post office service left—a counter in another business, which is a small shop or, as in one case, a card and paper shop. That does not give confidence in the service—notwithstanding the service that such shops can provide and the extent they go to—especially for business banking, and that needs to be looked at.
If we contact any of our major banks, they will try to get us to go online and work through the computer. That is fine, but many of our elderly people cannot do that, and many people with small businesses do not want to invest in the extra equipment. To pick up the point made by the hon. Member for Ealing Central and Acton (Angie Bray), there is also a serious problem with broadband provision in many parts of our country.
In my constituency many of the towns now have a good broadband service that has been upgraded, but one does not have to go far outside the town for it to disappear altogether. Part of the reason for that is that many small exchanges that serve the country in village areas desperately need upgrading and can no longer take any more broadband lines. I have had situations where people have moved house, cancelled their broadband contract, and when they went to get a contract for their new house they were told they could not get one any more because the line they used had been allocated to someone else.
The Budget has missed a huge opportunity to invest in that infrastructure for the future. If we are to be a successful nation and increase business, we need the infrastructure to do that. I have talked often in the House about a rural area such as mine where many businesses are taking advantage of the internet where they can. It is not always a bad thing. A business in a rural area can get a niche market, survive on the internet and have quite a good business, but it needs an internet connection, good broadband, and a good postal service to deliver the goods to the rest of the country.
Since the privatisation of Royal Mail we have seen an erosion of that service in some parts of the country. In some parts of Scotland, as I am sure is the case in other parts of the country, it has announced that it will not be picking up so often from post boxes—there might be one pick-up first thing in the morning, but nothing else for the rest of the day. That is hopeless for a business. Furthermore, many of the new post office locals do not have sufficient room for proper business mail to be left for Royal Mail to pick up. Again, that was a missed opportunity in the Budget.
Unfortunately, the real message of the Budget is that massive cuts are coming our way, which will have a terrible impact on many of our local communities and businesses. The OBR has described the coming years as a rollercoaster for public expenditure and said it will return the level of Government expenditure to that of 1964. This morning, the Chief Secretary to the Treasury, who presumably had a hand in writing the Budget, as well as his alternative Budget, said it would take us back to the era of “Cathy Come Home”. That film brought home to many people the extent of the housing crisis in the 1960s, but that housing crisis is coming back to haunt many of our communities.
Many Members have talked about the need to build more houses, and I entirely agree, but I was concerned that the only specific announcement about this in the Budget was the new ISA to help get younger people on the housing ladder. That is good news for those who can afford to put money into an ISA, and I am sure that well-off parents around the country will be preparing to open such accounts for their children, but it is just another variation on the bank of mum and dad and does nothing to help the many young people who can only dream of renting their own home, let alone owning one.
The only boost to local businesses is likely to be for estate agents, as this measure fuels a housing bubble in our cities and communities—houses are expensive all over the country. If we are to tackle the housing crisis, we need a boost to build new affordable homes and homes for rent. Not only would that give young people a real chance to get a home of their own without needing well-off parents to finance it, but it would give a boost to local economies by providing work for those who build the homes and the businesses supplying the needs of new home owners.
The hon. Member for Luton North (Kelvin Hopkins) commented on why we had reached this situation. In Scotland, we are now building new homes and have removed the right to buy introduced by the last Tory Government. Whatever people thought of the policy at the time, it is no longer appropriate for the current market because it acts as a disincentive to councils to build new houses—because they might have to sell them off fairly quickly at reduced rates. In Scotland, new houses for rent are being built for the first time in many years. When I read the leaks of the proposed Budget, I was concerned at the suggestion that the Chancellor would introduce a new right to buy for housing associations. I think we should all be grateful that he did not do that, although it would not have applied in Scotland anyway, since we have taken a different route.
Many of the cuts, however, will make things much worse for our young people. Many people, particularly under-25s, will no longer be able to get housing benefit and will be forced to continue to live with their parents, but in many cases, either that will not be practical or for some other reason they will not be able to do it, and they will end up sofa surfing with friends and relatives. It is all very easy, as Government all too often seem to do, to announce crackdowns on welfare and go for cheap headlines in the more rabid tabloids. As we all know, however, in reality many of those in receipt of benefits are working, and the benefits are not their income but top up the income they receive from their employment. In my constituency, on the latest figures, the unemployment rate is 2.5%. On the face of it, that is excellent news, but it is also a low-wage economy, and that is the difficulty. Many people rely on benefits to top up their income and enable them to live.
Many of us will be spending more hours than is healthy over the next few weeks knocking on constituents’ doors, and I am sure that many have had the same experience as me of finding it difficult to find people in, mainly because so many work long hours, split shifts or more than one job to make ends meet. That is the reality of modern Britain, with so many people still relying on food banks to feed their families.
The assault on the welfare state has a dramatic effect on our local businesses. Those who are less well off will tend to spend their money—and to spend it in local businesses. Cuts not only attack those on benefits, but remove a substantial amount of money from local economies, hitting businesses. Is it any wonder that so many businesses on our high streets are closing?
In Scotland, the Government have made determined efforts to halt the decline in small businesses with policies such as the business bonus scheme, which has abolished or reduced business rates for many small businesses. The Chancellor announced a scheme for business rates retention, but the Scottish Government introduced such a scheme in Scotland back in 2011. These schemes help, but more needs to be done to boost local businesses.
We already know that some of the poorest in society will bear the brunt of the misery of the austerity programme. The proportion of tax cuts to tax rises has moved from 4:1 to 9:1, and this will have a dramatic effect on many households. As others have said, we do not yet know the details of the coming cuts and benefits, but this is all money being sucked out of our local economies and will impact directly on our local businesses.
Before I finish, let me say that it is not all bad news. I welcome the Government’s changes to North sea oil taxation. I called for it, the Scottish Government called for it, and there is widespread support for it across all parties. This industry is going through a downturn at the moment—not for the first time, and I dare say it will not be for the last. It is worth noting that the reduction in the supplementary charge will take us back to the position in 2011, when the decision to increase it, taken without consultation with the industry, was hugely damaging.
On a more positive note, the Bank of Scotland did an oil survey last week, showing that 90% of firms are optimistic about the future. Many of them were looking to diversify into such things as renewables. Here, again, however, the Government have missed the chance—
Mr Robert Walter (North Dorset) (Con)
It is a pleasure to follow the hon. Member for Angus (Mr Weir). If he had his way, he would not be in this House to benefit from our long-term economic plan.
When I made a speech last week I said that it would probably be my last, so this one can be regarded as an encore. I am delighted to speak in support of my right hon. Friend the Chancellor’s Budget, which I think is superb. I shall not comment on the Liberal Democrat alternative budget that we heard this morning. After 18 years in this House, I have been elected and subsequently re-elected three times despite the Liberal Democrats. I ought to be an expert on Liberal Democrat policy, but I cannot remember ever having much of a policy debate with them during any of those elections. I do remember the slogan “Winning Here!” on every roadside poster, but I do not think that will be true in the next election either.
I shall not indulge myself for long in commenting on the two kitchens of the Leader of the Opposition. I attest that I am convinced he has only one principal family kitchen, and it is clear to me that the room in which he was photographed, adjacent to his drawing room, is his butler’s pantry. We should always remember that whenever he is connecting with the ordinary people of Britain.
This Budget has suffered once or twice from facetious comments from the Opposition about “the long-term economic plan”. We have had five years of robust policy from my right hon. Friend the Chancellor and the Treasury team—I see the Economic Secretary in her place on the Front Bench—and this plan continues for another five years. I always thought that a week was a long time in politics, but 10 years certainly is. This is a long-term plan, and it is working.
The headlines in the Budget are clear. We are cutting income tax for 27 million hard-working people, cancelling the planned rise in fuel duty, and, not least, taking a penny off a pint of beer or lager and freezing the tax on wine. The new Help to Buy ISA is a superb way of tackling the problem that first-time buyers still have. I think that it is sometimes exaggerated, but it is none the less welcome that if a first-time buyer saves up to £12,000 towards a deposit on a home through an ISA, the Government will contribute an extra £3,000. The help for savers through the abolition of tax on the first £1,000 of savings will benefit some 17 million people.
The commitment to run a budget surplus and keep our debt share falling is particularly important, as is backing the business and skills that will create full employment. As the Chancellor said, we must invest throughout Britain. I know that his pet scheme, if I may call it that—the northern powerhouse—is an exemplar for other parts of the country, including my own in Dorset. The Budget shows our commitment—the Conservative commitment—to a long-term economic plan. Perhaps I am being partisan, but I believe that the only way in which we will deliver on that commitment is to elect a Conservative Government on 7 May, because otherwise we shall put all this at risk.
Let us look at the plan, and at how it is working. Debt as a share of the economy will start to fall in 2015-16, thus meeting our debt target. The deficit is down by more than half as a share of the economy, and is forecast to fall to 5% of GDP in 2014-15, down from 10.2% in 2009-10. The economy is growing, and the growth forecast for 2015 has been revised upwards to 2.5%. The OBR’s forecast was upgraded for the second time after Britain’s economy grew faster than any other advanced economy in 2014. That growth has been balanced, with manufacturing growing 4.5 times faster than it did in the pre-crisis decade.
Employment is going up, and unemployment is very much down. There are more people in work than ever before, and 1.9 million more than there were in 2010. In my constituency, unemployment is down to 0.7%. We heard yesterday that the year-on-year figure was down again, by a further 145, and youth unemployment is down as well. I should like to say that I could count the number of unemployed people on the fingers of two hands, but the figure is a little higher than that, and I do not know everyone who is on the register. However, I do know that we have a turnover of labour in my constituency because we have a vibrant economy, and that the big complaint from employers is that they cannot get the work force that they are looking for.
I think that the Opposition are not entirely sure what they would do differently from the Budget, but the electorate are aware of their record and the legacy that they left us five years ago. The note from the former Chief Secretary, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), read, classically, “There is no money left”, which speaks for itself. The Government’s record, however, has been very positive. It is a positive story: of growth, the best in the G7; of employment, the best in the industrialised world and an exemplar for most of Europe; of debt, which is now falling significantly; of a deficit that is coming down; and, most importantly, of business confidence, which is up.
This contrasts with the nightmare scenario of the possibility—no more than that—of a minority Labour Government kept in office, or held to ransom, by the Scottish National party. That really would be a nightmare scenario for Britain. So the question is clear, and I believe that the answer is obvious. I only regret that I will not be here in this House to support the next Conservative Government, but I believe that the nation, and particularly the nation’s economy and finances, is very safe in our hands.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I am grateful to the hon. Member for North Dorset (Mr Walter) for delivering his speech in reasonable time and for not taking the allotted 12 minutes. I am afraid that the arithmetic does not allow 12 minutes per person from now on and I must reduce the time limit to nine minutes, thereby allowing everyone who has indicated they wish to speak the opportunity to do so.
Mr George Howarth (Knowsley) (Lab)
The hon. Member for North Dorset (Mr Walter) said that he was still waiting to hear what Labour’s proposals were, but if he had taken the trouble to attend the opening of the debate, he would have heard from my right hon. Friend the shadow Chancellor precisely what we intend to do.
The shadow Chancellor’s opening speech contained many quotes from Shakespeare. It is a little known fact that there is a strong connection between Shakespeare and Knowsley. The sixth Earl of Derby was a patron of William Shakespeare, and “A Midsummer Night’s Dream” was written for his wedding and performed before Elizabeth I in Knowsley hall, so I thought a quote from “A Midsummer Night’s Dream” might be appropriate. Earlier today the Chief Secretary to the Treasury sought to put some distance between the Liberal Democrats and their coalition partners, and I think the quote might sum that up:
“So we grew together,
Like to a double cherry, seeming parted,
But yet an union in partition,
Two lovely berries molded on one stem”.
That perfectly sums up how the Liberal Democrats cannot realistically distance themselves from everything that has gone on over the last five years.
My hon. Friend the Member for Halton (Derek Twigg) made a very good speech, including a passionate plea on local government finance and how that has affected his constituents during this Government’s time in office. He made some important points that bear repetition.
Derek Twigg
I am grateful to my right hon. Friend for his reference to my speech and the issue of local government finance. Does he agree that the scale and viciousness of the cuts to the most deprived authorities in England beggars belief? Merseyside has suffered particularly badly.
Mr Howarth
My hon. Friend is absolutely right. Knowsley has had the worst cuts in Government grant this year, and over the period of this Government the amount of Government grant per household in Knowsley will have been reduced by £1,500, yet it is one of the poorest, most deprived local authorities in the area.
The main point I want to make is to do with economic growth and the structural problems in our economy. The key point is that we have an unbalanced economy; economic growth is overly dependent on asset inflation and consumer demand. As a consequence, over recent decades the balance has shifted away from manufacturing and towards the service and retail sectors. This is well illustrated by the decline in manufacturing as a proportion of gross domestic product. In 1970, manufacturing accounted for about 30% of GDP, but in the intervening period it has declined to some 10%. For an area such as Knowsley, which has a strong manufacturing base, that is bad news.
There is of course a complex set of reasons for that, but two factors are specifically relevant, the first of which is housing policy and our national obsession with owner-occupation, which distorts any attempt to have a rational housing policy. In the north-west, between 1997 and 2013, average house prices increased from £51,000 to £109,000, yet in the same period wages increased from £309 a week to just £460 a week. In the same period, local authority waiting lists have grown by more than 90%. So, despite the various incentives for owner-occupiers, saving for a deposit and securing a mortgage is becoming an increasingly impossible goal.
I welcome the Chancellor’s introduction in the Budget statement of a new Help to Buy ISA, which will help people to save towards a deposit. Superficially, that is an attractive way to help them get a foot on the property ladder, but the real problem is that it will not help those on lower incomes. A first-time buyer currently needs an income of about £36,000 a year, which is way beyond what many of my constituents earn, so even with that scheme, they will not be able to get on the property ladder.
I am pleased that my party is committed to working towards a goal of building 200,000 homes a year over the next five years. Welcome though that is, it still will not make up the shortfall. Although the sale of council houses—the hon. Member for Angus (Mr Weir) referred to this; I may have misunderstood him—is a good thing from the point of view of the individual buyer, is it good public policy? The National Housing Federation has called for a review of that policy, which I support. We need to know how that policy will contribute to the building of more properties, which needs to happen if we are to bring prices down.
Mr Weir
For the avoidance of doubt, I was making the point that the right to buy caused the sale of many council houses and new ones were not being built to replace them. The removal of the right to buy in Scotland has meant that we are now building new houses for the first time in many years.
Mr Howarth
The hon. Gentleman is quite right, but my point is that, even if we are substituting those houses with new ones, we are still not building enough additional properties, net, to solve the problem.
The Chancellor sees himself as the champion of devolution and the northern powerhouse, and that is a fair claim for him to make. I am very much in favour of greater devolution and the development of city regions, and there are many problems in our city region that need to be addressed. Time forbids me to go into them all, but, for example, we need to get 42,000 more people into employment and an increase in income of about £1,700 per head if we are to close the gap between us and the UK average. The Chancellor said that in his view there is no one-size-fits-all solution to leadership for city regions, yet the evidence of Manchester suggests that there is a favoured option—an elected mayor.
The key to unlocking more resources and powers appears to involve agreeing to have an elected mayor. Regardless of my views on elected mayors, there is no consensus on this on Merseyside. I do not think it should be for the Government to insist on people having one thing before they can get another. There should be a referendum so that the people can have their say on the matter. I hope that progress on devolution to city regions will not be sacrificed purely on the basis that there is no consensus on an elected mayor for the Liverpool city region.
Annette Brooke (Mid Dorset and North Poole) (LD)
May I start by apologising for my absence during part of the debate? I am pleased to be here now to make a short contribution. I have been following Budgets for decades, because my former occupation was that of an economics teacher and I always liked to use real-world examples in my lessons. I remember the first time I sat in the House to listen to a Budget speech; it was absolutely awesome. It was such an honour and privilege to be right here listening to it after so many years of just following it on the television.
I was teaching economics on black Wednesday, 16 September 1992. In my role as a teacher, I found that day incredibly exciting, because it provided illustrations for many of the chapters of the economics textbooks. Members might remember that that was the day on which we fell out of the exchange rate mechanism in a big way and interest rates went up rapidly before our eyes, with the threat of their going up to 15% at one point. I can remember the mortgage interest rate that I had to pay in those days; it was at a staggeringly high level. My colleagues recall my being on top of the world on that day. I was terribly excited while they were all desperately worried about how they were going to manage their budgets and pay their mortgages.
This is relevant to the reason that the coalition was formed. I genuinely believed that we were on the edge of a precipice at that time, and that we faced a major decline in the financial markets. I felt that achieving financial stability was the most important thing to do. It is well known that I have had difficulties with many aspects of coalition policy, but I remain convinced that we did the right thing in this regard, and there are many aspects of this Budget that I am proud to stand up and defend. I shall touch on just a few of them.
People would probably expect a Liberal Democrat to start by commenting on the increase in the income tax allowances. That policy was on the front page of our manifesto, and I am pleased that we in the coalition have now gone beyond that amount and are proposing that the threshold should be raised even higher. It is important to take 26 million workers to the point at which they pay less tax, and to take 3 million people out of tax altogether. That clearly benefits lower earners. My hon. Friend the Member for North Dorset (Mr Walter) and I will probably benefit a little bit from the Budget as well, because pensioners will now be brought into the increased allowances. That will be really appreciated by the many constituents who have written to me to say how unfair it was that their income tax allowance was fixed.
I should also like to comment on the savings income allowance. This represents a really important and interesting principle. It might not initially make a lot of difference financially to people, but it is not a good principle to tax someone a second time when they have saved all their life and paid tax before putting their money into savings. That is a great disincentive to saving, and the change in the rules will be an important concept in the future.
I would also particularly like to comment on the increased expenditure proposed for children’s mental health services. I have drawn the House’s attention to the fact that in Dorset we have no intensive psychiatric care units whatsoever for young women and that they have to travel afar. We have enormously long waiting lists for children’s mental health services and I have argued many times in this House that when, for example, a child is suffering from abuse, it is vital that they can access treatment quickly. I have made many proposals in education and children’s Bills that there should be an absolute duty to provide mental health support in such circumstances. I have never managed to achieve that legislatively, although we now have a clear policy framework in which the Department of Health and the Department for Education work together. Delivering the service needs money, however, and that is very important for our young people.
I welcome the new proposals to tackle tax avoidance and would like to refer to the statement made by my right hon. Friend the Chief Secretary this morning. I thought that some important points were made while this House was less than attentive. Let me give two of them. First, for offshore evaders, following consultation we will introduce a new strict liability criminal offence so that people can no longer plead ignorance in an attempt to avoid criminal prosecution. Secondly, we will introduce a new offence of corporate failure to prevent tax evasion or the facilitation of tax evasion. They are very important and I personally find the idea of a tax dodging Bill very attractive for any future Government. It is important to appreciate that by raising billions in such a way we can help fight poverty in the UK and in developing countries.
In my maiden speech, I focused in particular on the underfunding of the two education authorities that I represent, Poole and Dorset, which are both in the 40 lowest-funded education authorities. I argued long and hard against the previous Government’s not tackling that and I was really pleased that this year we had some extra money to acknowledge that gross underfunding. The future Government must introduce a fair funding formula. It is all ready to run and I hope that the next Government will do that so that children in my constituency and across Dorset will get a fair deal.
My constituency is diverse. I have farmers who will benefit from yesterday's proposed change to tax. Businesses have been well supported by various measures that have been introduced. It is a constituency that, proportionately, has very little public sector employment and it is very strong in employment and business terms because it is a mixed economy. It has a sustainable future, but even so I welcome the contribution that the Dorset local enterprise partnership has made, with successful bids supporting new industries, such as the creative digital industries.
I believe that working within the coalition we have achieved a strong economy, but for me the future must be about tackling the fairness side of things. I therefore welcome the fact that the Liberal Democrats have a different approach for the future. Finally, I want to thank all the staff of the House who have been so supportive in the time that I have been here.
Grahame M. Morris (Easington) (Lab)
It is an absolute pleasure to follow the right hon. Member for Mid Dorset and North Poole (Annette Brooke), who has represented her constituency with great distinction. She will be sadly missed.
I want to make a number of points and challenge some of the things that have been said by various Members on the Government Benches and by the Business Secretary.
I was underwhelmed by the Budget because it makes no real or practical difference to the lives and living standards of the people I represent in the north-east and east Durham. Various figures were bandied around, but when I checked, the one I was drawn to was that over the past decade—pre-recession to current times—the richest 20% have become 64% richer than they were before the recession whereas the poorest 20% have become 57% poorer. I find it very difficult to accept Government Members’ narrative that the rich are shouldering a greater share of the burden of austerity and balancing the books, as the poor seem to be the ones who are suffering. That is certainly the case in my constituency, and the figures seem to back that up.
The Chancellor seems to have demanded more of the same, with deeper and more extreme cuts in public spending. That will certainly damage every service we value—education, policing and the NHS. No figures have been given, but I have seen suggestions that the cuts likely to fall on the police budget are of the order of 30,000 police and 6,700 community support officers. That is a colossal reduction in the number of officers, and suggesting that it will not diminish services, response times and public safety is incredible. The Chancellor’s own OBR warned that his Budget would mean
“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years”.
That is a huge warning to the electorate and the general public.
My right hon. Friend the Member for Knowsley (Mr Howarth) treated us to a further rendition of Shakespeare and “A Midsummer Night’s Dream”, making reference to the coalition and the partnership between the Conservatives and the Lib Dems. I was thinking more of “Midsomer Murders”, because we know what a promise means from this Government. Much though I respect Government Members individually, let us not forget the promises that were made on tuition fees, on protecting the poorest—we then saw the introduction of the bedroom tax—on making work pay and on balancing the budget within a single Parliament. I have not got amnesia and I do not think the Chancellor will be able to erase the memory of the past five years. His claim was that he would make work pay, and the Prime Minister told the House and the nation that
“the best route out of poverty is work.”—[Official Report, 11 June 2014; Vol. 582, c. 543.]
I suggest that those words are meaningless to the two thirds of children in poverty who live in working households.
There are more than 5 million low-paid workers in the UK earning less than the living wage, which is an increase from 3.4 million in 2009. I thought it was ironic when I put the news on early this morning and saw the Chancellor in a luminous jacket visiting the port of Tilbury and extolling the virtues of the Budget, because no mention has ever been made of the insecurity of employment and the fact that 1.8 million workers are on zero-hours contracts, 1,400 of them at the port of Tilbury. Surely the right thing to do, particularly in that location, is to offer those people, who are working, in effect, full time, proper contracts on decent rates of pay. That would be an indication that the Chancellor is serious about making work pay.
I wish to say a few words about the northern powerhouse because not only have the Government hit people directly through spending cuts and tax rises, but they are failing to deliver the investment needed to grow our economy in the north-east. After the Business Secretary’s remarks, I was drawn to the table on page 45 of the Red Book. The section on the northern powerhouse lists 12 projects that are highlighted. The northern powerhouse does not seem to extend any further north than Leeds or Manchester, so of the 12 projects only two and a bit of them are linked to the north-east. One of them that is being trumpeted concerns the publishing of an interim report on transport. Another one—point 7—has £1 million going to the Centre for Process Innovation on the north-east chemical sector. Point 9 talks about welcoming talks—I know that this is very important for stimulating jobs and investment—to reinstate the ferry from Norway to Newcastle. That seems rather thin to me for a commitment.
In fact, the whole thing is a huge disappointment. This much vaunted northern powerhouse is just empty rhetoric for my people. Where is the definite action that we were promised? What the Government have done over the past five years is abolish our successful regional development agency and take away our voice by removing the post of Minister for the north-east.
For every £1 spent in the north-east, the Chancellor spends £24.33 in London. How can we create a northern powerhouse when the Chancellor inflicts disproportionate cuts on northern councils? Durham county council, my local authority, has had cuts of £250 million. In response, the council produced an ambitious programme to deliver jobs and growth, but it was rejected by the Government and the Planning Inspectorate.
In what scenario does the Chancellor believe that the decisions announced in the Budget will rebalance the economy and promote growth in the north-east? What does the northern powerhouse mean when there is a lack major infrastructure projects of national importance in our region? High Speed 2, for example, does not include our region, as it stops at Leeds. To benefit my constituents, Network Rail has suggested a cut in journey times from Durham to London of 11 minutes by 2033, at the potential cost of direct services to London and slower journey times to major cities in Scotland.
I cannot think of a policy that costs so much, with estimates ranging from £50 billion to £80 billion, but that delivers so little to my communities. I would like priority to be given to improving our connectivity to major lines, and to increasing rail services as we continue to work towards a new rail stop at Horden, on the Seaview estate. I want the Government to show some commitment, and a sense of urgency, to my constituency and get behind these plans, which are a tiny fraction of the cost of some of the major commitments that have been made.
The Budget delivered nothing for east Durham except more of the same policies of austerity and more damaging cuts for our communities. The simple question that everyone should ask is: can they afford another five years of policies crafted in Witney and Tatton?
Chris Heaton-Harris (Daventry) (Con)
It is a privilege to speak in this debate not just because it follows a sensible and wise Budget but because I have been able to benefit from the wisdom of a number of retiring Members. I am talking about my hon. Friend the Member for North Dorset (Mr Walter), my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), my hon. Friends the Members for Dudley South (Chris Kelly), for North Warwickshire (Dan Byles) and, not least, for Northampton South (Mr Binley). It is a true privilege to follow some great speeches with some very wise words. Indeed, the hon. Member for Easington (Grahame M. Morris) also delivered a great speech. I would love to disagree with him on every single point that he raised, and probably will do in my speech, but he is such a nice man that it is very difficult to do that.
It is also good to see Front Benchers wearing their team colours. The Economic Secretary to the Treasury, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and my next door neighbour, is adorned with a jacket that is the Northampton Saints strip. I know that the shadow Minister, the hon. Member for Hartlepool (Mr Wright), would be wearing his Hartlepool kit if he had the opportunity. I have heard him speak before, so I know it would not be as the mascot.
I listened to the speeches from the shadow Chancellor and others, and I really wanted to follow a Labour Member I did not like, because there is a brilliant Shakespearian insult that I wanted to use:
“O, he is as tedious
As a tired horse, a railing wife;
Worse than a smoky house: I had rather live
With cheese and garlic in a windmill”.
But unfortunately I followed the hon. Member for Easington, so I could not use any of that.
It is a pleasure to stand here today, only a week before Dissolution, and reflect upon the Chancellor’s remarkable economic achievement in picking Britain’s economy up off its knees after it was left in tatters by the Labour party. I would like to focus today on the businesses up and down the county without which this economic recovery would not have been possible. They are the meat on the bone of our long-term economic plan. It is they who have helped to get record numbers of people into employment, they who have helped grow our economy by 2.6% in the past year alone, and they who have taken the risks to help Britain succeed, now and in the future.
The economic news is good not only at a national level, but in my constituency of Daventry. Unemployment there is now running at the extraordinarily low rate of around 1%, with only 600 constituents on jobseeker’s allowance, which is down 42% since a year ago. Youth unemployment is down 40% since 2010, and long-term unemployment has been halved. Those figures are quite miraculous. They are a testament both to those who work in the jobcentre and help find work for my unemployed constituents and to the businesses in my constituency that created the jobs in the first place.
In fact, the midlands are having quite an economic renaissance. We are seeing a job created there every 10 minutes, with employment rising faster there over the past than even in London. Those are amazing statistics, especially when we consider that 80% of the jobs being created are full time and in high-skilled occupations. Over the past two years, Daventry has seen 1,700 people begin apprenticeships. I am proud of the legacy that we will be able to look back on in that area. The Prime Minister has outlined his ambition to see 3 million apprenticeships in the next Parliament, and I know that in only a few weeks’ time that ambition will start to become a reality when the British people rightly vote Conservative across the country and deliver a Conservative Government.
Another proud achievement of this Government has been the creation of and support for university technical colleges, one of which is in my constituency. There are now 40 UTCs thanks to this Government, and there are more to come. Daventry university technical college, under the wise stewardship of Dave Edmondson, is performing great things. With the Daventry international rail freight terminal in my constituency, the UTC focuses on sustainable and related new technologies in engineering, construction and environmental sustainability. That reflects the growing demand for well-qualified technical specialists in my constituency. It is now building the skills sets of students going through the UTC so that they can walk into jobs that are right on their doorstep.
There are many good points that got only a brief mention in the Budget statement. I echo yesterday’s statement from the Federation of Small Businesses, which said that giving stand-alone guidance for research and development tax credits for small businesses will
“drive further investment by innovative companies”.
In fact, I recently met a representative of an accounting firm who works with small businesses in order to discuss tax credits. Jane Ollis, managing director of RIFT, pointed out that in 2013 only 13,000 of the millions of small businesses in the UK claimed back the cash they were entitled to from the Government under research and development tax credits, so there is a lot of work to be done in that area. If a business has spent time and resources carrying out new product development, or if it is working on some innovative solutions, it should be able to reduce its tax bill or secure a cash injection of up to 25% of what it has spent. RIFT has identified that the average R and D tax refund claimed back from HMRC is £55,000, which is an invaluable injection of cash for any small business.
We have also taken 360,000 small businesses out of business rates over this Parliament by extending small business rate relief. We have thrown our weight behind businesses by cutting corporation tax, which in two weeks’ time will fall to 20%, the joint lowest rate in the G20 and a far cry from the legacy of the previous Labour Government—it stood at 28% in 2010. Now, we will go further. Realising that business rates have not kept pace with the needs of the modern economy, the Chancellor has announced a review of the structure of this system. That is welcomed by everybody in business.
We have argued in this place about whether people are feeling the benefits of the economic recovery. The IFS said today:
“Average household incomes have just about regained their pre-recession levels. They are finally rising and probably will be higher in 2015 than they were in 2010, and possibly higher than their 2009 peak.”
Families are, on average, about £900 a year better off under this Government.
On my next point, I should declare an interest. I do not receive any payment but I am the chairman of two regional theatres and a cinema. Arts, heritage and sport have received a great deal of money from this Government —£300 million extra in the past four years, compared with the preceding four years, because the Government changed the funding formula with the lottery. This is opposed by the Labour party, which has still not decided whether it would go back to the funding system that it previously operated, meaning a huge cut for the arts. I hope the hon. Member for Hartlepool will pick up this point and say how arts would be funded in the future.
We must never forget Labour’s great recession, its mismanagement of the economy and its economic illiteracy. The Leader of the Opposition and the shadow Chancellor fail to disguise their disdain for business, trotting out the same tired lines and failed policies, such as rent controls, threatening businessmen who criticise their policies, proposing punitive taxes on wealth creators and refusing to commit to deregulation. I have numerous photographs of many Opposition Members, including the one who is, I believe, next to speak, standing next to a huge ice cube, trumpeting their proposed energy price freeze, only to abandon it as energy prices are decreased by market forces. This literal political meltdown shows their utter incompetence. They have no economic plan, let alone a long-term one like the Conservative party and this Government.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I will deal with the closing remarks of the hon. Member for Daventry (Chris Heaton-Harris) later in my speech.
The rhetoric from both parties in the Government has been breathtaking. It certainly has not matched the reality for my constituents in Oldham East and Saddleworth and for constituents across the country. For them, all is not rosy. As we have already heard, most working people on average earnings are £1,600 a year worse off than they were in 2010. According to the Institute for Fiscal Studies, families are on average £1,100 worse off if we take into account tax and benefit changes. That is important to consider. We know that our NHS is at breaking point, with A and E targets and cancer targets all being missed on this Government’s watch. Trying to get access to a GP is a challenge, and frail older people have to fend for themselves after being isolated and left alone because of the £2.7 billion cuts to social care.
The sick and disabled are vilified for needing support from the state, and are made to go through dehumanising assessments and told to take up their bed and walk, as this Government will have cut £24 billion in support for them by 2018. Food banks provide subsistence to people left poverty-stricken through benefits sanctions and from just being in a low-paid job. Young people feel as though they have been thrown on the scrapheap even before their working lives have started. This is just as I remember it in the 1980s, when my first job was with community groups and I worked specifically with unemployed young people. Small businesses struggling with late payments from contractors and cash-flow issues are being driven to the brink, with the Government doing little to help them. This is Britain in the 21st century, the sixth wealthiest country in the world, under this Tory and Liberal Democrat Government.
After what has been said by Government Members crowing about their economic performance, let me take them back to an economy that was growing at the end of 2010. It then flatlined for three years, and, yes, we have seen a little bit of growth, and every bit is welcome, but we know from the International Monetary Fund that it is all going downhill from now, despite what the Government have said. We have had the worst recovery in 100 years, and they have squandered the growth that was given to them at the end of 2010. We have the second lowest level of productivity in the G7 and we are 19th lowest in terms of average productivity—the worst figure since 1992. The total annual value of UK exports decreased by 3.9% in the year ending 2014. As we have heard, the Government are borrowing £219 billion more than they estimated in 2010. How about that for economic incompetence? Just this year, they will be borrowing £91 billion as opposed to the £37 billion they said they would be borrowing.
On unemployment, the jobseeker’s allowance figures look positive, but evidence from eminent academics has shown the effects of benefit sanctions on JSA claimants. One in five JSA claimants will be sanctioned, and 43% of them will leave JSA, 80% without getting a job. What is being reported in official statistics is not reflected in what is really going on. We have had the biggest rise in self-employment in 40 years—an increase of 15%. For many, that is a positive thing and a good way of working, but the average income of self-employed people is £10,000. We have already heard about zero-hours contracts and the levels of under-employment. The picture is not all rosy.
On the inequalities that this Tory and Liberal Democrat Government have presided over, according to the IFS, families on low incomes, particularly families with children, have lost proportionately more of their income than any other group as a result of tax and benefit changes. There is clear evidence that parental income affects a child’s cognitive and social development as well as their health. This Government are condemning another generation before they have even got started. House of Commons Library figures show that after housing costs have been taken into account, 4.1 million children are living in absolute poverty—half a million more than in 2010, a figure that will increase to about 1.1 million by 2020, according to the Institute for Fiscal Studies.
The net effect of the Government’s fiscal policies has been to favour the rich at the expense of the poor. It does not stop at family incomes. Shockingly, as many hon. Members have said, the evidence shows that the link between public spending and life expectancy is not being recognised, and the Government have decided to cut resources allocated to the public sector in the most deprived areas. One can only draw the conclusion that the Chancellor is on some kind of evangelical mission. The Secretary of State for Work and Pensions wants to restrict child benefit to the first two children in a family to instigate what he calls behaviour change, which is code for wanting poor families to have just two children, and perhaps the Chancellor is of a similar mind.
We are already seeing the effects of these cuts in the dire circumstances that people are finding themselves in. We have seen a surge in the number of food banks, with nearly 1 million food parcels delivered last year. In my home town of Oldham, we never had a food bank until 2012. Last year, it delivered meals to 5,000 people, including 1,500 children. We have a level of malnutrition that we have not seen since the ’30s, as well as increases in rickets and scurvy—and this is 2015. After decades of decline, suicide rates are going up, with more than 4,500 male suicides in the UK in 2012—three and half times the figure for women. Again, this is exactly what happened in the 1980s.
At the same time, we have more billionaires per capita than anywhere else in the world. The wealth of five families is equivalent to that of the poorest 20%—in other words, 13 million people—and boardroom pay has rocketed. According to the High Pay Commission, FTSE 100 chief executive officers earn 185 times the salary of their average employee, and that does not reflect performance. As I have said, incomes have fallen by £1,600. In my own town, one in three people are paid below the living wage.
The Government have done nothing about those damaging inequalities. I am sure that some Government Members still believe the discredited theory that inequalities are good for motivation, but that and the theory of trickle-down economics have been disproved. Overwhelming evidence now shows how bad inequality is for the economy and for society as a whole. The IMF has come out in support of Joseph Stiglitz’s analysis that inequality is a drag on growth and can also make growth more volatile. The OECD has also rejected trickle-down economics and said that the resulting inequality has slowed growth, not increased it, through negative effects on human capital. The Equality Trust estimates that the UK loses £39 billion a year as a result of inequalities, and the work of Richard Wilkinson and Kate Pickett has described how reducing the gap between rich and poor can increase not only life expectancy, but social mobility, educational attainment and happiness, while reducing crime.
Mr Iain Wright (Hartlepool) (Lab)
I think you will agree, Madam Deputy Speaker, that this has been an excellent and often revealing debate on the impact of the Budget. I thank hon. Members for making excellent contributions.
The Chair of the Business, Innovation and Skills Committee rightly criticised the Chancellor’s use of the words “walking tall”, which ring hollow when people are walking to a food bank. My hon. Friend the Member for Halton (Derek Twigg) reminded us of memory, particularly with regard to the Lib Dems helping to stop the education maintenance allowance and how the Government have also failed to meet their policy objectives on deficit reduction and debt, which I will return to later.
My hon. Friend the Member for Luton North (Kelvin Hopkins) rightly mentioned how the NHS, local government and housing are in crisis, threatened still further by the proposed sharp acceleration of cuts to public spending.
I was particularly pleased to hear the contribution of my hon. Friend the Member for Clwyd South (Susan Elan Jones), who rightly talked about the importance of entrepreneurs and the self-employed in the British economy. She praised Alice Murray, founder of Giggles and Games. I thought that the Liberal Democrats’ yellow toytown box was by Fisher Price, but I wonder whether Giggles and Games might have produced it for that toytown and busted flush of a political party.
My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) mentioned the £30 billion post-election bombshell if these plans go through. She also talked about the pressure on working families in her constituency with regard to child care, so I think she welcomes Labour’s plan to provide 25 hours of free child care for working parents of three and four-year-olds.
My parliamentary neighbours, my hon. Friends the Members for Stockton North (Alex Cunningham) and for Easington (Grahame M. Morris), made excellent contributions. They rightly said that there is nothing in this Budget for people in Teesside, east Durham or, indeed, the whole of the north-east. My hon. Friend the Member for Stockton North mentioned the disproportionate cuts in our area—they are far worse than those in any other area—to police, fire and local government. My hon. Friend the Member for Easington said that he was underwhelmed by the Budget and talked about the pressure on his constituents. They will know that the Chancellor mentioned Agincourt more times than the north-east, but they will not be surprised, because the Government’s record shows that he has neglected the north-east for the whole of the past five years.
My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) argued for his own city to be given similar freedoms on business rates to those given to Greater Manchester. I particularly liked his subtle references to Beatles songs: he quoted lyrics from two songs on “Abbey Road” when he said that the Chancellor was more like the “Sun King” than “Here Comes the Sun”. My right hon. Friend the Member for Knowsley (Mr Howarth) mentioned the importance of manufacturing to a modern, innovative and resilient economy, and I fully agree with him.
In an at times warm speech, the hon. Member for Daventry (Chris Heaton-Harris) was kind enough to mention Hartlepool United. I think he was being kind, but we are bottom of the Football League at the moment.
Mr Wright
As the shadow Chancellor says, the only way is up. We have just won two games on the trot, which is unusual for us. We are only four points away from the next team up, so we have everything to play for.
My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) told us that this Government’s tax and benefit changes mean that families are on average £1,127 a year worse off. She has been a fantastic champion of the NHS, and she mentioned how A and E and the rest of the NHS is at breaking point. She said that Oldham never had a food bank until 2012, which is very similar to my experience in Hartlepool and to the experience elsewhere around the country. I particularly pay tribute to her for being a champion in tackling late payments to contractors, which can be a blight on small businesses trying to pay their way in the economy.
Several hon. Members who spoke are leaving the House voluntarily; I imagine that several others will leave involuntarily. I pay tribute to the hon. Members for Dudley South (Chris Kelly) and for North Warwickshire (Dan Byles). I am genuinely sorry that they have decided not to stand again, but I look forward to welcoming the excellent Natasha Millward to the House, and to Mike O’Brien coming back. I also pay tribute to the right hon. Member for Mid Dorset and North Poole (Annette Brooke), who has been a fantastic champion for park homes, on which we have worked closely together.
I want to single out the hon. Member for Northampton South (Mr Binley), who has just walked into the Chamber. I consider him a real friend to me and to business in this country, as he is very knowledgeable. Before he leaves this place, I hope that we can have a pint and celebrate the great work that he has done, and the great work he will continue to do.
Mr Wright
It’s a date—and perhaps I can bring along the hon. Gentleman’s successor in his seat, Kevin McKeever.
The hon. Member for North Dorset (Mr Walter) made a weak joke, frankly, about how the Leader of the Opposition’s kitchen must be a butler’s pantry. That was particularly welcome from the hon. Gentleman, who I know has serious and relevant credentials for talking about the experiences of ordinary working families in this country. As an alumnus of Warminster boarding school, a former international banker and a freeman of the City of London, his comments were very relevant.
The Chancellor should have focused on the country’s long-term prosperity and competitiveness, using the Budget to do more to strengthen productivity, investment and trade, yet that did not happen. Today’s Financial Times stated:
“This was a Budget that offered little to business”.
It was revealing that the Chancellor did not once utter the word “productivity” in his statement, but tackling the productivity gap is the single biggest means by which Britain can improve competitiveness, raise living standards for all and ensure that the deficit is brought down. UK output per hour has fallen to 17% below the rest of the G7, the largest gap since 1991. It takes British workers until the end of Friday to produce what a German or American worker has produced by Thursday. The OBR reports that actual growth in productivity per hour has again been weaker than expected, with a fall in the final quarter of 2014. It states that productivity growth
“remains the most important and uncertain judgement in our forecast”.
Failing to act on productivity during the next Parliament will make the difference between the austerity well into the future that the Conservatives will provide and the better plan for business and rising living standards that Labour is preparing. We need to restore the link between economic growth and higher living standards for all. To do that, our economy needs more high-skill, high-pay jobs in the high-productivity sectors in which Britain has an advantage. That will require a proper, co-ordinated and focused industrial strategy, but Ernst and Young said yesterday that the Chancellor’s “scatter-gun approach” to UK industry will not help to deliver a proper industrial strategy, or to achieve the 300,000 additional jobs that a sector-focused strategy could produce.
Higher productivity would be boosted by higher investment, but spending on infrastructure has fallen by a third under this Government. The Red Book shows that there will be a planned reduction in capital spending over the five years to 2019-20. The OBR has said that business investment fell by 1.4% in the last quarter of 2014, following a fall of 1.2% in the third quarter. The failure of the Chancellor to announce future plans for the annual investment allowance disappointed business, has increased uncertainty and delay, and almost certainly postponed investment in new equipment and jobs.
Why did the Government not set up an independent national infrastructure commission to stop long-term decisions about the performance of our economy being kicked into the long grass? Why did the Chancellor not announce a boost to the investment in low-carbon technologies? Why did he not ensure that Britain is a world leader in green technology? The Business Secretary mentioned in passing, almost in embarrassment, changes to the green investment bank. Will the Economic Secretary put a little more meat on the bones of that proposal? The Chancellor put in place measures that will increase the demand for homes, but there was nothing to help the construction industry and the supply of new homes—things that are vital for the future of this country. Why did he not introduce a long-term innovation strategy for science and research, with a stable and secure funding framework, to improve the UK’s record on R and D?
Throughout his time in office, the Chancellor has made much of an export-led recovery. He said yesterday:
“Out of the red and into the black—Britain is back paying its way in the world today.”—[Official Report, 18 March 2015; Vol. 594, c. 770.]
He sounded less like Shakespeare and more like an episode of “Bullseye”. What he said was simply untrue. He will not achieve his objective of doubling exports by 2020. He is certainly not going to win Bully’s special prize of the keys to No. 10. I can hear the voice of Jim Bowen talking to the Chancellor: “Look at what you could’ve won.”
The OBR said yesterday:
“The current account deficit remains wide by historical standards.”
In the third quarter of 2014, the deficit was at 6% of GDP, which it said was
“the second largest quarterly deficit in National Accounts data stretching back to 1955.”
The contribution to GDP growth that is made by Britain selling things around the world is falling. Page 108 of the Red Book shows that in every one of the six years from 2014 to 2019, the percentage growth in imports of goods and services will exceed that in exports of goods and services. Our trade position is forecast to worsen in every single year. The Chancellor has failed to produce an export-led recovery.
In a very complacent and out-of-touch speech that was soaked in hubris and arrogance, the Chancellor said that people have never had it so good. After five years, he has failed. He has failed on debt, he has failed on deficit reduction and he has failed working families, who are on average £1,600 a year worse off. The Budget has shown what a further five years of Conservative rule would inflict on this country: a sharp acceleration in the cuts to public spending; a rollercoaster approach to managing the public finances; threats to our NHS and other valued aspects of British life; uncertainty for business that will lead to reduced investment; and, ultimately, poorer living standards for all. The British people will deliver their verdict on this Government in 48 days’ time. They deserve a better plan for Britain’s future, and that can be achieved only with a Labour Government.
The Economic Secretary to the Treasury (Andrea Leadsom)
I thank hon. Members on both sides of the Chamber for their contributions this afternoon. For some, it will have been their last contribution in the Chamber. I congratulate them on choosing such an important final debate.
The truth is that everybody wants economic growth and greater employment. No Government in the world say that they want less growth and fewer jobs. However, there is a big difference between talking about something and achieving it. This Government are proud of our achievements: the fastest growth of any major advanced economy in the world, employment at a record high, unemployment at a record low, rising living standards, a falling deficit and the return of national optimism. And we have done all that within five years of the worst ever peacetime recession, which was caused not only by the financial crisis, but by the spending of the Labour party from 2001 onwards.
There have been some very good contributions this afternoon. The hon. Member for West Bromwich West (Mr Bailey) raised the sale of the student loan book. I can tell him that the first tranche is expected to be sold by the end of 2015-16 and that over a five-year period the sales are expected to generate between £10 billion and £15 billion in revenues.
The hon. Member for Halton (Derek Twigg) spoke about living standards. Perhaps I can lay his concerns to rest by telling him what Paul Johnson of the Institute for Fiscal Studies said was
“the difference between Mr Osborne’s £900 better off and Mr Miliband’s £1,600 worse off”.
He said:
“In part the difference arises because Mr Miliband is talking about gross earnings, not net incomes. The latter allows the fuller description of what has happened to household living standards.”
It is important for all Members to understand the reality of how our economy is performing.
Andrea Leadsom
The right hon. Gentleman will realise that I have just quoted Paul Johnson of the IFS. I stand by what the IFS has said, which is that, from 2010 to 2015, the average household is £900 better off.
My right hon. Friend the Member for Boston and Skegness (Mark Simmonds) welcomed the fall in unemployment, the many who have been taken out of tax, and the fuel duty freeze, which has been great for his constituents. My hon. Friend the Member for Dudley South (Chris Kelly) spoke about the fact that Dudley is full of hard-working people, and said how our support for businesses has helped them. He will certainly be missed in this place.
The hon. Member for Luton North (Kelvin Hopkins) criticised many of the coalition’s cuts but did not say how he would sort out the huge financial mess left by the Labour party in 2010. My hon. Friend the Member for North Warwickshire (Dan Byles) gave impressive figures for improvements in his constituency, not just to the local economy but also to local public services. As he pointed out, a strong economy means that we can pay for excellent public services. I wish him every success in his career when he leaves this place.
The hon. Member for Clwyd South (Susan Elan Jones) welcomed the increase in personal allowances and the rise in gift aid for charity cash collections. I join her in congratulating Giggles and Games in her constituency on its prize for a thriving business. My hon. Friend the Member for South Norfolk (Mr Bacon) raised the important issue of housing. He welcomed the Budget creating 20 housing zones, and made important suggestions about the need to improve housing supply, including through self-build. The hon. Member for Hackney South and Shoreditch (Meg Hillier) talked about problems of poverty in her constituency, but acknowledged that the route out of poverty is work. She should welcome the fact that the total claimant count in her constituency is down by 39% since 2010. She also raised the issue of real-time data for credit reference agencies. The FCA is continuing to focus on achieving real-time data sharing, and significant progress is being made.
My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) pointed out the economic benefits to her constituency of regeneration and making work pay, as well as the business rate reliefs for her high street and support for the creative industries. She highlights the urgent need for faster broadband and more new housing, and I agree with her about that. The hon. Member for Stockton North (Alex Cunningham) challenged the quality of the jobs available, so I am sure he will be pleased to know that since Q1 2010, more than 70% of the increase in employment has come from full-time workers, two thirds of whom have been in high-skilled occupations, and that the claimant count in his constituency is down by 25% since May 2010.
Alex Cunningham
I welcome any jobs that are created in my constituency, but the statistics I referred to showed that hundreds of people have disappeared from the jobseeker’s allowance lists. Nobody knows where they have gone and whether they have died, left the country or something else. Is there any explanation for where those hundreds of people missing from the JSA lists have gone?
Andrea Leadsom
That is an extremely interesting question and the hon. Gentleman may well want to follow it up as the representative for his constituency. It is not something that I can answer at the Dispatch Box.
My hon. Friend the Member for Ealing Central and Acton (Angie Bray) welcomed the review of business rates and pointed out their importance, particularly for businesses in her constituency that are competing with online companies. She also pointed out the need for urgent action on superfast broadband for business, and welcomed the measures in the Budget.
The hon. Member for Birmingham, Selly Oak (Steve McCabe) welcomed the penny off a pint and the freeze in fuel duty, but said that the Chancellor ignored the NHS. In truth, the Government have chosen to protect the NHS through this tough period and have now committed to much greater support for mentally ill people. I would dearly love to hear the Opposition just once welcome this vital investment, which will do so much to help people struggling with poor mental health, rather than just ignoring it. My hon. Friend the Member for Northampton South (Mr Binley) told us about the choices that his grandmother gave us all—either earn more or spend less when in difficulty—and I am delighted to hear she would have been pleased with the Budget. I congratulate him on his long-standing support for small and medium-sized businesses and put on the record how much I have enjoyed being his constituency neighbour in the lovely country of Northamptonshire.
The hon. Member for Angus (Mr Weir) talked about the problem of the last bank in town, which I am very sympathetic to, but he might be reassured to know that I have held round tables, including with the Secretary of State for Business, Innovation and Skills, talking to banks about the need for smart ATMs that take in, as well as give out, cash and discussing improvements to post offices, including longer hours and upgrading security at counters for business banking, and we hope there will be a protocol for bank closures in the future. I am happy to talk to him separately about the matter. My hon. Friend the Member for North Dorset (Mr Walter), in his encore speech as a retiring Member, warmly supported the Budget and gave a considered assessment of the measures in it. It was an excellent swansong, and I wish him a successful and peaceful retirement.
Mr Bacon
Before my hon. Friend moves on entirely from the point about bank closures, will she accept that it is not just about protocol but about sharing resources, possibly between commercial banks and institutions such as the Post Office, so that instead of closures we have facilities that work for local people in very rural areas such as South Norfolk?
Andrea Leadsom
I agree absolutely with my hon. Friend and assure him that that is precisely the point that the Secretary of State and I have been taking up with the banks.
The right hon. Member for Knowsley (Mr Howarth) might recall that I had the privilege of standing as a candidate in 2005 for Knowsley South against Eddie O’Hara. I am delighted that he welcomed the Help to Buy ISA and urge him to promote it to his local first-time buyers. It will be flexible for those on low incomes and will give a Government contribution of up to £3,000 towards a deposit for a new home.
Mr George Howarth
The Minister has quoted me out of context. I was making the point that we keep trying to subsidise owner-occupation by one means or another, none of which contributes to building new houses.
Andrea Leadsom
I apologise if I misunderstood the right hon. Gentleman’s comment. Nevertheless, Help to Buy will provide support for young people in his constituency looking to get on the housing ladder.
My right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) gave an interesting insight into her experience as an economics teacher, particularly in respect of the terrible time of our exit from the ERM. I was working in a dealing room then, and like her I have always thought that financial stability is key to our security, our jobs and our future. As she knows, I agree totally with her about the vital importance of interventions to support the mental health of children, mums and babies in the perinatal period, and I thoroughly congratulate her on her work in that area.
On the hon. Member for Easington (Grahame M. Morris), the best I can say is that I agree with my hon. Friend the Member for Daventry (Chris Heaton-Harris). Although I disagree with what the hon. Gentleman said, he is too courteous for me to pick a fight with him about it. I agree with my hon. Friend the Member for Daventry on two other points—first, that Northampton Saints are an excellent rugby team, and secondly, that it is people and businesses across the UK that, through their hard work and aspiration, deserve the credit for our economic recovery.
Finally, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) talked about the biggest increase in self-employment in 40 years, and then somehow suggested it was a bad thing. I hope her aspiring new business owners were listening. In truth, under this Government, the richest 20% of households are contributing in cash terms over four times more than the poorest 20%.
Debbie Abrahams
For clarity, I said that although some people might want to adopt the lifestyle, it had to be recognised that the average salary of people who are self-employed is about £10,000.
Andrea Leadsom
I am glad that the hon. Lady has clarified what she meant.
I would like to tackle head-on the lazy idea held by many Labour Members that when a country grows, it is the Government who do the running. It is not the Government; it is businesses and hard-working individuals.
In this Budget, as in all previous fiscal statements, this Government have demonstrated our pro-business, pro-growth credentials. That means more tax credits for key sectors, whether they be energy-intensive heavy industries or creative industries maintaining Britain’s status as a cultural centre of the world. It means further action to stimulate investment in the North sea through investments and tax cuts, and a long-term strategy for superfast broadband, enabling the next step in the technological revolution.
Yesterday, my right hon. Friend the Chancellor announced that next April we will abolish national insurance altogether for employing a young apprentice. We will be holding a major review of business rates, reflecting the fact that the old system needs to be reviewed so that it works better to support aspiring business owners in our country. He announced the abolition of class 2 national insurance contributions for the self- employed, and the abolition of the annual tax return altogether. I can tell you, Madam Deputy Speaker, that I had phone calls to my office from two constituents, one of whom said that the Government’s Help to Buy ISA will persuade them to vote for me, while the other said that the abolition of the annual tax return will encourage them to do the same. On the basis of my own small opinion poll, this is already making a difference.
Meg Hillier
The Minister raises the important issue of national insurance contributions. Will she highlight for many of the self-employed people in my constituency what that will mean for their pensions?
Andrea Leadsom
We are consulting on that, and further information will come out in due course.
To help the food, drink and hospitality industry, we are freezing wine duty, cutting beer duty by a penny a pint, and cutting duty on cider, Scotch whisky and other spirits by 2%. To help any business that depends on a car, a truck or a van—or even a pink bus—we are cancelling the fuel duty increase scheduled for September. This is the longest duty freeze in over 20 years, saving someone filling up a Ford transit van £15 at the pumps every time they fill the tank. To help our businesses expand internationally, we are putting ourselves forward to be a founding member of the Asian Infrastructure Investment Bank, and we are doubling our support for British exporters to China. These are all vital steps to improve Britain’s ability to export and to support those businesses that are returning Britain’s economy to health.
This is a Budget that helps businesses from a Government who understand businesses. This is a Budget that will help secure Britain’s economic future for years to come. This is a Budget that will deliver prosperity for all, and I commend it to the House.
Ordered, That the debate be now adjourned.—(Mr Vara.)
Debate to be resumed tomorrow.
Shooters Hill Mobile Phone Mast (Stoke-on-Trent)
Robert Flello (Stoke-on-Trent South) (Lab)
Thank you, Madam Deputy Speaker. I would like to put on record my thanks to Mr Speaker for granting me this Adjournment debate.
In the time available to me, I hope to catalogue what is sadly a list of incompetence, misdirection, deliberate misrepresentation of the truth, inaction, lies and alleged corruption that have surrounded the phone mast construction in my constituency since 1993. If an author thought about writing this case up as a book, he or she would be forced to publish it as fiction, because simply no one would believe such a catalogue of appalling behaviour could take place and could continue to be allowed to take place.
Our tale of despair begins back in 1974, when a radio mast was approved to relay information about water levels and so forth at the Shooters Hill reservoir.
Robert Flello
The radio mast was a thin, whip-style antenna, and was effectively screened from sight. I am fortunate enough to have a photograph—not that I have pinned it up on my wall. As the Minister will see, it shows a tiny little mast.
Back in 1974, then, all was good, but in 1993 an application was made by Hutchison Microtel, on behalf of Orange, for a replacement of the existing radio mast at the reservoir site. It was, indeed, some replacement. What was built, supposedly to replace—I keep using the word “replace”—a thin radio antenna, was a 25 metre tower with microwave dishes and ground cabinets in a compound. I am fortunate, again, to have a photograph of what even a cursory examination shows is nothing like a thin, whip-like antenna. Was it owing to—dare I say—cock-up or conspiracy that the replacement mast was given permission by the council in 1993, with no reference to the planning laws that were in force at the time, no consultation with anyone, and no assessments or reports?
The icing on the cake, however, was the fact that the so-called replacement mast was not even in the same place. It was sited on recreational land behind the reservoir, rather than where the telemetry radio mast had been. The application form—I have a copy here—is simply wrong: it totally misrepresents what was being proposed. It is therefore not surprising that there was none of the compulsory publicity that was required by the Town and Country Planning Act 1990, and none of the publicity required by the Highways Act 1980. There was no reference to development on the green belt, as required by planning policy guidance note 2, and no reference to the fact that a 25 metre mast would be deemed visually intrusive under PPG8, the fact that it conflicted with the statutory local plan under BP10, or the fact that it contravened GP5 of the City of Stoke-on-Trent Local Plan 1990-2001. Indeed, many more policies and laws were completely ignored. That too is not entirely surprising, given that the application did not reflect the reality of what was being built.
During the intervening years, local residents have tried time and again to get the council and Orange to accept that the mast was not built in accordance with the planning permission that had been granted. They have tried time and again to highlight the fact that the mast was built on a public right of way across recreation ground, but they have been thwarted at every turn. Even in 2011, Orange was still putting misleading information on its applications in respect of the site. For instance, it responded “No” to the question
“Can the site be seen from a public road, public footpath, bridleway or other public land?”
It is incredible that, even at that early stage, Orange was issuing information that misrepresented the facts.
In January 2008, a request was made to the local authority to use its powers under section 102 of the Town and Country Planning Act to require the removal of the mast. A report—no, actually an utterly misleading and factually incorrect report—was presented to councillors by the then planning team, advising them that the section 102 request should be denied. Emphasis was placed on the potential costs to the authority, rather than on whether the advice was right or wrong. Officers suggested that the council could incur large costs if it lost the case—if it was found that the mast was not in the right place, and was not a simple replacement for a whip-thin radio antenna—and that, if it won, it would have to pay for the mast to be relocated, which was utterly bizarre. At no point did the officers take account of the fact that the permission that had been given back in 1993 bore no resemblance whatsoever to what was actually built.
Time ticked on. In June 2008, the residents and I went to see the then Secretary of State for Communities and Local Government to ask her to use the powers under Section 104 of the Town and Country Planning Act to issue a notice calling for the mast’s removal. I have brought the file of documents into the Chamber. It is a hefty file. Somebody asked if it was my speech; I was able to reassure them that it was not, but I could easily have made it my speech if I had had more than half an hour. This heavy file is the file of documents that were provided before the meeting with the Secretary of State, and they are pretty damning about what happened and set out clear grounds for ordering the mast to be removed.
Incredibly, however, it transpired that the civil servants had not properly considered the documents, but had instead advised the Secretary of State not to use the power under section 104. Their incredible logic was that the section 104 power had not previously been used and that she should not set a precedent by using it now. In the 10 years that I have had the good fortune of representing the people of Stoke-on-Trent South in this place, I have sometimes wondered why we pass laws if we are not going to use the powers that Parliament approved because we cannot be the first to use them. That is nonsense.
In August 2011, Orange submitted an application to undertake further development within the compound at the bottom of the mast, but this was disguised as a repositioning of existing cabinets, and a deal was done with council officers that the supposed repositioning would clear the way for the reinstatement of the public footpath that had been built over and therefore the council would be off the hook. Once again, city council planning officers misled councillors, telling them they could not consider anything about the site other than whether or not to approve the repositioning of the cabinets. Councillors on the committee were told that they could not raise the lawfulness or otherwise of a phone mast that was not in the same location and looked nothing like the radio mast it was supposed to replace. Unsurprisingly, the councillors accepted what the officers told them and approved the repositioning.
I do not know whether you have ever repositioned anything, Madam Deputy Speaker—perhaps the settee in the living room at home—but to my mind when someone replaces two cabinets with three, albeit in a different place, that is not repositioning. That is like moving the settee from one side of the room and repositioning it with two settees on the other side of the room. Again, that is absolute nonsense.
More time passed and the local residents put forward another application to the local authority for use of the section 102 order, based this time on the fact that the mast was on land now covered by village green legislation, but once again the council officers presented a flawed report, based on the flawed 2008 report. The officers refused to go back before the 2008 date and used as the basis of their new report the conclusion that everything in the 2008 report was factually correct. There was no independent review of the facts, and once more councillors were advised to reject the section 102 request.
