Draft Smoke and Carbon Monoxide Alarm (England) Regulations 2015
(8 years, 8 months ago)
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The Minister for Housing and Planning (Brandon Lewis)
I beg to move,
That the Committee has considered the draft Smoke and Carbon Monoxide Alarm (England) Regulations 2015.
It is a pleasure to serve under your chairmanship for the first time, Mr Percy.
The regulations, which were laid before the House on 16 March 2015, will require private sector landlords, from 1 October 2015, to have at least one smoke alarm installed on every storey of a rental property that is used as living accommodation and a carbon monoxide alarm in any room used as living accommodation where solid fuel is used. After that, the landlord must ensure that the alarms are in working order at the start of each new tenancy. Local authorities will be responsible for enforcing the regulations, which have been brought before the House because the Government want to increase the safety of private sector tenants.
Working alarms save lives; that is a simple fact. In the event of a fire in the home, a person is at least four times more likely to die if there is no working smoke alarm. Successive Governments of all parties and local fire and rescue authorities have made extensive use of non-regulatory approaches to increase the uptake of smoke alarms, including a series of highly effective public campaigns, such as “Fire Kills”. However, private rented sector tenants remain less likely to be protected by a working smoke alarm than any other tenure in the country. The Department for Communities and Local Government has also piloted alternatives to regulatory approaches to increase the installation of carbon monoxide alarms, but there are still high-risk properties without alarms installed.
Carbon monoxide poisoning is a serious and preventable form of poisoning. Each year, there are around 40 deaths from accidental carbon monoxide poisoning in England and Wales and in excess of 200 non-fatal cases requiring hospitalisation. We estimate that the new regulations will save at least 26 lives and nearly 700 injuries a year. I should be clear that the majority of landlords act responsibly and protect their tenants with working alarms. However, a small minority of private sector landlords have proved resistant to safety advice and recommended best practice. We decided that it was necessary to introduce the draft regulations to protect the tenants of such landlords.
A regulatory approach to the installation of smoke and carbon monoxide alarms was discussed as part of the Government’s discussion paper, a “Review of property conditions in the private rented sector”, and the majority of responses were very much in favour. The regulations aim to increase tenants’ safety by ensuring that they are not subject to death, poisoning or injury by a lack of smoke or carbon monoxide warning alarms. The Government have funded local fire and rescue authorities to purchase a number of alarms for free distribution to such landlords, encouraging all landlords to act responsibly towards their tenants and helping them to comply with the regulations. Fire authorities across the country have worked on that over the summer, with some 8 million people contacted and liaised with. Alongside the regulations, the Department intends to continue to pursue non-regulatory solutions to boost regular testing and uptake of alarms across all sectors.
I will briefly address a concern raised by the Joint Committee on Statutory Instruments regarding the non-inclusion of a review clause in the regulations. The draft regulations were laid before Parliament in March, before the Small Business, Enterprise and Employment Act 2015 received Royal Assent. The Department acknowledges, however, that as of 1 July, Ministers are required to include a review provision in secondary legislation that regulates business or to publish a statement explaining why it is not appropriate to do so. If the draft regulations are approved by Parliament and made, the Department has committed to amend them by adding a review clause at the earliest suitable opportunity.
We are committed to creating a bigger and better private rented sector with good protections for tenants and to encouraging more investment in the sector. The regulations will set a new benchmark for alarm installation in private rented sector properties, making tenants safer and increasing property standards, while still supporting good landlords by not over-regulating or stifling the sector with unnecessary red tape. The regulations prove our commitment to continued improvement and to creating a private rented sector that works for and protects all. I commend the regulations to the Committee.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
May I say what a pleasure it is to serve under your chairmanship, Mr Percy? I am pleased that the Government are, at last, listening to the concerns that have been expressed across the sector for some time about the need for more action to be taken by the Government to avert the dangers of fire and carbon monoxide poisoning.
Smoke and carbon monoxide detectors are inexpensive and save lives, so I welcome the Government’s plans to make it compulsory for all properties in the private rented sector to have a smoke alarm on each floor and a carbon monoxide alarm in any room with a solid fuel heating system. It is good that the alarms need to be in proper working order at the start of a new tenancy.
It is shocking that 40 deaths and about 200 non-fatal hospitalisations result from carbon monoxide poisoning each year, yet 17% of private rented properties do not have a smoke alarm. A report by the Gas Safety Trust on carbon monoxide risks showed that the likelihood of an incident in privately rented accommodation is significantly higher than in any other housing sector. The report also shows that residents of rental properties are, on average, three times more likely to suffer a carbon monoxide-related incident. The regulations are therefore very much welcome, but I have a few questions for the Minister.
We know from the Government’s own figures that 40 deaths a year result from carbon monoxide poisoning, so why are the Government not simply making it a requirement that all private rented sector tenancies have carbon monoxide alarms and that they are checked to ensure they are in working order? The regulations place huge enforcement responsibilities on local authorities, and the Government need to ensure that local authorities are adequately resourced to carry out that set of tasks. Many local authorities are facing huge funding cuts, and it is not clear how they will ensure that resources are available to enforce the regulations.
The Government’s impact assessment acknowledges that 9.6% of private rented sector landlords seem resistant to efforts to make them have these alarms fitted in their properties. What will the Government do to ensure that they reach out to landlords who are not providing smoke alarms and carbon monoxide alarms in their properties?
Why is the Minister not considering more regulation or licensing of private landlords? It would make access to them so much easier for local authorities and others, and it would make it easier to ensure that the alarms are fitted. In fact, the Government acknowledge that in the explanatory memorandum, in the context of licensing houses in multiple occupation. Paragraph 4 states that the regulations need not be applied to HMOs because this is already required through licensing. The obvious question is: why not just have licensing right across the sector? We would then not need to worry about non-compliance.
Will the Government make it clear what standard smoke alarms should be? The Residential Landlords Association has raised that concern publicly and with the Minister, and it wants some assurance that the alarms fitted will be of a good standard. The current guidance does not cover long leases or accommodation shared with the landlord. Will the Minister say a little more about why those are being excluded? Finally, I wanted to ask about the need for a review, but I heard what the Minister said, which was welcome as well.
Brandon Lewis
On the hon. Lady’s point about licensing, I think I am the first Minister for Housing and Planning to survive a general election. Having been in post for about 15 months, even I find it shocking that I am now facing the third shadow Minister for Housing and Planning in my time as the Minister, which might explain why the hon. Lady is not necessarily aware of the licensing issue. Only a few months ago, just before the general election, there was cross-party agreement on selective licensing. We introduced that just before the general election in agreement with her predecessor in the post. I hope that I might face the hon. Lady again in this post in due course.
Parliament agreed to selective licensing just a few months ago. Where there is an issue, local authorities can look at licensing in selective areas. As we outlined at the time, blanket licensing simply creates a tax on tenants. It passes a cost on to tenants through a regulatory burden that does not necessarily target where we need it to target.
On why certain tenancy agreements and housing tenures are excluded, the regulations are not aimed at social housing. They also do not apply where a long lease has been granted, as the hon. Lady rightly highlighted. Nor do they apply to live-in landlords, as they are not targeted at owner-occupied properties. The regulations are specifically aimed at the most at-risk properties.
As for the burdens on local authorities that the hon. Lady mentioned and the costs involved, we are assessing new burdens, but there is an ability for local authorities to take action. Civil penalties are up to £5,000. This year, from May to July, local and fire authorities spent time talking to the sector. About 8 million people have been approached, particularly by the fire and rescue authorities, which I commend for the excellent work and campaigning that they have done on this issue.
I thank Members for their attendance and the hon. Lady for the points she has made. I appreciate that there is in principle agreement on this matter. We want to reduce the risk that tenants face from fire and carbon monoxide poisoning without over-regulating. There is a fine balance. We have been clear about this, as I was at the Dispatch Box earlier today. I am determined that we drive out bad and rogue landlords. In light of the consultation document, I am looking at other issues and other ways to target bad landlords to give the best protection for tenants. We will look at what we can do legislatively as we go forward. However, we want to make sure that we do not create unnecessary burdens for the majority of good landlords. Those are the key messages behind the regulations, and I commend them to the Committee.
Question put and agreed to.
Misuse of Drugs Act 1971 (Temporary Class Drug) (NO. 2) order 2015
(8 years, 8 months ago)
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The Minister for Policing, Crime and Criminal Justice (Mike Penning)
I beg to move,
That the Committee has considered the Misuse of Drugs Act 1971 (Temporary Class Drug) (No.2) Order 2015.
It is a pleasure to serve under your chairmanship, Mr Stringer. The document that we are considering is short, but it is very important. Its object is to protect people from the drugs that it mentions. I apologise for not having been able to bring the order sooner; both the shadow Minister and I would have liked that to have happened, but this has been the earliest opportunity. We want orders such as this to come forward as early as possible—in fact, to ensure that they become unnecessary as a result of the Psychoactive Substances Bill, which has already gone through the other place.
I place on the record my thanks to the Advisory Council on the Misuse of Drugs for its continuous support and advice, particularly on this order and the Psychoactive Substances Bill. The order controls seven methylphenidate-based compounds and relates to section 2A of the Misuse of Drugs Act 1971.
Perhaps it will be useful if I tell the Committee in layman’s terms about the “legal high” we are discussing. It is often used as a substitute for cocaine and is injected directly into a vein or artery. I found out yesterday that, in a documentary that is being produced, a gentleman was filmed injecting the drug directly into the artery in his groin as a substitute for cocaine. The product is very dangerous. Initially, five compounds within this bracket were to be placed under the order, but since that time—when the previous Minister was in post—two others have been added. We now want to ban seven compounds.
The methylphenidate-based compounds are highly potent stimulants. One is marketed online as an alternative to cocaine. Harms include anxiety, paranoia, visible disturbance of the veins and arteries, chest pain and a strong urge to reuse—the compounds are highly addictive. They have become a dangerous problem in parts of the United Kingdom. Police in Scotland particularly asked for the order to be made as they had seen the use of and damage caused by the compounds increase hugely.
Since the temporary order has been in place, attendances at A and E in Scotland as a result of infections and overdoses from the compounds have dropped dramatically. We can see where the expert advice is telling us to go, and that is why the order needs to be agreed today.
Mr David Burrowes (Enfield, Southgate) (Con)
I welcome the order as well as the upcoming Psychoactive Substances Bill. There is no evidence of the Government’s family impact test in the impact assessment. In future, it would be good to include that test in such assessments. People will recognise that the issues the order raises have a significant impact on the family.
Mike Penning
My hon. Friend has made an important point. I was not aware that the family impact test was not in the assessment, but we should make sure that it is in all these assessments. We always assume that the impact is only on the individual, but the effect on families and loved ones is absolutely huge. My hon. Friend also mentioned the Psychoactive Substances Bill; we hope that that will receive its Second Reading before Christmas, after which this sort of statutory instrument will no longer be required. With that in mind, I hope the Committee will approve the order.
Diana Johnson (Kingston upon Hull North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer.
Let me start by thanking the Minister for setting out so clearly the purpose of the order before us. I have been coming along to Committees considering orders like this for five years now, and I would like to take this opportunity to thank him and his colleagues for the courtesy they have shown me over those five years by providing information and for the support that officials have given me when I have sought further information. As we live in uncertain times, I am not sure whether I will be speaking from this exact position again, so I wanted to put on record my thanks for that support from the Minister.
Mike Penning
I do not want to delay the Committee, but I thank the shadow Minister very much for her comments. I hope she will remain in place, because this issue is something she is passionate about, and that passion is something that all of us who come to this House should have. If she does not remain in place, I am sure that, whether from the Back Benches or wherever else she is, she will continue to get that support from my Department on the work she does in this area.
Diana Johnson
I am grateful to the Minister. I will certainly be taking an enormous amount of interest, in whatever capacity, to the Bill that said he would be introducing before Christmas.
The Opposition welcome the order before us. I do not wish to delay the Committee too long, but I want to ask some questions. This is the latest in a long line of statutory instruments that I have debated over the past five years, as the Government have struggled to keep pace with the explosion of new psychoactive substances. As with previous orders, we are today discussing a ban for a group of related compounds. What is unusual about today’s order is that it introduces only a temporary ban. The Government promised that the introduction of temporary bans would transform the UK’s response to new psychoactive substances. In fact, the power has been used only four times, while hundreds of new psychoactive substances have emerged on the UK market.
I want to emphasise, as the Minister did, the dangers of these drugs. I thoroughly support what he said about the result of taking these particular substances. It is important to highlight the review that was conducted by the Advisory Council on the Misuse of Drugs. I am grateful for the work it does to assist us in making our decisions.
The types of dangers we are discussing today are not dissimilar to those associated with other new psychoactive substances that we have been discussing over the previous few years: a lack of control, a danger of overdosing, chest pain, paranoia and hypertension. However, it is particularly worrying to see reports that this drug is highly addictive, as the Minister said, with users frequently needing to re-dose, often with needles. Clearly this suggests that it poses a particular public health threat. It is of course tragic that the drug has been linked with a death, as set out in the accompanying documents.
I want to make three short points. First, I want to highlight the delays in taking action against these drugs. According to the European Monitoring Centre for Drugs and Drug Addiction, ethylphenidate was first identified in the UK in 2011. The EMCDDA’s partner organisation in the UK is the National Poisons Information Service. That suggests that the drug was detected in hospital admissions as far back in 2011. The Advisory Council on the Misuse of Drugs report said that ethylphenidate was identified by surveys of online new psychoactive substances stores back in 2011, and it was first linked with a drugs death in the UK in 2013. I know that the Minister apologised for the delay in getting the order before us, but I wonder why it has taken so long to get to this point. Even if we take it from 2013, that is still two years.
There appear to have been delays at every stage of the process. Although the drug was first identified in the UK in 2011, it was not until 2014 that it was included in the UK’s forensic early warning system report. It then took a further year for the ACMD to assess the evidence and six months from the ACMD making a recommendation to Parliament discussing a temporary ban. Denmark, Austria, Germany, Hungary, the US, Australia, Sweden, Turkey, Portugal and even Jersey have already acted to ban the drug. Given that the UK has the world’s second largest legal highs market, can the Minister explain why he thinks it has taken so long to get to this point and why we appear to be so far behind those other countries?
The Minister referred to the new Psychoactive Substances Bill, which the Opposition fully support and have called for over a long period. It is coming to the House of Commons shortly. The Bill should address the issue of the supply of these drugs while their dangers are being evaluated. However, it will not address the serious shortage of capacity in the evaluation process. The Government need to consider that urgently. I would welcome the Minister’s view on the capacity of the Advisory Council on the Misuse of Drugs to carry out its functions.
Secondly, I want to ask the Minister about analogue bans—a change in the drugs laws introduced in the last five years, supposedly to address the spread of new psychoactive substances. I would like to know why an analogue ban, covering all the derivatives of methylphenidate, was not introduced in 2012 when the Government did ban other substances, most notably desoxypipradrol. All the other substances that we are discussing today are linked to methylphenidate. Why was an analogue ban that would have stopped the spread of these new substances not pursued in 2012?
Finally, I turn to education and public awareness. The Government’s efforts to control the supply of these drugs have been slow and I am concerned about the need to inform the public about the harms of legal highs. Sadly, people taking these drugs still think “legal” means safe. They are often taken in by heavy and misleading advertising from online and high-street head shops. Take, for example, the drugs we are discussing today. They are sold under generic street names such as “Gogaine” and “Burst”. Previously, those names referred to other substances; as those were banned, the component substances were changed. The unsuspecting user does not know that. We have to address that huge lack of understanding among young people, who are often tempted to take these drugs.
In its report on drugs, the Home Affairs Committee said that prevention and education were given the least attention within the Government’s drugs strategy. The expert panel on legal highs assembled by the Government last year, or early this year, called for a comprehensive strategy to increase public understanding. We need a clear national campaign and to consider again the issue of drugs education in schools. Public Health England should also put forward its views about how to tackle the issue.
There has not really been a proper attempt to engage with young people through social media, which are so important these days. In his response, the Minister will no doubt talk to me about the “Frank” website—all Ministers over the past five years have. Although that has its place, I do not think it is providing the full answer to how we educate young people on these issues. The Labour-led Welsh Government are going for a broader and more inclusive response to new psychoactive substances, looking at health and education messaging. I hope the Minister will be willing to consider the Welsh model and what can be learned from it. Finally, what work is being done to co-ordinate cross-departmental work on NPS as well as work with the Welsh, Scottish and Northern Irish Governments?
I am interested to hear what the Minister has to say on those three points. As I said at the beginning, the Opposition fully support the order.