So over the last couple of years, local residents and I have been arguing with and trying to persuade EE— Previously Everything Everywhere, previously Orange—to do the right thing and remove the mast, which should not be where it is and should not look like it does. To our delight we began to make some ground and finally—amazingly, after a lot of work and effort—EE agreed to decommission the mast and remove it, but then there were months and months of delay and we began to fear we were being misled yet again. Each time we spoke to the representative from EE we were reassured that decommissioning was on track, but then we would not hear anything again. Then the representative would come to see us, or go straight to see the residents—sometimes dropping in to see me first or afterwards—or see us jointly. Time and again we were assured that everything was on track, and that there had been some delays but everything was moving forward. Then there were months on end when we could not get hold of anybody—nobody from EE would respond—but then the representative would again appear.
Latterly, when we did speak to them we were told there were technical problems with handing off the service to other masts in the city, and that there were problems with EE, quite understandably, wanting to make sure their customers were not going to lose signal and would still be able to use their mobile phones. Despite all the years of, frankly, lies and deceit we were still prepared to be reasonable and said, “Okay, absolutely, we don’t want people to suffer loss of connectivity. We want to be reasonable. We’ve been treated very badly, and the residents have been treated appallingly for decades, but if there is a time-frame and work going on to overcome these difficulties and technical issues, we will be patient.” So we waited.
Then, on 23 July last year, the mast was switched off. “Wonderful news”, we thought. “Fantastic! Now, all we need is for this eyesore, this thin, whip-style mast that is in the wrong place, to be removed, and 30 years of wrong will at last be put right.” So we asked when the mast was going to come down, and we heard nothing. So we pushed again and again, repeatedly saying, “You promised to switch the mast off and you’ve done it— fantastic! That is great news. When are you going to take it down?” Again, there was delay and a wall of silence. The representative announced that he was leaving the company—we were concerned about that for a while—but that everything was fine and on track.
So, when would EE fulfil its final promise and remove the mast? To our horror and disgust, we have been told that the mast will not be removed. Apparently, there was never any plan to remove it. What we were told time and again over all those months about supposed technical problems and difficulties, along with the reassurances, was simply a way of spinning out time. There were never any plans to remove the mast.
Has EE no shame? Why has there been lie after lie, compounded by misinformation and misrepresentation and appalling behaviour? Sadly, previous council officers in the planning team—I stress, previous council officers—were happy to go along with anything and did not want to rock the boat. Time and again, this community has been let down. EE kept its word by switching the mast off. Why will it not now keep its word by actually removing the mast?
I appreciate that this is a difficult issue for the Minister to pick up now, but I hope that he has some words of comfort for the community at Shooters Hill, off the Sandon road, in my constituency. I hope he will get in touch with EE, ask its representatives to meet him if there is still time—I know we are only a week away from Dissolution—and tell them that this community has suffered for many years. It has been misled, abused and lied to time and again—keep your word, EE, and remove the mast.
I have left the Minister plenty of time to reply and I am sure he will not need anywhere near all of it, but I hope he will take on this issue and approach EE on behalf of the residents of Shooters Hill to see whether we can finally get the mast removed. Who knows—we might even invite him to the party we have been planning for years.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
It is a great honour to speak in this debate under your chairmanship, Madam Deputy Speaker, and to reply to the excellent speech from the hon. Member for Stoke-on-Trent South (Robert Flello). In my speaking notes, he is described as “my noble Friend”, so my Department clearly takes a different view, and I bow to their respectful description of him.
It is interesting to hear the issues the hon. Gentleman has raised, and I have no doubt, given the cogent way he put his argument, that the mast is a source of enormous aggravation and annoyance to his constituents in and around Shooter’s Hill. It was painful to hear about the 30 years of hurt, although I am pleased to learn that they have never stopped dreaming of a solution, so let us see if we can make some progress.
The roll-out of mobile phone infrastructure is a vexed question. Those of us who use mobile phones—that pretty much encompasses most of the population of this country—get very frustrated when we cannot get a mobile phone signal, but it depends, of course, on a mobile phone mast and mobile phone cells.
Robert Flello
I am grateful to the Minister for giving way and I appreciate that, having given him a lot of time to reply, I am now taking some of it back. I absolutely agree with what he has just said, which is why the residents were prepared to be extremely reasonable, despite the 30 years of hurt, as he describes it, and wait until such time as EE was able to make sure that people did not lose signal.
Mr Vaizey
I would not want my general remarks about mobile phone companies to be in any way construed as criticism of the hon. Gentleman’s constituents. That certainly was not my intention. I was simply setting the scene.
We have recently reached a groundbreaking deal with the mobile operators that will increase mobile phone coverage to 90% of the geographical area of the country, in contrast to the current measure, which uses the coverage of premises in the UK. At the moment, the target is 98% of premises, but geographical coverage is much wider. In some instances, the benefits that the siting of a mobile phone mast can bring in terms of coverage can be outweighed by the loss of visual amenity caused by the mast. Despite years of deployment, their design has not moved on to one that could be described as aesthetically pleasing. Shooter’s Hill appears to be an egregious example of this, and it is important that local communities should have a say in where mobile phone masts are placed.
The Shooter’s Hill mast is owned by the mobile operator EE, which, as the hon. Gentleman mentioned, has gone through a number of iterations. EE is the result of the merger of Orange and T-Mobile, which explains why the mast was previously operated by Orange. It is no longer broadcasting a mobile signal in the local area. However, that does not mean that the mast is redundant equipment, and it cannot be removed immediately. It continues to be part of EE’s wider network operations. Three other masts in the vicinity rely on the Shooter’s Hill mast for point-to-point wireless backhaul. That involves taking data back to the centre to ensure that people get good connectivity. For as long as the mast is providing this backhaul function, it is entitled to remain in situ. I will explain more about that in a moment.
The immediate removal of the mast would address residents’ concerns about its impact on the visual amenity, but it would lead to a loss of coverage for a much larger proportion of the local community because of the backhaul function that I have described. There is light at the end of the tunnel, however. EE’s future investment programme will enable the mast to be removed. EE plans to upgrade the hardware on the three sites that are dependent on the mast. I hope that this is not going to be like the other promises that have been made to the hon. Gentleman and his constituents; I hope that this one will not be broken. Following the upgrade, EE will be able to remove the Shooter’s Hill mast. The company’s intention is to remove the mast no later than September 2016, which is some 18 months from the date of this debate. I appreciate that residents would like to see it happen more quickly, but I understand that the necessary upgrades on the other sites are significant and will take time.
If the Shooter’s Hill mast had been redundant, there would have been two ways to secure its removal. There are provisions covering this in part 24 of the Town and Country Planning (General Permitted Development) Order 1995. Communications providers are required to remove infrastructure that is no longer needed, and to restore the land to its former condition or a condition acceptable to the local planning authority. Failure to comply with a part 24 condition would be a breach of planning control and in those circumstances the local planning authority in Stoke could have invoked part 24 and forced the removal of the mast. Where the equipment is installed on private land, the electronic communications code also provides for landowners to serve notices on communications providers requesting a mast’s removal.
To a certain extent, we have made a bit of progress in this debate.
Robert Flello
I sense that the Minister is coming to a conclusion. I am grateful to hear what he says, because at no point has EE mentioned to us that it has these plans for September 2016. We could have saved ourselves an interesting afternoon, although it is always a pleasure to have such debates. It is a shame that EE did not tell us that, because all it has told residents is that it has no plans to remove the mast. That is welcome news, but, as the Minister said a moment or two ago, let us hope that this is a reality and not yet another myth.
Mr Vaizey
I was going to say to the hon. Gentleman that I texted the chief executive of EE this afternoon. I have not received a reply, but I said that I was replying to this debate and was rather surprised that I had not been contacted by EE about it, although clearly my officials have spoken to the company.
I shall take up the hon. Gentleman’s suggestion of a meeting. We have only a few working days left, but that need not delay us in seeking a solution. When I hear back from the chief executive, I will see whether I can arrange for a senior representative of EE to consider the matter in some detail. Given the number of masts that a mobile operator operates, one would not expect the chief executive or his senior management team necessarily to have detailed knowledge at their fingertips of a particular infrastructure issue, but I shall ask them to consider it and send a senior representative to meet the hon. Gentleman. I will meet him as well if time can be found in both of our diaries. We are, I think, a week away from Dissolution, but I am sure that we can find a 10 or 15-minute slot in which finally to nail down this important issue.
Question put and agreed to.
Ministerial Correction
(9 years, 9 months ago)
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Oral Hormone Pregnancy Tests
(9 years, 9 months ago)
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Graeme Morrice (Livingston) (Lab)
T7. My constituent Wilma Ord was prescribed Primodos in the 1970s, an oral hormone pregnancy testing pill that she blames for her daughter’s birth defects. As the Secretary of State is aware, it was announced back in October that an inquiry would be established to look into the whole issue. What progress has been made in setting up the inquiry and what assurances can he give my constituent, and the many other women and families affected throughout the country, that the inquiry will be fully comprehensive, transparent and independent?
The Parliamentary Under-Secretary of State for Health (George Freeman)
I am delighted to report that I have met colleagues from across the House and patient representatives of that campaign on a number of occasions. We have appointed the chair and made sure that the terms of reference for the inquiry are clear and comprehensive. It is not, I stress, a judicial inquiry; it is a medical inquiry looking at the evidence.
[Official Report, 24 February 2015, Vol. 593, c. 194.]
Letter of correction from George Freeman:
An error has been identified in the response I gave to the hon. Member for Livingston (Graeme Morrice) during Topical Questions to the Secretary of State for Health.
The correct response should have been:
The Parliamentary Under-Secretary of State for Health (George Freeman)
I am delighted to report that I have met the all-party parliamentary group on oral hormone pregnancy tests about the inquiry. We have appointed the chair and made sure that the terms of reference for the inquiry are clear and comprehensive. It is not, I stress, a judicial inquiry; it is a medical inquiry looking at the evidence.
Westminster Hall
(9 years, 9 months ago)
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backbench business
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Local Newspapers
(9 years, 9 months ago)
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Sir Hugh Bayley (in the Chair)
This is a very important debate about the future of local newspapers, and I am pleased to call John McDonnell.
John McDonnell (Hayes and Harlington) (Lab)
Thank you, Sir Hugh. I am very pleased with the turnout. I thought that there would be only a few of us, because of the nature of today. I know that some Members have constituency duties and may want to intervene and then leave. I completely understand that, given that we are only a few days from Prorogation.
Let me place it on the record that I am the secretary of the National Union of Journalists parliamentary group. It is a cross-party group of MPs who have raised issues on behalf of the union and journalists generally over a number of years. It is chaired by my hon. Friend and comrade the Member for Great Grimsby (Austin Mitchell). His speech today may not be his last in the House before he retires at the end of this Parliament, but it may well be the last time that he speaks on this subject. He is leaving the House to take up a more productive and fulfilling life outside. I look forward to the articles, novels and updated memoirs that he will produce.
Paul Flynn (Newport West) (Lab)
Does my hon. Friend share my distress at the departure of our hon. Friend the Member for Great Grimsby (Austin Mitchell), because that will deprive the House of diversity? Our greatest problem in the House is in getting a House that is as diverse as the nation, and his departure will add to the terrible shortage of octogenarians here. Is that not a terrible shame?
John McDonnell
It will be a great loss. I want formally to thank my hon. Friend the Member for Great Grimsby for his services to the NUJ in the House. He has championed a free and flourishing media in this country and the critically important role of journalists. I place on the record all our thanks for that.
As this will be our last discussion on this subject before the new Parliament, I also thank the Minister for having always been willing to engage with the union and the parliamentary group. He has always been accessible, co-operative and keenly interested in supporting the role of journalists. I am grateful for that. I wanted to place that on the record.
This debate was sponsored by me, the hon. Member for Colchester (Sir Bob Russell), the hon. Member for Maldon (Mr Whittingdale), who chairs the Select Committee on Culture, Media and Sport, and a number of others. I also place on record my thanks and the union’s thanks to the Chair of the Committee for the support and focus that he has given to the Committee’s work in seeking to promote vibrant media in this country and, in particular, for the keen interest that he has displayed in the role of the local press and its importance to our democracy. He has always made the Committee accessible to the views of the NUJ. He has enabled successive general secretaries to present evidence to the Committee and has met them when necessary. He has engaged in an ongoing dialogue on the issues facing the industry, and I want to say that I am grateful for that on behalf of the NUJ.
The NUJ parliamentary group has secured, with its allies across the parties, a number of debates in recent years on local media, and has met with some success, if I may say so. Some hon. Members may recall that we were in this Chamber—I think that it was two years ago—to debate the cuts to local BBC radio services, and we fended off the large-scale cutting of those services. Similarly, we have used Adjournment debates, parliamentary questions and early-day motions persistently to highlight the troubles visited on the local newspaper sector. We held a debate similar to this two and a half years ago, I believe. I recall that at that stage we were all hoping, on a cross-party basis, that the economic cycle would lead to an upturn in the prospects of local newspapers as they integrated themselves into the new world of digital media.
The reason why the hon. Member for Colchester, the Chair of the Select Committee and others supported this debate is that although there have undoubtedly been some positive developments, the plight of local newspapers has in many ways and in many areas worsened, and in some areas the position is perilous now.
The Library briefing pack has been circulated. I hope that hon. Members have seen it. The NUJ provided the Library with a detailed briefing setting out an analysis of what has been happening in the local newspaper sector in the two years since the debate. It is pretty grim reading. I will run through some of the main features, but more importantly I want to prompt a discussion about where we go from here and put forward some ideas on that. It is especially important in the light of yesterday’s statement by the Chancellor of the Exchequer, which offered a possible lifeline to some elements of the local press, certainly if the measure is designed properly. I do not think it takes much forensic examination to discern the Minister’s fingerprints on the reference in the Chancellor’s speech, and I congratulate him and thank him for achieving this breakthrough in the recognition by the Treasury that something has to be done.
Let me put on the record again what the Chancellor said:
“Local newspapers are a vital part of community life, but they have had a very tough time in recent years. Today, we announce a consultation on how we can provide them, too, with tax support.”—[Official Report, 18 March 2015; Vol. 594, c. 776.]
The details of that consultation have not been released yet. I am told that it may not be before the general election, but I expect whoever is in government to pursue the consultation. I think that it will be a worthwhile exercise enabling us to have a wider dialogue on what sort of support can be provided to the newspaper industry.
Philip Davies (Shipley) (Con)
Does the hon. Gentleman agree that in many respects the Chancellor understated the importance of local media? It is not just that they are important to community life and local life. They are an essential part of local democracy—of holding people to account in a politically neutral way. That is not always the case with other elements of the media. On that basis, does he agree that local councils sending out propaganda masquerading as independent newspapers will never be a substitute for a good local press?
John McDonnell
The Government have taken action on that matter and introduced a code of practice, which they have also enforced in some areas, so in that debate, things have moved on dramatically. I am aware that the hon. Gentleman has in the past tabled early-day motions on the subject and participated in debates on it.
I want to focus on what is happening in the industry at the moment. Many of us have taken the view that we simply cannot go on the way we are, or we risk losing the local newspapers that, as the hon. Member for Shipley (Philip Davies) said, we all value as the bedrock of local democracy in many ways.
Pauline Latham (Mid Derbyshire) (Con)
The Derby Telegraph, which is my local paper, is the midlands’ newspaper of the year and still sells 25,000 copies every day, but more importantly it has 71,000 unique users on the website every day. That is something that local newspapers are having to adapt to, and the question is how they fund it. The problem is that people will not pay for local newspapers, but they will go online—and there are adverts everywhere. I would like to see the end of adverts, and perhaps people subscribing to local newspapers on the web.
John McDonnell
The important thing about the Chancellor’s statement yesterday was that it recognised that the local press is moving to a new model, exactly as the hon. Lady says, and it recognised also the need for Government intervention to support the transitional period. As I said, I think that that came from the dialogue and discussions that the Minister has had with the Treasury, and I welcome it.
Jeremy Corbyn (Islington North) (Lab)
Will my hon. Friend recognise that there are different models for local newspapers? In my area, we have the Gazette group, which is based outside London and covers a very large number of areas, and it is barely a local paper because of that. We also have the Camden New Journal group, which is a worker-owned group that grew out of a strike and provides excellent, high-quality free newspapers in Camden and Islington and has a good readership as a result. Does my hon. Friend think that that model could be developed in other parts of the country?
John McDonnell
That is one of the issues that I want to raise later. If there is to be Government intervention and support, it has to be done in a way that maximises the public interest; it must not simply get swallowed up as a reduction in business rates and then be given out to shareholders or—as we have unfortunately seen happen in recent years—go towards the salaries of some chief executives, which are exorbitant to say the least, and which many of us have criticised.
I want to reinforce the point that hon. Members have made about the importance of local newspapers to democracy overall. The reporting of the activities of local politicians, local councils, local Members of Parliament, NHS bodies, the police and others in the local community is important to hold them to account. It is critical to have a local newspaper that will shed light on their activities.
Let me briefly explain what has been happening in recent years. The NUJ has published a chronology of closures and job losses in local newspapers over the past nine months. It is a shocking roll-call of cuts on a significant and worrying scale. I will not go through it in detail now, but I will place in the Library, for Members’ information, the short report that the NUJ has provided. It illustrates the range of titles that have gone in the past nine months, and the scale of cutbacks of journalists, sub-editors and photographers. It is worrying that the trend that we discussed in this Chamber only two and a half years ago has continued at such a pace.
I will draw in the key elements of the briefing that the NUJ has provided to Members. Between 2005 and the start of 2012, 242 local papers were shut. The NUJ’s detailed roll-call from the past nine months confirms that that trend has continued with the loss of further newspapers. Whole areas of the country are local news-free zones. There are hon. Members from Wales here; Port Talbot, which has a population of 50,000, has had no local newspaper since 2009.
Rehman Chishti (Gillingham and Rainham) (Con)
The hon. Gentleman is talking about the closure of newspapers; I want to give an example from my area. Before the Medway News closed, there was talk of merging it with the Kent Messenger, which is a brilliant paper. However, the burdensome regulations surrounding the merger prevented that from happening. The Office of Fair Trading stated that the Kent Messenger would have an unfair advantage on advertising, which is complete nonsense because people can get advertisements online as well. As a result, the merger did not go ahead. Medway News closed and jobs went, and people were left without a brilliant local newspaper. The situation could have been different if the regulations had been designed properly. Does the hon. Gentleman agree that that needs to be looked at?
John McDonnell
There is a whole range of such anomalies, which we need to inquire into. That is one of the reasons why the NUJ is promoting the idea of a proper inquiry—it does not have to be a long-winded one—into some of the details of regulation. That might assist in protecting titles and protecting jobs and services.
As I said, some areas of the country have become local news-free zones. The staff cuts have been staggering, and the NUJ’s survey concerning Trinity Mirror and Newsquest revealed that the lack of staff meant that basic services were not being provided. Council meetings and court cases were not being covered. Local businesses were not being held to account.
Some Members may recall that some time ago, we expressed our disappointment about the decision by the Press Association to scrap its “Lobby Extra” package, which provided a House of Commons service for 15 regional titles. Many of us thought that that service was vital, because it covered regional newspapers such as the Liverpool Echo, the Manchester Evening News and the Express & Star, many of which no longer employ staff Lobby correspondents. If newspapers are unable to report on our activities, they will not be able to hold us to account and our democratic links with constituents will be undermined.
The number of job cuts in some areas has been extremely worrying. Johnston Press annual reports from 2007 to 2012 revealed that the number of full-time journalists fell by 44% from 2,774 to 1,558, and the trend has continued this morning. The Daily Mail and General Trust has admitted that half its 4,200 staff in the Northcliffe Media regional newspaper division have been cut since 2008. As we have heard in our discussions elsewhere, local and district offices are being closed, so reporters are working much further from their local communities. That issue was raised at our cross-sectoral seminar with the Minister some time ago.
We also find that papers are being edited in hubs. I agree wholeheartedly with Michelle Stanistreet, the NUJ general secretary, who has said:
“Readers are not stupid. They can tell when their newspaper is being produced from a different county—and in some cases country. They can tell when they are served up rehashed, reconstituted fare. They feel robbed when they can no longer speak to the local reporter on their patch and when their voices go unheard.”
We should be concerned about the fact that that has become a common phenomenon. We should also be concerned about the fact that regional newspaper group publishers have significant local monopolies. The resulting lack of competition may undermine standards and the quality of journalism.
As we have discussed, the decline in the sector has been blamed on the transition to the internet, with a lot of content being made free. Another problem is the drop in advertising revenue, which has been caused by the recession and falling circulation. As many of us have argued for some time, it is not as simple as that. There is a depth of anguish about what has happened to local newspapers over the past 20 years.
Throughout the ’90s and until about 2005, local newspaper profit margins ranged from approximately 20% to 35%. Between the start of 2003 and the end of 2007—I am sorry to pick on Wales all the time—the profit margin of Media Wales averaged 34%, and it peaked at 38% at the end of 2005. In a normal business, profits on that scale would be reinvested in the industry long term. As the hon. Member for Mid Derbyshire (Pauline Latham) said, such reinvestment would fund the transition to the new model. That did not happen, unfortunately. I hate to say it, but some of the company results make it clear that instead of being reinvested, those profits were creamed off and used for sizeable shareholder dividend pay-outs. In addition, the pay of newspaper executives was enormous, and I will give some examples later.
Another issue that has affected the sector over the past 10 years is the rapid closure of local presses. Johnston Press in the north has closed presses in Halifax and Leeds. As a result of such closures, any new entrant to the regional newspaper market is forced to choose between bearing the virtually prohibitive expense of a new press, entering into contract arrangements with potential competitors, or printing outside the UK and building import costs into their overheads from the outset. That is a dangerous pattern. That all happened while profits were at a high level. In any other sector with profits of more than 30%, it would be almost unthinkable not to plough that money back into the industry. I do not want to use phrases such as fixing the roof when the sun shines, or having a long-term economic plan, but we would expect someone somewhere in the sector to wake up to the need for such things.
Some of the examples have been absolutely staggering. My hon. Friend the Member for Great Grimsby (Austin Mitchell) and I have waged something of a crusade with regard to Trinity Mirror over the past 10 years, and I have looked back at some of the interventions we made in Adjournment debates and so on. Trinity Mirror covers a whole range of titles from the Liverpool Echo to the Oldham Advertiser and the Rossendale Free Press. What did Trinity Mirror do with its profits during the good times? It appointed Sly Bailey as chief executive in 2003. In 2005, if I remember rightly, we raised concerns about her management skills. When she left last year, she was given a £900,000 payoff. She pocketed more than £14 million during her time at the company, despite the fact that the work force was cut in half and the share price plummeted by 90% during her tenure. That is absolutely extraordinary. To quote Michelle Stanistreet, general secretary of the NUJ:
“Trinity Mirror owns some of the best-known and respected newspaper titles in the UK. In 2003, when Sly Bailey took over as chief executive, it was a FTSE 250 company worth more than £1 billion and with a share price of 380p. Now, less than ten years later, the same CEO presides over a company that is a shadow of its former self—with a share price of 30p.”
Despite that, Sly Bailey received the £900,000 payoff on leaving. That is simply payment for failure. We can see why journalists on the front line who are losing their jobs are so angry about what happened during that period. Half the jobs have gone, and the company has been driven into the sand. Her successor has just had to announce £10 million-worth of cuts. The company is currently losing another 92 jobs. Fifty-three new jobs have been created in its national and regional titles, but the company is moving towards a shared content model of producing material that is not local, which will start to undermine the quality of the press.
It just goes on. Newsquest publishes 200 newspapers, and audit figures show that its circulation dropped by 10% in the last round. Roy Greenslade, the expert commentator on the press industry, argues that that drop is partly due to short-term thinking. Newsquest has increased the price of its papers, and the result has been an immediate sales plunge. There is a real management issue in this sector. Newsquest is owned by an American company called Gannett. In February 2014, Gannett issued one of the biggest shareholder payouts that we have seen. Gannett’s chief executive said:
“We remain on track to return approximately $1.3 billion to shareholders through dividends and share repurchases by 2015.”
Yet staff on the company’s papers have had a pay freeze for four of the past five years. A typical Newsquest journalist earns about £21,000 a year, but Newsquest’s outgoing chief executive, Paul Davidson, was paid £0.5 million in 2012 and his fellow directors took a performance-related payment of nearly £300,000. Understandably, there is phenomenal anger among staff. The company has cut 5% in the past year, which includes compulsory redundancies. That cut was driven through by abysmal management. Newsquest has also moved paper production from the north down to Newport. The Northern Echo will now be edited 270 miles from where it is distributed. It just goes on and on, and I worry about what is happening generally.
Johnston Press is an example of catastrophically bad management. The company publishes 200 titles, and its chief executive has announced a new project to produce a paper with 75% of its content provided by readers, not journalists. Chris Oakley, a former editor of the Liverpool Echo, says:
“In the boom years, the Stock Market valued Johnston Press at more than £1 billion and investors and analysts applauded as the company ran up nearly half a billion in debt.”
Johnston Press, relatively speaking, is now more indebted than Greece. Between 2005 and 2007, the company spent £1 billion on acquisitions, including £250 million for 11 paid weeklies and 10 free sheets in rural Ireland. Two years later, after spending all that money, the best offer when it tried to sell those titles was £40 million. That is a scandalous waste of resources that almost destroyed the company overnight.
Last year, Johnston Press made an operating profit of £57 million, but its debt is now £360 million. That debt is owed, among others, to RBS and Lloyds, which are charging a 13% interest rate compared with the Bank of England rate of 0.5%. The company could be destroyed purely and simply because of the punitive interest rates charged by those publicly owned banks. The NUJ has been campaigning for the banks to renegotiate the terms, otherwise the company will fail and everyone will lose out—not only the journalists who will lose their jobs but the banks that will have to try to retrieve the money they paid out.
The next member of the big four is Local World, which was created in November 2012 by the merger of Northcliffe regional newspaper group and Iliffe News and Media. Northcliffe’s owner, the Daily Mail and General Trust, was paid £52 million and took a 38.7% stake in Local World. Iliffe’s owner, the Yattendon Group, has a 21.3% stake in the business. Trinity Mirror paid £14.2 million for a 20% share. Local World has no presses and no pension fund liabilities, but it has 110 newspapers. It is the new kid on the block, but its founder, David Montgomery, is an old hand who has been around a long while—he was previously at Trinity Mirror. He is reinventing the model so that it is virtually without journalists. He has already got rid of sub-editors. Barry Fitzpatrick, the NUJ deputy secretary who negotiates on behalf of the workers, says:
“This is a very dangerous vision. What he appears to be suggesting is that the police, schools, Tesco and other organisations can put their press releases directly into the local paper, without verification or comment.”
That undermines the very product that Local World is trying to sell, which is extraordinary.
Pauline Latham
I thank the hon. Gentleman for giving way again. His speech makes me realise that the Derby Telegraph is a fortunate paper and that my area has been lucky with Northcliffe Media. In recent years, the Derby Telegraph has become much more of a campaigning newspaper. It has uncovered stories such as the Al-Madinah school scandal, which it broke. The newspaper has also campaigned to keep train making in this country, which was a big, cross-party campaign. Recently, the Derby Telegraph helped to raise a lot of money in the name of a BBC Radio Derby journalist who has malignant melanoma—the campaign by the radio station and the newspaper is raising money to fight melanomas. The sort of things that the Derby Telegraph has done has brought in more readership, and more people are getting involved. Working with the local radio station, the newspaper’s numbers have been boosted considerably.
John McDonnell
Individual newspapers and managements attended the meeting that the Minister convened with different sectors of the industry. The meeting demonstrated that, with good management, it can be done. An element of creativity and community engagement is needed, but the core of success is always quality journalism. If a company undermines the quality of its product, the whole operation will eventually be brought into crisis, which is what has happened as a result of short-term profiteering by poor management. Greedy executives have walked away with packages of hundreds of thousands of pounds while their workers on the front line have been sacked.
The hon. Lady makes a good point that quality journalism has exposed local scandals. We spoke to Shaun Lintern, the journalist who broke the Mid Staffs hospital story. He basically said that such a story could not be broken with the resources available now because there are not enough staff on the ground.
I have demonstrated what has happened in recent years. Wages on local papers are now extremely low. Newsquest has had a pay freeze for four of the past five years. Typically, a journalist now earns £21,000 a year, but trainee journalists in Yorkshire are earning 7p above the minimum wage. Journalists in Cheshire and Merseyside earn as little as £14,500. Traineeships are one way in which people get into journalism, but trainees who have worked at one newspaper group in London for years earn some £16,000. That is in the capital, and it is just above the London living wage at best. Those trainees do not receive London weighting. Another high-profile paper in the capital now pays journalists £18,000, which is a scandal. It undermines the quality of the job, professionalism and the workers themselves if they are not paid properly.
Rehman Chishti
The hon. Gentleman is highlighting the brilliant work of local journalists such as those on the Medway Messenger. The chairman of the Kent Messenger Group, Geraldine Allinson, told me that where local journalists have done a brilliant job and their story has been used by, say, the BBC or other nationals, they have not been credited. When the BBC’s charter comes up for renewal, it might say, “Yes, we’ll do it,” but when charter renewal goes away, there has not been such collaboration with local newspapers to ensure that journalists get the credit they deserve.
John McDonnell
The BBC has entered into relationships with the local press in some areas, and the dissemination of information in that way has been fairly constructive. The NUJ is calling for a short, sharp inquiry on the future of local newspapers because we want to look at the whole architecture in which local media operate.
I repeat the statement in the NUJ briefing, which was sent to all of us. It believes that journalists should be at the heart of local communities, speaking and listening to readers. It believes that there is a strong future for local papers that enjoy high levels of trust among their readers, but the sector is in a precarious position. That is why year-on-year cuts, pay freezes and increased work loads are creating low morale among journalists at local papers and undermining the product that companies are seeking to sell. Professional journalism, community journalism and investigative journalism could be casualties in the coming years if we do not act soon.
The NUJ has been running a country-wide campaign with Co-operatives UK and the Carnegie Trust to consider how good journalism could be funded. An issue that has come up, including at our seminar, is that the NUJ believes that this Government’s Localism Act 2011, which we supported, should be amended to give local newspapers protected status as community assets to prevent newspaper titles from closing overnight and allow new owners—including, as my hon. Friend the Member for Islington North (Jeremy Corbyn) said, co-operatives and other community initiatives—time to put together bids for the paper. Newspaper groups should not be allowed to close a paper and lock away a title that has resonance in the local community. Legislation is also needed to prevent newspaper owners from refusing to offer titles for sale before closing them. They should at least be offered to others who might want to make them a going concern.
The NUJ asks the Government to open an inquiry into the future of local papers to explore how Government could support new models of ownership, such as co-operatives and community ownership by readers, and investigate how Government subsidies and tax advantages could work for local newspapers. I welcome yesterday’s statement, but tax concessions and reductions in business rates should not be allowed to go towards featherbedding companies with increased shareholder dividends or into high salaries for executives.
We should consider how local papers could be funded or part-funded, as others are, on a public service model. If local papers receive public subsidies through tax concessions or otherwise, there should be a public benefit test. Do they report council meetings? Do they report what is happening with local statutory agencies, and hold them to account? We have also been proposing for a while that the use of industrial levies should be investigated: for example, a 1% levy on pay TV operators such as Sky and Virgin Media would bring in about £80 million a year to fund the development and transitional costs of the local newspaper sector. A 1% levy on the five big mobile phone operators could generate £208 million a year. On boardroom greed, one proposal that has been debated is to link chief executives’ and executives’ pay not just to performance but to their employees’ pay, and to ensure trade union and proper representation on remuneration committees, so that there is more transparency and openness.
As we have seen today, despite all the travails of the local newspaper sector, the recognition of its importance is prompting Government and all parties to consider seriously how we can intervene to support it in this period of transition into the new digital age. It will survive and thrive only on the basis of preserving and promoting quality journalism. Without that, a local paper is undermined as a product and will wither on the vine. I urge whoever is in government next to seize the NUJ proposal of an open and engaging inquiry involving all stakeholders into delivering a way forward to enable an essential public service to flourish once again.
Sir Hugh Bayley (in the Chair)
As 10 Members are trying to catch my eye and we have just under two hours until we start the winding-up speeches, that makes something like 11 minutes each.
Sir Bob Russell (Colchester) (LD)
I apologise to you, Sir Hugh, and to the two Front-Bench spokesmen; as I have said, I will have to leave before the winding-up speeches due to a prior engagement. I thank the hon. Member for Hayes and Harlington (John McDonnell) for the detailed way in which he presented the case, and the National Union of Journalists and the House of Commons Library for all the background provided to this debate.
I declare that I am a former secretary of the north Essex branch of the National Union of Journalists. Some 51 years ago—I know you will find it hard to believe, Sir Hugh—I was a trainee reporter for what was then called Benham Newspapers, which included the Tuesday Colchester Gazette, long before it became an evening and then a morning paper, and the Friday Essex County Standard, which I am pleased to say is still going. When I hear stories about news-barren areas of the country, I think that perhaps north Essex has been spared the worst. I shall come to that in a minute.
The East Anglian counties of Norfolk and Suffolk, as I understand it, still have a locally owned newspaper group, Archant, which runs the Eastern Daily Press, primarily in Norfolk, and the East Anglian Daily Times, primarily in Suffolk but also in north Essex. The Saturday edition is the one to buy, because page 41 features Sir Bob’s diary recounting what has happened in the last week.
As has been pointed out, local government, local magistrates courts and local community activities are going unreported. It is bad enough that social historians will have less to dip into. I cut my teeth on those things; in fact, I can probably blame Brightlingsea urban district council for my interest in local government and for my ending up here in Westminster.
At the age of 21, having become a qualified journalist through the National Council for the Training of Journalists, I became news editor of the Braintree and Witham Times, which was part of the Benham Newspapers group and known affectionately as the “Brainless and Witless Times”. Just before my 22nd birthday, I became editor of the Maldon and Burnham Standard, in which distinguished organ some of the parliamentary activities of my hon. Friend the Member for Maldon (Mr Whittingdale) are covered. Mrs Russell, as she was in those days, our infant twin sons and I lived in a flat above a shop at 107 High street, Maldon, long since gone.
Benham Newspapers then merged with another group to become Essex County Newspapers, which was then acquired by another group. That was acquired by another group, and it is now under the American-owned Newsquest. I can vouch for the fact that capital asset stripping has taken place. I pay tribute to the journalists who still work on those local newspapers, but they are few in number, and not so long ago there was another cull and photographers were made redundant.
To me, the local newspaper is a key ingredient in telling people what the local council and local democracy are doing, but it is not unknown now for a council meeting, let alone a committee meeting, to go unreported. For a journalist to turn up at a court hearing is a rare occasion. To my mind, a newspaper cannot be replaced by electronic media; the internet and social media should be in addition to it, not instead of it.
Fifty years ago, in virtually any town—it was certainly the case in Colchester—the number of front doors was smaller than the number of newspapers sold. I will not say that there was 100% penetration, but it was in the upper 90s, because some people bought more than one paper. Today, it is about a quarter of that, if we are lucky. What has made it worse is that when we go around knocking on doors, we find notices saying “No junk mail”. Not only are people not buying local newspapers, they do not want to receive communications from their local councillors or Members of Parliament, irrespective of which party they are from. We will now have a few weeks in which candidates from throughout the spectrum will be trying to get their message across, and residents will be saying, “I don’t want any of this rubbish, because you’re all the same.”
We have a serious issue. A large part of the population are cutting themselves off from the community in which they live. The community is no longer what it was. We must go back to education to find out why schools are not engaging sufficiently to get families to buy newspapers. Compared with the cost of other things, local newspapers are still relatively cheap.
Clearly, I am concerned about the loss of titles and the loss of jobs, and not only editorial jobs but printing jobs. The Colchester Daily Gazette was started in 1970 as The Colchester Evening Gazette. Like many other evening newspapers, it is now a daily newspaper and it is no longer printed in the town; it is printed elsewhere in the country and then driven into Colchester.
I used to be a sub-editor, but now the sub-editorial side of things is quite often done—not always, but quite often—as a production-line job many miles away. We see that when we read the local newspaper. We find that villages and roads have been put in the wrong place, and if someone knows that those things are wrong they then start to doubt and question the accuracy of other things. So, we have an issue in that regard.
Following on from a point that the hon. Member for Hayes and Harlington made, where does the legal buck stop with those newspapers that do not have sub-editors or, seemingly, an editor? I ask that because one day something will go seriously wrong and somebody will be held accountable, but I am not sure who that person will be. Presumably, it will be the managing director, because the editorial control will not be there.
Eventually, I ended up working in London, first at The Evening News, which is no longer with us, and then at the Evening Standard. Today, more people read the London Standard than at any time in its history, but nobody pays for it. It is all free, but of course somebody has to pay for it, and obviously that is the advertisers. In a huge city such as London, that can be done.
I can remember the time when many of our provincial cities had not one but two evening newspapers, as well as the morning newspaper. Norwich and Ipswich have bucked the trend in that sense, so something has happened there. However, there is often a lack of local identity within our newspapers. I am not criticising that; I am just making an observation. It used to be that advertising revenue was coming in, which meant newspapers could employ journalists to cover the council, the courts and all the other things. The pagination of the newspapers was such that they could cover lots of social “good news” stories as well as the day-to-day things.
In summing up, I look to the two Front-Bench spokesmen, the hon. Member for Rhondda (Chris Bryant) and the Minister, to see if there are any solutions. We will not get back to where we were 50 years ago, when we had 100% newspaper penetration, but something has got to be done because we have a disconnected community. Those who buy and read their local newspapers are clearly much better informed than those of their neighbours who do not do so, and all MPs will have constituents who raise issues with us not knowing that we have already taken those issues up, dealt with them and sometimes even solved them. Nevertheless, we then get a letter saying, “Why don’t you do something about so-and-so?”, and it has been widely reported in the local paper.
I end with a plea to both Front-Bench spokesmen—there must be a coming together to see how we can help local newspapers. They are a vital part of our society, they are crucial to democratic accountability, and we are all the poorer when the circulations of newspapers fall and, even worse, when titles go.
Nia Griffith (Llanelli) (Lab)
I am grateful for the opportunity to speak, Sir Hugh. I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on his excellent and eloquent speech, which has covered many of the points that many of us will want to make today.
I am particularly blessed in south-west Wales because we have a number of newspapers. We have the Llanelli Star, in my own town of Llanelli, and its sister papers, the Carmarthen Journal and the South Wales Evening Post, which also cover my constituency. We also have the South Wales Guardian, which is another completely independent newspaper and it, too, covers my constituency. We also have the Carmarthenshire Herald, which has just started up and which offers yet another perspective.
Nationally in Wales, we have the Western Mail and I will begin my comments today by talking about the whole issue of devolution and local newspapers, because it is quite apparent to me that the more that devolution progresses and the more that policy differs between England and Wales, the more difficult it is for people in Wales to get information about the policy in Wales, so that they can hold to account the Ministers in the Welsh Government in the same way that other Members today have talked about local government being held to account by local newspapers. That role of newspapers is extremely important.
For example, if someone reads any of the UK national newspapers, they will see extremely little reference to the policy differences that exist in Wales. To take one fairly “hot” subject for debate, there is the issue of student fees. When the Conservative and Lib Dem coalition chose to charge university students who are domiciled in England fees of £9,000 a year, the Welsh Labour Government decided to peg fees at £3,500 per year for those university students who are domiciled in Wales, regardless of which university they go to. Consequently, the issues of funding of universities are very different in Wales, and they need to be discussed in a different context and in a different way from the way in which they are discussed in England. There is a debate as to whether the level of fees is affordable, about the effect on the institutions themselves and, obviously, about the effect on the students of any change in that situation. That is typical of the type of issue that we will just see disappear altogether, and there will not be quality debate on such issues, if we do not have a plethora of local newspapers that are able to promote that debate.
Likewise, as other Members have already referred to, there is the local council. As we see a greater extent of devolution in different ways in different parts of the UK, it is ever more important that people who hold the purse-strings and who make policy decisions are held to account locally. Sometimes that can be very uncomfortable, but it is extremely necessary.
That process may not necessarily be simply about the local council. We have bodies and individuals such as local health boards, the police commissioners and the fire authorities. All of those are partly covered by some elective democratic control, but very often they are perceived by the local population as not necessarily responding to local need. Again, it is often local newspapers that can uncover, perhaps through freedom of information requests, some uncomfortable information about the way that those bodies or individuals spend money, or it may be that local newspapers will champion campaigns, as we have seen locally in my area with support being expressed for keeping services in our local hospital. All those democratic and semi-democratic institutions need to be held to account, and the loss of local newspapers, or the loss of the quality from local newspapers if they simply regurgitate pre-prepared articles from miles away, will of course have a very detrimental effect on that democratic process.
I support the idea of a short, sharp inquiry into what can be done, because I do not think that we have all the solutions ready straight away. We need to have that inquiry, but I do not want it to be a way of kicking things into the long grass.
Obviously, we have seen a dramatic decline in the number of journalists and quality journalists who are able to work in full-time employment on these papers, and it is absolutely no good thinking that the resulting gap will be filled by lots of people with the time and inclination to write that sort of stuff. There are just not that many people out there who want to do that, and the danger is that they can simply be used by those organisations that have the necessary capacity and that do not really reflect the interests of local people.
This is an urgent issue, which we need further investigation into to see whether financial help can be given, or whether a break can be allowed to enable community groups to take over newspapers. However, it would be a terrible shame if we saw our papers disappear.
It is all very well to talk about things going online, but if we consider some of our constituents, we would all recognise that there are older people who go online but they do so for a specific purpose—perhaps to e-mail their friends, children or grandchildren who live far away—and they are not “grazers”, as perhaps some of the younger generation are, who “graze” continually. Indeed, many of us here do that, as we are continually on e-mail or websites. However, many older people do not find that a natural way to access their news; they much prefer to have it in a written format, which they can pick up and buy.
Hon. Members mentioned archivists. I am worried—I think many of us have noticed it—that with the change to digital cameras a whole chunk of our lives, or our children’s lives, is no longer recorded because we lost our first digital cameras or lost or moved on from the computer we downloaded the images on to. There is a danger that, with the move to the web, we do not have the same quality of archive material that we find in a printed archive.
We elected Members are sometimes uncomfortable with newspapers, because they pinpoint things that they disagree with us about or hold us to account, but that is part of the democratic process and I welcome that dialogue. The more we devolve power to the Welsh Assembly and the more that we ask local councils to take on, the more vital it is that we have quality local journalism, not simply something regurgitated and sent down the M4. For example, there was an article in my local paper not so long ago about driving down the M4 and seeing Castell Coch on the right hand side, but when driving from my constituency Castell Coch is on the left hand side. That article had clearly been written on the other side of the Severn bridge and was in no way reflective of local journalism.
We really need people who have the proper training—proper, qualified journalists—who are able to delve and look, find and sort things out, and really put people on the spot, asking them pertinent questions to make sure that local people have the opportunity to see that in print, so that it informs their decision making.
Mr John Whittingdale (Maldon) (Con)
I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on obtaining this important debate. I thank him for his kind words about my chairmanship of the Select Committee.
This matter has caused the Committee considerable concern for quite a long time. We carried out an inquiry on the future of local and regional media in 2010 and were alarmed by the number of closures and job losses, of which there was a steady stream. At that time, there were 1,300 local and regional media titles. Claire Enders, of Enders Analysis, told us that she expected half of those to close within five years. It has not been quite as bad as that, but we are down to about 1,000 and the closures are continuing, as the hon. Gentleman said.
It is not just closures. We have seen steady reductions in the number of staff; the journalists are often young and low paid; there have been relocations away from high streets; and there has been a reduction in the number of photographers. What Nick Davies, in The Guardian, has called “churnalism” is becoming ever more obvious, with local newspapers taking press releases and reproducing them without any attempt to establish whether facts within them are correct, or whether there is an alternative.
Investigative reporting has also declined. The hon. Gentleman mentioned the Mid Staffordshire inquiry and investigation, which was a shining example of investigative reporting. We in the Committee heard from the journalist responsible for that. It is interesting to note that the Rotherham scandal was exposed not by the local paper, but by The Times, which allowed Andrew Norfolk, one of its journalists, to spend four years investigating that story. He rightly received commendation and awards at the Society of Editors press awards a few days ago. That was an extraordinary commitment to pursuing a story on the part of a national newspaper. It is possible that a local paper simply would not have the resources to do that.
In my area, as we have already heard to some extent from my hon. Friend the Member for Colchester (Sir Bob Russell), who is a distinguished former editor of my local newspaper, we have two local newspapers—both weeklies—the Maldon and Burnham Standard, which he mentioned, and the Essex Chronicle. Both do their best. The Maldon and Burnham Standard used to have an address on the High street, which my hon. Friend described, but is no longer there, having moved to Braintree. The Chronicle is now based in an industrial estate on the outskirts of Chelmsford. The Standard is still performing well. The editor tells me it has one of the highest year-on-year ABC sales figures and that its decline is around 1.8%, which is considerably better than many others. I am going to see the editor, Andrew Bennett, tomorrow, and his two young, extremely hard-working and excellent reporters, Nina Morgan and Ally Grainger.
When I was first elected, the Chronicle had a veteran local government editor called Kathleen Corby and the Maldon and Burnham Standard had a deputy editor, Geoff Percival, both of whom had been there for years and had a breadth of experience. I suspect that my hon. Friend remembers both of those characters. One problem for young journalists working at local newspapers is that there is no longer an upward career path, so it is difficult for them to get promoted to achieve higher earnings. The consequence is that they go into other areas, such as public relations or public affairs. It is understandable. However, that is a worrying development, because most journalists acquire their training on local newspapers. National newspapers, television channels and radio stations depend on local newspapers to train the journalists whom they will one day employ.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I apologise for not being here at the beginning of the debate. The hon. Gentleman is right. The Stornoway Gazette, in Lewis and the Hebrides, employs local people in the local community and provides a service that would be sorely missed if it were not there. There is not enough appreciation of what the local press is doing. What are the hon. Gentleman’s views on what we can do to support the local press more and ensure that we have a local press in years to come? There is a feeling that it will always be there because it has been there in the past. Local papers are under great pressures, as the hon. Gentleman has mentioned. What does he think could be done to support them?
Mr Whittingdale
The turnout in this debate reflects the concern felt throughout the United Kingdom, which is replicated in every community. I will answer the hon. Gentleman’s question in a moment. I do have some suggestions about what can be done to assist, which I will mention shortly.
The decline of local newspapers has been attributed to many causes that have undoubtedly played their part, including: the growth of local authority free sheets, which sometimes masquerade as local papers and are not obviously publications of the local authority, although they are, of course, paid for by the council tax payer; the decline in public service notices and public service advertising, which has removed some revenue streams; and competition from the BBC, which I will mention. Many local papers resent the fact that not only is the BBC competing with them by providing online news reports free of charge, but frequently those news reports are taken from local newspapers without proper attribution. The attitude of the competition authorities is another concern; they have adopted a very narrow definition of competition, which has in some cases prevented consolidation, which represents the best chance of creating viable local media companies.
The internet has changed everything. More and more people are accessing their news online and not paying for it. Local newspapers have rightly followed that trend and almost every local newspaper has developed its own online distribution, but it is still provided for free, and therefore revenues have declined. At the same time, the advertising on which local papers depend has migrated away from them, and to the internet.
On the way here this morning, I bumped into Mark D’Arcy, the BBC’s excellent parliamentary correspondent, whom I suspect will be familiar to all hon. Members in this Chamber. He told me that he began his career on the Leicester Mercury. At that time, the paper had a section for property advertising that was a couple of centimetres thick. “Now, of course”, he said, “it is all on Zoopla.” That is reflected right across the board. Classified advertising has been in steady decline as ever more is done online. That is another source of reduction in revenues.
Local newspaper groups are seeking to adapt to this new world. I heard the critical comments of the hon. Member for Hayes and Harlington about David Montgomery’s company, Local World. I have to say that I spent a morning sitting in on its news conference and was impressed with the way that he is trying to ensure the integration of the online news coverage with his local newspapers. There is no question but that the business models have to change. In this world, the old business model is simply not going to work. David Montgomery is making a valiant attempt to develop a viable news model when other former newspaper group owners have withdrawn, as the hon. Gentleman knows.
The decline has left some areas with just one paper, and some with none at all. I will not repeat what has already been said about the dangers that that holds for accountability and democracy. In five weeks’ time, we do not just have national parliamentary elections; in many areas of the country, including mine, we have local elections that in some ways affect people’s lives more than whom they elect to send to this place. How are they supposed to reach a judgment on the performance of local authorities if that is no longer covered in detail by the local paper? That is why local papers matter so much.
The same thing applies in the court system. It is a fundamental principle that justice must not only be done, but be seen to be done. That means that the proceedings of courts need to be reported, as do those of health trusts, education authorities and the new local enterprise partnerships. The hon. Member for Llanelli (Nia Griffith) was absolutely right: as we devolve more power out to these different institutions, we have to ensure accountability by having coverage of them.
To go back to the points made by the hon. Member for Hayes and Harlington, one or two things can be done to help. First, I congratulate the Chancellor and thoroughly welcome his announcement yesterday on the possibility of business rate relief for local newspapers. There is no question but that that will help. It is gratifying that the Treasury has listened and acknowledged the importance of this matter, but more needs to be done. In 2010, the Culture, Media and Sport Committee welcomed a proposal put forward by the Press Association on what it called public service reporting. The idea is that journalists sit in the local council chamber or the local court and make factual, independent content available to any news outlet that wants it. Those journalists would be funded by a public service fund. There was a pilot to introduce that, and it offers a potential way forward.
There is an additional element to that proposal, which I press on the Minister. In the Committee’s recent inquiry on the future of the BBC, we received evidence from the chairman of the KM Group, Geraldine Allinson, to whom my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) referred. She suggested that the BBC should commission content from local media. Rather than just taking it and not paying for it, the BBC would commission content and so support local media. We received an excellent submission from the South West News Service, which extended the idea with an interesting suggestion. The BBC has an independent production quota for drama. It has to place 25% of its commissioning outside the BBC with independent production houses. SWNS’s suggestion was that we should consider extending that measure to local news, so that the BBC would be required to contract out part of its local news coverage to outside media groups. That could be done on a competitive basis and would be a way in which the BBC, which is extremely well financed by the licence fee, could be part of a solution, rather than being seen to undermine and damage newspapers.
Mr MacNeil
I worked as a journalist at the BBC—it was more than 20 years ago, I have to be honest—but does the hon. Gentleman think that the BBC should name-check and credit local media? The BBC picks up a lot of stories from local newspapers, and they go UK-wide and worldwide, but the credit is never given to papers such as the Stornoway Gazette or the Oban Times or whatever.
Mr Whittingdale
I agree that the BBC should do that, but it should not just credit stories. I hope that the BBC will, when it takes a story from a local newspaper, not only attribute it, but include a direct web link on the online report, so that someone can go straight across to the original article on the newspaper’s website. That is beginning to happen, but our suggestion goes a bit further than that. It calls for the BBC to buy in content as part of a quota.
I have been encouraged by the response we have had. James Harding has already made a speech in which he emphasised the importance of local media and the need for the BBC to try to support local media. I have spoken to James Purnell about the idea, and he was also receptive. I hope that the Government, whichever colour they are after the election, will examine that when they come to look at the charter review. The BBC does and will continue to play an extremely important role in this country, but it could also provide a vehicle for supporting local media, which, as every speaker in the debate will agree, is of vital importance to the democracy and accountability of institutions and the governance of this country.
Austin Mitchell (Great Grimsby) (Lab)
It is a pleasure to stand here as the chair of the NUJ parliamentary group, but to crack a Ken Dodd joke, it is a pleasure to be standing anywhere at my age. I am delighted to support the secretary of the group, my hon. Friend the Member for Hayes and Harlington (John McDonnell), in his efforts today. He has given us a litany of decline that is striking in its impact. It has hit journalists particularly hard. Journalists are central to this institution. We want to encourage good journalism and good local journalism and we want to raise standards. Instead, it is all being cut back. We have had a 10% fall in the paid sales of local newspapers in the past year and a 20% reduction in the number of local papers over the past 10 years. We have a situation where a fifth of local government units have no local paper to carry on a critique of the local authority and its activities. That is tragic when we consider that all politics is local politics. Everything is local, in fact. Our roots are local, and we need local discussion and active journalism to keep us on our toes and to provide proper effective scrutiny of local government.
There are cheering parts in the story. I was talking to the editor of the Grimsby Telegraph just this morning. He pointed out that it is a recession and everyone has had to cut back and look at new ways of working. I accept that, but a recession will lift. According to the Chancellor, it has lifted already and we are walking towards a glowing future, but that glowing future is based on promises that are mainly specious, as far as I can see. I do not attach all that much hope to the prospect of recovery and the turning around of the newspaper situation. We have a dynamic of cuts to increase dividends, and the executives are rewarded with high pay.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I have a number of excellent local media outlets in Oldham and Saddleworth. The Oldham Evening Chronicle in particular is keen to promote the importance of local media in helping accountability and democracy. What is my hon. Friend’s take on what the Chairman of the Culture, Media and Sport Committee proposed on public sector reporting and the BBC contributing by commissioning some of that support?
Austin Mitchell
I shall be coming to my comments on the BBC very shortly. I apologise for not responding immediately to my hon. Friend’s question. I have to have a translator, not to translate things from English into Yorkshire dialect, but because I am stone deaf.
I was going to argue that there are more cheering points. Grimsby and north-east Lincolnshire, because it is a real community—unlike most places, which are just slices of somewhere else—has a great interest in its history and politics and has been more supportive. The Grimsby Telegraph has had one of the lowest falls in circulation of any paper. It is making a profit from selling its own past in the form of “Bygones”, which sells well and helps to support the newspaper. The number of people who see the newspaper—the number of eyeballs that read it, whether in digital or print form—has actually increased over the past 20 years.
The hon. Member for Cleethorpes (Martin Vickers) has an outstanding example of enterprise in his constituency in the form of the Cleethorpes Chronicle, a local success story that was started from scratch. That is cheering, and the hope of recovery as the economy recovers, very slowly, will keep us going, but we have a real problem that affects the quality of debate and politics and the sense of community in our societies: the decline of journalism—the decline in the number of journalists and their training—caused by newspapers’ financial problems.
I have envisaged the forthcoming election having to be covered by Members sending in reports of our own speeches—they will not be published as they were previously —and taking selfies. That is how David Montgomery’s vision of a digital future will end up: idiots writing rubbish for electronic forums and sending in photographs of themselves as the authors of this gibberish—[Laughter.] But not me.
Think what our communities would be like without trenchant and active local journalism to cover community and council events, court proceedings and local functions, as opposed to asking people to send in their own photographs, as is increasingly the case. Think of Bradford, where the Poulson scandal was exposed by Ray Fitzwalter at Bradford’s Telegraph and Argus, who later went on to work for Granada. Think of the various problems unearthed by that paper’s competitors in the northern region. Think of the ability to discover who is getting what out of council deals, and any scandals that emerge. All that would go.
National journalists’ training is based on the local papers—they are the training grounds for quality journalism. That is where journalists learn their craft. If the functions are to be shifted from the local paper to a hub somewhere else in the country, the all-round experience of producing a newspaper, producing and editing news and developing the argument is going to be gone, and gone from a diminished number of journalists. There was a well-beaten track from local journalism to Fleet street. It provided the training ground for the quality journalism in Fleet street, but that is going to be undercut and will disappear.
This morning, the editor of the Grimsby Telegraph argued with me that at least her journalists are now more multi-skilled. Well, they can take photographs, deal with websites and upload news—that is certainly true. That could not have been done by my generation of journalists. I was at the glamour end of the profession, not the literate, intelligent end. Nevertheless, although they are more multi-skilled, there are fewer of them and they have less ability to inquire into what is really going on behind the scenes.
All that is easy to describe, and I have just done so, but in a debate such as this we must ask: what is the alternative? What do we do about it? That is the singular deficiency of all the debates on this issue that I have heard, read or seen over the years. That is why we want, and the National Union of Journalists is demanding, a short, sharp, quick and strong inquiry to discover the roots of the problem and offer solutions. We cannot develop them here and now, although the hon. Member for Maldon (Mr Whittingdale) has tried to offer some, but we must have an inquiry into the whole issue.
That brings me to the BBC. I do not and cannot support, and I do not think we should support, any proposal for top-slicing the BBC. Everyone wants to top-slice the BBC: ITV wants a bit, local media want a bit and local television stations want a bit. The BBC licence fee must be there to support quality production in this country. That is its purpose and that is what it should be devoted to.
Mr Whittingdale
The Select Committee had two potential solutions, one of which was top-slicing the licence fee to set up public service reporting. The hon. Gentleman is right that the BBC was opposed to that. However, the solution I was setting out was not top-slicing. I was talking about the BBC itself commissioning content. The BBC would continue to use the licence fee for itself, without giving it to any other body. As long as it remains within the control of the BBC, I do not think that there is an objection.
Austin Mitchell
There are alternative ways for the BBC to help out the newspapers financially. It now observes a requirement to buy stories from the local television stations—indeed, it has begun to buy stories from Estuary TV in my constituency. That is a good thing. There is no reason why the BBC should not buy stories from local newspaper journalists, provided that the money goes to the journalists, not to the directors and chief executives of the newspaper.
John McDonnell
Also, provided that it is additional, because otherwise it would be effectively top-slicing.
Austin Mitchell
Yes. That is the argument. It must be an additional subsidy. I must admit that when I was a television journalist, my first recourse was to steal stories from the local newspapers. There is no reason why such stories should not be developed and sold by local newspapers. We have had too great a website imperialism by the BBC. It might provide competition, but it is also taking viewers, readers and news stories away from local newspapers. I agree with the need for a degree of co-operation with the BBC.
In a previous debate, Ms Mensch, the hon. Member for Corby at the time, spoke of subsidising local newspapers. I would be in favour of subsidising local newspapers, as they do in Sweden, but I do not think that that would be a politically acceptable way to finance them. We must look at alternatives. One that has been mentioned since the Government have begun to take action against council free sheets, which were a problem and were unreasonable competition, would be subsidy from local government for advertising and carrying news information, not only provided by but paid for by local government.
Another option would be Departments. The Department for Work and Pensions publishes a lot on its website. People without internet access are penalised in their relations with the DWP. Why should not that Department pay for the material to be published in local papers? We could and should treat local papers as community assets under the Localism Act 2011. That would give them a degree of protection and might stop decisions such as those of Local World to turn daily papers all over the country into weekly papers, in order to generate a higher rate of profit. We could put restrictions on the pay of the chief executive, because many of the attempts to move to weekly rather than daily papers are simply to generate more profit, and the rate of profit of local newspapers is, frankly, obscene—we are talking about 20% to 30% profit to pay higher salaries to chief executives and higher dividends to shareholders at the expense of the journalists, who are being fired and losing their jobs. That is damaging.
I have a press release with me, which I received only today from West Yorkshire about an argument of local journalists with the Johnston Press, which runs weekly and daily papers in Yorkshire and is proposing to fire 19 more people from editorial jobs. The chapel for the weekly newspaper says:
“Our members believe passionately in the importance of local journalism but are being prevented from giving readers the level of news and sports coverage they deserve because of a lack of staff and investment in our papers—and any further jobs cuts will only add to this problem.”
Nineteen job cuts are proposed by a group whose chief executive is on a salary of £400,000 and whose chief financial officer is on £250,000. They used to have their bonuses capped at 100% of salary, but the bonus cap has now been lifted, so they will be eligible for bonuses of up to 180% and 150% of their pay, respectively, simply for closing down journalists’ jobs in future.
We have to look at every opportunity to restrict the ability for newspapers to be turned into weeklies or, more importantly, to be closed. There should be a period in which they can be offered to alternative community groups, perhaps even based on crowdfunding. And while I am on the subject, why can we not also look at tax incentives? We give tax incentives to people who invest in films, even if they are sometimes used as a tax avoidance racket, so why can we not give tax incentives to invest in newspapers, in particular newspaper start-ups or community newspapers? Indeed, why can we not look at an industrial levy on Sky, Virgin or the mobile phone operators? Small levies on those companies would produce a major subsidy for the newspapers.
There are 100 ways to skin a cat and it is not beyond the wit of man or Government—perhaps it is beyond the wit of Government, but not of man—to devise ways in which to help papers through their financial situation. To conclude, therefore, it is important for us to have an inquiry to look at the various ways in which we can stop the decline in journalist training, pay and numbers.
Sir Edward Garnier (Harborough) (Con)
I will not take up my full allotted time, Sir Hugh.
I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on initiating the debate. I thank my hon. Friend the Minister for Culture and the Digital Economy for taking a real interest in this aspect of his portfolio. Few Ministers have had the length of service in one job and have therefore come to know a great deal about their subject; I am grateful to him for that. I also thank the Chair of the Select Committee, my hon. Friend the Member for Maldon (Mr Whittingdale), who has brought great wisdom and knowledge to this subject, as we have witnessed today.