Mike Penning
I thank the shadow Minister for her support and the work that she has done over many years. If I do not answer all her questions fully this afternoon, I will write to her personally and copy in the other members of the Committee.
The hon. Lady is right to say that methylphenidate was identified under the forensic early warning system in 2011. It has been monitored by the ACMD since and has gained localised popularity as an injecting drug. The committee gave us that advice, which is why we have acted as we have today. I do not know exactly why it was not included back in 2012; I understand that a more descriptive answer is needed.
I am not going to say that “Frank” does for this area and the language around legal highs, although it does a lot of other work. We all get told we should not use the phrase “legal highs”, but that is what the youngsters and others call these substances, so we should use language that others understand. A lot of people feel that the substances are safe because they are legal.
Given the support of Her Majesty’s Opposition, I hope the new legislation will be on the statute book by April, and it will mean that we are not playing catch-up anymore. The hon. Lady named several countries that are in advance of us on such orders, but there have been some 500 changes to drugs that we have banned—I am no scientist, but I understand that they have merely been tweaked. The new legislation will ban all psychoactive substances and we will then re-insert the ones we would like to have—for instance caffeine, without which I would not be able to survive for a day. We are learning a lot from the mistakes in Ireland as well as the positive things—I have visited Ireland and met with their scientists and Ministers. I also recently met the New Zealand justice Minister. New Zealand is going to adjust its legislation in the direction of what we are doing, because it introduced a partial ban, which makes things even more complicated.
The hon. Lady is absolutely right that we must ensure that the scientific experts have the capacity to do the work they are doing, and I have had assurances that that is the case. She is also absolutely right that this work has to be done across Government. If necessary, I will set up an inter-ministerial group to bring in all the other Departments that have to come to the table on this issue, so that we can educate young people not just about psychoactive drugs, but about drugs in general, including those that they think are safe, such as cannabis. We know about the dangers of those sorts of drugs, but sadly there are a lot of people who want to legalise them. I would advise those people to go and talk to the experts about the damage they can do.
I accept the points that the hon. Lady has made: there is a lot of work to be done, but we are now stepping up to the plate. I hope this will be the last such order. We will have new legislation that will enable us to get ahead of the scientists who keep tweaking the formulae and damaging the lives of families and their loved ones in the most destructive way. With that in mind, I hope the Committee will agree to the order.
Question put and agreed to.
Scotland Act 1998 (Modification of Schedules 4 and 5) Order 2015
(8 years, 8 months ago)
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The Secretary of State for Scotland (David Mundell)
I beg to move,
That the Committee has considered the draft Scotland Act 1998 (Modification of Schedules 4 and 5) Order 2015.
It is an honour to serve under your chairmanship, Mr Gray. I know that as a Scot you take a close interest in all matters that relate to Scotland.
If it pleases the Committee, I shall provide a brief summary of the background to the order and set out what it seeks to achieve. When the Fixed-term Parliaments Act 2011 was passed, it provided that the next general election for membership of this Parliament would occur on 7 May 2020. That same Act also provided that the next Scottish parliamentary ordinary general election would be on 5 May 2016. The Scotland Act 1998, to which I shall refer as the 1998 Act, provides for the poll at Scottish parliamentary ordinary general elections to be held on the first Thursday in May every fourth year. All this combines to mean that, as things currently stand, there are due to be general elections to both the UK and Scottish Parliaments on 7 May 2020.
It is agreed that a clash of elections is undesirable and this Government have always been committed to ensuring that any clash is avoided. The Government are also committed to implementing the recommendations of the Smith commission agreement. One of those recommendations is that the Scottish Parliament should have all powers in relation to Scottish parliamentary and local government elections in Scotland.
As the Committee will know, the current Scotland Bill makes provision to implement that recommendation. However, as both the UK and Scottish Governments agree that Scottish parliamentary electors should be aware of the term of the Scottish Parliament to which they are electing Members when they vote in May 2016, we are faced with an issue of timing. If the Scottish Parliament is to legislate in advance of the May 2016 election to determine a date for the first Scottish parliamentary ordinary general election after that one, the power to do so needs to be devolved now.
Devolving that power is exactly what this order does. The order is made under section 30 of the 1998 Act. Section 30 provides a mechanism whereby schedule 4 or schedule 5 to that Act can be modified by an Order in Council, subject to the agreement of both the UK and Scottish Parliaments. The order amends both schedules 4 and 5 to the 1998 Act. First, schedule 4 to the 1998 Act lists enactments that are protected from modification by the Scottish Parliament. Much of the 1998 Act itself is included in this list. As I have already mentioned, the 1998 Act provides for the poll at Scottish parliamentary ordinary general elections to be held on the first Thursday in May every fourth year. Section 2(2) of the 1998 Act makes that particular provision. The order therefore amends schedule 4 to the 1998 Act to allow an Act of the Scottish Parliament to modify section 2(2) in relation to the first Scottish parliamentary ordinary general election after 2016.
Secondly, as the Committee knows, schedule 5 to the 1998 Act lists the matters that are reserved to this Parliament. Among other things, elections for membership of the Scottish Parliament are reserved. In order that the Scottish Parliament can determine the day of the poll at the first Scottish parliamentary ordinary general election after 2016, the order will amend schedule 5 to provide that that matter will no longer be a reserved matter. The amendments to both schedules will combine to ensure that the Scottish Parliament has the power to determine the date of the first Scottish parliamentary ordinary general election after that to be held next May. The order also amends section 2 of the 1998 Act in connection with the amendments to schedules 4 and 5.
However, the order places certain limitations on the day that can be chosen. Specifically, the order will prevent the day of the poll determined by the Scottish Parliament from being the same as the day of the poll at a UK parliamentary general election, other than an early parliamentary general election, a European parliamentary general election or an ordinary local government election in Scotland. I would like to make it clear that those limitations were recommended in the Smith commission agreement.
The order demonstrates the Government’s commitment to honouring the Smith commission agreement. It also demonstrates the way in which this Government can work effectively with the Scottish Government to make the devolution settlement work. I commend the order to the Committee.
Ian Murray (Edinburgh South) (Lab)
As always, it is a great pleasure to serve while you are in the Chair, Mr Gray.
The Opposition do not disagree with the order. I thank the Secretary of State for his introductory remarks and I will pose just two questions in response to his explanation of the order. The first is a more general question of whether he envisages any other reasons for introducing a section 30 order before the Scotland Bill gains Royal Assent, hopefully very shortly in this Parliament. Secondly, the right hon. Gentleman did not touch on the modification of schedule 5 in article 3(2)(a), which refers to inserting
“‘The reduction of the minimum voting age’”
under “‘Exception 1’”. Will the Secretary of State cover in his summing up exactly what that means for devolving that power? I hope that it devolves the power to the Scottish Parliament to decide to allow 16 and 17-year-olds to vote.
I thank the Secretary of State for being here for his first Statutory Instrument Committee of this parliamentary term. However, it may be his last, and the Deputy Leader of the House will ably deputise for him in future such Committees—not because he has upset the Prime Minister; I do not want to start any vicious rumours of his demise from the Cabinet.
With those two brief questions, I emphasise that we are grateful for the order’s being introduced quickly so that the Scottish Parliament has the power to determine its elections timetable from next year.
David Mundell
I thank the hon. Gentleman for his kind words. I felt that it was appropriate to introduce the order myself because it is a very important measure that relates to the Scotland Bill.
The hon. Gentleman will know that we have already taken forward the order that allows the Scottish Parliament to determine whether 16 or 17-year-olds can vote in next year’s Scottish parliamentary elections, and the Scottish Parliament has decided to allow them to vote. We should take this opportunity to encourage everyone to register so that all eligible 16 and 17-year-olds can vote in those elections.
I have discussed with the Scottish Government the delivery of the Smith commission report’s recommendations, and we agreed that if it were necessary to meet the timing of the transfer of the Work programme arrangements, I would be willing to consider introducing a section 30 order to fit in with the Scottish Government’s roll-out of their proposed Work programme. However, at the moment, we believe that, should the Scotland Bill be enacted according to the timescale currently envisaged—by next spring—that will allow the Scottish Government to move forward with the Work programme as they would wish.
I hope that clarification satisfies the hon. Gentleman.
Question put and agreed to.
Draft African Development Bank (Further Payments to Capital Stock) Order 2015
(8 years, 8 months ago)
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The Minister of State, Department for International Development (Mr Desmond Swayne)
I beg to move,
That the Committee has considered the draft African Development Bank (Further Payments to Capital Stock) Order 2015.