One of the dangers that I will relieve the hon. Member for Hayes and Harlington of having to face is my being here for the entire debate—as he anticipated, a number of us cannot stay for its full length—but there is still danger that we will appear to the outside world as a collection of retired colonels, regretting the past. If we give the impression that the newspaper world should never change and that it is immune from the ordinary laws of economics, we are doing it a disservice, just as we are doing ourselves a disservice.
I have an interest to declare in that, for the past 40 or so years, I have been a member of the Bar who specialises in newspaper cases—newspaper and media law. I have acted for and against many local newspapers and I have understood, both as a consumer of the product and as a person being paid by them, the value that they provide throughout the country to local communities. It does not matter whether one is in Scotland—the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) mentioned his local paper in Stornoway—Northern Ireland or any part of England and Wales; there is no community that has not over the years benefited in some way from its local press.
Of course we regret the demise of the local press and the way in which it has changed. In my own county and constituency, the Harborough Mail, a weekly paper that has been going for more than 100 years, is now running from a hub—to use an expression used earlier—and is using shared content. It is no longer based in Market Harborough. It is part of the Johnston Press company, and our editor is now the editor of a number of local titles and he is based in Kettering, so we do not have that immediate local connection. Although Kettering is only 15 or so miles down the road, there is a psychological gap that has been created by the rationalisation—to use that awful expression—of the newspaper world.
My local daily paper, the Leicester Mercury, which was mentioned a moment ago, is in the same group as the Derby Telegraph. At one stage the whole production of the Mercury and all the journalists, as well as the outlying offices, were connected into the main office on St George street. When I first became the Member of Parliament for Harborough, the newsroom was noisy, bustling, full of paper and all that sort of stuff. Now, the newsroom is quiet, not only because everyone is typing on word processors and not the old Imperial typewriters, but because fewer people are in there, and as someone has mentioned, they are drawing on press releases, cutting and pasting.
I do not ascribe that problem only to the Leicester Mercury. When I worked in Fleet street newspapers—I am talking about the late 1970s—I remember listening to a City journalist on The Guardian complain that all he was doing was cutting and pasting or reproducing company press releases. He said, “That’s not journalism. That’s just copying.” If we do not get the training at local level for the journalists who translate to Fleet street and become the great national names of journalism, we will lose something, but I do not think that we will repair that loss by getting the state to subsidise the press, as I think the hon. Member for Great Grimsby (Austin Mitchell) might have been implying. The press should be utterly free of Government interference. Yes, the Government—Parliament—should regulate the world within which we all operate, but the day that we get the Government paying for the production of newspapers is a day that I think we would regret.
[Andrew Rosindell in the Chair]
I do not want to belabour the point, but we cannot constantly regret the past. We need to come up with innovative and practical solutions. In his brief remarks, my hon. Friend the Member for Maldon offered a few suggestions that he and his colleagues in the Committee of which he is Chair came up with. We need to ask the Government, whether this one or the next, to think carefully about what they can do without sitting on the press and the news media. What can they do to help them flourish?
One thing that I would urge the Government who are in charge of this review to look at is the way in which we regulate the acquisition and merger of local titles. That idea is not original to me; it has been suggested to me by the News Media Association and I am happy to repeat it. The association asks that we
“Reform and liberalise the local media merger and transfer regime so that more titles are not closed down because their sale to a willing buyer is blocked by the competition authorities.”
It tells me that
“In 2011, Northcliffe Media’s attempted sale of seven weekly newspapers to KM Group was aborted after the Office of Fair Trading referred the sale to the Competition Commission, leading to the closure of some of the newspapers.”
Ofcom has since endorsed the industry’s position, suggesting that the media merger regime needs to be modified and local media excluded from its plurality review, but there is no evidence that that new approach has been adopted. Through the Minister, I urge that the review consider that position.
Johnston Press is a large organisation. It owns the longest continuously published local newspaper, the Belfast News Letter, which has been published daily since the first half of the 18th century. I do not know who owns The Oban Times in Scotland, to which the hon. Member for Na h-Eileanan an Iar referred, but it is the most widely read newspaper throughout the English-speaking world.
Chris Bryant (Rhondda) (Lab)
The right hon. and learned Gentleman has referred to long ownership of titles. One of the things that have happened when large conglomerates, such as the ones mentioned in this debate, close titles is that they have refused to allow anybody else to use the titles. Might there not be an advantage to making it possible—after a moratorium of, say, two or three years—for others to take on such titles, so that they can maintain the tradition, albeit under a different model?
Sir Edward Garnier
That is a very sensible suggestion, which I hope the review can take into account. Of course, the owners of the intellectual property in a title may want to resurrect it in some other form, or to restart the newspaper when times get better. For example, the Evening Standard and the Evening News here in London are now merged into one paper, but who knows whether the current owner of the Evening Standard may not one day wish to revive the Evening News? I do not know where the ownership of that title has gone. However, the hon. Gentleman’s point is worthy of consideration.
I urge that we behave in a positive way and do not constantly doomsay and give the impression that the problem is completely insoluble. It is not, if there is the will and if there is intelligent and appropriate management of the finances of these companies—although some of the stories told by the hon. Members for Hayes and Harlington and for Great Grimsby about the movement of money within them were surprising, if not shocking. None the less, it seems to me that the newspaper industry has it within its resources to do a lot to help the local press. For example, why do not The Daily Mail or The Sun, both immensely successful newspapers in their own right, adopt a local paper outside the family tree of Northcliffe Media or News Corp, so that both can flourish in their different markets? No one would suggest that the Leicester Mercury is competing with The Sun or that the Harborough Mail is competing with The Times, but there are commonalities of interest that could be explored, to help little local newspapers.
My constituency has lost the Harborough Herald & Post. I have no idea who owns the title now, but there was a reasonably well read local newspaper that has gone and will probably never come back. I want the Harborough Mail and the Leicester Mercury still to be there in 50 years’ time. I am sure many other hon. Members would like a good local voice operating loudly and disinterestedly in each of our constituencies.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Diolch yn fawr, Mr Rosindell; it is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing this debate and on his excellent opening remarks.
Against the better judgment of my agent, who, when he heard that there were no votes this afternoon, wanted me back home campaigning in west Wales—especially as the weather happens to be sunny at the moment—I wanted to be here today to show a degree of solidarity with local newspaper journalists, because I think they are vital to the work that we do as elected Members. They are often the link that communicates the work that we do here in Westminster to our constituents; they are also often the forum in which our constituents hold us to account between elections.
Before I go on to discuss local newspapers, in Carmarthenshire in particular, I echo the comments of the hon. Member for Llanelli (Nia Griffith), who mentioned the incredible contribution of the national print media in Wales. I will take this opportunity to mention two journalists in particular. One is Martin Shipton, who has made a huge contribution to Welsh public life in his work with the Western Mail. He is currently that newspaper’s chief correspondent and also serves the NUJ in Wales with great distinction. The other is David Williamson, who is the parliamentary correspondent for three titles: the Western Mail, which largely serves south Wales, the Daily Post, which serves the north of my country, and the Liverpool Echo. I pay tribute to his incredible work in reporting on events here in Parliament.
In 2012, I was elected the first secretary of the all-party group on the Welsh media. The group was set up following a crisis in the local newspaper industry in Wales, with the closure of a series of titles. The group has not been as active as we should have been, although I am glad to see two members here, the hon. Member for Rhondda (Chris Bryant), who is the group’s chair, and the hon. Member for Llanelli. Perhaps, following the election, we should reconvene and take up the task once again.
In June that year, I spoke about the need to expand the scope of the Localism Act—I believe it was in a question to the Minister here today—to protect newspapers by giving them community asset status, a position that was supported by the NUJ. Giving newspapers that protection would mean owners could not close a paper down overnight, as happened to the Neath Guardian. A consultation on a newspaper’s future would have to be held, allowing potential new owners—perhaps even a co-operative—time to bid for the paper.
As has been said already in some excellent speeches, local newspapers are vital elements that bind our communities together. They are also vital for local democracy. Not long after my contribution on the subject on the Floor of the House nearly three years ago, my local newspapers, the South Wales Guardian and the Carmarthen Journal, were holding Carmarthenshire county council to account about what were, according to the Wales Audit Office, unlawful payments made to the authority’s chief executive by the Labour and independent executive board. Those local newspapers were instrumental in the sharing of information with local residents and in holding local politicians to account for their actions. The South Wales Guardian was threatened with having its advertising withdrawn if it continued to publish stories that were critical of the council, but I am pleased to say that under the strong editorship of Mike Lewis, the paper held its nerve and did not give in to the bullying. The conviction of local editors such as Mike demonstrates why local newspapers are the most trusted source of news. Democracy cannot survive without effective scrutiny and accountability. At local level, local newspapers are key players in the democratic system.
Today, the South Wales Guardian and the Carmarthen Journal have new editors—respectively, Steve Adams and Emma Bryant—who have brought new and exciting ways of delivering local news to their readers and maintain their papers’ position at the heart of the community. In my discussions with the editors, what I have found most interesting is how they have to work to very tight revenue deadlines. The primary role of an editor is to raise revenue for their newsgroup rather than to work on editorial content. That puts huge pressure on them as news editors.
The Tivyside Advertiser, which has been the pillar of communities in the Teifi valley, has regrettably abolished its editor’s position due to increasing financial pressures and is now being edited outside the county. The former editor, Sue Lewis, was a huge asset to the newspaper and I wish her well in future. Just two weeks ago, my local newspapers were joined by a new kid on the block, as the hon. Member for Llanelli mentioned, the Carmarthenshire Herald. From its initial editions, it seems the paper will be pulling no punches in holding local politicians to account, which might worry us slightly on the eve of an election.
Unfortunately, those vital publications continue to find themselves under threat for a number of reasons. First, an all-powerful BBC, via its website operations, is trampling on the traditional territory of local newspapers. Publications trying to embrace the new opportunities of the internet have undermined themselves by providing their content for free, hence hitting circulation. The ideas put forward by the Chair of the Select Committee, the hon. Member for Maldon (Mr Whittingdale), on how local newspapers and the BBC could work together were therefore quite interesting. Despite being pure propaganda sheets for senior directors and ruling councillors, local authority publications that are paid for by the public directly undermine local newspapers by sucking up vital advertising revenue. One of the welcome steps the Government have taken is to ban council propaganda sheets here in England; unfortunately, they are still available in Wales.
Local papers in Wales are owned by three large groups based outside our country, including Media Wales, which is part of the Trinity Mirror group. As the hon. Member for Hayes and Harlington outlined, Media Wales is financially very well resourced and hugely profitable, but the number of its journalists has been cut drastically. The centralisation of the newspaper industry has led to a higher percentage of turnover being demanded in profit for shareholders, and that is often achieved by putting huge pressure on local news teams’ human resources, with a direct impact on content. Essentially, the model for our local newspapers is one of asset stripping, and that is what is being rolled out across the sector in the UK.
Yesterday’s announcement by the Chancellor that the Government will consult on ways to support local newspapers via the tax regime is to be welcomed, and I look forward to the consultation. While we await its terms of reference, I hope the Government will take the opportunity to look at all ways to support local newspapers, including taking action to stem job cuts and attacks on journalism, especially by public bodies threatening to remove advertising if publications criticise their actions; looking at new models of community journalism; and looking again at my 2012 proposal for protecting newspapers as community assets.
Newspapers in Wales are a treasured part of our heritage, reflecting a mix of local news, views and sports coverage. They are a place where many excellent journalists work and become part of their communities. They are, in every sense, community assets, and they should be considered as such in law. Diolch yn fawr.
David Morris (Morecambe and Lunesdale) (Con)
It is an absolute pleasure to serve under your guidance, Mr Rosindell. I thank the hon. Member for Hayes and Harlington (John McDonnell) for securing the debate. His comments were very thoughtful and collegiate.
I attend the debate at the request of my local newspaper editor, Nicola Adam, who has asked me to express her team’s views. In my constituency, we have two local newspapers, which cross-cover both parts of it: The Visitor, which comes out on a Tuesday evening, and the Lancaster Guardian, which comes out on a Thursday morning.
Despite the doom-and-gloom reports we hear of decline, my local papers’ readership is ever increasing. That is because The Visitor and the Lancaster Guardian have embraced the new online audience in the face of the decline in physical, printed copies. Both versions have an audience in my constituency. Anyone who has ever been to Morrisons in Morecambe at 5 pm on a Tuesday will almost have been mowed down by the stampede of people trying to get hold of The Visitor. Some 22,280 people in my constituency read the paper copy each week, while there are 60,843 unique users online and 133,133 views on mobile devices. That shows that the audience for local news is still there, but that people want to access news in a different, instant, digital medium. For local news to survive, newspapers need to embrace the online market and not rely solely on paper circulation figures. The digitalisation of the local press, far from meaning that fewer people are engaged, has actually shown that there is a greater demand for local news, insight and opinion.
Local newspapers are champions of democracy. Nicola and her team work hard to ensure that the things I do in the area as the Member of Parliament are covered in a fair and balanced way. In addition, I have a weekly column in both papers, which also appears online as a weekly update to my constituents. Some more elderly constituents read my column every week and enjoy being updated about positive things that are happening in the area. If the local paper covered a wider area or multiple constituencies, residents would miss out on getting a personalised update every week. Instead, they would get a more general update on the whole area, some of which would not be relevant to the area in which they live.
Nicola has passed me research showing that, contrary to popular belief, there are no major gaps in the UK in terms of areas that are not served by a local paper, and we are lucky enough to have two covering my area. It is clear that, at a time when the market is struggling, free newspapers have declined, but the net reduction in the number of local papers in the past 20 years has been a mere 1.6%.
One of the main concerns expressed by the editor of Morecambe’s The Visitor, and by Johnston Press more widely, is that there could be a knee-jerk decision for the BBC to step in and save local newspapers. That would be misjudged and have a negative impact. More generally, there seems to be a feeling that the BBC could change and have a commercial and complementary relationship with its competitors, instead of undermining them. The BBC often covers a much larger area than the local newspaper, so local newspaper teams who live in the area they report on can sometimes handle local knowledge and interests better.
To sum up, the local newspapers in my constituency professionally represent local people’s views, and Nicola and the team are adapting to the increased digitalisation of their product. Local news teams must see that the future is digital, but I believe that local newspapers, if not always in print form, are here to stay for a long time to come.
Valerie Vaz (Walsall South) (Lab)
It is a pleasure to serve under you as Chair, Mr Rosindell. I thank my hon. Friend the Member for Hayes and Harlington (John McDonnell), the hon. Member for Colchester (Sir Bob Russell), who is not here, and the hon. Member for Maldon (Mr Whittingdale) for going to the Backbench Business Committee to secure this important debate.
I also pay tribute to the previous Chair, Sir Hugh Bayley. I wanted to make these remarks while he was here, and I told him I would be making them, but he has now left. This may well be the last debate he chairs—it is certainly the last debate in which I will appear before him—because he is retiring. I pay tribute to him for all his efforts in the House. He was actually in the Speaker’s Chair when I made my maiden speech, and it would have been nice to complete the circle, but that is not to be. However, I have you, Mr Rosindell, which is just as good.
Valerie Vaz
I do not know whether hon. Members are aware of this, but one of my earliest jobs, before I went to university, was at the local newspaper, the Richmond and Twickenham Times, which was run by the Dimbleby newspaper group. One of the major stories that broke when I was very young was by a reporter on the Brentford and Chiswick Times called Malcolm Richards, who went on to become the editor of the Richmond and Twickenham Times. It was about a new women’s refuge in Chiswick—the first ever women’s refuge, which was set up by Erin Pizzey—and there was a lovely photograph of Malcolm and Erin sitting on the refuge steps. However, that piece would not have come about had it not been for a local reporter. Malcolm could have gone on to become a very important journalist in what we then called Fleet Street. However, he chose to stay at the Richmond and Twickenham Times, and it remained a flourishing local newspaper.
That is why it is so important for young journalists to cut their teeth in local journalism and to find out what it is like. When I was at Cambridge for a short while doing some research, one of the local journalists at the Cambridge Evening News was Alan Rusbridger. He was a fine, outstanding journalist, and we know where he has ended up. It is important for young journalists to cut their teeth on local newspapers; writing a blog or writing for the internet are slightly different from the journalism we want to see. When people have time to get the facts right and to get the evidence, we get a proper, balanced article.
The Government have a role to play, not in interfering with, but in supporting the local newspapers that inform people. When I first came to the House, local newspapers contacted me to say they were alarmed by the fact that adverts had been pulled from them. That was a pity and a shame, because it is important to encourage and support local newspapers. Local people want to be informed.
Many people will know that young David Pearce designed the new pound coin that was announced in the Budget, and he is on the front page of the Walsall Express & Star because he is a pupil at Queen Mary’s grammar school. I am very proud of the fact; it is in my constituency. That is not major news to everyone else. David was given a small piece in some of the other newspapers—but local people want to know about that. That is the importance of local newspapers.
Another major event will happen on Sunday when for the first time in its history Walsall football club will go to Wembley, for the Johnstone’s paint trophy final. We wish the team well. There will be a souvenir edition of the Walsall Advertiser and the Express & Star. It is probably not of interest to everyone else, but it is very much of interest to local people. I wonder how someone could get a souvenir edition of a blog or something on the internet. Many people keep souvenir editions. I think I have kept one of The Times from when my daughter was born. It is wrapped up in a plastic bag, and I am keeping it for her. Many parents do that with announcements about their children, or items about things that happen to them—particularly people such as David Pearce’s parents.
I agree with my hon. Friend the Member for Hayes and Harlington and support the call by the NUJ not just for Government consultation but a full inquiry. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is not in his place, mentioned that it is important to ensure that there are different models and ways of working, and it is also important to enhance the quality of local journalism. That will be a help to local journalists and the national journalists of the future. We need thriving local papers to survive in a thriving democracy.
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to serve under your chairmanship, Mr Rosindell. Like other hon. Members, I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing the debate. He began with a reference to the hon. Member for Great Grimsby (Austin Mitchell), who has been my Member of Parliament for 38 years, despite my efforts to dislodge him; so it would not be appropriate for me not to compliment him on those years of service. I am obviously the only one in the Chamber who was present on the night he won—against all the odds, so we were told, but clearly his natural charm and ability shone through.
I recall campaigns in which we have been involved—not only in the past five years, when we worked quite successfully together to achieve some much needed investment in north-east Lincolnshire, but also when I was a councillor. Together I think we contributed to saving Scartho infants school. I also recall a heated meeting at the Seven Seas pub with an understandably angry group of local residents, when it was proposed that the nurses’ home should become a hostel for asylum seekers. We have seen some ups and downs together, so I thank the hon. Gentleman for his service to the community. Despite our differences, there is no doubt that he has the interest of the people of Great Grimsby and the wider area at heart.
We have heard about the problems of the local newspaper industry, which are challenging. However, on the whole my constituents are extremely fortunate. We have a thriving array of local papers, of which the Grimsby Telegraph has already been mentioned. That is now Lincolnshire’s only daily paper, and has been delivering daily news since 1897—hence the fact that the “Bygones” edition has a lot of archive material to delve into. It is always worrying, of course, to see oneself in the bygones edition, but such is life. Sadly, its sister paper, the Scunthorpe Telegraph, has become a weekly edition, but the Grimsby edition circulates throughout my constituency, although in the Barton-upon-Humber ward it is the Scunthorpe edition that is a must-buy for most households every Thursday. We are also fortunate to have the Cleethorpes Chronicle, which is celebrating its seventh anniversary tomorrow. Certainly in Cleethorpes and the part of Grimsby where the Chronicle circulates the papers complement each other, and have some high-quality journalism.
The Telegraph is a greatly valued local institution. I recall a newly-arrived curate at the parish church telling me she had been confused when people kept referring to “the paper”, but had rapidly realised that in the Grimsby and Cleethorpes area, that means the Grimsby Telegraph. The Chronicle was launched six months before the economic crash, and it is a credit to Mark Webb and Nigel Lowther, the directors, that they have steered it through the choppy waters of the economic recession to the calmer seas that the coalition’s long-term economic plan has delivered. [Hon. Members: “Oh no!”] I get a bonus point for that.
Like me, Nigel Lowther, the editor of the Chronicle, is a Meggie, which means he was born in a certain part of Cleethorpes. He thinks he is probably the only newspaper editor in the country who can claim to be editing his home town newspaper. The Grimsby Telegraph is one of the best performing local papers in the country. Its print edition reaches 52,000 readers six days a week. The weekly readership is in excess of 82,800, which I am told means it outsells the Daily Mail in the constituency by two to one. Six out of 10 local people read either the online or hard-copy edition. I am sure that circulation must be higher on Mondays, as that is the day when the hon. Member for Great Grimsby and I share our weekly column. People queue up at the newsagents each Monday morning.
The online readership is between 30,000 and 40,000 unique readers a week. There is no doubt that one reason the Telegraph is held in high regard by the community is that it has championed many local causes, such as charities, and campaigns that I and other local politicians have been involved in—most recently to save the rail links between Grimsby, Cleethorpes and Manchester. It has been involved in fundraising for St Andrews hospice and for a Christmas outing to Lapland for desperately ill children. There are many other examples of its support for the community.
The Scunthorpe edition sells about 17,000 each week and 26,000 people visit its website each day. As with many local newspapers, there is a misconception that the readership of the online editions is made up of a distinct age group. In fact, 29% of the Scunthorpe edition readers are under 34, and 32% are in the 35 to 53 age group. The regional press, like many other industries in Britain, has had difficult times, but the birth and success of the Cleethorpes Chronicle and the continuing popularity of the Grimsby Telegraph and Scunthorpe Telegraph support what Michelle Lalor, the Grimsby Telegraph editor, said to me a day or two ago:
“I have been a local journalist for 26 years (all of it in the Humber region) and I see a local press in North East Lincolnshire today that is probably healthier and more exciting than it ever has been.”
There is no doubt about the challenges, and that fewer people are employed in the local press, but we are blessed in having had continuity. For the past 33 years there have been only two editors of the Grimsby Telegraph and many of the local reporters have moved on to higher things. There are quite a few around here, in Westminster, who started by being bored to death watching me in the Great Grimsby borough council public protection committee, or whatever, pontificating about some local issue or other. Although reports of local government meetings are fewer in number than they were in the 1980s when I was first elected, fortunately both the Grimsby Telegraph and the Cleethorpes Chronicle still report local politics. Local politicians can fear what the next edition may include.
The hon. Member for Great Grimsby referred to local papers publishing press releases sent out by political parties, MPs and whoever, who do their own selfies and so on. It occurs to me that if they write the articles and take the pictures, that is a good way to get much better press—surely some decent coverage is guaranteed.
The Grimsby Telegraph told me that it would welcome plans to look at further models for local journalism. If that is to be done by way of the inquiry that has been mentioned, I am sure that many local papers would welcome the opportunity to contribute. However, we must face the fact that, as with all products, ultimately the customer will determine whether local papers will succeed as electronic, digital editions or as hard copies. I much prefer the hard copy, but that is probably more a sign of my age than anything else. I cannot stand all the pop-up adverts—I would much rather subscribe to an online edition to avoid all those adverts, but each to their own.
In these days in which many of the institutions that hold together local communities, such as the church, the pub, the post office and so on, are in decline, local newspapers are a glue for local communities and a part of our identity. We must do all we can to ensure the vitality and success of that industry. Local papers are valuable to our local communities. Long may they continue.
Paul Flynn (Newport West) (Lab)
I am grateful to you for calling me at this point in the debate, Mr Rosindell, because as I reach the near halfway point of my parliamentary career, you have given me a special distinction. In the debate in the Chamber last Thursday, there were a great many speeches and I was the final speaker to be called. The Thursday before that I was also the final speaker to be called and I am the last speaker today. I know that this is meant kindly by the Speaker’s Office, because they want to ensure that I have the benefit of hearing all the other speakers so that I can make up my mind about what to say. I hope you will pass my gratitude on to those who have given me this rare but precious distinction.
I do not think that this debate will make the headlines, but if it does its headline will be, “No MP criticises his local paper 50 days before an election”. [Laughter.]
Nia Griffith
Does my hon. Friend share my alarm at being told, on a previous occasion when we discussed this very topic, that journalists were afraid to mention it in their local paper? They had been intimidated. Does he agree that that is utterly disgraceful?
Paul Flynn
I agree very much. I will tell a story about my local paper, I will play the game as well and say what I think about them. When I was first elected to this place, it was in spite of the local paper. The then editor made it clear to me many times. This was in 1987. It did an editorial on each constituency and recommended that its readers vote Labour in four constituencies, but when it came to my constituency, which was the only one that could possibly change hands, it invited and urged its readers to vote Conservative. The editor told me that that was because of a conversation that took place. Of course, local newspapers are subject to the same pressures as others.
I do prize my local paper for what it did last Friday, when it printed a tribute to a local politician who just died at the age of 92. He was a wonderful man, radicalised by the second world war to be a pacifist and peacemonger for the rest of his life. He was a great visionary and an accomplished poet who, as a councillor, valued the permanent treasure of the city, Tredegar house, which he ensured was preserved in its best form as well as the Transporter bridge, a wonderful piece of engineering that people wanted to destroy. He leaves a legacy to the city that is precious but forgotten. However, one of the journalists at the local paper, the South Wales Argus, did a tender, perceptive tribute—it was not just an obituary—that saw the fine qualities of Glyn Cleaves.
I am also grateful to the Leicester Mercury. I wrote a biography of one of our former colleagues, David Taylor. Of course, there is no interest in that nationally—there will not be anything in The Guardian about that—but he was a model, devoted MP. The Leicester Mercury was kind in giving that great coverage, which his family and admirers greatly enjoyed.
Local newspapers cover an area covered by no one else and I agree with everything that has been said about them. The Argus has had a long tradition. We went through a bad patch a while ago when printing, which had been done in Newport for more than 150 years, suddenly disappeared. We have compensation for that now in that one of the hubs referred to is in Newport. I understand the criticism of doing sub-editing from a distance, because that has problems, but 40 badly needed jobs have been created in Newport mainly because of that hub. There is a certain amount of rough justice involved in that.
The paper is more optimistic than has been heard in many of the comments made today. It claims, quite accurately, that more people are reading it than for many years because of the numbers coming online. Certainly there has been a serious loss in paper sales, but the online presence is powerful. That must be accepted.
It is clear that advertising has been eaten away from local newspapers. So much basic advertising for property, jobs and public notices has gone and, sadly, it will not come back to them. We have a crisis but, as everyone has said, local newspapers perform an irreplaceable service for democracy. We have a gap between national publicity for the great events that go on and the publicity given to what is done in local government and by the various other people who are responsible for their local communities.
We must say to this Government and the next Government that something must be done. We cannot talk about subsidies for local newspapers. We do not want them to be dependent on money from elsewhere, because that might affect their independence, as we have seen with other organs in the past.
In Wales we have a particular problem, because national newspapers are dominated by the political agenda. For four days running, the Daily Mail had page 1 leads about the state of the health service in Wales. In no way were those front-page leads attributable to news values; they were purely political propaganda that did a great deal of damage by undermining the faith and trust that people have in the health service and their doctors, which is a crucial part of recovery and therapy. That campaign was completely irresponsible, but, sadly, the Daily Mail may be far more influential than all the local newspapers put together.
Local newspapers would not dare to give such a distorted view of the health service. Of course, health services throughout the United Kingdom have problems, but we know that the Nuffield Foundation, which looked into that, said that there are strengths and weaknesses everywhere. We know that the strengths of the health service in Wales include the fact that a cancer patient in Wales is likely to live longer than one in England. Also, there has been less use of the private finance initiative in Wales, thanks to the wisdom of the Welsh Assembly, and there will be fewer problems in future. However, the way in which the health service has been used by the national press—by these greatly influential bodies—has been a disgrace. Local papers certainly would not get away with that; they would be brought to book.
Local newspapers have to continue to provide the quality service that we have had for years. It is up to them to find a mechanism to do so, which may be a subscription system—people who value their paper might have to pay directly for it. However, the Government have a responsibility to come up with a formula through which local papers can survive, thrive and do the valuable the job that only they can do, but do it in a manner that keeps their independence and integrity.
Chris Bryant (Rhondda) (Lab)
It is always a delight to serve under your chairmanship, Mr Rosindell. In fact, there is a never a delight greater than serving under your chairmanship—and if you believe that, you’ll believe anything.
I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing the debate. I knew that he and other hon. Members were seeking it, and I am delighted that it has come to pass. Perhaps he thought that only a few of us would be here and that we would have to stretch our speeches out for hours to fill the allocated time—we know that the Minister finds that difficult to do—but what my hon. Friend had forgotten was that the debate has a subtitle, “How to get in your local newspaper”, and an awful lot of colleagues have come along to get in their local newspaper. We have heard an array of names of local newspapers and a great deal of name-checking, and we are all grateful for it.
It is a shame that the beknighted Gentleman, the hon. Member for Colchester (Sir Bob Russell), is unable to join us for the end of the debate. He has apologised, and obviously we understand that he has to fight off the Labour contender in his seat, so he cannot stay here for the rest of the debate.
I was delighted to hear from my hon. Friend the Member for Llanelli (Nia Griffith), who made extremely important points about what is happening in Wales, which I will refer to later.
It is always a delight to hear from the hon. Member for Maldon (Mr Whittingdale), the honourable toyboy of Mrs Thatcher—[Laughter.] Well, that is what the press described him as, so we can only presume that it was the truth. Maldon, of course, has a great tradition of journalist MPs. Tom Driberg had quite a reputation, which the hon. Gentleman has not quite managed to live up to—or live down to, or live across, but I have never crossed Westminster bridge with him, so I do not know.
I am envious of my hon. Friend the Member for Great Grimsby (Austin Mitchell), because I think the Rhondda, too, should be the Great Rhondda. His constituency should not be the only one called “Great”. In fact, my constituency used to be the Great Rhondda, in that it was Rhondda Fawr and there was a Rhondda Fach as well. Perhaps we will return to the Greater Rhondda at some point.
It was a delight to hear from the right hon. and learned Member for Harborough (Sir Edward Garnier). He also represents Oadby and Wigston, though he left those two bits out, and I see that he has departed this realm—or this room, anyway.
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) has obviously gone off to his constituency as well. He referred to Martin Shipton and David Williamson as great scions of Welsh journalism. I would only say that Martin Shipton laid a bet with my hon. Friend the Member for Cardiff West (Kevin Brennan), when I was selected as the Labour candidate in the Rhondda in 2000, that I would lose the seat because of my sexuality. My hon. Friend said that I would win by more than 10,000 votes, and he had better political antennae than Mr Shipton, for which I am grateful.
We also heard from the hon. Member for Morecambe and Lunesdale (David Morris), which is always a delight—oh, he’s gone as well.
My hon. Friend the Member for Walsall South (Valerie Vaz) told charmingly entertaining stories of the various different careers that she has had in the past, and it was a delight to hear from her.
The hon. Member for Cleethorpes (Martin Vickers) referred to selfies, and as one of the early proponents of the selfie, it is a delight to hear that everybody has now come round to my opinion on this matter. I merely point out that further to The Mail on Sunday and The Sun advertising my selfie in November 2003, I increased my majority at the next election, so it pays to advertise—although perhaps not in quite that fashion, would be my advice.
My hon. Friend the Member for Newport West (Paul Flynn) has been derided by the press in the past, in many different ways and in many different guises. He has the scars on his back and he is proud of them, as are many of us.
The truth is that, as many have adumbrated this afternoon, there are enormous problems in the local newspaper industry. As people have mentioned, first of all, there are the closures, with 150 titles gone since 2008. In November 2014, Trinity Mirror itself closed seven newspapers, losing 50 journalists. It does not feel as though the pace of those closures is slowing, and if anything, there is a danger that it will increase.
There has also been a dramatic fall in sales, not only in local newspapers, but in national newspapers: it has been 15% year on year for some time now. Last year, sales of the Bolton Journal fell by 39% in a single year, whereas for the Coventry Telegraph, they were down by 14.4%. In Wales, as we know even more keenly than I suspect many other places, sales of the Western Mail fell last year by 14%, and it is now down to just 19,654 copies. It does not feel like a national newspaper any longer, given that 3 million people live in Wales. The figure for the South Wales Echo is similar—20,634—and they are virtually identical newspapers now, with many articles repeated word for word from one to the other, or nicked from the Rhondda Leader.
As I have mentioned the Rhondda Leader—because I have to do my bit about getting into my local newspaper—it is a depressing fact that, when I was first elected, the number of copies sold every week was in the tens of thousands, and it is now 4,342. It is not a local newspaper any more, and frankly, that is partly because most of the news is not local news. It is published out of a hub. The paper is not published in the Rhondda and has not been for some time. It does not have its own distinct set of reporters and the inside pages often refer to all sorts of other places in south Wales that have nothing to do with the Rhondda. The fall even in the last few years, from nearly 10,000 copies in 2009 to 4,432 now, means that sales have halved in the period of this Parliament, and that represents a major problem.
There has been the collapse in journalism as well. In 1999, Media Wales had 700 journalists, but it now has 136. It simply cannot provide the same degree and level of expertise about a wide range of subjects—from agricultural through to politics, to broadcasting and so on—that the national newspaper of Wales really needs. Many local newspapers now have barely any truly local content, and certainly none with investigative reporting or fact-checking behind it, as many hon. Members mentioned.
Advertising revenue fell dramatically during the recession, but there have been further problems since then. The advertising revenue for local newspapers is still falling, in part because they used to rely on people selling or buying a car or their home, and many of these things are now done entirely on the internet. Some hon. Members have asked, “Would it not be a good idea if Government advertised more in these newspapers?” The legal requirements are clear, but I do not think that Government should advertise in newspapers solely to keep the newspapers alive. That would be inappropriate. Government have to decide what is the most cost-effective way of communicating with all the community.
I say gently to the newspaper proprietors that I think sometimes they have conspired in their own downfall with regard to local newspapers—I truly do. My hon. Friend the Member for Hayes and Harlington made extremely good points about boardroom pay and profits simply not matching, or being completely out of kilter with what was needed in the industry to invest for the future to make sure that there was an ongoing revenue stream. Therefore, to try to keep the figures up, companies ended up putting cover prices up. The Rhondda Leader now costs 90p—quite a significant sum if there is to be no local newspaper content. When The Northern Echo put up its price by 15p a little over a year ago, the number of people buying the newspaper fell dramatically. Fifteen pence may be nothing to Members of Parliament or to many people listening to this debate, but that just made it an unattractive option for many people in the north. Somehow or other, we have to deal with that vicious circle. Why does that matter? It matters for the simple reason that local newspapers are an essential part of local democracy and local culture—people understanding what is happening around them.
At the moment, there is a little story going on in my constituency. Maerdy surgery has decided to go part time on Thursdays and has threatened to close on Fridays. There is no means of knowing that from a local newspaper now. To all intents and purposes, it is barely reported at all. There is a grass fire going on in Porth this afternoon. I doubt whether that will get into a printed newspaper in any shape or form, and if the kids who probably started the fire got arrested, I doubt whether that would end up being in a newspaper, either.
This is a problem for us all, because local government is where most of the policies and most of the public services that we talk about are administered. If no one gets to find out what is happening in their local area, there is no true accountability. That is all the more difficult in Wales. Scotland has quite a substantial national set of newspapers. They compete with one another. There is competition for voice, political posture and quality. Very little of that happens in Wales, where virtually only one voice can be heard in any given area and many people simply do not understand the devolved settlement. Sorry, I mislead the House. It is not a settlement; it is the devolved process, which changes every year because some new Secretary of State for Wales comes in and decides, “Right, we’ve got to do another chunk of devolution that no one will end up understanding.”
My hon. Friend the Member for Great Grimsby referred to local newspapers as the breeding ground for this country’s great journalists. Nearly every journalist, whether on television, on radio or at a great national newspaper, started life on a local newspaper. But even in south Wales, which in Cardiff has one of the best schools of journalism in the land and in Europe—it is much respected around the world—those newspapers are finding it difficult to take people on. There will be a very significant problem in the long term for the whole newspaper industry if we do not manage to address that.
Of course we should not overstate the problem, because it is possible to find out what is happening with the Maerdy surgery on Facebook, and that is increasingly changing the pattern out there. Many local people will create a local Maerdy page, a Ferndale page, a Treorchy page, a Tonypandy page, a Llwynypia page and so on, and people go there and have great conversations about what is happening in local politics and so on. However, that excludes a significant proportion of the population, who do not have internet access or do not want it, and we need to be aware of that.
Of course we must have a plurality of voices. My particular anxiety in relation to Wales—this was mentioned by my hon. Friends the Members for Llanelli and for Newport West—is that the BBC could all too easily be the only news voice in Wales, providing news for S4C and deciding how much funding it gets, completely out-resourcing ITV and making it difficult for anyone to listen to anything other than one single voice. This has always been depressing to me. My hon. Friend the Member for Llanelli mentioned the problem of a newspaper referring to whether Castell Coch was on the right or left of the motorway and revealing that the person had obviously been going in the wrong direction. In fact, it would be quite nice if BBC journalists could occasionally get north of the M4 to see Castell Coch. The problems with the BBC in London never managing to get any further than Camden are replicated elsewhere in the country because they cannot get any further than Llanishen.
I should say, however, that it is not only local newspapers that sometimes get things wrong. I remember that on one occasion the Daily Mail wrote that I was an ex-gay vicar, and it took me 20 minutes to explain that I am not an ex-gay vicar; I am a gay ex-vicar. There is a very significant difference between those two propositions—I have put aside one thing, but not the other.
The problem for us, of course, is whether this is all just a load of howling at the wind. Are we, like King Lear, finding it easy to spot the problem but not so easy to find the solution? That is a real question for the Government, because in response to many of the suggestions that have been made, other hon. Members have said, “Well, that doesn’t really work.” For instance, it was suggested that a bit of the licence fee might be taken to pay for local newspapers. I do not think that that is a goer myself. I think that any suggestion that there should be some kind of state subsidy for local newspapers is a major problem, for the obvious reasons about freedom of the press and so on. That leaves us with some difficult issues to address.
We need to hold on to some clear principles. The first is that in any given part of the country, there cannot be just one voice dominating what people hear. That applies to the whole country as well. A single person should not have so much power over the media that they can dominate—I hope that we will be able to say something about that in the general election—but it is also true for regional news and local news. I think that an important point to pursue is the one that I made to the right hon. and learned Member for Harborough in relation to newspaper groups that close a title but then are so jealous of their intellectual property that they refuse to allow anyone else to take over the title. I am sure that if the Rhondda Leader were ever to close, people in the Rhondda would want to take it over as a community venture.
My hon. Friend the Member for Islington North (Jeremy Corbyn) is not here now, but he referred earlier to the Camden New Journal, which is a completely different model of doing a newspaper. It has managed to survive through remarkably difficult periods, and perhaps others could, too. I gently say to some of the newspaper organisations that if they are closing down a title, they could look at handing it on to others in a constructive way. There are other models, and we need to pursue them.
I support the idea from the National Union of Journalists that there should be a short sharp inquiry. The hon. Member for Maldon is stepping down as Chair of the Select Committee—well, he does not have any choice, but he is leaving. He is departing from that Committee. Who knows? He may have more greatness thrust upon him. The point is that the Select Committee did a very good report in 2010. I think that the Select Committee is the right body to do the next inquiry, because it can bring people in; it can force people to come, and it can do it swiftly and relatively cheaply. I would very much welcome that, but it is not for a shadow Minister or even a Minister, were I to become one, to tell a Select Committee what reports it should engage in.
Finally, I want to ask the Minister a few questions if that is all right.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
If you must.
Chris Bryant
The Kraken rises! The Minister is shuffling his papers and getting ready for the questions.
We were all intrigued by the Government’s announcement yesterday, but I am slightly sceptical about it. What is proposed might be a good thing, but I am nervous about how it will work. I say that because I blew a fanfare, as did the Cory band in the Rhondda—incidentally, it is the greatest brass band that Britain has had—when the orchestra tax relief was announced in December; but then of course we all discovered that it does not apply to most orchestras and it does not apply to brass bands, because of how the Government have drafted the concept of an orchestra. Not even the Orchestra of the Age of Enlightenment is counted as an orchestra under the tax relief.
I just want to be precise and pin the Government down. Why consider only business rates? Why have the Government gone for that angle? I understand, of course, that some of these issues are devolved, but a tax relief would not normally be devolved and would be available in Wales and in Northern Ireland and, for that matter, in Scotland, depending on how it was crafted.
What counts as a local newspaper? That sounds like a stupid question, because we have all referred to so many local newspapers, but is something that carries only advertising and no locally created content a local newspaper? Does something that is produced by a local council count as a local newspaper? If the Government stick with the business rate model that they have gone with, what happens if all the content of a newspaper is produced in England but the newspaper is distributed in Wales, or vice versa? I presume that the Government do not intend to legislate on that before the general election—if that is to be the case, we might have to meet rather more frequently than usual next week—but I wonder when the Government intend to publish their consultation on the matter.
With those comments, and with enormous thanks to my hon. Friend the Member for Hayes and Harlington for securing the debate, I will close my remarks. I agree with the octogenarians who have spoken in the debate that there are far too few of them. I see that my hon. Friend the Member for Great Grimsby heard that.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
I am genuinely grateful to be appearing under your chairmanship, Mr Rosindell. This has been a lengthy debate. At one point, I thought I was in an episode of “Doctor Who”, because the debate started under the chairmanship of the hon. Member for York Central (Sir Hugh Bayley), but the next minute—so absorbed was I in the speeches I was hearing—I turned around and it was you in the Chair, Mr Rosindell. I wondered whether the time lord had changed into a younger, more vigorous and, may I say, more handsome version. I am only kidding; I am a huge fan of the hon. Member for York Central, and I echo the comments that have been made about this being potentially his last chairmanship. I wish him well in the future.
I thank the hon. Member for Hayes and Harlington (John McDonnell) for securing the debate, and for his kind words, which I was not expecting. I am grateful for the kind things that he said about my work with local government. I am not entirely sure whether this is the last debate that the hon. Member for Great Grimsby (Austin Mitchell) will take part in. I gather that the Speaker is holding a special debate for retiring Members, in which they can reminisce—at length, we hope—on their time in the Chamber. I wanted to say, after hearing the hon. Gentleman’s speech, that it is a privilege to speak in a debate led by so many distinguished old warhorses. I should make it absolutely clear that I do not include in that the hon. Members for Llanelli (Nia Griffith) or for Walsall South (Valerie Vaz). I include everybody else, however, including the official Opposition spokesman, the hon. Member for Rhondda (Chris Bryant).
The partnership that I have built with the Opposition spokesman is pretty formidable. We are at the stage where we are beginning to finish each other’s sentences, and when he got up to speak, he nicked the line that I was planning to open with. There are many important reasons why Members participate in debates about local newspapers, but it should not go unnoticed that I made a note of every newspaper that was mentioned in the debate. Rather than mentioning every speaker, it is probably worth my mentioning the Braintree and Witham Times, the Maldon and something newspaper—I cannot read my own writing—the Llanelli Star, the Carmarthen Journal, the South Wales Guardian, the South Wales Evening Post, the new paper on the block, the Carmarthenshire Herald, the Western Mail, the Maldon Standard and the Essex Chronicle. My hon. Friend the Member for Maldon (Mr Whittingdale) gets bonus points for mentioning two journalists, Nina Morgan and Ally Grainger, whom he described as “excellent”. It will be interesting to see the coverage that they give him in the next five weeks.
I should also mention the Grimsby Telegraph, the Cleethorpes Chronicle, the Leicester Mercury, Martin Shipton—he has had mixed reviews during this debate—David Williamson, the Liverpool Echo, Nicola Adam, The Visitor and the Lancaster Guardian. I give a special mention to the Richmond and Twickenham Times, in which I hope to appear tomorrow following my visit to the Orleans House gallery in Twickenham with the excellent Conservative candidate Tania Mathias; and to the Brentford and Chiswick Times, in which I hope to appear tomorrow following my visit to the Watermans arts centre this morning. Having grown up in Chiswick, I know all about the work of Erin Pizzey, and I used to read the Brentford and Chiswick Times regularly. I will also mention the Walsall Express & Star, the Walsall Advertiser, the Scunthorpe Telegraph and the Rhondda Leader.
Paul Flynn
Disgracefully, the Minister has not mentioned the South Wales Argus. We should point to the vacuity of his contribution, however. We would like him to say something, rather than indulging in a shameless attempt to get mentioned in the papers tomorrow.
Mr Vaizey
I quite agree. I merely mentioned the newspapers that exist in the constituencies of hon. Members and my hon. Friends. I would not indulge in this kind of thing on my own behalf, however. I would not mention the Wantage Herald, the Wallingford Herald or the Didcot Herald, which are three editions of the excellent weekly newspaper in my constituency. Neither would I mention the Oxford Mail, which sells 40,000 copies a day, prints 6,000 different Oxfordshire articles every month, has 670,000 unique users visiting its website and, importantly for the tone of this debate, has 17 reporters on the ground. I am told that that is more reporters than all the other Oxfordshire news outlets combined; I assume that that includes the BBC. I should also mention the Oxfordshire Guardian.
Austin Mitchell
Unfortunately, I forgot to mention the Yorkshire Post, which is Yorkshire’s national newspaper, so I would like the Minister to include it in his roll of honour.
Mr Vaizey
Before I move on to the meat of the debate, I would like to mention an excellent newspaper, the Yorkshire Post, which has a fine track record of many years.
We are speaking somewhat light-heartedly about a serious subject, namely the health and well-being of our local newspapers. I absolutely understand the points made by hon. Members and hon. Friends about the threat that local newspapers have faced. We have rehearsed many times in the House the reasons for that threat. We have discussed whether it has been caused by existential factors such as the rise of new technology and the changing way in which consumers access the paying parts of the media landscape, namely classified advertising, or whether it has been caused by bad management. Some hon. Members have referred to bad management in relation to bad investment decisions or what some might term asset stripping, which others might describe more neutrally as taking investment in different directions. When the hon. Member for Hayes and Harlington spoke, I was reminded of our debates about football clubs. Local newspapers are community assets, in the broadest sense, with a huge following of loyal supporters. Most people want owners who understand the place of a local newspaper in a community, and who invest accordingly.
If I can say so without risking too much opprobrium, perhaps the death of the local newspaper has been exaggerated. It is worth recalling that there are still 1,100 local newspapers in this country with 1,700 related websites, and that 31 million people read them every week. The Johnston Press reaches 25 million people every week. A third of local newspaper readers do not read their national paper. Local newspapers have the distinct advantage that the advertisements that they carry are more likely to be trusted and acted on than those in other newspapers. The readership of the print edition of local newspapers is declining, but the readership of the digital edition is increasing. Some newspaper groups have seen a rise in readership of between 30% and 50% a year, albeit from a low base.
It is worth paying tribute to the hard-working editors, local directors and journalists who have kept local newspapers going, and who are going through the same kind of transition that has been seen in other areas, such as the music industry or film and television, as we move ever more quickly towards digital platforms. Those people continue to work very hard and to consider difficult issues to which there are no easy answers. If there were easy answers, they would have been implemented already.
The Government must do what they can to help, and part of that role is to get out of the way and clear away hurdles or, to put it another way, to try to level the playing field where there is unfair competition. I do not mean unfair competition in the sense of anti-competitive behaviour but in the sense of burdensome regulations on local newspapers that may not exist for other outlets. Let us start with the Chancellor’s welcome announcement on rates relief in yesterday’s Budget. The spokesman for the official Opposition ended his excellent speech by asking me detailed questions about that. We have held a number of meetings with local newspaper groups, which the hon. Member for Hayes and Harlington helped to facilitate. The Secretary of State for Culture, Media and Sport has also engaged with local newspaper organisations. There is an appetite to act.
Why focus on business rates? One reason is that it removes unfair competition. Local newspapers, by definition, often have large buildings with large numbers of staff, whereas smaller local newspaper websites have fewer physical overheads. Reducing business rates is an obvious way of targeting relief and reducing costs. The consultation will be published after the election, and I cannot say exactly how it will be framed, but the definition of a local newspaper might parallel the one set out in the requirement for statutory notices to be published in local newspapers. There are plenty of potential definitions, but it seems obvious to use an existing one.
When the next Government publish that consultation, it could form part of a more wide-ranging discussion about the future of local newspapers. The next Chair of the Select Committee on Culture, Media and Sport may decide that it is worth holding an inquiry at the same time as that consultation. That gives me an opportunity to pay tribute to my hon. Friend the Member for Maldon for his excellent chairmanship of that wonderful Select Committee over two Parliaments, and hon. Members will relish any opportunity to hear him tell a few anecdotes from those 10 years.
Levelling the playing field through targeted rates relief would be a good thing. Continuing on that theme, the Government have two other achievements. First, on the town hall Pravdas—the free newspapers effectively paid for by council tax payers that are often made to look very like a local newspaper both visually and tonally— we have published a statutory code of conduct to ensure that councils do not produce publications that compete unfairly with local newspapers. As the hon. Member for Hayes and Harlington mentioned, the Government have acted, where appropriate, when councils have breached that code.
Secondly, as far as I can recall, statutory notices have been a live issue for this entire Parliament. There was a threat that statutory notices would be withdrawn from local newspapers, for which statutory notices are obviously an important source of income. That has not happened but, nevertheless, there is still a debate to be had on statutory notices. The debate is not binary in that we would either take away statutory notices from all local newspapers or simply keep the system as it is. The debate has become more nuanced, and the Government have provided £1 million to pilot new ways of publishing statutory notices, which could include using local newspaper websites more effectively to bring statutory notices to the attention of a wider public. We could even potentially issue e-mail alerts about statutory notices via local newspapers. We want to continue with statutory notices, but we need to modernise them. That should not be seen as simply cutting off funding for local newspapers.
At the moment, the Government do not believe that conferring community asset status would be easy, and it is obviously important to remember that local newspapers are still private organisations. We remain open to persuasive arguments about whether community asset status could be a route to save local newspapers. I note the shadow Minister’s comments on the hoarding of newspaper titles. When a newspaper closes, its title and the value of its brand are not made available for local communities. The door remains open on that, and the Government do not have a fixed view. We remain open to persuasion, but we can see no clear way forward at the moment.
Finally, the BBC charter review will sit firmly in the next Government’s in-tray, and it is important that work on that gets under way as soon as possible. The BBC is clearly making overtures to local newspapers. For example, the BBC has a local working group—the local live partnership—with newspapers in Leeds, west Yorkshire and the north-east. The BBC is considering the potential opportunities for sharing training resources, for example, with local newspapers, which is another way to alleviate costs. In another part of the country, I gather that the BBC is auditing how often it uses local newspaper sources to generate its own news output, which should give the BBC a clear idea of how much it depends on local newspapers, thereby providing a potential route for accreditation or click-throughs to local newspaper sites.
At the other end of the spectrum, many local newspaper groups would welcome the opportunity to use BBC content, particularly video content, on their websites. The relationship between the BBC, local newspapers and local newspaper groups should be explored in the next charter review, although I am aware of the caveats in effectively extending licence fee funding to local newspapers. That important and subtle debate will form part of the charter review discussion.
I am grateful for the extensive and learned contributions on local newspapers by so many hon. Members and hon. Friends. I am glad that we have made progress, albeit at the end of this Parliament, on making a potentially meaningful change for local newspapers. We need to consider a range of different issues, and I hope that local newspapers will be high on the next Government’s agenda.
John McDonnell
I thank the Backbench Business Committee for providing the opportunity for this debate. If nothing else, the debate has given hon. Members the opportunity to name check local journalists in a shameless attempt to ingratiate themselves with their local press, so this debate has made one valuable contribution to the next few weeks.
We have reached consensus on a number of points. First, there is consensus in this House on the value of the local press to our society. Secondly, there is cross-party commitment to support and assist the securing of the local press’s future. Thirdly, there is consensus that the next Government must act on this issue. Following the Chancellor’s statement yesterday, I welcome the Government’s first step in the direction of recognising the need to intervene and support local media.
A range of ideas have been discussed today, some of which the NUJ supports. Members of Parliament should recall that the NUJ represents members within the BBC and on local council publications, so we do not want to see anything that in any way undermines their position or their professional capacity to operate. With regard to the BBC, we do not want to see resources diverted; we want to see additional resources, which must take into account any future discussions on the licence fee and the charter. We want a discussion that enables us to discern a way forward.
A general consensus has emerged in support of some form of review.
The consultation that will be introduced, whoever is in government, on proposals for financial support, whether in the form of business rates or otherwise, could be expanded into a Government inquiry. I would welcome another Select Committee inquiry, but it is important that whatever review takes place does so alongside a Select Committee inquiry. There is a difference: a Select Committee brings forward ideas and views, while a Government-inspired consultational review leads to action with the Government imprimatur. That is absolutely critical.
Finally, whatever way forward is taken and however the Government intervene to secure the future of local newspapers, I think that we have all agreed that the future of the local press can be successfully secured only if it is based on an investment in quality journalism. I hope that we have framed the nature of the debate for the new Government when they come to power.
Question put and agreed to.
Written Statements
(9 years, 9 months ago)
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Intellectual Property Office
(9 years, 9 months ago)
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The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
My noble Friend the Under-Secretary of State for Business, Innovation and Skills, the Minister for Intellectual Property (Baroness Neville-Rolfe) has today made the following statement.
As an Executive agency and trading fund of the Department for Business, Innovation and Skills, we set targets which are agreed by Ministers and laid before Parliament. For 2015 -2018 our targets are:
We will complete all necessary steps for the domestic implementation of the UPC agreement, ready for ratification at the appropriate time.
We will deliver an operational online application service for our designs customers as part of the TRIPOD portfolio by the end of March 2016.
We will ensure that overall average customer satisfaction is at least 80%.
We will offer faster handling of patent applications, by providing an examination report with a search report when both are requested at the application date, and meeting at least 90% of requests for an accelerated two-month turnaround for search, publication and examination.
We will publish 85% of acceptable applications for national trade marks for opposition within 90 days of filing.
We will launch a new online hub, bringing together material for all forms of IP, and achieve a 7.5% increase in traffic to this website over that achieved on the previous website.
We will reach an audience of at least 100,000 businesses in the UK with IP messages by the end of March 2016.
We will support the export activity of UK companies by providing education, advice and specific case support to 4,500 businesses by March 2016.
We will define the future operating model for the IPO, identifying the structure, behaviours and roles we will need to deliver for our customers in a digital environment.
We will achieve a 4% return on Capital Employed (ROCE).
We will deliver an efficiency gain of 3.5%.
[HCWS424]
Environment Council
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)
My noble Friend the Parliamentary Under-Secretary of State for the Department of Energy and Climate Change (Baroness Verma) and I attended the EU Environment Council in Brussels on 6 March.
After adopting the agenda, climate Ministers discussed the Commission’s Paris Protocol for the UN Framework Convention on Climate Change (UNFCCC) Conference of the parties and the presidency’s Intended National Determined Contribution (INDC) to the UNFCCC. Consensus was reached on the EU INDC, which has now been communicated to the UNFCCC. The EU’s INDC can be found at the following website link:
http://www4.unfccc.int/submissions/indc/Submission%20Pages/submissions.aspx
Ministers expressed views on the Commission’s Energy Union proposal. Baroness Verma welcomed the proposal with its forward looking climate policy and supported by member states which favoured a technology neutral approach to decarbonisation, emphasised the importance of enabling all low carbon technologies to be used if countries so choose, to deliver on the EU’s climate and energy objective including energy security. Spain and other member states raised the importance of energy market reform and infrastructure including smart grids to ensure that the full benefits of increased deployment of renewable energy techniques could be realised.
The Council held a discussion on greening the European semester and the annual growth survey 2015. The Commission confirmed the withdrawal of the July 2014 waste proposal. New proposals are planned for autumn 2015. Most member states noted the huge potential in mainstreaming environmental policy across EU policies and aligning the digital agenda to resource efficiency. Some member states were disappointed that the annual growth survey did not sufficiently address actions to promote the circular economy. Germany and the Netherlands joined me in indicating a desire to work with the Commission and member states on shaping the new circular economy package.
Ministers exchanged views on the post-2015 development agenda. The UK stressed the need to ensure that the final targets were specific, measurable and achievable, and for the EU to support the development of the UN Secretary General’s “six essential elements” as a means to aid communication. The UK underlined the importance of including, within the financing for sustainable development negotiations, a strong re-commitment to the official development assistance target with a clear timetable. This would be key to unlocking a successful outcome for the post-2015 and climate change agendas.
Under any other business, the Council noted information provided by the Commission on enabling a global phase down of hydrofluorcarbons under the Montreal protocol, soil-sealing and the second ministerial meeting on environment and renewable energies of the western Mediterranean dialogue.
Over lunch, Ministers discussed the European Environment Agency’s recently published State of the Environment Report 2015.
[HCWS423]
Justice and Home Affairs Council
(9 years, 9 months ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
The Justice and Home Affairs (JHA) Council was held on 12 and 13 March in Brussels. My hon, Friend the Minister of State for Civil Justice and Legal Policy (Lord Faulks QC) and I attended on behalf of the United Kingdom. The following items were discussed.
The interior session began with a discussion on the fight against terrorism where the presidency presented their discussion paper identifying key priorities for action in advance of the June European Council. These included: enhancing security at the Schengen external border; developing an EU internet referral capabilities unit at Europol; tackling illicit trafficking of firearms and stepping up information sharing.
The UK stressed the importance of supporting progress on establishing the Europol unit and numerous delegations intervened in full support. There was also full support for enhanced EU action to tackle illegal trafficking of firearms. The UK called for swift action in this area. The Commission indicated that it continues to assess all options, but deactivation standards have emerged as a clear priority.
The UK highlighted the need to ensure that where there is free movement of people, there is also free movement of criminal conviction data. Many Ministers called for agreement on a PNR directive before the end of the year, and the UK stressed that this must include the ability to exchange intra-EEA data. The presidency expressed their confidence that agreement with the European Parliament remained possible by the end of 2015. In the meantime they would continue informal dialogue to prepare the Council for Trilogue. The presidency concluded that Ministers supported the proposal to enhance checks at the Schengen external border based on common risk indicators. The indicators would be provided by the Commission by the end of April and subsequently be updated by Europol. Ministers would also ensure access to relevant information systems at all Schengen external border crossings, though this will not apply to the UK as we do not participate in the border and immigration aspects of Schengen. Connectivity to SIS II and the Interpol Lost and Stolen Travel Document (SLTD) database would be the priority in the first instance. Work would also continue at pace in order to establish an internet referrals unit at Europol. Finally, the Standing Committee on Internal Security (COSI) would progress work on the firearms and information sharing points and report back to the June JHA Council.
The Greek road map on asylum for 2015 was presented and an overview of the new Government’s migration policy was provided to the Council. Greece highlighted that immigration detention would only be used as a last resort, and that their priority would be to meet their obligations under EU law and improve conditions to host illegal migrants. The road map also set out a strategy for clearance of the asylum backlog and a fast track process. Greece confirmed they would not withdraw from Schengen or Dublin obligations, however, they continued to call for the use of ‘burden sharing’ between member states. The UK noted the important strategic position of Greece at the external border and the advances it had made, but stressed that much still needed to be done. Greece should continue to build on work with European Asylum Support Office (EASO) and the UK remained committed to providing support, both via EASO and bilaterally.
The lunchtime discussion on migratory pressures focused on discussion of the Commission’s forthcoming new European agenda on migration, as well the recent flows to the EU from Kosovo. Member states raised a series of current concerns and potential EU responses under the new agenda, with strong support for enhanced and coherent action in countries of origin and transit including efforts to tackle people smugglers and traffickers, and for the enhancement of Frontex. The UK supported these proposals. The UK also pressed for all member states to meet their responsibilities regarding the processing of illegal migrants arriving on their territory, a call supported by other Ministers. Several member states called for enhanced resettlement from third countries to the EU, but the Commission suggested there was insufficient support from member states to implement this. There was only limited support for calls for greater solidarity and burden sharing. The UK expressed scepticism regarding proposals for the “upstream processing” of asylum seekers outside the EU and the consensus was that such proposals could only be developed if we were clear they would not represent a ‘pull factor’.
Under AOB PNR with Mexico and Argentina was discussed at Spain’s request. Spain noted that a number of third countries, including Mexico and Argentina, were demanding PNR data from EU airlines, and urged the Commission to bring forward a negotiating mandate to open discussions on such agreements, or risk a race against time to avoid carriers being caught between a conflict of laws. The UK agreed, noting also that this reinforced the need to agree an EU PNR Directive which included intra EEA flights, or find ourselves in the bizarre situation of being required to share data with a growing number of third countries, without the capability to share between member states.
Justice day began with the presidency seeking a partial general approach on Chapters II (general principles), VI and VII (“one-stop-shop”) of the Data Protection Regulation. The UK with other member states raised a number of concerns about the regulatory one-stop-shop mechanism in the regulation, in particular that it was too complex, bureaucratic and did not maximise benefits for either businesses or individuals. One member state raised the need for a specific review of the one-stop-shop to be included in the text, on which the UK and others agreed. Others recognised the presidency’s attempt to find agreement and thought the text represented a good compromise. The majority of member states agreed to the partial general approach, though the UK abstained. There was a collective view that significant further work is needed on the text in the coming months if there is going to be a general approach on the whole regulation in June, as the Latvian presidency intends.
The Council then adopted a general approach on the Legal Aid directive. Some member states expressed disappointment at the reduction in the scope of the proposal and lowering of the level of protection it offers, although others supported the balance struck between the different legal systems. The UK has not opted into the directive.
The Council reached a general approach on the Eurojust regulation, with the provisions setting out the relationship between Eurojust and the European Public Prosecutor’s Office removed. The UK did not opt-in to the Eurojust proposal, and as such did not vote on the general approach text which will form the basis for discussion with the European Parliament.
The Council discussed certain aspects of the proposal to establish a European Public Prosecutor’s Office, in which the UK will not participate. The Council considered whether the European Public Prosecutor’s Office should have the power to dismiss a case through ‘transaction’ (in summary, this refers to the payment of compensation for damage, and a lump sum fine, by a suspected person as an alternative to prosecution). The presidency concluded that while most member states could support the idea, further technical work is needed.
The discussion over lunch was on the judicial dimension of de-radicalising foreign fighters. There was an initial exchange between member states on the work they do to combat radicalisation in prisons. The European Commission noted that it is keen to facilitate exchange of best practice between member states and referred to the UK’s expertise in this area. The UK confirmed that it was willing to share experience, while respecting the limits of EU competence in this area.
The presidency then presented a partial general approach on the simplification of public documents regulation, which was supported by the UK and all other member states bar one. A number of member states, including the UK, made interventions to be clear that the EU does not enjoy exclusive external competence in this field of policy. Some member states wanted to consider the possibility of a joint political declaration on external competence in June, while others were of the view that there was no need for the political declaration.
The Commission noted its willingness to work with member states on the issue of external competence language in the text of the regulation, but needed some changes compared to the current text. The presidency concluded that the Council agreed a partial general approach and that technical work to conclude the general approach would be carried out swiftly including finalising the text on the external competence, the recital and the multilingual forms. The Council would evaluate in June whether or not a joint political declaration is required on external competence.
Under AOB, the presidency signalled its intention to resume official-level work on the data protective directive, covering the processing of personal data in criminal investigations and prosecutions, in April as part of a package with the regulation.
[HCWS425]
Grand Committee
Care Act 2014 and Children and Families Act 2014 (Consequential Amendments) Order 2015
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, this order, while detailed, has a simple overarching purpose: to make amendments to primary legislation in relation to England consequent to new laws already passed by Parliament, primarily the Care Act 2014, but also to a small extent the Children and Families Act 2014, as I shall explain.
Part 1 of the Care Act 2014 is a crucial step in delivering the commitments in the Government’s White Paper Caring for Our Future: Reforming Care and Support. It takes forward the recommendations of the Law Commission to consolidate 60 years of fragmented law into a single statute, refocusing the law around the person, not the service.
The order before us today is part of the final step in this process, disapplying current legislation for England which is to be replaced by the Care Act, and changing references to that legislation in other Acts to reflect the Care Act. For example, many of the core entitlements to social care services included in the National Assistance Act 1948 are disapplied for England by this order because they are to be replaced by the overarching duty and power to meet care and support needs included in Sections 18 and 19 of the Care Act 2014.
The Department of Health and the Department for Education have worked together to ensure that carer provisions have been extended in key areas. Part 1 of the Care Act introduces improved rights for adult carers caring for adults, including to assessment and support. Sections 96 and 97 of the Children and Families Act 2014 amend the Children Act 1989 to introduce significant new rights for young carers and parent carers respectively. These new provisions will work alongside those in the Care Act 2014 for assessing adults to enable services to co-ordinate their approaches to assessment and support for young carers and the people they care for.
This consequential order therefore makes some amendments which are in consequence of the new provisions introduced by the Children and Families Act 2014. Because the previous legislation relating to carers is being replaced by a combination of provisions in these two Acts, it makes sense to deal with the necessary consequential amendments in a single order.
The order also includes some savings provisions which are necessary for the purposes of transition from the old system to the new one. Essentially the amendments in the Schedule to the primary order “turn off” the old law in England but, in respect of those currently in receipt of services, the order enables services to continue under the old law until those people move over to the new system. These savings provisions will work with separate transitional provisions, to be made by another instrument, and will ensure a smooth transition for those currently in receipt of services under the present law.
Lastly, I briefly outline how this order fits into the broader context of statutory instruments under the Care Act. Subject to parliamentary approval of this order, we will, as I have mentioned, be making a further transitional order that will complete the temporary legislative framework for local authorities and partners to move from old legislation to the Care Act. Also subject to approval of this order, we will make a commencement order to formally commence the relevant provisions in the Care Act from 1 April 2015.
We have also laid before Parliament the Care Act 2014 (Consequential Amendments) (Secondary Legislation) Order, which makes similar amendments to secondary legislation as the order before us makes to primary legislation. This is subject to the negative procedure.
I hope that this standard exercise of ensuring legislative coherence will not prove controversial, so I commend this statutory instrument to the Committee.
Baroness Wheeler (Lab)
My Lords, I thank the Minister for his comprehensive introduction to the order. As we have heard, it is part of the final steps of implementing the Care Act and related aspects of the Children and Families Act in respect of transition for disabled children into adulthood and on parent and young carers. Contrary to previous form on such Care Act SIs, I do not intend to raise many issues. The SI is very much a technical instrument, potentially complex and involved. However, read in connection with the 2014 statutory guidance to local authorities on implementation and transition to ensure that current services can continue under the old law until the new legal framework applies, it becomes clearer and more intelligible, even to non-lawyers such as myself.
The key imperative, which we strongly support, is for local authorities to be able to manage the transition for existing people receiving care and support services and carers before 1 April 2015 in a practical, case-by-case way. Assessments, care plans and funding arrangements and services agreed under the previous legislation continue unless circumstances have changed, and in accordance with the established review procedures to ensure that arrangements comply with the new Acts.
The Minister knows that we share local authorities’ continuing concerns over capacity and resource issues to ensure effective implementation, and I would be grateful if he could update the House on the latest stock-take survey of local authorities’ readiness and their continuing areas of concern. I understand that the joint LGA/Department of Health/ADASS programme office will continue to monitor and evaluate implementation, as well as co-ordinating the consultation on phase 2 of the Care Act implementation on the care costs cap. I hope that regular updates and information on implementation can be provided over the critical April/May period, and I would be grateful for the Minister’s reassurance on that—even if only up until 7 May.
As the Minister said, the separate transitional order setting out the detail of the circumstances in which the new order is to apply is to follow shortly, so this is especially important. The Department of Health has undertaken to circulate the draft next week via its local authority and other networks before it is formally issued, to confirm the approach for both phase 1 and phase 2 of the Care Act implementation so that it can address some of the recent detailed queries and concerns from local authorities. That is to be welcomed, as I am sure that we all agree that the local authorities need all the help and support that they can get on what is a huge and complex implementation programme.
The department has also undertaken to share the draft with us, and I am grateful for that. However, publishing the final transitional order so close to the date on which the Care Act comes into force will cause considerable difficulties to local authorities. The Minister will know that the order cannot be published until after this SI has been passed in the other place, which will take place next Wednesday. Even if it is published immediately after Commons agreement, that is exactly a week before the changes begin to be implemented and there will be no real opportunity for parliamentary comeback on such a detailed and important implementation document. I recognise that much of the order content will have already been discussed with and communicated to local authorities, but receiving the final authorisation so late in the day presents even greater implementation challenges than already faced. What steps are the Government taking to mitigate that very difficult position?
Two other key issues arise from the statutory instrument. The first is that it formally sets out the position in respect of Wales concerning the Social Services and Well-being (Wales) Act 2014 in relation to adult social care law and to children. The enforcement date of that is currently intended to be 1 April 2016, but that is rightly up to Welsh Ministers. The SI provisions underline that any provisions disapplied in England to make way for the Care Act and the Children and Families Act continue to apply in Wales until such time as Wales brings in the Welsh Act. The Explanatory Note has reassured us that full consultation has taken place with the devolved Administrations in both Wales and Scotland. It also underlines that the order does not contain any provision which changes the current law as it applies to Scotland or Wales, and we welcome those assurances.
The second issue in the SI is in the detail of the Schedule setting out the consequential amendments to existing legislation on the provision of care and support to carers in England resulting from the implementation of the Care Act and the Children and Families Act. That has obviously been a major exercise in cross-government departmental working, and we fully recognise the scale and extent of the task that the department has had to undertake. It is to be congratulated on this work. It is also timely to remind ourselves of the pioneering work described in the Law Commission’s 2008 report, which set out the agenda for the reform of social care law. We have always strongly supported the need to update, consolidate and modernise social care legislation and the key principles of the Care Act, and have been committed to working closely with Members from across the House to ensure improvements and amendments to the Act.
Can the Minister update the Committee on the issue arising from the recent report from the Joint Committee on Statutory Instruments in respect of the drafting of paragraph 95 of the Schedule? The committee has said that the amendments to the Personal Care at Home Act 2010 made by this paragraph are not comprehensive and that consequential amendments are needed. This is an important issue and the department has undertaken to remedy this omission, so will the Minister ensure that the amendments are communicated to all interested parties and organisations as soon as possible?
Earl Howe
I am grateful to the noble Baroness. She asked about the local authority stock take. The results of the recent stock take in relation to implementation of the Care Act for January and February reported a positive picture overall regarding local authority preparedness. Specifically, the stock take’s headline findings reported that 99% of councils say that they are very or fairly confident that they will be able to deliver the Care Act reforms from April 2015, compared to 97% of councils in stock take 2 and 90% in stock take 1. Of the four authorities which reported low confidence in stock take 2, three are now fairly confident and one is very confident; one authority has gone from fairly to not very confident.
Seventy-five per cent of councils say that they are on track in 2015-16 in their preparations for the Care Act, the remainder being slightly behind. Confidence has increased on six out of 10 proxy measures from stock take 2 to stock take 3. The exceptions are self-funders, carers’ assessment costs and information, advice and advocacy.
We have already invested more than £5 million in developing a suite of support materials, learning modules and other tools to help councils implement the Act. This is in addition to £23 million of investment in regional and local support that we have provided this year.
The noble Baroness referred to the transition order and regretted the fact that, in her view, it had been published rather late in the day. We set out the approach to transition in the statutory guidance published last October. The joint implementation programme of the Department of Health, the Local Government Association and ADASS has supported transition conversations with local authorities since that time. We do not think that anything in the transition order will have come as a surprise to local authorities.
The noble Baroness referred to the JCSI report, which pointed out that a particular consequential amendment had been omitted from the order. We accept that paragraph 95 of the Schedule to the 2015 order should have amended Section 1(2) to (5) of the Personal Care at Home Act 2010. Failure to do so was an oversight. Those subsections make some prospective amendments to Section 15 of the Community Care (Delayed Discharges etc.) Act 2003. The issue here, however, is that the 2010 Act is not yet in force and there are currently no plans to commence it. The department will ensure that if the provisions of the 2010 Act are commenced, the necessary consequential amendments to Section 1(2) to (5) will be made in the same order using the consequential amendment powers in the Care Act 2014. In summary, while we regret the missed amendment, the omission has no practical effect, and we will have ample opportunity to correct it if the relevant legislation is ever commenced.
False or Misleading Information (Specified Care Providers and Specified Information) Regulations 2015
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, before I go into the detail of the regulations, I will briefly set out the background for why this offence was set in statute and why the regulations are required.
The report of the Francis inquiry into the events at Mid Staffordshire NHS Foundation Trust made clear the need for clear and reliable information about the quality of care and organisational performance. The inquiry found that inaccurate statistics about mortality rates obscure the true picture of care and can allow poor care to continue unchecked. The creation of a culture of openness and honesty is vital in improving care in the NHS and in empowering staff to challenge poor care where and when it occurs, and this Government have taken great strides to ensure that this is the case.
The provision of accurate information is central to the safe functioning of the NHS. It provides the intelligence on which commissioners and regulators form judgments about the quality of care. Where that information is wrong, it can result in delays in taking action to protect patients and service users. Deliberately falsifying such information is a serious matter that can frustrate attempts to provide safe care for patients and service users.
Care providers, which are directly responsible for the standard of services, have a clear responsibility to ensure that the information they supply is accurate and gives a true picture of the standards of care that they provide. The Care Act 2014 put in place a new criminal offence that will apply to care providers that supply, publish or otherwise make available false or misleading information. The offence will apply to the misreporting of information that is required to comply with a legal obligation. I wish to emphasise that last point: this offence applies only to providers of care, not regulators or commissioners of care.
Where a provider is found to have committed the offence, which could be as a result of deliberately supplying false or misleading information or as a result of neglect, the provider can be fined by the courts. In addition, the courts can require the provider to take action to address the failings which led to the offence occurring and make publicly known the action it is taking.
The FOMI offence can also apply to senior individuals within a care provider but only when the care provider has been found guilty of the offence. Senior individuals can also be found guilty of the offence where they have consented or connived in the publication or submission of false or misleading information, or have been sufficiently neglectful in their duties to allow false or misleading information to be published. An individual found guilty of the offence could face imprisonment of up to two years, a fine or both.
Of course, misreporting of information can be the result of genuine error and it is essential that such mistakes do not result in a criminal conviction. The Care Act 2014 therefore allows for a defence against the offence where a care provider is able to demonstrate that it took all reasonable steps and exercised due diligence to avoid the misreporting of information.
The primary legislation contains a regulation-making power that allows the types of care providers and the types of information to which the offence applies to be specified in regulations. The regulations before the Committee specify that the offence will apply to NHS trusts in England, NHS foundation trusts and other persons who provide health services from a non-NHS hospital,
“pursuant to arrangements made with a public body”.
For clarification, this means that the offence can apply to independent providers delivering services under an NHS contract, but only if they are also required to submit or publish the information included in the regulations.
The information to which the FOMI offence applies is focused on the issues raised by Robert Francis, such as mortality figures, and is supplied by providers of NHS secondary care. This is a short list, but one that represents a significant quantity of data provided by the NHS and forms the foundation of the information used to assess NHS performance.
The regulations include other key information supplied by providers of NHS secondary care, including cancer waiting times, maternity data sets, many of the core commissioning data sets and NHS quality accounts. The latter is an important inclusion, as Sir Robert Francis specifically recommended that:
“It should be a criminal offence for a director to sign a declaration of belief that the contents of a quality account are true if it contains a misstatement of fact concerning an item of prescribed information which he/she does not have reason to believe is true at the time of making the declaration”.
All the information listed in the regulations is that which providers are or will be required to publish or submit because of a statutory or other legal obligation. This is a requirement of the primary legislation of the Care Act 2014 and an important part of the legislation for a few reasons.
First, it means that a provider cannot opt out of submitting or publishing information just because it wants to circumvent the false or misleading information offence. Secondly, as this is information that is already required to be published or submitted, we are not requiring providers of NHS secondary care services to undertake any additional work—only that they should ensure the information they provide is accurate and not misleading. Finally, providers of NHS secondary care services publish or submit on a voluntary basis a great deal of information which is incredibly valuable to improving the delivery of services and developing a greater understanding of the nation’s health. We do not want to dissuade providers from submitting or publishing such information, which is why the offence cannot be applied to information of that type.
In summary, the offence will apply only to the providers listed in the regulations and only where the offence occurs in relation to the provision or publication of the information listed. When the Department of Health consulted on the regulations in 2014, it was noted that the application of the offence was quite complicated. We have addressed this concern through guidance on the application of the FOMI offence which sets out how this law works.
The FOMI offence puts in place an important new sanction against providers of NHS-funded secondary care that mislead others about the performance of their services. As this offence is new, the regulations have been developed to focus the application of the offence so that it covers important data sets and data that can be robustly interrogated to determine if a provider has committed the offence. Designing the regulations this way will enable us to better understand how the offence operates in practice and allow us to make changes to the regulations in a targeted way in the future. I hope that noble Lords will support this rationale and will therefore agree to these regulations being commended to the House. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, I am very grateful to the noble Earl for introducing these important regulations, which the Opposition are very happy to support. It is clearly unacceptable for anyone or any organisation in the NHS to knowingly publish false or misleading information. We are fully behind the Government on this. The noble Earl will probably remember that during the passage of the Care Act we tried to strengthen the clause that the regulations emanate from by tabling an amendment which would have made it an offence to withhold information with the intention to mislead or misdirect. That was not accepted by the Government.
I come back to the point that the Minister ended with. He emphasised that this applies only to NHS trusts, foundation trusts and those providing services. He will know from our discussions on the Bill that we wanted to expand this to cover other organisations, including local authorities and clinical commissioning groups. I would be grateful if he could respond on why the Government still think this should be confined to those who provide services.
I put to him that the Francis report into Mid Staffordshire, and indeed the more recent report by Bill Kirkup looking at the very worrying incidents that happened in Morecambe Bay, do not just put responsibility for what happened at the door of the providers, though I fully accept that in the end the board of the Mid Staffordshire NHS Foundation Trust and the board of the trust that ran Morecambe Bay must take primary responsibility. However, a number of other organisations were listed—organisations that would not be defined as providers. There are circumstances in which clinical commissioning groups, or part of NHS England, ought to be covered by the same rules and law because one depends on honesty and openness throughout the system. I would be interested in the Minister’s comments on that.
This is part of wishing to develop a culture of openness and transparency. People in the health service are very cynical about these proposals because they do not see the same transparency and openness and, to be frank, honesty emanating from the Minister’s own department. If my noble friend Lord Brooke were here, he would remind the Minister about the lack of publication of the interim risk register. I point to the report by the noble Lord, Lord Rose, on management capacity. It is one thing to have a legal provision, but it is another to ensure that everyone in the system actually operates according to the spirit of what the Government intend. I myself believe that that should apply as much to the Minister’s department and NHS England as it does to the providers in the health service.
Earl Howe
My Lords, I am grateful to the noble Lord for his support for these regulations. He returned us to an issue that we debated during the passage of the Care Act: the question of why this offence is restricted to providers and does not extend further to either NHS or local authority commissioners. We took the view that, in determining the scope of the offence, the focus should be on information that is closest to patient care, where inaccurate statements can allow poor and dangerous care to continue. This type of information is required by law from providers of NHS secondary care, such as hospital trusts, and to be frank we have not yet identified information that would warrant extending this offence to commissioners or other providers of information. The scope of the offence is therefore determined by the information to which it applies.
The noble Lord referred to the need for openness throughout and across the system. I agree with him, of course, and I contend that over the past five years this Government have done more than any other to promote transparency in the health service and indeed from the department itself. The particular case of the risk register is one that we have debated on a number of occasions. He may recall that while the decision was taken by the Cabinet not to publish the transition risk register, nevertheless I laid before the House the essential elements contained within the register to enable noble Lords to understand the broad content of the risks that the transition addressed. The approach to risk registers in general is one that was taken under the previous Administration in a number of departments.
The report prepared by the noble Lord, Lord Rose, on NHS leadership is being looked at in the light of NHS England’s five-year review. The five-year review was published during the time that the noble Lord, Lord Rose, was preparing his report and the possibility of extending the report to take account of the review is being considered. We look forward to seeing the conclusions of the report once it is ready.
Nicotine Inhaling Products (Age of Sale and Proxy Purchasing) Regulations 2015
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, these regulations restrict children’s access to electronic cigarettes. I am glad that we have the opportunity to debate these regulations, as they are the final element of the package of measures the Government introduced in the Children and Families Act aimed at protecting young people from tobacco and nicotine addiction and the serious health harms of smoked tobacco.
The provisions in the Act give Ministers regulation-making powers to introduce an age of sale requirement for electronic cigarettes and we have taken the decision to do so. The market for electronic cigarettes—which are also known as e-cigarettes—has developed rapidly in recent years. There are many different types and brands now available. Some of them are designed to look and feel like conventional cigarettes; others have a tank or reservoir which is filled and refilled with liquid nicotine. E-cigarettes can be disposable or rechargeable.
Most of the e-cigarettes on the market are flavoured and some of these flavours, such as cherry cola, bubble gum and gummy bear, may be appealing to children. The use of e-cigarettes is also increasing. Action on Smoking and Health estimates that 2.1 million adults in Britain currently use them. This is an increase on the estimated 700,000 users in 2012. Use of e-cigarettes by people under the age of 18 is not currently widespread in this country; however, international evidence suggests that this may increase. The emerging evidence suggests that awareness of e-cigarettes by British children is high. A Public Health England report found that two-thirds—66%—of 11 to 18-year olds had heard of e-cigarettes. Some 7% had tried e-cigarettes at least once and 2% reported using them sometimes or often. E-cigarettes are widely promoted through social media. They are sold in a wide range of retail outlets, including supermarkets, newsagents, specialist shops and pharmacies, and are often prominently displayed and promoted in store.
It is clear that more research is needed before we can determine whether e-cigarettes are acting as a gateway into tobacco use. While e-cigarette use by children is currently associated with existing tobacco smoking, research published by the Welsh Government provides tentative evidence that e-cigarette use may represent a new form of childhood experimentation with nicotine. The Chief Medical Officer has raised concern about e-cigarette use by children and the World Health Organization has recommended that they should not be sold to minors.
Nicotine is highly addictive; it is five to 10 times more potent than cocaine or morphine, and young people can rapidly develop nicotine addiction. Research shows that adolescents are more sensitive to the rewarding effects of nicotine and this may be a reason why many people start to smoke during adolescence. We are aware that responsible e-cigarette manufacturers and retailers do not sell e-cigarettes to children at the moment. However, we have decided to introduce an age-of-sale requirement; we consider that concerns about the increased awareness and use of these products by children make this an appropriate step to take. The age of sale requirement will also provide clarity and consistency for retailers and enforcement officers.
Proxy purchasing occurs when a person over 18 buys an age-restricted product on behalf of someone underage. Young people are known to approach strangers outside shops or ask friends, neighbours or, in some cases, parents to buy tobacco for them. That is why we introduced a new offence of proxy purchasing of tobacco in the Children and Families Act. The regulations extend this offence to cover e-cigarettes.
I shall briefly set out what the regulations will do. The first set of regulations defines a “nicotine inhaling product” as any device which is intended to enable nicotine to be inhaled through a mouthpiece. The definition encompasses e-cigarettes, including disposable and rechargeable types, and certain component parts such as nicotine refill cartridges and nicotine refill substances, often called “e-liquids”. It does not cover component parts such as batteries or charging devices. The regulations do not apply to tobacco products, because we already have age of sale laws for tobacco. The regulations include exemptions for products that are licensed as medicines and so are subject to separate regulatory rules. There are exemptions for nicotine inhaling products that are a medicine or medical device made available in accordance with a valid prescription by a pharmacist. The regulations also exempt the sale of any nicotine inhaling product licensed as a non-prescription medicine—that is to say, available for general sale—and which the licensing authority has determined is indicated for use by children under 18. In such cases, the seller need not be a pharmacist, as such medicines can be sold in other types of shops including newsagents. This means that those under 18 years trying to quit smoking would still be able to access e-cigarettes as well as products such as nicotine patches or gum.
The regulations also extend the proxy purchasing provision in the Act to make it an offence for an adult to buy, or attempt to buy, a nicotine inhaling product on behalf of a child aged under 18 years. The penalties for these offences are set out in the Act: a person making a proxy purchase may be issued with a fixed penalty notice or could be referred to court; and the adult making the purchase would be committing the offence, not the retailer. A retailer guilty of selling nicotine inhaling products to someone under the age of 18 could be fined up to £2,500 on conviction. Local authority trading standards officers would be responsible for enforcing the regulations, as they enforce much of the tobacco control laws.
The regulations bring the age of sale offence for nicotine inhaling products within the scope of primary authority. This arrangement allows businesses to form a statutory partnership with one local authority, which then provides advice for other local regulators to take into account when carrying out inspections or addressing non-compliance.
We are also debating a second set of regulations, which set the amount of the fixed penalty notice for the proxy purchase provisions at £90; this is reduced to £60 if it is paid within 15 days. This provides consistency for retailers and enforcement officers as it will bring the proxy purchase of tobacco and nicotine inhaling products in line with the equivalent offence for alcohol.
The regulations will apply to England and Wales and have been agreed by the Welsh Government. They would come into force on 1 October 2015. We have decided to use the October—rather than April—common commencement date to allow time for the training of enforcement officers and to raise retailer and public awareness.
There will also be further negative statutory instruments to complete the enforcement regime. One will set out the fixed penalty notice form for the proxy purchase of tobacco and nicotine inhaling products in England, and one will add age of sale and proxy purchasing to the list of offences for which enforcement officers can carry out directed surveillance, subject to existing safeguards; for example, to allow test purchasing operations.
The Department of Health held a six-week public consultation on the draft regulations and received 81 responses. The consultation responses confirmed that many responsible manufacturers recommend that their products are for use by adults only and responsible retailers already voluntarily restrict children from accessing e-cigarettes. Almost all respondents supported the policy aims and the specific proposals set out in the regulations. Retailers, e-cigarette manufacturers, local authorities, enforcement officers and the public health community have all been absolutely clear that they want these regulations in place.
The regulations are business-friendly and a number of retail organisations have told us that putting the age of sale in law will help those responsible retailers that already refuse to sell e-cigarettes to children, by ensuring that they are not at a competitive disadvantage by doing so. The cost of the regulations is estimated to be very small indeed and will be mainly on businesses that currently profit from selling e-cigarettes to children and young people.
Many consultation respondents emphasised that this is a fast-moving market in terms of product development as well as patterns of consumer use, and that research evidence into the effectiveness of e-cigarettes in smoking cessation and potential long-term health harms is still emerging. I agree that these are all important aspects of this policy area and we have therefore included a duty to review the regulations within five years of them coming into force.
As I said earlier, I am very pleased to be able to present these regulations to the Committee. They represent the final stage in the implementation of the important public health measures in the Children and Families Act. In recent weeks, we have also introduced legislation to end smoking in private cars carrying children, and earlier this week noble Lords debated the regulations that will introduce standardised packaging for tobacco products. They are all part of our comprehensive approach to tobacco control and make an important contribution to our vision of a tobacco-free generation in the future. I commend the regulations to the Committee.
Baroness Finlay of Llandaff (CB)
My Lords, I thank the noble Earl for introducing these regulations and welcome the way in which they have been drafted. Clearly, a great deal of care was taken in the drafting, and they seem eminently sensible.
It is most reassuring to know that the Association of Convenience Stores welcomes these regulations and the clarity that they provide. It says:
“We support strong enforcement against proxy purchasing of tobacco. We need to see these properly enforced, something that is lacking with the same powers that are in place for alcohol proxy purchasing”,
and that the penalty for proxy purchasing on e-cigarettes puts everything consistently in line. Indeed, it has welcomed the age restriction.
I was glad, too, to hear the reference to the Welsh study because it was the data from Wales that really began to make me personally concerned about these products. There is evidence of increased use among under-18s. I know some people will say that data from ASH are biased, but ASH has been fairly neutral in its view on electronic cigarettes because of the way that they have helped people quit ordinary tobacco cigarettes. It has found that the number of 11 to 18 year-olds who have tried an electronic cigarette increased from 5% in 2013 to 8% in 2014, although it did put the caveat around those figures that the use is closely linked with smoking behaviour.
One piece of research which is really important to have on the record is the work from Counotte and colleagues, published in Developmental Cognitive Neuroscience in 2011, which found that,
“nicotine exposure during adolescence can disrupt brain development bearing long-term consequences on executive cognitive function in adulthood”.
These are new products, with high levels of nicotine in them. We know that the propensity for the developing brain in the age group up until 25 years to develop addictions of all sorts, right across the board, and addictive behaviour is greater than in the older brain. There is a concern that exposure in the young leads to a much greater propensity to develop nicotine addiction.
I have been concerned at the way that these products are marketed, especially to the young, and about their appeal almost as a fashion accessory. When I have looked at those shops which specialise in selling these products, they have made me feel as if I was probably a bit too old to go and buy one. They seem to be marketed very much to a young, vibrant population, which I find alarming. If they are shown to be as addictive as they might be, this will create a long-term market for them in the future.
I have been to several meetings about electronic cigarettes, including one held here in your Lordships’ House at which I was concerned at the almost aggressive way in which vaping was being pursued by some people present, which set alarm bells ringing a bit in my head over the process. These regulations are proportionate, timely and welcomed by those who have the responsibility for selling these products. I am glad that they appear to have universal support.
Lord Hunt of Kings Heath (Lab)
My Lords, I welcome both sets of regulations. The Opposition fully support them. Like the noble Baroness, Lady Finlay, I was very impressed by the evidence from the Association of Convenience Stores and its support for the regulations. It is very persuasive in relation to the introduction of a minimum age of sale and I commend the ACS for the responsible briefing that we were sent ahead of these regulations.
The noble Earl referred to the research, such as the Welsh data and the evidence we have received from ASH, and mentioned the CMO’s concerns. Essentially, although one can certainly see that these products can have a beneficial health impact for many adult smokers, there is this issue about whether children go to smoking through these e-products. Is the noble Earl satisfied that enough research is being undertaken at the moment, either through the traditional research areas such as the MRC and Wellcome or perhaps through Public Health England? I do not know if he has information about this, but clearly it would be good to know that his department is keeping a continuing watchful eye to ensure that enough research is being done. Particularly relating to children, there is enough uncertainty around to make us want to ensure that there is ongoing research on this.
I have another question for the Minister, raised by the evidence that ASH submitted to his department when it was consulting on the regulations. ASH says that there is real confusion about the relative risks of electronic cigarettes compared to smoking, not just among the general public but among health professionals. It quotes from newspaper articles saying that smokers have been given advice by medical people and have had the impression that it is nicotine rather than tobacco smoke that is harmful. ASH quotes a study presented at the UK National Smoking Cessation Conference; it was some years ago so the profession may be more up to date now, but in one study presented at the conference a substantial proportion of GPs incorrectly asserted that nicotine in cigarettes caused CVD, strokes and lung cancer.
The point that ASH makes is that at the same time as regulations are introduced, the Department of Health should promote better understanding of the relative harm of electronic cigarettes and other nicotine products, including those authorised as medicine and their potential benefit to smokers. I understand that with regard to children there are areas where we are uncertain, but there are areas where we are more certain as well. I would be interested to know whether any advice or guidance accompanying the regulations is to be given to medical practitioners in particular.
I welcome the proxy purchasing offence, which is something that we very much support. The Minister quoted cases of young smokers having their cigarettes bought for them by another person, and outlawing this will help to crack down on it and send a wider public message that this is wrong. The other point comes back to the issue raised by the ACS regarding the e-cigarette issue: introducing the offence will give greater power to responsible shopkeepers not to serve people who they know, or strongly suspect, are going to pass cigarettes on to children. Overall, we are glad to see these regulations and to support them.
Earl Howe
My Lords, I welcome the support that the noble Baroness, Lady Finlay, and the noble Lord, Lord Hunt, have given to these regulations. I shall respond to the questions and points that they have raised. The study mentioned by the noble Baroness, Lady Finlay, was referenced in our consultation document. It was an important study, showing the impact of nicotine on the adolescent brain, and it influenced us considerably in informing the policy.
E-cigarettes are not risk-free. We do not know enough about the long-term health effects of adults using them, let alone children. There have as yet been no long-term studies to examine whether e-cigarettes serve as a gateway to tobacco use. Therefore, we cannot be certain at this stage whether there is a gateway effect from the use of e-cigarettes into tobacco smoking. Further research is needed to answer the question definitively. However, we know that nicotine is highly addictive, and we wish to protect children from the risk of nicotine addiction and the impact that nicotine can have on the developing adolescent brain.
The noble Baroness expressed a fear, which I share, about the aggressive marketing of these products. It is worth noting that the revised European tobacco products directive, which will apply from 20 May next year, includes a ban on advertising e-cigarettes, with a cross-border dimension—that is, advertising through television, radio, newspapers, magazines and sponsorship of sports events.
On the point made by the noble Lord, Lord Hunt, about what are sometimes seen as mixed messages around e-cigarettes, there is no doubt that, looked at in a certain context, e-cigarettes could be seen to have a role in enabling smokers to quit where they have tried other methods and not succeeded. We recognise that e-cigarettes are used by some smokers in that way. That is why the Government are working towards a regulatory framework that ensures that these devices meet basic standards of safety, quality and efficacy. We are clear that e-cigarettes must be accompanied by sufficient information to enable users to make informed choices.
The noble Lord asked about research. I agree that these matters must be kept under the policy spotlight going forward. The National Institute for Health Research recently commissioned a large, randomised control trial to examine the efficacy of e-cigarettes compared with conventional nicotine replacement therapy when used within UK stop smoking services. That research study is inevitably quite long-term. It is envisaged that the project will end in 2018, but the NIHR is confident that it will improve our current understanding considerably.
Proxy Purchasing of Tobacco, Nicotine Products etc. (Fixed Penalty Amount) Regulations 2015
(9 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Energy Efficiency (Domestic Private Rented Property) Order 2015
Baroness Verma
That the Grand Committee do consider the Energy Efficiency (Domestic Private Rented Property) Order 2015.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments, 27th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I am pleased to open the debate on the order and the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.
The energy-efficiency regulations will drive improvements in the least energy-efficient privately rented properties in both the domestic and the non-domestic sector, and provide domestic tenants with a right to ask for consent to cost-effective energy-efficiency improvements to their property. The energy-efficiency order is designed to ensure that those tenants living in the majority of domestic agricultural properties can benefit from the energy-efficiency regulations, in addition to those tenants already defined under the Energy Act 2011. As the order is relatively straightforward, I propose to focus my introduction on the regulations themselves.
I will first give some background on the private rented sector to provide context to these regulations. There are around 1.2 million non-domestic rental properties, which make up approximately two-thirds of the non-domestic property market. Around one in five of the non-domestic private rented stock falls within the lowest two energy-efficiency bands, which have an F and G energy performance certificate rating. In the domestic sector there are around 4.6 million private rented sector properties in England and Wales, making it the second largest tenure after owner-occupation, at around one-fifth of the total domestic housing stock. Around 6% of all domestic properties have an F or G EPC rating, but the percentage of F and G-rated properties in the privately rented sector is almost double this at around 10%.
Although newly built properties in the domestic privately rented sector tend to have higher energy-efficiency ratings, there remains a stock of older properties, many of which have poor energy efficiency and are difficult and costly to heat. The high proportion of older, untreated properties results in lower energy efficiency. This means higher tenant energy bills, and, for domestic tenants, the likelihood of living in fuel poverty. Living in private rented accommodation is an independent risk factor that significantly increases the likelihood of a household being fuel poor, so much so that around a third of all fuel-poor households in England live in the private rented sector, despite the sector accounting for only around a fifth of all households in England and a seventh of the households in Wales. Put simply, the PRS has a disproportionate share of the UK’s least energy-efficient properties and fuel-poor households. That nearly one in five non-domestic properties falls below an E EPC rating also shows the huge potential for energy and carbon savings that remain untapped in our country’s non-domestic stock.
Much of the reason for the slower change and poor energy efficiency in the private rented sector is the split incentive, where the costs of installing energy-efficiency measures traditionally fell to landlords while the benefits of lower energy bills and a warmer property usually fell to tenants. Various approaches have been tried in the past to improve the energy efficiency of the private rented sector. These include voluntary approaches, information services, tax breaks for landlords and subsidies for the installation of energy-efficiency measures. The success of these actions has been limited. The Government have therefore concluded that well designed regulations targeted at the very worst properties, and signalled to the market well in advance of coming into effect, will help drive action to improve the building stock and benefit the wider UK.
The regulations are game-changing and have been hailed by the UK Green Building Council as,
“the single most important piece of green legislation to affect our homes and buildings that has been introduced in the whole of this Parliament”.
This is the first time the Government are directly targeting energy efficiency in the existing private rented sector building stock.
I turn to the key aspects of the energy-efficiency regulations. The regulations fulfil a duty in the Energy Act 2011 to implement regulations so that by 1 April 2016 private domestic tenants have a right to request consent for energy-efficiency improvements where that consent may not be unreasonably refused by the landlord. By 1 April 2018, privately rented domestic and non-domestic property which falls below a minimum energy-efficiency standard, based on the energy performance certificate rating, cannot be let.
The regulations will reduce the UK’s carbon emissions, which is essential to meet the UK’s statutory domestic carbon budgets and the long-term 2050 goal set by the Climate Change Act 2008. By targeting the worst properties, they will improve the state of some of UK’s least energy-efficient building stock. By reducing the winter peak demand, the regulations will also improve the UK’s energy security, but not at any cost. The regulations have been shaped with significant input from the sector to work with the grain of existing practice. They will encourage cost-effective investment in energy efficiency. But the regulations will not demand landlords reach an E EPC at any price. In the domestic sector, a landlord will not be required to reach an E EPC by installing measures which are not cost effective. Provided that a landlord has carried out all the energy-efficiency improvements to the property that could be funded through a Green Deal, under the energy company obligation and any available grant funding they may continue to let their property. My department’s analysis suggests that 73% of domestic F and G EPC-rated properties will be able to reach an E EPC using measures that meet the Green Deal’s golden rule, and another 10% can make some improvement, even if they cannot reach an E.
Non-domestic landlords are provided with similar protections; they will be required to carry out all the energy-efficiency improvements that can be funded through a Green Deal if it becomes available, or that cost the same or less than their expected energy savings over a seven-year period. My department’s analysis suggests that 85% of non-domestic properties can be brought up to an E EPC using measures that meet the Green Deal’s golden rule.
We are also taking care that the regulations do not drive inappropriate interventions, or force landlords or tenants to take decisions that are not in their best interests. The regulations set out specific exemptions for not installing improvements in listed buildings, where they will negatively impact on the value of the property by more than 5%, and where a landlord cannot get third-party consents, such as planning consent. Landlords will also be able to claim an exemption from installing wall insulation where it could negatively impact the fabric of the building.
We have made the regulations fair and the key message simple to understand: landlords will need to get their properties to an E energy performance certificate rating where they can do this cost-effectively, safely and in accordance with existing legal obligations. Tenants have the right to ask for consent for energy-efficiency works, and for that consent to be not unreasonably refused. Clear regulations, signposted in advance, mean higher compliance rates, and less need for enforcement. We will work with tenant groups, landlord groups, local authorities, local weights and measures authorities, and estate agents to ensure that all parties are aware of their rights and responsibilities, and we will endeavour to use innovative channels to warn tenants and landlords. However, where landlords choose to ignore their responsibilities, we have designed an enforcement regime that we believe will be clear, simple and effective. Landlords will either need to reach the minimum standard, or register an exemption on the central PRS exemptions register—a database to be set up and maintained by my department. Local authorities and local weights and measures authorities can choose to take action to enforce compliance.
The economic case for these regulations is also clear. They will provide overall benefit to the UK of £2 billion in net present value terms over the life of the policy. By encouraging co-investment, and decreasing search costs to install ECO measures to eligible householders, the minimum standards will also reduce the cost of delivering the energy company obligation. They will facilitate the delivery of the third and fourth carbon budgets at lower cost, and with greater certainty, by providing over 1 million tonnes of carbon dioxide savings between 2018 and 2022 and nearly 2 million tonnes of carbon dioxide savings between 2023 and 2027.
Furthermore, compliance with the minimum level of energy-efficiency provisions of the regulations will provide significant benefits to non-domestic SMEs, providing them with over £2 billion net bill savings, and over £3 billion net bill savings to the non-domestic privately rented sector overall.
In conclusion, these regulations will drive significant change to the energy efficiency of the worst properties in the private rented sector, improve the lives of tenants living within them, reduce the UK’s carbon emissions, and provide a net benefit to the UK economy of around £2 billion in present value terms. I commend the order and regulations to the Committee.
Baroness Worthington (Lab)
My Lords, I am grateful to the Minister for introducing these regulations. Here we are, one week before the end of this Government’s term in office and here we find, finally, the one piece of energy legislation that they can be proud of. All I can say is: what has taken so long?
This is a very sensible piece of policy. It is a crying shame that so many people still live in very poorly insulated, unhealthy homes—those F and G properties—with such poor energy-efficiency ratings. It is high time that we took action to address this and I am therefore very pleased to see these regulations being brought forward. I particularly welcome the fact that tenants will now have some legal back-up when they enter into negotiations with their landlords so that they will not be able to turn down measures. For a long time this split incentive has been a real barrier to change and it has trapped people in a cycle of fuel poverty where they do not have the means to improve their own situations. This is a very serious and welcome intervention.
Of course, as was outlined, the measure has not just fuel poverty benefits but economic benefits for the country, and indeed carbon benefits in terms of us meeting our climate change objectives. Perhaps the only point on which we differ is that we think we could go further and we would like to see a commitment from the Government to further increase the requirements on landlords to move properties out of the E category into the C category. In the document that we published at the party conference last year, Caroline Flint launched a comprehensive set of policies to wage war on cold homes. Within that, we committed to phasing in a much higher standard for properties by 2027. We think that that is what the industry needs. We need to send a long-term signal that this is not just a stop-start process; this is going to be an ongoing process of improvement, and we will force those people currently profiting from the rent of substandard properties to keep improving those properties so that everybody can benefit from the measures available.
The one thing we will need to keep under careful review, as we always do with these policies, is the extent to which the exemptions that are provided are tied to the Green Deal. We have had discussions about the success or otherwise of the Green Deal. We hope that more and more people are taking measures to improve their homes but we are not convinced that that policy is completely fit for purpose. We would like to explore the rationale for allowing exemptions based on Green Deal availability. There may be some things that fall outside the Green Deal’s current offer that landlords and tenants may wish to pursue and we would not want to limit unnecessarily the efficacy of these regulations by tying them to another policy too strictly.
However, that is a small point compared to the bigger point, which is that finally we have a very good piece of regulation coming forward from the Government, which addresses a critical issue. We support these regulations.
Baroness Verma
My Lords, I thank the noble Baroness, Lady Worthington, for her full support for these regulations. Of course, I do not agree that this is the only piece of legislative work that has gone through this House in the past four and a half years that the coalition Government can be proud of. Much of the legislation that I have delivered has been to ensure that we have more efficient homes, lower energy costs and energy security, as well as looking very much at reducing carbon emissions. So I think she was being slightly disingenuous about the progress we have made. Given that we have spent many, many hours during the past four years or so, particularly in this Room, discussing the work that this Government have undertaken, we dispute that we have not achieved a great deal.
Of course, as with all things, we want to make sure that those who need more efficient homes, particularly vulnerable people in the private rented sector, are able to enjoy a much better living environment. The noble Baroness referred to a C rating. Of course everyone is ambitious, and we are equally ambitious to get the properties to be far more efficient than they are today. We have achieved a lot but there is a lot more to do. My consistent line to the noble Baroness has always been that we must not do this at any cost; there has to be a cost-effective way of being able to deliver what I think, and the noble Baroness has agreed, is the key policy of being able to help to improve our homes. There is a lot of work to be done and I look forward to debating for many more hours, particularly in this Committee.
Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015
Baroness Verma
That the Grand Committee do consider the Energy Efficiency (Private Rented Property) Regulations 2015.
Relevant document: 25th Report from the Joint Committee on Statutory Instruments
Contracts for Difference (Allocation) (Amendment) Regulations 2015
Baroness Verma
That the Grand Committee do consider the Contracts for Difference (Allocation) (Amendment) Regulations 2015.
Relevant document: 25th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, we are today considering an instrument which amends the Contracts for Difference (Allocation) Regulations 2014, which came into force last summer, implementing electricity market reform. The powers to make this secondary legislation are found in the Energy Act 2013.
This reform, as noble Lords will be aware, is designed to encourage the necessary investment in secure low-carbon electricity generation through contracts for difference, or CFDs, which provide long-term price stabilisation to low-carbon plant, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. In brief, a contract for difference is a private law contract between a low-carbon electricity generator and a Government-owned company that provides the generator with greater certainty and stability of revenues, resulting in lower borrowing costs. This saving is passed on to consumers in the form of lower support costs to low-carbon generators.
As the Committee may be aware, the result of the first CFD allocation round was announced on 26 February. Twenty-seven contracts were offered to projects aiming to deliver 2 gigawatts of low-carbon energy capacity across England, Scotland and Wales. Together, these projects have the ability to power 1.4 million homes. The competitive CFD auction has successfully driven down the costs to consumers, resulting in the capacity costing up to £110 million per year less than it would have in the absence of competition.
Before we commence the debate, I will briefly describe the amending instrument. The draft Contracts for Difference (Allocation) (Amendment) Regulations 2015 amend the instrument that came into force last summer which governs the way in which applicants to the CFD are treated for the purposes of contract allocation. These amendment regulations, which the industry has been consulted on, implement a non-delivery disincentive to the CFD scheme. The amending provisions are aimed at preventing gaming and speculative bidding behaviour in CFD allocation, ensuring that only projects that intend to deliver and are capable of it participate in CFD allocation rounds.
The amending instrument sets out a consequence in relation to the site of the main generating structures of a generating station where either an applicant has been offered a CFD and fails to sign or a CFD was entered into but was terminated on a date less than 13 months from the date when the CFD notification in respect of that CFD was given. Applications in respect of such a site will be temporarily excluded for a period of 13 months from the date on which the relevant CFD notification was given. Unless an exemption applies, an applicant will not be able to make a CFD application in respect of the same site during that temporary exclusion period. This will help to ensure that only legitimate projects which are able to deliver low-carbon energy capacity participate in a CFD allocation round.
The amending regulations also set out a process for granting exemptions. This process is to be administered by the Secretary of State in accordance with the time periods set out in the regulations. The amending regulations also set out the grounds on which an exemption to the temporary site exclusion may be available. These are as follows—first, when an applicant can demonstrate that an application is in respect of a site that is not materially the same as the site to which a temporary site exclusion applies. Materiality limits are specified in the amending legislation. Secondly, it is when an applicant can demonstrate that it held a relevant property interest in the site prior to 14 October 2014, the date when stakeholders should have been aware of the detail of the NDD policy. This ground also requires that the applicant is not, and is not corporately associated with, the person who caused the temporary exclusion to apply by not signing or having their CFD terminated. Thirdly, it is when an applicant can demonstrate that it agreed a relevant property interest with a landowner prior to 14 October 2014. This ground also requires that the applicant is not, and is not corporately associated with, the person who caused the temporary exclusion to apply by not signing or having their CFD terminated. Fourthly, in relation to a non-signature case only, an exemption may apply when an applicant can demonstrate that relevant court proceedings, as defined in the instrument, are ongoing at the time of signature and the applicant’s ability to comply with the terms of the CFD would have been materially adversely affected. Relevant court proceedings include a judicial or statutory review of a planning consent applicable to the relevant project. The final ground on which an exemption may apply, which applies only to a non-delivery case, is when an generator’s CFD contract is terminated as a consequence of a qualifying change in law or relevant construction event, as defined in the CFD itself.
When the Secretary of State is satisfied that an exemption applies, an exemption certificate may be issued by them to a prospective applicant, allowing a CFD application in relation to that site to be made by that prospective applicant in the next allocation round. Once these amending regulations are in force, the Low Carbon Contracts Company will maintain and update a publicly available list of any excluded sites setting out the site, the name of the person who caused the temporary exclusion to apply by not signing or having their CFD terminated, and the period for which a temporary exclusion applies to each site. Implementation of the non-delivery disincentive into legislation will inspire further confidence in the robust CFD allocation process, which has already demonstrated an ability to drive down prices and deliver value for money for consumers. I commend the regulations to the Committee.
Baroness Worthington (Lab)
My Lords, I am grateful to the Minister for presenting these regulations. Given that this might be the last time we meet over the Dispatch Box after what has been an interesting four and a half years of energy policy development, these regulations give us an opportunity to take a step back and reflect on how things are going with the energy market reforms introduced in the Energy Bill.
Here we have what seems to be quite a technical, small regulation that is being implemented, but at the heart of it is something quite significant; that is, that we have moved into a world where, rather than the private sector having overall responsibility for the delivery of projects and the decision-making processes, as you would have in an open and liberal market, by and large it falls on the Secretary of State to cause investment to happen in low-carbon energy.
That is quite a fundamental shift and one that has quite a few challenges attached to it, one of which is that, in the interests of containing price rises, we have introduced a levy control framework that sets a nominal budget for how many low-carbon projects will be signed and then, I hope, delivered. This is not an easy task, and these regulations hint at some of the complexities. It might well be that in the nice confines of Whitehall we are able to sit down with a plan and try to estimate how much low-carbon energy we need, which projects are the best and how we go forward with those that we deem to be cost-efficient, but out in the real world there can be unforeseen circumstances that cause things to change. The difficulty will be having all that responsibility resting on the shoulders of the Secretary of State and the Civil Service. Are we confident that we have the right information and skill sets and a sufficient degree of detailed understanding of the energy system to ensure that we do not pursue projects, or seek to have projects come forward, that ultimately are not delivered?
I suspect it is clear what I am hinting at here: the ongoing concern over the Hinkley Point nuclear power station. If the Minister will forgive me, I have a series of questions relating to that contract. Part of the impetus for introducing energy market reform in the first place was a desire to see nuclear power stations once again being built in the UK. The decision was taken by the Secretary of State that we would pursue contracts for difference as the means to make that happen. That is what lay behind the entire Energy Bill: a desire for the confidence for investors to make a large-scale capital-intensive project like Hinkley possible in the UK. We heard an awful lot about it and discussed it at length, and yet in the Chancellor’s Budget yesterday there was not one mention of the project. Why is that? Why is such a huge project—let us be honest about this, it is massive; it is a huge infrastructure project with a huge budget attached—not something that the Chancellor felt it wise to mention, and indeed simply glossed over? He referred instead to a tidal lagoon project in Swansea Bay that does not have a CFD and is only just entering into negotiations. The one project that has been central to all government thinking on energy policy has been Hinkley, yet it gets scarcely a mention. I worry about why that is. It concerns me that we have a system set up that is now not sufficiently subject to market forces, and we might find ourselves taking decisions and picking apparent winners that turn out not to be the winners that we thought. That is at the heart of this new system.
On a positive note, one of the side-effects of the intervention to make Hinkley happen has been the introduction of competitive auctions for renewables. The department should be commended for bringing forward the timetable for those competitive auctions, and we have seen those auctions deliver cost savings in the strike prices that we were anticipating for established renewables. So there is some good news, but almost as a by-product of what the original intention was. I am concerned about the silence, and I have questions. How are we doing regarding the timetable that the department expected the Hinkley project to follow? When do we now expect to see a contract signed, and when will it ultimately deliver low-carbon electricity, which of course is the end that we want to achieve? Will that be in time for the closing down of some of our older capacity in the early 2020s? The concern was always that we were going to lose some thermal capacity as a result of tightening air quality standards, and we needed new, clean, large-scale nuclear to bridge that gap. Indeed, some of the nuclear will be going off in that timescale too. Where are we at? When will we know whether that contract will be pursued? It was my understanding throughout our debates that it would be a fairly quick decision and that we would see EDF go ahead with the build and the signing of the contract early this year, with the NAO poised to scrutinise the contract, yet we have seen nothing.
Why is all this relevant to the regulations? It is because here we have regulations designed to prevent companies gaming or occupying the space under the LRF that would then preclude others from bidding in. I am not accusing EDF of gaming—far from it; I do not think that this is a premeditated attempt to pretend that it can do something that it cannot—but it is subject to circumstances outside of its control. It represents a huge chunk of that LRF and the signs are that it is not now on track for the delivery schedule that it anticipated. It is a significant issue, not just because of the need for capacity but because of the scale of this one project. If it were not to go ahead, we would have to rethink our strategies for other technology groups and projects and hope to bring those forward to replace the gap that would be created. That is why I am interested in what the non-delivery disincentive is for those big projects.
Do the regulations apply to Hinkley? I suspect, on some of the grounds outlined by the Minister, that they do not. There is a reference under ground 4 to “relevant court proceedings”. Austria is pursuing a court case, which I understand Luxembourg has now joined, in which it is challenging the state aid rulings for the Hinkley Point decision in the EU. Does that count as “court proceedings”? Does it mean that the Hinkley project would be exempt from the disincentives? The Minister referred to those projects bidding in to the auction rounds, but the Hinkley project was a bilaterally negotiated contract. Do the regulations cover bilaterally negotiated contracts? If they do not, what measures is the department considering to avoid this cuckoo-in-the-nest problem whereby the expectation is that the arrangement will deliver, yet circumstances beyond the control of government mean that it ultimately will not, putting significant pressure on departmental structures and the energy system?
Perhaps we should have considered these instruments in the opposite order because then we could have ended on a high. Throughout our debates, we have raised our concerns about the degree to which interventions change the balance between government control and the market’s ability to find the right solutions. We obviously want new nuclear power stations to be built in Great Britain but we need some early clarity from government on the status of the project, and a definitive answer on whether it is going ahead and when it is likely to start delivering us the low-carbon energy that we will need to keep the lights on. I look forward to the Minister’s response to those questions.
Baroness Verma
My Lords, I hope that we end on a happy note. The noble Baroness and I have had wonderful discussions at the Dispatch Box, which have ended with us agreeing that the interest of the country is more important than our political spats.
I will first give a general overview, because the noble Baroness took the discussion slightly away from the regulations in front us, and then draw her neatly back to her question. On coming into office in 2010, it was obvious that 20% of our energy would be going offline by 2020 and that we needed to take certain measures to fill that gap. We also knew that we were being dictated to by a very small group of operators, so that choice and competition were lacking. That needed to be realigned and redressed. Since 2010, with the measures and the legislation that we have introduced, we have seen greater competition. We now have not just six generators, but a great number of smaller, independent generators that have driven competition into the marketplace, which is a uniquely good point for the UK consumer.
The second thing we needed to ensure was energy security. That is crucial if we do not want the lights to go off: we have to make sure that we take all the various measures and meet our emissions obligations, which are very important to all of us. We all signed up to the Climate Change 2008 and the principle that we should have a wide range of energy sources. Nuclear energy at Hinkley Point C of course plays a part in that.
On the noble Baroness’s question about Hinkley Point C, the non-delivery disincentive measure will prevent speculative bidding. That is what we are trying to ensure here. However, it will not apply to CFDs that are bilaterally negotiated with the Secretary of State. Neither of these requirements of a non-signature case—the requirement for an offer to lapse in relation to a successful application or, in a non-delivery case, a requirement linked to a CFD notification being given—relates to a bilaterally negotiated offer. Hinkley Point C is, uniquely, a bilaterally negotiated CFD. The noble Baroness talked about the uncertainty of the response. The Commission has given state aid approval, but as the noble Baroness is fully aware, the processes at Commission level take time. They are not driven by one country but by a great range of 27 other countries. We are waiting for responses on that.
Let us look at the wider picture. The noble Baroness mentioned Austria, but we have not yet received a legal challenge from Austria. All the information and detail that the Commission wanted was provided and the case was therefore approved. Now we just have to wait, as always with these processes, which take a little time. However, the fact that we have investors wanting to come to Moorside and to Wylfa, that we have seen over £45 billion of investment in the energy sector, particularly around renewables, and that we have seen an increase in the jobs in the sector gives us reasonable confidence that our measures have resulted in the energy sector being in a much better place than it was when we came into office in 2010. That is my starting point in rebutting some of the noble Baroness’s commentary.
Going forward, we have to take into account that we cannot be held to ransom by external forces. It is crucial that we focus on ensuring that our own home-grown supplies are supported but that we are mindful that the huge impact this may have on the consumer is not at any cost. This is the argument that I have led through the House throughout my time in this role. This is about the important balance of making sure that we have a fair, competitive marketplace, which is not open to gaming or speculation, and a firm response to give certainty to investors on one side while justifying our commitment to the consumer on the other. The noble Baroness obviously wants to raise another point.
Baroness Worthington
Maybe the noble Baroness cannot answer this directly, but my main concern is that we are given information as early as we can about when we can expect Hinkley Point C to be signed or not signed, so that if we get a no, or decide not to pursue it, we can pursue other alternatives. The noble Baroness is completely right that there are other nuclear projects that are more developed now than they were when we started this process and which might be able to replace the capacity almost as quickly. We cannot just let this drift. My reference to the budget was to make the point that we cannot just keep chasing these shiny new projects, such as the lagoons. Last year it was fracking; the year before that it was Hinkley. We have to see some of these things be grounded in reality. It worries me when we do not talk about these projects. We need to get a yes or no, and then we can move on.
Baroness Verma
I wish the noble Baroness could see how much determination there is in the department to speed up processes in relation to Hinkley Point C. However, certain processes have to be followed. As soon as we know the outcomes, I will make sure that the noble Baroness is the first to get that information. However, she also has to agree that we have been consistent in this regard by looking at fracking as another potential source of energy for the country. It is not that we keep finding shiny new energy sources, but we have to look at different sources in the round so that we do not become dependent on any one of them. During the passage of the Infrastructure Bill, the noble Baroness took us through a gruelling procedure with regard to fracking. If we are to have a reasoned, sensible debate on these things, we have to be responsible for making sure that the legislation passes smoothly through both Houses of Parliament when it comes before us. I agree with the noble Baroness that sometimes we want to respond more quickly. The Government work incredibly hard to respond in a timely fashion, but ultimately the response has to go through the proper processes and channels.
Bank of England Act 1998 (Macro-prudential Measures) Order 2015
(9 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Newby
That the Grand Committee do consider the Bank of England Act 1998 (Macro-prudential Measures) Order 2015.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
Lord Newby (LD)
My Lords, this Government have undertaken the most fundamental programme of financial reform this country has ever seen. The Bank of England sits at the heart of this new system, with clear responsibility for maintaining financial stability. The Bank is supported by the firm-level supervisors: the Prudential Regulation Authority and the Financial Conduct Authority.
A key element of the new system is the Financial Policy Committee. The FPC is responsible for identifying, monitoring and addressing risks to the system as a whole. This macroprudential regulation was entirely absent from the system we inherited.
The FPC works to improve financial stability in two ways: first, through recommendations, which can be made to the regulators, industry, the Treasury, within the Bank and to other persons; and, secondly, through directions that can be given to the PRA and FCA. The FPC’s direction power is limited to macroprudential measures set out in orders like those currently before the House. The regulators must comply with a direction, but they will have discretion over its timing and implementation method.
The FPC has recommended that its powers of direction be expanded so that it may effectively tackle systemic risks within the financial sector. The Government agree with those recommendations and have brought forward the instruments that we are discussing today. These instruments will provide the FPC with powers of direction with regard to the UK housing market and a leverage ratio framework. I will discuss these powers in turn.
Owning a property is an aspiration for many people in the UK, and one which this Government support. However, we cannot be blind to the risks that can emerge from the housing market. More than two-thirds of previous systemic banking crises were preceded by boom-bust housing cycles, and recessions following property booms have been two to three times deeper on average than those without.
To solve this issue, we need to be clear about where the risks arise. They arise when people borrow too much and leave themselves vulnerable to changes in circumstances. Excessive debt can create serious difficulties for households and, given that mortgages are the single largest asset on bank balance sheets, it can result in significant vulnerabilities in the banking system. We all know from the experience of the financial crisis how important it is for the banking system to be resilient to all shocks, including those from the housing market. Excess debt can also force households to cut back on spending which can, in aggregate, create difficulties for the economy as a whole.
Let me be clear: there is no immediate cause for alarm. The FPC has itself stated that since taking action in June, there has been no increase in financial stability risk from the housing market. However, not to prepare for such events would be dangerously complacent. So we need to ensure the FPC has the tools at its disposal to deal with these risks should they arise, which is why we are giving the FPC far-reaching new powers over owner-occupied mortgages. Specifically, if the FPC judges that some borrowers are being offered excessive amounts of debt, they can limit the proportion of high debt-to-income—DTI—mortgages each bank can lend or, in extremis, simply ban all new lending above a specific ratio. Similarly, if the FPC is concerned by the risks posed by a housing bubble, it could impose caps on loan-to-value ratios. These additional powers over the housing market are commonly held by central banks in other countries, and the experiences of Korea, Singapore and Hong Kong confirm that DTI and LTV limits are efficient tools to address risks in the housing sector.
I now turn to the other instrument that we are considering today. The recent financial crisis revealed serious weaknesses in the existing framework of internationally agreed standards of capital adequacy. Banks in most jurisdictions were only required to meet risk-weighted capital requirements and were not subject to leverage requirements. In the lead-up to the crisis, some banks’ balance sheets expanded significantly while average risk weights declined. Firms’ leverage ratios were a useful indicator of failure during the last crisis, and the period immediately preceding the crisis was characterised by sharp increases in leverage. Firms with high leverage ratios have greater amounts of capital to absorb losses which materialise and have less reliance on debt financing.