Mr Chope, it is always a pleasure to benefit from the stewardship and guidance of the Chair, but particularly so when you are in it.
The African Development Bank provides economic development for the continent of Africa. Africa is in great want of jobs to provide livelihoods for its people. One of the principal impediments to economic growth and the development of those jobs is a chronic shortage of infrastructure, which creates a barrier to trade. Equally, poor governance often gets in the way of commercial activity and trade.
We believe that the focus of the Department for International Development matches very well the focus of the African Development Bank, with the importance that it places on private sector-led economic development, to breaking down barriers to trade and to governance. The bank’s recent success has often been ascribed to its president, Mr Kaberuka, who stood down in May. The Minister of State, Department for International Development, my right hon. Friend the Member for Welwyn Hatfield (Grant Shapps), was privileged to attend the annual general meeting and see his successor, Dr Adesina, elected with our support from a strong field of eight candidates. We believe that he will make an excellent president of the bank. He is a former Agriculture Minister who has worked for the World Bank and has experience in the United States and west Africa. He speaks several languages and we believe that he has the focus, energy and enterprise to build on the achievements of his predecessor.
The African Development Bank promotes development in two different ways. The first is through the African Development Fund, providing grants to countries that have a poor credit rating. We hold a 14% burden share in that fund, having committed some £600 million in the period 2014 to 2016. The order is not concerned with that fund. The other way in which the bank makes development possible is by providing loan capital to countries and private enterprises with a good credit rating through its ordinary capital subscribed by members of the bank. In its book for 2014, it made UA 4.5 billion in new loans available, of which 55% were for infrastructure.
The bank maintains a ratio between regional and non-regional members of 60:40. The last general capital increase was in 2011, when the capital subscribed rose by 200% to take account of the international financial crisis. There now arises an opportunity for us to acquire more capital in the bank. First, several non-regional countries were unable to take up their subscriptions to the 2011 increase, so 1,453 shares are now available to us. Equally, the ratification of the membership of South Sudan has altered the 60:40 ratio. To maintain it at 60:40, more shares are available to the non-regional players. Our allocation is 3,157 shares, only 6% of which have to be paid in. The rest are callable capital, a contingent liability for holding for which we have received the permission of the Chief Secretary to the Treasury.
Of the 6% that have to be paid in, taking the shares that are now available to us, the amount that we would have to pay by the 2 October deadline, which we will meet if the order is passed, is some £2.76 million, but the order asks for just shy of £8 million. We are asking for more because we estimate that, as previously, several countries will not be able to make the very tight deadlines to acquire their shares. We want to have the flexibility within the even tighter deadlines that then follow to be able to purchase those additional shares.
Why do we want to do it? The simple fact is that we currently have the smallest shareholding of the G7 members, at 1.7% of the shares available. That does not buy us a lot of influence. Over the longer term, we want to significantly increase our shareholding in order to increase our influence over the bank’s operations. Secondly, we regard the bank as very good value for money. Our £2.8 million subscription for the shares that we have been definitely allocated will give rise to £43 million of additional lending, which means £43 million towards creating jobs, so it is good value for money. Of course, it will have the side effect of reinforcing our support for Dr Adesina and the new regime at the bank.
I hope I have persuaded the Committee that there are good reasons for proceeding with the order.
Mr Gavin Shuker (Luton South) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Chope.
We should be proud of Britain’s history under successive Governments of providing funding to multilateral investment organisations such as the African Development Bank that work to tackle poverty and engender sustainable economic growth. Members may not realise that we first joined the African Development Fund in 1973 and the African Development Bank when membership was extended to non-regional countries in 1983, so Britain has an important long-standing relationship with the organisation.
In Europe, we take for granted the ready availability of transport networks and public utilities such as running water, energy and telecommunications. Most of our businesses know that they can access finance in order to expand. Those are fundamental prerequisites for growth and prosperity. Without them, public services and education are held back, entrepreneurial drive and talent risk being wasted and the outlook for a country’s development is bleak. Development is dependent upon getting the essential infrastructure right. Investing in the sort of projects the Minister outlined pays dividends several times over. For that reason, we will seek to support him in taking the order forward.
Since beginning operations, the African Development Bank has mobilised financial resources for more than 4,500 projects, with contributions totalling more than $118 billion. The assistance the bank provides comes in many forms: lending for infrastructure projects; funding for programmes and studies in agriculture, education, industry and governance; and technical assistance and policy advice. Its commitment to sustainable growth is of particular relevance to our age as we come face to face with the spectre of climate change, and as the world comes together to agree the sustainable development goals. That is why it is encouraging to see the bank’s support of clean, renewable energy projects in countries across Africa and its emphasis on green growth.
The bank’s recently published African competitiveness report makes it abundantly clear that Africa is a growing continent with real potential for even further growth if the necessary conditions for prosperity are in place. Over the past 15 years, the continent’s GDP growth as a whole has averaged more than 5% a year, and the growing consumer markets in many countries herald further possibilities.
I turn briefly to the detail of the order, and I have a few questions for the Minister. Britain’s contributions to multilateral development banks are among the smartest investments in international development that we can make. The African Development Bank is a positive, African-led vehicle for development lending, and that is why we will not oppose the Government’s plans to increase their shareholding in the bank by taking advantage of newly available shares under the special capital increase and shares forfeited from the sixth general capital increase.
We agree with the Government’s wish to add to the UK capital stock by purchasing the additional shares allocated to us, with a paid-in value of £2.7 million. As well as allowing the bank to provide more development lending, that increased investment will lend greater weight to Britain’s vote on issues facing the bank. That is desirable given the UK’s historically small shareholding in the bank, as it will bring us closer to the G7 nations that have a significantly larger shareholding—our European partners in Germany, at 4.1%, and in France, at 3.8%.
We also acknowledge that, if Britain were to refuse the opportunity of subscribing to the shares or miss the deadline, the UK’s shareholding would decrease. Both for the good of the bank and to maintain Britain’s influence, we agree that that should be avoided. We note that the share purchase will give rise to a contingent liability of some £43.3 million in shares, which could be called for should the bank find itself in serious difficulty, but given the bank’s strong triple A credit rating—something that even the UK has not managed to maintain throughout the past five years—and its history of never having called in such shares, we acknowledge that the contingent liability is highly unlikely to turn into a loss. It is therefore our judgment that we should support the order.
However, as the Minister explained, in addition to calling for the approval of a further £2.8 million of investment in capital stock, the order seeks permission for further shares to be purchased, up to a total of some £8 million, should they become available. Although in principle we would support the Government making further payments to increase our capital investment and our influence on the board of the bank, the Committee ought to consider the potential for a much higher contingent liability of some £124.6 million as a consequence of purchasing those additional shares.
Increasing the UK’s shareholding by the full £7.95 million sought in the order would leave the UK’s total contingent liability with the African Development Bank at about £1.1 billion. What assessment has the Minister made of the likelihood that members that have been unable to meet the October deadline will forfeit shares reissued under the sixth GCI? I would also welcome any estimate that has been made of the number of shares that might realistically become available.
I understand from the Department’s written statement of 14 July that the sum of £7.95 million represents the total amount of reissued GCI shares available to all shareholders, as well as the UK’s special capital increase allocation. That means that the Department is giving itself a significant degree of leeway and suggests that the Minister believes that, as he said earlier, a substantial number of shares may be forfeited before the October deadline. To reassure the Committee that the Department’s request for that flexibility is justified, I would welcome any additional detail he might have, including which countries may forfeit.
Whenever we use taxpayers’ money, we must always consider whether it is being spent or invested wisely. Even when projects and organisations are working well, we must always bring our scrutiny to bear. Improving results for the world’s poorest people and ensuring value for money mean that we must monitor, evaluate and look for improvements. Will the Minister reassure me that the Department is satisfied that increasing Britain’s stake in the bank and taking on the accompanying further contingent liabilities will contribute to DFID’s influence and its strategic priorities, and represent a good use of the country’s resources? I know that, as part of the Department’s multilateral aid review, there has not been a dedicated assessment of the African Development Bank.
A review has been carried out of the UK’s funding of the African Development Fund, part of the African Development Group, and has highlighted some concerns about its progress on cross-cutting issues, namely gender, fragile contexts and climate change, as well as cost and value consciousness. I would welcome the Minister’s view on whether those concerns that relate to the African Development Fund are relevant to the bank, and any other assessment he can provide of the bank’s performance.