There is international agreement that the leverage ratio is a crucial complement to risk-based capital requirements. The usefulness of the leverage ratio as a regulatory requirement has been recognised by the Basel Committee on Banking Supervision, which has included proposals for a 3% minimum leverage ratio in the Basel III agreement. Countries such as Canada and the US already impose leverage ratio requirements and have also committed to going beyond the Basel III requirements.
In the UK, both the Independent Commission on Banking and the Parliamentary Commission on Banking Standards have recommended that banks should be subject to minimum leverage ratio requirements. On 26 November 2013, the Chancellor requested that the FPC undertake a review of the leverage ratio and its role in the regulatory framework. In light of international developments, the Chancellor judged that it was an appropriate time for the FPC to consider all outstanding issues relating to the leverage ratio, including whether and when the FPC needed any additional powers of direction over the leverage ratio, and whether and how leverage requirements should be scaled up for ring-fenced banks and in other circumstances where risk-based capital ratios are raised.
On 31 October last year, following almost a year of work and extensive consultation with stakeholders, the FPC published its response, The Financial Policy Committee’s Review of the Leverage Ratio. The review recommended that the FPC be given new powers of direction over the leverage ratio framework for the UK banking sector. The Chancellor agreed with these recommendations and, following a consultation on the implementation of the proposals, brought forward the instrument that we are considering today.
The instrument will grant the FPC powers to set: a minimum leverage ratio that all firms must meet; additional leverage ratio buffers for systemic firms, linked to their systemic risk-weighted capital requirements; and a countercyclical leverage ratio buffer for all firms, linked to the countercyclical capital buffer that is also set by the FPC. These powers will allow the FPC to ensure that firms are not allowed to take on excessive levels of leverage, that the most systemically important firms are more resilient than other firms and that resilience is built up for all firms when times are good. I beg to move.
Lord Tunnicliffe (Lab)
My Lords, I thank the Minister for introducing these two orders. The Minister and I meet like this quite regularly, just the two of us. I thank the noble Lord, Lord Ashton of Hyde, for making the government side look a bit more multiple, but only two of us are going to speak. Often we discuss rather minor orders, but I do not think that these are minor; they are absolutely fundamental to the work that we have done in the Chamber with the various financial reform Acts and in the creation and designing of powers of the FPC. These are probably the key ones that have come before us. I thought that they were the first, and possibly I am wrong about that, but I certainly do not remember any as important as this. I do not want in any way to suggest that we are other than supportive of the orders, but I have a few queries and the odd complaint.
The Lords Secondary Legislation Scrutiny Committee commented on what it saw as the inadequacies of the Explanatory Memorandum. It particularly pointed out the very trivial summary of the consultation. I agree with the committee in the sense that the explanation of these orders needs quite a narrative. I would have appreciated it if that narrative was in the EM, but in fact one has to go into the impact assessment—and then, really to understand, I found that I had to go back into the minutes of the Financial Policy Committee and its interesting review of the leverage ratio. As a Committee, our considerations would have been enhanced if we had been led down that path rather than having to discover it. In the middle of this process, I realised what a different world it is, because 10 years ago without the internet I would not have had the faintest idea what we were talking about. It is really very complicated to get at if you cannot get back to those source documents.
The one thing that I did find in the Explanatory Memorandums from the Treasury was a name and telephone number. I have to say that my experience of ringing those numbers has been very impressive under previous orders. This time, because his name came up first, because it is attached to the second order, I publicly thank Christopher Woodspeed for spending 40 minutes taking this amateur politician through the intricacies and giving some signposts as to where to go.
I shall be slightly repetitive for the Minister, to set the scene. In creating the FPC and the other institutions, we said to the FPC that it could have two toolkits—a recommended and a directional toolkit. The recommended toolkit is a “comply or explain” toolkit, while the directional toolkit is a “do it” toolkit. As I understand it from going back into the minutes of the Financial Policy Committee of 17 and 25 June, written up as one, the committee discussed the world and particularly alighted on the UK housing market. I do not suppose anybody reads what we say, so it does not matter, but I commend whoever produced the minutes of that meeting, because I found them very readable. They are a good read; they fit together and are pleasantly discursive.
When discussing the housing market, in paragraph 11 of the minutes, the FPC reminds itself what its job is—which I thought was quite clever to put into its minutes. It states:
“Under its primary objective, the FPC was required to ‘remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system’; legislation defined one source of systemic risk as ‘unsustainable levels of leverage, debt or credit growth’”.
Then the minutes describe a debate, which seems to have been a proper and interesting one. The paragraph that sums up where the committee got to says:
“Taking this evidence together, the Committee assessed that there was the potential for a large and diverse impact on aggregate demand from household indebtedness, with this risk more marked in relation to borrowers with higher levels of indebtedness. The Committee judged that the size of that impact on aggregate demand was sufficient to warrant intervening now”—
that is, in June—
“in the mortgage market, given current conditions and the potential upside risks to the FPC’s central view of the possible future path of the share of mortgages extended at high LTI multiples and hence to overall indebtedness”.
So the MPC had this conversation and produced a couple of recommendations. One was a stress test—about 3% over a period of years, and so on, which all makes sense—and the other is that:
“The PRA and the FCA should ensure that mortgage lenders do not extend more than 15% of their total number of new residential mortgages at loan to income ratios at or greater than 4.5”.
Then there is a de minimis bit of it, and so on. As I understand what the Minister has said, those recommendations did their work. My understanding from reading the various documents and from what he said is that there is not a concern with the housing market at this moment, and I do not think it is seen as a concern in the future. I do not know whether I can confess this, but I actually read the Daily Telegraph this morning—it happens. In an article, Roger Bootle, chief executive of Capital Economics and, as far as I know, pretty politically neutral, says:
“Time and again governments take measures that boost the demand for housing without doing anything to increase supply. The result is higher house prices without accommodating a single extra family—hard-working or otherwise”.
I would like the Minister to confirm that the increased demand that the Budget put into the housing market is not expected to create any destabilising effect.
So we think that the FPC has stabilised the market. However, in October 2014—no, sorry, that was the other stuff; perhaps it was September 2014—the committee determined that it wanted to move its powers from the recommendation toolkit to the direction toolkit. Does the Minister feel that that is because the FPC envisaged instability; is it just going to take the directional power and put in the same figures as in the recommendation, to tidy things up; or is it going to do neither of those things but simply put it in a drawer, with the marketplace knowing it is in a drawer and that it can be drawn out at any time to direct the marketplace away from an unstable path? I would be interested in which of those three options the Government envisage the FPC using these powers for.
I turn to the other order. I read lots of stuff on this but found one document particularly useful. The Minister has the advantage of me as he works in the Treasury; for my part, I end up understanding a bit of this legislation for about a day and a half before we discuss it and then it goes out of one’s mind. The nice thing about the Financial Policy Committee’s review of the leverage ratio is that it takes you through all the background so you can see how all the bits fit together.
As I understand it, the second order, which creates the leverage ratio concept, rules and “calibration”—the word that the FPC used—will not bite with most firms because the capital buffer, if that is the right term, derived from the risk-weighted analysis is in most cases greater than the leverage ratio buffer that will be recommended. In that sense, the new leverage ratio sits there as a floor rather than something that is biting and acting on firms. But I understand, or at least I hope I do—this will be a confirmation of whether or not I have understood it; please forgive me, but I think it is quite important—that some firms, particularly ones that have high-quality assets with low risk, may in fact be caught by the leverage ratio, and that particularly includes building societies.
My next question is: are any problems envisaged from the tightening of the market, for want of a better way of putting it, that the biting of this leverage ratio on those particular institutions is going to lead to? Will there be any adverse effects on housing finance as a result of these ratios being introduced? Finally, as I understand it, a firm could respond to the leverage ratio constraint by changing its asset mix; by moving between different levels of risk, it would change its risk-weighted buffer and come down to this buffer. It is an invitation for firms to look at their asset portfolios.
What I did not understand is the impact that this is going to have on lending to SMEs. I think there is a political consensus that SMEs need to be encouraged and funded in this country. I am curious about the extent to which it is envisaged—I got mixed messages when trying to understand it from the documentation—that this will impact on SME borrowing.
The two orders have the potential to have an impact on growth. The impact assessment has some worked-out examples. They are not forecasts, I accept that, but they illustrate scenarios where there may be some impact on growth through the use of the ratios. The leverage ratio could have a similar effect—a reduction in lending and hence some impact on growth.
It was a particular joy to read the Daily Telegraph this morning. I rather assumed it would be wall-to-wall praise. I take the Guardian to think but I take the Telegraph for therapy—that is one way of looking at it—and it is free at the club. The front page of the business section reads: “Osborne’s bank raid” and concludes that he has done a bank raid of £9.28 billion. The article refers to the OBR report. I have not a chance to read the OBR report—I am saving that for my holiday; I am covering everything in sight today, am I not? But I think it is an incredibly well constructed document which has developed well over the years, and I now find that it is genuinely worthwhile reading as one of the best documents to give you a feel for the economy as a whole. The article says:
“The OBR said in its review of the Budget that the higher levy could ‘affect banks’ ability to meet capital requirements … the measures could affect the supply of credit and therefore GDP growth’”.
So you have on the one hand the Budget with the high levy and on the other these leverage ratios, which if they bite could have an adverse effect. Given the central scenario—by that I mean the scenario that the OBR uses for its next five-year plan—are these orders expected to have any adverse effect on growth? You can read stuff that suggests they do not but it does not definitely say that they do not. Given the central scenario that the Government are using—that is, the OBR scenario for the next five years—are these orders expected to have an adverse effect on growth and, if they do, did the OBR take account of that adverse effect in its documentation or would that need to be added?
This is the end of the Parliament. I am not going to say much about the next order because it is so reasonable I cannot find anything to say about it. We have had a lot of encounters and we are in a situation which I do not know how to remedy but I somehow feel is wrong. We have here some incredibly important orders but I am not sure that we are using the correct mechanism to do them justice. There are just the two of us discussing them. The noble Lord will have studied these orders carefully and been fully briefed and no doubt will hopefully have put his staff under some pressure in this respect, and I have put quite a lot of effort into it. However, I worry about the value of these encounters. I have been trying to think through the value of this encounter. One of the things you can do with an affirmative order is to resist it by voting against it. Realistically, that happens two or three times a Parliament. Very occasionally, you vote it down. In my recollection, that occurs once or twice a decade, so it is hardly our central business. You can seek clarification which sometimes tends to verge on a bit of a blood sport where you are trying to catch the Minister out. I would not try to do that because I know the Minister is so well briefed.
The real issue is scrutiny. One of the problems with scrutiny is that it is so difficult for the Opposition to evidence the fact that they have put effort into scrutinising the legislation and making sure that it does not contain any faults. The value of scrutiny lies usually not so much in scrutinising the order but creating an atmosphere so that back at the ranch—back in the Treasury—people know that the orders that they bring forward are going to be carefully examined, and therefore they are encouraged to be that much more careful and thoughtful. In a sense, all one can do is stand up and say, “We have scrutinised the order”. These orders are particularly unhelpful in that regard, as I cannot find anything wrong with them. As far as I can see, they are well crafted. They sensibly add to the FPC’s powers. As I say, I am disappointed that I cannot find anything wrong with them.
I then glanced down at the first page of the report, which happens to list the membership of the FPC as being the Governor, four deputy-governors—for reasons I do not understand, three were there because they should be there and one was there because she was there; that is roughly what it says on the front page—the chief executive of the FCA, a man from the Treasury and four non-executives. They spent a year doing this work and, if they cannot get it right, we are in trouble. I think that they have got it right.
In summary, I thank the FPC for its efforts and commend it on the results.
Lord Newby
My Lords, I am extremely grateful to the noble Lord for taking such trouble over these orders. He raised a number of points. He asked whether it was the first time that we had used the macroprudential powers. We previously legislated to grant the FPC a power of direction with regard to sectoral capital requirements. This was done through a similar order in 2013. The debate in your Lordships’ House was on 26 February 2013. The FPC was also granted the power to set the UK rate of the countercyclical capital buffer under the CRD IV in the normal way.
The noble Lord was concerned about the lack of detail in the Explanatory Memorandum. The full consultation response document was published on the government website, but I take his point. Those of us who sat through the many weeks and months of consideration of the background policy to these orders when we were putting the Financial Services Bill through your Lordships’ House, had it in our water almost that this was going on. For people who did not do that, which of course is the vast majority of people, it is very important that the accompanying documentation is as comprehensive as possible. I am sure that my colleagues in the Treasury will have noted that, although I am of course very pleased that the noble Lord found the experience of seeking advice from the Treasury so positive.
The noble Lord asked about the extent to which there was concern at the moment about housing and whether this was a precautionary measure or the powers were going to be used immediately. The FPC is clear that these instruments are necessary to tackle financial stability risks that could emerge in the future rather than any risks that we are facing at the moment. As it said in its 2 October statement, the recommendation in relation to these powers,
“relates to the FPC’s general ability to tackle risks that could emerge from the housing market in the future. The Recommendation does not reflect any FPC decision about the current state of the housing market”.
This is a recognition of the importance of the housing market in relation to financial stability, but there is no concern at the moment that the housing market is in such a position that these powers are needed immediately.
The noble Lord asked whether, as a result of the Budget, there was likely to be a further problem with house prices and these powers might be needed sooner rather than later. The key thing here is that we are not just introducing new measures for first-time buyers, for example, but are taking, and have taken, significant steps to boost housing supply, including the new planning policy framework and the most ambitious affordable housing programme for 30 years. Everybody accepts that we need to do more on housing, but when the FPC looked at the Help to Buy scheme in October last year, which people are questioning as a potential problem in terms of financial stability, it came to the conclusion that it did not represent a material risk to financial stability, that it had not been a material driver of recent house price growth and that its key parameters remained appropriate.
The noble Lord asked about the SME lending proposals. The Government and the FPC do not expect leverage requirements to have a material impact on lending to the real economy. At the margins, firms that are bound by leverage ratio requirements may be incentivised to increase SME lending relative to other types of lending, as SME lending often attracts a higher return than other assets that have lower risk weights, as the leverage ration is not risk-weighted. However, we do not expect this effect to be significant.
The noble Lord asked how the leverage tool would affect companies with low-risk assets, particularly building societies. As he pointed out, the key capital constraint for banks and building societies is the risk-weighted capital requirements rather than the leverage ratio. The FPC’s impact assessment suggests that only two of the seven building societies in its sample would need to raise capital to meet leverage ratio requirements. The majority of building societies in the UK use standardised risk models, which means that their average risk weights are above 35%. An average risk weight above 35% means that risk-weighted capital requirements will bind—take effect—before the FPC’s proposed leverage requirements.
Bank of England Act 1998 (Macro-prudential Measures) (No. 2) Order 2015
(9 years, 9 months ago)
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Lord Newby
That the Grand Committee do consider the Bank of England Act 1998 (Macro-prudential Measures) (No. 2) Order 2015.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments
Mortgage Credit Directive Order 2015
(9 years, 9 months ago)
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Lord Newby
That the Grand Committee do consider the Mortgage Credit Directive Order 2015.
Relevant document: 24th Report from the Joint Committee on Statutory Instruments
Lord Newby (LD)
Noble Lords might find it helpful if I start by outlining the background to the legislation. In February 2014 the mortgage credit directive—MCD—was agreed, giving member states until 21 March 2016 to ensure that it is implemented. The MCD has two broad aims: to protect consumers by setting minimum regulatory requirements that member states must meet and to promote the creation of a more harmonised European mortgage market.
However, the UK already has a strong regulatory framework in place to protect consumers in the residential mortgage market. Under this framework, the independent regulator, the FCA, has the authority to put in place, supervise and enforce a range of rules to ensure that firms act responsibly when conducting residential mortgage business. Since this framework was put in place in 2004, the FCA has been able to make incremental changes and develop a regime with strong consumer protections, tailored to the specifics of the UK market.
The MCD does not offer many additional benefits to UK consumers beyond those already provided. However, it does have the potential to increase the burden on business. In recognition of this, the UK’s approach throughout the negotiations on the MCD was to try to align the directive’s requirements with the existing UK regulations, in order to minimise the impact on UK industry and consumers. This strategy proved highly successful and the Government were able to secure a good outcome for the UK.
Once the directive was agreed, the Government set out an approach to implementation that was an extension of the earlier negotiation strategy. We decided to build on the existing UK regulatory regime, minimising the impact on the UK market, avoiding disruption and ensuring that the gains made from improvements in regulation over the past 10 years were not squandered unnecessarily. This approach means that implementation of the MCD will be achieved primarily through adjustments to existing FCA rules. However, there are areas where UK legislation has to be changed, and that is the purpose of the draft order under consideration today.
There are two main areas where the draft order makes a significant change. The first is to the regulatory framework for second charge mortgages. These are loans secured on property that is already acting as security for a first charge mortgage. The terms first charge and second charge refer to the priority of securities held by the lenders, where the second charge is subordinate to the first. Typical uses for this type of loan include debt consolidation and home improvements. Currently, the scope of FCA mortgage regulation is limited to first charge mortgage lending, with second charge lending regulated as part of the FCA’s consumer credit regime.
The Government previously committed to move second charge mortgage lending into the regulatory regime for mortgage lending on the basis that it is more appropriate to regulate lending secured on the borrower’s home consistently. This proposal was welcomed by the industry. However, it was decided that this move would be postponed to coincide with the implementation of the MCD and reduce the number of regulatory changes that firms would have to ensure compliance with. As a result, this draft order will ensure that, as of 21 March 2016, the FCA will be able to regulate the vast majority of secured lending under one regulatory regime.
The second area where this order will make a significant change is with respect to buy-to-let mortgages. Existing UK legislation excludes buy-to-let mortgages from the scope of FCA regulation. This approach is driven by two key considerations. The first is that, unlike lending to an owner-occupier, the borrower’s home is not at risk. Second is the acknowledgement that buy-to-let borrowers tend to be acting as a business.
The Government are committed to introducing FCA regulation only where there is a clear case for doing so in order to avoid putting additional costs on firms that would ultimately lead to higher costs for borrowers. However, while the MCD allows member states to exempt buy-to-let from the detailed requirements of the directive, it requires that member states using this option put in place an appropriate framework at a national level for buy-to-let lending to consumers. The Government have decided to use this option to put in place the minimum requirements needed to meet the UK’s legal obligations, as they are not persuaded of the case for the full conduct regulation of buy-to-let mortgages.
The order under consideration today sets out these rules and gives the FCA the power to register, supervise and enforce them in line with its existing statutory duties. This draft order has been prepared in close co-ordination with the FCA, industry and consumer groups. The overall approach we have taken has had broad-based support from all these groups and it has been extremely pleasing to see how we could work together to achieve a positive outcome for the UK. By delivering on our key objective and putting this legislation in place well in advance of the transposition date, we will give the mortgage industry the certainty it desires and the best chance possible of a smooth transition to the new regulatory framework.
The net cost of this draft order is expected to be £11 million in total over a 10-year period. However, it is also worth noting that the cost of taking a copy-out approach in this instance was estimated to cost £48.7 million more per year over the same period.
I hope I have persuaded the noble Lord that this statutory instrument will ensure compliance with the EU mortgage credit directive in a manner that minimises the impact on industry, retains the strengths of our regulatory framework for mortgages and ensures that consumers experience limited change as a result.
Lord Tunnicliffe (Lab)
My Lords, I thank the noble Lord for introducing this order. He has persuaded me that it is perfectly sensible and that it achieves the objectives.
My sole comment relates to the tone of the description of our relationship with the EU in this matter. I would love to have heard a tone that said we were concerned about the health of the EU in these markets—because, in all probability, this is a good EU directive, taking the EU as a whole—and that we had secured appropriate freedoms to build on our own well developed market regulation. It is just a matter of tone, but one has to remember that the idea of having these unified directives is to clean up—though that is too hard a term—or to codify European markets as a whole; and, in general, that is a good thing. As far as the order itself goes, how it was created and how it has been evaluated, I am content.
House of Lords
Introduction: Lord Kerslake
School Curriculum: PSHE
(9 years, 9 months ago)
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Baroness Massey of Darwen
To ask Her Majesty’s Government whether they have any plans to make PSHE a statutory part of the school curriculum.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, high-quality PSHE education has a vital role to play in preparing young people for life in modern Britain. However, making it statutory is not the simple answer. We believe that all schools should teach PSHE in a way that is appropriate for their pupils, and we outline this expectation in the introduction to the new national curriculum. We are working closely with the PSHE Association to quality-assess resources and establish a new charter mark for schools that demonstrates robust evidence of high-quality PSHE provision.
Baroness Massey of Darwen (Lab)
I thank the Minister for his response. Does he agree that personal, social and health education is not—or should not be—a one-off topic in schools, that it is more about developing social and emotional skills, not just imparting information, and that such skills can improve behaviour and academic performance, as many schools have found?
Lord Nash
I agree entirely with the noble Baroness. As the Secretary of State said last week, high-quality PSHE should offer people a curriculum for life as a planned programme of learning that is supported by a whole-school ethos covering all the knowledge and skills that young people need to manage their lives. I do agree with the noble Baroness’s point about character, which is why we have launched a £5 million innovation fund. Under our highly successful free schools programme, we have schools majoring on character development, such as the outstanding Dixons Trinity Academy in Bradford and those in the Floreat group. I recommend that all noble Lords from across the House visit some of those schools before they jump to conclusions based on inadequate information.
Baroness Walmsley (LD)
My Lords, in the light of the fact that deaf and disabled children are three times more likely to be sexually abused, and four times more likely to be physically or emotionally abused, than other children, will the Government make sure that schools ensure that these children receive their PSHE education in an appropriate form of communication that they can understand and are not withdrawn from PSHE classes for one reason or another because it is the easiest class to take them out of?
Lord Aberdare (CB)
My Lords, the Government argue that schools should have the flexibility to determine their own curriculum outside core subjects, but the result is that most schools are not teaching essential skills such as first aid, which not only gives students valuable life skills and confidence but would save many lives, as shown by countries where such training is mandatory. Does the Minister not agree that making PSHE statutory, including subjects such as first aid, and indeed citizenship, would result in students emerging much better prepared for their lives as citizens?
Lord Nash
The national curriculum creates a minimum expectation for the content of a curriculum in maintained schools. Quite deliberately, it does not represent everything that a school should teach. It would not be possible to cover all that when there are so many groups wishing things to be included in the curriculum, but many schools already choose to include CPR and defibrillator awareness as part of their PSHE teaching. We will work with the British Heart Foundation to promote its call push rescue kit to schools, including through our social media channels and the summer term email.
Baroness McIntosh of Hudnall (Lab)
My Lords, what work is being done with teacher educators to ensure that there is a good supply of properly qualified teachers to take this agenda forward, particularly in view of what my noble friend Lady Massey said about it being a whole-school enterprise and not a specialist subject?
Lord Nash
The noble Baroness is quite right in her observations. High-quality professional development for teachers is an essential part of raising standards in schools. The PSHE Association has some excellent resources, which we signpost for schools. They include an online CPD course, which explores assessment policy writing, creating schemes of work and SRE education. Teachers can of course benefit from the national PSHE CPD programme.
Lord Northbourne (CB)
My Lords, does the Minister agree that every child, as they pass through adolescence towards the world of work and raising a family, needs to acquire what are often called the soft skills: self-confidence, an ability to communicate, character and caring about other people? Can he make it clear whether these things are to be taught, are supposed to be taught or are being taught through the PSHE syllabus or somewhere else in schools, and whether the Government are concerned to ensure that every school provides a learning environment in respect of soft skills?
Lord Nash
The noble Lord makes a very good point. These skills are particularly important for underprivileged children. The noble Lord, Lord Giddens, made a very good point recently: that in order to have social mobility, you need social immobility. We need to give particularly children from disadvantaged backgrounds these soft skills, which is why we have such a big focus on character education. We would expect this to be inspected by Ofsted as part of SMSC and as part of a broad and balanced curriculum.
Earl Attlee (Con)
My Lords, what is Ofsted doing to ensure that schools properly cover PSHE?
Lord Nash
As with other areas of the curriculum, PSHE and citizenship are not explicitly covered in the school curriculum inspection framework. However, in reporting, inspectors must consider how the school is meeting the needs of the range of pupils and pupils’ SMSC and cultural development to help to prepare them for life in modern Britain. Inspectors will also look at how effectively schools engage with parents in the development of their SMSC policy.
Baroness Jones of Whitchurch (Lab)
My Lords, the Education Select Committee, as the noble Lord will know, recently reported that PSHE requires improvement in 40% of schools, that the situation appears to have got worse over time, and that young people are consistently reporting that the sex and relationship education that they receive is inadequate. Surely the Minister is showing a large degree of complacency about this. Perhaps making PSHE statutory is, indeed, a simple answer.
Lord Nash
The noble Baroness feels very strongly about it, but the Labour Party had 13 years to make it statutory and did not do so. We are currently considering the findings of the Education Select Committee report. We have launched a communications campaign to promote the selection of high-quality resources via our social media sites. They include PSHE Association programmes of study, “Sex and Relationships Education for the 21st Century” and various other products.
The Earl of Listowel (CB)
Will the Minister praise the previous Government’s success in reducing teenage pregnancy to its current low, while recognising that compared to the continent we are still well behind? Will he keep a very open mind about this issue of a statutory requirement for PSHE? After all, the Education Select Committee in the other House recently recommended in its report that there should indeed be statutory provision in this area.
Electoral Register
(9 years, 9 months ago)
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Lord Kennedy of Southwark
To ask Her Majesty’s Government what action they are taking to maximise the number of people on the electoral register before the deadline of 20 April by which people must register to vote in the General Election on 7 May.
Lord Wallace of Saltaire (LD)
My Lords, the Government have invested £14 million over two financial years to support activities to maximise the number of people on the register. In 2014-15, this includes £6.8 million divided among electoral registration offices across Great Britain according to levels of underregistration. Up to £2.5 million will be used to fund wider activity, including working with national organisations to reach underrepresented groups, such as young people, students, Armed Forces personnel and overseas voters.
Lord Kennedy of Southwark (Lab)
My Lords, I declare an interest as the chair of the All-Party Parliamentary Group on Voter Registration. I hope the noble Lord’s response to my Question will move beyond the “We’ve all got a role to play” response that I often get from him. My Question asks specifically what action the Government are going to take in the next month to address the 7 million of our fellow citizens who are not on the register. How can we get those people on so that they can actually vote in the general election?
Lord Wallace of Saltaire
My Lords, it is up to all of us, not just the Government, to make sure. I was with the noble Baroness, Lady Royall, and the noble Baroness, Lady Perry, at UCL the other week. We all three made the point that it was extremely important that students both register and vote, and we should all be repeating that message each time we go to a college, university or school. The noble Lord will have seen the Electoral Commission’s announcement of its pre-election campaign earlier this week. That is another dimension of this. There will be advertising online and in the media. The Government are very happy that in February a million new applications came in to register. We expect there to be a similar surge in the last few weeks before the closing date, as there was in 2010. We are not at all complacent, but as the election gets closer, we expect interest to rise and we expect the 2.7 million applications which have come in since last December to be added to by, we hope, another million.
Lord Cormack (Con)
My Lords, as there are penalties for not registering, can my noble friend explain to me—he has failed to do so in the past—why we do not move towards compulsory registration?
Lord Wallace of Saltaire
My Lords, the noble Lord, Lord Maxton, has also asked me this question on a number of occasions. We would be moving towards a different relationship between the citizen and the state. In Denmark, Finland and Germany, there is a national population register. If you are on a national population register, you are automatically also on a voting register. It is also used for welfare, taxation and a range of other questions. That takes us down the road towards national identification numbers and national identity cards. We will have to have that debate in the next Parliament. It is not the tradition in this country.
Lord Roberts of Llandudno (LD)
My Lords, I congratulate the Minister on the backing he has given for organisations such as Bite the Ballot, of which I am the honorary president. I hope that the new voters exercise their vote on 7 May. After 7 May, it will be important to have a proper analysis of exactly what went wrong with individual registration as against the previous form. I am told that many constituencies have many fewer registered voters than in the past. Whichever Government are in office, will they urge the Electoral Commission to come to grips with this question very soon?
Lord Wallace of Saltaire
My Lords, after the election, the Electoral Commission, which is an excellent organisation, will of course examine the successes and weaknesses of the transition to individual electoral registration. We have guaranteed that this will come back to Parliament—there will be a report to Parliament on how the transition to individual electoral registration has gone. I emphasise that this has not been a failure. Applications are still coming in. Two-thirds of applications since last June have been online. We are doing everything we can to ensure that more people who have not yet registered, or who are registered in the wrong place, register before 20 April.
Lord Wills (Lab)
My Lords, the Electoral Commission has said that between March and December last year 920,000 people disappeared off the electoral register. This is clearly going to have an impact on the outcome of the general election. Will the Minister say what impact he thinks it will have?
Lord Wallace of Saltaire
My Lords, I have just emphasised that nearly 3 million have applied to register since December. There is movement on and off the voting register all the time, as the noble Lord well knows. We are doing everything we can to make sure that movement in the next few weeks, as over the past three months, continues to be positive.
Lord Grocott (Lab)
My Lords, since this is all about establishing the identity of people who are eligible to vote, at this stage in the Parliament, five years in, will the Minister acknowledge that one of the numerous mistakes this coalition Government have made—it would take too long to list them—was the early decision to get rid of national identity cards, which would have solved this and many other problems relating to migration and other matters about which this Government have made such a mess?
Lord Wallace of Saltaire
I thank the noble Lord for his normally generous comments. The sheer heavy weight of the Labour Government’s ID proposals seemed to me and many of my colleagues to make it an unavoidable failure. There is a debate about the shift to a digital relationship between the citizen and the state, which we will have to have, and about convenience against privacy, which we need to have as we move forward. My right honourable friend Francis Maude and others working on the Government Digital Service have made a good deal of progress in that regard.
Lord Lexden (Con)
Does the Minister have any information about the growth in the number of 18 to 21 year-olds on the register?
Lord Wallace of Saltaire
Since 1 December, some 700,000 16 to 24 year-olds have applied to register. We do not have an exact figure on what proportion that is because the figures on how many 16 year-olds will be eligible to vote in the election are not exact because we do not have all their birthdays.
Lord Greaves (LD)
My Lords, do the Government have an estimate of the extent to which the reduction in the number on the electoral register as reported last December is due to a reduction in multiple registrations?
Lord Wallace of Saltaire
My Lords, it is highly likely that that is the case, particularly with students not being registered both at home and at university. That is one of many difficulties in assessing the completeness and accuracy of the register.
Syria and Iraq: Daesh
(9 years, 9 months ago)
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Lord Avebury
To ask Her Majesty’s Government what is the strategy of the United States-led coalition for clearing the Daesh out of the territories which they currently occupy in Syria and Iraq.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, we are part of a global coalition with more than 60 members committing to defeating ISIL. We support inclusive governance in Iraq and Syria, work to counter ISIL’s vile narrative, its access to finance and foreign fighters, and provide military support to Iraqi forces fighting ISIL. The UK also provides humanitarian assistance to those affected by ISIL’s brutality and will contribute to the Syrian opposition train and equip programme.
Lord Avebury (LD)
My Lords, the FCO website makes reference to a global strategy for combating the global threat of ISIL, which allegedly was agreed at a meeting in Paris on 15 September last year. However, the text of the agreement is not on the FCO website, and I cannot find it anywhere else using Google. Can the Government leave a parting message in Washington before next Thursday to say that we need a mechanism to co-ordinate military strategy among the armed forces of active coalition stakeholders and with the Syrian armed forces on retaking Raqqa?
Baroness Anelay of St Johns
My Lords, I can reassure my noble friend that there was a meeting at the beginning of this year in London at which the coalition of more than 60 countries against ISIL agreed that there should be a small working group. The strategy of the global work is now being refined into a practical system and we have agreed to the formation of five working groups: military operations, foreign fighters, counterfinance, stabilisation support, and countermessaging. The UK is represented on all groups and we are co-chairing the countermessaging group with the UAE and the US. I will be delighted to discuss the detail further with my noble friend, who is right to draw attention to the importance of activity around and in Raqqa by ISIL.
Lord Howell of Guildford (Con)
My Lords, the Question refers to the “United States-led coalition”, but does my noble friend agree that this is far more than just a western issue and that the great powers such as India and the People’s Republic of China have a major interest, as do all civilised countries, in containing this barbarian infection, which threatens them all? Does she further agree that nations such as Egypt are also closely involved? Does my noble friend therefore accept that the coalition we need to build effectively to contain this horror has to be global rather than purely western? If it is purely western, there will be bad reactions, which we will have to overcome.
Baroness Anelay of St Johns
I entirely agree with my noble friend. That is the very nature that underlines the formation of the five working groups, where non-western countries not only co-chair groups but are prominent members of them.
Lord West of Spithead (Lab)
My Lords, does the Minister not agree that finally to defeat Daesh—to take it out—we would have to have forces on the ground in Iraq and Syria, which I hope will be Iraqi, Kurdish and local forces? One can understand, militarily, how that can be done in Iraq, but going into Syria means that we would have to look at our relationship with Assad. Without stamping out Daesh on the ground in Syria, we will not achieve success.
Baroness Anelay of St Johns
My Lords, there are three points there. First, with regard to Iraq, it is clear that the Government of Iraq have said that they do not wish to have our forces on the ground in Iraq, but they welcome the use of surveillance and airstrikes. With regard to Syria, we are of course assisting the moderate opposition, but let us be clear about Assad’s record. He responded to peaceful protests with violence, used chemical weapons against his own people, and continues to conduct air attacks on defenceless civilians. We must not fall into the trap of thinking and accepting what Assad wants to believe—that he is the only alternative to extremists and terrorists. He is not.
Baroness Warsi (Con)
My Lords, do the Government have a cross-government agreement on how they refer to Daesh? If they do not, would they consider that? I suggest that they seriously consider using the word “Daesh”.
Baroness Anelay of St Johns
I sympathise entirely with my noble friend. I am aware from when I talk to my Foreign Minister counterparts throughout the region that they find it puzzling that in this country the media and therefore the Government continue to use the term “ISIL”. They prefer “Daesh”, and I understand the significance of that. However, at the moment we find that if we talk about Daesh the media become puzzled. I take my noble friend’s point, and we will indeed consider how we can discuss that further.
The Lord Bishop of Winchester
My Lords, even if the current operations to clear Daesh prove successful, the ancient religious and ethnic minority communities in Iraq have an uncertain future. Does the Minister agree with the statement recently submitted by the Holy See to the United Nations Human Rights Council? It said that a future without these communities in Iraq and the Middle East risks,
“new forms of violence, exclusion, and the absence of peace and development”.
Therefore, what steps are being taken to secure the future of those communities, and in particular their human right to religious freedom?
Baroness Anelay of St Johns
I can respond first by saying that the motion before the Human Rights Council was presented by the Vatican jointly with Russia. We are a signatory to that and fully support it. The work that we are doing with regard to humanitarian aid and our work with the International Committee of the Red Cross is fully aimed at supporting all minorities. The Christian church is clearly an important part of that. I pay tribute to those who use the £800 million of aid we provide in Syria to provide support to keep communities safe in the future and to keep them able to stay there. But it is bleak at present.
Lord Bach (Lab)
My Lords, does the Minister agree that whatever happens after ISIL is defeated in Iraq—let us hope that it is soon—it will be for the Government of Iraq to take the lead on the necessary measures? Does she agree—I am sure that she will—that those measures should or might include more power sharing, encourage tolerance, and work towards a free, open and unsectarian society?
Baroness Anelay of St Johns
I agree entirely with the noble Lord, Lord Bach. Those views underpinned all the work I did when I was at the Human Rights Council in having bilaterals with other Ministers. I am sure that the Government of Iraq will be pleased to hear his comments and my support for them.
Burma: Policing of Demonstrations
(9 years, 9 months ago)
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Baroness Kinnock of Holyhead
To ask Her Majesty’s Government what assessment they have made of the recent actions by police in Burma in response to student demonstrations in Letpadan.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, we are deeply concerned by the use of force by police in Letpadan on 10 March, and by the use of irregular security groups in Rangoon on 5 March. These incidents undermined an otherwise disciplined approach to policing student protests and demonstrate the need for further policing reform. We support the EU’s call for a full investigation and call on the Government of Burma to release all the remaining demonstrators.
Baroness Kinnock of Holyhead (Lab)
I thank the Minister for her reply and ask her whether, in the light of the violent attacks and arrests of students in Burma last week—and, I have to say, other abuses of human rights in that country—we can now anticipate that the British Government will thoroughly review the support and assistance they currently provide to the Government in Burma. Otherwise, how can we be sure that the UK financial and technical assistance is not now actually supporting the institutions of an authoritarian regime that has made no real progress towards the civilised objectives that the people of Burma and the international community were promised?
Baroness Anelay of St Johns
My Lords, we continue, of course, to review how our work is undertaken with the Government of Burma. The noble Baroness will be aware that our contribution with regard to police training was via the EU instrument of a stability-funded project in support of police reform, following a request from not only the Burmese Government but Aung San Suu Kyi. That contribution remains under review. However, it is important to mark the fact that the Government of Burma have made progress, although they have a long way to go. We are always happy to discuss these matters with noble Lords and MPs. We have offered such meetings across both Houses to individuals with an interest in these matters and have had quite a lot of uptake. I understand that at the moment the noble Baroness, Lady Kinnock, has not accepted the invitation to meet our most senior official on this matter. I warmly offer that invitation again, and hope that she may accept it.
Baroness Cox (CB)
My Lords, is the Minister aware that I recently visited remote hill tribe areas in Chin state, where I am pleased to report that local people appreciate some significant reforms, including improvements in relationships with the army and police, cessation of forced labour, and investment in infrastructure? However, we of course remain deeply concerned by the Burmese Government’s violations of human rights and military offensives against the Rohingya, Shan and Kachin peoples. How are Her Majesty’s Government achieving an effective balance in encouraging genuine reforms by the Burmese Government, while applying appropriate pressure to end gross violations of human rights in other areas?
Baroness Anelay of St Johns
My Lords, I pay tribute to the work of the noble Baroness, Lady Cox, and her courage over so many years in the work that she has done in Burma. It is a balance, whereby one needs, as she said in her report, to recognise progress but to be ever cautious about the huge amount of work yet to be done. I read her report with interest. The stories of the community health workers were very touching indeed.
The Burmese Government have released political prisoners, discharged child soldiers—not all of them—ratified the Biological Weapons Convention and endorsed the declaration to end sexual violence in conflict, but we have seen an increase in the number of political prisoners, conflict in Kachin and in Shan, arrests of journalists and continued discrimination in Rakhine state. I shall be discussing these immediately after Questions with the United Nations special rapporteur, Yanghee Lee.
Baroness Falkner of Margravine (LD)
My Lords, as recently as November when I met Daw Aung San Suu Kyi, her main point for the West was that we must not become complacent that the constitutional reform process is sufficient. With elections coming up in November, she is extremely concerned that there is a regression on the part of the military. That is what we have seen, in terms of the Question asked by the noble Baroness, Lady Kinnock. Could the Minister tell the House what meetings the Government are having with the military Government to press them to bring about constitutional reform—it was meant to be announced but has not been yet—so that they can embed that before the election period begins?
Baroness Anelay of St Johns
My Lords, my right honourable friend Hugo Swire visited Burma last year. He has met representatives of the Burmese Government and discussed the range of progress that the Burmese Government need to make. As my noble friend said, the elections this year are critical for Burma. It is the first time that Burma has had the opportunity to have democratic elections and make real progress. It must not let that slip.
Lord McConnell of Glenscorrodale (Lab)
My Lords, the long-term solutions to the conflicts between the central authorities in Myanmar and the ethnic armed groups active in many parts of the country will undoubtedly be assisted if the work of ASEAN—the Association of Southeast Asian Nations—to become more involved in peace and security across the region is supported by the international community. Will that work by ASEAN and those sorts of regional initiatives be a priority for the new stabilisation fund that comes into place in April?
Baroness Anelay of St Johns
The noble Lord makes an important point. I will look very carefully to see what kind of stress has been put on that. I would like to consider that and see whether it has been properly reflected.
Baroness Berridge (Con)
My Lords, although the Rohingya Muslims remain one of the most persecuted people on the face of the planet—I declare an interest as chair of the All-Party Group on International Freedom of Religion or Belief—they had a vote in the first national elections. At that point in time, temporary ID cards were sufficient to give you a vote. In fact, they elected Mr Shwe Maung, who I think is the only Rohingya Muslim member of the Parliament there. Could my noble friend the Minister outline what representations Her Majesty’s Government have made to the President of Burma following his executive order on 11 February this year, which basically invalidates those temporary ID cards and will deprive the Rohingya Muslims of their vote in November’s elections?
Baroness Anelay of St Johns
My Lords, representations have been made with regard not only to that but to the method by which information is collected in that state about one’s ethnicity. As I understand it, one is forced to put down that one is Bengali, rather than one’s real ethnicity. These are matters that must continue to be discussed.
Barts Health NHS Trust
(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I will now repeat in the form of a Statement an Answer to an Urgent Question tabled in another place and given by my honourable friend the Minister for Public Health on the subject of Barts Health NHS Trust. The Statement is as follows:
“The NHS Trust Development Authority announced on Tuesday 17 March that Barts Health would be placed into special measures. This followed a report by the Care Quality Commission that rated services at the Barts Health site at Whipps Cross as ‘inadequate’. As a result of this decision, the trust will receive a package of tailored support to help it to rapidly make the necessary improvements for patients. This will include the appointment of an improvement director and the opportunity to partner with a high-performing trust.
The Chief Inspector of Hospitals has highlighted the scale of the challenge ahead and this is an opportunity to ensure that the trust has the extra support it needs to meet this challenge. Barts Health has already announced that it has begun to strengthen management arrangements at Whipps Cross, in response to concerns raised by the CQC.
We make no apology that, under the new rigorous inspection regime led by the Chief Inspector of Hospitals, if a hospital is not performing as it should, the public will be told. If a hospital is providing inadequate care and we do not have confidence in the ability of its leadership to make the required improvements without intensive support, it will be put into special measures. It will remain in special measures until it is able it to reach the quality standards that patients rightly expect.
While the trust is in special measures, it will receive increased support and intensive oversight to help it address its specific failings. This process is publicly transparent so that patients and the public can see and track for themselves, online through the NHS Choices website, the progress that their trusts are making. Any changes or additional support required for the trust leadership are put in place early on in the improvement process, as has already taken place at Barts Health.
The expectation is that an NHS trust or foundation trust will be reinspected by the CQC within 12 months of being placed in special measures. It is the job of the Chief Inspector of Hospitals to recommend when a trust is ready to exit special measures. The NHS Trust Development Authority or Monitor will then formally decide to take the trust out of special measures when they consider that the trust is able to sustain the quality of care at the level that patients expect.
A total of 21 trusts have been put into special measures over the past 20 months as a result of this new approach to poor care. Six trusts have exited the regime and there has been progress at nearly all the others. The willingness to recognise poor care has been critical in starting a journey to improvement and we make no apology for upholding the high standards of care that are rightly expected of the NHS”.
My Lords, that concludes the Statement.
Lord Hunt of Kings Heath (Lab)
My Lords, I am sure that the House is grateful to the noble Earl, Lord Howe, for repeating that. It is a worrying report about the largest trust in England, which is directly managed by his department through the NHS Trust Development Authority. Why have these problems been allowed to get worse over the past two years? Does he agree that the report has identified that the root cause of the problem was the reorganisation of the trust in 2013? Can he say why Ministers overruled the Co-operation and Competition Panel, which advised against the proposed merger and warned of the adverse consequences for patients?
Earl Howe
The decision to create Barts Health was taken following a report that analysed the options open to the department at that time. As the noble Lord knows, there was, effectively, a merger of several trusts to create Barts Health. The advice received by the Secretary of State at the time was that none of the three trusts subject to the merger with Barts was sustainable as a stand-alone organisation. The appraisal of the options identified the three-way merger as the most beneficial and strategic solution for the system as a whole, taking into account a wide range of clinical, financial and government issues.
Baroness Finlay of Llandaff (CB)
My Lords, in looking at the non-viability, I have been concerned that the PFI deals that Barts Health is saddled with amount to £115 million a year. I wonder whether the other trusts that went into special measures have also had this albatross of PFI deals around their necks that has pulled them down over the years. Why have the Government been unable to address the problem of the burden of previous PFI deals?
Earl Howe
Early on in the Government’s term of office, we analysed all the trusts that were subject to PFI liabilities. The worst affected trusts were singled out to be given ongoing financial support by the Department of Health. Barts has a very large PFI debt of about £1 billion, and I have asked whether it is considered that this in itself has proved to be a deciding factor in the trust’s financial stresses. The advice I have been given is that it is not seen as a particular cause of the difficulties now being experienced.
Baroness Donaghy (Lab)
My Lords, I want to ask a question about a trade union representative who was dismissed from the authority two years ago for raising some of these very issues. She was a member of UNISON, and I declare an interest as a former member. I wonder whether, in working closely with trade unions, a better step would be to look after the interests of all the staff and to be not afraid to listen to some of the difficulties. The authority fought that case tooth and nail. She won at an employment tribunal but did not get reinstatement. Can the Minister give us a reassurance that in future there will be a more constructive relationship with the trade unions?
Earl Howe
My Lords, I cannot disagree with the philosophy expounded by the noble Baroness. It is very important that not just the trade unions but members of staff generally feel involved and have a sense of ownership of the organisation for which they work. I hope it is of some reassurance to the noble Baroness that staff and health partners will be fully involved in the development and implementation of the improvement programme and that a staff representative will be a member of a new improvement board at Whipps Cross.
Baroness Masham of Ilton (CB)
My Lords, it was stated in the press that there had been bullying at Whipps Cross and that people had been denied food and fluid for far too long. What is being done about those people who bullied patients?
Earl Howe
The noble Baroness is right. The CQC found that there was a culture of bullying at Whipps Cross. They had concerns about whether enough was being done to encourage a culture of openness and transparency—something on which, as she knows, we place great emphasis in the light of the report on Mid Staffordshire NHS Foundation Trust. I can only say to the noble Baroness that this is one of the issues that will be top of the list for the new improvement director at Whipps Cross.
Baroness Manzoor (LD)
My Lords, the culture within the NHS appears to be changing, and not for the better. Is the Department of Health looking at that, as well as at the issue of PFI across the NHS, and is it doing so not in a piecemeal fashion whereby things are identified only when they go wrong?
Earl Howe
It is precisely because we have wanted to confront the issue across the NHS that so much has been done following the report of Sir Robert Francis into Mid Staffordshire NHS Foundation Trust. All the recommendations flowing from that report should resonate with every part of the NHS. The recent work done by Sir Robert on whistleblowing can be put into the same category. There are lessons and messages for the NHS as a whole, and I believe that progress is being made, as it needs to be in particular quarters.
Lord Campbell-Savours (Lab)
My Lords, I declare an interest as a financial sponsor of research into cancer at St Bartholomew’s Hospital in central London. Can we be given an assurance that the work done at St Bartholomew’s is in no way under criticism in the Statement made by the Minister?
Earl Howe
The Statement related to Whipps Cross specifically, but the Trust Development Authority took the decision to place the entire trust into special measures. That was a slightly unusual step to take but I think that it reflected the concern that it felt about the management of the trust generally. However, the TDA also singled out some areas at Barts for particular praise. It is important to stress that patients will receive the good care that they have known about at Barts in the future.
Inquiries Act 2005 (Select Committee Report)
(9 years, 9 months ago)
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Lord Shutt of Greetland
That this House takes note of the report of the Select Committee on the Inquiries Act 2005 (Session 2013–14, HL Paper 143).
Lord Shutt of Greetland (LD)
My Lords, I invite the House to take note of the report of the Select Committee on the Inquiries Act 2005. I received several wry smiles while undertaking the chairmanship of the committee, when people asked what I was doing in the House of Lords and I said I was inquiring into the Inquiries Act. I believe it has been a useful piece of work to do.
We are privileged in this debate today to hear the noble Viscount, Lord Tenby, give his valedictory speech. We will all be able to say that we were present when the last Lloyd George—for the present, at any rate—concludes service in Parliament. We look forward to his contribution and wish him well in his new life.
I thank my colleagues who served with me on the committee. We had members who have set up inquiries and members who have chaired inquiries as well as those who have been scarred by inquiries. But we also had an abundance of lawyers. We have been well served by our clerk, Michael Collon, assisted by Emily Greenwood and our special adviser, Professor Carol Harlow. I also thank the witnesses who have given their time and talents, both in written and in oral form, to assist in our work.
I believe that the committee has produced a thorough piece of work, based on much evidence. We have also had the benefit of our own visit to the only inquiry that was taking place at that time—the Al-Sweady inquiry. We were concerned to take evidence and meet not only people who had chaired inquiries and had been counsel or panel members but also secretaries, solicitors and assessors, co-participants, academics, legal specialists, interest groups and others. We endeavoured to look at all participants in the inquiry process.
Inquiries are usually set up because of an overwhelming concern at an event, or a series of events, in the public domain that has gone wrong and something serious must be done for confidence in that area of work to return. One of our witnesses, Robert Francis QC, now Sir Robert, set out his summary of the reasons for holding a public inquiry. He concluded that the reasons include:
“establishing the facts leading up to a matter of concern; determining the explanations for and causes of things which have gone wrong; identifying those responsible for deficiencies or performance failures; establishing the lessons to be learned from what has happened; making recommendations intended to correct the deficiencies for the future”.
In our post-legislative scrutiny of the Act we have tried to see how objectives such as those can be achieved.
Our report contains 33 recommendations which come very much from our consideration of the evidence. These recommendations follow the sequence of the report, and, of course, some are more vital than others. I want to highlight three of the main recommendations.
The first is that, although we recommend some improvements, the Inquiries Act 2005 is a good Act and should be used. We were surprised to find that, on so many occasions, Ministers had set up inquiries other than under the Act. All our evidence was that, except in circumstances concerning security matters, the Act should be used. We note that since we reported back in March 2014, two new inquiries have been announced under the Act. Perhaps a lesson has been learnt a little, but we hope to learn more about that.
The second of our recommendations that I would like to speak about is recommendation 12, where we recommend the setting up of a unit. We suggested that it should be under Her Majesty’s Courts and Tribunals Service and serve as the centre of excellence and expertise for all the practical details of setting up an inquiry. It is the existence of the unit that is important; it may be appropriate to put it somewhere else in government, but we suggested that particular department. The unit would be responsible for making clear the location of premises that could be used for inquiries, their infrastructure and the necessary IT. We heard many stories of inappropriate IT procurement and cost. The unit should also look at staffing and work closely with the chairman and the secretary of each inquiry. We heard much evidence from people responsible for setting up the administration of inquiries. They said that when they had started, it was a matter of reinventing the wheel, as if there had never been an inquiry before. We also believe that the unit should be a place where lessons-learnt papers should be placed so that best practice can be distilled and updated. Indeed, the unit could retain vital contacts for future involvement. We were shocked that that information, which is supposed to be kept somewhere, was just not kept.
Recommendation 25, which is the third matter that I want to raise, relates to warning letters. The evidence led us to recommend that inquiry Rules 13 to 15 of the Inquiry Rules 2006 should be withdrawn. Several chairmen raised this issue with us and we became aware that the use of these rules prolonged inquiries by several months, with the consequent delay in publication of the inquiry report. We must always remember that when we have inquiries, people are desperate to learn their results and do not want to wait and wait. I am sure that other members—and I am delighted that nine of the 12 of us are listed to speak today—will highlight other elements of the report that they believe are particularly important.
The report was published on 11 March 2014, now over 12 months ago. I understand that the government response was due within two months. I was asked if the Government could have more time to respond. Being of a somewhat generous disposition, I acquiesced to that request. The response was published on 30 June but, sadly, we found it somewhat disappointing. In his foreword to the report, the right honourable Simon Hughes, the Minister of State for Justice and Civil Liberties, said:
“The Inquiries Act potentially touches upon every department of state, and the Government has given careful consideration to the Select Committee’s 33 recommendations, agreeing with the majority of them. We will implement changes as soon as practicable and, where primary legislation is needed, when parliamentary time allows”.
That was not correct arithmetically. I reckon that 10 recommendations were accepted; four were “accepted, but”; 14 were rejected; and five were “rejected, but”. However, we should really look at the weight in terms of importance, and the weight was very much on the rejection side.
With the good will of the by then former members of the committee and our clerk, the committee met again and sought a meeting with Simon Hughes, which was readily agreed to. We met on 29 October and had a full and frank discussion. The Minister asked that he be given a month to see what he could do about our concerns, particularly the three issues I raised earlier. We have been waiting. Very many inquiries have been made. I was told on one occasion that the Ministry of Justice had concluded its work and matters rested with the Cabinet Office. If there is a government turf war, that is very sad. The latest inquiry, made yesterday, brought news that the noble Lord, Lord Faulks, will be addressing concerns today. We look forward to his response. It occurs to me that I am right to ask the noble Lord, Lord Faulks, in the circumstances we find ourselves in, if he will provide a supplementary written response after today.
I have one further thing that I think it is important to raise, not necessarily for the Minister, but for the Chairman of Committees and the Liaison Committee. Our experience leads me to suggest that once a Select Committee has produced its report, as we did in March 2014, the committee should not be laid down but retained in light dormancy in order to respond to further developments and, indeed, not completely laid down before a final meeting after the report has been debated. I have been reading the Hansard report of a debate I witnessed a week ago on the report of the committee of the noble and learned Lord, Lord Hardie, on the Mental Capacity Act 2005. It seems that that committee faced very similar circumstances. It did better than us in that it got a written response from the Minister the day before the debate. Again, it was the noble Lord, Lord Faulks, and he said that the Government were taking a slightly different view—a better view as far as the committee was concerned—from that taken in the government response which had been published earlier.
It has been a privilege to do this work and I commend the report to the House. I beg to move.
Lord Trefgarne (Con)
My Lords, I had the privilege of being a member of the committee which the noble Lord, Lord Shutt, chaired and I pay tribute to him for his chairmanship and, above all, for his patience, not only with the members, who, no doubt, irritated him from time to time, but, of course, with the response from government departments, which, while not malevolent, was lethargic to say the least. It was disappointing that it was not possible to get more positive observations from the Government, as my noble friend has described. I, too, am looking forward to the valedictory speech of the noble Viscount, Lord Tenby. I am jolly sorry that he has decided to leave the House. I have known him for as many years as he has been here, I think, and will miss him, as we all will, very much.
I agreed with virtually all of the committee’s report and all the conclusions which my noble friend described, but if noble Lords look at paragraph 234, they will see that there is reference to one member of the committee who disagreed on one matter. That one member was me and I shall tell noble Lords where my concerns arose. It related to the representation of witnesses by counsel when they appear before a public inquiry. I spoke from a little experience. I was one of the witnesses before the Scott inquiry, 20-odd years ago now, chaired by the then Sir Richard Scott, who is now, of course, the noble and learned Lord, Lord Scott. That inquiry had a counsel for the inquiry called Presiley Baxendale, who became pretty famous in her time, and who adopted a very confrontational attitude with the witnesses. She was, of course, trying to get the best information she could for the benefit of the noble and learned Lord, Lord Scott, or Sir Richard as he was then, in reaching his conclusions, but she did choose to be very aggressive.
I was, I think, the only witness before that inquiry who was represented by counsel. Most of the witnesses were still civil servants or serving Ministers. I had just left the Government at the time and actually said that I would not appear unless I was represented by counsel because that inquiry did not have the power to summon witnesses by order, so to speak. I was represented by the then Sir Patrick Neill, who is now of course the noble Lord, Lord Neill of Bladen. In fact, I was treated entirely courteously and I hope that my evidence was of some benefit to Sir Richard, as he then was, in reaching his conclusions.
However, some of the witnesses before the Scott inquiry were scarred, as my noble friend has described, by the examination and cross-examination to which they were subjected by Presiley Baxendale. That, I think, is regrettable. By scarring witnesses and treating them in that way, you do not get better evidence. The witnesses are not there to be tried for some offence; they are there to give the best information they can. I believe that Ms Baxendale did not serve the inquiry well by treating some of the witnesses as she did, and who turned out to be permanently scarred. At least one or two of them retired from their work shortly afterwards and, frankly, that was not satisfactory. I must say to the noble and learned Lord, who is sitting in his place, that he should have intervened to stop some of that, and I and the rest of us regret very much that he did not. I believe firmly that that did not improve the evidence he was given and is very much to be regretted.
That is really the main point I want to make. I think that witnesses who are compelled to appear before a public inquiry ought to be entitled to have counsel that is paid for by the inquiry, if they so wish. That would enable them to be protected in a way that some witnesses on other occasions have not been protected, and I hope that it can be further considered on some future occasion.
The inquiry we are now discussing, chaired by my noble friend Lord Shutt, did a good job. I was proud and pleased to be a member of the committee. We were well chaired by the noble Lord, if I may say so, and well served by the officials, led by Michael Collon, who also attended upon us. I am grateful to them for that, and I support the report which has been submitted for your Lordships’ consideration today.
Lord Richard (Lab)
My Lords, it was indeed a privilege to have been a member of the committee. The whole issue of public inquiries is now very much coming more to the fore in this country. Day by day we read of someone demanding an inquiry or an inquiry being set up, either a total inquiry into a particular issue or a partial one. It is a topic that is certainly current and of interest to a large number of people in this country. The Inquiries Act 2005 clearly needed post-legislative scrutiny to ascertain how it has been working and what amendments, if any, should be made to its operation. The committee heard a variety of evidence and came to some stern conclusions.
If I may say so, it was as good a committee as I have served on. I echo the tributes that have been paid to the chairman, the noble Lord, Lord Shutt, who chaired the committee with determination and good humour. He kept us at it and in the end we produced a unanimous report, save for the one slight qualification which the noble Lord who preceded me has referred to. It is a good report. We were extremely well served by Michael Collon and his staff, and by our special adviser, Professor Carol Harlow.
One has only to look at the list of witnesses who came before the committee to see the quality of the evidence that they gave. I do not propose to read the list out because it is set out in the report, but if any Member looks at it, he will see included in it a number of people of distinguished lineage and great experience who have either set up inquiries, or participated in them, written about them, dealt with them, have been subject to them or have given evidence to them. It is an impressive list.
Before I turn to the recommendations made by the committee, given that background, I must say a word or two about the attitude of the Government. It has been contemptuous and peremptory, and is indeed a good example of how Governments should not behave when faced with a powerful parliamentary committee report. It would be difficult, I think, to find a better instance of that. I would not wish to divert this debate into consideration of the Government’s behaviour, but it really was deplorable. Despite our efforts, and particularly those of our clerk, we were unable to obtain the attendance of a senior Minister. The Minister who actually gave evidence, Mr Shailesh Vara MP, the Parliamentary Under-Secretary of State for Justice, had, to put it kindly, only a nodding acquaintance with the subject. I make no great criticism of him and he did his very best to assist us with what we were trying to do in our inquiry, but he really was not the right person for the Government to have fielded on an issue of this importance before a committee of this sort.
The government response to our report, which was presented to Parliament in June last year by Mr Simon Hughes, was extraordinarily negative and unhelpful. Clearly, whoever was responsible for that response could not have properly read the evidence that was given to the committee. The response was, quite frankly, so dissociated from the mass of evidence that the committee received that it was difficult to see how they could have come to the conclusions that they did. Such was the feeling of the committee that, although it had formally ceased to exist, we asked for a further meeting with Mr Hughes, which, as Lord Shutt has told us, took place on 29 October. After listening, he undertook to review the Government’s position and let us have a written response by the end of November. That response has never been received.
Indeed, as members of the committee know, on 18 March this year the Ministry of Justice responded, saying that,
“the Ministry of Justice and Cabinet Office are working together”—
that is nice to know—
“on the points you and Lord Shutt have raised, and they will be addressed by Lord Faulks in Thursday’s debate”.
Frankly, this is farcical. If the Government have changed their view, we will not be in a position to comment upon it because the noble Lord, Lord Faulks, will be speaking at the end of the debate. The Government have elevated obfuscation to an art form in the way in which they have dealt with this report.
On the merits of the report, I would draw the particular attention of the House to paragraphs 81 and 82. If I may, I will read them:
“We recommend that inquiries into issues of public concern should normally be held under the Act. This is essential where Article 2 of the ECHR is engaged. No inquiry should be set up without the power to compel the attendance of witnesses unless ministers are confident that all potential witnesses will attend”.
In the next paragraph, we said:
“We would not however remove the possibility of an inquiry being held otherwise than under the Act, for example where security issues are involved, or other sensitive issues which require evidence to be heard in secret. Ministers should give reasons for any decision to hold an inquiry otherwise than under the Act”.
I also draw the attention of the House to the evidence given by Mr Vara. He was asked whether there should be at least a presumption that, if an inquiry was being set up, it should be under the Act. Mr Vara replied:
“I see no reason for not having that presumption … certainly the Act is there and it is there to be used … it is a first port of call”.