Although scrutiny of spending and investments is always necessary, it seems clear that the African Development Bank is a valuable force in the fight for development, and that the Government’s wish to increase Britain’s involvement in the bank is justified. It therefore gives me pleasure to support the order on behalf of the Opposition, endorsing the Government’s approach and proposals for increasing Britain’s investment in the African Development Bank, provided that the Minister can give us the reassurances that we seek.
Mr Swayne
I thank the hon. Gentleman for his support and questions. He initially asked about the bank’s importance in furnishing studies. That is important, and we are grateful for its study on transport costs. We have asked them to conduct a similar study on driving down energy costs.
The hon. Gentleman specifically asked me about two things. First, he asked about taking on the additional contingent liabilities. I felt that he answered his own question effectively, in that we are considering a triple A-rated institution—there has never been any call on the capital. We estimate that it is worth taking on the liability, and we have received the Chief Secretary to the Treasury’s permission to do that.
I believe that buying the additional influence is some way off. Even if we got all the shares, increasing our influence is a long-term prospect. There is a key change: among the non-regional players, shareholdings determine how long they hold the directorship. That is an important means of influencing the process. In the longer term, we are therefore keen to increase our influence and to purchase the shares.
Secondly, the hon. Gentleman asked about the multilateral aid review. The last review said that we were getting good value for money, and that the bank’s performance was generally very good. There was some concern at the corporate level about the lack of emphasis on women and girls, and also about climate change, which the hon. Gentleman mentioned. The MAR is not a one-off process. We provided, because of our determination to improve the bank’s performance, £2 million of technical assistance to enable it to improve. A special envoy on gender has been appointed and we are confident that the bank is performing well on that metric. On climate change, the bank’s 10-year plan is to make Africa transform into a clean energy continent. Increasing the focus on climate change is welcome and now meets our requirements.
I think that that accounts for all the questions that I have been asked. I have been informed that I may have made a slight slip with my figures. I very much doubt it! I referred to £4.5 million lending from 2013. I should have said that it relates to 2014 to 2016 and that it takes the form of concessional loans as well as grants.
DRAFT Armed Forces Act (Continuation) Order 2015
(8 years, 8 months ago)
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The Parliamentary Under-Secretary of State for Defence (Mark Lancaster)
I am pleased to serve under your chairmanship, Mr Davies.
The purpose of the order is to continue in force legislation governing the armed forces, the Armed Forces Act 2006, for a further period of one year until November 2016. This reflects the constitutional requirement under the Bill of Rights that the armed forces may not be maintained without the consent of Parliament.
The legislation that makes the necessary provision for the armed forces to exist as disciplined forces is renewed every year. There is five-yearly renewal by Act of Parliament, which is the primary purpose of the Armed Forces Acts. Between Acts, there must be an annual Order in Council, and that is the draft order that we are considering today.
I should say something about why we need to keep the 2006 Act in force. If the Order in Council is not made by the end of 2 November 2015, the Armed Forces Act 2006 will automatically expire. The effect would be to end the powers and provisions necessary to maintain the armed forces as disciplined bodies.
The 2006 Act applies to all service personnel, wherever in the world they are operating. It makes nearly all the provisions for the existence of a system of command, discipline and justice for the armed forces, covering such matters as offences, the power of service police and the jurisdiction and powers of commanding officers and service courts, in particular the court martial. It is the basis of the service justice system that underpins the maintenance of discipline throughout the chain of command, which is fundamental to the operational effectiveness of our armed forces.
The 2006 Act also provides for a number of other matters that are important for the armed forces, such as their enlistment, their pay and the redress of complaints. Members of the armed forces have no contract of employment, and so no duty as employees. While they owe a duty of allegiance to Her Majesty, their obligation is essentially a duty to obey lawful orders. Without the 2006 Act, commanding officers and the court martial would have no powers of punishment for either disciplinary or criminal misconduct. That is why the Act is so important, and why we need to continue it in force.
The order will continue in force the 2006 Act until the end of 2 November 2016, when a new Act of Parliament will be required to provide for the legislation to continue for the next five years. We therefore expect the next Armed Forces Bill to be introduced into Parliament soon, and I look forward to full and interesting debates on it, and on matters of great importance to our armed forces, during its passage through the House.
Yvonne Fovargue (Makerfield) (Lab)
We have no objections to the order and look forward to the passage of the Armed Forces Bill, and we would like to add our support for the armed forces.
Question put and agreed to.
EU general budgets for 2015 and 2016
(8 years, 8 months ago)
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The Chair
Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant documents to the Committee? Mr Rees-Mogg, do you wish to speak?
The Chair
No. I have on my notes “likely to be Jacob Rees-Mogg”. As we have an outbreak of good humour, I call the Minister to make the opening statement. You have no more than 10 minutes, Minister.
The Financial Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship, Mr Walker. An outbreak of good humour is only to be expected in the circumstances.
I thank Members for their attendance at this debate and for providing the opportunity for me to present the Government’s position on the EU budget. As members of the Committee will be aware, we remain in the midst of one of the biggest debt crises to have hit Europe. In response, this Government, like other Governments across the EU, have taken the difficult but necessary decision to consolidate our public finances and implement structural reforms. We have been clear that the EU budget, which is funded by EU taxpayers, cannot be immune to reform. The Government have delivered on this in Brussels, not least through the multi-annual financial framework deal secured by the Prime Minister in 2013.
In the 2005 MFF negotiation under the Labour Government, the UK’s rebate came under attack, as it so often does in Europe. Under pressure, the previous Government folded. This cost British taxpayers more than €9 billion over the 2007-13 period. By contrast, in the 2013 MFF deal, the Prime Minister protected our rebate, and also prevented new EU-wide taxes to finance EU spending. The Prime Minister’s deal did not only mean a smaller EU budget; it meant an EU budget that was better focused on areas that are important for the UK.
Within the smaller overall MFF, expenditure has been reorientated towards areas that provide higher value for money to the British taxpayer: namely, high-value research and development, universities and other pro-growth investment. Last year’s annual budget negotiations were trying, but I am pleased to tell the House that the current proposal from the Commission for the 2016 annual budget is consistent with the MFF annual ceilings. The Commission proposed €143.5 billion in payments and €153.8 billion in commitments, with the recently agreed European fund for strategic investments deal, which is below the annual MFF ceilings by €1.2 billion on payments and €2.1 billion on commitments, making it a more reasonable proposal than those of the past two years. The cash increase of 1.6% is smaller than previous year-on-year increases, showing the impact of the MFF deal. Nevertheless, the UK, along with like-minded states, has continued to push for savings in order to reduce waste and inefficiency.
On 4 September, the Council unanimously agreed its position on the Commission’s proposal on the draft budget. The Council cut the Commission’s proposal by approximately €1.4 billion in payments and €0.6 billion in commitments so that both commitments and payments are €2.6 billion below the annual MFF ceilings. The UK received full support from our usual budget disciplinarian allies—Austria, Denmark, Finland, France, Germany, Sweden and the Netherlands—in achieving these cuts to the Commission’s proposal.
The Government supported this deal because we judged that it reflected the need for fiscal discipline while preserving funding to key areas supporting jobs and growth, and responding to external pressures. For example, the Council position increases funding compared to last year for Horizon 2020 by 9% for research and development, and increases pro-growth spend overall under heading 1a by 9%, while the external aid budget under heading 4 has increased by 22%, enabling the union to respond more effectively to external pressures. As negotiations on the final deal continue with the European Parliament in the autumn, the Government will continue to work closely with our allies in Council to ensure the best possible deal for UK taxpayers.
As well as the Commission’s draft budget 2016, a number of related documents have been held for debate. I shall now address them in turn. The mobilisation of the EU solidarity fund is a separate document alongside the draft 2016 budget, which proposes the sum of €50 million, or £35.6 million, in commitment and payment appropriations in the 2016 budget to provide a reserve for rapid disbursement of funds to member states before more substantive support is agreed. The Commission included that amount in the draft 2015 budget and it is a requirement of the EU solidarity fund regulation as amended in May last year.
We are supportive of the principles of the EU solidarity fund in providing support when an EU country is seriously affected by a major natural disaster. Natural disasters, which in most cases cannot be foreseen, bring new pressures to bear on the EU budget. However, we do not believe that new pressures should necessarily lead to requests for new money from member states, which is why we consistently press the Commission to identify possibilities for reallocation within existing budgets, when mobilising the EU solidarity fund for substantive support to member states, before requesting additional funds. Indeed, that reflects the inter-institutional agreement on budgetary discipline of December 2013, which requires the Commission to take into account the scope for reallocations to fund EU solidarity fund applications.