I was very content with that answer. Unfortunately, he subsequently went back on it in further evidence, telling the Committee that:
“To the extent that I may have led the Committee to believe that there is a presumption, I am saying that I do not know the answer. I am not aware of the word ‘presumption’ being used in the Guidance”.
I find this evidence extraordinarily disappointing. The 2005 Act was passed after very considerable parliamentary scrutiny. That there are some aspects of its operation which need amending is undoubtedly true but, by and large, and particularly if it were to be altered in accordance with our recommendations, the Act should stand as the normal way in which public inquiries are conducted. The fact is that the powers of compulsion under the Act are always helpful. Even if rarely used, they act as a useful weapon to persuade witnesses to attend and give truthful evidence. I can see no reason why that presumption should not be accepted by the Government. Of course there are the exceptions that I just referred to but, prima facie, if a public inquiry is to be set up, then it ought to be set up under the Act that Parliament passed dealing with the issue of public inquiries and which we have now inquired into.
We pointed out various amendments that should be made to the Act. I do not propose to refer to those in detail today, but they are set out from page 89 and Members of the House can read them if they wish to. Suffice it for me to say that they provide a comprehensive analysis of the terms of the Act and of the ways in which it could be improved. One defect we pointed out, which has already been referred to by the noble Lord, Lord Shutt, was in relation to the rules, particularly on warning letters. We pointed out that if that could be dealt with, it would make the operation of inquiries under the Act quicker and less stressful for those carrying them out. We recommended that rules 13 to 15 should be revoked and a rule substituted giving the chairman discretion as to the circumstances in which a warning letter should be sent.
Finally, I believe that this report is a significant analysis of the way in which the 2005 Act operates. It was a serious piece of work, taken seriously by all those who took part in the committee, and deserved better treatment than it has received from the Government.
Lord Woolf (CB)
My Lords, I begin by disclosing the matters in the register, particularly those with regard to my having conducted inquiries. I also echo as warmly as I can the comments made about my noble friend Lord Tenby. Both when I was Lord Chief Justice and made only very occasional visits to this House, and since I have retired and so have been able to spend more time here, I have found him a great source of wise advice. I always found him willing and generous with his time to give that advice. I know how many of the Members of the House, like me, will miss him as a result of his retirement. I would like publicly to give him my very best wishes.
I also join in the things said about our chairman in respect of this inquiry, which was a rewarding experience to be part of. As the register shows, I was previously involved in another inquiry into inquiries. This recent inquiry was a model of its sort. The first inquiry in which I was involved is coming up to its 25th birthday on 1 April. That was the Strangeways inquiry, which is perhaps worth mentioning only to the extent that it involved prisoners and prison staff from six prisons across the country—indicating the sort of problems that can arise in an inquiry—and the fact that inquiries are of very great importance to satisfy public concerns. They may not always get it right but they are certainly a way in which the public can be involved in the process of achieving justice, which enables many people to feel that justice has been done.
If we are to continue to perform that process, it is very important indeed that the process continually evolves. It is very easy for an inquiry to go wrong on the process—the way in which the matter is handled. That is why I particularly recommend that we pay the closest attention to the idea of having a specialist unit within the Courts and Tribunals Service that will be a repository of the critical information that one inquiry can provide for later inquiries. I can say only that I would have valued that in the Strangeways inquiry. Irrespective of what has happened since, I do not believe that any proper machinery has yet been devised to perform that purpose which has been put into practice by any Government.
The important thing about the proposal in the report in that regard is that it would enable the running of inquiries to appear to be separate from government. Many inquiries involve government, and the difficulty with the Cabinet Office being the repository is, first, that the functioning of the Inquiries Act is a matter of very small importance to the Cabinet Office, although I suggest that it should be high in a table of significance, and, secondly, it means that the inquiry has a link in its management to something absolutely at the heart of government: the Cabinet Office. That differs, of course, from the decision whether there should be an inquiry, which is a matter I fully accept that the Government must be involved in, but the running and management of inquiries is a different matter.
The quality of the Courts and Tribunals Service is that it is used to being attached to an independent body, which is a separate part of government: namely, the Courts Service. The Courts Service is a peculiar service within the Civil Service. We should build on the advantage that we have in having it as a possible repository. Because of that, the noble Lord, Lord Shutt, appropriately inquired whether the courts would be happy to take on that responsibility. Subject, of course, to their being properly financed to do so, they recognised that that is something that they should do. With respect, I say that that is a matter that the Government, or a Government, should look at again, because it would help to give credibility to the inquiry.
I do not want to take up too long a time, but I would like to touch on one or two other recommendations. From my experience, I regard counsel to an inquiry as critical. The great thing about counsel to the inquiry is that he can help to shorten the process. I know of at least one inquiry taking place at this time where the absence of counsel to the inquiry may be very significant in the delays that have occurred.
I should also like to say a word about Salmon letters. One of the witnesses from whom we heard with regard to Salmon letters made it clear that they have a place to play in inquiries, but we do not want rigid rules that they have to be served in all circumstances. In many situations, it is an unnecessary additional procedure to impose upon inquiries to have Salmon letters. Where they help to achieve justice, they have to be served, but where there is no special reason for serving them, in the ordinary process of legal proceedings we do not have Salmon letters, and I can see no reason why we should have them in inquiries unless, if they were not sent, there would be an injustice in relation to a particular witness. Otherwise, we are just prolonging the process of the inquiry.
There is also a danger of not taking advantage of the full use that inquiries can provide to future legal proceedings. There is a recommendation in the report that the evidence at an inquiry and its inclusion should in effect be admissible in subsequent legal proceedings. I confess that it is a great advantage to be followed later by the noble and learned Lord, Lord Cullen of Whitekirk, who probably has the most unique experience of conducting inquiries. He gave evidence before us on that matter and I suggest that he can speak to that matter as well.
Finally, the way we use inquiries in this jurisdiction is exceptional. Other common-law jurisdictions are nervous about the deployment of the judiciary, because that seems to be outside their normal process. We should recognise that our approach, which has worked so well in the past, is going through a particularly difficult period at the moment, but that the value of inquiries is immense and that we should continue to build on what we have learnt already.
Lord Trimble (Con)
My Lords, I was also a member of the Select Committee which produced this report. Like other Members, I want to thank the noble Lord, Lord Shutt, for his chairmanship of the report and in particular for the way in which he has followed matters up in the interval since we made our report. I will come back to that later.
I had intended to start by quoting paragraph 14 of the report, in which we express our disappointment at the contribution that we had from the Government, but the noble Lord, Lord Richard, has done that in pungent terms and I merely endorse what he said.
I then thought of referring to paragraph 19, in which we challenged the Government. I will be interested to hear what the noble Lord, Lord Faulks, says about this when he replies. In that paragraph, we refer to how we recommend in the report a number of amendments to the Inquiry Rules 2006 and point out that the power exists to make those amendments by order. We suggest that this is so simple a procedure that there is no reason why the Government cannot make these amendments to the Inquiry Rules “within three months”. The Government’s response accepts the recommended changes in the rules but I am not aware of any order coming forward to implement them.
A lot turns on the question of the type of inquiry that one has. I want to touch on that for a moment, first, by referring to the Royal Commission on Tribunals of Inquiry back in the 1960s. It made a number of important recommendations, the sixth of which was:
“No Government should in future set up a tribunal of the type adopted in the Profumo case to investigate any matter causing nation-wide public concern”.
That inquiry was not established under the 1921 Act. It was a non-statutory inquiry and the judge conducted it entirely in private. Witnesses were not permitted to hear the evidence of other witnesses and there was no opportunity for any witness to test the evidence of another witness. Naturally, we described this in our report as unsatisfactory but I much prefer the terms of the royal commission in saying that no such tribunal should be set up in future. I wish that that had been before the Northern Ireland Office when, a few months ago, it decided to establish a private inquiry into the on-the-runs letters. The description of the Profumo inquiry fits pretty well the way in which that inquiry was conducted, which was unfortunate.
However, the main issue is whether the Act should be used or non-statutory inquiries should take place. The starting point here should really be: what was the intention of the 2005 Act? The genesis of the 2005 Act appears to have been in a recommendation made by Sir Anthony Clarke—now the noble and learned Lord, Lord Clarke—in the Thames safety inquiry in 2000. He commented:
“The time has in my opinion come to set up a statutory framework for inquiries generally to replace the various statutes which govern them at present”.
That language was echoed in the Explanatory Notes to the 2005 Bill, which said that the object was,
“to provide a comprehensive statutory framework for inquiries”,
and the Minister introducing the Bill virtually repeated those words. That language points to the Act being used for inquiries generally. It does not say that the Act is optional. It does not say, “We have enacted this Act and you don’t have to pay any attention to it. You can ignore it if you like”. That would be a rather novel proposition for legislation. I know that the practice has developed of non-statutory inquiries and it is perhaps late in the day to challenge that now. However, I suggest that it is not really within the original intention of the Act, which is why we made the recommendations we did in the terms that have been mentioned.
Another issue is perhaps more significant. It is the question of the compliance of the inquiries with the requirements of Article 2 of the European Convention on Human Rights. It is fairly clear that non-statutory inquiries are not compliant with the ECHR. I will refer to what we said in paragraphs 69, 70 and 74. I will not go through them in detail but the Edwards case is mentioned, as is a subsequent case in which the court directed the setting-up of a number of inquiries and went on to say that steps would have to be taken to ensure that the persons conducting those inquiries had the powers to compel witnesses and the disclosure of documents. I am not quite clear as to how that has happened in practice and whether anything has been done. Again, perhaps the Minister might enlighten us when he replies.
On this matter, the Government say in paragraph 32 of their response that inquests are,
“the main way in which the Government fulfils its responsibilities under Article 2”.
Three comments come to mind with regard to that. First, Article 2 goes wider than inquests. It is not just a matter of unlawful killing but of ill treatment and unlawful killing, so you cannot say that you regard inquests as meeting the requirements of Article 2 when it goes wider than the subject matter of inquests. Secondly, inquests are limited compared to inquiries. I will not go into detail on that. We set that out in paragraph 83 of the report, which shows that it may not be desirable to use inquests to fulfil the requirement of Article 2.
However, there is a more general point to be made because while we have the particular terminology of Article 2 in the ECHR, the general principle nowadays goes further. The second report of the Turkel commission, which I was attached to as an international observer, said:
“The general principles for an ‘effective investigation’ can be found in various international human rights law sources, including binding conventions (such as the Convention against Torture); interpretations of the International Covenant on Civil and Political Rights by the Human Rights Committee and its decisions in specific cases; and resolutions adopted by the General Assembly of the United Nations”.
It then goes on to refer to the ECHR. If this has migrated into a general obligation on human rights law, it reinforces the point that inquiries should be done on the basis of the statute and with the powers that the statute gives.
In chapter 6 of the report, we deal with another aspect, namely the independence of inquiries. We refer there to the reservations that the Joint Committee on Human Rights had with regard to the various powers that the Government have to influence the conduct of the inquiry, which led the Joint Committee to think that those powers in themselves rendered the inquiries not in compliance with the convention.
We make a number of recommendations in paragraphs 206 to 210. I notice that the Government accept one of those recommendations but reject three of them, particularly the power that they have, as it were, to close down the inquiry. I notice that in their response, the Government say in paragraph 72 that they wish to “retain the flexibility” given by this provision. I think that “flexibility” is not the right word. The word that should have been used is “power” and the power should not be utilised in the way that the existing legislation permits.
My last statement is by way of a digression. I referred to the commission to which I was attached as an international observer. Following the example of the noble Lord, Lord Shutt, in following up matters, he might be interested to know that some months after he took that initiative here, I got together with the other international observer who is domiciled in Australia but who comes to this part of the world from time to time. We both went back to his room to raise the issue with the Israeli Government as to whether they were implementing those recommendations. I suspect, though, that I will have to go back again.
Lord Cullen of Whitekirk (CB)
My Lords, the committee’s report is sound, thorough and constructive. I have an interest in the subject matter of the report in the sense that I have chaired a number of public inquiries, the first being the inquiry into the Piper Alpha disaster, and I gave evidence to the committee.
I welcome the Government’s acceptance of the committee’s recommendation that the Inquiries Act should be amended so that a Minister who wishes to appoint a serving judge should first obtain the consent of, and not merely consult with, the appropriate senior member of the judiciary. I recall that some 10 years ago, during the passage of the Inquiries Bill, the noble and learned Lord, Lord Woolf, and I were the senior judges of our respective jurisdictions at that time and we spoke in favour of such an amendment. However, it was not to be. It was opposed by the then Government and did not become part of the Act.
The committee’s recommendation on this point is supported by a number of important considerations. It is surely a matter for the senior judge in each jurisdiction to decide, for example, whether a judge should be deployed from the available resources, whether a particular judge is in fact suitable for the task and, perhaps most important of all, whether the subject of the inquiry is one for which the involvement of a judge is appropriate. Where the subject is sensitive in political terms, there is a risk of damage to the high regard in which judges are held and, in particular, their reputation for independence and impartiality. A judge who is invited to take an inquiry but has good reasons for declining, despite his sense of public duty, should know that he can have the backing of the senior judge in his jurisdiction. I trust that, whatever the complexion of the next Government, they will support the amendment proposed and recommended by the committee.
I now turn to other matters. I am less than happy with the Government’s treatment of other recommendations by the committee and propose to mention two of them. The first concerns the appointment of counsel to the inquiry—an appointment which is likely to be needed in almost every inquiry under the Act. The role of counsel to the inquiry is of crucial importance: overseeing and preparing evidence; questioning witnesses, if necessary robustly; advising the inquiry; and potentially representing it in the event of its being challenged. In my experience, it is essential for counsel not only to be competent for the job but to have a close working relationship with the chairman, interpreting and fulfilling his aims and enjoying his respect and confidence. This is even more important today when counsel to the inquiry has an increasing influence on the scope of the questioning of witnesses and hence on how the inquiry is perceived. I also agree with what the noble and learned Lord, Lord Woolf, has said about the important assistance which counsel can give to the parties.
The rules define counsel to the inquiry as,
“the qualified lawyer or lawyers, if any, appointed by the chairman to act as counsel”.
The committee considered that it should be put beyond doubt that the Minister had no say in the appointment, so it recommended that solely the chairman should appoint counsel to the inquiry. The Government rejected that recommendation, because,
“Ministers will want to retain control of such issues which affect departmental budgets and the terms of reference of an inquiry”.
What does this exactly entail? Does it mean that, where the chairman and the Minister are not in agreement about an appointment, the Minister should have the right to override the chairman and direct him as to who should be appointed, or at any rate veto the chairman’s choice? Either way, that is a poor foundation for what should be a confident and productive relationship. If the Government are concerned about the cost of leaving the choice of counsel to the chairman, one has to bear in mind that, under Section 17(3) of the Act, the chairman has to act with regard to avoiding any unnecessary cost. It was also one of the committee’s recommendations that the chairman should consult the Treasury Solicitor in order to ensure that counsel is appointed on terms which give good value for money. As for the Government’s reference to the terms of reference of the inquiry, I find their relevance to the choice of counsel obscure and, in any event, unconvincing.
Secondly, I turn to warning letters. One might expect that the chairman of an inquiry should judge what warning should be given, as a matter of fairness, to a person—that includes a body corporate or incorporate—that is liable be criticised in the report of the inquiry. Nevertheless, the Inquiry Rules prescribe what must be done. To put it briefly, rule 13 states that the report must not include any “explicit or significant criticism” of a person without sending that person a warning letter and giving the recipient the opportunity to respond. The rule has to be read along with rule 15 which prescribes the content: it must state the criticism; the facts which substantiate it; and the evidence supporting those facts. Since my inquiries were before the Act came into force, I have not had any direct experience of working under these rules. But I can readily envisage the difficulties, which were clearly illustrated during the course of the evidence given to the committee.
First, the rules take no account of the considerable differences in the nature of various inquiries and the events or conduct with which they may be concerned. It has often been said that every inquiry has to adapt the procedure to meet its own circumstances. No doubt there are some cases in which there is a need for a detailed warning, for example in the case of a person who is faced with very serious allegations, or a person who has not been represented at the inquiry. However, at the other end of the spectrum, the position may be entirely different. Parties who are represented throughout the proceedings will have heard the evidence and the submissions, and will also have taken steps to challenge them. They are already aware of the issues—as it were, they know the score. Yet rules 13 and 15 require the inquiry to issue detailed warning letters, as defined, and to take into account responses which may simply repeat, or seek to embellish, what they have already said during the inquiry proceedings.
Secondly, literal compliance with the rules and the handling of responses can prove so complex, demanding and time-consuming as to add greatly to the time taken by the inquiry to produce the report. It would be a mistake to think that a warning letter would set out what was required in a few pages. I understand that a warning letter and its response can amount to hundreds of pages. No doubt an inquiry team would be anxious to avoid overlooking what could be a “significant” criticism, but where should it draw the line? Sir Robert Francis, whose name has been mentioned already and who chaired the inquiry into the Mid Staffordshire NHS Foundation Trust, gave evidence that in his experience warning letters could cause quite unnecessary alarm and a lot of time was spent on people responding to things that were not in fact on the mind of the chairman. He said that the process of warning letters and responses to them extended his inquiry by at least six months.
I also see from the committee’s report that Sir Brian Leveson explained to it that, in his inquiry into the conduct of the press, the prescription set out in rule 15 led to his adopting a different approach in which he ventilated possible criticism by means of a generic letter. He said that, had he sought to comply in terms with the requirements of rule 15,
“I need never have finished because they were all very specific”.
Even so, his leading counsel Robert Jay, now Sir Robert Jay, spoke of that rule causing,
“huge grief and a huge amount of work and incurring of public expense”.
The committee’s recommendation with regard to these rules has been mentioned in earlier speeches. I am not saying that what the committee recommends is a perfect solution. Others have suggested that it might be practicable to modify the rules to set out what should generally be done, giving the inquiry chairman some discretion, without courting the risk of judicial review.
The Government’s response to the committee’s recommendation was to reject it. Having referred to the structure of rule 13, it merely stated,
“The Treasury Solicitor's Department has advised that the drafting of rule 13 is not defective”.
It said nothing about rule 15. It did not address the committee’s concerns as expressed in its report in the light of the evidence before it. I urge the Minister the noble Lord, Lord Faulks, and his colleagues to think again and to give serious consideration to introducing flexibility and proportionality to the rules so that fairness can be achieved without loss of common sense.
Lord Morris of Aberavon (Lab)
My Lords, I note that the noble Viscount, Lord Tenby, will speak after me in a valedictory speech. I have been privileged to be associated with many members of his distinguished family for a very long time—in fact, for more than 50 years. During our service with the Royal Welch Fusiliers, I shared a tent with the noble Viscount. We were guarding the shores of Pembrokeshire. I came to no harm, and neither did he. His friendship and his contribution to this House will be greatly missed.
The Select Committee did an effective, workmanlike job under the wise guidance of the noble Lord, Lord Shutt, who deserves our warm thanks, as do the staff. Before I express my disappointment with some of the Government’s responses to the committee’s recommendations, I will mention one matter that with hindsight we might have spent some time discussing. Because of the very nature of the independence of an inquiry, there is a real danger that an inquiry can get out of control. I was involved as Attorney when the Londonderry inquiry under the noble and learned Lord, Lord Saville, was set up. No one ever dreamt that it would get so out of control that it could have bankrupted any non-government organisation carrying out a similar investigation into facts. I hope the figures will be better as far as Chilcot is concerned, but again the delay is disgraceful and shameful. It seems that that inquiry is master of its own procedures and that there is no power in the land to get it to publish its report. Six years and more after the event, it may have lost many of its original purposes.
I suggest that Parliament should have another look at this aspect of public inquiries. The first question is: how is the independence of an inquiry to be safeguarded without imperilling proportionality in the time it takes to report and its cost to the public purse? Secondly, should a Minister who finds himself powerless not report to Parliament to reconsider its consent to the setting up of the inquiry and its terms of reference and perhaps to put a ceiling on costs? In short, should considering pulling the plug be out of bounds?
All the inquiries I have been ministerially involved in have been non-statutory inquiries. I will not go through them. I went along with the committee in its preference, now that we have an Inquiries Act, for a statutory inquiry rather than a non-statutory inquiry, with a degree of reluctance. From my experience, a non-statutory inquiry can be a very effective tool. I would therefore not quarrel with the Government in their response on this aspect. Although the evidence of the junior Minister from the Ministry of Justice did not have a great deal of depth, he was doing his best with a very bad brief. Perhaps, as the noble Lord, Lord Richard, indicated, the Government should have fielded a more senior and more experienced Minister.
There are two issues where the Government’s responses are particularly unpersuasive. The first is to our recommendation 12:
“that the Government should make resources available to create a unit within Her Majesty’s Courts and Tribunals Service which will be responsible for all the practical details of setting up an inquiry, whether statutory or non-statutory, including but not limited to assistance with premises, infrastructure, IT, procurement and staffing. The unit should work to the chairman and secretary of the inquiry”.
While agreeing with the spirit of the recommendation, the Government go on to reject it completely and prefer the status quo of leaving it in the hands of the propriety and ethics team of the Cabinet Office to continue to co-ordinate matters, despite the fact that these arrangements have manifestly failed so far. The Government provide no evidence to support their rejection of our recommendation. When a Minister and his officials have to respond to the clamour for a public inquiry, as I have, they have no effective body with any sense of continuity behind it to turn to for advice and guidance on how to proceed.
The committee was able to parade a string of most telling evidence that something must be done. It heard significant evidence of the difficulties faced by each new inquiry team in setting up an inquiry from scratch, despite the numerous inquiries held before. It was apparent that despite current government policy, lessons learnt from previous inquiries had not been requested or retained. The witnesses proved beyond question that lessons had not been learnt.
The evidence of the Hamill inquiry finance officer and of secretaries Lee Hughes and Alun Evans was impressive, as were the recommendations of Michael Collins, Judi Kemish and Ashley Underwood QC, who thought that,
“a dedicated sponsoring department for inquiries would be invaluable”.
Alun Evans and Lee Hughes were between them secretaries to five inquiries. Alun Evans talked of trying to,
“prevent having to re-create the wheel at the start of each inquiry”.
Lee Hughes said that,
“it is very dispiriting two or three years down the line to do another inquiry and find that everything you set up before has been dismantled and you have to do it all again”.
The Government propose instead the strengthening of the existing machinery in view of the infrequency of setting up inquiries and the diversity of the departments concerned. With six Permanent Secretaries in the Cabinet Office at the last count—when I sat on the Constitution Committee—it would be a show of some willingness to take the criticism seriously if the existing machinery was made directly answerable to one Permanent Secretary as part of his published duties.
My second point concerns Rules 13 to 15, which have already been referred to, regarding the sending of warning letters to those who might be criticised. Of course there must be fairness in what is now called Maxwellisation, but the requirement in the regulations, as opposed to discretion, can result in a shocking waste of time. Robert Francis QC, as he then was, told us on this aspect that,
“in practice I think my inquiry was extended by at least six months”.
Robert Jay, as he then was, also said:
“Rule 15 caused us huge grief and a huge amount of work and incurring of public expense. I think literally thousands of hours of work went into the generic letter”.
In paragraph 251 of our report we take the criticisms on board, recommending that Rules 13 to 15 should be revoked and suggesting a simplified substitution without the shackles of the existing rules. The Government have rejected that recommendation on the grounds that it was the pre-2005 practice to send warning letters, and therefore that because it was the practice before the Act, it must be right. That is the best justification that they can muster. It appears that Francis and Jay spoke in vain.
I invite the Government to think again about the regulation and to reconsider our recommendations in the light of the evidence. The remarkable thing is that the Government’s responses on both these recommendations are not evidence-based.
Viscount Tenby (CB) (Valedictory Speech)
My Lords, I thank noble Lords for the many generous remarks made this morning about someone I do not recognise. As a Welshman and a Lloyd George, I find myself almost lost for words—which, I think noble Lords will agree, is a pretty kettle of fish.
I begin by apologising to the noble Lord, Lord Shutt, and to the Minister for gate-crashing an important debate on the Inquiries Act. In an ill informed bow to the subject of this most important Select Committee report, I merely observe that with the ever-increasing need for inquiries, it must make sense to have some central body or “unit”—to quote the noble Lord, Lord Shutt—to oversee all the issues; and, without being too restrictive, a set of generally agreed requirements which would make such inquiries more cost-effective and less time-consuming.
I imagine that intruders into the parliamentary timetable are no more welcome than gate-crashers at a teenager’s birthday party—but, in their wisdom, and with some sensitivity, the authorities have decided that such a privilege should be available. Indeed, Lord Jenkin of Roding, who has served his country with such distinction in both Houses, memorably took the plunge last December. As an inadequate token of appreciation, I will undertake not to take too much of the House’s time. In other words, I will not repeat two of my pet aversions over the years: a long Second Reading speech on Report, or starting by saying, “I had not intended to speak in this debate”, before making a beautifully crafted speech lasting at least 10 minutes.
After I made my maiden speech some 26 years ago on alternatives to custodial sentencing, I thought, “Well, that’s one terrifying experience I won’t have to go through again”—but how wrong I was. It has been an immense pleasure to have participated in the work of the House over these past years. During that time I have been both proud and privileged to have served five outstanding Convenors of the Cross Benches, who happily are all now with us save for the much missed late Lord Weatherill, with whom, in a junior role of course, I was able to play some small part in the first stage of Lords reform. I pay tribute and give thanks to all of them, and to my fellow colleagues and friends.
My retirement will bring to an end—almost to the day—125 years of continuous parliamentary representation in my immediate family. Perhaps due to family interest in the subject, I was a member of what may well have been in recent times the earliest committee to turn its attention to Lords reform back in 1995, and I like to think that some of our commentaries and suggestions then have stood the test of time. I have been fortunate in being able to continue that interest, not least as a long-serving member of the campaign for an effective second Chamber—I see certain distinguished members of that group in their seats today. We seek to bring clarity and common sense to the discussions on the future composition of this vital revising Chamber, which does not make laws and which—rightly, in a democracy—gives way to the elected Chamber.
As a personal experience, I will say how rewarding it was to be a member of a House that helped to bring in legal and criminal justice Bills—it seems like every year; I think it was—while at the same time being able to judge their efficacy as chairman of a Bench of over 100 magistrates. It should be noted, in any future composition of a second Chamber, that election is not necessarily an all-embracing panacea. I hope that any future House will contain a large number of Members appointed for their knowledge and experience, so that the close examination of legislation may continue to be professional and thorough.
However, the principal reason I welcome the chance to speak here today is that it enables me to thank most warmly the very many splendid servants of this remarkable place: secretaries, officials, clerks, officers, attendants, the post room, the Printed Paper Office, all the catering and banqueting staff, the Library, accounts, the information office, police and security—I could go on and on, and I apologise to those I have inadvertently omitted. Together, ladies and gentlemen, you are the life-blood which makes this House what it is, and I thank you one and all, most sincerely, for your unstinting help over the years.
In my early days here, I enjoyed the friendship and advice of a noble Lord now sadly long-departed—the late Lord Allen of Abbeydale, for whom the evocative phrase “Civil Service luminary” might well have been coined. Often, if I was making a set-piece speech, I would go to him for advice. In his later years, when ill health prevented him from attending the House, he would ring up to find out how the day had gone. I would always give him the same reply: “Well, at least my trousers didn’t fall down”—which invariably seemed to satisfy him. Fortunately, mine still seem to be in place today, so, without wishing to press my luck to destruction, I wish your Lordships the greatest good fortune and constitutional success in the years to come. I thank you one and all. I have enjoyed my time here immensely.
Lord Pannick (CB)
My Lords, on behalf of all noble Lords I thank the noble Viscount, Lord Tenby, for his distinguished service to this House since 1983. We wish him a very happy retirement. Noble Lords will know that his grandfather, David Lloyd George, famously described this House as,
“a body of 500 men chosen at random from amongst the unemployed”.
I cannot believe that the noble Viscount has ever not been employed on some worthwhile task. It is especially appropriate that he has played so valuable a role in the discussions on the role of this House and how to move this House—now composed of rather more than 500 men and women—to the next stage of reform.
Unlike the noble and learned Lord, Lord Morris of Aberavon, I have never had the pleasure of sharing a tent with the noble Viscount, but I am one of many noble Lords who have benefited enormously from his advice about matters relating to this House. That advice has been valued by all of us because it has been based on knowledge, wisdom, kindness—a much underrated quality—and humility, as your Lordships have again heard today. The noble Viscount, Lord Tenby, will be much missed on these Benches and around the House.
I join other noble Lords in welcoming this impressive and stimulating report. I want to focus, as other noble Lords have done, on paragraphs 243 to 251 of the report, which address warning letters. As the noble and learned Lords, Lord Cullen, Lord Woolf and Lord Morris of Aberavon, have mentioned, those paragraphs address the need under the current rules to send letters to those who are the subject of criticism in a draft report, giving them an opportunity to comment before the final report is drawn up and published—an obligation that adds a very substantial amount of work for an inquiry, and a very substantial delay before publication. The committee is correct at paragraph 251 to recommend that these rules need to be replaced by a discretion for the chairman as to whether to give a person who is to be criticised in a report an opportunity to respond. Given that the Inquiry Rules do not apply, as we have heard, to many inquiries, including Chilcot, the practice needs to change as well.
This issue requires consideration of a little history and a little law. The noble Lord, Lord Trimble, mentioned the Profumo inquiry. When Lord Denning inquired into the Profumo case in 1963, he acted, as he said in his report, as,
“detective, inquisitor, advocate and judge”,
hearing all the evidence in secret. This led to the 1966 Royal Commission on Tribunals of Inquiry, chaired by Lord Justice Salmon, as he then was. He understandably concluded that future inquiries should do more to ensure justice for those involved. That led to the practice of witnesses being given a “Salmon letter”, setting out before they give evidence matters of interest and concern. The process has become increasingly legalistic in the worst sense of that word. Some advocates even argued on behalf of their clients that one party to the inquiry should be able to issue a Salmon letter to another party, seeking to transfer culpability—a practice that became known as a “smoked Salmon letter”.
The practice also developed whereby if an inquiry intends to criticise an individual in the final report, that individual has to be given the relevant sections of the draft report in order that he or she can comment before publication. This process is known as Maxwellisation, and is now enshrined in Rules 13 to 15 of the Inquiry Rules. It is ironic indeed that the law and practice so commemorates Robert Maxwell because he brought a case against Department of Trade inspectors in 1974, complaining about a report critical of his business practices. The complaint was that he had not been shown the draft report before publication. The Court of Appeal rejected that complaint: Lord Denning, sitting with others, said that Maxwell was not entitled to see the draft report. Why not? It was because he had been fairly treated during the inquiry. He had had a proper opportunity to comment during the inquiry on the allegations in the case, so fairness did not require yet another opportunity at the end of the process.
This general legal principle was also stated by Lord Diplock in the Appellate Committee of this House, also in 1974, in the case of Hoffmann-La Roche. Lord Diplock pointed out—this point was made today by the noble and learned Lord, Lord Woolf—that even in a court of law, once a fair hearing has been given to the witnesses, the rules of natural justice do not require the judge to present a draft judgment on which the parties are then entitled to comment before the judge hands down the final decision. If that is right in a court of law, it is all the more so when we are talking about the report of an inquiry—which, however important, imposes no criminal or civil liability on anyone. So it must be right, as the noble and learned Lords, Lord Woolf, Lord Cullen and Lord Morris, have all suggested, that Rules 13 to 15 must go. They are far too absolute, and there should be a discretion for the inquiry chairman because exceptionally there may be cases where fairness indeed demands that at the end of the process the chairman goes back to a specific witness on a specific point—because, for example, a significant new piece of evidence has emerged or the witness had not previously had an opportunity to comment. However, subject to that, fairness during the hearing suffices.
There is one other matter. The noble Lord, Lord Trefgarne, complained in his speech that at the Scott inquiry, counsel to the inquiry, Presiley Baxendale QC “permanently scarred”—the noble Lord’s words—witnesses by the ferocity of her cross-examination. I know Miss Baxendale well. She was, before her retirement, a member of my chambers, Blackstone Chambers. A more polite and more reasonable person it would be difficult to find. I have to say to the noble Lord, Lord Trefgarne, that an inquiry is there to find the facts. To do so depends on counsel to the inquiry fearlessly and without favour asking difficult questions of witnesses who may be reluctant, for a variety of reasons, to tell the full story. It is undoubtedly not a pleasant experience to be cross-examined, but Miss Baxendale was not there to make friends. She did her job. So did this Select Committee. The House is very grateful to the noble Lord, Lord Shutt, and the other members of the committee.
Baroness Buscombe (Con)
My Lords, I join other noble Lords in congratulating the noble Viscount, Lord Tenby, on a wonderful valedictory speech. All I can say is: some gatecrasher! He will be sorely missed.
As a member of the committee I begin by saying that we had an excellent chairman in the noble Lord, Lord Shutt, and a wonderful clerk to the committee, Michael Collon, together with his team and special adviser. It is a good report and we have been right to express concerns, given the Government’s response to it. That said, the Government have accepted some of our recommendations, although I do not propose to spend any time on those today.
While our primary focus has been to concentrate on the Inquiries Act 2005, our terms of reference went considerably wider and required us to consider more generally,
“the law and practice relating to inquiries into matters of public concern, in particular the Inquiries Act 2005”.
We therefore used the Act as a basis for a broader and more topical inquiry. I believe that this approach allowed us to benefit in our thinking and assisted us with regard to taking evidence from a broad spectrum of individuals with different experiences concerning inquiries over many years. Indeed, as noble Lords have already said, the quality of the evidence given by those who attended our committee was exceptional.
I can attest to the committee arguing and debating at considerable length, ably chaired, as I have said, by my noble friend Lord Shutt, before making our recommendations. I shall follow other noble Lords in focusing on two areas: the task of setting up inquiries—as it turned out, we learnt, from scratch—and warning letters. I may have something to say on progress on that issue.
We were very clear that for an inquiry to proceed expeditiously, expediently and effectively, focusing on the terms of reference and ensuring the best questions were asked to elicit the truth—paramount for having an inquiry in the first place—from the right witnesses in a timely manner, it would be necessary to have, and to some degree we assumed that there would be, experience to draw from, and expertise and officials, when setting up an inquiry. Unfortunately, we quickly learnt that inquiries do not in large part follow an established system. There is no memory bank. The new chairman and team must essentially start from first base, without the benefit of the experience of others who have been through the process before, beyond, as our committee discovered, a dusty draft guidance held by the Cabinet Office and some notes written by a chairman following just one inquiry, offering some advice to future inquiry administrations. That is a shocking revelation, in my view and that of the committee, that obviously contributes to a waste of time and of public money.
Witnesses giving evidence to our committee spoke of the difficulties in commencing an inquiry without experience, reference to proper financial oversight and ongoing assessments of whether the terms of reference were being adhered to, or whether those terms of reference might in practice be proving too broad and thereby ineffectual. In response to numerous witnesses expressing real concern about a lack of sensible experience to draw from when setting up an inquiry, which affects the due process and possibly the outcome, we made a recommendation to set up a small dedicated unit—a central inquiries unit—to be responsible for all the practical details of the inquiry, whether statutory or non-statutory, including assistance with premises, infrastructure, IT, procurement and staffing. Indeed, I personally would extend that role to continuing objective oversight of whether the inquiry is on track to serve its purpose.
It is important to keep in mind in considering our recommendations the extraordinary timescales involved and the sometimes frankly incredible sums of money that are spent in conducting these inquiries. As I kept thinking through our deliberations, in almost all cases these inquiries cost many people’s lifetime contribution to the tax system—whether any of this is proportionate to the purpose. I have to say I think the Government’s response to this recommendation for a small, bespoke unit does not appear properly to consider the enormity of the task.
We have heard from other noble Lords the committee’s concern regarding warning letters and of the meeting held with Simon Hughes MP. The Minister asked me to write to him with a very personal experience. Here I declare that I gave evidence to the Leveson inquiry; indeed, I was the subject of a warning letter. The Minister asked me to write to him following the meeting about my experience and why it had led me to believe strongly that an amendment to Rule 13 should be seriously considered to clarify intent and thereby remove any inference that warning letters are a mandatory part of the process. As the noble and learned Lord, Lord Woolf, said, we do not want rigid rules.
I will not delay the House by reading out the whole contents of my letter, but in effect I made reference to my personal experience but also made clear, I thought, what we were asking for. I will read a short extract from that first letter:
“In the course of obtaining evidence during our consideration of the Inquiries Act, several witnesses, including Sir Robert Francis, Sir Brian Leveson and Sir Robert Jay, all explained that they thought there was a mandatory requirement for an Inquiry Chairman to send out Warning Letters, however unnecessary, expensive and time-consuming this might be. This led our Committee to unanimously agree that the drafting of Rule 13 might not be defective, as the Government’s response said, however, the content was”.
I waited some time for a reply, which, I have to say, I found most unsatisfactory. Indeed, I went as far as responding to the right honourable Simon Hughes:
“I was disappointed by your response to my letter dated 9th November 2014 and frankly do not believe that you wrote it!”.
Why should I be surprised? What I went on to do was explain again why the committee felt that it was important to address this point, so I explained:
“Perhaps I need to spell it out in more detail: if you read beyond paragraph (1) of Rule 13 which begins: ‘The Chairman may send a warning letter to any person’ you would then find in paragraph (3): ‘The inquiry panel must not include any explicit or significant criticism of a person in the report, or in any interim report, unless … the Chairman has sent that person a Warning Letter and … the person has been given a reasonable opportunity to respond to the warning letter.’
So, in the event a Chairman, when drafting his Report, might wish to make any reference to a witness which could be construed as a criticism, there is no discretion; the Chairman must first send a warning letter. A Chairman may, when drafting his Report, develop his thinking and be inclined to mention many individuals in which case, he may be compromised in so doing, if he hasn’t first issued a warning letter in case a ‘mention’ of a witness is construed as a criticism by someone. How can that make sense?”.
So, we suggested,
“surely a simple amendment to clarify intention to make it clear that warning letters should be issued to witnesses at the discretion of the Chairman of the Inquiry would be simple to do and the effect would be to make an enormous difference in terms of cost and upset”—
which is incredibly important—
“to all concerned. Would that not be progress?”.
I sent that letter on 9 December. Until 11.22 am precisely, I had not received a reply, which I have now received from the right honourable Simon Hughes MP. It was given to me just as the debate began by my noble friend. I should add that I sent a chaser email at the beginning of this week, which perhaps helped. I think it would be helpful to the House if I were to read out the letter, dated today’s date:
“Dear Lady Buscombe,
Thank you for your further email of 9 December in response to mine of 26 November following my suggestion that you provide me with details of your experience in relation to Inquiry warning letters. I am sorry that you were disappointed with my response and apologise for the delay in responding.
I recognise that Rule 13, as currently drafted, has led inquiry chairs to treat the issue of warning letters as an obligation and I agree with your observations on how that leads to increased inquiry costs and the potential to cause concern for some witnesses. However, I believe that Rule 13 strikes the right balance, affording individuals every opportunity to take legal advice and, if they consider it necessary, to respond to criticism. A departure from the current approach, giving more discretion to inquiry chairs, could either lead to a loss of that opportunity with a corresponding impact on the involvement of witnesses, or as indicated in the Government’s response result in no change to the practice of sending Salmon letters almost universally adopted by inquiry chairs.
Although I do not propose to take this issue further, I look forward to the implementation of a number of the Committee’s recommendations by HMG when parliamentary time allows”.
Of course, we do not have very long.
So we have another reply—a response that I am still not convinced answers the question. We are not saying that there should be no rule; we are saying that the rule should be discretionary. There is a suggestion in the letter that,
“giving more discretion to inquiry chairs, could … lead to a loss of that opportunity”.
I think that noble Lords who have already spoken might argue that that is not necessarily the case, and, indeed, that it would be beneficial for there to be an amendment to ensure that there is discretion. I urge my noble friend the Minister—given the Government’s belief that Rule 13, in principle, strikes the right balance—to reconsider the question of making it explicit in the rule that this should be discretionary and that in no way should this compromise the position of the witnesses concerned.
We have learnt that the extraordinary, unexplained delay in publishing the Chilcot report relates to the ongoing receipt of information by the inquiry panel following the issuance of warning letters. If that is true, surely it is a prime example of a lack of clarity in the rules pursuant to the Inquiries Act, leading—I have no doubt—to a considerable increase in costs, time wasted and frustration on the part of all concerned and, worse still, to a loss of public trust in the process. Will anyone believe the report when it is published? That leads to my final point.
In this excellent report there are several references to public trust in inquiries. On reflection, I must declare that at the outset of our committee’s inquiry, I did not believe that the public trust or value inquiries very much at all, and nothing has happened since to change that belief. That is not to say that I do not believe in the value of public inquiries, but I am concerned about public trust. Any value is probably upfront; one witness said that the value is all upfront when an inquiry is a catharsis that something is being done. Other witnesses expressed the view that expectations are raised and, sadly, all too often wane when outcomes—we now have the latest example of that with the Al-Sweady inquiry—bring the whole process into very expensive disrepute. It is to the Government’s credit that the lawyers involved will be subject to legal action. This kind of scenario, relating directly to the Al-Sweady inquiry, was not one considered during our deliberations.
This is a very good and worthwhile report. I urge my noble friend the Minister that the recommendations which have been accepted by the Government in their response should remain in the pending tray, along with the question of Rule 13, to be actioned—we hope—by the next Government.
Lord Brown of Eaton-under-Heywood (CB)
My Lords, I begin by joining in the tributes rightly paid today to the noble Viscount, Lord Tenby. Where in this House, I wonder, will we find the wisdom that we shall be losing by his departure?
I, too, respectfully congratulate all those concerned with this impressive report, in which I played absolutely no part. Like others, I want to focus on recommendation 25, for the revoking of inquiry Rules 13 to 15 and substituting for them the single rule for flexibility set out in paragraph 251 of the report. It is, I hope, a sufficient qualification for me to speak today that Lord Salmon of Sandwich was a close kinsman and indeed largely responsible for my going to the Bar half a century or more ago. It was he, as Lord Justice Salmon, who in 1966 chaired the Royal Commission on Tribunals of Inquiry and articulated the six cardinal principles designed to secure fairness in future inquiries which, of course, by their nature are inquisitorial and not adversarial. It is the second Salmon principle that is here in point. It provides:
“Before any person who is involved in an inquiry is called as a witness, he should be informed of any allegations which are made against him and the substance of the evidence in support of them”.
Five years later there followed the Maxwell saga—the Board of Trade’s inquiry into Maxwell’s running of Pergamon Press—which prompted a series of spurious legal challenges to the inspectors’ conduct of that inquiry. The noble Lord, Lord Pannick, has shot most of my foxes, but this part of the history is worth emphasising. Maxwell’s complaint, that he had not been sent a draft of the inspectors’ proposed conclusions and given an opportunity for a last-minute comment on them—the process that has come to be known as Maxwellisation—was roundly rejected by the Court of Appeal, presided over by Lord Denning, as the noble Lord, Lord Pannick, explained. The inspectors—the one most severely criticised being my erstwhile pupil master, Owen Stable, Queen’s Counsel—were totally vindicated. Lord Denning’s judgment has been cited, but it is worth quoting a short passage from Lord Justice Lawton’s judgment—[1974] Q.B. 523, page 541. It puts it neatly thus:
“The researches of counsel have not produced any other case which has suggested that at the end of an inquiry those likely to be criticised in a report should be given an opportunity of refuting the tentative conclusions of whoever is making it. Those who conduct inquiries have to base their … findings … on the evidence. In my judgment they are no more bound to tell a witness likely to be criticised in their report what they have in mind to say about him than has a judge sitting alone who has to decide which of two conflicting witnesses is telling the truth. The judge must ensure that the witness whose credibility is suspected has a fair opportunity of correcting or contradicting the substance of what other witnesses have said or are expected to say which is in conflict with his testimony. Inspectors should do the same but I can see no reason why they should do any more”.
It is somewhat surprising that, in those circumstances and in the light of those judgments, the process of Maxwellisation nevertheless began to gain currency. It was adopted, apparently, by Lord Bingham in the inquiry that he chaired into the collapse of BCCI and, to some extent, by my noble and learned friend Lord Scott of Foscote in his arms to Iraq inquiry. Speaking some 20 years ago, just before the publication of his report, my noble and learned friend Lord Scott put it thus:
“The golden rule, in my opinion, is that there should be procedural flexibility, with procedures to achieve fairness tailored to suit the circumstances of each Inquiry”.
Ten years later came the Inquiries Act 2005, which, as your Lordships know, by Section 17 provided that, subject to the Act and to rules made under Section 41, the procedure and conduct of an inquiry is for the chairman. The following year, the Lord Chancellor made the Inquiry Rules 2006, and there are to be found Rules 13 to 15, providing, as they do, for an extreme and inflexible Maxwellisation process in all statutory inquiries.
Although, as the Government’s response to this recommendation observes, the power to send a Rule 13(1) letter is discretionary, Rule 13(3) prohibits an inquiry report criticising anyone unless they have been sent a warning letter—mandatorily, it has to contain all the detailed information set out in Rule 15—and given an opportunity to respond to it. My noble and learned friend Lord Cullen has already explained what that can amount to.
I will not repeat what my noble and learned friends Lord Cullen and Lord Morris of Aberavon have reminded us is to be found in the committee’s report about the experience of Mr—as he then was—Robert Francis on the Mid Staffordshire inquiry or indeed what was said by Lord Justice Leveson and his counsel to the inquiry, Mr Robert Jay QC, who, more than 30 years ago, was my pupil and is now Mr Justice Jay. The Chilcot inquiry, apparently treating itself as bound by these rules, although not in fact being conducted under the 2005 Act, has clearly been suffering from no less, and indeed almost certainly more, by way of “grief”—the word used by Mr Jay—delay and expense from a conscientious and thorough application of such rules. It, moreover, has suffered the additional disadvantage of having no counsel to the inquiry.
In short, the Government’s bland rejection of this recommendation is surely to be regarded as deeply unsatisfactory and indeed somewhat disingenuous. Nothing could be more obviously calculated to result in future inquiries needlessly suffering the same problems of delay and expense. I say “needlessly” because the rule proposed in substitution for Rules 13 to 15 would provide precisely the flexibility required to enable chairmen in future to ensure fairness in the particular circumstances of each case. The recommendation makes obvious good sense and should be accepted and implemented without further delay.
If I am allowed the briefest footnote, it is this. The Salmon principles themselves remain essentially sound. I respectfully suggest that, to some extent at least, they might with advantage be adopted by certain parliamentary committees—not, I hasten to say, in this House but in the other place.
Lord Soley (Lab)
My Lords, I begin by saying that it was a pleasure to be here when the noble Viscount, Lord Tenby, made his valedictory speech. I was very interested to hear that his first speech in this place was on non-custodial sentences. That led me to think to myself that he then went on to do 26 years of what might be described as a semi-custodial sentence. However, he has done it with great distinction and he will be missed.
I also congratulate the noble Lord, Lord Shutt, as well as all the staff of the committee, who often do not get the recognition they deserve. As a member of that committee, I can say that it was very informative, very well run and a pleasure to be on.
I echo what a number of speakers have said about the inadequacy of the Government’s response, which initially I thought was just down to Ministers’ incompetence and arrogance. I have come to the conclusion that it is actually more complicated than that: it is almost certainly about interdepartmental struggles over what to change and what not to change. No one can really believe that there is not a problem, not least in relation to the length and cost of inquiries. People often quote the Saville inquiry, which lasted 12 years at a cost of £191 million, but in fact others have overrun and been very costly. Therefore, there is a problem there.
However, I ask the Minister to put this matter in a wider perspective. My view—and this was said to us by a number of people giving evidence—is that inquiries are becoming increasingly important in winning the confidence of the public in our political and judicial systems. That point was made a number of times and I cannot stress it enough. At a time when we politicians are struggling to re-engage effectively with the public, and when that is very complicated because society is so much more complicated, these inquiries give the public a chance to have their voice heard, and not only in special circumstances if they are directly involved. They also enable the wider public to recognise that there are ways in which very complex topics can be explored in more detail, with good recommendations being made.
I entered the House of Commons back in 1979. When the riots started in 1981, I had in mind the Coldbath Fields riots of the 1830s. Then, the House of Commons set up a committee of inquiry composed of Members of Parliament, who took only two or three months to make their recommendations, including very major ones such as preventing the police being agents provocateurs. I thought that that was a very good system because it changed things after the Coldbath Fields riots, so why can we not do that again? However, when you saw the complexity of the inner-city riots and the Scarman inquiry began, you realised that it was too complex and too party-political to do it within the parliamentary system. Indeed, when I was at the Meadow Well Estate near Newcastle, where the riots had taken place, it occurred to me that the whole approach taken by Scarman was very impressive and needed to be taken forward. Since those days, we have had more and more inquiries in very appropriate circumstances.
What amazes me about this report is that one of the central recommendations—that we should presume to use the 2005 Act—is rejected in the government response through a list of statements, which do not give any clear reason why we should not do so. They could best be described as a painful elaboration of an attempt to find a field with very long grass into which to kick the recommendation. My noble friend Lord Richard made the point, as did others, that there will obviously be cases where, understandably, people will not want to use the 2005 Act, and security may well be one. I want to return to that in a moment. However, by and large, why is there not a presumption that the 2005 Act will be used? Although it received criticism, nobody said that it was a really bad Act.
Why is another of our recommendations—that a Minister should be expected to come before Parliament and say why they are not going to use the Act—rejected? In most cases, they would be able to do that. In cases which are difficult for security reasons, I have never generally found Ministers or MPs so shy or bashful that they cannot find a way of dealing with that. The Litvinenko affair was a classic example of where there was a need for an inquiry. However, for very real reasons—not just security reasons but reasons of relationships with a major power, Russia—it could not be done. Now, because relations with Russia are so much worse, the inquiry is taking place. However, initially it was resisted. If that is why the Government are reluctant to accept the recommendation of an assumption of using the 2005 Act, I say that that is not good enough. Reasons can be given in Parliament as to why they do not want to use the Act.
All the other points that have been made, which I do not wish to repeat in great detail, are absolutely right. It is absurd that we take so much time on insisting on letters being sent out with a warning when the chairman of the inquiry does not think it is necessary. Clearly, we have to give a considerable degree of leeway to the chairmen of inquiries in these circumstances. I also think that there are other points that we need to emphasise, such as the importance of involving the judiciary in the selection of the judge, if it is a judge-led inquiry, and issues of that kind.
Going through the report, the noble Lord, Lord Shutt, spelt out how many had been accepted, how many rejected and how many were conditional. The reality of reading the report in the round is that it is generally a case of avoidance. It is saying, “This is difficult; I can’t really do that; that’s too problematic; we’ll look at this again”, and so on. Reading the introduction by Simon Hughes MP, where he says that he welcomes the report, I thought that it would have been more accurate to say that he did not welcome the report and would rather it had never been written.
That is the thrust of the Government’s response. This is an important issue. If we look at recent public inquiries—the one on the hospital and the arguments around the inquiry that will take place on child sexual abuse—they are incredibly important to the public. They help to restore confidence in our political and judicial system, which has received some heavy knocks in recent years. We need to deal with that. It may be a bit late in the day, but perhaps not too late, to say to the Government that a bit of creative thinking would be useful. If the Government had approached their response to the report by picking up the evidence that a number of people have made about how important these inquiries are—Leveson is a classic example of one that attracted enormous interest—why are they so reluctant to make sure that they are well developed? The noble Baroness, Lady Buscombe, made the point about the importance of some central unit that keeps the processes under review to ensure that we do not spend lots of money on reinventing the wheel.
Inquiries are important for the public. They give the public greater confidence in the administrative system of the UK and that our constitutional structures are working well. They are becoming, in my judgment, a very important tool with which to re-engage with the public. That is how the Government should have approached this, and I am very sorry that they did not. They have underestimated their opportunity to engage better with the public by using public inquiries, and at the same time recognising that many of the things that have been mentioned today could be done not only to make them work better but to save an awful lot of money. It would not take too many more Savilles—I hope there will not be any—for the public to begin to lose support for them when they know the costs and timescales. That undermines public confidence. What the report is trying to do is to give structure to the system so that people continue to find inquiries useful and interesting, and that people have confidence in the administration of the UK and its constitution.
Baroness Stern (CB)
I begin, if I may, with a word about the noble Viscount, Lord Tenby. He may remember that when I arrived here 16 years ago I felt totally bewildered and utterly overwhelmed by it all. It is absolutely thanks to the noble Viscount and how he looked after me that I found my feet—I think I found my feet—and I have never forgotten his kindness and understanding.
I felt very privileged to have been a member of this Select Committee; it contained a vast wealth of wisdom and we have heard much of that today. The staff were hugely impressive and we had a chairman who held it all together, kept us in order, made us laugh, and got out of us what I feel is a very important report. We say in our summary:
“Inquiries into matters of major public concern are now an integral feature of the governance of this country”.
Indeed, they are a very important part of the arrangements we make to respond to and to resolve wrongs, disasters and failures. I appreciate the remarks of the noble Lord, Lord Soley, which spelt that out in some detail.
In my remarks I want to concentrate on the significance of inquiries to good governance in relation to their role in giving satisfaction to injured parties, helping to lay matters to rest so that they do not fester for years, and giving to people who have suffered a sense that justice has been done. The word “justice” can be used in different ways. It can mean that someone is convicted and punished or blamed and shamed. It can also mean that injured parties find out the truth of what happened. I am sure that some noble Lords heard on the BBC a woman whose son had died at Hillsborough talking about the effect on her of hearing the truth that came out at the inquest about what really happened on 15 April 1989. After all those years of waiting it was very forceful.
We explored this aspect with most of our witnesses and we conclude in paragraph 9 that one of the purposes of having public inquiries is “catharsis”, which we define as,
“an opportunity for reconciliation between those affected by an event and those whose action caused it or whose inaction failed to prevent it”.
We heard much interesting evidence on this theme. Liberty told us:
“Inquiries provide a means for the truth about an event or series of events to be reached by an independent and authoritative body, but in a manner which is more inclusive and restorative than litigation”.
The words, “inclusive” and “restorative” are significant in this context.
Ashley Underwood QC told us that if you did not have the cathartic element you were likely to fail. You simply will not have allayed the public concern if you do not get reconciliation and do not have people thinking they have had their voices heard. Robert Francis QC, now Sir Robert, told us that the cathartic effect of being heard is a very important part of the inquiry. Hazel Shaw of Inquest said that the standing of the victims or bereaved families in an inquiry was very important. She said that often they are asking some of the most searching and difficult questions and performing a function in the wider public interest. That point is worth stressing. Although the victims—those who have suffered wrong—are at the centre or core of an inquiry, which is why we call them “core participants”, the outcome is of much wider importance for the public as a whole.
I want to thank those who gave evidence who have suffered some grievous wrong, and were prepared to put effort and commitment into making a success of the inquiry that looked into what had happened to them. I think, for example, of Christopher Jefferies who had been vilified by the press, mistakenly as a murder suspect—he gave evidence to the Leveson inquiry—and Julie Bailey who was such a leading figure in the Mid Staffordshire inquiry. We considered in some depth how such core participants were dealt with in the inquiry process, and whether it was appropriate. We heard about good practice from the noble and learned Lord, Lord Cullen, who spoke earlier and who, as an inquiry chairman, had meetings with the bereaved before the inquiry started,
“so they have a chance to see what I am like”.
The noble Lord, Lord Gill, who also chaired an inquiry told us that he met the core participants in advance. He said:
“You have to make it clear to them at the outset that everything is coming out in the open, that nothing is being held back”.
These are very useful examples of good practice.
The committee recommended that interested parties, particularly victims and victims’ families, should be given an opportunity to make representations about the final terms of reference. The Government, in their response—that most unfortunate document that we have been talking about for much of the time throughout this debate—accepted that recommendation very half-heartedly. The response states that it is,
“accepted to the extent that it may be helpful in certain instances”.
One of the elements of the inquiry that is important for public confidence and for core participants in particular so that they feel that they will be treated fairly and nothing will be swept under the carpet, is independence. Our committee made recommendations about independence from government. The noble Lord, Lord Trimble, referred to those, as did the noble and learned Lord, Lord Cullen. For example, we recommended that the Minister should appoint a panel member only with the consent of the chairman. That was rejected. The Government response rejected that recommendation because,
“there may be occasions when the minister and chair have different views”.
We recommended that the Minister should get the consent of the chairman to appoint assessors. That was rejected. We recommended that,
“the Act should be amended so that the consent of the chair is needed before the minister can set or amend the terms of reference”.
That was also rejected because,
“ministers will wish to retain control of the details”.
Recommendation 19, which is that,
“the power of the minister to issue a restriction notice under section 19, restricting public access to an inquiry, should be abrogated”,
was also rejected. The Government said that Ministers must keep this power because:
“They will understand the nature of national security and other sensitive material”.
We must draw from that the unavoidable conclusion that, in the view of the Government, a learned judge chairing a public inquiry will not understand such matters.
Recommendation 21 was that,
“where the minister wishes to terminate the appointment of a panel member other than the chair”,
the Act,
“should be amended to require the chair’s consent”.
That was rejected.
In light of the rejection of these recommendations and particularly in light of the reasoning given, I hope that the Minister will affirm the Government’s commitment to the independence of public inquiries. I hope that this debate will convince your Lordships’ House and the wider public who follow our proceedings that public inquiries are of considerable importance in ensuring transparency, accountability, truth finding and catharsis, and that our recommendations deserved a more thoughtful and intelligent response than they received.
Baroness O'Loan (CB)
My Lords, I join with other noble and noble and learned Lords in congratulating the noble Viscount, Lord Tenby. When I came into this House five years ago, I, too, benefited very much not only from his gentle courtesy, but from his profound wisdom and I would like to thank him for all that he has done in this House.
I am grateful to the noble Lord, Lord Shutt, and the members of his committee for the excellent report that they produced on the Inquiries Act. This debate affords an important opportunity for the Government to review their position in relation to their response to the report.
I declare an interest. I am chairing the Daniel Morgan independent panel. It is not an inquiry under the Act; it is a Hillsborough-type independent panel, which was set up to examine the murder of Daniel Morgan in London in 1987, allegations of police involvement in his murder and of police and media corruption affecting the investigation. The issues that we have discussed are therefore of significant interest to me.
The genesis of this Act goes back, among other things, to 2003, when the European Court held that there had not been sufficiently effective and independent investigation for the purposes of Article 2 of the European Convention on Human Rights into the circumstances of the death of Belfast solicitor Patrick Finucane. He was murdered, it was subsequently established, as a consequence of,
“a series of positive actions by employees of the State”,
which,
“actively furthered and facilitated his murder and … in the aftermath of the murder”,
we are told,
“there was a relentless attempt to defeat the ends of justice”.
The Select Committee in its report was very clear that the Act does not as a whole require radical surgery, but it sets out clearly the deficiencies in respect of which evidence was received. The recommendations for amendment have already been referred to by a number of noble Lords and are summarised on page 89 of the report. Many of the deficiencies identified by the report go to the independence of the inquiry process. That is vital to public confidence in the Act, in the inquiry process and in governance. In responding, as the noble Baroness, Lady Stern, and others have said, the Government rejected the call to amend the most important of these provisions—the ministerial powers to amend the terms of reference, appoint members and, most particularly, the use of restriction notices.
As the noble Baroness, Lady Stern, said, in paragraphs 69 to 72 of their response, Her Majesty’s Government state that Ministers,
“will understand the nature of national security and other sensitive material”.
I have no doubt that we need to protect our national security. Having been the victim of a bomb explosion and having had other terrorist-related experiences, I am very clear about that. There are many threats to national security, as we know. But there is an imperative to learn from our past, not just on the terrorist front but as we now contemplate even just the number of inquiries currently being established into historic child sexual abuse and its alleged cover-up. Lord Acton, in one of his letters in January 1861, famously wrote:
“Everything secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity”.
There is a temptation in any organisation to cover up its wrongdoing. We have seen it across so many professions and institutions. Governments will not be immune to that temptation and those who have advised them and their successors may seek to cover up past wrongdoing to protect what they perceive to be the stability of the present. But when we build on the shifting sands of noble cause corruption, we do so at our peril. We do not need to think back very far to identify situations in which a dishonest response, and a quick calculated inquiry, such as that which resulted in the Widgery report on Bloody Sunday, resulted in serious damage. They say in Northern Ireland that the Bloody Sunday shootings were one of the best recruiting agents for the IRA. We heard reference to the Saville report and to its cost, but I remind noble Lords and Her Majesty’s Government that a lot of the costs of that inquiry resulted from challenges by the Government and their agents to the inquiry itself. We must remember that.
I do not say this to offend; I say it because there is a duty on those who conduct these inquiries to do so using every tool at their disposal to uncover the truth. The power of the Minister to restrict attendances and block access to and disclosure of documentation, as the noble Lord, Lord Saville, is reported to have said in the report made,
“a very serious inroad into the independence of any inquiry; and is likely to damage or destroy public confidence in the inquiry and its findings”.
That view was also clearly articulated by the Joint Committee on Human Rights and the House of Lords Select Committee, stating that the power to make such notice compromises the Article 2 compliance of an inquiry by curtailing its independence and restricting the ability of the next of kin effectively to engage with an inquiry so as to enable it to lead to an accurate determination of responsibility.
A way forward in this dilemma was identified in the Baha Mousa inquiry, the chair of which was able to maintain his independence by insisting on a protocol that allowed him to maintain control over disclosure. However, placing the burden to stand up for independence on the chair is not right and does not ensure that, in the future, every inquiry will be independent and effective. The reality is that an inquiry that is deeply immersed in what might be millions of pages of documents is much better placed to assess the relevance of documentation and capable of protecting that which requires to be kept secret than the Government and their advisers.
The Finucane family, whose tragic loss has been the subject of so many limited inquiries, firmly believe that the whole truth about what was happening in Northern Ireland at the time, which led not just to the death of Patrick Finucane but to that of Adam Lambert, has not been told. It is now common knowledge that many other people died at the hands of terrorists because of the involvement of state agents in one way or another in these murders and the protection of those who committed them. I have seen the pattern of activity involving the state and paramilitary organisations, republican and loyalist. That is why they continue to call for a public inquiry, as, indeed, do other victims of atrocities.
Such inquiries must have proper independence. It is 27 years since Patrick Finucane was murdered and 13 years since the then Secretary of State declared that there would have to be an inquiry, but the terms of the Inquiries Act are such that the family cannot be sure of the initial and ongoing independence of any inquiry. The arguments not to have inquiries into atrocities such as the deaths of Mr Finucane and the Ballymurphy and Omagh victims are not even persuasive, let alone convincing, as we look at inquiries which have been established under the Inquiries Act.
It is not in the interests of national security that we protect those who did wrong, yet this Act, as currently framed, makes it much more possible for this to happen. I know that those seeking to protect vital national interests have, on occasion, been badly advised, but we all know that not every document marked “Secret” merits that mark and not every confidential document is in any way confidential. Each document should be capable of being examined on its merits by an independent inquiry. Chairmen and inquiry members should be cleared to the necessary level and can be briefed by the same people as Ministers. They surely have as much intellectual capacity as Ministers and hence will be competent to understand the nature of any briefing or explanations. Judges and others routinely work in areas of national security. They do not come new to it when they assume the role of chair of an inquiry.
As several noble Lords have said, Her Majesty’s Government’s arguments and their response to the Select Committee report are not convincing. There is significant risk of reputational damage to the UK as a consequence of the way the Inquiries Act was drafted and is playing out. As I have said, I am completely convinced of the need to protect national security, but I ask the Minister to look again at these provisions. I also urge any new Government to consider seriously the implications of the ongoing lack of trust which is to some degree perpetuated and even aggravated by the current state of the law. As we fight our current anti-terrorist battles, it is profoundly important that we do not, through our legislative and administrative activities, demonstrate that we are not capable of learning the lessons of the past. For 10 years there has been consistent criticism of this Act by parliamentary committees, by many noble and learned Lords and by other very distinguished academics. It is beyond time for change.
Lord King of Bridgwater (Con)
My Lords, I speak very briefly in the gap to congratulate my noble friend Lord Shutt on his chairmanship of this committee. I think that 90% of the committee have now contributed to this debate. I apologise to colleagues on the committee that I was unavoidably absent in the middle of this debate. I very strongly agree with the comments of my noble friend and the noble Lord, Lord Richard. I say to the Minister that while we talk in the report about lessons that might be learnt in the conduct of various inquiries, I think that there are lessons to be learnt, also, in how the Government should respond to Select Committee inquiries.
I was very interested indeed to serve on this committee and I think it was a sign of the contribution that the House of Lords can make. Looking at the membership of the committee, we had a former Lord Chief Justice, a former Attorney-General, a former Leader of this House, a number of Ministers who had to grapple with these sorts of problems and a number of people who take an interest in these issues and made contributions. Undoubted evidence was established in the course of that inquiry of actions that could be taken. In the current climate, with issues of public expenditure, we saw shocking illustrations of the considerable waste of public expenditure when people embarked on inquiries without proper preparation or knowing what was involved. Costs and time were wasted. If ever there was a case for a central store of evidence, this is it.
Like the noble Baroness, Lady O’Loan, I have faced requests for public inquiries of more than one kind, as she knows very well. The truth is that in many cases one never knows where a public inquiry is going to hit, which department it will be in or whether the Minister or the officials have ever had any previous relevant experience. There is a need for a central clearing arrangement so that people can learn lessons, not just in order to save money but in the chance of a prompt setting up of inquiries, which is in the interests of all concerned and is very important.
We are in a difficult position. I do not have a clue what the Minister is going to say, but I hope that it will be a very adequate and full response, reflecting, at last, some important points made by people who genuinely contribute to a very important discussion of this issue. I hope that he will be able to respond in a very full and helpful way in the interests of the better conduct of inquiries in the future.
Lord Beecham (Lab)
My Lords, I add the thanks of the Opposition Front Bench to the noble Viscount, Lord Tenby, for his many years of distinguished service in this House, to which others have referred. My father did not know Lloyd George, but as it happens he was a constituent of the noble Viscount’s father when he was a Member of Parliament for Newcastle North. The by-election that followed the first Viscount’s elevation to this place remains in my memory as the first by-election that I can recall as a very young supporter of the party of which the noble Viscount’s father was not a member.
I also add my tribute to the noble Lord, Lord Shutt, and the members of the committee, 10 of whom have spoken in today’s debate. It is a matter of regret, as he gently hinted, that the report has enjoyed its first birthday before making an appearance in this House for a debate. As I said last week in connection with another long-delayed report, although perhaps with less force in that case, the House needs to look at how it deals with post-legislative scrutiny, because it becomes extremely post if, once reports are published, they do not reach the Chamber for discussion.
Last week I chanced upon my copy of a book which I last consulted 50 years ago, as I, among others, including the noble Baroness, Lady Deech, who is not in her place today, was preparing for the final examinations for my Oxford law degree. The title of the book was Administrative Law and its author was the eminent legal academic, the Professor of English Law at Oxford, HWR Wade. In those days administrative law could be said to have been in its infancy. Indeed, the Lord Chancellor would be delighted to know that the words “judicial review” do not appear in the index or, indeed, in any other part of the book.
However, there is a chapter on statutory inquiries, which makes instructive reading. Of its 29 pages, 26 are essentially confined to planning inquiries, two to accident inquiries and one to what Professor Wade described as, “a type of public enquiry which from time to time attracts much attention: the special inquiry which Parliament may at any time constitute under the Tribunals of Inquiry (Evidence) Act”. He cited, as examples of the latter, premature disclosures of Budget details by Ministers, allegations that a change in bank rate was prematurely divulged, accusations of brutality by the police and other matters of public importance.
In the first 40 years of the Tribunals of Inquiry (Evidence) Act 1921 only 14 inquiries were established by a vote of both Houses to investigate such matters of urgent public importance, and the following 44 years saw only another 10. It is this Act that was replaced by the 2005 Act, which is the subject of the Select Committee report. Any discussion of inquiries has long since seen matters of urgent public importance overtake planning inquiries and the like as a subject of concern and debate.
Very often, of course, the demands for the establishment of a statutory inquiry arise from questions about the conduct of the Executive in one or other of its various manifestations. It is the role of Ministers in any Government in setting up inquiries, appointing the chair, controlling the disclosure of evidence and publication that not surprisingly provokes scepticism about the process.
It is striking that most of the 2005 Act inquiries arose from deaths in which the role of the police, military or health services came under scrutiny, in addition to the Leveson inquiry and some others. There are others, such as the inquiry into undercover policing, where the inquiry is a 2005 Act inquiry, but as the noble Lord, Lord Shutt, elucidated in a Question last year, the inquiry into the so-called “on the runs” in Northern Ireland is not. That was described as “an administrative review”, despite the issue stemming from a political decision, albeit one that many would say—I would be one of them—was the right one in the circumstances and which contributed to the successful outcome of the protracted negotiations that brought peace to Northern Ireland.
The indefatigable noble Lord, Lord Shutt, who Ministers, one senses, might have wished to have lived up to his name, was told in answer to another Question concerning the inquiry into the death of young people in prison—being conducted, I am absolutely confident, in exemplary fashion by my noble friend Lord Harris of Haringey—that the terms of the 2005 Act did not apply. Yet, as I have indicated, deaths in prisons and hospitals were the subject of 2005 Act inquiries. There are, as we have heard, crucial differences between 2005 Act and other inquiries, especially about such matters as the compellability of witnesses, the production of documents, and the public nature of the proceedings being subject to restrictions on grounds specified in the Act. But it is difficult to understand the decision-making processes that lead, for example in the case of the Hillsborough tragedy, to there being one inquest, followed by a major inquiry conducted by the late and much lamented Lord Taylor of Gosforth, and then a second inquest, on the face of it now being properly conducted, as opposed to the first. My noble friend Lord Soley referred to some misgivings, which many would perhaps share, about the way the Litvinenko matter has been handled—first possibly by an inquiry and now by an inquest.
The lack of a consistent approach is surely a matter of concern. It lends force to the Select Committee’s suggestion of central support for inquiries based in Her Majesty’s Courts and Tribunals Service, although in my view there might be other options for its location. However, the principle of having such a unit seems to be very appropriate. The Government’s response, relying on the roles of the Ministry of Justice and, heaven help us, the Cabinet Office, is not very appealing, particularly when it proclaims that the latter,
“offers advice and acts as a conduit for any interaction between the inquiry and Parliament”.
The response goes on to state that:
“In our experience, inquiry chairs and ministers have worked well together in agreeing the details of how an inquiry is to be established”.
It might be thought that the views of the parties to an inquiry, for example, or an independent source would offer more reassurance than this exercise in self-assessment and self-approval. Then there is the equally complacent, if not to say patronising, assertion, which the noble Baroness, Lady Stern, referred to, that:
“Ministers are best placed to understand the full significance of considerations such as national security and international relations and they make decisions accordingly in a way which cannot be expected of the inquiry chair”.
Of course such considerations have to be given due weight, but would it not be possible to involve others in the process, perhaps from the judiciary or Parliament?
It is disappointing that the Government have rejected out of hand recommendation 11 to give interested parties, particularly victims or their families, an opportunity to comment on the terms of reference for an inquiry, although perhaps such a procedure should be qualified by the words “wherever practical”; it may not be practical in all cases. However, there may well be some where it would be.
The Government have also rejected recommendation 19: that a notice,
“restricting access to an inquiry, should be abrogated”,
leaving that decision to the chair, and recommendation 20, giving,
“only the chair … the power to withhold material from publication”.
Again, if there is some doubt in the Government’s mind, could there not be recourse to some third-party involvement, at the very least on a trial basis?
I also have difficulty with the response to recommendation 23, referred to by the noble and learned Lord, Lord Cullen, that “only the chair” may appoint counsel to the inquiry because—I repeat his quotation:
“Ministers will want to retain control of such issues which affect departmental budgets and the terms of reference of an inquiry”.
Those are legitimate considerations, no doubt, but again is there not at the very least scope for some third-party involvement in the appointment of counsel, perhaps from the judiciary in this instance?
The noble Lord, Lord Shutt, explained the delay in bringing the committee’s report to the House when he asked a Question of the Leader in January saying that the delay was occasioned by the unsatisfactory nature of the response, about which we have heard a good deal in the debate today. Perhaps in replying to the debate the Minister will refer to the attempts made to secure a better response, which do not appear to have been startlingly successful, if I heard the noble Lord correctly. Why have the Government remained, as it would appear, pretty obdurate in respect of some of the recommendations and requests for a further and better response? Perhaps the Minister, not least in the light of the child abuse inquiry fiasco, could indicate whether any thought is being given to an enhanced role for Parliament in this whole area.
Another issue has been raised with me by the eminent QC, Stephen Hockman: namely, the responsibility for writing the report to be published by the inquiry. This is not covered by the rules or the committee report. I understand that Lord Leveson delegated the drafting of much of his landmark report to counsel to the inquiry, now Sir Robert Jay, whereas the noble and learned Lord, Lord Saville, wrote the entire report on Bloody Sunday himself after a prolonged 12-year inquiry. Another approach was apparently adopted by the noble and learned Lord, Phillips of Worth Matravers, who in the course of conducting the BSE inquiry published online a section of his report after each week of evidence. That is an interesting technique, and I am not saying for a moment that it would apply to all cases, but perhaps it is worth considering.
Is there not a case for providing inquiries with professional assistance in report drafting and a framework within which a draft report can be submitted for comment by interested parties on a more systematic basis than appears to be present at this time? After all, we are dealing with matters of great public interest in which it is vital to sustain public confidence in the independence of the process and its capacity to discover the truth, uncomfortable though that will sometimes be. Governments must go further if the public are to be reassured of the integrity and capacity of the system to meet these objectives, and they should recognise the role of Parliament as an indispensable element in the system.
Finally, I will conclude, if I may, by saying a word or two about the Minister. He and I have had the pleasure of confronting each other across the Dispatch Box for the last 15 months. I have always found him to be an extremely courteous and effective debater, and somebody who has done a valiant job in defending the Government—pursuing my ancestral career of making bricks without straw—but doing so with great charm and to great effect. Who knows what the forthcoming election will bring about in terms of our respective positions on the Front Benches or elsewhere in the Chamber, but I would like to put on the record something which I believe many members of the committee would share: our gratitude to the noble Lord for the way he responds to debates both in the Chamber and outside. I wish him well, whatever the outcome of the election and wherever that leads or leaves him.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I thank my noble friend Lord Shutt for initiating this debate to discuss the Select Committee’s report on the Inquiries Act 2005, and in particular the Government’s much criticised response to its recommendations. I also thank all other noble Lords who have contributed to this debate. If it is to be my last appearance at the Dispatch Box—I am most grateful to the noble Lord, Lord Beecham, for his remarks in that respect—it is a great privilege not only to be involved in a debate of this quality with so many participants of enormous experience, but also to be present on the occasion of the valedictory speech of the noble Viscount, Lord Tenby. I have not had the privilege of knowing him well; I wish I had known him better. I do know, however, that he was the assistant to no fewer than five Convenors of the Cross Benches. Perhaps I could dare this observation: I suspect that that might well have been quite a challenging occupation on some occasions.
Before finally turning to the debate itself, perhaps I may reciprocate the comments of the noble Lord, Lord Beecham. He has been a formidable opponent—not to say a thorn in my side—during the time that I have been standing at the Dispatch Box. He has held the Government to account with tremendous ferocity accompanied at the same time by great wit. I pay tribute to him for that.
The report of the noble Lord, Lord Shutt, received a response from the Government. The noble Lord, Lord Soley, suggested that in the welcome expressed by my ministerial colleague, Simon Hughes, there was a subtext that the Government did not in fact welcome the report. I am here to disabuse him on that particular matter: the Government do indeed welcome the report and know that the committee invested a considerable amount of time and effort in understanding the operation of inquiries both under the Act and otherwise. The committee’s work has undoubtedly prompted a lively and constructive debate today.
I am grateful to all those who have given evidence to the inquiry—both written evidence and in person—including former chairs, panel members, inquiry legal and administrative teams, and others with involvement in inquiries, who provided invaluable knowledge, experience and insight into how inquiry processes and procedures might be improved.
I assure the noble Lord, Lord Shutt, and his committee that their report was well received across government and that careful consideration was given to the recommendations. It is worth making clear to the House that the response submitted by my right honourable friend Simon Hughes, the Minister of State for Justice and Civil Liberties, who has responsibility for this policy area at the Ministry of Justice, reflected opinion across the whole of Whitehall, not just that of our department. As my noble friend Lord King pointed out, the possible need for these inquiries can confront Ministers in different departments with different levels of experience. It is important that there should be—this is very much the burden of one of the recommendations—a degree of sharing of knowledge and experience to enable a proper response to be given by Ministers in different departments to the call, as there often is, for a public inquiry.
For the benefit of those who are not familiar with this aspect of government, the Ministry of Justice works closely with the Cabinet Office in the operation of inquiries. My department has responsibility for the Inquiries Act 2005 and the Inquiry Rules 2006, which underpin the Act. It provides advice on the application of the Act and the rules. The Cabinet Office has responsibility within government for providing guidance on how to establish and conduct inquiries, and provides the main liaison between lead departments and the centre of government.
Regardless of how they are constituted—whether they are statutory or not—and as a number of noble Lords quite rightly said, public inquiries perform an important role in today’s society of holding public bodies to account, as well as bringing to light, and providing answers to, issues and events that cause public concern. Setting up a major public inquiry is a process that of course the Government take extremely seriously. There is a clear requirement in the Ministerial Code reflecting the importance that is attached to major inquiries of this nature. It states that:
“The Prime Minister must be consulted in good time about any proposal to set up … Major public inquiries under the Inquiries Act 2005”.
I know that the noble Lord, Lord Shutt, and his committee colleagues may feel that the Government took a long time to respond to their recommendations. However, as I have alluded to already, the Ministry of Justice consulted widely to make sure that the response was as comprehensive as possible. Some government departments had little experience of running an inquiry while others had much to offer. As it was, and simply for the sake of the record, the committee’s report was published on 11 March and the Government’s response was published on 30 June.
The noble Lord, Lord Shutt, referred, by way of comparison, to the report of the noble and learned Lord, Lord Hardie—another essay in post-legislative consideration—on the Mental Capacity Act. I was the Minister who responded to that debate. Lest it be thought that the Government are serial offenders in late responses, I should correct one slight misunderstanding that my noble friend may have in that respect. We did in fact respond to that report well within time. The letter that I wrote, and which was referred to in the debate, was a response to the noble Lord, Lord Beecham, simply to update the House as to what had been done to implement the various recommendations—I am glad to see the noble Lord nodding to affirm this. It enabled the debate to be much shorter because the House was made aware of the up to date position. The point that my noble friend makes is a valuable one, but it is not an appropriate criticism of the Government in that respect.
Here, the Select Committee’s report reflected a number of concerns about the use and operation of the 2005 Act and contained 33 recommendations. There were three broad areas of concern that my noble friend Lord Shutt focused on. First, the Committee believed that, when considering what form an inquiry should take, it should be Ministers’ practice to start from a presumption that the 2005 Act should be used—a point made forcefully in the course of our debate by the noble Lord, Lord Richard, who referred to the evidence given by my ministerial colleague Shailesh Vara.
The word “presumption” does not appear in the Act. It is an expression familiar to lawyers and it may be that, on many occasions, Ministers would be well advised to look at the 2005 Act first. However, it would be wrong to superimpose some rule of law, from whatever origin, that there is a presumption that the 2005 Act should be used. Whether it is wise, of course, is a matter of opinion, and this particular Act does not contain any mandatory obligation on the part of a Minister to employ the Act.
Secondly, the Committee felt that it would be useful to have a standing central inquiries unit to give practical support to the chair and secretary of inquiries. Thirdly, the committee made a number of recommendations to increase the accountability of government Ministers and limit their powers to act without the consent of the inquiry chair.
I am sorry that the committee did not feel that the Government’s response addressed these points to their satisfaction. The Government accepted over half of its recommendations—19, in fact, although I understand there is slight carping over the mathematics—and we believe that these included the most important recommendations, as I will explain in a moment.
As noted in the Government’s response, the Select Committee’s report was very much welcomed. My department had carried out post-legislative scrutiny of the Act in 2010, in line with the then new regime of departments scrutinising their legislation between three and five years after implementation. The 2010 scrutiny concluded that the Act was working well but that the 2006 rules presented a number of concerns. The work of the committee was therefore timely. When it reported in March last year, four years had elapsed since that post-legislative scrutiny. At that point, 17 inquiries, under the Act or otherwise, had reported since the implementation. Since the scrutiny, three further inquiries have either been set up under the 2005 Act or been converted to run under the Act. This includes the most recent independent inquiry into child sex abuse, to be chaired by Justice Lowell Goddard.
At the end of October, as he told the House, my noble friend Lord Shutt and members of the committee met my colleague the Minister of State for Justice and Civil Liberties. I understand that many of the committee’s concerns were addressed. There were, however, a few points on which the Government committed to respond—around the role of the Cabinet Office, as I understand it. Perhaps I may take this opportunity to apologise to the noble Lord and his colleagues for the delay in responding to those points. In response to the committee’s report, and to further helpful discussion with committee members, we have looked again at the guidance available and the role that the Cabinet Office can play in supporting departments. I will say a little more about that in due course.
As to the question of whether to establish an inquiry under the 2005 Act, the government response looked in some detail at how Ministers decide what kind of inquiry to establish. At the October meeting, my ministerial colleague addressed the committee’s concerns about the consideration given by government departments to establishing inquiries under the Act. However, for the benefit of the House, I will explain that Ministers will in fact always consider the suitability of the 2005 Act when deciding to establish a public inquiry—it will always be the starting point.
Ministers will, however, also want to consider whether another vehicle would be more appropriate and effective, bearing in mind time and cost. This could be a non-statutory inquiry—I note that the noble and learned Lord, Lord Morris, drew on his experience of non-statutory inquiries and said that they could be useful; an independent review; a parliamentary inquiry; an inquiry of privy counsellors; an investigation with a public hearings element overseen by a judge or QC; an independent review with a public hearings element; or, in a very limited number of cases, an inquiry established under other legislation, such as the Financial Services Act 2012 or the Merchant Shipping Act 1995.
Across government there was consensus that Ministers must retain the option of deciding whether or not to use the Act. It is essential to adopt what is the right approach under all circumstances. It should also be noted—some noble Lords might already be aware of this—that Section 1(1) of the Act gives Ministers discretion to decide whether or not to use the Act. This clearly indicates that Parliament was mindful of the potential of other, non-statutory, approaches.
The House should not lose sight, either, of the fact that there is always the option to convert an inquest or other form of inquiry, investigation or review, into a 2005 Act inquiry in the event that powers under the Act—such as those to compel witnesses—are felt to be required. Very often, witnesses do not need compelling, but recently this has been the case in the investigation into the death of Alexander Litvinenko. On 22 July 2014, the Home Secretary announced that the inquest would be converted into an inquiry—the noble Lord, Lord Soley, referred to this—under the 2005 Act to give the chair the power he needs to consider sensitive material.
On the point about a central inquiries unit and guidance—an important part of the report—I fully understand the concerns behind the committee’s recommendation that a central inquiries unit should be established within central government. Government departments considering establishing an inquiry—as well as potential inquiry chairs and teams, both administrative and legal—will want to be assured that there is resource and experience available to them, rather than having to reinvent the wheel, to use the terminology employed by the committee, with every new inquiry. However, as the Government’s response sets out, we do not accept the need to create a new standing team. The MoJ and Cabinet Office already work closely with departments to provide guidance and assistance at various stages of inquiries, from the point at which Ministers consider whether an inquiry is required, through set-up and on to the final publication of reports, to closing down inquiries and learning lessons.
We absolutely accept that more can be done to improve this service, and to ensure that we learn lessons from inquiries. However, it is essential that any central resource provided for inquiries work is proportionate to the number of inquiries and reflects the need from departments. In this vein, and since the Government’s response last June, the Cabinet Office revisited its approach in this area and identified dedicated resource to build the nature and profile of support available. The Cabinet Office also revisited the draft guidance to departments on establishing an inquiry, taking account of the views of the committee and feedback from departments. This will be a more streamlined document, providing the necessary signposts for those involved in inquiries and ensuring that there is complete clarity around additional sources of information and support.
The guidance will take account of the recommendations made by the noble Lord and his committee, of what has been said in today’s debate and also of the recently published guidance by the Centre for Effective Dispute Resolution—with which I know the noble and learned Lord, Lord Woolf, has been involved—on setting up and running a public inquiry. It will also take account of lessons learnt from inquiries that have completed or are underway, including the recent data loss from the Robert Hamill and Azelle Rodney inquiries. The Cabinet Office official responsible for this area of work instructed me to say that she would be very willing to meet my noble friend Lord Shutt to discuss this ongoing work before it is finalised.
Alongside this, the Cabinet Office is engaging with key officials across Whitehall to ensure that the cross-Whitehall officials group on inquiries operates as effectively as possible. In addition, we are establishing a network of former inquiry secretaries to provide a further repository of expertise and experience. We absolutely accept the committee’s concerns regarding the completion of lessons learnt exercises, and the Cabinet Office will ensure that these are completed with greater consistency than they have been to date, and that the lessons arising are cascaded appropriately and are used to continue to inform guidance to departments.
Like my department’s post-legislative review in 2010, the committee concluded that, generally speaking—and notwithstanding its various recommendations—the 2005 Act continues to work pretty well. However, the committee also agreed that there is a need to improve the rules. The committee recommended four amendments to the rules, of which the Government accepted three. Unfortunately, we have been unable to make these amendments in the current parliamentary Session. However, work is in hand to progress these changes at the earliest opportunity under the new Parliament. The changes are in no way controversial.
I now come to what is much more controversial: the question why Her Majesty’s Government rejected the committee’s recommendation that Rules 13 to 15 on warning letters should be revoked and substituted with a rule giving chairs greater discretion. Of course, on warning letters, a 2005 Act inquiry cannot apportion civil or criminal liability—although I note the observation of the noble and learned Lord, Lord Woolf, that more use might be made of the findings of inquiries in civil proceedings. The warning letter provides a mechanism to inform someone of the fact that they have been or may be criticised during the course of the inquiry. Rule 13 contains a discretion to send warning letters. The warning letter also provides that individual or body with the opportunity to respond to the inquiry chairman and provide any additional information. To that extent, warning letters can—as acknowledged in the debate—assist in the effectiveness of inquiries by encouraging engagement and allowing the inquiry to consider any response from that individual before reporting.
The next paragraph I will share with the House reflects the letter to my noble friend Lady Buscombe but contains a further comment. Her Majesty’s Government consider that Rule 13 strikes the right balance, affording individuals the opportunity to take legal advice and, if necessary, to respond to criticism. A departure from the current approach could lead to a loss of that opportunity with a corresponding impact on the involvement of witnesses.
During the course of this very helpful debate, there have been useful observations from the noble and learned Lords, Lord Woolf, Lord Cullen and Lord Morris, and the noble Lord, Lord Pannick. In the helpful comments of the noble and learned Lord, Lord Brown of Eaton-under-Heywood, he provided the useful quotation from Sir Richard Scott—as he then was—stressing the need for flexibility and how so often this process has got out of hand. I can tell the House, notwithstanding the official response, that the Government—although considering, on the face of it, that there should be sufficient discretion for chairmen to avoid some of the undesirable features of the Salmonisation or Maxwellisation process so helpfully identified in this debate—are none the less much impressed by the strength of the argument today and consider that it may well be necessary to reconsider these particular rules to give greater clarity to chairmen so as to avoid some of those undesirable features. The House will realise that I cannot go further than that but I hope that that will provide some comfort to those who participated in the debate.
I assure the noble Lord, Lord Shutt, and his colleagues that, since the Government published their response, the Ministry of Justice and the Cabinet Office have worked closely together, and will continue to do so, to make sure that the committee’s recommendations are implemented. As I said, work has progressed on the support provided to those considering establishing an inquiry. The Cabinet Office is currently working with departments to ensure that this guidance reflects their needs, and will of course take account of all that has been said.
I was asked to deal specifically with a number of matters. I will do so very briefly given the time that has already elapsed in my response—although I was asked by my noble friend Lord King to give a full response, and I am endeavouring to do so.
The noble Lord, Lord Trefgarne, was concerned about the need for representation. Of course, he will be aware that it is provided for by Section 40 of the Act that the chair can award reasonable costs, but he was right to draw attention to the fact that he departed somewhat from the rest of the committee given his particular experience, having been before the Scott inquiry.
The noble and learned Lord, Lord Cullen, referred to the appointment of counsel. He will be aware that the cost of legal teams is one of the biggest cost drivers in inquiries, so it is right, in the Government’s view, that—important though the role of counsel is, for the reasons that he gave——Ministers should protect the power to be involved in the appointment of counsel. In the Government’s view, that should not be for the chairman alone, although one imagines that the chairman often has considerable influence in the identification of appropriate counsel.
My noble friend Lord Trimble referred to the question of inquests—whether there were inquests rather than inquiries, in a reference to Article 2 of the European convention. There is a slight difference. Of course, there has to be an inquest as a matter of law in certain circumstances but there is always discretion whether to call an inquiry. As he will know, all inquests have to comply with Article 2. I understand that the inquest system in Northern Ireland is somewhat different, and inquests there have been held by the ECHR not to comply with Article 2 of the European convention. He also referred to the on-the-runs inquiry. He said that that was a private inquiry. I am instructed that in fact it was not private, but was an independent review under the chairmanship of Lady Justice Hallett. No public evidence sessions were held, given the nature of the issues—of which my noble friend will be well aware—but a full report was published on 17 July 2014.
In conclusion, I hope that the House will be assured from my remarks today that the committee’s recommendations were well received and that work is progressing—perhaps not at the pace that the committee would like but at a pace that is realistic given the many other pressures, especially now as we approach the end of the Parliament.
The noble Lords, Lord Soley and Lord Richard, and the noble Baroness, Lady Stern, all rightly emphasised the importance that public inquiries exercise in the public mind as a reassurance when, sometimes, confidence in politicians is not quite what it might be. The noble Baronesses, Lady Stern and Lady O’Loan, emphasised the absolute need for the paramountcy of independence where inquiries are concerned. I entirely agree.
I think that the noble Lord, Lord Shutt, and his committee colleagues have accepted that given the nature of public inquiries there needs to be a degree of flexibility. One size plainly will not fit all. As we know, every time that an issue arises, there is a call for an inquiry. Consideration must be given to the most suitable approach that will deliver the answers and limit the possibility of the event happening again, but in a cost-efficient and timely manner.
The report, and this debate, have been an extremely valuable contribution to what is and will remain a very important topic. I thank all who have taken part very much.
Lord Shutt of Greetland
My Lords, before the noble Lord sits down, can he confirm whether we are to cull from Hansard some of the important things that he has had to say, or whether there will be what we might call a supplementary government response to the report?
Lord Faulks
I will not to commit to a supplementary government response, but I will look through Hansard to see whether there are any particular matters that I did not deal with in the course of the debate.
Lord Shutt of Greetland
My Lords, I thank the noble Lord, Lord Faulks, for his response. He said that the Government had welcomed our report, and perhaps they have, although it did not seem like it at the time. I am delighted that he said today that in looking at inquiries under the Act, the Act will always be considered: it is on the agenda of the Minister bringing in an inquiry. Secondly, whether it is a central inquiries unit or a discrete department of the Cabinet Office, it sounds to me as though we are going down the right track. That is also helpful.
We will see what happens. There will be a Ministry of Justice Bill at some point in a subsequent Parliament. Amendments may well arise in connection with such a Bill. I thank the Minister for his work during this period in government.
I also thank everyone who has taken part in this debate and I am grateful for the very kind remarks that have been made. It is quite splendid that 10 of the 12 members of the committee have spoken today. That says to me that there has been a real weight of support for what we did and the recommendations that we made. We will read Hansard to take in the debate further, and there may be supplementary information, but as for the inquiry rules in connection with warning letters, not only did the committee hear witnesses and take a view, that has been enhanced by the debate today. It has been further embraced by serious, solid, senior lawyers—amazingly to me—that there can be a real saving in time and money. I should have thought that that was something to be grabbed by government. I hope that what the Minister said will be embraced in a supplementary report or is dealt with later. I thank everyone for taking part today.
European Public Prosecutor’s Office (EUC Report)
(9 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Corston
That this House takes note of the report of the European Union Committee on the impact of the European Public Prosecutor’s Office on the United Kingdom (4th Report, HL Paper 53).
Baroness Corston (Lab)
My Lords, it was my pleasure to serve as both a member and the chair of the Sub-Committee on Justice, Institutions and Consumer Protection. At the outset I thank my colleagues who served as members of that committee, who all brought extraordinary expertise and diligence to their work, and pay tribute to our staff. We were very fortunate in the clerks who served when I was on the committee and in our legal advisers, who were second to none. Having served for 13 years as a Member of another place, I think I can say without contradiction that the scrutiny role of the House of Lords in its European work is second to none and is recognised as such throughout the European Union.
On 17 July 2013, the European Commission published its long-awaited proposal for a European public prosecutor’s office. It is subject to the UK’s opt-in protocol, but the coalition agreement had already ruled out participation by the United Kingdom. I interject a personal note here. It seems to me to be quite a discourtesy in parliamentary terms to start a consultation process on 17 July in any year as Parliament has either risen for the Summer Recess or is about to do so. In order for us to do our scrutiny work properly, not only did it involve holiday time for staff, it meant that the committee had to come back when the House was not sitting to be able to fulfil its role. I hope that the European Commission will not persist with that kind of timetable in future.
Under the Commission’s proposal, the prosecutor would be made,
“responsible for investigating, prosecuting and bringing to judgment … the perpetrators of … offences against the Union’s financial interest”,
and would be empowered to,
“exercise the functions of prosecutor in the competent courts of the Member States”.
This organisation was going to be responsible for all fraud in the European Union. At its meeting on 11 September 2013, the Sub-Committee on Justice, Institutions and Consumer Protection, which at the time I chaired, considered the Commission’s proposal for the first time and decided to issue a reasoned opinion, challenging it on the grounds of subsidiarity. In October of the same year, this House approved the sub-committee’s proposed reasoned opinion and because the number of reasoned opinions submitted by the national parliaments reached the “yellow card” threshold, the Commission was obliged to review the proposal. It is important to point out that this was only the second time that sufficient national parliaments had ever forced the Commission to undertake such a review.
We were consequently very disappointed when shortly thereafter, in November, following its review, the Commission produced a communication in which it decided to maintain its proposed European prosecutor as originally brought forward. There was not much in the way of a reasoned argument. Following this news, in January 2014, the sub-committee agreed to launch an inquiry into the ramifications of the proposed European public prosecutor’s office for non-participating states such as the United Kingdom—but of course, the United Kingdom is not the only one. While we had our doubts about the proposal, we were also very concerned about the impact it would have on the non-participating member states, of which the UK is one, and on the ongoing relationship with the European Union’s current anti-fraud body, OLAF, and Eurojust.
We began taking evidence in March 2014. We heard from leading academics in the field, representatives of the legal profession, the current president of Eurojust and one former holder of that position, and the current director-general of OLAF. The sessions concluded with evidence from the Home Secretary. We are grateful to all those who submitted evidence to our inquiry. Unfortunately, the committee’s planned timetable was somewhat frustrated in that while the evidence sessions were well under way, following the member states’ initial discussion of the Commission’s proposal, the then Greek presidency of the Council brought forward an alternative prosecutor’s proposal, addressing some of the member states’ key concerns. The Government submitted an Explanatory Memorandum on this alternative text in June 2014.
We took the decision to postpone publication to allow all those who gave evidence to the inquiry an opportunity to consider the rival text. The committee’s subsequent report was published on 3 November 2014. My committee found a number of very significant problems with the Commission’s proposal. We were worried about the principle that the prosecutor would be responsible for investigating and prosecuting all EU fraud crimes, to the exclusion of the national bodies responsible—what is referred to in the jargon as exclusive competence. This in turn would run the risk of the prosecutor being overwhelmed from birth by an excessive workload. We also expressed doubts about the proposed centralised structure.
Unfortunately, we did not see the presidency’s text as a panacea. The committee found that the rival text raised more questions than answers. There was a lack of clarity about sharing competence for these crimes between the member states and the relevant national authorities. We also thought that the attempt to mimic Eurojust’s collegiate structure was overly complicated. As for the position of the non-participating member states, neither of the texts considered during the inquiry addressed their position at all. However, the report warned that the proposed European prosecutor could seriously undermine the UK’s relationship with the European Union’s current anti-fraud body, OLAF, and with Eurojust.
Unsurprisingly, given their long-standing opposition to the European public prosecutor’s office, the Government shared many of the committee’s concerns. There is a great deal of common ground between the committee and the Government and, as we know, that is not always the case.
Lord Spicer (Con)
I do not quite see why the committee was so surprised that it was all or nothing. As it is all going to be conducted under a different form of law from ours, it has to be, in the interests of fairness, all or nothing, does it not?
Baroness Corston
The main problem, as we saw it, was not only that the prosecutor would be completely overwhelmed but that no consideration at all was given to countries that, from the outset, would not play any part. I think that formed the basis of both our concern and the concern of the Government.
Given that there was a great deal of common ground between the Government and the committee, the Government agreed with nearly all our conclusions and recommendations. The only point of disagreement relates to the Home Secretary’s suggestion during her evidence that the United Kingdom might not be legally obliged to respond to requests for assistance from the European public prosecutor’s office. Given her doubts, the committee called for an urgent consultation by the Home Office on this matter. Sadly, our call was rejected by the Government. They cited as a reason the current lack of clarity over the prosecutor’s potential role. I accept, of course, that a lack of clarity pervades any discussion of the proposed public prosecutor’s office—indeed, this theme runs throughout the report—but I would suggest that the issue of co-operation between the European public prosecutor in whatever form and the relevant UK authorities—for example, in relation to European arrest warrants—is not going to go away.
Witnesses to the inquiry were quite clear that any weakness or failure by the UK authorities to co-operate with the European public prosecutor in this regard risked the UK being seen as a safe-haven for those suspected of committing offences against the European Union’s financial interests and for illegally obtained EU funds. The members of my former committee would not want to see the UK become, as one witness warned, the Costa del Sol of the 1980s for those who perpetrate criminal frauds against the European Union’s finances.
I again thank those who contributed to the inquiry and my former colleagues on the sub-committee, whose company I very much appreciated. No doubt we all agree that it is essential that the European Union and the UK consider the full implications of the establishment of the European public prosecutor, not only for those states that will not participate but for bringing to justice those people who commit fraud against the interests of the European Union. I beg to move.
Lord Hope of Craighead (CB)
My Lords, I congratulate the noble Baroness, Lady Corston, and her committee on the work they have done and on their very timely report on this rather troublesome issue. For the most part, I welcome the response by the Home Office to the report. I particularly welcome the Government’s decision not to opt in to the Commission’s proposal to establish a European public prosecutor’s office. I am delighted that the committee has taken the opportunity in paragraph 6 of its report to endorse that proposal.
I last worked on Sub-Committee E about 15 years ago. At that time, the splendidly named OLAF had only just been born and Eurojust was still in the course of being conceived. It was being talked about, but had not yet come into existence. Now that they have grown up, as it were, it is a real pleasure for me to cast an eye over them to see how they are getting on. As it happened, last October I attended a seminar in Florence, at which one of the delegates was from Eurojust. We enjoyed a conversation over dinner, at which she spoke with real enthusiasm about the contacts which she had in the course of her work with prosecutors in the United Kingdom. As I spent some time when I was at the Bar as a prosecutor in Scotland, I was particularly interested in what she had to say about her contacts with the Lord Advocate’s department. Here, too, she was enthusiastic about her contacts with that department and the practical value which she saw in those contacts.
Your Lordships would get much the same message if they were to read the written evidence which the committee received in March last year from Frank Mulholland QC, the Lord Advocate, to which brief reference is made in paragraph 37 of the report. He tells us that the serious and organised crime division in his department, which has an international co-operation unit, participates fully in the work of Eurojust and OLAF. That unit liaises regularly with colleagues abroad in relation to investigations and prosecutions in Scotland, as well as providing assistance to colleagues from other jurisdictions in their own investigations. He tells us that it has successfully used the assistance of Eurojust in a number of serious and high-profile cases, especially those, as in the case of VAT fraud, which are especially complicated.
The Lord Advocate describes the work that Eurojust does in the co-ordination of investigations of the different member states when dealing with cross-border crime as “extremely valuable”. He says that his department also has experience of working with OLAF and that it too carries out much valuable work, although it is fair to say that he adds that difficulties have sometimes arisen because OLAF was not engaged at a sufficiently early stage of an investigation to meet the procedural requirements of Scots law.
If I have any criticism of the report, it is the tiny point that it did not make a little more use of the Lord Advocate’s criticism. As I have said, it gets only one very brief mention in two sentences in paragraph 37. The essence of that evidence is accurately summarised in these two sentences, but it might have been helpful if some more references had been given to his evidence in the later passages dealing particularly with OLAF and Eurojust. Of course, it is possible to trace the evidence online with the assistance of the reference in footnote 98. I am particularly grateful to our Librarian for being able to do this for me. I encourage the Minister and his team to do just that, and to read what the Lord Advocate has to say. That is because one does get from it some valuable insight from someone who as a prosecutor is really in touch with what is going on on the ground.
May I mention briefly some of the points the Lord Advocate makes because I think that they add force to the points made in conclusions and recommendations 6, 7, 8 and 9, with all of which I respectfully agree? The first point is that his department does not see the need for the creation of the EPPO. It is perhaps a bit late in the day to make that point, but it does underline the good sense of the decision not to opt in to the proposal, and the reasons why he makes it are worth stressing. He says:
“There are many challenges to overcome where criminal jurisdiction is potentially viable in different Member States and the diverse rules of evidence within Europe bring their own barriers. Whilst it is recognised that organised crime is not necessarily related to a specific Member State and that the fight against crime needs to be addressed Europe wide, without an evidence based assessment relating to why existing measures and national procedures and practices are not sufficient it is difficult to come to the conclusion that a European Public Prosecutor’s Office would be able to prosecute cases more effectively than individual Member States”.
It is worth stressing the different evidential rules which arise from state to state. The complications for a central office trying to deal with that are fairly obvious. He also makes the point that,
“there is scope for further improvements to be made in the investigation and prosecution of frauds against EU interests through better use of Eurojust and OLAF and by improving working practices between Member States and those organisations”.
He believes, and one can see the force of this, that:
“It is logical that Member States use the current structures available to their full extent before consideration is given to establishing a new body with such far reaching powers”.
As for the impact that the creation of an EPPO would have on a non-participant member state, the Lord Advocate makes the point several times that there is a lack of sufficiently robust evidence to demonstrate that such an office is required. This reinforces the point made in conclusion 6 that the Commission has failed to address the EPPO’s impact on OLAF and the knock-on effect for non-participating member states. As the Lord Advocate sees it, there is a lack of information which makes these effects difficult to assess. He sees real difficulties, whichever model is adopted, whether it is exclusive competence to the EPPO in matters affecting the EU’s budget or a competence that is shared with member states. Either way, conflicts of competence or jurisdiction will arise, which would be a recipe for confusion and delay and would play into the hands of offenders and their defence teams. As the Lord Advocate puts it, a system that gives exclusive competence in some cases and a shared competence in others would result in confusion as to who is dealing with which offence, which would be highly undesirable.
As for the effect on Eurojust and OLAF, here too there is a lack of sufficient information. That is why the assurances referred to in recommendations 6 to 9 are so necessary. There is real cause for concern. This would not be so if the functions of Eurojust were to remain as they are, as Scottish prosecutors would still have the access they enjoy at present, but that is not what seems likely to happen if the proposal goes ahead.
I warmly support what the report says in these recommendations. It is important that the Government take an active role in the development of the proposal. I hope that they will draw strength and guidance from the points made by the Lord Advocate, to which I have referred. I stress that they are not motivated in the least by any kind of Euroscepticism on his part. On the contrary, he is all in favour of inter-state co-operation. He has seen on the ground the benefits that that can bring in combating fraud conducted across borders. The points are essentially practical ones made by someone who really does know what he is talking about,
Baroness O'Loan (CB)
My Lords, I speak in this debate as a member of European Union Sub-Committee E, which was so ably chaired by the noble Baroness, Lady Corston. This report deals with a subject which has much exercised the committee over the past years as the heart of it goes to how the European Union and the member states thereof seek to control crime, and particularly fraud affecting the EU.
There can be little doubt that co-operation between member states and European institutions and agencies in the fields of justice and home affairs has resulted in significant achievements in the battle against crime. Eurojust, Europol and OLAF—the European anti-fraud office—have all played their role in fighting crime. While there are deficiencies which have been identified, there can be no doubt that co-operation in the processes of investigation et cetera has facilitated effective action. The sub-committee was aware that there is a problem of hitherto unquantified fraud on the EU’s finances and it published a report on this matter.
European Union law obliges both the European Commission and member states to combat fraud on the EU’s finances, but the onus to protect the EU’s financial interests falls mainly on individual member states because they are currently responsible for administering 80% of EU funds. We found that the EU’s anti-fraud system has a number of weaknesses. The Commission cites a figure of fraud worth €404 million per annum, but we felt it offered only a glimpse of the level of fraud perpetrated against the EU’s budget. Based on the evidence we received, we felt that the actual figure is around £5 billion but may be even more. There clearly is a problem and the proposal for the EPPO is one of the initiatives intended to address this issue, but it does not really address the problem. Rather, we found that it had the capacity to create major problems both within participating member states—as the noble Baroness, Lady Corston, said, the UK would not be one at present because we would exercise our right not to participate—but also in other member states because of the capacity of the proposals to interfere with the working of the two institutions which have been really useful in the fight against crime against the EU’s financial interests: Eurojust and OLAF.
An EU body to investigate and prosecute crimes against the EU’s financial interests was provided for in Article 86 of the treaty on the functioning of the EU, which says that any EPPO would be responsible for investigating and prosecuting and bringing to judgment the perpetrators against the EU’s financial interests and that it would be empowered to exercise the functions of prosecutor in competent courts of the member states. The noble Baroness, Lady Corston, has articulated what happened when that proposal came before the sub-committee. We published a report in October 2013 which suggested that the House challenge the EPPO proposal on the very considerable grounds of subsidiarity. The House approved that opinion, and 14 other legislatures reached similar views, causing the EU Commission to review its proposal. However, it was a cursory review, and in December 2013 the Commission indicated that it would proceed with its proposal. We therefore undertook the second stage of the inquiry.
We found many problems with the current proposal for the EPPO, and many potential difficulties for the United Kingdom in the proposed arrangements and the possible UK response to them. First, the potential workload of the EPPO would be absolutely overwhelming, given the range of crimes against the EU’s financial interests. Witness after witness gave evidence to that effect, and even the Home Secretary was clear that it was impossible for anybody to give the correct figure for such crime—a view shared by the British former president of Eurojust, Mike Kennedy. The UK could not legally respond to EPPO requests for assistance, giving rise to the risk that the UK would—as the noble Baroness, Lady Corston, said—become a safe haven for illegally obtained EU funds; there would be problems for non-participating states in that the proposal might affect the capacity of Eurojust to support all member states; the proposals for shared competence between the EPPO and the member states are unclear to the extent that they may be unworkable; robust and capable monitoring of investigations and supporting fast and efficient decision-making would not be possible; and there is no clarity as to the impact of the existence of the EPPO on OLAF.
At a time when the activities and costs of the EU are under significant scrutiny, when organised crime is becoming even more effective despite the massive resources poured into the attempts to control it, and when there is deep scepticism in some quarters about the benefits of EU membership—scepticism which I do not share—the committee has called on the Government to take effective action to ensure that the UK’s interests and indeed the interests of its colleagues of the European Union are not compromised, that very clear steps are taken both here and in the Union to ensure that before any EPPO is established there are very clear rules about how its shared competence will operate, and to provide for the situation in which we do not participate but must be protected against the adverse consequences which may result. In addition, the need to protect OLAF and the assistance currently received by the UK from OLAF and Eurojust is vital.
I therefore commend the recommendations of this report to Government for implementation. I welcome their response to the report, but urge them to accept all the recommendations, notwithstanding the lack of clarity about the proposal for the EPPO’s role and operation.
Lord Pearson of Rannoch (UKIP)
My Lords, I cannot resist speaking briefly in the gap, because I think this is the first time in 25 years that I am able to congratulate an EU Select Committee on one of its reports, and indeed the Government on their reply.
I also take the opportunity to apologise for scratching last Wednesday 11 March from our debate on the competences review, or balance of power between Brussels and our Government. A long-standing family engagement meant that I could not have stayed to the end—not that I would have asked the Minister, the noble Lord, Lord Wallace, any questions. I would just have explained why the whole exercise is pretty much a waste of time that will do little to curb the appetite of the corrupt octopus in Brussels.
I will, however, take this opportunity to say that I am disappointed that the Minister, the noble Lord, Lord Wallace, took the opportunity—at col.748—to criticise me and my views on the European Union in my absence. The richest bit of this criticism was perhaps that the noble Lord opined that Euroscepticism in this country is a belief, a faith, a prejudice. Yet it is surely our Europhiles who demonstrate a disease-like blind faith in the project of European integration, which is failing before our eyes, causing great misery across the continent, and which will continue to do so until it eventually collapses.
This report and the Government are rightly critical of the Commission’s stubbornness in continuing with its plans for a European public prosecutor. I therefore thought that it might be helpful if I put the powers of the unelected Commission on the record, perhaps for the first time, so that people can see what our powerless national Government are up against.
First, the Commission enjoys the monopoly to propose in secret all EU legislation, and thus a large proportion of our national law.
Secondly, its proposals go for still-secret discussion in COREPER—the Committee of Permanent Representatives, sometimes described as EU ambassadors—where the bureaucrats from the member states negotiate their national interest, the members of the Commission having sworn allegiance to the EU and not to support any partial national interest. I have never understood how our privy counsellors square their oath of allegiance to Her Majesty with that one. That is their problem, I suppose.
Thirdly, when the proposals emerge from COREPER as pretty much a done deal, they go for ratification to the Council of Ministers from the member states, in still largely clandestine discussion, and to the European Parliament, with its powers of co-decision.
Fourthly, our Parliament can scrutinise the emerging legislation but cannot change it. Indeed, it has never done so, as we see with this proposed public prosecutor.
Fifthly, the Commission then becomes the sole enforcer of all EU law and can impose massive fines for transgression, subject only to the Europhile Luxembourg court.
Sixthly, the Commission manages the EU budget so badly that the EU’s accounts have not been signed off by its internal auditors—there being no external auditor— for the last 19 years. If a public company was in a similar position, its directors would have been in jail many years ago.
Seventhly, the Commission negotiates all our foreign trade arrangements, again badly. Singapore has had free trade agreements with India, China, Japan and the United States for 10 years, but we have none because the Commission is in charge on behalf of all the member states.
I cannot help feeling that if the British people understood the full extent of the unelected Commission’s powers, which I have set out above, and how powerless their Parliament has become in this and other matters, their dislike of our EU membership would increase even further.
I have only one question for the Minister: what happens if the Commission decides to plough on with this proposal?
Baroness Smith of Basildon (Lab)
My Lords, to return to the committee report, I thank my noble friend Lady Corston and her committee. I was also grateful for her introduction to the debate. She was extremely helpful in her narrative about the twists and turns, and the ongoing debate on this issue. It was of benefit to the House to hear about the frustrations that her committee had in dealing with some of these issues.
Other noble Lords who took part in our previous debate on this issue on 28 October 2013 will recall that the report that we then discussed and the scrutiny that the committee had provided were invaluable in the understanding and analysis of what a European public prosecutor’s office could do and was intended to do. That position remains the same. I thank my noble friend and her colleagues on the committee, including the noble Baroness, Lady O’Loan, for providing what for me, having not considered this in great detail before, is a clear and detailed report.
There are important issues, but although the premise may be very straightforward, there are complexities and differences of opinion on how they can best be tackled, which cannot be lightly dismissed or ignored because they are genuine and justified concerns. As my noble friend Lady Corston pointed out, it is not a new proposal. The idea had been discussed even before the Commission’s proposals in the 2001 Green Paper, particularly in discussions on the Nice treaty. At that time, an outline proposal was debated but then abandoned though lack of support. Concerns were expressed and discussed then. They are still being discussed and concerns remain, which have not been addressed, about the relationship between an EPPO, Eurojust and OLAF, the European Anti-Fraud Office. The European Scrutiny Committee in the other place reported that a body such as the EPPO was,
“unnecessary, particularly given the existence of Eurojust”.
Our committee took evidence from experts of exactly the same view.
It is not the first time that this has been raised and it is not the first time that it has been debated in your Lordships’ House; it is the second report of the EU Committee. However, despite the criticisms of the proposed mechanism, the issues that the proposal seeks to address are very serious. That is why the deficiencies in the proposals are so disappointing and so serious. This is not an issue that has been plucked out of thin air; it seeks to address a very genuine and serious problem. The level of fraud against the EU budget must be taken extremely seriously and action has to be taken to address it. When we last discussed the issue, the Commission estimated the level of fraud at around €5 million in each of the previous five years. That is money taken from British taxpayers. Not only do we need to take action against those responsible and bring them to justice, it is very clear that far more preventive work and action must be undertaken.
The ongoing debate is not on whether we should tackle fraud, or assess whether we are tackling it or how best to tackle it, but on whether the proposal that has been put forward for the European Public Prosecutor’s Office is the best way to deal with the problem and to bring those responsible to justice. As this report highlights and analyses, there is also the question of whether the Commission recognises the concerns that have been raised and why they were not addressed in the revised proposals. As we said, the proposals previously presented clearly breached the subsidiarity principle, and the national level approach supported by existing EU mechanisms was far more appropriate.
It was therefore unfortunate and unhelpful that, as the report makes clear, despite the response of a number of national parliaments expressing their concerns and despite the Commission being forced to review the proposals in December 2013, the Commission decided not to make any amendments but to continue with the proposal as originally intended. The noble Baroness, Lady O’Loan, referred to it as a cursory review; I think that that is a correct assessment. As a result, 14 reasoned opinions were issued by national parliaments, which clearly makes the case that there are widespread concerns across the EU—we are not the only country with such concerns and reservations. Then we had the position where, seeking compromise, the Greek presidency issued an alternative text—but that is not supported by the Commission.
So where are we now? The conclusions and recommendations of the EU Committee are not based, as we have seen so often with debates on EU legislation, on whether the committee is pro-European Union or anti-European Union. I mention that because it sometimes characterises debates. We heard earlier from the noble Lord, Lord Pearson—and whether someone is pro-EU or anti-EU can colour their judgment on anything brought forward. When we had that farce of the opt out, opt in again debates on policing and criminal justice measures, it was very clear that the Government’s position was highly political, rather than a pragmatic, principled position in the interests of tackling crime across the European Union.
I have to return to this—I know that the Minister will groan with frustration as I do—but I have never, ever had an answer from the Government to my question about the practical impact or the operational value of those EU crime and policing measures that the Government have opted out of. I suspect that their answer is that there is very little: surely no Government want to get rid of EU-wide measures that are effective in tackling crime. Either the measures that the UK has opted out of had a practical and operational effect, or it was just a political stunt. I suspect that it was the latter.
That is where the committee’s report is so useful, both for your Lordships’ consideration in this debate and for wider consideration. I hope that the Minister recognises that it is also helpful to the Government. I saw the Government’s response rather late in the day in an undated letter to the noble Lord, Lord Boswell. I do not know when the letter was sent; I was able to get a copy only today. I certainly would have appreciated a copy of that letter much sooner for today’s debate than collecting it from the Printed Paper Office earlier.
I come back to the central point about this report: it is factual, well informed and principled. I think that the frustration of the committee in looking at these issues comes across very loud and clear. On this occasion, it is frustration—I have to say—not with the UK Government but with what appears to be, and I put it politely, some intransigence on the part of the Commission. All of us need to understand how serious the issue of EU fraud and financial crime is. Being critical of the proposals put forward in no way detracts from our wish to tackle these issues or from our understanding of how serious it is. The proposals and recommendations of the committee seek, first, to address some of the problems that have arisen from the Commission’s proposals, and, secondly, to suggest how the UK could take a lead and play a key role in seeking to ensure that those issues are addressed.
It should also be recognised that the political landscape has changed—as my noble friend Lady Corston observed—in the way that these matters are considered. Any new proposal such as this would now be subject to a referendum and legislation if its adoption by the UK were to be recommended—although that is not currently the case and it seems unlikely that it will be so. What is so disappointing is that the Commission’s position does not appear to have changed and it does not appear to be designed to try to gain as much support as possible for an EU-wide body or EU-wide co-operation around the core principles and actions of tackling crime. Had the Commission wanted to garner greater support, and if it was serious about ensuring that this was workable and that other nations would sign up to it, it would have amended the proposals and had more discussions. That frustration comes through in the report. There is no doubt that tackling any cross-border crime, including—or perhaps especially—EU fraud, benefits from EU-wide co-operation.
The objections outlined in this report cannot be lightly dismissed and I was pleased to read the Government’s response. The objections deserve far greater consideration by the Commission. On the issues that were highlighted—exclusive competence and workload—evidence was given to the committee that a new body such as the EPPO would collapse under the weight of the work it was provided with. The impact on Eurojust and OLAF is important, not just in principle, but in pragmatic, operational terms: how a new body such as the EPPO could possibly be effective in practice. It seems that all those who gave evidence for the report said that the complications of such a body would make it even more difficult to prosecute than it would be without the body: first, because it would collapse under the weight of the work, and, secondly, because of its relationship with the other bodies.
It is worrying—as the report and the Home Secretary’s evidence highlighted—that the lack of attention to the impact on non-participating member states creates an unacceptable level of risk that has to be addressed. When this proposal was first discussed, it was on the basis that all member states would sign up to it; that is clearly not the case, so the issue about those member states that do not sign up to it has to be properly considered. We had a similar debate on the National Crime Agency not applying to Northern Ireland, and we see it in this debate on a far wider scale; it is clear that they have not properly looked at this issue. My noble friend Lady Corston warned that the UK could be placed at risk by being, in effect, a safe haven for illegally obtained EU funds. That is why this issue has to be considered.
I do not want to repeat the detail of the report. It is an excellent report, and it does this House a great service to be able to consider such reports. The committee’s recommendations are useful and seek to find some way forward. The Government’s response—in the time that I have had to look at it—is positive, but this is a debate that will continue for weeks, months and, I suspect, possibly for years. We often say that a committee’s report is a valuable contribution to a debate, but in this case it goes far wider than that. This report is essential reading for any Government who have to deal with this matter. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, I join others in paying tribute to the work of the wider EU committees under the chairmanship of the noble Lord, Lord Boswell, and, specifically in this context, to the work of the Sub-Committee on Justice, Institutions and Consumer Protection under the chairmanship of the noble Baroness, Lady Corston.
The report is very thorough and comprehensive, and the body of evidence that it drew upon in arriving at its conclusions was substantial. Anyone who has had anything to do with EU institutions will recognise the high regard that is held throughout the European Union member states for the work of this House in carrying out scrutiny of proposals. It is therefore doubly disappointing that the concerns, which were clearly expressed in the reasoned opinion, were not taken more seriously. The yellow card system could perhaps have worked a little better in that regard. However, the Government have very much welcomed the report. The Home Secretary gave evidence to it, and we have responded to the committee and to its specific recommendations. I now want to cover some of the principal points raised during the debate.
The Government have consistently made it clear that we will not participate in an EPPO, and we have assurances from the Commission and all member states that our non-participation will be respected. We continue to take an active role in negotiations to ensure that it is, and those negotiations are ongoing. I was amazed to see that the idea of an EPPO had its genesis back in 2000 or 2001, so it has been going on for some 14 years. I do not understand why, in the words of the noble and learned Lord, Lord Hope, people are not looking at the existing structure and making what we have work better rather than seeking to develop something that is new, untried and untested. That logic escapes the Government, as it has escaped the committee.
The negotiations are contentious and extremely fluid. The focus to date has been on Chapters I to V of the proposal. Participating member states regard these as internal business matters that concern only them. In their view, it is too early to have discussions about impacts on non-participating member states. The Latvian presidency is aiming to reach a partial general approach at the June Justice and Home Affairs Council, which it hopes will firm up the basic structure of the EPPO. Yet member states still have divergent positions on many of these issues.
There are other factors in play, many of which have been mentioned today. Under negotiation are separate EU measures, such as the directive in the fight against fraud to the Union’s financial interests by means of criminal law, known as the PIF directive, as well as the Eurojust regulation. The PIF directive in particular will affect how an EPPO would deal with cases on a day-to-day basis. It is therefore extremely difficult for us to know what effect an EPPO will have on existing EU co-operation mechanisms and systems. It is also still too early for the presidency and other member states to consider how an EPPO will impact on the UK. We totally accept that, as stated by the noble Baroness, Lady O’Loan, there will be very serious implications for the UK, including Scotland, and these will need to be addressed and assessed. However, there will be a continuing need to engage closely in the negotiations, and where we deem that so-called internal issues directly affect the UK we will continue to strongly raise our concerns. We also continue to make it clear that we want to strengthen the existing—
Lord Spicer (Con)
The Minister says that there could be serious effects on the UK. Is one of those effects that we could have to go across to a different form of law?
Lord Bates
I do not think that is the particular effect that I was thinking about in this context. Clearly we have a system that works to a degree at the moment with Eurojust and OLAF as the two bodies that then refer back, in our case, to the Serious Fraud Office and the newly established National Crime Agency, which is doing very good work in tackling fraud of this nature. They are then prosecuted through a court in the UK. It is more that operational level which the Government are thinking about at this time.