A proposal to mobilise the flexibility instrument was also appended to the draft budget. The instrument exists to allow the financing of expenditure that cannot be covered within the ceiling limits of an area of the budget. In the 2016 budget, heading 3 was short on commitment appropriations due to pressures arising from the migration crisis. As the Committee is aware, the Prime Minister has expressed support for EU-wide action to tackle the migration crisis and, in this case, the flexibility instrument provides a means of meeting those emergency funding requirements. Moreover, the proposed commitments budget for 2016 is more than sufficient comfortably to meet such funding requirements without incurring any breach of annual or global multi-annual financial framework ceilings.
That recognition of the need for the EU budget to respond to new pressures does not change our commitment to ensure overall financial discipline and respect for the MFF limits. As with the EU solidarity fund, we continue to urge the Commission to seek reallocations from areas of lesser priority when new pressures emerge. The Prime Minister has clearly set out that special instruments spending exists in the EU budget specifically to respond to new events, and that it is important to control that as well.
After releasing the 2016 draft budget proposal, the Commission issued an amending letter to the proposal to reflect agreement reached in June on the financing of the European fund for strategic investments, a guarantee fund to help plug the current investment gap in the EU by mobilising private financing for strategic investments. The Government supported the EFSI agreement as a way to raise growth prospects throughout Europe while being fully consistent with the MFF deal.
The Government also welcomed the protection of specific research programmes within Horizon 2020, including the Marie Sklodowska-Curie actions programme and the spreading excellence and widening participation programme, as part of the agreement reached on EFSI. The amending letter, which has now been incorporated into the Council’s position on the draft budget, increases the commitment appropriations available to Horizon 2020 and the connecting Europe facility by around €153 million and €150 million respectively, resulting in an overall increase in commitment appropriations in the 2016 budget by €303 million.
As for the 2015 budget, the Commission has issued a number of draft amending budgets, which have all been adopted in Europe, except the latest, DAB 6. In line with the routine annual practice, it provides for a revision in the forecast of member state contributions to the EU budget to reflect the latest economic data and forecasts provided and agreed by member states in March every year. The changes in that DAB were already anticipated in the Office for Budget Responsibility’s most recent forecast in July.
DAB 6 is important because it contains the rebate that we will receive on the 2014 surcharge payment. It confirms that we will receive the rebate in the same year as our making the surcharge payment, rather than with a year’s lag. It also sets out that we will receive a rebate that is higher than estimated by the Commission last autumn, so the total net surcharge payment from the UK to the EU will be under £0.8 billion, less than half of the original bill of £1.7 billion.
As we enter the final few months of negotiations on the annual budget, we face the usual challenges that we have come to expect from Brussels. The European Parliament will agree its final position on the budget on 28 October. I can confidently predict that it will seek to increase significantly the Commission’s proposal and leave a much-reduced margin below the annual MFF ceiling. I can equally confidently predict that many member states—in particular, net recipient member states—will support that.
Despite those challenges, we remain fully committed to obtaining the best deal for the UK and the British taxpayer. Our objective is an agreement for 2016 that supports the delivery of the Prime Minister’s MFF and achieves the greatest possible amount of restraint in the framework. This is a negotiation and the outcome will ultimately be decided by a qualified majority in the Council, which is why working closely with our like-minded allies, as we have done successfully to date, is so important.
Today the Committee has the opportunity to present a united front in favour of restraint in the annual budget from 2016 and to give the Government a strong mandate to continue to work with like-minded member states in pressing for necessary restraint and discipline in the budget negotiations this autumn in order to get the best deal for UK taxpayers.
The Chair
We now have until 5.30 pm for questions to the Minister. May I remind Members that these should be brief? It is open to a Member, subject to my discretion, to ask related, supplementary questions.
Barbara Keeley (Worsley and Eccles South) (Lab)
Thank you, Mr Walker. It is a pleasure to speak in this Committee, the first time that I have done so with you in the Chair. May I thank you for chairing our proceedings today? I hope it is helpful if I group my questions.
First, on the draft decision about the use of the EU solidarity fund in 2016 for financial assistance to eligible states affected by major national disasters or extraordinary regional disasters, the terrible floods experienced by Romania, Bulgaria and Italy in 2014 caused extensive damage to the economic and productive sectors in many towns and cities in those countries. The UK was a beneficiary of the solidarity fund after the 2007 floods; I am sure Members remember those floods and the difficulties they caused for many constituents. We received £127 million to help with their aftermath.
I agree and have constantly said in debates on these matters that there is a need for budgetary restraint and reform in the EU budget. I spoke strongly about that in the debate on the European Union (Finance) Bill. Will the Minister make his position on the solidarity fund clearer? Will he accept the need to help countries that have experienced significant problems owing to flooding? Will he agree to such mechanisms being used in a similar way in the future, or does he think that, for us to achieve budgetary restraint, we have to reform the way those instruments work?
Secondly, what plans do the Government have to ensure that this annual budget and future EU budgets are controlled and that funding is prioritised on interventions to encourage jobs and growth throughout the EU and in the UK? Today’s documents raise again some of the issues that I raised in the European Union (Finance) Bill. Funding for the common agricultural policy is still high and not being diverted to more useful programmes such as the European fund for strategic investments. Other budget amendments have pushed the budgets further into the margins, which again raises my question of whether the gap between commitment and payment appropriations is manageable and whether it is the most efficient way to ensure budgetary restraint. We had quite a debate on that when discussing the Bill. What plans does the Minister have to ensure wider reform of the EU budget?
Finally, I would like to ask the Minister about the UK’s response to migratory pressures in Italy and Greece. In document 11, his follow-up letter to the Chair of the European Scrutiny Committee, the hon. Member for Stone (Sir William Cash), on draft amending budget 5, responding to those migratory pressures, he outlined more details and he has said more on that today. In the letter, he said that the funding provided for in this DAB supported a range of measures to support the management of migration flows, none of which directly funded the Commission’s proposed schemes for relocation to other member states of 40,000 migrants arriving in Italy and Greece or the resettlement of 20,000 refugees from those countries. Will he confirm whether, in line with the European announcement, the project will include resettlement to other European member states? Does he agree that, contrary to the comments he made in the letter, that does appear to constitute direct funding for the relocation of some of the migrants arriving in Italy and Greece?
Labour Members in the UK Parliament and European Parliament have called for a joint approach to help cope with the increasing number of refugees. The Government have stated that they will not participate in a proposed mandatory EU programme to resettle migrants rescued when trying to cross the Mediterranean to Europe. Now that European leaders have voted against a quota system for relocation, something with which the Government did not agree, are there plans to engage further in the European effort to solve the migrant crisis? What future financial support are the Government willing to mobilise to help the UK and other EU countries deal with those migratory pressures, which are the consequence of unrest in the middle east?
Mr Gauke
May I put it on record that I am grateful to see the hon. Member for Worsley and Eccles South in her place? I hope we can continue to debate this and other matters in future. I am also delighted to see the hon. Member for Scunthorpe in his place, and I hope we will continue to debate Treasury matters.
First, in terms of our position on the EU solidarity fund, the Government support the objectives and principles of the fund in providing assistance to member states affected by serious natural disasters. However, the Government also take the view that the Commission should always look first to reallocate funds from within existing agreed budgets to meet in-year pressures, rather than coming to member states to request additional money. Past examples show that the Commission is able to find reallocations—for example, when programmes are delayed or take-up is slower than expected.
In terms of the budget more widely and the need to prioritise areas relating to jobs and growth, the Government’s record is clear. As I made clear in my opening remarks, the best way to put pressure on inefficient spending is to cap the overall expenditure. The deal negotiated by the Prime Minister in February 2013 was the first real-terms reduction in the EU budget, and such budgetary restraint is very important. As the Prime Minister said at the time, EU spending reform is a long-term project, but the deal that he secured represents important progress, including on common agricultural policy expenditure. While spending on CAP was cut by 13%, spending on areas of pro-growth expenditure increased and now accounts for 13% rather than 9% of the overall budget.