Lord Hope of Craighead
I am grateful to the Minister for allowing me to intervene. The point that really gives rise to concerns for the Lord Advocate is confusion about competence and jurisdiction. At the moment we have complete clarity as to which body is entitled to prosecute in our courts. They have a complete understanding, rights of audience, and so on. Introducing this outside body would give rise to differentials and demarcations. That in itself would give rise to disputes and we would have a sort of preliminary session as to whether one body or the other should prosecute, which gives rise to delay. So it is not really a matter of resources so much as a matter of confusion, which is why the call for further detail is really so important and why I still support the line that the Government are taking.
Lord Bates
That very clearly makes the point that we are talking about, and perhaps explains why it has been impossible to find a way forward so far. I would also mention some of the challenges, which may be insurmountable, in trying to progress down this model. The Government are absolutely committed carefully to watching the negotiations and ensuring that our interests are defended.
The noble and learned Lord also asked about shared competence. Ideally member states would retain competence. It is the only way in which they could contain the elements of the Commission’s proposal that they favour. An independent prosecutor would investigate cases inside member states free of bribery and corruption. We believe that that would be the only way in which the EPPO would add any value to the fight against EU fraud. The UK would prefer the EPPO to have as little competence as possible.
In response to a number of questions raised particularly by the noble Baroness, Lady Corston, in her introduction, it is worth putting on the record and restating the fact that the UK Government are absolutely committed to the fight against fraud. We certainly cannot envisage any circumstances in which it would be tolerated that the UK could become a safe haven for fraud. We are expressing confidence in our own legal systems and existing cross-border co-operation to ensure that that does not become the case.
Lord Pearson of Rannoch
While he is on that subject, can the Minister give noble Lords any estimate of the annual amount of EU fraud across the European Union? Do we have a modern figure for that?
Lord Bates
A figure has been mentioned. I am trying to put my hand on it. I wonder whether the noble Lord would accept the Commission’s estimate of the level of fraud. Those of us who are participating in this debate are still trying to recover and see whether we are on the right track when praised by the noble Lord, Lord Pearson, on European matters. It slightly shook our confidence, but we are recovering from that, and I think we are all on the same page here.
The Commission’s estimate of the level of fraud in July 2013 in the impact assessment put EU fraud at not detectable, and therefore unknown, at around £2.55 billion a year. I am reading out this figure and am aware that it is slightly contradictory to say, “not detectable, and therefore unknown”, when the estimate is around £2.55 billion a year. But that is the Commission’s estimate.
Baroness Corston
Can I point out to the Minister that evidence given to the EU Justice, Institutions and Consumer Protection Sub-Committee before this inquiry was that the dimension of fraud against the European Union budget was probably about €5 billion a year?
Lord Bates
Yes. They are extraordinarily large and very worrying sums of money, and this Government remain absolutely committed to tackling that. We continue to support efforts by the EU anti-fraud office to tackle EU fraud, we value the role of OLAF and Eurojust, and we want to minimise disruption to current and future anti-fraud cases if an EPPO is created.
We understand that the EPPO-to-Eurojust relationship and the EPPO’s impact on OLAF will not be discussed until later in the negotiations. We also have no further information from the Commission on any plan for reform of OLAF. I appreciate that this lack of clarity makes assessment of the impact of an EPPO difficult at this stage. The Luxembourg presidency may be in a position in the latter half of this year to begin constructive discussions on EPPO interactions with other EU bodies, third countries and non-participating member states, but that is highly likely to depend on where things stand in June. As soon as there are significant developments, we will update noble Lords in the normal way.
Lord Spicer
We always used to be told that European criminal law would not incurse itself into our law, which is a different form of law. This is surely an example of the reverse; this is the incursion of European criminal law into our common law-based system. It is very serious from the point of view of this country, surely.
Lord Bates
These are important constitutional matters. I am looking across to the Benches where we have a distinguished constitutional academic and a distinguished former member of the Supreme Court, who may offer opinion, but I think I will slightly side-step the question.
Help is at hand.
Baroness O'Loan
My Lords, the proposal is that prosecutions will occur in British courts under British law. This is not a proposal that European law will be exercised in British courts, so the reservations of the noble Lord are not warranted.
Lord Pearson of Rannoch
I am not quite sure whether the Minister was attempting to answer the question that I put to him, but just to be sure I will repeat it. What happens if the Commission decides to plough on with this proposal? Are we capable of stopping it or must we just live with the muddle, the increase in fraud and the damage that will ensue, thanks to the Commission’s activities?
Lord Bates
If the Commission continues down that line, there will have to be treaty changes. Negotiations will have to take place on the implications for non-member states and third-party countries as well as for member states. However, the proposal is in such flux at the moment that trying to judge what it is is nigh on impossible at present, let alone what a future Government’s position would be in responding to it. The fact is that we would have a position, there would be a negotiation and there would have to be agreement as to how it would operate in this country. The report, which has been presented so ably today, has highlighted the many complex issues that will need to be addressed by a future Government.
Baroness Corston
My Lords, I am very grateful to all noble Lords who have taken part in this debate. While it has been a short debate, it has been an excellent one. I am very grateful to my noble friend Lady O’Loan for drawing your Lordships’ attention to the possible dimensions of fraud against the European Union, particularly so-called carousel fraud. We all take that terribly seriously and want it to be addressed, except that we do not think that the EPPO is the remedy.
I also want to reassure the noble and learned Lord, Lord Hope of Craighead, that no discourtesy at all was intended in not referring more comprehensively to the evidence submitted to us by the Lord Advocate for Scotland, Frank Mulholland QC; we found his contribution to be both cogent and persuasive and based very much on practical experience. I also want to thank the Minister for his thoughtful response.
International Science, Technology, Engineering and Mathematics Students (S&T Committee Report)
Lord Krebs
That this House takes note of the report of the Science and Technology Committee on International Science, Technology, Engineering and Mathematics (STEM) students (4th Report, Session 2013–14, HL Paper 162).
Lord Krebs (CB)
My Lords, I declare two interests, first as principal of Jesus College, Oxford, where we have many international students, and secondly as chairman of Oxford Risk, a small-business spin-out of Oxford University that has an interest in recruiting the best talent from around the world.
I thank the members of the Science and Technology Select Committee for their excellent contributions to this inquiry, as well as our outstanding specialist adviser, Professor Sir William Wakeham, for his wise and expert advice and, of course, the committee clerk and policy analyst for their superb support. Noble Lords will be aware that this report is a historical throw-back to my time as chairman of the S&T Select Committee and I am pleased to note that it is the last of the reports under my chairmanship to be debated.
I also thank the noble Baroness the Minister for the Government’s response to our report, although I have to say that the response was a little less positive than we had hoped. We made nine recommendations, of which one was accepted unequivocally, four were rejected and four were considered, I suppose. I hope that at the end of the debate, the noble Baroness will bring us an update on the Government’s thinking.
I start by clarifying what it is we are talking about. Noble Lords will be aware that there is a broader debate about measures to reduce net migration into this country. Our inquiry falls within that broader context. We looked, in particular, at undergraduate and postgraduate students from outside the UK and European Union, referred to either as overseas students or international students, coming to this country, or not, to study science, technology, engineering and mathematics—STEM subjects, as they are commonly known. We were particularly concerned with what we called “hard STEM subjects”, such as physics, maths, chemistry, engineering, computer sciences, medicine and biology, rather than the softer subjects that come under the broad heading of STEM used by the Higher Education Statistics Agency and which include courses such as architecture, building and planning, forensic science and equine studies.
When we think about students who are studying what we called “hard STEM subjects”, the first point to note is that we have a national skills shortage. The CBI estimates that 43% of employers have recruitment difficulties with STEM graduates and that, in order to fill the requirements of industry, the number of graduates will have to rise by 40% from today’s levels. Similarly, the Social Market Foundation has proposed that we need an extra 40,000 STEM graduates per year up to 2020. Another metric is the shortage of physics teachers in state schools. It is estimated that more than 500 state schools have no qualified physics teacher at all and that there is an overall national shortage of about 4,000 physics teachers. If we are to develop the high-tech, science-based economy that was referred to in yesterday’s Budget, we need to be able to educate and employ more STEM graduates.
International STEM graduates are a very important part of the higher education ecosystem. In total, there are between 50,000 and 60,000 international STEM students in the UK, if we include both undergraduate and postgraduate. Some university courses are hugely dependent on international students for their sustainability. For instance, almost half of those enrolled on taught master’s courses in computing and engineering come from outside the UK and the European Union.
In spite of our dependence on international students both in our educational system and for employment in our science and engineering industries, it seems that our ability to attract international STEM students is declining relative to our competitors. The question we asked in our inquiry was whether this decline, which started about five years ago, has been caused at least in part by the serial changes to immigration policies that have been introduced since 2010 as part of the Government’s aim of cutting net migration. Before 2010, the number of so-called hard STEM students from overseas was steadily increasing year on year, but since then the overall number has not increased, and in some cases there have been dramatic declines.
The picture is not uniform across subjects, across courses and across countries of origin. I will not go through all the detail of the figures we were given by BIS, but suffice it to say that the most dramatic decline post 2010 is in students coming from the Indian subcontinent. Indian student numbers declined from around 12,000 to 5,000 over the two years post 2010, while other countries, notably China, have continued to show an increase. Looking at subjects and kinds of course, the biggest declines within subjects are in engineering, computer science and subjects allied to medicine like optometry and pharmacology, and that is true whether looking at undergraduate numbers or those taking postgraduate taught master’s degrees. There has been no discernible trend towards a decline in the number of students studying for PhD degrees—research students—but the numbers here are in any case relatively small. The decline in particular subjects and courses may actually be linked to the decline in geographical origin because many Indian students who used to come here would study the subjects in which there has been a marked decline in overall intake.
The question is this: what has caused these changes? Is the correlation between the decline or levelling off in some areas and the introduction of changes to the Immigration Rules for students sufficient for us to infer causation? The problem with interpreting the trends is that, of course, we do not have the counterfactual; we do not know what would have happened had there not been any changes to the Immigration Rules. Would the increase in students from China have been even steeper? Would India have continued to rise instead of falling? We were told by officials from BIS that other factors may have influenced the trends. They mentioned, for example, exchange rate fluctuations, particularly the fall in the value of the rupee, and they also referred to more aggressive marketing and recruitment by our major competitors such as Australia, the USA, Canada, Singapore and other EU countries. But while we saw a 42% decrease in Indian students between 2010 and 2012, Germany and Canada both saw an increase, and the USA had a mere 7% decrease. Since the fall in the value of the rupee would surely have affected these countries too, it would appear that exchange rate fluctuations cannot be the whole story.
A report published last month by the British Council draws on the figures from the Higher Education Statistics Agency. It highlights how we are losing out to our competitors. Our market share of international students globally—not just in STEM, it has to be said—has fallen over the past four years by more than 4% and there is no sign of that decline slowing down. So in spite of our natural advantages—the English language and our global connections through the Commonwealth—our competitors seem to be eroding our market share. This is bad news for universities and for the much-needed skills that I have already referred to which international STEM students could bring to our industries, not to mention the soft power effect of building relationships with other countries for the future.
We cannot be absolutely sure what has caused the slow-down and in some cases the decline in the arrival of international students, but the circumstantial evidence we heard suggests very strongly that government policies on immigration have played a significant role in preventing STEM students from coming here to study and work. I will not attempt to speculate whether this was the Government’s intention, but we know from the Statement made in another place by the Home Secretary in March 2011 that the aim of the changes to which I am about to refer was to reduce net migration and,
“to return some … sense to our student visa system”.—[Official Report, Commons, 22/3/11; col. 856.]
So there probably was some element of intent in that.
To summarise the evidence, we heard about three kinds of factors that might be putting off students from outside the European Union coming to this country. The first is perception, the second is bureaucracy, and the third is specific barriers. I shall say a little about each of those.
On perception, as a result of the changes that started in 2010, some overseas students appear to have got the message that the UK does not welcome them. That is great news for our competitors. I know that the Prime Minister and the former Minister with responsibility for science, David Willetts, have gone to great efforts, including travelling to India, to say that the UK is open for business and welcomes international students. But once confidence has been eroded, it is not easy to rebuild it, and I think that more work needs to be done. Although the numbers are very small, my own informal survey of international students at Oxford University tells me that there is still a perception in India and elsewhere that the UK is less welcoming than it used to be.
On bureaucracy, we heard in our evidence that the frequent changes in immigration policy—it was not just a one-off; many things have changed since 2010—and the bureaucracy associated with applying for visas is off-putting to potential students.
On both those issues, the Government in their response appeared to be pretty well satisfied with the current situation. However, I would like to ask the Minister whether the Government have done any research to ascertain the perceptions of students themselves, both those who choose to come to the UK and those who considered coming here and have gone elsewhere. In a moment, I will refer to such a survey carried out by an independent body. I think that market research of that kind might help as a reality check to see where we are.
I turn now to some specific barriers. The first thing to say about the evidence that we heard is that the cost of a student visa to come here is higher than in eight out of nine competitor countries for which we have evidence. The sums of money may not be huge—they are in the order of tens to hundreds of pounds—but the implicit signal is clear: we want to make it more difficult to come here, through what we will charge you for a visa, than some of our competitors do. I think that that is a continuing problem.
Perhaps the most important barrier that we heard about is the change in the rules allowing students to stay on and work after they have qualified. Some, perhaps many, international STEM students, having qualified in a UK university, would like to stay on and work. This is surely a good thing, given that we have trained and educated them to provide the skills that our industry desperately needs. You would think it a no-brainer that we would want to try to persuade them to stay here.
Under the old arrangements, prior to 2012, the so-called post-study work route entitled international students to stay on and work for up to two years before applying for a tier 2 skilled worker visa if they had a job. In 2012, the post-study work route was abolished and replaced with a new scheme in which students have a mere four months to find a job, not after they have graduated but after they finish their course, and have to have a salary, which is today more than £20,500, to apply for a visa. We heard that this is a major deterrent to overseas students coming here. Our time limit of four months is shorter than in any other English-speaking or EU competitor country. For instance, Germany has a period of 18 months; the USA, 29 months after STEM graduates finish the course; and Australia, depending on the course and the circumstances, has a period of between 18 months and four years.
Look at the numbers. In the year before the old tier 1 post-study route was abolished, just under 35,000 visas were issued. In 2013, under the new tier 2 “general” route, only 4,175 visas were issued. That is an 88% drop in one year. We heard abundant evidence that the current arrangements are not only bad for UK universities but bad for UK business. One of our witnesses, Sir Andrew Witty, the chief executive of GlaxoSmithKline, told us that the new arrangements are “not great for employers” and that students have,
“vanishingly small amounts of time”,
to secure a job. As I said, the four-month clock starts ticking as soon as they finish their course, which may be many weeks ahead of the time that they receive their degree or final qualification, especially if it is a Masters degree with an element of a viva. The time that they have after they know their qualification to complete a visa application and job application is vanishingly small, as Sir Andrew says.
The Engineering Employers Federation also commented to us on the difficulties of the new arrangements, particularly for businesses that need to get a sponsorship licence. As I declared at the beginning, I am chairman of a small business. This morning we discussed there the fact that the UKVI guidance book that we must study if we want to get a sponsorship licence is a mere 144 pages long. We are not making life easy for small businesses to hire skilled STEM graduates from overseas. Would the Minister agree that our evidence from industrial employers shows that the current arrangements are really not fit for purpose? Why should the Government ignore the comments of those working hard to build a UK science-based economy?
Furthermore, an independent survey carried out by Hobsons of 70,000 prospective international students who made inquiries to UK universities between March 2011 and 2013 demonstrated that perceptions of visa restrictions, including the post-study work route, were a major deterrent to students coming to this country from overseas.
Let me end with, very briefly, two individual case histories that both relate to my college at Oxford, Jesus College. One student who gave written evidence to the committee is a Canadian citizen who studied medicine at King’s College London before coming to Oxford for further specialist training. She went back to Canada briefly to complete Canadian medical exams in case at some point in her career she wanted to practise there, but she wanted to come back and work in the NHS. However, in the brief period she was away, the rules changed and she was told that she was no longer eligible for further medical training in the UK. It seems to be madness for us to invest years in training a doctor and then tell her that she cannot come and work here.
My other case history is a Chinese engineering graduate from Jesus College who set up her own company, Oxford Space Structures, which is building consumer products as a spin-out of the European Space Agency’s research. Apparently, her company’s product is a lightweight travel cot based on technology developed for satellites—I look forward to buying one for my brand-new granddaughter, who arrived last Saturday. The BBC covered the story two weeks ago under the banner headline, “The global fight to attract foreign entrepreneurs”. It seems like a good news story, and indeed it is. However, when I clicked on the link to the UKTI Sirius scheme, under which the Chinese engineer was able to set up her business and which is designed to attract such entrepreneurs, I read that it is currently closed. Does UKTI have future plans for attracting overseas entrepreneurs if the Sirius scheme is now closed?
I could make a number of further comments about our report, but I prefer to hear what other noble Lords have to say. I just end by noting that our report is by no means alone in highlighting the problems to which I have alluded. In 2011, the Home Affairs Select Committee in another place advised against the closure of the post-study work route. Just last month, the All-Party Parliamentary Group on Migration published a report that reached a very similar conclusion to ours, based—as was our report—on a substantial volume of evidence from universities, students and employers. I beg to move.
The Earl of Selborne (Con)
My Lords, the whole House will be grateful to the noble Lord, Lord Krebs. He speaks with great experience about these matters, as we have just heard. He has chaired the Science and Technology Committee for some time. I was very privileged to serve with him and to succeed him. We are enormously grateful for the way he introduced this report. I was particularly taken by the case histories he mentioned from Jesus College. I cannot, alas, from my own background quote such specific examples but I am absolutely certain that it is only when we get to the detail of some of these astonishing cases that we realise that at the moment we seem to muddle our way into making life difficult for the very students we wish to attract. Before I start my main observations, perhaps I may say also how much I am looking forward to the maiden speech of the noble Earl, Lord Kinnoull.
There are two government policies that are both perfectly worthy but are proving difficult to reconcile. The first is to increase numbers of international students and the second is to deal with the historic abuses which certainly happened in the international student visa system. If we are to deliver what the Budget set out yesterday, which is a competitive economy, we simply must attract students to our world-class universities in competition with other world-class universities in competing economies. That, I am certain, is universally accepted. We have to look at how successful we are in that, the first and most important of the Government’s policies. We know that our economy’s success in creating employment will depend on an industrial strategy of building on existing strengths. For example, I could mention healthcare, aerospace, biotechnology, renewable energy, the automotive sector and many more. They are often multidisciplinary, with an interaction between chemistry, biology, medicine, engineering and much else. We will need to attract inward investment, which will come when those who have the inclination to invest are persuaded that the quality of the science and engineering is the highest, and that a reservoir of skilled persons is available to drive that knowledge economy.
We have a skills shortage. The noble Lord, Lord Krebs, mentioned the figures issued by the CBI. Employers throughout the country are struggling to meet demand, particularly for engineers, but for other skilled graduates in the science and technology sectors. The number of UK-based engineering students over the past 10 years has risen a little, but very disappointingly, from 12,700 in 2004 to 13,700—an increase of 1,000 over four years. The number of non-EU international engineering students increased by much more, by about 70% from 3,200 to 5,500. The Institution of Engineering and Technology estimates that to meet demand from employers we need 87,000 new engineers per year. Even if the Government do not accept that figure—which I accept may be special pleading—I think we all recognise just how dire the shortage can be in those specialist skills areas. Sir James Dyson, who has advised the Conservative Party on these matters, recently stated in an article in the Guardian:
“But I do worry about Britain’s ability to make, make, make. Make engineering breakthroughs. Make scientific progress. And, yes, make money for UK plc”.
I think that sums up what an awful lot of captains of industry would say and the evidence that the committee heard. We need to attract more of our UK students into STEM subjects, we need to attract more international STEM students and we need to attract more highly qualified scientists and engineers, even if they have not done their research training and graduate or postgraduate studies here, to make up our numbers.
That brings me to the second government policy, which is proving incompatible with the first: the policy of tightening procedures and qualifications for student visas. We have heard about the added complexity, cost and bureaucracy and the perception, particularly in India and Pakistan, that once you have graduated you are no longer welcome. Some pretty lurid headlines in the Indian papers said just that. I give credit to the Prime Minister, to David Willetts, and to other Ministers who had the thankless job of trying to reverse that perception but, as the noble Lord, Lord Krebs, said, once the perception gains currency it takes an awful lot of hard work to reverse it.
We must acknowledge that there has been historic abuse of student visas by some institutions that I would call marginal. In the past, there has been a danger of international graduates, once they finished their studies and decided to stay in this country, taking jobs for which they were overqualified—unskilled jobs—therefore increasing the competition for jobs for our nationals. These issues need addressing. Clearly, you need to make sure that, having trained people for skilled jobs, they take on the skilled jobs. It is important that we do not allow such abuses, but we must not try to deal with these problems at the expense of jeopardising that overriding national need to equip ourselves with a competitive knowledge economy.
The Government said in response to our committee’s report:
“There have been a number of myths and inaccurate perceptions, which we are determined to correct, in partnership with the sector who also have an important role to play in this”.
I hope my noble friend the Minister will concede that the well documented examples in the report of added costs and complexity which have fallen on students, the higher education sector and employers amount to more than myths and inaccurate perceptions, although there are indeed those as well. The abuses certainly needed tackling but, equally, genuine students deserved a better visa service than they were receiving in some of the instances on which we took evidence. I acknowledge that since our report there have been some improvements, although it will take years for some of these perceptions, however ill founded, to be redressed.
An example of the complexity which the Government have imposed on the system is the tier 5 route, for people who want to come to the United Kingdom for a short period to do work experience, training, research or a fellowship through an approved, government-authorised exchange scheme. As paragraph 106 of our report said:
“The University of Manchester described the Tier 5 route as ‘unpopular with both our students and employers … We are not familiar with any students actually taking a Tier 5 experience at Manchester’”.
If the Home Office really sought to work in partnership with universities to implement a reformed student visa regime—as the Government’s response suggested and as I am sure it does—it would surely have been much more productive to have worked closely with the sector in designing measures which were effective, fit for purpose, less complex and, above all, did not need changing rapidly and repeatedly at short notice. It would also have been desirable, if possible, to have a scheme which would be less expensive for students.
The Government remain determined to cling to a net migration target that includes students as its largest component. They plead the need to comply with UN regulations. The United States also includes students in its overall migration figures and then excludes them for migration policy purposes. This would also have been the sensible way for us to proceed. As international student numbers grow, the United States has no inducement to limit their share of this expanding market. While we insist on including students in the national migration targets, we will be conflicted and remain so until international student numbers level off or decline. The huge public benefit derived from international students coming to Britain will be compromised.
The Earl of Kinnoull (CB) (Maiden Speech)
My Lords, it is an honour and a privilege to rise for the first time in your Lordships’ House. In the last weeks, I have been much touched by the warmth of Members of the House, many of whom have been generous of their time and canny in their advice. I would particularly like to cite the noble Lords, Lord Laming and Lord Aberdare.
I am also grateful for the staff of the House who have helped me in very many ways. I have discovered one thing—that there is finally something for which there is no iPad app: that is, of course, navigation around your Lordships’ House. Like every other new Peer I have been lost frequently but, always with good humour and a smile, put back on the right road. I dare say that for some moons to come, they will be doing the same.
I congratulate the noble Lord, Lord Krebs, and his committee on their report. Its clarity, its appealing logic and the good body of evidence it assembled in its recommendations were a cracking read. I would like to add a very few thoughts to it, because it was settled roughly a year ago.
My first thought can be summarised in the proposition that British international business needs the international STEM student product. Here I declare an interest: I have worked for more than 25 years in British international business and for a very large number of years in senior levels at the Hiscox insurance group, in which I declare a financial interest, as I do in Schroders plc. International business naturally likes STEM graduates. They are numerate, flexible-minded and well trained. If we like them, we like the international STEM graduates even more, because they bring with them the two additional dimensions of knowledge of another culture and, one hopes, linguistic skills. When put together in a team trying to win business internationally, having a balance in the availability of all of those features is something which often, in my experience, makes the difference between success and lack of success.
It has been marvellous for all the British international businesses to be able to participate in the annual milk rounds around the various universities to attract the best and the brightest and to try to sell our businesses and the excitement of doing things in our businesses to those students. Anything that reduces the availability of the pot of good students is something which is not in the interests of British international business. I put it to the Minister that, in consideration of the matters considered in this report, the interests of British international business should always be borne in mind.
I decided to do a little private update to see what it was like in the front line; it was a very limited exercise. I contacted the department of chemistry at Oxford. I should declare another interest in that in the 1980s, for four very happy years, including a year in research, I studied chemistry there. The department was very helpful and sent me an enormous lot of comment and figures, most of which I have sent straight on to the secretary of the committee in the hope that, when the committee returns to the subject—as I very much hope it will—it will be of some help to it.
I would like to bring to your Lordships’ attention three things that came out of that exercise. First, my own fiddling around with the statistics showed something pretty interesting to me about the chemistry department, which is that, roughly speaking, half the chemistry product at Oxford—both graduate and undergraduate—goes into business. The second thing I was not expecting at all, as it did not arise out of any of the questions I had asked. It came from an unsolicited email from Lucy Erickson, an international STEM graduate, who was my conduit at the department of chemistry. It was through her that I was contacting quite a large number of people. I think your Lordships should hear her words:
“I am an international alumna (Canadian) and graduated from Oxford in 2011. I’ve been working in Oxford since then and have seen many contemporaries struggle with visas.
I was lucky enough to get a Tier 1 Post-study Work Visa after my degree, which allowed me to stay and job hunt in the UK for two years.
However, after I finished, the post-study work visa was abolished. This had a huge negative effect on my colleagues who graduated after 2012—it was a real struggle for people to find sponsored work in just 6 months.
For example, two of my close friends were forced to leave the UK and move back to America when they were desperate to stay here. Those are just two examples but I know of many other people who were affected negatively by the change”.
I must say—slipping back on the British international business hat—that I find it very disappointing that we were not able to get access at least to try to attract those obviously high-potential graduates into our world.
British international business tends to operate on an annual recruitment basis. It is simply not practical to run induction and training programmes more than, say, once a year. If one is doing that, it takes several months to run a process from the opening of applications to the awarding of jobs. One is therefore looking, in the interests of British international business, for STEM students to be allowed to stay in the country for at least 15 months. I will come shortly to a practical suggestion about how that might be addressed.
I suppose that, net, that is slightly bad news. However, something that is, net, very good news came out of my mini-survey—and this is the third and final point on that. It was an email from the careers service team at Oxford University which states:
“While the lack of post study work opportunities has caused concern, the new ‘Tier 1 Graduate Entrepreneurship Visa (GEV)’ has enabled Oxford to endorse 40 international graduate students to stay in the UK with their new business ideas and the scheme has been very positive”.
I was not really aware of that scheme, but I am now. In further questioning, it turned out that more than half those 40 students were STEM students. When I looked at the high-level summaries of the business ideas, I was most impressed. However, there was a mild warning gong. It turned out that Oxford had the impression that only 135 GEVs have been issued so far. If that is the case, Oxford has a market share—if that is the right expression—of rather more than 25%, which suggests that the GEV is possibly not well enough understood or not well enough known about by a large number of other higher education institutions in the United Kingdom. I am coming on to a practical suggestion about how that should be looked into as a matter of urgency.
I realise that touching on anything to do with immigration at the moment is, at the very least, a warm potato, but I put it to the Minister that she would be able to instruct officials during the election break to look at the two issues I have raised and to see whether it would be possible to raise the post-study work time allowed to international STEM students from four months to the minimum of 15 months that I suggested, and how to do it; and to look at the GEV point I have made to see whether there is anything in that. Officials could be asked to report back by mid-June so that the report arrives absolutely fresh on the desk of the new government Minister, who would then be able to consider the findings and act accordingly and rapidly.
Viscount Hanworth (Lab)
My Lords, we must congratulate the noble Earl, Lord Kinnoull, on a most interesting and engaging maiden speech, which conveyed some important and compelling evidence. His speech is a contribution to a debate on a most important issue in which, remarkably, three earls are speaking. The noble Earl, Lord Kinnoull, trained and practised as a lawyer and has spent 25 years in the insurance industry. We have just learnt that he is also a chemistry graduate. He will bring significant professional expertise to the deliberations of this House, and we can look forward to his well informed contributions in the course of what he has promised will be his regular and diligent attendance.
The excellent report of the Science and Technology Select Committee, which we are debating today, was published in April 2014. Since then, almost a year has passed, during which time the policies that the report wishes to see amended have been inflicting severe damage on our universities. The problems that the report instances have arisen from measures that have been enacted in response to an unguarded declaration of the Prime Minster concerning the number of immigrants to the UK. In a speech in March 2013, the Prime Minister declared that net migration needs to come down from hundreds of thousands per year to just tens of thousands. It seems that no serious thought had been given, in advance of the statement, to how this objective might be achieved.
In one unguarded moment the Government became hostage to the right wing of their own party. They suffered acute embarrassment at the failure to come anywhere near to achieving the declared target. They have handed ammunition to another party, which in contrast to the leadership of the Conservatives, is strongly opposed to our membership of the European Union, which allows citizens to migrate freely within its territories. The ineptitude in that connection is staggering, or at least it would be so had we not witnessed other, similar instances of such extemporary and troublesome policy declarations. The collateral damage that has been inflicted on the universities by an attempt to staunch the flow of immigrants in fulfilment of the policy has been immense.
To understand how foolish was the statement concerning net migration, one need only glance at table 1 of the committee’s report, which shows that in 2012-13 the total number of immigrants, which was roughly 500,000, was divided almost equally between immigrants from the European Union and from elsewhere. Short of leaving the Union, the Government can exercise no control over the numbers of European immigrants. Unless those people can be disbarred from coming to the country, there is no way in which net migration can be reduced to the tens of thousands. When we look at the figures for non-EU immigrants, we find that in the year in question nearly 170,000 out of 240,000 immigrants were entrants to courses at publicly funded higher education institutions. That is a fraction in excess of two-thirds. It is only by radically reducing those numbers that any significant reduction in net migration could be achieved.
In providing courses to overseas students, the university sector constitutes a major export industry. It appears that the Government have been prepared to curtail those valuable activities of the sector solely for the purpose of saving themselves the embarrassment of a failing political agenda that has arisen from a foolishly unguarded statement.
The committee’s report has urged the Government to remove students from the net migration figures. That was also urged upon the Government, almost unanimously, by those who participated in a previous debate on higher education. However, the Government have been intransigent on this point. By removing student migrants from the total, the Government could surely cut the numbers of recorded immigrants at a stroke. Their unwillingness to do so is almost incomprehensible. The only conceivable reason for not doing so is that by removing the students from the figures the Government would be denying themselves a valued opportunity to show that their policies are having an effect on the numbers of immigrants.
It may be that the Government have begun to believe their own propaganda. They may be imagining that, contrary to all the evidence, many of the non-European Union students are intent on exploiting the opportunity to come to the UK as a means of gaining permanent residence or of neglecting their studies in order to exploit other opportunities. The few instances when that has been the case have been widely publicised in support of a highly erroneous perception.
The supposition that a large proportion of the students have fraudulent intentions goes some way towards explaining the nature of the numerous additional provisions and restrictions that have been imposed upon overseas students. The conditions of the tier 4 student visas have been made increasingly stringent. The rules regarding the funds for their maintenance and for paying their university fees, which the students must have in their bank account if they are to be allowed to join a course, are now disbarring many of them. Perhaps the greatest discouragement to prospective students has been the way in which the routes to post-study work, which is so valuable to postgraduate and doctoral students, have been closed.
The increasing burden of regulations has been administered in a careless way. Changes in the regulations have occurred without sufficient prior announcement to allow the institutions of higher education to adapt to them. They have often occurred midway in the cycle of student recruitment, which has created severe difficulties for the institutions.
The rule changes have also had very distressing impacts on individual students, who have discovered that the suppositions under which they embarked on their courses are no longer valid. Thus, for example, the work experience components that may have been an attractive feature of many courses have, in certain instances, ceased to be available at a midway point in the course, in consequence of the new regulations.
One applicant to a doctoral program, with whose case I am well acquainted, was subjected to a test of his competence in the English language. This person originates in one of the central Asian republics. His written English is superb but his spoken English is hesitant and strongly accented in consequence of his lack of practice. On these grounds, he has been disbarred from pursuing his doctoral studies in the UK under the supervision of one of my academic colleagues.
I must now respond to the fact that the committee’s report is devoted primarily to the impact of the immigration regulations on the recruitment of students in science, technology, engineering and mathematics. A large proportion of these students are at the postgraduate level pursuing masters or doctoral studies. In their absence, many of our MSc courses would not be viable and would have to close. In effect, we depend upon overseas students for the maintenance of our scientific and technological skills. We shall continue to do so until a scientific and technological revival in the UK allows us to fill our courses with native students. For this purpose, we should need to provide adequate funding for our postgraduate students.
I should take the opportunity now of drawing attention to the fact that we are failing to produce sufficient numbers of scientists, technologists and mathematicians to staff our universities. A cursory glance at the staff list within academic departments will reveal that the majority of them are non-native. In the past, we have been able to celebrate the fact that our academic staff have been drawn from many other nations. We have had a genius for converting such people into British citizens with strong allegiances to this country, from whom we have profited greatly. Such circumstances no longer prevail.
Nowadays, the numerous overseas recruits to our university departments are typically short-stay visitors. In some academic departments, in my experience, a staff turnover of as much as 30% per annum is not unusual. If such circumstances are to continue, and there is no indication that they will not do so, then the effect upon the quality of higher education in the UK and upon our scientific research capacity will be dire.
It is typical when discussing in this Chamber the circumstances of UK higher education to hear fulsome assertions regarding its outstanding quality and world-beating status. Such assertions usually come from people who are only tenuously connected to higher education. They relate to past glories and to their lingering effects. The view from inside could not be more different; and the well informed prognosis for higher education in the UK is a grim one, which foresees a terminal decline.
Lord Rees of Ludlow (CB)
I thank the noble Lord, Lord Krebs, for chairing this study, and for his comprehensive speech. I echo his thanks to the staff of the committee, and I declare an interest as a member of Cambridge University.
We must be aware that overseas students display huge diversity in interests as well as nationality. The bulk of them are doing undergraduate degrees, but those doing masters or doctoral degrees tend to be a larger proportion of all students in those categories. We are in an international market for talent in which our strong higher education system ought to give us an edge. My concern is that the various obstacles being put in the way are preventing us from achieving our potential.
The most insistent theme of our committee’s evidence was the general regret at the removal of the post-study work visa scheme in 2012 and unease with the more stringent and vexatious requirements that have replaced it. As the noble Lord, Lord Krebs, has said, a specially compelling witness was Sir Andrew Witty. He came as chancellor of Nottingham University but spoke with the authority of a chief executive of a major company, GSK. He noted, with regard to the four-month limit, that the clock starts when the students finish their course, not when they formally graduate. This puts them under even greater time pressure in seeking a job. Some try and fail, but too many are less confident: they assume failure and do not even try. Sir Andrew recommended a year from finishing the degree, which might then obviate the need for the specific entrepreneurial route. In the US, for instance, students are given a five-year visa for a four-year course, which makes it possible to gain work experience without hassle. Germany offers 18 months.
It was pointed out, particularly in evidence from Leicester University, that for students from India or Pakistan the work experience is perceived as a highly valued supplement to one-year master’s courses. Let us not forget what a huge investment in rupees Indian students make and how life-changing their experience here can be. The decline in perceived opportunities tilts the balance, in their minds, in favour of the US, Canada and elsewhere. Of course, such perceptions feed back to India and weaken the field applying here in future years.
Another issue that we raised is the salary threshold of £20,700. The Government’s response was that this was not too high and that its purpose was to prevent people staying on in unskilled occupations. However, we were told in evidence that new graduates in a subject such as pharmacy, without professional accreditation, would not get an offer at that level, but they would get lower-paid jobs offering the kind of valuable experience that would help them and convince them that they had made the right decision coming here. In fact, a similar concern was expressed recently in a radio interview with no less an authority than David Willetts, who pointed out that the threshold salary may be appropriate for London but is not so easy to achieve in the Midlands or the north of England, and so has the effect of sucking overseas graduates into the south-east. He suggested that there should be flexibility, with rather lower wage requirements in other parts of the country. Technical jobs paying less are genuinely valuable work experience—certainly not the same as unskilled work. The potential of such work is part of the package that allows students from India and Pakistan to get good value from the sacrifices that they make to come here.
A further impediment is that employers, especially in SMEs, continue to perceive complexity in the current rules for becoming sponsors. This was clear from the evidence, despite the official claims that it takes only 30 minutes to do so. The doctorate extension scheme is welcome, but again there were concerns that the application was not straightforward because the application has to be made no more than 60 days before the uncertain completion date of a PhD.
Subsequent to our report, further measures have been introduced by the Immigration Act 2014. These need to be carefully monitored. For instance, the NHS surcharge will increase application fees significantly. For a PhD student on a four-year course, visa and associated costs will increase from £310 to around £1,000, with the same amount for each dependant. The pilot scheme in the West Midlands for immigration checks by landlords would need thorough assessment before any decision was made to roll out the requirement nationally. There is a risk that it will deter landlords from renting to overseas students, especially in university cities where accommodation is already scarce.
The Government did not accept our committee’s recommendation for a biennial review to monitor the impact of frequent policy changes such as these, which are widely reported overseas and fuel the perception of the UK as inconsistent and unwelcoming to international students. Universities would like a period of stability, not only for their planning purposes but because it would give confidence to potential applicants. Of course, there was huge relief in January when there was no follow-through on the Home Secretary’s proposal to abolish even the four-month grace period, but the fact that this was prominently floated will surely in itself have deterred some applicants this year.
Many are perplexed at the Government’s reluctance to distinguish in their public pronouncements and policy between students and other immigrants—something that has been urged by several other committees apart than our own. Students are a substantial fraction of non-EU arrivals. As we know, the Government are being pressured about the gap between their 100,000 target and the three-times higher reality. It seems baffling that they are not eager to highlight the distinction and thereby at least blunt the manifest contradiction between the rhetoric from the Home Office and that from BIS. Perhaps the Minister could clarify that.
There is a growing worldwide demand for young people with STEM qualifications, and indeed with expertise in other fields of learning. As has been said, our universities are especially well placed to attract students at all levels: undergraduates, those who seek the professional development that a taught master’s course provides, and those seeking PhDs. In the competition for talent, our traditional rivals have been the US, Canada and Australia, but mainland Europe is more attractive now to students, especially from Asia, because courses are also offered in English.
We should surely also prepare for the disruptive effects of distance learning. So-called massive, open, online courses—MOOCs for short—have perhaps been overhyped, but they have their greatest potential at the level of vocational master’s courses, especially in subjects that do not require laboratory work. These MOOCs offer the UK an opportunity; the Open University especially has a real chance to excel in marketing this kind of distance learning. Its downside will be that as online courses develop, expensive residential courses in the UK will lose their allure unless enhanced by the genuine prospect of work experience, which requires relaxing visa regulations.
It may not be easy, even with optimum policies, to sustain the level of foreign students, the best of whom are surely an asset who should be welcomed and encouraged to stay. That is why we must surely avoid the own goals stemming from erratic and burdensome regulations. Foreign students who stay enhance our talent pool; those who return can forge links with this country that enhance our soft power. Overseas students should be welcomed—their paths should be smooth.
The Earl of Dundee (Con)
My Lords, all of us will be grateful to the noble Lord, Lord Krebs, for introducing this debate. We have also heard from the noble Earl, Lord Kinnoull, in what was an excellent maiden speech. The House is very fortunate that he has joined us and to be able to look forward to his future contributions.
To attract here students of these subjects, in particular those from overseas, I would like to make a few brief points. There is an obvious need: to increase foreign student numbers which have been declining; to make them feel welcome and thus also, in the first place, to simplify their process of application for entry; to encourage them to stay to find employment with UK businesses and industry; for proper monitoring of our policies and assessments of their results—these to be viewed against those of our competitor countries; and for our Government to be alert to other associated and constructive expedients—for science, technology and mathematics not least would such include the considerable scope, to mutual advantage, for student exchanges between United Kingdom institutions and those elsewhere.
The noble Lord, Lord Krebs, mentioned falling numbers; my noble friend the Minister may point out that there has been a slight recovery. This can be noticed in recent figures for Indian students coming here. There have also been useful government missions to build up trade and investment between the United Kingdom and India. That apart, there is still a much reduced number of students coming here from India and other states.
Several aspects may put off foreign students, and each of these is in our power to change. There is a need for greater clarity in the publication of immigration statistics. So far, our presentations do not sufficiently distinguish student figures from those of all other immigrants. This category is overseas students in possession of tier 4 visas. Does my noble friend the Minister agree that clear publication of their numbers as a separate immigration component would achieve two purposes: first, the removal of a government policy anomaly, where a Government restrict general immigration on one hand yet seek to increase student immigration on the other; and, secondly, that it would serve to help reverse the impression of many potential overseas students, to which many of your Lordships have referred, that they are unwelcome in the United Kingdom?
Foreign students are discouraged as well by unnecessary remaining complications within the application process itself. There is a strong case, therefore, for its simplification and streamlining, and the Select Committee has recommended that. Might the Government perhaps pursue this recommendation?
The Government have introduced a scheme for foreign students to stay on as graduate entrepreneurs. This is to be welcomed. It also connects to arrangements for students to complete PhDs and for corporate interns. Nevertheless, as the noble Lord, Lord Krebs, and others have stressed, the Select Committee has expressed much concern about the government scheme that has replaced it, named post-study work. It recommends that the Government should reinstate the latter. Does my noble friend concur that, if combined, the PSW and graduate entrepreneurs scheme together would send out a very positive message? Thereby, foreign students would have much greater opportunity than they do now to prolong their studies and to take up employment with United Kingdom business and industry.
We also need frequent reviews of the effect of policies and of how our results compare with those of competitor countries. Does my noble friend support this? If so, might the Government introduce those constructive procedures for monitoring and assessments? Whether in the humanities or sciences, the pursuit of opportunities for student exchange is always worth while and to the advantage of all. It also reflects a paradox. In this case, it demonstrates how co-operation transcends competition while still retaining all the benefits of the latter. That comes from academic exchange and working synergies between universities and institutions in different countries. As a Council of Europe parliamentarian, it is a great privilege for me to have been asked to help with programmes for such exchanges between the United Kingdom and elsewhere.
At the same time, as the noble Earl, Lord Kinnoull, reminded us, the United Kingdom must not fall behind the standards of competitor countries, which equally seek to attract foreign students to their own economies. There is every good chance that we will not do so and, instead, build up very good practice. Meanwhile, and to that end, we are fortunate to be guided by this useful Select Committee report.
Lord Stevenson of Balmacara (Lab)
My Lords, I begin by thanking the noble Earl, Lord Kinnoull, for his very fine maiden speech, which has already been referred to around the House. We are all very grateful to have him with us to join in our discussions. I send my particular welcome to him as a fellow chemistry graduate from the same university, although, I think, of a different generation. In fact, I think that we did the same thing, which was to take the best of the chemistry courses on offer and then immediately go off and do something else—in my case, an accountancy and professional administration degree. Nevertheless, the lessons that we learnt will stay with us. Indeed, the noble Earl was able to use his business experience to contribute directly to this debate and we were all informed by that. His point that international businesses need international STEM graduates is very important, and it is a theme that comes back throughout the report.
It is no disrespect to the noble Earl to say that the other people who have contributed to the debate have also made it a very high-quality one. The point was made that it was rather weighted on the scales towards the aristocratic side, with three earls and a viscount. Indeed, I got so freaked by that that I decided I had better have some reserves, so I brought along my good and noble friend Lord Grantchester. Unfortunately, he scarpered just before he had the chance to bolster up what I was about to say, but I am sure he will come back.
I thank the committee and particularly the chairman, the noble Lord, Lord Krebs, for an excellent report on international science, technology, engineering and mathematics students and for trying to tease out some helpful recommendations for the benefit of your Lordships’ House and, indeed, of the Government. Once again, it is fair to point out that there has been a delay of nearly a year before your Lordships have been able to discuss such a good report. That is to be regretted.
It is a fine report and it is in the best traditions of the House. It is one that we expect to see but it is also important to recognise how good it is. It is a process of taking evidence, reflecting on and sifting through it, and then reporting carefully on the issues and offering suggestions to the Government on how many of those issues might be resolved. Sadly, as the noble Lord, Lord Krebs, said in his introduction, the Government’s response to the report is rather defensive and, in some cases, rather brusque to the point of rudeness. I may be wrong but I wonder whether anybody else got from the response, as I did, some Orwellian overtones, with the assertive mantra: there was a problem; the government have acted; there is therefore no longer a problem and no further work is required. For example, the introduction to their response states:
“The Government has reformed the student visa system to cut out the abuse of the system, and will continue to do so. We have also taken steps to continue to attract talented international students to our world class universities. We have been very clear that there is no limit on the number of international students and there are no barriers to studying in the UK”.
It is pure aspiration and rhetoric. It is not evidence-based or thoughtful in terms of the report. It continues with the rather chilling phrase:
“There have been a number of myths and inaccurate perceptions, which we are determined to correct”.
That smacks more of Room 101 in the Ministry of Love than a considered response from BIS and the Home Office.
In my view, Britain has long been and must remain an optimistic, outward looking and confident nation. When more people travel and trade physically and virtually across borders than ever before, no country can pull up the drawbridge. Our economy and culture have benefited immensely from those who have come here through the generations. We should be proud of being British and we should rejoice in the confident British diversity that occurs right across the country, and which London showed off for us in Olympic year. As we have heard today, the impact of the Government’s student visa policy is both economically illiterate and culturally bankrupt. Bringing more talented students, whether from China, India or Brazil, to learn at Britain’s universities not only brings in substantial investment in the short term but helps Britain to build cultural and economic links with the future leaders of the fastest growing economies on earth.
Britain has a long and proud history of being the destination of choice for potential students from around the globe. Our universities are highly regarded and the UK provides a rich, diverse and safe environment to study. All of this is detailed in the report. It seems to me that, given the comparative advantage that we have established, and the place we hold within the world, UK higher education should be front and centre of an active government strategy to generate growth. If we are going to keep up with our competitor countries we need to be bringing in more talented students from around the world to learn at Britain’s top universities. It not only brings in substantial investment but helps Britain to build important cultural and economic links—the soft power referred to by other speakers—and we should be absolutely getting behind it and backing it all the way.
Why is the Government’s policy so confused? Why is it so destructive? It is already having negative impacts, as we have heard, on the perception of the UK as a good place to study. A recent NUS survey of international students found that 40 per cent of those who were here said that they would not advise a friend or relative from their home country to come to the UK to study. That does not seem to be the best possible advice. Everybody knows that the best advertising for any product are the clients and customers. If they turn against it, there is a problem.
As we heard today, the main charge is that there is a causal relationship between the immigration changes brought in by this Government and the erosion in our market share of students coming to study STEM subjects. The evidence is that there is a perception around the world that Britain no longer welcomes its international students. As we heard, the Indian subcontinent has been one of the worst examples of that. We think that many of the students who would previously have come here have gone to Canada, Australia or America. We doubt whether that will ever revert back to the normal situation. The evidence is difficult to prove. As was said, there is no test that could be carried out on what would have happened if the world had not changed, but it seems to be convincing that so much has happened within the period of four years in which these changes have come in. Changing the rules continuously, as has happened, and as documented in the report, fuels that perception, whatever the Prime Minister or Ministers may say.
If bureaucracy is intensifying and the costs are going up, we are hardly being competitive. The world market is competitive and we are falling behind in what we can offer in terms of easy access to courses and then in terms of graduate employment, as shown in the report and raised by a number of noble Lords. We are not able to sustain our postgraduate courses, with all that that implies in terms of what the impact might be on home-based students. It also has an impact on SMEs, as employers’ organisations have pointed out, so it is a perfect storm.
With one or two exceptions, we seem to be agreed in the Chamber that there is a problem and that the solutions put forward by the Government will not clear it up. But as the noble Lord, Lord Rees, said, what is intriguing is why this has happened. The department responsible for higher education, BIS, has in effect been rolled over by the Home Office and the policies of immigration have trumped the policies of growth. An initial idea, which was probably right in instinct and correct to carry out, to clean up what seems to have been a really troublesome FE sector in terms of immigration, has been used to drive a coach and horses through a sector that we should support and cherish.
Can the Minister reconcile what is set out in this excellent report with the aspirations set out in her department’s July 2013 publication, International Education: Global Growth and Prosperity, which is quoted in the Select Committee’s report, which states that international students,
“boost the local economy where they study—as well as enhancing our cultural life, and broadening the educational experience of the UK students they study alongside”.
Is that still the case? Can she confirm that it remains the Government’s intention to leave the immigration system as it is? If so, can she explain how the Government can say that they believe that it is realistic for numbers of international students in HE to grow by 15% to 20% over the next five years? I do not see the evidence to support that. Can she set out for us today the practical steps that the Government are taking to show that the UK values international students, will provide a warm welcome and support while they are here and will keep in touch after they go home?
Baroness Williams of Trafford (Con)
I thank all noble Lords who have participated in this debate today and who have supported the inquiry, particularly the noble Lord, Lord Krebs, and the noble Earl, Lord Kinnoull, who made his maiden speech today outlining some of his experiences, which were extremely interesting. I also noted, as did the noble Lord, Lord Stevenson, that we are surrounded by three earls and a viscount today, so I stand humbled before the committee and the noble Lords who spoke.
The quality of the debate that we have had today underlines just how important it is to attract and harness the talent across science, technology, engineering and maths, otherwise known as STEM, and how important it is to the economic and social well-being of our nation.
In 2013-14, we welcomed 179,390 new entrants from outside the EU to UK universities, including 56,340 STEM entrants. This year there has been a 6% increase. That is an additional 3,400 STEM entrants from outside the UK. The UK enjoys a 13% share of the international higher education student market. Competing recruiting countries such as Australia, the US and Canada are developing national education brands and marketing activities alongside competitive visa policies. All noble Lords referred to that in some way or other. They raised concerns that changes to our visa regime for international students and specifically those on post-study work options have been a big deterrent. I will try to argue that the latest data show a much more complex and somewhat patchy picture.
There was a 7% growth in visa applications last year and 18% since 2010. That includes an 11% increase for the Russell group. The Government have been very clear that there is no limit on the number of international students and there are no barriers to studying in the UK. It is also true that the Government have made reforms to the student visa arrangements, as many noble Lords pointed out. I will briefly outline why.
Under the system that the Government inherited, there was evidence of the system being abused. My noble friend Lord Selborne alluded to that. An example of the scale of the problem is the findings of the National Audit Office which reported that up to a quarter of the international students who came to the UK in 2009-10 may have come to work rather than to study and 26% of international students at private colleges were potentially non-compliant with immigration control.
Since 2010 the Home Office has revoked more than 860 sponsor licences. The system needed reform, with a series of measures to tackle the abuse, while continuing to attract the best and brightest students, and we believe that we have struck the right balance. Striking the right balance does, however, mean some tightening up of the system in some areas. These changes were entirely necessary to eliminate non-genuine students and to remove those providers not supplying genuine high-quality education. We believe that these changes are helping to protect the reputation of the UK education sector.
The current visa system is a good one but the committee is right to advise the Government to keep the system under review so that we can remain competitive and respond to the changing needs of students, providers and employers. The report recognised that many factors influence international students when they decide where they would like to study and it can be,
“difficult to tease out the motivations of prospective international students with any great certainty”.
I will now address some of the committee’s key recommendations. The committee recommended that we should change the way we calculate our net migration statistics and not include students when considering immigration policy. A number of noble Lords mentioned this, particularly the noble Viscount, Lord Hanworth. The Government use the UN definition of net migration, which covers all those coming for 12 months or more, including students. There is no need to change the way we measure the statistics and this would not make any difference to our student migration policy. As the Prime Minister said before the Liaison Committee on 13 May 2014:
“We do not need to make a change to our immigration policy or the way we measure statistics in order to have an incredibly positive offer to students around the world”.
The committee also called for a period of stability. We are all aware that there has been significant reform during this Parliament. However, it is important to note that many of the changes to tier 4 have been undertaken in response to requests from sponsors to simplify the system or to provide more flexibility. While we seek to minimise the frequency of changes, it is important to retain flexibility and to react quickly where there is evidence that the system is being abused. That is why the Government are keen to work with the education sector and have set up the education sector forum with those institutions which recruit international students and have the practical experience to identify unnecessary obstacles and work with the Government to overcome them.
The report also recommended that BIS establish a working group to review the effects of a reduction in international STEM students on STEM taught masters courses. The Government response highlighted the fact that the International Education Council, which was set up following the publication of the international education strategy in 2013, would look annually at the trends of international students coming to the UK. I can confirm that the council met earlier this week and the matter was on the agenda. The minutes of the meeting will be published on the GOV.UK website in due course.
We also recognise that there is a job to be done in better communicating our offer. A number of noble Lords talked about this. Other nations are ready and able to pounce on any chink in our armour. In a world of mobile technologies and social media, any perceived difficulties within the UK will be played back not only by the media in our key competitor nations, such as Australia, Canada or the US, but more directly and more powerfully as students share their experience with their peers in Asia, India and the Middle East.
I am pleased to note that the Government have made some progress in improving the information that is available for prospective international students. The Home Office strategic communications team has developed a suite of products for use by stakeholders and migrants which are updated quarterly. The Government are very keen to demystify the student offer for international students, and I am pleased to report to the House that the immigration and universities Ministers have agreed to continue to develop communications material for international students, their sponsors and employers to explain the different work rights.
I should like to focus briefly on a country which was mentioned by a couple of noble Lords, and that is India. We have seen a fall in the number of Indian students coming to the UK. Our response has been direct and unequivocal. The Prime Minister visited India and stressed that the UK welcomes genuine international students. A series of Ministers, including Vince Cable and David Willetts, have visited India to reinforce the message. Sir Mark Walport, the Government Chief Scientific Adviser, has also visited and reiterated these points. The British Council has used the education element of the GREAT Britain campaign as part of a series of exhibitions and seminars across India to promote the opportunities open to prospective students interested in coming to the UK.
Noble Lords will appreciate that just as there are several factors influencing the promotion of the UK as a study destination, there are many factors which influence a student’s choice of course and institution and country. There has been particularly strong and continuing growth in the Indian higher education capacity, from 250 universities and 12,500 colleges in 2000-01 to around 700 universities and more than 35,000 colleges today, with a comparable increase in domestic enrolment rates. Around 45 UK institutions have a presence in India in the form of a representative office or individual, and all are investing heavily in resources to market their brand. These offices also manage alumni and partnership opportunities for their universities, thus contributing to the efforts of marketing the UK as a favoured study-abroad destination.
So that we can get a much clearer understanding of the reasons for such a drop in international students from India, Greg Clark and James Brokenshire now jointly chair a UK-India visa group which convenes every three months with Mr Ranjan Mathai, the Indian High Commissioner to the UK. The aim is to ensure that our existing visa rules are being applied correctly by discussing specific cases of individual difficulties brought by the Indian High Commission, to promote our excellent student visa offer, and seek to tackle the negative perceptions through targeted communications. We are making it clear that there are plenty of opportunities for Indian students who wish to stay to work after graduating in the UK, with no limits on their numbers.
Perhaps I may now turn to the specific questions put to me by noble Lords. The noble Lord, Lord Krebs, said that the exchange rate may have affected the number of STEM students coming here, but he also pointed out that the USA and Australia exchange rates have also fallen, so why have not their numbers? It is difficult to determine an answer. As the committee has recognised, many factors influence prospective international students when they are deciding where they would like to study, and it is not easy to tease out their motivations with any great certainty.
Most noble Lords asked about the post-study work route and expressed concerns about the short period of time that students on graduating have to remain in this country, as well as the level of starting salaries. The Government are committed to enabling the best international graduates to access the labour market. The old tier 1 post-study visa allowed too many students to end up in low-skilled and unskilled jobs or being unemployed. As I have already mentioned, in 2009 more than 38,000 graduates were given post-study work visas which gave them unconditional access to the labour market for up to two years. This was absurdly generous at a time of high unemployment in the UK.
We have replaced the post-study work visa with a selective system. All students studying a course for a year or more will have four months at the end of their course which they can use to search for a graduate-level job with a company holding a tier 2 licence. Those entering tier 2 in this way do not count against the annual tier 2 limit of 20,700 places. We have also waived the requirement on employers to test whether a suitable resident worker is available. It is easy for businesses to become tier 2 sponsors; they can apply online and the application takes just 30 minutes. That has been questioned, I know, by the noble Lord, Lord Rees, and so I stand corrected if that is not in fact the case.
The noble Earl, Lord Kinnoull, mentioned the milk round, which is an excellent way for companies and businesses to recruit students. I remember the milk round, and it is a way in which many students can secure jobs before they have even graduated, therefore putting them on the route to employment before the four-month clock starts ticking.
The noble Lord, Lord Krebs, mentioned the Sirius programme. If you look on the website, you will see that the Sirius programme is no more. That is because it was a pilot scheme, and the pilot is currently closed to new applicants. As he will know, it was a competition that invited applications in 2013 and 2014 and applications were received from over 93 countries. It is now being evaluated and we need to learn from the pilot before we can say what will happen in the future, but—there is no doubt about it—it has been a very popular initiative.
The noble Lord, Lord Krebs, mentioned a case study of a Canadian student, which is in the Select Committee report. The student in question could apply for a tier 2 visa and would be subject to the residential labour market test. The speciality that the student had chosen at that time was one where training places were, I understand, heavily oversubscribed, so the complaint is essentially that the places would be taken by resident workers before the student was able to apply. The NHS does choose to manage the RLMT by having two application rounds, with only resident workers being allowed to apply in round one. If the noble Lord would like any more detail on that, I am very happy to give it to him. Interestingly, there was no policy change in 2013 that would have changed the situation. Before April 2012, the student could have started her speciality training under tier 1 with no need for the RLMT, but this had already closed by the time that she finished her foundation training in August 2012. However, I am happy to write further to the noble Lord if he should wish.
Many noble Lords talked today about the difficulty in getting visas. We do not accept that the UK’s immigration rules are deterring international students and there is no clear evidence in the report to support that argument: where some courses and countries have seen falling numbers, other countries and courses are on the rise. As I have already outlined, visa applications continued to rise in 2014, with a significant increase for the Russell Group universities.
The noble Lord, Lord Krebs, asked about research by government to ascertain the views of students and the student experience. The International Education Council has commissioned a working group to look at the student experience and hear first-hand views from international students on what practical things we can do to remove barriers. The stakeholders will report once they have completed their project.
Time is running out; I am going to have to write to some noble Lords. My noble friend Lord Dundee talked about the recent improvement in numbers of Indian students. I have already covered the point on India.
My noble friend Lord Selborne talked about the tier 5 temporary worker visa, which is for 12 to 24 months. That is certainly a route for some international students. As a country and as a Government, I think that we need to do more to help employers understand the options open to them.
My noble friend Lord Dundee asked a question on entrants for STEM and non-STEM. In 2003-04, for STEM there were just over 39,000 entrants; in 2013-14, there were just over 56,000. For non-STEM, back in 2003-04, there were 72,500 entrants; in 2013-14, there were just over 123,000.
The noble Earl, Lord Kinnoull, asked about graduate entrepreneur visas and how many were issued in 2013. Some 171 were issued in 2013. He commented that that was quite a low figure and, given that it was such a good scheme, he asked whether we could do more to promote it. I totally agree with the noble Earl on that.
My noble friend Lord Selborne asked about tier 4 and whether the doctorate extension scheme is too complicated. The Home Office reports that 434 doctorate extensions were granted in 2013.
I have run out of time. I apologise—I know I have not answered all noble Lords’ questions because there was more to come. I thank all noble Lords for taking part in this very interesting debate.
Lord Krebs
My Lords, I thank all noble Lords who took part in this debate for their tremendous contributions. I particularly congratulate the noble Earl, Lord Kinnoull, on his excellent maiden speech. He made some immensely interesting points and revealed the advantage of having a chemistry degree from an ancient university.
I also thank the Minister for her response. The one area where we did not quite get the answer that we might have hoped for was on the four-month limit in the post-graduation time to acquire a visa. I hope that whoever is in government after the May election will look at that again, because the evidence is overwhelming from all sides that four months is just too short. As the noble Earl, Lord Kinnoull, said, with the milk round and the annual cycle of companies in recruiting, four months just does not work. As Sir Andrew Witty said, it does not leave students with enough time. I hope that will be reconsidered in future.
Health Service Commissioner for England (Complaint Handling) Bill
Baroness Finlay of Llandaff (CB)
My Lords, I understand that no amendments have been tabled to the Bill and that no noble Lord has expressed a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.