It is also worth mentioning wider budgetary reform. The UK welcomes the objectives of Vice-President Georgieva’s “budget for results” initiative, which aims to develop a more performance-orientated budget that delivers tangible results for EU citizens. We are working closely with the Commission on that and see it as an important opportunity to help improve the value and efficiency of EU spending and to increase transparency about it for taxpayers. The Chancellor made our position clear at ECOFIN earlier in the year. We have held discussions with the Commission and offered technical assistance, and we are keen to drive this agenda forward.
On migration funding and our response to the crisis, the UK is of the view that a great impact can be made in conflict regions, which is why we are the second largest bilateral donor to the Syrian relief effort. We will continue with our significant efforts to ease the burden on front-line member states by providing practical, on-the-ground support. In line with the Prime Minister’s announcements, we will also take forward plans to resettle up to 20,000 Syrian refugees over the course of this Parliament.
With regard to funding of Frontex, to which we contribute not via the EU budget but through a separate bilateral contribution, we will match increased EU funding as proposed under draft amended budget 5. I hope those points are helpful to the Committee, and I will be happy to answer any further questions.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
May I say, Mr Walker, what a great pleasure it is to serve under your chairmanship for the first occasion in this Parliament? I did so many times in the previous Parliament when you were chairing, with great élan, the Procedure Committee.
To begin with, what are the Minister’s expectations for our rebate? It has gone up this year, which is good news, but last year we obviously had the problem of suddenly discovering that we owed the EU a great deal more money. Does he think that that will be a recurring problem or will the good news on the rebate be the more important part?
Mr Gauke
In terms of the rebate and the surcharge, which, as my hon. Friend rightly pointed out, emerged last year, the first point is that he is right that the rebate has increased. The effect of that is that the net additional contribution, as a consequence of revisions to our gross national income, has fallen by something in the region of €100 million. It is worth saying that the draft amending budget before us confirms this; that is an important point. On the wider question of whether we are likely to see any repeat of what happened last year, it is worth remembering the negotiation achievements that were reached last year by the Chancellor of the Exchequer, ensuring that no country is bounced into having an additional liability in the way that occurred last time.
When it comes to the revisions of GNI that have an impact on the calculation of contributions of member states, as far as the UK—or, indeed, any member state—is concerned, until all revisions have been done by all member states, it is not possible to make an assessment of precisely what additional sum is likely to be made.
Finally on this topic, let me make it perfectly clear that under this Government the UK rebate is safe. The rebate will continue to be calculated on an unchanged basis. There was no change to the formula and no change to the types of EU expenditure that we get a rebate on. The UK abatement remains fully justified due to continuing expenditure distortions in the EU budget; it is simply a matter of fairness. In terms of the surcharge issue, which is a separate but related one, we cannot yet say whether the UK will make a payment or receive a repayment from the EU later in the year until all calculations have been completed.
Mr Rees-Mogg
The Minister said that the external aid budget will go up by 22%. Do our contributions to it that go through the European Union but are not co-funding operations with the European Union count towards our 0.7% target for overseas aid?
Mr Rees-Mogg
I do have another question, and the Minister might get inspiration.
Mr Rees-Mogg
Very often in these European debates on the budget, we look at the smaller issues, but subheadings 1 and 2—economic, social and territorial cohesion, and sustainable growth and natural resources—cover about €111 billion of expenditure. Those terms seem to be vague and woolly. Will the Minister give us some more guidance as to where the money really goes? What is economic, social and territorial cohesion, other than building a fence in Hungary? What is sustainable growth and natural resources? I do not think that we are not doing a lot of mining in the European Union.
Mr Gauke
On my hon. Friend’s previous question, I can confirm that the contribution to the EU budget that is spent on overseas aid is included in our 0.7% official development assistance target. I am pleased to be able to provide that clarification.
My hon. Friend makes a wider point about the vagueness of the definitions, but that is perhaps not unique to the European Union. Whether descriptions relate to UK expenditure or various UN conventions and expenditure, they are not always as clear as they might be. There have been issues in trying to explain to the general public how we spend money within the UK, and such terms can be a little vague. I support my hon. Friend’s enthusiasm for greater transparency in this area. The Government introduced UK taxpayers to tax summaries setting out where expenditure goes so that they can be better informed about how public money is spent.
On the EU budget headings, my hon. Friend referred to sustainable growth. This includes common agricultural policy pillar two spending, which focuses on rural development that is environmentally sustainable. That is part of heading 2 spend. The EU budget spend contributes to financing through various programmes. For example, Horizon 2020, which I touched on earlier, is perhaps one of the less controversial areas of EU expenditure, as are cohesion funds for sustainable development within the EU.
I hope that I have provided some information for my hon. Friend about the relevant headings, but if he would like more, I am happy to set that out.
The Chair
Mr Rees-Mogg, are you content? If no more Members have questions, we will proceed to the debate on the motion.
Motion made, and Question proposed,
That the Committee takes note of the European Union Documents No. 9404/15, Draft Decision on mobilisation of the EU Solidarity Fund to provide for payment of advances in the 2016 Budget; No. SEC(15) 240, Statement of Estimates of the Commission for 2016 (Preparation of the 2016 Budget): Political Presentation; No. SEC(15) 240 Statement of Estimates of the Commission for 2016 (Preparation of the 2016 Budget): Financial programming 2017-2020 (Provisional figures); No. 9403/15 Draft Decision on the mobilisation of the Flexibility Instrument for the provisional measures in the area of international protection for the benefit of Italy and Greece; No. 10343/1/15 Letter of amendment No 1 to the draft general budget 2016: Financing of the EFSI Guarantee Fund; No. COM(15)351 Draft Amending Budget No. 6 to the General Budget 2015; supports the Government's efforts to limit the size of the EU Budget, including use of the EU Solidarity Fund and Flexibility Instrument, in order to get the best deal for UK taxpayers at a time of tight constraints on domestic public spending; welcomes the fact that the 2016 Draft Budget respects the Multi-Annual Financial Framework agreement secured by the Prime Minister in 2013, which delivers an unprecedented real-terms reduction compared with the 2007-2013 period while protecting the UK rebate; notes that the 2016 Draft Budget achieves an increased payments and commitments margin compared to 2015 and that the Amending Letter No. 1 updates the 2016 Draft Budget to reflect strong political agreement on the Regulation on the European Fund for Strategic Investments which the UK supported as a mechanism to boost jobs and growth in the UK and Europe; and further notes that the Draft Amending Budget 6 concerns a routine adjustment of revenue calculations and welcomes that it provides for the payment of the rebate on the 2014 EU budget surcharge that was secured last autumn. —(Mr Gauke.)
Barbara Keeley
I thank the Minister for his answers. It was interesting that the hon. Member for North East Somerset made an appropriate point about the vagueness of definitions in an 88-page document and the various other attachments. What we are debating is probably as clear as the proverbial mud to many people outside the room, so perhaps we can add a little clarity.
I have made this point before: the Opposition believe—we must keep insisting on this—that the European Commission should try to make decisions surrounding the budget much more accessible to citizens. The material is dense and, even for a short debate such as this, it is hard to understand what is being said. The Commission should start to understand how to give more and better information about the budget and the budget process, and I am sure that the Minister, who has to plough through all these things, agrees. Transparency is a key factor, so I was glad that the hon. Member for North East Somerset talked about that.
I want to cover several more points, just for emphasis. A lot of this is uncontentious, albeit not all. As I have said, we welcome the fact that the draft budget states that its primary objective is to
“provide a new boost for jobs, growth and investment”.
We welcome the overall increase in the fund for competitiveness for growth and jobs of 11.4% for 2016 compared with 2015. However, there have been decreases in funding for large infrastructure projects and, at a much greater rate, for energy projects to aid economic recovery. We should encourage a focus on green energy and investment.
Funding for economic, social and territorial cohesion has received a small overall increase, although both the cohesion fund and the European territorial co-operation fund have decreased. That heading has been the subject of an extensive reprogramming exercise and the margin left beneath the ceiling is now very tight, with only £11 million of difference. We will continue to press the Government to ensure that significant changes to and reallocations of funding are made on the basis that they are likely to increase value for money for the UK taxpayer.
We welcome the continued decline in agriculture spending as a share of the European budget—as I have said, it will drop from 41% of EU commitments in 2014 to 35% in 2020—but the wider reform of the common agricultural policy that is needed has still not taken place. The UK Government should push for such reform in future negotiations. Deductions are being made to sustainable growth and natural resource funding, but they involve funds for which reform is less of a priority. For example, the European agricultural fund has decreased by 24.9%, whereas market-related expenditure and direct payments have decreased by only 1.4%.
We welcome the increased focus on dealing with the refugee crisis. Draft amending budget No. 5 was intended to support the EU relocation and resettlement schemes. As the Minister mentioned, the money has been used to reinforce Frontex, to provide emergency assistance after the first arrival and screening of migrants, to reinforce the regional development and protection programmes for north Africa and the horn of Africa, and to cover emergency assistance for the surveillance activities carried out in the context of Frontex operations.
In addition, €25 million was used to implement a voluntary pilot project on resettlement. To refer back to my question, a European announcement on 13 May suggest that that project would include resettlement in European member states. Labour welcomes the use of the flexibility instrument to help to alleviate the migrant crisis, but we encourage the UK Government to engage with the rest of Europe and other affected countries to find a sustainable way of funding a response to this increasingly serious situation. Frankly, we must have something more sustainable than what is in place today. It was disappointing that many Conservative and UKIP MEPs voted on 9 September against legislation calling for a unified response to the relocation of 40,000 asylum seekers from Italy and Greece. Labour Members and MEPs have called for a joint approach to help to cope with the increasing numbers of refugees. My colleague, Claude Moraes MEP, chair of the European Parliament’s civil liberties, justice and home affairs committee, said:
“We need a long-term solution, with Britain opting into a comprehensive EU plan to tackle a crisis which is likely to go on for some time and will require solidarity on refugees and measures to halt people-smuggling and the root causes.”
I believe that this is a Treasury issue as well as a Home Office one, and I hope that the UK Government engage with the EU to provide an adequate response to the crisis.
Along with our European counterparts, Labour Members fully support the letter of draft amending budget No. 1, which helps to create the budget structure necessary for the provision and creation of the European fund for strategic investments. We believe that such funding should be a priority for the EU. It will help to target areas for growth, including infrastructure in the transport, energy, digital, environment, urban and social sectors. Other areas of focus will be education and training, health, research and development, and support for small and medium-sized enterprises. It is unfortunate that the money redirected to that fund is from funding already set aside to increase competitiveness for growth and employment. We should not be in that either/or situation. Money is being shifted from the Connecting Europe Facility to fund the European fund for strategic development. That means that money to improve cross-border rail and operability, sustainable and efficient transport, and the connectivity of transport modes has been more than halved. However, there is a new budget allowance for encouraging private investment for transport infrastructure projects. The Minister mentioned the redeployment of funds from Horizon 2020.
I want to leave the Minister with a question, although I do not know whether he will have time to answer it today. Have the Government made any assessment of whether the shifting of the funds will provide better value for the UK taxpayer? I understand that the measure uses unallocated margins, but that goes to the question of the manageability of the gap between authorised commitments and authorised payments. I spoke about that a great deal in our debates on the European Union (Finance) Act 2015, so I will not rehearse the arguments again today.
Mr Rees-Mogg
My initial point is that we should always remember that when the EU budget talks about “own resources”, it means our money, which was the point that Margaret Thatcher made so forcefully all those years ago to get our money back. The EU does not, in fact, have any of its own resources. It has money that it squeezes out of the British taxpayer, and it gives us a little bit back in return, but it does not have its own resources.
I am concerned about the size of the budget that is spent on things about which we know very little, except the common agricultural policy, which I fear is used to subsidise inefficient continental farmers and damages the interests of our farmers, because it is biased in favour of small, inefficient farming units whereas so many of our farmers have consolidated. That is a particular problem when dairy prices are so low because our farms, have become much more efficient, in many cases quite painfully.
My neighbour, my hon. Friend the Member for Somerton and Frome, and I have large rural constituencies with a lot of dairy farmers who suffer because the CAP is focused away from British farmers to less efficient farmers—and we pay for it. That seems to be the worst of all possible worlds. It will, as the hon. Member for Worsley and Eccles South said, go down to representing 35% of the EU budget, but that is still an enormous amount to be paying in agricultural subsidies. If we look at the experience of New Zealand and how competitive it has become after weaning itself off subsidies, the lesson is quite clear. We want efficient, larger farming units that are able to compete globally, not to have the principles of the 1960s applying to farming.
It is also difficult to know where the money is going, which was why I asked the Minister about the €110-odd billion in the main parts of the budget. We often argue about the rise in administrative expenses. They are important, but they are 6% of the budget, and that 6% of the budget ought to be reduced. An administrative cost of 6% is pretty high in the context of other Administrations but if we save money there, we are talking about hundreds of millions, whereas if we save money in the major part of what the EU is doing, we can talk about saving billions. It really is a question of going through this line by line and seeing whether the money is being spent reasonably.
Perhaps Parliament does not take the whole issue of European spending seriously enough because we hand the money over and that is it, whereas we spend four days debating the UK Budget, as well as the autumn statement and so on. However, we are having a two-hour debate with not many participants on a quiet Monday afternoon in which we are discussing the very large European budget, the inefficiencies that go with that, and the aspects of the spending that may not be in the British national interest.
I am fully supportive of what the Government have done on the MFF—it was an absolute triumph. I did not think that it would be possible to get the European budget cut. It worries me that outside the MFF, the process is subject to qualified majority voting, so our ability to limit things is seriously curtailed and, as the Minister suggested, we have to find allies in like-minded countries that do not want spending to go up. The question is whether the use of this money is wasteful and in the British national interest. The reminder is, as always, that this is our money—our taxpayers’ money.
Mr Gauke
May I thank the hon. Member for Worsley and Eccles South and my hon. Friend the Member for North East Somerset for their contributions? I thank other Members for attending today’s proceedings and, indeed, members of the European Scrutiny Committee for selecting the documents for debate.
EU budget negotiations are a challenging process, but I am pleased to say that the initial Commission proposal was more reasonable than in previous years, as I pointed out earlier. That shows the effect that the Prime Minister’s deal is having in bearing down on spending. The Government, working closely with our like-minded allies, have been successful in achieving further savings by cutting the Commission proposal by approximately €1.4 billion in payments and €0.6 billion in commitments, meaning that both commitments and payments are €2.6 billion below the annual MFF ceilings.
As I turn to the issues raised in the debate, I must note that there has been a degree of cross-party unity, which is an attribute that we might not often see in the next few months. I agree with the essence of the point about the transparency of spending that was raised by the hon. Lady and my hon. Friend. It is worth pointing out that Vice-President Georgieva’s budget for results initiative aims to increase budget transparency to EU citizens and, as I mentioned in my earlier remarks, we are keen to support her in that process. The widespread use of open data to provide more information to the public can help that, but for public spending in general, and spending by EU institutions in particular, the case for greater transparency is strong indeed.
We reduced CAP spend in the previous MFF. CAP reform is a long-term project and we continue to work with allies to achieve maximum value for money. It is worth pointing out that there has been modest redistribution of direct payments in recent years. Generally, the pattern of direct payment receipts by member states is a function of patterns of production, in particular in the production of commodities for which compensation rates are highest. We continue to argue for CAP reform and we have succeeded in reducing CAP spend by 13% in this MFF.
We agree that it is disappointing that administrative costs remain high. My hon. Friend was right to say that those costs are 6%, which are higher than they should be. We continue to hold the institutions to their commitment to reduce staff headcount by 5% a year.
The hon. Lady touched on the EFSI, which we voted in favour of because we judged that it was an effective way to leverage private financing for growth, including infrastructure. Those funds will be allocated through a competitive process. Funding needed to be found within the limits of the MFF and, in such circumstances, that is a reasonable approach.
On migration, the UK will not participate in relocation because we believe that it fails to address the cause of the problems—it will act as a pull factor to the EU and simply move the problem around Europe. A greater impact can be made in conflict regions, which is why we are the second largest bilateral donor to the Syrian relief effort. We will continue our significant efforts to ease the burden on front-line member states by providing practical, on-the-ground support. In the past three years, the UK has contributed more resource to support missions run by the European Asylum Support Office than any other member state, with more than 1,000 expert working days contributed in deployments to Greece, Italy, Bulgaria and Cyprus.
The Government will continue to champion the need for an efficient EU budget that provides good value for the UK taxpayer and firmly press to ensure fiscal discipline by limiting the budget size to deliver the Prime Minister’s MFF deal. In doing so, we will work with like-minded allies to deliver the best EU budget deal possible within the negotiation’s parameters. We continue to take difficult decisions to deal with deficits domestically, and such budget discipline is also needed at an EU level. We will, of course, keep members of the Committee updated as appropriate and I welcome their continued interest in this important issue.
Question put and agreed to.